EXHIBIT 10.11
INDEMNIFICATION AGREEMENT
This Agreement, dated as of November __ 1997, is by and between Rushmore
Financial Group, Inc., a Texas corporation (the "Company"), and X. X. (Xxxxx)
Xxxxx, Jr.("Indemnitee").
WITNESSETH:
WHEREAS, the Company desires to have qualified directors serving on its
Board of Directors and executive officers, who are willing to make decisions
that in their judgment are in the Company's best interest without any undue
threat of personal liability;
WHEREAS, the Company's Articles of Incorporation ("Articles of
Incorporation") and the Company's Bylaws ("Bylaws") require indemnification of
each director or officer of the Company in his capacity as a director or officer
and, if serving at the request of the Company as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, in each of
those capacities, against any and all liability and reasonable expense that may
be incurred by him in connection with or resulting from (a) any threatened,
pending, or completed action, suit, or proceeding whether civil, criminal,
administrative, arbitrative, or investigative (collectively, a "Proceeding"),
(b) an appeal in such a Proceeding, or (c) any inquiry or investigation that
could lead to such a Proceeding, to the fullest extent permitted by the Texas
Business Corporation Act ("Act"), as the same exists or may be hereafter
amended;
WHEREAS, the Company desires to grant to Indemnitee the maximum
indemnification for any Loss (hereinafter defined) permitted by the Articles of
Incorporation and Bylaws;
WHEREAS, developments with respect to the terms and availability of
directors' and officers' liability insurance and with respect to the
application, amendment, and enforcement of statutory, charter, and bylaw
indemnification provisions generally have raised questions concerning the
adequacy, and reliability of the protection afforded to persons intended to be
protected thereunder; and
WHEREAS, in order to resolve such questions and thereby induce Indemnitee
to serve or to continue serving, as a director and/or executive officer of the
Company, the Company has agreed to enter into this Agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's consent to serve or
continuing to serve in the position of director and/or executive officer of the
Company, the parties hereto agree as follows:
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1 Indemnity of Indemnitee. The Company shall indemnify Indemnitee in his
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capacity as director, and/or officer of the Company, as the case may be, and,
if serving at the request of the Company as a director, officer, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, trust partnership, joint venture, sole proprietorship, employee
benefit plan, or other enterprise, in each of those capacities, against any and
all liability and reasonable expense that may be incurred by Indemnitee in
connection with or resulting from (a) any Proceeding, (b) an appeal in such a
Proceeding, or (c) any inquiry or investigation that could lead to such a
Proceeding, all to the fullest extent permitted by Article 2.02-1 of the Act.
2. Continuation of Indemnity. All agreements and obligations of the
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Company contained herein shall continue during the period Indemnitee is a
director, or officer of the Company, shall be retroactive to the date Indemnitee
first became a director, director nominee or officer covering all periods of
service from time to time, and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending, or completed
Proceeding, any appeal in a Proceeding, and any inquiry or investigation that
could lead to a Proceeding, by reason of the fact that Indemnitee was serving,
or had consented to serve, in any capacity referred to herein.
3. Notification and Defense of Claim. Promptly after receipt by
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Indemnitee of notice of any claim against Indemnitee or the commencement of any
Proceeding, Indemnitee will, if a claim in respect thereof is to be made against
the Company under this Agreement, notify the Company of the assertion of any
such claim or the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability under this Agreement unless such
delay in notification actually prejudiced the Company (and then only to the
extent the Company was actually prejudiced thereby) and in addition, the Company
shall not be relieved from any liability which it may have to Indemnitee
otherwise than under this Agreement. With respect to any such Proceeding as to
which Indemnitee notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense.
(b) Except as otherwise provided below, to the extent that it may
wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof and to employ
counsel reasonably satisfactory to Indemnitee. After notice from the
Company to the Indemnitee of its election so to assume the defense
thereof, the Company shall not be liable to the Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. The Indemnitee shall
have the right to employ counsel of his own choosing in such Proceeding but
the fees and expenses of such counsel incurred after notice from the
Company of assumption by the Company of the defense thereof shall be at the
expense of the Indemnitee unless (i) the employment of counsel by the
Indemnitee has been specifically authorized by the Company, such
authorization to be conclusively established by action by disinterested
members of the Board though less than a quorum; (ii) representation by the
same counsel of both the Indemnitee and the Company would, in the
reasonable judgment of the Indemnitee and the Company, be inappropriate
due to an actual or potential conflict of interest between the Company and
the Indemnitee in the conduct of the defense of such Proceeding, such
conflict of interest to be conclusively established by an opinion of
counsel to the Company to such effect; (iii) the counsel employed by the
Company and reasonably satisfactory to the Indemnitee has advised the
Indemnitee in writing that such counsel's representation of the Indemnitee
would likely involve such counsel in representing differing interests which
could adversely affect the judgement or loyalty of such counsel to the
Indemnitee, whether it be a conflicting, inconsistent, diverse or other
interest; or (iv) the Company shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and
expenses of counsel shall be paid, as provided herein, by the Company. The
Company shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Company or as to which a conflict of
interest has been established as provided in subsection (ii) hereof; and
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(c) The Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any penalty or limitation
on Indemnitee without Indemnitee's written consent. Neither the Company nor
Indemnitee will unreasonably withhold their consent to any proposed
settlement.
4. Advances of Expenses. Reasonable expenses (other than judgments,
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penalties, fines and settlements) incurred by Indemnitee that are subject to
indemnification under this Agreement (and not paid, reimbursed or advanced by
others) shall be paid or reimbursed by the Company in advance of the final
disposition of the Proceeding within 30 days after the Company receives a
written request by Indemnitee accompanied by substantiating documentation of
such expenses, a written affirmation by Indemnitee of his good faith belief that
he has met the standard of conduct necessary for indemnification under this
Agreement, and a written undertaking by or on behalf of Indemnitee to repay the
amount paid or reimbursed if it is ultimately determined that he has not met
those standards or that such reasonable expenses do not constitute a Loss. The
written undertaking described above shall be an unlimited general obligation of
Indemnitee and shall not be secured. Such undertaking shall be without reference
to the financial ability of Indemnitee to make repayment.
5. Right of Indemnitee to Indemnification Upon Application: Procedure
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Upon Application. Upon the written request of Indemnitee to be indemnified
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pursuant to this Agreement (other than pursuant to Section 4 hereof), the
Company shall cause the Reviewing Party (hereinafter defined) to determine,
within 45 days, whether or not the Indemnitee has met the relevant standards for
indemnification required by this Agreement. The termination of a Proceeding by
judgment, order, settlement, or conviction, or on a plea of nolo contendere or
its equivalent, shall not of itself create a presumption that Indemnitee did not
meet the requirements for indemnification required by this Agreement. If a
determination of indemnification is to be made by Independent Legal Counsel
(hereinafter defined), such Independent Legal Counsel shall render its written
opinion to the Company and Indemnitee as to what extent Indemnitee will be
permitted to be indemnified. The Company shall pay the reasonable fees of
Independent Legal Counsel and indemnify and hold harmless such Indemnitee
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to the engagement of Independent Legal
Counsel pursuant hereto and the written opinion of such Independent Legal
Counsel.
6. Definitions. The terms defined in this Section 6 shall, for purposes
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of this Agreement have the indicated meanings:
(a) "Loss" shall mean any and all judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expense
(including attorneys' fees) actually incurred by Indemnitee, after
realization of or giving effect to all insurance, bonding, indemnification
and other payments or recoveries actually received by or for the benefit of
Indemnitee, directly or indirectly.
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(b) "Reviewing Party" means, if a Change in Control (hereinafter
defined) has not occurred (or if a Change in Control has occurred and such
Change in Control has been approved by a majority of the Board of Directors
of the Company who were directors of the Company immediately prior to such
Change in Control), (i) a majority of a quorum of directors of the Company
who at the time of voting upon a determination of indemnification are
neither officers or employees of the Company or members of the immediate
family of an officer or employee of the Company ("Interested Parties") nor
parties to that particular Proceeding to which Indemnitee is seeking
indemnification; or (ii) Independent Legal Counsel selected by a majority
of a quorum of directors who at the time of selecting such Independent
Legal Counsel are neither Interested Parties nor parties to that particular
Proceeding to which Indemnitee is seeking indemnification, or if such a
quorum cannot be obtained, by a majority vote of a committee of the Board
of Directors of the Company designated to select such Independent Legal
Counsel by a majority vote of all directors of the Company, consisting
solely of two or more directors who at the time of such selection are
neither Interested Parties nor parties in that particular Proceeding to
which Indemnitee is seeking indemnification, or if such a quorum cannot be
obtained and such a committee cannot be established, by a majority vote of
all directors of the Company. "Reviewing Party" means if a Change in
Control has occurred, Independent Legal Counsel selected in the manner set
forth in (ii) above.
(c) "Change in Control" shall mean an event which shall be deemed to
have occurred if: (i) a merger or consolidation of the Company with or into
another corporation occurs in which the Company shall not be the surviving
corporation (for purposes of this definition, the Company shall not be
deemed the surviving corporation in any such transaction if, as the result
thereof, it becomes a wholly-owned subsidiary of another corporation); (ii)
a dissolution of the Company occurs; (iii) a transfer of all or
substantially all of the assets or shares of stock of the Company in one
transaction or a series of related transactions to one or more other
persons or entities occurs; (iv) if any "person" or "group" as those terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Excluded Persons, becomes
the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding
securities; or (v) during any period of two consecutive years commencing on
or after January 1, 1998, individuals who at the beginning of the period
constituted the Board cease for any reason to constitute at least a
majority, unless the election of each director who was not a director at
the beginning of the period has been approved in advance by directors
representing at least two-thirds (2/3) of the directors then in office who
were directors at the beginning of the period. The term "Excluded Persons"
means each of Xxx X. Xxxxx, X. X. Xxxxxx, X. X. Xxxxx, Xx. and Xxxx X.
Xxxxx, and any person, entity, or group under the control of any of them,
or a trustee or other fiduciary holding securities under an employee
benefit plan of the Company.
(d) "Independent Legal Counsel" shall mean an attorney, selected in
accordance with the provisions of Section 6(b) hereof, who shall not have
otherwise performed services for Indemnitee, the Company, any person that
controls the Company or any of the directors of the Company, within five
years preceding the time of such selection (other
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than in connection with seeking indemnification under this Agreement).
Independent Legal Counsel shall not be any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee's rights under this Agreement, nor shall Independent
Legal Counsel be any person who has been sanctioned or censured for ethical
violations of applicable standards of professional conduct.
7. Enforceability. The right to indemnification or advances as provided
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by this Agreement shall be enforceable by Indemnitee in any court of competent
jurisdiction. The burden of proof that indemnification is not appropriate shall
be on the Company. Neither the failure of the Company (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 Company (including its Board of Directors or
Independent Legal Counsel) that Indemnitee has not met such an 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.
8. Partial Indemnity: Expenses. If the Indemnitee is entitled under any
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provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, and penalties, but not for the total
amount thereof, the Company shall indemnify Indemnitee for the portion thereof
to which Indemnitee is entitled. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Proceedings relating in whole or in part to
an event subject to indemnification hereunder or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against expenses incurred for any Loss in connection with such
Proceeding, issue or matter, as the case may be.
9. Repayment of Expenses. Indemnitee shall reimburse the Company for
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all reasonable expenses paid by the Company in defending any Proceeding against
Indemnitee in the event and only to the extent that it shall be ultimately
determined that Indemnitee is not entitled to be indemnified by the Company for
such expenses under the provisions of this Agreement.
10. Consideration. The Company expressly confirms and agrees that it has
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entered into this Agreement and assumed the obligations imposed on the Company
hereby in order to induce Indemnitee to consent to serve, and/or to continue
serving as a director, and acknowledges that Indemnitee is relying upon this
Agreement in consenting to serve and serving in such capacity.
11. Indemnification Hereunder Not Exclusive. The indemnification and
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advancement of expenses provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may be entitled under any other
agreement, vote of shareholders, as a matter of law, or otherwise.
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12. Subrogation. If a payment is made under this Agreement, the Company
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shall be subrogated to the extent of such payment to all of the right of
recovery of such Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights.
13. Severability. Each of the provisions of this Agreement is a separate
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and distinct agreement and independent of the others, so that if any provision
thereof shall be held to be invalid or unenforceable for any reason such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereto.
14. Notice. Any notice, consent, or other communication to be given under
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this Agreement by any party to any other party shall be in writing and shall be
either (a) personally delivered, (b) mailed by registered or certified mail,
postage prepaid with return receipt requested, (c) delivered by overnight
express delivery service or same-day local courier service, or (d) delivered by
telex or facsimile transmission to the address set forth beneath the signature
of the parties below, or at such other address as may be designated by the
parties from time to time in accordance with this Section. Notices delivered
personally, by overnight express delivery service, or by local courier service
shall be deemed given as of actual receipt. Mailed notices shall be deemed given
three business days after mailing. Notices delivered by telex or facsimile
transmission shall be deemed upon receipt by the sender of the answer back (in
the case of a telex) or transmission confirmation (in the case of a facsimile
transmission).
15. Governing Law: Binding Effect: Amendment and Termination:
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Reimbursement.
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(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Texas, without giving effect to Texas
principles of conflicts of laws.
(b) This Agreement shall be binding upon Indemnitee and upon the
Company, its successors, and assigns, and shall inure to the benefit of
Indemnitee, his heirs, executors, administrators, personal representation,
and assigns and to the benefit of the Company, its successors, and assigns.
(c) No amendment, modification, termination, or cancellation of this
Agreement shall be effective unless in writing signed by both parties
hereto.
(d) If Indemnitee is required to bring any action to enforce rights
or to collect moneys due under this Agreement and is successful in such
action, the Company shall reimburse Indemnitee for all of Indemnitee's
reasonable fees and expenses in bringing and pursuing such action.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
RUSHMORE FINANCIAL GROUP, INC.
By: Xxx X. Xxxxx, Secretary
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Name:
Its:
Address of Rushmore Financial Group, Inc.
00000 Xxxx Xx Xxx 000
Xxxxxx, XX 00000
Facsimile: 000-000-0000
/s/ X. X. Xxxxx, Xx.
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X. X. Xxxxx, Xx., INDEMNITEE:
Address of Indemnitee:
____________________________
____________________________
Facsimile:
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