EXHIBIT 10 (c)
INDEMNIFICATION AGREEMENT
This Agreement is made as of the _____ day of ________________, 2002,
by and between HALLMARK FINANCIAL SERVICES, INC., a Nevada corporation (the
"Corporation"), and _____________ ("Indemnitee"), a director and/or officer
of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract the
most capable persons available to serve as its directors and officers , and
WHEREAS, the substantial increase in corporate litigation subjects
directors and officers to expensive litigation risks at the same time that
the availability of directors' and officers' liability insurance has been
severely limited, and
WHEREAS, it is now and has always been the policy of the Corporation to
indemnify its directors and officers to the fullest extent permitted by law,
and
WHEREAS, the Corporation does not regard the protection currently
available to Indemnitee to be adequate in the present circumstances, and
realizes that Indemnitee may not be willing to serve or continue to serve as
a director and/or officer without additional protection, and
WHEREAS, the Corporation desires Indemnitee to serve, or continue to
serve, as a director and/or officer of the Corporation.
NOW, THEREFORE, in consideration of the Indemnitee's service as a
director and/or officer of the Corporation subsequent to the date hereof,
the parties hereby agree as follows:
1. Definitions. As used in this Agreement:
a. The term "Proceeding" shall include any threatened, pending or
completed action, suit, arbitration, alternative dispute resolution
proceeding, administrative hearing or other proceeding, whether brought
by or in the right of the Corporation or otherwise and whether of a
civil, criminal, administrative or investigative nature, and any appeal
therefrom.
b. The term "Corporate Status" shall mean the status of a person who
is or was a director or officer of the Corporation, or is or was
serving, or has agreed to serve, at the request of the Corporation, as
a director, officer, partner, trustee, member, employee or agent of
another corporation, partnership, joint venture, trust, limited
liability company or other enterprise.
c. The term "Expenses" shall include, without limitation, attorneys'
fees, retainers, court costs, transcript costs, fees and expenses of
experts, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees and other
disbursements or expenses of the types customarily incurred in
connection with investigations, judicial or administrative proceedings
or appeals, but shall not include the amount of judgments, fines or
penalties against Indemnitee or amounts paid in settlement in
connection with such matters.
d. References to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the
request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner
such person reasonably believed to be in the interests of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Agreement.
2. Indemnification in Third Party Proceedings. The Corporation shall
indemnify Indemnitee in accordance with the provisions of this Paragraph if
Indemnitee was or is a party to, is threatened to be made a party to, or is
otherwise involved in any Proceeding (other than a Proceeding by or in the
right of the Corporation to procure a judgment in its favor) by reason of
the Indemnitee's Corporate Status or by reason of any action alleged to have
been taken or omitted by Indemnitee in connection therewith, against all
Expenses, judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by or on behalf of Indemnitee in connection
with such Proceeding, if Indemnitee acted in good faith and in a manner
which Indemnitee reasonably believed to be in, or not opposed to, the best
interests of the Corporation and, with respect to any criminal Proceeding,
had no reasonable cause to believe that his/her conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that Indemnitee did not act in good faith and in a
manner which the Indemnitee reasonably believed to be in, or not opposed to,
the best interests of the Corporation or, with respect to any criminal
Proceeding, had reasonable cause to believe that his/her conduct was
unlawful.
3. Indemnification in Proceedings by or in the Right of the
Corporation. The Corporation shall indemnify Indemnitee in accordance with
the provisions of this Paragraph if Indemnitee is a party to or threatened
to be made a party to or otherwise involved in any Proceeding by or in the
right of the Corporation to procure a judgment in its favor by reason of the
Indemnitee's Corporate Status or by reason of any action alleged to have
been taken or omitted by Indemnitee in connection therewith, against all
Expenses and, to the extent permitted by law, amounts paid in settlement
actually and reasonably incurred by or on behalf of Indemnitee in connection
with such Proceeding, if he acted in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation; provided, however, that no indemnification shall be made under
this Paragraph in respect of any claim, issue, or matter as to which
Indemnitee shall have been adjudged to be liable to the Corporation unless,
and then only to the extent, that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
such liability but in view of all the circumstances of the case, Indemnitee
is fairly and reasonably entitled to indemnity for such Expenses and/or
settlement as the other court shall deem proper.
4. Exceptions to Right of Indemnification. Notwithstanding anything
to the contrary in this Agreement, except as set forth in Paragraph 9, the
Corporation shall not indemnify the Indemnitee in connection with a
Proceeding (or part thereof) initiated by the Indemnitee unless the
initiation thereof was approved by the Board of Directors of the
Corporation. Notwithstanding anything to the contrary in this Agreement, the
Corporation shall not indemnify the Indemnitee to the extent the Indemnitee
is reimbursed from the proceeds of insurance, and in the event the
Corporation makes any indemnification payments to the Indemnitee and the
Indemnitee is subsequently reimbursed from the proceeds of insurance, the
Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
5. Indemnification of Expenses of Successful Party. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has
been successful, on the merits or otherwise, in defense of any Proceeding or
in defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by him or on his behalf in
connection therewith. Without limiting the foregoing, if any Proceeding or
any claim, issue or matter therein is disposed of, on the merits or
otherwise (including a disposition without prejudice), without (i) the
disposition being adverse to the Indemnitee, (ii) an adjudication that the
Indemnitee was liable to the Corporation, (iii) a plea of guilty or NOLO
CONTENDERE by the Indemnitee, (iv) an adjudication that the Indemnitee did
not act in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and (v) with respect to
any criminal proceeding, an adjudication that the Indemnitee had reasonable
cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with
respect thereto.
6. Notification and Defense of Claim. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in
writing as soon as practicable of any Proceeding for which indemnity will or
could be sought by him and provide the Corporation with a copy of any
summons, citation, subpoena, complaint, indictment, information or other
document relating to such Proceeding with which he is served. With respect
to any Proceeding of which the Corporation is so notified, the Corporation
will be entitled to participate therein at its own expense and/or to assume
the defense thereof at its own expense, with legal counsel reasonably
acceptable to the Indemnitee. After notice from the Corporation to the
Indemnitee of its election so to assume such defense, the Corporation shall
not be liable to the Indemnitee for any legal or other expenses subsequently
incurred by the Indemnitee in connection with such claim, other than as
provided below in this Paragraph 6. The Indemnitee shall have the right to
employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized
by the Corporation, (ii) counsel to the Indemnitee shall have reasonably
concluded that there may be a conflict of interest or position on any
significant issue between the Corporation and the Indemnitee in the conduct
of the defense of such action or (iii) the Corporation 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 for the Indemnitee shall be at the
expense of the Corporation, except as otherwise expressly provided by this
Agreement. The Corporation shall not be entitled, without the consent of the
Indemnitee, to assume the defense of any claim brought by or in the right of
the Corporation or as to which counsel for the Indemnitee shall have
reasonably made the conclusion provided for in clause (ii) above. The
Corporation shall not be required to indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding effected
without its written consent. The Corporation shall not settle any Proceeding
in any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent. Neither the Corporation nor the
Indemnitee will unreasonably withhold their consent to any proposed
settlement.
7. Advancement of Expenses. Subject to the provisions of Paragraph 8
below, in the event that the Corporation does not assume the defense
pursuant to Paragraph 6 of this Agreement of any Proceeding to which the
Indemnitee was or is a party or is threatened to be made a party by reason
of his Corporate Status or by reason of any action alleged to have been
taken or omitted in connection therewith and of which the Corporation
receives notice under this Agreement, any Expenses incurred by the
Indemnitee or on his behalf in defending such Proceeding shall be paid by
the Corporation in advance of the final disposition of such Proceeding;
provided, however, that the payment of such Expenses incurred by the
Indemnitee or on his behalf in advance of the final disposition of such
Proceeding shall be made only upon receipt of an undertaking by or on behalf
of the Indemnitee to repay all amounts so advanced in the event that it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Corporation as authorized in this Agreement. Such
undertaking shall be accepted without reference to the financial ability of
the Indemnitee to make repayment.
8. Procedure for Indemnification. In order to obtain indemnification
or advancement of Expenses pursuant to Paragraphs 2, 3, 5 or 7 of this
Agreement, Indemnitee shall submit to the Corporation a written request,
including in such request such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification or
advancement of Expenses. Any such indemnification or advancement of Expenses
shall be made promptly, and in any event within 60 days after receipt by the
Corporation of the written request of the Indemnitee, unless with respect to
requests under Paragraphs 2, 3 or 7 the Corporation determines within such
60-day period that such Indemnitee did not meet the applicable standard of
conduct set forth in Paragraph 2 or 3, as the case may be. Such
determination, and any determination that advanced Expenses must be repaid
to the Corporation, shall be made in each instance (a) by a majority vote of
the directors of the Corporation consisting of persons who are not at that
time parties to the Proceeding ("disinterested directors"), whether or not a
quorum, (b) by a committee of disinterested directors designated by a
majority vote of disinterested directors, whether or not a quorum, (c) if
there are no disinterested directors, or if the disinterested directors so
direct, by independent legal counsel (who may, to the extent permitted by
applicable law, be regular legal counsel to the Corporation) in a written
opinion to the Board, or (d) by the stockholders.
9. Remedies. The right to indemnification or advancement of Expenses
as provided by this Agreement shall be enforceable by the Indemnitee in any
court of competent jurisdiction if the Corporation denies such request, in
whole or in part, or if no disposition thereof is made within the 60-day
period referred to above in Paragraph 8. Unless otherwise required by law,
the burden of proving that indemnification is not appropriate shall be on
the Corporation. Neither the failure of the Corporation to have made a
determination prior to the commencement of such action that indemnification
is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Corporation pursuant
to Paragraph 8 that Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct. Indemnitee's
Expenses reasonably incurred in connection with successfully establishing
his right to indemnification, in whole or in part, in any such Proceeding
shall also be indemnified by the Corporation.
10. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation for some
or a portion of the Expenses, judgments, fines, penalties or amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with any Proceeding but not, however, for the total amount
thereof, the Corporation shall nevertheless indemnify Indemnitee for the
portion of such Expenses, judgments, fines, penalties or amounts paid in
settlement to which Indemnitee is entitled.
11. Subrogation. In the event of any payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
take all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Corporation to bring suit to
enforce such rights.
12. Term of Agreement. This Agreement shall continue until and
terminate upon the later of (a) six years after the date that Indemnitee's
Corporate Status ceases, or (b) the final termination of all Proceedings
pending on the date set forth in clause (a) in respect of which Indemnitee
is granted rights of indemnification or advancement of Expenses hereunder
and of any Proceeding commenced by Indemnitee pursuant to Paragraph 9 of
this Agreement relating thereto.
13. Indemnification Hereunder Not Exclusive. The indemnification and
advancement of Expenses provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under the
Certificate of Incorporation, the By-Laws, any agreement, any vote of
stockholders or disinterested directors, the Nevada Revised Statutes, any
other law (common or statutory), or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office
for the Corporation. Nothing contained in this Agreement shall be deemed to
prohibit the Corporation from purchasing and maintaining insurance, at its
expense, to protect itself or the Indemnitee against any expense, liability
or loss incurred by it or him in his Corporate Status or arising out of his
Corporate Status, whether or not the Indemnitee would be indemnified against
such expense, liability or loss under this Agreement; provided that the
Corporation shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
14. No Special Rights. Nothing herein shall confer upon Indemnitee any
right to continue to serve as an officer or director of the Corporation for
any period of time or at any particular rate of compensation.
15. Savings Clause. If this Agreement or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify Indemnitee as to Expenses,
judgments, fines, penalties and amounts paid in settlement with respect to
any Proceeding to the full extent permitted by any applicable portion of
this Agreement that shall not have been invalidated and to the fullest
extent permitted by applicable law.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute the original.
17. Successors and Assigns. This Agreement shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit of
the estate, heirs, executors, administrators and personal representatives of
Indemnitee.
18. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
19. Modification and Waiver. This Agreement may be amended from time
to time to reflect changes in Nevada law or for other reasons. No
supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof nor shall any such waiver constitute a
continuing waiver.
20. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been given (i)
when delivered by hand or (ii) if mailed by certified or registered mail
with postage prepaid, on the third day after the date on which it is so
mailed:
a. if to the Indemnitee, to:
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a. if to the Corporation, to:
Hallmark Financial Services, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Board of Directors
or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
21. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Nevada.
22. Enforcement. The Corporation expressly confirms and agrees that it
has entered into this Agreement in order to induce Indemnitee to serve, or
continue to serve, as a director or officer of the Corporation, and
acknowledges that Indemnitee is relying upon this Agreement in accepting or
continuing such capacity.
23. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supercedes all prior agreements, whether oral or written, by any officer,
employee or representative of any party hereto in respect of the subject
matter contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CORPORATION:
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HALLMARK FINANCIAL SERVICES, INC.
By: _________________________________
Xxxxx X. Xxxxxxx, President and Chief
Executive Officer
INDEMNITEE:
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