INDEMNIFICATION AGREEMENT
EXHIBIT 10.2
This Indemnification Agreement (the “Agreement”) is entered into as of
by and between Charm Communications Inc., a Cayman Islands company (the “Company”)
and the undersigned, a [director or officer] of the Company (“Indemnitee”).
RECITALS
1. The Company recognizes that highly competent persons are becoming more reluctant to serve
corporations as directors or in other capacities unless they are provided with adequate protection
through insurance or adequate indemnification against risks of claims and actions against them
arising out of their services to the corporation.
2. The Board of Directors of the Company (the “Board”) has determined that the inability to
attract and retain highly competent persons to serve the Company is detrimental to the best
interests of the Company and its shareholders and that it is reasonable and necessary for the
Company to provide adequate protection to such persons against risks of claims and actions against
them arising out of their services to the corporation.
3. The Company and Indemnitee do not regard the indemnities available under the Company’s
current memorandum and articles of association (the “Articles of Association”) as adequate to
protect Indemnitee against the risks associated with his service to the Company.
4. The Company is willing to indemnify Indemnitee to the fullest extent permitted by
applicable law, and Indemnitee is willing to serve and continue to serve the Company on the
condition that he be so indemnified.
AGREEMENT
In consideration of the premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
I. Definitions
The following terms shall have the meanings defined below:
Disinterested Director means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by Indemnitee.
Change in Control shall be deemed to have occurred if, on or after the date of this Agreement,
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), other than (a) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company acting in such capacity; (b) a corporation
owned directly or indirectly by the shareholders of the Company in substantially the same
proportions as their ownership of ordinary shares of the Company; or (c) any current beneficial
shareholder or group, as defined by Rule 13d-5 of the Exchange Act, including the heirs, assigns
and successors thereof, of beneficial ownership, within the meaning of Rule 13d-3 of the Exchange
Act, of securities possessing more than 50% of the total combined voting power of the Company’s
outstanding securities; hereafter
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 20% of the total combined voting
power represented by the Company’s then outstanding ordinary shares, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election by the Company’s shareholders was
approved by a vote of at least two thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof, or (iii) the
shareholders of the Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the ordinary shares of the
Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into ordinary shares of the surviving entity) at least 80% of the
total voting power represented by the ordinary shares of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders of the Company
approve a plan of complete liquidation of the Company or an agreement for the sale or disposition
by the Company of (in one transaction or a series of related transactions) all or substantially all
of the Company’s assets.
Expenses shall include damages, judgments, fines, penalties, settlements and costs, attorneys’
fees and disbursements and costs of attachment or similar bond, investigations, liabilities,
losses, taxes, any expenses paid or incurred in connection with investigating, defending, being a
witness in, participating in (including on appeal), or preparing for any of the foregoing in, any
Proceeding, and any taxes, interests, assessments or other charges imposed as a result of the
actual or deemed receipt of any payments under this Agreement.
Indemnifiable Event means any event or occurrence that takes place either before or after the
execution of this Agreement, related to the fact that Indemnitee is or was a director or an officer
of the Company, or is 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 entity, including
services with respect to employee benefit plans, or was a director or officer of an entity that was
a predecessor of the Company or another entity at the request of such predecessor entity, or
related to anything done or not done by Indemnitee in any such capacity.
Independent Counsel means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five (5) years has been,
retained to represent (i) the Company or Indemnitee in any matter material to either such party
(other than with respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
Participant means a person who is a party to, or witness or participant (including on appeal)
in, a Proceeding.
Proceeding means any threatened, pending, or completed action, suit or proceeding, or any
inquiry, hearing or investigation, whether civil, criminal, administrative, investigative
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or other, including any appeal thereof, in which Indemnitee may be or may have been involved
as a party or otherwise by reason of an Indemnifiable Event, including, without limitation, any
threatened, pending, or completed action, suit or proceeding by or in the right of the Company.
Reviewing Party means (A) the Board by a majority vote of a quorum consisting of Disinterested
Directors, or (B) if a quorum of the Board consisting of Disinterested Directors is not obtainable
or, even if obtainable, said Disinterested Directors so direct, Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee.
II. Agreement To Indemnify
1. General Agreement. In the event Indemnitee was, is, or becomes a Participant in,
or is threatened to be made a Participant in, a Proceeding, the Company shall indemnify the
Indemnitee from and against any and all Expenses which Indemnitee incurs or becomes obligated to
incur in connection with such Proceeding, to the fullest extent permitted by applicable law.
2. Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for a portion of Expenses, but not for the total amount
of Expenses, the Company shall indemnify the Indemnitee for the portion of such Expenses to which
Indemnitee is entitled.
3. Exclusions. Notwithstanding anything in this Agreement to the contrary, Indemnitee
shall not be entitled to indemnification under this Agreement:
(a) to the extent that payment is actually made to Indemnitee under a valid, enforceable and
collectible insurance policy;
(b) to the extent that Indemnitee is indemnified and actually paid other than pursuant to this
Agreement;
(c) in connection with any Proceeding initiated by Indemnitee against the Company, any
director or officer of the Company or any other party, and not by way of defense, unless (i) the
Company has joined in or the Reviewing Party (as hereinafter defined) has consented to the
initiation of such Proceeding; or (ii) the Proceeding is one to enforce indemnification rights
under this Agreement or any applicable law;
(d) for a disgorgement of profits made from the purchase and sale by the Indemnitee of
securities pursuant to Section 16(b) of the Exchange Act or similar provisions of any applicable
U.S. state statutory law or common law;
(e) for Expenses that have been finally judicially determined to have resulted from fraud,
gross negligence or willful misconduct of the Indemnitee;
(f) for any judgment, fine or penalty which the Company is prohibited by applicable law from
paying as indemnity;
(g) arising out of Indemnitee’s personal tax matter; or
(h) arising out of Indemnitee’s breach of an employment agreement with the Company (if any) or
any other agreement with the Company or any of its subsidiaries.
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4. No Employment Rights. Nothing in this Agreement is intended to create in
Indemnitee any right to continued employment with the Company.
5. Contribution. If the indemnification provided in this Agreement is unavailable and
may not be paid to Indemnitee for any reason other than those set forth in Section II. 3, then the
Company shall contribute to the amount of Expenses paid in settlement actually and reasonably
incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the
relative benefits received by the Company on the one hand and by the Indemnitee on the other hand
from the transaction from which such Proceeding arose, and (ii) the relative fault of the Company
on the one hand and of the Indemnitee on the other hand in connection with the events which
resulted in such Expenses, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent the circumstances resulting in such Expenses, judgments,
fines or settlement amounts. The Company agrees that it would not be just and equitable if
contribution pursuant to this Section II. 5 were determined by pro rata allocation or any other
method of allocation which does not take account of the foregoing equitable considerations.
III. Indemnification Process
1. Notice and Cooperation By Indemnitee. Indemnitee shall give the Company notice in
writing as soon as practicable of any claim made against Indemnitee for which indemnification will
or could be sought under this Agreement. Notice to the Company shall be given in accordance with
Section VI.7 below. In addition, Indemnitee shall give the Company such information and
cooperation as the Company may reasonably request.
2. Indemnification Payment.
(a) Advancement of Expenses. Indemnitee may submit a written request with reasonable
particulars to the Company requesting that the Company advance to Indemnitee all Expenses that may
be reasonably incurred in advance by Indemnitee in connection with a Proceeding. The Company
shall, within ten (10) business days of receiving such a written request by Indemnitee, advance all
requested Expenses to Indemnitee. Any excess of the advanced Expenses over the actual Expenses
will be repaid to the Company.
(b) Reimbursement of Expenses. To the extent Indemnitee has not requested any advanced
payment of Expenses from the Company, Indemnitee shall be entitled to receive reimbursement for the
Expenses incurred in connection with a Proceeding from the Company as soon as practicable after
Indemnitee makes a written request to the Company for reimbursement.
(c) Determination by the Reviewing Party. Notwithstanding the foregoing, (i) the obligations
of the Company under Section II.1 shall be subject to the condition that the Reviewing Party shall
not have determined (in a written opinion, in any case in which the Independent Counsel referred to
in Section III.2(e) hereof is involved) that Indemnitee would not be permitted to be indemnified
under applicable law or the Company’s Articles of Association, and (ii) the obligation of the
Company to make an advance payment of Expenses to Indemnitee pursuant to Section III. 2(a) shall be
subject to the condition that, if, when and to the extent that the Reviewing Party determines that
Indemnitee would not be
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permitted to be so indemnified under applicable law or the Company’s Articles of Association,
the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced
or thereafter commences legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any determination made by
the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the Company for any advanced
Expenses until a final judicial determination is made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or lapsed). The Indemnitee’s obligation to reimburse the
Company for any advanced Expenses shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control, the Reviewing Party shall be selected by the Board, and if
there has been such a Change in Control (other than a Change in Control which has been approved by
a majority of the Company’s Board who were directors immediately prior to such Change in Control),
the Reviewing Party shall be the Independent Counsel referred to in Section III.2(e) hereof.
(d) Enforcement of Indemnification Rights. If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable law, or if Indemnitee has not
otherwise been paid in full within 30 days after a written demand has been received by the Company,
Indemnitee shall have the right to commence litigation in any court having subject matter
jurisdiction thereof and in which venue is proper to recover the unpaid amount of the demand (an
“Enforcement Proceeding”) and, if successful in whole or in part, Indemnitee shall be entitled to
be paid any and all Expenses in connection with such Enforcement Proceeding. The Company hereby
consents to service of process and to appear in any such proceeding.
(e) Change in Control. The Company agrees that if there is a Change in Control of the Company
(other than a Change in Control which has been approved by a majority of the Company’s Board who
were directors immediately prior to such Change in Control) then, with respect to all matters
thereafter arising concerning the rights of Indemnitees to payments of Expenses under this
Agreement or any other agreement or under the Company’s Articles of Association as now or hereafter
in effect, Independent Counsel shall be selected by the Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law, and the Company agrees to
abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Counsel
referred to above and to fully indemnify such counsel against any and all expenses (including
attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.
3. Assumption of Defense. In the event the Company is obligated under this Agreement
to advance or bear any Expenses for any Proceeding against Indemnitee, the Company shall be
entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee, upon
delivery to Indemnitee of written notice of its election to do so. After delivery of such notice,
approval of such counsel by Indemnitee in writing 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
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same Proceeding, unless (i) the employment of counsel by Indemnitee has been previously
authorized by the Company, (ii) Indemnitee shall have reasonably concluded that, based on written
advice of counsel, there may be a conflict of interest of such counsel retained by the Company
between the Company and Indemnitee in the conduct of any such defense, or that counsel selected by
the Company may not be adequately representing Indemnitee, or (iii) the Company ceases or
terminates the employment of such counsel with respect to the defense of such Proceeding, in any of
which events the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.
At all times, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee’s
expense.
4. Defense to Indemnification, Burden of Proof and Presumptions. It shall be a
defense to any action brought by Indemnitee against the Company to enforce this Agreement that it
is not permissible under this Agreement or applicable law for the Company to indemnify the
Indemnitee for the amount claimed. In connection with any such action or any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified under this
Agreement, the burden of proving such a defense or determination shall be on the Company. Neither
the failure of the Reviewing Party or the Company to have made a determination prior to the
commencement of such action by Indemnitee that indemnification is proper under the circumstances
because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual
determination by the Reviewing Party or the Company that Indemnitee had not met such applicable
standard of conduct shall be a defense to the action or create a presumption that Indemnitee has
not met the applicable standard of conduct.
5. No Settlement Without Consent. Neither party to this Agreement shall settle any
Proceeding in any manner that would impose any damage, loss, penalty or limitation on Indemnitee
without the other party’s written consent. Neither the Company nor Indemnitee shall unreasonably
withhold its consent to any proposed settlement.
6. Company Participation. Subject to Section II.5, the Company shall not be liable to
indemnify the Indemnitee under this Agreement with regard to any judicial action if the Company was
not given a reasonable and timely opportunity, at its expense, to participate in the defense,
conduct and/or settlement of such action.
IV. Director and Officer Liability Insurance
1. Liability Insurance. The Company shall obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and directors of the Company
with coverage for losses incurred in connection with their services to the Company or to ensure the
Company’s performance of its indemnification obligations under this Agreement. To the extent the
Company determines that it is no longer practicable for the Company to maintain such insurances, it
shall notify promptly its directors and officers before it terminates such insurances and such
termination must be approved by the majority of the Company’s directors.
2. Coverage of Indemnitee. To the extent the Company maintains an insurance policy or
policies providing directors’ and officers’ liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any of the Company’s directors or officers.
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3. No Obligation. Notwithstanding the foregoing, the Company shall have no obligation
to obtain or maintain any director and officer insurance policy if a majority of the Company’s
directors determines in good faith that such insurance is not reasonably available in the case that
(i) premium costs for such insurance are disproportionate to the amount of coverage provided, (ii)
the coverage provided by such insurance is limited by exclusions so as to provide an insufficient
benefit, or (iii) Indemnitee is covered by similar insurance maintained by a parent or subsidiary
of the Company.
V. Non-Exclusivity; Federal Preemption; Term
1. Non-Exclusivity. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which Indemnitee may be entitled under the Articles of
Association, any vote of shareholders or directors, applicable law or any written agreement between
Indemnitee and the Company (including its subsidiaries and affiliates). The indemnification
provided under this Agreement shall continue to be available to Indemnitee for any action taken or
not taken while serving in an indemnified capacity even though he may have ceased to serve in any
such capacity at the time of any Proceeding.
2. Federal Preemption. Notwithstanding the foregoing, both the Company and Indemnitee
acknowledge that in certain instances, U.S. federal law or public policy may override applicable
law and prohibit the Company from indemnifying its directors and officers under this Agreement or
otherwise. Such instances include, but are not limited to, the U.S. Securities and Exchange
Commission’s prohibition on indemnification for liabilities arising under certain U.S. federal
securities laws. Indemnitee understands and acknowledges that the Company has undertaken or may be
required in the future to undertake with the SEC 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.
3. Duration of Agreement. All agreements and obligations of the Company contained
herein shall continue during the period Indemnitee is an officer and/or a director of the Company
(or is 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) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding by reason of his former or
current capacity at the Company or any other enterprise, including service with respect to employee
benefit plans) at the Company’s request, whether or not he is acting or serving in any such
capacity at the time any Expense is incurred for which indemnification can be provided under this
Agreement. This Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an officer and/or a director of the Company or any other enterprise at the Company’s
request.
VI. Miscellaneous
1. Amendment of this Agreement. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall operate as a waiver of any other provisions (whether or not
similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided in
this Agreement, no failure to exercise or any delay in exercising any right or remedy shall
constitute a waiver.
2. Subrogation. In the event of payment to Indemnitee by the Company under this
Agreement, the Company shall be subrogated to the extent of such payment to all of the
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rights of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution of such documents
necessary to enable the Company to bring suit to enforce such rights.
3. Assignment; Binding Effect. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party hereto without the prior written consent of
the other party; except that the Company may, without such consent, assign all such rights and
obligations to a successor in interest to the Company which assumes all obligations of the Company
under this Agreement in a written agreement in form and substance satisfactory to Indemnitee.
Notwithstanding the foregoing, this Agreement shall be binding upon and inure to the benefit of and
be enforceable by and against the parties hereto and the Company’s successors (including any direct
or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all
of the business and/or assets of the Company) and assigns, as well as Indemnitee’s spouses, heirs,
and personal and legal representatives.
4. Severability and Construction. 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 a court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. In addition, if any portion of this
Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise
unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by
applicable law. The parties hereto acknowledge that they each have opportunities to have their
respective counsels review this Agreement. Accordingly, this Agreement shall be deemed to be the
product of both of the parties hereto, and no ambiguity shall be construed in favor of or against
either of the parties hereto.
5. Counterparts. This Agreement may be executed in two counterparts, both of which
taken together shall constitute one instrument.
6. Governing Law. This agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of New York, U.S.A., without giving effect to conflicts of
law provisions thereof.
7. Notices. All notices, demands, and other communications required or permitted
under this Agreement shall be made in writing and shall be deemed to have been duly given if
delivered by hand, against receipt, on the date of delivery, or mailed, on the third business day
after mailing, postage prepaid, certified or registered mail, return receipt requested, and
addressed to the Company at:
Charm Communications Inc.
00xx Xxxxx, Xxxxx X, Xxxxxxxx Media Xxxxxx
0 Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx
Xxxxxxx 000000
People’s Republic of China
Attention: Mr. Xxx Xxxx
00xx Xxxxx, Xxxxx X, Xxxxxxxx Media Xxxxxx
0 Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx
Xxxxxxx 000000
People’s Republic of China
Attention: Mr. Xxx Xxxx
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and to Indemnitee at:
[Name]
[Address]
[Address]
[Address]
[Address]
[Address]
[Address]
Notice of change of address shall be effective only when done in accordance with this Section.
8. Certain Relationships. The obligations and rights created under this Agreement
shall not be affected by any amendment to the Company’s Articles of Association or any other
agreement or instrument to which Indemnitee is not a party, and shall not diminish any other rights
which Indemnitee now or in the future has against the Company or any other person or entity.
9. Acknowledgment. The Company expressly acknowledges that it has entered into this
Agreement and assumed the obligations imposed on the Company under this Agreement in order to
induce Indemnitee to serve or to continue to serve as a director or officer and acknowledges that
Indemnitee is relying on this Agreement in serving or continuing to serve in such capacity. The
Company further agrees to stipulate in any court proceeding that the Company is bound by all of the
provisions of this Agreement.
10. Period of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or in the right of the Company against Indemnitee, or Indemnitee’s estate,
heirs, executors, administrators or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, and any claim or cause of action of the
Company shall be extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter period shall govern.
11. Entire Agreement. This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
(Signature page follows)
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IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the date first written above.
COMPANY
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Name: Title: |
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INDEMNITEE
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