FORM OF INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered
into as of the day of January, 1997 by and among
National Auto Finance Company, Inc., a Delaware corporation
(the "Company"), and (the "Indemnitee").
W I T N E S S E T H
WHEREAS, each of the Certificate of Incorporation
and By-laws of the Company contains provisions requiring the
Company to indemnify its directors, officers, employees and
agents or any person who is serving at the Company's request
as a director, officer, employee or agent of another
corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise (each, an "Other Entity")
for certain losses and expenses incurred by such person who
was, is or is threatened to be a defendant in a proceeding
because such person is or was a director, officer, employee
or agent of the Company;
WHEREAS, at this time there are no suits, actions
or claims or threatened suits, actions or claims pending
against the Indemnitee with respect to his or her serving as
a director and/or officer of the Company or serving at the
request of the Company as a director, officer, employee or
agent of an Other Entity; and
WHEREAS, in order to induce the Indemnitee to
serve or to continue to serve as a director and/or officer
of the Company or any Affiliate (as defined below) or as a
director, officer, employee or agent of an Other Entity, the
Company has agreed to provide the Indemnitee with the
additional indemnification contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises
and mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company
and the Indemnitee hereby agree as follows:
1. Definitions. The following terms, as used herein,
shall have the following respective meanings:
(a) "Affiliate" means any person that directly,
or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the Company.
(b) "Claim" means any threatened, pending or
completed action, suit, arbitration or proceeding, or
any inquiry or investigation, whether brought by or in
the right of the Company or otherwise, that the
Indemnitee in good faith believes might lead to the
institution of any such action, suit, arbitration or
proceeding, whether civil, criminal, administrative,
investigative or other, or any appeal therefrom.
(c) "control" (including the terms "controlling,"
"controlled by" and "under common control with") means
the possession, direct or indirect, of the power to
direct or cause the direction of the management and
policies of a person, whether through the ownership of
voting securities, by contract, or otherwise.
(d) "D&O Insurance" means any valid directors'
and officers' liability insurance policy maintained by
the Company for the benefit of the Indemnitee, if any.
(e) "Excluded Claim" means any payment for Losses
or Expenses in connection with any Claim resulting from
the Indemnitee's knowingly fraudulent, dishonest or
willful misconduct or gross negligence.
(f) "Expenses" means any reasonable expenses
incurred by the Indemnitee as a result of a Claim or
Claims made against the Indemnitee for Indemnifiable
Events including, without limitation, reasonable
attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with
investigating, defending, being a witness in or
participating in (including on appeal), or preparing to
defend, any Claim relating to any Indemnifiable Event.
(g) "Indemnifiable Event" means any act, event or
occurrence, whether occurring prior to, on or after the
date of this Agreement, related to or arising out of
the Indemnitee's serving as a director and/or officer
of the Company.
(h) "Losses" means any amounts or sums which the
Indemnitee is legally obligated to pay as a result of a
Claim or Claims made against the Indemnitee for
Indemnifiable Events including, without limitation,
damages, judgments and sums or amounts paid in
settlement of a Claim or Claims.
(i) "person" means an individual, a corporation,
a partnership, an association, a joint-stock company, a
trust, any unincorporated organization, or a government
or political subdivision thereof.
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2. Basic Indemnification Agreement. The Company
agrees that in the event the Indemnitee is or becomes a
party to or witness or other participant in a Claim by
reason of (or arising in part out of) an Indemnifiable
Event, the Company will indemnify the Indemnitee to the
fullest extent permitted by law, against any and all
Expenses and Losses (including all interest, assessments and
other charges paid or payable in connection with or in
respect of such Expenses and Losses) of such Claim, whether
or not such Claim proceeds to judgment or is settled or
otherwise is brought to a final disposition, subject in each
case, to the further provisions of this Agreement.
3. Limitations on Indemnification. Notwithstanding
the provisions of Section 2 hereof, the Indemnitee shall not
be indemnified and held harmless from any Expenses or Losses
(a) which are determined by the Company to constitute an
Excluded Claim or (b) to the extent the Indemnitee is indem-
nified by the Company and has actually received payment
pursuant to the Company's Certificate of Incorporation, D&O
Insurance, or otherwise.
4. Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of
notice of any Claim, the Indemnitee shall, if indemni-
fication with respect thereto may be sought from the
Company under this Agreement, notify the Company of the
commencement thereof.
(b) If, at the time of receipt of such notice,
the Company has D&O Insurance in effect, the Indemnitee
shall thereafter take all necessary or desirable action
to cause the insurer(s) to pay, on behalf of the
Indemnitee, all Expenses and Losses payable as a result
of such Claim.
(c) To the extent that the Company does not, at
the time of the Claim, have applicable D&O Insurance,
or if a determination is made by the Company that any
Expenses arising out of such Claim will not be payable
under the D&O Insurance then in effect and, in either
case, the Company is otherwise unable or unwilling to
indemnify the Indemnitee with respect to such Claim,
the Company shall be obligated to pay the Expenses of
any Claim from time to time as incurred.
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall
be made within thirty (30) days of the Indemnitee's
written request therefor unless a determination is made
by the Company that the Claims giving rise to the
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Indemnitee's request are Excluded Claims or otherwise
not payable under this Agreement. In the event the
Company takes the position that the Indemnitee is not
entitled to indemnification in connection with the
proposed settlement of any Claim, the Indemnitee shall
have the right at its own expense to undertake the
defense of any such Claim. If it is subsequently
determined that the Indemnifiable Events are not
Excluded Claims and that the Indemnitee, therefore, is
entitled to be indemnified under the provisions of
Section 2 hereof, the Company shall promptly indemnify
the Indemnitee.
(e) The Indemnitee hereby expressly undertakes
and agrees to reimburse the Company for all Expenses
and Losses paid by the Company in connection with any
Claim against the Indemnitee in the event and only to
the extent that a determination shall have been made by
a court of competent jurisdiction that the Indemnitee
is not entitled to be indemnified by the Company for
such Expenses and Losses because the Claim is an
Excluded Claim or because the Indemnitee is otherwise
not entitled to payment under this Agreement or
applicable law.
5. Non-exclusivity. The rights of the Indemnitee
hereunder shall be in addition to any other rights the
Indemnitee may have under the Company's Certificate of
Incorporation, By-Laws and any agreement with the Company,
both as to action in the Indemnitee's official capacity and
as to action in any other capacity by holding such office,
and shall continue for so long as the Indemnitee shall be
subject to any Claim by reason of (or arising in part out
of) an Indemnifiable Event.
6. Partial Indemnity. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by
the Company for some or a portion of the Expenses and Losses
of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify the
Indemnitee for the portion thereof to which the Indemnitee
is entitled.
7. Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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8. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed
entirely within such State, without regard to its principles
of conflicts of law.
9. Notices. Any notice or other communication
required to be made pursuant to the provisions of this
Agreement shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback, addressed as follows:
If to the Company, at:
National Auto Finance Company, Inc.
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Attention: General Counsel
If to the Indemnitee, at:
c/o National Auto Finance Company, Inc.
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or at such other address as may be substituted by notice
given as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to
receive such notice. Every notice or other communication
hereunder shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt
acknowledged, or ten (10) days after the same shall have
been deposited in the mail.
10. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or other-
wise affect the meaning hereof.
11. Entire Agreement. This Agreement, subject to
Section 5 hereof, represents the complete agreement and
understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes
all prior agreements and understandings between the parties
with respect to the subject matter hereof.
12. Successors and Assigns. Except as set forth in
the following sentence, neither of the parties hereto may
assign any of its or his duties or obligations under this
Agreement without the prior written consent of the other
party hereto. Any entity which acquires substantially all
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of the assets of the Company shall assume the Company's
obligations under the Agreement, whereupon the Company shall
have no further liability hereunder.
13. Amendment; Waiver. No amendment, modification,
termination or cancellation of this Agreement shall be
effective unless made in a writing signed by each of the
parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
14. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be considered an
original, but all of which taken together shall constitute
one and the same Agreement.
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IN WITNESS WHEREOF, the Company and the Indemnitee have
duly executed this Agreement as of the date first above
written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: -------------------------------
Name:
Title:
INDEMNITEE
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