INDEMNITY AGREEMENT
This AGREEMENT is made as of___________, 199__, by and between Price
Enterprises, Inc., a Maryland corporation (the "Corporation"), and
______________ (the "Indemnitee").
RECITALS
WHEREAS, the Charter and By-Laws of the Corporation provide for
indemnification by the Corporation of its directors and officers as provided
therein, and the Indemnitee has agreed to serve as a director and/or officer of
the Corporation or has been serving and continues to serve as a director and/or
officer of the Corporation in partly reliance on such provision;
WHEREAS, to provide the Indemnitee with additional contractual assurance of
protection against personal liability in connection with certain proceedings
described below, the Corporation desires to enter into this Agreement;
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 By-Laws of the Corporation, 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 By-Laws of
the Corporation, as permitted by the Maryland Statute and as authorized by the
Charter and the Board of Directors of the Corporation; and
WHEREAS, in order to induce the Indemnitee to serve or continue to serve as
a director and/or officer of the Corporation and in consideration of the
Indemnitee's so serving, the Corporation desires to indemnify the Indemnitee and
to make arrangements pursuant to which the Indemnitee may be advanced or
reimbursed expenses incurred by the Indemnitee in certain proceedings described
below, according to the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and of the
Indemnitee's serving or continuing to serve the Corporation as a director and/or
officer, the parties agree as follows:
1. Indemnification.
(a) In accordance with the provisions of subsection (b) of this Section 1,
the Corporation shall hold harmless and indemnify the Indemnitee against any and
all 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 Corporation on the Indemnitee's behalf), in connection with any threatened,
pending or completed action, suit, arbitration or proceeding (or any inquiry or
investigation, whether brought by or in the right of the Corporation 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 or becomes a party or a witness or other participant, or is
threatened to be made a party
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or witness or other participant, (a "Proceeding") based upon, arising from,
relating to, or by reason of the fact that the Indemnitee is, was, shall be, or
shall have been a director and/or officer of the Corporation or is or was
serving, shall serve, or shall have served at the request of the Corporation 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 Corporation shall, with
respect to a Proceeding, hold harmless and indemnify the Indemnitee to the
fullest extent required by the Maryland Statute and to the fullest extent
permitted by the Express Permitted Indemnification Provisions (as hereinafter
defined) of the Maryland Statute. For purposes of this Agreement, the Express
Permitted Indemnification Provisions of the Maryland Statute shall mean
indemnification as permitted by Section 2-418(b) of the Maryland Statute or by
any amendment thereof or other statutory provisions expressly permitting such
indemnification which is adopted after the date hereof (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law required or permitted
the Corporation to provide prior to such amendment).
(c) 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.
(d) If the Indemnitee is entitled under this Agreement to indemnification
by the Corporation for some or a portion of the Indemnified Amounts but not,
however, for all of the total amount thereof, the Corporation shall nevertheless
indemnify the Indemnitee for the portion thereof to which the Indemnitee is
entitled.
2. Other Indemnification Arrangements. The Maryland Statute and the Charter
and By-Laws of the Corporation permit the Corporation to purchase and maintain
insurance or furnish similar protection or make other arrangements, including,
but not limited to, providing a trust fund, letter of credit, or surety bond
("Indemnification Arrangements") on behalf of the Indemnitee against any
liability asserted against him or her or incurred by or on behalf of him or her
in such capacity as a director or officer of the Corporation or an Affiliated
Indemnitee, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her 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 Corporation or of the Indemnitee under this Agreement except
as expressly provided herein, and the execution and delivery of this Agreement
by the Corporation and the Indemnitee shall not in any way limit or affect the
rights and obligations of the Corporation or the other party or parties thereto
under any such Indemnification Arrangement. All amounts payable by the
Corporation 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, nonappealable judgment or other final adjudication of a Proceeding (a
"Final Determination") the amount of any and all expenses, including, without
limitation, investigation expenses, expert witnesses'
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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").
(b) In making any written request for Advanced Amounts, the Indemnitee
shall submit to the Corporation 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
Corporation, the Indemnitee shall provide to the Corporation (i) a written
affirmation of the Indemnitee's good faith belief that the applicable standard
of conduct required for indemnification by the Corporation 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 Corporation shall pay
to the Indemnitee all Advanced Amounts within twenty (20) days after receipt by
the Corporation of all information and documentation required to be provided by
the Indemnitee pursuant to this paragraph.
4. Procedure for Payment of Indemnified Amounts.
(a) To obtain indemnification under this Agreement, the Indemnitee shall
submit to the Corporation a written request for payment of the appropriate
Indemnified Amounts, including with such requests 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 Corporation shall, promptly upon receipt
of such a request for indemnification, advise the Board of Directors in writing
that the Indemnitee has requested indemnification.
(b) The Corporation shall pay the Indemnitee the appropriate Indemnified
Amounts unless it is established that the Indemnitee has not met any applicable
standard of conduct of the Express Permitted Indemnification Provisions. For
purposes of determining whether the Indemnitee is entitled to Indemnified
Amounts, in order to deny indemnification to the Indemnitee the Corporation 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 of Directors 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 Corporation); 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 Corporation who is not party to such action (sometimes hereinafter referred
to as "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
Corporation especially for such purpose, provided that such counsel be approved
in advance in writing by both the said Senior Officer and the Indemnitee and
provided
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further, that such counsel shall not be outside counsel regularly employed by
the Corporation. The fees and expenses of counsel in connection with making said
determination contemplated hereunder shall be paid by the Corporation, and, if
requested by such counsel, the Corporation 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 Corporation will use its best efforts to conclude as soon as
practicable any required determination pursuant to subparagraph (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.
(e) Notwithstanding the foregoing, the Indemnitee may, at any time after
sixty (60) days after a claim for Indemnified Amounts has been filed with the
Corporation (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 of
Directors 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 Corporation shall pay all expenses (including attorneys' fees and
disbursements) 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 Corporation,
any subsidiary of the Corporation, 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 Corporation'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
Corporation for the benefit of the Indemnitee; provided, however, that in no
event shall the Indemnitee be required to maintain any other such arrangement or
request payment pursuant to any other such arrangement before seeking to be
indemnified hereunder.
(b) In the event the Indemnitee shall receive payment from any insurance
carrier or from the plaintiff in any Proceeding against such Indemnitee in
respect of Indemnified Amounts after payments on account of all or part of such
Indemnified Amounts have been made by the Corporation pursuant hereto, such
Indemnitee shall promptly reimburse to the Corporation the amount, if any, by
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which the sum of such payment by such insurance carrier or such plaintiff and
payments by the Corporation or pursuant to arrangements made by the Corporation
to the 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 Corporation 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 Corporation deems necessary or advisable to secure such rights. Such right
of subrogation shall be terminated upon receipt by the Corporation of the amount
to be reimbursed by the Indemnitee pursuant to the first sentence of this
paragraph.
6. Insurance Coverage. In the event that the Corporation maintains
directors and officers liability insurance to protect itself and any director or
officer of the Corporation 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 Corporation.
7. Establishment of Trust. In the event of a potential business combination
or change in control (as contemplated by Article Eighth (a)(4) of the Charter of
the Corporation) (collectively, a "Change in Control"), the Corporation shall,
upon written request by the Indemnitee, create a trust (the "Trust") for the
benefit of the Indemnitee and from time to time upon written request of the
Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all
Indemnified Amounts (including, Advanced Amounts) which are actually paid (but
not as yet reimbursed) or which the Indemnitee reasonably determines from time
to time may be payable by the Corporation 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. The terms of the Trust shall provide that following its
establishment: (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 shall advance, within twenty (20) 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 under which the Indemnitee would be
required to reimburse the Corporation under Section 3(b)(ii) hereof); (iii) the
Corporation shall continue to fund the Trust from time to time in accordance
with the funding obligations set forth above; (iv) the trustee of the Trust
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 Corporation 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 of the Trust
shall be chosen by the Indemnitee.
8. Continuation of Indemnity. All agreements and obligations of the
Corporation contained herein shall continue during the period the Indemnitee is
a director or officer, as the case may be, of the Corporation (or is serving at
the request of the Corporation 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
Corporation 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 Corporation's successors
and assigns and by the Indemnitee's
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personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. The Corporation 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 Corporation, by written agreement in form and substance reasonably
satisfactory to the Corporation and to the Indemnitee, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform if no such succession or assignment
had taken place.
10. Enforcement. The Corporation has entered into this Agreement and
assumed the obligations imposed on the Corporation hereby in order to induce the
Indemnitee to act as a director or officer, as the case may be, of the
Corporation, and acknowledges 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 Corporation shall reimburse the Indemnitee for
all of the Indemnitee's fees and expenses (including attorneys' 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. Severability. 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 agreed to in
writing signed by the Indemnitee and either the Chairman of the Board or the
President of the Corporation or another officer of the Corporation specifically
designated by the Board of Directors. 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 time. 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 or her place of business is located, and
in any related appellate courts, and the Corporation 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:
If to the Indemnitee:
Attention:
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If to the Corporation:
Attention: President
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.
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.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
ATTEST:
By:
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WITNESS: INDEMNITEE
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