EXHIBIT 99.2: INDEMNIFICATION AGREEMENT
PROASSURANCE CORPORATION
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INDEMNIFICATION AGREEMENT
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THIS Agreement is made effective as of the 1st day of October, 2006, by and
between ProAssurance Corporation, a Delaware corporation (the "Company"), and
William J. Listwan ("Indemnitee").
Recitals
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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
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NOW, THEREFORE, in consideration of and for the Indemnitee's agreement to
serve as a director, associate committee member, officer, employee, consultant,
agent or contractor 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.
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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, consultant, agent or contractor of the Company, or is or was serving
at the request of the Company as a director, associate committee member,
officer, partner, manager, trustee, employee, consultant, agent or contractor 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;
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(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 October 1, 2006 and September 30, 2007. This
Agreement shall renew for successive one year terms unless sooner terminated
upon termination of Indemnitee's relationship with 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
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assume the defense thereof, the Company will 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 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 Indemnitee, unless a determination is reasonably and promptly made that
such Indemnitee failed to meet the applicable standard of conduct set forth in
Section 1 hereof or that such Indemnitee 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 Indemnitee, 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 Indemnitee in
connection with successfully establishing such Indemnitee'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 made to
the Indemnitee hereunder shall be accounted for or treated as a loan from the
Company to the Indemnitee.
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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 Sarbanes-Oxley 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
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PROASSURANCE CORPORATION
(the "Company")
100 Brookwood Place
Birmingham, Alabama 35209
By: /s/ Victor T. Adamo
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Victor T. Adamo
Its: President
("Indemnitee")
/s/ William J. Listwan
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Signature
William J. Listwan
[Home Address]
[Home Address]
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