INDEMNIFICATION AGREEMENT
Exhibit 10.2
This INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into this day of
,
2005 by and between Landwin REIT, Inc., a Maryland corporation (the “Company”),
and (the “Indemnitee”).
RECITALS
WHEREAS, it is essential to the Company to retain and attract as directors and officers the
most capable persons available;
WHEREAS, the Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and the Indemnitee recognize the increased risk of litigation and
other claims being asserted against directors and officers of companies in today’s environment;
WHEREAS, the Company’s Articles of Incorporation (the “Charter”) provide that the Company will
indemnify its directors and officers subject to the conditions set forth
under Maryland law and other conditions set forth in the Charter, and will advance expenses
in connection therewith, and the Indemnitee’s willingness to serve as a director and/or officer of
the Company is based in part on the Indemnitee’s reliance on such provisions;
WHEREAS, the Maryland General Corporation Law (the “Maryland Statute”) expressly recognizes
that the indemnification provisions of the Maryland Statute are not exclusive of any other rights
to which a person seeking indemnification may be entitled under the Charter or Bylaws of the
Company, a resolution of stockholders or directors, an agreement or otherwise, and this Agreement
is being entered into pursuant to and in furtherance of the Charter and Bylaws, as permitted by the
Maryland Statute and as authorized by the Charter and the Board of Directors of the Company (the
“Board”); and
WHEREAS, in recognition of the Indemnitee’s need for substantial protection against personal
liability in order to enhance the Indemnitee’s continued service to the Company in an effective
manner, and the Indemnitee’s reliance on the aforesaid provisions of the Charter, and in part to
provide the Indemnitee with specific contractual assurance that the protection promised by such
provisions will be available to the Indemnitee (regardless of, among other things, any amendment to
or revocation of such provisions or any change in the composition of the Board or any acquisition
or business combination transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancement of expenses to the Indemnitee as set forth
in this Agreement and, to the extent insurance is maintained, for the continued coverage of the
Indemnitee under the Company’s directors’ and officers’ liability insurance policies, if any.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Indemnification.
(a) In accordance with the provisions of subsection (b) of this Section 1, the Company shall
hold harmless and indemnify the Indemnitee against any and all reasonable expenses, liabilities and
losses (including, without limitation, investigation expenses and expert witnesses’ and attorneys’
fees and expenses, judgments, penalties, fines, ERISA excise taxes and amounts paid or to be paid
in settlement) actually incurred by the Indemnitee (net of any related insurance proceeds or other
amounts received by the Indemnitee or paid by or on behalf of the Company on the Indemnitee’s
behalf), in connection with any action, suit, arbitration or proceeding (or any inquiry or
investigation, whether brought by or in the right of the Company or otherwise, that the Indemnitee
in good faith believes might lead to the institution of any such action, suit, arbitration or
proceeding), whether civil, criminal, administrative or investigative, or any appeal therefrom, in
which the Indemnitee is a party, is threatened to be made a party, is a witness or is participating
(a “Proceeding”) based upon, arising from, relating to or by reason of the fact that Indemnitee is,
was, shall be or shall have been a director and/or officer of the Company or is or was serving,
shall serve, or shall have served at the request of the Board of Directors of the Company as a
director, officer, partner, trustee, employee or agent (“Affiliate Indemnitee”) of another foreign
or domestic corporation or non-profit corporation, cooperative, partnership, joint venture, trust
or other incorporated or unincorporated enterprise (each, a “Company Affiliate”).
(b) In providing the foregoing indemnification, the Company shall, with respect to a
Proceeding, hold harmless and indemnify the Indemnitee, if all of the following conditions are met:
| (i) | The Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company. | |
| (ii) | The Indemnitee was acting on behalf of or performing services for the Company. | |
| (iii) | Such liability or loss was not the result of (A) negligence or misconduct, in the case that the Indemnitee is a Director (other than an Independent Director), the Advisor or an Affiliate of the Advisor or (B) gross negligence or willful misconduct, in the case that the Indemnitee is an Independent Director. | |
| (iv) | Such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from the Company’s stockholders. |
(c) Notwithstanding anything to the contrary contained in paragraph (a) or (b) above,
the Company shall not provide indemnification for any loss, liability or expense arising
from or out of an alleged violation of federal or state securities laws by Indemnitee unless
one or more of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged material 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 and finds
that indemnification of the settlement and the related costs should be made, and the court
considering the request for indemnification has been advised of the position of the
Securities and Exchange Commission and of the published position of any state securities
regulatory authority in which Securities were offered or sold as to indemnification for
violations of securities laws.
(d) Without limiting the generality of the foregoing, the Indemnitee shall be entitled to the
rights of indemnification provided in this Section 1 for any expenses actually incurred in any
Proceeding initiated by or in the right of the Company unless the Indemnitee shall have been
adjudged to be liable to the Company.
(e) If the Indemnitee is entitled under this Agreement to indemnification by the Company for
some or a portion of the Indemnified Amounts (as hereinafter defined) but not, however, for all of
the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion
thereof to which Indemnitee is entitled.
(f) Notwithstanding anything herein to the contrary, if the Indemnitee (or Affiliate
Indemnitee) is unwilling to accept a settlement offer (the “Settlement Offer”) with respect to any
Proceeding, under which settlement offer no civil or criminal liability (or presumption of civil or
criminal liability) is imposed on the Indemnitee (or Affiliate Indemnitee) and the Company has
agreed in writing to pay all costs and expenses associated therewith, then
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the Company’s indemnification obligations hereunder with respect to such Proceeding shall
terminate, provided that Indemnitee shall still be entitled to receive all rights provided, and
amounts payable, under the Settlement Offer.
2. Other Indemnification Arrangements. The Maryland Statute, the Charter and the
Bylaws of the Company permit the Company to purchase and maintain insurance or furnish similar
protection or make other arrangements, including, without limitation, providing a trust fund letter
of credit or surety bond (collectively, the “Indemnity Arrangements”) on behalf of the Indemnitee
against any liability asserted against him or incurred by or on behalf of him in such capacity as a
director or officer of the Company or as an Affiliate Indemnitee, or arising out of his status as
such, whether or not the Company would have the power to indemnify him against such liability under
the provisions of this Agreement or under the Maryland Statute, as it may then be in effect. The
purchase, establishment and maintenance of any such Indemnification Arrangement shall not in any
way limit or affect the rights and obligations of the Company or of the 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 and obligations of
the Company or the other party or parties thereto under any such Indemnification Arrangement. All
amounts payable by the Company pursuant to this Section 2 and Section 1 hereof are herein referred
to as “Indemnified Amounts.”
3. Advance Payment of Indemnified Amounts.
(a) The Indemnitee hereby is granted the right to receive in advance of a final,
non-appealable judgment or other final adjudication of a Proceeding (a “Final Determination”) the
amount of any and all expenses, including, without limitation, investigation expenses, expert
witness and attorneys’ fees and other expenses expended or incurred by the Indemnitee in connection
with any Proceeding or otherwise expended or incurred by the Indemnitee (such amounts so expended
or incurred being referred to as “Advanced Amounts”)
if all of the following conditions are satisfied:
| (i) | the proceeding relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; | |
| (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 set forth in this agreement; | |
| (iii) | the legal proceeding was initiated by a third party who is not a stockholder or, if by a stockholder of the Company acting in his or her capacity as such, a court of competent jurisdiction approves such advancement; and | |
| (iv) | the Indemnitee provides the Company with a written agreement 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 did not comply with the requisite standard of conduct and is not entitled to indemnification. Any indemnification payment or reimbursement of expenses will be furnished in accordance with the procedures in Section 2-418(e) of the Maryland Statute or any successor statute. |
(b) In making any written request for Advanced Amounts, the Indemnitee shall submit to the
Company a schedule setting forth in reasonable detail the dollar amount expended or incurred and
expected to be expended. Each such listing shall be supported by the xxxx, agreement or other
documentation relating thereto, each of which shall be appended to the schedule as an exhibit. In
addition, before the Indemnitee may receive Advanced Amounts from the Company, the Indemnitee shall
provide to the Company (i) a written affirmation of the Indemnitee’s good faith belief that the
applicable standard of conduct required for indemnification by the Company has been satisfied by
the Indemnitee and (ii) a written undertaking by or on behalf of the Indemnitee to repay the
Advanced Amount if it shall ultimately be determined that the Indemnitee has not satisfied any
applicable standard of conduct. The written undertaking required from the Indemnitee shall be an
unlimited general obligation of the Indemnitee but need not be secured. The Company shall pay to
the Indemnitee all Advanced Amounts within ten (10) business days after receipt by the Company of
all information and documentation required to be provided by the Indemnitee pursuant to this
subsection (b).
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4. Procedure for Payment of Indemnified Amounts.
(a) To obtain indemnification under this Agreement, the Indemnitee shall submit to the Company
a written request for payment of the appropriate Indemnified Amounts, including with such request
such documentation and information as is reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.
The Secretary of the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that the Indemnitee has requested indemnification.
(b) The Company shall pay the Indemnitee the appropriate Indemnified Amounts unless it is
established that the Indemnitee has not met any applicable standard
of conduct set forth in this agreement. For purposes of determining whether the Indemnitee is
entitled to Indemnified Amounts, in order to deny indemnification to the Indemnitee the Company has
the burden of proof in establishing that the Indemnitee did not meet the applicable standard of
conduct. In this regard, a termination of any Proceeding by judgment, order or settlement does not
create a presumption that the Indemnitee did not meet the requisite standard of conduct; provided,
however, that the termination of any criminal proceeding by conviction, or a pleading of
nolo contendere or its equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttable presumption that the Indemnitee did not meet the applicable standard
of conduct.
(c) Any determination that the Indemnitee has not met the applicable standard of conduct
required to qualify for indemnification shall be made (i) either by the Board by a majority vote of
a quorum consisting of directors who were not parties of such action, suit or proceeding or (ii) by
independent legal counsel (who may be the outside counsel regularly employed by the Company),
provided that the manner in which (and, if applicable, the counsel by which) the right to
indemnification is to be determined shall be approved in advance in writing by both the highest
ranking executive officer of the Company who is not party to such action (sometimes hereinafter
referred to as the “Senior Officer”) and by the Indemnitee. In the event that such parties are
unable to agree on the manner in which any such determination is to be made, such determination
shall be made by independent legal counsel retained by the Company especially for such purpose,
provided that such counsel be approved in advance in writing by both the Senior Officer and the
Indemnitee and, provided further, that such counsel shall not be outside counsel regularly employed
by the Company. The fees and expenses of counsel in connection with making said determination
contemplated hereunder shall be paid by the Company, and if requested by such counsel, the Company
shall give such counsel an appropriate written agreement with respect to the payment of their fees
and expenses and such other matters as may be reasonably requested by counsel.
(d) The Company will use its best efforts to conclude as soon as practicable any required
determination pursuant to subsection (c) above and promptly will advise the Indemnitee in writing
with respect to any determination that the Indemnitee is or is not entitled to indemnification,
including a description of any reason or basis for which indemnification has been denied. Payment
of any applicable Indemnified Amounts will be made to the Indemnitee within ten (10) days after any
determination of the Indemnitee’s entitlement to indemnification.
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(e) Notwithstanding the foregoing, the Indemnitee may, at any time sixty (60) days after a
claim for Indemnified Amounts has been filed with the Company (or upon receipt of written notice
that a claim for Indemnified Amounts has been rejected, if earlier) and before three (3) years
after a claim for Indemnified Amounts has been filed, petition a court of competent jurisdiction to
determine whether the Indemnitee is entitled to indemnification under the provisions of this
Agreement, and such court shall thereupon have the exclusive authority to make such determination
unless and until such court dismisses or otherwise terminates such action without having made such
determination. The court shall, as petitioned, make an independent determination of whether the
Indemnitee is entitled to indemnification as provided under this Agreement, irrespective of any
prior determination made by the Board or independent counsel. If the court shall determine that
the Indemnitee is entitled to indemnification as to any claim, issue or matter involved in the
Proceeding with respect to which there has been no prior determination pursuant to this Agreement
or with respect to which there has been a prior determination that the Indemnitee was not entitled
to indemnification hereunder, the Company shall pay all expenses (including attorneys’ fees)
actually incurred by the Indemnitee in connection with such judicial determination.
5. Agreement Not Exclusive; Subrogation Rights, etc.
(a) This Agreement shall not be deemed exclusive of and shall not diminish any other rights
the Indemnitee may have to be indemnified or insured or otherwise protected against any liability,
loss or expense by the Company, any subsidiary of the Company or any other person or entity under
any charter, bylaws, law, agreement, policy of insurance or similar protection, vote of
stockholders or directors, disinterested or not, or otherwise, whether or not now in effect, both
as to actions in the Indemnitee’s official capacity, and as to actions in another capacity while
holding such office. The Company’s obligations to make payments of Indemnified Amounts hereunder
shall be satisfied to the extent that payments with respect to the same Proceeding (or part
thereof) have been made to or for the benefit of the Indemnitee by reason of the indemnification of
the Indemnitee pursuant to any other arrangement made by the Company for the benefit of the
Indemnitee.
(b) In the event the Indemnitee shall receive payment from any insurance carrier or from the
plaintiff in any Proceeding against the Indemnitee in respect of Indemnified Amounts after payments
on account of all or part of such Indemnified Amounts have been made by the Company pursuant
hereto, the Indemnitee shall promptly reimburse to the Company the amount, if any, by which the sum
of such payment by such insurance carrier or such plaintiff and payments by the Company or pursuant
to arrangements made by the Company to Indemnitee exceeds such Indemnified Amounts; provided,
however, that such portions, if any, of such insurance proceeds that are required to be reimbursed
to the insurance carrier under the terms of its insurance policy, such as deductible or
co-insurance payments, shall not be deemed to be payments to the Indemnitee hereunder. In
addition, upon payment of Indemnified Amounts hereunder, the Company shall be subrogated to the
rights of the Indemnitee receiving such payments (to the extent thereof) against any insurance
carrier (to the extent permitted under such insurance policies) or plaintiff in respect of such
Indemnified Amounts, and the Indemnitee shall execute and deliver any and all instruments and
documents and perform any and all other acts or deeds which the Company deems necessary or
advisable to secure such rights. Such right of
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subrogation shall be terminated upon receipt by the Company of the amount to be reimbursed by
the Indemnitee pursuant to the first sentence of this subsection (b).
6. Insurance Coverage. In the event that the Company maintains directors’ and
officers’ 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
extent as any other director or officer of the Company.
7. Establishment of Trust. The Company may, in its sole discretion, create a trust
(the “Trust”) for the benefit of the Indemnitee and, to the extent such Trust has been created,
from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient
to satisfy any and all Indemnified Amounts (including Advanced Amounts) which are actually paid or
which Indemnitee reasonably determines from time to time may be payable by the Company under this
Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding
obligation shall be determined by the independent legal counsel appointed under Section 4 hereof.
If the Trust is established, the terms thereof shall provide that (i) the Trust shall not be
revoked or the principal thereof invaded without the written consent of the Indemnitee; (ii) the
trustee of the Trust (the “Trustee”) shall advance, within ten (10) business days of a request by
the Indemnitee, any and all Advanced Amounts to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the Trust under the circumstances which the Indemnitee would be required to reimburse the
Company under Section 3(b)(ii) hereof); the Company shall continue to fund the Trust from time to
time in accordance with the funding obligations set forth above; (iv) the Trustee shall promptly
pay to the Indemnitee all Indemnified Amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement; and (v) all unexpended funds in the Trust shall revert
to the Company upon a final determination by a court of competent jurisdiction in a final decision
from which there is no further right of appeal that the Indemnitee has been fully indemnified under
the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this
Section 7 shall relieve the Company of any of its obligations under this Agreement.
8. Continuation of Indemnity. All agreements and obligations of the Company contained
herein shall continue during the period the Indemnitee is a director or officer of the Company (or
is serving at the request of the Company as an Affiliate Indemnitee) and shall continue thereafter
so long as the Indemnitee shall be subject to any possible Proceeding by reason of the fact that
the Indemnitee was a director or officer of the Company or was serving in any other capacity
referred to herein.
9. Successors; Binding Agreement. This Agreement shall be binding on and shall inure
to the benefit of and be enforceable by the Company’s successors and assigns and by the
Indemnitee’s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. The Company shall require any successor or assignee (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by written agreement in form and substance reasonably
satisfactory to the Company and to the 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 or assignment had taken place.
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10. Enforcement. The Company has entered into this Agreement and assumed the
obligations imposed on the Company hereby in order to induce the Indemnitee to act as a director or
officer, as the case may be, of the Company, and acknowledge that the Indemnitee is relying upon
this Agreement in continuing in such capacity. In the event the Indemnitee is required to bring
any action to enforce rights or to collect moneys due under this Agreement and is successful in
such action, the Company shall reimburse the Indemnitee for all of the Indemnitee’s fees and
expenses in bringing and pursuing such action. The Indemnitee shall be entitled to the advancement
of Indemnified Amounts to the full extent contemplated by Section 3 hereof in connection with such
proceeding.
11. Separability. Each of the provisions of this Agreement is a separate and distinct
agreement independent of the others, so that if any provision hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof, which other provisions shall remain in full force
and effect.
12. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is approved by the Board and agreed to in
writing signed by the Indemnitee and either the Chairman of the Board or the Chief Executive
Officer of the Company or another officer of the Company specifically designated by the Board. No
waiver by either party at any time of any breach by the other party of, or of compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same time or at any prior or
subsequent times. No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of Maryland, without giving effect to the
principles of conflicts of laws thereof. The Indemnitee may bring an action seeking resolution of
disputes or controversies arising under or in any way related to this Agreement in the state or
federal court jurisdiction in which the Indemnitee resides or in which his place of business is
located, and in any related appellate courts, and the Company consents to the jurisdiction of such
courts and to such venue.
13. Notices. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as
follows: (i) if to the Indemnitee, at the address set forth below the Indemnitee’s name on the
signature page hereof, and (ii) if to the Company:
| 00000 Xxxxxxx Xxxxxxxxx | ||
| Xxxxx 000 | ||
| Xxxxxx, Xxxxxxxxxx 00000 | ||
| Attention: Corporate Secretary |
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
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14. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the same
instrument.
15. Effectiveness. This Agreement shall be effective as of the date it is executed.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the
day and year first above written.
| LANDWIN REIT, INC. | ||||||
| By: | ||||||
| Xxxxxx Xxxxxx | ||||||
| Chief Executive Officer | ||||||
| INDEMNITEE | ||||||
| Name: | ||||||
| Address: | ||||||
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