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EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made and entered into as of the ____
day of ______________, 2000, by and between Royal BodyCare, Inc., a Nevada
corporation (the "COMPANY"), and ______________________ (the "INDEMNITEE").
W I T N E S S E T H:
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WHEREAS, the interpretation of ambiguous statutes, regulations and
bylaws regarding indemnification of directors and officers may be too uncertain
to provide such directors and officers with adequate notice of the legal,
financial and other risks to which they may be exposed by virtue of their
service as such; and
WHEREAS, damages sought against directors and officers in shareholder
or similar litigation by class action plaintiffs may be substantial, and the
costs of defending such actions and of judgments in favor of plaintiffs or of
settlement therewith may be prohibitive for individual directors and officers,
without regard to the merits of a particular action and without regard to the
culpability of, or the receipt of improper personal benefit by, any named
director or officer to the detriment of the corporation; and
WHEREAS, the issues in controversy in such litigation usually relate to
the knowledge, motives and intent of the director or officer, who may be the
only person with firsthand knowledge of essential facts or exculpating
circumstances who is qualified to testify in such person's defense regarding
matters of such a subjective nature, and the long period of time which may
elapse before final disposition of such litigation may impose undue hardship and
burden on a director or officer or on such person's estate in launching and
maintaining a proper and adequate defense for a director or officer or for such
person's estate against claims for damages; and
WHEREAS, the Company is organized under the General Corporation Law of
the State of Nevada of the Nevada Revised Statutes (the "NRS") and Sections
78.7502, 78.751 and 78.752 of the NRS empower corporations to indemnify and
advance expenses to a person serving as a director, officer, employee or agent
of a corporation and to persons serving at the request of the corporation as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan,
and, as Section 78.751(3)(a) further provides, that the indemnification and
advancement of expenses provided by, or granted pursuant to, said sections "does
not exclude any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the articles of incorporation or
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an action in another
capacity while holding his office, except that indemnification, unless ordered
pursuant to NRS 78.7502 or for the advancement of expenses made pursuant to
subsection 2, may not be made to or on behalf of any director or officer if a
final adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action."; and
WHEREAS, the Board of the Company have concluded that it is reasonable
and prudent for the Company contractually to obligate itself to indemnify in a
reasonable and adequate manner the Indemnitee and to assume for itself maximum
liability for expenses and damages in connection with claims lodged against the
Indemnitee for such person's decisions and actions as a director, officer,
employee or agent of the Company and its subsidiaries.
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties agree as follows:
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ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
A. "AGREEMENT" means this Indemnification Agreement, as it may be
amended from time to time.
B. "ARTICLES OF INCORPORATION" means the Articles of Incorporation of
the Company (as it may be amended or amended and restated from time to time).
C. "BOARD" means the Board of Directors of the Company.
D. "CHANGE IN CONTROL" is defined as:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act of 1934) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting
power represented by the Company's then outstanding voting securities;
or
(b) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors.
(c) The consummation of a merger or consolidation of the Company
with any other corporation other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or
(d) The consummation of the sale or disposition by the Company of
all or substantially all of the Company's assets.
E. "COMPANY" has the meaning set forth in the introductory paragraph of
this Agreement.
F. "CORPORATE STATUS" means the status of a person who is or was a
director, officer, employee or agent of the Company, or is or was a member of
any committee of the Board, and the status of a person who is or was serving at
the request of the Company as a director, officer, partner (including service as
a general partner of any limited partnership), member, trustee, employee, or
agent of another foreign or domestic corporation, partnership, limited liability
company, joint venture, trust, other incorporated or unincorporated entity or
enterprise or employee benefit plan. For the purposes of this Agreement, any
person serving as a director, officer, partner, member, trustee, employee, or
agent of any subsidiary of the Company or any employee benefit plan of the
Company or any of its subsidiaries shall be deemed to be so serving at the
request of the Company, and no corporate or other action shall be or be deemed
to be required to evidence any such request.
G. "DISINTERESTED DIRECTOR" means a director of the Company who is not
a party to the Proceeding in respect of which indemnification is being sought by
the Indemnitee.
H. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended from time to time.
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I. "EXPENSES" means any and all expenses actually and reasonably
incurred directly or indirectly in connection with a Proceeding, including,
without limitation, all attorneys' fees, retainers, court costs, transcript
costs, fees of experts, investigation fees and expenses, accounting and witness
fees, travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating or being or preparing to be a
witness in a Proceeding.
J. "GOOD FAITH" means, when used with reference to an act or omission
of the Indemnitee, an act or omission other than (i) an act or omission
committed in bad faith and in a manner the Indemnitee believed to be opposed to
the best interests of the Company; (ii) an act or omission that was the result
of intentional misconduct involving active or deliberate dishonesty; (iii) an
act or omission from which the Indemnitee actually received an improper personal
benefit in money, property or services; or (iv) in the case of a criminal
Proceeding, an act or omission which involves a knowing violation of law.
K. "INCUMBENT DIRECTORS" means directors who either (i) are directors
of the Company as of the date hereof, or (ii) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or termination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).
L. "INDEMNIFICATION ARRANGEMENT" has the meaning set forth in SECTION
10.1.
M. "INDEMNITEE" has the meaning set forth in the introductory paragraph
of this Agreement.
N. "LIABILITIES" means liabilities of any type whatsoever, including,
without limitation, any judgments, fines, excise taxes and penalties under the
Employee Retirement Income Security Act of 1974, as amended (or any successor
statute or act), penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such judgments, fines, penalties or amounts paid in settlement)
actually and reasonably incurred directly or indirectly in connection with the
investigation, defense, settlement or appeal of any Proceeding or any claim,
issue or matter therein.
O. "NRS" has the meaning set forth in the recitals of this Agreement.
P. "PROCEEDING" means any threatened, pending or completed action,
suit, proceeding, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other actual, threatened or
completed proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal or appeals therefrom, and any inquiry or investigation
that could lead to any of the foregoing.
Q. "TRUST" has the meaning set forth in ARTICLE IX.
R. "TRUSTEE" has the meaning set forth in ARTICLE IX.
S. "UNDERTAKING" has the meaning set forth in ARTICLE IV.
T. "VOTING SECURITIES" means any securities of the Company that are
entitled to vote generally in the election of directors.
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ARTICLE II
TERM OF AGREEMENT
This Agreement shall continue until, and terminate upon the later to
occur of (i) the death of the Indemnitee; or (ii) the final termination of all
Proceedings (including possible Proceedings) in respect of which the Indemnitee
is granted rights of indemnification or advancement of Expenses hereunder and of
any Proceeding commenced by the Indemnitee regarding the interpretation or
enforcement of this Agreement. This Agreement shall govern the indemnification
rights of the Indemnitee for all Liabilities and Expenses in connection with any
Proceeding instituted or commenced on or after the date hereof notwithstanding
that any alleged act or omission of the Indemnitee occurred prior to the date
hereof.
ARTICLE III
NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS
SECTION 3.1 NOTICE OF PROCEEDINGS. The Indemnitee will notify the
Company promptly in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder, but the Indemnitee's failure to so notify the
Company shall not relieve the Company from any liability to the Indemnitee under
this Agreement.
SECTION 3.2 DEFENSE OF CLAIMS. The Company will be entitled to
participate, at the expense of the Company, in any Proceeding of which the
Company has notice. The Company jointly with any other indemnifying party
similarly notified of any Proceeding will be entitled to assume the defense of
the Indemnitee therein, with counsel reasonably satisfactory to the Indemnitee;
provided, however, that the Company shall not be entitled to assume the defense
of the Indemnitee in any Proceeding if there has been a Change in Control or if
the Indemnitee has reasonably concluded that there may be a conflict of interest
between the Company and the Indemnitee with respect to such Proceeding. The
Company will not be liable to the Indemnitee under this Agreement for any
Expenses incurred by the Indemnitee in connection with the defense of any
Proceeding, other than reasonable costs of investigation or as otherwise
provided below, after notice from the Company to the Indemnitee of its election
to assume the defense of the Indemnitee therein. The Indemnitee shall have the
right to employ his or her own counsel in any such Proceeding, but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company; (ii) the Indemnitee shall have reasonably concluded that counsel
employed by the Company may not adequately represent the Indemnitee and shall
have so informed the Company; or (iii) the Company shall not in fact have
employed counsel to assume the defense of the Indemnitee in such Proceeding or
such counsel shall not, in fact, have assumed such defense or such counsel shall
not be acting, in connection therewith, with reasonable diligence; and in each
such case the fees and expenses of the Indemnitee's counsel shall be advanced by
the Company.
SECTION 3.3 SETTLEMENT OF CLAIMS. The Company shall not settle any
Proceeding in any manner which would impose any Liability, penalty or limitation
on the Indemnitee, or cause the Indemnitee to become subject to or bound by any
injunction, order, judgment or decree, without the written consent of the
Indemnitee, which consent shall not be unreasonably withheld or delayed. The
Company shall not be liable to indemnify the Indemnitee under this Agreement or
otherwise for any amounts paid in settlement of any Proceeding effected by the
Indemnitee without the Company's written consent, which consent shall not be
unreasonably withheld or delayed.
ARTICLE IV
INDEMNIFICATION
SECTION 4.1 IN GENERAL. Upon the terms and subject to the conditions
set forth in this Agreement, the Company shall hold harmless and indemnify the
Indemnitee against any and all Liabilities and Expenses
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actually incurred by or for the Indemnitee in connection with any Proceeding
(whether the Indemnitee is or becomes a party, a witness or otherwise is a
participant in any role) to the fullest extent required or permitted by
applicable law in effect on the date hereof and to such greater extent as
applicable law may hereafter from time to time require or permit. To the extent
that the Indemnitee has at any time heretofore served or at any time hereafter
serves as a director, officer, employee, partner, trustee or agent of, for, or
on behalf of any subsidiary of the Company, the Company expressly agrees and
acknowledges that Indemnitee was or is serving in each such capacity at the
request of the Company.
SECTION 4.2 PROCEEDING OTHER THAN A PROCEEDING BY OR IN THE RIGHT OF
THE COMPANY. Without limiting the generality of SECTION 4.1, if the Indemnitee
was or is a party or is threatened to be made a party to any Proceeding (whether
the Indemnitee is or becomes a party, a witness or otherwise is a participant in
any role) (other than a Proceeding by or in the right of the Company) by reason
of the Indemnitee's Corporate Status, or by reason of any alleged act or
omission by the Indemnitee in any such capacity, the Company shall, subject to
the limitations set forth in SECTION 4.6 below, hold harmless and indemnify the
Indemnitee against any and all Liabilities and Expenses of the Indemnitee in
connection with the Proceeding if the Indemnitee acted in Good Faith.
SECTION 4.3 PROCEEDING BY OR IN THE RIGHT OF THE COMPANY. Without
limiting the generality of SECTION 4.1, if the Indemnitee was or is a party or
is threatened to be made a party to any Proceeding (whether the Indemnitee is or
becomes a party, a witness or otherwise is a participant in any role) by or in
the right of the Company to procure a judgment in its favor by reason of the
Indemnitee's Corporate Status, or by reason of any alleged act or omission by
the Indemnitee in any such capacity, the Company shall, subject to the
limitations set forth in SECTION 4.6 below, hold harmless and indemnify the
Indemnitee against any and all Expenses of the Indemnitee in connection with the
Proceeding if the Indemnitee acted in Good Faith; except that no indemnification
under this SECTION 4.3 shall be made in respect of any claim, issue or matter as
to which the Indemnitee shall have been finally adjudged, pursuant to a judgment
or other adjudication which is final and has become nonappealable, to be liable
to the Company, unless a court of appropriate jurisdiction (including, but not
limited to, the court in which such Proceeding was brought) shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and reasonably entitled to
indemnification for such Expenses which such court shall deem proper.
SECTION 4.4 INDEMNIFICATION OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee is or has been successful on the merits or otherwise in
defense of any Proceeding, the Indemnitee shall be indemnified by the Company to
the maximum extent consistent with law against all Expenses of the Indemnitee in
connection therewith. If the Indemnitee is not wholly successful in such
Proceeding but is or has been successful on the merits or otherwise in defense
of one or more but less than all claims, issues or matters in such Proceeding,
the Company shall hold harmless and indemnify the Indemnitee to the maximum
extent consistent with law against all Expenses of the Indemnitee in connection
with each successfully resolved claim, issue or matter in such Proceeding.
Resolution of a claim, issue or matter by dismissal, with or without prejudice,
shall be deemed a successful result as to such claim, issue or matter.
SECTION 4.5 INDEMNIFICATION FOR EXPENSES OF WITNESS. Notwithstanding
any other provision of this Agreement, to the extent that the Indemnitee, by
reason of the Indemnitee's Corporate Status, has prepared to serve or has served
as a witness in any Proceeding, or has participated in discovery proceedings or
other trial preparation, the Indemnitee shall be held harmless and indemnified
against all Expenses of the Indemnitee in connection therewith.
SECTION 4.6 SPECIFIC LIMITATIONS ON INDEMNIFICATION. In addition to the
other limitations set forth in this ARTICLE IV, and notwithstanding anything in
this Agreement to the contrary, the Company shall not be
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obligated under this Agreement to make any payment to the Indemnitee for
indemnification of Liabilities or Expenses, or both, in connection with any
Proceeding:
1. To the extent that payment of any of the Liabilities or
Expenses of the Indemnitee is actually made to the Indemnitee under
any insurance policy or is made on behalf of the Indemnitee by or on
behalf of the Company otherwise than pursuant to this Agreement; or
2. For an accounting of profits made from the purchase or sale by
the Indemnitee of securities of the Company within the meaning of
section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any federal, state or local statute or
regulation.
ARTICLE V
ADVANCEMENT OF EXPENSES
Notwithstanding any provision to the contrary in ARTICLE VI hereof, the
Company shall pay or reimburse all Expenses of the Indemnitee incurred by or for
the Indemnitee in connection with any Proceeding in advance of the final
disposition of such Proceeding, provided that the Company receives an
undertaking by or on behalf of the Indemnitee to repay such amounts if it shall
ultimately be determined by a court of competent jurisdiction that the
Indemnitee is not entitled to be indemnified by the Company under applicable law
(the "UNDERTAKING"). The Undertaking shall reasonably evidence the Expenses
incurred by or for the Indemnitee. The Company shall pay all such Expenses
within five (5) business days after the receipt by the Company of the
Undertaking. The Undertaking shall be unsecured and interest free, and shall be
made and accepted by the Company without reference to the Indemnitee's financial
ability to make repayment.
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ARTICLE VI
PROCEDURE FOR PAYMENT;
DETERMINATION OF RIGHT TO INDEMNIFICATION
SECTION 6.1 PROCEDURE FOR PAYMENT. To obtain indemnification for
Liabilities under this Agreement, and to obtain indemnification for Expenses not
paid in advance of the final disposition of any Proceeding pursuant to ARTICLE
V, the Indemnitee shall submit to the Company a written request for payment,
including with such request such documentation as is reasonably available to the
Indemnitee and reasonably necessary to determine whether, and to what extent,
the Indemnitee is entitled to indemnification and payment hereunder. The
Secretary of the Company, or such other person as shall be designated by the
Board of Directors, promptly upon receipt of a request for indemnification shall
advise the Board of Directors, in writing, of such request. Any indemnification
payment due hereunder shall be paid by the Company no later than five (5)
business days following the determination, pursuant to this ARTICLE VI, that
such indemnification payment is proper hereunder.
SECTION 6.2 NO DETERMINATION NECESSARY WHEN THE INDEMNITEE WAS
SUCCESSFUL. To the extent the Indemnitee is or has been successful on the merits
or otherwise in defense of any Proceeding, or in defense of any claim, issue or
matter therein, the Company shall indemnify the Indemnitee against Expenses of
the Indemnitee in connection with any such Proceeding or any claim, issue or
matter therein as provided in SECTION 4.4.
SECTION 6.3 DETERMINATION OF GOOD FAITH ACT OR OMISSION. In the event
that SECTION 6.2 is inapplicable with respect to any Proceeding, or any claim,
issue or matter therein, the Company shall hold harmless and indemnify the
Indemnitee as provided herein unless the Company shall prove by clear and
convincing evidence to a forum listed in SECTION 6.4 that the Indemnitee did not
act in Good Faith.
SECTION 6.4 FORUM FOR DETERMINATION. In the event that SECTION 6.2 is
inapplicable with respect to any Proceeding, or any claim, issue or matter
therein, or unless ordered by a court, or unless the Company has advanced
Expenses, then any such discretionary indemnification may be made by the Company
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. Such determination must be made:
1. By the stockholders;
2. By the Board of Directors by majority vote of a quorum
consisting of Disinterested Directors;
3. If a majority vote of a quorum consisting of Disinterested
Directors so orders, by independent legal counsel in a written
opinion; or
4. If a majority vote of a quorum consisting of Disinterested
Directors cannot be obtained, by independent legal counsel in a
written opinion.
As soon as practicable, and in no event later than thirty (30) days
after written notice of the Indemnitee's choice of forum pursuant to this
SECTION 6.4, the Company shall, at the expense of the Company, submit to the
selected forum, in such manner as the Indemnitee or the Indemnitee's counsel may
reasonably request, its claim that the Indemnitee is not entitled to
indemnification, and the Company shall act in the utmost good faith to assure
the Indemnitee a complete opportunity to defend against such claim. The fees and
expenses of the selected forum in connection with making the determination
contemplated hereunder shall be paid by the Company. If the Company shall fail
to submit the matter to the selected forum within thirty (30) days after the
Indemnitee's written notice, or if the forum so empowered to make the
determination shall have failed to make the requested
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determination within thirty (30) days after the matter has been submitted to it
by the Company, the requisite determination that the Indemnitee has the right to
indemnification hereunder shall be deemed to have been made by a majority vote
of the Directors who are Disinterested Directors, even though less than a
quorum.
SECTION 6.5 RIGHT TO APPEAL. Notwithstanding a determination by any
forum listed in SECTION 6.4 that the Indemnitee is not entitled to
indemnification with respect to a specific Proceeding, or any claim, issue or
matter therein, the Indemnitee shall have the right to apply to the court in
which that Proceeding is or was pending, or to any other court of competent
jurisdiction, for the purpose of enforcing the Indemnitee's right to
indemnification pursuant to this Agreement. Such enforcement action shall
consider the Indemnitee's entitlement to indemnification de novo, and the
Indemnitee shall not be prejudiced by reason of a prior determination that the
Indemnitee is not entitled to indemnification. The Company shall be precluded
from asserting that the procedures and presumptions of this Agreement are not
valid, binding and enforceable. The Company further agrees to stipulate in any
such judicial proceeding that the Company is bound by all the provisions of this
Agreement and is precluded from making any assertion to the contrary.
SECTION 6.6 RIGHT TO SEEK JUDICIAL DETERMINATION. Notwithstanding any
other provision of this Agreement to the contrary, at any time after sixty (60)
days after a request for indemnification has been made to the Company (or upon
earlier receipt of written notice that a request for indemnification has been
rejected or the expiration of time within which any such payment must be made
hereunder) and before the third (3rd) anniversary of the making of such
indemnification request, the Indemnitee may petition a court of competent
jurisdiction, whether or not such court has jurisdiction over, or is the forum
in which is pending, the Proceeding, to determine whether the Indemnitee is
entitled to indemnification hereunder, and such court thereupon shall have the
exclusive authority to make such determination, unless and until such court
dismisses or otherwise terminates the Indemnitee's action without having made
such determination. The court, as petitioned, shall make an independent
determination of whether the Indemnitee is entitled to indemnification
hereunder, without regard to any prior determination in any other forum as
provided hereby.
SECTION 6.7 EXPENSES UNDER THIS AGREEMENT. Notwithstanding any other
provision in this Agreement to the contrary, the Company shall indemnify the
Indemnitee against all Expenses incurred by the Indemnitee in connection with
any hearing, action, suit or proceeding under this ARTICLE VI involving the
Indemnitee and against all Expenses incurred by the Indemnitee in connection
with any other hearing, action, suit or proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement, even if it is finally determined that the
Indemnitee is not entitled to indemnification in whole or in part hereunder.
ARTICLE VII
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS
SECTION 7.1 BURDEN OF PROOF. In making a determination with respect to
entitlement to indemnification hereunder, the person, persons, entity or
entities making such determination shall presume that the Indemnitee is entitled
to indemnification under this Agreement and the Company shall have the burden of
proof to overcome that presumption.
SECTION 7.2 STANDARDS FOR DETERMINING IF EXPENSES REASONABLY INCURRED.
It is a purpose of this Agreement to induce the most highly qualified
individuals to accept positions of responsibility with the Company and, in so
doing, to serve as directors, officers, employees and agents of the Company.
Accordingly, the Company desires to provide the Indemnitee with the highest
quality professional services available if the Indemnitee becomes a party to or
is otherwise involved in a Proceeding because of the Indemnitee's Corporate
Status without the Indemnitee's incurring any personal Expense in connection
therewith. The Company therefore agrees that the Indemnitee may retain
attorneys, accountants, investment bankers, and other professionals and
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experts anywhere within the United States to represent the Indemnitee in any
Proceeding in the United States, that the Indemnitee may retain attorneys,
accountants, investment bankers, and other professionals without regard to
location if the Proceeding is not in the United States, and that the Company
will not deny any request for indemnification hereunder on the basis that the
Expenses of any such attorneys, accountants, investment bankers, or other
professionals and experts are not or have not been reasonably incurred because
of the location of any such attorneys, accountants, investment bankers, or other
professionals and experts. The Company further agrees that, for the purpose of
determining if an Expense for professional services, including, without
limitation, fees of attorneys, accountants, investment bankers, and other
professionals and experts, is or has been reasonably incurred, or for the
purpose of determining the reasonableness of any such Expense, the standard to
be used shall be the highest rates per hour or fees charged by attorneys
specializing in the defense of individuals in Proceedings similar to the
Proceeding to which the Indemnitee is a party or otherwise involved in the city
or cities in which such attorneys are located, and the highest rates per hour or
fees charged by accountants, investment bankers, and other professionals and
experts assisting or participating in the defense of individuals in Proceedings
similar to the Proceeding to which the Indemnitee is a party or otherwise
involved in the city or cities in which such accountants, investment bankers,
and other professionals and experts are located. In addition to the foregoing,
the Company has determined that it is in the Company's best interests that any
director, officer, employee or agent of Company who is involved in any
Proceeding because of such person's Corporate Status maintain to the greatest
extent possible the confidentiality of matters pertaining to such Proceeding,
and that such person's participation in such Proceeding be on conditions as
similar as reasonably possible to conditions as if such person were
participating in the city of such person's personal residence. Due to the
continuing deterioration in commercial travel conditions, however, it is
increasingly more difficult to achieve this result, and, accordingly, the
Company desires to provide the Indemnitee with travel arrangements that come
most closely to achieving this result. The Company therefore agrees that, for
the purpose of determining whether any Expense hereunder for travel related
items is or has been reasonably incurred, or for the purpose of determining the
reasonableness of any such Expense, the standards to be used shall be the
non-stop first class airfare between destinations and the daily non-discounted
room rates charged by the highest rated hotel in the destination city. Any
Expense actually incurred for or on behalf of the Indemnitee by any firm
providing professional services, including, without limitation, attorneys,
accountants, investment bankers, and other professionals and experts, to the
Indemnitee in any Proceeding shall be deemed to be reasonably incurred and
reasonable. In determining whether any other Expense is or has been reasonably
incurred, or whether any such other Expense is reasonable, the standard to be
used shall be commensurate with the foregoing. In the event the Company
determines not to indemnify the Indemnitee hereunder for any Expense on the
basis that any such Expense was or has not been reasonably incurred, the Company
agrees that it must prove by clear and convincing evidence that the professional
or other services rendered for and on behalf of the Indemnitee, or the goods or
services received by or provided for or on behalf of the Indemnitee, provided
(i) no value whatsoever, and (ii) bore no reasonable relationship whatsoever, to
the defense of the Indemnitee in the Proceeding. In the event the Company
determines not to indemnify the Indemnitee hereunder for any Expense on the
basis that any such Expense is or was not reasonable, the Company agrees that it
must prove by clear and convincing evidence that the challenged Expense is so
grossly in excess of the fair market value for the same or similar Expense as to
be manifestly unfair.
SECTION 7.3 EFFECT OF OTHER PROCEEDINGS. The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not act in
Good Faith.
SECTION 7.4 RELIANCE AS SAFE HARBOR. For purposes of any determination
of whether any act or omission of the Indemnitee was done or made in Good Faith,
each act or omission of the Indemnitee shall be deemed to be in Good Faith if
the Indemnitee's act or omission is based on the records or books of accounts of
the Company, including financial statements, or on information supplied to the
Indemnitee by the officers of the Company in the course of their duties, or on
the advice of legal counsel for the Company, or on information or records given
or reports made to the Company by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the Company.
The provisions of this SECTION 7.4 shall not be
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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 or under applicable law.
SECTION 7.5 ACTIONS OF OTHERS. The knowledge and/or actions, or failure
to act, of any other director, officer, agent or employee of the Company shall
not be imputed to the Indemnitee for purposes of determining the right to
indemnification under this Agreement.
ARTICLE VIII
INSURANCE; OTHER INDEMNIFICATION ARRANGEMENTS
SECTION 8.1 INSURANCE. In the event that the Company maintains
officers' and directors' or similar liability insurance to protect itself and
any director or officer of the Company against any expense, liability or loss,
such insurance shall cover the Indemnitee to at least the same degree as each
other director and/or officer of the Company.
SECTION 8.2 OTHER ARRANGEMENTS. The Articles of Incorporation and
Bylaws of the Company and the NRS permit the Company to purchase and maintain
insurance on behalf of the Indemnitee against any Liability asserted against or
incurred by him or any Expenses incurred by him or on his behalf in connection
with actions taken or omissions by the Indemnitee in his Corporate Status,
whether or not the Company would have the power to indemnify the Indemnitee
under this Agreement or under the NRS, as they may be in effect from time to
time. The purchase of any such insurance shall in no way affect or limit the
rights and obligations of the Indemnitee and the Company hereunder, except as
expressly provided herein, and the execution and delivery of this Agreement by
the Indemnitee and the Company shall in no way affect or limit the rights and
obligations of such parties under or with respect to any other such
Indemnification Arrangement.
ARTICLE IX
OBLIGATIONS OF THE COMPANY UPON A CHANGE IN CONTROL
In the event of a Change in Control, upon written request of the
Indemnitee the Company shall establish a trust for the benefit of the Indemnitee
hereunder (a "TRUST") and from time to time, upon written request from the
Indemnitee, shall fund the Trust in an amount sufficient to satisfy all amounts
that may from time to time be payable to the Indemnitee hereunder as
indemnification for Liabilities or Expenses (including those that are required
to be paid in advance hereunder). The amount or amounts to be deposited in the
Trust shall be determined by legal counsel selected by the Indemnitee and
approved by the Company, which approval shall not be unreasonably withheld. The
terms of the Trust shall provide that (i) the Trust shall not be dissolved or
the principal thereof invaded without the written consent of the Indemnitee;
(ii) the trustee of the Trust (the "TRUSTEE") shall be selected by the
Indemnitee; (iii) the Trustee shall make advances to the Indemnitee for Expenses
within five (5) business days following receipt of a written request therefor
and the Undertaking; (iv) the Company shall continue to fund the Trust from time
to time in accordance with its funding obligations hereunder; (v) the Trustee
promptly shall pay to the Indemnitee all amounts as to which indemnification is
due under this Agreement; (vi) unless the Indemnitee agrees otherwise in
writing, the Trust for the Indemnitee shall be kept separate from any other
trust established for any other person to whom indemnification might be due by
the Company; and (vii) all unexpended funds in the Trust shall revert to the
Company upon final, nonappealable determination by a court of competent
jurisdiction that the Indemnitee has been indemnified to the full extent
required under this Agreement.
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ARTICLE X
NON-EXCLUSIVITY, SUBROGATION AND MISCELLANEOUS
SECTION 10.1 NON-EXCLUSIVITY. The rights of the Indemnitee hereunder
shall not be deemed exclusive of any other rights to which the Indemnitee may at
any time be entitled under any provision of law, the Articles of Incorporation,
the Bylaws of the Company, as the same may be in effect from time to time, any
other agreement, a vote of stockholders of the Company or a resolution of
directors of the Company or otherwise (each an "INDEMNIFICATION ARRANGEMENT"),
and to the extent that during the term of this Agreement the rights of the
then-existing directors and officers of the Company are more favorable to such
directors or officers than the rights currently provided to the Indemnitee under
this Agreement, the Indemnitee shall be entitled to the full benefits of such
more favorable rights. No amendment, alteration, rescission or replacement of
this Agreement or any provision hereof which would in any way limit the benefits
and protections afforded to an Indemnitee hereby shall be effective as to such
Indemnitee with respect to any act or omission by such Indemnitee in the
Indemnitee's Corporate Status prior to such amendment, alteration, rescission or
replacement.
SECTION 10.2 SUBROGATION. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all documents
required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.
SECTION 10.3 NOTICES. All notices, requests, consents and other
communications herein (except as stated in the last sentence of this SECTION
10.3) shall be in writing and shall be mailed by first class or certified mail,
postage prepaid, sent by a nationally recognized overnight delivery service, or
personally delivered, as follows:
(a) If to the Company:
Royal BodyCare, Inc.
0000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxx, President
with a copy which shall not constitute notice to:
Xxxxxxxx Xxxxxxxx & Xxxxxx, P.C.
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: D. Xxxxxxx Xxxxxxxxx, Esq.
(b) If to the Indemnitee at the address shown in the address shown in
the Indemnitee's signature below.
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. For purposes of computing the time periods
set forth herein, the date of mailing shall be deemed to be the delivery date.
SECTION 10.4 GOVERNING LAW. The parties agree that this Agreement shall
be governed by, construed and enforced in accordance with, the substantive laws
of the State of Nevada, without regard to the principles of choice of laws
thereof.
SECTION 10.5 CONSOLIDATION, MERGER OR SALE OF ASSETS. The Company shall
not consolidate with or merge into any other corporation, partnership, limited
liability company or other entity or convey or transfer
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its properties and assets substantially as an entirety to any individual,
corporation, partnership, limited liability company or other entity, unless (i)
the entity formed by such consolidation or into which the Company is merged or
the individual or entity who or which acquires by conveyance or transfer the
properties and assets of the Company substantially as an entirety (in either
case, a "SUCCESSOR") shall be a citizen of or entity organized under the laws of
the United States of America, or any state thereof or the District of Columbia,
and shall by written agreement executed and delivered to the Indemnitee, in
form, scope and substance satisfactory to the Indemnitee and the Indemnitee's
legal counsel, expressly assume and agree to be bound by and to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform absent such consolidation, merger, conveyance or transfer,
and (ii) the Indemnitee shall have received an opinion, in form, scope and
substance satisfactory to the Indemnitee and the Indemnitee's legal counsel,
from counsel acceptable to the Indemnitee, that such written agreement to assume
and be bound by and perform this Agreement has been duly authorized by all
requisite actions, has been duly executed and delivered by the Successor and is
enforceable against the Successor (except to the extent enforceability may be
limited by bankruptcy or similar laws, general principles of equity or the
federal securities laws).
SECTION 10.6 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, legal representatives, successors and permitted assigns. This
Agreement cannot be assigned by the Company, either directly or indirectly, by
purchase, merger, consolidation or otherwise, without the express written
consent of the Indemnitee unless the Company shall have received, prior to such
assignment, from any successor or assignee (whether direct or indirect, by
purchase, merger, consolidation or otherwise) a written agreement, in form,
scope and substance reasonably satisfactory to the Indemnitee, expressly to
assume and agree to be bound by and to perform this Agreement in the same manner
and to the same extent as the Company would be required to perform absent such
succession or assignment.
SECTION 10.7 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
It is the express intention and agreement of the Company and the Indemnitee that
any court of competent jurisdiction that interprets or enforces this Agreement
have full power and authority to reform any provision of this Agreement to
modify the invalid or unenforceable provision to achieve the parties' intent to
provide the Indemnitee with indemnification for Liabilities and Expenses to the
maximum extent permitted by applicable law.
SECTION 10.8 WAIVER. No termination, cancellation, modification,
amendment, deletion, addition or other change in this Agreement, or any
provision hereof, or waiver of any right or remedy herein, shall be effective
for any purpose unless specifically set forth in a writing signed by the party
or parties to be bound thereby. The waiver of any right or remedy with respect
to any occurrence on one occasion shall not be deemed a waiver of such right or
remedy with respect to such occurrence on any other occasion.
SECTION 10.9 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding among the parties hereto in reference to the subject
matter hereof; provided, however, that the parties acknowledge and agree that
the NRS and the Articles of Incorporation and Bylaws of the Company and each of
its subsidiaries contain provisions on the subject matter hereof and that this
Agreement is not intended to, and does not, limit the rights or obligations of
the parties hereto pursuant to the NRS or such instruments, or under any other
contract, agreement, insurance policy or other instrument or document heretofore
or hereafter existing which provides to the Indemnitee any right of
indemnification or reimbursement of any nature whatsoever.
SECTION 10.10 TITLES. The titles to the articles and sections of this
Agreement are inserted for convenience of reference only and should not be
deemed a part hereof or affect the construction or interpretation of any
provisions hereof.
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SECTION 10.11 PRONOUNS AND PLURALS. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
SECTION 10.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together constitute one agreement binding on all the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ROYAL BODYCARE, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
INDEMNITEE
-------------------------------------
[Name]
[Address]
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