Document:

United States Security & Exchange Commission EDGAR Filing

Exhibit 10.1

EMPLOYMENT AGREEMENT

Employment Agreement, dated as of March 29, 2007 (this "Agreement"), by and between Timothy Leathers, a resident of the State of Florida located at Tequesta, Florida (the "Executive"), and Sun American Bank, a Florida corporation (the "Company").

R E C I T A L S :

The Company is desirous of employing the Executive, and the Executive desires to be employed by the Company, upon the terms and provisions, and subject to the conditions, set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.

Employment; Term.  The Company shall employ the Executive, and the Executive shall accept employment by the Company, upon the terms and provisions, and subject to the conditions, of this Agreement.  The term of the Executive's employment hereunder shall commence on and as of the date hereof on terms and conditions reasonably satisfactory to the Executive (the "Employment Date").  The term of the Executive's employment hereunder shall commence on the Employment Date and terminate on the first (1st) anniversary of the Employment Date (as the same may be extended by the parties by mutual agreement or terminated earlier as provided in this Agreement, the "Employment Term"). 

2.

Position and Duties.

(a)

The Company shall employ the Executive, and the Executive shall serve, as the Regional President (North Palm Beach & Martin Counties).  The Executive shall be responsible for the duties outlined on Schedule 1 hereof, subject to the ultimate authority of the Board of Directors of the Company.  The Executive shall have such additional responsibilities or duties with respect to the Company and its subsidiaries, and their respective operations, as may be determined and assigned to the Executive by the Chief Executive Officer of the Company.

(b)

Nothing in this Agreement shall prohibit the Executive from serving as an officer or director of any entity or business enterprise, or otherwise participating in educational, welfare, social, religious and civic organizations; provided, however, that during the Employment Term, the Executive shall not serve as a director or officer of any entity or business enterprise which engages in a business that competes directly with the Business.

(c)

Nothing in this Agreement shall prohibit the Executive from making any investments in the securities of any entity or business enterprise; provided, however, that during the Employment Term, the Executive shall not make any investments (other than "passive investments" as defined below) in the securities of any entity or business enterprise 

which engages in a business that competes directly with the business of the Company (the “Business”).  An investment shall be considered a "passive investment" to the extent that such securities (i) are actively traded on a United States national securities exchange, the OTC Bulletin Board or on any foreign securities exchange, and (ii) represent, at the time such investment is made, less than five percent (5%) of the aggregate voting power of such entity or business enterprise.

3.

Base Salary; Signing Bonus; Common Stock Bonus; Sale Bonus; Performance Bonus.

(a)

During the Employment Term, the Company shall pay to the Executive an annual salary of One Hundred and Fifty Thousand dollars and no cents (US $150,000), ( the "Base Salary").  The Base Salary shall be payable in equal bi-weekly installments during any year of the Employment Term; provided, however, that such payments shall be subject to withholding for applicable taxes and any other amounts generally withheld from compensation paid to salaried senior executives of the Company.  

(b)

Following the end of each fiscal year of the Company during the Employment Term, the Executive shall receive a fiscal year end bonus as set forth in Schedule 2 hereto; provided however that such bonus be not less than $30,000 (the "Performance Bonus").  The Company shall pay to the Executive the Performance Bonus if the Company attains the financial performance targets for such fiscal year as set forth on the Schedule 2 hereto.  The Performance Bonus, if earned, shall be paid by the Company to the Executive within thirty (30) days following the completion of the audited financial statements of the Company for the prior fiscal year.

(c)

During the Employment Period the Executive shall have exclusive use of a 2005 Volvo S80 or comparable vehicle.

(d)

As soon as practical after the Employment Date, the Sun American Bancorp Compensation Committee shall have a meeting to approve an option grant to the Executive for the purchase of 35,000 shares of the common stock of Sun American Bancorp for an exercise price equal to the fair market value as of the date the Sun American Bancorp Compensation Committee acts.  All other terms and conditions of the option agreement shall be in accordance with the terms and conditions of the standard option agreement issued by Sun American Bancorp pursuant to its 2005 Stock Option Plan.

4.

Expense Allowance; Business Expenses.

(a)

The Company shall reimburse the Executive for all necessary and reasonable expenses actually incurred or paid by the Executive during the Employment Term in connection with the performance of the Executive's duties and obligations to the Company in accordance with this Agreement, in accordance with the Company's policies from time to time in effect.  

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5.

Benefits; Indemnification and D&O Insurance.

(a)

During the Employment Term, the Executive may (subject to applicable eligibility requirements) participate in such insurance and health and medical benefits as are generally made available to the senior executives of the Company pursuant to such plans as are from time to time maintained by the Company; provided, however, that the Company shall implement and maintain a health and medical plan as soon after the Employment Date as is reasonably practical and maintain such throughout the Employment Term.  The Executive acknowledges that his participation in any benefit plan may require the Executive's co-payment of a periodic premium as a deduction from his salary. 

(b)

During each full year of the Employment Term, the Executive shall be entitled to 4 weeks of vacation.  The Executive shall take vacation at such time or times as the Executive desires based upon the then current business needs and activities of the Company.

6.

Covenant Not to Solicit.

(a)

The Executive shall not, during the Employment Term and the twelve (12) month period following end of the Employment Term (the "Restriction Period"), directly or indirectly, solicit, entice, persuade, induce or cause any employee, officer, manager, director, consultant, agent or independent contractor of the Company to terminate his, her or its employment, consultancy or other engagement by the Company to become employed by or engaged by any individual, entity, corporation, partnership, association, or other organization (collectively, "Person") other than the Company, or approach any such employee, officer, manager, director, consultant, agent or independent contractor for any of the foregoing purposes, or authorize or assist in the taking of any of such actions by any Person.  

(b)

The Executive shall not, during the Restriction Period, directly or indirectly, solicit, entice, persuade, induce or cause:

(i)

any Person who is a customer of the Company at any time during the Restriction Period; or

(ii)

any lessee, vendor or supplier to, or any other Person who had or has a business relationship with, the Company at any time during the Restriction Period;

(the Persons referred to in items (i) and (ii) above, collectively, the "Prohibited Persons") to enter into a business relationship with any other Person for the same or similar services, activities or goods that any such Prohibited Person purchased from, was engaged in with or provided to, the Company or to reduce or terminate such Prohibited Person's business relationship with the Company; and the Executive shall not, directly or indirectly, approach any such Prohibited Person for any such purpose, or authorize or assist in the taking of any of such actions by any Person.

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(c)

For purposes of this Section 6, the terms "employee", "consultant", "agent", and "independent contractor" shall include any Persons with such status at any time during the one (1) month preceding any solicitation in question.

7.

Non-Competition.  Except as otherwise provided in this Agreement, during the Employment Term and during the Restriction Period, the Executive shall not, anywhere within Palm Beach County, Martin County, Broward County and Miami Dade County (collectively the “Restricted Territory”), directly or indirectly, alone or in association with any other Person, directly or indirectly, (i) acquire, or own in any manner, any interest in any Person that engages in the Business or that engages in any business, activity or enterprise that competes with any aspect of the Business, or (ii) be interested in (whether as an owner, director, officer, partner, member, lender, shareholder, vendor, consultant, employee, advisor, agent, independent contractor or otherwise), or otherwise participate in the management or operation of, any Person that engages in any business, activity or enterprise that competes with any aspect of the Business.

8.

Protection of Confidential Information.  

(a)

The Executive acknowledges that prior to the date hereof the Executive has had access to, and during the course of the Executive's employment hereunder will have access to, significant Confidential Information (as hereinafter defined).  During the Restriction Period, (i) the Executive shall maintain all Confidential Information in strict confidence and shall not disclose any Confidential Information to any other Person, except as necessary in connection with the performance of the Executive's duties and obligations under this Agreement, and (ii) the Executive shall not use any Confidential Information for any purpose whatsoever except in connection with the performance of the Executive's duties and obligations under this Agreement.  

(b)

"Confidential Information" shall mean any and all information pertaining to the Company and the Business, whether such information is in written form or communicated orally, visually or otherwise, that is proprietary, non-public or relates to any trade secret, including, but not limited to, customer data, branch data, sales and marketing information, business and marketing strategies, loan data, loan and deposit account information, files, loan products, deposit account products, business secrets and business techniques.  Notwithstanding the foregoing, "Confidential Information" shall not include information that (i) is or becomes generally available to, or known by, the public through no fault of the Executive, or (ii) is independently acquired or developed by the Executive outside the scope of is employment.

9.

Certain Additional Agreements.

(a)

The Executive agrees that it is a legitimate interest of the Company and reasonable and necessary for the protection of the goodwill and business of the Company, which are valuable to the Company, that the Executive make the covenants contained in Section 6, Section 7 and Section 8 of this Agreement.

(b)

The parties acknowledge that (i) the type and periods of restriction imposed in the provisions of Section 6, Section 7 and Section 8 of this Agreement are fair and reasonable and are reasonably required to protect and maintain the proprietary and other 

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legitimate business interests of the Company, as well as the goodwill associated with the Business conducted by the Company, (ii) the Business conducted by the Company extends throughout the Restricted Territory, and (iii) the time, scope, geographic area and other provisions of Section 6, Section 7 and Section 8 of this Agreement have been specifically negotiated by sophisticated commercial parties represented by experienced legal counsel. 

(c)

In the event that any covenant contained in this Agreement, including, without limitation, any covenant contained in Section 6, Section 7, or Section 8 of this Agreement shall be determined by any court of competent jurisdiction to be illegal, invalid or unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, (i) such covenant shall be interpreted to extend over the maximum period of time for which it may be legal, valid and enforceable, as applicable, and/or over the maximum geographical area as to which it may be legal, valid and enforceable, as applicable, and/or to the maximum extent in all other respects as to which it may be legal, valid and enforceable, as applicable, all as determined by such court making such determination, and (ii) in its reduced form, such covenant shall then be legal, valid and enforceable, as applicable, but such reduced form of covenant shall only apply with respect to the operation of such covenant in the particular jurisdiction in or for which such adjudication is made.  It is the intention of the parties that such covenants shall be enforceable to the maximum extent permitted by applicable law. 

10.

Specific Performance.  The Executive acknowledges that any breach or threatened breach of the covenants contained in Section 6, Section 7, Section 8 and Section 9 of this Agreement will cause the Company material and irreparable damage, the exact amount of which will be difficult to ascertain and that the remedies at law for any such breach or threatened breach will be inadequate.  Accordingly, the Executive agrees that the Company shall, in addition to all other available rights and remedies (including, but not limited to, seeking such damages as either of them can show it has sustained by reason of such breach), be entitled to specific performance and injunctive relief in respect of any breach or threatened breach of any of Section 6, Section 7, Section 8 and Section 9 of this Agreement, without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law or irreparable harm.

11.

Termination.

(a)

In the event of the termination of the Executive during the Employment Term for any reason, except as set forth in Section 11(b), the Executive's employment hereunder shall automatically terminate as of the date of termination; provided, however, that the Executive or his estate or legal representative, as the case may be, shall be entitled to receive, and the Company shall pay the Executive or his estate or legal representative, as the case may be, (i) the Base Salary owing to the Executive hereunder through the date of termination and (ii) any business expenses which were properly reimbursable to the Executive pursuant to Section 4 hereof, through the date of termination.  The Executive or his estate or legal representative, as the case may be, shall be entitled to no further payment upon such termination.

(b)

In the event of the termination of the Executive during the Employment Term (i) by the Company without Cause (as defined below) or (ii) by the Executive for Good 

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Reason (as defined below), the Executive's employment hereunder shall automatically terminate as of the date of termination; provided, however, that the Executive or his estate or legal representative, as the case may be, shall be entitled to receive, and the Company shall pay the Executive or his estate or legal representative, as the case may be, (i) the Base Salary owing to the Executive hereunder through the date of termination; (ii) any business expenses which were properly reimbursable to the Executive pursuant to Section 4 hereof, through the date of termination; and (iii) severance equal to the remaining Base Salary that would have otherwise been due the Executive through the end of the Employment Term had there been no early termination.  The Executive or his estate or legal representative, as the case may be, shall be entitled to no further payment upon such termination. 

For purposes of this Agreement, “Cause” shall mean that Executive shall have committed:

(i)

an intentional act of fraud, embezzlement or theft in connection with his duties with, or in the course of his employment with, the Company, or been convicted of a felony or other crime involving moral turpitude;

(ii)

intentional wrongful damage to or misappropriation of property of the Company;

(iii)

an intentional or grossly negligent refusal or failure to perform Executive's duties, or to carry out the reasonable directions of the Company’s Chief Executive Officer (other than on account of illness or other physical or mental disability), which refusal or failure is not remedied within the 10 calendar days after receipt by the Executive of written notice from the Company thereof; or 

(iv)

a material breach of any of the provisions of this Agreement applicable to Executive, which breach is not remedied within the 10 calendar days after receipt by the Executive of written notice from the Company of such breach;

and in any case any such act or failure to act shall be determined by the Chief Executive Officer of the Company to have been materially harmful to the Company.  For purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be deemed "intentional" unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that his action or omission was in the best interests of the Company, as determined by the Board of Directors of the Company in its sole but reasonable discretion.

For purposes of this Agreement, “Good Reason” shall mean any of the following events:

(i)

a significant and material adverse change in the nature or scope of Employee's duties and responsibilities or other working conditions with Employer, 

(ii)

a failure by the Employer to make timely payment to the Employee of any amounts to which he is entitled hereunder or to otherwise provide Employee with any of the benefits to which he is entitled hereunder on the terms provided herein or any other breach of the covenants contained herein, any of which is not remedied within 10 calendar days after receipt by the Employer of written notice from the Employee of Employee's objection to such change, failure, reduction or breach, as the case may be; 

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(iii)

an ordered relocation of Executive to an area more than fifty (50) miles from the place where the Executive’s office is situated on the date hereof without Executive's prior written consent (which consent may be withheld for any reason); or

(iv)

the liquidation, dissolution, merger, consolidation or reorganization of Employer or transfer of a significant amount of the business and/or assets of the Employer to another party, unless the successor or successors (by liquidation, dissolution, merger, consolidation, reorganization or otherwise) or other transferee or transferees to which all or substantially all of such business and/or assets have been transferred (directly or by operation of law) shall have assumed all duties and obligations of the Employer to Employee hereunder by an instrument in writing reasonably satisfactory in form and in substance to the Employee.

12.

Miscellaneous.

(a)

Notices.  All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows:  (i) if personally delivered, on the business day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed certified or registered mail return receipt requested, four (4) business days after being mailed, (iii) if delivered by overnight courier (with all charges having been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iv) if delivered by facsimile transmission, on the business day of such delivery if sent by 5:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party's facsimile machine).  If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 12(a)), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender).  All such notices, demands, consents, requests, instructions and other communications will be sent to the following addresses or facsimile numbers as applicable:  

If to the Company, to:

Sun American Bank.

Attn: Robert Nichols

1200 N. Federal Highway.

Suite 111

Boca Raton, FL 33432

with a copy to:

Blank, Rome, LLP

Attn: Bruce C. Rosetto, Esq.

1200 Federal Highway

Suite 417

Boca Raton, Florida 33432

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If to the Executive, to:

Timothy L. Leathers

5343 SE Acadia terrace

Hobe Sound, Florida 33455

or to such other address as any party may specify by notice given to the other party in accordance with this Section 12(a).  

(b)

Amendment.  This Agreement may not be modified, amended, altered or supplemented, except by a written agreement executed by each of the parties hereto.  

(c)

Entire Agreement.  This Agreement contains the entire understanding and agreement of the parties relating to the subject matter hereof and supersedes all prior and/or contemporaneous understandings and agreements of any kind and nature (whether written or oral) among the parties with respect to such subject matter, all of which are merged herein. 

(d)

Waiver.  Any waiver by a party hereto of any breach of or failure to comply with any provision or condition of this Agreement by any other party hereto shall not be construed as, or constitute, a continuing waiver of such provision or condition, or a waiver of any other breach of, or failure to comply with, any other provision or condition of this Agreement, any such waiver to be limited to the specific matter and instance for which it is given.  No waiver of any such breach or failure or of any provision or condition of this Agreement shall be effective unless in a written instrument signed by the party granting the waiver and delivered to the other party hereto in the manner provided for hereunder in Section 12(a).  No failure or delay by any party to enforce or exercise its rights hereunder shall be deemed a waiver hereof, nor shall any single or partial exercise of any such right or any abandonment or discontinuance of steps to enforce such rights, preclude any other or further exercise thereof or the exercise of any other right.

13.

Governing Law; Jurisdiction.

(a)

This Agreement shall be governed by and construed in accordance with the

laws of the State of Florida applicable to agreements made and to be performed in that state, without regard to any of its principles of

conflicts of laws or other laws that would result in the application of the laws of another jurisdiction.

 

(b)

Each of the parties unconditionally and irrevocably consents to the exclusive jurisdiction of the courts of the State of Florida located in Palm Beach County and the federal district court for the Southern District of Florida located in Palm Beach County with respect to any suit, action or proceeding arising out of or relating to this Agreement, and each of the parties hereby unconditionally and irrevocably waives any objection to venue in any such court or to assert that any such court is an inconvenient forum, and agrees that service of any summons, complaint, notice or other process relating to such suit, action or other proceeding may be effected in the manner provided in Section 13(a) hereof.  Each of the parties hereby unconditionally and irrevocably waives the right to a trial by jury in any such action, suit or other proceeding.

 

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14.

Binding Effect, No Assignment, etc.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, estate, successors and permitted assigns.  Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other party, and any attempt to do so shall be void and of no force and effect, except (i) assignments and transfers by operation of law and (ii) that the Company may assign any or all of its respective rights, interests and obligations hereunder to any purchaser of a majority of the issued and outstanding capital stock of the Company or a substantial part of the assets of the Company.  

15.

Third Parties.  Nothing herein is intended or shall be construed to confer upon or give to any Person, other than the parties hereto (or persons set forth in Section 14), any rights, privileges or remedies under or by reason of this Agreement.

16.

Headings.  The section headings contained in this Agreement  are inserted for reference purposes only and shall not affect in any way the meaning, construction or interpretation of this Agreement.  Any reference to the masculine, feminine, or neuter gender shall be a reference to such other gender as is appropriate.  References to the singular shall include the plural and vice versa.

17.

Counterparts.  This Agreement may be executed in two (2) or more counterparts (including by facsimile signature, which shall constitute a legal and valid signature), and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same document.  This Agreement shall become effective when one or more counterparts, taken together, shall have been executed and delivered by all of the parties.  

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

			
	                                                       

	SUN AMERICAN BANK

	 
	 

	 
	 
	 

	 
	By:  

	/s/ Michael E. Golden

	 
	 
	Name:  Michael E. Golden

	 
	 
	Title:    President and Chief Executive Officer

			
	                                                       

	EXECUTIVE

	 
	 

	 
	 
	 

	 
	By:  

	/s/ Timothy L Leathers

	 
	 
	Timothy L. Leathers 

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SCHEDULE 1

JOB DUTIES

Regional President (North Palm Beach & Martin Counties)

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General administrative and management oversight of branches in the Northern Region (including PGA, Stuart and Tequesta branches).

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Overall responsibility for growth of branch deposits in Northern region.

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Overall responsibility for growth of commercial and consumer in Northern region.

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Daily supervision of staff in the Northern region.

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Oversee recruitment of new staff for the Northern region to ensure appropriate skill sets and business continuity.

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Completion of Special Projects as assigned by the CEO of the Company.

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SCHEDULE 2

PERFORMANCE BONUS

The Executive shall receive a performance based bonus of not be less than $30,000 (the "Performance Bonus"), at the end of their first contract year that the Executive is employed by the Company, with such bonus amount  to be determined by the Compensation Committee of the Company, in consultation with the Chief Executive Officer, in accordance with the terms and conditions of the Company’s Bonus Plan.  The Company shall pay to the Executive the Performance Bonus if the Company attains the financial performance targets for such fiscal year for which this Agreement relates as determined by the Compensation Committee of the Company.

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				Exhibit 10.49

				

				

			

		

		
			INDEMNIFICATION AGREEMENT

					

		

		            This Indemnification Agreement (“Agreement”) is made on November 17, 2006, between Material Technologies, Inc., a Delaware corporation (the “Corporation”), and ______________ (the “Director”).

		

		Recitals

				

		

		            A.        The Director is a member of the Corporation’s Board of Directors and the Corporation desires Director to continue in such capacity.  Director is willing to continue to serve on the Corporation’s Board of Directors if Director receives the protections provided by this Agreement.

		

		            B.         Article 6 of the Corporation’s Articles of Incorporation provides that, to the fullest extent permitted by law, no director or officer shall be personally liable to the Corporation or its shareholders.  Section 3 of the Corporation’s Bylaws provides that, to the fullest extent permitted by law, the Corporation shall have the power to indemnify the officers and directors of this Corporation against any liability as may be determined to be in the best interests of the Corporation.

		

		            C.        The Corporation has not obtained directors and officers liability insurance (“D&O Insurance”), but may acquire such at a time in the future.

		

		            D.        The Corporation believes that (1) litigation against corporate directors, regardless of whether meritorious, is expensive and time-consuming for the director to defend; (2) there is a substantial risk of a large judgment or settlement in litigation in which a corporate director was neither culpable nor profited personally to the detriment of the corporation; (3) it is increasingly difficult to attract and keep qualified directors because of such potential liabilities; (4) it is important for a director to have assurance that indemnification will be available if the director acts in accordance with reasonable business standards; and (5) because the indemnification available from the Corporation is not adequate to fully protect the Corporation’s directors against the problems discussed above, it is in the best interests of the Corporation and its shareholders for the Corporation to contractually obligate itself to indemnify its directors and to set forth the details of the indemnification process.

		

		            E.         Based upon the conclusions stated in Recital D above, to induce Director to continue to serve on the Corporation’s Board of Directors and in consideration of Director’s continued service as a director, the Corporation wishes to enter in to this Agreement with Director.

		

		            Therefore, Corporation and Director agree as follows:

		            1.         Agreement to Serve.  Director will serve as a member of the Board of Directors of the Corporation so long as Director is duly elected and qualified to so serve or until Director resigns or is removed from the Corporation’s Board of Directors.

			

			

			

			

		

		
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		            2.         Indemnification.

		

		                        (a)         Corporation will indemnify Director to the fullest extent permitted under applicable law if Director was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding of any kind, whether civil, criminal, administrative or investigative and whether formal or informal (including actions by or in the right of Corporation and any preliminary inquiry or claim by any person or authority), by reason of the fact that Director is or was a director, officer, partner, trustee, employee or agent of Corporation or is or was serving at Corporation’s request as a director, officer, employee or agent of another corporation (including a Subsidiary), limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, whether or not for profit, or by reason of anything done or not done by Director in any such capacity (collectively, “Covered Matters”). Such indemnification will cover all Expenses (as defined in paragraph 5(a) below), liabilities, judgments (including punitive and exemplary damages), penalties, fines (including excise taxes relating to employee benefit plans and civil penalties) and amounts paid in settlement that are incurred or imposed upon Director in connection with a Covered Matter (collectively, “Indemnified Amounts”).

		

		                        (b)         Director will be indemnified for all Indemnified Amounts and Corporation will defend Director against claims (including threatened claims and investigations) in any way related to Director’s service as a director including claims brought by or on behalf of Corporation or any Subsidiary, except if it is finally determined by the court of last resort (or by a lower court if not timely appealed) that (1) the payment is prohibited by applicable law or (2) Director engaged in intentional misconduct for the primary purpose of significant personal financial benefit through actions adverse to Corporation’s and its shareholders’ best interests. As used in this Agreement, (1) “intentional misconduct” will not include violations of disclosure or reporting requirements of federal securities laws or a breach of fiduciary duties (including duties of loyalty or care) if Director relied on advice of counsel to Corporation, or otherwise reasonably believed that there was no violation of such requirements or breach of fiduciary duty; and (2) “significant personal financial benefit” will not include compensation or employee benefits for past or prospective services to Corporation or Corporation’s successor or in connection with an agreement not to compete or similar agreement, or any benefit received by directors or officers or shareholders of Corporation generally.

		

		                        (c)         If Director is entitled under this Agreement to indemnification for less than all of the amounts incurred by Director in connection with a Covered Matter, Corporation will indemnify Director for the indemnifiable amount.

		            3.         Claims for Indemnification.  Director will give Corporation written notice of any claim for indemnification under this Agreement.  Payment requests will include a schedule setting forth in reasonable detail the amount requested and will be accompanied (or, if necessary, followed) by copies of the relevant invoice or other documentation. Upon Corporation’s request, Director will provide Corporation with a copy of the document or pleading, if any, notifying Director of the Covered Matter. To 

			

			

			

			

		

		
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		the extent practicable, Corporation will pay Indemnified Amounts directly without requiring Director to make any prior payment.

		            4.         Determination of Right to Indemnification.

		                        (a)         Director will be presumed to be entitled to indemnification under this Agreement and will receive such indemnification, subject to paragraph 4(b) below, irrespective of whether the Covered Matter involves allegations of intentional misconduct, alleged violations of Section 16(b) of the Securities Exchange Act of 1934, alleged violations of Section 10(b) of Securities Exchange Act of 1934 (including Rule 10b-5 thereunder), breach of Director’s fiduciary duties (including duties of loyalty or care) or any other claim.

		

		                        (b)         If, in the opinion of counsel to Corporation, applicable law permits indemnification in a Covered Matter only as authorized in the specific case upon a determination that indemnification is proper in the circumstances because Director has met a standard of conduct established by applicable law, and upon an evaluation of Indemnification Amounts to be paid in connection with such Covered Matter, the following will apply:

		

		                                      (1)     Corporation will give Director notice that a determination and evaluation will be made under this paragraph 4(b); such notice will be given immediately after receipt of counsel’s opinion that such a determination and evaluations necessary and will include a copy of such opinion.

		

		                                      (2)     Such determination and evaluation will be made in good faith, as follows:

		

		                                               (A)         by a majority vote of a quorum of Corporation’s Board of Directors who are not parties or threatened to be made parties to the Covered Matter in question (“Disinterested Directors”) or, if such a quorum is not obtainable, by a majority vote of a committee of Disinterested Directors who are selected by the Board; or

		

		                                               (B)         by an attorney or firm of attorneys, having no previous relationship with Corporation or Director, which is selected by Corporation and Director; or

		

		                                               (C)         by all independent directors of Corporation who are not parties or threatened to be made parties to the Covered Matter.

		

		                                      (3)         Director will be entitled to a hearing before the entire Board of Directors of Corporation and any other person or persons making the determination and evaluation under clause (2) above. Director will be entitled to be represented by counsel at such hearing. 

		                                      (4)         The cost of a determination and evaluation under this paragraph 4(b) (including attorneys’ fees and other expenses incurred by Director in

			

			

			

			

		

		
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		preparing for and attending the hearing contemplated by clause (3) above and otherwise in connection with the determination and evaluation under this paragraph 4(b)) will be borne by Corporation.

		                                      (5)         The determination will be made as promptly as possible after final adjudication of the Covered Matter.

		

		                                      (6)         Director will be presumed to have met the required standard of conduct under this Section 4(b) unless it is clearly demonstrated to the determining body that Director had not met the required standard of conduct.

		

		            5.         Advance of Expenses.

		                        (a)         Before final adjudication of a Covered Matter, upon Director’s request pursuant to paragraph 3 above, Corporation will promptly either advance Expenses directly or reimburse Director for all Expenses. As used in this Agreement, “Expenses” means all costs and expenses (including attorneys’ fees, expert fees, other professional fees and court costs) incurred by Director in connection with a Covered Matter other than judgments, penalties, fines and settlement amounts.

		

		                         (b)         If, in the opinion of counsel to Corporation, applicable law permits advancement of Expenses only as authorized in the specific case upon a determination that Director has met a standard of conduct established by applicable law, the determination will be made at Corporation’s cost, in good faith and as promptly as possible after Director’s request, in accordance with clauses (1) through (4) and (6)  of paragraph 4(b) above. Because of the difficulties inherent in making any such determination before final disposition of the Covered Matter, to the extent permitted by law such advance will be made if (1) the facts then known to those persons making the determination, without conducting a formal independent investigation, would not preclude advancement of Expenses under applicable law and (2) Director submits to Corporation a written affirmation of Director’s belief that Director has met the standard of conduct necessary for advancement of Expenses under the circumstances.

		

		                          (c)         Director will repay any Expenses that are advanced under this paragraph 5 if it is ultimately determined, in a final, non-appealable judgment rendered by the court of last resort (or by a lower court if not timely appealed), that Director is not entitled to be indemnified against such Expenses. This undertaking by Director is an unlimited general undertaking but no security for such undertaking will be required.

		

		            6.         Defense of Claim.

		

		                        (a)         Except as provided in paragraph 6(c) below, Corporation, jointly with any other indemnifying party, will be entitled to assume the defense of any Covered Matter as to which Director requests indemnification.

		

		                        (b)         Counsel selected by Corporation to defend any Covered Matter will be subject to Director’s advance written approval, which will not be unreasonably withheld.

			

			

			

			

		

		
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		                       (c)         Director may employ Director’s own counsel in a Covered Matter and be fully reimbursed therefore if (1) Corporation approves, in writing, the employment of such counsel or (2) either (A) Director has reasonably concluded that there may be a conflict of interest between Corporation and Director or between Director and other parties represented by counsel employed by Corporation to represent Director in such action or (B) Corporation has not employed counsel reasonably satisfactory to Director to assume the defense of such Covered Matter promptly after Director’s request.

		

		                        (d)         Neither Corporation nor Director will settle any Covered Matter without the other’s written consent, which will not be unreasonably withheld.

		

		                        (e)         If Director is required to testify (in court proceedings, depositions, informal interviews or otherwise), consult with counsel, furnish documents or take any other reasonable action in connection with a Covered Matter, Corporation will pay Director a fee for Director’s efforts at a rate equal to the amount payable to Director for attending Board and Board committee meetings, plus reimbursement for all reasonable expenses incurred by Director in connection therewith.

		

		            7.         Disputes; Enforcement.

		

		                        (a)         If there is a dispute relating to the validity or enforceability of this Agreement or a denial of indemnification, advance of Expenses or payment of any other amounts due under this Agreement or Corporation’s Articles of Incorporation or Bylaws, Corporation will provide such indemnification, advance of Expenses or other payment until a final, non-appealable judgment that Director is not entitled to such indemnification, advance of Expenses or other payment has been rendered by the court of last resort (or by a lower court if not timely appealed). Director will repay such amounts if such final, non-appealable judgment so requires.

		

		                         (b)         Corporation will reimburse all of Director’s reasonable expenses (including attorney’s fees) in pursuing an action to enforce Director’s rights under this Agreement unless a final, non-appealable judgment against Director has been rendered in such action by the court of last resort (or by a lower court if not timely appealed).  At Director’s request, such expenses will be advanced by Corporation to Director as incurred before final resolution of such action by the court of last resort; such expenses will be repaid by Director if a final, non-appealable judgment in Corporations favor is rendered in such action by the court of last resort (or by a lower court if not timely appealed).

		

		            8.         D&O Insurance.

		                        (a)         Corporation will not be required to purchase and maintain D&O Insurance if the Board of Directors of Corporation determines, after diligent inquiry, that (1) such insurance is not available; (2) the premiums for available insurance are disproportionate to the amount of coverage and to the premiums paid by other corporations similarly situated; or (3) the Corporation is not financially able to pay the premiums. The Board of Directors of Corporation will, at least twice annually, in good

			

			

			

			

		

		
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		faith review its decision not to maintain D&O Insurance and will purchase such insurance at any time that the conditions of this paragraph 8(a) cease to apply.

		                       (b)         The parties will cooperate to obtain advances of Expenses, indemnification payments and consents from D&O Insurance carriers in any Covered Matter to the full extent of applicable D&O Insurance.  The existence of D&O Insurance coverage will not diminish or limit Corporation’s obligation to make indemnification payments to Director.  Amounts paid directly to Director with respect to a Covered Matter by Corporation’s D&O Insurance carriers will be credited to the amounts payable by Corporation to Director under this Agreement.

		

		            9.         Limitations of Actions; Limitation of Liability.

		                        (a)         No action will be brought by or on behalf of Corporation against Director or Director’s heirs or personal representatives relating to Director’s service as a director, after the expiration of one year from the date Director ceases (for any reason) to serve as a Director of Corporation, and any claim or cause of action of Corporation will be extinguished and deemed released unless asserted by the filing of a legal action before the expiration of such period.

		

		            10.        Rights Not Exclusive.  The Indemnification provided to Director under this Agreement will be in addition to any indemnification provided to Director by law, agreement, Board resolution, provision of the Articles of Incorporation or Bylaws of Corporation or otherwise.

		

		            11.        Subrogation.  Upon payment of any Indemnified Amount under this Agreement, Corporation will be subrogated to the extent of such payment to all of Director’s rights of recovery therefore and Director will take all reasonable actions requested by Corporation (at no cost or penalty to Director) to secure Corporation’s rights under this paragraph 11 including executing documents.

		

		            12.        Continuation of Indemnity.  All of Corporation’s obligations under this Agreement will continue as long as Director is subject to any actual or possible Covered Matter, notwithstanding Director’s termination of service as a director.

		

		            13.        Amendments.  Neither Corporation’s Articles of Incorporation nor its Bylaws will be changed to increase liability of directors or to limit Director’s indemnification.  Any repeal or modification of Corporation’s Articles of Incorporation or Bylaws or any repeal or modification of the relevant provisions of any applicable law will not in any way diminish any of Director’s rights or Corporation’s obligations under this Agreement.  This Agreement cannot be amended except with the written consent of Corporation or Director.

		

		            14.        Governing Law.  This Agreement will be governed by California law.

			

			

			

			

		

		
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		            15.         Successors.

		                          (a)         This Agreement will be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives and assigns.

		

		                          (b)         Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation to assume all of Corporation’s obligations under this Agreement. Such assumption will not release Corporation from its obligations under this Agreement.

		

		            16.         Severability.  The provisions of this Agreement will be deemed severable, and if any part of any provision is held illegal, void or invalid under applicable law, such provision may be changed to the extent reasonably necessary to make the provision, as so changed, legal, valid and binding. If any provision of this Agreement is held illegal, void or invalid in its entirety, the remaining provisions of this Agreement will not in any way be affected or impaired but will remain binding in accordance with their terms.

		

		            17.         Notices.  All notices given under this Agreement will be in writing and delivered either personally, by recognized overnight courier or by telecopy (if promptly followed by a copy delivered personally, or by overnight courier), as follows:

		

		                        If to Director:                                                                                       

			                                                                                                                                    

			                                                                                                                                    

			

		

		                        If to Corporation:          Material Technologies, Inc.

			                                                            11661 San Vicente Boulevard, Suite 707

			                                                             Los Angeles, CA  90049

			                                                             Attention:   Chief Executive Officer

		

		or to such other address as either party furnishes to the other in writing.

		

		            18.         Counterparts.  This Agreement may be signed in counterpart.

		

		            19.         Subsidiaries.  As used in this Agreement, the term “Subsidiary” means any corporation in which Corporation owns a majority interest.

			

			

		

		[Signature page to follow]

			

			

			

			

			

			

			

		

		
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		            IN WITNESS WHEREOF, the parties have executed this Agreement on the date written above.

		

		Material Technologies, Inc.,

			a Delaware Corporation

			

			

		

		______________________________                        ______________________________

			By:       Robert M. Bernstein                                         ________________, an individual

			Its:        Chief Executive Officer

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		

		
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