EXHIBIT 10.12
INDEMNIFICATION AGREEMENT
This Agreement is made this 12th day of August, 1996, by and between
Intercargo Corporation, a Delaware corporation and its subsidiaries (the
"Company") and Xxxxxxx Xxxxx, ("Officer").
WITNESSETH:
WHEREAS, the Company has been advised that there can be no assurance that
directors' and officers' liability insurance will continue to be available to
the Company and Officer, and believes that it is possible that the cost of such
insurance, if obtainable, may not be acceptable to the Company; and
WHEREAS, Officer is unwilling to serve, or continue to serve, the Company
as an Officer without assurances that adequate liability insurance,
indemnification or a combination thereof is, and will continue to be, provided;
and
WHEREAS, the Company, in order to induce Officer to continue to serve the
Company, has agreed to provide Officer with the benefits contemplated by this
Agreement; and
WHEREAS, as a result of the provision of such benefits, Officer has agreed
to serve or to continue to serve as an Officer of the Company.
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Officer's
continued service to the Company, the Company and Officer hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
"Covered Amount" means losses and expenses which, in type or amount,
are not insured under any directors' and officers' liability insurance
maintained by the Company from time to time.
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"Covered Act" means any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or
wrongfully attempted by Officer or any of the foregoing alleged by any
claimant or any claim against Officer solely by reason of him being an
Officer of the Company.
"Determination" means a determination, based on the facts known at
the time, made by:
i. A majority vote of a quorum of disinterested directors; or
ii. Independent legal counsel in a written opinion prepared at the
request of a majority of a quorum of disinterested directors;
or
iii. A majority of the disinterested stockholders of the Company;
or
iv. A final adjudication by a court of competent jurisdiction.
"Determined" shall have a correlative meaning.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim:
i. Based upon or attributable to Officer gaining in fact any
personal profit or advantage to which Officer is not entitled; or
ii. For an accounting of profits in fact made from the purchase or
sale by Officer of securities of the Company within the meaning of Section
16 of the Securities Exchange Act of 1934 as amended, or similar provisions
of any state law; or
iii. Resulting from Officer's knowingly fraudulent, dishonest or
willful misconduct; or
iv. The payment of which by the Company under this Agreement is
not permitted by applicable law; or
v. Which are not within the Covered Amount.
"Expenses" means any reasonable expenses incurred by Officer as a
result of a claim or claims made against him for Covered Acts including,
without limitation, counsel fees and costs of investigative, judicial or
administrative proceedings or appeals.
"Loss" means any amount which Officer is legally obligated to pay as
a result of a claim or claims made against him for Covered Acts including,
without limitation, damages and judgments and sums paid in settlement of a
claim or claims.
2. Indemnification. The Company shall indemnify Officer and hold him
harmless from the Covered Amount of any and all Losses and Expenses subject, in
each case, to the further provisions of this Agreement.
3. Excluded Coverage.
a. The Company shall have no obligation to indemnify Officer for
and hold him harmless from any Loss or Expense which has been Determined to
constitute an Excluded Claim.
b. The Company shall have no obligation to indemnify Officer and
hold him harmless for any Loss or Expense to the extent that Officer is
indemnified by the Company pursuant to the Company's bylaws or otherwise
indemnified.
4. Indemnification Procedures.
a. Promptly after receipt by Officer of notice of the
commencement of or the threat of commencement of any action, suit or proceeding,
Officer shall, if indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement thereof.
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b. If, at the time of the receipt of such notice, the Company has
directors' and officers' liability insurance in effect, the Company shall give
prompt notice of the commencement of such action, suit or proceeding to the
insurers in accordance with the procedures set forth in the respective policies
in favor of Officer. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Officer, all Losses
and Expenses payable as a result of such action, suit or proceeding in
accordance with the terms of such policies.
c. To the extent the Company does not, at the time of the
commencement of or the threat or commencement of such action, suit or
proceeding, have applicable directors' and officers' liability insurance, or if
a Determination is made that any Expenses arising out of such action, suit or
proceeding will not be payable under the directors' and officers' liability
insurance then in effect, the Company shall be obligated to pay the Expenses of
any such action, suit or proceeding in advance of the final disposition thereof;
and the Company, if appropriate, shall be entitled to assume the defense of such
action, suit or proceeding with counsel satisfactory to Officer, upon the
delivery to Officer of written notice of its election so to do. After delivery
of such notice, the Company will not be liable to Officer under this Agreement
for any legal or other Expenses subsequently insured by Officer in connection
with such defense other than reasonable Expenses of investigation, provided that
Officer shall have the right to employ its counsel in any such action, suit or
proceeding, but the fees and expenses of such counsel incurred after delivery of
notice from the Company of its assumption of such defense shall be at Officer's
expense, provided further that if (i) the employment of counsel by Officer has
been previously authorized by the Company, (ii) Officer shall have reasonably
concluded that there may be a conflict of interest between the Company and
Officer in the conduct of any such defense, or (iii) the Company shall not, in
fact, have employed counsel to assume the defense of such action, the fees and
expenses of counsel shall be at the expense of the Company.
d. All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Officer's written request therefor unless a Determination is made that the
claims giving rise to Officer's request are Excluded Claims or otherwise not
payable under this Agreement, provided that all payments on account of the
Company's obligations under Paragraph 4(c) of this Agreement prior to the final
disposition of any action, suit or proceeding shall be made within twenty (20)
days of Officer's written request therefor and such obligation shall not be
subject to any such Determination but shall be subject to Paragraph 4(e) of this
Agreement.
e. Officer agrees that he will reimburse the Company for all
Losses and Expenses paid by the Company in connection with any action, suit or
proceeding against Officer in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication from which
there is no further right of appeal that the Officer is not entitled to be
indemnified by the Company for such Expenses because the claim is an Excluded
Claim or because Officer is otherwise not entitled to payment under this
Agreement.
5. Settlement. The Company shall have no obligation to indemnify
Officer under this Agreement for any amounts paid in settlement of any action,
suit or proceeding effected without the Company's prior written consent. The
Company shall not settle any claim in any manner which would impose any
obligation on Officer without Officer's written consent. Neither the Company
nor Officer shall unreasonably withhold their consent to any proposed
settlement.
6. Rights Not Exclusive. The rights provided hereunder shall not be
deemed exclusive of any other rights to which the Officer may be entitled under
any bylaw, agreement, vote of stockholders or of disinterested directors or
otherwise, both as to action in his official capacity and as to action in any
other capacity by holding such office, and shall continue after the Officer
ceases to serve the Company as a Officer.
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7. Enforcement.
a. Officer's right to indemnification shall be enforceable by
Officer notwithstanding any adverse Determination. In any such action, if a
prior adverse Determination has been made, the burden of proving that
indemnification is required under this Agreement shall be on Officer. The
Company shall have the burden of proving that indemnification is not required
under this Agreement if no prior adverse Determination shall have been made.
b. In the event that any action is instituted by Officer under
this Agreement, or to enforce or interpret any of the terms of this Agreement,
Officer shall be entitled to be paid all court costs and expenses, including
reasonable counsel fees, incurred by Officer with respect to such action, unless
the court determines that each of the material assertions made by Officer as a
basis for such action were not made in good faith or were frivolous.
8. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do any act
which is in violation of applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
9. Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.
10. Continuation of Indemnification. All agreements and obligations of
the Company contained herein shall continue during the period that Officer is an
Officer of the Company and shall continue thereafter so long as Officer shall be
subject to any possible Loss or Expense by reason of the fact that Officer was
an Officer of the Company.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Officer, who shall execute all documents and take all actions
reasonably requested by the Company to implement such right of subrogation.
12. Successor and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and (ii) shall be binding on and inure to the benefit of the
heirs, personal representatives and estate of Officer.
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13. Amendment. No amendment, modification, termination or cancellation
of this Agreement shall be effective unless made in writing signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and Officer have executed this Agreement as
of the day and year first above written.
INTERCARGO CORPORATION
___________________________________
Xxxxx X. Xxxxxx
Chairman of the Board
President and Chief Executive Officer
___________________________________
Xxxxxxx Xxxxx
Officer
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