INDEMNIFICATION
AGREEMENT
This
INDEMNIFICATION AGREEMENT (the “AGREEMENT”) is made and
entered into as of the ___ day of ___, ___, by and between First
Acceptance Corporation, a Delaware corporation (including any
successors thereto, the “COMPANY”), and___
(“INDEMNITEE”).
A. Competent
and experienced persons are reluctant to serve or to continue to
serve corporations as directors, officers, or in other capacities
unless they are provided with adequate protection through insurance
or indemnification (or both) against claims and actions against
them arising out of their service to and activities on behalf of
those corporations.
B. The
current uncertainties relating to the availability of adequate
insurance for directors and officers have increased the difficulty
for corporations to attract and retain competent and experienced
persons.
C. The Board
of Directors of the Company (the “BOARD”) has
determined that the continuation of present trends in litigation
will make it more difficult to attract and retain competent and
experienced persons, that this situation is detrimental to the best
interests of the Company’s stockholders, and that the Company
should act to assure its directors and officers that there will be
increased certainty of adequate protection in the
future.
D. It is
reasonable, prudent, and necessary for the Company to obligate
itself contractually to indemnify its directors and officers to the
fullest extent permitted by applicable law in order to induce them
to serve or continue to serve the Company.
E. Indemnitee
is willing to serve and continue to serve the Company on the
condition that he be indemnified to the fullest extent permitted by
law.
F. Concurrently
with the execution of this Agreement, Indemnitee is agreeing to
serve or to continue to serve as a director or officer of the
Company.
NOW, THEREFORE, in
consideration of the foregoing premises, Indemnitee’s
agreement to serve or continue to serve as a director or officer of
the Company, and the covenants contained in this Agreement, the
Company and Indemnitee hereby covenant and agree as
follows:
For
purposes of this Agreement:
(a)
Change of Control : shall mean the occurrence of any of the
following events:
(i) The
acquisition by any individual, entity, or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “EXCHANGE ACT”))(a
“PERSON”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (x) the then outstanding shares of common stock
of the Company (the “OUTSTANDING COMPANY COMMON STOCK”)
or (y) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the “OUTSTANDING COMPANY VOTING
SECURITIES”); provided, however, that for purposes of this
paragraph (i), the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from the
Company or any Subsidiary thereof, (B) any acquisition by the
Company or any Subsidiary thereof, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any Subsidiary of the Company, or (D) any
acquisition by any entity or its security holders pursuant to a
transaction which complies with clauses (A) and (B) of
paragraph (iii) below; or
(ii) Individuals
who, as of the date of this Agreement, constitute the Board (the
“INCUMBENT BOARD”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date of this
Agreement whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Consummation
of a reorganization, merger, or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or an acquisition of assets of another entity (a
“BUSINESS COMBINATION”), in each case, unless,
immediately following such Business Combination, (A) the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common
stock or other equity interests and the combined voting power of
the then outstanding voting securities entitled to vote generally
in the election of directors (or similar governing body), as the
case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
Subsidiaries) in proportions not materially different from their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, and (B) at least a majority of
the members of the board of directors (or similar governing body)
of the entity resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination, or
(iv) Approval
by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
2
(b)
Claim : shall mean any threatened, pending, or completed
action, suit, or proceeding (including, without limitation,
securities laws actions, suits, and proceedings and also any cross
claim or counterclaim in any action, suit, or proceeding), whether
civil, criminal, arbitral, administrative, or investigative in
nature, or any inquiry or investigation (including discovery),
whether conducted by the Company or any other Person.
(c)
Expenses : shall mean all costs, fees and expenses
(including, without limitation, attorneys’ and expert
witnesses’ fees and disbursements, fees of private
investigators and professional advisors, court costs, transcript
costs and travel expenses), and obligations paid or incurred in
connection with investigating, defending (including affirmative
defenses and counterclaims), being a witness in, or participating
in (including on appeal), or preparing to defend, be a witness in,
or participate in, any Claim relating to any Indemnifiable
Event.
(d)
Indemnifiable Event : shall mean any actual or alleged act,
omission, statement, misstatement, event, or occurrence related to
the fact that Indemnitee is or was a director, officer, agent, or
fiduciary of the Company, or is or was serving at the request of
the Company as a director, officer, trustee, agent, or fiduciary of
another corporation, partnership, joint venture, employee benefit
plan, trust, or other enterprise, or by reason of any actual or
alleged thing done or not done by Indemnitee in any such capacity.
For purposes of this Agreement, the Company agrees that
Indemnitee’s service on behalf of or with respect to any
Subsidiary or employee benefits plan of the Company or any
Subsidiary of the Company shall be deemed to be at the request of
the Company.
(e)
Indemnifiable Liabilities : shall mean all Expenses and all
other liabilities, damages (including, without limitation,
punitive, exemplary, and the multiplied portion of any damages),
judgments, payments, fines, penalties, amounts paid in settlement,
and awards paid or incurred that arise out of, or in any way relate
to, any Indemnifiable Event.
(f)
Potential Change of Control : shall be deemed to have
occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change of
Control; (ii) any Person (including the Company) publicly
announces an intention to take or to consider taking actions that,
if consummated, would constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change of Control has
occurred.
(g)
Reviewing Party : shall mean (i) a member or members of
the Board who are not parties to the particular Claim for which
Indemnitee is seeking indemnification or (ii) if a Change of
Control has occurred and Indemnitee so requests, or if the members
of the Board so elect, or if all of the members of the Board are
parties to such Claim, Special Counsel.
(h)
Special Counsel : shall mean special, independent legal
counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not
otherwise performed material services for the Company or for
Indemnitee within the last three years (other than as Special
Counsel under this Agreement or similar agreement).
3
(i)
Subsidiary : shall mean, with respect to any Person, any
corporation or other entity of which a majority of the voting power
of the voting equity securities or equity interest is owned,
directly or indirectly, by that Person.
2. Indemnification and Expense Advancement .
(a) The
Company shall indemnify Indemnitee and hold Indemnitee harmless to
the fullest extent permitted by law, as soon as practicable but in
any event no later than 30 days after written demand is
presented to the Company, from and against any and all
Indemnifiable Liabilities. In connection with the foregoing
obligation, the Company agrees that the Reviewing Party shall make
a determination (in a written opinion, in any case in which Special
Counsel is involved) as to Indemnitee’s entitlement to
indemnification under Section 145 of the Delaware General
Corporation Law, as amended from time to time (“APPLICABLE
LAW”). Notwithstanding the foregoing, nothing contained in
this Agreement shall require any determination under this Section
2(a) to be made by the Reviewing Party prior to the disposition or
conclusion of the Claim against the Indemnitee. If there has been a
Change of Control, the Reviewing Party shall be Special Counsel, if
Indemnitee so requests, in accordance with the terms of
Section 3 hereof.
(b) If
so requested by Indemnitee, the Company shall advance to Indemnitee
all reasonable Expenses incurred by Indemnitee to the fullest
extent permitted by law (or, if applicable, reimburse Indemnitee
for any and all reasonable Expenses incurred by Indemnitee and
previously paid by Indemnitee) within ten business days after such
request (an “EXPENSE ADVANCE”). The Company shall be
obligated from time to time at the request of Indemnitee to make or
pay an Expense Advance in advance of the final disposition or
conclusion of any Claim and in advance of any determination by the
Reviewing Party as to Indemnitee’s entitlement to
indemnification hereunder.
(c) If,
when, and to the extent that the Reviewing Party determines that
Indemnitee would not permitted to be indemnified with respect to a
Claim under Applicable Law, the Company shall be entitled to be
reimbursed by Indemnitee and Indemnitee hereby agrees to reimburse
the Company without interest (which agreement shall be an unsecured
obligation of Indemnitee) for all related Expense Advances
theretofore made or paid by the Company in the event that it is
determined that indemnificat
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