INDEMNIFICATION AGREEMENT
THIS AGREEMENT, effective as of April 15, 1999, is between SCRIPPS
FINANCIAL CORPORATION, a California corporation (the "Company"), and
(the "Indemnitee").
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A. It is essential to the Company to attract and retain as directors and
officers the most capable persons available;
B. Indemnitee is a director or officer of the Company;
C. Both the Company and Indemnitee recognize the increased risk of litigation
and other claims being asserted against directors and officers of public
companies in today's environment;
D. Basic protection against undue risk of personal liability of directors
and officers heretofore has been provided through insurance coverage
providing reasonable protection at reasonable cost, and Indemnitee has relied
on the availability of such coverage, but as a result of substantial changes
in the marketplace for such insurance it has become increasingly difficult to
obtain such insurance on terms providing reasonable protection at reasonable
cost;
E. The Charter documents of the Company permit the Company to indemnify and
advance expenses to its directors and officers to the full extent permitted
by law and the Indemnitee has been serving and continues to serve as a
director or officer of the Company in part in reliance on such Bylaws;
F. In recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued service to the
Company in an effective manner, the increasing difficulty in obtaining
satisfactory director and officer liability insurance coverage, and
Indemnitee's reliance on the aforesaid Bylaws, and in part to provide
Indemnitee with specific contractual assurance that the protection promised
by such Bylaws will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of such Bylaws or any change in the
composition of the Company's Board of Directors), the Company wishes to
provide in this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the extent
insurance is maintained, for the continued coverage of Indemnitee under the
Company's directors' and officers' liability insurance policies; NOW,
THEREFORE, in consideration of the premises and of Indemnitee continuing to
serve the Company directly or, at its request, another enterprise, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
a. CHANGE IN CONTROL: shall be deemed to have occurred if (i) any
"person" (as such term is used in Section 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 the
Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, becomes after the date hereof
the 'beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of
securities of the Company representing twenty percent or more of the
total voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds 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 the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the Voting Securities of
the Company 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 percent of the
total voting power represented by the Voting Securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of
transactions) all or substantially all the Company's assets.
b. CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether instituted by the
Company or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or other.
c. EXPENSES: include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
d. INDEMNIFIABLE EVENT: any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity.
e. INDEPENDENT LEGAL COUNSEL: an attorney or firm of attorneys,
selected in accordance with the provisions of Section 3, who shall not
have otherwise performed services for the Company or Indemnitee within
the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements).
f. REVIEWING PARTY: any appropriate person or body consisting of
a member or members of the Company's Board of Directors or any other
person or body appointed by the Board who is not a party to the
particular Claim for which Indemnitee is seeking indemnification, or
Independent Legal Counsel.
g. VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
2. BASIC INDEMNIFICATION ARRANGEMENT.
a. In the event Indemnitee was, is or becomes a party to or
witness or other participant in, or
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is threatened to be made a party to or witness or other participant in,
a Claim by reason of (or arising in part out of) an Indemnifiable Event,
the Company shall indemnify Indemnitee to the fullest extent permitted
by law as soon as practicable but in any event no later than thirty days
after written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim. If so requested
by Indemnitee, the Company shall advance (within two business days of
such request) any and all Expenses to Indemnitee (an 'Expense Advance").
Notwithstanding anything in this Agreement to the contrary, prior to a
Change in Control Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated by
Indemnitee unless the Board of Directors has authorized or consented to
the initiation of such Claim.
b. Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a written opinion, in any
case in which the Independent Legal Counsel referred to in Section 3
hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the Company
to make an Expense Advance pursuant to Section 2(a) shall be subject to
the condition that, if, when and to the extent that the Reviewing Party
determines that the Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a
court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any determination
made by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or lapsed). If
there has not been a Change in Control, the Reviewing Party shall be
selected by the Board of Directors, and if there has been such a Change
in Control (other than a Change in Control which has been approved by a
majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall
be the Independent Legal Counsel referred to in Section 3 hereof. If
there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation in any court in
the State of California having subject matter jurisdiction thereof and
in which venue is proper seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual basis therefor, and the
Company thereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or
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Company Bylaw now or hereafter in effect relating to Claims for Indemnifiable
Events, the Company shall seek legal advice only from Independent Legal
Counsel selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld). Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such
counsel against any and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or Company Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
5. PARTIAL INDEMNITY, ETC. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee has been successful on the merits or otherwise in defense of any
or all Claims relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.
6. BURDEN OF PROOF. In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
7. NO PRESUMPTIONS. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contenders, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief
or that a court has determined that indemnification is not permitted by
applicable law. In addition, neither the failure of the Reviewing Party to
have made a determination as to whether Indemnitee has met any particular
standard of conduct or had any particular belief, nor an actual determination
by the Reviewing Party that Indemnitee has not met such standard of conduct
or did not have such belief, prior to the commencement of legal proceedings
by Indemnitee to secure a judicial determination that Indemnitee should be
indemnified under applicable law shall be a defense to Indemnitee's claim or
create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief.
8. NONEXCLUSIVITY, ETC. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's Bylaws or
the California Corporations
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Code or otherwise. To the extent that a change in the California
Corporations Code (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the
Company's Bylaws, Articles of Incorporation, and this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. LIABILITY INSURANCE. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability 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
Company director or officer.
10. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall
be extinguished and deemed released unless asserted by the timely filing of a
legal action within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action such shorter period shall govern.
11. AMENDMENTS, ETC. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
12. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, 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 the Company effectively to
bring suit to enforce such rights.
13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw or otherwise) of the amounts otherwise
Indemnifiable hereunder.
14. BINDING EFFECT, ETC. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, 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 the Company, spouses, heirs, executors and personal
and legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as an officer or director
of the Company or of any other enterprise at the Company's request.
15. SEVERABILITY. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable in any respect,
and the validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
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16. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
day of April, 1999. ---
SCRIPPS FINANCIAL CORPORATION
By:
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Name:
Title:
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(Indemnitee)
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