Superconductor
Technologies Inc.
INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (“Agreement”) is effective as
of this ______ day of _______________, 200___, by and between
Superconductor Technologies Inc., a Delaware corporation (the
“Company”), and _______________
(“Indemnitee”).
WHEREAS, the
Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers,
employees, agents and fiduciaries, the significant increases in the
cost of such insurance and the general reductions in the coverage
of such insurance;
WHEREAS, the
Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at
the same time as the availability and coverage of liability
insurance has been severely limited;
WHEREAS,
Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and
other directors, officers, employees, agents and fiduciaries of the
Company may not be willing to continue to serve in such capacities
without additional protection; and
WHEREAS, the
Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company
and, in part, in order to induce Indemnitee to continue to provide
services to the Company, wishes to provide for the indemnification
and advancing of expenses to Indemnitee to the maximum extent
permitted by law.
NOW, THEREFORE,
the Company and Indemnitee hereby agree as follows:
(a)
Indemnification of Expenses . The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was
or is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant
in, any threatened, pending or completed action, suit, proceeding
or alternative dispute resolution mechanism, or any hearing,
inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding
or alternative dispute resolution mechanism, whether civil,
criminal, administrative, investigative or other (hereinafter a
“Claim”) by reason of (or arising in part out of) any
event or occurrence related to the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company; or
any subsidiary of the Company, or is or was serving at the request
of the Company as a director, officer, employee, agent or fiduciary
of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity (hereinafter an
“Indemnifiable Event”) against any and all expenses
(including attorneys’ fees and all other costs, expenses and
obligations incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any such
action, suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in
advance by the Company, which
approval shall
not be unreasonably withheld) of such Claim and any federal, state,
local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter “Expenses”), including all
interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses. Such payment of
Expenses shall be made by the Company as soon as practicable but in
any event no later than five days after written demand by
Indemnitee therefor is presented to the Company.
(b)
Reviewing Party . Notwithstanding the foregoing,
(i) the obligations of the Company under Section 1(a) shall be
subject to the condition that the Reviewing Party (as described in
Section 10(e) hereof) shall not have determined (in a written
opinion, in any case in which the Independent Legal Counsel
referred to in Section 1(c) hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an advance payment
of Expenses to Indemnitee pursuant to Section 2(a) (an
“Expense Advance”) shall be subject to the condition
that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so
indemnified under applicable law, 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 Expense Advance until a
final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or
lapsed). Indemnitee’s obligation to reimburse the Company for
any Expense Advance shall be unsecured and no interest shall be
charged thereon. If there has not been a Change in Control (as
defined in Section 10(c) hereof), the Reviewing Party shall be
selected by the Board of Directors, 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 of Directors
who were directors immediately prior to such Change in Control),
the Reviewing Party shall be the Independent Legal Counsel referred
to in Section 1(c) hereof. 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, Indemnitee shall have the
right to commence litigation seeking an initial determination by
the court or challenging any such determination by the Reviewing
Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and
to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
(c)
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
of Directors who were directors immediately prior to such Change in
Control) then with respect to all matters thereafter arising
concerning the rights of Indemnitee to payments of Expenses and
Expense Advances under this Agreement or any other agreement or
under the Company’s Certificate of Incorporation or Bylaws as
now or hereafter in effect, Independent Legal Counsel (as defined
in Section 10(d) hereof) 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 have 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 Legal
Counsel referred to
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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.
(d)
Mandatory Payment of Expenses . Notwithstanding any other
provision of this Agreement other than Section 9 hereof, to
the extent that Indemnitee has been successful on the merits or
otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit,
proceeding, inquiry or investigation referred to in Section (1)
(a) hereof or in the defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against all Expenses
incurred by the Indemnitee in connection therewith.
2.
Expenses; Indemnification Procedure .
(a)
Advancement of Expenses . The Company shall advance all
Expenses incurred by the Indemnitee. The advances to be made
hereunder shall be paid by the Company to Indemnitee as soon as
practicable but in any event no later than five days after written
demand by Indemnitee therefor to the Company.
(b)
Notice/Cooperation by Indemnitee . Indemnitee shall, as a
condition precedent to Indemnitee’s right to be indemnified
under this Agreement, 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 directed to the Chief Executive
Officer of the Company at the address shown on the signature page
of this Agreement (or such other address as the Company shall
designate in writing to the Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee’s
power.
(c)
No Presumptions; Burden of Proof . For purposes of this
Agreement, the termination of any Claim by judgment, order,
settlement (whether with or without court approval) or conviction,
or upon a plea of nolo contendere , or its equivalent, shall
not create of presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted
by applicable law. In addition, neither the failure of the
Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing
Party that Indemnitee has not met such standard of conduct or did
not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that
Indemnitee should be indemnified under applicable law, shall be a
defense to Indemnitee’s claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did
not have any particular belief. In connection with any
determination by the Reviewing Party or otherwise as to whether the
Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not
so entitled.
(d)
Notice to Insurers . If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof, the
Company has liability insurance in effect which may cover such
Claim, the Company shall give prompt notice of the commencement of
such Claim 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
action, suit, proceeding, inquiry or investigation in accordance
with the terms of such policies.
(e)
Selection of Counsel . In the event the Company shall be
obligated hereunder to pay the Expenses of any Claim, the Company,
if appropriate, shall be entitled to assume the defense of such
Claim with counsel approved by Indemnitee, upon the delivery
to
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Indemnitee of
written notice of its election so to do. 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 Claim;
provided that, (i)
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