INDEMNIFICATION AGREEMENT
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Exhibit
10.1
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THIS
INDEMNIFICATION AGREEMENT (the "Agreement") is entered into effective as of
, 2010, (the "Effective Date"), between Banner Corporation, a Washington
corporation (the "Company"), and
, a director of the Company ("Indemnitee").
R E C I T
A L S
A. Indemnitee
is a director of the Company and in such capacity is performing valuable
services for the Company.
B. The
Company recognizes that competent and experienced persons are increasingly
reluctant to serve or to continue to serve as directors of corporations unless
they are protected from financial exposure resulting from their service to such
corporations, and due to the fact that the risk of such exposure frequently
bears no reasonable relationship to the compensation of such
directors.
C. The
Board of Directors (the "Board") has determined that the protections set forth
herein are not only reasonable and prudent but also promote the best interests
of the Company and its shareholders.
D. The
Company desires and has requested Indemnitee to serve or continue to serve as a
director of the Company free from undue concern for unwarranted claims for
damages arising out of or related to such services to the Company.
E. Indemnitee
is not willing to serve, continue to serve or to provide additional service for
or on behalf of the Company unless Indemnitee is furnished the protections
provided for herein.
NOW,
THEREFORE, in consideration of the recitals above, the mutual covenants and
agreements set forth in this Agreement, and Indemnitee's service as a director
both before and after the date hereof, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and Indemnitee, intending to be legally bound, hereby agree as
follows:
1.
INDEMNIFICATION
1.1 SCOPE. The
Company agrees to and shall hold harmless and indemnify Indemnitee to the full
extent permitted by law against any Damages (as defined in Section 1.3) incurred
by Indemnitee with respect to any Proceeding (as defined in Section 1.4) to
which Indemnitee is or is threatened to be made a party or witness,
notwithstanding that such indemnification is not specifically authorized by this
Agreement, the Company's Articles of Incorporation (the "Articles") or the
Company's Bylaws (the "Bylaws"), the Washington Business Corporation Act (the
"Act") or otherwise. Such right to indemnification shall be
subject
to the limitations on, and conditions for, indemnification found (a) in the Act
as of the date of this Agreement and (b) elsewhere in this Agreement, including,
but not limited to, Sections 6.1 and 6.2 hereof. In the event of any
change, after the date of this Agreement, in any applicable law, statute or rule
issued pursuant to such law or statute regarding the right of the Company to
indemnify Indemnitee, such changes, to the extent that they would expand
Indemnitee's rights hereunder, shall be within the scope of Indemnitee's rights
and the Company's obligations hereunder, and, to the extent that they would
narrow Indemnitee's rights hereunder, shall be excluded from this Agreement;
provided, however, that any change that is found in a final judgment, not
subject to appeal, by a court of proper jurisdiction to be required by
applicable laws, statutes or rules issued pursuant to such law or statute to be
applied to this Agreement shall be so applied regardless of whether the effect
of such change is to narrow Indemnitee's rights hereunder.
1.2 NONEXCLUSIVITY. The
indemnification provided by this Agreement shall not be deemed exclusive of any
rights to which Indemnitee may be entitled (and any failure to qualify for
indemnification under this Agreement shall not be determinative of any such
rights) under the Company's Articles, the Company's Bylaws, any vote of or
resolution adopted by shareholders or disinterested directors, the Act or
otherwise, whether as to actions or omissions by Indemnitee in Indemnitee's
official capacity or otherwise.
1.3 INCLUDED
COVERAGE. If Indemnitee is made a party (or is threatened to be made
a party) to, or is otherwise involved (including, but not limited to, as a
witness) in any Proceeding, the Company shall hold harmless and indemnify
Indemnitee from and against any and all losses, claims, damages and liabilities
incurred in connection with such Proceeding, including but not limited to
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, amounts paid
in settlement and any other related expenses (collectively,
"Damages").
1.4 DEFINITION
OF PROCEEDING. For purposes of this Agreement, "Proceeding" shall
mean any actual, pending, threatened or completed investigation, mediation,
arbitration, action, suit, claim or other proceeding (whether civil, criminal,
administrative, regulatory or investigative and whether formal or informal) in
which Indemnitee is, has been or becomes involved by reason of the fact that
Indemnitee is or was at any time before on or after the Effective Date of this
Agreement, a director of the Company or that, being or having been such a
director, Indemnitee is or was serving by appointment or election by the Board,
or otherwise at the request of the Company, as a director, officer, employee,
trustee or agent of the Company or of another corporation or of a partnership,
joint venture, trust or other enterprise (collectively, a "Related Company"),
including but not limited to service with respect to any employee benefit plan,
whether the basis of such investigation, action, suit,
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claim or
proceeding is alleged action or omission by Indemnitee in an official capacity
as a director, officer, employee, trustee or agent or in any other capacity
while serving as a director, officer, employee, trustee or agent; provided,
however, that, except with respect to an action to enforce this Agreement,
"Proceeding" shall not include any investigation, mediation, arbitration,
action, suit, claim or other proceeding instituted by or at the direction of
Indemnitee unless such investigation, mediation, arbitration, action, suit,
claim or other proceeding is or was authorized by the Board.
1.5 NOTIFICATION. As
promptly as reasonably practicable 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 Company under this Agreement, notify the Company of
the commencement thereof; provided, however, that failure to so notify the
Company will relieve the Company from any liability that it may otherwise have
to Indemnitee under this Agreement only if, and then solely to the extent that,
such failure can be shown to have materially prejudiced the Company's ability to
defend the Proceeding.
1.6 DETERMINATION
OF ENTITLEMENT. If a determination of Indemnitee's entitlement to
indemnification is required pursuant to applicable law, (a) Indemnitee shall
initially be presumed in all cases to be entitled to indemnification, and (b)
unless the Company shall deliver to Indemnitee written notice of a determination
that Indemnitee may not be entitled to indemnification within thirty (30) days
after the Company's receipt of Indemnitee's notice pursuant to Section 1.5,
Indemnitee shall conclusively be deemed to be entitled to such indemnification
and the Company hereby agrees not to assert otherwise. Indemnitee may
establish a conclusive presumption of any fact necessary to such a determination
by delivering to the Company a declaration made under penalty of perjury that
such fact is true.
1.7 PRESUMPTION
AND EFFECT OF CERTAIN PROCEEDINGS.
A. The
Company shall have the burden of proof to overcome the presumption that
Indemnitee is entitled to the protections provided for herein.
B. The
settlement or termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's
conduct was lawful.
1.8 SURVIVAL. The
indemnification and release provided under this Agreement shall apply to any and
all Proceedings, notwithstanding that Indemnitee has ceased to be a director,
officer, employee, trustee or agent of the Company or a Related
Company.
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2.
ADVANCEMENT OF EXPENSES
2.1 GENERALLY. The
protections provided for herein shall include the right to have the Company pay
Indemnitee's attorneys' fees and other 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").
2.2 CONDITIONS
TO EXPENSE ADVANCE. The Company's obligation to provide an Expense
Advance is subject to the following conditions:
A. UNDERTAKING. Indemnitee
or Indemnitee's representative shall have executed and delivered to the Company
an undertaking, which need not be secured 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 decision not subject to appeal rendered by
a court having proper jurisdiction, that Indemnitee is not entitled to be
indemnified for such Expense Advance under this Agreement or
otherwise.
B. AFFIRMATION. If
required under applicable law, Indemnitee shall furnish a written affirmation of
Indemnitee's good faith belief that Indemnitee has met all applicable standards
of conduct.
3.
PROCEDURES
3.1 ENFORCEMENT. If
a claim for indemnification made by Indemnitee hereunder is not paid in full
within thirty (30) days, or a claim for an Expense Advance made by Indemnitee
hereunder is not paid in full within thirty (30) days, after written notice of
such claim is delivered to the Company, the parties agree Indemnitee's remedy at
law will be inadequate and therefore in addition to any other right or remedy
Indemnitee may have at law or in equity with respect to breach of this
Agreement, Indemnitee shall be entitled to injunctive or mandatory relief
directing specific performance by the Company of its obligations under this
Agreement (any such action at law, in equity or for injunctive or mandatory
relief, an "Enforcement Action").
3.2 PRESUMPTIONS. The
following presumptions (and limitations on presumptions) shall apply
hereunder:
A. The
failure of the Company (including but not limited to the Board, independent or
special legal counsel or the Company's shareholders) to make a determination
prior to the commencement of an Enforcement Action that indemnification of
Indemnitee is proper in the circumstances shall not be a defense to the
Enforcement Action or create a presumption that Indemnitee is not entitled to
indemnification hereunder; and
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B. If
Indemnitee is or was serving (i) 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 or controlled by the Company or in which the
Company has otherwise made an investment, or (ii) in an executive or management
capacity in a partnership, joint venture, trust or other enterprise of which the
Company or a majority-owned subsidiary of the Company is a general partner or
has a majority ownership or control position or in which the Company has
otherwise made an investment, 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 Company for all purposes hereunder.
3.3 ATTORNEYS'
FEES AND EXPENSES FOR ENFORCEMENT ACTION. If Indemnitee is required
to bring an Enforcement Action, the Company shall pay, hold harmless and
indemnify Indemnitee against all of Indemnitee's attorneys' fees and expenses in
bringing and pursuing the Enforcement Action (including but not limited to
attorneys' fees at any stage of the Enforcement Action, and on any appeal of
such Enforcement Action).
4. DEFENSE
OF CLAIM
With
respect to any Proceeding as to which Indemnitee has provided notice to the
Company pursuant to Section 1.5:
4.1 The
Company may participate therein at its own expense.
4.2 If:
(a) the Company agrees, in writing, to provide the Indemnitee with all of the
protections provided for herein with respect to the Proceeding; (b) the Company
is able to demonstrate, to Indemnitee's reasonable satisfaction, that it is
financially capable of providing Indemnitee with all of the protections provided
for herein; (c) the Company retains counsel reasonably satisfactory to
Indemnitee; and (d) there exists no material conflict of interest between the
Indemnitee and any of the other parties to the Proceeding, then the Company,
jointly with any other indemnifying party similarly notified, may assume the
defense of the Proceeding for as long as the conditions in this sentence remain
fulfilled. After notice from the Company to Indemnitee of its
election to so assume the defense thereof, the Company shall not be liable to
Indemnitee under this Agreement for any legal fees or other expenses (other than
reasonable costs of investigation) subsequently incurred by Indemnitee in
connection with the defense thereof.
4.3 The
Company shall not be liable for any amounts paid in settlement of any Proceeding
effected without its prior written consent, which consent shall not be
unreasonably withheld.
4.4 The
Company shall not settle any Proceeding in any manner which would impose any
penalty, costs or Damages on Indemnitee without Indemnitee's prior written
consent.
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4.5 The
Company shall make reasonable efforts to ensure that the terms of any settlement
of any Proceeding to which Indemnitee is a party shall be subject to
confidentiality obligations and that any such settlement does not admit
Indemnitee's culpability with respect to the subject matter of the Proceeding
without Indemnitee's prior written consent.
5. DIRECTORS
AND OFFICERS INSURANCE
5.1 To
the extent that the Company maintains a policy or policies of insurance for
directors and officers, employees, or agents or fiduciaries of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise which such person serves at the request of the Company
("D&O Insurance"), Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. For so long as Indemnitee is a director or officer of the
Company, the Company shall use commercially reasonable efforts, as determined by
a majority of the members of the Board, to maintain in effect D&O Insurance
containing substantially the same terms and conditions as the D&O Insurance
in effect at the time this Agreement is executed and delivered. If
such D&O Insurance is to be cancelled without being replaced, or the amount
of coverage is to be reduced, or the deductible amount increased, then the
Company shall provide Indemnitee written notice of such change at least 10 days
prior to the effectiveness of such change.
5.2 Notwithstanding
the foregoing or anything else contained in this Agreement, if any person or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) acquires the legal right to elect a majority of the Board in a
transaction or series of transactions that has not received the prior approval
of the Board, the Company or its successor, as the case may be, shall, for a
period of two years following the date that such legal right is acquired (the
"Trigger Date"), maintain all D&O Insurance in effect prior to the Trigger
Date that covers Indemnitee.
5.3 In
the event of any payment under this Agreement by the Company, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall reasonably cooperate in the Company's action to secure
such rights, including executing such documents as are reasonably necessary to
enable the Company to bring suit to enforce such rights.
5.4 The
Company shall not be liable under this Agreement to make any payment of amounts
otherwise payable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under any insurance policy, contract, agreement
or otherwise.
6. LIMITATION
ON INDEMNIFICATION; MUTUAL ACKNOWLEDGMENT
6.1 No
indemnification pursuant to this Agreement shall be provided by the Company on
account of any suit in which a final, unappealable judgment for which there is
no further right
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of appeal
is rendered by a court having proper jurisdiction against Indemnitee for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company in violation of the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto.
6.2 Notwithstanding
any other provision contained in this Agreement, the provisions of this
Agreement are subject to the requirements, limitations and conditions set forth
in state and federal laws, rules, regulations, or orders regarding
indemnification, defense of claims and prepayment of legal fees and expenses,
including, but not limited to, Section 18(k) of the Federal Deposit Insurance
Act and Part 359 of the Federal Deposit Insurance Corporation's Rules and
Regulations or any successor regulations thereto.
7. SEVERABILITY
Any term
or provision of this Agreement which is declared invalid or unenforceable by a
court of competent jurisdiction in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
8. GOVERNING
LAW; BINDING EFFECT; ASSUMPTION BY SUCCESSORS; AMENDMENT AND
TERMINATION
8.1 This
Agreement shall be interpreted and enforced in accordance with the laws of the
State of Washington.
8.2 This
Agreement shall be binding upon Indemnitee and upon the Company, its successors
and assigns, and shall inure to the benefit of Indemnitee, his or her spouse and
marital community, Indemnitee's heirs, personal representatives and assigns and
to the benefit of the Company, its successors and assigns.
8.3 In
the event the Company or any successor (i) consolidates with or merges into any
other person or entity and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) liquidates, dissolves or
transfers all or substantially all of its assets to any person or entity, then,
and in each case, proper provisions shall be made so that the successors of the
Company assume the obligations set forth in this Agreement.
8.4 No
amendment, modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both parties hereto.
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8.5 No
amendment, modification, repeal, termination or replacement of any part or all
of the Company's Bylaws or Articles shall operate in any way to limit
Indemnitee's rights under this Agreement.
8.6 Nothing
in this Agreement shall confer upon Indemnitee the right to continue to serve as
a director and/or officer of the Company. If Indemnitee is an officer
of the Company, then, unless otherwise expressly provided in a written
employment agreement between the Company and Indemnitee, the employment of
Indemnitee with the Company shall be terminable at will by either
party.
8.7 Nothing
in this Agreement is intended to require or shall be construed as requiring the
Company to take or fail to take any action in violation of applicable
law. The Company's inability to perform its obligations under this
Agreement pursuant to an unappealable judgment rendered by a court having proper
jurisdiction shall not constitute a breach of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the day and year first set forth above.
BANNER
CORPORATION
By: _______________________________________
Its __________________________________
INDEMNITEE
________________________________________
[SIGNATURE
PAGE TO INDEMNIFICATION AGREEMENT]
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