Item
6.
Indemnification of Directors and
Officers
.
Sections 55-8-50 through 55-8-58 of the North Carolina General
Statutes permit a corporation to indemnify its directors, officers,
employees or agents under either or both a statutory or
non-statutory scheme of indemnification. Under the statutory
scheme, a corporation may, with certain exceptions, indemnify a
director, officer, employee or agent of the corporation who was,
is, or is threatened to be made, a party to any threatened, pending
or completed legal action, suit or proceeding, whether civil,
criminal, administrative, or investigative, because of the fact
that such person was a director, officer, agent or employee of the
corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation or enterprise. This indemnity may include the
obligation to pay any judgment, settlement, penalty, fine
(including an excise tax assessed with respect to an employee
benefit plan) and reasonable expenses incurred in connection with a
proceeding (including counsel fees), but no such indemnification
may be granted unless such director, officer, agent or employee (i)
conducted himself in good faith, (ii) reasonably believed (a) that
any action taken in his official capacity with the corporation was
in the best interest of the corporation or (b) that in all other
cases his conduct at least was not opposed to the
corporation’s best interest, and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct
was unlawful. Whether a director has met the requisite standard of
conduct for the type of indemnification set forth above is
determined by the board of directors, a committee of directors,
special legal counsel or the shareholders in accordance with
Section 55-8-55. A corporation may not indemnify a director under
the statutory scheme in connection with a proceeding by or in the
right of the corporation in which the director was adjudged liable
to the corporation or in connection with a proceeding in which a
director was adjudged liable on the basis of having received an
improper personal benefit.
In addition to, and separate and apart from the indemnification
described above under the statutory scheme, Section 55-8-57 of
the North Carolina General Statutes permits a corporation to
indemnify or agree to indemnify any of its directors, officers,
employees or agents against liability and expenses (including
attorney’s fees) in any proceeding (including proceedings
brought by or on behalf of the corporation) arising out of their
status as such or their activities in such capacities, except for
any liabilities or expenses incurred on account of activities that
were, at the time taken, known or believed by the person to be
clearly in conflict with the best interests of the corporation. Our
bylaws provide for indemnification to the fullest extent permitted
by law for persons who serve as a director, officer, agent or
employee of Level Brands or at the request of Level Brands serve as
a director, officer, agent or employee for any other corporation,
partnership, joint venture, trust or other enterprise, or as a
trustee or administrator under an employee benefit plan.
Accordingly, we may indemnify our directors, officers, agents or
employees in accordance with either the statutory or non-statutory
standards.
Sections 55-8-52 and 55-8-56 of the North Carolina General Statutes
require a corporation, unless its articles of incorporation provide
otherwise, to indemnify a director or officer who has been wholly
successful, on the merits or otherwise, in the defense of any
proceeding to which such director or officer was a party. Unless
prohibited by the articles of incorporation, a director or officer
also may make application and obtain court-ordered indemnification
if the court determines that such director or officer is fairly and
reasonably entitled to such indemnification as provided in Sections
55-8-54 and 55-8-56.
Finally, Section 55-8-57 of the North Carolina General Statutes
provides that a corporation may purchase and maintain insurance on
behalf of an individual who is or was a director, officer, employee
or agent of the corporation against certain liabilities incurred by
such persons, whether or not the corporation is otherwise
authorized by the North Carolina Business Corporation Act to
indemnify such party. We have purchased a standard directors’
and officers’ liability policy which will, subject to certain
limitations, indemnify us and our officers and directors for
damages they become legally obligated to pay as a result of any
negligent act, error, or omission committed by directors or
officers while acting in their capacity as such.
As permitted by North Carolina law, Article 6 of our Articles of
Incorporation limits the personal liability of directors for
monetary damages for breaches of duty as a director arising out of
any legal action for breach of duty as a director.
Item
9.
Undertakings
.
(a)
The undersigned
rregistrant 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, 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) of
Securities Act if, in the aggregate, the changes in volume and
price represent no more than 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 information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic 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.
(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 herein,
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 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.