Item 6. Indemnification of Directors and Officers.
The Registrant is a Utah corporation and subject
to the provisions of the Utah Revised Business Corporation Act
(Section 16-10a-101 et seq. of the Utah Code or the
“Utah
Act”), which includes
provisions related to indemnification of directors and officers.
The key terms of the Utah Act applicable to indemnification of
directors and officers are summarized below.
Section
16-10a-902 allows a corporation to indemnify any individual made a
party to a proceeding because the party is or was a director of the
corporation if (a) the conduct was in good faith, (b) the party
reasonably believed that their conduct was in, or not opposed to,
the best interests of the corporation, and (c) in the case of any
criminal proceeding, the party had no reasonable cause to believe
such conduct was unlawful. Such indemnification is limited to
reasonable expenses (including attorney’s fees) incurred in
connection with any such proceeding. Notwithstanding the foregoing,
Section 16-10a-902(4)-(5) of the Utah Act provides that a
corporation may not indemnify a director in connection
with:
(i)
any
proceeding brought by or in the right of the corporation (including
any derivative actions) if that director was adjudged liable to the
corporation; and
(ii)
any
other proceeding charging that the director derived an improper
personal benefit, whether or not involving action in his or her
official capacity, in which proceeding he or she was adjudged
liable on the basis that he or she derived an improper personal
benefit.
Section
16-10a-903 provides that, unless limited by its articles of
incorporation, a corporation must indemnify a director who is
successful, on the merits or otherwise, in the defense of any
proceeding, or in the defense of any claim, issue or matter in the
proceeding, to which the director was a party because the director
is or was a director of the corporation, against reasonable
expenses (including attorneys’ fees) incurred in connection
with the proceeding or claim with respect to which the director has
been successful.
Section
16-10a-904 allows a corporation to pay for or reimburse the
reasonable expenses (including attorneys’ fees) incurred by a
director who is a party to a proceeding in advance of the final
disposition of the proceeding upon certain affirmations,
undertakings and determinations required thereunder.
Section
16-10a-905 provides that, unless otherwise limited by a
corporation’s articles of incorporation, a director who is or
was a party to a proceeding may apply for indemnification to the
court conducting the proceeding or to another court of competent
jurisdiction. The court may order such indemnification if it
determines that the director is entitled to mandatory
indemnification under Section 16-10a-903 or is otherwise fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances.
Section
16-10a-906 provides a corporation may only indemnify a director
pursuant to Section 16-10a-902 if a determination is made in the
specific proceeding that indemnification is permissible in the
circumstances and such indemnification is authorized by the
corporation. Similarly, authorization is required for a corporation
to advance expenses under Section 16-10a-904.
Section
16-10a-907 provides that, unless otherwise limited by a
corporation’s articles of incorporation:
(i)
an
officer of the corporation is entitled to mandatory indemnification
under Section 16-10a-903 and is entitled to apply for court-ordered
indemnification under Section 16-10a-905, in each case to the same
extent as a director;
(ii)
the
corporation may indemnify and advance expenses to an officer,
employee, fiduciary or agent of the corporation to the same extent
as a director; and
(iii)
a
corporation may also indemnify and advance expenses to an officer,
employee, fiduciary or agent who is not a director to a greater
extent than the right of indemnification granted to a director, if
not inconsistent with public policy and if provided for by its
articles of incorporation, bylaws, general or specific action of
its board of directors or contract.
Section
16-10a-908 allows a corporation to purchase and maintain liability
insurance on behalf of a person who is or was a director, officer,
employee, fiduciary or agent of the corporation or who, while
serving in any such capacity, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another foreign or domestic corporation or
other person, or of an employee benefit plan, in each case, against
liability asserted against or incurred by the individual in that
capacity or arising from his or her status as such. Such insurance
may be purchased and maintained whether or not the corporation
would have the power to indemnify any such person against the same
liability under Sections 16-10a-902, 903 or 907.
Under
Section 16-10a-909, a provision treating a corporation’s
indemnification of, or advance for expenses to, directors that is
contained in its articles of incorporation or bylaws, in a
resolution of its shareholders or board of directors or in a
contract (except an insurance policy) or otherwise, will only be
valid if and to the extent that provision is not inconsistent with
Sections 16-10a-901 through 909. Additionally, if the articles of
incorporation of a corporation limit indemnification or advancement
of expenses, then such indemnification and advancement of expenses
will be valid only to the extent not inconsistent with such
articles.
The Registrant’s Amended and Restated
Articles of Incorporation (the “Articles”) require the Registrant to indemnify our
directors and officers against liabilities incurred by them that
result from acts performed by them in furtherance of the business
of the corporation to the fullest extent permitted by Utah
law.
The
Registrant’s Amended and Restated Bylaws (the
“Bylaws”) also include mandatory indemnification
provisions with respect to our directors and officers and
discretionary indemnification provisions with respect to employees
and agents, each subject to limitations generally reflecting the
limitations on indemnification set forth in the Utah Act (as
discussed above). The Bylaws also allow us to purchase and maintain
insurance on behalf of any person who is or was one of our
directors or officers (or is or was serving at our request as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) against any
liability asserted against, or incurred by, him or her in such
capacity or arising out of his or her status in such capacity,
whether or not we would have the power to indemnify him or her
against such liability under the indemnification provisions of the
Bylaws or Utah law. We maintain insurance from commercial carriers
against certain liabilities that may be incurred by our directors
and officers.
The
Registrant has also entered into indemnification agreements with
its directors and certain of our executive officers, pursuant to
which we have, among other things, agreed to defend, indemnify and
hold harmless each such person to the fullest extent permitted by
the Utah Act if he or she is or was a party, or is threatened to be
made a party, to any proceeding (other than derivative proceedings)
by reason of his or her role as a director, officer or agent of the
company or its subsidiaries. The Registrant has also agreed to
defend, indemnify and hold harmless each such person to the fullest
extent permitted by the Utah Act in connection with any derivative
proceeding to which such person was or is, or is threatened to be
made, a party if he or she acted in good faith and in a manner
reasonably believed by him or her to be in the best interests of
our company and shareholders, unless such person is found by a
court to be liable to our company and shareholders in performance
of his or her duties. Under these agreements, each person is
presumed to have satisfied the applicable standard of conduct
necessary to be indemnified by our company, a presumption that may
only be rebutted by clear and convincing evidence to the
contrary.
Indemnification
may also be granted to our directors and officers in the future
pursuant to other agreements, amendments to the Articles or Bylaws
or by vote of our shareholders or directors.
The
foregoing descriptions are summary in nature, do not describe all
details regarding the indemnification of our officers, directors or
controlling persons and are subject in its entirety by reference to
the applicable provisions of the Utah Act, the Articles and Bylaws
and such indemnification agreements.
Item 9. Undertakings.
(a) The
undersigned Registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration
Statement:
(i) To
include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To
reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the
effective Registration Statement; and
(iii)
To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
Provided, however, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That,
for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The
undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the Registrant’s annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference
in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such
issue.