OFFICER INDEMNIFICATION AGREEMENT
Exhibit 10.3
EXECUTION COPY
THIS AGREEMENT is entered into, effective as of [EFFECTIVE DATE], between Wintrust Financial
Corporation, an Illinois corporation (the “Company”) and [NAME OF OFFICER] (“Indemnitee”).
WHEREAS, it is essential to the Company to retain and attract as officers the most capable
persons available;
WHEREAS, Indemnitee is an officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other
claims currently being asserted against officers of corporations; and
WHEREAS, in recognition of Indemnitee’s need for substantial protection against personal
liability in order to enhance Indemnitee’s continued and effective service to the Company, and in
order to induce Indemnitee to provide continued services to the Company as an officer, 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 for the coverage of Indemnitee under the Company’s directors’ and officers’
liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of Indemnitee’s continuing to serve
as an officer of the Company and intending to be legally bound hereby, the parties agree as
follows:
1. Certain Definitions:
(a) Board: The Board of Directors of the Company.
(b) Change in Control: A Change in Control shall be deemed to occur if:
(i) any “person,” as such term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934 (the “Exchange Act”), as modified and used in Section 13(d) and 14(d) thereof
(but not including (a) the Company or any of its subsidiaries, (b) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any of its
subsidiaries, (c) an underwriter temporarily holding securities pursuant to an offering of
such securities, or (d) 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) (hereinafter a “Person”) is or becomes the beneficial owner, as defined in Rule
13d-3 of the Exchange Act, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates, excluding an acquisition resulting from the
exercise of a conversion or exchange privilege in respect of outstanding convertible or
exchangeable securities) representing 50% or more of the combined voting power of the
Company’s then outstanding securities; or
(ii) during any period of two consecutive years beginning on the date hereof,
individuals who at the beginning of such period constitute the Board and any new director
(other than a director designated by a Person who has entered into any agreement with the
Company to effect a transaction described in Clause (i), (iii) or (iv) of this Section)
whose election by the Board 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 (each such director, a “Continuing Director”), 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) 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 or acquiring entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the Company, at least
50% of the combined voting power of the voting securities of the Company or such surviving
or acquiring entity outstanding immediately after such merger or consolidation, or (b) a
merger or consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 50% of the combined voting power of the
Company’s then outstanding securities; 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 all or substantially
all of the Company’s assets.
(c) Disinterested Director: A director of the Company who is not and was not a party
to the Proceeding in respect of which indemnification is sought by Indemnitee.
(d) Expenses: Any expense, including without limitation, attorneys’ fees, retainers,
court costs, transcript costs, fees and expenses of experts, including accountants and other
advisors, travel expenses, duplicating costs, postage, delivery service fees, filing fees, and all
other disbursements or expenses of the types typically paid or incurred in connection with
investigating, defending, being a witness in, or participating (including on appeal), or preparing
for any of the foregoing, in any Proceeding relating to any Indemnifiable Event, and any expenses
of establishing a right to indemnification under any of Sections 2, 4 or 5 of this Agreement, in
each case, to the extent actually and reasonably incurred.
(e) Indemnifiable Costs: Any cost that is eligible for indemnification pursuant to
applicable law, including, without limitation, any and all Expenses, liability or loss, judgments,
fines and amounts paid in settlement and any interest, assessments, or other charges imposed
thereon, and any federal, state, local, or foreign taxes imposed as a result of the actual or
deemed receipt of any payments under this Agreement.
(f) Indemnifiable Event: Any event or occurrence that takes place either prior to or
after the execution of this Agreement, related to the fact that Indemnitee is or was an officer
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of the Company, or while an officer is or was serving at the request of the Company as a
director or officer of another corporation, partnership, joint venture, trust or other enterprise
or related to anything done or not done by Indemnitee in any such capacity, whether or not the
basis of the Proceeding is alleged action in an official capacity as an officer of the Company, or
in any other capacity, as described above.
(g) Independent Counsel: means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past three years has
been, retained to represent: (i) the Company or any of its subsidiaries or affiliates, (ii) the
Indemnitee or (iii) any other party to the Proceeding giving rise to a claim for indemnification or
Expense Advances hereunder, in any matter (other than with respect to matters relating to
indemnification and advancement of expenses). No law firm or lawyer shall qualify to serve as
Independent Counsel if that person would, under the applicable standards of professional conduct
then prevailing, have a conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this Agreement. The Indemnitee shall select a law
firm or member of a law firm to serve as Independent Counsel, subject to the consent of the
Company, which consent shall not be unreasonably withheld. Subject to the foregoing, any law firm
or a member of a law firm in the Am Law 200 shall be presumed to qualify as Independent Counsel.
In the event that the Indemnitee and the Company are unable to agree upon the selection of the
Independent Counsel, the parties shall first try to settle the dispute by mediation under the
Commercial Mediation Rules of the American Arbitration Association. Any dispute that cannot be
resolved by mediation shall be finally resolved by arbitration by the American Arbitration
Association under its Commercial Arbitration Rules. The fees for any such dispute resolution
procedure shall be borne by the Company.
(h) Proceeding: Any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative that relates to an Indemnifiable Event.
(i) Reviewing Party: Reviewing Party shall have the meaning ascribed to such term in
Section 3.
2. Agreement to Indemnify.
(a) General Agreement regarding Indemnification. In the event Indemnitee was, is, or
becomes a party to or witness or other participant in, or is threatened to be made a party to or
witness or other participant in, a Proceeding by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee from and against Indemnifiable Costs,
to the fullest extent permitted by applicable law, as the same exists or may hereafter be amended
or interpreted (but in the case of any such amendment or interpretation, only to the extent that
such amendment or interpretation permits the Company to provide broader indemnification rights than
were permitted prior thereto); provided that the Company’s commitment set forth in this Section
2(a) to indemnify the Indemnitee shall be subject to the limitations and procedural requirements
set forth in this Agreement.
(b) Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of Indemnifiable Costs,
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but not, however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
(c) Advancement of Expenses. If so requested by Indemnitee, the Company shall advance
to Indemnitee, to the fullest extent permitted by applicable law, any and all Expenses incurred by
Indemnitee (an “Expense Advance” or an “Advance”) within 10 calendar days after the receipt by the
Company of a request from Indemnitee for an Advance, whether prior to or after final disposition of
any Proceeding. Indemnitee shall, and hereby undertakes to, repay to the Company any funds
advanced to Indemnitee or paid on his or her behalf if it shall ultimately be determined that
Indemnitee is not entitled to indemnification. Indemnitee shall make any such repayment promptly
following written notice of any such determination. Payment by the Company of Indemnitee’s
expenses in connection with any Proceeding in advance of the final disposition thereof shall not be
deemed an admission by the Company that it shall ultimately be determined that Indemnitee is
entitled to indemnification. Any request for an Expense Advance shall be accompanied by an
itemization of the Expenses for which advancement is sought, and a reasonably detailed summary
shall be provided if the Company so requests. Advances shall be made without regard to
Indemnitee’s ability to repay the Expenses. If Indemnitee has commenced legal proceedings in a
court of competent jurisdiction in the State of Illinois to secure a determination that Indemnitee
should be indemnified under applicable law, as provided in Section 4, 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 have lapsed). Indemnitee’s obligation to reimburse the
Company for Expense Advances shall be unsecured and no interest shall be charged thereon.
(d) Exception to Obligation to Indemnify and Advance Expenses. Notwithstanding
anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification or
advancement pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee
against the Company or any director or officer of the Company unless (i) the Company has joined in
or the Board has consented to the initiation of such Proceeding; or (ii) the Proceeding is one to
enforce indemnification rights under this Agreement, including Section 5.
3. Reviewing Party.
(a) Definition of Reviewing Party. Other than as contemplated by Section 3(b), the
person, persons or entity who shall determine whether Indemnitee is entitled to indemnification in
the first instance (“the Reviewing Party”) shall be (i) the Board of Directors of the Company
acting by a majority vote of a quorum of Disinterested Directors or (ii) if there are no
Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel in a
written determination to the Board of Directors, a copy of which shall be delivered to Indemnitee.
(b) Reviewing Party Following Change in Control. After a Change in Control, the
Reviewing Party shall be the Independent Counsel. With respect to all matters arising from such a
Change in Control concerning the rights of Indemnitee to indemnity payments and
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Expense Advances under this Agreement or any other agreement or under applicable law or the
Company’s Articles of Incorporation or Bylaws now or hereafter in effect relating to
indemnification for Indemnifiable Events, the Company shall seek legal advice only from the
Independent Counsel. Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be
indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent
Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’
fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the
engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment.
(i) The determination with respect to Indemnitee’s entitlement to
indemnification shall, to the extent practicable, be made by the Reviewing Party not
later than 30 calendar days after receipt by the Company of a written demand on the
Company for indemnification (which written demand shall include such documentation
and information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to indemnification).
The Reviewing Party making the determination with respect to Indemnitee’s
entitlement to indemnification shall notify Indemnitee of such written determination
no later than two business days thereafter.
(ii) Unless the Reviewing Party has provided a written determination to the
Company that Indemnitee is not entitled to indemnification under applicable law,
Indemnitee shall be entitled to indemnification of Indemnifiable Costs, and shall
receive payment thereof, from the Company in accordance with this Agreement as early
as practicable, but not later than 10 business days after the Reviewing Party has
made its determination with respect to Indemnitee’s entitlement to indemnification.
(b) Suit to Enforce Rights. If (i) no determination of entitlement to indemnification
shall have been made within the time limitation for such a determination set forth in Section
4(a)(i), (ii) payment of indemnification pursuant to Section 4(a)(ii) is not made within the period
permitted for such payment by such section, (iii) the Reviewing Party determines pursuant to
Section 4(a) that Indemnitee is not entitled to indemnification under this Agreement, or (iv)
Indemnitee has not received advancement of Expenses within the time period permitted for such
advancement by Section 2(c), then Indemnitee shall have the right to enforce the indemnification
rights granted under this Agreement by commencing litigation in any court of competent jurisdiction
in the State of Illinois seeking an initial determination by the court or challenging any
determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service
of process and to appear in any such proceeding. Any determination by the Reviewing Party not
challenged by the Indemnitee within six months of the date of the Reviewing Party’s determination
shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be
in addition to any other remedies available to Indemnitee in law or equity.
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(c) Defense to Indemnification, Burden of Proof, and Presumptions.
(i) To the maximum extent permitted by applicable law in making a determination
with respect to entitlement to indemnification (or payment of Expense Advances)
hereunder, the Reviewing Party shall presume that an Indemnitee is entitled to
indemnification (or payment of Expense Advances) under this Agreement, and the
Company shall have the burden of proof to overcome that presumption in connection
with the making by the Reviewing Party of any determination contrary to that
presumption.
(ii) It shall be a defense to any action brought by Indemnitee against the
Company to enforce this Agreement that it is not permissible under applicable law
for the Company to indemnify Indemnitee for the amount claimed.
(iii) For purposes of this Agreement, the termination of any claim, action,
suit, or proceeding, by judgment, order, settlement (whether with or without court
approval), conviction, or upon a plea of nolo contendere, 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.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company shall
indemnify Indemnitee against any and all Expenses to the fullest extent permitted by law and, if
requested by Indemnitee pursuant to the procedures set forth in Section 2(c), shall advance such
Expenses to Indemnitee, that are incurred by Indemnitee in connection with any claim asserted
against or action brought by Indemnitee for:
(i) enforcement of this Agreement;
(ii) indemnification of Indemnifiable Costs or Expense Advances by the Company under this
Agreement or any other agreement or under applicable law or the Company’s Articles of Incorporation
or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events; and/or
(iii) recovery under directors’ and officers’ liability insurance policies maintained by the
Company.
6. Notification and Defense of Proceeding.
(a) Notice. Promptly 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. The failure to notify or promptly
notify the Company shall not relieve the Company from any liability which it may have to the
Indemnitee otherwise than under this Agreement, and shall not relieve the Company from liability
hereunder except to the extent the Company has been prejudiced or as further provided in Section
6(c).
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(b) Defense. With respect to any Proceeding as to which Indemnitee notifies the
Company of the commencement thereof, the Company will be entitled to participate in the Proceeding
at its own expense and except as otherwise provided below, to the extent the Company so wishes, it
may assume the defense thereof with counsel selected by the Company. After notice from the Company
to Indemnitee of its election to assume the defense of any Proceeding, the Company will not be
liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by
Indemnitee in connection with the defense of such Proceeding other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right to employ separate
counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company
of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of
counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined
that there may be a conflict of interest between Indemnitee and the Company in the defense of the
Proceeding, (iii) after a Change in Control, the employment of counsel by Indemnitee has been
approved by the Independent Counsel, or (iv) the Company shall not within 60 calendar days in fact
have employed counsel to assume the defense of such Proceeding, in each of which case all Expenses
of the Proceeding shall be borne by the Company. If the Company has selected counsel to represent
Indemnitee and other current and former directors, officers or employees of the Company in the
defense of a Proceeding, and a majority of such persons, including Indemnitee, reasonably object to
such counsel selected by the Company pursuant to the first sentence of this Section 6(b),
then such persons, including Indemnitee, shall be permitted to employ one additional counsel(s) of
their choice and the reasonable fees and expenses of such counsel shall be at the expense of the
Company; provided, however, that such counsel shall, if required by any company
with which the Company obtains or maintains insurance, be approved by such company or chosen from
amongst the list of counsel approved by such company. In the event separate counsel(s) is retained
by Indemnitee and/or by a group of persons including Indemnitee pursuant to this Section 6(b), the
Company shall cooperate with such counsel(s) with respect to the defense of the Proceeding,
including making documents, witnesses and other information related to the defense available to
such separate counsel(s) pursuant to joint-defense agreements or confidentiality agreements, as
appropriate. The Company shall not be entitled to assume the defense of any Proceeding (x) brought
by or on behalf of the Company, (y) as to which Indemnitee shall have made the determination
provided for in clause (ii) above or (z) as to which Independent Counsel has approved the
employment of counsel by Indemnitee in accordance with clause (iii) above.
(c) Settlement of Claims. The Company shall not be liable to indemnify Indemnitee
under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected
without the Company’s written consent. The Company shall not settle any Proceeding in any manner
that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent.
Neither the Company nor the Indemnitee will unreasonably withhold their consent to any proposed
settlement. The Company shall not be liable to indemnify the Indemnitee under this Agreement with
regard to any judicial award if the Company was not given a reasonable and timely opportunity, at
its expense, to participate in the defense of such action; the Company’s liability hereunder shall
not be excused if participation in the Proceeding by the Company was barred by this Agreement.
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7. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the laws of the State of Illinois, the Company’s Articles of
Incorporation, Bylaws, applicable law, or otherwise. To the extent that a change in applicable law
(whether by statute or judicial decision) permits greater indemnification by agreement than would
be afforded currently under the Company’s Articles of Incorporation, Bylaws, applicable law, or
this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater
benefits so afforded by such change.
8. Liability Insurance. The Company shall use its best efforts (a) to continue to
maintain in effect directors’ and officers’ insurance policies and fiduciary liability insurance
policies (collectively, “D&O Insurance Policies”) with terms, conditions, retentions and limits of
liability that are at least as favorable as those contained in the Company’s D&O Insurance Policies
in effect as of the date hereof (D&O Insurance Policies containing such terms, conditions,
retentions and limits of liability, referred to herein as “Comparable D&O Insurance Policies”),
and, for so long as Indemnitee serves as an officer of the Company and for a period of six (6)
years thereafter, to cause Indemnitee to be covered under such Comparable D&O Insurance Policies in
accordance with their respective terms, and (b) for a period of not less than six (6) years
following the occurrence of (i) a Change in Control or (ii) the Company ceasing to operate its
business as a going concern, to maintain in effect Comparable D&O Insurance Policies, and, until
the earlier of (x) such time as the Company is no longer required to maintain such Comparable D&O
Insurance Policies pursuant to this clause (b) or (y) the sixth (6th)
anniversary of Indemnitee ceasing to serve as an officer of the Company, to cause Indemnitee to be
covered under such Comparable D&O Insurance Policies in accordance with their respective terms. In
the event the Company, at any time it is required to maintain Comparable D&O Insurance Policies
pursuant to the foregoing sentence, is not able to obtain Comparable D&O Insurance Policies, the
Company shall be obligated to maintain D&O Insurance Policies with the best coverage then available
for the time periods provided in, and otherwise in accordance with the terms of, the foregoing
sentence.
9. Amendment of this Agreement. 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 operate as a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver. Except as
specifically provided herein, no failure to exercise or any delay in exercising any right or remedy
hereunder shall constitute a waiver thereof.
10. 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.
11. No Duplication or Shortfall of Payments. The Company shall make any payment
required to be made under this Agreement to the extent, but only to the extent, Indemnitee has not
otherwise actually received payment (whether under the Company’s Articles of Incorporation, the
Company’s Bylaws, any insurance policy, by law, or otherwise) of the amounts otherwise payable
hereunder.
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12. Binding Effect. 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, and personal and
legal representatives. The Company 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 Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform if no such
succession had taken place. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer of the Company or of any other enterprise at the
Company’s request.
13. Severability. If any provision (or portion thereof) of this Agreement shall be
held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the
remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore,
to the fullest extent possible, the provisions of this Agreement (including, without limitation,
each portion of this Agreement containing any provision held to be invalid, void, or otherwise
unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, void, or unenforceable.
14. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Illinois applicable to contracts made and to be performed
in such State without giving effect to the principles of conflicts of laws.
15. Notices. All notices, demands, and other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given if delivered by
hand, against receipt, transmitted by facsimile upon confirmation that such facsimile has been
received or mailed, postage prepaid, certified or registered mail, return receipt requested, and
addressed
to the Company at:
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Sidley Austin LLP
Xxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
Fax: (000) 000-0000
and
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to Indemnitee at:
[NAME OF OFFICER]
[__________________]
[__________________]
[__________________]
[__________________]
[__________________]
[__________________]
Notice of change of address shall be effective only when done in accordance with this Section. All
notices complying with this Section shall be deemed to have been received on the date of delivery
or on the third business day after mailing.
* * *
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of
the day specified above.
| COMPANY: | WINTRUST FINANCIAL CORPORATION |
|||
| By: | ||||
| Name: | ||||
| Title: | ||||
| INDEMNITEE: | |
|||
| [NAME OF OFFICER] | ||||
