EXHIBIT 10.1
FORM OF INDEMNIFICATION AGREEMENT
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This Agreement, made and entered into as of this 13th day of
December,
2005 ("Agreement"), by and between Natural
Health Trends Corp., a Delaware
corporation (the "Company"), and
_______________ (the "Indemnitee").
WHEREAS, highly competent persons are reluctant to serve
corporations
as directors or officers or in other
capacities unless they are provided with
adequate protection through insurance or
adequate indemnification against
inordinate risks of claims and actions
against them arising out of their service
to and activities on behalf of
corporations; and
WHEREAS, the current impracticability of obtaining adequate
insurance
and the uncertainties relating to
indemnification have increased the difficulty
of attracting and retaining such persons;
and
WHEREAS, it is reasonable, prudent and necessary for the
Company
contractually to obligate itself to
indemnify such persons to the fullest extent
permitted by applicable law so that they
will serve or continue to serve the
Company free from undue concern that they
will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve and continue to serve for
or on
behalf of the Company on the condition that
Indemnitee be indemnified to the
fullest extent permitted by applicable
law.
NOW, THEREFORE, in consideration of the premises and the
covenants
contained herein, the Company and
Indemnitee do hereby covenant and agree as
follows:
ARTICLE I
Definitions
For purposes of this Agreement the following terms shall have
the
meanings indicated:
1.01
"Board" shall mean the Board of Directors of the Company.
1.02
A "Change in Control" shall be deemed to have occurred if (i)
any "person" (as that term is used in
Sections 13 (d) and 14 (d) of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act")), other than a
trustee or other fiduciary holding
securities under an employee benefit plan of
the Company or a corporation owned directly
or indirectly by the stockholders of
the Company in substantially the same
proportions as their ownership of stock of
the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3
under the Exchange Act), directly or
indirectly, of securities of the Company
representing 20% or more of the total
voting power represented by the Company's
then outstanding voting securities, or (ii)
during any period of two consecutive
years, individuals who at the beginning of
the two year period constitute the
Board of Directors of the Company and any
new director whose election by the
Board of Directors or nomination for
election by the Company's stockholders was
approved by a vote of at least two-thirds
(2/3) of the directors then still in
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office who either were directors at the
beginning of the period or whose
election or nomination for election was
previously so approved, cease for any
reason to constitute a majority of the
Board of Directors, or (iii) the
stockholders of the Company approve a
merger or consolidation of the Company
with any other corporation, other than a
merger or consolidation which would
result in the voting securities of the
Company outstanding immediately prior to
such a merger or consolidation continuing
to represent (either by remaining
outstanding or by being converted into
voting securities of the surviving
entity) at least 80% of the total voting
power represented by the voting
securities of the Company or the surviving
entity outstanding immediately after
the merger or consolidation, or the
stockholders of the Company approve a plan
of complete liquidation of the Company or
an agreement for the sale or
disposition by the company (in one
transaction or a series of transactions) of
all or substantially all the Company's
assets.
1.03
"Corporate Status" describes the status of a person who is or
was a director, officer, employee, agent,
trustee or fiduciary of the Company or
of any other corporation, partnership,
joint venture, trust, employee benefit
plan or other Enterprise which such person
is or was serving at the request or
on behalf of the Company.
1.04
"Court" means the Court of Chancery of the State of Delaware,
the court in which the Proceeding, in
respect of which indemnification is sought
by the Indemnitee, shall have been brought
or is pending, or another court
having subject matter jurisdiction and
personal jurisdiction over the parties.
1.05
"Disinterested Director" means a director of the Company who
is not and was not a party to the
Proceeding in respect of which indemnification
is sought by Indemnitee.
1.06
"Enterprise" shall mean the Company and any other corporation,
partnership, joint venture, trust, employee
benefit plan or other enterprise of
which Indemnitee is or was serving at the
request of the Company as a director,
officer, employee, agent, trustee or
fiduciary.
1.07
"Expenses" shall include, without limitation, all reasonable
attorneys' fees, retainers, court costs,
transcript costs, fees of experts,
witness fees, travel expenses, duplicating
costs, printing and binding costs,
telephone charges, postage, delivery
service fees, facsimile transmission
charges, and all other disbursements or
expenses of the types customarily
incurred in connection with prosecuting,
defending, preparing to prosecute or
defend, investigating or being or preparing
to be a witness in a Proceeding.
1.08
"Good Faith" shall mean Indemnitee having acted in good faith
and in a manner Indemnitee reasonably
believed to be in or not opposed to the
best interests of the Company or, in the
case of an Enterprise which is a
employee benefit plan, the best interests
of the participants or beneficiaries
of said plan, as the case may be, and, with
respect to any Proceeding which is
criminal in nature, having had no
reasonable cause to believe Indemnitee's
conduct was unlawful.
1.09
"Improper Personal Benefit" shall include, but not be limited
to, the personal gain in fact by reason of
a person's Corporate Status of a
financial profit, monies or other advantage
not also accruing to the benefit of
the Company or to the stockholders
generally and which is unrelated to his or
her usual compensation including, but not
limited to: (i) in exchange for the
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exercise of influence over the Company's
affairs; (ii) as a result of the
diversion of corporate opportunity; or
(iii) pursuant to the use or
communication of confidential or inside
information for the purpose of
generating a profit from trading in the
Company's securities. Notwithstanding
the foregoing, "Improper Personal Benefit"
shall not include any benefit,
directly or indirectly, related to actions
taken in order to evaluate,
discourage, resist, prevent or negotiate
any transaction with or proposal from
any person or entity seeking control of, or
a controlling interest in, the
Company.
1.10
"Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of
corporate law and may include law firms
or members thereof that are regularly
retained by the Company but not any other
party to the Proceeding giving rise to a
claim for indemnification hereunder.
Notwithstanding the foregoing, the term
"Independent Counsel" shall not include
any person who, under the standards of
professional conduct then prevailing and
applicable to such counsel, would have a
conflict of interest in representing
either the Company or Indemnitee in an
action to determine Indemnitee's rights
under this Agreement unless such parties
execute a written waiver of any such
conflict of interest.
1.11
"Officer" means the chief executive officer, president, chief
operating officer, vice presidents,
treasurer, assistant treasurer(s), chief
financial officer, chief accounting
officer, general counsel, secretary,
assistant secretary and such other
executive officers as are appointed by the
Board or by the board of directors of the
Enterprise, as the case may be.
1.12
"Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation
(including any internal corporate
investigation), administrative hearing or
any other actual, threatened or
completed proceeding, whether civil,
criminal, administrative or investigative,
formal or informal, and any appeal from any
such Proceeding, other than one
initiated by Indemnitee. For purposes of
the foregoing sentence, a "Proceeding"
shall not be deemed to have been initiated
by Indemnitee where Indemnitee seeks,
pursuant to Article VIII of this Agreement,
to enforce Indemnitee's rights under
this Agreement.
ARTICLE II
Term of Agreement
2.01
This Agreement shall continue until and terminate upon the
later of: (i) ten (10) years after the date
that Indemnitee shall have ceased to
serve in all capacities as a director,
officer, employee, agent, trustee or
fiduciary of the Company or of any other
Enterprise (the "Ten Year Period"); or
(ii) the final termination of all pending
Proceedings instituted before the
expiration of the Ten Year Period in
respect of which Indemnitee is granted
rights of indemnification or advancement of
expenses hereunder and of any
proceeding commenced by Indemnitee within
the Ten Year Period pursuant to
Article VIII of this Agreement relating
thereto.
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ARTICLE III
Services by Indemnitee, Notice of Proceedings
3.01
Services. Indemnitee agrees to serve or continue to serve as a
director or Officer of the Company for so
long as he or she is duly elected or
appointed. Indemnitee may at any time and
for any reason resign from such
position (subject to any other contractual
obligation or any obligation imposed
by operation of law).
3.02
Notice of Proceeding. Indemnitee agrees promptly to notify the
Company in writing upon being served with
any summons, citation, subpoena,
complaint, indictment, information or other
document relating to any Proceeding
or matter which may be subject to
indemnification or advancement of Expenses
covered hereunder, but the omission so to
notify the Company shall not relieve
the Company from its obligations
hereunder.
ARTICLE IV
Indemnification
4.01
In General. In connection with any Proceeding, the Company
shall indemnify, and advance Expenses, to
Indemnitee as provided in this
Agreement and to the fullest extent
permitted by applicable law in effect on the
date hereof and to such greater extent as
applicable law may hereafter from time
to time permit.
4.02
Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to
the rights of indemnification provided
in this Section 4.02 if, by reason of
Indemnitee's Corporate Status, Indemnitee
is, or is threatened to be made, a party to
or is otherwise involved in any
Proceeding, other than a Proceeding by or
in the right of the Company.
Indemnitee shall be indemnified against
Expenses, judgments, penalties, fines
and amounts paid in settlement, actually
and reasonably incurred by Indemnitee
or on Indemnitee's behalf in connection
with such Proceeding or any claim, issue
or matter therein, regardless of the
outcome of such Proceeding, if Indemnitee
acted in Good Faith and such Indemnitee has
not been adjudged during the course
of such Proceeding to have derived an
Improper Personal Benefit from the
transaction or occurrence forming the basis
of such Proceeding.
4.03
Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of
indemnification provided in this Section 4.03
if, by reason of Indemnitee's Corporate
Status, Indemnitee is, or is threatened
to be made, a party to or is otherwise
involved in any Proceeding brought by or
in the right of the Company to procure a
judgment in its favor. Indemnitee shall
be indemnified against Expenses, judgments,
penalties, fines and amounts paid in
settlement, actually and reasonably
incurred by Indemnitee or on Indemnitee's
behalf in connection with such Proceeding
if Indemnitee acted in Good Faith and
such Indemnitee has not been adjudged
during the course of such Proceeding to
have derived an Improper Personal Benefit
from the transaction or occurrence
forming the basis of such Proceeding.
Notwithstanding the foregoing, no such
indemnification shall be made in respect of
any claim, issue or matter in such
Proceeding as to which Indemnitee shall
have been adjudged to be liable to the
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Company if applicable law prohibits such
indemnification; provided, however,
that, if applicable law so permits,
indemnification shall nevertheless be made
by the Company in such event if and only to
the extent that the Court which is
considering the matter shall so
determine.
4.04
Indemnification of a Party Who is Wholly or Partly Successful.
Notwithstanding any limitations in Sections
4.02 and 4.03 above or other
provision of this Agreement, to the extent
that Indemnitee is, by reason of
Indemnitee's Corporate Status, a party to
or is otherwise involved in and is
successful, on the merits or otherwise, in
any Proceeding, Indemnitee shall be
indemnified, to the maximum extent
permitted by law, against all Expenses,
judgments, penalties, fines, and amounts
paid in settlement, actually and
reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection
therewith. If Indemnitee is not wholly
successful in such Proceeding but is
successful, on the merits or otherwise, as
to one or more but less than all
claims, issues or matters in such
Proceeding, the Company shall indemnify
Indemnitee, to the maximum extent permitted
by law, against all Expenses,
judgments, penalties, fines, and amounts
paid in settlement, actually and
reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with
each successfully resolved claim, issue or
matter as determined by the Court
which adjudicates the Proceeding. For
purposes of this Section 4.04 and without
limitation, the termination of any claim,
issue or matter in such a Proceeding
by dismissal, with or without prejudice,
shall be deemed to be a successful
result as to such claim, issue or
matter.
4.05
Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the
extent that Indemnitee is, by reason
of Indemnitee's Corporate Status, a witness
in any Proceeding, Indemnitee shall
be indemnified against all Expenses
actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in
connection therewith.
4.06
Partial Indemnification. If the Indemnitee is entitled under
any provision of this Agreement to
indemnification by the Company for some or a
portion of, but not the total amount of,
the Expenses, judgments, fines, or
penalties actually and reasonably incurred
in connection with the investigation,
defense, appeal or settlement of any
Proceeding, the Company shall nevertheless
indemnify the Indemnitee for the portion of
the Expenses, judgments, fines, or
penalties to which the Indemnitee is
entitled.
4.07
Contribution. If the indemnification provided in this
Agreement is unavailable by reason of a
decision of a court of competent
jurisdiction, then in respect to any
Proceeding in which the Company is jointly
liable with the Indemnitee (or would be if
joined in such Proceeding), the
Company shall contribute to the amount of
Expenses, judgments, fines and
penalties actually and reasonably incurred
and paid or payable by Indemnitee in
such proportion as is appropriate to
reflect (i) the relative benefits received
by the Company on the one hand and
Indemnitee on the other hand from the
transaction or event from which such
Proceeding arose, and (ii) the relative
fault of the Company on the one hand and
Indemnitee on the other in connection
with the events which resulted in such
Expenses, judgments, fines and penalties,
