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EXHIBIT 10.13
WESTERN SIERRA NATIONAL BANK
INDEMNIFICATION AGREEMENT
This Agreement is made as of the 16TH day of MAY, 1994 by and between Western
Sierra National Bank, a national association ("Bank"), and XXXX X. XXXX ("the
Indemnitee"), a director (or officer) of Bank.
RECITALS
A. Bank and the Indemnitee recognize that statutes, regulations,
court opinions and Bank's Articles of Association and Bylaws are uncertain in
providing Bank's directors and officers with adequate protection from
liabilities to which they may become personally exposed as a result of
performing their duties in good faith for Bank;
B. Bank and the Indemnitee are aware of the large number of
lawsuits filed against corporate directors and officers;
C. Bank and the Indemnitee recognize that the cost of defending
against such lawsuits, may be beyond the financial resources of most directors
and officers of Bank;
D. Bank and the Indemnitee recognize that the potential risks and
liabilities of being a director or officer pose a significant deterrent and
increased reluctance on the part of experienced and capable individuals to serve
as a director or officer of Bank;
E. Bank has investigated the availability and sufficiency of
liability insurance to its directors and officers with adequate protection
against potential liabilities and has concluded that such insurance provides
both inadequate and unacceptable protection to its directors and officers, and
thus, it would be in the best interests of Bank and its shareholders to contract
with the Indemnitee, to indemnify him to the fullest extent permitted by law
against personal liability for actions taken in the good faith performance of
his duties to Bank;
F. The Office of the Comptroller of the Currency (the "OCC")
interpretive ruling 12 CRF 7.5217 states that, with regard to indemnification of
directors, officers and employees, a national bank may amend its Articles of
Association to substantially reflect the general standards of law of the state
in which it is headquartered.
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G. Section 317 of the General Corporation Law of the state of
California ("Section 317") sets forth certain provisions relating to the
mandatory and permissive indemnification of directors and officers (among
others) of a California corporation by such corporation.
H. In order to induce and encourage experienced and capable persons
such as the Indemnitee to continue to serve as a director or officer of Bank,
the Board of Directors of Bank has determined, after due consideration and
investigation of the terms and provisions of this Agreement and the various
other options available to Bank and the Indemnitee in lieu hereof, that the
following Agreement is not only reasonable and prudent but necessary to promote
and ensure the best interests of Bank and its shareholders;
I. Bank desires to have the Indemnitee continue to serve as a
director or officer of Bank free from undue concern for unpredictable,
inappropriate or unreasonable legal risks and personal liabilities by reason of
his acting in good faith in the performance to his duty to Bank; and the
Indemnitee desires to continue to serve as a director or officer of Bank;
provided, and on the express condition, that the Indemnitee is furnished with
the indemnity set forth hereinafter.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below and based on the premises set forth above, Bank and the
Indemnitee do hereby agree as follows:
1. Agreement to Serve. The Indemnitee will serve or continue to
serve as a director or officer of Bank to the best of his abilities at the will
of Bank for so long as the Indemnitee is duly elected or appointed or until such
time as the Indemnitee tenders his resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether brought in the right of
Bank or otherwise and whether of a civil, criminal, administrative or
investigative nature, including, but not limited to, actions, suits or
proceedings brought under and/or predicated upon the Securities Act of 1933, as
amended, and/or the Securities Exchange Act of 1934, as amended, and/or their
respective state counterparts and/or any rule or regulation promulgated
thereunder, in which the Indemnitee may be or may have been involved as a party
or otherwise, by reason of the fact that the Indemnitee is or was a director or
officer
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of Bank, by reason of any action taken by him or of any inaction on his part
while acting as such director or officer or by reason of the fact that he is or
was serving at the request of Bank as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
whether or not he is serving in such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be provided
under this Agreement.
Notwithstanding anything to the contrary above, the term
Proceeding does not include any administrative proceeding or action instituted
by an appropriate bank regulatory agency which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action by
the Indemnitee in the form of payments to Bank.
(b) The term "Expenses" includes, without limitation
thereto, expenses of investigations, of judicial or administrative proceedings
or appeals, attorneys' fees and disbursements and any expenses of establishing a
right indemnification under Paragraph 7 of this Agreement, but shall not include
the amount of judgments, fines or penalties actually levied against the
Indemnitee.
Notwithstanding anything to the contrary above, the term
Expenses does not include expenses incurred by the Indemnitee or payments to
Bank required of the Indemnitee as a result of an administrative action or
proceeding by an appropriate bank regulatory agency.
3. Indemnity in Third Party Proceedings. Bank shall indemnify the
Indemnitee in accordance with the provisions of this section if the Indemnitee
is a party to or threatened to be made a party to or otherwise involved in any
Proceeding (other than a Proceeding by or in the right of Bank to procure a
judgment in its favor), by reason of the fact that the Indemnitee is or was a
director or officer of Bank or is or was serving at the request of Bank as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise, against all Expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred by the Indemnitee
in connection 'with such Proceeding, provided it is determined pursuant to
Paragraph 7 of this Agreement or by the court before which such action was
brought or by the shareholders of Bank in the manner prescribed by Section 317,
that the Indemnitee acted in good faith and in a manner which he reasonably
believed to be in the best interests of Bank and, in the case of a criminal
proceeding, in addition, had no reasonable cause to believe that his conduct was
unlawful. The termination of any such Proceeding by judgment. order of court,
settlemen, conviction, or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the Indemnitee
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did not act in good faith and in a manner which he reasonably believed to be in
the best interest of Bank, and with respect to any criminal proceeding, that
such person had reasonable cause to believe that his conduct was unlawful.
4. Indemnity in Proceedings by or in the Right of Bank. Bank shall
indemnify the Indemnitee in accordance with the provisions of this section if
the Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any Proceeding by or in the right of Bank to procure a judgment in
its favor by reason of the fact that the Indemnitee is or was a director of
Bank or is or was serving at the request of Bank as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against all Expenses actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such Proceeding,
provided it is determined pursuant to Paragraph 7 of this Agreement or by the
court before which such action was brought or by the shareholders of Bank in the
manner prescribed by Section 317, that the Indemnitee acted in good faith and in
a manner which he reasonably believed to be in the best interests of Bank and
its shareholders (for a Proceeding by or in the right of Bank) and with such
care, including reasonable inquiry, as an ordinarily prudent person in a like
position would use under similar circumstances. Notwithstanding the foregoing,
no indemnification shall be made under this Paragraph 4:
(a) in respect of any claim, issue or matter as to which the
Indemnitee shall have been adjudged to be liable to bank, unless and only to the
extent that the court in which such Proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, the
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
such court shall determine;
(b) of amounts paid in settling or otherwise disposing of
such Proceeding, other than a Threatened action, suit or proceeding, without
court approval;
(c) of Expenses incurred in defending such Proceeding, other
than a threatened action, suit or proceeding, which is settled or otherwise
disposed of without court approval, or,
(d) in respect of any act, omission, or transaction set
forth in Section 204(a)(10)(A)(i)-(vii) of the California Corporations Code.
5. Indemnification of Expenses of Successful Party. Notwithstanding
any other provision of this Agreement, to the extent that the Indemnitee has
been successful on the merits in defense of any Proceeding or in the defense of
any claim, issue or matter therein, the Indemnitee shall be indemnified against
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all Expenses actually and reasonably incurred in connection therewith.
6. Advances of Expenses. The Expenses incurred by the Indemnitee
pursuant to Paragraphs 3 and 4 in defending any Proceeding shall be paid by Bank
in advance of the final disposition of such Proceeding at the written request of
the Indemnitee, if the Indemnitee shall provide an undertaking in the form
attached hereto as Exhibit "A" to Bank to repay such amount unless it is
ultimately determined that the Indemnitee is entitled to the payment of
expenses. The written request to Bank shall include a description of the nature
of the Proceeding and be accompanied by copies of any documents filed with a
court relating to the Proceeding.
Notwithstanding the foregoing or any other provision of this
Agreement, no advance shall be made by Bank if a determination is reasonably and
promptly made by the Board of Directors by a majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs) by independent legal
counsel, that, based upon the facts known to the board or counsel at the time
such determination is made, (a) the Indemnitee acted in bad faith or
deliberately breached his duty to Bank or its stockholders, and (b) as a result
of such actions by the Indemnitee, it is more likely than not that it will
ultimately be determined that the Indemnitee is not entitled to indemnification
under the terms of this Agreement.
7. Rights of the Indemnitee to Indemnification Upon Application;
Procedure Upon Application. To the extent a quorum of the Board of Directors of
Bank consisting of directors who were or are not parties to a Proceeding is
obtainable, the Board of Directors shall determine within 45 days after receipt
of the written request of the Indemnitee for indemnification whether the
Indemnitee has met the relevant standards for indemnification set forth in
Paragraphs 3 and 4 and, if it determines that such standards have been met, it
shall provide indemnification to the Indemnitee.
Notwithstanding the foregoing, the Indemnitee may request independent
counsel or may bring suit in the court in which such Proceeding is or was
pending to determine whether the Indemnitee is entitled to indemnification as
provided by this Agreement. The Indemnitee's expenses incurred in connection
with successfully establishing his right to indemnification, in whole or part,
shall also be indemnified by Bank.
8. Partial Indemnification. the Indemnitee is entitled under any
provision of this Agreement to indemnification by Bank for some or a portion of
the Expenses, judgments, fines, settlements or other amounts actually and
reasonably incurred by
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him in the investigation, defense, appeal or settlement of any Proceeding but
not, however, for the total amount thereof, Bank shall nevertheless indemnify
the Indemnitee for the portion of such Expenses, judgments, fines settlements or
other amounts to which the Indemnitee is entitled.
9. Directors' and Officers' Liability Insurance. The obtaining of
directors' and officers' liability insurance ("D&O Coverage") at the expense of
and by Bank shall in no way limit or diminish the obligation of Bank to
indemnify the Indemnitee as provided in this Agreement, provided, however, that
any amounts actually recovered by the Indemnitee from the insurer providing D&O
Coverage shall be applied in reduction of amounts otherwise owing by Bank by
reason of it's indemnification under this Agreement and if Bank pays any
amounts to the Indemnitee pursuant to this Agreement, bank shall be subrogated
to the Indemnitee's rights and claims against the insurer providing D&O
Coverage and the Indemnitee shall execute such documents as Bank shall deem
necessary to reflect such subrogation.
Notwithstanding anything to the contrary in this Agreement, the D&O
Coverage obtained by Bank shall explicitly exclude insurance coverage for a
formal order assessing civil money penalties against the Indemnitee.
10. Settlement of Claims.
(a) If Bank has not obtained D&O Coverage, the Indemnitee
shall not settle any Proceeding for which he intends to seek indemnification
hereunder without first attempting to obtain the approval of Bank. If the
Indemnitee seeks such approval and such approval is not granted by Bank, the
Indemnitee shall be free to settle the Proceeding and pursue any procedures to
establish his right to indemnification as provided under this Agreement. If the
Indemnitee seeks such approval and such approval is not granted, but Bank agrees
to indemnify the Indemnitee against any Expenses, judgments, fines, settlements,
or other amounts actually and reasonably incurred by the Indemnitee in
connection with such Proceeding, the Indemnitee shall not settle such
Proceeding. If, however, under such circumstances the Indemnitee does settle
such Proceeding, the Indemnitee shall forfeit his rights to indemnification
under this Agreement.
(b) if Bank has obtained D&O Coverage, the Indemnitee shall
not settle any Proceeding for which he intends to seek indemnification without
first attempting to obtain any approval required with respect to such settlement
by the insurance carrier of any applicable D&O Coverage. If the Indemnitee seeks
such approval and such approval is not granted by the insurance carrier of any
applicable D&O Coverage, the Indemnitee shall not settle such Proceeding without
then attempting to obtain the
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approval of Bank. In the event the Indemnitee seeks such approval from Bank,
Bank and the Indemnitee shall have the same rights and obligations as set forth
in Paragraph 10(a). If the Indemnitee seeks such approval from Bank and such
approval is granted, Bank shall be subrogated to the Indemnitee's rights and
claims against the insurance carrier of any applicable D&O coverage and the
Indemnitee shall execute such documents as Bank shall deem necessary to effect
such subrogation.
11. Mutual Acknowledgment. acknowledge that in certain instances,
Federal law, the OCC or applicable public policy may prohibit Bank from
indemnifying its directors and officers under this Agreement or otherwise. For
examples Bank and the 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. The
Indemnitee understands and acknowledges that Bank 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
Bank's right under public Policy to indemnify the Indemnitee.
Further, the Indemnitee understands that in accordance with its
supervisory responsibilities, the OCC may, in its discretion, review the
possible threat to Bank's safety and soundness posed by this Agreement. Based on
this review, the OCC may direct a modification of this Agreement through
appropriate administrative action.
12. Successors and Assigns. This Agreement shall be binding upon
Bank and its successors and assigns and shall inure to the benefit of the
Indemnitee and the Indemnitee's spouse, heirs, executors and administrators.
13. Savings Clause. If this Agreement or any portion thereof be
invalidated on any ground by any court of competent jurisdiction, then Bank
shall nevertheless indemnify the Indemnitee as to Expenses, judgments, fines,
settlements or other amounts with respect to any Proceeding to the fullest
extent permitted by any applicable portion of this Agreement that to shall not
have been invalidated or by any other applicable law.
14. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California and national banking law.
15. Notices. The Indemnitee shall, as a condition precedent to his
right to be indemnified under this Agreement, give to Bank notice in writing as
soon as practicable of any claim made against him for which indemnification will
or could be sought
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under this Agreement. Notice to Bank shall be directed to Western Sierra
National Bank, 0000 Xxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxx
Xxxxxxxx, President (or such other address as Bank shall designate in writing to
the Indemnitee).
16. Modification and Amendment. No amendment, modification,
termination or cancellation of this Agreement shall be effected unless in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year set forth above.
WESTERN SIERRA NATIONAL BANK
By: /s/ XXXX X. XXXX By: /s/ XXXXXXXXX XXXXX
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Indemnitee /s/ Xxxxxxx X. Xxxxxxx, Secretary
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WESTERN SIERRA NATIONAL BANK
UNDERTAKING
TO: President
Western Sierra National Bank
0000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
I, XXXX X. XXXX a director(officer) of Western Sierra National Bank, a national
association, pursuant to national banking laws, Section 317(f) of the California
Corporations Code and the terms of my Indemnification Agreement with Western
Sierra National Bank agree to repay Western Sierra National Bank for all
expenses advanced on my behalf in defense of any proceeding or in defense of any
claim, issue or matter therein, prior to the disposition of such proceeding,
unless it shall be determined ultimately that I am entitled to indemnification
under national banking laws, Section 317 of the California Corporations Code or
Western Sierra National Bank's Articles of Association, Bylaws, or my
Indemnification Agreement.
Date: MAY 16, 1994
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INDEMNITEE
[SIG]
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