Liability coverage

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF  PRINCETON NATIONAL BANCORP, INC. 
 SEVENTH:  The Corporation shall, to the full extent permitted by Section 145 of  the General Corporation Law of the State of Delaware, 
as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto. 
 ELEVENTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7)
of subsection(b) of Section 102 of the General Corporation Law of the State of    Delaware, as the same may be amended and supplemented.  

Delaware code Section 145 is here and scroll down.

Following is paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented.

(7) A provision eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit the
liability of a director: (i) For any breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under § 174 of this title; or (iv) for any transaction from which the director derived an improper personal benefit. No such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date when
such provision becomes effective. All references in this paragraph to a director 
shall also be deemed to refer to such other person or persons, if any, who, 
pursuant to a provision of the certificate of incorporation in accordance with 
§ 141(a) of this title, exercise or perform any of the powers or duties otherwise conferred or imposed upon the board of directors by this title.

3 comments on “Liability coverage

  1. A bank’s indemnification for directors and officers wouldn’t be worth a hill of beans if the bank fails.

      • Under normal circumstances, you are correct. But the indemnification also protects the directors from being held accountable by the bank itself or by third parties. However, If a bank fails, D&O insurance will likely soon cease and the bank’s indemnification is essentially worthless – because the bank itself would be worthless. In the case of Broadway Bank, the suit against the directors came two years after the bank failed.

        If the FDIC and/or the shareholders sue the directors after a bank collapses, the directors and the officers (former or current) are likely on their own – there will probably be no insurance.

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