Exhibit 10.7 Form of indemnification agreement
CERRITOS VALLEY BANCORP
INDEMNIFICATION AGREEMENT
This Agreement is made as of the ____ day of ______________ by and between
Cerritos Valley Bancorp, a California corporation (the "Corporation"), and
___________ ("Indemnitee"), a director (or officer) of the Corporation.
RECITALS
A. The Corporation and Indemnitee recognize that statutes, regulations, court
opinions and the Corporation's Articles of Incorporation and Bylaws are
uncertain in providing the Corporation'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 the
Corporation;
B. The Corporation and Indemnitee are aware of the large number of lawsuits
filed against corporate directors and officers;
C. The Corporation and Indemnitee recognize that the cost of defending against
such lawsuits, may be beyond the financial resources of most directors and
officers of the Corporation;
D. The Corporation and 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 the Corporation;
E. The Corporation 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 the Corporation
and its shareholders to contract with 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 the Corporation;
F. Section 317 of the California Corporations Code ("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;
G. In order to induce and encourage experienced and capable persons such as
Indemnitee to continue to serve as a director or officer of the
Corporation, the Board of Directors of the Corporation has determined,
after due consideration and investigation of the terms and provisions of
this Agreement and the various other options available to the Corporation
and Indemnitee in lieu hereof, that the following Agreement is not only
reasonable and prudent but necessary to promote and ensure the best
interests of the Corporation and its shareholders;
H. The Corporation desires to have Indemnitee continue to serve as a director
or officer of the Corporation free from undue concern for unpredictable,
inappropriate or unreasonable legal
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risks and personal liabilities by reason of his acting in good faith in
the performance of his duty to the Corporation; and Indemnitee desires
to continue to serve as a director or officer of the Corporation;
provided, and on the express condition, that 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, the Corporation and
Indemnitee do hereby agree as follows:
1. AGREEMENT TO SERVE. Indemnitee will serve or continue to serve as a
director or officer of the Corporation to the best of his abilities at the
will of the Corporation for so long as Indemnitee is duly elected or
appointed or until such time as 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
the Corporation 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 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 or officer of the
Corporation, 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 the Corporation
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.
(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 to indemnification under Paragraph 7 of this Agreement, but
shall not include the amount of judgments, fines or penalties actually
levied against Indemnitee.
3. INDEMNITY IN THIRD PARTY PROCEEDINGS. The Corporation shall indemnify
Indemnitee in accordance with the provisions of this section if 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 the
Corporation to procure a judgment in its favor), by reason of the fact that
Indemnitee is or was a director or officer of the Corporation or is 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, against all Expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred by Indemnitee in connection
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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 the Corporation in the manner prescribed by
Section 317, that Indemnitee acted in good faith and in a manner which
he reasonably believed to be in the best interests of the Corporation
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,
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 he reasonably believed
to be in the best interests of the Corporation, 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 THE CORPORATION. The
Corporation shall indemnify Indemnitee in accordance with the provisions of
this section if 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 the
Corporation to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a director or officer of the Corporation or is 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 against all Expenses actually and reasonably incurred by
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
the Corporation in the manner prescribed by Section 317, that Indemnitee
acted in good faith and in a manner which he reasonably believed to be in
the best interests of the Corporation and its shareholders (for a
Proceeding by or in the right of the Corporation) 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 Indemnitee shall
have been adjudged to be liable to the Corporation, 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 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 Indemnitee has been
successful on the merits in defense
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of any Proceeding or in defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred in connection therewith.
6. ADVANCES OF EXPENSES. The Expenses incurred by Indemnitee pursuant to
Paragraphs 3 and 4 in defending any Proceeding shall be paid by the
Corporation in advance of the final disposition of such Proceeding at the
written request of Indemnitee, if Indemnitee shall provide an undertaking
in the form attached hereto as Exhibit "A" to the Corporation to repay such
amount unless it is ultimately determined that Indemnitee is entitled to
the payment of expenses. The written request to the Corporation 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 the Corporation 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 of
Directors or counsel at the time such determination is made, (a) Indemnitee
acted in bad faith or deliberately breached his duty to the Corporation or
its shareholders, and (b) as a result of such actions by Indemnitee, it is
more likely than not that it will ultimately be determined that Indemnitee
is not entitled to indemnification under the terms of this Agreement.
7. RIGHTS OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION; PROCEDURE UPON
APPLICATION. To the extent a quorum of the Board of Directors of the
Corporation 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 Indemnitee for indemnification
whether 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 Indemnitee.
Notwithstanding the foregoing, Indemnitee may request independent counsel
or may bring suit in the court in which such Proceeding is or was pending
to determine whether Indemnitee is entitled to indemnification as provided
by this Agreement. Indemnitee's expenses incurred in connection with
successfully establishing his right to indemnification, in whole or part,
shall also be indemnified by the Corporation.
8. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Corporation for some or a portion
of the Expenses, judgments, fines, settlements or other amounts 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 Corporation shall nevertheless indemnify Indemnitee for the
portion of such Expenses, judgments, fines, settlements or other amounts to
which 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
the Corporation shall in no way limit or diminish the obligation of the
Corporation to indemnify Indemnitee as provided in this Agreement;
provided, however, that any amounts actually recovered by Indemnitee from
the insurer providing D&O Coverage shall be applied in reduction of amounts
otherwise owing
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by the Corporation by reason of its indemnification under this Agreement
and if the Corporation pays any amounts to Indemnitee pursuant to this
Agreement, the Corporation shall be subrogated to Indemnitee's rights
and claims against the insurer providing D&0 Coverage and Indemnitee
shall execute such documents as the Corporation shall deem necessary to
reflect such subrogation.
10. SETTLEMENT OF CLAIMS.
(a) If the Corporation has not obtained D&O Coverage, Indemnitee shall not
settle any Proceeding for which he intends to seek indemnification
hereunder without first attempting to obtain the approval of the
Corporation. If Indemnitee seeks such approval and such approval is
not granted by the Corporation, Indemnitee shall be free to settle the
Proceeding and pursue any procedures to establish his right to
indemnification as provided under this Agreement. If Indemnitee seeks
such approval and such approval is not granted, but the Corporation
agrees to indemnify Indemnitee against any Expenses, judgments, fines,
settlements or other amounts actually and reasonably incurred by
Indemnitee in connection with such Proceeding, Indemnitee shall not
settle such Proceeding. If, however, under such circumstances
Indemnitee does settle such Proceeding, Indemnitee shall forfeit his
rights to indemnification under this Agreement.
(b) If the Corporation has obtained D&O Coverage, 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 Indemnitee seeks such approval and such approval is not
granted by the insurance carrier of any applicable D&O Coverage,
Indemnitee shall not settle such Proceeding without then attempting to
obtain the approval of the Corporation. In the event Indemnitee seeks
such approval from the Corporation, the Corporation and Indemnitee
shall have the same rights and obligations as set forth in Paragraph
10(a). If Indemnitee seeks such approval from the Corporation and
such approval is granted, the Corporation shall be subrogated to
Indemnitee's rights and claims against the insurance carrier of any
applicable D&O Coverage and Indemnitee shall execute such documents as
the Corporation shall deem necessary to effect such subrogation.
11. 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. For example, the Corporation and Indemnitee
acknowledge that the Securities and Exchange Commission (the "SEC") has
taken the position that indemnification is not permissible for liabilities
arising under certain federal securities laws, and federal legislation
prohibits indemnification for certain ERISA violations. Indemnitee
understands and acknowledges that the Corporation has undertaken or may be
required in the future to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of
the Corporation's right under public policy to indemnify Indemnitee.
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12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit
of Indemnitee and such 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 the Corporation
shall nevertheless indemnify Indemnitee as to Expenses, judgments, fines,
settlements or other amounts with respect to any Proceeding to the full
extent permitted by any applicable portion of this Agreement that 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.
15. NOTICES. Indemnitee shall, as a condition precedent to his right to be
indemnified under this Agreement, give to the Corporation notice in writing
as soon as practicable of any claim made against him for which
indemnification will or could be sought under this Agreement. Notice to
the Corporation shall be directed to Cerritos Valley Bancorp, 13400 San
Antonio Drive, Norwalk, California 90650, Attention: President (or such
other address as the Corporation shall designate in writing to 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.
CERRITOS VALLEY BANCORP
By
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By
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