Exhibit 10.1

INDEMNITY AGREEMENT

This Indemnity Agreement, effective as of _______, _____ is made by and between
ACA Capital Holdings, Inc., a Delaware corporation with executive offices
located at 140 Broadway, New York, NY (the “Company”), and ___________, a
director of the Company residing at _________________ (the “Indemnitee”).

RECITALS

A.             The Board of Directors of the Company (the “Board”) has
determined that it is desirable and in the best interest of the Company to
appoint an additional independent director for membership on the Board;

B.              The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors of corporations unless they are
protected by comprehensive liability insurance or indemnification, due to
increased exposure to litigation costs and risks resulting from their service to
such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors;

C.              The statutes and judicial decisions regarding the duties of
directors are often difficult to apply, ambiguous, or conflicting, and therefore
fail to provide such directors with adequate, reliable knowledge of legal risks
to which they are exposed or information regarding the proper course of action
to take;

D.              Plaintiffs often seek damages in such large amounts and the
costs of litigation may be so substantial (whether or not the case is
meritorious) that the defense and/or settlement of such litigation is often
beyond the personal resources of the directors;

E.              Based upon their experience as business managers, the Board has
concluded that, to retain and attract talented and experienced individuals to
serve as independent directors of the Company and its subsidiaries, it is
necessary and appropriate for the Company to contractually indemnify such
directors, and to assume for itself maximum liability for expenses and damages
in connection with claims against such directors in connection with their
service to the Company and its subsidiaries;

F.              Section 145 of the General Corporation Law of the State of
Delaware, under which the Company is organized (“Section 145”), empowers the
Company to indemnify by agreement its officers, directors, employees, and
agents, and persons who serve, at the request of the Company, as directors,
officers, employees, or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive;

G.              The Company desires and has requested the Indemnitee to serve or
continue to serve as an independent director of the Company and/or the
subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or a subsidiary of
the Company; and

H.              The Indemnitee is willing to serve, or to continue to serve, the
Company and/or the subsidiaries of the Company, provided that he or she is
furnished the indemnity provided for herein.

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AGREEMENT

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

1.           Definitions.

(a)          Agent.  For the purposes of this Agreement, “agent” of the Company
means any person who is or was a director, officer, employee, or other agent of
the Company or a subsidiary of the Company; or is or was serving at the request
of, for the convenience of or to represent the interest of the Company or a
subsidiary of the Company as a director, officer, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust, or other
enterprise; or was a director, officer, employee, or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee, or agent of
another enterprise at the request of, for the convenience of or to represent the
interests of such predecessor corporation.

(b)         Expenses.  For purposes of this Agreement, “expenses” includes all
direct and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys’ fees and related disbursements, and other
out-of-pocket costs such as retainers, court costs, expert fees, travel expenses
and telephone charges) actually and reasonably incurred by the Indemnitee as a
party or as a participant in connection with either the investigation, defense,
or appeal of a proceeding or establishing or enforcing a right to
indemnification under this Agreement, Section 145, or otherwise; provided,
however, that expenses shall not include any judgments, fines, ERISA excise
taxes or penalties or amounts paid in settlement of a proceeding.

(c)          Proceeding.  For the purposes of this Agreement, “proceeding” means
any threatened, pending, or completed action, suit, claim, inquiry or other
proceeding, formal or informal, including arbitration, mediation, other
alternative dispute resolution mechanism, or hearing, whether civil, criminal,
administrative, investigative, or any other type whatsoever.

(d)         Subsidiary.  For purposes of this Agreement, “subsidiary” means any
corporation or other form of business entity of which more than 50% of the
outstanding voting securities is owned directly or indirectly by the Company, by
the Company and one or more other subsidiaries, or by one or more other
subsidiaries.

2.           Agreement to Serve.  The Indemnitee agrees to serve and/or continue
to serve as an agent of the Company, in the capacity the Indemnitee currently
serves as an agent of the Company, so long as he or she is duly appointed or
elected and qualified in accordance with the applicable provisions of the Bylaws
of the Company or any subsidiary of the Company or until such time as he or she
tenders his resignation in writing or he or she is removed from such position.

3.           Liability Insurance.  To the extent the Company or any of its
subsidiaries maintains an insurance policy or policies providing liability
insurance for agents of the Company and its subsidiaries (“D&O Insurance”), the
Indemnitee shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available.

4.           Mandatory Indemnification.  The Company shall indemnify the
Indemnitee:

(a)          Third Party Actions.  If the Indemnitee is a person who was or is a
party or other participant or is threatened to be made a party or other
participant to any proceeding (other than an action by or in the right of the
Company) by reason of the fact that he or she is or was an agent of the Company,

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or by reason of anything done or not done by him or her in any such capacity,
against any and all expenses and liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) actually and reasonably incurred by him or her in
connection with the investigation, defense, settlement or appeal of such
proceeding to the fullest extent authorized or permitted by law, the Certificate
of Incorporation of the Company or the Bylaws of the Company; provided that he
or she 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, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful; and

(b)         Actions By or In the Right of the Company.  If the Indemnitee is a
person who was or is a party or other participant or is threatened to be made a
party or other participant to any proceeding by or in the right of the Company
to procure a judgment in its favor by reason of the fact that he or she is or
was an agent of the Company, or by reason of anything done or not done by him or
her in any such capacity, against any amounts paid in settlement of any such
proceeding, to the extent permitted by law, and all expenses actually and
reasonably incurred by him or her in connection with the investigation, defense,
settlement, or appeal of such proceeding if he or she 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 under this subsection
shall be made in respect of any claim, issue, or matter as to which such person
shall have been finally adjudged to be liable to the Company unless and only to
the extent that the Court of Chancery or the court in which such proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such amounts which the Court of
Chancery or such other court shall deem proper; and

(c)          The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not act 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, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful; and

(d)         Indemnification for Expenses Incurred as a Witness.  To the extent
that Indemnitee is, by reason of the fact that he or she is or was an agent of
the Company, a witness in any proceeding to which Indemnitee is not a party, the
Company shall indemnify Indemnitee against all expenses actually and reasonably
incurred by Indemnitee in connection therewith; and

(e)          Exception for Amounts Covered by Insurance.  Notwithstanding the
foregoing, the Company shall not be obligated to indemnify the Indemnitee for
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fees, ERISA excise taxes or penalties, and amounts paid in
settlement) that have been paid directly to Indemnitee under D&O Insurance.

5.           Partial Indemnification.  If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by him or her in the investigation, defense,
settlement, or appeal of a proceeding but not entitled, however, to
indemnification for all of the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for such amount except as to the portion
thereof to which the Indemnitee is not entitled.

6.           Mandatory Advancement of Expenses.  Subject to Section 9 below and
subject to receipt by the Company of a statement that reasonably evidences the
expenses incurred, the Company shall advance all expenses actually and
reasonably incurred by the Indemnitee in connection with the

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investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or participant or is threatened to be made a party or
participant by reason of the fact that the Indemnitee is or was an agent of the
Company or by reason of anything done or not done by him or her in any such
capacity. Indemnitee hereby undertakes to repay such amounts advanced only if,
and to the extent that, it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that the Indemnitee is
not entitled to be indemnified by the Company as authorized hereby. The advances
to be made hereunder shall be paid by the Company to the Indemnitee within
twenty (20) days following delivery of a written request therefor by the
Indemnitee to the Company.

7.           Notice and Other Indemnification Procedures.

(a)          Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding or his or her
potential involvement as a participant (be it as a party or otherwise), the
Indemnitee shall, if the Indemnitee believes that indemnification with respect
thereto may be sought from the Company under this Agreement, notify the Company
in writing of the commencement or threat of commencement thereof.

(b)         If, at the time of the receipt of a notice of the commencement of a
proceeding pursuant to Section 7(a) hereof, the Company has D&O Insurance in
effect, the Company shall give notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.

(c)          In the event the Company shall be obligated to advance the expenses
for any proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (i) the Indemnitee shall have the right to employ his
or her counsel in any such proceeding at the Indemnitee’s expense; and (ii) if
(A) the employment of counsel by the Indemnitee has been previously authorized
by the Company, (B) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee in the
conduct of any such defense or (C) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, the fees and expenses of the
Indemnitee’s counsel shall be at the expense of the Company.

8.           Determination of Right to Indemnification.

(a)          To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 4(a) or 4(b) of
this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him or her in connection therewith to the extent
permitted by law.

(b)         Upon each submission of a written notice by Indemnitee for
indemnification pursuant to Section 7(a) above, a determination with respect to
Indemnitee’s entitlement thereto because he or she has met all the applicable
standards set forth in this Agreement shall be made in accordance with this
Section 8.

(c)          The Indemnitee shall be entitled to select the decision maker or
decision making body who will determine, on behalf of the Company, the
Indemnitee’s entitlement to indemnification from

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among the following:

(1)               All of the members of the Board of Directors who are not
parties to or participants in the proceeding for which indemnification is being
sought, even though less than a quorum, or a committee of such directors
designated by majority vote of such directors, even though less than a quorum;

(2)               The stockholders of the Company; or

(3)               Independent legal counsel selected by the Board, which counsel
shall make such determination in a written opinion.

(d)         As soon as practicable, and in no event later than 30 days after
written notice of the Indemnitee’s choice of decision maker pursuant to Section
8(c) above, the Company shall, at its own expense, submit to the selected
decision maker its claim that the Indemnitee is not entitled to indemnification;
and the Company shall act in the utmost good faith to assure the Indemnitee a
complete opportunity to defend against such claim.

(e)          Notwithstanding a determination by any decision maker listed in
Section 8(c) hereof that the Indemnitee is not entitled to indemnification with
respect to a specific proceeding, the Indemnitee shall have the right to apply
to the Court of Chancery of the State of Delaware, the court in which the
Proceeding is or was pending, or any other court of competent jurisdiction, for
the purpose of enforcing the Indemnitee’s right to indemnification pursuant to
the Agreement.

(f)          In any suit brought by Indemnitee seeking to enforce a right to
indemnification hereunder (but not a suit brought by Indemnitee seeking to
enforce a right to an advancement of expenses hereunder), it shall be a defense
that Indemnitee has not met any applicable standard for indemnification under
applicable law. With respect to any suit brought by Indemnitee seeking to
enforce a right to indemnification or right to advancement of expenses hereunder
or any suit brought by the Company to recover an advancement of expenses
(whether pursuant to the terms of an undertaking or otherwise), neither (i) the
failure of the Company to have made a determination prior to commencement of
such suit that indemnification of such person is proper in the circumstances
because such person has met the applicable standards of conduct under applicable
law, nor (ii) an actual determination by the Company that such person has not
met such applicable standards of conduct, shall create a presumption that such
person has not met the applicable standards of conduct or, in a case brought by
such person seeking to enforce a right to indemnification, be a defense to such
suit.

(g)         In any suit brought by Indemnitee seeking to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the Company to
recover an advancement of expenses (whether pursuant to the terms of an
undertaking or otherwise), the burden shall be on the Company to prove that the
Indemnitee is not entitled to be indemnified, or to such an advancement of
expenses, under this Agreement or otherwise.

(h)         The Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any proceeding under this Section
8 involving the Indemnitee and against all expenses incurred by the Indemnitee
in connection with any other proceeding between the Company and the Indemnitee
involving the interpretation or enforcement of the rights of the Indemnitee
under this Agreement so long as a court of competent jurisdiction finds that
Indemnitee in any such proceeding was entitled to indemnification or advancement
of expenses, in whole or in part.

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9.           Exceptions.  Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

(a)          Claims Initiated by Indemnitee.  To indemnify or advance expenses
(including attorneys’ fees) to the Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by the Indemnitee against the Company or
in defending any counterclaim, cross-claim, affirmative defense or like claim of
the Company), except with respect to proceedings brought to establish or enforce
a right to indemnification or advancement of expenses under this Agreement or
any other statute or law or otherwise as required under Section 145, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors finds it to be appropriate; or

(b)         Lack of Good Faith.  To indemnify the Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

(c)          Unauthorized Settlements.  To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a proceeding unless the Company
consents to such settlement; or

(d)         Claims by the Company for Willful Misconduct.  To indemnify or
advance expenses to the Indemnitee under this Agreement for any expenses
incurred by the Indemnitee with respect to any proceeding or claim brought by
the Company against the Indemnitee for willful misconduct, unless a court of
competent jurisdiction determines that each of such claims was not made in good
faith or was frivolous; or

(e)          Section 16(b).  To indemnify Indemnitee for expenses and the
payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, to the extent applicable to the Company, or any similar successor
statute; or

(f)          Willful Misconduct.  To indemnify the Indemnitee (x) on account of
the Indemnitee’s conduct which is finally adjudged to have been knowingly
fraudulent or deliberately dishonest, or to constitute willful misconduct or (y)
if it is finally adjudged that Indemnitee did not act in good faith or in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company; or

(g)         Unlawful Indemnification.  To indemnify the Indemnitee if a final
decision by a court having jurisdiction in the matter shall determine that such
indemnification is not lawful.

10.         Right to Bring Suit.  If (a) a claim under Section 4(a) or 4(b)
hereof with respect to any right to indemnification is not paid in full by the
Company within sixty days after a written demand has been received by the
Company or (b) a claim under Section 6 hereof with respect to any right to the
advancement of expenses is not paid in full by the Company within twenty days
after a written demand has been received by the Company, then Indemnitee may at
any time thereafter bring suit against the Company to recover the unpaid amount
of the claim.

11.         Subrogation.  Upon a payment to Indemnitee under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of the Indemnitee to recover against any person for such liability, and
Indemnitee shall execute all documents and instruments reasonably required and
shall take such other actions as may be reasonably necessary to secure such
rights, including the execution of such documents as may be necessary for the
Company to bring suit to enforce such rights.

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12.         Nonexclusivity.  The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company’s Certificate of Incorporation or Bylaws, the vote of the Company’s
stockholders or disinterested directors, other agreements, or otherwise, both as
to actions in his or her official capacity and to actions in another capacity
while occupying his or her position as an agent of the Company, and the
Indemnitee’s rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.

13.         Interpretation of Agreement.  It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.

14.         Severability.  If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever, (i) the validity, legality, and enforceability of the remaining
provisions of the Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable, that are not themselves invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby, and (ii) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraphs of this Agreement containing
any such provision held to be invalid, illegal, or unenforceable, that are not
themselves invalid, illegal, or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 13 hereof.

15.         Modification and Waiver.  No supplement, modification, or amendment
of this Agreement shall be binding unless executed in writing by both 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.

16.         Successors and Assigns.  The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors, heirs, executors, and
administrators and assigns of the parties hereto.

17.         Notice.  All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date, (iii) sent by a recognized overnight courier, on the
next business day after the date on which it was so sent, or (iv) sent by
facsimile, the successful transmission and receipt of which is confirmed in a
written report. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.

18.         Governing Law.  This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware.

19.         Consent to Jurisdiction.  To the fullest extent permitted by law,
the Company and the Indemnitee each hereby irrevocably consent to the
jurisdiction of the Court of Chancery of the State of Delaware for all purposes
in connection with any action or proceeding that arises out of or relates to
this Agreement.

20.         Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

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The parties hereto have entered into this Indemnity Agreement effective as of
the date first above written.

ACA CAPITAL HOLDINGS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Address for notice purposes:

 

 

ACA Capital Holdings, Inc.

 

 

140 Broadway, 47th Floor

 

 

New York, NY 10005

 

 

Attention: General Counsel

 

 

Facsimile: 212-375-2302

 

 

 

 

 

 

 

 

 

 

 

 

 

INDEMNITEE:

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

 

 

 

Address for notice purposes:

 

 

[                              ]

 

 

[                              ]

 

 

[                              ]

 

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