Item 6.
|
Indemnification of Directors and Officers.
|
The
Registrant is incorporated in Delaware and consequently is subject to the Delaware General Corporation Law (the “DGCL”).
Section 145 of the DGCL provides a detailed statutory framework covering indemnification of directors and officers who have
been or are threatened to be or have been made defendants in legal proceedings by reason of their service as directors or officers
of the Registrant. The Registrant’s By-laws provide, in effect, that the Registrant shall indemnify its directors and officers
to the maximum extent permitted by Delaware law. Article V, Sections 1 through 9 of the By-Laws of the Registrant provide as follows:
“Section 1.
Actions other than by or in the Right of the Corporation. The corporation shall 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 he 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 him in
connection with such action, suit or 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 corporation, and, with respect to any criminal action or proceedings, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he 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 reasonable cause to believe that his conduct was unlawful.
Section 2.
Actions by or in the Right of the Corporation. The corporation shall 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 his favor by reason of the fact that he 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 attorney’s fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit 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 corporation and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances for the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper.
Section 3.
Success on the Merits. To the extent that any person described in Section 1 or 2 of this Article V has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to in said Sections, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred
by him in connection therewith.
Section 4.
Specific Authorization. Any indemnification under Section 1 or 2 of this Article V (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination that indemnification of any person described in
said Sections is proper in the circumstances because he has met the applicable standard of conduct set forth in said Sections.
Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a quorum
of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders to the
corporation.
Section 5.
Advance Payment. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of any person
described in said Section to repay such amount if it shall ultimately be determined that he is not entitled to indemnification
by the corporation as authorized in this Article V.
Section 6.
Non-Exclusivity. The indemnification and advancement of expenses provided by, or granted pursuant to, the other Sections of this
Article V shall not be deemed exclusive of any other rights to which those provided indemnification or advancement of expenses
may be entitled under any By-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such office.
Section 7.
Insurance. The Board of Directors may authorize, by a vote of the majority of the full board, the corporation to purchase and
maintain insurance on behalf of any person who 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 any liability asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the
provisions of this Article V.
Section 8.
Continuation of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article V shall continue as to a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a person.
Section 9.
Intent of Article. The intent of this Article V is to provide for indemnification and advancement of expenses to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware. To the extent that such Section or any successor action
may be amended or supplemented from time to time, this Article V shall be amended automatically and construed so as to permit
indemnification and advancement of expenses to the fullest extent from time to time permitted by law.”
Reference
is made to Article Eighth of the Registrant’s Certificate of Incorporation, which provides as follows:
“EIGHTH.
A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit. In addition to and not in limitation of the foregoing, a director of the corporation
shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director to
the fullest extent provided by the General Corporation Law of Delaware as the same may hereafter be amended.”
Reference
is also made to Section 145 of the DGCL, which provides as follows:
“(a)
A corporation shall have power to 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 such action, suit or proceeding
if the person acted in good faith and in a manner the 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 the person’s
conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith
and in a manner which the 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 reasonable cause to believe that the person’s conduct was unlawful.
(b)
A corporation shall have power to 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 attorneys’ fees) actually and reasonably incurred by the person in connection with
the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit 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 expenses which the Court of Chancery or such other court shall deem proper.
(c)
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any
claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection therewith.
(d)
Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that indemnification of the present or former director, officer,
employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer
at the time of such determination: (1) by a majority vote of the directors who are not parties to such action, suit or proceeding,
even though less than a quorum; or (2) by a committee of such directors designated by majority vote of such directors, even
though less than a quorum; or (3) if there are no such directors, or if such directors so direct, by independent legal counsel
in a written opinion; or (4) by the stockholders.
(e)
Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including
attorneys’ fees) incurred by former directors and officers or other employees and agents or by persons serving at the request
of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other
enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
(f)
The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s
official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement
of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an
amendment to the certificate of incorporation or the bylaws 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.
(g)
A corporation shall have power to purchase and maintain insurance on behalf of any person who 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 any liability asserted against such person
and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation
would have the power to indemnify such person against such liability under this section.
(h)
For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(i)
For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to
“fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references
to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent
of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.
(j)
The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such a person.
(k)
The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses
or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors,
or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’
fees).”
As
permitted by the By-laws, the Registrant also presently maintains a policy of directors’ and officers’ liability insurance.
The
Registrant has also entered into an indemnification agreement (the “Indemnification Agreement”) with each of its directors
and executive officers which is intended to complement the indemnity and protection available under the Registrant’s Certificate
of Incorporation and By-laws and the directors’ and officers’ liability insurance policy maintained by the Registrant,
and to provide for indemnification of directors and officers to the fullest extent permitted by applicable law.
While
the Registrant’s By-laws provide, in effect, that the Registrant shall indemnify directors and officers to the maximum extent
permitted by Delaware law, the Indemnification Agreement provides a number of procedures, presumptions and remedies used in the
determination of the right of the director or officer to indemnification. These procedures, presumptions and remedies substantially
broaden the indemnity rights of directors and officers beyond those expressly contained in the By-laws and in Section 145
of the DGCL.
The
Indemnification Agreement provides that the Registrant will pay certain expenses incurred by a director or officer in connection
with any threatened, pending or completed action, suit, arbitration or proceeding, whether civil, criminal, administrative, or
investigative, and specifically including actions by or in the name of the Registrant (“derivative suits”), where
the individual’s involvement is by reason of the fact that he is or was a director or officer. Such amounts include attorneys’
fees and other expenses customarily incurred in connection with legal proceedings and, in the case of proceedings other than derivative
suits, judgments, fines and amounts paid in settlement. Indemnification would be available for actions, suits, arbitrations or
proceedings commenced after the effective date of the Indemnification Agreement. A director or officer will not receive indemnification
if the director or officer is found not to have acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Registrant.
The
Indemnification Agreement further provides that if an action against an indemnified party is dismissed, with or without prejudice,
the defense is deemed to have been successful and indemnification is required to be made. The Indemnification Agreement also provides
that litigation expenses must be advanced within twenty days of any request, against an undertaking to repay if the payee is ultimately
determined not be entitled to indemnification. A determination of entitlement must be made within sixty days of an indemnification
request, and payment is to be made within ten days after a favorable determination. (Otherwise a determination in favor of the
indemnified party is deemed to have been made.) If there is a change in control of the Registrant (as defined in the Indemnification
Agreement), the indemnified party is presumed to be entitled to indemnification (although the Registrant may overcome this presumption),
and the indemnified party may require that independent counsel (as defined in the Indemnification Agreement) make the determination
of entitlement and may choose such counsel, subject to objection by the Registrant on limited grounds specified in the Indemnification
Agreement. If a determination of entitlement is made, the Registrant is bound, but if the indemnified party is denied indemnification
pursuant to the terms of the Indemnification Agreement he or she is entitled to seek a DE NOVO determination from a court. The
indemnified party is entitled to enforce the Indemnification Agreement in court and the Registrant is precluded from challenging
the validity of the procedures and presumptions contained in the Indemnification Agreement.