INDEMNIFICATION
AGREEMENT
This
INDEMNIFICATION AGREEMENT (the “Agreement”) is made and
entered into effective as of the _____ day of _____, 20_____ by and
between HCC Insurance Holdings, Inc., a Delaware corporation
(“Company”), and
_________(“Indemnitee”).
WHEREAS, competent
and experienced persons are becoming more reluctant to serve as
directors and officers of corporations unless they are provided
with adequate protection against claims and actions against them
for their activities on behalf or at the request of such
corporations, generally through insurance and indemnification;
and
WHEREAS,
uncertainties in the interpretations of the statutes and
regulations, laws and public policies relating to indemnification
of corporate directors and officers are such as to make adequate,
reliable assessment of the risks to which directors and officers of
corporations may be exposed difficult, particularly in light of the
proliferation of lawsuits against directors and officers;
and
WHEREAS, the Board
of Directors of the Company, based upon its business experience,
has concluded that the continuation of present trends in litigation
against corporate directors and officers will inevitably make it
more difficult for the Company to attract and retain directors and
officers of the highest degree of competence committed to the
active and effective direction and supervision of the business and
affairs of the Company and its subsidiaries and affiliates and the
operation of its and their facilities, and the Board deems such
consequences to be so detrimental to the best interests of the
Company’s stockholders that it has concluded that the Company
should act to provide its directors and officers with enhanced
protection against inordinate risks attendant on their positions in
order to assure that the most capable persons otherwise available
will be attracted to such positions and, in such connection, such
directors have further concluded that it is not only reasonable and
prudent, but necessary, for the Company to contractually obligate
itself to indemnify to the fullest extent permitted by applicable
law its directors and certain of its officers and to assume, to the
maximum extent permitted by applicable law, financial
responsibility for expenses and liabilities which might be incurred
by such individuals in connection with claims lodged against them
for their decisions, actions and omissions in such capacities;
and
WHEREAS,
Section 145 of the General Corporation Law of the State of
Delaware, under which law the Company is organized, empowers a
corporation organized in Delaware to indemnify persons who serve as
directors, officers, employees or agents of the corporation or
persons who serve at the request of the corporation as directors,
officers, employees or agents of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise,
and further specifies that the indemnification provided by such
section “shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any
By-Law, agreement, vote of stockholders or disinterested directors
or otherwise,” and further empowers a corporation to
“purchase and maintain insurance” on behalf of such
persons “against any liability asserted against him or
incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of”
such laws; and
WHEREAS, the
Certificate of Incorporation of the Company provides for
indemnification in accordance with and to the fullest extent
permitted by the General Corporation Law of the State of Delaware
or any other applicable laws as presently or hereinafter in effect;
and
WHEREAS, the
Company has (a) reviewed the type of insurance available to
insure the directors and officers of the Company and of its
affiliates against costs, expenses (including attorneys’ fees
and disbursements), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by them in connection
with any action, suit or proceeding to which they are, or are
threatened to be made, a party by reason of their status and/or
decisions or actions in such positions, (b) studied the nature
and extent of the coverage provided by such insurance and the cost
thereof to the Company, (c) purchased such insurance to the
extent reasonably available, and (d) concluded,
notwithstanding the purchase of such insurance to the extent
reasonably available, that it would be in the best interests of the
Company and its stockholders for the Company to enter into
agreements to indemnify certain of such persons in the form of this
Agreement; and
WHEREAS, the
Company desires to have Indemnitee serve or continue to serve as a
director and/or officer of the Company, and/or as a director,
officer, employee, partner, trustee, agent or fiduciary of such
other corporations, partnerships, joint ventures, employee benefit
plans, trusts or other enterprises (herein collectively called
“Company Affiliates”) of which he has been or is
serving, or will serve, at the request of or for the convenience of
or to represent the interests of the Company, free from undue
concern for unpredictable, inappropriate or unreasonable claims for
damages by reason of his being an officer of the Company or a
director, officer, employee, partner, trustee, agent or fiduciary
of a Company Affiliate or by reason of his decisions or actions on
their behalf; and
WHEREAS,
Indemnitee is willing to serve, or to continue to serve, or to take
on additional service for, the Company and/or the Company
Affiliates in such aforesaid capacities on the condition that he be
indemnified as provided for herein;
NOW, THEREFORE, in
consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as
follows:
1.
Services to the Company . Indemnitee will serve and/or
continue to serve as a director and/or officer of the Company
and/or as a director, officer, employee, partner, trustee, agent or
fiduciary of a Company Affiliate in good faith so long as he is
duly elected and qualified in accordance with the provisions of the
Company’s By-Laws or other applicable constitutive documents
thereof; provided that Indemnitee may at any time and for any
reason resign from such position.
(a) Except
as otherwise expressly provided in this Agreement or prohibited by
applicable law, the Company, within 60 days (or such longer
period, if any, as may be permitted by Section 4(a) hereof) after
receipt of a written statement from Indemnitee requesting
indemnification and reasonably evidencing the costs, expenses,
judgments, penalties, fines and amounts in settlement
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incurred by
him, shall, in accordance with the applicable provisions of this
Agreement, fully indemnify Indemnitee if Indemnitee is or was made
a Party or is threatened to be made a party to any Proceeding (as
hereinafter defined) by reason of the fact that he is or was a
director, officer, employee, agent or fiduciary of the Company or
is or was serving at the request of or for the convenience of or to
represent the interests of the Company as a director, officer,
employee, partner, trustee, agent or fiduciary of a Company
Affiliate, or by reason of anything done or not done by him in any
such capacity (all of the foregoing reasons being herein
collectively called “Qualifying Reasons”), against
costs, expenses (including attorneys’ fees and
disbursements), judgments, penalties, fines and amounts in
settlement incurred by him in connection with such Proceeding
(including, but not limited to, the investigation, defense,
settlement or appeal thereof). In the event that both the foregoing
sentence and Section 2(b) hereof would be applicable to the
indemnification being sought, the provisions of Section 2(b) shall
govern. For purposes of this Agreement, (i) a
“Proceeding” shall mean any threatened, pending or
completed investigation, action, suit, arbitration, alternate
dispute resolution mechanism or any other proceeding (including any
appeals therefrom), whether civil, criminal, administrative or
investigative in nature and whether in a court or arbitration, or
before or involving a governmental, administrative or private
entity (including, but not limited to, an investigation initiated
by the Company, a Company Affiliate, or the Board of Directors or
fiduciaries of any thereof), (ii) references to
“fines” shall include, without limitation, any excise
taxes assessed on Indemnitee with respect to any employee benefit
or welfare plan and (iii) references to “serving at the
request of the Company” shall include, without limitation,
any service, while serving as a director, officer, employee,
partner, trustee, agent or fiduciary of the Company or any Company
Affiliate which imposes duties on, or involves services by,
Indemnitee with respect to any employee benefit or welfare plan of
the Company or any Company Affiliate, its participants or
beneficiaries.
(b) Notwithstanding
any other provisions of this Agreement (except as set forth in
Section 2(c) hereof), and without a requirement for any
determination as described in Section 4(a) hereof, to the extent
Indemnitee (i) has prepared to serve or has served as a
witness in any Proceeding in any way relating to the Company, any
Company Affiliate, any affiliate (as defined in Rule 405 under
the Securities Act of 1933, as amended) of the Company
(“Securities Act Affiliate”), any associate (as defined
in such Rule 405) of the Company or of any Securities Act
Affiliate or Company Affiliate, or anything done or not done by
Indemnitee as a director, officer, employee, partner, trustee,
agent or fiduciary of the Company or any Company Affiliate or
(ii) has been successful on the merits or otherwise
(including, without limitation, the dismissal of an action without
prejudice) in defense of any Proceeding arising out of a Qualifying
Reason, or in the defense of any claim, issue or matter involved
therein, whether in the final adjudication, arbitration or
alternate dispute resolution mechanism or on appeal, the Company
shall fully indemnify him against all costs and expenses (including
attorneys’ fees and disbursements) incurred by him in
connection therewith (including, but not limited to, the
preparation or service as a witness or the investigation, defense
or appeal in connection with any such Proceeding) within
30 days after receipt by the Company from Indemnitee of a
statement requesting such indemnification, reasonably evidencing
the expenses and costs so incurred by him and averring that they do
not relate to matters of the type described in clauses (i) or
(ii) of Section 2(c) hereof.
(c) Notwithstanding
anything to the contrary in the foregoing provisions of this
Section 2 (and except as provided in the proviso clause of
this sentence), Indemnitee shall not be
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entitled, as a
matter of right, to indemnification pursuant to this
Section 2: (i) except as provided in Section 4(e) or 9
hereof, against costs and expenses incurred in connection with any
Proceeding commenced by Indemnitee against the Company, any Company
Affiliate, any Securities Act Affiliate or any person who is or was
a director or officer, in his or her respective capacity as such,
of the Company, any Company Affiliate or any Securities Act
Affiliate; or (ii) against costs and expenses incurred by
Indemnitee in connection with preparing to serve or serving, prior
to a Change in Control (as defined in Section 4(d)(i) hereof),
as a witness in cooperation with any party or entity, who or which
has threatened or commenced any Proceeding against the Company, any
Company Affiliate or Securities Act Affiliate, or any director,
officer, employee, partner, trustee, agent or fiduciary of any
thereof in his or her respective capacity as such; or (iii) to
the extent that Indemnitee has theretofore received payment
pursuant to any directors’ and officers’ liability
insurance policy maintained by the Company; provided, however, that
indemnification may be provided by the Company in any specific case
as contemplated by Section 6 hereof notwithstanding the
applicability of the foregoing clause (i) or (ii).
(d) Notwithstanding
any other provision of this Agreement, indemnification shall also
be made by the Company to the extent that the Court of Chancery of
the State of Delaware or the court in which a Proceeding was
brought shall determine that Indemnitee is fairly and reasonably
entitled to indemnification for such costs and expenses as such
court shall deem proper.
(e) The
rights of the Indemnitee under this Agreement shall not be limited,
diminished or reduced by the right of the Indemnitee to seek or
receive payments with respect to the matters covered by this
Agreement from any person other than the Company or under the
insurance policies maintained by the Company. In addition, the
Indemnitee shall be under no obligation to seek or accept any
settlement offer and the failure to accept a settlement offer shall
not be a basis for refusing indemnification or any diminution
thereof.
3.
Partial Indemnification . If Indemnitee is only partially
successful in the defense of any Proceeding arising out of a
Qualifying Reason, or in the defense of any claim, issue or matter
involved therein, whether in the initial adjudication, arbitration
or alternate dispute resolution mechanism or on appeal, the Company
shall nevertheless indemnify Indemnitee, as a matter of right
pursuant to Section 2(b) hereof, to the extent Indemnitee has been
partially successful.
4.
Determination of Entitlement to Indemnification Pursuant to
Section 2(a) .
(a) Upon
written request by Indemnitee for indemnification pursuant to the
first sentence of Section 2(a) hereof, any determination required
by Delaware law regarding Indemnitee’s entitlement to
indemnification shall be made not later than 60 days after the
Company shall have received such written request. Such 60-day
period can be extended for an additional reasonable time
if:
(i) the
Company, pursuant to a request by Indemnitee, has provided timely,
continuous and effective Interval Protection (as defined in
Section 7 hereof); and
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(ii) the
Company in good faith requires such additional time for the
obtaining or evaluating of documentation reasonably available to
Indemnitee and required for the determination of entitlement to
indemnification.
Any such
determination of eligibility shall be made:
(i) if
a Change in Control (as hereinafter defined) shall have occurred,
by Independent Counsel (as hereinafter defined) in a written
opinion delivered by such Independent Counsel to the Board of
Directors, a copy of which (including each prior draft thereof)
shall be simultaneously delivered to Indemnitee (unless Indemnitee
shall have made a request, which request is timely under the
circumstances, that such determination be made by the Board of
Directors or stockholders, in which case the determination shall be
made, as requested by Indemnitee, pursuant to clause (ii)(A) or
(ii)(C) of this Section 4(a)); and
(A)
by the Board of Directors of the Company by a majority vote of a
quorum consisting of Disinterested Directors (as hereinafter
defined), or
(B)
if such a quorum is not obtainable or, even if obtainable, if the
Board of Directors by the majority vote of Disinterested Directors
so directs, by Independent Counsel in a written opinion delivered
by such Independent Counsel to the Board of Directors, a copy of
which shall be simultaneously delivered to Indemnitee,
or
(C)
by the stockholders of the Company.
The General
Counsel of the Company, if any, shall, promptly upon receipt of
Indemnitee’s request for indemnification, advise the Board of
Directors in writing that Indemnitee has made such request for
indemnification. Indemnitee shall cooperate with the party making
the determination of Indemnitee’s entitlement to
indemnification, including providing to such party, upon reasonable
advance request, any documentation or information reasonably
available to Indemnitee and necessary to such determination, but
not including documents or information that is within the scope of
Indemnitee’s attorney-client privilege. Any costs or expenses
(including attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the party making such
determination shall be borne by the Company (irrespective of the
determination as to Indemnitee’s entitlement to
indemnification pursuant to Section 2(a) hereof), and the Company
hereby indemnifies and agrees to hold Indemnitee harmless from such
costs or expenses.
(b) In
making a determination of entitlement pursuant to Section 4(a) or
4(e) hereof, the person or entity making suc
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