EXHIBIT 10.4
Indemnification Agreement
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made and entered into
as of the ____ day of August, 2003, by and among CNL Income Properties, Inc., a
Maryland corporation (the "Company") and ____________, a director and/or officer
of the Company (the "Indemnitee").
W I T N E S S E T H:
WHEREAS, the interpretation of ambiguous statutes, regulations,
articles of incorporation and bylaws regarding indemnification of directors and
officers may be too uncertain to provide such directors and officers with
adequate notice of the legal, financial and other risks to which they may be
exposed by virtue of their service as such; and
WHEREAS, damages sought against directors and officers in shareholder
or similar litigation by class action plaintiffs may be substantial, and the
costs of defending such actions and of judgments in favor of plaintiffs or of
settlement therewith may be prohibitive for individual directors and officers,
without regard to the merits of a particular action and without regard to the
culpability of, or the receipt of improper personal benefit by, any named
director or officer to the detriment of the corporation; and
WHEREAS, the issues in controversy in such litigation usually relate to
the knowledge, motives and intent of the director or officer, who may be the
only person with firsthand knowledge of essential facts or exculpating
circumstances who is qualified to testify in his defense regarding matters of
such a subjective nature, and the long period of time which may elapse before
final disposition of such litigation may impose undue hardship and burden on a
director or officer or his estate in launching and maintaining a proper and
adequate defense of himself or his estate against claims for damages; and
WHEREAS, the Company is organized under the Maryland General
Corporation Law (the "MGCL") and Section 2-418 of the MGCL empowers corporations
to indemnify and advance expenses of litigation to a person serving as a
director, officer, employee or agent of a corporation and to persons serving at
the request of the corporation, while a director of a corporation, 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, and further provides that the indemnification and
advancement of expenses set forth in said section, subject to certain
limitations are not "exclusive of any other rights, by indemnification or
otherwise, to which a director may be entitled under the charter, the bylaws, a
resolution of stockholders or directors, an agreement or otherwise, both as to
action in an official capacity and as to action in another capacity while
holding such office"; and
WHEREAS, the Articles of Incorporation of the Company, as they may be
amended or amended and restated from time to time (the "Articles of
Incorporation"), provide that the Company shall indemnify and hold harmless
directors, advisors, or affiliates, as such terms are defined in the Articles of
Incorporation; and
WHEREAS, the Board of Directors of the Company (the "Board") has
concluded that it is reasonable and prudent for the Company contractually to
obligate itself to indemnify in a reasonable and adequate manner the Indemnitee
and to assume for itself maximum liability for expenses and damages in
connection with claims lodged against him for his decisions and actions as a
director and/or officer of the Company; and
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which is acknowledged
by each of the parties hereto, the parties agree as follows:
I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
A. "BOARD" shall mean the Board of Directors of the Company.
B. "CHANGE IN CONTROL" shall mean a change in the ownership or
power to direct the Voting Securities of the Company or the acquisition by a
person not affiliated with the Company of the ability to direct the management
of the Company.
C. "CORPORATE STATUS" shall mean the status of a person who is or
was a director or officer of the Company, or a member of any committee of the
Board, and 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 in respect of which
indemnification is being sought by the Indemnitee.
E. "EXPENSES" shall mean without limitation expenses of
Proceedings including 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 and all other disbursements or expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating or being or preparing to be a
witness in a Proceeding.
F. "GOOD FAITH ACT OR OMISSION" shall mean an act or omission of
the Indemnitee reasonably believed by the Indemnitee to be in or not opposed to
the best interests of the Company and other than (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 conduct was unlawful.
G. "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 in respect of 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, administrative hearing or any other actual, threatened or
completed proceeding whether civil, criminal, administrative or investigative,
or any appeal therefrom.
I. "VOTING SECURITIES" shall mean any securities of the Company
that are entitled to vote generally in the election of directors.
II
TERMINATION OF AGREEMENT
This Agreement shall continue until, and terminate upon the later to
occur of (i) the death of the Indemnitee; or (ii) the final termination of all
Proceedings (including possible Proceedings) in respect of which the Indemnitee
is granted rights of indemnification or advancement of Expenses hereunder and of
any proceeding commenced by the Indemnitee regarding the interpretation or
enforcement of this Agreement.
III
SERVICE BY INDEMNITEE, NOTICE OF
PROCEEDINGS, DEFENSE OF CLAIMS
A. NOTICE OF PROCEEDINGS. The Indemnitee agrees to notify the
Company promptly in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder, but the Indemnitee's omission to so notify the
Company shall not relieve the Company from any liability which it may have to
the Indemnitee under this Agreement.
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B. DEFENSE OF CLAIMS. The Company will be entitled to
participate, at its own expense, in any Proceeding of which it has notice. The
Company jointly with any other indemnifying party similarly notified of any
Proceeding will be entitled to assume the defense of the Indemnitee therein,
with counsel reasonably satisfactory to the Indemnitee; provided, however, that
the Company shall not be entitled to assume the defense of the Indemnitee in any
Proceeding if there has been a Change in Control or if the Indemnitee has
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee with respect to such Proceeding. The Company will not
be liable to the Indemnitee under this Agreement for any Expenses incurred by
the Indemnitee in connection with the defense of any Proceeding, other than
reasonable costs of investigation or as otherwise provided below, after notice
from the Company to the Indemnitee of its election to assume the defense of the
Indemnitee therein. The Indemnitee shall have the right to employ his own
counsel in any such Proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of the Indemnitee unless (i) the employment of counsel
by the Indemnitee has been authorized by the Company; (ii) the Indemnitee shall
have reasonably concluded that counsel employed by the Company may not
adequately represent the Indemnitee and shall have so informed the Company; or
(iii) the Company shall not in fact have employed counsel to assume the defense
of the Indemnitee in such Proceeding or such counsel shall not, in fact, have
assumed such defense or such counsel shall not be acting, in connection
therewith, with reasonable diligence; and in each such case the fees and
expenses of the Indemnitee's counsel shall be advanced by the Company in
accordance with this Agreement.
C. SETTLEMENT OF CLAIMS. The Company shall not settle any
Proceeding in any manner which would impose any liability, penalty or limitation
on the Indemnitee without the written consent of the Indemnitee; provided,
however, that the Indemnitee will not unreasonably withhold or delay consent to
any proposed settlement. The Company shall not be liable to indemnify the
Indemnitee under this Agreement or otherwise for any amounts paid in settlement
of any Proceeding effected by the Indemnitee without the Company's written
consent, which consent shall not be unreasonably withheld or delayed.
IV
INDEMNIFICATION
A. IN GENERAL. Upon the terms and subject to the conditions set
forth in this Agreement, the Company shall hold harmless and indemnify the
Indemnitee against any and all Liabilities actually incurred by or for him in
connection with any Proceeding (whether the Indemnitee is or becomes a party, a
witness or otherwise is a participant in any role) to the fullest extent
required or permitted by the Articles of Incorporation and by applicable law in
effect on the date hereof and to such greater extent as applicable law may
hereafter from time to time permit. For all matters for which the Indemnitee is
entitled to indemnification under this Article IV, the Indemnitee shall be
entitled to advancement of Expenses in accordance with Article V hereof.
B. PROCEEDING OTHER THAN A PROCEEDING BY OR IN THE RIGHT OF THE
COMPANY. If the Indemnitee 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
otherwise is a participant in any role) (other than a Proceeding by or in the
right of the Company) by reason of his Corporate Status, or by reason of alleged
action or inaction by him in any such capacity, the Company shall, subject to
the limitations set forth in Section IV.F. below, hold harmless and indemnify
him 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).
C. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. If the
Indemnitee 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 otherwise
is a participant in any role) by or in the right of the Company to procure a
judgment in its favor by reason of his Corporate Status, or by reason of any
action or inaction by him in any such capacity, the Company shall, subject to
the limitations set forth in Section IV.F. below, hold harmless and indemnify
him against any and all Expenses actually incurred by or for him in connection
with the investigation, defense, settlement or appeal of such Proceeding if the
act(s) or omission(s) of the Indemnitee giving rise to the Proceeding were Good
Faith Act(s) or Omission(s); except that no indemnification under this Section
IV.C. shall be made in respect of any claim, issue or matter as to which the
Indemnitee shall have been finally adjudged to be liable to the Company, unless
a court of appropriate jurisdiction (including, but not limited to, the court in
which such Proceeding was brought) shall determine upon application that,
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despite the adjudication of liability but in view of all the circumstances of
the case, regardless of whether the Indemnitee's act(s) or omission(s) were
found to be a Good Faith Act(s) or Omission(s), the Indemnitee is fairly and
reasonably entitled to indemnification for such Expenses which such court shall
deem proper.
D. INDEMNIFICATION OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee is, by reason of the Indemnitee's Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, the Indemnitee shall
be indemnified by the Company to the maximum extent consistent with applicable
law, against all Expenses and Liabilities actually incurred by or for him in
connection therewith. If the 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
hold harmless and indemnify the Indemnitee to the maximum extent consistent with
applicable law, against all Expenses and Liabilities actually and reasonably
incurred by or for him in connection with each successfully resolved claim,
issue or matter in such Proceeding. Resolution of a claim, issue or matter by
dismissal, with or without prejudice, except as provided in subsection F hereof,
shall be deemed a successful result as to such claim, issue or matter, so long
as there has been no finding (either adjudicated or pursuant to Article VI
hereof) that the act(s) or omission(s) of the Indemnitee giving rise thereto
were not a Good Faith Act(s) or Omission(s).
E. INDEMNIFICATION FOR EXPENSES OF WITNESS. Notwithstanding any
other provision of this Agreement, to the extent that the Indemnitee, by reason
of the Indemnitee's Corporate Status, has prepared to serve or has served as a
witness in any Proceeding, or has participated in discovery proceedings or other
trial preparation, the Indemnitee shall be held harmless and indemnified against
all Expenses actually and reasonably incurred by or for him in connection
therewith.
F. SPECIFIC LIMITATIONS ON INDEMNIFICATION. In addition to the
other limitations set forth in this Article IV, and notwithstanding anything in
this Agreement to the contrary, the Company shall not be obligated under this
Agreement to make any payment to the Indemnitee for indemnification with respect
to any Proceeding:
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 nonappealable 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 that are not Good Faith Acts or Omissions or which are
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, however, shall not be 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 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
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 of the Company were
offered or sold as to indemnification for violations of securities
laws.
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V
ADVANCEMENT OF EXPENSES
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 him 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 his service as a director or officer of the
Company, (ii) the Indemnitee provides the Company with written affirmation of
his good faith belief that he 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 did not comply with the requisite standard of conduct, and (iv) the
legal proceeding was initiated by a third party who is not a stockholder of the
Company or, if by a stockholder of the Company acting in his or her capacity as
such, a court of competent jurisdiction 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 his 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 the receipt by the Company of the Undertaking. The
Indemnitee hereby agrees to repay any Expenses advanced hereunder if it shall
ultimately be 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
A. PROCEDURE FOR PAYMENT. To obtain indemnification for
Liabilities under this Agreement, the Indemnitee shall submit to the Company a
written request for payment, including with such request such documentation as
is reasonably available to the Indemnitee and reasonably necessary to determine
whether, and to what extent, the Indemnitee is entitled to indemnification and
payment hereunder. The Secretary of the Company, or such other person as shall
be designated by the Board of Directors, promptly upon receipt of a request for
indemnification shall advise the Board of Directors, in writing, of such
request. Any indemnification payment due hereunder shall be paid by the Company
no later than five (5) business days following the determination, pursuant to
this Article VI, that such indemnification payment is proper hereunder.
B. NO DETERMINATION NECESSARY WHEN THE INDEMNITEE WAS SUCCESSFUL.
To the extent the Indemnitee has been successful, on the merits or otherwise, in
defense of any Proceeding referred to in Sections IV.B. or IV.C. above or in the
defense of any claim, issue or matter described therein, the Company shall
indemnify the Indemnitee against Expenses actually and reasonably incurred by or
for him in connection with the investigation, defense or appeal of such
Proceeding.
C. DETERMINATION OF GOOD FAITH ACT OR OMISSION. In the event that
Section VI.B. is inapplicable, the Company also shall hold harmless and
indemnify the Indemnitee unless the Company shall prove by clear and convincing
evidence to a forum listed in Section VI.D. below that the act(s) or omission(s)
of the Indemnitee giving rise to the Proceeding were not Good Faith Act(s) or
Omission(s).
D. FORUM FOR DETERMINATION. The Indemnitee shall be entitled to
select from among the following the forums, in which the validity of the
Company's claim under Section VI.C., above, that the Indemnitee is not entitled
to indemnification will be heard:
1. A quorum of the Board consisting of Disinterested
Directors;
2. The shareholders of the Company;
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3. Legal counsel selected by the Indemnitee, subject to
the approval of the Board, which approval shall not be unreasonably
delayed or denied, 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 in
such manner as the Indemnitee or the Indemnitee's counsel may reasonably
request, its claim that the Indemnitee is not entitled to indemnification, and
the Company shall act in the utmost good faith to assure the Indemnitee a
complete opportunity to defend against such claim. The fees and expenses of the
selected forum in connection with making the determination contemplated
hereunder shall be paid by the Company. If the Company shall fail to submit the
matter to the selected forum within thirty (30) days after the Indemnitee's
written notice or if the forum so empowered to make the determination shall have
failed to make the requested determination within thirty (30) days after the
matter has been submitted to it by the Company, the requisite determination that
the Indemnitee has the right to indemnification shall be deemed to have been
made.
E. RIGHT TO APPEAL. Notwithstanding a determination by any forum
listed in Section VI.D. above that the Indemnitee is not entitled to
indemnification with respect to a specific Proceeding, the Indemnitee shall have
the right to apply to the court in which that Proceeding is or was pending, or
to any other court of competent jurisdiction, for the purpose of enforcing the
Indemnitee's right to indemnification pursuant to this Agreement. Such
enforcement action shall consider the Indemnitee's entitlement to
indemnification de novo, and the Indemnitee shall not be prejudiced by reason of
a prior determination that the Indemnitee is not entitled to indemnification.
The Company shall be precluded from asserting that the procedures and
presumptions of this Agreement are not valid, binding and enforceable. The
Company further agrees to stipulate in any such judicial proceeding that the
Company is bound by all the provisions of this Agreement and is precluded from
making any assertion to the contrary.
F. RIGHT TO SEEK JUDICIAL DETERMINATION. Notwithstanding any
other provision of this Agreement to the contrary, at any time after sixty (60)
days after a request for indemnification has been made to the Company (or upon
earlier receipt of written notice that a request for indemnification has been
rejected) and before the third (3rd) anniversary of the making of such
indemnification request, the Indemnitee may petition a court of competent
jurisdiction, whether or not the court has jurisdiction over, or is the forum in
which is pending, the Proceeding, to determine whether the Indemnitee is
entitled to indemnification hereunder, and such court thereupon shall have the
exclusive authority to make such determination, unless and until such court
dismisses or otherwise terminates the Indemnitee's action without having made
such determination. The court, as petitioned, shall make an independent
determination of whether the Indemnitee is entitled to indemnification
hereunder, without regard to any prior determination in any other forum as
provided hereby.
G. EXPENSES UNDER THIS AGREEMENT. Notwithstanding any other
provision in this Agreement to the contrary, the Company shall indemnify the
Indemnitee against all Expenses incurred by the Indemnitee in connection with
any hearing or proceeding under this Section VI involving the Indemnitee and
against all Expenses incurred by the Indemnitee in connection with any other
action between the Company and the Indemnitee involving the interpretation or
enforcement of the rights of the Indemnitee under this Agreement, even if it is
finally determined that the Indemnitee is not entitled to indemnification in
whole or in part hereunder.
VII
PRESUMPTIONS AND EFFECT
OF CERTAIN PROCEEDINGS
A. BURDEN OF PROOF. In making a determination with respect to
entitlement to indemnification hereunder, the person, persons, entity or
entities making such determination shall presume that the Indemnitee is entitled
to indemnification under this Agreement and the Company shall have the burden of
proof to overcome that presumption.
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B. EFFECT OF OTHER PROCEEDINGS. The termination of any Proceeding
or of any claim, issue or matter therein, by judgment, order or settlement shall
not create a presumption that the act(s) or omission(s) giving rise to the
Proceeding were not Good Faith Act(s) or Omission(s). The termination of any
Proceeding by conviction, or upon a plea of nolo contendere, or its equivalent,
or an entry of an order of probation prior to judgment, shall create a
rebuttable presumption that the act(s) or omission(s) of the Indemnitee giving
rise to the Proceeding were not Good Faith Act(s) or Omission(s).
C. RELIANCE AS SAFE HARBOR. For purposes of any determination of
whether any act or omission of the Indemnitee was a Good Faith Act or Omission,
each act of the Indemnitee shall be deemed to be a Good Faith Act or Omission if
the Indemnitee's action is based on the records or books of accounts of the
Company, including financial statements, or on information supplied to the
Indemnitee by the officers of the Company in the course of their duties, or on
the advice of legal counsel for the Company or on information or records given
or reports made to the Company by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the Company.
The provisions of this Section VII.C. shall not be deemed to be exclusive or to
limit in any way the other circumstances in which the Indemnitee may be deemed
to have met the applicable standard of conduct set forth in this Agreement or
under applicable law.
D. ACTIONS OF OTHERS. The knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Company shall not be
imputed to the Indemnitee for purposes of determining the right to
indemnification under this Agreement.
VIII
INSURANCE
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, 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, 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 promptly shall 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 due 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.
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X
NON-EXCLUSIVITY,
SUBROGATION AND MISCELLANEOUS
A. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall
not be deemed exclusive of any other rights to which the Indemnitee may at any
time be entitled under any provision of law, the Articles of Incorporation, the
Bylaws of the Company, as the same may be in effect from time to time, any
agreement, a vote of shareholders of the Company or a resolution of directors of
the Company or otherwise, and to the extent that during the term of this
Agreement the rights of the then-existing directors and officers of the Company
are more favorable to such directors or officers than the rights currently
provided to the Indemnitee under this Agreement, the Indemnitee shall be
entitled to the full benefits of such more favorable rights. No amendment,
alteration, rescission or replacement of this Agreement or any provision hereof
which would in any way limit the benefits and protections afforded to an
Indemnitee hereby shall be effective as to such Indemnitee with respect to any
action or inaction by such Indemnitee in the Indemnitee's Corporate Status prior
to such amendment, alteration, rescission or replacement.
B. SUBROGATION. 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 the Indemnitee, who shall execute all documents 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.
C. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (i) if delivered by hand, by courier or by telegram and receipted for
by the party to whom said notice or other communication shall have been directed
at the time indicated on such receipt; (ii) if by facsimile at the time shown on
the confirmation of such facsimile transmission; or (iii) if by U.S. certified
or registered mail, with postage prepaid, on the third business day after the
date on which it is so mailed:
If to the Indemnitee, as shown with the Indemnitee's signature below.
If to the Company to:
CNL Income Properties, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
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, and construed and enforced in accordance with, the substantive laws
of the State of Maryland, without application of the conflict of laws principles
thereof.
E. BINDING EFFECT. Except as otherwise provided in this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns. The Company shall require any successor
or assignee (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its respective assets or business, by
written agreement in form and substance reasonably satisfactory to the
Indemnitee, expressly to assume and agree to be bound by and to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform absent such succession or assignment.
F. WAIVER. No termination, cancellation, modification, amendment,
deletion, addition or other change in this Agreement, or any provision hereof,
or waiver of any right or remedy herein, shall be effective for any purpose
unless specifically set forth in a writing signed by the party or parties to be
bound thereby. The waiver of any right or remedy with respect to any occurrence
on one occasion shall not be deemed a waiver of such right or remedy with
respect to such occurrence on any other occasion.
-8-
G. ENTIRE AGREEMENT. This Agreement, constitutes the entire
agreement and understanding among the parties hereto in reference to the subject
matter hereof; provided, however, that the parties acknowledge and agree that
the Amended and Restated Articles of Incorporation of the Company contain
provisions on the subject matter hereof and that this Agreement is not intended
to, and does not, limit the rights or obligations of the parties hereto pursuant
to such instruments.
H. TITLES. The titles to the articles and sections of this
Agreement are inserted for convenience of reference only and should not be
deemed a part hereof or affect the construction or interpretation of any
provisions hereof.
I. INVALIDITY OF PROVISIONS. Every provision of this Agreement is
severable, and the invalidity or unenforceability of any term or provision shall
not effect the validity or enforceability of the remainder of this Agreement.
J. PRONOUNS AND PLURALS. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
K. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one agreement binding on all the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CNL INCOME PROPERTIES, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
________________________, as INDEMNITEE
Name: ______________________________
Title: ______________________________
Address: ______________________________
______________________________
Facsimile No.: ____________________
-9-
EXHIBIT A
FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED
The Board of Directors of CNL Income
Properties, Inc.
Re: Undertaking to Repay Expenses Advanced
Ladies and Gentlemen:
This undertaking is being provided pursuant to that certain
Indemnification Agreement dated the ____ day of September, 1998, by and among
CNL Income Properties, Inc. 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 Income Properties, Inc. Pursuant to Section 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]
This 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.
________________________________________
Signature
________________________________________
Print Name
________________________________________
Date
