INDEMNIFICATION AGREEMENT
EXHIBIT
10.1
This
Indemnification Agreement (“Agreement”) is made as of the 26th
day of
October 2006 by and between THE MIDLAND COMPANY, an Ohio corporation (the
“Corporation”), and the individual whose name appears on the signature page
hereof (such individual being referred to herein as the “Indemnified
Representative” and collectively with other individuals who may execute
substantially similar agreements as the “Indemnified Representatives”), with
reference to the following background:
A. The
Indemnified Representative currently is serving as a director of the
Corporation, and may also be serving as, or may have previously served as,
an
officer of the Corporation, and in such capacity or capacities, is rendering
or
has rendered a valuable service to the Corporation.
B. Directors
and officers of corporations are being increasingly subjected to expensive
and
time-consuming litigation and other Proceedings (as hereafter defined),
including matters that traditionally would have been brought only against such
corporations or their subsidiaries. The Indemnified Representative has been
offered the protection afforded by this Agreement from such
Proceedings.
C. In
recognition of the valuable services provided by the Indemnified Representative,
to induce the Indemnified Representative to continue to serve the Corporation
and in consideration for such continued service, and to assist in the
recruitment of qualified Directors in the future, the Corporation agrees to
indemnify as provided in Paragraph 2, and to advance expenses as provided in
Paragraph 4, to the Indemnified Representative upon the terms set forth herein.
The pledge to indemnify and to advance expenses shall be hereinafter
collectively referred to as the “Pledge of Indemnity”.
NOW,
THEREFORE, in consideration of the foregoing premises, the Corporation and
the
Indemnified Representative agree as follows:
1. Agreement
to Serve.
In
consideration of the Corporation’s Pledge of Indemnity, the Indemnified
Representative agrees to serve or to continue to serve in the Indemnified
Capacity now or in the future; provided, however, that this Agreement shall
not
be deemed either an employment contract or a commitment to continue to provide
services for a defined period. It is expressly understood that the Pledge of
Indemnity shall survive the voluntary or involuntary termination of the
Indemnified Representative’s service in an Indemnified Capacity.
2. Indemnification.
(a) Except
as
provided in Section 3, the Corporation shall indemnify the Indemnified
Representative against any Liability (as hereafter defined) incurred by the
Indemnified Representative in connection with any Proceeding (as hereafter
defined) in which the Indemnified Representative may be involved as a party
or
otherwise, by reason of the fact that the Indemnified Representative is or
was
serving in an Indemnified Capacity (as hereafter defined), including, without
limitation, any Liability resulting from actual or alleged breach or neglect
of
duty, error, misstatement or
misleading
statement, gross negligence, negligence, omission, act or failure to act or
act
giving rise to strict or products liability, occurring any time during the
Indemnified Representative’s service in an Indemnified Capacity. If the
Indemnified Representative is entitled to indemnification in respect of a
portion, but not all, of any Liability, the Corporation shall indemnify the
Indemnified Representative to the maximum extent for such portion of any
Liability, with all uncertainties being resolved in favor of broader
indemnification.
(b) Notwithstanding
the provisions of subsection (a), the Corporation shall not indemnify the
Indemnified Representative under this Agreement for any Liability incurred
in a
Proceeding initiated (which shall not be deemed to include counter-claims or
affirmative defenses) or participated in as an intervenor or amicus curiae
by the
Indemnified Representative unless such initiation of or participation in the
Proceeding is authorized, either before or after commencement of the Proceeding,
by the affirmative vote of a majority of the Board of Directors of the
Corporation in office. This subsection (b) does not apply to reimbursement
of
expenses incurred in successfully prosecuting or defending the rights granted
to
the Indemnified Representative by or pursuant to this Agreement.
(c) As
used
in this Agreement:
(i) “Indemnified
Capacity” means any and all past, present or future service by an Indemnified
Representative: (A) in one or more capacities as a director, officer or employee
of the Corporation, or, at the request of the Corporation while serving as
such
a director, officer or employee, as a director, officer, manager, employee,
agent, fiduciary or trustee of another corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or other entity
or enterprise; or (B) in the capacity of an agent of the Corporation if such
capacity is designated as an “indemnified capacity” for purposes of this
Agreement by the Board of Directors of the Corporation;
(ii) “Liability”
means any damage, judgment, amount paid in settlement, fine, penalty, punitive
damages, cost or expense of any nature (including, without limitation,
attorneys’ fees and disbursements) in any way associated with the above, excise
tax assessed with respect to an employee benefit plan, excise taxes or penalties
arising under the Employee Retirement Income Security Act of 1974 (“ERISA”),
rules or orders of the Securities and Exchange Commission or other federal
or
state acts, rules, notices, orders or regulations; and
(iii) “Proceeding”
means
any threatened, pending or completed action, suit, appeal, or
other proceeding of any nature, whether civil, criminal, administrative or
investigative, whether formal or informal, and whether brought by or in the
right of the Corporation, a class of its security holders, third parties or
otherwise.
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3. Exclusions.
(a) The
Corporation shall not be liable under Section 2 of this Agreement to make any
indemnification payment in connection with any Liability incurred by the
Indemnified Representative and arising from acts or failures to act in which
the
Indemnified Representative failed to act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Any
fact,
act or omission pertaining to any other director, officer, employee or agent
of
the Corporation shall not be imputed to the Indemnified Representative hereunder
for the purposes of determining the applicability of any exclusion set forth
herein.
(c) The
termination of a proceeding by judgment, order, settlement, conviction or upon
a
plea of nolo contendere
or its
equivalent shall not, of itself, create a presumption that the Indemnified
Representative is not entitled to indemnification under Section 2 of this
Agreement.
(d) The
Corporation shall not be liable under this Agreement to make any payment if
the
making of such payment is expressly prohibited by applicable law or has been
finally determined in a final adjudication or otherwise to be
unlawful.
4. Mandatory
Advancement of Expenses.
The
Corporation shall pay any Liability incurred in good faith by the Indemnified
Representative in advance of the final disposition of a Proceeding upon receipt
of an undertaking by or on behalf of the Indemnified Representative to repay
all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such Indemnified
Representative is not entitled to be indemnified under Section 2 of this
Agreement or otherwise. The financial ability of the Indemnified Representative
to repay an advance shall not be a prerequisite to the making of such advance.
The advances to be made hereunder shall be paid by the Corporation to or for
the
benefit of the Indemnified Representative within twenty (20) days following
delivery of a written request therefor, accompanied by true and complete copies
of invoices therefor, by the Indemnified Representative to the Corporation.
Any
advances and undertakings to repay pursuant to this Section 4 shall not be
secured and shall not bear interest.
5. Indemnification
Procedure.
(a) The
Indemnified Representative shall use such Indemnified Representative’s best
efforts promptly to notify the Secretary of the Corporation of the commencement
of any Proceeding or the occurrence of any event which might give rise to a
Liability under this Agreement, but the failure so to notify the Corporation
shall not relieve the Corporation of any liability which it may have to the
Indemnified Representative under this Agreement or otherwise.
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(b) The
Corporation shall be entitled, upon notice to the Indemnified Representative,
to
assume the defense of any such Proceeding with counsel reasonably satisfactory
to the Indemnified Representative involved in such Proceeding, or a majority
of
the Indemnified Representatives involved in such Proceeding if there be more
than one. If the Corporation notifies the Indemnified Representative of its
election to defend the Proceeding, the Corporation shall have no liability
for
the expenses (including attorneys’ fees) of the Indemnified Representative
incurred in connection with the defense of such Proceeding subsequent to such
notice, unless any of the following pertain: (i) such expenses (including
attorneys’ fees) have been authorized by the Corporation; (ii) the Corporation
shall not, in fact, have employed counsel reasonably satisfactory to such
Indemnified Representative or such majority of Indemnified Representatives
to
assume the defense of such Proceeding; or (iii) it shall have been determined
pursuant to a final adjudication that the Indemnified Representative was
entitled to indemnification for such expenses under this Agreement or otherwise.
Notwithstanding the foregoing, the Indemnified Representative may elect to
retain counsel at the Indemnified Representative’s own cost and expense to
participate in the defense of such Proceeding.
(c) Except
with respect to criminal matters and injunctive or other non-monetary relief,
the Corporation shall not be required to obtain the consent of the Indemnified
Representative to the settlement of any Proceeding which the Corporation has
undertaken to defend if the Corporation assumes full and sole responsibility
for
such settlement and the settlement grants the Indemnified Representative an
unqualified release in respect of all Liabilities at issue in the Proceeding.
The Corporation shall not be liable for any amount paid by an Indemnified
Representative in settlement of any Proceeding that is not defended by the
Corporation, unless the Corporation has consented in writing to such settlement
(which consent shall not be unreasonably withheld or delayed).
(d) Upon
a
payment to the Indemnified Representative under this Agreement, the Corporation
shall be subrogated to the extent of such payment to all of the rights of the
Indemnified Representative to recover against any person for such Liability,
and
the Indemnified Representative shall execute all documents and instruments
required and shall take such other actions as may be necessary to secure such
rights, including the execution of such documents as may be necessary for the
Corporation to bring suit to enforce such rights.
6. Discharge
of Duty.
The
Indemnified Representative shall be deemed to have discharged such person’s duty
to the Corporation if the Indemnified Representative has relied in good faith on
information, opinions, reports or statements, including financial statements
and
other financial data, prepared by:
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(a) one
or
more officers or employees of the Corporation whom the Indemnified
Representative reasonably believes to be reliable and competent with respect
to
the matter presented;
(b) legal
counsel, public accountants or other persons as to matters that the Indemnified
Representative reasonably believes are within the person’s professional or
expert competence; or
(c) a
committee of the Board of Directors of the Corporation upon which he does not
serve as to matters within its area of designated authority, which committee
he
reasonably believes to merit confidence.
7. No
Restriction of Other Indemnification Rights.
The
Corporation shall not adopt any amendment, however effected, directly or
indirectly by merger, consolidation or otherwise, to its Articles of
Incorporation or Regulations, the effect of which would be to deny, diminish
or
encumber the Indemnitee’s rights to indemnity pursuant to the Articles of
Incorporation, the Regulations, the Ohio Revised Code or any other applicable
law as applied to any act or failure to act occurring in whole or in part prior
to the date (the “Effective Date”) upon which the amendment shall apply only to
acts or failure to act occurring entirely after the Effective Date thereof,
unless the Indemnitee shall have voted in favor of the amendment as a director
or holder of record of the Corporation’s common stock, as the case may
be.
8. Merger
or Consolidation.
In the
event that the Corporation shall be a constituent corporation in a merger,
consolidation or other reorganization, the Corporation, if it shall not be
the
surviving, resulting or acquiring corporation therein, shall require, as a
condition thereto, that the surviving, resulting, or acquiring corporation
agree
to indemnify the Indemnitee to the full extent provided in this Agreement and
to
adopt and assume the Corporation’s obligations under this Agreement. Whether or
not the Corporation is the surviving, resulting or acquiring corporation in
any
such transaction, the Indemnitee shall also stand in the same position under
this Agreement as he would have with respect to the Corporation if its separate
existence had continued.
9. Non-Exclusivity.
The
indemnification rights granted to the Indemnified Representative pursuant to
this Agreement: (a) shall not be deemed exclusive of any other right to which
the Indemnified Representative may be entitled under any statute, by-law,
certificate or articles of incorporation, limited liability company agreement
or
operating agreement, agreement, vote of shareholders or directors or otherwise,
both as to action in an Indemnified Capacity and in any other capacity; and
(b)
shall continue as to a person who has ceased to be an Indemnified Representative
in respect of matters arising prior to such cessation.
10. Reliance
on Provisions.
The
Indemnified Representative shall be deemed to be acting in such person’s
respective official capacity or capacities in reliance upon the rights provided
by this Agreement.
11. Insurance.
The
Corporation shall, as promptly as practicable following the date hereof, obtain
and maintain directors and officers’ liability insurance coverage on terms
reasonably satisfactory to the Indemnified Representative of at least $500,000
per occurrence, covering, among other things, violations of federal or state
securities laws. In all policies of director and officer liability insurance,
the Indemnified Representative shall be named as an insured in such a manner
as
to provide the Indemnified Representative the same rights and benefits as are
accorded to the most favorably insured of the Corporation’s directors and
officers.
5
12. Severability
and Reformation.
Any
provision of this Agreement which is adjudicated to be invalid or unenforceable
in any jurisdiction or under any circumstance shall be ineffective to the extent
of such invalidity or unenforceability only and shall be deemed reformed so
as
to continue to apply to the maximum extent and to provide the maximum
indemnification permissible under the applicable law of such jurisdiction.
Any
such adjudication shall not invalidate or render unenforceable the remaining
provisions hereof and shall not invalidate or render unenforceable such
provision in any other jurisdiction or under any other
circumstances.
13. Notices.
Any
notice, claim, request or demand required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by telegram
or
by registered or certified mail, postage prepaid: (a) if to the Corporation,
to
The Midland Company, 0000 Xxxxxxx Xxxxxxxxx, Xxxxxx, Xxxx 00000-0000 or to
such
other address to which the executive offices of the Corporation may be moved,
Attention: Corporate Secretary; or (b) if to any Indemnified Representative,
to
the address of such Indemnified Representative listed on the signature page
hereof; or to such other address as either party hereto shall have specified
in
a notice duly given in accordance with this Section.
14. Amendments
and Binding Effect.
No
amendment, modification, waiver, termination or cancellation of this Agreement
shall be effective as to the Indemnified Representative unless signed in writing
by the Corporation and the Indemnified Representative. This Agreement shall
be
binding upon the Corporation and its successors and assigns and shall inure
to
the benefit of the heirs, executors, administrators and personal representatives
of the Indemnified Representative.
15. Governing
Law.
This
Agreement shall be governed by, interpreted and enforced in accordance with
the
internal substantive laws of the State of Ohio, without reference to the
principles governing the conflict of laws applicable in that or any other
jurisdiction.
16. Gender
and Number.
Words
used herein, regardless of the gender or number specifically used, shall be
deemed to include any other gender, masculine, feminine or neuter, and any
other
number, singular or plural, as the context may require.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and
year first set forth above.
| THE MIDLAND COMPANY | ||
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INDEMNIFIED
REPRESENTATIVE |
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(Signature)
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(Printed Name) |
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Address:
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