EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the 21st day
of February, 2001, by and between D.R. Horton, Inc., a Delaware corporation (the
"Company"), and James K. Schuler, a director and officer of the Company (the
"Indemnitee").
RECITALS
A. The Indemnitee has been elected as a director and officer of the
Company and the Company desires the Indemnitee to serve in such capacities. The
Indemnitee is willing, subject to certain conditions including without
limitation the execution and performance of this Agreement by the Company, to
serve in such capacities.
B. In addition to the indemnification to which the Indemnitee is
entitled under the certificate of incorporation of the Company (the
"Certificate"), the Company may in its discretion obtain at its sole expense
insurance protecting its officers and directors including the Indemnitee against
certain losses arising out of actual or threatened actions, suits or proceedings
to which such persons may be made or threatened to be made parties. If such
insurance is obtained, there can be no assurance that such insurance will not be
cancelled by the insurer or that the Company will elect not to continue or renew
such insurance. Accordingly, and in order to induce the Indemnitee to serve in
his present capacities, the Company and Indemnitee agree as follows:
1. Continued Service. The Indemnitee will serve as a director of the
Company so long as he is duly elected and qualified in accordance with the
bylaws of the Company (the "Bylaws") or until he resigns in writing in
accordance with applicable law and will continue to serve as an officer of the
Company at the pleasure of its Board of Directors (the "Board") so long as he is
duly appointed or elected by the Board or until he resigns in writing in
accordance with applicable law.
2. Initial Indemnity. (a) The Company shall indemnify the Indemnitee
when he was or is a party or is threatened to be made a party to any pending,
threatened or completed action, suit or proceeding, whether civil,
administrative, investigative or criminal (other than an action by or in the
name of the Company), by reason of the fact that he is or was or had agreed to
become a director or officer of the Company, or is or was serving or had agreed
to serve at the written request of the Company as director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, in any such case owned or controlled by the Company, or by reason of
any action alleged to have been taken or omitted in such capacity, against any
and all costs, charges and expenses, including without limitation, attorneys'
and others' fees and expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection therewith and
any appeal therefrom if the Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the Indemnitee did not satisfy the foregoing standard of
conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee when he was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company to
procure a judgment in its favor by reason of the fact that he is or was or had
agreed to become a director or officer of the Company, or is or was serving or
had agreed to serve at the written request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint
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venture, trust or other enterprise, in any such case owned or controlled by the
Company, against costs, charges and expenses (including attorneys' and others'
fees and expenses) actually and reasonably incurred by him in connection with
the defense or settlement thereof or any appeal therefrom if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and except that no indemnification shall be made in
respect of any claim, issue or matter as to which the Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery or the court in which such action, suit or proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, the Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(c) To the extent that the Indemnitee has been successful on the merits
or otherwise, including without limitation the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to in Sections
2(a) or 2(b) hereof or in defense of any claim, issue or matter therein, he
shall be indemnified against costs, charges and expenses (including attorneys'
and others' fees and expenses) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under Sections 2(a) or 2(b) (unless ordered by
a court) shall be made by the Company only as authorized in the specific case
upon a determination in accordance with Section 4 hereof or any applicable
provision of the Certificate, Bylaws, other agreement, resolution or otherwise.
Such determination shall be made (i) by the Board, by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding or (ii) if such a quorum of disinterested directors is not available
or so directs, by independent legal counsel (designated in the manner provided
below in this
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subsection (d)) in a written opinion or (iii) by the stockholders of the Company
(the "Stockholders"). Independent legal counsel shall be designated by vote of a
majority of the disinterested directors; provided, however, that if the Board is
unable or fails to so designate, such designation shall be made by the
Indemnitee subject to the approval of the Company (which approval shall not be
unreasonably withheld). Independent legal counsel shall not be any person or
firm who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or the Indemnitee in an action to determine the Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees and expenses of such
independent legal counsel and to indemnify fully such counsel against costs,
charges and expenses (including attorneys' and others' fees and expenses)
actually and reasonably incurred by such counsel in connection with this
Agreement or the opinion of such counsel pursuant hereto.
(e) All expenses (including attorneys' and others' fees and expenses)
incurred by the Indemnitee in his capacity as a director or officer of the
Company in defending a civil or criminal action, suit or proceeding shall be
paid by the Company in advance of the final disposition of such action, suit or
proceeding in the manner prescribed by Section 4(b) hereof.
(f) The Company shall not adopt any amendment to the Certificate or
Bylaws the effect of which would be to deny, diminish or encumber the
Indemnitee's rights to indemnity pursuant to the Certificate, Bylaws, the
General Corporation Law of the State of Delaware (the "DGCL") or any other
applicable law as applied to any act or failure to act occurring in whole or in
part prior to the date (the "Effective Date") upon which the amendment was
approved by the Board or the Stockholders, as the case may be. In the event that
the Company shall adopt any amendment to the Certificate or Bylaws the effect
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of which is to so deny, diminish or encumber the Indemnitee's rights to
indemnity, such amendment shall apply only to acts or failures to act occurring
entirely after the Effective Date thereof unless the Indemnitee shall have voted
in favor of such adoption as a director or holder of record of the Company's
voting stock, as the case may be.
3. Additional Indemnification. (a) Pursuant to Section 145(f) of the
DGCL, without limiting any right which the Indemnitee may have pursuant to
Section 2 hereof, the Certificate, the Bylaws, the DGCL, any policy of insurance
or otherwise, but subject to the limitations on the maximum permissible
indemnity which may exist under applicable law at the time of any request for
indemnity hereunder determined as contemplated by Section 3(a) hereof, the
Company shall indemnify the Indemnitee against any amount which he is or becomes
legally obligated to pay relating to or arising out of any claim made against
him because of any act, failure to act or neglect or breach of duty, including
any actual or alleged error, misstatement or misleading statement, which he
commits, suffers, permits or acquiesces in while acting in his capacity as a
director of the Company, or, at the written request of the Company, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, in any such case owned or controlled by the
Company. The payments which the Company is obligated to make pursuant to this
Section 3 shall include without limitation damages, judgments, settlements and
charges, costs, expenses, expenses of investigation and expenses of defense of
legal actions, suits, proceedings or claims and appeals therefrom, and expenses
of appeal, attachment or similar bonds; provided, however, that the Company
shall not be obligated under this Section 3(a) to make any payment in connection
with any claim against the Indemnitee:
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(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law
from paying which results in a final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee gaining in fact a personal profit to which he was
not legally entitled, including without limitation profits
made from the purchase and sale by the Indemnitee of equity
securities of the Company which are recoverable by the Company
pursuant to Section 16(b) of the Securities Exchange Act of
1934, and profits arising from transactions in publicly traded
securities of the Company which were effected by the
Indemnitee in violation of Section 10(b) of the Securities
Exchange Act of 1934, including Rule l0b-5 promulgated
thereunder.
The determination of whether the Indemnitee shall be entitled to indemnification
under this Section 3(a) may be, but shall not be required to, be made in
accordance with Section 4(a) hereof. If that determination is so made, it shall
be binding upon the Company and the Indemnitee for all purposes.
(b) Expenses (including without limitation attorneys' and others' fees
and expenses) incurred by Indemnitee in defending any actual or threatened civil
or criminal action, suit, proceeding or claim shall be paid by the Company in
advance of the final disposition thereof as authorized in accordance with
Section 4(b) hereof.
4. Certain Procedures Relating to Indemnification and Advancement of
Expenses. (a) Except as otherwise permitted or required by the DGCL, for
purposes of pursuing his rights to indemnification under Sections 2(a), 2(b) or
3(a) hereof, as the case may be, the Indemnitee may, but shall not be required
to, (i) submit to the Board a sworn statement of request for indemnification
substantially
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in the form of Exhibit 1 attached hereto and made a part hereof (the
"Indemnification Statement") averring that he is entitled to indemnification
hereunder; and (ii) present to the Company reasonable evidence of all
indemnification amounts for which payment is requested. Submission of an
Indemnification Statement to the Board shall create a presumption that the
Indemnitee is entitled to indemnification under Sections 2(a), 2(b) or 3(a)
hereof, as the case may be, and the Board shall be deemed to have determined
that the Indemnitee is entitled to such indemnification unless within 30
calendar days after submission of the Indemnification Statement the Board shall
determine by vote of a majority of the directors at a meeting at which a quorum
is present, based upon clear and convincing evidence (sufficient to rebut the
foregoing presumption) and the Indemnitee shall have received notice within such
period in writing of such determination that the Indemnitee is not so entitled
to indemnification, which notice shall disclose with particularity the evidence
in support of the Board's determination. The foregoing notice shall be sworn to
by all persons who participated in the determination and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of the Indemnitee to
indemnification under this Agreement and any determination by the Board that the
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review as provided in Section 6 hereof.
(b) For purposes of determining whether to authorize advancement of
expenses pursuant to Section 2(e) hereof, the Indemnitee shall submit to the
Board a sworn statement of request for advancement of expenses substantially in
the form of Exhibit 2 attached hereto and made a part hereof (the
"Undertaking"), averring that (i) he has reasonably incurred or will reasonably
incur actual expenses in
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defending an actual civil or criminal action, suit, proceeding or claim and (ii)
he undertakes to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the Company under this Agreement or
otherwise. For purposes of requesting advancement of expenses pursuant to
Section 3(b) hereof, the Indemnitee may, but shall not be required to, submit an
Undertaking or such other form of request as he determines to be appropriate (an
"Expense Request"). Upon receipt of an Undertaking or Expense Request, as the
case may be, the Board shall within 10 calendar days authorize immediate payment
of the expenses stated in the Undertaking or Expense Request, as the case may
be, whereupon such payments shall immediately be made by the Company. No
security shall be required in connection with any Undertaking or Expense Request
and any Undertaking or Expense Request shall be accepted without reference to
the Indemnitee's ability to make repayment.
5. Subrogation; Duplication of Payments. (a) In the event of payment
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of the Indemnitee, who shall execute
all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against the Indemnitee to the extent
the Indemnitee has actually received payment (under any insurance policy, the
Certificate, the Bylaws or otherwise) of the amounts otherwise payable
hereunder.
6. Enforcement. (a) If a claim for indemnification made to the Company
pursuant to Section 4 hereof is not paid in full by the Company within 30
calendar days after a written claim has been received
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by the Company, the Indemnitee may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim.
(b) In any action brought under Section 6(a) hereof, it shall be a
defense to a claim for indemnification pursuant to Sections 2(a) or 2(b) hereof
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
Undertaking, if any is required, has been tendered to the Company) that the
Indemnitee has not met the standards of conduct which make it permissible under
the DGCL for the Company to indemnify the Indemnitee for the amount claimed, but
the burden of proving such defense shall be on the Company. Neither the failure
of the Company (including the Board, independent legal counsel or the
Stockholders) to have made a determination prior to commencement of such action
that indemnification of the Indemnitee is proper in the circumstances because he
has met the applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Company (including the Board, independent legal counsel or
the Stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
(c) It is the intent of the Company that the Indemnitee not be required
to incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee
that the Company has failed to comply with any of its obligations under the
Agreement or in the event that the Company or any other person takes any action
to declare the Agreement void or unenforceable, or institutes any action, suit
or proceeding designed (or having the effect of being designed) to deny, or to
recover from, the Indemnitee
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the benefits intended to be provided to the Indemnitee hereunder, the Company
irrevocably authorizes the Indemnitee from time to time to retain counsel of his
choice, at the expense of the Company as hereafter provided, to represent the
Indemnitee in connection with the initiation or defense of any litigation or
other legal action, whether by or against the Company or any director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Regardless of the outcome thereof, the Company shall pay and be solely
responsible for any and all costs, charges and expenses, including without
limitation attorneys' and others' fees and expenses, reasonably incurred by the
Indemnitee (i) as a result of the Company's failure to perform this Agreement or
any provision thereof or (ii) as a result of the Company or any person
contesting the validity or enforceability of this Agreement or any provision
thereof as aforesaid.
7. Merger or Consolidation. In the event that the Company shall be a
constituent corporation in a consolidation, merger or other reorganization, the
Company, if it shall not be the surviving, resulting or other corporation
therein, shall require as a condition thereto the surviving, resulting or
acquiring corporation to agree to indemnify the Indemnitee to the full extent
provided in Section 3 hereof. Whether or not the Company is the resulting,
surviving or acquiring corporation in any such transaction, the Indemnitee shall
also stand in the same position under this Agreement with respect to the
resulting, surviving or acquiring corporation as he would have with respect to
the Company if its separate existence had continued.
8. Nonexclusivity and Severability. (a) The right to indemnification
provided by this Agreement shall not be exclusive of any other rights to which
the Indemnitee may be entitled under the Certificate, Bylaws, the DGCL, any
other statute, insurance policy, agreement, vote of Stockholders or of directors
or otherwise, both as to actions in his official capacity and as to actions in
another capacity
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while holding such office, and shall continue after the Indemnitee has ceased to
be a director, officer, employee or agent and shall inure to the benefit of his
heirs, executors and administrators.
(b) If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof.
10. Modification; Survival. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
may be modified only by an instrument in writing signed by both parties hereto.
The provisions of this Agreement shall survive the death, disability, or
incapacity of the Indemnitee or the termination of the Indemnitee's service as a
director of the Company and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators.
11. Certain Terms. For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to any employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, the Indemnitee with respect to
an employee benefit
plan, its participants or beneficiaries; references to the masculine shall
include the feminine; references to the singular shall include the plural and
vice versa; and if the Indemnitee acted in good faith and in a manner he
reasonably believed
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to be in the interest of the participants and beneficiaries of an employee
benefit plan he shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
D.R. HORTON, INC.
By: /s/ Donald R. Horton
--------------------------------
Donald R. Horton, Chairman of
the Board
/s/ James K. Schuler
--------------------------------
James K. Schuler
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EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF )
---------- ) )
COUNTY OF )
----------
I, ______________________________, being first duly sworn, do depose
and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated as of ____________________, 200__, between D.R.
Horton, Inc., a Delaware corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against charges, costs, expenses
(including attorneys' and others' fees and expenses), judgments, fines and
amounts paid in settlement, all of which (collectively, "Liabilities") have been
or will be incurred by me in connection with an actual or threatened action,
suit, proceeding or claim to which I am a party or am threatened to be made a
party.
3. With respect to all matters related to any such action, suit,
proceeding or claim, I am entitled to be indemnified as herein contemplated
pursuant to the aforesaid Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
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Name:
---------------------------
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this _____ day of _________________, 200__.
[Seal]
---------------------------
My commission expires the ____ day of ________________, 200___.
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EXHIBIT 2
UNDERTAKING
STATE OF )
---------- ) )
COUNTY OF )
----------
I, ___________________________, being first duly sworn do depose and
say as follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated as of ____________________, 200___, between D.R. Horton, Inc.,
a Delaware corporation (the "Company"), and the undersigned.
2. I am requesting advancement of certain costs, charges and expenses
which I have incurred or will incur in defending an actual or pending civil or
criminal action, suit, proceeding or claim.
3. I hereby undertake to repay this advancement of expenses if it shall
ultimately be determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.
4. The costs, charges and expenses for which advancement is requested
are, in general, all expenses related to _______________________________________
_______________________________________________________________________________.
Name:
-------------------------
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this _____ day of _________________, 200__.
[Seal]
-------------------------
My commission expires the ____ day of ________________, 200___.
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