EXHIBIT 10.4
VITALSTATE, INC.
INDEMNITY AGREEMENT
This Indemnity Agreement, effective as of __________, 2003, is made by and
between Vitalstate Inc., a New York corporation (the "Company"), and _________,
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a director of the Company (the "Indemnitee").
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RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors and
officers;
B. Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
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talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company to contractually
indemnify officers and directors, and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;
C. Section 722 of the Business Corporation Law of the State of New York,
under which the Company is organized ("Section 722"), empowers the Company to
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indemnify by agreement its officers, directors, employees and agents, and
persons who serve, at the request of the Company, as directors, officers,
employees or agents of other corporations or enterprises; in addition, Section
721 expressly provides that the indemnification provided by Section 722 is not
exclusive;
D. The Company desires the Indemnitee to serve or continue to serve as a
director or officer of the Company free from undue concern for claims for
damages arising out of or related to such services to the Company; and
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions.
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1.1 Agent. For the purposes of this Agreement, "agent" of the Company
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means any person who is or was a director or officer of the Company or a
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subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interest of the Company or a subsidiary of
the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the
Company; or was a director or officer of a foreign or domestic corporation which
was a predecessor corporation of the Company or a subsidiary of the Company, or
was a director or officer of another enterprise or affiliate of the Company at
the request of, for the convenience of, or to represent the interests of such
predecessor corporation. The term "enterprise" includes any employee benefit
plan of the Company, its subsidiaries, affiliates and predecessor corporations.
1.2 Expenses. For purposes of this Agreement, "expenses" includes all
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direct and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement,
Section 722 or otherwise; provided, however, that expenses shall not include any
judgments, fees, ERISA excise taxes or penalties or amounts paid in settlement
of a proceeding.
1.3 Proceeding. For the purposes of this Agreement, "proceeding" means
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any threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type whatsoever.
1.4 Subsidiary. For purposes of this Agreement, "subsidiary" means any
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corporation of which more than 50% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or more other
subsidiaries, or by one or more other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue
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to serve as an agent of the Company, at the will of the Company (or under
separate agreement, if such agreement exists), in the capacity Indemnitee
currently serves as an agent of the Company, faithfully and to the best of his
ability so long as he is duly appointed or elected and qualified in accordance
with the applicable provisions of the Bylaws or charter documents of the Company
or any subsidiary of the Company; provided, however, that Indemnitee may at any
time and for any reason resign from such position (subject to any contractual
obligation that Indemnitee may have assumed apart from this Agreement) and that
the Company or any subsidiary shall have no obligation under this Agreement to
continue Indemnitee in any such position.
3. Mandatory Indemnification. The Company shall indemnify the
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Indemnitee:
3.1 Third Party Actions. If the Indemnitee is a person who was or is a
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party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties, and amounts paid in settlement) actually and reasonably incurred
by him in connection with the investigation, defense, settlement or appeal of
such proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
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to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and
3.2 Derivative Actions. If the Indemnitee is a person who was or is a
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party or is threatened to be made a party to any proceeding by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, against any amounts paid in settlement of any such
proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement, or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that 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, such person is
fairly and reasonably entitled to indemnity for such amounts which such court
shall deem proper; and
3.3 Exception for Amounts Covered by Insurance. Notwithstanding the
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foregoing, the Company shall not be obligated to indemnify the Indemnitee for
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to Indemnitee by directors' and
officers' liability insurance ("D&O Insurance").
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4. Partial Indemnification. If the Indemnitee is entitled under any
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provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding but not entitled, however, to indemnification for all of
the total amount thereof, the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled.
5. Mandatory Advancement of Expenses. Subject to Section 8 below, the
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Company shall advance all expenses incurred by the Indemnitee in connection with
the investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company or by reason of anything
done or not done by him in any such capacity. Indemnitee hereby undertakes to
repay such amounts advanced only if, and to the extent that, it shall ultimately
be determined that the Indemnitee is not entitled to be indemnified by the
Company under the provisions of this Agreement, the Certificate of Incorporation
or Bylaws of the Company, the Business Corporation Law of the State of New York
or otherwise. The advances to be made hereunder shall be paid by the Company to
the Indemnitee within forty-five (45) days following delivery of a written
request therefor by the Indemnitee to the Company. Notwithstanding the
foregoing provisions of this Section 5, the Company shall not be obligated to
advance any expenses to Indemnitee arising from a lawsuit filed by the Company
against the Indemnitee if a determination is reasonably made in good faith,
within forty-five (45) days of Indemnitee's request to be advanced expenses, by
the Board of Directors by a majority vote of a quorum consisting of directors
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who are not parties to the proceeding (or, if no such quorum exists, by
independent legal counsel in a written opinion) that the facts known to the
decision making party at the time such determination is made demonstrate clearly
and convincingly that such person acted in bad faith or in a manner that such
person did not believe to be in, or not opposed to, the best interests of the
Company. If the Board of Directors makes such a determination, Indemnitee may
have such decision reviewed by another forum, in the manner set forth in
Sections 7.3, 7.4 and 7.5 hereof, and the burden of proof shall be on the
Company to demonstrate that, based on the facts known at the time, the
Indemnitee acted in a manner set forth in the previous sentence.
6. Notice and Other Indemnification Procedures.
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6.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
6.2 If, at the time of the receipt of a notice of the commencement of a
proceeding pursuant to Section 6.1 hereof, the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding 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 proceeding in accordance with the terms of
such policies.
6.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of such
counsel by the Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to the Indemnitee under this Agreement for any fees
of counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (a) the Indemnitee shall have the right to employ his
own counsel in any such proceeding at the Indemnitee's expense; (b) the
Indemnitee shall have the right to employ his own counsel in connection with any
such proceeding, at the expense of the Company, if such counsel serves in a
review, observer, advice and counseling capacity and does not otherwise
materially control or participate in the defense of such proceeding; and (c) if
(i) the employment of counsel by the Indemnitee has been previously authorized
by the Company, (ii) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee in the
conduct of any such defense or (iii) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the fees and
expenses of Indemnitee's counsel shall be at the expense of the Company.
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7. Determination of Right to Indemnification.
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7.1 To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 3.1 or 3.2 of this
Agreement or in the defense of any claim, issue or matter described therein, the
Company shall indemnify the Indemnitee against expenses actually and reasonably
incurred by him in connection with the investigation, defense or appeal of such
proceeding.
7.2 In the event that Section 7.1 is inapplicable, the Company shall
nonetheless indemnify the Indemnitee unless the Company shall prove by clear and
convincing evidence to a forum listed in Section 7.3 below that the Indemnitee
has not met the applicable standard of conduct required to entitle the
Indemnitee to such indemnification.
7.3 The Indemnitee shall be entitled to select the forum in which the
validity of the Company's claim under Section 7.2 hereof that the Indemnitee is
not entitled to indemnification will be heard from among the following:
(a) A quorum of the Board consisting of directors who are not parties
to the proceeding for which indemnification is being sought;
(b) The stockholders of the Company;
(c) Legal counsel selected by the Indemnitee, and reasonably approved
by the Board, which counsel shall make such determination in a written
opinion; or
(d) A panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by the Indemnitee and the last of whom
is selected by the first two arbitrators so selected.
7.4 As soon as practicable, and in no event later than 30 days after
written notice of the Indemnitee's choice of forum pursuant to Section 7.3
above, the Company shall, at its own expense, 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.
7.5 If the forum listed in Section 7.3 hereof selected by Indemnitee
determines that Indemnitee is entitled to indemnification with respect to a
specific proceeding, such determination shall be final and binding on the
Company. If the forum listed in Section 7.3 hereof selected by Indemnitee
determines that Indemnitee is not entitled to indemnification with respect to a
specific proceeding, the Indemnitee shall have the right to apply to the court
in which that proceeding is or was pending or any other court of competent
jurisdiction, for the purpose of enforcing the Indemnitee's right to
indemnification pursuant to the Agreement.
7.6 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 or proceeding under
this Section 7 involving the Indemnitee and against all expenses incurred by the
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Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement. unless a court of competent jurisdiction finds
that each of the, material claims and/or defenses of the Indemnitee in any such
proceeding was frivolous or not made in good faith.
8. Exceptions. Any other provision herein to the contrary
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notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
8.1 Claims Initiated by Indemnitee. To indemnify or advance expenses
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to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
proceedings specifically authorized by the Board of Directors or brought to
establish or enforce a right to indemnification under this Agreement, the Bylaws
or charter documents of the Company or any subsidiary, or any statute or law or
otherwise as required under Section 722, but such indemnification or advancement
of expenses may be provided by the Company in specific cases if the Board of
Directors finds it to be appropriate; or
8.2 Unauthorized Settlements. To indemnify the Indemnitee hereunder
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for any amounts paid in settlement of a proceeding unless the Company
consents in advance in writing to such settlement; or
8.3 Unlawful Indemnification. To indemnify the Indemnitee if a final
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decision by a court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities law is
against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication.
9. Non-exclusivity. The provisions for indemnification and advancement
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of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Certificate of Incorporation or Bylaws, the vote of the Company's
stockholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
10. General Provisions
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10.1 Interpretation of Agreement. It is understood that the parties
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hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law, except as expressly limited herein.
10.2 Severability. If any provision or provisions of this Agreement
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shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
(a) the validity, legality and enforceability of the remaining provisions of the
Agreement (including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
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unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 10.1 hereof
10.3 Modification and Waiver. No supplement, modification or amendment of
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this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
10.4 Subrogation. In the event of payment under this Agreement, the Company
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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 or desirable to secure such rights and to enable
the Company effectively to bring suit to enforce such rights.
10.5 Counterparts. This Agreement may be executed in one or more
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counterparts, which shall together constitute one agreement.
10.6 Successors and Assigns. The terms of this Agreement shall bind, and
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shall inure to the benefit of, the successors and assigns of the parties hereto.
10.7 Notice. All notices, requests, demands and other communications under
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this Agreement shall be in writing and shall be deemed duly given (a) if
delivered by hand and receipted for by the party addressee or (b) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
10.8 Governing Law. This Agreement shall be governed exclusively by and
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construed according to the laws of the State of New York, as applied to
contracts between New York residents entered into and to be performed entirely
with New York.
10.9 Consent to Jurisdiction. The Company and the Indemnitee each hereby
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irrevocably consent to the jurisdiction of the courts of the State of New York
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement.
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The parties hereto have entered into this Indemnity Agreement effective as
of the date first written above.
VITALSTATE, INC.
By: ______________________________
Name:
Title:
Address: 0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
INDEMNITEE
___________________________________
Name:
Address:
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