Indemnification Agreement - RoomSystems Inc. and Alan C. Ashton
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATIION AGREEMENT (this "Agreement") is entered into
effective as of August 17, 1999, by and between RoomSystems, Inc., a Nevada
corporation (the "Corporation"), and ALAN C. ASHTON ("Indemnitee"), based on the
following premises.
Premises
A. The articles of incorporation of the Corporation (the "Articles") and
the bylaws (the "Bylaws") provide for indemnification of the Corporation's
directors and officers in accordance with the Domestic and Foreign Corporation
laws of Nevada (the "Statute").
B. The Articles, Bylaws, and Statute contemplate that contracts and other
arrangements may be entered into with respect to indemnification of officers and
directors.
C. It is reasonable, prudent, and necessary for the Corporation to
obligate itself contractually to indemnify Indemnitee so that he will to serve
as a director of the Corporation and will be able to service the Corporation
free from undue concern that he will not be adequately protected.
D. Indemnitee is willing to serve the Corporation on condition that he is
indemnified on the terms and conditions of this Agreement.
E. The directors of the Corporation have duly approved this Agreement and
the indemnification provided herein with the express recognition that the
indemnification arrangements provided herein exceed that which the Corporation
would be required to provide pursuant to Section 78.751 of the Statute.
Agreement
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
1. Definitions. As used in this Agreement.
a. The term "Proceeding" shall include any threatened, pending, or
completed action, suit, or proceeding, whether brought by or in the right
of the Corporation or otherwise and whether of a civil, criminal,
administrative, or investigative nature, in which Indemnitee was, is, or
will be involved as a party, as a witness, or otherwise, by reason of the
fact that Indemnitee is or was a director, officer, agent, or advisor of
the Corporation, by reason of any action taken by him or of any inaction
on his part while acting as a director, officer, agent, or advisor of the
Corporation, or by reason of the fact that he is or was serving at the
request of the Corporation as a director, officer, employee, agent, or
advisor of another corporation, partnership, joint venture, trust, limited
liability company, or other entity or enterprise, in each case whether or
not he is acting or serving in any such capacity at the time any liability
or expense is incurred for which indemnification or reimbursement can be
provided under this
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Agreement: provided, that any such action which is brought by Indemnitee
to enforce his rights under this Agreement shall not be a Proceeding
without prior approval of a majority of the board of directors of the
Corporation.
b. The term "Expenses" shall include, without limitation, any
judgments, fines, and penalties against Indemnitee in connection with a
Proceeding; amounts paid by Indemnitee in settlement of a Proceeding; and
all attorneys' fees and disbursements, accountants' fees and
disbursements, private investigation fees and disbursements, retainers,
court costs, transcript costs, fees of experts, fees and expenses of
witnesses, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses reasonably incurred by or for Indemnitee in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding or
establishing Indemnitee's right or entitlement to indemnification for any
of the foregoing.
c. Reference to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the
request of the Corporation" shall include any service as a director,
officer, employee, agent, or advisor with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interests of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interest of the
Corporation" as referred to in this Agreement.
d. The term "substantiating documentation" shall mean copies of
bills or invoices for costs incurred by or for Indemnitee, or copies or
court or agency orders or decrees or settlement agreements, as the case
may be, accompanied by a sworn statement from Indemnitee that such bills,
invoices, court or agency orders or decrees or settlement agreements,
represent costs or liabilities meeting the definition of "Expenses"
herein.
e. The term "he" and "his" have been used for convenience and mean
"she" and "her" if Indemnitee is female.
2. Indemnity of Director. The Corporation hereby agrees to hold harmless
and indemnify Indemnitee against any and all Expenses incurred by reason of the
fact that Indemnitee is or was a director, officer, agent, or advisor of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, agent or advisor of another corporation,
partnership, joint venture, trust, limited liability company, or other entity or
enterprise, but only if Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe that his conduct was unlawful. The termination of any Proceeding by
judgment, order of the court, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the Corporation, and
with respect to any criminal proceeding, shall not create a presumption that
such person believed that his conduct was unlawful. The indemnification provided
herein shall be applicable whether or not negligence or gross negligence
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of the Indemnitee is alleged or proven. Notwithstanding the foregoing, in the
case of any Proceeding brought by or in the right of the Corporation, Indemnitee
shall not be entitled to indemnification for any claim, issue or matter as to
which Indemnitee 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 Proceeding was brought or another court of
competent jurisdiction determines, on application, that in view of all the
circumstances, the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
3. Choice of Counsel. Indemnitee shall be entitled to employ, and be reimbursed
for the fees and disbursements of, counsel separate from that chosen by any
other person or persons whom the Corporation is obligated to indemnify with
respect to the same or any related or similar Proceeding.
4. Advances of Expenses. Expenses (other than judgments, penalties, fines, and
settlements) incurred by Indemnitee shall be paid by the Corporation, in advance
of the final disposition of the Proceeding, within 10 days after receipt of
Indemnitee's written request accompanied by substantiating documentation and
Indemnitee's unsecured undertaking to repay such amount to the extent it is
ultimately determined and Indemnitee is not entitled to indemnification.
5. Right of Indemnitee to Indemnification Upon Application; Procedure upon
Application. Any indemnification under this Agreement, other than pursuant to
Section 4 hereof, shall be made no later than 45 days after receipt by the
Corporation of the written request of Indemnitee, accompanied by substantiating
documentation, unless a determination is made within said 45-day period by (a)
the board of directors by a majority vote of a quorum consisting of directors
who are not or were not parties to such Proceeding, or (b) independent legal
counsel in a written opinion (which counsel shall be appointed if such a quorum
is not obtainable), that Indemnitee has not met the relevant standards for
indemnification set forth in Section 2 hereof.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors or independent legal counsel) to have made a determination prior to
the commencement of such action that indemnification is proper in the
circumstances because Indemnitee has met the applicable standard of conduct, nor
an actual determination by the Corporation (including its board of directors or
independent legal counsel) that Indemnitee has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct.
6. Undertaking by Indemnitee. Indemnitee hereby undertakes to repay to the
Corporation any advances of Expenses pursuant to this Agreement to the extent
that it is ultimately determined that Indemnitee is not entitled to
indemnification.
7. Indemnification Hereunder Not Exclusive. The indemnification and
advancement of Expenses provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may be entitled under the Articles or
Bylaws, the Statute, any policy or
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policies of directors' and officers' liability insurance, any agreement, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. However, Indemnitee shall reimburse
the Corporation for amounts paid to him under this Agreement in an amount equal
to any payments received pursuant to such other rights to the extent such
payments duplicate any payments received pursuant to this Agreement.
8. Continuation of Indemnity. All agreements and obligations of the Corporation
contained herein shall continue during the period Indemnitee is a director,
officer, agent, or advisor of the Corporation (or is or was serving at the
request of the Corporation as a director, officer, employee, agent, or advisor
of another corporation, partnership, joint venture, trust, limited liability
company, or other enterprise) and shall continue thereafter so long as
Indemnitee shall be subject to any possible Proceeding.
9. Partial Indemnification. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Corporation for some or a portion of
Expenses, but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify Indemnitee for the portion of such Expenses to which
Indemnitee is entitled.
10. Settlement of Claims. The Corporation shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding effected without the Corporation's written consent. The Corporation
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on Indemnitee's rights under this Agreement without Indemnitee's
written consent. Neither the Corporation nor Indemnitee will unreasonably
withhold its or his consent to any proposed settlement. The Corporation shall
not be liable to indemnify Indemnitee under this Agreement with regard to any
judicial award if the Corporation was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such action.
11. Enforcement.
a. The Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on the Corporation
hereby in order to induce Indemnitee to serve as a director or officer of
the Corporation, and acknowledges that Indemnitee is relying upon this
Agreement in continuing as a director or officer.
b. In the event Indemnitee is required to bring any action or other
proceeding to enforce rights or to collect monies due under this Agreement
and is successful in such action, the Corporation shall reimburse
Indemnitee for all of the Indemnitee's Expenses in bringing and pursuing
such action.
12. Governing Law; Binding Effect; Amendment and Termination.
a. This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Nevada.
b. This Agreement shall be binding upon the Corporation, its
successors and assigns, and shall inure to the benefit of Indemnitee, his
heirs, personal representatives, and assigns, and to the benefit of the
Corporation, its successors and assigns.
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c. No amendment, modification, termination, or cancellation of this
Agreement shall be effective unless in writing signed by the Corporation
and Indemnitee.
13. Severability. If any provision of this Agreement shall be held
to be invalid, illegal, or unenforceable.
a. the validity, legality, and enforceability of the remaining
provisions of this Agreement shall not be in any way affected or impaired
thereby; and
b. to the fullest extent possible, the provisions of this Agreement
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal, or unenforceable.
Each section of this Agreement is a separate and independent portion of
this Agreement. If the indemnification to which Indemnitee is entitled as
respects any aspect of any claim varies between two or more sections of this
Agreement, that section providing the most comprehensive indemnification shall
apply.
14. Notice. All notices, demands, requests, or other communications
required or authorized hereunder shall be deemed given sufficiently if in
writing and if personally delivered; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express delivery; if
sent by registered mail or certified mail, return receipt requested and postage
prepaid; or if sent by overnight express delivery:
If to the Corporation, to: RoomSystems, Inc.
390 North 3050 East
St. George, Utah 84790
Telecopy No.: (435) 628-8611
If to the Indemnitee, to: Alan C. Ashton
261 East 1200 South
Orem, Utah 84058
or such other addresses and facsimile numbers as shall be furnished by any party
in the manner for giving notices hereunder, and any such notice, demand,
request, or other communication shall be deemed to have been given as of the
date so delivered or sent by facsimile transmission, five business days after
the date so mailed, or one day after the date so sent by overnight delivery.
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IN WITNESS WHEREOF, the parties hereto have executive this Agreement on
and as of the day and year first above written.
Corporation:
ROOMSYSTEMS, INC.
By: /s/ Steven L. Sunyich
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Steven L. Sunyich, President
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Indemnitee: /s/ Alan C. Ashton
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ALAN C. ASHTON
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