INDEMNIFICATION
AGREEMENT
This Indemnification Agreement, dated as of
September _, 2009, is made by and between Mexoro Minerals Ltd., a
Colorado corporation (the “ Company ”),
and
(the “ Indemnitee ”).
A. The Company and Indemnitee recognize the
difficulties associated with obtaining liability insurance for the
Company’s directors, officers, employees and other agents,
including the rising cost of such insurance and the general
reductions in the coverage of such insurance;
B. The Company and Indemnitee recognize the
substantial increase in corporate litigation in general, subjecting
directors, officers, employees and other agents to expensive
litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
C. The Company desires to attract and
retain the services of talented and experienced individuals, such
as Indemnitee, to serve as directors, officers, employees and
agents of the Company and its subsidiaries and wishes to provide
the indemnification of, and the advancement of expenses to,
Indemnitee, its directors, officers, employees and other agents to
the maximum extent permitted by law;
D. The Company
will benefit from the service of the Indemnitee;
E. Article 7-109 of the Revised
Statutes of the State of Colorado, under which the Company is
organized (“ Article 7-109 ”),
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
F. In order to induce Indemnitee to serve
or continue to serve as a director, officer, employee 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, the Company has determined and agreed to enter into
this Agreement with Indemnitee.
Accordingly,
the Company and Indemnitee agree as follows:
1. Certain Definitions . As used in
this Agreement:
(a) A “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), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or
becomes the “beneficial owner” (as defined in Rule
13d-3 under such Act), directly or indirectly, of securities of the
Company representing 35% or more of the total voting power
represented by the Company’s then outstanding Voting
Securities, or (ii) during any period of two consecutive
years, individuals who at the beginning of that two-year period
constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company’s shareholders was approved by a vote
of at least a majority of the directors then still in office who
either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the
Board of Directors, or (iii) the shareholders of the Company
approve a merger or consolidation of the Company with any other
entity, other than a merger or consolidation which would result in
the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
by being converted into Voting Securities of the surviving entity)
at least 50% of the total voting power represented by the Voting
Securities 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
in one transaction or a series of transactions of all or
substantially all the Company’s assets.
(b) “Charter Documents” means
the articles of incorporation of the Company and the bylaws of the
Company.
(c) “Claim” shall mean with
respect to an Indemnifiable Event (as defined below): any
threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry
or investigation that leads to the institution of any such action,
suit, proceeding or alternative dispute resolution mechanism,
whether civil, criminal, administrative, investigative or
other.
(d) “Disinterested Director”
means a director of the Company who is not a party to a Proceeding
in respect of which indemnification or advancement of Expenses is
sought by Indemnitee.
(e) “Expenses” means all costs
and expenses, including attorneys’ fees, paid or incurred in
connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing for an
investigation or preparing to defend, be a witness in or
participate in any Proceeding relating to any Indemnifiable Event
and any federal, state, local or foreign taxes imposed as a result
of the actual or deemed receipt of any payments under the
Agreement.
(f) “Expense Advance” shall
mean a payment to Indemnitee pursuant to Section 3 of Expenses
in advance of the settlement of or final judgment in any Proceeding
or Claim.
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(g) “Indemnifiable Event” means
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, partner,
manager, member, employee, trustee, agent or fiduciary of another
corporation, partnership, limited liability company, joint venture,
employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by Indemnitee in any such
capacity.
(h) “Independent Counsel” means
an attorney or firm of attorneys, selected in accordance with the
provisions of Section 6(c), who shall not have otherwise
performed services for the Company or Indemnitee within the last
three years (other than with respect to matters concerning the
rights of indemnity under this Agreement, or of other indemnitees
under similar indemnification agreements or under the Charter
Documents).
(i) “Liabilities” means the
obligation incurred with respect to a Proceeding to pay any
judgment, settlement, penalty, fine or reasonable Expense,
including any excise taxes assessed with respect to any employee
benefit plan, and including all interest, assessments and other
charges paid or payable in connection with or in respect of any
such amounts.
(j) “Proceeding” means any
threatened, pending or completed action, suit or proceeding,
including any alternative dispute resolution mechanism, whether
civil, criminal, administrative or investigative, and whether
formal or informal.
(k) “Representation” shall mean
any officer, director, employee, manager, advisor, protector,
agent, grantor, trustee, affiliates or associates of an Indemnitee
or the Estate of an Indemnitee.
(l)
“Section” refers to a section of this Agreement unless
otherwise indicated.
(m) “Voting Securities” means
any securities of the Company which are entitled to vote generally
in the election of directors.
(a) The Company shall indemnify Indemnitee
to the fullest extent permitted by law against any and all
Liabilities and Expenses arising out of or in connection with any
Proceeding to which Indemnitee was, is or becomes a party, or is
threatened to be made a party, by reason of, or arising in whole or
part out of, an Indemnifiable Event.
(b) 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 Proceeding, Indemnitee shall be indemnified against
all Expenses incurred by Indemnitee in connection therewith. If
Indemnitee is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in any Proceeding,
the Company shall indemnify Indemnitee against all Expenses
incurred by Indemnitee in connection with each successfully
resolved claim, issue or matter.
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(c) To the extent that Indemnitee is, by
reason of an Indemnifiable Event, a witness in any Proceeding to
which Indemnitee is not a party, Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by or on
behalf of Indemnitee in connection therewith.
(d) The Company shall indemnify and hold
Indemnitee harmless from any Expenses incurred by or on behalf of
Indemnitee to recover under any liability insurance policy
maintained by any person for the benefit of Indemnitee in
connection with the performance of Indemnitee’s duties for or
on behalf of the Company.
(a) Obligation to Make Expense
Advances . Unless otherwise prohibited by any statute, law or
regulation applicable to the Company and subject the terms of this
Agreement (including Section 3(b) below), the Company shall make
Expense Advances to Indemnitee upon written request by
Indemnitee.
(b) Form of Undertaking . The
initial request for payment of Expenses (including any Expense
Advances) in connection with any Proceeding or Claim shall include,
or be accompanied or preceded by, (i) a written affirmation of
Indemnitee of Indemnitee’s good faith belief that Indemnitee
has met any applicable standard of conduct required under the Act
and (ii) an undertaking by Indemnitee to reimburse the Company
for all amounts advanced by the Company pursuant to this
Section 3 if it is ultimately determined that Indemnitee is
not entitled to be indemnified by the Company for such Expenses.
Any such advances shall be made on an unsecured basis and shall be
interest free. Notwithstanding the foregoing, if Indemnitee seeks a
judicial adjudication or an arbitration pursuant to
Section 10, Indemnitee shall not be required to reimburse the
Company pursuant to the undertaking described above until a final
determination (as to which all rights of appeal have been exhausted
or lapsed) has been made. Any written undertaking by the Indemnitee
to repay any Expenses (including Expense Advances) hereunder shall
be unsecured and no interest shall be charged thereon.
(c) Timing of Payments . All
payments of Expenses (including without limitation Expense
Advances) by the Company and the Indemnitors to an Indemnitee
pursuant to this Agreement shall be made to the fullest extent
permitted by law as soon as practicable after written demand by
Indemnitee therefor is presented to the Company, but in no event
later than twenty (20) days after such written demand by
Indemnitee is presented to the Company.
(d) Notice to Insurers . If, at the
time of the receipt by the Company of a notice of a Proceeding or
Claim pursuant to Section 6(a) hereof, the Company has liability
insurance in effect which may cover such Proceeding or Claim, the
Company shall give prompt notice of the commencement of such
Proceeding or 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 Proceeding or Claim in accordance with the
terms of such policies. However, the Company shall be liable for
any amount in excess of those not paid by an insurance carrier or
that are not promptly paid by the insurers.
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(e) Selection of Counsel . In the
event the Company shall be obligated hereunder to provide
indemnification for or make any Expense Advances with respect to
the Expenses of any Proceeding or Claim, the Company, if
appropriate, shall be entitled to assume the defense of such
Proceeding or Claim with counsel approved by Indemnitee (which
approval shall not be unreasonably withheld, conditioned or
delayed) upon the delivery to Indemnitee a written notice of the
Company’s 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 or expenses of
separate counsel subsequently employed by or on behalf of
Indemnitee with respect to the same Proceeding or Claim; provided,
however, that (i) Indemnitee shall have the right to employ
Indemnitee’s separate counsel in any such Proceeding or Claim
at Indemnitee’s expense and (ii) if (A) the
employment of separate counsel by Indemnitee has been previously
authorized by the Company, (B) Indemnitee shall have
reasonably concluded (based on legal advice) that there may be a
conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees
and expenses of Indemnitee’s separate counsel shall be
Expenses for which Indemnitee may receive indemnification or
Expense Advances hereunder.
5. Exceptions . Notwithstanding any
other provision of this Agreement, the Company shall not be
obligated pursuant to the terms of this Agreement:
(a) To indemnify or advance Expenses to
Indemnitee with respect to Proceedings or Claims arising out of
acts, omissions or transactions for which Indemnitee is prohibited
from receiving indemnification under applicable law.
(b) 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,
counterclaim or crossclaim, except (i) with respect to actions
or proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other agreement or
insurance policy or under the Charter Documents now or hereafter in
effect relating to Proceedings or Claims for Indemnifiable Events,
or (ii) in specific cases if the Board of Directors of the
Company has approved the initiation or bringing of such Proceeding
or Claims by a majority vote of the Disinterested
Directors.
(c) To indemnify Indemnitee for any
Expenses incurred by Indemnitee with respect to any action
instituted (i) by Indemnitee to enforce or interpret this
Agreement, if a court having jurisdiction over such action
determines that each of the material assertions made by Indemnitee
as a basis for such action was not made in good faith or was
frivolous, or (ii) by or in the name of the Company
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