Exhibit 10.23
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT is
made and entered into this __th day of
, 200_ (“Agreement”), by and between Sunstone Hotel
Investors, Inc., a Maryland corporation (the
“Company”), and [name]
(“Indemnitee”).
WHEREAS, at the request of the
Company, Indemnitee currently serves as director of the Company and
may, therefore, be subjected to claims, suits or proceedings
arising as a result of his service; and
WHEREAS, as an inducement to
Indemnitee to continue to serve as such director, the Company has
agreed to indemnify and to advance expenses and costs incurred by
Indemnitee in connection with any such claims, suits or
proceedings, to the maximum extent permitted by law; and
WHEREAS, the parties by this
Agreement desire to set forth their agreement regarding
indemnification and advance of expenses;
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
Section 1. Definitions . For
purposes of this Agreement:
(a) “Change in Control”
means a change in control of the Company occurring after the
Effective Date of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, as amended
(the “Act”), whether or not the Company is then subject
to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have
occurred if after the Effective Date (i) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Act), directly or indirectly,
of securities of the Company representing 15% or more of the
combined voting power of the Company’s then outstanding
securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to
such person attaining such percentage interest; (ii) there
occurs a proxy contest, or the Company is a party to a merger,
consolidation, sale of assets, plan of liquidation or other
reorganization not approved by at least two-thirds of the members
of the Board of Directors then in office, as a consequence of which
members of the Board of Directors in office immediately prior to
such transaction or event constitute less than a majority of the
Board of Directors thereafter; or (iii) during any period of
two consecutive years, other than as a result of an event described
in clause (a)(ii) of this Section 1, individuals who at the
beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or
nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period)
cease for any reason to constitute at least a majority of the Board
of Directors.
(b) “Corporate Status”
means the status of a person who is or was a director, trustee,
officer, employee or agent of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise (each, an “Enterprise”) for
which such person is or was serving at the request of the
Company.
(c) “Disinterested
Director” means a director of the Company who is not and was
not a party to the Proceeding in respect of which indemnification
or advance of Expenses is sought by Indemnitee.
(d) “Effective Date”
means the date set forth in the first paragraph of this
Agreement.
(e) “Expenses” shall
include all reasonable and out-of-pocket attorneys’ fees,
retainers, court costs, transcript costs, fees of experts, 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. Expenses shall also include Expenses incurred in
connection with any appeal resulting from any Proceeding, including
without limitation the premiums, security for, and other costs
relating to any cost bond, supersedeas bond or other appeal bond or
its equivalent.
(f) “Independent
Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither is, nor in
the past five years has been, retained to represent: (i) the
Company or Indemnitee in any matter material to either such party
(other than with respect to matters concerning Indemnitee under
this Agreement or of other indemnitees under similar agreements),
or (ii) any other party to or witness in the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “Independent Counsel” shall not
include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this Agreement.
If a Change of Control has not occurred, Independent Counsel shall
be selected by the Board of Directors, with the approval of
Indemnitee, which approval will not be unreasonably withheld. If a
Change of Control has occurred, Independent Counsel shall be
selected by Indemnitee.
(g) “Proceeding”
includes any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative (including on appeal),
except one pending or completed on or before the Effective Date,
unless otherwise specifically agreed in writing by the Company and
Indemnitee.
(h) Reference to “fines”
shall include any excise tax assessed with respect to any employee
benefit plan; references to “serving at the request of the
Company” shall include any service as an officer, director,
committee member or official which imposes duties on, or involves
services by, such officer, with respect to an employee benefit
plan, its participants or beneficiaries; and action taken or
omitted to be taken by Indemnitee with respect to an employer
benefit plan in the performance of Indemnitee’s duties for a
purpose reasonably believed to be in the best interests of the
participants and
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beneficiaries of an employee benefit
plan shall be deemed to be a purpose that is” “not
opposed to the best interests of the Company” as referred to
in this Agreement.
Section 2. Services by
Indemnitee . Indemnitee will serve as a director of the
Company. However, this Agreement shall not impose any obligation on
Indemnitee or the Company to continue Indemnitee’s service to
the Company beyond any period otherwise required by law or by other
agreements or commitments of the parties, if any, provided that
this Agreement shall continue in force after such time as
Indemnitee has ceased to serve as a director of the Company and
Indemnitee will retain all rights provided under this Agreement
after such time.
Section 3. Indemnification -
General . The Company shall indemnify, and advance Expenses to,
Indemnitee (a) as provided in this Agreement and
(b) otherwise to the maximum extent permitted by Maryland law
in effect on the date hereof and as amended from time to time;
provided, however, that no change in Maryland law shall have the
effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The rights
of Indemnitee provided in this Section 3 shall include,
without limitation, the rights set forth in the other sections of
this Agreement, including any additional indemnification permitted
by Section 2-418 of the Maryland General Corporation Law
(“MGCL”), the charter or bylaws of the Company, a
resolution of stockholders or directors, another agreement or
otherwise.
Section 4. Proceedings Other Than
Proceedings by or in the Right of the Company . Indemnitee
shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is
threatened to be, made a party to or a witness in any threatened,
pending, or completed Proceeding, other than a Proceeding by or in
the right of the Company. Pursuant to this Section 4,
Indemnitee shall be indemnified against all judgments, penalties,
fines and amounts paid in settlement and all Expenses actually and
reasonably incurred by him or on his behalf in connection with a
Proceeding by reason of his Corporate Status unless it is
established that (i) the act or omission of Indemnitee was
material to the matter giving rise to the Proceeding and
(a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty, (ii) Indemnitee actually
received an improper personal benefit in money, property or
services, or (iii) in the case of any criminal Proceeding,
Indemnitee had reasonable cause to believe that his conduct was
unlawful.
Section 5. Proceedings by or in
the Right of the Company . Indemnitee shall be entitled to the
rights of indemnification provided in this Section 5 if, by
reason of his Corporate Status, he is, or is threatened to be, made
a party to or a witness in any threatened, pending or completed
Proceeding brought by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 5, Indemnitee
shall be indemnified against all amounts paid in settlement and all
Expenses actually and reasonably incurred by him or on his behalf
in connection with such Proceeding unless it is established that
(i) the act or omission of Indemnitee was material to the
matter giving rise to such a Proceeding and (a) was committed
in bad faith or (b) was the result of active and deliberate
dishonesty or (ii) Indemnitee actually received an improper
personal benefit in money, property or services.
Section 6. Court-Ordered
Indemnification . Notwithstanding any other provision of this
Agreement, a court of appropriate jurisdiction, upon application of
Indemnitee and such notice as the court shall require, may order
indemnification in the following circumstances:
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(a) if it determines Indemnitee is
entitled to reimbursement under Section 2-418(d)(1) of the
MGCL, the court shall order indemnification, in which case
Indemnitee shall be entitled to recover the expenses of securing
such reimbursement; or
(b) if it determines that Indemnitee
is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not Indemnitee (i) has
met the standards of conduct set forth in Section 2-418(b) of
the MGCL or (ii) has been adjudged liable for receipt of an
improper personal benefit under Section 2-418(c) of the MGCL,
the court may order such indemnification as the court shall deem
proper. However, indemnification with respect to any Proceeding by
or in the right of the Company or in which liability shall have
been adjudged in the circumstances described in
Section 2-418(c) of the MGCL shall be limited to Expenses
actually and reasonably incurred by him or on his behalf in
connection with a Proceeding.
Section 7. Indemnification for
Expenses of a Party Who is Wholly or Partly Successful .
Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that Indemnitee is, by
reason of his Corporate Status, made a party to and is successful,
on the merits or otherwise, in the defense of any Proceeding, he
shall be indemnified for all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If
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 indemnify Indemnitee under this Section 7 for all
Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or
matter, allocated on a reasonable and proportionate basis. For
purposes of this Section and without limitation, the termination of
any claim, issue or matter in such a Proceeding by dismissal, with
or without prejudice, shall be deemed to be a successful result as
to such claim, issue or matter.
Section 8. Advance of
Expenses . Notwithstanding any provision herein to the
contrary, the Company shall advance all Expenses actually and
reasonably incurred by or on behalf of Indemnitee in connection
with any Proceeding (other than a Proceeding brought to enforce
indemnification under this Agreement, applicable law, the Charter
or Bylaws of the Company, any agreement or a resolution of the
stockholders entitled to vote generally in the election of
directors or of the Board of Directors) to which Indemnitee is, or
is threatened to be, made a party or a witness, within ten days
after the receipt by the Company of a statement or statements from
Indemnitee requesting such advance or advances from time to time,
whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or
accompanied by a written affirmation by Indemnitee of
Indemnitee’s good faith belief that the standard of conduct
necessary for indemnification by the Company as authorized by law
and by this Agreement has been met and a written undertaking by or
on behalf of Indemnitee, in substantially the form attached hereto
as Exhibit A or in such form as may be required under
applicable law as in effect at the time of the execution thereof,
to reimburse the portion of any Expenses advanced to Indemnitee
relating to claims, issues or matters in the Proceeding as to which
it shall ultimately be established that the standard of conduct has
not been met. To the extent that Expenses advanced to Indemnitee do
not relate to a specific claim, issue or matter in the Proceeding,
such Expenses shall be allocated on a reasonable and proportionate
basis. The undertaking required by this Section 8 shall be an
unlimited general obligation by or on behalf of Indemnitee and
shall be accepted without reference to Indemnitee’s financial
ability to repay
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such advanced Expenses and without any
requirement to post security therefor. Advances shall be unsecured
and interest free.
Section 9. Procedure for
Determination of Entitlement to Indemnification .
(a) To obtain indemnification under
this Agreement, Indemnitee shall submit to the Company a written
request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The omission to notify
the Company will not relieve the Company from any liability that it
may have to Indemnitee other than under this Agreement. The
Secretary of the Company shall, promptly upon receipt of such a
request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written requ
