EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this __ day of
_________, 1999 by and between ISB Financial Corporation, a Louisiana
corporation ("ISB"), and (the "Indemnitee").
WHEREAS, ISB and the Indemnitee recognize the volatility in the market for
directors' and officers' liability insurance, the lack of certainty as to the
availability and scope of such insurance at any given time, and the fluctuating
cost of such insurance;
WHEREAS, ISB and the Indemnitee further recognize the substantial increase
in corporate litigation in general, which has subjected officers to a greater
risk of expensive litigation;
WHEREAS, the Indemnitee does not regard the current protection available as
adequate under the present circumstances; and
WHEREAS, ISB desires to indemnify the Indemnitee individually so as to
provide him maximum protection permitted by law.
NOW, THEREFORE, ISB and the Indemnitee hereby agree as follows:
1. Definitions. The following terms shall have the indicated meanings:
(a) A "Change in Control" shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of ISB, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of ISB representing 25% or more of the total voting
power represented by ISB's then outstanding Voting Securities, or (ii) during
any 24-consecutive-month-period, individuals who at the beginning of such period
constitute the Board of Directors of ISB and any new directors whose election by
the Board of Directors or nomination for election by ISB's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of ISB
approve a merger or consolidation of ISB with any other corporation, other than
a merger or consolidation which would result in the Voting Securities of ISB
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of" the
surviving entity) at least 80% of the total power represented by the Voting
Securities of ISB or such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the stockholders of ISB approve a plan of
complete liquidation of ISB or an agreement for the sale or disposition by ISB
(in one transaction or a series of transactions) of all or substantially all
ISB's assets.
(b) "Disinterested Director" shall mean a director of ISB qualified and in
good standing who is not a party, or an officer, employee, significant
shareholder or owner, or member of the
immediate family of any party, other than the Batik or its subsidiaries or
affiliates, to the Proceeding for which indemnification hereunder is being
sought.
(c) "Expenses" include, without limitation, (i) an amount for which the
Indemnitee becomes liable in a judgment in a Proceeding (include without
limitation, all judgments, fines, excise taxes assessed with respect to an
employee benefit plan, court costs), (ii) amounts paid in Settlement of a
Proceeding, (iii) reasonable attorney's fees actually paid or incurred by the
Indemnitee in connection with a Proceeding, and (iv) if the Indemnitee commences
any action or other proceeding to enforcing the Indemnitee's rights under this
Agreement, or under the Charter or Bylaws of ISB, and obtains a favorable
judgment therein, the Indemnitee's reasonable attorney's fees, costs and other
expenses actually paid or incurred in connection therewith.
(d) "Final Judgment" means a judgment, decree or order which is not
appealable or as to which the period for appeal has expired with no appeal
taken.
(e) "Independent Legal Counsel" shall mean an attorney, selected in
accordance with the provisions of Section 8 hereof, who shall not have otherwise
performed services for ISB or the Indemnitee within the last five years (other
than in connection with seeking indemnification under this Agreement).
Independent Legal Counsel shall not be any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either ISB or the Indemnitee in an action to determine
the Indemnitee's rights under this Agreement, nor shall Independent Legal
Counsel be any person who has been sanctioned or censured for ethical violations
of applicable standards of professional conduct.
(f) A "Potential Change in Control" shall be deemed to have occurred if (i)
ISB enters into an agreement or arrangement, the consummation of which would
result in the occurrence of a Change in Control; (ii) any person (including ISB)
publicly announces an intention to take or to consider taking actions that if
consummated would constitute a Change in Control; or (iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(g) "Proceeding" means any judicial or administrative proceeding, or other
proceeding, whether civil, criminal, administrative or otherwise, including any
appeal or other proceeding for review, as a result of or in connection with any
action or inaction on the part of the Indemnitee while the Indemnitee is or was
an officer of ISB or of a subsidiary of ISB or while the Indemnitee is or was
serving at the request of ISB as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise or as
a trustee, administrator or committee member of any employee benefit plan
established and maintained by ISB or by a subsidiary of ISB, to which the
Indemnitee is or was a party or target or is threatened to be made a party or
target. Without limitation of any indemnification provided hereunder, an
Indemnitee serving (i) another corporation, partnership, joint venture or trust
of which 20% or more of the voting power or residual economic interest is held,
directly or indirectly, by ISB, or (ii) any employee benefit plan of ISB or any
entity referred to in clause (i), in any capacity shall be deemed to be doing so
at the request of ISB.
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(h) "Settlement" shall mean any agreement or action by which a Proceeding
or other action is terminated or a complaint withdrawn before final judgment on
the merits, and shall include, without limitation, a judgment by consent or
confession or plea of guilty or nolo contendere.
(i) "Voting Securities" shall mean any securities of ISB that vote
generally in the election of directors.
2. Indemnification.
(a) Indemnification. ISB shall indemnify, and advance Expenses (as
hereinafter defined) to, Indemnitee (a) as provided in this Agreement and (b) to
the fullest extent permitted by applicable law in effect on the date hereof and
as amended from time to time. The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement. Subject to the limitations and
exceptions set forth herein, ISB shall indemnify the Indemnitee for Expenses
incurred in connection with any and all Proceedings to which the Indemnitee is a
party or a witness; provided, however, that the facts giving rise to the
Proceedings were disclosed to the Chairman or the Executive Committee of the
Board of Directors prior to the initiation of the Proceedings.
(b) No Presumptions Created: Defenses. The termination of any Proceeding by
Final Judgment or Settlement shall not, of itself, create a presumption that the
Indemnitee did not act in good faith in the reasonable belief that the
Indemnitee's action was in the best interests of the Bank. ISB's inability,
pursuant to law, regulation, or order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. It shall be a defense
to any action by the Indemnitee for indemnification under this Agreement that
the Indemnitee has not met the standards of conduct which make it permissible
under applicable law for ISB to indemnify the Indemnitee for the amount claimed
or that ISB is prohibited by law, regulation, or order from paying such amount,
but the burden of proving such defense shall be on ISB except as may otherwise
be required by applicable law or regulation.
(c) ISB Duty to Act. ISB shall act diligently, promptly, in good faith, and
at its own expense with respect to requests for indemnification hereunder.
(d) Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by ISB for some or a portion of
any Expenses incurred by the Indemnitee in connection with a Proceeding, but
not, however, for the total amount thereof, ISB shall nevertheless indemnify the
Indemnitee for the portion of such Expenses to which the Indemnitee is entitled.
3. Expenses: Indemnification Procedure.
(a) Notice/Cooperation by the Indemnitee. The Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
ISB notice in writing as soon as practicable of any claim made against the
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to ISB shall be directed to the Corporate Secretary of ISB, at
0000 Xxxx Xxxxxxx Xxxxx Xxxxx, Xxx Xxxxxx, Xxxxxxxxx 00000, or such other
address as ISB shall designate in writing to the Indemnitee. In addition, the
Indemnitee shall give ISB such
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information and cooperation as it may reasonably require and as shall be within
the Indemnitee's power.
(b) Claims. Claims for indemnification must be made in writing and be
accompanied by evidence that the Expense for which indemnification is claimed
hereunder has been paid or incurred by the Indemnitee.
(c) Payment Procedure for Indemnification. Any indemnification provided for
hereunder shall be paid no later than thirty (30) days after receipt of the
written request of Indemnitee. If a claim under this Agreement, under any
statute, or under any provision of ISB's Charter or Bylaws providing for
indemnification is not paid 'in full by ISB within thirty (30) days after a
written request for payment thereof has first been received by ISB, the
Indemnitee may, but need not, at any time thereafter bring an action against ISB
to recover the unpaid amount of the claim and be entitled to indemnification in
accordance herewith with respect to such action.
(d) Procedure for Advance Payment of Expenses. Any provision to the
contrary herein notwithstanding, ISB shall make payment of Expenses incurred by
the Indemnitee, in advance of the final disposition of a Proceeding, to the
Indemnitee within five (5) business days after receipt of the Indemnitee's
written request therefor, which must include the Indemnitee's undertaking to
repay such payment if the Indemnitee shall be adjudicated to be not entitled to
indemnification under Louisiana law. ISB shall accept such undertaking by the
Indemnitee without reference to the Indemnitee's ability to make such repayment.
(e) Advance Payment of Expenses in Claims Initiated by the Indemnitee.
Within five (5) business days of receipt of a written request from the
Indemnitee, ISB shall make payment to the Indemnitee of Expenses incurred by the
Indemnitee in connection with any action brought by the Indemnitee for (i)
indemnification or advance payment of Expenses by ISB under this Agreement or
any other agreement or the Charter or Bylaws of ISB now or hereafter in effect
relating to a Proceeding, in which case the Indemnitee's written request must
include the Indemnitee's undertaking to repay such payment if the Indemnitee
shall be adjudicated to be not entitled to indemnification under Louisiana law;
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by ISB, regardless of whether the Indemnitee ultimately is
determined to be entitled to such insurance recovery.
4. Limitations and Exceptions. The limitations and exceptions set forth in this
Section 4 are effective notwithstanding any other provision of this Agreement to
the contrary.
(a) Excluded Acts. The Indemnitee will not be indemnified hereunder for any
acts or omissions or transactions from which a director or officer, as the case
may be, may not be indemnified under the laws of the State of Louisiana.
(b) Proceedings or in the Right of ISB. No indemnification shall be made
hereunder of Expenses for which the Indemnitee is adjudged in a Proceeding to be
liable to ISB in the performance the Indemnitee's duty to ISB and its
shareholders unless, and only to the extent that court in which such Proceeding
is or was pending determines that, in view of all the circumstances of the case,
the Indemnitee is fairly and reasonably entitled to indemnity for Expenses and
then only to the extent that the court shall determine.
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(c) Claims Initiated by the Indemnitee. ISB is not required hereunder to
indemnify or advance Expenses to the Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to (i) actions brought to establish or enforce a
right to indemnification under this Agreement or any other agreement or the
Charter or Bylaws of ISB now or hereafter in effect relating to a Proceeding;
and (ii) actions for recovery under any directors' and officers' liability
insurance policies maintained by ISB, regardless of whether the Indemnitee
ultimately is determined to be entitled to such advance expense payment or
insurance recovery.
(d) No Duplication of Payments. ISB is not required hereunder to indemnify
the Indemnitee for Expenses which have been paid directly to the Indemnitee by
ISB under its Charter or Bylaws or by an insurance carrier under a policy of
directors' and officers' liability insurance.
5. Attorneys.
(a) Selection of Counsel. In the event ISB shall be obligated under Section
2 hereof to pay the Expenses of any Proceeding against the Indemnitee, ISB, if
appropriate, shall be entitled to assume the defense of such Proceeding 'with
counsel approved by the Indemnitee, which approval shall not be unreasonably
withheld, upon the delivery to the Indemnitee of written notice of its election
so to do. After delivery of such notice, approval of such counsel by the
Indemnitee and the retention of such counsel by ISB, ISB shall not be liable to
the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same Proceeding, provided that
(i) the Indemnitee shall have the right to employ its counsel in any such
Proceeding at the Indemnitee's expense; and (ii) if (A) the employment of
counsel by the Indemnitee has been previously authorized by ISB, (B) the
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between ISB and the Indemnitee in the conduct of any such defense, or
(C) ISB shall not, in fact, have employed counsel to assume the defense of such
Proceeding, then the fees and expenses of the Indemnitee's counsel shall be at
the expense of ISB.
(b) Attorney's Fees. In the event the Indemnitee commences any action or
other proceeding to enforce the Indemnitee's rights under this Agreement, or
under the Charter or Bylaws of ISB, and obtains a favorable judgment therein,
ISB shall indemnify the Indemnitee for the Indemnitee's Expenses incurred in
connection therewith. In the event of an action instituted by or in the name of
ISB under this Agreement or to enforce or interpret any of the terms of this
Agreement, the Indemnitee shall be entitled to be paid all Expenses incurred by
the Indemnitee in defense of such action (including with respect to the
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that each of the Indemnitee's material
defenses to such action were made in bad faith or were frivolous.
6. Directors' and Officers' Liability Insurance.
(a) Maintenance of Insurance. ISB has the power to purchase and maintain
insurance on behalf of any person who is or was a director or officer of ISB
against any liability incurred by such person in such capacity, whether or not
ISB would have the power to indemnify such person against such liability. From
time to time, ISB shall make the good faith determination
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whether or not it is practicable for ISB to obtain and maintain a policy or
policies of insurance with reputable insurance companies providing the officers
and the directors of ISB with coverage for losses from wrongful acts, or to
ensure ISB's performance of its indemnification obligations under this
Agreement. Among other considerations, ISB will weigh the costs of obtaining
such insurance against the protection afforded by such coverage. In all policies
of directors' and officers' liability insurance, the 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 ISB directors or
officers, as the case may be. Notwithstanding the foregoing, ISB shall have no
obligation to obtain or maintain such insurance if ISB determines in good faith
that such insurance is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if the Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of ISB.
(b) Notice to Insurers. If, at the time of the receipt of a notice of a
claim hereunder, ISB has directors' and officers' liability insurance in effect,
ISB shall give prompt notice of the commencement of such Proceeding to the
insurers in accordance with the procedures set forth in the respective policies.
ISB shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of
such Proceeding in accordance with the terms of such policies.
7. Nonexclusivity. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which the Indemnitee may be entitled under
ISB's Charter, its Bylaws, any agreement, any vote of shareholders or
disinterested directors, or otherwise, as to action in the Indemnitee's official
capacity and as to liability alleged to result from holding such office.
8. Change in Control. ISB agrees that if there is a Change in Control of ISB
(other than a Change in Control that has been approved by a majority of ISB's
Board of Directors who were directors immediately prior to such Change in
Control), then Independent Legal Counsel shall be selected by the Indemnitee and
approved by ISB (which approval shall not be unreasonably withheld) and such
Independent Legal Counsel shall determine whether the Indemnitee is entitled to
indemnity payments and advances of Expenses under this Agreement or any other
agreement or the Charter or Bylaws of ISB now or hereafter in effect in
connection with any Proceeding. Such Independent Legal Counsel, among other
things, shall render its written opinion to ISB and the Indemnitee as to whether
and to what extent the Indemnitee will be permitted to be indemnified. ISB
agrees to pay the reasonable fees of the Independent Legal Counsel and to
indemnify fully such Independent Legal Counsel against any and all expenses
(including attorneys' fees) claims, liabilities and damages arising out of or
relating to this Agreement or the engagement of Independent Legal Counsel
pursuant hereto.
9. Potential Change in Control, Establishment of Trust. In the event of a
Potential Change in Control, ISB shall, upon written request by the Indemnitee,
create a trust for the benefit of the Indemnitee and from time to time upon
written request of the Indemnitee shall fund such trust in an amount sufficient
to satisfy any and all Expenses reasonably anticipated at the time of each such
request to be incurred in connection with a Proceeding and any and all
judgments, fines, penalties and settlement amounts in connection with a
Proceeding from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid, plus reasonable fees to the trustee
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and coverage of the trustee's expenses in connection with his, her, or its
duties under the trust. The amount or amounts to be deposited in the trust
pursuant to the foregoing funding obligation shall be determined by a majority
of the Disinterested Directors. The terms of the trust shall provide that upon a
Change in Control (i) the trust shall not be revoked or the principal thereof
invaded, without the written consent of the Indemnitee, (ii) the trustee shall
advance, within five (5) business days of a written request by the Indemnitee,
any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the trust under the circumstances under which the Indemnitee would be
required to reimburse ISB under Section 3 hereof), (iii) the trust shall
continue to be funded by ISB in accordance with the funding obligation set forth
above, (iv) the trustee shall promptly pay to the Indemnitee all amounts for
which the Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in such trust shall revert
to ISB upon a final determination by the Independent Legal Counsel selected in
accordance with Section 8 hereof or a court of competent jurisdiction, as the
case may be, that the Indemnitee has been fully indemnified under the terms of
this Agreement. The trust shall provide for prompt payment of reasonable fees
and expenses of the trustee. The trustee shall be chosen by the Indemnitee.
Nothing in this Section 9 shall relieve ISB of any of its obligations under this
Agreement. All income earned on the assets held in the trust shall be reported
as income by ISB for federal, state, local and foreign tax purposes.
10. Effect of Merger, Consolidation or Acquisition. For purposes of this
Agreement, the term "ISB" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power or authority to indemnify its
directors, officers, employees or agents, so that if the Indemnitee is or was a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise, the Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as the Indemnitee would have with respect to
such constituent corporation if its separate existence had continued.
11. Severability. The provisions of this Agreement shall be severable as
provided in this Section 11. If this Agreement or any portion hereof: shall be
invalidated on any ground by any court of competent jurisdiction, then ISB shall
nevertheless indemnify the 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.
12. Specific Performance. The parties recognize that if any provision of this
Agreement is violated by ISB, the Indemnitee may be without an adequate remedy
at law. Accordingly, in the event of any such violation, the Indemnitee shall be
entitled, if the Indemnitee so elects, to institute proceedings, either in law
or at equity, to obtain damages, to enforce specific performance, to enjoin such
violation, or to obtain any relief or any combination of the foregoing as the
Indemnitee may elect to pursue.
13. Binding Effect; Continuation Of Indemnification. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors,
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assigns, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or
assets of ISB, spouses, heirs, and personal and legal representatives. ISB shall
require and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business and/or assets of the, Bank, by written agreement in form and
substance satisfactory to the Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that ISB would
be required to perform if no such succession had taken place. The
indemnification provided under this Agreement shall continue as to the
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though he may have ceased to serve in such capacity at the time of
any action or other covered Proceeding.
14. Changes in Applicable Law. To the extent that changes in the Louisiana law
permit greater indemnification by agreement than would be afforded currently
under this Agreement and the Charter and Bylaws of ISB, it is the intent of the
parties hereto that the Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. In the event that changes in the Louisiana
law place limitations on indemnification of directors and officers that restrict
the rights to indemnification set forth in this Agreement, any such change in
applicable law shall not alter any rights or obligations then existing with
respect to any state of facts then or theretofore existing or any action, suit
or proceeding theretofore or thereafter brought based in whole or in part upon
any such state of facts.
15. Amendments. No amendment or modification of, or supplement to, this
Agreement shall be binding unless executed in writing by both of the parties
hereto.
16. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.
17. Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by
hand and receipted for by the party addressed, on the date of such receipt, or
(ii) if mailed by domestic certified or registered mail with postage prepaid, on
the third business day after the date postmarked. The address for notice to ISB
is 1101 East Admiral Xxxxx Drive, New Iberia, Louisiana 70560 , and the address
for notice to the Indemnitee is as shown on the signature page of this
Agreement, until either is subsequently modified by written notice.
18. Choice of Law. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Louisiana as applied to
contracts between residents thereof entered into and to be performed entirely
within the State of Louisiana.
19. Titles and Headings. Titles and headings used herein are for convenience of
reference only.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE INDEMNITEE ISB FINANCIAL
_____________________________ By: __________________________
(type name)
_____________________________ Title: _________________________
(signature)
_____________________________
(address)
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