Exhibit 10.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") dated as of May 19,
2003 is by and between ResortQuest International, Inc., a Delaware corporation
(the "Company"), and John W. McConomy ("Indemnitee").
RECITALS
A. Indemnitee is an officer of the Company and in such capacity is
performing a valuable service to the Company.
B. The Company's Bylaws (the "Bylaws") provide for the indemnification
of directors, officers, employees and agents of the Company.
C. The Amended and Restated Certificate of Incorporation of the Company
(the "Certificate") provides that the Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time (the "Corporation Law") indemnify the
directors, officers, employees and agents of the Company.
D. The Corporation Law specifically provides that indemnification and
advancement of expenses provided in such statute shall not be exclusive of any
other rights under any agreement, and thereby contemplates that agreements may
be entered into between the Company and members of the Board of Directors or
officers of the Company with respect to the indemnification of such directors or
officers.
E. In accordance with the authorization provided in the Corporation
Law, the Company has purchased and presently maintains a policy or policies of
directors' and officers' liabilities insurance (the "Insurance") covering
certain liabilities which may be incurred by the Company's directors and
officers in the performance of their services to the Company.
F. The general availability of directors' and officers' liability
insurance covering certain liabilities which may be incurred by the Company's
directors and officers in the performance of their services to the Company and
the applicability, amendment and enforcement of statutory and bylaw provisions
have raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers.
G. In order to induce Indemnitee to serve as an officer of the Company
for the current term and for any subsequent term to which he is elected or
nominated, the Company has deemed it to be in its best interest to enter into
this Agreement with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve as
an officer of the Company after the date hereof, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
(a) Change in Control. A "Change in Control" shall be deemed to have
occurred if any of the following shall have occurred unless the transaction or
event shall have been approved by at least two-thirds (2/3) of the Board of
Directors of RQI:
(i) any person or entity, other than RQI or an employee benefit
plan of RQI, acquires directly or indirectly the Beneficial Ownership
(as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of RQI and immediately after such
acquisition such person or entity is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
RQI;
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of RQI: (A) the individuals
who, as of the closing date of RQI's initial public offering,
constitute the Board of Directors of RQI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of RQI and whose election, or nomination for election, to the
Board of Directors of RQI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of RQI and whose election, or nomination for election, to the
Board of Directors of RQI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election);
(iii) the stockholders of RQI shall approve a merger,
consolidation, recapitalization or reorganization of RQI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of RQI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of RQI shall approve a plan of complete
liquidation of RQI or an agreement for the sale or disposition by RQI
of all or a substantial portion of RQI's assets (i.e., 50% or more of
the total assets of RQI).
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(b) Reviewing Party. A "Reviewing Party" means (i) the Board of
Directors or a committee of directors of the Company, who are not officers,
appointed by the Board of Directors, provided that a majority of such directors
are not parties to the claim, or (ii) special, independent counsel selected and
appointed by the Board of Directors or by a committee of directors of the
Company who are not officers.
2. Indemnification of Indemnitee.
The Company hereby agrees that it shall hold harmless and indemnify
Indemnitee to the fullest extent authorized and permitted by the provisions of
the Certificate and Bylaws and the provisions of the Corporation Law, or by any
amendment thereof, but in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than the Certificate, Bylaws or Corporation Law permitted the Company to
provide prior to such amendment, or other statutory provisions authorizing or
permitting such indemnification which is adopted after the date hereof.
3. Insurance.
3.1 Insurance Policies. So long as Indemnitee may be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
Indenmitee is or was a director or officer, to the extent that the Company
maintains one or more insurance policy or policies providing directors' and
officers' liability insurance, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms, to the maximum extent of the
coverage applicable to any director or officer then serving the Company.
3.2 Maintenance of Insurance. The Company shall not be required to maintain the
Insurance or any policy or policies of comparable insurance, as the case may be,
if such insurance is not reasonably available or if, in the reasonable business
judgment of the Board of Directors of the Company which shall be conclusively
established by such determination by the Board of Directors, or any appropriate
committee thereof, either (i) the premium cost for such insurance is
substantially disproportionate to the amount of coverage thereunder, or (ii) the
coverage provided by such insurance is so limited by exclusions that there is
insufficient benefit from such insurance.
3.3 Self-Insurance. To the extent Indemnitee is not indemnified under other
Sections of this Agreement and is not fully, by reason of deductible or
otherwise, covered by directors' and officers' liability insurance, the Company
shall maintain self-insurance for, and thereby indemnify and hold harmless,
Indemnitee from and against any and all expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Indemnitee in connection with any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, in which Indemnitee was or is made party or was or is involved
by reason of the fact that Indemnitee is or was a director or officer of the
Company. Notwithstanding the foregoing, payments of self-insurance under this
Section to Indemnitee by the Company shall be limited in accordance with Section
5 hereof. An "event" as used in the preceding sentence in reference to a
limitation on self-
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insurance shall include the same acts or omissions by Indemnitee and
interrelated, repeated or continuous acts or omissions.
4. Additional Indemnification.
Subject only to the exclusions set forth in Section 5 hereof, the
Company hereby agrees that it shall hold harmless and indemnify Indemnitee:
(a) against any and all expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
Indemnitee in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or on behalf of stockholders of the Company or by or in
the right of the Company, to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, advisory director,
officer, employee or agent of the Company, or is or was serving or at any time
serves at the request of the Company as a director, advisory director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise; and
(b) otherwise to the fullest extent as may be provided to Indemnitee by
the Company under the non-exclusivity provisions of the Corporation Law.
5. Limitations on Additional Indemnification.
No indemnification pursuant to this Agreement shall be paid by the Company:
(a) in respect to any transaction if it shall be determined by the
Reviewing Party, or by final judgment or other final adjudication, that
Indemnitee derived an improper personal benefit;
(b) on account of Indemnitee's conduct which is determined by the
Reviewing Party, or by final judgment or other final adjudication, to have
involved acts or omissions not in good faith, intentional misconduct or a
knowing violation of law; or
(c) if the Reviewing Party or a court having jurisdiction in the matter
shall determine that such indemnification is in violation of the Certificate,
the Bylaws or the law.
6. Advancement of Expenses.
In the event of any threatened or pending action, suit or proceeding in
which Indemnitee is a party or is involved and which may give rise to a right of
indemnification under this Agreement, following written request to the Company
by Indemnitee the Company shall promptly pay to Indemnitee amounts to cover
expenses incurred by Indemnitee in such proceeding in advance of its final
disposition upon the receipt by the Company of (i) a written undertaking
executed by or on behalf of Indemnitee to repay the advance if it shall
ultimately be
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determined that Indemnitee is not entitled to be indemnified by the Company as
provided in this Agreement, and (ii) satisfactory evidence as to the amount of
such expenses.
7. Repayment of Expenses.
Indemnitee agrees that Indemnitee shall reimburse the Company for all
reasonable expenses paid by the Company in defending any civil, criminal,
administrative or investigative action, suit or proceeding against Indemnitee in
the event and only to the extent that it shall be determined by final judgment
or other final adjudication that Indemnitee is not entitled to be indemnified by
the Company for such expenses under the provisions of the Corporation Law or any
applicable law.
8. Determination of Indemnification, Burden of Proof.
With respect to all matters concerning the rights of Indemnitee to
indemnification and payment of expenses under this Agreement or under the
provisions of the Certificate and Bylaws now or hereafter in effect, the Company
shall appoint a Reviewing Party and any determination by the Reviewing Party
shall be conclusive and binding on the Company and Indemnitee. If under
applicable law, the entitlement of Indemnitee to be indemnified under this
Agreement depends on whether a standard of conduct has been met, the burden of
proof of establishing that Indemnitee did not act in accordance with such
standard of conduct shall rest with the Company. Indemnitee shall be presumed to
have acted in accordance with such standard and entitled to indemnification or
advancement of expenses hereunder, as the case may be, unless, based upon a
preponderance of the evidence, it shall be determined by the Reviewing Party
that Indemnitee did not meet such standard. For purposes of this Agreement,
unless otherwise expressly stated herein, the termination of any action, suit or
proceeding by judgment, order, settlement, whether with or without court
approval, or conviction, or upon a plea of nolo contenders or its equivalent
shall not create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law.
9. Effect of Change in Control.
If there has not been a Change in Control after the date of this
Agreement, the determination of (i) the rights of Indemnitee to indemnification
and payment of expenses under this Agreement or under the provisions of the
Certificate and the Bylaws, (ii) standard of conduct, and (iii) evaluation of
the reasonableness of amounts claimed by Indemnitee shall be made by the
Reviewing Party or such other body or persons as may be permitted by the
Corporation Law. If there has been a Change in Control after the date of this
Agreement, such determination and evaluation shall be made by a special,
independent counsel who is selected by Indemnitee and approved by the Company,
which approval shall not be unreasonably withheld, and who has not otherwise
performed services for Indemnitee or the Company.
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10. Continuation of Indemnification.
All agreements and obligations of the Company contained herein shall
continue during the period that Indemnitee is a director, advisory director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Indemnitee
was a director, advisory director or officer of the Company or serving in any
other capacity referred to herein.
11. Notification and Defense of Claim.
Promptly after receipt by Indemnitee of notice of the commencement of
any action, suit or proceeding, Indemnitee shall, if a claim in respect hereof
is to be made against the Company under this Agreement, notify the Company of
the commencement thereof; provided, however, that delay in so notifying the
Company shall not constitute a waiver or release by Indemnitee of rights
hereunder and that omission by Indemnitee to so notify the Company shall not
relieve the Company 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 shall 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, shall be entitled to assume the defense thereof and to employ
counsel reasonably satisfactory to Indemnitee. After notice from the
Company to Indemnitee of its election to so assume the defense thereof,
the Company shall not be liable to 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 counsel of his own choosing in such action, suit or
proceeding but the fees and expenses of such counsel incurred after
notice from the Company of assumption by the Company of the defense
thereof shall be at the expense of Indemnitee unless: (i) the
employment of counsel by Indemnitee has been specifically authorized by
the Company, such authorization to be conclusively established by
action by disinterested members of the Board of Directors though less
than a quorum; (ii) representation by the same counsel of both
Indemnitee and the Company would, in the reasonable judgment of
Indemnitee and the Company, be inappropriate due to an actual or
potential conflict of interest between the Company and Indemnitee in
the conduct of the defense of such action, such conflict of interest to
be conclusively established by an opinion of counsel to the Company to
such effect; (iii) the counsel employed by the Company and reasonably
satisfactory to Indemnitee has advised Indemnitee in writing that such
counsel's representation of Indemnitee would likely involve such
counsel in representing differing interests which could adversely
affect the judgment or loyalty of such counsel to Indemnitee, whether
it be a conflicting, inconsistent, diverse or other
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interest; or (iv) the Company 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 shall be paid by 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 has been established as provided in (ii) hereof.
Notwithstanding the foregoing, if an insurance company has supplied
directors' and officers' liability insurance covering an action, suit
or proceeding, then such insurance company shall employ counsel to
conduct the defense of such action, suit or proceeding unless
Indemnitee and the Company reasonably concur in writing that such
counsel is unacceptable.
(c) 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, which would impose any liability or
penalty on Indemnitee without Indemnitee's written consent. Neither the
Company nor Indemnitee shall unreasonably withhold consent to any
proposed settlement.
12. 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 as a director, advisory
director or officer of the Company and acknowledges that Indemnitee is
relying upon this Agreement in continuing in such capacity.
(b) If a claim for indemnification or advancement of expenses is not
paid in full by the Company within thirty (30) days after a written
claim by Indemnitee has been received by the Company, Indemnitee may at
any time assert the claim and bring suit against the Company to recover
the unpaid amount of the claim. In the event Indemnitee is required to
bring any action to enforce rights or to collect moneys due under this
Agreement and is successful in such action, the Company shall reimburse
Indemnitee for all of Indemnitee's reasonable attorneys' fees and
expenses in bringing and pursuing such action.
13. Proceedings by Indemnitee.
The Company shall not be liable to make any payment under this
Agreement in connection with any action, suit or proceeding, or any part
thereof, initiated by Indemnitee unless such action, suit or proceeding, or part
thereof, (i) was authorized by the Company, such authorization to be
conclusively established by action by disinterested members of the Board of
Directors though less than a quorum, or (ii) was brought by Indemnitee pursuant
to Section 12(b) hereof.
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14. Effectiveness.
This Agreement is effective for, and shall apply to, (i) any claim
which is asserted or threatened before, on or after the date of this Agreement
but for which no action, suit or proceeding has been brought prior to the date
hereof, and (ii) any action, suit or proceeding which is threatened before, on
or after the date of this Agreement but which is not pending prior to the date
hereof. This Agreement shall not apply to any action, suit or proceeding which
was brought before the date of this Agreement. So long as the foregoing is
satisfied, this Agreement shall be effective for, and be applicable to, acts or
omissions occurring prior to, on or after the date hereof.
15. Non-exclusivity.
The rights of Indemnitee under this Agreement shall not be deemed
exclusive, or in limitation of, any rights to which Indemnitee may be entitled
under any applicable common or statutory law, or pursuant to the Certificate,
the Bylaws, a vote of the stockholders or otherwise.
16. Other Payments.
The Company shall not be liable to make any payment under this
Agreement in connection with any action, suit or proceeding against Indemnitee
to the extent Indemnitee has otherwise received payment of the amounts otherwise
payable by the Company hereunder.
17. Subrogation.
In the event the Company makes any payment under this Agreement, the
Company shall be subrogated, to the extent of such payment, to all rights of
recovery of Indemnitee with respect thereto and Indemnitee shall execute all
agreements, instruments, certificates or other documents and do or cause to be
done all things necessary or appropriate to secure such recovery rights to the
Company including, without limitation, executing such documents as shall enable
the Company to bring an action or suit to enforce such recovery rights.
18. Survival; Continuation.
The rights of Indemnitee under this Agreement shall inure to the
benefit of Indemnitee, his heirs, executors, administrators, personal
representatives and assigns, and this Agreement shall be binding upon the
Company, its successors and assigns. The rights of Indemnitee under this
Agreement shall continue so long as Indemnitee may be subject to any action,
suit or proceeding because of the fact that Indemnitee is or was a director,
advisory director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
If the Company, in a single transaction or series of related transactions,
sells, leases, exchanges, or otherwise disposes of all or substantially all of
its property and assets, the Company shall, as a condition precedent to any such
transaction, cause effective provision to be made so that the persons or
entities acquiring such property and assets shall become bound by and replace
the Company under this Agreement.
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19. Amendment and Termination.
No amendment, modification, termination or cancellation of this
Agreement shall be effective unless made in writing signed by both parties
hereto.
20. Headings.
Section headings of the sections and paragraphs of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
21. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally, mailed by
certified mail (return receipt requested) or sent by overnight delivery service,
cable, telegram, facsimile transmission or telex to the parties at the following
addresses or at such other addresses as shall be specified by the parties by
like notice:
(a) if to the Company:
ResortQuest International, Inc.
530 Oak Court Drive, Suite 360
Memphis, TN 38117 Attn: President
(b) if to the Indemnitee
John W. McConomy
2900 Waterleaf Drive
Germantown, TN 38138
Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery.
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22. Severability.
If any provision of this Agreement shall be held to be illegal, invalid or
unenforceable under any applicable law, then such contravention or invalidity
shall not invalidate the entire Agreement. Such provision shall be deemed to be
modified to the extent necessary to render it legal, valid and enforceable, and
if no such modification shall render it legal, valid and enforceable, then this
Agreement shall be construed as if not containing the provision held to
be-invalid, and the rights and obligations of the parties shall be construed and
enforced accordingly.
23. Complete Agreement.
This Agreement, those documents expressly referred to herein and other documents
of even date herewith embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
24. Counterparts.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, with the same effect as if all parties
had signed the same document. All such counterparts shall be deemed an original,
shall be construed together and shall constitute one and the same instrument.
25. Choice of Law.
This agreement will be governed by the internal law, and not the law of
conflicts, of the State of Delaware.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ResortQuest International, Inc.
By:
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John W. McConomy
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