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Exhibit 10.14
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into as of
___________________, by and between Equity Residential Properties Trust ("EQR"),
a Maryland real estate investment trust, and [[Name]] (the "Indemnitee").
WHEREAS, the Indemnitee is an officer or a member of the Board of
Trustees of EQR and in such capacity is performing a valuable service for EQR;
WHEREAS, the law of EQR's state of organization permits EQR to enter
into contracts with its officers or members of its Board of Trustees with
respect to indemnification of such persons; and
WHEREAS, to induce the Indemnitee to continue to provide services to
EQR as an officer or a member of the Board of Trustees, and to provide the
Indemnitee with specific contractual assurance that indemnification will be
available to the Indemnitee regardless of, among other things, any amendment to
or revocation of EQR's Amended and Restated Declaration of Trust ("Declaration
of Trust"), or any acquisition transaction relating to EQR, EQR desires to
provide the Indemnitee with protection against personal liability.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, EQR and the Indemnitee hereby agree as follows:
1. DEFINITIONS.
For purposes of this Agreement:
(A) "Change in Control" shall mean a change in the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of EQR, or any
successor in interest thereto, whether through the ownership
of voting securities, by contract or otherwise, including but
not limited to a change which would be required to be reported
under Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 as in effect on the
date hereof (the "Exchange Act") or as may otherwise be
determined pursuant to a resolution of the Board of Trustees.
A rebuttable presumption of a Change in Control shall be
created by any of the following which first occur after the
date hereof and EQR shall have the burden of proof to overcome
such presumption:
i. the ability of any "Person" (as such term is defined
in Sections 13(d) and 14(d) of the Exchange Act)
together with an "Affiliate" or "Associate" (as
defined in Rule 12b-2 of the Exchange Act) or "Group"
(within the meaning of Section 13(d)(3) of the
Exchange Act) to exercise or direct the exercise of
20% or more of the combined voting power of all
outstanding shares of voting stock of EQR in the
election of its trustees ("Interested Party")
(provided, however, "Interested Party" shall not
include an agent, broker, nominee, custodian or
trustee, solely in their capacity as such, for
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one or more persons who do not individually or as a
group possess such power),
ii. during any period of two consecutive years,
individuals who at the beginning of such period
constitute the Board of Trustees of EQR cease for any
reason to constitute at least a majority thereof,
unless the election of each trustee who was not a
trustee at the beginning of such period has been
approved in advance by the trustees representing
two-thirds of the trustees then in office who were
the trustees at the beginning of the period,
iii. the approval of the shareholders of EQR of:
(a) a merger or consolidation of EQR with any
Interested Party,
(b) any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition, to or with
any Interested Party in any transaction or
series of transactions, of EQR's assets or
the assets of any subsidiary of EQR having a
market value equal to 10% or more of the
aggregate market value of all assets of EQR
determined on a consolidated basis, all
outstanding stock of EQR, or the earning
power or net income of EQR, determined on a
consolidated basis,
(c) the issuance or transfer by EQR, or any
subsidiary thereof, to any Interested Party
in any transaction or a series of
transactions, of capital securities with a
value equal to 5% or more of the aggregate
market value of the then outstanding shares
of voting stock of EQR other than the
issuance or transfer of such shares of stock
to all EQR shareholders on a pro rata basis,
(d) the adoption of any plan or proposal for the
partial or complete liquidation or
dissolution of EQR proposed by an Interested
Party or pursuant to any agreement,
arrangement or understanding, whether or not
in writing, with any Interested Party, or
(e) any reclassification of securities,
including, without limitation, any stock
split, stock dividend, or other
distributions of stock, or any reverse stock
split, recapitalization of EQR, or any
merger or consolidation of EQR with any
subsidiary thereof, or any other transaction
proposed by, or pursuant to, any agreement,
arrangement, or understanding, whether or
not in writing, with any Interested Party
which has the effect, directly or
indirectly,
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of increasing the proportionate shares of
the voting stock of EQR directly or
indirectly owned by any such Interested
Party, or
iv. any receipt by any Interested Party, directly or
indirectly, of any loans, advances, guarantees,
pledges or other financial assistance, or any tax
credits or other tax advantages provided by or
through EQR other than the receipt of such advantages
which are provided to all EQR shareholders on a pro
rata basis.
(B) "Corporate Status" describes the status of a person who is or
was a trustee, officer, employee, agent or fiduciary of EQR or
of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (whether conducted
for profit or not for profit) which such person is or was
serving at the request of EQR.
(C) "Disinterested Trustee" means a trustee of EQR who is not and
was not a party to the Proceeding (as hereinafter defined) in
respect of which indemnification is sought by the Indemnitee.
(D) "Effective Date" means the date of this Agreement as set forth
above.
(E) "Expenses" shall include all attorneys and paralegals' 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 and
neither presently is, or in the past two (2) years has been,
retained to represent (i) EQR or the Indemnitee in any matter
material to either such party, or (ii) any other party to the
Proceeding giving rise to a claim for indemnification
hereunder.
(G) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative
hearing, or any other proceeding, including appeals therefrom,
whether civil, criminal, administrative, or investigative,
except one initiated by the Indemnitee pursuant to paragraph 8
of this Agreement to enforce such Indemnitee's rights under
this Agreement.
2. INDEMNIFICATION - GENERAL
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The Indemnitee shall be entitled to the rights of indemnification
provided in this paragraph 2 and under applicable law, the Declaration
of Trust, EQR's By-Laws, any agreement, a vote of shareholders or
resolution of the Board of Trustees or otherwise if, by reason of such
Indemnitee's Corporate Status, such Indemnitee is, or is threatened to
be made, a party to any threatened, pending, or completed Proceeding,
including a Proceeding by or in the right of EQR. Unless prohibited by
paragraph 13 hereof, the Indemnitee shall be indemnified against
Expenses, judgments, penalties, fines, and settlement amounts actually
and reasonably incurred by or on behalf of such Indemnitee in
connection with such Proceeding or any claim, issue or matter therein.
3. EXPENSES OF A SUCCESSFUL PARTY
Without limiting the effect of any other provision of this Agreement,
to the extent that the Indemnitee is, by reason of such Indemnitee's
Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding pursuant to a final non-appealable order,
such Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by or on behalf of such Indemnitee in connection
therewith. If the Indemnitee is not wholly successful in such
Proceeding pursuant to a final non-appealable order but is successful,
on the merits or otherwise, as to one or more but less than all claims,
issues, or matters in such Proceeding pursuant to a final
non-appealable order, EQR shall indemnify the Indemnitee against all
Expenses actually and reasonably incurred by or on behalf of such
Indemnitee in connection with each successfully resolved claim, issue
or matter. For purposes of this paragraph and without limitation, the
termination of any claim, issue or matter in such Proceeding by
dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
4. WITNESS EXPENSES
Notwithstanding any other provision of this Agreement, to the extent
that the Indemnitee is, by reason of such Indemnitee's Corporate
Status, a witness for any reason in any Proceeding to which such
Indemnitee is not a party, such Indemnitee shall be indemnified against
all Expenses actually and reasonably incurred by or on behalf of such
Indemnitee in connection therewith.
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5. ADVANCES
EQR shall advance all reasonable Expenses incurred by or on behalf of
the Indemnitee in connection with any Proceeding within twenty (20)
days after the receipt by EQR of a statement from the Indemnitee
requesting such advance from time to time, whether prior to or after
final disposition of such Proceeding. Such statement shall reasonably
evidence the Expenses incurred by the Indemnitee and shall include or
be preceded or accompanied by an undertaking by or on behalf of the
Indemnitee to repay any Expenses advanced if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified
against such Expenses.
6. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION
(A) To obtain indemnification under this Agreement, the Indemnitee
shall submit to EQR a written request, including therewith
such documentation and information reasonably necessary to
determine whether and to what extent the Indemnitee is
entitled to indemnification.
(B) Upon such written request pursuant to subparagraph 6(A), a
determination with respect to the Indemnitee's entitlement
thereto shall be made in the specific case: (i) if a Change in
Control shall have occurred, by Independent Counsel in a
written opinion to the Board of Trustees, a copy of which
shall be delivered to the Indemnitee (unless the Indemnitee
shall request that such determination be made by the Board of
Trustees or the shareholders of EQR, in which case by the
person or persons or in the manner provided in clauses (ii) or
(iii) of this paragraph 6(B)); (ii) if a Change in Control
shall not have occurred, (A) by the Board of Trustees by a
majority vote of a quorum consisting of Disinterested
Trustees, or (B) if a quorum of the Board of Trustees
consisting of Disinterested Trustees is not obtainable, or,
even if obtainable, if such quorum of Disinterested Trustees
so directs, by Independent Counsel in a written opinion to the
Board of Trustees, a copy of which shall be delivered to the
Trustee, or (C) by the shareholders of EQR; or (iii) as
provided in paragraph 7(B) of this Agreement. If it is so
determined that the Indemnitee is entitled to indemnification,
payment to the Indemnitee shall be made within ten (10) days
after such determination.
(C) The Indemnitee shall cooperate with the person or entity
making such determination with respect to the Indemnitee's
entitlement to indemnification, including providing upon
reasonable advance request any documentation or information
which is not privileged or otherwise protected from disclosure
and which is reasonably available to the Indemnitee and
reasonably necessary to such determination. Any costs or
expenses (including attorneys' fees and disbursements)
incurred by the Indemnitee in so cooperating shall be borne by
EQR (irrespective of the determination as to the Indemnitee's
entitlement to indemnification)
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and EQR hereby indemnifies and agrees to hold the Indemnitee's
harmless therefrom.
(D) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant
to paragraph 6(B) hereof, the Independent Counsel shall be
selected as provided in this paragraph 6(D). If a Change in
Control shall not have occurred, the Independent Counsel shall
be selected by the Board of Trustees, and EQR shall give
written notice to the Indemnitee advising such Indemnitee of
the identity of the Independent Counsel so selected. If a
Change in Control shall have occurred, the Independent Counsel
shall be selected by the Indemnitee (unless the Indemnitee
shall request that such selection be made by the Board of
Trustees, in which event the preceding sentence shall apply),
and the Indemnitee shall give written notice to EQR advising
it of the identity of the Independent Counsel so selected. In
either event, the Indemnitee, or EQR, as the case may be, may,
within seven (7) days after such written notice of selection
shall have been given, deliver to EQR or to the Indemnitee, as
the case may be, a written objection to such selection. Such
objection may be asserted only on the grounds that the
Independent Counsel so selected does not meet the requirements
of "Independent Counsel" as defined in paragraph 1 of this
Agreement. If such written objection is made, the Independent
Counsel so selected may not serve as Independent Counsel until
a court has determined that such objection is without merit.
If, within twenty (20) days after submission by the Indemnitee
of a written request for indemnification pursuant to paragraph
6(A) hereof, no Independent Counsel shall have been selected
or, if selected, shall have been objected to, either EQR or
the Indemnitee may petition a court for resolution of any
objection which shall have been made by EQR or the Indemnitee
to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the
court or by such other person as the court shall designate,
and the person with respect to whom an objection is so
resolved or the person so appointed shall act as Independent
Counsel under paragraph 6(B) hereof. EQR shall pay all
reasonable fees and expenses of Independent Counsel incurred
in connection with acting pursuant to paragraph 6(B) hereof,
and all reasonable fees and expenses incident to the selection
of such Independent Counsel pursuant to this paragraph 6(D).
In the event that a determination of entitlement to
indemnification is to be made by Independent Counsel and such
determination shall not have been made and delivered in a
written opinion within ninety (90) days after the receipt by
EQR of the Indemnitee's request in accordance with paragraph
6(A), upon the due commencement of any judicial proceeding in
accordance with paragraph 8(A) of this Agreement, Independent
Counsel shall be discharged and relieved of any further
responsibility in such capacity.
7. PRESUMPTIONS
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(A) In making a determination with respect to entitlement or
indemnification hereunder, the person or entity making such
determination shall presume that the Indemnitee is entitled to
indemnification under this Agreement and EQR shall have the
burden of proof to overcome such presumption.
(B) If the person or entity making the determination whether the
Indemnitee is entitled to indemnification shall not have made
a determination within sixty (60) days after receipt by EQR of
the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been
made and the Indemnitee shall be entitled to such
indemnification, absent: (i) a misstatement by the Indemnitee
of a material fact, or an omission of a material fact
necessary to make the Indemnitee's statement not materially
misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification
under applicable law. Such sixty (60)-day period may be
extended for a reasonable time, not to exceed an additional
thirty (30) days, if the person or entity making said
determination in good faith requires additional time for the
obtaining or evaluating of documentation and/or information
relating thereto. The foregoing provisions of this paragraph
7(B) shall not apply: (i) if the determination of entitlement
to indemnification is to be made by the shareholders and if
within fifteen (15) days after receipt by EQR of the request
for such determination the Board of Trustees resolves to
submit such determination to the shareholders for
consideration at an annual or special meeting thereof to be
held within seventy-five (75) days after such receipt and such
determination is made at such meeting, or (ii) if the
determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to paragraph 6(B) of this
Agreement.
(C) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement, or conviction,
or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of
itself adversely affect the right of the Indemnitee to
indemnification.
8. REMEDIES
(A) In the event that: (i) a determination is made that the
Indemnitee is not entitled to indemnification under this
Agreement, or (ii) advancement of Expenses is not timely made
pursuant to this Agreement, or (iii) payment of
indemnification due the Indemnitee under this Agreement is not
timely made, the Indemnitee shall be entitled to an
adjudication in an appropriate court of competent jurisdiction
of such Indemnitee's entitlement to such indemnification or
advancement of Expenses.
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(B) In the event that a determination shall have been made
pursuant to this Agreement that the Indemnitee is not entitled
to indemnification, any judicial proceeding commenced pursuant
to this paragraph 8 shall be conducted in all respects as a de
novo trial, on the merits and the Indemnitee shall not be
prejudiced by reason of that adverse determination. In any
judicial proceeding or arbitration commenced pursuant to this
paragraph 8, EQR shall have the burden of proving that the
Indemnitee is not entitled to indemnification or advancement
of Expenses, as the case may be.
(C) If a determination shall have been made or deemed to have been
made pursuant to this Agreement that the Indemnitee is
entitled to indemnification, EQR shall be bound by such
determination in any judicial proceeding commenced pursuant to
this paragraph 8, absent: (i) a misstatement by the Indemnitee
of a material fact, or an omission of a material fact
necessary to make the Indemnitee's statement not materially
misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(D) EQR shall be precluded from asserting in any judicial
proceeding commenced pursuant to this paragraph 8 that the
procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such court
that EQR is bound by all the provisions of this Agreement.
(E) In the event that the Indemnitee, pursuant to this paragraph
8, seeks a judicial adjudication of such Indemnitee's rights
under, or to recover damages for breach of, this Agreement, if
successful in whole or in part, the Indemnitee shall be
entitled to recover from EQR, and shall be indemnified by EQR
against, any and all Expenses actually and reasonably incurred
by such Indemnitee in such judicial adjudication.
9. ESTABLISHMENT OF TRUST
In the event of a Change in Control, EQR shall, upon written request by
the Indemnitee, create a trust for the benefit of the Indemnitee
("Trust") and from time-to-time upon written request by the Indemnitee,
shall fund such Trust in an amount sufficient to satisfy any and all
Expenses, judgments, penalties, fines and settlement amounts actually
and reasonably incurred by or on behalf of such Indemnitee or claimed,
reasonably anticipated or proposed to be paid in accordance with the
terms of this Agreement. The amount to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by
Independent Counsel. The terms of the Trust shall provide that upon a
Change in Control: (i) the Trust shall not be revoked or the principal
thereof invaded, without the prior written consent of the Indemnitee,
(ii) the trustee of the Trust ("Trustee") shall advance, within two
business days of a request by the Indemnitee and in accordance with
paragraph 5 of this Agreement, any and all
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Expenses to the Indemnitee, (iii) the Trust shall continue to be funded
by EQR in accordance with the funding obligation set forth above, (iv)
the Trustee shall promptly pay to the Indemnitee all amounts for which
the Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in such Trust
shall revert to EQR upon a final determination by Independent Counsel
that the Indemnitee has been fully indemnified under the terms of this
Agreement. The Trustee shall be chosen by the Indemnitee and agreed to
by EQR. Nothing in this Section 9 shall relieve EQR of any of its
obligations under this Agreement.
10. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE SUBROGATION
(A) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee may at
any time be entitled under applicable law, the Declaration of
Trust, EQR's Bylaws, any agreement, a vote of shareholders or
a resolution of the Board of Trustees, or otherwise. No
amendment, alteration or repeal of this Agreement or any
provision hereof shall be effective as to the Indemnitee with
respect to any action taken or omitted by the Indemnitee as a
member of the Board of Trustees prior to such amendment,
alteration or repeal.
(B) To the extent that EQR maintains an insurance policy or
policies providing liability insurance for trustees of EQR,
the Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of
the coverage available and upon any "Change in Control" EQR
shall obtain continuation and/or "tail" coverage for the
Indemnitee to the maximum extent obtainable at such time.
(C) In the event of any payment under this Agreement, EQR shall be
subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all papers
required and take all actions necessary to secure such rights,
including execution of such documents as are necessary to
enable EQR to bring suit to enforce such rights.
(D) EQR shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to
the extent that the Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement,
or otherwise.
11. CONTINUATION OF INDEMNITY
All agreements and obligations of EQR contained herein shall continue
during the period the Indemnitee is an officer or a member of the Board of
Trustees of EQR and shall continue thereafter so long as the Indemnitee shall be
subject to any threatened, pending or completed Proceeding by reason of such
Indemnitee's
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Corporate Status and during the period of statute of limitations for any act or
omission occurring during the Indemnitee's term of Corporate Status. No legal
action shall be brought and no cause of action shall be asserted by or on behalf
of EQR against the Indemnitee, the Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two (2) years from the
date of accrual of such cause of action, and any claim or cause of action of EQR
shall be extinguished and deemed released unless asserted by the timely filing
of a legal action within such two (2) 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. This Agreement shall be binding upon
EQR and its successors and assigns and shall inure to the benefit of the
Indemnitee and such Indemnitee's heirs, executors and administrators.
12. SEVERABILITY
If any provision or provisions of this Agreement shall be held to be
invalid, illegal, or unenforceable for any reason whatsoever, (i) the validity,
legality, and enforceability of the remaining provisions of this Agreement
(including, without limitation, each portion of any paragraph 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 (ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
paragraph 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 provisions held invalid, illegal, or unenforceable.
13. EXCEPTIONS TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES
Notwithstanding any other provisions of this Agreement, the Indemnitee
shall not be entitled to indemnification or advancement of Expenses under this
Agreement: (i) with respect to any Proceeding initiated by such Indemnitee
against EQR other than a proceeding commenced pursuant to paragraph 8, or (ii)
with respect to any Proceeding in which such Indemnitee's act or omission was
material to the cause of action adjudicated and was committed in bad faith or
was the result of active and deliberate dishonesty, or (iii) if the Indemnitee
actually received an improper personal benefit in money, property, or services.
14. HEADINGS
The headings of the paragraph of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.
15. MODIFICATION AND WAIVER
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No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both of the parties 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.
16. NOTICE BY THE INDEMNITEE
The Indemnitee agrees promptly to notify EQR in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information,
or other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.
17. NOTICES
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i) delivered
by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed, if so delivered or mailed, as the case may be, to the
following addresses:
If to the Indemnitee, to the address set forth in the records of EQR.
If to EQR, to: Equity Residential Properties Trust
Two North Riverside Plaza, Suite 450
Chicago, Illinois 60606
Attn.: General Counsel
or to such other address as may have been furnished to the Indemnitee by EQR or
to EQR by the Indemnitee, as the case may be.
18. GOVERNING LAW
The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EQUITY RESIDENTIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By:
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Its:
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[[Name]], an individual
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