INDEMNIFICATION AGREEMENT
EXHIBIT
10.06
This
Indemnification Agreement, dated as of August 9, 2007, is made by and among
Bank
of Marin Bancorp, a California corporation, Bank of Marin, a California banking
corporation (Bank of Marin Bancorp and Bank of Marin being collectively referred
to as the "Corporation"),
and a
director [officer] of either Bank of Marin Bancorp or Bank of Marin (the
"Indemnitee").
RECITALS
A. The
Corporation and the Indemnitee recognize that the present state of the law
is
too uncertain to provide the Corporation's officers and directors with adequate
and reliable advance knowledge or guidance with respect to the legal risks
and
potential liabilities to which they may become personally exposed as a result
of
performing their duties for the Corporation;
B. The
Corporation and the Indemnitee are aware of the substantial growth in the number
of lawsuits filed against corporate officers and directors in connection with
their activities in such capacities and by reason of their status as
such;
C. The
Corporation and the Indemnitee recognize that the cost of defending against
such
lawsuits, whether or not meritorious, is typically beyond the financial
resources of most officers and directors of the Corporation;
D. The
Corporation and the Indemnitee recognize that the legal risks and potential
liabilities, and the threat thereof, associated with proceedings filed against
the officers and directors of the Corporation bear no reasonable relationship
to
the amount of compensation received by the Corporation's officers and
directors;
E. The
Corporation has determined that the liability insurance coverage available
to
the Corporation as of the date may not be entirely adequate. The
Corporation believes, therefore, that the interest of the Corporation's
shareholders would be best served by a combination of (i) such insurance as
the
Corporation may obtain pursuant to the Corporation's obligations hereunder
and
(ii) a contract with its officers and directors, including the Indemnitee,
to
indemnify them to the fullest extent permitted by law (as in effect on the
date
hereof, or, to the extent any amendment may expand such permitted
indemnification, as hereafter in effect) against personal liability for actions
taken in the performance of their duties to the Corporation;
F. Section
317 of the California Corporations Code empowers California corporations to
indemnify their officers and directors and further states that the
indemnification provided by Section 317 "shall not be deemed exclusive of any
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, to the extent such additional rights to
indemnification are authorized in the articles of the corporation"; thus,
Section 317 does not by itself limit the extent to which the Corporation may
indemnify persons serving as its officers and directors;
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G. The
Corporation's Articles of Incorporation and Bylaws authorize the indemnification
of the officers and directors of the Corporation in excess of that expressly
permitted by Section 317, subject to the limitations set forth in Section
204(a)(11) of the California Corporations Code;
H. The
Board of Directors of the Corporation has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of
the
Corporation and to encourage such individuals to take the business risks
necessary for the success of the Corporation, it is necessary for the
Corporation to contractually indemnify its officers and directors, and to assume
for itself liability for expenses and damages in connection with claims against
such officers and directors in connection with their service to the Corporation,
and has further concluded that the failure to provide such contractual
indemnification could result in great harm to the Corporation and its
shareholders;
I. The
Corporation desires and has requested Indemnitee to serve or continue to serve
as a director [officer] of the Corporation, free from undue concern for the
potential liabilities associated with such services to Corporation;
and
J. The
Indemnitee is willing to serve, or continue to serve, the Corporation, provided,
and on the expressed condition, that he is furnished with the indemnification
provided for herein.
AGREEMENT
NOW,
THEREFORE, the Corporation and Indemnitee agree as follows:
1. Definitions.
(a) "Expenses"
means, for the purposes of this Agreement, all direct and indirect costs of
any
type or nature whatsoever (including, without limitation, any fees and
disbursements of Indemnitee's counsel, accountants and other experts and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, preparation, defense or appeal of a
Proceeding; provided, however, that Expenses shall not include judgments, fines,
penalties or amounts paid in settlement of a Proceeding.
(b) "Proceeding"
means, for the purposes of this Agreement, any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative
(including an action brought by or in the right of the Corporation) in which
Indemnitee may be or may have been involved as a party or otherwise, by reason
of the fact that Indemnitee is or was a director [officer] of the Corporation,
or is or was a director [officer] of any subsidiary of the Corporation, by
reason of any action taken by him or of any inaction on his part while acting
as
such director [officer] or by reason of the fact that he is or was serving
at
the request of the Corporation as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust
or
other enterprise, or was a director and/or officer of the foreign or domestic
corporation which was a predecessor corporation to the Corporation or of another
enterprise at the request of such predecessor corporation, 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.
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2. Agreement
to Serve. In consideration of the protection afforded by this
Agreement, if Indemnitee is a director of the Corporation, he agrees to continue
to serve in such capacity until his resignation or the expiration of his
term. If Indemnitee is an officer of the corporation not serving
under an employment contract, he agrees to continue to serve in such capacity
until his resignation or until at least for the balance of the current fiscal
year of the Corporation. Nothing contained in this Agreement is intended to
create in Indemnitee any right to continued employment.
3. Indemnification.
(a) Third
Party Proceedings. The Corporation shall indemnify Indemnitee
against Expenses, judgments, fines, penalties or amounts paid in settlement
(if
the settlement is approved in advance by the Corporation, which approval shall
not be unreasonably withheld) actually and reasonably incurred by Indemnitee
in
connection with a Proceeding (other than a Proceeding by or in the right of
the
Corporation) if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful. The termination of any Proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in the best interests of the Corporation, or, with
respect to any criminal Proceeding, had no reasonable cause to believe that
Indemnitee's conduct was unlawful.
(b) Proceedings
By or in the Right of the Corporation. To the fullest extent
permitted by law, the Corporation shall indemnify Indemnitee against Expenses
and amounts paid in settlement, actually and reasonably incurred by Indemnitee
in connection with a Proceeding by or in the right of the Corporation to procure
a judgment in its favor if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the best interests of the Corporation
and its shareholders.
(c) Scope. Notwithstanding
any other provision of this Agreement but subject to Section 14(b), the
Corporation shall indemnify the Indemnitee to the fullest extent permitted
by
law, notwithstanding that such indemnification is not specifically authorized
by
other provisions of this Agreement, the Corporation's Articles of Incorporation,
the Corporation's Bylaws or by statute.
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4. Limitations
on Indemnification. Any other provision herein to the contrary
notwithstanding, the Corporation shall not be obligated pursuant to the terms
of
this Agreement:
(a) Excluded
Acts. To indemnify Indemnitee for any acts or omissions or
transactions from which a director or officer may not be relieved of liability
under the California General Corporation Law or for expenses, penalties, or
other payments prohibited by Part 359 of the FDIC’s Rules and Regulations,
incurred in an 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 an individual
or individuals in the form of payments to the Corporation or its
subsidiary;
(b) 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, 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
Section 317 of the California General Corporation Law, but such indemnification
or advancement of Expenses may be provided by the Corporation in specific cases
if the Board of Directors has approved the initiation or bringing of such suit;
or
(c) Lack
of Good Faith. To indemnify Indemnitee for any Expenses incurred
by the Indemnitee with respect to any proceeding instituted by Indemnitee to
enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by the Indemnitee in such
proceeding was not made in good faith or was frivolous; or
(d) 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
paid
directly to or on behalf of Indemnitee by an insurance carrier under a policy
of
directors' and officers' liability insurance maintained by the Corporation
or
any other policy of insurance maintained by the Corporation or Indemnitee;
or
(e) Claims
Under Section 16(b). To indemnify Indemnitee for Expenses and 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.
5. Determination
of Right to Indemnification.
Upon
receipt of a written claim
addressed to the Board of Directors for indemnification pursuant to Section
3,
the Corporation shall determine by any of the methods set forth in Section
317(e) of the California Corporations Code whether Indemnitee has met the
applicable standard of conduct which makes it permissible under applicable
law
to indemnify Indemnitee. If a claim under Section 3 is not paid in
full by the Corporation within ninety (90) days after such written claim has
been received by the Corporation, the Indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim
and, unless such action is dismissed by the court as frivolous or brought in
bad
faith, the Indemnitee shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action,
other than an action brought to enforce a claim for Expenses incurred in
defending any Proceeding (other than a Proceeding brought by the Corporation
directly in its own right as distinguished from an action brought derivatively
or by any receiver or trustee) in advance of its final disposition where the
required undertaking, if any, has been tendered to the Corporation that the
Indemnitee has not met the standards of conduct which make it permissible under
applicable law to indemnify the Indemnitee for the amount claimed, but the
burden of proving such defense, by clear and convincing evidence, shall be
on
the Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel, or its shareholders) to
make
a determination prior to the commencement of such action that indemnification
of
the Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct under applicable law, nor an actual determination
by the Corporation (including its Board of Directors, independent legal counsel
or its shareholders) that the Indemnitee has not met such applicable standard
of
conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct.
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6. Advancement
and Repayment of Expenses.
(a) The
Expenses incurred by Indemnitee in defending and investigating any Proceeding
shall be paid by the Corporation in advance of the final disposition of such
Proceeding within 30 days after receiving from Indemnitee the copies of invoices
presented to Indemnitee for such Expenses, if Indemnitee shall provide an
undertaking to the Corporation to repay such amount to the extent it is
ultimately determined that Indemnitee is not entitled to
indemnification. In determining whether or not to make an advance
hereunder, the ability to Indemnitee to repay shall not be a
factor. Notwithstanding the foregoing, in a proceeding brought by the
Corporation directly, in its own right (as distinguished from an action bought
derivatively or by any receiver or trustee), the Corporation shall not be
required to make the advances called for hereby if the Board of Directors
determines, in its sole discretion, that it does not appear that Indemnitee
has
met the standards of conduct which make it permissible under applicable law
to
indemnify Indemnitee and the advancement of Expenses would not be in the best
interests of the Corporation and its shareholders.
7. Partial
Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification or advancement by the Corporation
of some or a portion of any Expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, penalties, and amounts paid
in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a Proceeding, but is not entitled to indemnification or advancement of the
total amount thereof, the Corporation shall nevertheless indemnify or pay
advancements to the Indemnitee for the portion of such Expenses or liabilities
to which the Indemnitee is entitled.
8. Notice
to Corporation by Indemnitee. Indemnitee shall notify the
Corporation in writing of any matter with respect to which Indemnitee intends
to
seek indemnification hereunder as soon as reasonably practicable following
the
receipt by Indemnitee of written notice thereof; provided that any delay in
so
notifying Corporation shall not constitute a waiver by Indemnitee of his rights
hereunder. The written notification to the Corporation shall be
addressed to the Board of Directors and shall include a description of the
nature of the Proceeding and the facts underlying the Proceeding and be
accompanied by copies of any documents filed with the court in which the
Proceeding is pending. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably require and
as
shall be within Indemnitee's power.
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9. Maintenance
of Liability Insurance.
(a) The
Corporation hereby agrees that so long as Indemnitee shall continue to serve
as
a director [officer] of the Corporation and thereafter so long as Indemnitee
shall be subject
to
any
possible Proceeding, the Corporation, subject to Section 9(b), shall use its
best efforts to obtain and maintain in full force and effect directors' and
officers' liability insurance ("D&O Insurance") which provides Indemnitee
the same rights and benefits as are accorded to the most favorably insured
of
the Corporation's directors, if Indemnitee is a director; or of the
Corporation's officers, if Indemnitee is not a director of the Corporation
but
is an officer.
(b) Notwithstanding
the foregoing, the Corporation shall have no obligation to obtain or maintain
D&O Insurance if the Corporation determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance
are
disproportionate to the amount of coverage provided, the coverage provided
by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Corporation.
(c) Notice
to Insurers. If, at the time of the receipt of a notice of a
claim pursuant to Section 8 hereof, the Corporation has D&O Insurance in
effect, the Corporation 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 Corporation 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.
10. Defense
of Claim. In the event that the Corporation shall be obligated under Section
6 hereof to pay the Expenses of any Proceeding against Indemnitee, the
Corporation, if appropriate, shall be entitled to assume the defense of such
Proceeding, with counsel approved by Indemnitee, which approval shall not be
unreasonably withheld, upon the delivery to Indemnitee of written notice of
its
election to do so. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Corporation,
the
Corporation 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
Corporation, or (b) Indemnitee shall have reasonably concluded that there may
be
a conflict of interest between the Corporation and the Indemnitee in the conduct
of such defense or (c) the Corporation 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
Corporation.
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11. Attorneys'
Fees.
(a) In
the event that Indemnitee or the Corporation institutes an action to enforce
or
interpret any terms of this Agreement, the Corporation shall reimburse
Indemnitee for all of the Indemnitee's reasonable fees and expenses in bringing
and pursuing such action or defense, unless as part of such action or defense,
a
court of competent jurisdiction determines that the material assertions made
by
Indemnitee as a basis for such action or defense were not made in good faith
or
were frivolous.
(b) Any
controversy or claim arising out of or relating to the interpretation of the
amount of an Indemnitee “reasonable” fees and expenses pursuant to this Section
11 or elsewhere in this Agreement may, at the election of Indemnitee, be finally
settled by arbitration in accordance with the rules of the American Arbitration
Association (with no right to a jury trial or appellate review), and judgment
upon the award rendered by the arbitrator may be rendered in any court having
jurisdiction thereof. The arbitration shall be conducted in San Francisco,
California in accordance with the ADR Service Provider’s then current rules for
arbitration of business disputes by a panel of three arbitrators (with each
party selecting one arbitrator and those two selecting the
third). The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16 (as may be amended). In no
event shall a claim be arbitrated that would be barred by the statute of
limitations in a judicial proceeding.
12. Continuation
of Obligations. All agreements and obligations of the Corporation
contained herein shall continue during the period the Indemnitee is a director
[officer] of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, and shall
continue thereafter so long as the Indemnitee shall be subject to any possible
proceeding by reason of the fact that Indemnitee served in any capacity referred
to herein.
13. Successors
and Assigns. This Agreement establishes contract rights that
shall be binding upon, and shall inure to the benefit of, the successors,
assigns, heirs and legal representatives of the parties hereto.
14. Non-exclusivity.
(a) The
provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed to be exclusive of any other rights that the
Indemnitee may have under any provision of law, the Corporation's Articles
of
Incorporation or Bylaws, the vote of the Corporation's shareholders or
disinterested directors, other agreements or otherwise, both as to action in
his
official capacity and action in another capacity while occupying his position
as
a director [officer] of the Corporation.
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(b) In
the event of any changes, after the date of this Agreement, in any applicable
law, statute, or rule which expand the right of a California corporation to
indemnify its officers and directors, the Indemnitee's rights and the
Corporation's obligations under this Agreement shall be expanded to the full
extent permitted by such changes. In the event of any changes in any
applicable law, statute or rule, which narrow the right of a California
corporation to indemnify a director or 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.
15. Effectiveness
of Agreement. To the extent that the indemnification permitted
under the terms of certain provisions of this Agreement exceeds the scope of
the
indemnification provided for in the California General Corporation Law, such
provisions shall not be effective unless and until the Corporation's Articles
of
Incorporation authorize such additional rights of indemnification. In
all other respects, the balance of this Agreement shall be effective as of
the
date set forth on the first page and may apply to acts of omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Corporation, or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, at the
time
such act or omission occurred.
16. Severability. Nothing
in this Agreement is intended to require or shall be construed as requiring
the
Corporation to do or fail to do any act in violation of applicable law. The
Corporation's inability, pursuant to court order or pursuant to Part 359 of
the
FDIC’s Rules and Regulations, 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 16. If
this Agreement or any portion hereof shall be invalidated on any ground by
any
court of competent jurisdiction, then the Corporation 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.
17. Governing
Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California. To the extent
permitted by applicable law, the parties hereby waive any provisions of law
which render any provision of this Agreement unenforceable in any
respect.
18. 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 or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
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19. Mutual
Acknowledgment. Both the Corporation and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Corporation from indemnifying its directors and officers under this
Agreement or otherwise. Indemnitee understands and acknowledges that
the Corporation has undertaken or may be required in the future to undertake
with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of
the
Corporation's right under public policy to indemnify Indemnitee.
20. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original.
21. Limitation
of Action To extent that Indemnitee is solely a director or
officer of Bank of Marin Bancorp or Bank of Marin and not both, any obligation
to Indemnitee hereunder shall be limited to only the entity of which Indemnitee
is an officer or director and the other entity shall have no obligation to
Indemnitee hereunder.
22. Amendment
and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed
by
both parties hereto.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
set forth above.
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By:
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Title:
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Address:
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000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
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BANK
OF MARIN
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By:
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Title:
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Address:
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000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
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INDEMNITEE:
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Signature:
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Address:
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