SOLAR ENERTECH CORP. INDEMNITY AGREEMENT
This
Indemnity Agreement, dated as of __________________, 20__, is made by and
between Solar EnerTech Corp., a Delaware corporation (the “Company”),
and
________________________________________ (the “Indemnitee”).
RECITALS
A. The
Company is aware that competent and experienced persons are increasingly
reluctant to serve as directors, officers or agents of corporations unless
they
are protected by comprehensive liability insurance or indemnification, due
to
increased exposure to litigation costs and risks resulting from their service
to
such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors, officers and
other agents.
B. The
statutes and judicial decisions regarding the duties of directors and officers
are often difficult to apply, ambiguous, or conflicting, and therefore fail
to
provide such directors, officers and agents with adequate, reliable knowledge
of
legal risks to which they are exposed or information regarding the proper course
of action to take.
C. Plaintiffs
often seek damages in such large amounts and the costs of litigation may be
so
enormous (whether or not the case is meritorious), that the defense and/or
resolution of such litigation is often beyond the personal resources of
directors, officers and other agents.
D. The
Company believes that it is unfair for its directors, officers and agents and
the directors, officers and agents of its subsidiaries to assume the risk of
huge judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases where the
director, officer or agent was not culpable.
E. The
Company recognizes that the issues in controversy in litigation against a
director, officer or agent of a corporation, such as the Company or its
subsidiaries, are often related to the knowledge, motives and intent of such
director, officer or agent, that he or she is usually the only witness with
knowledge of the essential facts and exculpating circumstances regarding such
matters, and that the long period of time which usually elapses before the
trial
or other disposition of such litigation often extends beyond the time that
the
director, officer or agent can reasonably recall such matters and may extend
beyond the normal time for retirement for such director, officer or agent with
the result that he or she, after retirement or in the event of his or her death,
his or her spouse, heirs, executors or administrators, may be faced with limited
ability and undue hardship in maintaining an adequate defense, which may
discourage such a director, officer or agent from serving in that
position.
F. Based
upon their experience as business managers, the Board of Directors of the
Company (the “Board”)
has
concluded that, to retain and attract talented and experienced individuals
to
serve as directors, officers and agents of the Company and its subsidiaries
and
to encourage such individuals to take the business risks necessary for the
success of the Company and its subsidiaries, it is necessary for the Company
to
contractually indemnify its directors, officers and agents and the directors,
officers and agents of its subsidiaries, and to assume for itself maximum
liability for expenses and damages in connection with claims against such
directors, officers and agents in connection with their service to the Company
and its subsidiaries, and has further concluded that the failure to provide
such
contractual indemnification could result in great harm to the Company and its
subsidiaries and the Company’s stockholders.
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G. Section 145
of the General Corporation Law of Delaware, under which the Company is organized
(“Section 145”),
empowers the Company to indemnify its directors, officers, employees and agents
by agreement and to indemnify persons who serve, at the request of the Company,
as the directors, officers, employees or agents of other corporations or
enterprises, and expressly provides that the indemnification provided by
Section 145 is not exclusive.
H. The
Company desires and has requested the Indemnitee to serve or continue to serve
as a director, officer or agent of the Company and/or one or more subsidiaries
of the Company free from undue concern for claims for damages arising out of
or
related to such services to the Company and/or one or more subsidiaries of
the
Company.
I. Indemnitee
is willing to serve, or to continue to serve, the Company and/or one or more
subsidiaries of the Company, provided that he or she is furnished the indemnity
provided for herein.
AGREEMENT
NOW,
THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. Definitions.
(a) Agent.
For the
purposes of this Agreement, “agent” of the Company means any person who is or
was a director, officer, employee or other agent of the Company or of a
subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interests of the Company or a subsidiary
of
the Company as a director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, limited liability company,
trust or other enterprise; or was a director, officer, manager, employee or
agent of a foreign or domestic corporation which was a predecessor corporation
of the Company or a subsidiary of the Company, or was a director, officer,
employee or agent of another enterprise at the request of, for the convenience
of, or to represent the interests of such predecessor corporation.
(b) Expenses.
For
purposes of this Agreement, “expenses” include all out-of-pocket costs of any
type or nature whatsoever (including, without limitation, all attorneys’ fees
and related disbursements), actually and reasonably incurred by the Indemnitee
in connection with either the investigation, defense or appeal of a proceeding
or establishing or enforcing a right to indemnification under this Agreement
or
Section 145 or otherwise; provided, however, that “expenses” shall not
include any judgments, fines, ERISA excise taxes or penalties, or amounts paid
in settlement of a proceeding.
(c) Proceeding.
For the
purposes of this Agreement, “proceeding” means any threatened, pending, or
completed action, suit or other proceeding, whether civil, criminal,
administrative, or investigative.
(d) Subsidiary.
For
purposes of this Agreement, “subsidiary” means any corporation of which more
than 50% of the outstanding voting securities is owned directly or indirectly
by
the Company, by the Company and one or more other subsidiaries, or by one or
more other subsidiaries.
2. Agreement
to Serve.
The
Indemnitee agrees to serve and/or continue to serve as agent of the Company,
at
its will (or under separate agreement, if such agreement exists), in the
capacity Indemnitee currently serves as an agent of the Company, so long as
he
or she is duly appointed or elected and qualified in accordance with the
applicable provisions of the Bylaws of the Company or any subsidiary of the
Company or until such time as he or she tenders his or her resignation in
writing; provided, however, that nothing contained in this Agreement is intended
to create any right to continued employment by Indemnitee.
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3. Liability
Insurance.
(a) Maintenance
of D&O Insurance.
The
Company hereby covenants and agrees that, so long as the Indemnitee shall
continue to serve as an agent of the Company and thereafter so long as the
Indemnitee shall be subject to any possible proceeding by reason of the fact
that the Indemnitee was an agent of the Company, the Company, subject to
Section 3(c), shall promptly obtain and maintain in full force and effect
directors’ and officers’ liability insurance (“D&O
Insurance”)
in
reasonable amounts from established and reputable insurers.
(b) Rights
and Benefits.
In all
policies of D&O Insurance, the Indemnitee shall be named as an insured in
such a manner as to provide the Indemnitee the same rights and benefits as
are
accorded to the most favorably insured of the Company’s directors, if the
Indemnitee is a director; or of the Company’s officers, if the Indemnitee is not
a director of the Company but is an officer; or of the Company’s key employees,
if the Indemnitee is not a director or officer but is a key
employee.
(c) Limitation
on Required Maintenance of D&O Insurance.
Notwithstanding the foregoing, the Company shall have no obligation to obtain
or
maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance
are
disproportionate to the amount of coverage provided, the coverage provided
by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company.
4. Mandatory
Indemnification.
Subject
to Section 9 below, the Company shall indemnify the Indemnitee as
follows:
(a) Third
Party Actions.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding (other than an action by or in the right of the Company)
by
reason of the fact that he or she is or was an agent of the Company, or by
reason of anything done or not done by him or her in any such capacity, the
Company shall indemnify the Indemnitee against any and all expenses and
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes and penalties, and amounts paid in settlement)
actually and reasonably incurred by him or her in connection with the
investigation, defense, settlement or appeal of such proceeding, provided the
Indemnitee acted in good faith and in a manner he or she reasonably believed
to
be in or not opposed to the best interests of the Company and its stockholders,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful.
(b) Derivative
Actions.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding by or in the right of the Company by reason of the fact that
he or she is or was an agent of the Company, or by reason of anything done
or
not done by him or her in any such capacity, the Company shall indemnify the
Indemnitee against all expenses actually and reasonably incurred by him or
her
in connection with the investigation, defense, settlement, or appeal of such
proceeding, provided the Indemnitee acted in good faith and in a manner he
or
she reasonably believed to be in or not opposed to the best interests of the
Company and its stockholders; except that no indemnification under this
subsection 4(b) shall be made in respect to any claim, issue or matter as
to which such person shall have been finally adjudged to be liable to the
Company by a court of competent jurisdiction unless and only to the extent
that
the court in which such proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such
amounts which the court shall deem proper.
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(c) Actions
where Indemnitee is Deceased.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding by reason of the fact that he or she is or was an agent of
the
Company, or by reason of anything done or not done by him or her in any such
capacity, and if prior to, during the pendency of after completion of such
proceeding Indemnitee becomes deceased, the Company shall indemnify the
Indemnitee’s heirs, executors and administrators against any and all expenses
and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred to the extent Indemnitee would
have
been entitled to indemnification pursuant to Sections 4(a) or 4(b) above
were Indemnitee still alive.
(d) Limitations.
Notwithstanding the foregoing, the Company shall not be obligated to indemnify
the Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes and penalties, and
amounts paid in settlement) for which payment is actually made to or on behalf
of Indemnitee under a valid and collectible insurance policy of D&O
Insurance, or under a valid and enforceable indemnity clause, by-law or
agreement.
5. Partial
Indemnification.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of any expenses or liabilities of any
type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement) incurred by him or her in the
investigation, defense, settlement or appeal of a proceeding, but not entitled,
however, to indemnification for all of the total amount hereof, the Company
shall nevertheless indemnify the Indemnitee for such total amount except as
to
the portion hereof to which the Indemnitee is not entitled.
6. Mandatory
Advancement of Expenses.
Subject
to Section 9(a) below, the Company shall advance all expenses incurred by
the Indemnitee in connection with the investigation, defense, settlement or
appeal of any proceeding to which the Indemnitee is a party or is threatened
to
be made a party by reason of the fact that the Indemnitee is or was an agent
of
the Company. Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall be determined ultimately that the
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the Company to the
Indemnitee within twenty (20) days following delivery of a written request
therefor by the Indemnitee to the Company. In the event that the Company fails
to pay expenses as incurred by the Indemnitee as required by this paragraph,
Indemnitee may seek mandatory injunctive relief from any court having
jurisdiction to require the Company to pay expenses as set forth in this
paragraph. If Indemnitee seeks mandatory injunctive relief pursuant to this
paragraph, it shall not be a defense to enforcement of the Company’s obligations
set forth in this paragraph that Indemnitee has an adequate remedy at law for
damages.
7. Notice
and Other Indemnification Procedures.
(a) Notice
by Indemnitee.
Promptly after receipt by the Indemnitee of notice of the commencement of or
the
threat of commencement of any proceeding, the Indemnitee shall, if the
Indemnitee believes that indemnification with respect thereto may be sought
from
the Company under this Agreement, notify the Company of the commencement or
threat of commencement thereof.
(b) Notice
by Company.
If, at
the time of the receipt of a notice of the commencement of a proceeding pursuant
to Section 7(a) hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to
the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such
policies.
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(c) Defense.
In the
event the Company shall be obligated to pay the expenses of any proceeding
against the Indemnitee, the Company, if appropriate, shall be entitled to assume
the defense of such proceeding, with counsel approved by the Indemnitee, upon
the delivery to the Indemnitee of written notice of its election so to do.
After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
the
Indemnitee under this Agreement for any fees of counsel subsequently incurred
by
the Indemnitee with respect to the same proceeding, provided that (i) the
Indemnitee shall have the right to employ his or her counsel in any such
proceeding at the Indemnitee’s expense; and (ii) if (A) the employment
of counsel by the Indemnitee has been previously authorized by the Company,
(B) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the Indemnitee in the conduct
of
any such defense, or (C) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the fees and expenses
of
Indemnitee’s counsel shall be at the expense of the Company.
8. Determination
of Right to Indemnification.
(a) Successful
Defense.
To the
extent the Indemnitee has been successful on the merits or otherwise in defense
of any proceeding (including, without limitation, an action by or in the right
of the Company) to which the Indemnitee was a party by reason of the fact that
he or she is or was an agent of the Company at any time, the Company shall
indemnify the Indemnitee against all expenses of any type whatsoever actually
and reasonably incurred by him or her in connection with the investigation,
defense or appeal of such proceeding.
(b) Other
Situations.
In the
event that Section 8(a) is inapplicable, the Company shall also indemnify
the Indemnitee unless, and except to the extent that, the Company shall prove
by
clear and convincing evidence in a forum listed in Section 8(c) below that
the Indemnitee has not met the applicable standard of conduct required to
entitle the Indemnitee to such indemnification.
(c) Selection
of Forum.
The
Indemnitee shall be entitled to select the forum in which the validity of the
Company’s claim under Section 8(b) hereof that the Indemnitee is not
entitled to indemnification will be heard from among the following:
(i) A
quorum
of the Board consisting of directors who are not parties to the proceeding
for
which indemnification is being sought;
(ii) The
stockholders of the Company;
(iii) Legal
counsel selected by the Indemnitee, and reasonably approved by the Board, which
counsel shall make such determination in a written opinion; or
(iv) A
panel
of three arbitrators, one of whom is selected by the Company, another of whom
is
selected by the Indemnitee and the last of whom is selected by the first two
arbitrators so selected.
(d) Submission
to Forum.
As soon
as practicable, and in no event later than thirty (30) days after written notice
of the Indemnitee’s choice of forum pursuant to Section 8(c) above, the
Company shall, at its own expense, submit to the selected forum in such manner
as the Indemnitee or the Indemnitee’s counsel may reasonably request, its claim
that the Indemnitee is not entitled to indemnification; and the Company shall
act in the utmost good faith to assure the Indemnitee a complete opportunity
to
defend against such claim.
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(e) Application
to Court of Chancery.
Notwithstanding a determination by any forum listed in Section 8(c) hereof
that Indemnitee is not entitled to indemnification with respect to a specific
proceeding, the Indemnitee shall have the right to apply to the Court of
Chancery of Delaware, the court in which that proceeding is or was pending
or
any other court of competent jurisdiction, for the purpose of enforcing the
Indemnitee’s right to indemnification pursuant to this Agreement.
(f) Expenses
Related to this Agreement.
Notwithstanding any other provision in this Agreement to the contrary, the
Company shall indemnify the Indemnitee against all expenses incurred by the
Indemnitee in connection with any hearing or proceeding under this
Section 8 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and
the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the claims and/or defenses of the Indemnitee in any such proceeding
was frivolous or made in bad faith.
9. Exceptions.
Any
other provision herein to the contrary notwithstanding, the Company shall not
be
obligated pursuant to the terms of this Agreement:
(a) Claims
Initiated by Indemnitee.
To
indemnify or advance expenses to the Indemnitee with respect to proceedings
or
claims initiated or brought voluntarily by the Indemnitee and not by way of
defense, unless (i) such indemnification is expressly required to be made
by law, (ii) the proceeding was authorized by the Board, (iii) such
indemnification is provided by the Company, in its sole discretion, pursuant
to
the powers vested in the Company under the General Corporation Law of Delaware
or (iv) the proceeding is brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise
as
required under Section 145;
(b) Lack
of Good Faith.
To
indemnify the Indemnitee for any expenses incurred by the Indemnitee with
respect to any proceeding instituted by the Indemnitee to enforce or interpret
this Agreement, if a court of competent jurisdiction determines that each of
the
material assertions made by the Indemnitee in such proceeding was not made
in
good faith or was frivolous; or
(c) Unauthorized
Settlements.
To
indemnify the Indemnitee under this Agreement for any amounts paid in settlement
of a proceeding unless the Company consents to such settlement, which consent
shall not be unreasonably withheld.
10. Non-exclusivity.
The
provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation
or Bylaws, the vote of the Company’s stockholders or disinterested directors,
other agreements, or otherwise, both as to action in his or her official
capacity and to action in another capacity while occupying his or her position
as an agent of the Company, and the Indemnitee’s rights hereunder shall continue
after the Indemnitee has ceased acting as an agent of the Company and shall
inure to the benefit of the heirs, executors and administrators of the
Indemnitee.
11. Enforcement.
Any
right to indemnification or advances granted by this Agreement to Indemnitee
shall be enforceable by or on behalf of Indemnitee in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied, in
whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. Indemnitee, in such enforcement action,
if
successful in whole or in part, shall be entitled to be paid also the expense
of
prosecuting his or her claim. It shall be a defense to any action for which
a
claim for indemnification is made under this Agreement (other than an action
brought to enforce a claim for expenses pursuant to Section 6 hereof,
provided that the required undertaking has been tendered to the Company) that
Indemnitee is not entitled to indemnification because of the limitations set
forth in Sections 4 and 9 hereof. Neither the failure of the Company
(including its Board of Directors or its stockholders) to have made a
determination prior to the commencement of such enforcement action that
indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors or its
stockholders) that such indemnification is improper, shall be a defense to
the
action or create a presumption that Indemnitee is not entitled to
indemnification under this Agreement or otherwise.
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12. Subrogation.
In the
event the Company is obligated to make a payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery under an insurance policy or any other indemnity agreement covering
the Indemnitee, who shall execute all documents required and shall do all acts
that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
13. Survival
of Rights.
(a) All
agreements and obligations of the Company contained herein shall continue during
the period Indemnitee is an agent of the Company and shall continue thereafter
so long as Indemnitee shall be subject to any possible claim or threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
arbitrational, administrative or investigative, by reason of the fact that
Indemnitee was serving in the capacity referred to herein.
(b) The
Company shall require any successor to the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
of
the business or assets of the Company, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
14. Interpretation
of Agreement.
It is
understood that the parties hereto intend this Agreement to be interpreted
and
enforced so as to provide indemnification to the Indemnitee to the fullest
extent permitted by law including those circumstances in which indemnification
would otherwise be discretionary.
15. Severability.
If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement (including without
limitation, all portions of any paragraphs of this Agreement containing any
such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby, and (ii) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any paragraph of
this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision
held
invalid, illegal or unenforceable and to give effect to Section 14
hereof.
16. Modification
and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any
other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
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17. Notice.
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement, or as subsequently modified by written
notice.
18. Governing
Law.
This
Agreement shall be governed exclusively by and construed according to the laws
of the State of Delaware as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware.
[Signature
Page Follows]
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The
parties hereto have entered into this Indemnity Agreement effective as of
the
date first above written.
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