Exhibit 10.9
FORM OF
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT is
made and entered into this
day of
, 200 (“ Agreement
”), by and between People’s Choice Financial
Corporation, a Maryland corporation (the “ Company
”), and (“ Indemnitee ”).
WHEREAS, at the request of the
Company, Indemnitee currently serves as a director of the Company
and may, therefore, be subjected to claims, suits or proceedings
arising as a result of his service; and
WHEREAS, as an inducement to
Indemnitee to serve as such director, the Company has agreed to
indemnify and to advance expenses and costs incurred by Indemnitee
in connection with any such claims, suits or proceedings, to the
maximum extent permitted by law; and
WHEREAS, the parties by this
Agreement desire to set forth their agreement regarding
indemnification and advance of expenses.
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, and intending to
be legally bound, the Company and Indemnitee do hereby agree as
follows:
SECTION 1. Definitions . For
purposes of this Agreement:
(a) “ Acquiring Person
” means that a Person, considered alone or as part of a
“group” within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), is or becomes directly or indirectly
the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of securities representing more than thirty-three and
one-third percent (33 1/3%) of the Company’s then outstanding
securities entitled to vote generally in the election of the Board
of Directors.
(b) “ Board of
Directors ” means the board of directors of the
Company.
(c) “ Change in Control
” means (i) a Person is or becomes an Acquiring Person;
(ii) holders of the securities of the Company entitled to vote
thereon approve any agreement with a Person (or, if such approval
is not required by applicable law and is not solicited by the
Company, the closing of such an agreement) that involves the
transfer of all or substantially all of the Company’s total
assets on a consolidated basis, as reported in the Company’s
consolidated financial statements filed with the Securities and
Exchange Commission; (iii) holders of the securities of the
Company entitled to vote thereon approve a transaction (or, if such
approval is not required by applicable law and is not solicited by
the Company, the closing of such a transaction) pursuant to which
the Company will undergo a merger, consolidation, or statutory
share exchange with a Person, regardless of whether the Company is
intended to be the surviving or resulting entity after the merger,
consolidation, or statutory share exchange, other than a
transaction that results in the voting securities of the Company
carrying the right to vote in elections of persons to the Board of
Directors outstanding immediately prior to the closing of the
transaction continuing to represent (either by remaining
outstanding or by being converted
into voting securities of the surviving entity) at least 50% (fifty
percent) of the Company’s voting securities carrying the
right to vote in elections of persons to the Board of Directors, or
such securities of such surviving entity, outstanding immediately
after the closing of such transaction; (iv) the Continuing
Directors cease for any reason to constitute a majority of the
Board of Directors; (v) holders of the securities of the
Company entitled to vote thereon approve a plan of complete
liquidation of the Company or an agreement for the sale or
liquidation by the Company of all or substantially all of the
Company’s assets (or, if such approval is not required by
applicable law and is not solicited by the Company, the
commencement of actions constituting such a plan or the closing of
such an agreement); or (vi) the Board of Directors adopts a
resolution to the effect that, in its judgment, as a consequence of
any one or more transactions or events or series of transactions or
events, a Change in Control of the Company has effectively
occurred. The Board of Directors shall be entitled to exercise its
sole and absolute discretion in exercising its judgment and in the
adoption of such resolution, whether or not any such transaction(s)
or event(s) might be deemed, individually or collectively, to
satisfy any of the criteria set forth in subparagraphs
(i) through (v) above.
(d) “ Continuing
Director ” means any member of the Board of Directors,
while a member of the Board of Directors and (i) who was a
member of the Board of Directors as of the Effective Date or
(ii) whose nomination for or election to the Board of
Directors was recommended or approved by a majority of the
Continuing Directors.
(e) “ Corporate Status
” means the status of a person who is or was a director,
trustee, officer, employee or agent of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise for which such person is or was serving at
the request of the Company.
(f) “ Disinterested
Director ” means a director of the Company who is not and
was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(g) “ Effective Date
” means the date set forth in the first paragraph of this
Agreement.
(h) “ Expenses ”
shall include all reasonable and out-of-pocket attorneys’
fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
(i) “ Independent
Counsel ” means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither is,
nor in the past five (5) years has been, retained to
represent: (i) the Company or Indemnitee in any matter
material to either such party, or (ii) any other party to or
witness in the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct
then
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prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this Agreement.
If a Change of Control has not occurred, Independent Counsel shall
be selected by the Board of Directors, with the approval of
Indemnitee, which approval will not be unreasonably withheld. If a
Change of Control has occurred, Independent Counsel shall be
selected by Indemnitee, with the approval of the Board of
Directors, which approval will not be unreasonably
withheld.
(j) “ Person ”
means any human being, firm, corporation, partnership, or other
entity. “Person” also includes any human being, firm,
corporation, partnership, or other entity as defined in sections
13(d)(3) and 14(d)(2) of the Exchange Act. The term
“Person” does not include the Company or any Related
Entity, and the term Person does not include any employee-benefit
plan maintained by the Company or any Related Entity, or any person
or entity organized, appointed, or established by the Company or
any Related Entity for or pursuant to the terms of any such
employee-benefit plan, unless the Board of Directors determines
that such an employee-benefit plan or such person or entity is a
“Person”.
(k) “ Proceeding
” includes any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative (including on appeal),
except one pending or completed on or before the Effective Date,
unless otherwise specifically agreed in writing by the Company and
Indemnitee;
(l) “ Related Entity
” means any entity that is part of a controlled group of
corporations or is under common control with the Company within the
meaning of Sections 1563(a), 414(b) or 414(c) of the Internal
Revenue Code of 1986, as amended.
SECTION 2. Services by
Indemnitee . Indemnitee will serve as a [director]
[officer] of the Company. However, this Agreement shall not
impose any obligation on Indemnitee or the Company to continue
Indemnitee’s service to the Company beyond any period
otherwise required by law or by other agreements or commitments of
the parties, if any.
SECTION 3. Indemnification -
General . The Company shall indemnify, and advance Expenses to,
Indemnitee (a) as provided in this Agreement and
(b) otherwise to the maximum extent permitted by Maryland law
in effect on the date hereof and as amended from time to time;
provided, however, that no change in Maryland law shall have the
effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The rights
of Indemnitee provided in this Section 3 shall include,
without limitation, the rights set forth in the other sections of
this Agreement, including any additional indemnification permitted
by Section 2-418(g) of the Maryland General Corporation Law
(“ MGCL ”).
SECTION 4. Proceedings Other Than
Proceedings by or in the Right of the Company . Indemnitee
shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is
threatened to be, made a party to or a witness in any threatened,
pending, or completed Proceeding, other than a Proceeding by or in
the right of the Company. Pursuant to this Section 4,
Indemnitee shall be indemnified against all judgments, penalties,
fines and amounts paid in settlement and all Expenses actually and
reasonably incurred
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by him or on his behalf in connection with a
Proceeding by reason of his Corporate Status unless it is
established that (i) the act or omission of Indemnitee was
material to the matter giving rise to the Proceeding and
(a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty, (ii) Indemnitee actually
received an improper personal benefit in money, property or
services, or (iii) in the case of any criminal Proceeding,
Indemnitee had reasonable cause to believe that his conduct was
unlawful.
SECTION 5. Proceedings by or in
the Right of the Company . Indemnitee shall be entitled to the
rights of indemnification provided in this Section 5 if, by
reason of his Corporate Status, he is, or is threatened to be, made
a party to or a witness in any threatened, pending or completed
Proceeding brought by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 5, Indemnitee
shall be indemnified against all amounts paid in settlement and all
Expenses actually and reasonably incurred by him or on his behalf
in connection with such Proceeding unless it is established that
(i) the act or omission of Indemnitee was material to the
matter giving rise to such a Proceeding and (a) was committed
in bad faith or (b) was the result of active and deliberate
dishonesty or (ii) Indemnitee actually received an improper
personal benefit in money, property or services.
SECTION 6. Court-Ordered
Indemnification . Notwithstanding any other provision of this
Agreement, a court of appropriate jurisdiction, upon application of
Indemnitee and such notice as the court shall require, may order
indemnification in the following circumstances:
(a) if it determines Indemnitee is
entitled to reimbursement under Section 2-418(d)(1) of the
MGCL, the court shall order indemnification, in which case
Indemnitee shall be entitled to recover the expenses of securing
such reimbursement; or
(b) if it determines that Indemnitee
is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not Indemnitee (i) has
met the standards of conduct set forth in Section 2-418(b) of
the MGCL or (ii) has been adjudged liable for receipt of an
improper personal benefit under Section 2-418(c) of the MGCL,
the court may order such indemnification as the court shall deem
proper. However, indemnification with respect to any Proceeding by
or in the right of the Company or in which liability shall have
been adjudged in the circumstances described in
Section 2-418(c) of the MGCL shall be limited to Expenses
actually and reasonably incurred by him or on his behalf in
connection with a Proceeding.
SECTION 7. Indemnification for
Expenses of a Party Who is Wholly or Partly Successful .
Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that Indemnitee is, by
reason of his Corporate Status, made a party to and is successful,
on the merits or otherwise, in the defense of any Proceeding, he
shall be indemnified for all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less
than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee under this Section 7 for all
Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or
matter, allocated on a reasonable and proportionate basis. For
purposes of this Section and without limitation, the termination of
any claim, issue or matter
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in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to
such claim, issue or matter.
SECTION 8. Advance of
Expenses . The Company shall advance all reasonable Expenses
actually and reasonably incurred by or on behalf of Indemnitee in
connection with any Proceeding (other than a Proceeding brought to
enforce indemnification under this Agreement, applicable law, the
Charter or Bylaws of the Company, any agreement or a resolution of
the stockholders entitled to vote generally in the election of
directors or of the Board of Directors) to which Indemnitee is, or
is threatened to be, made a party or a witness, within ten
(10) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence
the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by a written affirmation by Indemnitee of
Indemnitee’s good faith belief that the standard of conduct
necessary for indemnification by the
