EXHIBIT 10.12
INDEMNIFICATION AGREEMENT
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This INDEMNIFICATION AGREEMENT, dated as of _____________, 1998 (this
"Agreement"), is made and entered into by and between Scottish Annuity & Life
Holdings, Ltd., a Cayman Islands corporation (the "Company"), and
_________________ ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available;
WHEREAS, Indemnitee is a director, officer, employee and/or agent of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors, officers,
employees and/or agents of companies in today's environment;
WHEREAS, the Company's Articles of Association (the Articles) provide that
the Company will indemnify its directors, officers, employees and/or agents to
the fullest extent permitted by law and will advance expenses in connection
therewith, and Indemnitee's willingness to serve as a director, officer,
employee and/or agent of the Company is based in part on Indemnitee's reliance
on such provisions; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, and Indemnitee's reliance on the aforesaid
provisions of the Articles, and in part to provide Indemnitee with specific
contractual assurance that the protection promised by such provisions will be
available to Indemnitee regardless of, among other things, any amendment to or
revocation of such provisions or any change in the composition of the Company's
Board of Directors or any acquisition or business combination transaction
relating to the Company, the Company wishes to provide in this Agreement for the
indemnification of and the advancement of expenses to Indemnitee as set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein set forth,
the parties hereto hereby agree as follows:
1. Certain Definitions.
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1.1. Claim. The term "Claim" shall mean any threatened, pending or
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completed action, suit or proceeding, or any inquiry or investigation that
Indemnitee in good faith believes might lead to the institution of any such
action, suit or proceeding, whether civil, criminal, administrative,
investigative (including, without limitation, an action by or in the right of
the Company) or other.
1.2. Indemnifiable Event. The term "Indemnifiable Event" shall mean
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any actual or asserted event or occurrence related to the fact that Indemnitee
is or was a director, officer, employee, agent, or fiduciary of the Company, or
is or was serving at the request of the Company as a director, officer,
employee, trustee, agent, or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust, or other entity, or anything done
or not done by Indemnitee in any such capacity.
2. Basic Indemnification Arrangement. (a) The Company shall indemnify,
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in accordance with and to the full extent now or hereinafter permitted by law,
Indemnitee who was or is a party or is threatened to be made a party to any
Claim by reason of (or arising in whole or in part out of) an Indemnifiable
Event, against any liability or expense actually and reasonably incurred,
including, without limitation, attorney's fees and other fees and expenses,
judgments, fines and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of any such attorneys' fees and other fees and expenses, judgments, fines or
amounts paid in settlement) by Indemnitee in connection with such Claim or any
appeal therefrom, if Indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interest of the Company,
and, with respect to any criminal action, proceeding or investigation, had no
reasonable cause to believe his or her conduct was unlawful.
(b) In the event Indemnitee was, is or becomes a party to or other
participant in, or is threatened to be made a party to or other participant in,
a Claim by or in the right of the Company to procure a judgment in its favor by
reason of (or arising in whole or in part out of) an Indemnifiable Event, the
Company will indemnify Indemnitee to the fullest extent permitted by law against
costs, charges and expenses, including, without limitation, attorneys' fees and
other fees and expenses, actually and reasonably incurred by Indemnitee in
connection with such Claim or any appeal therefrom, 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, except that no indemnification shall be made
in respect of any such Claim as to which Indemnitee shall have been adjudged to
be liable to the Company unless and only to the extent that the Grand Court of
the Cayman Islands 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, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which the Grand
Court of the Cayman Islands 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 Claim referred to in Sections 2(a) or 2(b)
hereof, Indemnitee shall be indemnified against costs, charges and expenses
(including attorneys' fees and other fees and expenses) actually and reasonably
incurred by him in connection therewith.
(d) Directors of the Company shall have no personal liability to the
Company or its Members for monetary damages for breach of fiduciary or other
duties as a director, except (i) for any breach of a director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) a
payment of a dividend on stock of the Company or a purchase or redemption of
stock of the Company in violation of law, or (iv) for any transaction from which
a director derived an improper personal benefit.
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(e) Subject to Section 3(a), 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 that indemnification of the
Indemnitee is proper in the circumstances because Indemnitee has satisfied the
applicable standard set forth in Section 2(a) or 2(b), as the case may be.
Subject to Section 4(a), such determination shall be made (i) by the Board of
Directors of the Company (the "Board"), by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
(ii) if such a quorum of disinterested directors is not available or if such
disinterested directors so direct, by independent legal counsel (designated in
the manner provided below in this subsection (d)) in a written opinion or (iii)
by the stockholders of the Company (the "Stockholders") by a majority vote of
Stockholders present at a meeting at which a quorum is present. 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
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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, without limitation, attorneys' fees and other fees and expenses,
actually and reasonably incurred by such counsel in connection with this
Agreement or the opinion of such counsel pursuant hereto.
(f) All expenses, including, without limitation, attorneys' fees and
other fees and expenses, incurred by Indemnitee in his capacity as a director,
officer, employee and/or agent of the Company in connection with a Claim shall
be paid by the Company in advance of the final disposition of such Claim in
accordance with and to the full extent now or hereafter permitted by law, and in
the procedural manner prescribed by Section 3(b) hereof.
3. Certain Procedures Relating to Indemnification and Advancement of
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Expenses. (a) Except as otherwise permitted or required by the Cayman Islands
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Companies Law (the "CICL"), for purposes of pursuing any rights to
indemnification under Sections 2(a), 2(b) or 4(a) hereof, as the case may be,
Indemnitee may, but shall not be required to, (i) submit to the entity making
the determination whether the Indemnitee is entitled to indemnification (the
"Determining Entity") a written statement of request for indemnification stating
that he or she is entitled to indemnification hereunder and the basis for
asserting such a claim for indemnification; and (ii) present to the Company
reasonable evidence of all expenses for which payment is requested. Submission
of such a written statement to the Determining Entity shall create a presumption
that the Indemnitee is entitled to indemnification under Sections 2(a), 2(b) or
4(a) hereof, as the case may be, and the Determining Entity shall be deemed to
have determined that Indemnitee is entitled to such indemnification unless
within 30 calendar days after receipt of such written statement the Determining
Entity shall determine (i) in the case of a determination made by the Board, by
a vote of a majority of the directors who are not parties to such suit, action
or proceeding at a meeting at which a quorum is present, (ii) in the case of a
determination made by independent legal counsel, in its judgment, or (iii) in
the case of a determination made by the Stockholders, by a vote of a majority of
the Stockholders present at a meeting of Stockholders entitled to vote thereon
at a meeting at which a quorum is present, in each case based upon clear and
convincing evidence
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(sufficient to rebut the foregoing presumption) that Indemnitee is not entitled
to indemnification and Indemnitee shall have received notice within such 30
calendar day period in writing of such determination that Indemnitee is not so
entitled to indemnification. The notice to the Indemnitee specified in the
preceding sentence shall disclose with particularity the evidence in support of
the Determining Entity's determination. The provisions of this Section 3(a) are
intended to be procedural only and shall not affect the right of Indemnitee to
indemnification under this Agreement and any determination by the Determining
Entity that the Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the written statement for indemnification shall
be subject to judicial review as provided in Section 7 hereof.
(b) For purposes of determining whether to authorize advancement of
expenses pursuant to Section 2(e) hereof, Indemnitee shall submit to the Board a
sworn statement of request for advancement of expenses substantially in the form
of Exhibit 1 attached hereto and made a part hereof (the "Undertaking"),
averring that (i) he or she has reasonably incurred or will reasonably incur
actual expenses in connection with a Claim and (ii) he or she undertakes to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company under this Agreement or otherwise.
For purposes of requesting advancement of expenses pursuant to Section 4(b)
hereof, Indemnitee shall submit an Undertaking or such other form of request as
he or she 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.
4. Indemnification for Additional Expenses. (a) Without limiting any
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right which Indemnitee may have pursuant to Section 2 hereof, the Articles, the
CICL, 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 this
Section 4(a), the Company shall indemnify Indemnitee against any amount which he
or she is or becomes legally obligated to pay relating to or arising out of any
Claim because of any act, failure to act or neglect or breach of duty, including
any actual or alleged error, misstatement or misleading statement, by reason of
an Indemnifiable Event. The payments which the Company is obligated to make
pursuant to this Section 4(a) 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,
including attorneys' fees, and appeals therefrom, and expenses of appeal,
attachment or similar bonds, including attorneys' fees; provided, however, that
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the Company shall not be obligated under this Section 4(a) to make any payment
in connection with any claim against Indemnitee:
(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
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(ii) to the extent based upon or attributable to Indemnitee gaining
in fact a personal profit to which he or she was not legally entitled,
including, without limitation, profits made from the purchase and sale by
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 Indemnitee in violation of Section 10(b) of
the Securities Exchange Act of 1934, including Rule 10b-5 promulgated
thereunder.
The procedures set forth in Section 3(a) shall be available to the Indemnitee
for purposes of indemnification under this Section 4(a).
(b) Expenses, including, without limitation, attorneys' fees and other
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 3(b) hereof.
5. Partial Indemnity, Etc. If Indemnitee is entitled under any provision
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of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company will nevertheless
indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
Moreover, notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in defense of any
or all Claims relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including, without limitation, dismissal
without prejudice, Indemnitee will be indemnified against all costs, charges and
expenses, including, without limitation, attorneys' fees and other fees and
expenses, incurred in connection therewith.
6. No Presumption. For purposes of this Agreement, the termination of
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any Claim by judgment, order, settlement (whether with or without court
approval), or conviction, or upon a plea of nolo contendere or its equivalent,
will 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.
7. Enforcement. (a) If a claim for indemnification made to the Company
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is not paid in full by the Company within 30 calendar days after a written claim
has been received 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 7(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 this Agreement and/or the
CICL 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
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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 this Agreement and/or the CICL, 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 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 this
Agreement or in the event that the Company or any other person takes any action
to declare this 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 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
hereinafter 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 other 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.
8. Non-Exclusivity and Severability. (a) The rights of Indemnitee
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hereunder will be in addition to any other rights Indemnitee may have under the
Articles or the CICL or otherwise; provided, however, that to the extent that
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Indemnitee otherwise would have any greater right to indemnification under any
provision of the Articles or the CICL as in effect on the date hereof,
Indemnitee will be deemed to have such greater right hereunder; and, provided
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further, that to the extent that any change is made to the CICL (whether by
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legislative action or judicial decision) or the Articles which permits any
greater right to indemnification than that provided under this Agreement as of
the date hereof, Indemnitee will be deemed to have such greater right hereunder.
The Company will not adopt any amendment to the Articles the effect of which
would be to deny, diminish or encumber Indemnitee's right to indemnification
under the Articles, the CICL, or otherwise as applied to any act or failure to
act occurring in whole or in part prior to the date upon which the amendment was
approved by the Company's Board of Directors and/or its Stockholders, as the
case may be.
(b) If any provision of this Agreement or the application of any provision
hereof to any person or circumstance is held invalid, unenforceable or otherwise
illegal, the remainder of this Agreement and the application of such provision
to any other person or circumstance will not be affected, and the provision so
held to be invalid, unenforceable or otherwise illegal will be reformed to the
extent (and only to the extent) necessary to make it enforceable, valid or
legal.
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9. Liability Insurance. The Board of Directors may authorize the Company
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to purchase and maintain insurance on behalf of any person who is or was a
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
company, partnership, joint venture, trust or other enterprise, or in a
fiduciary or other capacity with respect to any employee benefit plan maintained
by the Company, against any liability asserted against him and incurred by him
in any such official capacity, or arising out of his status as such, whether or
not the Company would have the power to indemnify him against such liability
under the provisions contained in Articles (S)119.
10. Allowance for Compliance with Commission Requirements. Indemnitee
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acknowledges that the Securities and Exchange Commission (the "Commission") has
expressed the opinion that indemnification of directors and officers from
liabilities under the Securities Act of 1933 ("Act") is against public policy as
expressed in the Act and is, therefore, unenforceable. Indemnitee hereby
acknowledges and agrees that it will not be a breach of this Agreement for the
Company to undertake with the Commission in connection with the registration for
sale of any shares or other securities of the Company from time to time that, in
the event a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director or officer of
the Company in the successful defense of any action, suit or proceeding) is
asserted in connection with such shares or other securities being registered,
the Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of competent jurisdiction
the question of whether or not such indemnification by the Company is against
public policy as expressed in the Act and the Company will be governed by the
final adjudication of such issue. Indemnitee further agrees that such
submission to a court of competent jurisdiction shall not be a breach of this
Agreement.
11. Subrogation. In the event of payment under this Agreement, the
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Company will be subrogated to the extent of such payment to all of the related
rights of recovery of Indemnitee against other persons or entities. Indemnitee
will execute all papers reasonably required and will do everything that may be
reasonably necessary to secure such rights and enable the Company effectively to
bring suit to enforce such rights, including all of Indemnitee's reasonable
costs and expenses, including attorneys' fees and disbursements, to be
reimbursed by, or at the option of Indemnitee advanced by, the Company.
12. No Duplication of Payments. The Company will not be liable under this
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Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Articles or otherwise) of the amounts otherwise
indemnifiable hereunder.
13. Successors and Binding Agreement. (a) The Company will use reasonable
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efforts to require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all
of the business or assets of the Company, by agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the business or
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assets of the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor will thereafter be deemed the "Company" for
purposes of this Agreement), but this Agreement will not otherwise be
assignable, transferable or delegatable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
Indemnitee's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties hereto
may, without the consent of the other, assign, transfer or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 12(a) and 12(b). Without limiting the generality or effect of the
foregoing, Indemnitee's right to receive payments hereunder will not be
assignable, transferable or delegatable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Indemnitee's will
or by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 12(c), the Company will have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
14. Notices. (a) For all purposes of this Agreement, all communications,
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including, without limitation, notices, consents, requests or approvals,
required or permitted to be given hereunder will be in writing and may be given
by the Company to any Stockholder either personally or by sending it by post,
cable, telex or telecopy to him or to his address as shown in the register of
Stockholders, such notice, if mailed, to be forwarded airmail if the address be
outside the Cayman Islands.
(b) Where a notice or other communication is sent by post, service of the
notice shall be deemed to be effected by properly addressing to the Company, to
the attention of the President of the Company, at its principle executive office
and to Indemnitee at Indemnitee's principal residence as shown in the Company's
most current records, pre-paying and posting a letter containing the notice, and
to have been effected at the expiration of sixty hours after the letter
containing the same is posted as aforesaid.
(c) Where a notice or other communication is sent by cable, telex, or
telecopy, service of the notice shall be deemed to be effected by properly
addressing, and sending such notice through a transmitting organization (with
receipt thereof orally confirmed) and to have been effected on the day the same
is sent as aforesaid.
15. Governing Law. The validity, interpretation, construction and
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performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the Cayman Islands.
16. Miscellaneous. No provision of this Agreement may be waived, modified
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or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Indemnitee and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or
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conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
17. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written.
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
By:
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Name:
Title:
INDEMNITEE:
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Name:
Title:
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Exhibit 1
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UNDERTAKING
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CAYMAN ISLANDS
I, __________________________________, being first duly sworn do
depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated as of ________________________________, 199__, between Scottish
Annuity & Life Holdings, Ltd. (the "Company"), a Cayman Islands corporation 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
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Subscribed and sworn to before me, a Notary Public in and for the
Cayman, this _________ day of _______________________, 19__.
[Seal] --------------------------------
My commission expires the _____________ day of ______________, 19__.
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