EXHIBIT 10.1
Indemnity Agreement
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of the date of October 31, 1997 by and
between PACIFIC COMMUNITY BANKING GROUP, a California corporation (the
"Company"), and E. LYNN CASWELL ("Indemnitee"), a director and/or officer of
the Company, with reference to the following facts:
A. The Company and the Indemnitee recognize the importance of
providing the Company's directors and executive officers ("officers") with
advance information and 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 Company;
B. The Company 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 Company and the Indemnitee recognize that the cost of
defending against such lawsuits, whether or not meritorious, could be beyond
the financial resources of most directors and officers of the Company;
D. The Company and the Indemnitee recognize that the legal risks
and potential liabilities, and the threat thereof, and the resultant
substantial time and expense endured in defending against such lawsuits, bear
no reasonable or logical relationship to the amount of compensation received
by the Company's directors and officers. These factors pose a significant
deterrent to, and induce increased reluctance on the part of, experienced and
capable individuals to serve as directors and officers of the Company;
E. The Company has investigated the availability and deficiency
of liability insurance to provide its directors and officers with adequate
protection against the foregoing legal risks and potential liabilities It has
concluded that such insurance does not provide adequate protection to its
directors and officers, is unreasonably expensive, or both. Thus, it would
be in the best interests of the Company and its shareholders to contract with
its directors and certain officers, 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
hereinafter in effect) against personal liability for actions taken in the
performance of their duties to the Company;
F. The Board of Directors of the Company has concluded that it is
not only reasonable and prudent but necessary for the Company to
contractually obligate itself to indemnify in a reasonable and adequate
manner its directors and officers and
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to assume for itself maximum liability for expenses and damages in connection
with claims lodged against such directors and officers for their line of duty
decisions and actions;
G. The General Corporation Law of the State of California (the
"Code") empowers the Company to indemnify certain persons serving as a
director, officer, employee or agent of the Company or a person who serves at
the request of the Company as a director, officers, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
and further specifies in Code Section 317(g) that the indemnification
provisions set forth in the Code "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 Company
may indemnify persons serving as its officers and directors;
H. In order to give proper effect to the indemnification
provisions provided under the Code, the Articles of Incorporation which
permit the Company to indemnify its directors and officers to the fullest
extent permissible under the Code, subject to the limitations set forth in
Section 204(a)(11) of the Code;
I. The Board of Directors of the Company has determined, after
due consideration and investigation of this Agreement and various other
options available in lieu hereof, that this Agreement is reasonable, prudent
and necessary to promote and ensure the best interests of the Company and its
shareholders. This Agreement is intended to: (1) induce and encourage highly
experienced and capable persons such as the Indemnitee to serve as officers
and/or directors of the Company; (2) encourage such persons to resist what
they consider unjustifiable suits and claims made against them in connection
with the good faith performance of their duties to the Company, secure in
knowledge that certain expenses, costs and liabilities incurred by them in
their defense of such litigation will be borne by the Company and that they
will receive the maximum protection against such risks and liabilities
legally may be made available to them; and (3) encourage directors to
exercise their best business judgment regarding matters which come before the
Board of Directors without undue concern for the risk that claims may be made
against them on account thereof.
J. The Company desires to have the Indemnitee continue to serve
as an officer and/or director of the Company free from concern for
unpredictable, inappropriate or unreasonable legal risk and personal
liabilities by reason of his acting in good faith in the performance of his
duty to the Company. The Indemnitee desires to continue to serve as an
officer and/or director of the Company, provided, and on the express
condition, that he is furnished with the indemnity set forth herein.
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below and based on the premises set forth above, the
Company and Indemnitee do hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the
following definitions shall apply:
(a) The term "Proceeding" shall include, for the purposes of
this Agreement, any threatened, pending or completed action, suit or
proceeding, whether brought in the name of the Company or otherwise and
whether of a civil, criminal or 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
Indemnitee may be or may have been involved as party or otherwise (other than
plaintiff against the Company), by reason of the fact that Indemnitee is or
was an Agent of the Company by reason any action taken by him or of any
inaction on his part while acting as such Agent.
(b) The term "Expenses", includes, without limitation, all
direct and indirect costs of any type or nature whatsoever, including,
without limitation, expenses of investigations, judicial or administrative
proceedings or appeals, court costs, attorneys' fees and disbursements and
any expenses of establishing a right to indemnification under law or
Paragraph 8 of this Agreement, actually and reasonably incurred by the
Indemnitee in connection with the investigation, preparation, defense or
appeal of a except that "Expenses" shall not include the amount of any
judgment, fine or penalty actually levied against Indemnitee or amounts paid
in settlement of a Proceeding.
(c) References to "other enterprise" shall include employee
benefit plans; reference to "fines" shall include any excise tax assessed
with respect to any employee benefit plan; references to "serving at the
request of the Company" shall include any service as a director of the
Company which imposes duties on, or involves services by, such director with
respect to an employee benefit plan, its participants, or beneficiaries; and
a person who acts in good faith and in a manner he reasonably believes to be
in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner in the best interests of the
Company as referred to in this Agreement.
(d) For the purposes of this Agreement, Indemnitee shall be
deemed to have been acting as an "Agent" if he was acting in his capacity as
an officer of the Company, director of the Company, member of a committee of
the Board of Directors of this Company, or agent of the Company, or was
serving as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or any other
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enterprise at the request of the Company, or was a director and/or officer of
the foreign or domestic corporation which was a predecessor corporation to
the Company 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.
(e) The term "Applicable Standard" means that a person acted
in good faith and in a manner such person believed to be in the best
interests of the Company; except that in a criminal proceeding, such person
must also have had no reasonable cause to believe that such person'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 any presumption, or establish, that the person
did not meet the "Applicable Standard."
(f) "Independent Legal Counsel" shall include any firm of
attorneys selected by the Board of Directors or by the regular corporate
counsel for the Company from a list of firms which meet minimum size criteria
and other reasonable criteria established by the Board of Directors of the
Company, so long as such firm has not represented the Company, Indemnitee or
any entity controlled by Indemnity within the proceeding 24 calendar months.
2. AGREEMENT TO SERVE. Indemnitee agrees to serve or continue to
serve as a Director and/or officer of the Company to the best of his
abilities at the will of the Company or under separate contract, as the case
may be, for so long as Indemnitee is duly elected or appointed and qualified
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. INDEMNIFICATION IN THIRD PARTY PROCEEDINGS. Subject to the
"Limitations on Indemnification" provided in Paragraph 10 herein, or any
other such limitations provided under the Code or any amendment thereto, the
Company shall indemnify Indemnitee if Indemnitee is made a party to or
threatened to be made a party to, or otherwise involved in, any Proceeding
(other than a Proceeding which is an action by or in the right of the Company
to procure a judgment in its favor), by reason of the fact that Indemnitee is
or was an Agent of the Company. This indemnification shall apply, and be
limited, to and against all Expenses, judgments, fines, settlements (if the
settlement is approved in advance by the Company) and other amounts actually
and reasonably incurred by Indemnitee in connection with the defense or
settlement of the Proceeding, so long as it is determined pursuant to
Paragraph 8 of this Agreement or by the court before which such action was
brought, that Indemnitee met the Applicable Standard.
4. INDEMNIFICATION IN PROCEEDINGS BY OR IN THE NAME OF THE COMPANY.
Subject to the "Limitations on Indemnification" provided in Paragraph 10 herein,
or any
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other such limitations provided under the Code or any amendment thereto, the
Company shall indemnify Indemnitee if Indemnitee is made a party to, or
threatened to be made a party to, or otherwise involved in, any Proceeding
which is an action by or in the right of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was an Agent of the
Company. This indemnity shall apply, and be limited, to and against all
Expenses actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of such Proceeding, but only if: (a) Indemnitee met
the Applicable Standard (except that the Indemnitee's belief regarding the
best interests of the Company need not have been reasonable); and (b) the
action is not settled or otherwise disposed of without court approval. No
indemnification shall be made under this Section 4 in respect of any claim,
issue or matter as to which Indemnitee shall have been adjudged to be liable
to the Company in the performance of such person's duty to the Company,
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, Indemnitee is fairly and reasonably entitled to
indemnification for the Expenses which such court shall determine.
5. EXPENSE OF SUCCESSFUL INDEMNITEE. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been
successful on the merits in defense of any Proceeding or in defense of any
claim, issue or matter therein, including the dismissal of an action or
portion thereof without prejudice, Indemnitee shall be indemnified against
all Expenses actually and reasonably incurred in connection therewith.
6. SCOPE. Notwithstanding any other provision of this Agreement
but subject to Section 9, the Company 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
Company's amended Articles of Incorporation, the Company's Bylaws or by
statute.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES. The Expenses incurred
by Indemnitee in defending and investigating any Proceeding shall be advanced
by the Company prior to the final disposition of such Proceeding after
receiving from Indemnitee the copies of invoices presented to Indemnitee for
such Expenses, but only if Indemnitee shall undertake in the form attached as
Exhibit "A" to repay such advances to the extent that it is ultimately
determined that the Indemnitee is not entitled to indemnification. Any
advance required hereunder shall be deemed to have been approved by the Board
of Directors of the Company to the extent this Agreement was so approved. In
determining whether or not to make an advance hereunder, the ability of
Indemnitee to repay shall not be a factor. However, in a proceeding brought
by the Company directly, in its own right (as distinguished from an action
brought derivatively or by any receiver or trustee), the Company shall have
discretion whether or not to make the advances called for hereby if
independent legal counsel advises in writing that the Company has probable
cause to believe, and the Company does
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believe, that Indemnitee did not act in good faith with regard to the subject
matter of the Proceeding or a material portion thereof.
In the event that the Company shall be obligated under this Section
7 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 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 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, or
(B) Indemnitee shall have reasonably concluded that there may be a conflict
of interest between the Company and the Indemnitee in the conduct of 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.
8. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION;
PROCEDURE UPON APPLICATION. Any and/or 7 hereof shall be made no later than
45 days after receipt of a written request of Indemnitee in accordance with
Paragraph 12 hereof. In all other cases, indemnification shall be made by the
Company only if authorized in the specific case, upon a determination that
indemnification of the Agent is proper under the circumstances and the terms
of this Agreement by: (a) a majority vote of a quorum of the Board of
Directors (or a duly constituted committee thereof), consisting of directors
who are not parties to such proceeding; (b) if such a quorum of directors is
not obtainable, by independent legal counsel in a written opinion, (c)
approval of the shareholders (as defined in Section 153 of the California
Corporations Code), with the Indemnitee shares not being entitled to vote
thereon; or (d) the court in which such proceeding is or was pending upon
application made by the Company, the Indemnitee or any person rendering
services in connection with Indemnitee's defense, whether or not the Company
opposes such application.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advances are not appropriate shall be
on the Company. Neither the failure of the Company (including its Board of
Directors or independent legal counsel) to have made a determination prior to
the commencement of such action that indemnification or advances are proper in
the circumstances because Indemnitee has met the applicable standard of conduct,
nor an actual determination by the Company (including its Board of Directors or
independent legal counsel) that Indemnitee has not met such applicable standard
of conduct, shall be a
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defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. Indemnitee's Expenses incurred in connection
with successfully establishing his right to indemnification or advances, in
whole or in part, in any such Proceeding shall also be indemnified by the
Company; provided, however, that if Indemnitee is only partially successful,
only an equitably allocated portion of such Expenses shall be indemnified.
If Indemnitee is deceased and is entitled to indemnification under
any provision of this Agreement, the Company shall indemnify Indemnitee's
estate and his or her spouse, heirs, administrators and executors against and
shall assume all of the Expenses, judgments, penalties and fines actually and
reasonably incurred by or for Indemnitee or his estate, in connection with
the investigation, defense, settlement or appeal of any such action, suit or
proceeding; provided, however, that when requested in writing by the spouse
of Indemnitee, and/or the heirs, executors or administrators of Indemnitee's
estate, the Company shall provide appropriate evidence of the Agreement set
our herein to indemnify Agent against and to itself assume such costs,
liabilities and Expenses.
If Indemnitee is entitled under any provision of this Agreement or
indemnification by the Company for some or a portion of the Expenses,
judgments, fines or penalties actually and reasonably incurred by him in the
investigation, defense, appeal or settlement of any Proceeding but not,
however, for the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion (determined on an equitable basis) of
such Expenses, judgments, fines or penalties to which Indemnitee is entitled.
Company's obligations to advance or indemnify hereunder shall be
deemed satisfied to the extent of any payments made by an insurer on behalf
of Company or Indemnitee.
9. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. (a) The
indemnification provided by this Agreement shall not be deemed exclusive of
any other rights to which Indemnitee may be entitled under the Articles of
Incorporation, the Bylaws, any agreement, any vote of shareholders or
disinterested directors, the General Corporation Law of the State of
California, or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. The indemnification
under this Agreement shall continue as to Indemnitee even though he may have
ceased to be a director or officer and shall inure to the benefit of the
heirs and personal representatives of Indemnitee.
(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 Company's obligations under this Agreement shall be expanded to
the full extent permitted by
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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.
10. LIMITATIONS ON INDEMNIFICATION. The Company shall not be
liable under this Agreement to make any payment in connection with any claim
made against the Indemnitee:
(a) for which payment is actually made to the Indemnitee under
a valid and collectible insurance policy, except in respect of any excess
beyond the amount of payment under such insurance;
(b) for which the Indemnitee is indemnified by the Company
otherwise than pursuant to this Agreement;
(c) for an accounting of profits made from the purchase or
sale by the Agent of securities for the Company within the meaning of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any state statutory law or common law;
(d) brought about or contributed to by the active and
deliberate dishonesty of the Indemnitee; however, notwithstanding the
proceeding clause, the Indemnitee shall be protected to the extent otherwise
provided under this Agreement as to any claims upon which suit may be brought
against him by reason of any alleged dishonesty on his part, unless a
judgment or other final adjudication thereof adverse to the Indemnitee shall
establish that he committed (i) acts of active and deliberate dishonesty (ii)
with actual dishonest purpose and intent, which acts were material to the
cause of action so adjudicated;
(e) for acts or omissions that involve intentional misconduct
or a knowing and culpable violation of law;
(f) for acts or omissions that the Indemnitee believes to be
contrary to the best interests of the Company or its shareholders that
involve the absence of good faith on the part of the Indemnitee;
(g) for any transaction from which the Indemnitee derived an
improper personal benefit;
(h) for acts or omissions that show a reckless disregard for
the Indemnitee's duty to the Company or its shareholders in circumstances in
which the Indemnitee was aware, or should have been aware, in the ordinary
course of
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performing Indemnitee's duties, of a risk of serious injury to the Company or
its shareholders;
(i) for acts or omissions that constitute unexcused matter of
inattention that amounts to abdication of the Indemnitee's duty to the
Company or shareholders;
(j) under Section 310 of the Code [i.e., for any transaction
between the Company and (a) a director, or (b) a corporation, firm, or
association in which the director has a material financial interest];
(k) under Section 316 of the Code [i.e., for any distribution
to shareholders, and for any loan or guaranty to officers or directors,
that violate specified provisions of the Code]; or
(l) for any such further acts or omissions delineated under
Code Section 204(a)(10) or any successor statute thereto.
11. SAVINGS CLAUSE. If this Agreement or any portion hereof is
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines and penalties with respect to any Proceeding to the full extent
permitted by any applicable portion of this Agreement by any other applicable
law.
12. NOTICES. Indemnitee shall, as a condition precedent to his
right to be indemnified under this Agreement, give to the Company notice in
writing within 30 days after he becomes aware of any claim made against him
for which he believes, or should reasonably believe, indemnification will or
could be sought under this Agreement. Notice to the Company shall be directed
to the Company's main office, Attention: President (or such other address the
Company shall designate in writing to Indemnitee). Failure to 80 notify
Company shall not relieve Company of any liability which it may have to
Indemnitee otherwise than under this Agreement.
All notices, requests, demands and other communications
(collectively "notices") provided for under this Agreement shall be in
writing (including communications by telephone, telex or telecommunication
facilities providing facsimile transmission) and mailed (postage prepaid and
return receipt requested), telegraphed, telexed, transmitted or personally
served to each party at the address set forth at the end of this Agreement or
at such other address as any party affected may designate in a written notice
to the other parties in compliance with this section. All such notices shall
be effective when received; provided, however, receipt shall be deemed to be
effective within three (3) business days of any properly addressed notice
having been deposited in the mail, within twenty-four (24) hours from the
time electronic
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transmission was made, or upon actual receipt of electronic delivery,
whichever occurs first.
No costs, charges or expenses for which indemnity shall be sought
hereunder shall be incurred without the Company's consent, which consent
shall not be unreasonably withheld.
13. MAINTENANCE OF LIABILITY INSURANCE.
(a) The Company hereby agrees that so long as Indemnitee shall
continue to serve as a director and/or officer of the Company and thereafter
so long as Indemnitee shall be subject to any possible Proceeding, the
Company, subject to Section 13(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 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.
(b) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company 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 80 as to
provide an insufficient benefit or the Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.
(c) If, at the time of the receipt of a notice of a claim
pursuant to Section 12 hereof, the Company has D&O 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.
14. CHOICE OF LAW. This Agreement should be interpreted and enforced
in accordance with the laws of the State of California, including applicable
statutes of limitation and other procedural statutes.
15. AMENDMENTS. Provisions of this Agreement may be waived,
altered, amended or repealed in whole or in part only by the written consent
of all parties.
16. PARTIES IN INTEREST. Nothing in this Agreement, whether
express or implied, is intended to confer any right or remedies under or by
reason of this Agreement to any persons other than the parties to it and
their respective successors
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and assigns (including an estate of Indemnitee), nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third persons to any party hereto. Furthermore, no provision of this
Agreement shall give any third persons any right of subrogation or action
against any party hereto.
17. 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 any portion of this Agreement shall
be deemed by a court of competent jurisdiction to be unenforceable, the
remaining portions shall be valid and enforceable only if, after excluding
the portion deemed to be unenforceable, the remaining terms shall provide for
the consummation of the transaction contemplated herein in substantially the
same manner as originally set forth at the date this Agreement was executed.
18. SUCCESSOR AND ASSIGNS. All terms and conditions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective transferees, successors and assigns; provided, however,
that this Agreement and all rights, privileges, duties and obligations of the
parties, may not be assigned or delegated by any party without the prior
written consent of the other parties.
19. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but
all of which together shall be deemed an original, but all of which together
shall constitute one and the same instrument.
20. ENTIRE AGREEMENT. Except as provided in Section 9 hereof,
this Agreement represents and contains the entire agreement and understanding
between and among the parties, and all previous statements or understandings,
whether express or implied, oral or written, relating to the subject matter
hereof are fully and completely extinguished and superseded by this
Agreement. This Agreement shall not be altered or varied except by a writing
duly signed by all of the parties.
21. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee
acknowledge that in certain instances, federal law or applicable public
policy may prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise. Indemnitee understands and acknowledges
that the Company 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 Company's right under public policy to indemnify Indemnitee.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
PACIFIC COMMUNITY BANKING GROUP
By: /s/ E. Lynn Caswell
----------------------------
E. Lynn Caswell
Chairman of the Board
By: /s/ E. Lynn Caswell
----------------------------
E. Lynn Caswell
Secretary
"Company"
----------------------------
Address:
-------------------
-------------------
"Indemnitee"
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EXHIBIT A
UNDERTAKING
THIS UNDERTAKING is made as of the date of _____________, 19__ by
___________________ ("Indemnitee") with reference to the following facts:
A. Indemnitee and PACIFIC COMMUNITY BANKING GROUP (the "Company")
have executed an Indemnity Agreement dated _____________, 19__ permitting
Indemnitee indemnification of all direct and indirect costs of Proceedings
(as defined in the Indemnity Agreement) by reason of the fact that Indemnitee
is an Agent (as defined in the Indemnity Agreement) of the Company and has
met the Applicable Standard (as defined in the Indemnity Agreement).
B. Paragraph 7 of the Indemnity Agreement allows for the Company to
advance Expenses incurred by the Indemnitee in defending and investigating
any Proceeding prior to the final disposition of such Proceeding after
receiving from Indemnitee copies of invoices presented to Indemnitee for such
Expenses, but only if Indemnitee shall undertake to repay such advances to
the extent that it is ultimately determined that the Indemnitee is not
entitled to indemnification, as well as other requirements contained in the
Indemnity Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below and based on the premises set forth above, the
Indemnitee does hereby undertake to the Company as follows:
1. The Expenses incurred by Indemnitee in defending and
investigating any Proceeding shall be advanced by the Company prior to the
final disposition of such Proceeding after receiving from Indemnitee copies
of invoices presented to Indemnitee for such Expenses.
2. Indemnitee hereby undertakes to repay such advances to the
extent that it is ultimately determined that the Indemnitee is not entitled
to indemnification,
3. Any advance required hereunder shall be deemed to have been
approved by the Board of Directors of the Company to the extent the Indemnity
Agreement was approved.
4. In determining whether or not to make an advance hereunder, the
ability of Indemnitee to repay shall not be a factor.
5. In a proceeding brought by the Company directly, in its own
right (as distinguished from an action brought derivatively or by any
receiver or trustee), the
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Company shall have discretion whether or not to make the advances called for
in the Indemnification Agreement if independent legal counsel advises in
writing that the Company has probable cause to believe, and the Company does
believe, that Indemnitee did not act in good faith with regard to the subject
matter of the Proceeding or a material portion thereof.
6. The remainder of the terms and conditions of the Indemnity
Agreement and Paragraph 7 regarding assumption of the defense by the Company
shall also remain applicable.
IN WITNESS WHEREOF, the undersigned has executed this Undertaking
as of the date first above written.
----------------------------
Address:
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----------------------------
"Indemnitee"
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