INDEMNIFICATION AGREEMENT
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This Indemnification Agreement ("Agreement") is dated as of February
21, 1998, between Westmark Group Holdings, Inc., a Delaware corporation
("Corporation"), and _____________________ ("Director").
Recitals
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A. Director is a member of Corporation's Board of Directors and
Corporation desires Director to continue in such capacity. Director is willing
to continue to serve on Corporation's Board of Directors if Director receives
the protections provided by this Agreement.
B. Corporation's Certificate of Incorporation, obligates it to
indemnify its officers and directors as authorized by Section 145 of the General
Corporation Law of the State of Delaware.
C. Corporation intends to secure, at its expense, directors' and
officers' liability insurance ("D&O Insurance") protecting its directors in
connection with their performance of services for Corporation.
D. Corporation believes that (1) litigation against corporate
directors, regardless of whether meritorious, is expensive and time-consuming
for the director to defend; (2) there is a substantial risk of a large judgment
or settlement in litigation in which a corporate director was neither culpable
nor profited personally to the detriment of the corporation; (3) it is
increasingly difficult to attract and keep qualified directors because of such
potential liabilities; and (4) it is important for a director to have assurance
that indemnification will be available if the director acts in accordance with
reasonable business standards to the fullest extent permitted by applicable law,
it is in the best interests of Corporation and its shareholders for Corporation
to contractually obligate itself to indemnify its directors and to set forth the
details of the indemnification process.
E. Based upon the conclusions stated in Recital D above, to induce
Director to continue to serve on Corporation's Board of Directors and in
consideration of Director's continued service as a director, Corporation wishes
to enter into this Agreement with Director.
Therefore, Corporation and Director agree as follows:
1. Agreement to Serve. Director will serve as a member of the Board of
Directors of Corporation so long as Director is duly elected and qualified to so
serve or until Director resigns or is removed from Corporation's Board of
Directors.
2. Indemnification.
(a) Corporation will indemnify Director to the fullest extent
permitted under the governing law in effect on the date hereof or as such laws
may from time to time hereafter be amended to increase the scope of such
permitted indemnification if Director was or is a party or threatened to be made
a party to any threatened, pending or completed action, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing, or any
other suit or proceeding of any kind, whether civil, criminal, administrative or
investigative and whether formal or informal (including actions by or in the
right of Corporation and any preliminary inquiry or claim by any person or
authority) (collectively, a "Proceeding"), by reason of the fact that Director
is or was a director, officer, employee or agent of Corporation or is or was
serving at Corporation's request as a director, officer, employee or agent of
another corporation (including a Subsidiary), partnership, joint venture, trust
or other enterprise against liability incurred in connection with such
proceeding, including any appeal thereof (collectively, "Covered Matters"). Such
indemnification will cover all Expenses (as defined in paragraph 5(a) below),
liabilities, judgments (including punitive and exemplary damages), penalties,
fines (including excise taxes relating to employee benefit plans and civil
penalties) and amounts paid in settlement which are incurred or imposed upon
Director in connection with a Covered Matter (collectively, "Indemnified
Amounts").
(b) Notwithstanding the foregoing provisions of paragraph 2(a)
above, no such indemnification shall be made in respect of any claim, issue, or
matter as to which the governing law expressly prohibits such indemnification by
reason of an adjudication of liability of Director to the Corporation; provided,
however, that in such event such indemnification shall nevertheless be made by
the Corporation to the extent that the court in which such action or suit was
brought shall determine equitable under the circumstances.
(c) Notwithstanding any provision of this Agreement, to the
extent that Director has been wholly successful on the merits or otherwise
absolved in any proceeding on any claim, issue or matter, Director shall be
indemnified against all Expenses incurred by Director or on Director's behalf in
connection therewith. If Director is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Corporation shall
indemnify Director to the maximum extent permitted by law, against all Expenses,
judgments, penalties, fines and amounts paid in settlement, incurred by Director
in connection with each successfully resolved claim, issue, or matter. For
purposes of this paragraph 2, and without limitation, the termination of any
such claim, issue or matter by dismissal with or without prejudice shall be
deemed to be a successful resolution as to such claim, issue or matter.
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3. Claims for Indemnification. Director will give Corporation written
notice of any claim for indemnification under this Agreement. Payment requests
will include a schedule setting forth in reasonable detail the amount requested
and will be accompanied (or, if necessary, followed) by copies of the relevant
invoices or other documentation. Upon Corporation's request, Director will
provide Corporation with a copy of the document or pleading, if any, notifying
Director of the Covered Matter. To the extent practicable, Corporation will pay
Indemnified Amounts directly without requiring Director to make any prior
payment.
4. Determination of Right to Indemnification.
(a) Director will be presumed to be entitled to
indemnification under this Agreement and will receive such indemnification,
subject to paragraph 4(b) below, irrespective of whether the Covered Matter
involves allegations of intentional misconduct, alleged violations of Section
16(b) of the Securities Exchange Act of 1934, alleged violations of Section
10(b) of the Securities Exchange Act of 1934 (including Rule 10b-5 thereunder),
breach of Director's fiduciary duties (including duties of loyalty or care) or
any other claim.
(b) If, in the opinion of counsel to Corporation, applicable
law permits indemnification in a Covered Matter only as authorized in the
specific case upon a determination that indemnification is proper in the
circumstances because Director has met a standard of conduct established by
applicable law, and upon an evaluation of Indemnified Amounts to be paid in
connection with such Covered Matter, the following will apply:
(1) Corporation will give Director notice that a
determination and evaluation will be made under this paragraph 4(b);
such notice will be given immediately after receipt of counsel's
opinion that such a determination and evaluation is necessary and will
include a copy of such opinion.
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(2) Such determination and evaluation will be made in
good faith, as follows:
(A) by a majority vote of a quorum of
Corporation's Board of Directors who are not parties or
threatened to be made parties to the Covered Matter in
question ("Disinterested Directors") or, if such a quorum is
not obtainable or, even if obtainable, by a majority vote of a
committee of two or more Disinterested Directors who are
selected by the entire Board; or
(B) by an attorney or firm of attorneys,
having no previous relationship with Corporation or Director,
which is selected by the Board of Directors or Committee as
prescribed in clause (A) above; or
(C) by the shareholders by a majority vote
of a quorum consisting of shareholders who were not parties to
such proceeding, or, if no such quorum is obtainable, by a
majority vote of shareholders who were not parties to such
proceeding.
(3) Director will be entitled to a hearing before the
entire Board of Directors of Corporation and any other person or
persons making the determination and evaluation under clause (2) above.
Director will be entitled to be represented by counsel at such hearing.
(4) The cost of a determination and evaluation under
this paragraph 4(b) (including attorneys' fees and other expenses
incurred by Director in preparing for and attending the hearing
contemplated by clause (3) above and otherwise in connection with the
determination and evaluation under this paragraph 4(b)) will be borne
by Corporation.
(5) The determination will be made as promptly as
reasonably possible after notice from counsel to Corporation of the
need therefor and, in any case, promptly as possible after final
adjudication of the Covered Matter.
(6) Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same manner as
the determination that indemnification is permissible. If the
determination of permissibility is made under clause 2(B) above, the
same persons shall evaluate the reasonableness of expenses and may
authorize indemnification.
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(7) Director will be presumed to have met the
required standard of conduct under this paragraph 4(b) unless it is
clearly demonstrated to the determining body that Director has not met
the required standard of conduct.
(c) Notwithstanding the failure of Corporation to provide
indemnification, and despite any contrary determination of the Board of
Directors or of the shareholders in the specific case, Director may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
5. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the
extent that Director is, by reason of the fact that Director is or was a
director, officer, employee or agent of Corporation or any other entity which
Director is or was serving at the request of Corporation, a witness in any
Proceeding, Director shall be indemnified by the Corporation against all
Expenses actually incurred by Director or on Director's behalf in connection
therewith.
6. Advance of Expenses.
(a) Before final adjudication of a Covered Matter, upon
Director's request pursuant to paragraph 3 above, Corporation will promptly
either advance Expenses directly or reimburse Director for all Expenses. As used
in this Agreement, "Expenses" means all costs and expenses (including attorneys'
fees, expert fees, other professional fees and court costs) incurred by Director
in connection with a Covered Matter other than judgments, penalties, fines and
settlement amounts.
(b) Expenses incurred by Director in defending a civil or
criminal proceeding may be paid by Corporation in advance of the final
disposition of such proceeding, only upon receipt of an undertaking by or on
behalf of Director to repay such amount if Director is ultimately found by the
court not to be entitled to indemnification by Corporation.
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7. Defense of Claim.
(a) Except as provided in paragraph 7(c) below, Corporation,
jointly with any other indemnifying party, will be entitled to assume the
defense of any Covered Matter as to which Director requests indemnification.
(b) Counsel selected by Corporation to defend any Covered
Matter will be subject to Director's advance written approval, which will not be
unreasonably withheld.
(c) Director may employ Director's own counsel in a Covered
Matter and be fully reimbursed therefor if (1) Corporation approves, in writing,
the employment of such counsel or (2) either (A) Director has reasonably
concluded that there may be a conflict of interest between Corporation and
Director or between Director and other parties represented by counsel employed
by Corporation to represent Director in such action or (B) Corporation has not
employed counsel reasonably satisfactory to Director to assume the defense of
such Covered Matter promptly after Director's request.
(d) Neither Corporation nor Director will settle any Covered
Matter without the other's written consent, which will not be unreasonably
withheld.
(e) If Director is required to testify (in court proceedings,
depositions, informal interviews or otherwise), consult with counsel, furnish
documents or take any other reasonable action in connection with a Covered
Matter, Corporation will pay Director a fee for Director's efforts at a rate
equal to the amount payable to Director for attending Board and Board committee
meetings, plus reimbursement for all reasonable expenses incurred by Director in
connection therewith.
8. Disputes; Enforcement.
(a) If there is a dispute relating to the validity or
enforceability of this Agreement or a denial of indemnification, Advance of
Expenses or payment of any other amounts due under this Agreement or
Corporation's Certificate of Incorporation or Bylaws, Corporation will provide
such indemnification, Advance of Expenses or other payment until a final,
non-appealable judgment that Director is not entitled to such indemnification,
Advance of Expenses or other payment has been rendered by the court of last
resort (or by a lower court if not timely appealed). Director will repay such
amounts if such final, non-appealable judgment so requires.
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(b) Corporation will reimburse all of Director's reasonable
expenses (including attorneys' fees) in pursuing an action to enforce Director's
rights under this Agreement unless a final, non-appealable judgment against
Director has been rendered in such action by the court of last resort (or by a
lower court if not timely appealed). At Director's request, such expenses will
be advanced by Corporation to Director as incurred before final resolution of
such action by the court of last resort; such expenses will be repaid by
Director if a final, non-appealable judgment in Corporation's favor is rendered
in such action by the court of last resort (or by a lower court if not timely
appealed).
9. D&O Insurance.
(a) Subject to the provisions of paragraph 9(b) below, to the
extent is reasonably practical in the sole judgment of the Board of Directors,
the Corporation will maintain D&O Insurance in such amount as its Board of
Directors determines appropriate, insuring Director against any liability
arising out of Director's status as a director of Corporation, regardless of
whether Corporation has the power to indemnify Director against such liability
under applicable law.
(b) Corporation will not be required to purchase or maintain
D&O Insurance if the Board of Directors of Corporation determines, after
diligent inquiry, that (1) such insurance is not available; or (2) the premiums
for available insurance are disproportionate to the amount of coverage and to
the premiums paid by other corporations similarly situated. The Board of
Directors of Corporation will, at least annually, in good faith review its
decision with respect to the maintenance of D&O Insurance and will purchase such
insurance at any time that the conditions of the first sentence of this
paragraph 9(b) do not apply. In the event Corporation determines not to
purchase, renew or replace its D&O Insurance, it will as soon as practicable
provide written notice of such determination to Director; specifying the date
and time any in force D&O Insurance will expire.
(c) The parties will cooperate to obtain advances of Expenses,
indemnification payments and consents from D&O Insurance carriers in any Covered
Matter to the full extent of applicable D&O Insurance. The existence of D&O
Insurance coverage will not diminish or limit Corporation's obligation to make
indemnification payments to Director. Amounts paid directly to Director with
respect to a Covered Matter by Corporation's D&O Insurance carriers will be
credited to the amounts payable by Corporation to Director under this Agreement.
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10. Limitations of Actions; Limitation of Liability. No action will be
brought by or on behalf of Corporation against Director or Director's heirs or
personal representatives relating to Director's service as a director, after the
expiration of one year from the date Director ceases (for any reason) to serve
as a Director of Corporation, and any claim or cause of action of Corporation
will be extinguished and deemed released unless asserted by the filing of a
legal action before the expiration of such period.
11. Rights Not Exclusive. The indemnification provided to Director
under this Agreement will be in addition to any indemnification provided to
Director by any law, agreement, Board resolution, provision of the Certificate
of Incorporation or Bylaws of Corporation or otherwise.
12. Subrogation. Upon payment of any Indemnified Amount under this
Agreement, Corporation will be subrogated to the extent of such payment to all
of Director's rights of recovery therefor and Director will take all reasonable
actions requested by Corporation (at no cost or penalty to Director) to secure
Corporation's rights under this paragraph 12 including executing documents.
13. Continuation of Indemnity. All of Corporation's obligations under
this Agreement will continue as long as Director is subject to any actual or
possible Covered Matter, notwithstanding Director's termination of service as a
director.
14. Amendments. Neither Corporation's Certificate of Incorporation nor
its Bylaws will be changed to increase liability of directors or to limit
Director's indemnification. Any repeal or modification of Corporation's
Certificate of Incorporation or Bylaws or any repeal or modification of the
relevant provisions of any applicable law will not in any way diminish any of
Director's rights or Corporation's obligations under this Agreement. This
Agreement cannot be amended except with the written consent of Corporation and
Director.
15. Governing Law. This Agreement will be governed by Delaware law.
16. Duration; Successors.
(a) This Agreement shall apply to any claim asserted and any
Expenses incurred in connection with any claim asserted on or after the
effective date of this Agreement and shall continue until and terminate upon the
later of: (a) 10 years after Director has ceased to occupy any of the positions
or have any of the relationships described in Section 2(a) of this Agreement, or
(b) one year after the final termination of all Proceedings of the kind
described herein with respect to Director which are pending or threatened as of
the date this Agreement would otherwise terminate. This Agreement will be
binding upon and inure to the benefit of the parties and their respective heirs,
legal representatives and assigns.
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(b) Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation to assume all of
Corporation's obligations under this Agreement. Such assumption will not release
Corporation from its obligations under this Agreement.
17. Severability. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If any
provision of this Agreement is held illegal, void or invalid in its entirety,
the remaining provisions of this Agreement will not in any way be affected or
impaired but will remain binding in accordance with their terms.
18. Notices. All notices given under this Agreement will be in writing
and delivered either personally, by registered or certified mail (return receipt
requested, postage prepaid), by recognized overnight courier or by telecopy (if
promptly followed by a copy delivered personally, by registered or certified
mail or overnight courier), as follows:
If to Director: ________________
________________
________________
If to Corporation: 0000 X. Xxxxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx, C.E.O.
or to such other address as either party furnishes to the other in writing.
19. Counterparts. This Agreement may be signed in counterpart.
20. Subsidiaries. As used in this Agreement, the term "Subsidiary"
means any corporation in which Corporation owns a majority interest.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date written above.
Westmark Group Holdings, Inc., a Delaware
corporation,
By:_________________________________________
Authorized Signatory
____________________________________________
_______________________, Director
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