INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT is
made and entered into this 31 st day of March, 2006
(“Agreement”), by and between Innkeepers USA Trust, a
Maryland real estate investment trust (the “Company”),
and Dennis M. Craven (“Indemnitee”).
WHEREAS, at the request of the
Company, Indemnitee currently serves as a trustee 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 trustee, 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 in the election of trustees of the
Company’s then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of
Trustees 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 Trustees then in office,
as a consequence of which members of the Board of Trustees in
office immediately prior to such transaction or event constitute
less than a majority of the Board of Trustees 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 Trustees (including for this purpose any
new trustee whose election or nomination for election by the
Company’s shareholders was approved by a vote of at least
two-thirds of the trustees then still in office who were trustees
at the beginning of such period) cease for any reason to constitute
at least a majority of the Board of Trustees.
(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 for which such person is or was serving at
the request of the Company.
(c) “Disinterested
Trustee” means a trustee of the Company who is not and was
not a party to the Proceeding in respect of which indemnification
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.
(f) “Independent
Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law as applicable to Maryland
real estate investment trusts 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, 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 Trustees, 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, with the approval of the Board of Trustees,
which approval will not be unreasonably withheld.
(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.
Section 2. Services by
Indemnitee . Indemnitee will serve as a trustee 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.
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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(g) of the Maryland General Corporation Law
(“MGCL”), as applicable to a Maryland real estate
investment trust by virtue of Section 8-301(15) of the
Maryland REIT Law.
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:
(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
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(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 . The Company shall advance all reasonable 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
Declaration of Trust or Bylaws of the Company, any agreement or a
resolution of the shareholders entitled to vote generally in the
election of trustees or of the Board of Trustees) 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
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ultimately be established that the standard of
conduct has not been met and which have not been successfully
resolved as described in Section 7. 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 such advanced
Expenses and without any requirement to post security therefor. The
Company shall advance all reasonable Expenses actually and
reasonably incurred by or on behalf of Indemnitee’s spouse in
connection with any Proceeding (other than a Proceeding brought to
enforce indemnification under this Agreement, applicable law, the
Declaration of Trust or Bylaws of the Company, any agreement or a
resolution of the shareholders entitled to vote generally in the
election of trustees or of the Board of Trustees) to which
Indemnitee’s spouse, as a result of Indemnitee’s
Corporate Status, 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 and/or Indemnitee’s
spouse requesting such advance or advances from time to time,
whether prior to or after final disposition of such Proceeding, and
after receipt from Indemnitee of the undertaking and affirmation
above.
Section 9. Procedure for
Determination of Entitlement to Indemnification .
(a) To obtain indemnification under
this Agreement,
