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Sni Valley Fire Protection District Policy Manual
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Indemnification
883 Indemnification
Effective Date:
Revision Date:
Directors are members of the Board of Directors of the District and in such capacity are performing a valuable service for the District and its patrons.
The District has purchased and presently maintains a policy of policies of Directors and Officers Liability Insurance ("D& O Insurance") covering certain liabilities which may be incurred by its directors and officers in the performance of their services for the District.
Recent developments with respect to the terms and availability of D&O Insurance and with respect to the application, amendment and enforcement of statutory and by-law indemnification provisions generally have raised questions concerning the adequacy and reliability of the protection afforded to directors thereby.
INDEMNITY OF DIRECTOR
The District shall indemnify each Director to the full extent authorized or permitted by law or statutory provisions authorizing or permitting such indemnification which is adopted after the date hereof.
MAINTENANCE OF INSURANCE AND SELF INSURANCE
The District shall place in force and effect policies of D&O Insurance in insurance companies and amounts as follows (the "Insurance Policies"): Subject only to the provisions of paragraph two of this section, the District shall, so long as a Director shall continue to serve as a director of the District, and thereafter so long as a director shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, or investigative by reason of the fact that Director was a Director of the District, purchase and maintain in effect for the benefit of a Director one or more valid, binding, and enforceable policy or policies of D&O Insurance providing, in all respects, coverage at least comparable to that presently provided pursuant to the Insurance Policies.
The District shall not be required to maintain said policy of policies of D&O Insurance in effect if said insurance is not reasonably available or if, in the reasonable business judgement of the then directors of the district, either (1) the premium cost for such insurance is substantially disproportionate to the amount of coverage, or (2) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance.
In the event the District does not purchase and maintain in effect said policy or policies of D&O Insurance pursuant to the provisions of paragraph two of this section the District agrees to hold harmless and indemnify Director to the full extent of the coverage which would otherwise have been provided for the benefit of Director pursuant to the Insurance Policies.
ADDITIONAL INDEMNITY
Subject only to the exclusions set forth in the Limitations Or Additional Indemnity section of this policy, the District shall hold harmless and indemnify Director:
Against any and all expenses (including attorney fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by a Director in connections with any threatened pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, to which a Director is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Director is, was or at any time becomes a director or officer of the District or is or was serving, or at any time serves, at the request of the District, as a director or officer of another entity or enterprise; and
LIMITATIONS OR ADDITIONAL INDEMNITY
No indemnity pursuant to the Additional Indemnity section shall be paid by the District;
(a) except to the extent the aggregate losses to be indemnified there under exceed the amount of losses for which the director is indemnified either pursuant to the Indemnity Of Director or Maintenance Of Insurance And Self Insurance sections hereof or pursuant to any D&O Insurance purchased and maintained by the District;
(b) in respect to remuneration paid to a Director if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;
(c) on account of a Director's conduct which is finally adjudged to have been knowingly fraudulent, deliberately dishonest or willful misconduct;
(d) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful
CONTINUATION OF INDEMNITY
All agreements and obligations of the District contained herein shall continue during the period a Director is a director or officer of the District, or is or was serving at the request of the District as a director or officer of another entity or enterprise, and shall continue thereafter so long as Director shall be subject to any possible claim or threatened, pending, or completed action, suit or proceeding, whether civil, criminal, or investigative, by reason of the fact that director was a director of the District or serving in any other capacity referred to herein.
NOTIFICATION AND DEFENSE OF CLAIM
Promptly after receipt by a Director of notice of the commencement of any action, suit, or proceeding, the Director will, if a claim in respect thereof is to be made against the District under this policy, notify the Fire Chief of the commencement thereof; but the omission so to notify the District will not relieve it from any liability which it may have to a Director otherwise than under this policy. With respect to any such action, suit or proceeding as to which a Director notifies the Fire Chief of the commencement thereof:
(a) The District will be entitled to participate therein at its own expense; and
(b) Except as otherwise provided below, to the extent that it may wish, the District jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to a Director. After notice from the District to the Director of its election so to assume the defense thereof, the District will not be liable to a Director under this policy for any legal or other expenses subsequently incurred by a Director in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. A Director shall have the right to employ its counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after a notice from the District of its assumption of the defense thereof shall be at the expense of a Director unless (1) the employment of counsel by the Director has been authorized by the District; (2) Director shall have reasonably concluded that there may be a conflict of interest between the District and the Director in the conduct of the defense of such action or (3) the District shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the District. The District shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the District or as to which the Director shall have made the conclusion provided for in (2) above.
(c) The District shall not be liable to indemnify the Director under this policy for any amounts paid in settlement of any action or claim affected without its written consent. The District shall not settle any action or claim in any manner which would impose any penalty or limitation on a Director without the Director's written consent. Neither the District nor the Director will unreasonably withhold their consent to any proposed settlement.
REPAYMENT OF EXPENSES
The Director shall reimburse the District for all reasonable expenses paid by the District in defending any civil or criminal action, suit or proceeding against a Director in the even and only to the extent that it shall be ultimately determined that the Director is not entitled to be indemnified by the District for such expenses by a court of competent jurisdiction.
ENFORCEMENT
This policy is adopted in order to induce a Director to continue as a director of the District, and a Director may rely upon this policy in continuing in such capacity.
SEPARABILITY
Each of the provisions of this policy is separate, distinct and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reasons, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof.
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