EXHIBIT 10.26
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into
as of the____________________, by and between ________________________ (the
"Company"), and___________________ (the "Indemnitee").
RECITALS
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WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available;
WHEREAS, the Indemnitee is director and/or officer of the Company;
WHEREAS, both the Company and the Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
companies in today's environment;
WHEREAS, the Company's Articles of Incorporation (the "Articles") provides
that the Company will indemnify its directors and officers to the full extent
permitted by law, and the Indemnitee's willingness to serve as a director and/or
officer of the Company is based in part on the Indemnitee's reliance on such
provisions; and
WHEREAS, the Texas Business Corporation Act (the "Texas Statute") expressly
recognizes that the indemnification provisions of the Texas Statute are not
exclusive of any other rights to which a person seeking indemnification may be
entitled under the Articles or Bylaws of the Company, a resolution of the
directors, an agreement or as permitted or required by common law, and this
Agreement is being entered into pursuant to and in furtherance of the Articles
and Bylaws, as permitted by the Texas Statute and as authorized by the Articles
and the directors of the Company (the "Directors"); and
WHEREAS, in recognition of the Indemnitee's need for substantial protection
against personal liability in order to enhance the Indemnitee's continued
service to the Company in an effective manner, and the Indemnitee's reliance on
the aforesaid provisions of the Articles, and in part to provide the Indemnitee
with specific contractual assurance that the protection promised by such
provisions will be available to the Indemnitee (regardless of, among other
things, any amendment to or revocation of such provisions or any change in the
composition of the Directors or any acquisition or business combination
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancement of expenses to the
Indemnitee as set forth in this Agreement and, to the extent insurance is
maintained, for the continued coverage of the Indemnitee under the Company's
directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Indemnification.
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(a) In accordance with the provisions of subsection (b) of this Section 1,
the Company shall hold harmless and indemnify the Indemnitee against any and all
expenses, liabilities and losses (including, without limitation, investigation
expenses and expert witnesses' and attorneys' fees and expenses, judgments,
penalties, fines, ERISA excise taxes and amounts paid or to be paid in
settlement) actually incurred by the Indemnitee (net of any related insurance
proceeds or other amounts received by the Indemnitee or paid by or on behalf of
the Company on the Indemnitee's behalf), in connection with any action, suit,
arbitration or proceeding (or any inquiry or investigation, whether brought by
or in the right of the Company or otherwise, that the Indemnitee in good faith
believes might lead to the institution of any such action, suit, arbitration or
proceeding), whether civil, criminal, administrative or investigative, or any
appeal therefrom, in which the Indemnitee is a party, is threatened to be made a
party, is a witness or is participating (a "Proceeding") based upon, arising
from, relating to or by reason of the fact that Indemnitee is, was, shall be or
shall have been a director and/or officer of the Company or is or was serving,
shall serve, or shall have served at the request of the Company as a director,
officer, partner, trustee, employee or agent ("Affiliate Indemnitee") of another
foreign or domestic corporation or non-profit corporation, cooperative,
partnership, joint venture, trust or other incorporated or unincorporated
enterprise.
(b) In providing the foregoing indemnification, the Company shall, with
respect to a Proceeding, hold harmless and indemnify the Indemnitee to the
fullest extent required by the Texas Statute and to the fullest extent permitted
by the Express Permitted Indemnification Provisions (as hereinafter defined) of
the Texas Statute. For purposes of this Agreement, the Express Permitted
Indemnification Provisions of the Texas Statute shall mean indemnification as
permitted by Section 2.02-1 of the Texas Statute or by any amendment thereof or
other statutory provisions expressly permitting such indemnification which is
adopted after the date hereof (but, in the case of any such amendment, only to
the extent that such amendment permits the Company to provide broader
indemnification rights than said law required or permitted the Company to
provide prior to such amendment).
(c) Without limiting the generality of the foregoing, the Indemnitee shall
be entitled to the rights of indemnification provided in this Section 1 for any
expenses actually incurred in any Proceeding initiated by or in the right of the
Company, provided that in the event that the Indemnitee shall have been adjudged
in a final, nonappealable judgment or other final adjudication to be liable to
the Company or shall have been adjudged liable on the basis that personal
benefit was improperly received by the Indemnitee, indemnification (i) is
limited to reasonable expenses actually incurred by the Indemnitee in connection
with the Proceeding; and (ii) shall not be made in respect of any Proceeding in
which the person shall have been found liable for wilful or intentional
misconduct in the performance of his duty to the Company.
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(d) If the Indemnitee is entitled under this Agreement to indemnification
by the Company for some or a portion of the Indemnified Amounts (as hereinafter
defined) but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for the portion thereof to which
Indemnitee is entitled.
2. Other Indemnification Arrangements. The Texas Statute and the
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Articles permit the Company to purchase and maintain insurance or furnish
similar protection or make other arrangements, including, without limitation,
securing indemnification obligations by granting a security interest or other
lien on the assets of the Company and providing self insurance, a letter of
credit, guaranty or surety bond (collectively, the "Indemnity Arrangements") on
behalf of the Indemnitee against any liability asserted against him or incurred
by or on behalf of him in such capacity as a director or officer of the Company
or as an Affiliate Indemnitee, or arising out of his status as such, whether or
not the Company would have the power to indemnify him against such liability
under the provisions of this Agreement or under the Texas Statute, as it may
then be in effect. The purchase, establishment and maintenance of any such
Indemnity Arrangement shall not in any way limit or affect the rights and
obligations of the Company or of the Indemnitee under this Agreement except as
expressly provided herein, and the execution and delivery of this Agreement by
the Company and the Indemnitee shall not in any way limit or affect the rights
and obligations of the Company or the other party or parties thereto under any
such Indemnity Arrangement. All amounts payable by the Company pursuant to this
Section 2 and Section 1 hereof are herein referred to as "Indemnified Amounts."
3. Advance Payment of Indemnified Amounts.
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(a) The Indemnitee hereby is granted the right to receive in advance of a
final, nonappealable judgment or other final adjudication of a Proceeding (a
"Final Determination") the amount of any and all expenses, including, without
limitation, investigation expenses, expert witness' and attorneys' fees and
other expenses expended or incurred by the Indemnitee in connection with any
Proceeding or otherwise expended or incurred by the Indemnitee (such amounts so
expended or incurred being referred to as "Advanced Amounts").
(b) In making any written request for the Advanced Amounts, the Indemnitee
shall submit to the Company a schedule setting forth in reasonable detail the
dollar amount expended or incurred and expected to be expended. Each such
listing shall be supported by the xxxx, agreement or other documentation
relating thereto, each of which shall be appended to the schedule as an exhibit.
In addition, before the Indemnitee may receive Advanced Amounts from the
Company, the Indemnitee shall provide to the Company (i) a written affirmation
of the Indemnitee's good faith belief that the applicable standard of conduct
required for indemnification by the Company has been satisfied by the
Indemnitee, and (ii) a written undertaking by or on behalf of the Indemnitee to
repay the Advanced Amounts if it shall ultimately be determined that the
Indemnitee has not satisfied any applicable standard of conduct. The written
undertaking required from the Indemnitee shall be an unlimited general
obligation of the Indemnitee but need
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not be secured. The Company shall pay to the Indemnitee all Advanced Amounts
within ten (10) business days after receipt by the Company of all information
and documentation required to be provided by the Indemnitee pursuant to this
subsection (b).
4. Procedure for Payment of Indemnified Amounts.
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(a) To obtain indemnification under this Agreement, the Indemnitee shall
submit to the Company a written request for payment of the appropriate
Indemnified Amounts, including with such request such documentation and
information as is reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Directors in writing that the
Indemnitee has requested indemnification.
(b) The Company shall pay the Indemnitee the appropriate Indemnified
Amounts unless it is established that the Indemnitee has not met any applicable
standard of conduct of the Express Permitted Indemnification Provisions. For
purposes of determining whether the Indemnitee is entitled to Indemnified
Amounts, in order to deny indemnification to the Indemnitee the Company has the
burden of proof in establishing that the Indemnitee did not meet the applicable
standard of conduct. In this regard, a termination of any Proceeding by
judgment, order, settlement, conviction, pleading of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment, does not
create a presumption that the Indemnitee did not meet the requisite standard of
conduct.
(c) Any determination that the Indemnitee has not met the applicable
standard of conduct required to qualify for indemnification shall be made (i) by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding; (ii) if such a quorum cannot be obtained, by a
majority vote of a committee of the board of directors, designated to act in the
matter by a majority vote of all 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) by special legal counsel selected by the board of
directors or a committee of the board by vote as set forth in (i) or (ii) of
this section, or, if such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or (iv) by the
shareholders in a vote that excludes the shares held by directors who are named
defendants or respondents in the proceeding.
(d) The Company will use its best efforts to conclude as soon as
practicable any required determination pursuant to subsection (c) above and
promptly will advise the Indemnitee in writing with respect to any determination
that the Indemnitee is or is not entitled to indemnification, including a
description of any reason or basis for which indemnification has been denied.
Payment of any applicable Indemnified Amounts will be made to the Indemnitee
within ten (10) days after any determination of the Indemnitee's entitlement to
indemnification.
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(e) Notwithstanding the foregoing, the Indemnitee may, at any time after
sixty (60) days after a claim for Indemnified Amounts has been filed with the
Company (or upon receipt of written notice that a claim for Indemnified Amounts
has been rejected, if earlier) and before three (3) years after a claim for
Indemnified Amounts has been filed, petition a court of competent jurisdiction
to determine whether the Indemnitee is entitled to indemnification under the
provisions of this Agreement, and such court shall thereupon have the exclusive
authority to make such determination unless and until such court dismisses or
otherwise terminates such action without having made such determination. The
court shall, as petitioned, make an independent determination of whether the
Indemnitee is entitled to indemnification as provided under this Agreement,
irrespective of any prior determination made by the Directors or independent
counsel. If the court shall determine that the Indemnitee is entitled to
indemnification as to any claim, issue or matter involved in the Proceeding with
respect to which there has been no prior determination pursuant to this
Agreement or with respect to which there has been a prior determination that the
Indemnitee was not entitled to indemnification hereunder, the Company shall pay
all expenses (including attorneys' fees) actually incurred by the Indemnitee in
connection with such judicial determination.
5. Agreement Not Exclusive; Subrogation Rights, etc.
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(a) This Agreement shall not be deemed exclusive of and shall not diminish
any other rights the Indemnitee may have to be indemnified or insured or
otherwise protected against any liability, loss or expense by the Company, any
subsidiary of the Company or any other person or entity under any charter,
bylaws, law, agreement, policy of insurance or similar protection, vote of
shareholders or Directors, disinterested or not, or otherwise, whether or not
now in effect, both as to actions in the Indemnitee's official capacity, and as
to actions in another capacity while holding such office. The Company's
obligations to make payments of Indemnified Amounts hereunder shall be satisfied
to the extent that payments with respect to the same Proceeding (or part
thereof) have been made to or for the benefit of the Indemnitee by reason of the
indemnification of the Indemnitee pursuant to any other arrangement made by the
Company for the benefit of the Indemnitee.
(b) In the event the Indemnitee shall receive payment from any insurance
carrier or from the plaintiff in any Proceeding against the Indemnitee in
respect of Indemnified Amounts after payments on account of all or part of such
Indemnified Amounts have been made by the Company pursuant hereto, the
Indemnitee shall promptly reimburse to the Company the amount, if any, by which
the sum of such payment by such insurance carrier or such plaintiff and payments
by the Company or pursuant to arrangements made by the Company to Indemnitee
exceeds such Indemnified Amounts; provided, however, that such portions, if any,
of such insurance proceeds that are required to be reimbursed to the insurance
carrier under the terms of its insurance policy, such as deductible or co-
insurance payments, shall not be deemed to be payments to the Indemnitee
hereunder. In addition, upon payment of Indemnified Amounts hereunder, the
Company shall be subrogated to the rights of the Indemnitee receiving such
payments (to the extent thereof) against any insurance carrier (to the extent
permitted under such insurance policies) or
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plaintiff in respect of such Indemnified Amounts and the Indemnitee shall
execute and deliver any and all instruments and documents and perform any and
all other acts or deeds which the Company deems necessary or advisable to secure
such rights. Such right of subrogation shall be terminated upon receipt by the
Company of the amount to be reimbursed by the Indemnitee pursuant to the first
sentence of this subsection (b).
6. Continuation of Indemnity. All agreements and obligations of the
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Company contained herein shall continue during the period the Indemnitee is a
director or officer of the Company (or is serving at the request of the Company
as an Affiliate Indemnitee) and shall continue thereafter for a period of ten
(10) years from the date the Indemnitee ceases to serve as a director or officer
of the Company or ceases to serve as an Affiliate Indemnitee (whichever is
later).
7. Notice and Defense of Claim. Indemnitee agrees promptly to notify the
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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. Notwithstanding any other provision of this Agreement, with
respect to any such Proceeding or matter 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 in this Section 7(b), to the extent it
desires, the Company, jointly with any other indemnifying party similarly
notified, shall be entitled to assume the defense thereof, with 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 his own counsel in such Proceeding or
matter, but the fees and expenses of such counsel incurred after notice from the
Company of its assumption of the defense thereof shall be at the expense of
Indemnitee unless (i) the employment of counsel by Indemnitee has been
authorized by the Company; (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of the defense of such action; or (iii) the Company shall not in fact
have employed counsel to assume the defense of such Proceeding or matter, in
each of which cases the fees and expenses of counsel shall be at the expense of
the Company. The Company shall not be entitled to assume the defense of any
Proceeding or matter brought by or on behalf of the Company or as to which
Indemnitee shall have made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding or matter
affected without its written consent. The Company shall not settle any
Proceeding or matter in any manner that would impose any
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penalty or limitation on Indemnitee without Indemnitee's written consent.
Neither the Company nor Indemnitee will unreasonably withhold their consent to
any proposed settlement.
8. Defense Counsel. Indemnitee hereby agrees that in any Proceeding in
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which Indemnitee and other past or present directors or officers of the Company
(or its successor) who are entitled to indemnification from the Company are
named defendants or respondents, Indemnitee and such other past or present
directors or officers shall collectively select one firm of attorneys in any
jurisdiction to defend all such defendants and respondents in such Proceeding
unless counsel for Indemnitee advises that there are issues which may raise
conflicts of interest between Indemnitee and such other persons.
9. Indemnification for Negligence. TO THE EXTENT PERMITTED BY THEN
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APPLICABLE LAW AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE PARTIES
HERETO RECOGNIZE AND ACKNOWLEDGE THAT INDEMNITEE MAY BE INDEMNIFIED IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT IN PROCEEDINGS INVOLVING THE
NEGLIGENCE OF INDEMNITEE.
10. Successors; Binding Agreement. This Agreement shall be binding on and
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shall inure to the benefit of and be enforceable by the Company's successors and
assigns and by the Indemnitee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. The
Company shall require any successor or assignee (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by written agreement in form and
substance reasonably satisfactory to the Company and to the Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession or assignment had taken place.
11. Enforcement. The Company has entered into this Agreement and assumed
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the obligations imposed on the Company hereby in order to induce the Indemnitee
to act as a director or officer, as the case may be, of the Company, and
acknowledge that the Indemnitee is relying upon this Agreement in continuing in
such capacity. In the event the 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 the Indemnitee for all of the
Indemnitee's fees and expenses in bringing and pursuing such action. The
Indemnitee shall be entitled to the advancement of Indemnified Amounts to the
full extent contemplated by Section 3 hereof in connection with such proceeding.
12. Severability. Each of the provisions of this Agreement is a separate
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and distinct agreement independent of the others, so that if any provision
hereof 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 hereof, which other provisions shall remain in full
force and effect, and, to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any section of this
Agreement containing any such provision held to
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invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held illegal, invalid or unenforceable.
13. Miscellaneous. No provisions of this Agreement may be modified,
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waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by the Indemnitee and either the President and Chief Executive
Officer of the Company or another officer of the Company specifically designated
by the Directors. No waiver by either party at any time of any breach by the
other party of, or of compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a wavier of
similar or dissimilar provisions or conditions at the same time or at any prior
or subsequent times. No agreements or representations, oral or otherwise,
express or impled, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas, without giving effect to the principles of
conflicts of laws thereof.
14. Notices. For the purposes of this Agreement, notices and all other
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communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Indemnitee:
If to the Company:
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
16. Effectiveness. This Agreement shall be effective as of the date first
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above written.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
COMPANY
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INDEMNITEE
___________________________________
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