Bank Directors Seminar, Coeur d'Alene, ID, September 15-17, 2019

DIRECTOR PROTECTION RIGHTS Italic Font Indicates Rights Within Directors’ Control

Indemnity

Hold Harmless

Exculpation

Duty to Defend Advancement of Expenses

Generally permitted but extent varies

Common Law

Not authorized Not authorized Not authorized Not authorized

Authorize; require if party successful Should authorize and consider requiring Private entity – not applicable Public entities – SEC (against public policy) Banks – FDIC (unsound banking practice)

Authorize (LLC) but not require Should authorize and consider requiring Private entity – not applicable Public Company – not addressed Banks – FDIC (unsound banking practice)

Authorize but not require

Authorize but not require Should authorize and consider requiring Private entity – not applicable Public Company – SEC Banks – FDIC

Statutes

Not addressed Should consider who provides defense Private entity – not applicable Public Company – not addressed Banks – not addressed

Entity Documents

Should require

Private entity – not applicable Public Company – SEC Banks – FDIC (unsound banking practice)

Rules and Regulations

Contract

Recommended

Recommended

Recommended

Recommended

Recommended

Primarily funding source; may be independent right

Primarily funding source; may be independent right

Primarily funding source; may be independent right

Insurance

Not applicable

Not applicable

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DIRECTOR PROTECTION: PARTIES Parties: Directors, Officers, Employees, Agents

Indemnity

Hold Harmless

Exculpation

Duty to Defend Advancement of Expenses

Common Law Generally all parties

Not permitted

Not permitted

Not permitted

Not permitted

Generally all parties

Authorize (LLC) but do not require Should authorize for all parties

Directors (others not mentioned) Should authorize for all parties

Directors and officers; others? Should authorize for all parties

Statutes

Not addressed

Should authorize for all parties

Entity Documents Should authorize for all parties

Focused on directors and officers

Focused on directors and officers

Focused on directors and officers

Focused on directors and officers

Rules and Regulations

FDIC – unsound banking practice

FDIC – unsound banking practice Recommended for all parties

FDIC – unsound banking practice Recommended for all parties

FDIC – unsound banking practice Recommended for all parties

FDIC – unsound banking practice Recommended for all parties

Recommended for all parties

Contract

Primarily funding source; may be independent right

Primarily funding source; may be independent right

Primarily funding source; may be independent right

Insurance

Not applicable

Not applicable

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