UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 3, 2012
OMNITEK ENGINEERING CORP
.
(Exact name of Registrant as specified in its charter)
California
(State or Other Jurisdiction of Incorporation)
000-53955
33-0984450
(Commission File Number) (IRS Employer Identification No.)
1945 S. Rancho Santa Fe Road, San Marcos, California 92078
(Address of principal executive offices, Zip Code)
(760) 591-0089
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
As set forth in Item 5.02 below, on August 3, 2012, in conjunction with the appointment of Mr. Maier and Mr. Chachas as Directors of the Company, Mr. Maier, Mr. Chachas and the Company entered into a Director Agreement, an Indemnification Agreement, and Confidentiality Agreement, in the forms attached hereto as Exhibits 10.01, 10.02 and 10.03, all of which are incorporated herein by reference.
Item 3.02 Unregistered Sale of Equity Securities.
As set forth in Item 5.02 below, in conjunction with the appointment of Mr. Maier and Mr. Chachas as Directors of the Company, the Company granted to Mr. Maier and Mr. Chachas, each, a non-qualified stock option grant to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable immediately.
Additionally, on August 3, 2012, the Company, granted a non-qualified stock option grant to the Company’s engineering group manager, to purchase forty thousand (40,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable with regard to 25% of the total shares subject to the Option, at the end of each year following the Date of Grant, so that all shares subject to the Options will be fully vested on the fourth anniversary of the Date of Grant.
No underwriters were used. The securities were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933. The individuals receiving the options were intimately acquainted with the Company’s business plan and proposed activities at the time of issuance, and possessed information on the Company necessary to make an informed investment decision.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 3, 2012, the Board of Directors of the Company appointed Gary S. Maier and George G. Chachas to serve as outside Directors of the Company. The biographies of Mr. Maier and Mr. Chachas are set forth below:
Gary S. Maier
- is an investor relations veteran with more than 25 years of industry experience. Prior to establishing Maier & Company, Inc. in 2003, he was a principal of another Los Angeles-based investor relations firm. He has counseled diverse clients ranging in size from multi-billion dollar organizations to emerging growth public and private companies across the country. His career includes positions with an international public relations firm and a proxy solicitation firm offering investor relations services, both based in New York, as well as a Chicago-based financial relations agency. He is a long-time member of the National Investor Relations Institute. His experience also includes local and national political campaigns – including serving as the Illinois deputy press secretary for Walter Mondale’s 1984 presidential campaign. Maier served as a board member for 18 years, including a term as president, of Veterans Park Conservancy, a non-profit community public/private partnership dedicated to the enhancement and preservation of four hundred acres of federal land to honor our nation’s veterans. He served for several years on the board of Southern California’s Colony Theater Company. Maier holds bachelor and master of philosophy degrees from Ohio University and completed course work toward a Ph.D. in philosophy at DePaul University. He served on the adjunct faculties of DePaul and Loyola
University in Chicago and is a graduate of New York University’s Graduate School of Business Administration’s Careers in Business program.
George G. Chachas
- is the principal of Chachas Law Group with experience in the area of corporate law, securities, and mergers and acquisitions. Prior to establishing Chachas Law Group in 2006, Mr. Chachas was a partner of Wenthur & Chachas, LLP from 1993 through 2005. Mr. Chachas received a J.D. from California Western School of Law in 1987, and also holds a B.A. (Economics) from San Diego State University in 1985. Mr. Chachas was admitted to the California Bar in 1987, the District of Columbia Bar in 1989 and the State Bar of Colorado in 1994.
As Directors, Mr. Maier and Mr. Chachas shall each receive a non-qualified stock option grant to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable immediately. In addition, the Company will pay to a fee of $500 for each Board and Committee meeting in which Director participates, either in person or by teleconference, and $1,500 for an in-person board meeting requiring attendance for longer than four hours, and will reimburse Director for all documented, reasonable, out-of-pocket expenses incurred in connection with the performance of Director’s duties under this Agreement.
In conjunction with their appointment as Directors, Mr. Maier, Mr. Chachas and the Company entered into a Director Agreement, an Indemnification Agreement, and Confidentiality Agreement, in the forms attached hereto as Exhibits 10.01, 10.02 and 10.03, all of which are incorporated herein by reference.
Family Relationships
There are no family relationships between Mr. Maier or Mr. Chachas and any of the Company's directors or officers.
Related Party Transactions
There are no related party transactions reportable under Item 5.02 of Form 8-K and Item 404(a) of Regulation S-K.
On August 3, 2012, the Company in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, and principal accounting officer that is reasonably designed to deter wrongdoing and to promote:
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Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationship;
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Full, fair, accurate, timely and understandable disclosure in SEC reports and in other public communications;
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Compliance with applicable governmental laws, rules and regulations;
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Prompt internal reporting of violations of the code of ethics to appropriate person or persons identified in the code of ethics; and
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Accountability for adherence to the code of ethics.
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The description of the Code of Ethics contained in this report is qualified in its entirety by reference to the full text of the Code of Ethics filed as Exhibit 14.01 to this Current Report on Form 8-K. The Code of Ethics shall be available on the Company's website at www.omnitekcorp.com
Item 9.01 Financial Statements and Exhibits
Exhibit
10.01 Form of Director Agreement
10.02 Form of Indemnification Agreement
10.03 Form of Confidentiality Agreement
14.01 Code of Ethics
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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OMNITEK ENGINEERING CORP.
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Date: August 7, 2012
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/s/ Werner Funk
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______________________________________
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By: Werner Funk
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Its: President and CEO
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DIRECTOR AGREEMENT
This Director’s Agreement (the “Agreement”) effective as of [__________________] (the “Effective Date”) is by and between Omnitek Engineering, Inc., a California Corporation (the “Company”), and [_________________________] (the “Director”) with reference to the following facts:
RECITALS
A. Whereas, the Company desires to retain the services of the Director in the capacity as an independent member of the Company’s Board of Directors, within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and any exchange on which the Company’s shares are traded.
B. Whereas, the Company believes that the Director possesses the necessary qualifications and abilities to serve as an independent member of its Board of Directors and the Director is willing to accept such appointment and to serve the Company in accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE
, in consideration of the foregoing, and of the mutual covenants and obligations contained herein and intending to be bound hereby, the parties hereto agree as follows:
ARTICLE 1.
DIRECTORSHIP
1.1
Appointment
. The Company appoints Director as a member of the Company’s Board of Directors (the “
Board
”) and Director accepts such appointment upon the terms and conditions as set forth herein.
1.2
Duties
. The Director shall serve as a director on the Board and, in such capacity, shall provide those services required of a director as are customarily associated with and are incident to the position of director, performed in accordance the Company’s Articles of Incorporation and Bylaws, as may be amended from time to time, and under the corporate law of the jurisdiction of incorporation of the Company, the federal securities laws and other state and federal laws and regulations, as applicable. Without limiting the generality of the foregoing, the Director shall attend meetings of the Board on an as needed basis. The Director shall faithfully, competently and diligently perform to the best of his ability all of the duties required of him as a director of the Company.
1.3
Term and Termination
. The term of this Agreement shall commence as of the Effective Date or the date of the Director’s appointment by the Board, whichever is later, and shall continue until terminated by:
1.3.1 the Director’s successor being appointed or elected and qualified;
1.3.2 the Director’s failure to win election or re-election to the Board;
1.3.3 the death of the Director;
1.3.4 the termination of the Director from his membership on the Board by the mutual agreement of the Company and the Director;
1.3.5 the removal of the Director from the Board by the majority stockholders of the Company;
1.3.6 the resignation by the Director from the Board upon written notice to the Company;
1.3.7 other removal in the manner set forth in the Company’s Articles of Incorporation or Bylaws, as applicable; and.
1.3.8 Upon the Disability of Director for a continuous period of 180 days, the Company may terminate the Director. “Disability” as used herein, shall mean the physical or mental incapacity of a Director which the Company determines prevents him from performing any substantial part of his then applicable duties for the Company with or without reasonable accommodation (other than accommodation which would impose undue hardship on the Company).
1.4
Background Check
. By executing this Agreement, the Director hereby consents to and agrees to execute any documents or to take any other actions reasonably necessary or desirable to facilitate the Company’s performance of a full background check.
1.5
Status
. Director hereby acknowledges and agrees that he shall not be considered an employee of the Company for any purpose. The Director acknowledges that he will not be eligible to participate in any retirement, welfare, or other benefit plan maintained by the Company for its employees. The Director agrees that he will not make any claim for such benefits.
1.6
Other Restrictions
. Nothing in this Agreement shall be construed to limit the Director’s freedom to engage in other businesses.
1.7
Maintenance of Directorship
. Neither Company nor any other person, shall be required to cause the continuation, election, or re-appointment of the Director as a member of the Board.
ARTICLE 2.
COMPENSATION AND EXPENSES
2.1
Stock Options
.
2.1.1 The Director shall receive, upon execution of this Agreement, a non-qualified stock option grant (the “Option”) to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price per share equal to eighty-five percent (85%) of the closing price of the Company’s common stock on the Effective Date of this Agreement. Such Option shall be exercisable for a period of five years. The Option shall vest and be exercisable immediately.
2.1.2 Unless the Director’s term is otherwise terminated as set forth in Section 1.3, the Director shall receive annually, an additional Option to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price per share equal to eighty-five percent (85%) of the closing price of the Company’s common stock, on the anniversary date of the Director’s appointment to the Board and shall continue in effect until such time as the Director is no longer on the Board.
2.2
Meeting Fees
. The Company will pay to Director a fee of $500 for each Board and Committee meeting in which Director participates, either in person or by teleconference, and $1,500 for an in-person board meeting requiring attendance for longer than four hours.
2.3
Expenses
. The Company will reimburse Director for all documented, reasonable, out-of-pocket expenses incurred in connection with the performance of Director’s duties under this Agreement.
2.4
Future Compensation and Benefits
. The Board, with the compensation committee, if any, reserves the right to determine the compensation for services provided under this Agreement. The Board may from time to time authorize additional compensation and benefits for Director, including stock options and restricted stock.
ARTICLE 3
DIRECTOR COVENANTS
3.1
Duty to Company
. The Director represents and warrants that the Director will devote his best efforts to the needs of the Company, and shall not allow his other business activities to materially interfere with his duties to the Company
3.2
No Conflict Of Interest
. The Director represents and warrants that the Director will not advise or sit on the board of any other public or private company or participate on any matter or in any meeting that creates a conflict of interest for Director. Apart from Director’s existing obligations and employment, Director agrees that until the expiration of this Agreement, Director will not engage in any other services that would create an actual or apparent conflict of interest between those services and the Company’s interests. The Director represents to the Company that his execution and performance of this Agreement shall not be in violation of any agreement or obligation (whether or not written) that he may have with or to any person or entity, including without limitation, any prior or current employer. The Director hereby acknowledges and agrees that this Agreement (and any other agreement or obligation referred to herein) shall be an obligation solely of the Company, and the Director shall have no recourse whatsoever against any stockholder of the Company or any of their respective affiliates with regard to this Agreement.
3.3
Business Opportunities
. Director may learn of business opportunities that are or may become available to the Company. Director represents and warrants that the Director will not, without the consent of a majority of the Company’s directors, on his own behalf or on behalf of any other party, participate in, engage in, or usurp business opportunities of which he becomes aware as a result of or in conjunction with his interactions with the Company or its officers, directors or employees. If Director, or a party with which he is affiliated, has a plan to participate in or engage in a business opportunity that is under consideration by the Company, Director agrees to disclose to the Company promptly the existence of the conflict or potential conflict of interest.
3.4
Confidentiality
. The Director acknowledges that he will obtain valuable, confidential or proprietary information concerning the Company as a result of being a Director and that the disclosure of such information could cause the Company irreparable injury. To protect the Company from such injury, the Director agrees to execute the Confidentiality and Nondisclosure Agreement attached hereto as
Exhibit A
(the “Confidentiality Agreement”), which shall be expressly incorporated by reference into this Agreement; provided however that the Confidentiality Agreement shall survive termination of this Agreement.
3.5
Non-Solicitation
. During the Directorship Term and for a period of two (2) years thereafter, the Director shall not interfere with the Company’s relationship with, or endeavor to entice away from the Company, any person who, on the date of the termination of the Directorship Term and/or at any time during the one year period prior to the termination of the Directorship Term, was an employee or customer of the Company or otherwise had a material business relationship with the Company.
3.6
Other Representations
. Director agrees to file all necessary forms with the SEC and/or as required by the market upon which the Company’s stock is then traded, as required by directors of public reporting companies, (ii) Director agrees to comply with, and be bound by, the provisions of the Company’s Code of Ethics, if any, and (iii) Director represents and warrants that he has no events requiring disclosure under SEC Regulation S-K Item 401(f).
ARTICLE 4.
INDEMNIFICATION AND INSURANCE
4.1
Indemnity of Director
. The Company hereby agrees to hold harmless, defend and indemnify Director to the fullest extent permitted by applicable law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:
4.1.1 The Corporation will pay on behalf of Director and his executors, administrators or assigns, any amount which her is or becomes legally obligated to pay because of any claim or claims made against Director because of any act or omission or neglect or breach of duty, including any actual or alleged error or misstatement or misleading statement, which Director commits or suffers while acting in his capacity as Director of the Company and solely because of his being Director of the Company. The payments which the Company will be obligate to make hereunder shall include, inter alia, damages, judgments, settlements and costs, costs of defense of legal actions, claims or proceedings and appeals therefrom, and costs of attachment or similar bonds.
4.1.2 Notwithstanding any other provision of this Agreement, to the extent that Director is or was, by reason of his corporate status or otherwise, a party to and is or was successful, on the merits or otherwise, in any Proceeding, as defined below, he shall be indemnified to the maximum extent permitted by applicable law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Director is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Director against all Expenses actually and reasonably incurred by Director or on Director’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter
4.1.3 No costs, charges or expense for which indemnity shall be sought hereunder shall be incurred without the Company’s consent, which consent shall not be unreasonably withheld.
4.1.4 For purposes of this Agreement, “Proceeding” includes any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether brought by or in the right of any party or otherwise and whether civil, criminal, administrative, or investigative, in which a Party was, is, or will be involved as a party or otherwise.
4.2
Insurance
.
4.2.1 This Agreement is effective only when the directors’ and officers’ insurance policy previously shown to the Director covering the Director is in place and an Indemnification Agreement in the form attached hereto as
Exhibit B
, is signed by the Company. When and if the Company anticipates the successful qualification of its common stock for trading on a national market exchange for securities trading, the Company shall amend its existing directors’ and officers’ insurance policy to increase limits available to independent directors by approximately $5,000,000 or a lesser or greater amount which is determined and approved by the Board to be appropriate, with such insurance effective on date of such listing or as soon thereafter as possible, provided that such increase is in the best interests of the Company and its shareholders.
4.2.2 The Company has provided the Director with a summary of the limits and terms of its current directors’ and officers’ insurance and the provisions of its corporate by-laws and governing documents dealing with indemnification of directors. To the fullest extent permitted by applicable law, the Company agrees that it will not voluntarily change the terms of such directors’ and officers’ insurance or the provisions of its corporate by-laws and governing documents dealing with indemnification of directors to the detriment of the Director at anytime while he is entitled to benefit of such.
ARTICLE 5.
MISCELLANEOUS
5.1
Binding Agreement
. This Agreement shall be binding on and inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors, executors and administrators.
5.2
Disclosure of Payments
. Except as expressly required by any law, neither party shall publicly disclose any payments under this Agreement unless prior approval of the other party is obtained.
5.3
Amendments; Entire Agreement
. This Agreement may not be modified, amended, altered or supplemented, except upon written agreement executed by the Company and the Director. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, oral or written, with respect to such transactions.
5.4
Further Assurances.
Each of the Parties to this Agreement agrees to perform such further acts and to execute and deliver any and all further documents that may reasonably be necessary or desirable to effectuate the purpose of this Agreement.
5.5
Severability
. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision hereof. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Director indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
5.6
Notices
. All notices, requests, demands and other communications under this Agreement, shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given or within five (5) business days if mailed to
the party to whom notice is to be given, by first-class mail, registered, or certified, postage prepaid and properly addressed as follows:
If to Omnitek, addressed to
:
Omnitek Engineering Corp.
Attn: Werner Funk, President
1945 S. Rancho Santa Fe Road
San Marcos, CA 92078
If to Director, addressed to
:
[_______________________]
________________________
________________________
5.7
Governing Law; Venue.
This Agreement is being executed and delivered, and is intended to be performed, in the State of California, and to the extent permitted by law, the execution, validity, construction, and performance of this Agreement shall be construed and enforced in accordance with the laws of the State of California without giving effect to conflict of law principles. This Agreement shall be deemed made and entered into in San Diego County, State of California and venue for any Proceeding as defined below, in connection with this Agreement shall be in San Diego County, California.
5.8
Waiver of Jury Trial
. The Parties hereto hereby voluntarily and irrevocably waive trial by jury in any Proceeding brought in connection with this Agreement, any of the related agreements and documents, or any of the transactions contemplated hereby or thereby. For purposes of this Agreement, “Proceeding” includes any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether brought by or in the right of any party or otherwise and whether civil, criminal, administrative, or investigative, in which a Party was, is, or will be involved as a party or otherwise.
5.9
Attorneys' Fees
. If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, at trial and on appeal, reasonable attorneys' fees, costs and disbursements in addition to any other relief that may be granted.
5.10
Counterparts
; Facsimile Signatures
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Facsimile signatures shall be sufficient for execution of this Agreement.
5.11
Independent Advice of Counsel.
The Parties hereto, and each of them, represent and declare that in executing this Agreement they relied solely upon their own judgment, belief, knowledge and the advice and recommendations of their own independently selected counsel, concerning the nature, extent, and duration of their rights and claims, and that they have not been influenced to any extent whatsoever in executing the Agreement by any representations or statements covering any matters made by any other party or that party’s representatives hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
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OMNITEK ENGINEERING CORP,
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_______________________________________________
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By: Werner Funk
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Its: President and CEO
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DIRECTOR
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_______________________________________________
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[Name and Signature of Director]
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OMNITEK ENGINEERING CORP.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“Agreement”) is effective as of [_______________] (the “Effective Date”) by and between Omnitek Engineering Corp., a California corporation (the “Company” or “Omnitek”), and [_________________] (“Indemnitee”). For purposes of this Agreement, the “Company” shall be deemed to include Omnitek and its subsidiaries, as appropriate.
RECITALS
A. Whereas, in order to induce Indemnitee to provide, or continue to provide, services to the Company, the Company wishes to provide for the indemnification of, and advancement of expenses to, Indemnitee to the maximum extent permitted by law;
B. Whereas, Indemnitee does not regard the current protection available as adequate under the present circumstances, and the Indemnitee and other directors, officers, employees, agents and fiduciaries of the Company may not be willing to continue to serve in such capacities without additional protection;
C. Whereas, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee to the fullest extent permitted by applicable law so that Indemnitee will serve or continue to serve the Company free from undue concern that he or she will not be so indemnified.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and Indemnitee’s agreement to provide, or continue to provide, services to the Company, the Company and Indemnitee hereby agree as set forth below.
1.
Certain Definitions
.
(a) “
Claim
” shall mean any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, whether formal or informal, investigative or other.
(b) References to the “
Company
” shall include, in addition to Omnitek, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which Omnitek (or any of its wholly owned subsidiaries) is a party which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
(c) “
Expenses
” shall mean any and all expenses (including attorneys’ fees and all other costs, expenses and obligations) incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or to participate in, any action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation, whether formal or informal.
(d) “
Expense Advance
” shall mean an advance payment of Expenses to Indemnitee pursuant to Section 3(a).
(e) “
Indemnifiable Event
” shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity.
(f) “
Independent Legal Counsel
” shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 3(e) hereof, 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 Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).
(g) “
Non-Party Directors
” shall mean those members of the Board consisting of directors who are not parties to the Claim.
(h) “
Other Liabilities
” shall mean judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of any Claim regarding any Indemnifiable Event and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement.
(i) References to “
other enterprises
” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.
(j) “
Reviewing Party
” shall mean an election made from among the following: (i) those members of the Board who are Non-Party Directors even though less than a quorum; (ii) a committee of Non-Party Directors designated by a majority of the Non-Party Directors, even though less than a quorum; or (iii) Independent Legal Counsel selected by the Indemnitee and approved by the Company (which approval shall not be unreasonably withheld).
2.
Indemnification.
(a)
Indemnification of Expenses and Other Liabilities
. The Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or other participant
in, or is threatened to be made a party to or witness or other participant in, any Claim by reason of (or arising in part out of) any Indemnifiable Event against Expenses and Other Liabilities, including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Indemnitee hereby agrees to repay to the Company all amounts advanced to Indemnitee hereunder if it is ultimately determined that Indemnitee is not entitled to indemnification hereunder. Other than in respect of Expense Advances paid in accordance with Section 3(a) hereof, such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than five (5) business days after written demand by Indemnitee therefor is presented to the Company.
(b)
Determination of Right to Indemnification
. Unless otherwise provided in Section 11 hereof, the Company shall indemnify Indemnitee pursuant to Section 2(a) if Indemnitee has not failed to meet the applicable standard of conduct for indemnification. With respect to all matters arising concerning whether or not the Indemnitee has met the applicable standard of conduct, the Indemnitee shall be entitled to select the Reviewing Party. The Reviewing Party shall determine whether and to what extent Indemnitee would be permitted to be indemnified under applicable law and the Company and Indemnitee agree to abide by such determination, which, if made by Independent Legal Counsel shall be made in a written opinion.
(c)
Mandatory Payment of Expenses
. Notwithstanding any other provision of this Agreement other than Section 11 hereof, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any Claim regarding any Indemnifiable Event, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in connection therewith.
3.
Expenses; Indemnification Procedure
.
(a)
Advancement of Expenses
. The Company shall advance all Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid by the Company to Indemnitee as soon as practicable but in any event no later than 30 days after written demand by Indemnitee therefor to the Company. Indemnitee hereby agrees to repay to the Company all amounts advanced to Indemnitee hereunder if it is ultimately determined that Indemnitee is not entitled to indemnification hereunder. The Company’s obligation to advance Expenses shall terminate with respect to any Claim as to which the Indemnitee shall have entered a plea of guilty or nolo contendere, or an equivalent plea acknowledging guilt.
(b)
Notice/Cooperation by Indemnitee
. Indemnitee shall, as a condition precedent to Indemnitee’s right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement; provided however that the failure to so provide notice to the Company shall not relieve the Company from any liability that it may have to Indemnitee hereunder unless the Company’s ability to participate in the defense of such claim was materially and adversely affected by such failure. Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power, to the extent that doing so is consistent with the exercise of the Indemnitee’s rights under the federal and state Constitutions. Company shall provide Indemnitee with such information and cooperation as Indemnitee may reasonably require, to the extent that doing so is consistent with the Company’s obligation to cooperate with regulatory or law enforcement agencies.
(c)
No Presumptions; Burden of Proof
. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.
(d)
Notice to Insurers
. If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 3(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies. The Company shall keep Indemnitee reasonably informed as to the status of all relevant insurance matters.
(e)
Selection of Counsel
. In the event the Company shall be obligated hereunder to pay the Expenses of any Claim the Company, if appropriate, shall be entitled to assume the defense of such Claim with counsel approved by Indemnitee (not to be unreasonably withheld) upon the delivery to Indemnitee of written notice of the Company’s election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall have the right to employ Indemnitee’s separate counsel in any such Claim at Indemnitee’s own 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 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 considered an Expense.
4.
Additional Indemnification Rights; Nonexclusivity; Company Obligations Primary.
(a)
Scope
. The Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Articles of Incorporation, the Company’s Bylaws (as now or hereafter in effect) or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a California corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a California corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Section 11(a) hereof.
(b)
Nonexclusivity
. The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation, its Bylaws (as now hereafter in effect), any other agreement, any vote of shareholders or disinterested directors, the General Corporation Law of the State of California, or otherwise. The indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.
(c)
Company Obligations Primary
. The Company agrees with Indemnitee that the Company is the indemnitor of first resort of Indemnitee with respect to matters for which indemnification is provided under this Agreement and that the Company will be obligated to make all payments due to or for the benefit of Indemnitee under this Agreement without regard to any rights that Indemnitee may have against the Other Indemnitor. The Company hereby waives any equitable rights to contribution or indemnification from the Other Indemnitor in respect of any amounts paid to Indemnitee hereunder. The Company further agrees that no payment of Expenses or Other Liabilities by the Other Indemnitor to or for the benefit of Indemnitee shall affect the obligations of the Company hereunder, and that the Company shall be obligated to repay the Other Indemnitor for all amounts so paid or reimbursed to the extent that the Company has an obligation to indemnify Indemnitee for such Expenses or Other Liabilities hereunder.
5.
Contribution.
(a) Whether or not the indemnification provided in Section 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall, unless indemnification would not be available as a result of Section 11 hereof, pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.
(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever other than the reasons set forth in Section 11 hereof, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses and Other Liabilities, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such proceeding; and/or (ii) the relative fault of the Company (and its directors (other than Indemnitee) officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
6.
Settlement
.
The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof.
7.
No Duplication of Payments
.
The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company’s Certificate of Incorporation, Bylaw (as now or hereafter in effect) or otherwise) of the amounts otherwise indemnifiable hereunder.
8.
Partial Indemnification
.
If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses or Other Liabilities incurred in connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses and Other Liabilities to which Indemnitee is entitled.
9.
No Imputation
.
The knowledge or actions, or failure to act, of any director, officer, agent or employee of the Company or the Company itself shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
10.
Liability Insurance
.
For the duration of Indemnitee’s service as a director or officer or other agent of the Company, and thereafter for so long as Indemnitee shall be subject to any pending or possible Claim by reason of any Indemnifiable Event, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of liability insurance providing coverage for directors and officers of the Company that are at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. To the extent the Company maintains liability insurance applicable to directors, officers, employees, agents or fiduciaries, Indemnitee shall be covered by such policies in such a manner as to provide Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company’s directors, if Indemnitee is a
director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of the Company’s key employees, agents or fiduciaries, if Indemnitee is not an officer or director but is a key employee, agent or fiduciary.
11.
Exceptions
.
Notwithstanding any other provision of this Agreement, the Company shall not be obligated pursuant to the terms of this Agreement:
(a)
Excluded Action or Omissions
. To indemnify Indemnitee for acts, omissions or transactions if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is prohibited by applicable law.
(b)
Claims Initiated by Indemnitee
. To indemnify Expenses or Other Liabilities or advance Expenses to Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee and not by way of defense, 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 Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such Claim, or (iii) as otherwise required under Section 145 of the California General Corporation Law, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance Expense payment or insurance recovery, as the case may be.
(c)
Lack of Good Faith
. To indemnify Indemnitee for any Expenses or Other Liabilities incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous.
(d)
Claims Under Section 16(b)
. To indemnify Indemnitee for the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute; provided that the Company shall advance Expenses in connection with Indemnitee’s defense of a claim under Section 16(b), which advances shall be repaid to the Company if it is ultimately determined that Indemnitee is not entitled to indemnification of such Expenses.
12.
Period of Limitations.
No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
13.
Binding Effect; Successors and Assigns
.
This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director, officer, employee, agent or fiduciary (as applicable) of the Company or of any other enterprise at the Company’s request.
14.
Notice
.
All notices, requests, demands and other communications under this Agreement, shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given or within five (5) business days if mailed to the party to whom notice is to be given, by first-class mail, registered, or certified, postage prepaid and properly addressed as follows:
If to Omnitek, addressed to
:
Omnitek Engineering Corp.
Attn: Werner Funk, President
1945 S. Rancho Santa Fe Road
San Marcos, CA 92078
If to Indemnitee, addressed to
:
[_______________________]
________________________
________________________
15.
Governing Law; Venue.
This Agreement is being executed and delivered, and is intended to be performed, in the State of California, and to the extent permitted by law, the execution, validity, construction, and performance of this Agreement shall be construed and enforced in accordance with the laws of the State of California without giving effect to conflict of law principles. This Agreement shall be deemed made and entered into in San Diego County, State of California and venue for any Proceeding as defined below, in connection with this Agreement shall be in San Diego County, California.
16.
Waiver of Jury Trial
.
The Parties hereto hereby voluntarily and irrevocably waive trial by jury in any Proceeding brought in connection with this Agreement, any of the related agreements and documents, or any of the transactions contemplated hereby or thereby. For purposes of this Agreement, “Proceeding” includes any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether brought by or in the right of any party or otherwise and whether civil, criminal, administrative, or investigative, in which a Party was, is, or will be involved as a party or otherwise.
17.
Attorneys’ Fees
.
In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless as a part of such action a court of competent 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. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee in defense of such action (including costs and Expenses incurred with respect to Indemnitee’s counterclaims and cross-claims made in such action), and shall be entitled to the advancement of Expenses with respect to such action.
18.
Severability
.
The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitations, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
19.
Subrogation
.
In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
20.
Amendment and Termination
.
Due to the uncertain application of any statutes of limitations that may govern any Claim, this Agreement shall be of indefinite duration. No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.
21.
Integration and Entire Agreement
.
This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto. If the Company and Indemnitee have previously entered into an indemnification agreement providing for indemnification of Indemnitee by the Company, the parties’ entry into this Indemnification Agreement shall be deemed to amend and restate such Indemnification Agreement to read in its entirety as, and to be superseded by, this Indemnification Agreement.
22.
No Construction as Employment Agreement
.
Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries or affiliated entities.
23.
Counterparts
; Facsimile Signatures
.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Facsimile signatures shall be sufficient for execution of this Agreement.
24.
Independent Advice of Counsel.
The Parties hereto, and each of them, represent and declare that in executing this Agreement they relied solely upon their own judgment, belief, knowledge and the advice and recommendations of their own independently selected counsel, concerning the nature, extent, and duration of their rights and claims, and that they have not been influenced to any extent whatsoever in executing the Agreement by any representations or statements covering any matters made by any other party or that party’s representatives hereto.
*** Signature Page Follows***
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the date first above written.
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OMNITEK ENGINEERING CORP
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_______________________________________________________________________
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By: Werner Funk
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Its: President and CEO
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AGREED AND ACCEPTED
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INDEMNITEE
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_______________________________________________________________________
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Name and Signature of Indemnitee]
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CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT
This Confidentiality and Nondisclosure Agreement ("Agreement") effective as of [___________] (the “Effective Date”) is by and between Omnitek Engineering, Inc., a California Corporation (the “Company”), and [________________] (the “Director”) with reference to the following facts:
Whereas, during the course of their discussions and dealings, and Director’s serving as a member of the Board of Directors of the Company, the Director may be exposed to or come into possession of information that is confidential and proprietary to the Company (as further defined below, "Protected Information").
NOW, THEREFORE
, in consideration of the foregoing, and of the mutual covenants and obligations contained herein and intending to be bound hereby, the parties hereto agree as follows:
NOW, THEREFORE
, in consideration of Director’s agreement to serve as a director of the Company pursuant to that certain Director Agreement executed concurrently herewith, Director hereto agrees as follows:
1.
Protected Information Defined; Exclusions
.
(a) "Protected Information" shall mean: (i) all proprietary information, in whatever form and format, of the Company and its affiliated and related companies; (ii) all information marked or designated by the Company as confidential; (iii) all information, whether in written or other tangible form and whether designated as confidential or unmarked, and which is treated by the Company as confidential; and (iv) all information provided to the Company by third parties which the Company is obligated to keep confidential. Without limiting the foregoing, Protected Information includes trade secrets as defined under the Uniform Trade Secrets Act, all information relating to Company’s suppliers and customers, inventions, discoveries, trade secrets, ideas, drawings, specifications, techniques, models, data, programs, documentation, software, processes, know-how, customer lists, marketing plans and financial information.
(b) Notwithstanding Section 1(a), Protected Information shall exclude any information that (i) is or becomes part of the public domain through no act or failure to act on the part of Director; (ii) is furnished to the Director by a third party without restriction on disclosure, where such third party obtained such information and the right to disclose it to the receiving party without violation of any rights which the Company may have in such information; or (iii) has been independently developed by the Director , before or after the execution of this Agreement, without violation of any rights which the Company may have in such information.
2.
Director's Obligations
.
Following the receipt of Protected Information obtained by Director from the Company or another source, the Director shall (a) not disclose Protected Information, directly or indirectly, to any third person without the express written consent of the Company, (b) hold and maintain Protected Information in trust and confidence for the benefit of the Company, (c) not copy, transmit, reproduce, summarize, quote or make any commercial or other use of any Protected Information, except for the benefit of the Company, (d) disclose Protected Information to its employees only on a need to know basis, and (e) inform all persons having access to Protected Information of the confidential nature thereof and of the Director's obligations hereunder, and shall take reasonable security precautions and such other actions as may be necessary to insure that there is no use or disclosure of Protected Information in violation of this Agreement. All confidential and non-use obligations contained in this Section 2 shall expire only at such time as the relevant Protected Information ceases to be Protected Information through no fault of Director.
3.
Property of the Company; Director's Information
.
(a) All Protected Information shall remain the sole property of the Company. Upon request, Director will return to the Company all items and material in Director's possession or control which contain any Protected Information. Any copies of such items or material shall also be returned, and any copies in computer files or other form that cannot be returned shall be destroyed and certified as such by Director.
(b) Director agrees not to disclose to the Company any information, which is confidential to Director or to any third party. the Company shall be free to use and to disclose in any way it deems appropriate any information, documents, or work product provided to the Company by Director without accounting to Director.
4.
No Rights
.
Nothing contained in this Agreement shall be construed as granting or conferring any right, title, or interest, in any Protected Information, patent, trademark, or copyright or other proprietary right that is now or subsequently owned by the Company.
5.
Term and Termination
.
This Agreement shall become effective on the date of execution by the Company and Director and remain in effect for so long as any of the Protected Information remains confidential or proprietary to the Company.
6.
Injunctive Relief
.
Each party acknowledges and agrees that the release of Protected Information in violation of this Agreement may cause irreparable harm for which the Company may not be fully or adequately compensated by recovery of monetary damages. Accordingly, in the event of any such violation or threatened violation the Company shall be entitled to injunctive relief from a court of competent jurisdiction in addition to any other remedy available at law or in equity. The Director further agrees to waive any requirements for the securing or posting of any bond in connection with obtaining any such equitable relief. This provision is without prejudice to any other rights that the Company may have against the Director for any failure to perform its respective obligations under this Agreement.
7.
Subpoenas
.
Director agrees that if it is served with any subpoena or other compulsory judicial or administrative process calling for production or disclosure of Protected Information, it will immediately notify the Company in order that the Company may take such action as it deems necessary to protect its interest.
8.
Amendments; Entire Agreement
.
This Agreement may not be modified, amended, altered or supplemented, except upon written agreement executed by the Company and the Director. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, oral or written, with respect to such transactions.
9.
Further Assurances.
Each of the Parties to this Agreement agrees to perform such further acts and to execute and deliver any and all further documents that may reasonably be necessary or desirable to effectuate the purpose of this Agreement.
10.
Severability
.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision hereof. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
11.
Notices
. All notices, requests, demands and other communications under this Agreement, shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given or within five (5) business days if mailed to the party to whom notice is to be given, by first-class mail, registered, or certified, postage prepaid and properly addressed as follows:
If to Omnitek, addressed to
:
Omnitek Engineering Corp.
Attn: Werner Funk, President
1945 S. Rancho Santa Fe Road
San Marcos, CA 92078
If to Director, addressed to
:
[_______________________]
________________________
________________________
12.
Governing Law; Venue.
This Agreement is being executed and delivered, and is intended to be performed, in the State of California, and to the extent permitted by law, the execution, validity, construction, and performance of this Agreement shall be construed and enforced in accordance with the laws of the State of California without giving effect to conflict of law principles. This Agreement shall be deemed made and entered into in San Diego County, State of California and venue for any Proceeding as defined below, in connection with this Agreement shall be in San Diego County, California.
13.
Waiver of Jury Trial
.
The Parties hereto hereby voluntarily and irrevocably waive trial by jury in any Proceeding brought in connection with this Agreement, any of the related agreements and documents, or any of the transactions contemplated hereby or thereby. For purposes of this Agreement, “Proceeding” includes any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether brought by or in the right of any party or otherwise and whether civil, criminal, administrative, or investigative, in which a Party was, is, or will be involved as a party or otherwise.
14.
Attorneys' Fees
.
If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover, at trial and on appeal, reasonable attorneys' fees, costs and disbursements in addition to any other relief that may be granted.
15.
Counterparts
; Facsimile Signatures
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Facsimile signatures shall be sufficient for execution of this Agreement.
16.
Independent Advice of Counsel.
The Parties hereto, and each of them, represent and declare that in executing this Agreement they relied solely upon their own judgment, belief, knowledge and the advice and recommendations of their own independently selected counsel, concerning the nature, extent, and duration of their rights and claims, and that they have not been influenced to any extent whatsoever in executing the Agreement by any representations or statements covering any matters made by any other party or that party’s representatives hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
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OMNITEK ENGINEERING CORP,
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_______________________________________________
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By: Werner Funk
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Its: President and CEO
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DIRECTOR
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_______________________________________________
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[Name and Signature of Director]
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OMNITEK ENGINEERING CORP.
CODE OF ETHICS
August 3, 2012
Introduction
This Code of Ethics (this "
Code
") sets forth policies of Omnitek Engineering, a California corporation (the "
Company
") with respect to the way we conduct ourselves individually and operate our business. The provisions of the Code are designed to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. All employees, officers and directors of the Company must comply with the provisions of the Code. References to employees contained in the Code should be understood as referring to officers and non-employee directors as well.
It is the Company’s intention that the Code be our written code of ethics and that it comply with the standards set forth in Securities and Exchange Commission Regulation S-K Item 406.
In the course of performing our various roles in the Company, each of us will encounter ethical questions in different forms and under a variety of circumstances. Moments of ethical uncertainty may arise in our dealing with fellow employees, with customers, or with other parties such as government entities or members of our community. Our employees should never be content with simply obeying the letter of the law, but must also strive to comport themselves in an honest and ethical manner. The Code provides rules and procedures to help our employees, officers and directors recognize and respond to situations that present ethical issues.
The reputation of the Company is our greatest asset and its value relies on the character of its employees. In order to protect this asset, the Company will not tolerate unethical behavior. Those who violate the standards in the Code will be subject to disciplinary action. If you are concerned about taking an action that may violate the Code or are aware of a violation by another employee, an officer or a director, follow the guidelines set forth in Sections 6 and 7 of the Code.
1. Compliance with Laws, Rules and Regulations.
As a U.S. company with international sales, the Company is subject to laws and regulations both in the United States and abroad. Company policy requires that all employees, officers and directors of the Company, comply fully with both the spirit and the letter of all laws, rules and regulations. Whenever an applicable law, rule or regulation is unclear or seems to conflict with either another law or any provision of the Code, all employees, officers and directors are urged to seek clarification from their supervisor, the Ethics Officer, if one has been appointed, or the Company employee designated to handle such matters, whose contact information is set forth in Section 6 below. The Code is in addition to, and should be read in conjunction with, the Company’s existing policies, practice and procedures, including, but not limited to, the Company’s policies on securities trades, proprietary inventions, trade secrets and employee conduct/harassment.
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2. Conflicts of Interest.
Every employee has a primary business responsibility to the Company and must avoid conflicts of interest. A conflict of interest arises when an employee takes actions or enters into relationships that could possibly oppose the interests of the Company or could possibly interfere with the employee’s performance or independent judgment when carrying out his or her duties. The Company strictly prohibits its employees from taking any action or entering into any relationship that creates, or even appears to create, a conflict of interest without the prior approval of a supervisor. The Company’s principal executive officer, principal financial officer, principal accounting officer and controller must receive approval of the Board of Directors (the “
Board
”) or a Board committee prior to taking any action or entering into any relationship that creates, or even appears to create, a conflict of interest. For purposes of determining whether a conflict exists, the actions of an employee’s immediate family members are treated as those of the employee and are therefore subject to the same considerations.
In order to avoid such conflicts, an employee may not receive any payments, compensation, or gifts, other than gifts of nominal value and in compliance with applicable laws, from any entity that does business or seeks to do business with the Company. Furthermore, employees may not use Company property, information or influence or their position in the Company for personal gain. Employees must be sensitive to other potential conflicts of interest that may arise and use their best efforts to avoid the conflict.
If an employee has any questions regarding the Company’s policy on conflicts of interest or needs assistance in avoiding a potential conflict of interest, he or she is urged to seek the advice of a supervisor, the Ethics Officer.
3. Fair Dealing
Although the success of our Company depends on our ability to outperform our competitors, the Company is committed to achieving success by fair and ethical means. We seek to maintain a reputation for honesty and fair dealing among our competitors and the public alike. In light of this aim, the Company prohibits employees from engaging in any dishonest, unethical or illegal business practices. An exhaustive list of unethical practices cannot be provided. Instead, the Company relies on the judgment of each individual employee to avoid such practices. Furthermore, each employee should endeavor to deal fairly with the Company’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair business practice.
4. Books and Records, Accounting Controls and Disclosures
The Company requires that all its books and records be maintained accurately and with honesty. This requires that no fund, asset, liability, revenue or expense be concealed or improperly or incompletely recorded for any purpose. All entries must be supported by documentation adequate to permit the books and record to be verified by audit. Proper accounting requires not only careful compliance by the Company’s accountants, but also the cooperation of all employees who are involved in keeping financial records of any type.
The Company’s accounting controls and procedures are essential to ensuring the accurate reporting of the Company’s financial information. The Audit Committee of the Board has the responsibility of reviewing the Company’s policies and practice with respect to financial reporting. By conducting this review, the Audit Committee of the Board helps the Company identify deficiencies in its practices so that they can be promptly corrected. Auditors will have unrestricted access to all Company documents and records. All employees are required to cooperate fully with internal and external audits, especially as it related to audits of our systems of internal controls,
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financial statements or accounting books and records. In no case may an employee make a false or misleading statement to any internal or external auditor, withhold records, or otherwise interfere with an audit. No employees should coerce, manipulate, mislead, or unduly influence any auditor. An employee who has knowledge of any unreported or improperly reported financial activity must report such information to a supervisor, the Ethics Officer or to the Board of Directors.
The Company recognizes that the investment community derives information regarding the Company’s financial condition primarily from the Company’s filings with the Securities and Exchange Commission. To promote the transparency of its financial operations, the Company has a strict policy requiring that all filings with the Securities and Exchange Commission be fair, accurate, timely and understandable.
5.
Waivers
The Company expects all employees, officers and directors to comply with the provisions of the Code. Any waiver of the Code for executive officers or directors may be made only by the Board and will be promptly disclosed to the public as may be required by law and the rules of such exchange where the Company’s shares are traded. When necessary, a waiver will be accompanied by appropriate controls designed to protect the Company.
6.
Compliance Resources
In some situations, an employee may be uncertain how to comply with the Code. This uncertainty may concern the ethical nature of the employee’s own acts or the employee’s duty to report the unethical acts of another. When determining the proper course of action, the employee should carefully analyze the situation and seek guidance from his or her supervisor, the Ethics Officer or other appropriate personnel in accordance with the following four steps:
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A.
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Gather all the facts
. Do not take any action that may violate the Code until you have gathered all the facts that are required to make a well-informed decision and, if necessary, you have consulted with your supervisor or the Ethics Officer.
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B.
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Action illegal or contrary to the Code
. If you believe that the Code has been violated by an employee, an officer or a director, you must promptly report the violation in accordance with the procedures set forth in Section 7.
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C.
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Discuss the problem with your supervisor
. It is your supervisor’s duty to assist employees in complying with the Code. Feel free to discuss the situation with your supervisor if you have any questions. You will suffer no retaliation for seeking such guidance.
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D.
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If necessary, seek additional resources
. The Ethics Officer will initially be our Chief Financial Officer, unless and until a successor Ethics Officer is appointed. The Ethics Officer and/or Company counsel will be available to speak with you about problematic situations if you do not feel comfortable approaching your direct supervisor. You may also request assistance in writing by sending a request to the Ethics Officer and/or the Company’s counsel, Chachas Law Group, 2445 Fifth Avenue, Suite 440, San Diego, California 92101.
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7. Reporting Procedures
All employees have a duty to report any violations of the Code, as well as violations of any laws, rules, or regulations. Employees also have a duty to report any transaction or relationship that could reasonably be expected to give rise to a conflict of interest.
If you are aware of a potential conflict of interest or believe that the Code has been violated by an employee, you must promptly report the violation to his or her direct supervisor or the Ethics Officer. If a report is made to a supervisor, the supervisor must in turn report the violation to the Ethics Officer. All violations by an officer or director of the Company must be reported directly to the Ethics Officer. Employees may also choose to report any violations regarding record keeping, financial accounting or financial reporting to the Chairman of the Audit Committee of the Board, pursuant to the Company’s Whistleblower Policy reporting procedures.
Reports may be made in person, by e-mail, by telephone or in writing by sending a description of the violation and the names of the parties involved to the appropriate personnel mentioned in the preceding paragraph. Reports to the Ethics Officer may be sent to the following address: Omnitek Engineering Corp., 1945 S. Rancho Santa Fe Road, San Marcos, California 92078. Reports to the Audit Committee of the Board should be submitted to the Chairman of the Audit Committee of the Board of Directors at the same address.
When reporting a violation, you may choose to remain anonymous. However, if you make an anonymous report, you should create and preserve your own record of this report in order to be able to demonstrate your compliance with the requirement of reporting violations. Generally speaking, every effort will be made to maintain the confidentiality of reports of potential violations. However, there may be a point where the identity of the reporting employee may become known or may have to be revealed in the course of the investigation or to take corrective action.
The Company does not permit retaliation of any kind against employees for good faith reports of ethical violations
. Any employee who attempts to or encourages others to retaliate against an individual who has reported a violation will be subject to disciplinary action.
8. Disciplinary Action
The Company has implemented the following disciplinary policies to ensure that prompt and consistent actions are taken in response to violations of the Code:
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A.
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Range of Penalties
. All violations of the Code will be treated seriously and will result in the prompt imposition of penalties which may include (1) an oral or written warning, (2) a reprimand, (3) suspension, and/or (4) termination. Violations will also be reported to the appropriate regulatory agencies or other authorities.
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B.
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Disciplinary
Process
. The penalty for a particular violation will be decided on a case-by-case basis and will depend on the nature and severity of the violations as well as the employee’s history of non-compliance and cooperation in the disciplinary process. Significant penalties will be imposed for violations resulting from intentional or reckless behavior. Penalties may also be imposed when an employee fails to report a violation due to the employee’s indifference, deliberate ignorance or reckless conduct. Where there is credible evidence of a violation, the Ethics Officer will determine the appropriate sanction with the assistance of the Company’s Counsel and the Audit Committee of the Board.
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C.
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Consistent Enforcement
. It is our intent to give consistent, equal treatment to all employees, officers and directors with respect to the imposition of disciplinary measures. Pursuant to this policy, all employees will be subject to the same disciplinary action for the commission of a similar offense.
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9. Dissemination and Amendment
The Code shall be distributed to each new employee, officer and director of the Company upon commencement of his or her employment or other relationship with the Company and shall also be distributed annually to each employee, officer and director of the Company, and each employee, officer and director shall sign an acknowledgment that he or she has received, read and understood the Code and will comply with its terms.
The Company reserves the right to amend, alter or terminate the Code at any time for any reasons. The most current version of the Code can be obtained from the Company’s Ethics Officer.
This document is not an employment contract between the Company and any of its employees, officers or directors.
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