INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is entered into as of this 1st day of
January, 1998, by and between Xxxxxx Xxxxxx Holding Corporation, a Texas
corporation (the "Company"), and ________________ ("Indemnitee").
RECITALS
A. The Company is aware that because of the increased exposure to
litigation costs, talented and experienced persons are increasingly
reluctant to serve or continue serving as directors and officers of
corporations unless they are protected by comprehensive liability
insurance and indemnification.
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 guidance regarding the proper course of action.
C. The Board of Directors of the Company (the "Board") has concluded
that, to retain and attract talented and experienced individuals to serve
as officers and directors of the Company and its subsidiaries and to
encourage such individuals to take the business risks necessary for the
success of the Company and its subsidiaries, the Company should
contractually indemnify its officers and directors, and the officers and
directors of its subsidiaries, in connection with their services to the
Company and its subsidiaries, and has further concluded that the failure
to provide such contractual indemnification could be detrimental to the
Company, its subsidiaries and stockholders.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
1. Definitions.
(a) Agent. "Agent" with respect to the Company means any person who is
or was a director, officer, employee or other agent of the Company or a
Subsidiary of the Company; or is or was serving at the request of, for
the convenience of, or to represent the interests of, the Company or a
Subsidiary of the Company as a director, officer, employee or agent or
another entity or enterprise; or was a director, officer, employee or
agent of a predecessor corporation of the Company or a Subsidiary of the
Company, or was a director, officer, employee or agent of another entity
or enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) Expenses. "Expenses" means all direct and indirect costs of any
type or nature whatsoever (including, without limitation, all attorneys'
fees, costs of investigation and related disbursements) incurred by the
Indemnitee in connection with the investigation, settlement, defense or
appeal of a claim or Proceeding covered hereby or establishing or
enforcing a right to indemnification under this Agreement.
(c) Proceeding. "Proceeding" means any threatened, pending or completed
claim, suit or action, whether civil, criminal, administrative,
investigative or otherwise.
(d) Subsidiary. "Subsidiary" means any corporation or other entity of
which more than 10% of the outstanding voting securities or interests is
owned directly or indirectly by the Company, and one or more other
Subsidiaries, taken as a whole.
2. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees with Indemnitee that,
subject to Section 2(b), the Company shall obtain and maintain in full
force and effect directors' and officers' liability insurance ("D&O
Insurance") in reasonable amounts as the Board of Directors shall
determine from established and reputable insurers. In all policies of
D&O Insurance, Indemnitee shall be named as an insured.
(b) Notwithstanding the foregoing, the Company shall have no obligation
to obtain or maintain D&O Insurance if the Company determines in good
faith that the premium costs for such insurance are disproportionate to
the amount of coverage provided after giving effect to exclusions.
3. Mandatory Indemnification. The Company shall defend, indemnify and
hold harmless Indemnitee:
(a) Third Party Actions. If Indemnitee is a person who was or is a
party or is threatened to be made a party to any Proceeding (other than
an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was or is claimed to be an Agent of the Company, or by
reason of anything done or not done by Indemnitee in any such capacity,
against any and all Expenses and liabilities of any type whatsoever
(including, but not limited to, legal fees, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) incurred by
such person in connection with the investigation, defense, settlement or
appeal of such Proceeding, so long as the Indemnitee acted in good faith
and in a manner the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any
criminal action or Proceeding, had no reasonable cause to believe such
person's conduct was unlawful.
(b) Actions by or in the Right of the Company. If Indemnitee is a
person who was or is a party or is threatened to be made a party to any
Proceeding by or in the right of the Company by reason of the fact that
he is or was an Agent of the Company, or by reason of anything done or
not done by him in any such capacity, against any and all Expenses and
liabilities or any type whatsoever (including, but not limited to, legal
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid
in settlement) incurred by such person in connection with the
investigation, defense, settlement or appeal of such Proceeding, so long
as the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company; except that no indemnification under this subsection shall be
made, and Indemnitee shall repay all amounts previously advanced by the
Company, in respect of any claim, issue or matter for which such person
is judged in a final, non-appealable decision to be liable to the Company
by a court of competent jurisdiction, unless and only to the extent that
the court in which such Proceeding was brought or a district court of the
State of Texas shall determine that Indemnitee is fairly and reasonably
entitled to indemnity.
(c) Actions Where Indemnitee is Deceased. If Indemnitee is a person who
was or is a party or is threatened to be made a party to any Proceeding
by reason of the fact that he is or was an Agent of the Company, or by
reason of anything done or not done by him in any such capacity, and
prior to, during the pendency of, or after completion of, such
Proceeding, the Indemnitee shall die, then the Company shall defend,
indemnify and hold harmless the estate, heirs and legatees of the
Indemnitee against any and all Expenses and liabilities incurred by or
for such persons or entities in connection with the investigation,
defense, settlement or appeal of such Proceeding on the same basis as
provided for the Indemnitee in Sections 3(a) and 3(b) above.
The Expenses and liabilities covered hereby shall be net of any payments
by D&O Insurance carriers or others.
4. Partial Indemnification. If Indemnitee is found under Section 3, 7
or 10 hereof not to be entitled to indemnification for all of the
Expenses and liabilities relating to a Proceeding, the Company shall
indemnify the Indemnitee for any portion of such Expenses not
specifically precluded by the operation of such Section 3, 7 or 10.
5. Mandatory Advancement of Expenses. Until a determination to the
contrary under Section 7 hereof is made, and unless the provisions of
Section 10 apply, the Company shall advance all Expenses incurred by
Indemnitee in connection with the investigation, defense, settlement or
appeal of any Proceeding to which Indemnitee is a party or is threatened
to be made a party covered by the indemnification in Section 3 hereof.
If required by law, as a condition to such advances, Indemnitee shall, at
the request of the Company, undertake in a reasonable manner to repay
such amounts advanced if it shall ultimately be determined by a final
order of a court that Indemnitee is not entitled to be indemnified by the
Company by the terms hereof or under applicable law. Subject to Section
6 hereof, the advances to be made hereunder shall be paid by the Company
to Indemnitee within 20 days following delivery of a written request by
Indemnitee to the Company, which request shall be accompanied by
vouchers, invoices and similar evidence documenting the amounts
requested.
6. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice to him of the
commencement or threat of any Proceeding or claim covered hereby,
Indemnitee shall notify the Company of the commencement or threat
thereof, provided that any failure to so notify shall not relieve the
Company of any of its obligations hereunder, except to the extent that
such failure or delay increases the liability of the Company hereunder.
(b) If, at the time of the receipt of a notice pursuant to Section 6(a)
above, the Company has D&O Insurance in effect, the Company shall give
prompt notice of the Proceeding or claim to its insurers in accordance
with the procedures set forth in the applicable policies. The Company
shall thereafter take all necessary or desirable action to cause such
insurers to pay all amounts payable as a result of such Proceeding or
claim in accordance with the terms of such policies, and the Indemnitee
shall not take any action (by waiver, settlement of otherwise) which
would adversely affect the ability of the Company to obtain payment from
its insurers.
(c) If the Company shall be obligated to pay the Expenses of the
Indemnitee, the Company may (and shall if requested by Indemnitee in
writing) assume the defense of the Proceeding to which the Expenses
relate, in which event the Company shall deliver a notice of assumption
to Indemnitee. Any counsel employed by the Company in connection with
the defense of such Proceeding shall be subject to approval by
Indemnitee, such approval not to be unreasonably withheld or delayed.
The Company will not be liable to Indemnitee under this Agreement for any
fees or expenses of counsel incurred by Indemnitee after delivery of such
notice of assumption with respect to such Proceeding; provided, however,
that if Indemnitee shall have provided the Company with an opinion of
counsel stating that there is a strong argument that a conflict of
interest exists between the Company and Indemnitee in the conduct of any
such defense, the fees and Expenses of Indemnitee's counsel shall be at
the expense of the Company. Notwithstanding the fact that the Company
assumes the defense of a Proceeding pursuant to the preceding sentence,
Indemnitee shall have the right to employ his own counsel in any such
Proceeding at Indemnitee's expense.
7. Determination of Right to Indemnification.
(a) To the extent Indemnitee has been successful on the merits or
otherwise in defense of any Proceeding, claim, issue or matter covered
hereby, Indemnitee need not repay any of the Expenses advanced in
connection with the investigation, defense or appeal of such Proceeding.
(b) If Section 7(a) is inapplicable, the Company shall remain obligated
to indemnify Indemnitee, and Indemnitee need not repay Expenses
previously advanced, unless the Company, by motion before a court of
competent jurisdiction, obtains an order for preliminary or permanent
relief suspending or denying the obligation to advance or indemnify for
Expenses.
(c) Notwithstanding a determination by the Board or a court that
Indemnitee is not entitled to indemnification with respect to a specific
Proceeding, Indemnitee shall have the right to apply to a district court
of the State of Texas for the purpose of enforcing Indemnitee's right to
indemnification pursuant to this Agreement.
(d) Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify Indemnitee against all Expenses
incurred by Indemnitee in connection with any Proceeding under Section
7(b) or 7(c) and against all Expenses incurred by Indemnitee in
connection with any other Proceeding between the Company and Indemnitee
involving the interpretation or enforcement of the rights of Indemnitee
under this Agreement unless a court of competent jurisdiction finds that
the material claims and/or defenses of Indemnitee in any such Proceeding
were frivolous or made in bad faith.
8. Certificate of Incorporation and By-Laws. The Company agrees
that the Company's Certificate of Incorporation and By-laws in effect on
the date hereof shall not be amended to reduce, limit, hinder or delay
(i) the rights of Indemnitee granted hereby, or (ii) the ability of the
Company to indemnify Indemnitee as required hereby.
9. Witness Expenses. The Company agrees to compensate Indemnitee
for the reasonable value of his time spent, and to reimburse Indemnitee
for all Expenses (including attorneys' fees and travel costs) incurred by
him, in connection with being a witness, or if Indemnitee is threatened
to be made a witness, with respect to any Proceeding, by reason of his
serving or having served as an Agent of the Company.
10. Exceptions. Notwithstanding any other provision hereunder to
the contrary, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnity or advance
Expenses to Indemnitee with respect to Proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense (other than
Proceedings brought to establish or enforce a right to indemnification
under this Agreement or the provisions of the Company's Certificate of
Incorporation or By-laws unless a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in
such Proceeding were not made in good faith or were frivolous).
(b) Unauthorized Settlements. To indemnify Indemnitee under
this Agreement for any amounts paid in settlement of a Proceeding covered
hereby without the prior written consent of the Company to such
settlement.
11. Non-exclusivity. This Agreement is not the exclusive
arrangement between the Company and Indemnitee regarding the subject
matter hereof and shall not diminish or affect any other rights which
Indemnitee may have under any provision of law, the Company's Certificate
of Incorporation or By-laws, under other agreements, or otherwise.
12. Continuation After Term. Indemnitee's rights hereunder shall
continue after the Indemnitee has ceased acting as a director or Agent of
the Company and the benefits hereof shall inure to the benefit of the
heirs, executors and administrators of Indemnitee.
13. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, provisions of the
Agreement shall not in any way be affected or impaired thereby, and to
the fullest extent possible, the provisions of this Agreement shall be
construed or altered by the court so as to remain enforceable and to
provide Indemnitee with as many of the benefits contemplated hereby as
are permitted under law.
14. Counterparts, Modification and Waiver. This Agreement may be
signed in counterparts. This Agreement constitutes a separate agreement
between the Company and Indemnitee and may be supplemented or amended as
to Indemnitee only by a written instrument signed by the Company and
Indemnitee, with such amendment binding only the Company and Indemnitee.
All waivers must be in a written document signed by the party to be
charged. No waiver of any of the provisions of this Agreement shall be
implied by the conduct of the parties. A waiver of any right hereunder
shall not constitute a waiver of any other right hereunder.
15. Notices. All notices, demands, consents, requests, approvals
and other communications required or permitted hereunder shall be in
writing and shall be deemed to have been properly given if hand delivered
(effective upon receipt or when refused), or if sent by a courier freight
prepaid (effective upon receipt or when refused), in the case of the
Company, at the addresses listed below, and in the case of Indemnitee, at
Indemnitee's address of record at the office of the Company, or to such
other addresses as the parties may notify each other in writing.
To Company: Xxxxxx Xxxxxx Holding Corporation
00000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: President
To Indemnitee: At the Indemnitee's residence address and facsimile
number on the records of the Company from time to time.
16. Evidence of Coverage. Upon request by Indemnitee, the Company shall
provide evidence of the liability insurance coverage required by this
Agreement. The Company shall promptly notify Indemnitee of any change in
the Company's D&O Insurance coverage.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnification Agreement effective as of the date first above written.
XXXXXX XXXXXX HOLDING CORPORATION
By:______________________________________
Xxxxxxx X. Xxxxxx, President
INDEMNITEE:
_________________________________________
