EXHIBIT 10.17
FORM OF INDEMNIFICATION
AGREEMENT WITH DIRECTORS
This Agreement is made as of the _____ day of __________, 2006, by and
between WSB FINANCIAL GROUP, INC., a Washington corporation (the "Company") and
_________________________ ("Indemnitee"), a Director of the Company.
WITNESSETH:
WHEREAS, it is essential to the Company to retain and attract as Directors
the most capable persons available; and
WHEREAS, the substantial increase in corporate litigation subjects
Directors to expensive litigation risks at the same time that the availability
of Directors' liability insurance has been severely limited; and
WHEREAS, it is now and has always been the express policy of the Company to
indemnify its Directors so as to provide them with the maximum possible
protection permitted by law; and
WHEREAS, Indemnitee does not regard the protection available under the
Company's Articles of Incorporation and Bylaws and insurance as adequate in the
present circumstances, and may not be willing to continue to serve as a Director
without adequate protection, and the Company desires Indemnitee to continue to
serve in such capacity.
NOW, THEREFORE, in consideration of the Indemnitee's continued service as a
Director of the Company, the Company and Indemnitee do hereby agree as follows:
1. Agreement to Serve. Indemnitee agrees to continue to serve as a Director
of the Company for so long as he or she is duly elected or appointed or until
such time as he or she tenders his or her resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending, or
completed action, suit, or proceeding, whether brought by or in the right of the
Company or otherwise, and whether of a civil, criminal, administrative, or
investigative nature, in which Indemnitee is or was a party or is threatened to
be made a party by reason of the fact that Indemnitee is or was a Director of
the Company (or any subsidiary of the Company), or is or was serving at the
request of the Company as a director, officer, employee, agent, or fiduciary of
another corporation, partnership, joint venture, trust, or other enterprise.
(b) The term "Expenses" shall include, without limitation, expenses of
investigation, judicial or administrative proceedings or appeals, amounts paid
in settlement by or on behalf of Indemnitee, attorneys' fees, and disbursements
and any expenses of establishing a right to indemnification under Paragraph 7 of
this Agreement, but shall not include amounts of judgments, fines, or penalties
against Indemnitee.
(c) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to any employee benefit plan; references to "serving at
the request of the Company" shall include any service as a Director, Officer,
employee or agent of the Company which imposes duties on, or involves services
by, such Director, Officer, employee, agent, or fiduciary with respect to an
employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he or she reasonably believed 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 interest of the
Company" as referred to in this Agreement.
3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Paragraph, against all
Expenses, judgments, fines, and penalties actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of any Proceeding (other
than a Proceeding by or in the right of the Company to procure a judgment in its
favor), but only if Indemnitee acted in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best interests of the
Company, and, in the case of a criminal proceeding, had no reasonable cause to
believe that his or her conduct was unlawful. The termination of any such
Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal proceeding, that Indemnitee had reasonable cause to
believe that his or her conduct was unlawful.
4. Indemnity in Proceedings By or In the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of this Paragraph,
against all Expenses actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of any Proceeding by or in the right
of the Company to procure a judgment in its favor, but only if Indemnitee acted
in good faith and in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the Company, except that no indemnification
for Expenses shall be made under this Paragraph in respect of any claim, issue,
or matter as to which Indemnitee shall have been adjudged to be liable to the
Company for negligence or misconduct in the performance of his or her duty to
the Company, unless and only to the extent that 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,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
which such court shall deem proper.
5. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise, in defense of any Proceeding, or in
defense of any claim, issue, or matter therein, Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by Indemnitee in
connection therewith.
6. Advances of Expenses. At the written request of Indemnitee, the Expenses
incurred by Indemnitee in any Proceeding shall be paid by the Company in advance
of the final disposition of such Proceeding, provided, that Indemnitee shall
undertake in writing to repay such amount to the extent that it is ultimately
determined that Indemnitee is not entitled to
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indemnification. If the Company makes an advance of expenses pursuant to this
Paragraph 6, the Company shall be subrogated to every right of recovery
Indemnitee may have against any insurance carrier from whom the Company has
purchased insurance for such purpose.
7. Right of Indemnitee to Indemnification Upon Application; Procedure Upon
Application.
(a) Any indemnification under Paragraphs 3 and 4 or advance under
Paragraph 6 shall be paid by the Company no later than 45 days after receipt of
the written request of Indemnitee, unless a determination is made within said
45-day period by (i) the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the Proceeding in respect of
which indemnification is being sought, or (2) independent legal counsel in a
written opinion (which counsel shall be appointed by a quorum of the Board of
Directors), or (3) the stockholders of the Company, that Indemnitee has not met
the relevant standards for indemnification set forth in Paragraphs 3 and 4.
(b) The right to indemnification or advancement of Expenses 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 or independent legal counsel or stockholders)
to have made a determination prior to the commencement of such action that
Indemnitee has met the applicable standard of conduct nor an actual
determination by the Company (including its Board of Directors or independent
legal counsel or stockholders) that Indemnitee has not met such standard shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct. Indemnitee's Expenses actually and
reasonably incurred in connection with successfully establishing his or her
right to indemnification or advances, in whole or in part, shall also be
indemnified by the Company.
(c) With respect to any Proceeding for which indemnification is
requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, the Company may assume the
defense thereof, with counsel satisfactory to Indemnitee. After notice from the
Company to Indemnitee of its election to assume the defense of a Proceeding, the
Company will not be liable to Indemnitee under this Agreement for any Expenses
subsequently incurred by Indemnitee in connection with the defense thereof,
other than as provided below. The Company shall not settle any Proceeding in any
manner which would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. Indemnitee shall have the right to employ counsel
in any Proceeding but the fees and expenses of such counsel incurred after
notice from the Company of its assumption of the defense of the Proceeding shall
be at the expense of Indemnitee, unless (i) the employment of counsel by
Indemnitee has been authorized by the Company, (ii) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of the defense of a Proceeding, or (iii)
the Company shall not in fact have employed counsel to assume the defense of a
Proceeding, in each of which cases the fees and expenses of Indemnitee's counsel
shall be advanced by the Company. Notwithstanding the foregoing, the Company
shall not be entitled to assume the defense of any Proceeding brought by or in
the right of the Company.
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8. Limitation on Indemnification. No payment pursuant to this Agreement
shall be made by the Company:
(a) to indemnify or advance funds to Indemnitee for Expenses with
respect to Proceedings initiated or brought voluntarily by Indemnitee and not by
way of defense, except with respect to Proceedings brought to establish or
enforce a right to indemnification under this Agreement, 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;
(b) to indemnify Indemnitee for any Expenses, judgments, fines, or
penalties sustained in any Proceeding for which payment is actually made to
Indemnitee under a valid and collectible insurance policy, except in respect of
any excess beyond the amount of payment under such insurance;
(c) to indemnify Indemnitee for any Expenses, judgments, fines or
penalties sustained in any Proceeding for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Xxxxxxxx Xxx 0000, the rules and
regulations promulgated thereunder and amendments thereto or similar provisions
of any federal, state, or local statutory law;
(d) to indemnify Indemnitee for any Expenses, judgments, fines or
penalties resulting from Indemnitee's conduct which is finally adjudged to have
been willful misconduct, knowingly fraudulent, or deliberately dishonest; or
(e) if a court of competent jurisdiction finally determines that such
payment hereunder is unlawful.
9. Indemnification Hereunder Not Exclusive. The indemnification and
advancement of Expenses provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may be entitled under the Articles of
Incorporation or the Bylaws of the Company, any agreement, any vote of
stockholders or disinterested Directors, the Revised Business Corporation Act of
the State of Washington, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. The
indemnification provided by this Agreement shall continue as to Indemnitee even
though he or she may have ceased to be a Director and shall inure to the benefit
of the heirs and personal representatives of Indemnitee.
10. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for a portion of the
Expenses, judgments, fines, or penalties actually and reasonably incurred by him
or her in any Proceeding but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
Expenses, judgments, fines, or penalties to which Indemnitee is entitled.
11. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, as long as
Indemnitee continues to serve as a Director of the Company and thereafter as
long as Indemnitee may be subject to any Proceeding, the Company, subject to
subsection (c) below, shall maintain in full
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force and effect Directors' and Officers' liability insurance ("D&O Insurance")
in reasonable amounts from established and reputable insurers.
(b) In all D&O Insurance policies, Indemnitee shall be named as an
insured in such a manner as to provide the Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's
Directors and Officers:
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the
coverage provided by such insurance is so limited by exclusions that it provides
an insufficient benefit, or Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
12. Savings Clause. If this Agreement or any portion hereof is invalidated
on any ground by any court of competent jurisdiction, the Company shall
nevertheless indemnify Indemnitee to the extent permitted by any applicable
portion of this Agreement that has not been invalidated or by any other
applicable law.
13. Notice. Indemnitee shall, as a condition precedent to his or her right
to be indemnified under this Agreement, give to the Company notice in writing as
soon as practicable of any Proceeding for which indemnity will or could be
sought under this Agreement. Notice to the Company shall be directed to WSB
Financial Group, Inc., 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Corporate Secretary (or such other address as the Company shall
designate in writing to Indemnitee). In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.
14. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be deemed to constitute one and the same
instrument.
15. Applicable Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of Washington.
16. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, ,
17. Amendments. No amendment, waiver, modification, termination, or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto. The indemnification rights afforded to Indemnitee hereby
are contract rights and may not be diminished, eliminated, or otherwise affected
by amendments to the Certificate of Incorporation or Bylaws of the Company or by
other agreements.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
COMPANY:
Attest: WSB FINANCIAL GROUP, INC.
By:
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Secretary Name:
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Title:
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INDEMNITEE:
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By:
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Name:
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Title:
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