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EXHIBIT 10.31
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement"), made and entered into
effective _________, 199___, is by and between Packaged Ice, Inc., a Texas
corporation (the "Company") and __________________ ("Indemnitee").
RECITALS
A. Indemnitee currently serves as a director of the Company and in
such capacity is performing a valuable service to the Company.
B. The Company's Bylaws (the "Bylaws") provide for the
indemnification of the directors and officers of the Company.
C. The Bylaws provide that the Company shall indemnify the directors
and officers of the Company to the fullest extent permitted by applicable law
including, without limitation, Article 2.02-1 of the Texas Business Corporation
Act, as amended to date and as may be amended from time to time (the
"Corporation Act").
D. The Corporation Act specifically provides that a corporation may
maintain another arrangement on behalf of any person who is or was a director,
officer, employee or agent of the corporation against any liability asserted
against him and incurred by him in such capacity or arising out of his status
as such a person, whether or not the corporation would have the power to
indemnify him against such liability under the Corporation Act, and thereby
contemplates that agreements may be entered into between the Company and
officers and directors of the Company with respect to the indemnification of
such officers and directors.
E. The applicability, amendment and enforcement of statutory and
bylaw indemnification provisions have raised questions concerning the adequacy
and reliability of the protection afforded thereby.
F. In order to resolve such questions and to induce Indemnitee to
serve or continue to serve as a director of the Company for the remainder of
his term and for any subsequent term to which he is elected by the shareholders
of the Company, the Company has deemed it to be in the best interest of the
Company to enter into this Agreement.
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve or
continue to serve as a director of the Company after the date hereof, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
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(a) Change in Control. A "Change in Control" shall be deemed
to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than persons currently holding securities representing 25% or more
of the combined voting power of the outstanding securities of the
Company, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the
outstanding securities of the Company, or (ii) during any period of two
consecutive years, individuals who at the beginning of such 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 shareholders of the Company was approved by a vote of at least two-
thirds (2/3) of the directors then still in 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 thereof, or (iii) the shareholders of the Company
approve (A) a merger or consolidation of the Company with any other
entity (other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation), (B) a plan of complete liquidation of the Company or (C)
an agreement or agreements for the sale or disposition, in a single
transaction or series of related transactions, by the Company of all or
substantially all of the property and assets of the Company.
Notwithstanding the foregoing, events otherwise constituting a Change in
Control in accordance with the foregoing shall not constitute a Change
in Control if such events are solicited by the Company and are approved,
recommended or supported by the Board of Directors of the Company in
actions taken prior to, and with respect to, such events.
(b) Reviewing Party. A "Reviewing Party" means (i) a quorum
of the Board of Directors of the Company who, at the time of the vote,
are not named defendants or respondents in the proceeding, (ii) if such
a quorum cannot be obtained, a committee of the Board of Directors of
the Company, designated to act in the matter by majority vote of all
members of the Board of Directors, consisting solely of two or more
directors who, at the time of the vote, are not named defendants or
respondents in the proceeding, (iii) special legal counsel selected by a
majority vote of a quorum of the Board of Directors of the Company or a
committee of the Board of Directors, as constituted in accordance with
(i) and (ii) above, or, if such a quorum cannot be obtained and such a
committee cannot be established, by a majority vote of all directors or
(iv) the shareholders excluding any shareholders who are named
defendants or respondents in the proceeding.
2. Indemnification of Indemnitee. The Company hereby agrees that it
shall hold harmless and indemnify Indemnitee to the fullest extent authorized
and permitted by the provisions of the Bylaws and the provisions of the
Corporation Act, or by any amendment thereof, but in the
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case of any such amendment, only to the extent that such amendment permits the
Company to provide broader indemnification rights than the Bylaws or
Corporation Act permitted the Company to provide prior to such amendment, or
other statutory provisions authorizing or permitting such indemnification which
is adopted after the date hereof.
3. Insurance. So long as Indemnitee may be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
Indemnitee is or was an officer or director, to the extent that the Company
maintains one or more insurance policy or policies providing directors' and
officers' liability insurance, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms, to the maximum extent of the
coverage applicable to any director or officer then serving the Company.
4. Letter of Credit. So long as Indemnitee may be subject to any
possible claim or threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that Indemnitee is or was an officer or director, the Company agrees to
establish a letter of credit (the "Letter of Credit") against which Indemnitee
may personally draw to cover expenses for which Indemnitee is indemnified
pursuant to Section 2 or Section 5 hereof. If not established by the Company
prior to receipt of notification pursuant to Section 7 or Section 13 hereof,
the Letter of Credit shall be promptly established by the Company upon receipt
of such notification.
5. Additional Indemnification. Subject only to the exclusions set
forth in Section 6 hereof, the Company hereby agrees that it shall hold
harmless and indemnify Indemnitee:
(a) against any and all judgments, penalties (including excise
and similar taxes), fines, settlements and reasonable expenses,
including attorneys' fees and court costs, actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an
action, suit, or proceeding, and any inquiry or investigation that could
lead to such an action, suit, or proceeding, including, without
limitation, an action by or on behalf of the shareholders of the Company
or by or in the right of the Company, to which Indemnitee is, was or at
any time becomes a party, or is threatened to be made a party, by reason
of the fact that Indemnitee is, was or at any time becomes a director or
officer of the Company, or is or was serving, or at any time serves, at
the request of the Company as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
corporation, partnership, joint venture, sole proprietorship, trust,
nonprofit entity, employee benefit plan, or other enterprise; and
(b) otherwise to the fullest extent as may be provided to
Indemnitee by the Company under the provisions of the Corporation Act
permitting such indemnification.
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6. Limitations on Additional Indemnification. No indemnification
pursuant to this Agreement shall be paid by the Company:
(a) in respect to any transaction if it shall be determined by
the Reviewing Party, or by final judgment or other final adjudication,
that Indemnitee derived an improper personal benefit;
(b) on account of Indemnitee's conduct which is determined by
the Reviewing Party, or by final judgment or other final adjudication,
to have involved acts or omissions not in good faith, intentional
misconduct or a knowing violation of law; or
(c) if the Reviewing Party or a court having jurisdiction in
the matter shall determine that such indemnification is in violation of
the Company's Articles of Incorporation (the "Articles"), the Bylaws or
the law.
7. Advancement of Expenses. In the event of any threatened or
pending action, suit or proceeding in which Indemnitee is a party or is
involved and which may give rise to a right of indemnification under this
Agreement, following written request to the Company by Indemnitee, the Company
shall pay promptly to Indemnitee amounts to cover expenses incurred by
Indemnitee in such proceeding (including, without limitation, payments of
retainers for legal services) in advance of its final disposition upon the
receipt by the Company of (i) a written affirmation by the Indemnitee of his
good faith belief that he has met the standard of conduct necessary for
indemnification and (ii) a written undertaking executed by or on behalf of
Indemnitee to repay the advance if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company for such expenses
as provided in this Agreement or the Bylaws and (iii) satisfactory evidence as
to the amount of such expenses.
8. Fee to Indemnitee. If Indemnitee is not an officer or employee
of the Company at the time of any pending action, suit or proceeding to which
Indemnitee is a party, the Company agrees to pay to Indemnitee, in addition to
any other payments due to Indemnitee under any other contract or arrangement,
an amount equal to $100.00 per hour for each hour which Indemnitee spends in
connection with any such action, suit or proceeding to which Indemnitee is a
party or otherwise becomes involved as a result of Indemnitee's position as a
director of the Company, plus the amount of all reasonable out-of-pocket
expenses incurred by Indemnitee.
9. Repayment of Expenses. Indemnitee agrees that Indemnitee shall
reimburse the Company for all reasonable expenses paid by the Company in
defending any civil, criminal, administrative or investigative action, suit or
proceeding against Indemnitee in the event and only to the extent that it shall
be determined by final judgment or other final adjudication that Indemnitee is
not entitled to be indemnified by the Company for such expenses under the
provisions of the Corporation Act or any applicable law.
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10. Determination of Indemnification; Burden of Proof. With respect
to all matters concerning the rights of Indemnitee to indemnification and
payment of expenses under this Agreement or under the provisions of the Bylaws
now or hereafter in effect, the Company shall appoint a Reviewing Party, and
any determination by the Reviewing Party shall be conclusive and binding on the
Company. If under applicable law, the entitlement of Indemnitee to be
indemnified under this Agreement depends on whether a standard of conduct has
been met, the burden of proof of establishing that Indemnitee did not act in
accordance with such standard of conduct shall rest with the Company.
Indemnitee shall be presumed to have acted in accordance with such standard and
entitled to indemnification or advancement of expenses hereunder, as the case
may be, unless, based upon a preponderance of the evidence, it shall be
determined by the Reviewing Party that Indemnitee did not meet such standard.
For purposes of this Agreement, unless otherwise expressly stated herein, the
termination of any action, suit or proceeding by judgment, order, settlement,
whether with or without court approval, or conviction, or upon a plea of nolo
contendere or its equivalent shall not create a presumption that Indemnitee did
not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law.
11. Effect of Change in Control. If there has not been a Change in
Control after the date of this Agreement, the determination of the (i) rights
of Indemnitee to indemnification and payment of expenses under this Agreement
or under the provisions of the Bylaws, (ii) standard of conduct, and (iii)
evaluation of the reasonableness of amounts claimed by Indemnitee, shall be
made by the Reviewing Party or such other body or persons as may be permitted
by the Corporation Act. If there has been a Change in Control after the date
of this Agreement, such determination and evaluation shall be made by a
special, independent counsel who is selected by Indemnitee and approved by the
Company, which approval shall not be unreasonably withheld, and who has not
otherwise performed services for Indemnitee or the Company.
12. Continuation of Indemnification. All agreements and obligations
of the Company contained herein shall continue during the period that
Indemnitee is a director or officer of the Company, or is or was serving at the
request of the Company as a director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another corporation,
partnership, joint venture, sole proprietorship, trust, nonprofit entity,
employee benefit plan, or other enterprise, and shall continue thereafter so
long as Indemnitee shall be subject to any possible claim or threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an action,
suit, or proceeding, and any inquiry or investigation that could lead to such
an action, suit, or proceeding, by reason of the fact that Indemnitee was an
officer or director of the Company or served in any other capacity referred to
herein.
13. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of the threat or commencement of any action, suit or
proceeding, Indemnitee shall, if a claim in respect hereof is to be made
against the Company under this Agreement, notify the Company of the threat or
commencement thereof; provided, however, that delay in so notifying the Company
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shall not constitute a waiver or release by Indemnitee of rights hereunder and
that omission by Indemnitee to so notify the Company shall not relieve the
Company from any liability which it may have to Indemnitee otherwise than under
this Agreement. With respect to any such action, suit or proceeding as to
which Indemnitee notifies the Company of the threat or commencement thereof:
(a) The Company shall 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, shall be entitled to assume the defense thereof and
to employ counsel reasonably satisfactory to Indemnitee. After notice
from the Company to Indemnitee of its election to so assume the defense
thereof, the Company shall not be liable to Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall
have the right to employ counsel of his own choosing in such action,
suit or 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 Indemnitee unless (i) the
employment of counsel by Indemnitee has been specifically authorized by
the Company, such authorization to be conclusively established by action
by disinterested shareholders of the Company though less than a quorum;
(ii) representation by the same counsel of both Indemnitee and the
Company would, in the reasonable judgment of Indemnitee and the Company,
be inappropriate due to an actual or potential conflict of interest
between the Company and Indemnitee in the conduct of the defense of such
action, 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 Indemnitee has
advised Indemnitee in writing that such counsel's representation of
Indemnitee would likely involve such counsel in representing differing
interests which could adversely affect the judgment or loyalty of such
counsel to 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 by the Company.
The Company shall not be entitled to assume the defense of any action,
suit or proceeding brought by or on behalf of the Company or as to which
a conflict of interest has been established as provided in (ii) hereof.
Notwithstanding the foregoing, if an insurance company has supplied
directors' and officers' liability insurance covering an action, suit or
proceeding, then such insurance company shall employ counsel to conduct
the defense of such action, suit or proceeding unless Indemnitee and the
Company reasonably concur in writing that such counsel is unacceptable.
(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 their written consent. The Company shall not
settle any action or claim in any manner which
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would impose any liability or penalty on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee shall unreasonably
withhold consent to any proposed settlement.
14. Enforcement.
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on the
Company hereby in order to induce Indemnitee to serve as an officer
and/or director of the Company and acknowledges that Indemnitee is
relying upon this Agreement in continuing in such capacity.
(b) If a claim for indemnification or advancement of expenses
is not paid in full, or if the Letter of Credit has not been
established, by the Company within 30 days after a written claim by
Indemnitee has been received by the Company, Indemnitee may at any time
assert the claim and bring suit against the Company to recover the
unpaid amount of the claim. In the event Indemnitee is required to
bring any action to enforce rights or to collect monies due under this
Agreement and is successful in such action, the Company shall reimburse
Indemnitee for all of Indemnitee's reasonable attorneys' fees and
expenses in bringing and pursuing such action.
15. Proceedings by Indemnitee. The Company shall not be liable to
make any payment under this Agreement in connection with any action, suit or
proceeding, or any part thereof, initiated by Indemnitee unless such action,
suit or proceeding, or part thereof, was authorized by the Company, such
authorization to be conclusively established by action by disinterested
shareholders of the Company though less than a quorum.
16. Effectiveness. This Agreement is effective for, and shall apply
to, (i) any claim which is asserted or threatened before, on or after the date
of this Agreement but for which no action, suit or proceeding has been brought
prior to the date hereof and (ii) any action, suit or proceeding which is
threatened before, on or after the date of this Agreement but which is not
pending prior to the date hereof. This Agreement shall not apply to any
action, suit or proceeding which was brought before the date of this Agreement.
So long as the foregoing is satisfied, this Agreement shall be effective for,
and be applicable to, acts or omissions occurring prior to, on or after the
date hereof.
17. Nonexclusivity. The rights of Indemnitee under this Agreement
shall not be deemed exclusive, or in limitation of, any rights to which
Indemnitee may be entitled under any applicable common or statutory law, or
pursuant to the Articles, the Bylaws, vote of shareholders or otherwise.
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18. Other Payments. The Company shall not be liable to make any
payment under this Agreement in connection with any action, suit or proceeding
against Indemnitee to the extent Indemnitee has otherwise received payment of
the amounts otherwise payable by the Company hereunder.
19. Subrogation. In the event the Company makes any payment under
this Agreement, the Company shall be subrogated, to the extent of such payment,
to all rights of recovery of Indemnitee with respect thereto, and Indemnitee
shall execute all agreements, instruments, certificates or other documents and
do or cause to be done all things necessary or appropriate to secure such
recovery rights to the Company including, without limitation, executing such
documents as shall enable the Company to bring an action or suit to enforce
such recovery rights.
20. Survival; Continuation. The rights of Indemnitee under this
Agreement shall inure to the benefit of Indemnitee, his heirs, executors,
administrators, personal representatives and assigns, and this Agreement shall
be binding upon the Company, its successors and assigns. The rights of
Indemnitee under this Agreement shall continue so long as Indemnitee may be
subject to any action, suit or proceeding because of the fact that Indemnitee
is or was a director or officer of the Company or is or was serving at the
request of the Company as a director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another corporation,
partnership, joint venture, sole proprietorship, trust, nonprofit entity,
employee benefit plan, or other enterprise. If the Company, in a single
transaction or series of related transactions, sells, leases, exchanges, or
otherwise disposes of all or substantially all of its property and assets, the
Company shall, as a condition precedent to any such transaction, cause
effective provision to be made so that the persons or entities acquiring such
property and assets shall become bound by and replace the Company under this
Agreement.
21. Amendment and Termination. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless made in
writing signed by both parties hereto.
22. Headings. Section headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
23. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
24. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by overnight
delivery service, cable, telegram, facsimile transmission or telex to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
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(a) if to the Company: Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
with a copy to: Xxxx Xxxxxxxxxx, P.C.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 XxxxxxxXxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
(b) if to Indemnitee: to the address on the
signature page hereof
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in
the case of notice so given by overnight delivery service, on the date of
actual delivery and, in the case of notice so given by cable, telegram,
facsimile transmission, telex or personal delivery, on the date of actual
transmission or, as the case may be, personal delivery.
25. Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it
legal, valid and enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
26. Complete Agreement. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
27. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be executed on the day and year first above written.
COMPANY:
PACKAGED ICE, INC.
By:
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Name:
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Title:
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INDEMNITEE:
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Name:
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Address:
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