INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (this “ Agreement
”), dated as of
___, 20___, is made by and between Quest Resource Corporation, a
Nevada corporation (the “ Corporation ”)
and
(the “ Indemnitee ”).
A. The
Corporation recognizes that competent and experienced persons are
increasingly reluctant to serve or to continue to serve as
directors or officers of corporations unless they are protected by
comprehensive liability insurance or indemnification, or both, due
to increased exposure to litigation costs and risks resulting from
their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the
compensation of such directors and officers;
B. The
statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or
conflicting, and therefore fail to provide such directors and
officers with adequate, reliable knowledge of legal risks to which
they are exposed or information regarding the proper course of
action to take;
C. The
Corporation and Indemnitee recognize that plaintiffs often seek
damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense
and/or settlement of such litigation is often beyond the personal
resources of directors and officers;
D. The
Corporation believes that it is unfair for its directors and
officers to assume the risk of huge judgments and other expenses
which may occur in cases in which the director or officer received
no personal profit and in cases where the director or officer was
not culpable;
E. The
Corporation, after reasonable investigation, has determined that
the liability insurance coverage presently available to the
Corporation may be inadequate in certain circumstances to cover all
possible exposure for which Indemnitee should be protected. The
Corporation believes that the interests of the Corporation and its
stockholders would best be served by a combination of such
insurance and the indemnification by the Corporation of the
directors and officers of the Corporation;
F. The
Corporation’s Restated Articles of Incorporation require the
Corporation to indemnify its directors and officers to the fullest
extent permitted by the Nevada Revised Statutes. The Restated
Articles of Incorporation expressly provide that the
indemnification provisions set forth therein are not exclusive, and
contemplate that contracts may be entered into between the
Corporation and its directors and officers with respect to
indemnification;
G. Section 78.7502
of the Nevada Revised Statutes (“
Section 78.7502 ”), under which the
Corporation is organized, empowers the Corporation to indemnify its
officers, directors, employees and agents by agreement and to
indemnify persons who serve, at the request of the Corporation, as
the directors, officers, employees or agents of other
corporations
or enterprises,
and Section 78.751 of the Nevada Revised Statutes expressly
provides that the indemnification provided by Section 78.7502
is not exclusive;
H. The
Corporation’s Board of Directors (the “ Board of
Directors ”) has determined that contractual
indemnification as set forth herein is not only reasonable and
prudent but also promotes the best interests of the Corporation and
its stockholders;
I. The
Corporation desires and has requested Indemnitee to serve or
continue to serve as a director or officer of the Corporation free
from undue concern for unwarranted claims for damages arising out
of or related to such services to the Corporation; and
J. Indemnitee
is willing to serve, continue to serve or to provide additional
service for or on behalf of the Corporation on the condition that
he is furnished the indemnity provided for herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
set forth below, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as
follows:
Section 1.
Generally . To the fullest extent permitted by the laws of
the State of Nevada:
(a) The
Corporation shall indemnify Indemnitee if Indemnitee was or is a
party or is threatened to be made a party to, or is otherwise
involved in, any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Corporation, or while
serving as a director or officer of the Corporation, is or was
serving or has agreed to serve at the request of the Corporation as
a director, officer, employee or agent (which, for purposes herein,
shall include a trustee, partner or manager or similar capacity) of
another corporation, partnership, joint venture, trust, or other
enterprise, or by reason of any action alleged to have been taken
or omitted in such capacity (each, a “
Proceeding ”).
(b) The
indemnification provided by this Section 1 shall be from and
against all Expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in
connection with such Proceeding and any appeal therefrom, but shall
only be provided if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal
Proceeding, had no reasonable cause to believe Indemnitee’s
conduct was unlawful or if the Indemnitee is not liable to the
Corporation pursuant to Section 78.138 of the Nevada Revised
Statutes.
(c) Notwithstanding
the foregoing provisions of this Section 1, in the case of any
threatened, pending or completed Proceeding by or in the right of
the Corporation to procure a judgment in its favor by reason of the
fact that Indemnitee is or was a director, officer,
2
employee or
agent of the Corporation, or while serving as a director or officer
of the Corporation, is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, or
other enterprise, no indemnification shall be made in respect of
any claim, issue or matter as to which Indemnitee shall have 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 District Court of the State of Nevada or the
court in which such Proceeding was brought or other court of
competent jurisdiction shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such Expenses which the District Court of
the State of Nevada or such other court shall deem
proper.
(d) The
termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee is
liable pursuant to Section 78.138 of the Nevada Revised
Statutes or did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, or with respect to any criminal
Proceeding, had reasonable cause to believe that Indemnitee’s
conduct was unlawful.
Section 2.
Successful Defense; Partial Indemnification .
(a) Notwithstanding
any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding or in defense of any claim, issue or
matter therein, Indemnitee shall be indemnified against all
Expenses (including attorneys’ fees) actually and reasonably
incurred in connection therewith. For purposes of this Agreement
and without limiting the foregoing, if any Proceeding or any claim,
issue or matter therein is disposed of, on the merits or otherwise
(including a disposition without prejudice), without (i) the
disposition being adverse to Indemnitee, (ii) an adjudication
that Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by Indemnitee, (iv) an adjudication
that Indemnitee did not act in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and (v) with respect to any
criminal Proceeding, an adjudication that Indemnitee had reasonable
cause to believe Indemnitee’s conduct was unlawful,
Indemnitee shall be considered for the purposes hereof to have been
wholly successful with respect thereto.
(b) If
Indemnitee is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the
Expenses (including attorneys’ fees), judgments, fines or
amounts paid in settlement actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection with any
Proceeding, or in defense of any claim, issue or matter therein,
and any appeal therefrom but not, however, for the total amount
thereof, the Corporation shall nevertheless indemnify Indemnitee
for the portion of such Expenses (including attorneys’ fees),
judgments, fines or amounts paid in settlement to which Indemnitee
is entitled.
Section 3.
Advance Payment of Expenses; Notification and Defense of
Claim .
3
(a) The
Corporation shall advance all Expenses actually and reasonably
incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal Proceeding
(but not amounts actually paid in settlement of any such
Proceeding). Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be
determined by the court hearing the Proceeding that Indemnitee is
not entitled to be indemnified by the Corporation as authorized
hereby. The advances to be made hereunder shall be paid by the
Corporation to Indemnitee within 30 days following receipt of
a written request therefor by the Corporation from the
Indemnitee.
(b) Indemnitee
shall, as a condition precedent to his right to be indemnified
under this Agreement, give the Corporation notice in writing as
soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement.
Notice to the Corporation shall be directed to the President of the
Corporation at the address indicated in Section 10 of this
Agreement (or such other address as the Corporation shall designate
in writing to Indemnitee). Notice shall be deemed received three
business days after the date postmarked if sent by domestic
certified or registered mail, properly addressed; otherwise notice
shall be deemed received when such notice shall actually be
received by the Corporation. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably
require and as shall be within Indemnitee’s power.
(c) Any
indemnification and advances provided for in Section 1 and
this Section 3 shall be made no later than 30 days after
receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the
Corporation’s Restated Articles of Incorporation or Bylaws
providing for indemnification, is not paid in full by the
Corporation within 30 days after a written request for payment
thereof has first been received by the Corporation, Indemnitee may,
but need not, at any time thereafter bring an action against the
Corporation to recover the unpaid amount of the claim and, subject
to Section 14 of this Agreement, Indemnitee shall also be
entitled to be paid for the reasonable Expenses (including
reasonable attorneys’ fees) of bringing such action. It shall
be a defense to any such action (other than an action brought to
enforce a claim for Expenses incurred in connection with any
Proceeding in advance of its final disposition) that Indemnitee has
not met the standards of conduct which make it permissible under
applicable law for the Corporation to indemnify Indemnitee for the
amount claimed. However, Indemnitee shall be entitled to receive
interim payments of Expenses pursuant to Section 3(a) unless
and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the
parties’ intention that if the Corporation contests
Indemnitee’s right to indemnification, the question of
Indemnitee’s right to indemnification shall be for the court
hearing the Proceeding to decide, and neither the failure of the
Corporation (including its Board of Directors, any committee of the
Board of Directors, independent legal counsel, or its stockholders)
to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an
actual determination by the Corporation (including its Board of
Directors, any committee of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met
such applicable standard of conduct, shall create a presumption
that Indemnitee has or has not met the applicable standard of
conduct. In all circumstances, unless otherwise required by law,
the burden of proving that indemnification is not appropriate will
be on the Corporation.
4
(d) In
the event the Corporation shall be obligated to pay the Expenses of
Indemnitee with respect to a Proceeding, as provided in this
Agreement, the Corporation, if appropriate, shall be entitled to
assume the defense of such Proceeding, with counsel reasonably
acceptable to Indemnitee, upon the delivery to Indemnitee of
written notice of its election to do so. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of
such counsel by the Corporation, the Corporation will not be liable
to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same
Proceeding, provided that (1) Indemnitee shall have the right
to employ Indemnitee’s own counsel in such Proceeding at
Indemnitee’s expense and (2) if (i) the employment
of counsel by Indemnitee has been previously authorized in writing
by the Corporation, (ii) counsel to the Corporation or
Indemnitee shall have reasonably concluded that there may be a
conflict of interest or position, or reasonably believes that a
conflict is likely to arise, on any significant issue between the
Corporation and Indemnitee in the conduct of any such defense or
(iii) the Corporation shall not, in fact, have employed
counsel to assume the defense of such Proceeding, then the fees and
Expenses of Indemnitee’s counsel shall be at the expense of
the Corporation, except as otherwise expressly provided by this
Agreement. The Corporation shall no
|
