Attached files
Exhibit 10.1
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into effective
as of December 21, 2009 (the "Effective Date"), between Sterling Financial
Corporation, a Washington corporation (the "Company"), and James B. Keegan, Jr.,
a director of the Company ("Indemnitee").
R E C I T A L S
A. Indemnitee is a director of the Company and in such capacity is
performing valuable services for the Company.
B. The Board of Directors has determined, after due investigation, without
the participation of Indemnitee, who recused himself from such investigation and
the resulting deliberations, that (i) Indemnitee has performed his duties as a
director of the Company in good faith and in a manner in which he reasonably
believed to be in the best interests of the Company and (ii) the protections set
forth herein are not only reasonable and prudent but also promote the best
interests of the Company and its shareholders.
C. Indemnitee has given notice to the Company that he intends to resign
from the Board of Directors in the near future because of health reasons.
D. The Company has desired and requested Indemnitee to continue to
cooperate with the Company subsequent to his term as a director of the Company
free from undue concern for unwarranted claims for damages arising out of or
related to his services to the Company.
NOW, THEREFORE, in consideration of the recitals above, the mutual
covenants and agreements set forth in this Agreement, and Indemnitee's service
as a director both before and after the date hereof, Indemnitee's continued
cooperation with the Company after the date hereof, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and Indemnitee, intending to be legally bound, hereby agree as follows:
1. INDEMNIFICATION
1.1 SCOPE. The Company agrees to and shall hold harmless and indemnify
Indemnitee to the full extent permitted by law against any Damages (as defined
in Section 1.3) incurred by Indemnitee with respect to any Proceeding (as
defined in Section 1.4) to which Indemnitee is or is threatened to be made a
party or witness, notwithstanding that such indemnification is not specifically
authorized by this Agreement, the Company's Articles of Incorporation (the
"Articles") or the Company's Bylaws (the "Bylaws"), the Washington Business
Corporation Act (the "Act") or otherwise. Such right to indemnification shall be
subject to the limitations on, and conditions for, indemnification of directors
found (a) in the Act as of the date of this Agreement and (b) elsewhere in this
Agreement, including, but not limited to the limitations of Section 18(k) of the
Federal Deposit Insurance Act and Part 359 of the Federal Deposit Insurance
Corporation's Rules and Regulations, as provided in Section 6.2 of this
Agreement. In the event of any change, after the date of this Agreement, in any
applicable law, statute or rule issued pursuant to such law or statute regarding
the right of a Washington corporation to indemnify a member of its board of
directors, such changes, to the extent that they would expand Indemnitee's
rights hereunder, shall be within the scope of Indemnitee's rights and the
Company's obligations hereunder, and, to the extent that they would narrow
Indemnitee's rights hereunder, shall be excluded from this Agreement; provided,
however, that any change that is found in a final judgment, not subject to
appeal, by a court of proper jurisdiction to be required by applicable laws,
statutes or rules issued pursuant to such law or statute to be applied to this
Agreement shall be so applied regardless of whether the effect of such change is
to narrow Indemnitee's rights hereunder.
1.2 NONEXCLUSIVITY. The indemnification provided by this Agreement shall
not be deemed exclusive of any rights to which Indemnitee may be entitled (and
any failure to qualify for indemnification under this Agreement shall not be
determinative of any such rights) under the Company's Articles, the Company's
Bylaws, any vote of shareholders or disinterested directors, the Act or
otherwise, whether as to actions or omissions by Indemnitee in Indemnitee's
official capacity or otherwise.
1.3 INCLUDED COVERAGE. If Indemnitee is made a party (or is threatened to
be made a party) to, or is otherwise involved (including, but not limited to, as
a witness) in any Proceeding, the Company shall hold harmless and indemnify
Indemnitee from and against any and all losses, claims, damages and liabilities
incurred in connection with such Proceeding, including but not limited to
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, amounts paid
in settlement and any other related expenses (collectively, "Damages").
1.4 DEFINITION OF PROCEEDING. For purposes of this Agreement, "Proceeding"
shall mean any actual, pending, threatened or completed investigation, action,
suit, claim or other proceeding (whether civil, criminal, administrative,
regulatory or investigative and whether formal or informal) in which Indemnitee
is, has been or becomes involved by reason of the fact that Indemnitee is or was
at any time before, on or after the Effective Date of this Agreement, a director
of the Company or that, being or having been such a director, Indemnitee is or
was serving at the request of the Company as a director, officer, employee,
trustee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise (collectively, a "Related Company"), including but not
limited to service with respect to any employee benefit plan, whether the basis
of such investigation, action, suit, claim or other proceeding is alleged action
or omission by Indemnitee in an official capacity as a director, officer,
employee, trustee or agent or in any other capacity while serving as a director,
officer, employee, trustee or agent; provided, however, that, except with
respect to an action to enforce this Agreement, "Proceeding" shall not include
any investigation, action, suit, claim or proceeding instituted by or at the
direction of Indemnitee unless such investigation, action, suit, claim or other
proceeding is or was authorized by the Board.
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1.5 NOTIFICATION. As promptly as reasonably practicable after receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if
a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof; provided, however,
that failure to so notify the Company will relieve the Company from any
liability that it may otherwise have to Indemnitee under this Agreement only if,
and then solely to the extent that, such failure can be shown to have materially
prejudiced the Company's ability to defend the Proceeding.
1.6 DETERMINATION OF ENTITLEMENT. If a determination of Indemnitee's
entitlement to indemnification is required pursuant to applicable law, (a)
Indemnitee shall initially be presumed in all cases to be entitled to
indemnification, and (b) unless the Company shall deliver to Indemnitee written
notice of a determination that Indemnitee may not be entitled to indemnification
within thirty (30) days after the Company's receipt of Indemnitee's notice
pursuant to Section 1.5, Indemnitee shall conclusively be deemed to be entitled
to such indemnification and the Company hereby agrees not to assert otherwise.
Indemnitee may establish a conclusive presumption of any fact necessary to such
a determination by delivering to the Company a declaration made under penalty of
perjury that such fact is true.
1.7 PRESUMPTION AND EFFECT OF CERTAIN PROCEEDINGS.
A. The Company shall have the burden of proof to overcome the
presumption that Indemnitee is entitled to the protections provided for
herein.
B. The settlement or termination of any Proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not (except as
otherwise expressly provided in this Agreement) of itself adversely affect
the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that Indemnitee's conduct was lawful.
1.8 SURVIVAL. The indemnification and release provided under this
Agreement shall apply to any and all Proceedings, notwithstanding that
Indemnitee has ceased to be a director, officer, employee, trustee or agent of
the Company or a Related Company.
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2. ADVANCEMENT OF EXPENSES
2.1 GENERALLY. The protections provided for herein shall include the
right to have the Company pay Indemnitee's attorneys' fees and other expenses in
any Proceeding as such expenses are incurred and in advance of such Proceeding's
final disposition (such right is referred to hereinafter as an "Expense
Advance").
2.2 CONDITIONS TO EXPENSE ADVANCE. The Company's obligation to provide an
Expense Advance is subject to the following conditions:
A. UNDERTAKING. Indemnitee or Indemnitee's representative shall have
executed and delivered to the Company an acceptable undertaking, which need
not be secured but shall demonstrate Indemnitee's financial ability to make
repayment, by or on behalf of Indemnitee, to repay all Expense Advances if
and to the extent that it shall ultimately be determined, by a final
decision not subject to appeal rendered by a court having proper
jurisdiction, that Indemnitee is not entitled to be indemnified for such
Expense Advance under this Agreement or otherwise.
B. AFFIRMATION. If required under applicable law, Indemnitee shall
furnish a written affirmation of Indemnitee's good faith belief that
Indemnitee has met all applicable standards of conduct.
3. PROCEDURES FOR ENFORCEMENT
3.1 ENFORCEMENT. If a claim for indemnification made by Indemnitee
hereunder is not paid in full within thirty (30) days, or a claim for an Expense
Advance made by Indemnitee hereunder is not paid in full within thirty (30)
days, after written notice of such claim is delivered to the Company, the
parties agree that Indemnitee's remedy at law will be inadequate and therefore,
in addition to any other right or remedy Indemnitee may have at law or in equity
with respect to breach of this Agreement, Indemnitee shall be entitled to
injunctive or mandatory relief directing specific performance by the Company of
its obligations under this Agreement (any such action at law, in equity or for
injunctive or mandatory relief, an "Enforcement Action").
3.2 PRESUMPTIONS. The following presumptions (and limitations on
presumptions) shall apply hereunder:
A. The failure of the Company (including but not limited to the Board,
independent or special legal counsel or the Company's shareholders) to make
a determination prior to the commencement of an Enforcement Action that
indemnification of Indemnitee is proper in the circumstances shall not be a
defense to the Enforcement Action or create a presumption that Indemnitee
is not entitled to indemnification hereunder; and
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B. If Indemnitee is or was serving (i) as a director, officer,
employee, trustee or agent of a corporation of which a majority of the
shares entitled to vote in the election of its directors is held or
controlled by the Company or in which the Company has otherwise made an
investment, or (ii) in an executive or management capacity in a
partnership, joint venture, trust or other enterprise of which the Company
or a wholly-owned subsidiary of the Company is a general partner or has a
majority ownership or control position or in which the Company has
otherwise made an investment, then such corporation, partnership, joint
venture, trust or enterprise shall conclusively be deemed a Related Company
and Indemnitee shall conclusively be deemed to be serving such Related
Company at the request of the Company for all purposes hereunder.
3.3 ATTORNEYS' FEES AND EXPENSES FOR ENFORCEMENT ACTION. If Indemnitee is
required to bring an Enforcement Action, the Company shall pay, hold harmless
and indemnify Indemnitee against all of Indemnitee's attorneys' fees and
expenses in bringing and pursuing the Enforcement Action (including but not
limited to attorneys' fees at any stage of the Enforcement Action, and on any
appeal of such Enforcement Action).
4. DEFENSE OF CLAIM. With respect to any Proceeding as to which Indemnitee
has provided notice to the Company pursuant to Section 1.5:
4.1 The Company may participate therein at its own expense.
4.2 If: (a) the Company agrees, in writing, to provide the Indemnitee with
all of the protections provided for herein with respect to the Proceeding; (b)
the Company is able to demonstrate, to Indemnitee's reasonable satisfaction,
that it is financially capable of providing Indemnitee with all of the
protections provided for herein; (c) the Company retains counsel reasonably
satisfactory to Indemnitee; and (d) there exists no material conflict of
interest between the Indemnitee and any of the other parties to the Proceeding,
then the Company, jointly with any other indemnifying party similarly notified,
may assume the defense of the Proceeding for as long as the conditions in this
sentence remain fulfilledAfter notice from the Company to Indemnitee of its
election to so assume the defense thereof, the Company shall not be liable to
Indemnitee under this Agreement for any legal fees or other expenses (other than
reasonable costs of investigation) subsequently incurred by Indemnitee in
connection with the defense thereof.
4.3 The Company shall not be liable for any amounts paid in settlement of
any Proceeding effected without its prior written consent, which consent shall
not be unreasonably withheld.
4.4 The Company shall not settle any Proceeding in any manner which would
impose any penalty, costs or Damages on Indemnitee without Indemnitee's prior
written consent.
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4.5 The Company shall make reasonable efforts to ensure that the terms of
any settlement of any Proceeding to which Indemnitee is a party shall be subject
to confidentiality obligations and that any such settlement does not admit
Indemnitee's culpability with respect to the subject matter of the proceeding
without Indemnitee's prior written consent.
5. DIRECTORS AND OFFICERS INSURANCE
5.1 To the extent that the Company maintains a policy or policies of
insurance ("D&O Insurance") for directors and officers, employees, or agents or
fiduciaries of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which such person
serves at the request of the Company, Indemnitee shall be covered by such policy
or policies in accordance with its or their terms to the maximum extent of the
coverage available for any such director, officer, employee or agent under such
policy or policies.
5.2 In the event of any payment under this Agreement by the Company, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall reasonably cooperate in the Company's
action to secure such rights, including executing such documents as are
reasonably necessary to enable the Company to bring suit to enforce such rights.
5.3 The Company shall not be liable under this Agreement to make any
payment of amounts otherwise payable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
6. LIMITATION ON INDEMNIFICATION; MUTUAL ACKNOWLEDGMENT
6.1 LIMITATION ON INDEMNIFICATION. No indemnification pursuant to this
Agreement shall be provided by the Company on account of any suit in which a
final, unappealable judgment for which there is no further right of appeal is
rendered by a court having proper jurisdiction against Indemnitee for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company in violation of the provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended.
6.2 Notwithstanding any other provision contained in this Agreement, the
provisions of this Agreement are subject to the requirements, limitations and
conditions set forth in state and federal laws, rules, regulations, or orders
regarding indemnification, defense of claims and prepayment of legal fees and
expenses, including, but not limited to, Section 18(k) of the Federal Deposit
Insurance Act and Part 359 of the Federal Deposit Insurance Corporation's Rules
and Regulations or any successor regulations thereto.
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7. COOPERATION AND PARTIAL INDEMNIFICATION. Indemnitee shall give the Company
such information and cooperation as it may reasonably request and as shall be
within Indemnitee's power. If the Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
Damages actually and reasonably incurred by the Indemnitee in connection with
the investigation, defense, settlement or appeal of a Proceeding but not
entitled, however, to indemnification for all of the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for that portion thereof to
which the Indemnitee is entitled.
8. SEVERABILITY. Any term or provision of this Agreement which is declared
invalid or unenforceable by a court of competent jurisdiction in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
9. GOVERNING LAW; BINDING EFFECT; ASSUMPTION BY SUCCESSORS; AMENDMENT AND
TERMINATION
9.1 This Agreement shall be interpreted and enforced in accordance with the
laws of the State of Washington.
9.2 This Agreement shall be binding upon Indemnitee and upon the Company,
its successors and assigns, and shall inure to the benefit of Indemnitee, his or
her spouse and marital community, Indemnitee's heirs, personal representatives
and assigns and to the benefit of the Company, its successors and assigns.
9.3 In the event the Company or any successor (i) consolidates with or
merges into any other person or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
liquidates, dissolves or transfers all or substantially all of its assets to any
person or entity, then, and in each case, proper provisions shall be made so
that the successors of the Company assume the obligations set forth in this
Agreement.
9.4 No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
9.5 No amendment, modification, repeal, termination or replacement of any
part or all of the Company's Bylaws or Articles shall operate in any way to
limit Indemnitee's rights under this Agreement.
9.6 Nothing in this Agreement shall confer upon Indemnitee the right to
continue to serve as a director and/or officer of the Company. If Indemnitee is
an officer of the Company, then, unless otherwise expressly provided in a
written employment agreement between the Company and Indemnitee, the employment
of Indemnitee with the Company shall be terminable at will by either party.
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9.7 It is understood that the parties hereto intend this Agreement to be
interpreted and enforced so as to provide indemnification to the Indemnitee to
the fullest extent now or hereafter permitted by law.
9.8 Nothing in this Agreement is intended to require or shall be construed
as requiring the Company to take or fail to take any action in violation of
applicable law. The Company's inability to perform its obligations under this
Agreement pursuant to an unappealable judgment rendered by a court having proper
jurisdiction shall not constitute a breach of this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the day and year first set forth above.
STERLING FINANCIAL CORPORATION
By: ________________________________________
INDEMNITEE
________________________________________
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