|
|
|
|
|
|
ITEM 6.
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
|
Section 78.7502 of the Nevada Revised Statutes provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the registrant or having served at the request of the corporation, 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 corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful; provided that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the adjudicating court determines that such indemnification is proper under the circumstances.
Except as otherwise provided in the Nevada Revised Statutes, or unless the articles of incorporation or an amendment thereto, in each case filed on or after October 1, 2003, provide for greater liability, section 78.138 of the Nevada Revised Statutes provides that a director or officer of the corporation will not be personally liable to the corporation, its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity unless it is proven that the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer, and the breach of those duties involved intentional misconduct, fraud or a knowing violation of the law.
Article 12 of the Registrant’s Amended and Restated Articles of Incorporation, as amended (included as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2005, filed March 31, 2006), provides that no director or officer shall have any personal liability to the corporation or its stockholders for damages for breach of fiduciary duty as a director or officer of the corporation, except that the article does not eliminate or limit the liability
of a director or officer for (i) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of dividends in violation of the Nevada Revised Statutes.
Article 11 of the Registrant’s Amended and Restated Bylaws, as amended (included as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2005, filed March 31, 2006), provides for the indemnification of every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he/she or a person of whom he/she is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation or for its benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, to the fullest legally permissible extent under the general Corporation law of the State of Nevada.
The employment agreements between the Company and its executive officers Louis Hoch, Tom Jewell, and Vaden Landers, provide that, to the full extent allowed by law, the Company shall hold harmless and indemnify the executive, his executors, administrators or assigns, against any and all judgments, penalties (including excise and similar taxes), fines, settlements and reasonable expenses (including attorney’s fees) actually incurred by the executive (net of any related insurance proceeds or other amounts received by the executive or paid by or on behalf of the Company on the executive’s behalf in compensation of such judgments, penalties, fines, settlements or expenses) in connection with any threatened, actual or completed action, suit or proceeding, whether civil, criminal, arbitral, administrative or investigative, or any appeal in such action, suit or proceeding, to which the Executive was, is or is threatened to be made a named defendant or respondent, because such person is or was a director or officer of the Company, or is or was serving at the request of the Company.
The independent director agreements between the Company and each of its independent directors provide that each director shall be entitled to limitations of liability and the right to indemnification against expenses and damages in connection with claims against the director relating to his service to the Company to the fullest extent permitted by the Company’s Certificate of Incorporation and Bylaws (as such documents may be amended from time to time) and other applicable law.