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EXHIBIT 10.4
FORM OF DIRECTOR/OFFICER INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT") is made as of
_______________________, by and between LONG BEACH FINANCIAL CORPORATION, a
Delaware corporation (the "COMPANY"), and ___________________________
("INDEMNITEE"), a director of the Company.
I.
DEFINITIONS
"AFFILIATE" shall mean (a) with respect to any corporation, any
officer, director or 10% or more stockholder of such corporation, or (b) with
respect to any individual, any partner or immediate family member of such
individual or the estate of such individual, or (c) with respect to any
partnership, trust or joint venture, any partner, co-venturer or trustee of such
partnership, trust of joint venture, or any beneficiary or owner having 10% or
more interest in the equity, property or profits of such partnership, trust or
joint venture, or (d) with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common control
with such Person or any Affiliate of such Person.
"BOARD" shall mean the Board of Directors of the Company.
"DGCL" shall mean the Delaware General Corporation Law, as may be
amended from time to time.
"PERSON" shall mean any individual, partnership, corporation, joint
venture, trust, estate, or other entity.
"SUBSIDIARY" shall mean any corporation of which the Company owns,
directly or indirectly, through one or more subsidiaries, securities having more
than 50% of the voting power of such corporation.
II.
LIABILITY AND INDEMNIFICATION
2.1 LIABILITY AND INDEMNIFICATION. To the fullest extent permitted by
the DGCL, Indemnitee shall not be liable to the Company or its stockholders for
monetary damages for breach of his or her fiduciary duty as a director. The
Company shall indemnify, in the manner and to the fullest extent permitted by
the DGCL, Indemnitee (or his or her estate) if Indemnitee is or was a party to,
or is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether or not by or in the right of the Company,
and whether civil, criminal, administrative, investigative or otherwise, by
reason of the fact that Indemnitee is or was a director of the Company or any
Subsidiary of the Company, or is or was serving as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against all expenses as incurred (including attorneys' fees), judgments, fines
and amounts paid in settlement of such action, suit or proceeding.
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2.2 ENFORCING THIS AGREEMENT. If Indemnitee properly makes a claim for
indemnification or an advance of expenses that is payable pursuant to the terms
of this Agreement, and that claim is not paid by the Company, or on its behalf,
within sixty (60) days after a written claim has been received by the Company,
except in the case of a claim for an advance of expenses, in which case the
applicable period shall be twenty (20) days, Indemnitee may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim and if successful in whole or in part, Indemnitee shall be entitled to be
paid also all expenses actually and reasonably incurred in connection with
prosecuting such claim. In (a) any suit brought by Indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by Indemnitee to enforce
a right to an advance of expenses) it shall be a defense that, and (b) any suit
by the Company to recover an advance of expenses pursuant to the terms of an
undertaking the Company shall be entitled to recover such expenses upon a final
adjudication that, Indemnitee has not met any applicable standard for
indemnification set forth hereunder or in the DGCL. Neither the failure of the
Company (including the Board, independent legal counsel or stockholders) to have
made a determination prior to the commencement of such suit that indemnification
of Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Company (including the Board, independent legal counsel or
stockholders) that Indemnitee has not met such applicable standard of conduct,
shall either create a presumption that Indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by Indemnitee, be a
defense to such suit. In any suit brought by Indemnitee to enforce a right to
indemnification or to an advance of expenses hereunder, or by the Company to
recover an advance of expenses pursuant to the terms of the undertaking of
Indemnitee in Section 3.1, the burden of proving that Indemnitee is not entitled
to be indemnified, or to such advance of expenses, shall be on the Company.
2.3 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.
III.
ADVANCEMENT OF EXPENSES; INDEMNIFICATION PROCEDURE
3.1 ADVANCEMENT OF EXPENSES. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 2.1. Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that Indemnitee is
not entitled to be indemnified by the Company as authorized hereby or that such
indemnification is not otherwise permitted by applicable law. The advances to be
made hereunder shall be paid by the Company to Indemnitee within twenty (20)
days following delivery of a written request therefor or by Indemnitee to the
Company. Notwithstanding the foregoing or any other provision of this Agreement,
no advance shall be made by the Company if a determination is reasonably and
promptly made by the Board by a majority vote of a quorum of disinterested
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directors, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel to
the Company, that based upon the facts known to the Board or such legal counsel
at the time such determination is made (a) Indemnitee acted in bad faith or
deliberately breached Indemnitee's duty to the Company or its stockholders and
(b) as a result of such actions by Indemnitee, it is more likely than not that
it will ultimately be determined that Indemnitee is not entitled to
indemnification pursuant to this Agreement.
3.2 NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a condition
precedent to Indemnitee's right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be given in the manner set forth in
Section 10.3 and to the address stated therein, or such other address as the
Company shall designate in writing to Indemnitee. In addition, Indemnitee shall
give the Company such information and cooperation as it may reasonably require
and as shall be within Indemnitee's power.
3.3 NOTICE TO INSURERS. If, at the time of the receipt of a notice of a
claim pursuant to Section 3.2, the Company has director liability 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 actions to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
3.4 SELECTION OF COUNSEL. In the event the Company shall be obligated
under Section 3.1 to pay the expenses of any proceeding against Indemnitee, the
Company shall be entitled to assume the defense of such proceeding, with counsel
approved by Indemnitee, upon the delivery to Indemnitee of written notice of the
Company's election so to do. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (a) Indemnitee shall have the right to employ separate counsel in
any such proceeding at Indemnitee's expense; and (b) if (i) the employment of
counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and 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 Indemnitee's counsel shall be at the
expense of the Company (subject to the provisions of this Agreement).
IV.
ADDITIONAL INDEMNIFICATION RIGHTS;
NON-EXCLUSIVITY
4.1 APPLICATION. The provisions of this Agreement shall be deemed
applicable to all actual or alleged actions or omissions by Indemnitee during
any and all periods of time that Indemnitee was, is or shall be serving as a
director of the Company or a Subsidiary.
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4.2 SCOPE. The Company hereby agrees to indemnify Indemnitee to the
fullest extent permitted by law (except as set forth in Articles VIII and IX),
notwithstanding that such indemnification is not specifically authorized by the
other provisions of this Agreement, the Company's Certificate of Incorporation,
the Company's Bylaws or by statute. In the event of any changes, after the date
of this Agreement, in any applicable law, statute, or rule that expands the
right of a Delaware corporation to indemnify a member of its board of directors,
such changes shall be, ipso facto, within the purview of Indemnitee's rights and
the Company's obligations under this Agreement. In the event of any change in
any applicable law, statute or rule that narrows the right of a Delaware
corporation to indemnify a member of its board of directors, such change shall
have no effect on this Agreement or the parties' rights and obligations
hereunder.
4.3 NON-EXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested directors, the DGCL or otherwise, both as
to action in Indemnitee's official capacity and as to action in another capacity
while holding such office. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity even though he may have ceased to serve in such
capacity at the time of any action, suit or other covered proceeding.
V.
PARTIAL INDEMNIFICATION
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 or penalties actually or reasonably incurred by Indemnitee in the
investigation, defense, appeal or settlement of any civil or criminal action,
suit or proceedings but not, however, for the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for that portion to which Indemnitee is
entitled.
VI.
MUTUAL ACKNOWLEDGMENT
Both the Company and Indemnitee acknowledge that in certain instances,
federal law or public policy may override applicable state law and prohibit the
Company from indemnifying its directors under this Agreement or otherwise. For
example, the Company and Indemnitee acknowledge that the Securities and Exchange
Commission (the "SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws, and
federal legislation prohibits indemnification for certain ERISA violations.
Indemnitee understands and acknowledges that the Company has undertaken or may
be required in the future to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's rights under public policy to indemnify Indemnitee.
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VII.
LIABILITY INSURANCE
The Company shall, from time to time, make the good faith determination
whether or not it is practicable for the Company to obtain and maintain a policy
or policies of insurance with reputable insurance companies, providing the
directors with coverage for losses from wrongful acts, or to ensure the
Company's performance of its indemnification obligations under this Agreement.
Among other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all such
policies of liability insurance, Indemnitee shall be named as an insured in such
a manner as to provide Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company's directors. Notwithstanding the
foregoing, the Company shall have no obligations to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a parent
or Subsidiary of the Company.
VIII.
SEVERABILITY
Nothing in this Agreement is intended to require or shall be construed
as requiring the Company to do or fail to do any act in violation of applicable
law. The Company's inability, pursuant to court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. If this Agreement, or any portion hereof, shall be invalidated on any
ground by any court or competent jurisdiction, the Company shall nevertheless
indemnify Indemnitee to the full extent permitted by any applicable portion of
this Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its terms.
IX.
EXCEPTIONS TO THE COMPANY'S OBLIGATIONS
Any other provision to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement for the following:
9.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses to
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, unless said proceedings or
claims were authorized by the Board.
9.2 IMPROPER PERSONAL BENEFIT. To indemnify Indemnitee against
liability for any transactions from which Indemnitee, or any Affiliate of
Indemnitee, derived an improper personal benefit, including, but not limited to,
self-dealing or usurpation of a corporate opportunity.
9.3 DISHONESTY. To indemnify Indemnitee if a judgment or other final
adjudication adverse to Indemnitee establishes that Indemnitee committed acts of
active and deliberate
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dishonesty, with actual dishonest purpose and intent, which acts were material
to the cause of action so adjudicated.
9.4 INSURED CLAIMS; PAID CLAIMS. To indemnify 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) that
have been paid directly to Indemnitee (a) by an insurance carrier under a policy
of liability insurance maintained by the Company or (b) otherwise by any other
means.
9.5 CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for an
accounting of profits in fact realized from the purchase and sale of securities
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or any similar successor statute.
X.
MISCELLANEOUS
10.1 CONSTRUCTION OF CERTAIN PHASES. For purposes of this Agreement,
(a) references to the "COMPANY" shall include any resulting or surviving
corporation in any merger or consolidation in which the Company (as then
constituted) is not the resulting or surviving corporation so that Indemnitee
will continue to have the full benefits of this Agreement; (b) references to
"OTHER ENTERPRISES" shall include employee benefit plans; (c) references to
"FINES" shall include any excise taxes assessed on Indemnitee with respect to an
employee benefit plan; (d) references to "SERVING AT THE REQUEST OF THE COMPANY"
shall include any service as a director, officer, employee or agent of the
Company which impose duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and (e) if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to
have acted in a manner "REASONABLY BELIEVED TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS" as referenced to in this Agreement.
10.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
Notwithstanding the foregoing, Indemnitee shall have no right or power to
voluntarily assign or transfer any rights granted to Indemnitee, or obligations
imposed upon the Company, by or pursuant to this Agreement. Further, the rights
of Indemnitee hereunder shall in no event accrue to the benefit of, or be
enforceable by, any judgment creditor or other involuntary transferee of
Indemnitee.
10.3 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (a) if
mailed by domestic certified or registered mail with postage prepaid, properly
addressed to the parties at the address set forth below, or to such other
address as may be furnished to Indemnitee by the Company or to the Company by
Indemnitee, as the case may be, on the third business day after the date
postmarked, or (b) otherwise notice shall be deemed received when such notice is
actually received by the party to whom it is directed.
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If to Indemnitee: __________________________________
__________________________________
__________________________________
If to Company: LONG BEACH FINANCIAL CORPORATION
0000 Xxxx & Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: General Counsel
10.4 CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Delaware.
10.5 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as
of the date first above written.
LONG BEACH FINANCIAL CORPORATION,
a Delaware corporation
By:___________________________________
Its:__________________________________
______________________________________
Name:_________________________________
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