Item
6. Indemnification of Directors and Officers.
Nevada
Revised Statutes (“NRS”) 78.138(7) provides that, subject to limited statutory exceptions and unless the articles
of incorporation or an amendment thereto (in each case filed on or after October 1, 2003) provide for greater individual liability,
a director or officer is not individually liable to a corporation or its stockholders or creditors for any damages as a result
of any act or failure to act in his or her capacity as a director or officer unless it is proven that: (i) the act or failure
to act constituted a breach of his or her fiduciary duties as a director or officer and (ii) the breach of those duties involved
intentional misconduct, fraud or a knowing violation of law.
NRS
78.7502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation), by reason of the fact that the person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action,
suit or proceeding if the person (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the conduct was unlawful. NRS 78.7502(2) provides that a corporation
may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys’ fees actually and reasonably incurred by the person in connection with the defense
or settlement of the action or suit if the person (a) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in
a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation. To the extent that
a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any such
action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify him or her against
expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person is liable pursuant to NRS 78.138 or did not act in good
faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, or
that, with respect to any criminal action or proceeding, he or she had reasonable cause to believe that the conduct was unlawful.
Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to
the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
NRS
78.751(1) provides that any discretionary indemnification pursuant to NRS 78.7502 (unless ordered by a court or advanced pursuant
to NRS 78.751(2)), may be made by the corporation only as authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances. The determination must be made (i) by the stockholders;
(ii) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or
proceeding; (iii) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion; or (iv) if a quorum consisting of directors who were not parties
to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. NRS 78.751(2) provides
that the corporation’s articles of incorporation or bylaws, or an agreement made by the corporation, may provide that the
expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation
as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking
by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction
that the director or officer is not entitled to be indemnified by the corporation.
Under
the NRS, the indemnification pursuant to NRS 78.7502 and advancement of expenses authorized in or ordered by a court pursuant
to NRS 78.751:
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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
the person’s official capacity or an action in another capacity while holding office,
except that indemnification, unless ordered by a court pursuant to NRS 78.7502 or for
the advancement of expenses made pursuant to NRS 78.751(2), may not be made to or on
behalf of any director or officer if a final adjudication establishes that the director’s
or officer’s acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action; and
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Continues
for a person who has ceased to be a director, officer, employee or agent and inures to
the benefit of the heirs, executors and administrators of such a person.
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A
right to indemnification or to advancement of expenses arising under a provision of the articles of incorporation or any bylaw
is not eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject
of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of
expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination
or impairment after such action or omission has occurred.
The
Articles of Incorporation of the Company provide that to the fullest extent permitted under the NRS and other applicable law,
the Company shall indemnify directors and officers of the Company in their respective capacities as such and in any and all other
capacities in which any of them serves at the request of the Company. The Articles of Incorporation of the Company further provide
that the liability of its directors shall be limited to acts or omissions that involve intentional misconduct, knowing violation
of the law, conduct violating NRS 78.138(7), or any transaction from which the director will personally benefit. The Articles
of Incorporation state that if the NRS are amended to further eliminate or limit or authorize corporate action to further eliminate
or limit the liability of directors, the liability of directors of the Company shall be eliminated or limited to the fullest extent
permitted by the NRS.
The
By-Laws of the Company provide that the Company shall, to the fullest extent permitted by the NRS and other applicable law, indemnify,
hold harmless and defend any person who: (i) was or is a director or officer of the Company or was or is a director or officer
of a direct or indirect wholly-owned subsidiary of the Company, and (ii) was or is a party or is threatened to be made a party
to, or was or is otherwise directly involved in, any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that
such person was or is a director or officer of the Company or any direct or indirect wholly-owned subsidiary, or was or is serving
at the request of the Company as a director, officer, employee, partner, member or agent of another entity, against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe such person’s conduct was unlawful.
The
By-Laws further provide that the Company shall indemnify, hold harmless and defend any person who: (i) was or is a director or
officer of the Company or was or is a director or officer of a direct or indirect wholly-owned subsidiary, and (ii) was or is
a party or is threatened to be made a party to, or was or is otherwise directly involved in, any threatened, pending or completed
action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person was
or is a director or officer of the Company or any direct or indirect wholly-owned subsidiary, or was or is serving at the request
of the Company as a director, officer, employee, partner, member or agent of another entity, and whether the basis of such action,
suit or proceeding is alleged action in an official capacity or in any other capacity, against expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such
person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the
Company. However, no indemnification shall be made in respect of any matter as to which such person shall have been adjudged to
be liable to the Company unless and only to the extent that the court determines 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 expenses.
To
the extent that a director, officer, employee or agent has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to above, he or she must be indemnified by the Company against expenses, including attorneys’
fees, actually and reasonably incurred by such person in connection with the defense. The By-Laws further provide that any indemnification
under the foregoing provisions must be made by the Company only upon a determination that indemnification is proper in the circumstances,
which such determination shall be made by the (i) stockholders; (ii) by a majority vote of a quorum of the Board of Directors
consisting of directors who were not parties to the act, suit or proceeding; (iii) if a majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding so orders, by independent legal counsel in a written opinion; or
(iv) if a quorum consisting of directors who were not parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion. The By-Laws also provide that expenses shall be paid in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by the involved director or officer to repay such amount if it
shall ultimately be determined that such person is not entitled to be indemnified by the Company.
Further,
the Company has entered into employment agreements with its Chief Executive Officer and Chief Operating Officer, both of whom
are directors, that require the Company to indemnify these individuals for certain expenses (including attorneys’ fees),
judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by
or in our right, on account of any services undertaken by such person on behalf of the Company or that person’s status as
an officer or a member of the Board of Directors to the maximum extent allowed under applicable Nevada law. The Company maintains
standard policies of insurance under which coverage is provided (a) to its directors and officers against loss rising from claims
made by reason of breach of duty or other wrongful act, and (b) to the Company with respect to payments which may be made by the
Company to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.
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 the Registration Statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (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, represent 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 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement;
(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
the Registration Statement; and
(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; and
(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 (and, where applicable,
each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated
by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered
herein, 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.