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EXHIBIT 10.3
VIB CORP
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made as of the ___
day of ________, ____ by and between VIB Corp, a California corporation (the
"Company"), and ____________________ ("Indemnitee"), a director or officer of
the Company with reference to the following facts:
RECITALS
A. The Company and the Indemnitee recognize that interpretations of
ambiguous statutes, regulations, court opinions, and the Company's Articles of
Incorporation and Bylaws are too uncertain to provide the Company's officers and
directors with adequate or reliable advance knowledge or guidance with respect
to the legal risks and potential liabilities to which they may become personally
exposed as a result of preforming their duties in good faith for the Company;
B. The Company and the Indemnitee are aware of the substantial growth in
the number of lawsuits filed against corporate officers and directors in
connection with their activities in such capacities and by reason of their
status as such;
C. The Company and the Indemnitee recognize that the cost of defending
against such lawsuits, whether or not meritorious, is typically beyond the
financial resources of most officers and directors of the Company;
D. The Company and the Indemnitee recognize that legal risks and
potential officer or director liabilities, or the threat thereof, and the
resultant substantial time and expense endured in defending against such
lawsuits, bear no reasonable logical relationship to the amount of compensation
received by the Company's officers or directors. These factors pose a
significant deterrent to, and induce increased reluctance on the part of,
experienced and capable individuals to serve as officers or directors of the
Company;
E. The Company has investigated the availability and deficiency of
liability insurance to provide its officers and directors with adequate
protection against the foregoing legal risks and potential liabilities. The
Company has concluded that such insurance provides only limited protection to
its officers and directors, and that it is in the best interests of the Company
and its shareholders to contract with its officers and directors, including the
Indemnitee, to indemnify them to the fullest extent permitted by law against
personal liability for actions taken in the good faith performance of their
duties to the Company;
F. Section 317 of the General Corporation Law of the State of
California, which sets forth certain provisions relating to mandatory and
permissive indemnification of officers and directors of a California corporation
by such corporation, requires indemnification in certain circumstances, permits
it in other circumstances, and prohibits it in some circumstances;
G. The Board of Directors of the Company has determined, after due
consideration and investigation of this Agreement and various other options
available in lieu hereof, that the following Agreement is reasonable, prudent
and necessary to promote and ensure the best interests of the
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Company and its shareholders in that this Agreement is intended to: (i) induce
and encourage highly experienced and capable persons such as the Indemnitee to
serve as officers and/or directors of the Company; (ii) encourage such persons
to resist what they consider unjustifiable suits and claims made against them in
connection with the good faith performance of their duties to the Company,
secure in knowledge that certain expenses, costs and liabilities incurred by
them in their defense of such litigation will be borne by the Company and that
they will receive the maximum protection against such risks and liabilities as
legally may be made available to them; and (iii) encourage officers and
directors to exercise their best business judgment regarding matters which come
before the Board of Directors without undue concern for the risk that claims may
be made against them on account thereof;
H. Article VI of the Company's Articles of Incorporation, Article VI of
the Company's Bylaws, and California Corporations Code Section 317 authorize
indemnification of persons who serve or served as officers or directors of the
Company; and
I. The Company desires to have the Indemnitee continue to serve as an
officer or director of the Company free from concern for unpredictable,
inappropriate or unreasonable legal risk and personal liabilities by reason of
Indemnitee acting in good faith in the performance of Indemnitee's duty to the
Company. The Indemnitee desires to continue to serve as an officer or director
of the Company, provided, and on the express condition, that he is furnished
with the indemnity set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below and based on the premises set forth above, the Company and
Indemnitee do hereby agree as follows:
AGREEMENT
1. Definitions. For the purposes of this Agreement, the following
definitions shall apply:
(a) The term "Agent" shall mean any person who is or was acting in
his capacity as a director or officer of the Company, or is or was serving as a
director, officer, employee or agent of any other enterprise at the request of
the Company, and whether or not he is serving in any such capacity at the time
any liability or expense is incurred for which indemnification or reimbursement
can be provided under this Agreement.
(b) The term "Applicable Standard" means that a person acted in good
faith and in a manner such person reasonably believed to be in the best
interests of the Company; except that in a criminal proceeding, such person must
also have had no reasonable cause to believe that such person's conduct was
unlawful. The termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create any presumption, or establish, that the person did not meet the
"Applicable Standard."
(c) The term "Expenses" includes, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals, court costs,
attorneys' fees and disbursements and any expenses of establishing a right to
indemnification under law or Paragraph 7 of this Agreement.
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"Expenses" shall not include the amount of any judgment, fines or penalties
actually levied against Indemnitee or amounts paid in settlement of a Proceeding
by or on behalf of Indemnitee without court approval.
(d) "Independent Legal Counsel" shall include any firm of attorneys
selected by lot by the regular outside counsel for the Company from a list of
firms which meet minimum size criteria and other reasonable criteria established
by the Board of Directors of the Company, so long as such firm has not
represented the Company, Indemnitee or any entity controlled by Indemnitee
within the preceding twenty-four (24) calendar months.
(e) References to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with respect
to any employee benefit plan; references to "serving at the request of the
Company" shall include any service as a director or officer of the Company which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants, or beneficiaries; and a
person who acts in good faith and in a manner he reasonably believes to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Company" as referred to in this Agreement.
(f) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the name of the Company
or otherwise and whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee may be or may have been involved as a party or
otherwise (other than as plaintiff against the Company), by reason of the fact
that Indemnitee is or was an Agent of the Company or by reason of any action
taken by him or of any inaction on his part while acting as such Agent.
2. Agreement to Serve. Indemnitee agrees to serve or continue to serve
as a director and/or officer of the Company at the will of the Company or in
accordance with the terms of any agreement with the Company, as the case may be,
for so long as he is duly elected or appointed, or until such time as he tenders
his resignation in writing or his service is terminated.
3. Indemnity in Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee is made a party to or threatened to be made a party to,
or otherwise involved in, any Proceeding (other than a Proceeding which is an
action by or in the right of the Company to procure a judgment in its favor), by
reason of the fact that Indemnitee is or was an Agent of the Company. This
indemnity shall apply, and be limited, to and against all Expenses, judgments,
fines, penalties, settlements, and other amounts, actually and reasonably
incurred by Indemnitee in connection with the defense or settlement of the
Proceeding, so long as it is determined pursuant to Paragraph 7 of this
Agreement or by the court before which such action was brought, that Indemnitee
met the Applicable Standard.
4. Indemnity in Proceeding By or In the Name of the Company. The Company
shall indemnify Indemnitee if Indemnitee is made a party to, or threatened to be
made a party to, or otherwise involved in, any Proceeding which is an action by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that Indemnitee is or was an Agent of the Company. This indemnity shall
apply, and be limited, to and against all expenses actually and reasonably
incurred by Indemnitee in connection with the defense or settlement of such
Proceeding, but only if: (a)
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Indemnitee met the Applicable Standard (except that the Indemnitee's belief
regarding the best interests of the Company need not have been reasonable); (b)
Indemnitee also acted in a manner he believed to be in the best interests of the
Company's shareholders; and (c) the action is not settled or otherwise disposed
of without court approval. No indemnification shall be made under this Paragraph
4 in respect of any claim, issue or matter as to which Indemnitee shall have
been adjudged to be liable to the Company in the performance of such person's
duty or the Company, unless, and only to the extent that, the court in which
such proceeding is or was pending shall determine upon application that, in view
of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification for the expenses which such court shall determine.
5. Expenses of Successful Indemnitee. Notwithstanding any other
provision of this Agreement, to the extent the Indemnitee has been successful on
the merits in defense of any Proceeding referred to in Paragraphs 3 or 4 hereof,
or in defense of any claim, issue or matter therein, including the dismissal of
an action or portion thereof without prejudice, Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred in connection therewith.
6. Advances of Expenses. The Expenses incurred by Indemnitee in any
Proceeding shall be advanced by the Company prior to the final disposition of
such proceeding at the written request of Indemnitee, but only if Indemnitee
shall undertake to repay such advances if it is ultimately determined that the
Indemnitee is not entitled to indemnification as provided for in this Agreement.
Any advance required hereunder shall be deemed to have been approved by the
Board of Directors of the Company to the extent this Agreement was so approved.
In determining whether or not to make an advance hereunder, the ability of
Indemnitee to repay shall not be a factor. However, in a Proceeding brought by
the Company directly, in its own right (as distinguished from an action brought
derivatively or by any receiver or trustee), the Company shall have discretion
whether or not to make the advances called for hereby if Independent Legal
Counsel advises in writing that the Company has probable cause to believe, and
the Company does believe, that Indemnitee did not act in good faith with regard
to the subject matter of the Proceeding or a material portion thereof.
The Company shall be entitled to participate in the Proceeding and to
assume the defense thereof, with counsel chosen by the Company reasonably
satisfactory to Indemnitee, and after notice from the Company to Indemnitee of
its election to assume the defense thereof, the Company shall not be liable to
Indemnitee under this Paragraph 6 for any Expenses of other counsel or any other
Expenses, in each case, subsequently incurred by such Indemnitee, in connection
with the defense thereof, other than reasonable costs of investigation actually
incurred by Indemnitee. In the event that after notice of such an action the
Company does not assume the complete defense thereof, then Indemnitee may, but
shall not be obligated, to conduct a defense of the action with counsel of
Indemnitee's choosing reasonably satisfactory to the Company, with reasonable
attorneys' fees and other reasonable Expenses to be paid by the Company within
thirty (30) days of the delivery of each invoice therefor to the Company. In all
cases, no settlement shall be entered into without the express prior written
consent of the Company. The Company and Indemnitee shall cooperate fully in the
defense of any Proceeding regardless of which party assumes the defense;
provided, further, Indemnitee's cooperation shall be without compensation.
7. Right of Indemnitee to Indemnification Upon Application; Procedure
Upon Application. Any advance under Paragraphs 5 and/or 6 hereof or
indemnification shall be made no later than forty-five (45) days after receipt
of a written request of Indemnitee in accordance with
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Paragraph 11 hereof. In all other cases, indemnification shall be made by the
Company only if authorized in the specific case, upon a determination that
indemnification of the Agent is proper under the circumstances and the terms of
this Agreement by: (a) a majority vote of a quorum of the Board of Directors (or
a duly constituted committee thereof), consisting of directors who are not
parties to such Proceeding; (b) approval of the shareholders (as defined in
Section 153 of the California Corporations Code, as that Section reads at
present), with the Indemnitee's shares not being entitled to vote thereon; (c)
the court in which such Proceeding is or was pending upon application made by
the Company, the Indemnitee or any person rendering services in connection with
Indemnitee's defense, whether or not the Company opposes such application; or
(d) to the extent permitted by law, and only if the court refuses or is unable
to rule, by Independent Legal Counsel in a written opinion.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advances are not appropriate shall be
on the Company. Neither the failure of the Company (including its Board of
Directors, Independent Legal Counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because Indemnitee has met the
Applicable Standard of Conduct, nor an actual determination by the Company
(including its Board of Directors or Independent Legal Counsel) that Indemnitee
has not met such Applicable Standard of Conduct, shall be a defense to the
action or create a presumption that Indemnitee has not met the Applicable
Standard of Conduct. Indemnitee's Expenses incurred in connection with
successfully establishing his right to indemnification or advances in any such
Proceeding shall also be indemnified by the Company; provided, however, that if
Indemnitee is only partially successful in establishing his right to
indemnification or advances, only an equitably allocated portion of such
Expenses, as determined by the court, shall be indemnified.
If Indemnitee is entitled under any provision of this Agreement or
indemnification by the Company, for some or a portion of the Expenses,
judgments, fines or penalties actually and reasonably incurred by Indemnitee in
the investigation, defense, appeal or settlement of any Proceeding but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion (determined on an equitable basis) of such Expenses,
judgments, fines or penalties to which Indemnitee is entitled.
The Company's obligations to advance or indemnify hereunder shall be
deemed satisfied to the extent of any payments made by an insurer on behalf of
the Company or Indemnitee.
8. Indemnification Hereunder Not Exclusive. The indemnification provided
by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under the Articles of Incorporation, the Bylaws, any
agreement, any vote of shareholders or disinterested directors, the General
Corporation Law of the State of California, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification under this Agreement shall continue as
to Indemnitee even though Indemnitee may have ceased to be a director or officer
and shall inure to the benefit of the heirs and personal representatives of
Indemnitee.
9. Limitations. The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee:
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(a) for which payment is actually made to or for the benefit of the
Indemnitee under a valid and collectible insurance policy, provided, however,
that the Company shall remain liable for any payments required by this Agreement
in excess of the amount of payment under such insurance;
(b) for which the Indemnitee is indemnified by the Company otherwise
than pursuant to this Agreement;
(c) for an accounting of profits made from the purchase or sale by
the Agent of securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of 1994 and amendments thereto or similar provisions
of any state statutory law or common law;
(d) for acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law;
(e) for acts or omissions that the Indemnitee believes to be contrary
to the best interests of the Company or its shareholders or that involve the
absence of good faith on the part of the Indemnitee;
(f) for any transaction from which the Indemnitee derived an improper
personal benefit;
(g) for acts or omissions that show a reckless disregard for the
Indemnitee's duty to the Company or its shareholders in circumstances in which
the Indemnitee was aware, or should have been aware, in the ordinary course of
performing his duties, of a risk of serious injury to the Company or its
shareholders;
(h) for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the Indemnitee's duty to the
Company or its shareholders;
(i) under Section 310 of the General Corporation Law of the State of
California, as that Section reads at present; or
(j) under Section 316 of the General Corporation Law of the State of
California, as that Section reads at present.
10. Savings Clause. If this Agreement or any portion hereof is
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee as to Expenses, judgments, fines
and penalties with respect to any Proceeding to the full extent permitted by any
applicable portion of this Agreement or by any other applicable law.
11. Notices. Indemnitee shall, as a condition precedent to Indemnitee's
right to be indemnified under this Agreement, give to the Company notice in
writing within thirty (30) days after he becomes aware of any claim made against
him for which he believes, or should reasonably believe, indemnification will or
could be sought under this Agreement. Notice to the Company shall be directed to
the Company's main office, Attention: President (or such other address as the
Company
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shall designate in writing to Indemnitee). Failure to so notify the Company
shall not relieve the Company of any liability which it may have to Indemnitee
otherwise than under this Agreement.
All notices, requests, demands and other communications (collectively
"notices") provided for under this Agreement shall be in writing (including
communications by telephone, telex or telecommunication facilities providing
facsimile transmission) and mailed (postage prepaid and return receipt
requested), telegraphed, telexed, transmitted or personally served to each party
at the address set forth at the end of this Agreement or at such other address
as any party affected may designate in a written notice to the other parties in
compliance with this section. All such notices shall be effective when received;
provided, however, receipt shall be deemed to be effective within three (3)
business days of any properly addressed notice having been deposited in the
mail, within twenty-four (24) hours from the time electronic transmission was
made, or upon actual receipt of electronic delivery, whichever occurs first.
No costs, charges or expenses for which indemnity shall be sought
hereunder shall be incurred without the Company's consent, which consent shall
not be unreasonably withheld.
12. Choice of Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California, including applicable
statutes of limitations and other procedural statutes.
13. Attorneys' Fees. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to the amounts to which the prevailing party may be entitled, actual
attorneys' fees and court costs as may be awarded by the court.
14. Amendments. Provisions of this Agreement may be waived, altered,
amended or repealed in whole or in part only by the written consent of all
parties.
15. Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement to any persons other than the parties to it and their respective
successors and assigns (including an estate of Indemnitee), nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party hereto. Furthermore, no provision of this
Agreement shall give any third persons any right of subrogation or action
against any party hereto.
16. Severability. If any portion of this Agreement shall be deemed by a
court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall provide for the consummation of the
transaction contemplated herein in substantially the same manner as originally
set forth at the date this Agreement was executed.
17. Successors and Assigns. All terms and conditions of this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective transferees, successors and assigns; provided, however, that this
Agreement and all rights, privileges, duties and obligations of the parties, may
not be assigned or delegated by any party without the prior written consent of
the other parties.
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18. Counterparts. This Agreement may be executed simultaneously in one
(1) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one (1) and the same instrument.
19. Entire Agreement. Except as provided in Paragraph 8 hereof, this
Agreement represents and contains the entire agreement and understanding between
and among the parties, and all previous statements or understandings, whether
express or implied, oral or written, relating to the subject matter hereof are
fully and completely extinguished and superseded by this Agreement. This
Agreement shall not be altered or varied except by a writing duly signed by all
of the parties.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
VIB Corp
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By: _______________________________
Its: ______________________________
"Indemnitee"
_________________________________________
Address: _______________________________
_______________________________
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