FORM OF INDEMNIFICATION AGREEMENT
CNL Strategic Capital, LLC S-1
Exhibit 10.7
FORM OF INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of the _____ day of June, 2017, by and among CNL Strategic Capital, LLC, a Delaware limited liability company (the “Company”) and , a director and/or officer of the Company (the “Indemnitee”).
WHEREAS, the Company is organized pursuant to, and in accordance with, the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.), as amended from time to time (the “Act”) by the filing of a Certificate of Formation of the Company with the Secretary of State of the State of Delaware; and
WHEREAS, the Board of Directors of the Company (the “Board”) has concluded that it is advisable and in the best interests of the Company to enter into an agreement to indemnify in a reasonable and adequate manner the Indemnitee and to assume for itself liability for expenses and damages in connection with claims lodged against the Indemnitee for the Indemnitee’s decisions and actions as a director and/or officer of the Company or any of its Subsidiaries, or as an officer of CNL Strategic Capital Management, LLC, a Delaware limited liability company and advisor to the Company (the “Manager”) or Xxxxxx Xxxxxxxxx Strategic Capital, LLC (the “Sub-Manager” and collectively with such Subsidiaries, the “Affiliates”).
For purposes of this Agreement, the following terms shall have the meanings set forth below:
A. “Board” shall have the meaning set forth in the Recitals hereof.
B. “Change in Control” shall mean a change in the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company, or any successor in interest thereto, whether through the ownership of Voting Securities, by contract or otherwise, including but not limited to a change which would be required to be reported under Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date hereof (the “Exchange Act”) or as may otherwise be determined pursuant to a resolution of the Board.
C. “Corporate Status” shall mean: (i) the status of a person who is or was a director or officer of the Company or any of the Affiliates, or a member of any committee of the Board; and (ii) the status of a person who, while a director or officer of the Company, is or was serving at the request of the Company as a director, officer, partner (including service as a general partner of any limited partnership), trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other incorporated or unincorporated entity or enterprise or employee benefit plan.
D. “Disinterested Director” shall mean a director of the Company who neither is nor was a party to the Proceeding with respect to which indemnification and/or advance of Expenses is being sought by the Indemnitee.
E. “Effective Date” means the date set forth in the first paragraph of this Agreement.
F. “Expenses” shall mean expenses of Proceedings including, without limitation, all attorneys’ fees, retainers, court costs, transcript costs, fees of experts, investigation fees and expenses, accounting and 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, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, being or preparing to be a witness in or investigating 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.
G. “Good Faith Act or Omission” shall mean an act or omission of the Indemnitee reasonably believed by the Indemnitee to be in the best interests of the Company and not: (i) one involving negligence or misconduct, or, if the Indemnitee is an independent director, one involving gross negligence or willful misconduct; (ii) one that was material to the loss or liability and that was committed in bad faith or that was the result of active or deliberate dishonesty; (iii) one from which the Indemnitee actually received an improper personal benefit in money, property or services; or (iv) in the case of a criminal Proceeding, one as to which the Indemnitee had cause to believe his or her conduct was unlawful.
H. “Liabilities” shall mean liabilities of any type whatsoever, including, without limitation, any judgments, fines, excise taxes and penalties under the Employee Retirement Income Security Act of 1974, as amended, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or with respect to such judgments, fines, penalties or amounts paid in settlement) in connection with the investigation, defense, settlement or appeal of any Proceeding or any claim, issue or matter therein.
H. “Proceeding” shall mean any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding whether civil, criminal, administrative or investigative, or 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.
I. “Trust” shall have the meaning ascribed to it in Article IX herein.
J. “Trustee” shall have the meaning ascribed to it in Article IX herein.
K. “Subsidiary” shall mean any corporation, limited liability company, partnership, business trust or other entity of which the Company, directly or indirectly, owns or controls at least fifty percent (50%) of the voting securities or economic interests.
L. “Undertakings” shall have the meaning ascribed to it in Article V herein.
M. “Voting Securities” shall mean any securities of the Company that are entitled to vote generally in the election of directors.
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).
III.
SERVICE BY INDEMNITEE, NOTICE OF
PROCEEDINGS, DEFENSE OF CLAIMS
B. Proceeding Other Than a Proceeding by or in the Right of the Company. If the Indemnitee, by reason of his or her Corporate Status or alleged action or inaction in such capacity, was or is a party or is threatened to be made a party to any Proceeding (whether the Indemnitee is or becomes a party, a witness or is otherwise a participant in any role) (other than a Proceeding by or in the right of the Company or any Affiliate), the Company shall, subject to the limitations set forth in Section IV.F below, hold harmless and indemnify the Indemnitee against any and all Expenses and Liabilities actually and reasonably incurred by or for the Indemnitee in connection with the Proceeding, if the act(s) or omission(s) of the Indemnitee giving rise thereto were Good Faith Act(s) or Omission(s).
1. To the extent that payment is actually made to the Indemnitee under any insurance policy or is made on behalf of the Indemnitee by or on behalf of the Company otherwise than pursuant to this Agreement.
2. If a court in such Proceeding has entered a judgment or other adjudication which is final and has become non-appealable and establishes that a claim of the Indemnitee for such indemnification arose from: (i) a breach by the Indemnitee of the Indemnitee’s duty of loyalty to the Company or its shareholders; (ii) acts or omissions of the Indemnitee for which the Indemnitee did not reasonably believe to be in or not opposed to the best interests of the Company or the Affiliates and was: (a) an act or omission involving negligence or misconduct, or, if the Indemnitee is an independent director, an act or omission involving gross negligence or willful misconduct, or (b) an act or omission that was material to the loss or liability and that was committed in bad faith or that was the result of active and deliberate dishonesty; (iii) acts or omissions of the Indemnitee which the Indemnitee had reasonable cause to believe were unlawful; or (iv) a transaction in which the Indemnitee actually received an improper personal benefit in money, property or services.
3. If there has been no Change in Control, for Liabilities in connection with Proceedings settled without the consent of the Company, which consent shall not have been unreasonably withheld.
4. For any loss or liability arising from an alleged violation of federal or state securities laws unless one or more of the following conditions are met: (i) there has been a successful adjudication in favor of the Indemnitee on the merits of each count involving alleged securities law violations as to the Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against the Indemnitee, finds that indemnification of the settlement and the related costs should be made, and has been advised of the position on indemnification for violations of securities laws of (A) the Securities and Exchange Commission and (B) any state securities regulatory authority in which securities of the Company were offered or sold.
5. If such Indemnitee is a party to such Proceeding by reason of his or her status as an officer of director of the Manager or the Sub-Manager and such Proceeding is brought by a member of the Manager or the Sub-Manager against such Indemnitee arising from claims solely related to the relationship of the members as members of the Manager or the Sub-Manager.
Notwithstanding any provision to the contrary in Article VI hereof, the Company shall advance to the Indemnitee all Expenses which, by reason of the Indemnitee’s Corporate Status, were incurred by or for the Indemnitee in connection with any Proceeding for which the Indemnitee is entitled to indemnification pursuant to Article IV hereof, in advance of the final disposition of such Proceeding, provided that all of the following are satisfied: (i) the Indemnitee was made a party to the proceeding by reason of Indemnitee’s Corporate Status; (ii) the Indemnitee provides the Company with written affirmation of the Indemnitee’s good faith belief that the Indemnitee has met the standard of conduct necessary for indemnification by the Company pursuant to Article IV hereof; (iii) the Indemnitee provides the Company with a written agreement (the “Undertaking”) to repay the amount paid or reimbursed by the Company, together with the applicable legal rate of interest thereon, if it is ultimately determined that the Indemnitee is not entitled to indemnification; and (iv) the Proceeding is initiated by a third party who is not a Member, or the Proceeding is initiated by a Member and a count of competent jurisdiction specifically approves such advancement. The Indemnitee shall be required to execute and submit the Undertaking to repay Expenses Advanced in the form of Exhibit A attached hereto or in such form as may be required under applicable law as in effect at the time of execution thereof. The Undertaking shall reasonably evidence the Expenses incurred by or for the Indemnitee and shall contain the written affirmation by the Indemnitee, described above, of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification has been met. The Company shall advance such expenses within five (5) business days after its receipt of the Undertaking. The Indemnitee hereby agrees to repay any Expenses advanced hereunder if it is ultimately determined that the Indemnitee is not entitled to be indemnified against such Expenses. Any advances and the undertaking to repay pursuant to this Article V shall be unsecured.
VI.
PROCEDURE FOR PAYMENT OF LIABILITIES;
DETERMINATION OF RIGHT TO INDEMNIFICATION
1. A majority of the Disinterested Directors, or, if there are fewer than three (but at least one) Disinterested Directors, all of the Disinterested Directors;
2. The shareholders of the Company;
3. Legal counsel selected by the Indemnitee, subject to the approval of the Board, which approval shall not be unreasonably delayed or denied and which counsel shall make such determination in a written opinion; or
4. A panel of three arbitrators, one of whom is selected by the Company, another of whom is selected by the Indemnitee and the last of whom is selected jointly by the first two arbitrators so selected.
As soon as practicable, and in no event later than thirty (30) days after written notice of the Indemnitee’s choice of forum pursuant to this Section VI.D, the Company shall, at its own expense, submit to the selected forum its claim that the Indemnitee is not entitled to indemnification, and the Company shall act in the utmost good faith to give the Indemnitee a complete opportunity to defend against such claim. The fees and expenses of the forum selected in connection with making the determination contemplated hereunder shall be paid by the Company. If the Company fails to submit the matter to the selected forum within thirty (30) days of the Indemnitee’s written notice or if the selected forum fails to make the requested determination within thirty (30) days of the matter being submitted to it by the Company, the determination that the Indemnitee has the right to indemnification will be made.
VII.
PRESUMPTIONS AND EFFECT
OF CERTAIN PROCEEDINGS
In the event that the Company maintains officers’ and directors’ or similar liability insurance to protect itself and any director or officer of the Company against any expense, liability or loss, such insurance shall cover the Indemnitee to at least the same degree as each other director and/or officer of the Company.
IX.
OBLIGATIONS OF THE COMPANY
UPON A CHANGE IN CONTROL
In the event of a Change in Control and upon written request of the Indemnitee, the Company shall establish a trust for the benefit of the Indemnitee hereunder (a “Trust”), and from time to time and upon written request from the Indemnitee, shall fund the Trust in an amount sufficient to satisfy all amounts actually paid hereunder as indemnification for Liabilities or Expenses (including those paid in advance) or which the Indemnitee reasonably determines and demonstrates, from time to time, may be payable by the Company hereunder. The amount or amounts to be deposited in the Trust shall be determined by legal counsel selected by the Indemnitee and approved by the Company, which approval shall not be unreasonably withheld. The terms of the Trust shall provide that: (i) the Trust shall not be dissolved or the principal thereof invaded without the written consent of the Indemnitee; (ii) the trustee of the Trust (the “Trustee”) shall be selected by the Indemnitee; (iii) the Trustee shall make advances to the Indemnitee for Expenses within ten (10) business days following receipt of a written request therefor (and the Indemnitee hereby agrees to reimburse the Trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Article V hereof); (iv) the Company shall continue to fund the Trust from time to time in accordance with its funding obligations hereunder; (v) the Trustee shall promptly pay to the Indemnitee all amounts as to which indemnification is due under this Agreement; (vi) unless the Indemnitee agrees otherwise in writing, the Trust for the Indemnitee shall be kept separate from any other trust established for any other person to whom indemnification might be owed by the Company; and (vii) all unexpended funds in the Trust shall revert to the Company upon final, nonappealable determination by a court of competent jurisdiction that the Indemnitee has been indemnified to the full extent required under this Agreement.
X.
NON-EXCLUSIVITY,
SUBROGATION AND MISCELLANEOUS
No amendment, alteration, rescission or replacement of this Agreement or any provision hereof that would limit in any way the benefits and protections afforded to an Indemnitee by this Agreement shall be effective as to an Indemnitee with regards to any action or inaction undertaken by such Indemnitee in the Indemnitee’s Corporate Status prior to such amendment, alteration, rescission or replacement.
If to the Indemnitee, as shown with the Indemnitee’s signature below.
If to the Company to:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, General Counsel
Facsimile No.: 000-000-0000
With copies to:
CNL Strategic Capital Management, LLC
c/o CNL Financial Group, LLC
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Office of General Counsel
Facsimile No.: (000) 000-0000
or to such other address as may have been furnished to the Indemnitee by the Company or to the Company by the Indemnitee, as the case may be.
D. Governing Law. The parties agree that this Agreement shall be governed by, construed and enforced in accordance with the internal laws of the State of Delaware, without application of the conflict of laws principles thereof.
CNL STRATEGIC CAPITAL, LLC, | |||
a Delaware limited liability company | |||
By: | |||
Name: | |||
Title: | Chief Executive Officer | ||
, as INDEMNITEE | |||
Name: | |||
Address: | |||
EXHIBIT A
FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED
The Board of Directors of CNL Strategic Capital, LLC
Re: | Undertaking to Repay Expenses Advanced |
Ladies and Gentlemen:
The undertaking is being provided pursuant to that certain Indemnification Agreement dated the ____ day of __________, 20__, by and between CNL Strategic Capital LLC and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advancement 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. During the period of time to which the Proceeding relates I was — [name of office(s) held] of CNL Strategic Capital, LLC. Pursuant to Article IV of the Indemnification Agreement, the Company is obligated to reimburse me for Expenses that are actually and reasonably incurred by or for me in connection with the Proceeding, provided that I execute and submit to the Company an Undertaking in which I: (i) undertake to repay any Expenses paid by the Company on my behalf, together with the applicable legal rate of interest thereon, if it shall be ultimately determined that I am not entitled to be indemnified thereby against such Expenses; (ii) affirm my good faith belief that I have met the standard of conduct necessary for indemnification; and (iii) reasonably evidence the Expenses incurred by or for me.
[Description of expenses incurred by or for Indemnitee]
The letter shall constitute my undertaking to repay to the Company any Expenses paid by it on my behalf, together with the applicable legal rate of interest thereon, in connection with the Proceeding if it is ultimately determined that I am not entitled to be indemnified with respect to such Expenses as set forth above. I hereby affirm my good faith belief that I have met the standard of conduct necessary for indemnification and that I am entitled to such indemnification.
[Name] | |
[Date] |