FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement, dated effective as of
__________, 1998, is made by and between ElderTrust, a Maryland real estate
investment trust (the "Company"), and ____________ (the "Indemnitee").
RECITALS
A. The Company is a real estate investment trust organized
under Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland;
B. The Declaration of Trust of the Company (the "Declaration
of Trust") provides that the Company has the power, to the maximum extent
permitted by Maryland law in effect from time to time, to obligate itself to
indemnify the trustees, officers and employees of the Company;
C. The bylaws of the Company (the "Bylaws") provide that each
trustee and officer of the Company shall be indemnified by the Company to the
maximum extent permitted by Maryland law in effect from time to time; and
D. Indemnitee has been elected as ___________ of the Company
and the Company desires to fulfill its obligations to indemnify the trustees and
officers to the maximum extent permitted by the Declaration of Trust and Bylaws.
NOW, THEREFORE, the parties hereto are entering into this
Indemnification Agreement (the "Agreement") as of the date hereof to evidence
the obligation of the Company to indemnify the Indemnitee.
Section 1. Definitions. In this Agreement the following words
have the meanings indicated:
(1) "Company" includes any domestic or foreign predecessor
entity of the Company in a merger, consolidation or other transaction in which
the predecessor's existence ceased upon consummation of the transaction.
(2) "Trustee" means any person who is or was a trustee of the
Company and any person who, while a trustee of the Company, is or was serving at
the request of the Company as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, other enterprise or employee benefit plan.
(3) "Expenses" include attorneys' fees.
(4) "Official Capacity" means the following:
(i) When used with respect to a Trustee, the office of
trustee in the Company;
(ii) When used with respect to a person other than a
Trustee as contemplated in Section 9, the elective or appointive office in the
Company held by the officer; and
(iii) "Official Capacity" does not include service for any
other foreign or domestic corporation or any partnership, joint venture, trust,
other enterprise or employee benefit plan.
(5) "Party" includes a person who was, is or is threatened to
be made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative.
Section 2. Indemnification of Trustees.
(1) Provided the determination required under Section 5 has
been made, the Company shall indemnify any Trustee made a Party to any
Proceeding by reason of service in that Trustee's Official Capacity unless it is
established that:
(i) The act or omission of the Trustee was material to
the matter giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate
dishonesty; or
(ii) The Trustee actually received an improper personal
benefit in money, property or services; or
(iii) In the case of any criminal proceeding, the
Trustee had reasonable cause to believe that the act or omission was unlawful.
(2) (i) Indemnification shall be against judgments,
penalties, fines, settlements and reasonable Expenses actually incurred by the
Trustee in connection with the Proceeding.
(ii) However, if the Proceeding was one by or in the
right of the Company, indemnification shall be made only against reasonable
Expenses and may not be made in respect of any liability to the Company.
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(3) (i) The termination of any Proceeding by judgment, order
or settlement does not create a presumption that the Trustee did not meet the
requisite standard of conduct set forth in this Section 2.
(ii) The termination of any Proceeding by conviction, or
a plea of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the Trustee
did not meet the requisite standard of conduct set forth in this Section 2.
Section 3. No indemnification of Trustee for liability for
improper personal benefit. A Trustee shall not be indemnified under Section 2 in
respect of any proceeding charging improper personal benefit to the Trustee,
whether or not involving action in the Trustee's Official Capacity, in which the
Trustee was adjudged to be liable on the basis that personal benefit was
improperly received.
Section 4. Required indemnification against Expenses incurred
in successful defense.
(1) A Trustee who has been successful, on the merits or
otherwise, in the defense of any Proceeding shall be indemnified against
reasonable Expenses incurred by the Trustee in connection with the Proceeding.
(2) Nothing in this Agreement shall limit the power of a court
of appropriate jurisdiction to order indemnification of a Trustee to the maximum
extent permitted by Maryland law in effect from time to time, including the
right to recover the Expenses of securing such reimbursement.
Section 5. Determination that indemnification was proper.
(1) Indemnification for a specific Proceeding under Section 2
shall not be made by the Company unless such indemnification is authorized for
the specific Proceeding after a determination has been made that indemnification
of the Trustee is permissible in the circumstances because the Trustee has met
the standard of conduct set forth in Section 2.
(2) Such determination shall be made:
(i) By the Board of Trustees of the Company (the
"Board") by a majority vote of a quorum consisting of Trustees not, at the time,
Parties to the Proceeding, or, if such a quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
Trustees not, at the time, Parties to such Proceeding and who were fully
designated to act in the matter by a majority vote of the full Board in which
the designated Trustees who are Parties may participate;
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(ii) By special legal counsel selected by the Board or a
committee of the Board by vote as set forth in subparagraph (i) of this
paragraph, or, if the requisite quorum of the full Board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the full
Board in which Trustees who are Parties may participate; or
(iii) By the shareholders.
(3) Authorization of indemnification and determination as to
reasonableness of Expenses shall be made in the same manner as the determination
that indemnification is permissible. However, if the determination that
indemnification is permissible is made by the special legal counsel,
authorization of indemnification and determination as to the reasonableness of
Expenses shall be made in the manner specified in subparagraph (ii) of paragraph
(2) of this Section 5 for selection of such counsel.
(4) Shares held by Trustees who are parties to the Proceeding
shall not be voted on the subject matter under this Section 5.
Section 6. Payment of Expenses in advance of final disposition
of action.
(1) Reasonable Expenses incurred by a Trustee who is a Party
to a Proceeding shall be paid or reimbursed by the Company in advance of the
final disposition of the Proceeding, upon receipt by the Company of:
(i) A written affirmation by the Trustee of the
Trustee's good faith belief that the standard of conduct necessary for
indemnification by the Company as authorized in this Agreement has been met; and
(ii) A written undertaking by or on behalf of the Trustee
to repay the amount if it shall ultimately be determined that the standard of
conduct has not been met.
(2) The undertaking required by subparagraph (ii) of paragraph
(1) of this Section 6 shall be an unlimited general obligation of the Trustee
but need not be secured and may be accepted without reference to financial
ability to make the repayment.
Section 7. Reimbursement of Trustee's Expenses incurred while
appearing as witness. The Company shall pay or reimburse Expenses incurred by a
Trustee in connection with an appearance as a witness in a Proceeding at a time
when the Trustee has not been made a named defendant or respondent in the
Proceeding.
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Section 8. Trustee's service to employee benefit plan. For
purposes of this Agreement:
(1) The Company shall be deemed to have requested a Trustee to
serve an employee benefit plan where the performance of the Trustee's duties to
the Company also imposes duties on, or otherwise involves services by, the
Trustee to the plan or participants or beneficiaries of the plan;
(2) Excise taxes assessed on a Trustee with respect to an
employee benefit plan pursuant to applicable law shall be deemed fines; and
(3) Action taken or omitted by the Trustee with respect to an
employee benefit plan in the performance of the Trustee's duties for a purpose
reasonably believed by the Trustee to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interest of the Company.
Section 9. Indemnification of officers.
(1) The Company shall indemnify and advance Expenses to an
officer of the Company to the same extent that it shall indemnify Trustees under
this Agreement.
Section 10. Non-Exclusivity. The indemnification and
advancement of Expenses provided or authorized by this Agreement may not be
deemed exclusive of any other rights by indemnification or otherwise, to which a
Trustee may be entitled under the Declaration of Trust, the Bylaws, a resolution
of shareholders or Trustees, an agreement or otherwise, both as to action in an
Official Capacity and as to action in another capacity while holding office.
Section 11. Insurance. The Company may purchase an maintain
insurance on behalf of any person who is or was a Trustee, officer, employee or
agent of the Company, or who, while a Trustee, officer, employee, or agent of
the Company, is or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan against any liability asserted against and incurred by such person
in any such capacity or arising out of such person's position, whether or not
the Company would have the power to indemnify against liability under the
provision of this Agreement or under Maryland law as in effect from time to
time.
Section 12. Governing Law. This Agreement shall be governed by
an construed in accordance with the laws of the State of Maryland applicable to
agreements to be made and to be performed entirely within such State.
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Section 13. Captions. The captions assigned to provisions of
this Agreement are for convenience only and shall be disregarded in construing
this Agreement.
Section 14. Number and Gender. Use of the singular in this
Agreement includes the plural, use of the plural includes the singular, and use
of one gender includes both genders, as the context may require.
Section 15. Cross References and Exhibits. Any reference in
this Agreement to a "Section," "paragraph" or "subparagraph" shall be construed
as referring, respectively, to a Section of this Agreement, to a paragraph of
the Section of this Agreement in which the reference appears or to a
subparagraph of the paragraph of this Agreement in which the reference appears.
Section 16. Successors. This Agreement shall be binding upon
and inure to the benefit of the successors of the Company, and shall inure to
the benefit of the heirs, personal representatives and estate of the Indemnitee.
Section 17. Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity of any other
provision, and all other provisions shall remain in full force and effect.
Section 18. Entire Agreement. This Agreement, the Declaration
of Trusts and the Bylaws contain the entire agreement between the parties as to
the rights granted and the obligations assumed in this instrument. The Agreement
may be amended only by a subsequent written instrument signed by both parties.
Section 19. Non-Assignability. This Agreement may not be
assigned by either party hereto, and any purported assignment of this Agreement
shall be null and void.
Section 20. Waiver. Any forbearance by a party to this
Agreement in exercising any right or remedy under this Agreement or otherwise
afforded by applicable law shall not be a waiver of or preclude the exercise of
that or any other right or remedy.
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The parties hereto have entered into this Agreement effective
as of the date first above written.
COMPANY: INDEMNITEE:
ELDERTRUST
a Maryland real estate investment trust ____________________________________
____________________________________
(Print Name)
By:______________________________________
Name:____________________________________
Title:___________________________________
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