Unassociated Document


    Exhibit
      10.3

     

    INDEMNIFICATION
      AGREEMENT

     

    THIS
      INDEMNIFICATION AGREEMENT (“Agreement”)
      is
      made as of the date set forth on the signature page to this Agreement, by and
      between Strasbaugh, a California corporation (“Company”),
      and
      the individual named on the signature page to this Agreement (“Indemnitee”),
      an
      officer and/or a director of the Company.

     

    R
      E C I T A L S

     

    A.    The
      Indemnitee is concerned about serving, or continuing to serve, the Company
      as an
      officer and/or a director without assurance that indemnities available to him
      are, and will be, adequate to protect him against the risks associated with
      his
      service to the Company.

     

    B.    The
      Company has investigated whether additional protective measures are warranted
      to
      adequately protect its directors and officers against various legal risks and
      potential liabilities to which such individuals are subject due to their
      position with the Company and has concluded that additional protective measures
      are warranted.

     

    C.    In
      order
      to induce and encourage highly experienced and capable persons such as the
      Indemnitee to serve, or to continue to serve, as an officer and/or a director,
      the Board of Directors of the Company has determined, after due consideration,
      that this Agreement is not only reasonable and prudent, but necessary to promote
      and ensure the best interests of the Company and its shareholders.

     

    D.    The
      Company wishes to provide in this Agreement for the indemnification of and
      the
      advancing of expenses to the Indemnitee to the fullest extent permitted by
      law
      and as provided for in this Agreement.

     

    E.    The
      Company’s execution of this Agreement has been approved by the Board of
      Directors of the Company.

     

    F.    Indemnitee
      has indicated to the Company that but for the Company’s agreement to enter into
      this Agreement, Indemnitee would decline to serve, or to continue to serve,
      as
      an officer and/or a director of the Company.

     

    A
      G R E E M E N T

     

    NOW,
      THEREFORE, in consideration of the recitals set forth above and the continued
      services of the Indemnitee, and as an inducement to the Indemnitee to serve,
      or
      to continue to serve, as an officer and/or a director of the Company, the
      Company and the Indemnitee do hereby agree as follows:

     

    1.    Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth
      below:

     

    (a)    “Proceeding”
shall
      mean any threatened, pending or completed action, suit or proceeding, whether
      brought in the name of the Company or otherwise and whether of a civil,
      criminal, administrative or investigative nature, by reason of the fact that
      the
      Indemnitee is or was 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 enterprise, whether or not he is serving in such capacity at the
      time
      any liability, Expense (as defined in subparagraph (b) below) or Loss (as
      defined in subparagraph (c) below) is incurred for which indemnification or
      advancement of Expenses or Losses is to be provided under this
      Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)    “Expenses”
means
      all costs, charges and expenses incurred in connection with a Proceeding,
      including, without limitation, attorneys’ fees, disbursements and retainers,
      accounting and witness fees, travel and deposition costs, expenses of
      investigations, judicial or administrative proceedings or appeals, and any
      expenses of establishing a right to indemnification pursuant to this Agreement
      or otherwise, including reasonable compensation for time spent by the Indemnitee
      in connection with the investigation, defense or appeal of a Proceeding or
      action for indemnification for which he is not otherwise compensated by the
      Company or any third party; provided,
      however,
      that
      the term “Expenses”
does
      not include Losses.

     

    (c)    “Losses”
means
      any amount which Indemnitee pays or is obligated to pay in connection with
      a
      Proceeding, including, without limitation, (i) the amount of damages, judgments,
      amounts paid in settlement, fines or penalties relating to any Proceeding,
      (ii)
      sums paid in respect of any deductible under any applicable D&O Insurance
      (as defined in Section 12(a))
      or
      (iii) excise taxes under the Employee Retirement Income Security Act of 1974,
      as
      amended (“ERISA”),
      relating to any Proceeding, either of which are actually levied against the
      Indemnitee or paid by or on behalf of the Indemnitee; provided,
      however,
      that
      the term “Losses”
does
      not include Expenses.

     

    2.    Agreement
      to Serve.
      The
      Indemnitee agrees to continue to serve as an officer and/or a director of the
      Company at the will of the Company for so long as Indemnitee is duly elected
      or
      appointed or until such time as Indemnitee tenders a resignation in writing
      or
      is terminated as an officer and/or removed as a director by the Company. Nothing
      in this Agreement shall be construed to create any right in Indemnitee to
      continued employment with the Company or any subsidiary or affiliate of the
      Company. Nothing in this Agreement shall affect or alter any of the terms of
      any
      otherwise valid employment agreement or other agreement between Indemnitee
      and
      the Company relating to Indemnitee’s conditions and/or terms of employment or
      service.

     

    3.    Indemnification
      in Third Party Actions.
      The
      Company shall indemnify the Indemnitee in accordance with the provisions of
      this
Section 3
      if the
      Indemnitee is a party to or threatened to be made a party to or is otherwise
      involved in any Proceeding (other than a Proceeding by or in the right of the
      Company to procure a judgment in its favor), by reason of the fact that the
      Indemnitee is or was 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 enterprise, or by reason of anything done or not done by Indemnitee
      in any such capacity, against all Expenses and Losses actually and reasonably
      incurred by the Indemnitee in connection with the defense or settlement of
      such
      Proceeding, to the fullest extent permitted by California law, whether or not
      the Indemnitee was the successful party in any such Proceeding; provided,
      however,
      that
      any settlement shall be approved in writing by the Company.

     

    
      
         

      

      
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    4.    Indemnification
      In Proceedings By or In the Right of the Company.
      The
      Company shall indemnify the Indemnitee in accordance with the provisions of
      this
      Section 4 if the Indemnitee is a party to or threatened to be made a party
      to or is otherwise involved in any Proceeding by or in the right of the Company
      to procure a judgment in its favor by reason of the fact that the Indemnitee
      is
      or was 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
      enterprise, or by reason of anything done or not done by Indemnitee in any
      such
      capacity, against all Expenses actually and reasonably incurred by Indemnitee
      in
      connection with the defense or settlement of such Proceeding, to the fullest
      extent permitted by California law, whether or not the Indemnitee is the
      successful party in any such Proceeding. The Company shall further indemnify
      the
      Indemnitee for any Losses actually and reasonably incurred by the Indemnitee
      in
      any such Proceeding described in the immediately preceding sentence, provided
      that either (i) the Proceeding is settled with the approval of a court of
      competent jurisdiction, or (ii) indemnification of such amounts is otherwise
      ordered by a court of competent jurisdiction in connection with such
      Proceeding.

     

    5.    Conclusive
      Presumption Regarding Standard of Conduct.
      The
      Indemnitee shall be conclusively presumed to have met the relevant standards
      of
      conduct required by California for indemnification pursuant to this Agreement,
      unless a determination is made that the Indemnitee has not met such standards
      (i) by the Board of Directors of the Company by a majority vote of a quorum
      thereof consisting of directors who were not parties to such Proceeding, (ii)
      by
      the shareholders of the Company by a majority vote, or (iii) in a written
      opinion of the Company’s independent legal counsel. Further, the termination of
      any Proceeding by judgment, order, settlement, conviction or upon a plea of
      nolo
      contendere or its equivalent, shall not, of itself, rebut such presumption
      that
      the Indemnitee met the relevant standards of conduct required for
      indemnification pursuant to this Agreement. 

     

    6.    Indemnification
      of Expenses of Successful Party.
      Notwithstanding any other provision of this Agreement, to the extent that the
      Indemnitee has been successful on the merits or otherwise in defense of any
      Proceeding or in defense of any claim, issue or matter therein, the Indemnitee
      shall be indemnified against all Expenses incurred in connection therewith
      to
      the fullest extent permitted by California law. For purposes of this paragraph,
      the Indemnitee will be deemed to have been successful on the merits if the
      Proceeding is terminated by settlement or is dismissed with
      prejudice.

     

    7.    Advances
      of Expenses.
      The
      Expenses incurred by the Indemnitee in connection with any Proceeding shall
      be
      paid by the Company in advance of the final disposition of the Proceeding at
      the
      written request of the Indemnitee, and within ten (10) business days of such
      request, to the fullest extent permitted by California law; provided that the
      Indemnitee shall undertake in writing to repay such amount to the extent that
      it
      is ultimately determined that the Indemnitee is not entitled to indemnification
      by the Company.

     

    8.    Partial
      Indemnification.
      If the
      Indemnitee is entitled under any provision of this Agreement to indemnification
      by the Company for some or a portion of the Expenses or Losses actually and
      reasonably incurred by Indemnitee in the investigation, defense, appeal or
      settlement of any Proceeding but not, however, for the total amount thereof,
      the
      Company shall nevertheless indemnify the Indemnitee for the portion of such
      Expenses and Losses to which the Indemnitee is entitled.

     

    
      
         

      

      
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    9.    Indemnification
      Procedure; Determination of Right to Indemnification.
      

     

    (a)    Promptly
      after receipt by the Indemnitee of notice of the commencement of any Proceeding
      with respect to which the Indemnitee intends to claim indemnification or
      advancement of Expenses or Losses pursuant to this Agreement, the Indemnitee
      will notify the Company of the commencement thereof. The omission to so notify
      the Company will not relieve the Company from any liability which it may have
      to
      the Indemnitee under this Agreement or otherwise.

     

    (b)    The
      Company shall give prompt notice of the commencement of such Proceeding to
      the
      insurers on the D&O Insurance in accordance with the procedures set forth in
      the respective policies in favor of Indemnitee. The Company shall thereafter
      take all necessary or desirable action to cause such insurers to pay, on behalf
      of Indemnitee, all amounts payable as a result of such Proceeding in accordance
      with the terms of such policies.

     

    (c)    If
      a
      claim for indemnification or advancement of Expenses or Losses under this
      Agreement is not paid by or on behalf of the Company within thirty (30) days
      of
      receipt of written notice thereof, Indemnitee may at any time thereafter bring
      suit in any court of competent jurisdiction against the Company to enforce
      the
      right to indemnification or advancement of Expenses or Losses provided by this
      Agreement. It shall be a defense to any such action (other than an action
      brought to enforce a claim for Expenses incurred in defending any Proceeding
      in
      advance of its final disposition where the required undertaking, if any is
      required, has been tendered to the Company) that the Indemnitee has failed
      to
      meet the standard of conduct that makes it permissible under California law
      for
      the Company to indemnify the Indemnitee for the amount claimed. The burden
      of
      proving by clear and convincing evidence that indemnification or advancement
      of
      Expenses or Losses is not appropriate shall be on the Company. The failure
      of
      the directors or shareholders of the Company or independent legal counsel to
      have made a determination prior to the commencement of such Proceeding that
      indemnification or advancement of Expenses or Losses are proper in the
      circumstances because the Indemnitee has met the applicable standard of conduct
      shall not be a defense to the action or create a presumption that the Indemnitee
      has not met the applicable standard of conduct.

     

    (d)    The
      Indemnitee’s Expenses incurred in connection with any action concerning
      Indemnitee’s right to indemnification or advancement of Expenses or Losses in
      whole or in part pursuant to this Agreement shall also be indemnified in
      accordance with the terms of this Agreement by the Company regardless of the
      outcome of such action, unless a court of competent jurisdiction determines
      that
      each of the material claims made by the Indemnitee in such action was not made
      in good faith or was frivolous.

     

    
      
         

      

      
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    (e)    With
      respect to any Proceeding for which indemnification is requested, the Company
      will be entitled to participate therein at its own expense and, except as
      otherwise provided below, to the extent that it may wish, the Company may assume
      the defense thereof, with counsel satisfactory to the Indemnitee. After notice
      from the Company to the Indemnitee of its election to assume the defense of
      a
      Proceeding, the Company will not be liable to the Indemnitee under this
      Agreement for any Expenses subsequently incurred by the Indemnitee in connection
      with the defense thereof, other than reasonable costs of investigation or as
      otherwise provided below. The Company shall not settle any Proceeding in any
      manner that would impose any penalty or limitation on the Indemnitee, or include
      an admission of wrongdoing by the Indemnitee, without the Indemnitee’s prior
      written consent. The Indemnitee shall have the right to employ counsel in any
      such Proceeding, but the Expenses of such counsel incurred after notice from
      the
      Company of its assumption of the defense thereof and the Indemnitee’s approval
      of the Company’s counsel shall be at the expense of the Indemnitee, unless (i)
      the employment of counsel by the Indemnitee has been authorized by the Company,
      (ii) the Indemnitee shall have reasonably concluded that there may be a conflict
      of interest between the Company and the Indemnitee in the conduct of the defense
      of a Proceeding, or (iii) the Company shall not in fact have employed counsel
      to
      assume the defense of a Proceeding, in each of which cases the Expenses of
      the
      Indemnitee’s counsel shall be at the expense of the Company. Notwithstanding the
      foregoing, the Company shall not be entitled to assume the defense of any
      Proceeding brought by or on behalf of the Company or as to which the Indemnitee
      has concluded that there may be a conflict of interest between the Company
      and
      the Indemnitee.

     

    (f)    With
      respect to any Proceeding that is other than by or in the right of the Company,
      the Indemnitee may require the Company to defend him. In the event that
      Indemnitee requires the Company to defend him, the Company shall promptly
      undertake to defend any such Proceeding at the Company’s sole expense, employing
      counsel satisfactory to the Indemnitee.

     

    (g)    If
      the
      Company fails timely to defend, contest or otherwise protect the Indemnitee
      against any Proceeding which is not by or in the right of the Company, the
      Indemnitee shall have the right to do so, including without limitation, the
      right to make any compromise or settlement thereof, and to recover from the
      Company all Expenses and Losses and amounts paid as a result
      thereof.

     

    10.    Retroactive
      Effect.
      Notwithstanding anything to the contrary contained in this Agreement, the
      Company’s obligation to indemnify the Indemnitee and advance Expenses and Losses
      to the Indemnitee shall be deemed to be in effect since the date that the
      Indemnitee first commenced serving in any of the capacities covered by this
      Agreement.

     

    11.    Limitations
      on Indemnification.
      No
      payments pursuant to this Agreement shall be made by the Company:

     

    (a)    to
      indemnify or advance Expenses to the Indemnitee with respect to actions
      initiated or brought voluntarily by the Indemnitee and not by way of defense,
      except with respect to actions brought to establish or enforce a right to
      indemnification or advancement of Expenses or Losses under this Agreement or
      any
      other statute or law or otherwise as required under California law, but such
      indemnification or advancement of Expenses or Losses may be provided by the
      Company in specific cases if approved by the Board of Directors by a majority
      vote of a quorum thereof consisting of directors who are not parties to such
      action;

     

    
      
         

      

      
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    (b)    to
      indemnify the Indemnitee for any Expenses or Losses for which payment is
      actually made to the Indemnitee under a valid and collectible insurance policy,
      except in respect of any excess beyond the amount paid under such
      insurance;

     

    (c)    to
      indemnify the Indemnitee for any Expenses or Losses for which the Indemnitee
      has
      been or is indemnified by the Company or any other party otherwise than pursuant
      to this Agreement; or

     

    (d)    to
      indemnify the Indemnitee for any Expenses or Losses sustained in any Proceeding
      for an accounting of profits made from the purchase or sale by Indemnitee of
      securities of the Company pursuant to the provisions of Section 16(b) of
      the Securities Exchange Act of 1934 and the rules and regulations promulgated
      thereunder or similar provisions of any federal, state or local statutory
      law.

     

    12.    Maintenance
      of Directors’ and Officers’ Insurance.

     

    (a)    Upon
      the
      Indemnitee’s request, the Company hereby agrees to maintain in full force and
      effect, at its sole cost and expense, directors’ and officers’ liability
      insurance (“D&O
      Insurance”)
      by an
      insurer, in an amount and with a deductible reasonably acceptable to the
      Indemnitee, covering the period during which the Indemnitee is serving in any
      of
      the capacities covered by this Agreement and for so long thereafter as the
      Indemnitee shall be subject to any possible claim or threatened, pending or
      completed Proceeding by reason of the fact that the Indemnitee is serving in
      any
      of the capacities covered by this Agreement. Upon receipt of any D&O
      Insurance policy, or any endorsement to any D&O Insurance policy, the
      Company shall promptly provide the Indemnitee with a complete copy
      thereof.

     

    (b)    In
      all
      policies of D&O Insurance to be maintained pursuant to Section 12(a),
      the
      Indemnitee shall be named as an insured in such a manner as to provide
      Indemnitee with the greatest rights and benefits available under such
      policy.

     

    (c)    The
      Company will, within ten (10) days of request of the Indemnitee and upon each
      subsequent renewal date of the D&O Insurance, furnish the Indemnitee with a
      certificate of insurance naming the Indemnitee as an insured and otherwise
      meeting the requirements of this Section 12
      and will
      not make any changes to such insurance without the prior consent of the
      Indemnitee, which consent will not be unreasonably withheld. Upon receipt by
      the
      Company of notice, in any form, of cancellation or termination or proposed
      cancellation or termination or any restriction or limitation of any D&O
      Insurance, the Company shall, within five (5) days of receipt of such notice,
      provide like notice to the Indemnitee.

     

    
      
         

      

      
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    (d)    Any
      approval by the Indemnitee of the D&O Insurance will not release the Company
      of its obligations under this Agreement.

     

    13.    Indemnification
      Hereunder Not Exclusive; Term.
      The
      indemnification and advancement of Expenses and Losses provided by this
      Agreement shall not be deemed to limit or preclude any other rights to which
      the
      Indemnitee may be entitled under the Company’s articles of incorporation or
      bylaws, any agreement, any vote of shareholders or disinterested directors
      of
      the Company, California law, or otherwise. The indemnification under this
      Agreement shall continue as to the Indemnitee, even though he may have ceased
      to
      be an officer and/or a director of the Company, for so long as the Indemnitee
      shall be subject to any possible Proceeding.

     

    14.    Primary
      Indemnity.
      The
      Company’s obligation to provide indemnification to the Indemnitee under this
      Agreement is primary to any other source of indemnification or insurance that
      may be available to the Indemnitee for matters covered by the indemnification
      under this Agreement. The Company agrees that it shall have no right of
      subrogation with respect to any such other right of recovery of the
      Indemnitee.

     

    15.    Successors
      and Assigns.
      This
      Agreement shall be binding upon, and shall inure to the benefit of (i) the
      Indemnitee and Indemnitee’s heirs, devisees, legatees, personal representatives,
      executors, administrators and assigns and (ii) the Company and its successors
      and assigns, including any transferee of all or substantially all of the
      Company’s assets and any successor or assign of the Company by merger or by
      operation of law.

     

    16.    Severability.
      Each
      provision of this Agreement is a separate and distinct agreement and independent
      of the other, so that if any provision hereof shall be held to be invalid or
      unenforceable for any reason, such invalidity or unenforceability shall not
      affect the validity or enforceability of the other provisions hereof. To the
      extent required, any provision of this Agreement may be modified by a court
      of
      competent jurisdiction to preserve its validity and to provide the Indemnitee
      with the broadest possible indemnification and advancement of Expenses and
      Losses permitted under California law. If this Agreement or any portion thereof
      is invalidated on any ground by any court of competent jurisdiction, then the
      Company shall nevertheless indemnify Indemnitee as to Expenses and Losses with
      respect to any Proceeding to the fullest extent permitted by any applicable
      portion of this Agreement that shall not have been invalidated or by any
      applicable provision of California law or any other applicable law.

     

    17.    Headings.
      The
      headings used herein are for convenience only and shall not be used in
      construing or interpreting any provision of the Agreement.

     

    18.    Governing
      Law.
      This
      Agreement shall be construed, interpreted and enforced in accordance with the
      laws of the State of California, without giving effect to the principles of
      conflicts of laws thereunder which would specify the application of the law
      of
      another jurisdiction. 

     

    19.    Amendments
      and Waivers.
      No
      amendment, waiver, modification, termination or cancellation of this Agreement
      shall be effective unless in writing and signed by the party against whom
      enforcement is sought. The indemnification rights afforded to the Indemnitee
      hereby are contract rights and may not be diminished, eliminated or otherwise
      affected by amendments to the Company’s articles of incorporation, bylaws or
      agreements, including any D&O Insurance policies, whether the alleged
      actions or conduct giving rise to indemnification hereunder arose before or
      after any such amendment. No waiver of any provision of this Agreement shall
      be
      deemed or shall constitute a waiver of any other provision hereof, whether
      or
      not similar, nor shall any waiver constitute a continuing waiver.

     

    
      
         

      

      
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    20.    Counterparts.
      This
      Agreement may be executed in one or more counterparts, all of which shall be
      considered one and the same agreement and shall become effective when one or
      more counterparts have been signed by each party and delivered to the
      other.

     

    21.    Notices.
      All
      notices and communications shall be in writing and shall be deemed duly given
      on
      the date of delivery or on the date of receipt of refusal indicated on the
      return receipt if sent by first class mail, postage prepaid, registered or
      certified, return receipt requested, to the following addresses, unless notice
      of a change of address is duly given by one party to the other, in which case
      notices shall be sent to such changed address:

     

    If
      to the
      Company:

     

    Strasbaugh

    825
      Buckley Road

    San
      Luis
      Obispo, CA 93401

    Attn:
      Chuck Schillings, President

     

    with
      a
      copy, which shall not constitute notice to the Company, to:

     

    Rutan
      & Tucker, LLP

    611
      Anton
      Boulevard, Suite 1400

    Costa
      Mesa, CA 92626

    Attn:
      Larry A. Cerutti, Esq.

     

    If
      to the
      Indemnitee, to the address set forth on the signature page to this
      Agreement.

     

    22.    Subject
      Matter and Parties.
      The
      intended purpose of this Agreement is to provide for indemnification and
      advancement of Expenses and Losses, and this Agreement is not intended to affect
      any other aspect of any relationship between the Indemnitee and the Company
      and
      is not intended to and shall not create any rights in any person as a third
      party beneficiary hereunder.

     

    (Signature
      page follows)

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of ____________,
      2007.

     

    
      	
              “Indemnitee”

            	
              Signature:________________________________

               

              Print Name:_______________________________

               

              Address For
                Notices:________________________

               

              ________________________________________

               

              
                ________________________________________

              

            
	 	 
	 	 
	
              “Company”

            	
              STRASBAUGH,

              
                a
                  California corporation

                 

                By:______________________________________

                 

                Name:____________________________________

                 

                Its:______________________________________

              

            


    

     

     

     

     

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