BANK OF THE CASCADES INDEMNIFICATION AGREEMENT
BANK OF
THE CASCADES
This
Indemnification Agreement (this “Agreement”) dated as of [_____], is made
between Bank of the Cascades, an Oregon corporation (the “Bank”), and [_____]
(“Indemnitee”).
RECITALS
A. Indemnitee
is [currently serving] [willing to serve] as a director, officer, employee
and/or agent of the Bank, and in such capacity Indemnitee [is performing] [will
perform] valuable services for the Bank.
B. The
Bank’s Articles of Incorporation (the “Articles”) provide for the
indemnification of members of its Board of Directors, and the bylaws of the Bank
(the “Bylaws”) further provide for the indemnification of members of its Board
of Directors to the full extent permitted by the laws of the State of Oregon,
including the Bank Act (the “Act”).
C. The
Act is not exclusive in the rights provided, and it contemplates that agreements
may be entered into between the Bank and the members of its Board of Directors,
as well as its officers, employees and/or agents with respect to the
indemnification of such directors, officers, employees and/or
agents.
D. In
order to induce Indemnitee to [continue to] serve as a director, officer,
employee and/or agent of the Bank, the Bank has agreed to enter into this
Agreement with Indemnitee.
AGREEMENT
In
consideration of the recitals above, the mutual covenants and agreements herein
contained, and Indemnitee’s [continued] service as a director, officer, employee
and/or agent, as the case may be, of the Bank after the date hereof, the parties
to this Agreement agree as follows:
1. Indemnity of
Indemnitee
1.1 Scope. If Indemnitee
was or is made a party, or is threatened to be made a party, to or is otherwise
involved (including, without limitation, as a witness) in any Proceeding (as
defined below), the Bank agrees to and shall hold harmless and indemnify
Indemnitee from and against any and all losses, claims, damages, liabilities or
expenses (including attorneys’ fees, judgments, fines, taxes or penalties,
amounts paid in settlement and other expenses incurred in connection with such
Proceeding) (collectively, “Damages”) to the full extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by this
Agreement, the Articles, the Bylaws, the Act or
otherwise.
In the
event of any change, after the date of this Agreement, in any applicable law,
statute or rule regarding the right of an Oregon banking institution to
indemnify a member of its Board of Directors, such changes, to the extent that
they would expand Indemnitee’s rights hereunder, shall be within the purview of
Indemnitee’s rights and the Bank’s obligations hereunder, and, to the extent
that they would narrow Indemnitee’s rights hereunder, shall be excluded from
this Agreement.
1.2 Nonexclusivity. The
indemnification provided by this Agreement shall not be deemed exclusive of any
rights to which Indemnitee may be entitled under the Act, the Articles, the
Bylaws, any agreement, any general or specific action of the Bank’s Board of
Directors, vote of shareholders or otherwise. To the extent that
there is a conflict or inconsistency between the terms of this Agreement and the
Articles or Bylaws, it is the intent of the parties hereto that the Indemnitee
shall enjoy the greater benefits regardless of whether contained herein, in the
Articles or in the Bylaws. No amendment or alteration of the Articles
or Bylaws or any other agreement shall adversely affect the rights provided to
Indemnitee under this Agreement.
1.3 Partial
Indemnity. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Bank for some or a portion of
Indemnitee’s expenses incurred in any Proceeding, but not, however, for all of
the total amount thereof, the Bank shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled.
1.4 Burden of
Proof. In connection with any determination by the Board of
Directors, any court or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the Board of Directors or court shall presume that
Indemnitee has satisfied the applicable standard of conduct and is entitled to
indemnification, and the burden of proof shall be on the Bank or its
representative to establish, by clear and convincing evidence, that Indemnitee
is not so entitled.
1.5 Reliance as Safe
Harbor. Indemnitee shall be entitled to indemnification for
any action or omission to act undertaken (i) in good faith reliance upon the
records of the Bank, including its financial statements, or upon information,
opinions, reports or statements furnished to Indemnitee by the officers or
employees of the Bank or any of its subsidiaries in the course of their duties,
or by committees of the Board of Directors, or by any other person as to matters
Indemnitee reasonably believes are within such other person’s professional or
expert competence, or (ii) on behalf of the Bank in furtherance of the interests
of the Bank in good faith in reliance upon, and in accordance with, the advice
of legal counsel or accountants, provided such legal counsel or accountants were
selected with reasonable care by or on behalf of the Bank. In
addition, the knowledge and/or actions, or failures to act, of any other
director, officer, agent or employee of the Bank shall not be imputed to
Indemnitee for purposes of determining the right to indemnity
hereunder.
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1.6 Definition of
Proceeding. For purposes of this Agreement, “Proceeding” shall mean any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, in
which Indemnitee is, was or becomes involved by reason of the fact that
Indemnitee is or was a director, officer, employee and/or agent of the Bank or
that, being or having been such a director, officer, employee and/or agent,
Indemnitee is or was serving at the Bank’s request as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
(collectively a “Related Company”), including service with respect to an
employee benefit plan, whether the basis of such proceeding is alleged action
(or inaction) by Indemnitee in an official capacity as a director, officer,
partner, trustee, employee or agent or in any other capacity while serving as a
director, officer, partner, trustee, employee or agent; provided, however, that,
except with respect to an action to enforce the provisions of this Agreement,
“Proceeding” shall not include any action, suit or proceeding instituted by or
at the direction of Indemnitee unless such action, suit or proceeding is or was
authorized by the Bank’s Board of Directors.
1.7 Survival. The
indemnification provided under this Agreement shall apply to any and all
Proceedings, notwithstanding that Indemnitee has ceased to be a director,
officer, partner, trustee, employee or agent of the Bank or a Related
Company.
1.8 Liability
Insurance. The Bank shall use its best efforts to purchase and
maintain a policy or policies of insurance with reputable insurance companies
with A.M. Best ratings of “A” or better, providing Indemnitee with coverage for
any liability asserted against, or incurred by, Indemnitee or on Indemnitee’s
behalf by reason of the fact that Indemnitee is or was a director, officer,
employee and/or agent of the Bank or that, being or having been such a director,
officer, employee and/or agent, Indemnitee is or was serving at the Bank’s
request as a director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, including service with respect to an employee
benefit plan, whether or not the Bank would have the power to indemnify
Indemnitee against such liability under the provisions of this
Agreement. Such insurance policies shall have coverage terms and
policy limits at least as favorable to Indemnitee as the insurance coverage
provided to any other director or officer of the Bank. If the Bank
has such insurance in effect at the time the Bank receives from Indemnitee any
notice of the commencement of a Proceeding, the Bank shall give prompt notice of
the commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the policy. The Bank shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policy.
2. Expense
Advances
2.1 Generally. Subject to
Section 2.2, the right to indemnification of Damages conferred by Section 1
shall include the right to have the Bank pay Indemnitee’s expenses in any
Proceeding as such expenses are incurred and in advance of such Proceeding’s
final disposition (such right is referred to hereinafter as an “Expense
Advance”). The Indemnitee’s right to an Expense Advance is absolute
and shall not be subject to any condition that the Bank’s Board of Directors
shall not have determined that the Indemnitee is not entitled to be indemnified
under applicable law.
2.2 Conditions to Expense
Advance. The Bank’s obligation to provide an Expense Advance is subject
to the following conditions:
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2.2.1 Undertaking. If the
Proceeding arose in connection with Indemnitee’s service as a director, officer,
employee and/or agent of the Bank (and not in any other capacity in which
Indemnitee rendered service, including service to any Related Company), then
Indemnitee or his or her representative shall have executed and delivered to the
Bank a written undertaking, which must be an unlimited general obligation, but
shall be unsecured and interest-free and shall be accepted without reference to
Indemnitee’s financial ability to make repayment, by or on behalf of Indemnitee
to repay all Expense Advances if and to the extent that it shall ultimately be
determined by a final, unappealable decision rendered by a court having
jurisdiction over the parties and the question that Indemnitee did not meet the
standard of conduct described in 707.746 of the Act.
2.2.2 Cooperation.
Indemnitee shall give the Bank such information and cooperation as it may
reasonably request and as shall be within Indemnitee’s power.
2.2.3 Affirmation.
Indemnitee shall furnish, upon request by the Bank and if required under
applicable law, a written affirmation of Indemnitee’s good faith belief that he
or she has met the standard of conduct described in 707.746 of the
Act.
3. Priority
3.1 Bank Fully and Primarily
Responsible. Given that certain Jointly Indemnifiable Claims may arise
due to the relationship between the Fund Entities and the Bank, and the service
of Indemnitee as a Director of the Bank at the request of the Fund Entities, the
Bank acknowledges and agrees that the Bank shall be fully and primarily
responsible for the indemnification and advancement of expenses of Indemnitee in
connection with any such Jointly Indemnifiable Claim, pursuant to and in
accordance with the terms of this Agreement, irrespective of any right of
recovery Indemnitee may have from the Fund Entities or any of their respective
Affiliates. Under no circumstances shall the Bank be entitled to any
right of contribution by the Fund Entities or any of their Affiliates and no
right of recovery Indemnitee may have from the Fund Entities or any of their
respective Affiliates shall reduce or otherwise alter the rights of Indemnitee
or the obligations of the Bank under this Agreement.
3.2 Definitions. For
purposes of this Section 3:
3.2.1 Affiliate.
“Affiliate” shall mean, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other
person. For purposes of this definition, (i) “control” (including,
with correlative meanings, the terms “controlled by” and “under common control
with”) when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such person, whether through the ownership of voting securities by contract or
otherwise or for purposes of the Bank Holding Company Act of 1956, as amended,
and (ii) “person” has the meaning given to it in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any
successor statute and as used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act.
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3.2.2 Fund Entities. “Fund
Entities” shall mean any corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise (other
than the Bank, the Bank’s parent corporation or any other corporation, limited
liability company, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise as to which Indemnitee has agreed, on behalf of the
Bank or at the Bank’s request, to serve as a director, officer, employee or
agent and which service is covered by this Agreement) from whom Indemnitee may
be entitled to indemnification or advancement of expenses with respect to which,
in whole or in part, the Bank may also have an indemnification or advancement
obligation.
3.2.3 Jointly Indemnifiable
Claims. “Jointly Indemnifiable Claim” shall mean any claim for which
Indemnitee may be entitled to indemnification both from any Fund Entity, on the
one hand, and the Bank, on the other hand, pursuant to applicable law, any
indemnification agreement or the certificate of incorporation, bylaws,
partnership agreement, operating agreement, certificate of formation,
certificate of limited partnership or comparable organizational documents of the
Bank or such Fund Entity.
4. Procedures for
Enforcement
4.1 Enforcement. In the
event that a claim for indemnity, an Expense Advance or otherwise is made
hereunder and is not paid in full within twenty calendar days after written
notice of such claim is delivered to the Bank, Indemnitee may, but need not, at
any time thereafter bring suit against the Bank to recover the unpaid amount of
the claim (an “Enforcement Action”).
4.2 Presumptions in Enforcement
Action. In any Enforcement Action the following presumptions (and
limitation on presumptions) shall apply:
(a) The Bank
shall conclusively be presumed to have entered into this Agreement and assumed
the obligations imposed on it hereunder in order to induce Indemnitee to
[continue to] serve as a director, officer, employee and/or agent, as the case
may be, of the Bank;
(b) Neither
(i) the failure of the Bank (including the Bank’s Board of Directors,
independent or special legal counsel or the Bank’s shareholders) to have made a
determination prior to the commencement of the Enforcement Action that
indemnification of Indemnitee is proper in the circumstances nor (ii) an actual
determination by the Bank, its Board of Directors, independent or special legal
counsel or shareholders that Indemnitee is not entitled to indemnification shall
be a defense to the Enforcement Action or create a presumption that Indemnitee
is not entitled to indemnification hereunder; and
(c) If
Indemnitee is or was serving as a director, officer, employee, trustee or agent
of a corporation of which a majority of the shares entitled to vote in the
election of its directors is held by the Bank or in an executive or management
capacity in a partnership, joint venture, trust or other enterprise of which the
Bank or a wholly-owned subsidiary of the Bank is a general partner or has a
majority ownership, then such corporation, partnership, joint venture, trust or
enterprise shall conclusively be deemed a Related Company and Indemnitee shall
conclusively be deemed to be serving such Related Company at the request of the
Bank.
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4.3 Attorneys’ Fees and Expenses
for Enforcement Action. In the event Indemnitee is required to bring an
Enforcement Action, the Bank shall indemnify and hold harmless Indemnitee
against all of Indemnitee’s fees and expenses in bringing and pursuing the
Enforcement Action (including attorneys’ fees at any stage, including on
appeal); provided, however, that the Bank shall not be required to provide such
indemnity for such attorneys’ fees or expenses if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such Enforcement Action was not made in good faith or was
frivolous.
5. Limitations on Indemnity;
Mutual Acknowledgment
5.1 Limitation on
Indemnity. No indemnity pursuant to this Agreement shall be provided by
the Bank:
(a) [Reserved];
(b) For
Damages that have been paid directly to Indemnitee by an insurance carrier under
a policy of officers’ and directors’ liability insurance maintained by the
Bank;
(c) On
account of Indemnitee’s conduct which is finally adjudged to fall within one or
more of the exclusions set forth in the Act; or
(d) If
a final decision by a court having jurisdiction in the matter shall determine
that such indemnification is not lawful.
5.2 Regulatory
Limitation. Notwithstanding anything herein to the contrary (including
without limitation the last sentence of Section 2.1), the Bank shall not be
required to make any indemnification payment (including without limitation any
Expense Advance) to the extent such payment is prohibited or limited pursuant to
12 U.S.C. 1828(k) or by 12 C.F.R. Part 359 or 707.744 - 707.764 of the Act and
any such payment made shall be in compliance with requirements imposed pursuant
to 12 U.S.C. 1828(k) or by 12 C.F.R, Part 359 or 707.744 - 707.764 of the Act
(including without limitation any required agreements of
Indemnitee)
6. Notification and Defense of
Claim
6.1 Notification.
Promptly after receipt by Indemnitee of notice of the commencement of any
Proceeding, Indemnitee will, if a claim in respect thereof is to be made against
the Bank under this Agreement, notify the Bank of the commencement thereof; but
the omission so to notify the Bank will not relieve the Bank from any liability
which it may have to Indemnitee under this Agreement unless and only to the
extent that such omission can be shown to have actually and materially
prejudiced the Bank’s ability to defend the Proceeding.
6.2 Defense of Claim.
With respect to any such Proceeding as to which Indemnitee notifies the Bank of
the commencement thereof:
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(a) The
Bank may participate therein at its own expense;
(b) The
Bank, by itself or jointly with any other indemnifying party similarly notified,
may assume the defense thereof, with counsel satisfactory to Indemnitee. After
notice from the Bank to Indemnitee of its election to assume the defense
thereof, the Bank shall not be liable to Indemnitee under this Agreement for any
legal or other expenses (other than reasonable costs of investigation)
subsequently incurred by Indemnitee in connection with the defense thereof
unless (i) the employment of counsel by Indemnitee has been authorized by the
Bank, (ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Bank and Indemnitee in the conduct of the
defense of such action, or (iii) the Bank shall not in fact have employed
counsel to assume the defense of such action, in each of which cases the fees
and expenses of counsel shall be at the expense of the Bank. The Bank shall not
be entitled to assume the defense of any action, suit or proceeding brought by
or on behalf of the Bank or as to which Indemnitee shall have made the
conclusion provided for in (ii) above. For the avoidance of doubt,
Indemnitee shall not be required to utilize counsel selected by or representing
the Bank or any other Indemnitee without the express consent of Indemnitee,
which consent may be withheld in his or her discretion;
(c) The
Bank shall not be liable to indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any Proceeding effected without its written
consent;
(d) The
Bank shall not settle any action or claim in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee’s written consent;
and
(e) Neither
the Bank nor Indemnitee will unreasonably withhold its, his or her consent to
any proposed settlement.
(f) To
the fullest extent permitted by law, the Bank’s assumption of the defense of a
Proceeding pursuant to this Section 6 will constitute an irrevocable
acknowledgement by the Bank that any expenses incurred by or for the account of
Indemnitee in connection therewith are indemnifiable by the Bank
hereunder.
7. Subrogation
In the
event of payment under this Agreement by or on behalf of the Bank, except as
provided in Section 3, the Bank shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall execute all
papers that may be required and shall do all things that may be necessary to
secure such rights, including without limitation, the execution of such
documents as may be necessary to enable the Bank effectively to bring suit to
enforce such rights. The Bank shall pay or reimburse all expenses
actually and reasonably incurred by Indemnitee in connection with such
subrogation.
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8. Severability
Nothing
in this Agreement is intended to require or shall be construed as requiring the
Bank to do or fail to do any act in violation of applicable law. The Bank’s
inability, pursuant to court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. The provisions of
this Agreement shall be severable, as provided in this Section 8. If this
Agreement or any portion hereof shall be invalidated on any ground by any court
of competent jurisdiction, then the Bank shall nevertheless indemnify Indemnitee
to the full extent permitted by any applicable portion of this Agreement that
shall not have been invalidated, and the balance of this Agreement not so
invalidated shall be enforceable in accordance with its terms.
9. Governing Law; Binding
Effect; Amendment and Termination; Specific Performance
(a) This
Agreement shall be interpreted and enforced in accordance with the laws of the
State of Oregon.
(b) This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Bank), assigns, spouses,
heirs, executors and personal and legal representatives. The Bank
shall require and cause any successor(s) (whether directly or indirectly,
whether in one or a series of transactions, and whether by purchase, merger,
consolidation, or otherwise) to all or a significant portion of the business
and/or assets of the Bank and/or its subsidiaries (on a consolidated basis), by
written agreement in form and substance reasonably satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Bank would be required to perform if no such
succession had taken place; provided that no such assumption shall relieve the
Bank from its obligations hereunder and any obligations shall thereafter be
joint and several.
(c) No
amendment, modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both parties.
(d) The
parties recognize that if any provision of this Agreement is violated by the
parties hereto, Indemnitee may be without an adequate remedy at
law. Accordingly, in the event of any such violation, Indemnitee
shall be entitled, if Indemnitee so elects, to institute proceedings, either in
law or at equity, to obtain damages, to obtain specific performance, to enjoin
such violation, or to obtain any relief or any combination of the foregoing as
Indemnitee may elect to pursue.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties have executed this Agreement on and as of the day
and year first above written.
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BANK
OF THE CASCADES
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By:
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INDEMNITEE:
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[Signature
Page to Indemnification Agreement]