Common use of Parent Board Observer Clause in Contracts

Parent Board Observer. (a) Prior to the Closing Date, the Company shall have the right to nominate, subject to the approval of the Parent Board, an individual to serve as a non-voting observer to the Parent Board (the “Observer”), who during the Observer Period shall be entitled to attend and participate in all meetings of the Parent Board and any and all committees thereof (including executive sessions thereof). Pursuant to the foregoing, the Company hereby nominates, and the Parent Board has consented to the appointment of, the individual set forth in Section 2.7(a) of the Company Disclosure Letter as the initial Observer and the individual set forth in Section 2.7(a) of the Company Disclosure Letter as the alternate Observer. In the event that such initial Observer shall for any reason cease to serve as the Observer during the Observer Period, the alternate Observer shall serve as the Observer, subject to the alternate Observer entering into the Observer Indemnification Agreement as set forth in Section 2.7(d). In no event shall Parent, the Parent Operating Partnership, or the Parent Board have any right to remove the individual appointed to serve as Observer pursuant to this Section 2.7(a). (b) During the Observer Period, the Observer shall have all of the rights and privileges of a member of the Parent Board and all committees thereof; provided, that in no event shall the Observer be deemed to be a member of the Parent Board or such committees or have the right to vote on any matter under consideration by the Parent Board or such committees. During the Observer Period, the Observer shall be provided with all notices of meetings, minutes and other materials (financial or otherwise) provided to members of the Parent Board and/or any and all committees thereof simultaneously with, and in the same manner as, the provision of such materials to the members of the Parent Board or such committees, as the case may be. During the Observer Period, all meetings of the Parent Board or committees thereof shall be held in a manner such that the Observer shall be able to participate therein either in person or telephonically. (c) During the Observer Period, Parent shall compensate the Observer in the same amount of all cash retainers, meeting fees and any other cash fees as if the Observer were an independent director member of the Parent Board and a member of each of the committees thereof, as such cash compensation may be modified from time to time. Further, Parent shall reimburse the Observer for all reasonable out-of-pocket expenses incurred by the Observer in connection with attendance at Parent Board and committee meetings during the Observer Period. All compensation and reimbursements payable by Parent pursuant to this Section 2.7(c) shall be paid to the Observer in accordance with Parent’s policies and practices with respect to director compensation and expense reimbursement then in effect; provided, however, that any such compensation or reimbursement shall be paid to the Observer no later than comparable compensation or reimbursement is paid to the members of the Parent Board. (d) Parent shall enter into an indemnification agreement with the Observer, dated as of the Effective Time, that shall be in substantially the form set forth as Exhibit A hereto (the “Board Observer Indemnification Agreement”). In the event that the initial Observer is replaced for any reason pursuant to Section 2.7(a), Parent and Observer agree to enter into an indemnification agreement with such alternate Observer that is substantially identical to the indemnification agreement entered into as of the Effective Time with the initial Observer. For the avoidance of doubt, failure to enter into the Board Observer Indemnification Agreement will toll the Observer’s, or alternative Observer’s, rights and privileges under Section 2.7. Parent shall also obtain and maintain insurance coverage on behalf of the Observer against liability that may be asserted against or incurred by him in his capacity as Observer, which insurance coverage shall be to the same extent as the insurance coverage provided to the members of the Parent Board. (e) In the event that the Observer is appointed or elected to the Parent Board, the Observer, while a member of the Parent Board, in addition to the rights and privileges of all other Parent Board members, may serve on each committee of the Parent Board, subject to the sole and absolute discretion of the Parent’s Nominating and Corporate Governance Committee; provided, further, in the event that the Observer is not appointed to each Committee, the Observer shall have the right to attend, as a non-voting observer, and participate in all meetings of such Committee(s), including the executive sessions thereof.