EXHIBIT 10.11
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INDEMNIFICATION AGREEMENT
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THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made as of
January 1, 1999, by and between BANYAN STRATEGIC REALTY TRUST, a
Massachusetts Business Trust (the "Company"), and Marvin A. Sotoloff
("Indemnitee").
RECITALS
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WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as the Indemnitee, to serve the Company
and its related entities;
WHEREAS, the Company and Indemnitee recognize the increasing
difficulty and expense of obtaining director and officer liability
insurance, the significant increases in the cost of such insurance and the
general reduction in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in litigation in general, subjecting officers and trustees to
expensive litigation risks at the same time as the availability and
coverage of liability insurance has been severely limited;
WHEREAS, in view of the consideration set forth above, the Company
desires to indemnify the Indemnitee as set forth herein;
NOW, THEREFORE, the Company and the Indemnitee hereby agree as set
forth below.
1. INDEMNIFICATION.
(a) The Company shall indemnify Indemnitee against any
losses, judgments, liabilities, expenses and amounts paid in settlement of
any claim sustained by Indemnitee by reason of the fact that Indemnitee is
or was serving as a trustee, officer, employee or agent of the Company or
acting in such capacity in another entity at the Company's direction
provided that: (i) Indemnitee determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interest of the
Company; (ii) the liability or loss was not the result of gross negligence
or misconduct by the Indemnitee; and (iii) the indemnifiable amount is
recoverable only out of the Company's assets and not from the personal
assets of any shareholder of the Company.
(b) The Company will not indemnify the Indemnitee for any
liability imposed by judgment and the costs associated therewith, including
attorneys' fees, arising from or out of a violation of state or federal
securities laws associated with the offer and sale of the shares of the
Company's beneficial interest. In addition, the Company will not indemnify
the Indemnitee for losses, liabilities, settlements and related expenses of
lawsuits alleging securities law violations unless: (i) a court approves
the settlement and finds that indemnification of the settlement and related
costs should be made; or (ii) there has been a dismissal with prejudice or
a successful adjudication on the merits of each count involving alleged
securities law violations, provided that the Indemnitee apprises the court
of the position of the Securities and Exchange Commission and the
Massachusetts Securities Division with respect to indemnification for
securities law violations before seeking court approval for
indemnification.
(c) The Company shall advance funds to the Indemnitee for
legal expenses and other costs incurred as a result of a legal action
initiated against the Indemnitee if the legal action relates to the
performance of duties or services by the Indemnitee on behalf of the
Company and the Indemnitee agrees in writing to repay the advanced funds to
the Company if it is ultimately determined that the Indemnitee is not
entitled to indemnification. The rights accruing to the Indemnitee
hereunder shall be in addition to any other right to which the Indemnitee
may be lawfully entitled, and nothing contained herein shall restrict the
right of the Indemnitee to contribution as may be available under
applicable law.
2. PROCEDURES FOR INDEMNIFICATION AND EXPENSE ADVANCES.
(a) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall
notify the Company in writing as soon as practicable of any claim or action
made against Indemnitee for which indemnification will or could be sought
under this Agreement; provided that failure to so notify shall not affect
Company's obligations hereunder unless the failure to so notify materially
prejudices the Company's rights or defenses in connection with the
underlying claim or action. In addition, Indemnitee shall cooperate with
the Company and provide it with the information it reasonably requires to
assert its rights or defenses to the underlying claim or action.
(b) TIMING OF PAYMENTS. The Company shall make all payments
required under this Agreement as soon as practicable after written demand
by the Indemnitee is presented to the Company, but in no event later than
forty-five (45) business days after the Indemnitee presents its demand to
the Company.
(c) NO PRESUMPTIONS: BURDEN OF PROOF. For purposes of this
Agreement, the termination of any claim or action 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 the Indemnitee did not meet any particular standard of conduct or have
any particular belief or be treated as a decision of a court that
indemnification is not permitted by this Agreement or applicable law. If a
claim for indemnification under this Agreement is not timely paid by the
Company, Indemnitee may, but need not, bring an action against the Company
to recover the unpaid amount of the claim and, subject to SECTION 13 of
this Agreement, Indemnitee shall also be entitled to be paid for the
expenses (including attorneys' fees) of bringing the action. The Company
may assert, as a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in connection with any action or
proceeding in advance of its final disposition), that Indemnitee has not
met the required standard of conduct for the Company to indemnify
Indemnitee for the amount claimed. The burden of proof shall be on the
Indemnitee to establish, by a preponderance of the evidence, that he or she
is entitled to indemnification. If the Company contests Indemnitee's right
to indemnification, the decision shall be reserved for a court; and neither
the Company's failure to determine that indemnification is proper nor the
Company's determination that indemnification is not proper shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
(d) NOTICE TO INSURERS. If the Company has director and
officer liability insurance in effect at the time that it is notified of a
claim, the Company shall promptly notify the insurers of the claim in
accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause
the insurers to pay on behalf of the Indemnitee all amounts payable as a
result of the proceeding in accordance with the terms of the policies.
(e) SELECTION OF COUNSEL. The Company may assume the defense
of any claim or proceeding for which indemnification is sought by the
Indemnitee with counsel approved by Indemnitee, provided that Indemnitee
may not unreasonably withhold approval, so long as the Company notifies the
Indemnitee of Company's election within a reasonable time of receiving
notice of the claim or proceeding. If the Indemnitee approves exercise of
the Company's rights hereunder, the Company will 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 or her own counsel in any
such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded that there may be a conflict
of interest between the Company and Indemnitee in the conduct of any such
defense, or (C) the Company 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 paid by the Company.
3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) SCOPE. Notwithstanding any provision of this Agreement,
if, after the date of this Agreement, the Company's Declaration of Trust or
other governing document is amended to expand the Company's right to
indemnify a member of its board or an officer, employee or agent, then the
Indemnitee shall be entitled to the increased protection. If the
Declaration of Trust or other governing document is amended to narrow or
limit the Company's right to indemnify a member of its board or an officer,
employee or agent, such changes, to the extent not otherwise required by
law, statute or rule to be applied to this Agreement shall have no effect
on this Agreement or the parties' rights and obligations hereunder.
(b) NONEXCLUSIVE. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Declaration of Trust or other governing
document, any agreement, any vote of shareholders or disinterested
directors, any applicable law or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity even though he or she may have ceased to serve
in the capacity at the time of any action or other covered proceeding.
4. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or
reasonably incurred by him or her in investigating, defending, appealing or
settling any civil or criminal action or proceeding, but not, however, for
the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such expenses, judgments, fines or penalties
to which Indemnitee is entitled.
5. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Company shall,
from time to time, make a determination, in good faith, as to whether it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and
trustees of the Company with coverage for losses from wrongful acts or to
ensure the Company's performance of its indemnification obligations under
this Agreement. Among other considerations, the Company will weigh the
cost of obtaining coverage against the benefits afforded by the policy.
The Company shall name the Indemnitee as an insured in all such policies of
insurance in such a manner as to provide Indemnitee the same rights and
benefits accorded to the most favorably insured person. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain
insurance for Indemnitee's benefit if: (i) the Company determines in good
faith that insurance is not reasonably available; (ii) the premium costs
are disproportionate to the amount of coverage provided; (iii) the coverage
provided is materially limited by exclusions; or (iv) Indemnitee is covered
by similar insurance maintained by a subsidiary or parent of the Company.
6. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made
against Indemnitee to the extent that Indemnitee has otherwise received
payment (under any insurance policy, provision of the Company's Declaration
of Trust or other governing document) of the amounts otherwise payable
hereunder.
7. SEVERABILITY. If any provision or provisions of this Agreement are
found invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
8. EXCEPTIONS. Except as provided in SECTION 3(a) hereof, the Company
shall not be obligated under this Agreement for the following:
(a) EXCLUDED ACTS. To indemnify Indemnitee for any acts or
omissions or transactions from which a person may not be relieved of
liability under the Company's Declaration of Trust or other governing
document;
(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law, unless
approved by the board;
(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any
expenses incurred by Indemnitee with respect to any proceeding instituted
by Indemnitee to enforce or interpret this Agreement, if a court of
competent jurisdiction determines that each of the material assertions made
by Indemnitee in such proceeding was not made in good faith or was
frivolous;
(d) INSURED CLAIMS. 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) which have been paid directly to Indemnitee by an insurance
carrier under a policy of director and officer liability insurance
maintained by the Company; or
(e) CLAIMS UNDER SECTION 16(B). To indemnify Indemnitee for
expenses or liability arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of
1934, as amended, or any similar successor statute; provided, however, that
notwithstanding any limitation set forth in this SECTION 8(e), Indemnitee
shall be entitled to receive an advance of expenses with respect to any
claim or proceeding unless and until a court makes a final determination
(as to which all rights of appeal therefrom have been exhausted or lapsed)
that the Indemnitee has violated the statute.
9. EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective as of
the date set forth on the first page and shall apply to prior acts or
omissions if Indemnitee was an officer, trustee, employee or agent of the
Company, or was serving at the request of the Company as a trustee,
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, at the time the act or omission
occurred.
10. CONSTRUCTION OF CERTAIN PHRASES. For purposes of this Agreement:
(a) References to the "Company" shall include any entity or
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, trustees,
officers, employees or agents, so that if Indemnitee is or was a director,
trustee, officer, employee or agent of such constituent corporation, or it
or was serving at the request of such constituent corporation as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall
stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving entity as Indemnitee would have with
respect to such constituent corporation if its separate existence had
continued.
(b) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit plan; and
references to "serving at the request of the Company" shall include any
service as a director, trustee, officer, employee or agent of the Company
which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants, or beneficiaries.
(c) The term "expenses" shall include all reasonable
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 any proceeding,
including any action, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing or any other proceeding
whether civil, criminal, administrative or investigative, whether or not
initiated prior to the effective date hereof.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and
assigns.
13. ATTORNEYS' FEES. If 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 unless, as a part of the
action, a court of competent jurisdiction expressly determines that each of
the material assertions made by Indemnitee as a basis for the action was
not made in good faith or was frivolous. Any action instituted by or in
the name of the Company 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 the action (including with respect to Indemnitee's
counterclaims and cross-claims made in the action) unless, as a part of the
action, a court of competent jurisdiction expressly determines that each of
Indemnitee's material defenses to the action was made in bad faith or was
frivolous.
14. NOTICE. Any notice required or permitted hereunder shall be made in
writing: (i) either by actual or delivery of the notice into the hands of
the party entitled; or (ii) by depositing the notice in the United States
mail, certified or registered, return receipt requested, all postage
prepaid and addressed to the party to whom notice is to be given at the
party's respective address set forth below, or such other address as the
party may, from time to time, designate by written notice to the other
party.
15. CHOICE OF LAW AND CONSENT TO JURISDICTION. This Agreement shall be
governed by and its provisions construed in accordance with the laws of the
State of Illinois as applied to contracts between Illinois residents
entered into and to be performed entirely within Illinois. The Company and
Indemnitee each hereby irrevocably consent to the jurisdiction of the
courts of the State of Illinois for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement and
agree that any action instituted under this Agreement.
16. SUBROGATION. If the Company makes any payment under this Agreement,
the Company shall be subrogated to the extent of the payment to all of the
rights of recovery of Indemnitee, who shall execute all documents and take
all actions that may be necessary to secure these rights and to enable the
Company effectively to bring suit to enforce these rights.
17. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in
writing signed by both the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to be or shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall
such waiver constitute a continuing waiver.
18. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained
in the employ of the Company or any of its subsidiaries or affiliated
entities.
[Signature page on next page]
The parties hereto have executed or caused to be executed this
Agreement as of the date first above written.
BANYAN STRATEGIC REALTY TRUST
By:
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Leonard G. Levine, President
Address: 150 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
AGREED TO AND ACCEPTED:
INDEMNITEE:
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Marvin A. Sotoloff
Trustee
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(capacity in which employed by the Company)
One East Wacker Drive
Suite 3900
Chicago, Illinois 60601
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(address)