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Item
6.
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Indemnification of Directors and Officers.
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The
Registrant is a Utah corporation and is governed generally by Utah
corporation law. The Registrant’s Articles of Incorporation
and Bylaws, each as amended, restated, and currently in effect,
provide that the Registrant shall indemnify and limit the personal
liability of its officers and directors to the fullest extent
permitted by applicable law.
Section 16-10a-841 of
the Utah Revised Business Corporation Act (the “Revised
Act”) allows a Utah corporation to provide, in its articles
of incorporation, bylaws or by shareholder resolution, for the
elimination or limitation of personal liability of a director to
the corporation or to its shareholders for monetary damages for any
action or omission, as a director, except (i) liability for a
financial benefit received by a director to which he was not
entitled, (ii) intentional infliction of harm on the corporation or
the shareholders, (iii) an unlawful distribution to shareholders in
violation of the Revised Act, and (iv) intentional violation of
criminal law.
Section
16-10a-902 of the Revised Act provides that a Utah corporation may
indemnify any individual made a party to a proceeding because he or
she is or was a director, against liability incurred in the
proceeding, if: (a) the director’s conduct was in good faith,
(b) the director reasonably believed that his or her conduct was
in, or not opposed to, the corporation’s best interests; and
(c) in the case of any criminal proceeding, the director had no
reasonable cause to believe such conduct was unlawful; provided, however, that a corporation
may not indemnify a director under Section 16-10a-902 if the
director was adjudged liable to the corporation in a proceeding by
or in the right of the corporation or adjudged liable for deriving
an improper personal benefit. All indemnification is limited to
reasonable expenses only.
Section
16-10a-903 of the Revised Act provides that, unless limited by its
articles of incorporation, a Utah corporation shall indemnify a
director who was 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
he or she is or was a director of the corporation, against
reasonable expenses incurred in connection with the proceeding or
claim with respect to which the director has been
successful.
In
addition to the indemnification provided by Sections 16-10a-902 and
16-10a-903, Section 6-10a-905 of the Revised Act provides that,
unless otherwise limited by a corporation’s articles of
incorporation, a director may apply for indemnification to the
court conducting the proceeding or to another court of competent
jurisdiction.
Under
Section 16-10a-904 of the Revised Act, a Utah corporation may pay
for or reimburse the reasonable expenses incurred by a director in
advance of final disposition of the proceeding if the director
furnishes the corporation a written affirmation of his or her good
faith belief that the director has met the applicable standard of
conduct, provides a written undertaking personally binding the
director to pay the advance if it is ultimately determined that he
or she did not meet the standard of conduct, and a determination is
made that the facts then known to those making a determination
would not preclude indemnification. The director’s
undertaking need not be secured and may be accepted without
reference to financial ability to make repayment. Section
16-10a-906 of the Revised Act prohibits a corporation from making
any discretionary indemnification, payment or reimbursement of
expenses unless a determination has been made that the director has
met the applicable standard of conduct.
We have
obtained directors’ and officers’ liability insurance,
which subject to certain exclusions, insures against certain
liabilities that our directors and officers and the directors and
officers of our subsidiaries may, in such capacities, incur. We
have entered into indemnification agreements with our directors and
certain officers, in addition to the indemnification provided for
in the Revised Act, its Articles of Incorporation and Bylaws and we
intend to enter into indemnification agreements with any new
directors and officers in the future.
The
foregoing discussion of the Registrant’s Articles of
Incorporation, Bylaws, indemnification agreements and Utah law is
not intended to be exhaustive and is qualified in its entirety by
such Articles of Incorporation, Bylaws, indemnification agreements
or law.