Document:

Exhibit 10.4

 

PRIAM PROPERTIES INC.

2019 EQUITY INCENTIVE PLAN

 

NOTICE OF LTIP UNIT AWARD

 

Subject to the terms and conditions of this Notice of LTIP Unit Award (this “Notice”), the LTIP Unit Award Agreement attached hereto (the “Award Agreement”), the Priam Properties Inc. 2019 Equity Incentive Plan (the “Plan”), and the First Amended and Restated Agreement of Limited Partnership of Priam Office Properties OP LP, dated as of        , 2019, as amended from time to time (the “Partnership Agreement”), Priam Properties Inc., a Maryland corporation (the “Company”), as the sole general partner of Priam Office Properties OP LP (the “Partnership”), hereby grants the below individual (the “Participant”) the below number of LTIP Units.  Unless otherwise specifically indicated, capitalized terms used in this Notice but not otherwise defined herein shall have their respective meanings set forth in the Award Agreement or the Plan.

 

Identifying Information:

 

	
Name and Address of the
    	
 
    
	
Participant:
    	
 
    
	
 
    	
 
    
	
Date of Grant:
    	
 
    
	
Number of LTIP Units:
    	
 
    

 

Vesting Schedule:

 

Subject to the Participant’s continuous status as an employee of the Company or an Affiliate  (“Continuous Service”), and the terms of the Plan, the Partnership Agreement, this Notice and the Award Agreement, the LTIP Units shall vest on the first anniversary of the Date of Grant (the “Vesting Date”).  The LTIP Units may vest before the Vesting Date in accordance with the Award Agreement.

 

Representations and Agreements of the Participant:

 

The Participant has reviewed this Notice, the Award Agreement, the Plan and the Partnership Agreement in their entirety, has had an opportunity to have them reviewed by his or her legal and tax advisers, and hereby represents that he or she is relying solely on such advisors and not on any statements or representations of the Company, the Partnership, any Affiliate or any of their agents.  The Participant represents that he or she is familiar with the terms of this Notice, the Award Agreement, the Plan and the Partnership Agreement, and hereby accepts the LTIP Units subject to all of their terms.  The Participant hereby agrees that all questions of interpretation and administration relating to this Notice, the Award Agreement and the Plan will be resolved solely by the Committee.

 

Electronic Signature:

 

This Notice may be executed by the Participant, the Company and the Partnership by means of electronic or digital signatures, which have the same force and effect as manual signatures.  The Participant agrees that clicking “I Accept” (or a tab of similar intent) in connection with or response to any electronic communication or other medium has the effect of affixing the Participant’s electronic signature to this Notice.  This award of LTIP Units will be forfeited by the Participant if it is not duly executed by electronic signature by the Participant prior to the deadline set forth in the electronic transmission of this Notice and the Award Agreement.

 

 

PRIAM PROPERTIES INC.

2019 EQUITY INCENTIVE PLAN

 

LTIP UNIT AWARD AGREEMENT

 

Subject to the terms and conditions of the Notice of LTIP Unit Award (the “Notice”), this LTIP Unit Award Agreement (this “Award Agreement”), the Priam Properties Inc. 2019 Equity Incentive Plan (the “Plan”), and the First Amended and Restated Agreement of Limited Partnership of Priam Office Properties OP LP, dated as of          , 2019, as amended from time to time (the “Partnership Agreement”), Priam Properties Inc., a Maryland corporation (the “Company”), as the sole general partner of Priam Office Properties OP LP (the “Partnership”), hereby grants the individual set forth in the Notice (the “Participant”) the number of LTIP Units set forth in the Notice.  Unless otherwise specifically indicated, capitalized terms used in this Award Agreement but not otherwise defined herein shall have their respective meanings set forth in the Notice or the Plan.

 

1.         Award in Exchange for Performance of Services.  In consideration of the Participant’s provision of services to or for the benefit of the Partnership in a partner capacity or in anticipation of being a partner, the Company grants the number of LTIP Units indicated in the Notice, effective as of the Date of Grant set forth in the Notice, and on the terms and conditions set forth in the Notice, this Award Agreement, the Plan and the Partnership Agreement.  Upon receipt of the LTIP Units, the Participant shall, automatically and without further action on his or her part, be deemed to be a party to, signatory of and bound by the Partnership Agreement.  Notwithstanding the foregoing, at the request of the Company or the Partnership, the Participant shall execute the Partnership Agreement or a joinder or counterpart signature page thereto before this Award Agreement and the underlying grant becomes effective.

 

2.         Vesting Date.  Subject to the Participant’s Continuous Service and any other limitations set forth in the Notice, the Plan, the Partnership Agreement or this Award Agreement, the LTIP Units will vest on the Vesting Date provided in the Notice.

 

3.         Risk of Forfeiture and Clawback.

 

(a)           Risk of Forfeiture - Vesting.  The LTIP Units shall be subject to a risk of forfeiture until such time the risk of forfeiture lapses in accordance with the Notice or this Award Agreement.  All or any portion of the LTIP Units subject to a risk of forfeiture shall immediately and automatically be forfeited and terminated if the Participant’s Continuous Service is interrupted or terminated for any reason other than as permitted hereunder, and the Company shall make no further payment to the Participant, cash or otherwise, for any unvested LTIP Units that are forfeited.

 

(b)           Risk of Forfeiture - Clawback.  Notwithstanding anything in this Award Agreement, the Plan or the Partnership Agreement to the contrary, the Participant hereby grants to the Company the unilateral right to forfeit/clawback/redeem any LTIP Units held by the Participant, whether vested or unvested, if either: (i) the Participant’s services to the Company, the Partnership or an Affiliate are terminated by the Company, the Partnership or an Affiliate for Cause; or (ii) the date the Participant breaches (as determined by the Board) any provision of the

 

 

Notice, this Award Agreement, the Plan or the Partnership Agreement.  Any implementation of this Section 3(b) shall be for no monetary consideration (i.e., this Section 3(b) is consideration for the grant to the Participant of the LTIP Units in the first instance).  For purposes of this Section 3(b), the term “Cause” shall mean, if the Participant is a party to an employment agreement or similar agreement between the Participant and the Company, the Partnership or an Affiliate and such agreement provides for a definition of “Cause” (or substantially similar term), the definition contained therein.  If no such agreement exists, or if any such agreement exists but “Cause” (or substantially similar term) is not defined therein, then Cause means (as determined by the Committee in its sole and absolute discretion) the occurrence of any one or more of the following events: (i) the Participant’s failure to perform a material duty to the Company or the Partnership other than by reason of the Participant’s mental or physical illness or injury; (ii) the Participant’s material breach of an obligation set forth in a written agreement with the Company or the Partnership other than be reason of the Participant’s mental or physical illness or injury; (iii) the Participant’s breach of the Participant’s fiduciary duties to the Company or the Partnership; (iv) conduct by the Participant that is demonstrably and materially injurious to the Company or the Partnership, monetarily or otherwise; or (v) the Participant’s conviction of, or plea of guilty or nolo contendre to, a felony or crime involving moral turpitude or fraud or dishonesty involving the assets of the Company or the Partnership.  The Participant’s termination shall not be with Cause unless the Board has given the Participant written notice of the grounds for such termination and the Participant has failed to cure such grounds to the reasonable satisfaction of the Board during the thirty (30) day period following the Participant’s receipt of the notice.

 

4.         Capital Contribution.  No Capital Contribution (as defined in the Partnership Agreement) is required of the Participant under the Partnership Agreement or this Award Agreement in connection with the Participant’s receipt of the LTIP Units.

 

5.         Acceleration of Vesting in Special Circumstances.

 

(a)           All LTIP Units granted herein that have not already become fully vested in accordance with Section 2 hereof shall automatically become fully vested on the date specified below if the Participant remains in the continuous employ of the Company, the Partnership or any Affiliate of the Company or the Partnership from the Date of Grant until such date:

 

i)              the date that the Participant’s employment with the Company, the Partnership or any Affiliate of the Company or the Partnership is terminated by the Company, the Partnership or any Affiliate of the Company or the Partnership for any reason other than “Cause” (as such term is defined in Section 3(b)) or the date that the Participant resigns from such employment with Good Reason (as such term is defined in Section 5(c); or

 

ii)             the date on which the Participant’s employment with the Company, the Partnership or any Affiliate of the Company or the Partnership terminates on account of the Participant’s death or “disability” (for purposes of this Agreement, the term “disability” means that the Participant is entitled to benefits under a long-term disability insurance policy or plan maintained by the Company, the Partnership or any Affiliate of the Company or the Partnership or, if there is no such policy or plan in effect, “disability” means that the Participant is totally and permanently disabled within the meaning of Section 22(e)(3) of the Code).

 

 

(b)           All LTIP Units granted herein that have not already become fully vested in accordance with Section 2 hereof shall automatically become fully vested on a Change in Control (as defined in the Plan).

 

(c)           For purposes of Section 5(a), the term “Good Reason” shall mean, if the Participant is a party to an employment agreement or similar agreement between the Participant and the Company, the Partnership or an Affiliate and such agreement provides for a definition of “Good Reason” (or substantially similar term), the definition contained therein.  If no such agreement exists, or if any such agreement exists but “Good Reason” (or substantially similar term) is not defined therein, then Good Reason means the occurrence of any one or more of the following events:  (i) the Company’s or the Partnership’s material breach of an obligation set forth in a written agreement with the Participant or a direction from the Board or a more senior executive officer that the Participant act or refrain from acting which in either case would be unlawful or contrary to a material and written policy of the Company or the Partnership; (ii) a material diminution in the Participant’s duties, functions and responsibilities to the Company, the Partnership or their Affiliates (and the Company ceasing to be a reporting company under the Securities Exchange Act of 1934, as amended, constitutes a material diminution of the Participant’s duties, functions and responsibilities to the Company, the Partnership and their Affiliates) or the Company or the Partnership preventing the Participant from fulfilling or exercising the Participant’s material duties, functions and responsibilities to the Company, the Partnership or their Affiliates without the Participant’s consent; (iii) a material reduction in the Participant’s base salary from the Company or a material reduction in the Participant’s target annual bonus opportunity from the Company or (iv) a requirement that the Participant relocate the Participant’s employment more than fifty (50) miles from the location of the Company’s principal office in Nashville, Tennessee, without the written consent of the Participant.  The Participant’s resignation shall not be deemed to be with Good Reason unless the Participant gives the Board written notice (delivered within thirty (30) days after the Participant knows of the event, action, etc. that the Participant asserts constitutes Good Reason), the written notice specifies the event, action, etc. that the Participant asserts constitutes Good Reason, the event, action, etc. that the Participant asserts constitutes Good Reason is not cured, to the reasonable satisfaction of the Participant, within thirty (30) days after such notice and the Participant resigns effective not later than thirty (30) days after the expiration of such cure period.

 

6.         Transfer Restrictions.  The Participant hereby acknowledges and agrees that the LTIP Units may not be sold, transferred, pledged, exchanged, hypothecated or otherwise disposed of by the Participant prior to vesting and are subject to transfer restrictions and other restrictions set forth in the Partnership Agreement.  Any transfer or attempted transfer of any LTIP Units in violation of the Partnership Agreement shall be void.  Any attempt to transfer LTIP Units in violation of this Section 6 will be null and void and will be disregarded.  The terms of the Plan, the Notice, this Award Agreement and the Partnership Agreement are binding upon the executors, administrators, heirs, successors and assigns of the Participant.

 

7.         Representations, Warranties, Covenants, and Acknowledgments of the Participant.  The Participant hereby represents, warrants, covenants, acknowledges and agrees, that:

 

 

(a)           Investment.  The Participant is holding the LTIP Units for the Participant’s own account and not for the account of any other person.  The Participant is holding the LTIP Units for investment and not with a view to any distribution or resale thereof except in compliance with applicable laws regulating securities.

 

(b)           Relation to the Company.  The LTIP Units are being offered to the Participant as an inducement to provide services to or for the benefit of the Partnership.

 

(c)           Access to Information.  The Participant has had the opportunity to ask questions of, and to receive answers from, the Company and the Partnership with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial conditions, and results of operations of the Company and the Partnership.

 

(d)           Registration.   The Participant understands that the LTIP Units have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and that the LTIP Units cannot be transferred by the Participant other than in accordance with the terms and conditions set forth in this Award Agreement and the Partnership Agreement and, in any event, unless such transfer is registered under the Securities Act, as well as applicable state securities laws, or an exemption from such registration is available.  The Company and the Partnership have made no agreement, covenant or undertaking whatsoever to register the transfer of the LTIP Units under the Securities Act on the ground that the grant of the LTIP Units is exempt from registration under the Securities Act pursuant to Rule 701 or Section 4(2) promulgated thereunder.

 

(e)           Public Trading.  None of the Partnership’s securities are presently publicly traded, and the Company and the Partnership have made no representation, covenant or agreement as to whether there will be a public market for any of its securities.

 

8.         Distributions and Allocations.  Any entitlement to distributions and/or allocations from the Participant’s holding vested and unvested LTIP Units shall be governed by the Partnership Agreement.

 

9.         Taxes.

 

(a)           Section 83(b) Election.  The Participant is solely responsible for the determination of whether to make an 83(b) election with respect to the LTIP Units, and the Participant has consulted with the Participant’s tax advisors as to whether such election should be made.  For convenience only, a form of the 83(b) election is attached hereto as Exhibit A.  If the Participant determines to make such an election, the Participant acknowledges that it is Participant’s sole responsibility, and not the responsibility of the Company or the Partnership, to file such protective election, and such shall be the result even if the Participant requests that the Board, the Company, the Partnership or their officers, employees or authorized representatives (including attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) assist in making such filing.

 

(b)           Tax Advice.  The Company and the Partnership have made no warranty or representation to the Participant with respect to the income tax consequences of the issuance of the LTIP Units or the transactions contemplated by this Award Agreement, and the Participant is

 

 

in no manner relying on the Company, the Partnership or their representatives for an assessment of such tax consequences.  The Participant is advised to consult with its own tax advisor with respect to such tax consequences and its ownership of the LTIP Units.

 

(c)           Section 409A of the Code.  The Company, the Partnership and the Participant intend for the issuance of the LTIP Units to be a transfer of property within the meaning of Section 83 of the Code.  Accordingly, neither this Award Agreement nor the LTIP Units are intended to constitute or provide for nonqualified deferred compensation within the meaning of Section 409A of the Code (“Section 409A”).  However, notwithstanding any other provision of this Award Agreement, if at any time the Committee determines that this Award Agreement or the LTIP Units may be subject to Section 409A, the Committee shall have the right, in its sole discretion, to adopt such amendments to this Award Agreement or take such other actions (including amendments and actions with retroactive effect) as the Committee determines are necessary or appropriate for this Award Agreement and/or the LTIP Units to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.  Notwithstanding the foregoing, the Committee shall have no obligation to adopt any such amendment or take any such other action, and nothing contained in this Section 9(c) shall create any such obligation.

 

(d)           The Participant hereby recognizes that the IRS has proposed regulations under Section 83 and 704 of the Internal Revenue Code and may propose regulations under Section 1061 of the Internal Revenue Code that may affect the treatment of the LTIP Units. In the event that those proposed regulations are finalized, the Participant hereby agrees to cooperate with the Partnership in amending this Agreement and the Partnership Agreement, and to take other actions required to conform to such regulations.

 

10.       Remedies.  The Participant shall be liable to the Company and the Partnership for all costs and damages, including incidental and consequential damages, resulting from a disposition of the LTIP Units that is in violation of the provisions of this Award Agreement.  Without limiting the generality of the foregoing, the Participant agrees that the Company and the Partnership shall be entitled to obtain specific performance of the obligations of the Participant under this Award Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same.  The Participant shall not urge as a defense that there is an adequate remedy at law.

 

11.       LTIP Units Certificate Restrictive Legends.  Certificates evidencing this Award Agreement, to the extent such certificates are issued, may bear such restrictive legends as the Company, the Partnership and/or the their counsel may deem necessary or advisable under applicable law or pursuant to this Award Agreement, including, without limitation, the following legends:

 

“The offering and sale of the securities represented hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).  Any transfer of such securities will be invalid unless a Registration Statement under the Securities Act is in effect as to such transfer or in the opinion of counsel for

 

 

the Company and the Partnership such registration is unnecessary in order for such transfer to comply with the Securities Act.”

 

“The securities represented hereby are subject to transferability restrictions and certain other restrictions as set forth in the (i) First Amended and Restated Agreement of Limited Partnership of Priam Office Properties OP LP, dated as of         , 2019, as it may be amended or restated from time to time, and (ii) Priam Properties Inc. 2019 Equity Incentive Plan, and such securities may not be sold or otherwise transferred except pursuant to the provisions of such documents.”

 

12.       Notice.  The notice provisions of the Partnership Agreement shall apply for purposes of any notice being provided under the Notice or this Award Agreement.

 

13.       Successors and Assigns.  Except as provided herein to the contrary, this Award Agreement is binding upon and will inure to the benefit of the parties to this Award Agreement, their respective successors and permitted assigns.

 

14.       No Assignment.  Except as otherwise provided in this Award Agreement, the Participant may not assign any of his or her rights under the Notice or this Award Agreement without the prior written consent of the Company and the Partnership, which consent may be withheld in their sole discretion.  The Company and the Partnership are permitted to assign their rights or obligations under the Notice and this Award Agreement.

 

15.       Construction; Severability.  The captions used in this Award Agreement are inserted for convenience and are not to be deemed to be a part of this Award Agreement for construction or interpretation.  Except where otherwise indicated by the context, the singular form includes the plural form and the plural form includes the singular form.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.  The validity, legality or enforceability of the remainder of this Award Agreement will not be affected even if one or more of the provisions of this Award Agreement are held to be invalid, illegal or unenforceable in any respect.

 

16.       Administration and Interpretation.  Any determination by the Committee in connection with any question or issue arising under the Notice, the Plan or this Award Agreement will be final, conclusive and binding on the Participant, the Company, the Partnership and all other persons. Any question or dispute regarding the interpretation of this Award Agreement or the receipt of the LTIP Units hereunder must be submitted by the Participant to the Committee.  The resolution of such question or dispute by the Committee will be final and binding on all parties.

 

17.       Counterparts.  The Notice may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile or portable electronic format (pdf), and each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument.

 

 

18.       Entire Agreement; Governing Law; and Amendments.  The provisions of the Plan, the Partnership Agreement and the Notice are incorporated herein by reference.  The Plan, the Notice, this Award Agreement and the Partnership Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company, the Partnership, and the Participant with respect to the subject matter hereof.  This Award Agreement may not be amended except in an instrument in writing signed by the Participant, the Company and the Partnership.  This Award Agreement is governed by the laws of the State of Delaware.

 

19.       Venue.  The Company, the Partnership, the Participant and the Participant’s assignees agree that any suit, action or proceeding arising out of or related to the Notice, this Award Agreement, the Plan or the Partnership Agreement must be brought in the United States District Court for the Middle District of Tennessee (or should such court lack jurisdiction to hear such action, suit or proceeding, in a state court in Nashville, Tennessee) and that all parties submit to the jurisdiction of such court.  The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court.  If any one or more provisions of this Section 19 are for any reason held invalid or unenforceable, it is the specific intent of the parties that such provisions be modified to the minimum extent necessary to make it or its application valid and enforceable.

 

20.       No Guarantee of Continued Service.  THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE LTIP UNITS ARE EARNED ONLY BY CONTINUOUS SERVICE AT THE WILL OF THE COMPANY, THE PARTNERSHIP OR AN AFFILIATE (NOT THROUGH THE ACT OF BEING GRANTED THE LTIP UNITS).  THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE RIGHTS GRANTED HEREUNDER, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING TERMS SET FORTH IN THIS AWARD AGREEMENT DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD OR FOR ANY PERIOD.

 

21.       Waiver.  Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof will not be deemed to be a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed to be a waiver or relinquishment of such right or power at any other time or times.

 

*   *   *   *   *

 

 

EXHIBIT A

 

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

 

This statement is made under Section 83(b) of the Internal Revenue Code of 1986, as amended, pursuant to Section 1.83-2 of the regulations.

 

1.                                      The taxpayer who performed the services is:

 

	
Name:
    	
 
    
	
Address:
    	
 
    
	
Social Security No.:
    	
 
    
	
Taxable Year:
    	
 
    

 

2.                                      The property with respect to which the election is made                 LTIP Units of Priam Office Properties OP LP , a              limited partnership.

 

3.                                      The property was transferred to the undersigned on                .

 

4.                                      The property is subject to a forfeiture condition pursuant to which the issuer has the right to acquire the property without compensation to the taxpayer if taxpayer’s service with the issuer or its Affiliates is terminated under certain circumstances.  The forfeiture condition lapses depending on certain conditions set forth in an award agreement.

 

5.                                      The fair market value of such property at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $ 0  per LTIP Unit x        LTIP Units = $ 0 .

 

6.                                      For the property transferred, the undersigned paid $ 0  per LTIP Unit x        LTIP Units = $ 0 .

 

7.                                      The amount to include in gross income is $ 0  [The result of the amount reported in Item 5 minus the amount reported in Item 6.]

 

8.                                      A copy of this statement was furnished to the Company for whom taxpayer rendered the services underlying the transfer of such property.

 

9.                                      This statement is executed on            ,     .

 

	
Signature of Taxpayer:
    	
 
    	
 
    	
Signature of Spouse (if any):
    	
 
    

 

This election must be filed within 30 days after the date of transfer with the Internal Revenue Service Center with which the undersigned files his or her federal income tax returns.  This filing should be made by registered or certified mail, return receipt requested.  The undersigned must retain two copies of the completed form for filing with his or her federal and state tax returns for the current tax year and an additional copy for his or her records, and deliver another additional copy to the Company.Exhibit 10.5

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the       day of          , 2019, effective as of           , 2019 (the “Effective Date”), by and between Priam Properties Inc., a Maryland corporation (the “Company”), and                          (“Indemnitee”).

 

WHEREAS, at the request of the Company, Indemnitee currently serves or will serve as [a director] [and] [an officer] of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of such service;

 

WHEREAS, as an inducement to Indemnitee to serve or continue to serve in such capacity, the Company has agreed to indemnify Indemnitee 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, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.                               Definitions.  For purposes of this Agreement:

 

(a)         “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing  at least 50% of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved.

 

 

(b)         “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, real estate investment trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company.  As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company:  (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust or other enterprise (1) of which a majority of the voting power or equity interest is or was owned directly or indirectly by the Company or (2) the management of which is controlled directly or indirectly by the Company and (ii) if, as a result of Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is subject to duties by, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as deemed fiduciary thereof.

 

(c)          “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.

 

(d)         “Effective Date” shall have the meaning ascribed to it in the first paragraph of this Agreement.

 

(e)          “Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, arbitration and mediation costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding.  Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.

 

(f)           “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 years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in

 

2

 

representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(g)          “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, claim, demand, discovery request or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee.  If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

 

Section 2.                               Services by Indemnitee.  Indemnitee serves or will serve in the capacity or capacities set forth in the first WHEREAS clause above.  However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company.  This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.

 

Section 3.                               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 Effective Date 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 Effective Date.  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 the Maryland General Corporation Law (the “MGCL”), including, without limitation, Section 2-418 of the MGCL.

 

Section 4.                               Standard for Indemnification.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

Section 5.                               Certain Limits on Indemnification.  Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:

 

(a)         indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company;

 

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(b)         indemnification hereunder if Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in the Indemnitee’s Corporate Status; or

 

(c)          indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.

 

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 of Indemnitee by the Company in the following circumstances:

 

(a)         if such court determines that 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 such court 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 without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

 

Section 7.                               Indemnification for Expenses of an Indemnitee Who is Wholly or Partially Successful.  Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, the Company shall indemnify Indemnitee for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s 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 Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 7 and, without limitation, the termination of any claim, issue or matter 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 for Indemnitee.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the

 

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Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding.  The Company shall make such advance within ten days after the receipt by the Company of a statement or statements requesting such advance from time to time, whether prior to or after final disposition of such Proceeding and may be in the form of, in the reasonable discretion of the Indemnitee (but without duplication) (a) payment of such Expenses directly to third parties on behalf of Indemnitee, (b) advance of funds to Indemnitee in an amount sufficient to pay such Expenses or (c) reimbursement to Indemnitee for Indemnitee’s payment of such Expenses.  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 and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.

 

Section 9.                               Indemnification and Advance of Expenses as a Witness or Other Participant.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other person, and to which Indemnitee is not a party, Indemnitee shall be advanced and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advance or indemnification 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.  In connection with any such advance of Expenses, the Company may require Indemnitee to provide an undertaking and affirmation substantially in the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of execution thereof.

 

Section 10.                        Procedure for Determination of Entitlement to Indemnification.

 

(a)                                 To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary or appropriate to determine whether and to what extent Indemnitee is entitled to indemnification.  Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion.  The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

 

(b)                                 Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control has occurred, by

 

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Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by the Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control has not occurred, (A) by a majority vote of the Disinterested Directors or, by the majority vote of a  group of Disinterested Directors designated by the Disinterested Directors to make the determination, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by the Indemnitee, which approval shall not be unreasonably withheld or delayed, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by the Board of Directors, by the stockholders of the Company, other than directors or officers who are parties to the Proceeding.  If it is so determined that Indemnitee is entitled to indemnification, the Company shall make payment to Indemnitee within ten days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary or appropriate to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b).  Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

 

(c)                                  The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.

 

Section 11.                        Presumptions and Effect of Certain Proceedings.

 

(a)                                 In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of overcoming that presumption in connection with the making of any determination contrary to that presumption.

 

(b)                                 The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

 

(c)                                  The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.

 

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Section 12.                        Remedies of Indemnitee.

 

(a)                                 If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, or in an arbitration conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association, of Indemnitee’s entitlement to indemnification or advance of Expenses.  Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 7 of this Agreement.  Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                                 In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).  The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

 

(c)                                  If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification that was not disclosed in connection with the determination.

 

(d)                                 In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the

 

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Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by Indemnitee in such judicial adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

 

(e)                                  Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 60th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

 

Section 13.                        Defense of the Underlying Proceeding.

 

(a)                                 Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding.  The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

 

(b)                                 Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above.  The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee, or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee.  This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.

 

(c)                                  Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that Indemnitee may have separate

 

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defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.

 

Section 14.                        Non-Exclusivity; Survival of Rights; Subrogation.

 

(a)                                 The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under 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, or otherwise.  Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of the charter or Bylaws of the Company, this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

 

(b)                                                In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

Section 15.                        Insurance.

 

(a)                                 The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of Indemnitee’s Corporate Status and covering the Company for any indemnification or advance of

 

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Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of Indemnitee’s Corporate Status.  In the event of a Change in Control, the Company shall maintain in force any and all directors and officers liability insurance policies that were maintained by the Company immediately prior to the Change in Control for a period of six years with the insurance carrier or carriers and through the insurance broker in place at the time of the Change in Control; provided, however, (i) if the carriers will not offer the same policy and an expiring policy needs to be replaced, a policy substantially comparable in scope and amount shall be obtained and (ii) if any replacement insurance carrier is necessary to obtain a policy substantially comparable in scope and amount, such insurance carrier shall have an AM Best rating that is the same or better than the AM Best rating of the existing insurance carrier; provided, further, however, in no event shall the Company be required to expend in the aggregate in excess of 250% of the annual premium or premiums paid by the Company for directors and officers liability insurance in effect on the date of the Change in Control.  In the event that 250% of the annual premium paid by the Company for such existing directors and officers liability insurance is insufficient for such coverage, the Company shall spend up to that amount to purchase such lesser coverage as may be obtained with such amount.

 

(b)                                 Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee which would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section 15(a).  The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies.  If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

 

(c)                                                          The Indemnitee shall cooperate with the Company or any insurance carrier of the Company with respect to any Proceeding.

 

Section 16.                        Coordination of Payments.  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

Section 17.                        Contribution.  If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, penalties,

 

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and/or amounts paid or to be paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

Section 18.                        Reports to Stockholders.  To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.

 

Section 19.                        Duration of Agreement; Binding Effect.

 

(a)         This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).

 

(b)         The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(c)          The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(d)         The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult to ascertain, and further agree that such breach may cause Indemnitee irreparable harm.  Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by

 

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seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled.  Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith.  The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.

 

Section 20.                        Severability.  If any provision or provisions of this Agreement shall be held to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

Section 21.                        Counterparts.  This Agreement may be executed in one or more counterparts (delivery of which may be by facsimile, or via e-mail as a portable document format (.pdf) or other electronic format file), each of which will be deemed to be an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one such counterpart.  One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

 

Section 22.                        Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

Section 23.                        Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor, unless otherwise expressly stated, shall such waiver constitute a continuing waiver.

 

Section 24.                        Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

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(a)         If to Indemnitee, to the address set forth on the signature page hereto.

 

(b)         If to the Company, to:

 

Priam Properties Inc.

102 Woodmont Blvd., Suite 100

Nashville, TN 37205

 

or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

Section 25.                        Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

	
 
    	
PRIAM   PROPERTIES INC.:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INDEMNITEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Address:
    

 

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EXHIBIT A

 

AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

 

To:  The Board of Directors of Priam Properties Inc.

 

Re:  Affirmation and Undertaking

 

Ladies and Gentlemen:

 

This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement dated the       day of               , 20    , by and between Priam Properties Inc., a Maryland corporation (the “Company”), and the undersigned, as Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).

 

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

 

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity.  I hereby affirm my good faith belief that at all times, insofar as I was involved as [a director] [and] [an officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

 

In consideration of the advance by the Company for Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me 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 or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.

 

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this     day of                     , 20    .

 

	
 
    	
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