INDEMNITY AGREEMENT
AGREEMENT, as of June 18, 1998 (the "Agreement"), between MGI
Properties, a Massachusetts trust (the "Trust") and __________ (the
"Indemnitee").
WHEREAS, it is essential to the Trust to retain and attract as trustees
and executive officers the most capable persons available;
WHEREAS, Indemnitee has agreed to serve as a trustee or executive
officer of the Trust;
WHEREAS, both the Trust and Indemnitee recognize the increased risk of
litigation and other claims being asserted against trustees and executive
officers of public companies in today's environment;
WHEREAS, the Bylaws (the "Bylaws") and Declaration of Trust (the
"Declaration of Trust") of the Trust require the Trust to indemnify and advance
expenses to its trustees and certain executive officers to the fullest extent
provided by law, and the Indemnitee has agreed to serve (or continue to serve)
as a trustee (or executive officer) of the Trust in part in reliance on such
provisions in the Bylaws and Declaration of Trust; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Trust in an effective manner and Indemnitee's reliance on the foregoing
provisions in the Bylaws and Declaration of Trust, and in part to provide
Indemnitee with specific contractual assurance that the protection promised by
such provisions in the Bylaws and Declaration of Trust will be available to
Indemnitee (regardless of, among other things, any amendment to or revocation of
such provisions in the Bylaws or Declaration of Trust or any change in the
composition of the Trust's Board of Trustees or acquisition transaction relating
to the Trust), the Trust wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of Indemnitee
agreeing to serve as a trustee or executive officer of the Trust and intending
to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Change in Control: shall be deemed to have occurred
upon any of the following events:
(i) The acquisition in one or more transactions by
any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) of
"Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the ▇▇▇▇ ▇▇▇) of twenty
percent (20%) or more of the combined voting power of
the Trust's then outstanding voting securities (the
"Voting Securities.), provided, however, that for
purposes of this Section l(a)(i), the Voting
Securities acquired directly from the Trust by any
Person shall be excluded from the determination of
such Person's Beneficial Ownership of voting
securities (but such Voting Securities shall be
included in the calculation of the total number of
Voting Securities then outstanding); or
(ii) The individuals who, as of June 18, 1998, are
members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of
the Board; provided, however, that if the election,
or nomination for election by the Trust's
shareholders, of any new trustee was approved by a
vote of at least two-thirds of the Incumbent Board,
such new trustee shall, for purposes of this
Agreement, be considered as a member of the Incumbent
Board; or
(iii) Approval by shareholders of the Trust of (A) a
merger or consolidation involving the Trust if the
shareholders of the Trust immediately before such
merger or consolidation do not own, directly or
indirectly immediately following such merger or
consolidation, more than seventy-five percent (75%)
of the combined voting power of the outstanding
voting securities of the entity resulting from such
merger or consolidation in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger or
consolidation or (B) a complete liquidation or
dissolution of the Trust or an agreement for the sale
or other disposition of all or substantially all of
the assets of the Trust.
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(iv) Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because
twenty percent (20%) or more of the then outstanding
Voting Securities is acquired by (i) a trustee or
other fiduciary holding securities under one or more
employee benefit plans maintained by the Trust or any
of its subsidiaries or (ii) any entity which,
immediately prior to such acquisition, is owned
directly or indirectly by the shareholders of the
Trust in the same proportion as their ownership of
stock in the Trust immediately prior to such
acquisition. Nor shall a Change in Control be deemed
to occur solely because any Person (the "Subject
Person") acquired Beneficial Ownership of more than
the permitted amount of the outstanding Voting
Securities as a result of the subsequent acquisition
of Voting Securities by the Trust which, by reducing
the number of Voting Securities outstanding,
increases the proportional number of shares
Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the
operation of this sentence) as a result of the
acquisition of Voting Securities by the Trust, and
after such share acquisition by the Trust, the
Subject Person becomes the Beneficial of an),
additional Voting Securities which increases the
percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(b) Claim: any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation,
whether commenced or conducted by the Trust or any
other party, that Indemnitee in good faith believes
might lead to the institution of any such action,
suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(c) Expenses: consist of attorneys' fees and all other
costs, charges and expenses paid or incurred in
connection with investigating, defending, settling,
being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any
Indemnifiable Event.
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(d) Indemnifiable Event: any event or occurrence related
to the fact that Indemnitee is, was or has agreed to
become a trustee, officer, employee, agent or
fiduciary of the Trust, or is or was serving or has
agreed to serve in any capacity, at the request of
the Trust, in any other corporation, partnership,
joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done
by Indemnitee in any such capacity.
(e) Potential Change in Control: shall be deemed to have
occurred if (i) the Trust enters into an agreement or
arrangement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any
person (including the Trust) publicly announces an
intention to take or to begins taking actions which
if completed would constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(f) Voting Securities: any securities of the Trust which
vote generally in the election of trustees.
2. Indemnification: Expenses: Procedure:
(a) Basic Indemnification Agreement. In the event
Indemnitee was, is or becomes a party to or witness
or other participant in, or is threatened to be made
a party to or witness or other participant in, a
Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Trust shall indemnify
Indemnitee who has acted in good faith (without
regard to the negligence or other fault of the
Indemnitee) to the fullest extent permitted by
applicable law, as soon as practicable but in no
event later than thirty days after written demand is
presented to the Trust, against any and all Expenses,
judgments, fines, penalties, excise taxes and amounts
paid or to be paid in settlement (if such settlement
is approved in advance by the Trust, which approval
shall not be unreasonably withheld) (including all
interest, assessments and other charges paid or
payable in connection with or in respect of such
Expenses, judgments, fines, penalties, excise taxes
or amounts paid or to be paid in settlement) of such
Claim. If Indemnitee makes a request to be
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indemnified under this Agreement, the Board of
Trustees (acting by a quorum consisting of trustees
who are not parties to the Claim with respect to the
Indemnifiable Event or, if such a quorum is not
obtainable, acting upon an opinion in writing of
independent legal counsel ("Board Action")) shall, as
soon as practicable but in no event later than thirty
days after such request, authorize such
indemnification. Notwithstanding anything in the
Bylaws or this Agreement to the contrary, following a
Change in Control, Indemnitee shall, unless
prohibited by law, be entitled to indemnification
pursuant to this Agreement in connection with any
Claim made hereunder.
(b) Advancement of Expenses. Notwithstanding anything in
the Bylaws or this Agreement to the contrary, if so
requested by Indemnitee, the Trust shall advance
(within two business days of such request) any and
all Expenses relating to a Claim to Indemnitee (an
"Expense Advance"), upon the receipt of a written
undertaking by or on behalf of Indemnitee to repay
such Expense Advance if a judgment or other final
adjudication adverse to Indemnitee establishes that
Indemnitee, with respect to such Claim, is not
eligible for indemnification.
(c) Notice/Cooperation by Indemnitee. Indemnitee shall,
as a condition precedent to his right to be
indemnified under this Agreement, give the Trust
notice in writing as soon as practicable of any Claim
made against Indemnitee for which indemnification
will or could be sought under this Agreement. Such
notice shall contain the written affirmation of the
Indemnitee that the standard of conduct necessary for
indemnification hereunder has been satisfied. Notice
to the Trust shall be directed to the Secretary of
the Trust in the manner provided in Section 18
hereof. Indemnitee shall give the Trust such
information and cooperation as it may reasonably
require and as shall be within Indemnitee's power. A
delay in giving notice under this Section 2(c) shall
not invalidate the Indemnitee's right to indemnity
under this Agreement unless such delay prejudices the
defense of the claim or the availability to the Trust
of insurance coverage for such claim.
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(d) Selection of Counsel. In the event the Trust shall be
obligated under Section 2(b) hereof to pay the
Expenses of any proceeding against Indemnitee, the
Trust, unless the Indemnitee determines that a
conflict of interest exists between the Indemnitee
and the Trust with respect to a particular Claim,
shall be entitled to assume the defense of such
proceeding, with counsel approved by Indemnitee,
which approval shall not be unreasonably withheld,
upon the delivery to Indemnitee of written notice of
its election to do so. After delivery of such notice,
approval of such counsel by Indemnitee and the
retention of such counsel by the Trust, the Trust
will be not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently
incurred by Indemnitee with respect to the same
proceeding, provided that (i) Indemnitee shall have
the right to employ his own separate counsel in any
such proceeding in addition to or in place of any
counsel retained by the Trust on behalf of Indemnitee
at Indemnitee's expense; and (ii) if (A) the
employment of counsel by Indemnitee has been
previously authorized by the Trust, (B) Indemnitee
shall have concluded that there may be a conflict of
interest between the Trust and Indemnitee in the
conduct of any such defense or (C) the Trust shall
not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and
expenses of Indemnitee's counsel shall be at the
expense of the Trust.
(e) Litigation Concerning Right to Indemnification. If
there has been no Board Action or Arbitration (as
defined in Section 3), or if Board Action determines
that Indemnitee would not be permitted to be
indemnified, in any respect, in whole or in part, in
accordance with Section 2(a) of this Agreement,
Indemnitee shall have the right to commence
litigation in the court which is hearing the action
or proceeding relating to the Claim for which
indemnification is sought or in any court in the
Commonwealth of Massachusetts having subject matter
jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or
challenging any Board Action or any aspect thereof,
and the Trust hereby consents to service of process
and to appear in any such proceeding. Notwithstanding
anything in the Declaration of Trust, the Bylaws or
this Agreement
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to the contrary, if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction or
Arbitration to secure a determination that Indemnitee
should be indemnified under this Agreement, the
Declaration of Trust, the Bylaws or applicable law,
any Board Action that Indemnitee would not be
permitted to be indemnified in accordance with
Section 2(a) of this Agreement shall not be binding
in the event that such legal proceedings are finally
adjudicated. Any Board Action not followed by such
litigation or Arbitration shall be conclusive and
binding on the Trust and Indemnitee.
3. Change in Control. The Trust agrees that if there is a Change in
Control, Indemnitee, by giving written notice to the Trust and the American
Arbitration Association (the "Notice"), may require that any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration (the "Arbitration") in Boston, Massachusetts in
accordance with the Rules of the American Arbitration Association (the "Rules")
Arbitration shall be conducted by a panel of three arbitrators selected in
accordance with the Rules within thirty days of delivery of the Notice. The
decision of the panel shall be made as soon as practicable after the panel has
been selected, and the parties agree to use their reasonable efforts to cause
the panel to deliver its decision within ninety days of its selection. The Trust
shall pay all fees and expenses of the Arbitration. The Arbitration shall be
conclusive and binding on the Trust and Indemnitee and the Trust or Indemnitee
may cause judgment upon award rendered by the arbitrators to be entered in any
court having jurisdiction thereof.
4. Establishment of Trust. In the event of a Potential Change in
Control or a Change in Control, the Trust shall, promptly upon written request
by Indemnitee, create a trust (the "Trust Fund") for the benefit of Indemnitee
and from time to time, upon written request of Indemnitee to the Trust, shall
fund such Trust Fund in an amount, as set forth in such request, sufficient to
satisfy any and all Expenses reasonably anticipated at the time of each such
request to be incurred in connection with investigating, preparing for and
defending any Claim relating to an Indemnifiable Event, and any and all
judgments, fines, penalties and settlement amounts of any and all Claims
relating to an Indemnifiable Event from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid. The terms of the Trust Fund shall
provide that upon a Change in Control (i) the Trust Fund shall not be revoked or
the principal thereof invaded, without the written consent of Indemnitee; (ii)
the trustee of the
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Trust Fund shall advance, within two business days of a request by Indemnitee,
any and all Expenses to Indemnitee, not advanced directly by the Trust to
Indemnitee (and Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which Indemnitee would be required to reimburse the Trust
under Section 2 (b) of this Agreement) (iii) the Trust Fund shall continue to be
funded by the Trust in accordance with the funding obligation set forth above:
(iv) the trustee of the Trust Fund shall promptly pay to Indemnitee all amounts
for which Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise; and (v) all unexpended funds in such Trust Fund shall
revert to the Trust upon a final determination by Board Action or Arbitration or
a court of competent jurisdiction, as the case may be, that Indemnitee has been
fully indemnified under the terms of this Agreement. The trustee of the Trust
Fund shall be an independent third party chosen by Indemnitee. Nothing in this
Section 4 shall relieve the Trust of any of its obligations under this
Agreement.
5. Indemnification for Additional Expenses. The Trust shall indemnify
Indemnitee against any and all expenses (including attorneys' fees, subject to
Section 19 hereof) and, if requested by Indemnitee, shall (within two business
days of such request) advance such expenses to Indemnitee, which are incurred by
Indemnitee in connection with any claim asserted by or action brought by or
against Indemnitee for (i) indemnification or advance payment of Expenses by the
Trust under law, this Agreement, or any other agreement or Bylaw of the Trust
now or hereafter in effect relating to Claims for Indemnifiable Events and/or
(ii) recovery under any trustees' and officers' liability insurance policies
maintained by the Trust, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Trust for some or a
portion of the Expenses, judgments, fines, penalties, excise taxes and amounts
paid or to be paid in settlement of a Claim but not, however, for all of the
total amount thereof, the Trust shall nevertheless indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to an Indemnifiable Event or in defense of any issue or
matter therein, including, without limitation, dismissal without prejudice,
Indemnitee shall be presumed to be entitled to indemnification against any and
all Expenses, judgments, fines, penalties, excise taxes and amounts paid or to
be paid in
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settlement of such Claim in connection with any determination by Board Action,
Arbitration or a court of competent jurisdiction that Indemnitee is not entitled
to be indemnified hereunder and the burden of proof shall be on the Trust to
establish that Indemnitee is not so entitled.
7. No Presumption. For purposes of this Agreement, the termination of
any claim, action, suit or proceeding, by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law or this Agreement.
8. Contribution. In the event that the indemnification provided for in
this Agreement is unavailable to Indemnitee for any reason whatsoever, the
Trust, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in connection with
any Claim relating to an Indemnifiable Event, in such proportion as is deemed
fair and reasonable in light of all of the circumstances of such action by Board
Action or Arbitration or by the court before which such action was brought in
order to reflect (i) the relative benefits received by the Trust and Indemnitee
as a result of the event (s) and/or transaction (s) giving cause to such action;
and/or (ii) the relative fault of the Trust (and its other trustees, officers,
employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s). Indemnitee's right to contribution under this Section 8 shall be
determined in accordance with, pursuant to and in the same manner as, the
provisions in Sections 2 and 3 hereof relating to Indemnitee's right to
indemnification under this Agreement.
9. Notice to the Trust by Indemnitee. Indemnitee agrees to promptly
notify the Trust in writing upon being served with or having actual knowledge of
any citation summons, compliant, indictment or any other similar document
relating to any action which may result in a claim of indemnification or
contribution hereunder.
10. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Declaration of
Trust or Bylaws or applicable law, and nothing herein shall be deemed to
diminish or otherwise restrict Indemnitee's right to indemnification under any
such other provision. To the extent applicable law or the Declaration of Trust
or the Bylaws of the Trust, as in effect on the date hereof or at any time in
the future, permit greater
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indemnification than as provided for in this Agreement, the parties hereto agree
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such law or provision of the Declaration of Trust or Bylaws and this
Agreement shall be deemed amended without any further action by the Trust or
Indemnitee to grant such greater benefits. Indemnitee may elect to have
Indemnitee's rights hereunder interpreted on the basis of applicable law in
affect at the time of execution of this Agreement, at the time of the occurrence
of the Indemnifiable Event giving rise to a claim or at the time indemnification
is sought.
11. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Trust or any affiliate
of the Trust against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause of action of the
Trust or its affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period; provided,
however, that if any shorter period of limitations is otherwise applicable to
any such cause of action such shorter period shall govern.
12. Amendments, Etc. Except as provided in Section 10 hereof, no
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the panics hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
13. Subrogation. In the event of payment under this Agreement, the
Trust shall be subrogated to the extent of such payment to all of the rights of
recovery with respect to such payment of 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 Trust
effectively to bring suit to enforce such rights.
14. No Duplication of Payments. The Trust shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder.
15. Binding Effect, Etc. This Agreement shall be binding upon and inure
to the benefit of and be enforceable against and by the parties hereto and their
respective successors, assigns
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(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or assets of the
Trust), spouses, heirs and personal and legal representatives. The Trust shall
require and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business and/or assets of the Trust, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Trust would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
trustee and/or officer of the Trust or of any other enterprise at the Trust's
request.
16. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
17. Exceptions. Any other provision herein to the contrary
notwithstanding, the Trust shall not be obligated pursuant to the terms of this
Agreement to indemnify the Indemnitee in the following circumstances:
(a) Excluded Acts. The Trust shall not be obligated to
indemnify any Indemnitee who is a trustee for any acts or omissions or
transactions of such person in such capacity from which a trustee may
not be relieved of liability under the laws of the state in which the
Trust is organized; or
(b) Claims. The Trust shall not be obligated to indemnify
Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) to the extent that Indemnitee
has otherwise actually received payment, or payments have been made on
behalf of Indemnitee, with respect to such expense or liability (under
any insurance policy, provision of the Trust's Declaration of Trust or
Bylaws, or otherwise) of amounts otherwise indemnifiable hereunder; or
(c) Claims Under Section 16(b). The Trust shall not be
obligated to indemnify Indemnitee for expenses and the payment of
profits arising from the purchase and sale by Indemnitee of securities
in violation of Section 16(b) of the 1934 Act, or any similar successor
statute.
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18. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by certified registered
mail, return receipt requested, with postage prepaid:
A. If to Indemnitee, to:
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or to such other person or address which Indemnitee shall furnish to the Trust
in writing pursuant to the above.
B. If to the Trust, to:
MGI Properties
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
or to such person or address as the Trust shall furnish to Indemnitee in writing
pursuant to the above.
19. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, a court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Trust under this Agreement or to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
20. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state in which the Trust is
organized, which laws are applicable to
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contracts made and to be performed in such state without giving to the
principles of conflicts of laws.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute a single agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of June 18, 1998.
MGI PROPERTIES
By:
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Name:
Title:
INDEMNITEE
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BY:
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