INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("AGREEMENT") is made as of this ______ day
of ________________, 1998, by and between AMERICAN NATIONAL FINANCIAL, INC., a
California corporation (the "COMPANY"), and _________________________
("INDEMNITEE").
RECITALS
A. The Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance.
B. The Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and
directors to expensive litigation risks at the same time as the availability
and coverage of liability insurance has been severely limited.
C. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers
and directors of the Company may not be willing to continue to serve as
officers and directors without additional protection.
D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors
of the Company and to indemnify its officers and directors so as to provide
them with the maximum protection permitted by law.
AGREEMENT
NOW, THEREFORE, The Company and Indemnitee hereby agree as follows:
1. AGREEMENT TO INDEMNIFY.
The Company hereby agrees to indemnify Indemnitee and hold him harmless
to the full extent authorized or permitted by the provisions of the General
Corporation Law of California, or by any amendment thereof or other statutory
provision requiring, authorizing or permitting such indemnification which may
be adopted after the date hereof; provided, however, that any such amendment
or other statutory provision which further limits the availability of or
further restricts the Company's ability to provide such indemnification shall
operate prospectively only, to the extent permitted by law.
2. AGREEMENT TO SERVE.
In consideration of the protection afforded by this Agreement, if
Indemnitee is presently a director of the Company he agrees to serve at least
for the balance of the current term as a director and not to resign
voluntarily during such period without the written consent of a majority of
the Board of Directors. If Indemnitee is presently an officer of the Company
not serving under an employment contract, he agrees to serve in such capacity
at least for the balance of the current fiscal year of the Company and not to
resign voluntarily during such period without the written consent of a
majority of the Board of Directors. Following the applicable period set
forth above, Indemnitee agrees to continue to serve in such capacity at the
will of the Company (or under separate agreement, if such agreement exists)
so long as he is duly appointed or elected and qualified in accordance with
the applicable provisions of the bylaws of the Company or any subsidiary of
the Company or until such time as he tenders his resignation in writing.
Nothing contained in this Agreement is intended to create in Indemnitee any
right to continued employment.
3. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) 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
subject to the indemnification provided in SECTION 1 hereof, to the final
disposition of such action, suit or proceeding. Indemnitee hereby undertakes
to 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 as authorized hereby. The advances to be made
hereunder shall be paid by the Company to the Indemnitee as soon as possible
following delivery of a written request therefor by Indemnitee to the
Company, but in no event more than twenty (20) days after such request.
(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall 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 directed to ___________________________
_________________________ (Attn: Chief Financial Officer) (or such other address
as the Company shall designate in writing to Indemnitee). Notice shall be
deemed received on the third business day after the date postmarked if sent by
domestic certified or registered mail, properly addressed; otherwise notice
shall be deemed received when such notice shall actually be received by the
Company. The Indemnitee's omission to so notify the Company under this
SECTION 3(b) shall not relieve the Company from any liability which it may have
to Indemnitee under this
-2-
Agreement (provided that the Company shall retain the right to reimbursement
from the Indemnitee for any damages it may have suffered as a result of the
failure so to notify). In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be
within Indemnitee's power.
(c) PROCEDURE. Any indemnification and advances provided for in
SECTION 1 and this SECTION 3 shall be made no later than twenty (20) days
after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Company's
Articles of Incorporation or Bylaws providing for indemnification, is not
paid in full by the Company within twenty (20) days after a written request
for payment thereof has first been received by the Company, Indemnitee may,
but need not, at any time thereafter bring an action against the Company to
recover the unpaid amount of the claim and, subject to SECTION 11(c) of this
Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including attorneys' fees) of bringing such action. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in connection with any action, suit or proceeding in
advance of its final disposition) that Indemnitee has not met the standards
of conduct which make it permissible under applicable law for the Company to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Company and Indemnitee shall be entitled to receive
interim payments of expenses pursuant to Subsection 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which
no further right of appeal exists. It is the parties' intention that if the
Company contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court to decide, and
neither the failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel,
or its stockholders) to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an actual
determination by the Company (including its Board of Directors, any committee
or subgroup of the Board of Directors, independent legal counsel, or its
stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice of
a claim pursuant to SECTION 3(b) hereof, the Company has director and officer
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 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.
-3-
(e) SELECTION OF COUNSEL. In the event the Company shall be obligated
under SECTION 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel reasonably acceptable to the
Indemnitee, upon the delivery to Indemnitee of written notice of its 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 (i) Indemnitee shall have the right to employ his counsel in
any such proceeding at Indemnitee's expense; and (ii) if (A) the employment
of counsel by Indemnitee has been previously authorized by the Company, (B)
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 (C) 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.
4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) SCOPE. Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Articles of Incorporation, the Company's Bylaws or by statute. In
the event of any change, after the date of this Agreement, in any applicable
law, statute, or rule which expands the right of a California corporation to
indemnify a member of its board of directors or an officer, such changes
shall be, IPSO FACTO, within the purview of Indemnitee's rights and Company's
obligations, under this Agreement. In the event of any change in any
applicable law, statute or rule which narrows the right of a California
corporation to indemnify a member of its board of directors or an officer,
such changes, to the extent not otherwise required by such law, statute or
rule to be applied to this Agreement shall have no effect on this Agreement
or the parties' rights and obligations hereunder.
(b) NONEXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be
entitled under the Company's Articles of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested Directors, the General
Corporation Law of the State of California, or otherwise, both as to action
in Indemnitee's official capacity and as to action in another capacity while
holding such office (an "INDEMNIFIED CAPACITY"). 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 an Indemnified Capacity at the time of any
action, suit or
-4-
other covered proceeding.
5. 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 him in the
investigation, defense, appeal or settlement of any civil or criminal action,
suit or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. ENFORCEMENT.
(a) PUBLIC POLICY. 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 and officers
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 right
under public policy to indemnify Indemnitee.
(b) INDUCEMENT. The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligation imposed on the Company
hereby in order to induce Indemnitee to continue to serve as a director or
officer of the Company and/or one or more of its subsidiaries, and
acknowledges that Indemnitee is relying upon this Agreement in continuing in
such indemnity.
-5-
7. OFFICER AND DIRECTOR 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 officers and directors of the Company 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 policies of director and
officer 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, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not
a director of the Company but is an officer; or of the Company's key
employees, if Indemnitee is not an officer or director but is a key employee.
Notwithstanding the foregoing, the Company shall have no obligation 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.
8. 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, and to the extent this Agreement requires any act or omission
to act which would be in violation of applicable law, such requirement shall
be IPSO FACTO eliminated herefrom. The Company's inability, pursuant to
court order, to perform its obligations under this Agreement shall not
constitute a breach of this Agreement. The provisions of this Agreement
shall be severable as provided in this SECTION 8. If this Agreement or any
portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then 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.
9. EXCEPTIONS.
Any other provision herein to the contrary notwithstanding, the Company
shall not be obligated pursuant to the terms of this Agreement:
(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or
-6-
advance expenses to Indemnitee with respect to proceedings or claims
initiated or brought voluntarily by 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, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board of
Directors finds it to be appropriate; or
(b) INSURED 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) which
have been actually paid directly to Indemnitee by an insurance carrier under
a policy of officers' and directors' liability insurance maintained by the
Company, without further liability to the Indemnitee for reimbursement of any
such amounts.
(c) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for expenses
or the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of
1934, as amended, or any similar successor statute.
10. CONSTRUCTION OF CERTAIN PHRASES.
(a) For purposes of this Agreement, references to the "COMPANY" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that if Indemnitee is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions
of this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.
(b) For purposes of this Agreement, references to "OTHER ENTERPRISES"
shall include employee benefit plans; references to "FINES" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "SERVING AT THE REQUEST OF THE COMPANY" shall include any
service as a director, officer, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer, employee
or agent with respect to any employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have
acted in a manner
-7-
"NOT OPPOSED TO THE BEST INTERESTS OF THE COMPANY" as referred to in this
Agreement.
11. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
(b) 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.
(c) ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms
hereof, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee with respect to
such action, unless as a part of such action, the court of competent
jurisdiction determines that each of the material assertions made by
Indemnitee as a basis for such action were not made in good faith or were
frivolous. In the event of an action instituted by or in the name of the
Company under this Agreement or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including attorneys' fees, incurred by Indemnitee in defense of
such action (including with respect to Indemnitee's counterclaims and
cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee's material defenses to such action were
made in bad faith or were frivolous.
(d) NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i)
if delivered by hand and receipted for by the party addressee, on the date of
such receipt, or (ii) if mailed by certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
(e) 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 and agree that any action
instituted under this Agreement shall be brought only in the state courts of
the State of California.
(f) CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of California,
as applied to contracts between California residents entered into and to be
performed entirely within California.
-8-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AMERICAN NATIONAL FINANCIAL, INC.
By:
--------------------------------
Its:
----------------------------
AGREED TO AND ACCEPTED:
INDEMNITEE:
------------------------------
(Address)
------------------------------
------------------------------
------------------------------
-9-
