Exhibit 10.7
PROASSURANCE CORPORATION
INDEMNIFICATION AGREEMENT
THIS Agreement is made effective as of the ____ day of _____________,
200_, by and between ProAssurance Corporation, a Delaware corporation (the
"Company"), and _____________ ("Indemnitee").
Recitals
WHEREAS, the Company has adopted Bylaws (the "Bylaws") which provide
for the indemnification of the directors, officers, agents, and employees of the
Company in accordance with Section 145 of the General Corporation Laws of
Delaware (the "State Statute");
WHEREAS, the State Statute provides that it is not exclusive, and thus
contemplates that contracts may be entered into between the Company and the
members of its Board of Directors and Officers and employees of the Company with
respect to the indemnification of such individuals;
WHEREAS, developments with respect to the terms, cost and availability
of directors' and officers' liability insurance ("Liability Insurance") have
raised questions regarding the adequacy and reliability of the protection
afforded to directors and officers thereby; and
WHEREAS, in order to resolve such questions and thereby induce the
Indemnitee to continue to perform services on behalf of the Company, the Company
has determined and agreed to enter into this contract with the Indemnitee.
Agreement
NOW, THEREFORE, in consideration of and for the Indemnitee's agreement
to serve as a director, associate committee member, officer, employee or agent
of the Company, and to render service on behalf of the Company, the parties
agree as follows:
1. Liability Insurance. The Company, as of the date of this
Agreement, has acquired a Liability Insurance policy. The Company shall use
reasonable efforts to maintain Liability Insurance during the term of this
Agreement, but shall not be required to continue to maintain Liability Insurance
if in the sole business judgment of the directors then in office, (i) the
premium cost for such insurance is excessive, (ii) the premium cost for such
insurance is not reasonably related to the amount of coverage provided, of (iii)
the coverage provided by such insurance is so limited by its terms and
exclusions or otherwise that sufficient benefit is not derived therefrom.
2. Indemnity. The Company agrees to indemnify and reimburse
Indemnitee to the full extent authorized and permitted by the provisions of the
Bylaws of the Company and the laws of the State of Delaware, and by any
amendment thereof, authorizing or permitting such indemnification which is
adopted after the date hereof.
3. Additional Indemnity.
(a) Subject only to the exclusions set forth in Section 4
hereof, the Company shall indemnify and reimburse Indemnitee under any
circumstances where Indemnitee was or is a party or is threatened to be made a
party to a threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative and whether formal or
informal, including an action by or in the right of the corporation, by reason
of the fact that he or she is or was a director, associate committee member,
officer, employee, or agent of the Company, or is or was serving at the request
of the Company as a director, associate committee member, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against reasonable expenses, including attorneys' fees, judgments,
penalties, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit, or proceeding, if
Indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company or its shareholders or
policyholders, and with respect to a criminal action or proceeding, if
Indemnitee had no reasonable cause to believe his or her conduct was unlawful.
The termination of an action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Company or its shareholders or
policyholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(b) The indemnification provided shall extend to all
expenses and circumstances for which indemnification is permitted under
paragraph 3(a) above, that arise:
(i) During the term of this Agreement based upon
the activities of Indemnitee prior to or
during the term of this Agreement; and,
(ii) Subsequent to the term of this Agreement
based upon the activities of Indemnitee
prior to or during the term of this
Agreement.
(c) The term "Company" shall for purposes of this
Agreement include ProAssurance Corporation and its direct and indirect
majority-owned subsidiaries.
4. Limitations on Indemnity. No indemnity pursuant to Section 3
hereof shall be paid by the Company:
(a) except to the extent the aggregate of losses to be
indemnified hereunder exceed the amount of such losses for which Indemnitee is
indemnified either: pursuant to Section 2 hereof; pursuant to an Indemnification
Agreement with any parent, subsidiary or affiliate of the Company; or, pursuant
to any Liability Insurance purchased and maintained by the Company pursuant to
Section 1 hereof;
(b) in respect to remuneration paid to Indemnitee if it
shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
2
(c) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(d) on account of Indemnitee conduct which is finally
adjudged to have been knowingly fraudulent, deliberately dishonest or willful
misconduct;
(e) if indemnification is prohibited by applicable law of
the State of Delaware;
(f) for a claim, issue, or matter in which Indemnitee has
been found liable to the Company unless and only to the extent that the Court of
Chancery in Delaware or the court in which the action or suit was brought has
determined upon application that, despite the adjudication of liability but in
view of all circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification for the expenses which the court considers proper;
or
(g) if a final decision by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful.
5. Term of Agreement. The original term of this Agreement shall
be the twelve month period between December 1, 2002, and November 30, 2003. This
Agreement shall renew for successive one year terms unless sooner terminated
upon termination of Indemnitee's position as an officer, director or employee of
the Company or upon delivery of written notice of termination by the Company to
the Indemnitee not less than 60 days prior to the date of termination stated in
the notice. Notwithstanding anything in this Agreement to the contrary, the
indemnification provided pursuant to this Agreement shall survive the
termination of this Agreement with respect to all actions or inactions occurring
or alleged to have occurred prior to or during the term of this Agreement, and
this Agreement shall remain binding upon the Company with respect to the covered
activities of Indemnitee occurring or alleged to have occurred prior to or
during the term of this Agreement.
6. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of the commencement or threatened commencement of any
action, suit or proceeding, Indemnitee will, if a claim in respect thereof is to
be made against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company will not relieve
it from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such action, suit or proceeding as to which
Indemnitee notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate therein
at its own expense; and
(b) Except as otherwise provided below, to the extent
that it may wish, the Company jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with counsel
selected by the Company and consented to by Indemnitee, which consent shall not
be unreasonably withheld. After notice from the Company to Indemnitee of its
election so to assume the defense thereof, the Company will not be liable to
3
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ his own counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after the notice
from the Company of its assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Company, (ii) a conflict of interest between the Company
and Indemnitee exists in the conduct of the defense of such action; or (iii) the
Company shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the reasonable fees and expenses of counsel shall
be at the expense of 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 exists between the Company and
Indemnitee.
The Company shall not be liable to indemnify Indemnitee 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
that would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will unreasonably withhold
its consent to any proposed settlement.
7. Payment of Indemnity. Any indemnification or advance shall be
made promptly and in any event within forty-five (45) days, upon the written
request of the director, officer, employee or agent of the Company, unless a
determination is reasonably and promptly made that such director, officer,
employee or agent failed to meet the applicable standard of conduct set forth in
Section 1 hereof or that such director, officer or employee is not entitled to
indemnity under Section 3 hereof. Such determination shall be made (l) by the
Board of Directors by a majority vote of a quorum consisting of disinterested
directors, or (2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (4) by the
stockholders. If the request for indemnification involves an action, suit or
proceeding that arises from the merger, consolidation, reorganization,
liquidation, sale of all or substantially all of the assets, or other
extraordinary transaction of the Company, the inquiry and resolution thereof
required by this Section 7, at the option of the person seeking indemnification,
shall be made by a neutral person mutually acceptable to the Company and the
person seeking indemnification. If no disposition of such claim for
indemnification is made within forty-five (45) days, a favorable determination
of entitlement to indemnification shall be deemed to have been made. The
expenses (including attorney's fees) incurred by the person seeking
indemnification in connection with successfully establishing such person's right
to indemnification, in whole or in part, shall also be indemnified by the
Company.
8. Repayment of Expenses. Indemnitee agrees that he or she will
reimburse the Company for all reasonable expenses paid by the Company in
defending any civil or criminal action, suit or proceeding against Indemnitee in
the event and only to the extent that it shall be ultimately determined that
Indemnitee is not entitled to be indemnified by the Company hereunder. The
undertaking to reimburse the Company for expenses is made pursuant to the
requirements of the State Statute. It is understood and agreed that no advances
or payments
4
made to the Indemnitee hereunder shall be accounted for or treated as a loan
from the Company to the Indemnitee.
9. 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 Indemnitee to serve and/or continue to serve the
Company, and acknowledges that Indemnitee is relying upon this Agreement in
continuing to serve in such capacity.
(b) In the event Indemnitee is required to bring any
action to enforce rights and/or to collect moneys due under this Agreement and
is successful in such action, Company shall reimburse Indemnitee for all of
Indemnitee's reasonable fees and expenses in bringing and pursuing such action.
10. Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable under applicable
federal or state law or for any other reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof.
11. Governing Law; Binding Effect; Amendment; Notice.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware without effect to its conflict
of law provisions, except to the extent that the provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and other federal laws preempt the applicable state
law to the enforceability or interpretation of this Agreement.
(b) This Agreement shall be binding upon Indemnitee and
upon the Company, its successors and assigns, and shall inure to the benefit of
the Indemnitee, his heirs, personal representatives and assigns and to the
benefit of the Company, its successors and assigns.
(c) No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
(d) Any notice required to be given hereunder shall be
deemed given when deposited with the United States Postal Service, postage
prepaid, addressed to the person to receive notice at its address below, or such
other address as may have theretofore been specified by such person in a notice
pursuant hereto, or delivered in person to that person (or an executive officer
thereof in the case of the Company).
12. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration, in Birmingham, Alabama, in accordance with the Commercial
Arbitration rules of the American Arbitration Association, except that the
arbitrator(s) shall be required to be familiar with the laws of the State of
Delaware as they relate to this Agreement. Judgment upon the award rendered by
the Arbitrator(s) may be entered in any court having jurisdiction thereof.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
PROASSURANCE CORPORATION
(the "Company")
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
By:
--------------------------------------
------------------
Its
---------------
("Indemnitee")
-----------------------------------------
Signature
-----------------------------------------
Address
-----------------------------------------
6
