INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT, dated as of the 8th day of May 2006 is made
by and between WINNER MEDICAL GROUP INC., a Nevada corporation (the "Company"),
and Xxxxx Xxxxxxx, CPA, an officer or director of the Company (the “Indemnitee”).
RECITALS
A.
The Company and the Indemnitee recognize that the present state of the law is
too uncertain to provide the Company's officers and directors with adequate
and reliable advance knowledge or guidance with respect to the legal risks and
potential liabilities to which they may become personally exposed as a result
of performing their duties for the Company;
B.
The Company and the Indemnitee are aware of the substantial growth in the number
of lawsuits filed against corporate officers and directors in connection with
their activities in such capacities and by reason of their status as such;
C.
The Company and the Indemnitee recognize that the cost of defending against
such lawsuits, whether or not meritorious, is typically beyond the financial
resources of most officers and directors of the Company;
D.
The Company and the Indemnitee recognize that the legal risks and potential
liabilities, and the threat thereof, associated with proceedings filed against
the officers and directors of the Company bear no reasonable relationship to
the amount of compensation received by the Company's officers and directors;
E.
The Company, after reasonable investigation prior to the date hereof, has determined
that the liability insurance coverage available to the Company as of the date
hereof is inadequate, unreasonably expensive or both. The Company believes,
therefore, that the interest of the Company and its current and future shareholders
would be best served by a combination of (i) such insurance as the Company may
obtain pursuant to the Company's obligations hereunder and (ii) a contract with
its officers and directors, including the Indemnitee, to indemnify them to the
fullest extent permitted by law (as in effect on the date hereof, or, to the
extent any amendment may expand such permitted indemnification, as hereafter
in effect) against personal liability for actions taken in the performance of
their duties to the Company;
F. Section 78.7502 of the Nevada Revised Statutes empowers Nevada corporations to indemnify their officers and directors and further states that the indemnification provided by Section 78.7502 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the articles of incorporation or any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office; thus, Section 78.7502 does not by itself limit the extent to which the Company may indemnify persons serving as its officers and directors;
G. The Company's Articles of Incorporation and Bylaws authorize the indemnification of the officers and directors of the Company in excess of that expressly permitted by Section 78.7502;
H.
The Board of Directors of the Company has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company to contractually
indemnify its officers and directors, and to assume for itself liability for
expenses and damages in connection with claims against such officers and directors
in connection with their service to the Company, and has further concluded that
the failure to provide such contractual indemnification could result in great
harm to the Company and its shareholders;
I.
The Company desires and has requested the Indemnitee to serve or continue to
serve as a director or officer of the Company, free from undue concern for the
risks and potential liabilities associated with such services to the Company;
and
J.
The Indemnitee is willing to serve, or continue to serve, the Company, provided,
and on the expressed condition, that he is furnished with the indemnification
provided for herein.
AGREEMENT
NOW, THEREFORE, the Company and Indemnitee agree as follows:
1.
DEFINITIONS.
(a)
“EXPENSES” means, for the purposes of this Agreement, all direct
and indirect costs of any type or nature whatsoever (including, without limitation,
any fees and disbursements of Indemnitee's counsel, accountants and other experts
and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee
in connection with the investigation, preparation, defense or appeal of a Proceeding;
provided, however, that Expenses shall not include judgments, fines, penalties
or amounts paid in settlement of a Proceeding.
(b)
“PROCEEDING” means, for the purposes of this Agreement, any threatened,
pending or completed action or proceeding, whether civil,
criminal, administrative or investigative (including an action brought by or
in the right of the Company) in which Indemnitee may be or may have been involved
as a party or otherwise, by reason of the fact that Indemnitee is or was a director
or officer of the Company, by reason of any action taken by him or of any inaction
on his part while acting as such director or officer or by reason of the fact
that he is or was serving at the request of the Company as a director, officer,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise, or was a director or officer of the foreign
or domestic corporation which was a predecessor corporation to the Company or
of another enterprise at the request of such predecessor corporation, whether
or not he is serving in such capacity at the time any liability or expense is
incurred for which indemnification or reimbursement can be provided under this
Agreement.
2.
AGREEMENT TO SERVE.
Indemnitee agrees to serve or continue to serve as a director or officer of
the Company to the best of his abilities at the will of the Company or under
separate contract, if such contract exists, for so long as Indemnitee is duly
elected or appointed and qualified or until such time as he tenders his resignation
in writing. Nothing contained in this Agreement is intended to create
in Indemnitee any right to continued employment.
3.
INDEMNIFICATION.
(a)
THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee against
Expenses, judgments, fines, penalties or amounts paid in settlement (if the
settlement is approved in advance by the Company) actually and reasonably incurred
by Indemnitee in connection with a Proceeding (other than a Proceeding by or
in the right of the Company) if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe Indemnitee's conduct was unlawful. The termination of any Proceeding
by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE
or its equivalent, shall not, of itself, create a presumption that Indemnitee
did not act in good faith and in a manner which Indemnitee reasonably believed
to be in the best interests of the Company, or, with respect to any criminal
Proceeding, had no reasonable cause to believe that Indemnitee's conduct was
unlawful.
(b)
PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent permitted
by law, the Company shall indemnify Indemnitee against Expenses and amounts
paid in settlement, actually and reasonably incurred by Indemnitee in connection
with a Proceeding by or in the right of the Company to procure a judgment in
its favor if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the Company and its shareholders.
Notwithstanding the foregoing, no indemnification shall be made in respect of
any claim, issue or matter as to which Indemnitee shall have been adjudged liable
to the Company in the performance of Indemnitee's duty to the Company and its
shareholders unless and only to the extent that the court in which such action
or proceeding is or was pending shall determine upon application that, in view
of all the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnity for expenses and then only to the extent that the court shall determine.
(c)
SCOPE. Notwithstanding any other provision of this Agreement but subject
to SECTION 14(b), the Company shall indemnify the Indemnitee to the fullest
extent permitted by law, notwithstanding that such indemnification is not specifically
authorized by other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's Bylaws or by statute.
4.
LIMITATIONS ON INDEMNIFICATION.
Any other provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement:
(a)
EXCLUDED ACTS. To indemnify Indemnitee for any acts or omissions or transactions
from which a director may not be relieved of liability under applicable law;
(b)
EXCLUDED INDEMNIFICATION PAYMENTS. To indemnify or advance Expenses in
violation of any prohibition or limitation on indemnification under the statutes,
regulations or rules promulgated by any state or federal regulatory agency having
jurisdiction over the Company.
(c)
CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance Expenses to Indemnitee
with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee
and not by way of defense, except with respect to proceedings brought to establish
or enforce a right to indemnification under this Agreement or any other statute
or law or otherwise as required under Section 78.7502 of the Nevada Revised
Statutes, but such indemnification or advancement of Expenses may be provided
by the Company in specific cases if the Board of Directors has approved the
initiation or bringing of such suit;
(d)
LACK OF GOOD FAITH. To indemnify Indemnitee for any Expenses incurred
by the Indemnitee with respect to any proceeding instituted by 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;
(e)
INSURED CLAIMS. To indemnify Indemnitee for Expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been paid
directly to or on behalf of Indemnitee by an insurance carrier under a policy
of directors' and officers' liability insurance maintained by the Company or
any other policy of insurance maintained by the Company or Indemnitee;
(f)
CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for Expenses and the
payment of profits arising from the purchase and sale by Indemnitee of securities
in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or any similar successor statute.
5.
DETERMINATION OF RIGHT TO INDEMNIFICATION.
Upon receipt of a written claim addressed to the Board of Directors for indemnification
pursuant to SECTION 3, the Company shall determine by any of the methods set
forth in Section 78.751 of the Nevada Revised Statutes whether Indemnitee has
met the applicable standards of conduct which makes it permissible under applicable
law to indemnify Indemnitee. If a claim under SECTION 3 is not paid in
full by the Company within ninety (90) days after such written claim has been
received by the Company, the Indemnitee may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim and, unless such
action is dismissed by the court as frivolous or brought in bad faith, the Indemnitee
shall be entitled to be paid also the expense of prosecuting such claim.
The court in which such action is brought shall
determine
whether Indemnitee or the Company shall have the burden of proof concerning
whether Indemnitee has or has not met the applicable standard of conduct.
6.
ADVANCEMENT AND REPAYMENT OF EXPENSES.
Subject to SECTION 4 hereof, the Expenses incurred by Indemnitee in defending
and investigating any Proceeding shall be paid by the Company in advance of
the final disposition of such Proceeding within 30 days after receiving from
Indemnitee the copies of invoices presented to Indemnitee for such Expenses,
if Indemnitee shall provide an undertaking to the Company to repay such amount
to the extent it is ultimately determined that Indemnitee is not entitled to
indemnification. In determining whether or not to make an advance hereunder,
the ability of Indemnitee to repay shall not be a factor. Notwithstanding
the foregoing, in a proceeding brought by the Company directly, in its own right
(as distinguished from an action bought derivatively or by any receiver or trustee),
the Company shall not be required to make the advances called for hereby if
the Board of Directors determines, in its sole discretion, that it does not
appear that Indemnitee has met the standards of conduct which make it permissible
under Applicable law to indemnify Indemnitee and the advancement of Expenses
would not be in the best interests of the Company and its shareholders.
7.
PARTIAL INDEMNIFICATION.
If the Indemnitee is entitled under any provision of this Agreement to indemnification
or advancement by the Company of some or a portion of any Expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, penalties,
and amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a Proceeding, but is not entitled to indemnification
or advancement of the total amount thereof, the Company shall nevertheless indemnify
or pay advancements to the Indemnitee for the portion of such Expenses or liabilities
to which the Indemnitee is entitled.
8.
NOTICE TO COMPANY BY INDEMNITEE.
Indemnitee shall notify the Company in writing of any matter with respect to
which Indemnitee intends to seek indemnification hereunder as soon as reasonably
practicable following the receipt by Indemnitee of written notice thereof; provided,
however, that any delay in so notifying the Company shall not constitute a waiver
by Indemnitee of his rights hereunder. The written notification to the
Company shall be addressed to the Board of Directors and shall include a description
of the nature of the Proceeding and the facts underlying the Proceeding and
be accompanied by copies of any documents filed with the court in which the
Proceeding is pending. In addition, Indemnitee shall give the Company
such information and cooperation as it may reasonably require and as shall be
within Indemnitee's power.
9.
MAINTENANCE OF LIABILITY INSURANCE.
(a)
Subject to SECTION 4 hereof, the Company hereby agrees that so long as Indemnitee
shall continue to serve as a director or officer of the Company and thereafter
so long as Indemnitee shall be subject to any possible Proceeding, the Company,
subject to SECTION 9(B), shall use reasonable commercial efforts to obtain and
maintain in full force and effect directors' and officers' liability insurance
(“D&O Insurance”) which provides Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee
is not a director of the Company but is an officer.
(b)
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
or parent of the Company.
(c)
If, at the time of the receipt of a notice of a claim pursuant to SECTION 8
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.
10.
DEFENSE OF CLAIM.
In the event that the Company shall be obligated under SECTION 6 hereof to pay
the Expenses of any Proceeding against Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such Proceeding, with counsel approved
by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery
to Indemnitee of written notice of its election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of
such counsel by the Company, the Company will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same Proceeding, provided that (i) Indemnitee shall have the
right to employ his counsel in any such Proceeding at Indemnitee's expense;
and (ii) if (A) the employment of counsel by Indemnitee has been previously
authorized by the Company, or (B) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of 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.
11.
ATTORNEYS' FEES.
In the event that Indemnitee or the Company institutes an action to enforce
or interpret any terms of this Agreement, the Company shall reimburse Indemnitee
for all of the Indemnitee's reasonable fees and expenses in bringing and pursuing
such action or defense, unless as part of such action or defense, a court of
competent jurisdiction determines that the material assertions made by Indemnitee
as a basis for such action or defense were not made in good faith or were frivolous.
12.
CONTINUATION OF OBLIGATIONS.
All agreements and obligations of the Company contained herein shall continue
during the period the Indemnitee is a director or officer of the Company, or
is or was serving at the request of the Company as a director, officer, fiduciary,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, and shall continue thereafter so long as the Indemnitee
shall be subject to any possible proceeding by reason of the fact that Indemnitee
served in any capacity referred to herein.
13.
SUCCESSORS AND ASSIGNS.
This Agreement establishes contract rights that shall be binding upon, and shall
inure to the benefit of, the successors, assigns, heirs and legal representatives
of the parties hereto.
14.
NON-EXCLUSIVITY.
(a)
The provisions for indemnification and advancement of expenses set forth in
this Agreement shall not be deemed to be exclusive of any other rights that
the Indemnitee may have under any provision of law, the Company's Articles of
Incorporation or Bylaws, the vote of the Company's shareholders or disinterested
directors, other agreements or otherwise, both as to action in his official
capacity and action in another capacity while occupying his position as a director
or officer of the Company.
(b)
In the event of any changes, after the date of this Agreement, in any applicable
law, statute, or rule which expand the right of a Nevada corporation to indemnify
its officers and directors, the Indemnitee's rights and the Company's obligations
under this Agreement shall be expanded to the full extent permitted by such
changes. In the event of any changes in any applicable law, statute or
rule, which narrow the right of a Nevada corporation to indemnify a director
or officer, such changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties' rights and obligations hereunder.
15.
EFFECTIVENESS OF AGREEMENT.
To the extent that the indemnification permitted under the terms of certain
provisions of this Agreement exceeds the scope of the indemnification provided
for in the Nevada Revised Statutes, such provisions shall not be effective unless
and until the Company's Articles of Incorporation authorize such additional
rights of indemnification. In all other respects, the balance of this
Agreement shall be effective as of the date set forth on the first page and
may apply to acts of omissions of Indemnitee which occurred prior to such date
if Indemnitee was an officer, director, employee or other agent of the Company,
or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, at the time such act or omission occurred.
16.
SEVERABILITY.
Nothing in this Agreement is intended to require or shall be construed as requiring
the Company to do or fail to do any act in violation of applicable law.
The Company's inability, pursuant to court order, to perform its obligations
under this Agreement shall not constitute a breach of this Agreement.
The provisions of this Agreement shall be severable as provided in this SECTION
16. If this Agreement or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall nevertheless
indemnify Indemnitee to the full extent permitted by any applicable portion
of this Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its terms.
17. GOVERNING LAW.
This Agreement shall be interpreted and enforced in accordance with the laws
of the State of Nevada, without reference to its conflict of law principals.
To the extent permitted by applicable law, the parties hereby waive any provisions
of law which render any provision of this Agreement unenforceable in any respect.
18.
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.
19.
MUTUAL ACKNOWLEDGMENT.
Both the Company and Indemnitee acknowledge that in certain instances, federal
law or applicable public policy may prohibit the Company from indemnifying its
directors and officers under this Agreement or otherwise. Indemnitee understands
and acknowledges that the Company has undertaken or may be required in the future
to undertake with the appropriate state or federal regulatory agency to submit
for approval any request for indemnification, and has undertaken or may be required
in the future to undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a determination
of the Company's right under public policy to indemnify Indemnitee.
20.
COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
constitute an original.
21.
AMENDMENT AND TERMINATION.
No amendment, modification, termination or cancellation of this Agreement shall
be effective unless in writing signed by both parties hereto.
[Signature
Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year set forth above.
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COMPANY:
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INDEMNITEE: | |||||||
| By: | /s/Xxxxxxxx Xx | /s/ Xxxxx Xxxxxxx | ||||||
|
Name: Xxxxxxxx Xx Title:
CEO and President
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Xxxxx Xxxxxxx, CPA |
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Address:
Winner Industrial Park
Bulong Road, Longhua
Shenzhen City, 518109
People’s Republic
of China
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Address: 0
Xxxxxxx Xxxx
Xxxxxxx,
XX 00000
|
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| Fax: (00-000) 00000000 | Fax:000-000-0000 | |||||||
