EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of
____________, 1997 by and between New Century Financial Corporation, a Delaware
corporation (the "Company"), and the individual whose name appears below the
word "Indemnitee" on the signature page (the "Indemnitee"), a director and/or
officer of the Company.
BACKGROUND
A. The Indemnitee is currently serving as a director and/or officer of the
Company and in such capacity has rendered valuable services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and Delaware statutory indemnification provisions to provide
its directors and officers with adequate protection against various legal risks
and potential liabilities to which directors and officers are subject due to
their position with the Company and has concluded that insurance and statutory
provisions may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and officers.
C. In order to induce and encourage highly experienced and capable
persons, such as the Indemnitee, to continue to serve as a director and/or
officer of the Company, the Board of Directors has determined, after due
consideration and investigation of the terms and provisions of this Agreement
and the various other options available to the Company and the Indemnitee in
lieu of this Agreement, that this Agreement is not only reasonable and prudent
but necessary to promote and ensure the best interests of the Company and its
stockholders.
AGREEMENT
In consideration of the continued services of the Indemnitee and in order
to induce the Indemnitee to continue to serve as a director and/or officer of
the Company, the Company and the Indemnitee agree as follows:
SECTION 1. DEFINITIONS
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As used in this Agreement:
(a) A "Change in Control" shall occur if (i) any "person" (as that term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
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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 the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% 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 the two year 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 (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 of the Board of Directors, 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 to such a merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 80% of
the total voting power represented by the voting securities of the Company or
the surviving entity outstanding immediately after the merger or consolidation,
or 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 (in one
transaction or a series of transactions) of all or substantially all the
Company's assets.
(b) The term "Expenses" includes, without limitation, attorneys' fees,
disbursements and retainers, accounting and witness fees, travel and deposition
costs, expenses of investigations, judicial or administrative proceedings or
appeals, amounts paid in settlement by or on behalf of Indemnitee, and any
expenses of establishing a right to indemnification, pursuant to this Agreement
or otherwise, including reasonable compensation for time spent by the Indemnitee
in connection with the investigation, defense or appeal of a Proceeding or
action for indemnification for which the Indemnitee is not otherwise compensated
by the Company or any third party. The term "Expenses" does not include the
amount of judgments, fines, penalties or ERISA excise taxes actually levied
against the Indemnitee.
(c) The term "Indemnified Costs" means all Expenses, judgments, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense, appeal or settlement
of any Proceeding.
(d) A "Potential Change in Control" shall occur if (i) the Company enters
into an agreement or arrangement, the
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consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which 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.
(e) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding (including appeals thereof), whether
brought by or in the name of the Company or otherwise and whether of a civil,
criminal or administrative or investigative nature, by reason of the fact that
the Indemnitee is or was a director and/or officer of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another enterprise, whether or not the Indemnitee is serving in such capacity
at the time any liability or Expense is incurred for which indemnification or
reimbursement is to be provided under this Agreement.
SECTION 2. INDEMNIFICATION
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2.1 Indemnification in Third Party Actions. The Company shall indemnify
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the Indemnitee if the Indemnitee is a party to, is threatened to be made a party
to, is a witness or other participant in, or is otherwise involved in any
Proceeding (other than a Proceeding by or in the name of the Company to procure
a judgment in its favor), because the Indemnitee is or was a director and/or
officer of the Company or is or was serving at the request of the Company as a
director, officer, employee or agent of another enterprise, against all
Indemnified Costs, to the fullest extent permitted by applicable law. Any
settlement must be approved in writing by the Company.
2.2 Indemnification in Proceedings By or In the Name of the Company. The
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Company shall indemnify the Indemnitee if the Indemnitee is a party to, is
threatened to be made a party to, is a witness or other participant in, or is
otherwise involved in any Proceeding by or in the name of the Company to procure
a judgment in its favor by reason of the fact that Indemnitee was or is a
director and/or officer of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another enterprise,
against all Expenses actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of the Proceeding, to the fullest
extent permitted by applicable law.
2.3 Partial Indemnification. If the Indemnitee is entitled under any
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provision of this Agreement to indemnification by the Company for some or a
portion of, but not the total amount of, the Indemnified Costs, the Company
shall nevertheless
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indemnify the Indemnitee for the portion of the Indemnified Costs to which the
Indemnitee is entitled.
2.4 Indemnification Hereunder Not Exclusive. The indemnification provided
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by this Agreement is not exclusive of any other rights to which the Indemnitee
may be entitled under the Company's Certificate of Incorporation, its Bylaws,
any agreement, any vote of stockholders or disinterested directors, applicable
law, or otherwise, both as to action in the Indemnitee's official capacity and
as to action in another capacity on behalf of the Company.
2.5 Indemnification of Expenses of Successful Party. Notwithstanding any
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other provisions of this Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
matter in the Proceeding, on the merits or otherwise, including, but not limited
to, the dismissal of a Proceeding without prejudice, the Indemnitee shall be
indemnified against all Indemnified Costs incurred in connection therewith to
the fullest extent permitted by applicable law.
2.6 Advances of Expenses. The Indemnified Costs by the Indemnitee in any
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Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable law. The advances to be made will be
paid by the Company to the Indemnitee within 30 days following delivery to the
Company of such written request which is accompanied by substantiating
documentation.
2.7 Limitations on Indemnification. No payments pursuant to this
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Agreement shall be made by the Company to:
(a) indemnify or advance Indemnified Costs to the Indemnitee with respect
to Proceedings initiated or brought voluntarily by the Indemnitee and not by way
of defense, except with respect to Proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under applicable law; provided, however, that the
indemnification or advancement of Indemnified Costs may be provided by the
Company with respect to Proceedings initiated or brought voluntarily by the
Indemnitee and not by way of defense if the Board of Directors finds such
indemnification or advancement appropriate;
(b) indemnify the Indemnitee for any Indemnified Costs for which payment
is actually made to the Indemnitee under a valid and collectible insurance
policy, except for any excess beyond the amount of payment under the policy;
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(c) indemnify the Indemnitee for any Indemnified Costs sustained in any
Proceeding 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
16(b) of the Exchange Act, the rules and regulations promulgated thereunder and
amendments thereto or similar provisions of any federal, state or local
statutory law;
(d) indemnify the Indemnitee for any Indemnified Costs resulting from
Indemnitee's conduct which is finally adjudged by a court of competent
jurisdiction to have been willful misconduct, knowingly fraudulent or
deliberately dishonest; or
(e) indemnify the Indemnitee if a court of competent jurisdiction shall
finally determine that such payment is unlawful.
SECTION 3. PRESUMPTIONS
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3.1 Presumption Regarding Standard of Conduct. The Indemnitee shall be
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conclusively presumed to have met the relevant standards of conduct as defined
by applicable law for indemnification pursuant to this Agreement unless a
determination that the Indemnitee has not met the relevant standards is made by
(i) a majority vote of the directors of the Company who are not parties to the
Proceeding, even though less than a quorum, (ii) a majority vote of the
stockholders of the Company, or (iii) in a written opinion by independent legal
counsel, selection of whom has been made by the Company's Board of Directors and
approved by the Indemnitee.
3.2 Determination of Right to Indemnification.
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(a) If a claim under this Agreement is not paid by the Company within 30
days of receipt of written notice, the right to indemnification as provided by
this Agreement shall be enforceable by the Indemnitee in any court of competent
jurisdiction. The Company shall bear the burden of proving by clear and
convincing evidence that indemnification or advances are not appropriate.
Neither (i) the failure of the directors, stockholders or independent legal
counsel to have made a determination prior to the commencement of the action
that indemnification or advances are proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor (ii) an actual
determination by the directors, stockholders or independent legal counsel that
the Indemnitee has not met the applicable standard of conduct, shall be a
defense to the action or create a presumption that the Indemnitee has not met
the applicable standard of conduct.
(b) The Indemnitee's Expenses incurred in connection with any Proceeding
concerning the Indemnitee's right to
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indemnification or advances in whole or in part pursuant to this Agreement shall
also be indemnified by the Company regardless of the outcome of the Proceeding,
unless a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in the Proceeding was not made in good faith
or was frivolous.
SECTION 4. CHANGE IN CONTROL
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The Company agrees that if there is a Change in Control or Potential Change
in Control of the Company (other than a Change in Control or Potential Change in
Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to the Change in Control or
Potential Change in Control), then with respect to all matters thereafter
arising concerning the rights of Indemnitee to be indemnified for Indemnified
Costs, the Company shall seek legal advice only from independent counsel who is
selected by Indemnitee and reasonably satisfactory to the Company and who has
not otherwise performed services for the Company or Indemnitee within the last
five years (the "Special Independent Counsel"). The Special Independent
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 and expenses of the Special Independent Counsel and may fully indemnify the
Special Independent Counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement.
SECTION 5. INDEMNIFICATION PROCEDURE
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5.1 Notice. Promptly after receipt by the Indemnitee of notice of the
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commencement of any Proceeding, the Indemnitee will, if a claim is to be made
against the Company under this Agreement, notify the Company of the commencement
of the Proceeding. The failure to notify the Company will not relieve the
Company from any liability which the Company may have to the Indemnitee, except
to the extent the Company is materially damaged by the failure of the Indemnitee
to so notify the Company.
5.2 Company Participation. With respect to any Proceeding for which
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indemnification is requested, the Company will be entitled to participate in the
Proceeding at its own expense and, except as otherwise provided below, to the
extent that it may desire, the Company may assume the defense of the Proceeding,
with counsel reasonably satisfactory to the Indemnitee. After the Company
notifies the Indemnitee of the Company's election to assume the defense of a
Proceeding, during the Company's good faith active defense the Company will not
be
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liable to the Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense of the
Proceeding, other than reasonable costs of investigation, out-of-pocket or as
otherwise provided below. The Indemnitee shall have the right to employ the
Indemnitee's counsel in any Proceeding but the fees and expenses of the counsel
incurred after notice from the Company of its assumption of the defense of the
Proceeding shall be at the expense of the Indemnitee, unless (i) the employment
of counsel by the Indemnitee has been authorized by the Company, (ii) the
Indemnitee has reasonably concluded that there may be a conflict of interest
between the Company and the Indemnitee in the conduct of the defense of a
Proceeding, (iii) the Company has not in fact employed counsel to assume the
defense of a Proceeding, or (iv) the Company has returned defense of the
Proceeding to Indemnitee. In each of the foregoing cases the reasonable fees
and expenses of the Indemnitee's counsel shall be at the expense of the Company.
The Company shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Company or as to which the Indemnitee has made
the conclusion that there may be a conflict of interest between the Company and
the Indemnitee.
5.3 Settlement. Neither the Company nor the Indemnitee shall settle or
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compromise any Proceeding in any manner which would impose any penalty or
limitation on either the Indemnitee or the Company without the written consent
of either the Company or the Indemnitee, as the case may be; provided, however,
that neither the Company nor the Indemnitee shall unreasonably withhold such
consent.
5.4 Subrogation. If the Company pays Indemnified Costs, the Company will
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be subrogated to the extent of such payment to all of the rights of recovery of
the Indemnitee against third parties. The Indemnitee will do all things
reasonably necessary to secure such rights, including the execution of documents
necessary to enable the Company effectively to bring suit to enforce such
rights.
SECTION 6. MAINTENANCE OF LIABILITY INSURANCE
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6.1 Affirmative Covenant of the Company. As long as the Indemnitee shall
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continue to serve as a director and/or officer of the Company and thereafter so
long as the Indemnitee shall be subject to any possible Proceeding, the Company
shall promptly obtain and maintain in full force and effect directors' and
officers' liability insurance ("D&O Insurance") in reasonable amounts from
established and reputable insurers which shall include, without limitation,
coverage for securities liabilities. Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain D&O Insurance if the Company
determines in good faith that insurance is not reasonably available, the premium
costs for insurance are disproportionate
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to the amount of coverage provided, the coverage provided by insurance is so
limited by exclusions that it provides an insufficient benefit, or the
Indemnitee is covered by similar insurance maintained by a subsidiary of the
Company. If the Company has D&O Insurance at the time the Company receives
notice that a Proceeding has commenced, the Company will give prompt notice of
such commencement to the insurers as required by the applicable insurance
policies. The Company will 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.
6.2 Indemnitee Named as Insured. In all D&O Insurance policies, the
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Indemnitee shall be named as an insured in a manner that provides the Indemnitee
the same rights and benefits as are accorded to the most favorably insured of
the Company's directors and/or officers.
SECTION 7. AGREEMENT TO SERVE; REPAYMENT
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7.1 Agreement to Serve. Indemnitee will serve or continue to serve as a
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director and/or officer of the Company for so long as the Indemnitee is duly
elected or appointed or until the Indemnitee voluntarily resigns. Any present
or future employment agreement between the Indemnitee and the Company is not
modified by this Agreement and nothing contained herein creates in the
Indemnitee any right of continued employment.
7.2 Repayment of Indemnified Costs. The Indemnitee will reimburse the
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Company for all Indemnified Costs paid by the Company in defending any
Proceeding against the Indemnitee if and only to the extent that a court of
competent jurisdiction finally decides that the Indemnitee is not entitled to be
indemnified by the Company for such Indemnified Costs under the provisions of
applicable law, the Company's Certificate of Incorporation, its Bylaws, this
Agreement, or otherwise. The Indemnitee will repay such amounts advanced only
if, and to the extent that, it is ultimately determined that Indemnitee is not
entitled to be indemnified for such Indemnified Costs by the Company pursuant to
this Agreement.
7.3 Repayment. The Indemnitee will promptly repay to the Company any
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amounts paid to the Indemnitee pursuant to other rights of indemnification or
under any insurance policy, to the extent those payments are duplicative of
payments under this Agreement.
SECTION 8. MISCELLANEOUS
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8.1 Successors and Assigns. This Agreement shall be binding upon, and
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shall inure to the benefit of the Indemnitee and the Indemnitee's spouse, heirs,
successors, personal
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representatives and assigns, and the Company and its successors and assigns.
Nothing in this Agreement, express or implied, is intended to confer any rights
or remedies upon any other person.
8.2 Separability. Each provision of this Agreement is a separate and
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distinct agreement and independent of the others, so that if any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, the
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions of this Agreement. To the extent required, any
provision of this Agreement may be modified by a court of competent jurisdiction
to preserve its validity and to provide the Indemnitee with the broadest
possible indemnification permitted under applicable law.
8.3 Savings Clause. If this Agreement or any portion of it is invalidated
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on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee as to Indemnified Costs with respect to any
Proceeding to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated or by any other applicable law.
8.4 Interpretation; Governing Law. This Agreement shall be construed as a
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whole and in accordance with its fair meaning. Headings are for convenience
only and shall not be used in construing meaning. This Agreement shall be
governed and interpreted in accordance with the laws of the State of Delaware.
8.5 Amendments; Waivers; Nature of Rights. No amendment, waiver,
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modification, termination or cancellation of this Agreement shall be effective
unless in writing signed by the party against whom enforcement is sought. No
failure or delay in exercising any right will be deemed a waiver of such right.
The indemnification rights afforded to the Indemnitee by this Agreement are
contract rights and may not be diminished, eliminated or otherwise affected by
amendments to the Company's Certificate of Incorporation, its Bylaws or any
agreement, including, without limitation, D&O Insurance policies.
8.6 Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
8.7 Notices. Any notice required to be given hereunder shall be in
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writing and, if directed to the Company, at 0000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000, Attention: Xxxx X. Xxxxxxx, and, if directed
to the Indemnitee, at the Indemnitee's most recent address on the books and
records of the Company, or to another address as either shall designate in
writing.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INDEMNITEE
___________________________________
Print Name: _______________________
NEW CENTURY FINANCIAL CORPORATION,
a Delaware corporation
By:________________________________
Title:_____________________________
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