INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (this " Agreement ") is made as of
September 25, 2009, by and between Sovran Self Storage, Inc., a
Maryland corporation (the " Corporation "), Sovran
Acquisition Limited Partnership, a Delaware limited partnership
(the " Operating Partnership " and, collectively with the
Corporation, the " Indemnitors "), and James R. Boldt, a
director of the Corporation (" Director ").
RECITALS
WHEREAS,
candidates highly qualified for service on the boards of directors
of publicly-held corporations have become increasingly reluctant to
serve in that capacity or in other related capacities unless they
are provided with strong protection through indemnification and
insurance against the substantial and escalating risks of, and
potential liability from, claims and actions arising out of their
service to and activities on behalf of such corporations, which
risks, absent such adequate protection, would far outweigh the
compensation and other benefits to such persons of serving as
directors;
WHEREAS,
although the Board of Directors of the Corporation (the "
Board ") has determined that, in order to attract and retain
such persons to serve on the Board, the Corporation will attempt to
maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving on the Board and in other
related capacities from certain liabilities, the Board recognizes
that such insurance may be available to it in the future only at
higher premiums and with more exclusions from its coverage, which
reduces the value of such insurance to directors and increases the
importance of indemnification by the Corporation to protect
directors against such liabilities;
WHEREAS,
it is essential for the Corporation to be able to attract and
retain the most capable persons available to serve on the Board,
and the uncertainties relating to such insurance and
indemnification has increased the difficulty of attracting and
retaining such persons;
WHEREAS,
the Corporation indirectly controls the Operating Partnership
(through its ownership of the general partner of the Operating
Partnership (the " General Partner ")) and conducts
substantially all of its business through the Operating
Partnership, such that the Operating Partnership would benefit from
the Corporation's ability to attract and retain the most qualified
persons to serve on its Board of Directors;
WHEREAS,
in order to induce the most qualified persons to serve and continue
to serve as directors of the Corporation, the Indemnitors desire to
provide directors with specific contractual assurance of their
rights to full indemnification against litigation risks and
expenses associated with their service as a director of the
Corporation and in other related capacities regardless of, among
other things, any amendment to or revocation of the Corporation's
charter or Bylaws or any change in the ownership of the Corporation
or in the composition of the Board;
WHEREAS,
the Indemnitors intend that this Agreement will provide Director
with greater protection than that which is provided by the
Corporation's charter and Bylaws, the Agreement of Limited
Partnership of the Operating Partnership and that this Agreement
shall supplement and be in furtherance of the By-laws of the
Corporation and any resolutions adopted pursuant thereto as well as
the Agreement of Limited Partnership of the Operating Partnership,
shall not be deemed a substitute therefor, and shall not diminish
or abrogate any rights of Director thereunder;
WHEREAS,
Director is relying upon the rights afforded under this Agreement
in deciding to begin serving or continue to serve as a director of
the Corporation; and
NOW,
THEREFORE, in consideration of the premises and covenants contained
herein, and in order to induce Director to serve as or to continue
to serve as a director of the Corporation and in consideration of
Director's so serving, the Indemnitors and Director do hereby
covenant and agree as follows:
Section
1. Services to the Corporation
. Director agrees to continue to serve as a director of
the Corporation and may serve as a director, officer, employee,
agent or fiduciary of one or more Covered Entities (as defined
below). Director may at any time and for any reason
resign from any such position (subject to any other contractual
obligation or any obligation imposed by operation of law), in which
event the Corporation shall have no obligation under this Agreement
to continue Director in any such position. This
Agreement shall not be deemed an employment contract between
Director and the Corporation (or any Covered
Entity). The foregoing notwithstanding, this Agreement
shall continue in force after Director has ceased to serve as a
director of the Corporation or otherwise ceased to have Corporate
Status (as defined below).
Section
2. Definitions . As used in this
Agreement:
(a) A
" Change in Control " shall be deemed to occur upon the
earliest to occur after the date of this Agreement of any of the
following events:
(i)
Acquisition of Stock by Third Party . Unless
explicitly approved by the Incumbent Board (as defined below), any
Person (as defined below) is or becomes the Beneficial Owner (as
defined below), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power
of the Corporation's then outstanding securities;
(ii)
Change in Board of Directors . A change in the
composition of the Board of Directors of the Corporation such that
the individuals who, as of the date hereof, constitute the Board of
Directors of the Corporation (such Board of Directors shall be
hereinafter referred to as the " Incumbent Board ") cease
for any reason to constitute at least a majority of the Board of
Directors of the Corporation; provided, however, for purposes of
this clause (ii), any individual who becomes a member of the Board
of Directors of the Corporation subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least a majority of
those individuals who are members of the Board of Directors of the
Corporation and who were also members of the Incumbent Board (or
deemed to
be such
pursuant to this provision) shall be considered as though such
individual were a member of the Incumbent Board; but, provided,
further, that any such individual whose initial assumption of
office occurs as a result of an actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the
Board of Directors of the Corporation shall not be so considered as
a member of the Incumbent Board; or
(iii)
Corporation Transactions . The effective date of
a merger or consolidation of the Corporation with any other entity,
other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior
to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 60% of the combined voting power
of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation and with the power
to elect at least a majority of the board of directors or other
governing body of such surviving entity;
(iv)
Liquidation . Unless the liquidation is
explicitly approved by the Incumbent Board, the approval by the
shareholders of the Corporation of a complete liquidation of the
Corporation, or a plan therefor, or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets; and
(v)
Other Events . Unless the event is explicitly
approved by the Incumbent Board, there occurs any event 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 Exchange
Act, as hereinafter defined, regardless of whether the Corporation
is then subject to such reporting requirement.
Solely
for purposes of this Section 2(a), the following terms shall have
the following meanings:
(A) "
Exchange Act " shall mean the Securities Exchange Act of
1934, as amended.
(B) "
Person " shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act and, for greater clarity, shall
include, without limitation, any entity or "group" within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act;
provided, however, that Person shall exclude (i) the Corporation,
(ii) any trustee or other fiduciary holding securities under
an employee benefit plan of the Corporation, and (iii) any
corporation owned, directly or indirectly, by the shareholders of
the Corporation in substantially the same proportions as their
ownership of stock of the Corporation.
(C) "
Beneficial Owner " shall have the meaning given to such term
in Rule 13d-3 under the Exchange Act; provided, however, that
Beneficial Owner shall exclude any Person otherwise becoming a
Beneficial Owner by reason of the shareholders of the Corporation
approving a merger, consolidation or other business combination of
the Corporation with another entity.
(b) "
Corporate Status " describes the status of a person who is
or was a director, officer, employee, agent or fiduciary of the
Corporation or any Covered Entity.
(c) "
Covered Entity " shall mean the Corporation, the Operating
Partnership, the General Partner and any other corporation, limited
liability company, partnership, joint venture, trust, employee
benefit plan or other entity or enterprise (as well as any domestic
or foreign predecessor entity of each such entity in a merger,
consolidation or other transaction) of which Director is, was or
may be deemed to be serving at the request of the Corporation as a
director, officer, employee, partner (limited or general), trustee,
agent or fiduciary. References to "serving at the
request of the Corporation" shall include any service as a
director, officer, employee, partner (limited or general), trustee,
agent or fiduciary of a Covered Entity which imposes duties on, or
involves services by, such director, officer, employee, partner
(limited or general), trustee, agent or fiduciary with respect to
an employee benefit plan, its participants or
beneficiaries.
(d) "
Disinterested Director " means a director of the Corporation
who is not and was not a party to the Proceeding in respect of
which indemnification is sought by Director.
(e) "
Disqualifying Conduct " means (A) the act or omission of
Director was material to the matter giving rise to the Proceeding
and (1) was committed in bad faith or (2) was the result of
active and deliberate dishonesty, (B) Director actually received an
improper personal benefit in money, property or services, or (C) in
the case of any criminal Proceeding, Director had reason to believe
that his conduct was unlawful.
(f) "
Expenses " shall include all reasonable attorneys' fees,
retainers, court and arbitration costs, transcript costs, fees of
experts, witness fees, travel expenses, duplicating costs, printing
and binding costs, scanning and data processing charges, electronic
legal research and other database charges, 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, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. Expenses also shall
include (i) Expenses incurred in connection with any appeal
resulting from any Proceeding, including the premium, security for,
and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent, and (ii) for purposes of
Section 12(d) only, Expenses incurred by Director in connection
with the interpretation, enforcement or defense of Director's
rights under this Agreement, by litigation or
otherwise. Expenses, however, shall not include amounts
paid in settlement by Director or the amount of judgments or fines
(including any excise tax assessed with respect to any employee
benefit plan) against Director.
(g) "
Independent Counsel " means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and that
neither presently is, nor in the past five years has been, retained
to represent any of the following: (i) the Indemnitors
or Director in any matter material to either such party (other than
with respect to matters concerning Director under this Agreement,
or of other Directors under similar indemnification agreements), or
(ii) any other party to 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 Indemnitors or Director in an action to determine
Director's rights under this Agreement. The Indemnitors
agrees to pay the reasonable fees and expenses of the Independent
Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages
arising out of or relating to this Agreement or its engagement
pursuant hereto.
(h) "
Losses " means Expenses, judgments, costs, fines (including
any excise tax assessed with respect to any employee benefit plan)
and amounts paid in settlement actually incurred by Director (net
of any related insurance proceeds or other indemnification payments
received by Director or paid on Director's behalf as described in
Section 7(a)).
(i) "
Proceeding " shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought
in the right of the Corporation or otherwise and whether of a
civil, criminal, administrative or investigative nature, in which
Director was, is or may be involved as a party or otherwise by
reason of Director's Corporate Status or by reason of any action
taken by him or of any action or omission on his part in connection
with Director's Corporate Status, in each case regardless of
whether Director retains Corporate Status at the time any liability
or expense is incurred for which indemnification, reimbursement, or
advancement of expenses can be provided under this
Agreement. However, a "Proceeding" does not include an
action, suit or proceeding initiated by Director to enforce his
rights under this Agreement.
Section
3. Indemnification . The Indemnitors
shall indemnify Director and hold Director harmless against any and
all Losses in connection with any present or future threatened,
pending or completed Proceeding, regardless of whether such
Proceeding is by or in the right of the Corporation, based upon
arising from, relating to, or by reason of Director's Corporate
Status; provided, that no indemnification pursuant to this Section
3 may be made to Director or on Director's behalf with respect to
any Proceeding if a final judgment or other final adjudication
adverse to Director establishes that Director engaged in
Disqualifying Conduct with respect to such Proceeding.
Section
4. Indemnification for Expenses of a Party Who is
Wholly or Partly Successful . Notwithstanding any
other provisions of this Agreement, to the fullest extent permitted
by applicable law and to the extent that Director is a party to (or
a participant in) and is successful, on the merits or otherwise, in
any Proceeding or in the defense of any claim, issue or matter
therein, in whole or in part, the Indemnitors shall indemnify
Director against all Expenses actually and reasonably incurred by
him in connection therewith. If Director is not wholly
successful in such Proceeding, the Indemnitors also shall indemnify
Director against all Expenses reasonably incurred in connection
with each successfully resolved claim, issue or matter and each
claim, issue or matter related to each successfully resolved claim,
issue, or matter. For purposes of this Section 4 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
5. Indemnification For Expenses of a Witness
. Notwithstanding any other provision of this Agreement,
to the fullest extent permitted by applicable law and to the extent
that Director is, by reason of his Corporate Status, a witness in
any Proceeding to which Director is not a party, he shall be
indemnified by the Indemnitors against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith.
Section
6. Additional Indemnification .
(a) Notwithstanding
any limitation in Sections 3 or 4, the Corporation shall indemnify
Director to the fullest extent permitted by applicable law if
Director is a party to or threatened to be made a party to any
Proceeding (including a Proceeding by or in the right of the
Corporation to procure a judgment in its favor) against all Losses
of Director in connection with the Proceeding.
(b) For
purposes of this Agreement, the meaning of the phrase " to the
fullest extent permitted by applicable law " shall include the
following:
(i) with
respect to the Corporation:
(A) to
the fullest extent permitted by the provisions of Maryland law that
authorize, permit or contemplate additional indemnification by
agreement, or the corresponding provisions of any amendment to or
replacement of such provisions of Maryland law; and
(B) to
the fullest extent authorized or permitted by any amendments to or
replacements of such provisions of Maryland law adopted after the
date of this Agreement that increase the extent to which a
corporation may indemnify its officers and directors.
(ii) with
respect to the Operating Partnership:
(A) to
the fullest extent permitted by the provisions of Delaware law that
authorize, permit or contemplate additional indemnification by
agreement, or the corresponding provisions of any amendment to or
replacement of such provisions of Delaware law; and
(B) to
the fullest extent authorized or permitted by any amendments to or
replacements of such provisions of Delaware law adopted after the
date of this Agreement that increase the extent to which a
corporation may indemnify its officers and directors.
Section
7. Exclusions . Notwithstanding any
provision in this Agreement, neither of the Indemnitors shall be
obligated under this Agreement to make any indemnity or advance in
connection with any claim made against Director:
(a) for
which payment has actually been made to or for the account of
Director under any insurance policy, other indemnity provision,
contract or agreement, except with respect to any excess beyond the
amount paid to Director under any insurance policy, other indemnity
provision, contract or agreement;
(b) for
(i) an accounting of profits made from the purchase and sale (or
sale and purchase) by Director of securities of the Corporation
that did, in fact, violate Section 16(b) of the Exchange Act or
(ii) any reimbursement of the Corporation by Director of any bonus
or other incentive-based or equity-based compensation or of any
profits realized by Director from the sale of securities of the
Corporation, as required in each case under the Exchange
Act;
(c) except
as otherwise provided in Section 12(d) of this Agreement, in
connection with any Proceeding (or any part of any Proceeding)
initiated by Director, including any Proceeding (or any part of any
Proceeding) initiated by Director against the Corporation or its
directors, officers or employees, unless (i) the Board of
Directors of the Corporation authorized the Proceeding (or any part
of any Proceeding) prior to its initiation, or (ii) the Corporation
provides the indemnification, in its sole discretion, pursuant to
the powers vested in the Corporation under applicable law;
or
(d) in
the event that the Indemnitors are advised, in a written opinion of
their regular outside legal counsel, that their performance of any
provision of this Agreement would violate Section 13(k) of the
Exchange Act, then the parties agree to revise and replace such
provision in a manner that will result in a new provision that does
not violate such provision and the legal effect of which comes as
close as possible to what the parties had intended to achieve with
the original provision.
Section
8. Advances of Expenses
. Notwithstanding any provision of this Agreement to the
contrary, the Indemnitors shall advance, to the extent not
prohibited by law, the Expenses incurred by Director (or reasonably
expected to be incurred by Director during the six months following
any such request) in connection with any Proceeding, and such
advancement shall be made within 30 days after the receipt by the
Indemnitors of a statement or statements requesting such advances
from time to time, whether prior to or after final disposition of
any Proceeding. Advances shall be unsecured and interest
free. Advances shall be made without regard to
Director's ability to repay the amounts advanced and without regard
to Director's ultimate entitlement to indemnification under the
other provisions of this Agreement. Advances shall
include any and all reasonable Expenses incurred pursuing an action
to enforce this right of advancement, including Expenses incurred
preparing and forwarding statements to the Indemnitors to support
the advances claimed. The Director shall qualify for
advances from the Operating Partnership upon the execution and
delivery to the Indemnitors of this Agreement, which shall
constitute an undertaking
