DIRECTOR INDEMNIFICATION
AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (the “ Agreement ”) is
made and entered into as of March 3, 2009 between Specialty
Underwriters’ Alliance, Inc., a Delaware corporation (the
“ Company ”), and
[ ]
(“ Indemnitee ”).
WHEREAS, highly
competent persons have become more reluctant to serve corporations
as directors or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising
out of their service to and activities on behalf of the
corporation;
WHEREAS, the Board
of Directors of the Company (the “ Board ”) has
determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities.
Although the furnishing of such insurance has been a customary and
widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be
available to it in the future only at higher premiums and with more
exclusions. At the same time, directors, officers, and other
persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that
traditionally would have been brought only against the Company or
business enterprise itself. The By-laws of the Company require
indemnification of the directors of the Company. Indemnitee may
also be entitled to indemnification pursuant to the General
Corporation Law of the State of Delaware (“ DGCL
”). The By-laws and the DGCL expressly provide that the
indemnification provisions set forth therein are not exclusive, and
thereby contemplate that contracts may be entered into between the
Company and members of the board of directors, officers and other
persons with respect to indemnification;
WHEREAS, the
uncertainties relating to such insurance and to indemnification
have increased the difficulty of attracting and retaining such
persons;
WHEREAS, the Board
has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of such
protection in the future;
WHEREAS, it is
reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of,
such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified;
WHEREAS, this
Agreement is a supplement to and in furtherance of the By-laws of
the Company and any resolutions adopted pursuant thereto, and shall
not be deemed a substitute therefor, nor to diminish or abrogate
any rights of Indemnitee thereunder;
WHEREAS,
Indemnitee does not regard the protection available under the
Company’s By-laws and insurance as adequate in the present
circumstances, and may not be willing to serve as a director
without adequate protection, and the Company desires Indemnitee to
serve in such capacity. Indemnitee is willing to serve, continue to
serve and to take on additional service for or on behalf of the
Company on the condition that he be so indemnified; and
NOW, THEREFORE, in
consideration of Indemnitee’s agreement to serve as a
director after the date hereof, the parties hereto agree as
follows:
1.
Definitions . For purposes of this Agreement:
(a) “
Corporate Status ” describes the status of a person
who is or was a director, officer, employee, agent or fiduciary of
the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise that such
person is or was serving at the express written request of the
Company.
(b) “
Disinterested Director ” means a director of the
Company who is not and was not a party to the Proceeding in respect
of which indemnification is sought by Indemnitee.
(c) “
Enterprise ” shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise that Indemnitee is or was serving at the
express written request of the Company as a director, officer,
employee, agent or fiduciary.
(d) “
Expenses ” shall include all reasonable
attorneys’ fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery
service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, participating, or
being or preparing to be a witness in a Proceeding. Expenses also
shall include Expenses incurred in connection with any appeal
resulting from any Proceeding, including without limitation the
premium, security for, and other costs relating to any cost bond,
supersede as bond, or other appeal bond or its equivalent.
Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against
Indemnitee.
(e) “
Independent Counsel ” means a law firm, or a member of
a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained
to represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters
concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other
party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. The Company agrees
to pay the reasonable fees of the Independent Counsel referred to
above and to fully indemnify such counsel against any and all
Expenses,
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claims,
liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(f) “
Proceeding ” includes any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought
by or in the right of the Company or otherwise and whether civil,
criminal, administrative or investigative, in which Indemnitee was,
is or will be involved as a party or otherwise, by reason of the
fact that Indemnitee is or was an officer or director of the
Company, by reason of any action taken by him or of any inaction on
his part while acting as an officer or director of the Company, or
by reason of the fact that he is or was serving at the request of
the Company as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other
Enterprise; in each case whether or not he is acting or serving in
any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement;
including one pending on or before the date of this Agreement, but
excluding one initiated by an Indemnitee pursuant to Section
8 of this Agreement to enforce his rights under this
Agreement.
2.
Indemnity of Indemnitee . The Company hereby agrees to hold
harmless and indemnify Indemnitee to the fullest extent permitted
by law, as such may be amended from time to time. In furtherance of
the foregoing indemnification, and without limiting the generality
thereof:
(a)
Proceedings Other Than Proceedings by or in the Right of the
Company . Indemnitee shall be entitled to the rights of
indemnification provided in this Section 2(a) if, by
reason of his Corporate Status, the Indemnitee is, or is threatened
to be made, a party to or participant in any Proceeding other than
a Proceeding by or in the right of the Company. Pursuant to this
Section 2(a) , Indemnitee shall be indemnified against
all Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him, or on his
behalf, in connection with such Proceeding or any claim, issue or
matter therein, if 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 Proceeding, had no reasonable cause to believe the
Indemnitee’s conduct was unlawful.
(b)
Proceedings by or in the Right of the Company . Indemnitee
shall be entitled to the rights of indemnification provided in this
Section 2(b) if, by reason of his Corporate Status, the
Indemnitee is, or is threatened to be made, a party to or
participant in any Proceeding brought by or in the right of the
Company. Pursuant to this Section 2(b) , Indemnitee
shall be indemnified against all Expenses actually and reasonably
incurred by the Indemnitee, or on the Indemnitee’s behalf, in
connection with such Proceeding if 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; provided,
however, if applicable law so provides, no indemnification against
such Expenses shall be made in respect of any claim, issue or
matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company unless and to the extent that
the Court of Chancery of the State of Delaware (the “
Delaware Court ”) shall determine that such
indemnification may be made.
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(c)
Indemnification for Expenses of a Party Who is Wholly or Partly
Successful . Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified to the
maximum extent permitted by law, as such may be amended from time
to time, against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims,
issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such claim, issue or
matter.
3.
Additional Indemnity . In addition to, and without regard to
any limitations on, the indemnification provided for in
Section 2 of this Agreement, the Company shall and
hereby does indemnify and hold harmless Indemnitee against all
Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf
if, by reason of his Corporate Status, he is, or is threatened to
be made, a party to or participant in any Proceeding (including a
Proceeding by or in the right of the Company), including, without
limitation, all liability arising out of the negligence or active
or passive wrongdoing of Indemnitee. The only limitation that shall
exist upon the Company’s obligations pursuant to this
Agreement shall be that the Company shall not be obligated to make
any payment to Indemnitee that is finally determined (under the
procedures, and subject to the presumptions, set forth in
Sections 7 and 8 hereof) to be unlawful.
(a) Whether
or not the indemnification provided in Sections 2 and 3
hereof is available, in respect of any threatened, pending or
completed action, suit or proceeding in which the Company is
jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), the Company shall pay, in the first
instance, the entire amount of any judgment or settlement of such
action, suit or proceeding without requiring Indemnitee to
contribute to such payment and the Company hereby waives and
relinquishes any right of contribution it may have against
Indemnitee. The Company shall not enter into any settlement of any
action, suit or proceeding in which the Company is jointly liable
with Indemnitee (or would be if joined in such action, suit or
proceeding) unless such settlement provides for a full and final
release of all claims asserted against Indemnitee.
(b) Without
diminishing or impairing the obligations of the Company set forth
in the preceding subparagraph, if, for any reason, Indemnitee shall
elect or be required to pay all or any portion of any judgment or
settlement in any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with Indemnitee
(or would be if joined in such action, suit or proceeding), the
Company shall contribute to the amount of expenses (including
attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by
Indemnitee in proportion to the relative benefits received by the
Company and all officers, directors or employees of the Company,
other than Indemnitee, who are jointly liable with Indemnitee (or
would be if joined in such action, suit or
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proceeding), on
the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit or proceeding arose;
provided, however, that the proportion determined on the basis of
relative benefit may, to the extent necessary to conform to law, be
further adjusted by reference to the relative fault of the Company
and all officers, directors or employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, in connection with the events that
resulted in such expenses, judgments, fines or settlement amounts,
as well as any other equitable considerations which the law may
require to be considered. The relative fault of the Company and all
officers, directors or employees of the Company, other than
Indemnitee, who are jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, shall be determined by reference to,
among other things, the degree to which their actions were
motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary and the
degree to which their conduct is active or passive.
(c) The
Company hereby agrees to fully indemnify and hold Indemnitee
harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company, other than
Indemnitee, who may be jointly liable with Indemnitee.
(d) To
the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of
indemnifying Indemnitee, shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under
this Agreement, in such proportion as is deemed fair and reasonable
in light of all of the circumstances of such Proceeding in order to
reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and/or (ii) the relative fault of
the Company (and its directors, officers, employees and agents) and
Indemnitee in connection with such event(s) and/or
transaction(s).
5.
Indemnification for Expenses of a Witness . Notwithstanding
any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
6.
Advancement of Expenses . Notwithstanding any other
provision of this Agreement, the Company shall advance all Expenses
incurred by or on behalf of Indemnitee in connection with any
Proceeding by reason of Indemnitee’s Corporate Status within
thirty (30) days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall
include or be preceded or accompanied by an undertaking by or on
behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that Indemnitee is not entitled to be
indemnified against such Expenses. Any advances and undertakings to
repay pursuant to this Section 6 shall be unsecured and
interest free.
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7.
Procedures and Presumptions for Determination of Entitlement to
Indemnificat
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