INDEMNIFICATION AGREEMENT
Exhibit
10.4
INDEMNIFICATION
AGREEMENT, dated as of September 25, 2006 by and between ARCH MANAGEMENT
SERVICES INC., a Nevada corporation on its own behalf and on behalf of each
of
its subsidiaries (collectively, the "Company"), and the director and/or officer
whose name appears on the signature page of this Agreement
("Indemnitee").
RECITALS
A. Highly
competent persons are becoming more reluctant to serve as directors or officers
or in other capacities unless they are provided with reasonable protection
through insurance or indemnification against risks of claims and actions against
them arising out of their service to and activities on behalf of the
corporations.
B. The
Board
of Directors of the Company (the "Board" or the "Board of Directors") has
determined that the Company should act to assure its directors and officers
that
there will be increased certainty of such protection in the future.
C. It
is
reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify such persons to the fullest extent permitted by applicable
law so that they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified.
D. Indemnitee
is willing to serve, to continue to serve and to take on additional service
for
or on behalf of the Company on the condition that Indemnitee be so
indemnified.
AGREEMENT
In
consideration of the premises and the covenants contained herein, the Company
and Indemnitee do hereby covenant and agree as follows:
1. Definitions.
For
purposes of this Agreement:
(a) "Affiliate"
shall mean any corporation, partnership, joint venture, trust or other
enterprise in respect of which the Indemnitee is or was or will be serving
as a
director, officer, advisory director or Board Committee member at the request
of
the Company, and including, but not limited to, any employee benefit plan of
the
Company or any of the foregoing.
(b) "Disinterested
Director" shall mean a director of the Company who is not or was not a party
to
the Proceeding in respect of which indemnification is being sought by
Indemnitee.
(c) "Expenses"
shall include all attorneys' fees and costs, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees
and all other disbursements or expenses incurred in connection with asserting
or
defending claims.
(d) "Independent
Counsel" shall mean a law firm or lawyer that neither is presently nor in the
past five years has been retained to represent: (i) the Company or Indemnitee
in
any matter material to any such party or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any firm or person
who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing any of the Company or
Indemnitee in an action to determine Indemnitee's right to indemnification
under
this Agreement. All Expenses of the Independent Counsel incurred in connection
with acting pursuant to this Agreement shall be borne by the
Company.
(e) "Losses"
shall mean all losses, claims, liabilities, judgments, fines, penalties and
amounts paid in settlement in connection with any Proceeding.
(f) "Proceeding"
includes any action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative; provided,
however,
that
the term "Proceeding" shall include any action instituted by an Indemnitee
(other than an action to enforce indemnification rights under this Agreement)
only if such action is authorized by the Board of Directors.
2. Service by Indemnitee.
Indemnitee agrees to begin or continue to serve the Company or an Affiliate
as a
director and/or officer. Notwithstanding anything contained herein, this
Agreement shall not create a contract of employment between the Company and
Indemnitee, and the termination of Indemnitee's relationship with the Company
or
an Affiliate by either party hereto shall not be restricted by this
Agreement.
3. Indemnification.
The
Company agrees to indemnify Indemnitee for, and hold Indemnitee harmless from
and against, any Losses or Expenses at any time incurred by or assessed against
Indemnitee arising out of or in connection with the service of Indemnitee as
a
director, advisory director, Board Committee member, officer, employee or agent
of the Company or of an Affiliate (collectively referred to as an "Officer
or
Director of the Company or of an Affiliate"), whether the basis of such
proceeding is alleged action in an official capacity or in any other capacity
while serving as an Officer or Director of the Company or of an Affiliate,
to
the fullest extent permitted by the laws of the State of New York in effect
on
the date hereof or as such laws may from time to time hereafter be amended
to
increase the scope of such permitted indemnification. Without diminishing the
scope of the indemnification provided by this Section 3, the rights of
indemnification of Indemnitee provided hereunder shall include but shall not
be
limited to those rights set forth hereinafter.
4. Action or Proceeding Other Than an Action by or in the Right of the
Company.
Indemnitee shall be entitled to the indemnification rights provided herein
if
Indemnitee is a person who was or is made a party or is threatened to be made
a
party to any pending, completed or threatened Proceeding, other than an action
by or in the right of the Company, by reason of (a) the fact that Indemnitee
is
or was an Officer or Director of the Company or of an Affiliate or (b) anything
done or not done by Indemnitee in any such capacity. Pursuant to this Section,
Indemnitee shall be indemnified against Losses or Expenses incurred by
Indemnitee or on Indemnitee's behalf in connection with any Proceeding, if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to
be in or not opposed to the best interests of the Company and, with respect
to
any criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful.
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5. Actions by or in the Right of the Company.
Indemnitee shall be entitled to the indemnification rights provided
herein if Indemnitee is a person who was or is made a party or is threatened
to
be made a party to any pending, completed or threatened Proceeding brought
by or
in the right of the Company to procure a judgment in its favor by reason of
(a)
the fact that Indemnitee is or was an Officer or Director of the Company or
of
an Affiliate or (b) anything done or not done by Indemnitee in any such
capacity. Pursuant to this Section, Indemnitee shall be indemnified against
Losses or Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with any Proceeding if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing
provisions of this Section, no such indemnification shall be made in respect
of
any claim, issue or matter as to which New York law expressly prohibits such
indemnification by reason of an adjudication of liability of Indemnitee to
the
Company; provided,
however,
that in
such event such indemnification shall nevertheless be made by the Company to
the
extent that the court in which such action or suit was brought shall determine
equitable under the circumstances.
6. Indemnification for Losses and Expenses of Party Who is Wholly
or Partly Successful.
Notwithstanding any provision of this Agreement, to the extent that Indemnitee
has been wholly successful on the merits or otherwise absolved in any Proceeding
on any claim, issue or matter, Indemnitee shall be indemnified against all
Losses or Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection therewith. If Indemnitee 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 agrees to indemnify Indemnitee, to the maximum extent permitted
by
law, against all Losses and Expenses incurred by Indemnitee in connection with
each successfully resolved claim, issue or matter. In any review or Proceeding
to determine the extent of indemnification, the Company shall bear the burden
of
proving any lack of success and which amounts sought in indemnity are allocable
to claims, issues or matters which were not successfully resolved. For purposes
of this Section and without limitation, the termination of any such claim,
issue
or matter by dismissal with or without prejudice shall be deemed to be a
successful resolution as to such claim, issue or matter.
7. Payment for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of the fact that Indemnitee is or was an Officer or Director of the
Company or of an Affiliate, a witness in any Proceeding, the Company agrees
to
pay to Indemnitee all Expenses actually and reasonably incurred by Indemnitee
or
on Indemnitee's behalf in connection therewith.
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8. Advancement of Expenses and Costs.
All
Expenses incurred by or on behalf of Indemnitee (or reasonably expected by
Indemnitee to be incurred by Indemnitee within three months) in connection
with
any Proceeding shall be paid promptly by the Company, and in any event in
advance of the final disposition of such Proceeding within sixty days after
the
receipt by the Company of a statement or statements from Indemnitee requesting
from time to time such advance or advances, whether or not a determination
to
indemnify has been made under Section 9. Such statement or statements shall
evidence such Expenses incurred (or reasonably expected to be incurred) by
Indemnitee in connection therewith and shall include or be accompanied by a
written undertaking by or on behalf of Indemnitee to repay such amount if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
therefor pursuant to the terms of this Agreement. The
right
to indemnification of advances as granted by this Section 8 shall be
enforceable by the director or officer in any court of competent jurisdiction,
if the Company denies such request, in whole or in part, or if no disposition
thereof is made within 60 days. Such person's costs and expenses incurred in
connection with successfully establishing his/her right to indemnification,
in
whole or in part, in any such action shall also be indemnified by the Company.
It shall be a defense to any such action seeking an adjudication or award in
arbitration pursuant to this Agreement (other than an action brought to enforce
a claim for the advance of costs, charges and expenses under this Section 8
where the required undertaking, if any, has been received by the Company) that
the claimant has not met the standard of conduct set forth in the New York
Business Corporation Law, as the same exists or hereafter may be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment), but the burden of
proving such defense shall be on the Company. Neither the failure of the Company
(including its Board of Directors, its independent legal counsel and its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he/she has met the applicable standard of conduct set forth in the
New
York Business Corporation Law, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights that said law
permitted the Company to provide prior to such amendment), nor the fact that
there has been an actual determination by the Company (including its Board
of
Directors, its independent legal counsel and its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
9. Procedure for Determination of Entitlement to Indemnification. (a) When
seeking indemnification under this Agreement (which shall not include in any
case the right of Indemnitee to receive payments pursuant to Section 7 and
Section 8 hereof, which shall not be subject to this Section 9), Indemnitee
shall submit a written request for indemnification to the Company. Such request
shall include documentation or information which is reasonably necessary for
the
Company to make a determination of Indemnitee's entitlement to indemnification
hereunder and which is reasonably available to Indemnitee. Determination of
Indemnitee's entitlement to indemnification shall be made promptly, but in
no
event later than 60 days after receipt by the Company of Indemnitee's written
request for indemnification. The Secretary of the Company shall, promptly upon
receipt of Indemnitee's request for indemnification, advise the Board that
Indemnitee has made such request for indemnification.
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(b) The
entitlement of Indemnitee to indemnification under this Agreement in respect
of
any pending, contemplated or threatened Proceeding shall be determined in the
specific case by (a) the Board of Directors by a majority vote of those
directors who were not party to such Proceeding, whether or not they constitute
a quorum of the Board of Directors, or (b) if such a quorum is not obtainable,
or if a quorum of disinterested directors so directs, by Independent Counsel
in
a written opinion, or (c) by the stockholders.
(c) In
the
event the determination of entitlement is to be made by Independent Counsel,
such Independent Counsel shall be selected by the Board and approved by
Indemnitee. Upon failure of the Board and the Board of Directors to so select
such Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by the President of the Association of
the
Bar of the City of New York.
(d) If
the
determination made pursuant to Section 9(b) is that Indemnitee is not
entitled to indemnification to the full extent of Indemnitee's request,
Indemnitee shall have the right to seek entitlement to indemnification in
accordance with the procedures set forth in Section 10 hereof.
(e) If
the
person or persons empowered pursuant to Section 9(b) hereof to make a
determination with respect to entitlement to indemnification shall have failed
to make the requested determination within 60 days after receipt by the Company
of such request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be absolutely entitled
to
such indemnification, absent (i) misrepresentation by Indemnitee of a material
fact in the request for indemnification or (ii) a final judicial determination
that all or any part of such indemnification is expressly prohibited by law.
(f) The
termination of any Proceeding by judgment, order, settlement or conviction,
or
upon a plea of nolo
contendere
or its
equivalent, shall not, of itself, adversely affect the rights of Indemnitee
to
indemnification hereunder, except as may be specifically provided herein, or
create a presumption that Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or create a presumption that (with respect to any
criminal action or Proceeding) Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
(g) For
purposes of any determination of good faith hereunder, Indemnitee shall be
deemed to have acted in good faith if in taking an action Indemnitee relied
on
the records or books of account of the Company or an Affiliate, including
financial statements, or on information supplied to Indemnitee by the officers
of the Company or an Affiliate in the course of their duties, or on the advice
of legal counsel for the Company or an Affiliate or on information or records
given or reports made to the Company or an Affiliate by an independent certified
public accountant or by an appraiser or other expert selected with reasonable
care by the Company or an Affiliate. The Company shall have the burden of
establishing the absence of good faith. The provisions of this Section 9(g)
shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the applicable
standard of conduct set forth in this Agreement.
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(h) The
knowledge and/or actions, or failure to act, of any director, officer, agent
or
employee of the Company or an Affiliate shall not be imputed to Indemnitee
for
purposes of determining the right to indemnification under this
Agreement.
10. Remedies in Cases of Determination Not to Indemnify or to Advance
Expenses. (a) In
the event that (i) a determination is made that Indemnitee is not entitled
to
indemnification hereunder, (ii) advances are not made pursuant to Section 8
hereof or (iii) payment has not been timely made following a determination
of
entitlement to indemnification pursuant to Section 9 hereof, Indemnitee shall
be
entitled to seek an adjudication in an appropriate court of the State of New
York or any other court of competent jurisdiction as to Indemnitee's entitlement
to such indemnification or advance.
(b) In
the
event a determination has been made in accordance with the procedures set forth
in Section 9 hereof, in whole or in part, that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration referred to in
paragraph (a) of this Section 10 shall be de novo
and
Indemnitee shall not be prejudiced by reason of any such prior determination
that Indemnitee is not entitled to indemnification, and the Company shall bear
the burdens of proof specified in paragraphs 6 and 9 hereof in such
proceeding.
(c) If
a
determination is made or deemed to have been made pursuant to the terms of
Section 9 or 10 hereof that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration in the absence of (i) a misrepresentation of a material fact by
Indemnitee or (ii) a final judicial determination that all or any part of such
indemnification is expressly prohibited by law.
(d) The
Company and Indemnitee agree that they shall be precluded from asserting that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable. The Company and Indemnitee further agree to stipulate in any such
court that the Company and Indemnitee are bound by all of the provisions of
this
Agreement and are precluded from making any assertion to the
contrary.
(e) To
the
extent deemed appropriate by the court, interest shall be paid by the Company
to
Indemnitee at a reasonable interest rate for amounts which the Company
indemnifies or is obliged to indemnify the Indemnitee for the period commencing
with the date on which Indemnitee requested indemnification (or reimbursement
or
advance of an Expense) and ending with the date on which such payment is made
to
Indemnitee by the Company.
11. Expenses Incurred by Indemnitee to Enforce this Agreement. All
Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be borne
by the Company. In the event that Indemnitee is a party to or intervenes in
any
proceeding in which the validity or enforceability of this Agreement is at
issue
or seeks an adjudication to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in
whole in such action, shall be entitled to recover from the Company, and shall
be indemnified by the Company against, any Expenses incurred by Indemnitee.
If
it is determined that Indemnitee is entitled to indemnification for part (but
not all) of the indemnification so requested, Expenses incurred in seeking
enforcement of such partial indemnification shall be reasonably prorated among
the claims, issues or matters for which the Indemnitee is entitled to
indemnification and for claims, issues or matters for which the Indemnitee
is
not so entitled.
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12. Non-Exclusivity. The
rights of indemnification and to receive advances as provided by this Agreement
shall not be deemed exclusive of any other rights to which Indemnitee may at
any
time be entitled under or by reason of applicable law, any certificate of
incorporation or by-laws, any agreement, any vote of stockholders or any
resolution of directors or otherwise. To the extent Indemnitee would be
prejudiced thereby, no amendment, alteration, rescission or replacement of
this
Agreement or any provision hereof shall be effective as to Indemnitee with
respect to any action taken or omitted by such Indemnitee in Indemnitee's
position with the Company or an Affiliate or any other entity which Indemnitee
is or was serving at the request of the Company prior to such amendment,
alteration, rescission or replacement.
13. Duration of Agreement.
This
Agreement shall apply to any claim asserted and any Losses and Expenses incurred
in connection with any claim asserted on or after the effective date of this
Agreement and shall continue until and terminate upon the later of: (a) 10
years
after Indemnitee has ceased to occupy any of the positions or have any of the
relationships described in Sections 3, 4 or 5 of this Agreement; or (b) one
year after the final termination of all pending or threatened Proceedings of
the
kind described herein with respect to Indemnitee. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to
the
benefit of Indemnitee and Indemnitee's spouse, assigns, heirs, devisee,
executors, administrators or other legal representatives.
14. Severability.
Should
any part, term or condition hereof be declared illegal or unenforceable or
in
conflict with any other law, the validity of the remaining portions or
provisions of this Agreement shall not be affected thereby, and the illegal
or
unenforceable portions of the Agreement shall be and hereby are redrafted to
conform with applicable law, while leaving the remaining portions of this
Agreement intact.
15. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
document.
16. Headings.
Section
headings are for convenience only and do not control or affect meaning or
interpretation of any terms or provisions of this Agreement.
17. Modification and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by each of the parties hereto.
18. No Duplicative Payment.
The
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has
otherwise actually received such payment (net of Expenses incurred in collecting
such payment) under this Agreement, any insurance policy, contract, agreement
or
otherwise.
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19. Notices.
All
notices, requests, demands and other communications provided for by this
Agreement shall be in writing (including telecopier or similar writing) and
shall be deemed to have been given at the time when mailed in a registered
or
certified postpaid envelope in any general or branch office of the United States
Postal Service, or sent by Federal Express or other similar overnight courier
service, addressed to the address of the parties stated below or to such changed
address as such party may have fixed by notice or, if given by telecopier,
when
such telecopy is transmitted and the appropriate answer back is
received.
(a) If
to
Indemnitee, to the address appearing on the signature page hereof.
(b) If
to the
Company to:
0000
Xxxxx-Xxxxxx, xxxxx 000
Xxxxxx-Xxxxxx,
Xxxxxx, Xxxxxx
X0X
0X0
Attention:
Xxxxx Xxx Xxxx Xxxxx
Phone:
000-000-0000
with
a
copy to:
Wuersch
& Xxxxxx LLP
000
Xxxx
Xxxxxx - 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
Phone:
(000) 000-0000
Fax:
(000) 000-0000
20. GOVERNING LAW.
THE
PARTIES AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
21. Entire Agreement.
Subject
to the provisions of Section 12 hereof, this Agreement constitutes the
entire understanding between the parties and supersedes all proposals,
commitments, writings, negotiations and understandings, oral and written, and
all other communications between the parties relating to the subject matter
of
this Agreement. This Agreement may not be amended or otherwise modified except
in writing duly executed by all of the parties. A waiver by any party of any
breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.
[Signature
Page to follow]
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IN
WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement
as of the date first above written.
| ARCH MANAGEMENT SERVICES INC. | ||
| |
|
|
| By: | /s/ | |
|
Name: Xxxxx Xxx Xxxx Xxxxx |
||
| Title: CEO | ||
| INDEMNITEE: | ||
| |
|
|
|
Name: |
||
| Title: | ||
| Address: | ||
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