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EXHIBIT 10.11
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") dated as of June ___,
1997 is by and between MiliRisk, Inc., a Texas corporation (the "Company"), and
________________ ("Director").
RECITALS
A. Director is a member of the Board of Directors 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, officers, employees and agents of the Company
to the extent set forth in the Articles of Incorporation of the Company (the
"Articles").
C. The Articles provide that the Company shall indemnify the
directors, officers, employees and agents of the Company to the fullest extent
permitted by Article 2.02-1 of the Texas Business Corporation Act, as amended
to date (the "Corporation Act").
D. The Corporation Law specifically provides that indemnification
and advancement of expenses under any agreement is valid to the extent it is
consistent with the Corporation Act, as limited by the Articles, and thereby
contemplates that agreements may be entered into between the Company and
members of the Board of Directors of the Company with respect to the
indemnification of such directors.
E. In accordance with the authorization provided in the
Corporation Act, the Company has purchased and presently maintains a policy or
policies of directors' and officers' liabilities insurance (the "Insurance")
covering certain liabilities which may be incurred by the Company's directors
and officers in the performance of their services to the Company.
F. The general availability of directors' and officers' liability
insurance covering certain liabilities which may be incurred by the Company's
directors and officers in the performance of their services to the Company and
the applicability, amendment and enforcement of statutory and bylaw provisions
have raised questions concerning the adequacy and reliability of the protection
afforded to directors.
G. In order to induce Director to serve as a member of the Board
of Directors of the Company for the current 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 its best interest to enter into this Agreement with Director.
NOW, THEREFORE, in consideration of Director's agreement to serve as a
member of the Board of Directors 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 (the "Act")), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or
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 Company's shareholders 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 (x) 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), (y) a plan of complete liquidation of
the Company or (z) 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) the
Board of Directors or a committee of directors of the Company, who are
not officers, appointed by the Board of Directors, provided that a
majority of such directors are not parties to the claim or (ii)
special, independent counsel selected and appointed by the Board of
Directors or by a committee of directors of the Company who are not
officers.
2. Indemnification of Director.
The Company hereby agrees that it shall hold harmless and indemnify
Director to the fullest extent authorized and permitted by the provisions of
the Articles and Bylaws and the provisions of the Corporation Act, or by any
amendment thereof, but in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than the Articles, Bylaws or Corporation Act permitted the Company to
provide prior to such
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amendment, or other statutory provisions authorizing or permitting such
indemnification which is adopted after the date hereof.
3. Insurance
3.1 Insurance Policies. So long as Director may 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 Director is or was a director, to the extent that the Company maintains
one or more insurance policy or policies providing directors' and officers'
liability insurance, Director 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.
3.2 Maintenance of Insurance. The Company shall not be required
to maintain the Insurance or any policy or policies of comparable insurance, as
the case may be, if such insurance is not reasonably available or if, in the
reasonable business judgment of the Board of Directors of the Company which
shall be conclusively established by such determination by the Board of
Directors, or any appropriate committee thereof, either (i) the premium cost
for such insurance is substantially disproportionate to the amount of coverage
thereunder or (ii) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such insurance.
3.3 Self-Insurance. To the extent Director is not indemnified
under other Sections of this Agreement and is not fully, by reason of
deductible or otherwise, covered by directors' and officers' liability
insurance, the Company shall maintain self-insurance for, and thereby indemnify
and hold harmless, Director from and against any and all expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Director in connection with any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, in which Director was or is made a
party or was or is involved by reason of the fact that Director is or was a
director of the Company. Notwithstanding the foregoing, payments of self-
insurance under this Section to Director by the Company shall not exceed the
amount of $5,000,000 for any event and further shall be limited in accordance
with Section 5 hereof. An "event" as used in the preceding sentence in
reference to a limitation on self-insurance shall include the same acts or
omissions by Director and interrelated, repeated or continuous acts or
omissions.
4. Additional Indemnification.
Subject only to the exclusions set forth in Section 5 hereof, the
Company hereby agrees that it shall hold harmless and indemnify Director:
(a) against any and all judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expenses
(including court costs and attorneys' fees) actually incurred by
Director in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
arbitrative, or
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investigative, including an action by or on behalf of shareholders of
the Company or by or in the right of the Company, any appeal in such
an action, suit, or proceeding, and any inquiry or investigation that
could lead to such an action, suit, or proceeding; and
(b) otherwise to the fullest extent as may be provided to
Director by the Company under the Corporation Act.
5. 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 Director derived an improper personal benefit;
(b) on account of Director'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;
(c) if the Reviewing Party or a court having jurisdiction
in the matter shall determine that such indemnification is in
violation of the Articles, the Bylaws or the law.
6. Advancement of Expenses.
In the event of any threatened or pending action, suit or proceeding in
which Director 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 Director, the Company shall promptly pay to Director amounts to cover
reasonable expenses incurred by Director in such proceeding in advance of its
final disposition upon the receipt by the Company of (i) a written affirmation
by Director of his good faith belief that he has met the standard of conduct
necessary for indemnification under the Corporation Act and (ii) a written
undertaking by or on behalf of Director to repay the amount paid or reimbursed
if it is ultimately determined that he has not met that standard or if it is
ultimately determined that indemnification of Director against expenses incurred
by him in connection with that proceeding is prohibited by the Corporation Act.
7. Repayment of Expenses.
Director agrees that Director shall reimburse the Company for all
reasonable expenses paid by the Company in defending any civil, criminal,
administrative, arbitrative, or investigative action, suit or proceeding
against Director in the event and only to the extent that it shall be
determined by final judgment or other final adjudication that Director 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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8. Determination of Indemnification; Burden of Proof.
With respect to all matters concerning the rights of Director to
indemnification and payment of expenses under this Agreement or under the
provisions of the Articles and 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 and Director. If under
applicable law, the entitlement of Director to be indemnified under this
Agreement depends on whether a standard of conduct has been met, the burden of
proof of establishing that Director did not act in accordance with such
standard of conduct shall rest with the Company. Director 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 Director 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 Director 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.
9. Effect of Change in Control.
If there has not been a Change in Control after the date of this
Agreement, the determination of (i) the rights of Director to indemnification
and payment of expenses under this Agreement or under the provisions of the
Articles and the Bylaws, (ii) standard of conduct and (iii) evaluation of the
reasonableness of amounts claimed by Director 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 Director and approved by the Company, which approval shall
not be unreasonably withheld, and who has not otherwise performed services for
Director or the Company.
10. Continuation of Indemnification. All agreements and
obligations of the Company contained herein shall continue during the period
that Director is director of the Company and, while a director of the Company,
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 foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, and shall
continue thereafter so long as Director 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
Director was a director of the Company or serving in any other capacity
referred to herein.
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11. Notification and Defense of Claim.
Promptly after receipt by Director of notice of the commencement of any
action, suit or proceeding, Director shall, if a claim in respect hereof is to
be made against the Company under this Agreement, notify the Company of the
commencement thereof; provided, however, that delay in so notifying the Company
shall not constitute a waiver or release by Director of rights hereunder and
that omission by Director to so notify the Company shall not relieve the
Company from any liability which it may have to Director otherwise than under
this Agreement. With respect to any such action, suit or proceeding as to
which Director notifies the Company of the 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 Director. After notice from
the Company to Director of its election to so assume the defense thereof,
the Company shall not be liable to Director under this Agreement for any
legal or other expenses subsequently incurred by Director in connection
with the defense thereof other than reasonable costs of investigation or
as otherwise provided below. Director 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 Director unless (i) the employment of counsel by Director has
been specifically authorized by the Company, such authorization to be
conclusively established by action by disinterested members of the Board
of Directors though less than a quorum; (ii) representation by the same
counsel of both Director and the Company would, in the reasonable
judgment of Director and the Company, be inappropriate due to an actual
or potential conflict of interest between the Company and Director 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 Director has advised Director in writing that such
counsel's representation of Director would likely involve such counsel in
representing differing interests which could adversely affect the
judgment or loyalty of such counsel to Director, 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 Director and the Company reasonably concur in writing that such
counsel is unacceptable; and
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(c) the Company shall not be liable to indemnify Director
under this Agreement for any amounts paid in settlement of any action or
claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any
liability or penalty on Director without Director's written consent.
Neither the Company nor Director shall unreasonably withhold consent to
any proposed settlement.
12. 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 Director to serve as a director of the
Company and acknowledges that Director 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 by the Company within thirty (30) days
after a written claim by Director has been received by the Company,
Director may at any time assert the claim and bring suit against the
Company to recover the unpaid amount of the claim. In the event
Director 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 Director for all of Director's reasonable
attorneys' fees and expenses in bringing and pursuing such action.
13. Proceedings by Director.
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 Director unless such action, suit or proceeding, or part thereof,
(i) was authorized by the Company, such authorization to be conclusively
established by action by disinterested members of the Board of Directors though
less than a quorum or (ii) was brought by Director pursuant to Section 12(b)
hereof.
14. 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.
15. Nonexclusivity.
The rights of Director under this Agreement shall not be deemed
exclusive, or in limitation of, any rights to which Director 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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16. Other Payments.
The Company shall not be liable to make any payment under this Agreement
in connection with any action, suit or proceeding against Director to the
extent Director has otherwise received payment of the amounts otherwise payable
by the Company hereunder.
17. 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 Director with respect thereto, and Director 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.
18. Survival; Continuation.
The rights of Director under this Agreement shall inure to the benefit
of Director, his heirs, executors, administrators, personal representatives and
assigns, and this Agreement shall be binding upon the Company, its successors
and assigns. The rights of Director under this Agreement shall continue so
long as Director may be subject to any action, suit or proceeding because of
the fact that Director is or was a director of the Company and, while a
director of the Company, 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 foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, 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.
19. Amendment and Termination.
No amendment, modification, termination or cancellation of this
Agreement shall be effective unless made in writing signed by both parties
hereto.
20. 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.
21. 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:
MiliRisk, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Attn: F. Xxxxxx Xxxxxx, III
Facsimile no.: (000) 000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, P.C.
Facsimile no.: (000) 000-0000
(b) if to the Director:
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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.
22. 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.
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23. Complete Agreement.
This Agreement, those documents expressly referred to herein and other
documents of even date herewith 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.
24. 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.
25. CHOICE OF LAW. THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL
LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
MILIRISK, INC.
By:
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F. Xxxxxx Xxxxxx, III
President and Chief Executive Officer
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, Director
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Schedule to Exhibit 10.11
Director Signatories to the Form of
Indemnification Agreement
F. Xxxxxx Xxxxxx, III
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
R. Xxxx Xxx, III
Xxxxx X. Xxxxx
