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EXHIBIT 10.8
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made and entered into as of July 20,
1995 between MegaBank Financial Corporation, a Colorado corporation
("MegaBank") and Xxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxx
(hereinafter referred to individually as a "Guarantor" and collectively as
"Guarantors").
RECITALS
A. MegaBank believes that it is in the best interests of itself
and its subsidiary, MegaBank of Arapahoe ("Bank"), for MegaBank to obtain a $3
million loan (the "Loan") from First Interstate Bank of Denver, N.A. ("First")
for the purpose of increasing Bank's capital which would enable Bank to
increase its lending limit by approximately $450,000 and better serve its
current customers and help attract new customers;
B. In order to obtain the Loan, First required the Guarantors to
personally guarantee (the "Guarantees") the Loan;
C. Guarantors have indicated that as a condition to them
providing the Guarantees required for the Loan, MegaBank shall agree to
indemnify them against liabilities, expenses and costs relating to the
Guarantees and that MegaBank compensate them, pursuant to the terms of this
Agreement, in consideration of the risk of the Guarantees to their respective
personal financial conditions;
D. MegaBank believes that this Agreement contains terms that are
reasonable and comparable as to what unrelated third parties would demand from
MegaBank in consideration for the Guarantees; and
E. MegaBank desires to indemnify and compensate the Guarantors in
consideration of their agreement to execute the required Guarantees on the
Loan.
AGREEMENT
Now, therefore, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
1. AGREEMENT TO INDEMNIFY. MegaBank shall indemnify each of the
Guarantors for all of their respective payments, costs and other
expenses relating to the Guarantees, in accordance with, and to the
fullest extent permitted by, Colorado law.
2. COMPENSATION. MegaBank shall pay to the Guarantors the compensation
set forth below in the aggregate based upon the following ratios: two-thirds
(2/3) to Xxxxxx
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X. Xxxxxxxx, one-sixth (1/6) to Xxxxxxx X. Xxxxxxxxx and one-sixth (1/6) to
Xxxxxx X. Xxxxx.
2.1. An annual one and one-half percent (1.5%) fee of the
outstanding balance of the Loan as of the date of the Loan and every
anniversary of the Loan, payable in cash on such dates, until the Loan
is paid in full.
2.2. (a) A payment (the "Payment") equal to twenty-five
percent (25%) of the increase (the "Increase") of annual pretax
earnings ("Earnings") of the Bank, if any, until the Loan is paid in
full. The base for calculating the increase in Earnings shall be the
Bank's Earnings for the fiscal year ended December 31, 1995. The
calculation concerning the Increase shall be done on an annual basis,
individually, and not on a cumulative basis. For example, if the
Earnings for the fiscal years ended December 31, 1995, 1996 and 1997
are $100,000, $200,000 and $250,000, respectively, the Bank shall pay
to the Guarantors in the aggregate $25,000 for the Increase for the
fiscal year ended December 31, 1996 and $37,500 for the Increase for
the fiscal year ended December 31, 1997.
(b) The Payment, if any, shall be payable annually in the
following manner, in the sole discretion of each of the Guarantors,
within thirty (30) days after the Earnings of the Bank are determined
by the Bank's independent certified public accountants:
(i) (A) A cash payment equal to forty percent
(40%) of the Payment and, (B) a stock dividend of MegaBank
Common Stock equal to sixty percent (60%) of the Payment using
$24.00 per share as the amount for determining such stock
dividend; or
(ii) (A) An option (the "Option") to purchase
MegaBank Common Stock at $30.00 per share exercisable within
ten (10) years of the date of grant, with the number of shares
subject to the Option calculated by dividing the Payment by
$24.00, and (B) at the time of the exercise of the Option,
MegaBank shall pay to the Guarantor an additional amount in
cash equal to forty percent (40%) of the Payment.
Notwithstanding the above, MegaBank shall not be required to issue in
the aggregate less than 7,500 shares of MegaBank Common Stock or options to
acquire less than 7,500 shares of MegaBank Common Stock pursuant to this
Section 2.2.
3. NOTICE TO MEGABANK. Guarantors shall notify MegaBank in writing of
any matter for which Guarantors intend to seek indemnification hereunder as
soon as reasonably practicable following the receipt by Guarantors of written
notice thereof; provided, however, that delay in so notifying MegaBank shall
not constitute a waiver or release by Guarantors of rights hereunder.
4. ENFORCEMENT. MegaBank acknowledges that Guarantors are relying upon
this
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Agreement in serving as Guarantors for the Loan. If a claim for
indemnification or compensation is not paid in full by MegaBank within ninety
(90) days after written notice has been received by MegaBank from the
Guarantors, Guarantors may bring suit against MegaBank to recover the unpaid
amount of the claim. If successful in whole or in part in such suit, Guarantors
shall also be entitled to be paid all reasonable fees and expenses (including
without limitation, fees of counsel) in bringing and prosecuting such claim for
indemnification or compensation.
5. NONEXCLUSIVITY. The rights of Guarantors for indemnification under
this Agreement shall not be deemed exclusive of, or in limitation of, any
rights to which Guarantors may be entitled under United States and Colorado
laws, or otherwise.
6. MISCELLANEOUS.
(a) SURVIVAL; CONTINUATION. The rights of Guarantors hereunder
shall inure to the benefit of Guarantors and their personal
representatives, heirs, executors, administrators and
beneficiaries; and this Agreement shall be binding upon
MegaBank and its successors and assigns. The rights of
Guarantors under this Agreement shall continue so long as
Guarantors may be subject to any possible proceeding
concerning the Guarantees. If MegaBank sells, leases,
exchanges or otherwise disposes of, in a single transaction or
series of related transactions, all or substantially all of
its property and assets, MegaBank shall, as a condition
precedent to such transaction, cause effective provisions to
be made so that the person or entity acquiring such property
and assets shall become bound by and replace MegaBank under
this Agreement.
(b) GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Colorado except to the extent that federal law
governs hereunder.
(c) SEVERABILITY. If any provisions of this Agreement shall be
held to be prohibited by or invalid under applicable law, such
provisions shall be deemed amended to accomplish the
objectives of the provisions as originally written to the
fullest extent permitted by law and all other provisions shall
remain in full force and effect.
(d) AMENDMENT. No amendment, termination or cancellation of this
Agreement shall be effective unless in writing signed by
MegaBank and Guarantors.
(e) OTHER PAYMENTS. MegaBank shall not be liable under this
Agreement to make any payment in connection with any claim or
proceeding against or involving Guarantors concerning
indemnification to the extent Guarantors have otherwise
actually received payment of the amounts otherwise
indemnifiable hereunder. Guarantors shall repay to MegaBank
the amount of any indemnification payment MegaBank makes to
Guarantors
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under this Agreement in connection with any proceeding against
or involving Guarantors, to the extent Guarantors have
otherwise actually received payment of such amount.
(f) SUBROGATION. In the event of indemnification payment under
this Agreement, MegaBank shall be subrogated to the extent of
such payment to all of the rights of recovery of Guarantors,
who shall execute all papers required and shall do everything
that may be necessary to secure such rights, including the
execution of such documents necessary to enable MegaBank
effectively to bring suit to enforce such rights.
(g) HEADINGS. The headings in this Agreement are for convenience
only and are not to be considered in construing this
Agreement.
(h) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be deemed an original, and
together which shall constitute one document.
(i) DEFINITIONS. As used in this Agreement, the term "proceeding"
means any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or
investigative, and whether formal or informal.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above
MEGABANK:
MEGABANK FINANCIAL CORPORATION
A COLORADO CORPORATION
By:/s/ Xxxxxx X.Xxxxxxxx
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Xxxxxx X Xxxxxxxx, President
GUARANTORS:
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
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