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Exhibit 10.6
FORM OF
TRUSTEE AND OFFICER INDEMNIFICATION AGREEMENT
This Trustee and Officer Indemnification Agreement (this
"Indemnification Agreement") is made as of the ____ day of __________, 1998, by
and between Correctional Properties Trust, a Maryland real estate investment
trust (the "Company"), and the undersigned Officer or Trustee of the Company
(the "Indemnitee").
WHEREAS, the Company wishes to retain the services of the Indemnitee as
an Officer or Trustee of the Company;
WHEREAS, Maryland Code Annotated, Courts and Judicial Proceeding,
Article 5-350, provides that a real estate investment trust's Declaration of
Trust may include any provision expanding or limiting the liability of its
officers or trustees to the trust or its shareholders for money damages, except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services, or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action;
WHEREAS, the Company's Declaration of Trust provides that to the
fullest extent allowed by Maryland law, no officer or trustee of the Company
shall be liable to the Company or its shareholders for money damages;
WHEREAS, in addition, the Bylaws of the Company provide that the
officers and trustees of the Company shall be entitled to indemnification on the
terms and conditions set forth therein;
WHEREAS, the Indemnitee has indicated that he or she does not regard
the foregoing provisions of the Company's Declaration of Trust and Bylaws as
adequate to protect him against the risks associated with his service to the
Company and has noted that the Company's directors' and officers' liability
insurance policy has numerous exclusions and a deductible and thus does not
adequately protect the Indemnitee; and
WHEREAS, the Company has agreed to enter into this Indemnification
Agreement in order to provide greater protection to the Indemnitee against such
risks of service to the Company in order to induce the Indemnitee to serve as an
Officer or Trustee of the Company.
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NOW, THEREFORE, in order to induce the Indemnitee to serve as an
Officer or Trustee of the Company and in consideration of such service, the
Company hereby agrees to indemnify the Indemnitee as follows:
1. INDEMNITY. The Company will indemnify the Indemnitee, his
executors, administrators, heirs and assigns, for any
Expenses (as defined below) which the Indemnitee is or
becomes legally obligated to pay in connection with any
Proceeding (as defined below). As used in this Agreement,
(a) the term "Proceeding" shall include any threatened,
pending or completed claim, action, suit or proceeding,
whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative
or investigative nature, in which the Indemnitee may be or
may have been involved as a party or otherwise, by reason of
the fact that Indemnitee is or was a trustee or officer of
the Company, by reason of any actual or alleged error,
misstatement, omission or misleading statement made or
suffered by the Indemnitee, by reason of any action taken by
him or of any inaction on his part while acting as such
trustee or officer, or by reason of the fact that he was
serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise;
provided, that in each such case Indemnitee acted in good
faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Company, and, in
the case of a criminal proceeding, in addition had no
reasonable cause to believe that the act or omission was
unlawful; (b) the term "other enterprise" shall include
(without limitation) employee benefit plans and
administrative committees thereof; (c) the term "fines"
shall include (without limitation) any excise tax assessed
with respect to any employee benefit plan; and (d) the term
"Expenses" shall include, without limitation, damages,
judgments, fines, penalties, settlements and reasonable
costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under
this Agreement.
2. ENFORCEMENT. If a claim or request under this Agreement is
not paid by the Company, or on its behalf, within thirty
days after a written claim or request has been received by
the Company, the Indemnitee may at any time thereafter bring
suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the
Indemnitee shall be entitled to be paid also the Expenses of
prosecuting such suit. The Company shall have the right to
withhold, or to recoup from, the Indemnitee the amount of
any item or items of Expenses theretofore paid by the
Company pursuant to this Agreement, to the extent such
Expenses are not reasonable in nature or amounts; provided,
however, that the Company shall have the burden of proving
such Expenses to be unreasonable. The burden of proving that
the
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Indemnitee is not entitled to indemnification for any other
reason shall also be upon the Company.
3. SUBROGATION. In the event of 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 papers required and shall do
everything that may be necessary to secure such rights,
including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such
rights.
4. EXCLUSIONS. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim
made against the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible
insurance policy;
(b) to the extent that the Indemnitee is indemnified and
actually paid otherwise than pursuant to this
Agreement;
(c) in connection with a judicial action by or in the right
of the Company, in respect of any claim, issue or
matter as to which the Indemnitee shall have been
adjudged to be liable for gross negligence or
intentional misconduct in the performance of his duty
to the Company unless and only to the extent that any
court in which such action was brought shall determine
upon application that, despite the adjudication of
liability but in view of all the circumstances of the
case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses as such court shall deem
proper.
(d) if it is proved by final judgment in a court of law or
other final adjudication to have been based upon or
attributable to the Indemnitee's personal profit or
advantage to which he or she was not legally entitled;
(e) for a disgorgement of profits made from the purchase
and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any
state statutory law or common law;
(f) brought about or contributed to by the dishonesty of
the Indemnitee seeking payment hereunder; however,
notwithstanding the foregoing, the Indemnitee shall be
protected under this Agreement as to any claims upon
which suit may be brought against him by reason of any
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alleged dishonesty on his part, unless a judgment or
other final adjudication thereof adverse to the
Indemnitee shall establish that he committed (i) acts
of active and deliberate dishonesty, (ii) with actual
dishonest purpose and intent, and (iii) which acts were
material to the cause of action so adjudicated; or
(g) for any judgment, fine or penalty which the Company is
prohibited by applicable law from paying as indemnity
or for any other reason.
5. INDEMNIFICATION OF EXPENSES OF A SUCCESSFUL PARTY.
Notwithstanding any other provision of this Agreement, to
the extent that the Indemnitee has been successful on the
merits or otherwise in defense of any Proceeding or in
defense of any claim, issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified
against any and all Expenses incurred in connection
therewith.
6. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under
any provision of this Agreement to the indemnification by
the Company for some or a portion of Expenses, but not for
the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such Expenses to
which the Indemnitee is entitled.
7. ADVANCE OF EXPENSES. Expenses incurred by the Indemnitee in
connection with any Proceeding, except the amount of any
settlement, shall be paid by the Company in advance upon
written request of the Indemnitee that the Company pay such
Expenses and delivery of a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification under this
Agreement has been met. The Indemnitee hereby undertakes to
repay to the Company the amount of any Expenses theretofore
paid by the Company to the extent that it is ultimately
determined that such Expenses were not reasonable or that
the Indemnitee is not entitled to indemnification.
8. APPROVAL OF EXPENSES. No Expenses for which indemnity shall
be sought under this Agreement, other than those in respect
of judgments and verdicts actually rendered, shall be
incurred without the prior consent of the Company, which
consent shall not be unreasonably withheld or delayed.
9. NOTICE OF CLAIM. The Indemnitee, as a condition precedent to
his right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of
any claim made against him for which indemnity will or could
be sought under this Agreement, provided, however, that the
failure to provide such notice shall not eliminate the
Company's obligations
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hereunder unless such failure to provide notice materially
and adversely affects the rights of the Company with respect
thereto. Notice to the Company shall be given at its
principal office and shall be directed to the Secretary (or
such other address as the Company shall designate in writing
to the Indemnitee); notice shall be deemed received if sent
by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall
give the Company such information and cooperation as it may
be reasonably require and as shall be within the
Indemnitee's power.
10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall
constitute one instrument.
11. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. Nothing herein
shall be deemed to diminish or otherwise restrict the
Indemnitee's right to indemnification under any provision of
the Declaration of Trust or Bylaws of the Company and
amendments thereto or under applicable law.
12. EXCULPATION. The Declaration of Trust of the Company, as
amended, a copy of which is duly filed with the Department
of Assessments and Taxation of the State of Maryland,
provides that no trustee, officer, shareholder, employee or
agent of the Company shall be held personally liable under
any written instrument creating an obligation of the
Company, or claim against, the Company. All persons dealing
with the Company, in any way, shall look only to the assets
of the Company for the payment of any sum or the performance
of any obligation.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State
of Maryland.
14. SAVING CLAUSE. Whenever there is conflict between any
provision of this Agreement and any applicable present or
future statute, law or regulations contrary to which the
Company and the Indemnitee have no legal right to contract,
the latter shall prevail, but in such event the affected
provisions of this Agreement shall be curtailed and
restricted only to the extent necessary to bring them within
applicable legal requirements.
15. COVERAGE. The provisions of this Agreement shall apply with
respect to the Indemnitee's service as an Officer or Trustee
of the Company prior to the date of this Agreement and with
respect to all periods of such service after the date of
this Agreement, even though the Indemnitee may have ceased
to be an Officer or Trustee of the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
CORRECTIONAL PROPERTIES TRUST,
a Maryland real estate investment trust
By:
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Name:
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Title:
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OFFICER OR TRUSTEE:
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Name:
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Address:
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