RUBICON FINANCIAL INCORPORATED INDEMNITY AGREEMENT
RUBICON FINANCIAL
INCORPORATED
INDEMNITY
AGREEMENT
This Indemnity Agreement (this
“Agreement”), dated as of July 15, 2009 is made by and between Rubicon
Financial Incorporated, a
Delaware corporation (the
“Company”), and Xxxxxxxx
XxXxxxxxx, a director
and/or officer of the
Company (the “Indemnitee”).
RECITALS
A. The Company is aware
that competent and experienced persons are increasingly reluctant to serve as
directors or officers of corporations unless they are protected by comprehensive
liability insurance and/or
indemnification, due to increased exposure to litigation
costs and risks resulting from their service to such corporations, and due to
the fact that the exposure frequently bears no reasonable relationship to the
compensation of such directors and officers;
B. Based upon their
experience as business managers, the Board of Directors of the Company (the
“Board”) has concluded that, to retain and
attract talented and experienced individuals to
serve as officers and directors of the Company, and to encourage such individuals to
take the business risks necessary for the success of the Company, it is
necessary for the Company contractually to indemnify officers and directors and to
assume for itself maximum liability for expenses and damages in connection with claims against such
officers and directors in connection with their
service to the Company;
C. Section 145 of the
General Corporation Law of the State of Delaware, under which the Company is organized
(“Section
145”), empowers the Company to indemnify by agreement its officers,
directors, employees and agents, and persons who serve, at the request of the
Company, as directors, officers, employees or agents of other
corporations or enterprises, and expressly provides that the indemnification provided by Section 145 is not
exclusive; and
D. The Company desires
and has requested the Indemnitee to serve or continue to serve as a director or
officer of the Company free from undue concern for claims for damages arising
out of or related to such
services to the Company.
NOW, THEREFORE, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
1.1 Agent. For the
purposes of this Agreement, “agent” of the Company means
any person who is or was a director or officer of the Company or a subsidiary of
the Company; or is or was serving at the request of, for the convenience of, or
to represent the interest of the Company or a subsidiary of the Company as a
director or officer of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or an affiliate of the Company; or was
a director or officer of a foreign or domestic corporation which was a
predecessor corporation of the Company, or was a director or officer of another
enterprise or affiliate of the Company at the request of, for the convenience
of, or to represent the interests of such predecessor corporation. The term
“enterprise” includes any employee benefit plan of the Company, its
subsidiaries, affiliates and predecessor corporations.
1
1.2 Expenses. For
purposes of this Agreement, “expenses” includes all direct
and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys’ fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement of expenses
under this Agreement, Section 145 or otherwise; provided, however, that expenses
shall not include any judgments, fines, ERISA excise taxes or penalties or
amounts paid in settlement of a proceeding.
1.3 Proceeding. For the
purposes of this Agreement, “proceeding” means any
threatened, pending or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type
whatsoever.
1.4 Subsidiary. For
purposes of this Agreement, “subsidiary” means any
corporation of which more than 50% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or more of its
subsidiaries or by one or more of the Company’s subsidiaries.
2. AGREEMENT TO
SERVE. The Indemnitee agrees to serve and/or continue to serve as an
agent of the Company, at the will of the Company (or under separate agreement,
if such agreement exists), in the capacity the Indemnitee currently serves as an
agent of the Company, faithfully and to the best of his ability, so long as he
is duly appointed or elected and qualified in accordance with the applicable
provisions of the charter documents of the Company or any subsidiary of the
Company; provided, however, that the Indemnitee may at any time and for any
reason resign from such position (subject to any contractual obligation that the
Indemnitee may have assumed apart from this Agreement), and the Company or any
subsidiary shall have no obligation under this Agreement to continue the
Indemnitee in any such position.
3. DIRECTORS’ AND
OFFICERS’ INSURANCE. The Company shall, to the extent that the Board
determines it to be economically reasonable, maintain a policy of directors’ and
officers’ liability insurance (“D&O Insurance”), on such
terms and conditions as may be approved by the Board.
4. MANDATORY
INDEMNIFICATION. Subject to Section 9 below, the Company shall indemnify
the Indemnitee:
4.1 Third Party Actions.
If the Indemnitee is a person who was or is a party or is threatened to be made
a party to any proceeding (other than an action by or in the right of the
Company) by reason of the fact that he is or was an agent of the Company, or by
reason of anything done or not done by him in any such capacity, against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful;
and
2
4.2 Derivative Actions.
If the Indemnitee is a person who was or is a party or is threatened to be made
a party to any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was an agent of the
Company, or by reason of anything done or not done by him in any such capacity,
against any amounts paid in settlement of any such proceeding and all expenses
actually and reasonably incurred by him in connection with the investigation,
defense, settlement or appeal of such proceeding if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company; except that no indemnification under this subsection
shall be made in respect of any claim, issue or matter as to which such person
shall have been finally adjudged to be liable to the Company by a court of
competent jurisdiction due to willful misconduct of a culpable nature in the
performance of his duty to the Company, unless and only to the extent that the
Court of Chancery or 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, such person is fairly and reasonably
entitled to indemnity for such amounts which the Court of Chancery or such other
court shall deem proper; and
4.3 Exception for Amounts
Covered by Insurance. Notwithstanding the foregoing, the Company shall
not be obligated to indemnify the Indemnitee for expenses or liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) to the extent such have been
paid directly to the Indemnitee by D&O Insurance.
5. PARTIAL
INDEMNIFICATION AND CONTRIBUTION.
5.1 Partial
Indemnification. If the Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a proceeding but is not entitled, however, to indemnification for all of the
total amount thereof, then the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled to indemnification.
3
5.2 Contribution. If the
Indemnitee is not entitled to the indemnification provided in Section 4 for any
reason other than the statutory limitations set forth in the Delaware General
Corporation Law, then in respect of any threatened, pending or completed
proceeding in which the Company is jointly liable with the Indemnitee (or would
be if joined in such proceeding), the Company shall contribute to the amount of
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Indemnitee on the other
hand from the transaction from which such proceeding arose and (ii) the relative
fault of the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnitee on the other
hand shall be determined by reference to, among other things, the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Company agrees that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
6. MANDATORY
ADVANCEMENT OF EXPENSES.
6.1 Advancement. Subject
to Section 9 below, the Company shall advance all expenses incurred by the
Indemnitee in connection with the investigation, defense, settlement or appeal
of any proceeding to which the Indemnitee is a party or is threatened to be made
a party by reason of the fact that the Indemnitee is or was an agent of the
Company or by reason of anything done or not done by him in any such capacity.
The Indemnitee hereby undertakes to promptly repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company under the provisions
of this Agreement, the Certificate of Incorporation or Bylaws of the Company,
the General Corporation Law of Delaware or otherwise. The advances to be made
hereunder shall be paid by the Company to the Indemnitee within thirty (30) days
following delivery of a written request therefor by the Indemnitee to the
Company.
6.2 Exception.
Notwithstanding the foregoing provisions of this Section 6, the Company shall
not be obligated to advance any expenses to the Indemnitee arising from a
lawsuit filed directly by the Company against the Indemnitee if an absolute
majority of the members of the Board reasonably determines in good faith, within
thirty (30) days of the Indemnitee’s request to be advanced expenses, that the
facts known to them at the time such determination is made demonstrate clearly
and convincingly that the Indemnitee acted in bad faith. If such a determination
is made, the Indemnitee may have such decision reviewed by another forum, in the
manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all references
therein to “indemnification” being deemed to refer to “advancement of expenses,” and
the burden of proof shall be on the Company to demonstrate clearly and
convincingly that, based on the facts known at the time, the Indemnitee acted in
bad faith. The Company may not avail itself of this Section 6.2 as to a given
lawsuit if, at any time after the occurrence of the activities or omissions that
are the primary focus of the lawsuit, the Company has undergone a change in
control. For this purpose, a change in control shall mean a given person or
group of affiliated persons or groups increasing their beneficial ownership
interest in the Company by at least twenty (20) percentage points without
advance Board approval.
4
7. NOTICE
AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly
after receipt by the Indemnitee of notice of the commencement of or the threat
of commencement of any proceeding, the Indemnitee shall, if the Indemnitee
believes that indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement or threat
of commencement thereof.
7.2 If,
at the time of the receipt of a notice of the commencement of a proceeding
pursuant to Section 7.1 hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the
insurers in accordance with the procedures set forth in the respective policies.
The Company 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 D&O Insurance
policies.
7.3 In
the event the Company shall be obligated to advance the expenses for any
proceeding against the Indemnitee, the Company, 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 to do so. After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will 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: (a) the
Indemnitee shall have the right to employ his own counsel in any such proceeding
at the Indemnitee’s expense; (b) the Indemnitee shall have the right to employ
his own counsel in connection with any such proceeding, at the expense of the
Company, if such counsel serves in a review, observer, advice and counseling
capacity and does not otherwise materially control or participate in the defense
of such proceeding; and (c) if (i) the employment of counsel by the Indemnitee
has been previously authorized by the Company, (ii) the Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of any such defense or (iii) the
Company 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 the Company.
8. DETERMINATION
OF RIGHT TO INDEMNIFICATION.
8.1 To
the extent the Indemnitee has been successful on the merits or otherwise in
defense of any proceeding referred to in Section 4.1 or 4.2 of this Agreement or
in the defense of any claim, issue or matter described therein, the Company
shall indemnify the Indemnitee against expenses actually and reasonably incurred
by him in connection with the investigation, defense or appeal of such
proceeding, or such claim, issue or matter, as the case may be.
5
8.2 In
the event that Section 8.1 is inapplicable, or does not apply to the entire
proceeding, the Company shall nonetheless indemnify the Indemnitee unless the
Company shall prove by clear and convincing evidence to a forum listed in
Section 8.3 below that the Indemnitee has not met the applicable standard of
conduct required to entitle the Indemnitee to such indemnification.
8.3 The
Indemnitee shall be entitled to select the forum in which the validity of the
Company’s claim under Section 8.2 hereof that the Indemnitee is not entitled to
indemnification will be heard from among the following, except that the
Indemnitee can select a forum consisting of the stockholders of the Company only
with the approval of the Company:
(a) A
quorum of the Board consisting of directors who are not parties to the
proceeding for which indemnification is being sought;
(b) The
stockholders of the Company;
(c) Legal
counsel mutually agreed upon by the Indemnitee and the Board, which counsel
shall make such determination in a written opinion;
(d) A
panel of three arbitrators, one of whom is selected by the Company, another of
whom is selected by the Indemnitee and the last of whom is selected by the first
two arbitrators so selected; or
(e) The
Court of Chancery of Delaware or other court having jurisdiction of subject
matter and the parties.
8.4 As
soon as practicable, and in no event later than thirty (30) days after the forum
has been selected pursuant to Section 8.3 above, the Company shall, at its own
expense, submit to the selected forum its claim that the Indemnitee is not
entitled to indemnification, and the Company shall act in the utmost good faith
to assure the Indemnitee a complete opportunity to defend against such
claim.
8.5 If
the forum selected in accordance with Section 8.3 hereof is not a court, then
after the final decision of such forum is rendered, the Company or the
Indemnitee shall have the right to apply to the Court of Chancery of Delaware,
the court in which the proceeding giving rise to the Indemnitee’s claim for
indemnification is or was pending or any other court of competent jurisdiction,
for the purpose of appealing the decision of such forum, provided that such
right is executed within sixty (60) days after the final decision of such forum
is rendered. If the forum selected in accordance with Section 8.3 hereof is a
court, then the rights of the Company or the Indemnitee to appeal any decision
of such court shall be governed by the applicable laws and rules governing
appeals of the decision of such court.
6
8.6 Notwithstanding
any other provision in this Agreement to the contrary, the Company shall
indemnify the Indemnitee against all expenses incurred by the Indemnitee in
connection with any hearing or proceeding under this Section 8 involving the
Indemnitee and against all expenses incurred by the Indemnitee in connection
with any other proceeding between the Company and the Indemnitee involving the
interpretation or enforcement of the rights of the Indemnitee under this
Agreement unless a court of competent jurisdiction finds that each of the
material claims and/or defenses of the Indemnitee in any such proceeding was
frivolous or not made in good faith.
9. EXCEPTIONS.
Any other provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement:
9.1 Claims Initiated by
Indemnitee. 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 proceedings
specifically authorized by the Board or brought to establish or enforce a right
to indemnification and/or advancement of expenses arising under this Agreement,
the charter documents of the Company or any subsidiary or any statute or law or
otherwise, but such indemnification or advancement of expenses may be provided
by the Company in specific cases if the Board finds it to be appropriate;
or
9.2 Unauthorized
Settlements. To indemnify the Indemnitee hereunder for any amounts paid
in settlement of a proceeding unless the Company consents in advance in writing
to such settlement, which consent shall not be unreasonably withheld;
or
9.3 Securities Law
Actions. To indemnify the Indemnitee on account of any suit in which
judgment is rendered against the Indemnitee for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section l6(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law; or
9.4 Unlawful
Indemnification. To indemnify the Indemnitee if a final decision by a
court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for
adjudication.
10. NON-EXCLUSIVITY.
The provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation
or Bylaws, the vote of the Company’s stockholders or disinterested directors,
other agreements or otherwise, both as to action in the Indemnitee’s official
capacity and to action in another capacity while occupying his position as an
agent of the Company, and the Indemnitee’s rights hereunder shall continue after
the Indemnitee has ceased acting as an agent of the Company and shall inure to
the benefit of the heirs, executors and administrators of the
Indemnitee.
7
11. GENERAL
PROVISIONS.
11.1
Interpretation of
Agreement. It is understood that the parties hereto intend this Agreement
to be interpreted and enforced so as to provide indemnification and advancement
of expenses to the Indemnitee to the fullest extent now or hereafter permitted
by law, except as expressly limited herein.
11.2
Severability.
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, then: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to
Section 11.1 hereof.
11.3
Modification and
Waiver. 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.
11.4
Subrogation. In
the event of full payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of the
Indemnitee, who shall execute all documents required and shall do all acts that
may be necessary or desirable to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
11.5
Counterparts.
This Agreement may be executed in one or more counter-parts, which shall
together constitute one agreement.
11.6
Successors and
Assigns. The terms of this Agreement shall bind, and shall inure to the
benefit of, the successors and assigns of the parties hereto.
11.7
Notice. All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given: (a) if delivered by hand and
receipted for by the party addressee; or (b) if mailed by certified or
registered mail, with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement or as subsequently modified by written
notice.
8
11.8
Governing Law.
This Agreement shall be governed exclusively by and construed according to the
laws of the State of Delaware, as applied to contracts between Delaware
residents entered into and to be performed entirely within
Delaware.
11.9
Consent to
Jurisdiction. The Company and the Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of California for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement.
11.10
Attorneys’
Fees. In the event Indemnitee is required to bring any action to enforce
rights under this Agreement (including, without limitation, the expenses of any
Proceeding described in Section 3), the Indemnitee shall be entitled to all
reasonable fees and expenses in bringing and pursuing such action, unless a
court of competent jurisdiction finds each of the material claims of the
Indemnitee in any such action was frivolous and not made in good
faith.
IN WITNESS WHEREOF, the
parties hereto have entered into this Indemnity Agreement effective as of the
date first written above.
|
Indemnitee:
|
|||
|
Rubicon
Financial Incorporated
|
|||
|
a
Delaware corporation
|
|||
|
By:
|
/s/ Xxxxxxxx XxXxxxxxx
|
||
|
Xxxxxx
Xxxxxxxxxx, Chairman/CEO
|
Xxxxxxxx
XxXxxxxxx
|
||
9
