Document:

EXHIBIT 10.4

 

GOVERNANCE RIGHTS AGREEMENT

 

by and among

 

Starwood Capital Group Global, L.P.,

 

Waypoint Real Estate Group Holdco, LLC and

 

Starwood Waypoint Residential Trust

 

 

Dated as of January 31, 2014

 

 

GOVERNANCE RIGHTS AGREEMENT

 

This GOVERNANCE RIGHTS AGREEMENT, dated as of January 31, 2014, is entered into by and among Waypoint Real Estate Group Holdco, LLC (“Waypoint Holdco”), Starwood Waypoint Residential Trust (“SRP”) and Starwood Capital Group Global, L.P. (“SCG”).

 

RECITALS

 

WHEREAS, SCG, SWAY Management LLC (“SRP Manager”) and Waypoint Holdco have entered into a transaction whereby SRP Manager acquired the operating company platform previously operated by Waypoint Holdco and its Affiliates concurrently with the completion of the Spin-Off (as defined below); and

 

WHEREAS, the Parties desire to memorialize their respective governance rights and certain obligations with respect to SRP.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and agreements hereinafter set forth, the Parties hereto hereby agree as follows:

 

ARTICLE 1.

 

Definitions

 

Section 1.1                                    The following terms used in this Agreement shall have the following meanings.

 

“Affiliate” means (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person, (ii) any executive officer or general partner of such other Person, (iii) any member of the board of directors, board of trustees or board of managers (or bodies performing similar functions) of such Person, and (iv) any legal entity for which such Person acts as an executive officer or general partner.

 

“Agreement” means this Governance Rights Agreement, as amended, supplemented or otherwise modified from time to time.

 

“Distribution Date” means the distribution date of the Spin-Off.

 

“Governing Instruments” means, with regard to any entity, the articles of incorporation or certificate of incorporation and bylaws in the case of a corporation, the partnership agreement in the case of a general or limited partnership, the certificate of formation and operating agreement in the case of a limited liability company, the trust instrument in the case of a trust, or similar governing documents in each case as amended.

 

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“Independent Trustee” means a member of the SRP Board who is “independent” in accordance with the rules of the NYSE or such other securities exchange on which the common shares of SRP are listed.

 

“NYSE” means The New York Stock Exchange.

 

“Parties” means, collectively, Waypoint Holdco, SRP and SCG.

 

“Person” means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal, state, county or municipal government or any bureau, department or agency thereof or any other legal entity and any fiduciary acting in such capacity on behalf of the foregoing.

 

“Spin-Off” means the distribution of common shares of SRP by Starwood Property Trust, Inc. to the holders of its outstanding shares of common stock pursuant to SRP’s Registration Statement on Form 10 (No. 001-36163).

 

“SRP Board” means the board of trustees of SRP.

 

Section 1.2                                    Interpretation.

 

As used herein, “calendar quarters” shall mean the period from January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1 to December 31 of the applicable year.  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.  The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The words include, includes and including shall be deemed to be followed by the phrase “without limitation.”  Any definition of or reference to any agreement, instrument, document, statute or regulation herein shall be construed as referring to such agreement, instrument, document, statute or regulation as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein).  This Agreement is among financially sophisticated and knowledgeable parties and is entered into by the Parties in reliance upon the economic and legal bargains contained herein and shall be interpreted and construed in a fair and impartial manner without regard to such factors as the Party who prepared, or cause the preparation of, this Agreement or the relative bargaining power of the Parties.

 

ARTICLE 2.

 

Board of Trustees of SRP

 

Section 2.1                                    Size of SRP Board.  From and after the date of this Agreement and until the termination hereof, each of SCG and Waypoint Holdco shall vote all of the voting securities of SRP over which such party has voting control and shall take all other reasonably necessary or desirable actions within its control (whether in its capacity as a shareholder, trustee, member of a committee of the SRP Board or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written

 

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consents in lieu of meetings), and SRP shall take all reasonably necessary or desirable actions within its control (including, without limitation, calling special SRP Board and shareholder meetings), so that the number of trustees on the SRP Board shall be established at, and shall remain during the term of this Agreement fixed at, nine (9) trustees.

 

Section 2.2                                    Composition of the SRP Board.  Each of SCG and Waypoint Holdco shall vote all of the voting securities of SRP over which such party has voting control and shall take all other reasonably necessary or desirable actions within its control (whether in its capacity as a shareholder, trustee, member of a committee of the SRP Board or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and SRP shall take all reasonably necessary or desirable actions within its control (including, without limitation, calling special SRP Board and shareholder meetings), so that from and after the date of this Agreement and until the termination hereof, the following nine (9) persons shall constitute the SRP Board:

 

(a)                                 two individuals designated by SCG, who may be affiliates of Starwood Property Trust, Inc. or SCG at the time of any such nomination;

 

(b)                                 two individuals designated by Waypoint Holdco, who may be affiliates of Waypoint Holdco’s equity holders at the time of any such nomination;

 

(c)                                  four individuals designated by SCG, each of whom shall qualify as Independent Trustees; and

 

(d)                                 one individual designated by Waypoint Holdco, who shall qualify as an Independent Trustee.

 

Section 2.3                                    Chairman of the SRP Board.  SCG shall have the right to designate one member of the SRP Board as the Chairman of the SRP Board.  SCG and Waypoint Holdco hereto agree to instruct their respective designees on the SRP Board to take all reasonably necessary or desirable actions within his or her control to elect the Chairman of the SRP Board as designated by SCG.

 

Section 2.4                                    Resignation; Removal of Trustees.

 

(a)                                 In the event that any trustee ceases to serve as a member of the SRP Board during his or her term of office, whether due to such member’s death, disability, resignation or removal, then (i) the Person or Persons entitled to designate the trustee who caused the vacancy shall have the exclusive right (vis-à-vis the SRP Board, any committee of the SRP Board, or any other party hereto) to nominate an alternate candidate for the vacated seat; or (ii) if no Person was entitled to designate such trustee, the resulting vacancy shall be filled by the shareholders of SRP in accordance with the Governing Instruments of SRP.

 

(b)                                 Unless required by applicable law, SCG and Waypoint Holdco shall not take any action for the purpose of removing a trustee from the SRP Board without the written consent of the Person entitled to designate such trustee.

 

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Section 2.5                                    Fiduciary Duties.  Notwithstanding anything contained in this Agreement to the contrary, if the trustees of the SRP Board hereto determine in good faith, after consultation with outside legal counsel, that any action or restriction on any action required by this Article 2 could reasonably constitute a violation of the trustees’ fiduciary duties or other obligations under applicable laws, rules or regulations, then, such action or restriction on such action shall not be required pursuant to this Agreement until such time, if any, as such action or restriction on such action could no longer reasonably constitute a violation of such duties or obligations.

 

ARTICLE 3.

 

Officers

 

Section 3.1                                    Officers.  The initial officers of SRP immediately following the Distribution Date are set forth on Schedule 1 hereto.  The officers of SRP shall hold their respective offices until their respective successors have been elected or appointed or until their earlier death, resignation or removal by the SRP Board.

 

ARTICLE 4.

 

Term; Termination

 

Section 4.1                                    Term.  This Agreement shall become effective on the Distribution Date and shall continue in operation, unless terminated in accordance with the terms hereof.

 

Section 4.2                                    Termination.

 

(a)                                 This Agreement shall remain in full force and effect in perpetuity unless terminated in accordance with its terms.

 

(b)                                 This Agreement may only be terminated: (i) upon the mutual written agreement of each of the Parties; (ii) by SCG in the event Waypoint Holdco materially breaches the terms of this Agreement and fails to cure such breach within thirty (30) days after receiving written notice thereof; (iii) by Waypoint Holdco in the event SCG materially breaches the terms of this Agreement and fails to cure such breach within thirty (30) days after receiving written notice thereof; or (iv) by SCG or SRP if at any time after the date hereof two or more of Gary Beasley, Doug Brien and Colin Wiel cease to serve as officers and employees of either SRP or SRP Manager. The termination rights set forth in this Agreement are in addition to any rights available at law or equity (other than rights to terminate or rescind this Agreement).

 

ARTICLE 5.

 

Equitable Adjustment

 

Section 5.1                                    Equitable Adjustments.  The Parties acknowledge and agree that this Agreement sets forth general principles and intent with respect to the Parties’ respective rights and obligations relating to the governance of SRP, and may not anticipate or appropriately contemplate all facts and circumstances that may arise after the date hereof.  Accordingly, the

 

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Parties acknowledge and agree that if SRP determines, in its reasonable judgment, that performance of any of the obligations set forth in this Agreement would violate any applicable law or any rule of any securities exchange on which the securities of SRP are traded, the Parties shall negotiate in good faith to amend or waive the applicable provisions of this Agreement in a manner that preserves as closely as possible the principles and intent set forth in this Agreement without violating such  law or rule.

 

ARTICLE 6.

 

Miscellaneous

 

Section 6.1                                    Notices.  All notices, requests and demands to or upon the respective Parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by facsimile transmission with telephonic confirmation or (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective Parties hereto in accordance with this Section 6.1):

 

	
SCG:
    	
Starwood   Capital Group
    
	
 
    	
591   West Putnam Avenue
    
	
 
    	
Greenwich,   Connecticut 06830
    
	
 
    	
Attention:   General Counsel
    
	
 
    	
Fax:   (203) 422-7899
    
	
 
    	
 
    
	
with   a copy to:
    	
Sidley   Austin LLP
    
	
 
    	
One   South Dearborn Street
    
	
 
    	
Chicago, Illinois   60603
    
	
 
    	
Attention:   Michael A. Gordon, Esq.
    
	
 
    	
                  Jonathan C. Babb, Esq.
    
	
 
    	
Fax:   (312) 853-7036
    
	
 
    	
 
    
	
Waypoint   Holdco:
    	
Waypoint   Real Estate Group Holdco, LLC
    
	
 
    	
1999   Harrison Street
    
	
 
    	
Oakland,   California 94612
    
	
 
    	
Attention:   Tamra Browne, CLO
    
	
 
    	
Fax:   (510) 550-2828
    
	
 
    	
 
    
	
with   a copy to:
    	
Latham &   Watkins LLP
    
	
 
    	
650   Town Center Drive, 20th Floor
    
	
 
    	
Costa   Mesa, California 92626
    
	
 
    	
Attention:   William Cernius, Esq.
    
	
 
    	
Fax:   (714) 755-8290
    

 

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SRP:
    	
Starwood   Waypoint Residential Trust
    
	
 
    	
1999   Harrison Street
    
	
 
    	
Oakland,   CA 94612
    
	
 
    	
Attention:   Tamra Browne
    
	
 
    	
Fax:   (510) 550-2828
    

 

Section 6.2                                    Binding Nature of Agreement; Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and assigns as provided herein.

 

Section 6.3                                    Integration.  This Agreement contains the entire agreement and understanding among the Parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

 

Section 6.4                                    Amendments.  This Agreement, nor any terms hereof, may not be amended, supplemented or modified except in an instrument in writing executed by the Parties hereto.

 

Section 6.5                                    GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MARYLAND, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, EXCEPT THAT MATTERS RELATING TO THE FIDUCIARY DUTIES OF THE GOVERNING BODIES OF EACH PARTY AND INTERNAL CORPORATE AFFAIRS OF EACH PARTY SHALL BE GOVERNED BY THE LAWS OF THE APPLICABLE STATE OF ORGANIZATION OF SUCH PARTY.  SUBJECT TO SECTION 6.12, EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MARYLAND AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.

 

Section 6.6                                    WAIVER OF JURY TRIAL.  EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

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Section 6.7                                    No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of a Party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Section 6.8                                    Costs and Expenses.  Each Party hereto shall bear its own costs and expenses (including the fees and disbursements of counsel and accountants) incurred in connection with the negotiations and preparation of and the closing under this Agreement, and all matter incident thereto.

 

Section 6.9                                    Section Headings.  The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.

 

Section 6.10                             Counterparts.  This Agreement may be executed by the Parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

Section 6.11                             Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 6.12                             Dispute Resolution.

 

(a)                                 All disputes, controversies, and disagreements arising out of or relating to this Agreement, interpretation or construction of this Agreement, any breach of or default under this Agreement, or the relationship between and among the Parties by virtue of this Agreement (referred to collectively as a “Dispute”) shall be resolved in accordance with this Section 6.12; provided, however, that the following shall not be subject to the provisions of this Section 6.12 and nothing herein shall be construed so as to prevent any Party from pursuing:

 

(1)                                 any action, claim or cause of action that the Parties may have against each other that arises from or is related to any claim or cause of action asserted or made by a person who is not a party to this Agreement (including, without limitation, any cross claims, counterclaims, or claims for indemnification or contribution), in which case the Parties reserve all rights that they may have against each other;

 

(2)                                 any action or claim for injunctive relief, whether by way of temporary restraining order, preliminary injunction, and/or permanent injunction, or other equitable remedies in which case the Parties shall have the right to proceed by way of litigation through judicial proceedings;

 

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(3)                                 any action to enforce the provisions of this Section 6.12.

 

(b)                                 All Disputes shall be resolved by final and binding arbitration  in accordance with the United States Arbitration Act (9 U.S.C. 1 et seq.) and the then existing rules (“Rules”) of practice and procedure of the Judicial Arbitration & Mediation Services (“JAMS”), except to the extent such JAMS Rules are inconsistent with the provisions of this Agreement.  The arbitration process shall be as follows:

 

(1)                                 Any Party may commence an arbitration proceeding in accordance with this Section 6.12(b), and shall simultaneously notify the other Parties in writing of such commencement.  The arbitration shall be conducted by one (1) neutral arbitrator, to be mutually selected by the Parties within five (5) business days after notice from one party to the other. If the Parties are unable to mutually select such arbitrator within such five (5) business day period, then either Party may request that JAMS appoint an arbitrator. In connection with any such request, a party may propose one or more persons to act as the arbitrator, provided that the arbitrator shall be independent and shall be a licensed attorney with at least ten (10) years’ experience in connection with voting agreements and similar instruments.  After the appointment of the arbitrator, the parties shall not have the right to take depositions and to obtain discovery by other means regarding the subject matter of the arbitration unless the arbitrator determines, for good cause shown, that discovery beyond the exchange of documents is necessary in the proceeding, at which point the arbitrator shall establish the number and extent of depositions and the extent of any other requested discovery.  The arbitrator shall have the power to decide all other procedural issues, including the following: the date, time and place of any hearing; the form, timing and subject matter of any pre-hearing documents to be submitted by the parties; and any evidentiary or procedural issues that may arise at or in connection with any arbitration hearing.  The arbitrator shall follow the law in reaching a reasoned decision and shall deliver a written opinion setting forth findings of fact, conclusions of law and the rationale for the decision.

 

(2)                                 The arbitration proceeding shall be held in New York, New York.  Each Party shall bear its own expenses (including the fees and expenses of its attorneys, consultants and witnesses) in connection with the arbitration proceeding, and each Party shall, on an ongoing basis, pay one-half (1⁄2) the fees and expenses of JAMS and the arbitrator.

 

(3)                                 The final decision of the arbitrator shall be the sole and exclusive remedy of the Parties, shall be final and shall be fully and irrevocably accepted by the Parties.  The prevailing Party may enforce such decision against the other Party in a court having jurisdiction in accordance with Sections 6.5 and 6.6.  In any arbitration hereunder, the arbitrator will not have the right to modify the terms and conditions of this Agreement.  As a result, the rights and obligations of the Parties will be determined in accordance with the terms and conditions of this Agreement, and any decision will be only in accordance with the terms and conditions of this Agreement.  The Parties will exert best efforts to have the

 

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decision rendered within ninety (90) days after a Party commences the arbitration proceeding.

 

(c)                                  Except as necessary in court proceedings to enforce the arbitration provisions in this Section 6.12 or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder, including all evidence taken, without the prior written consent of the Parties.

 

(d)                                 In the event of any litigation arising under Section 6.12(a)(1) — (3), the prevailing Party shall be entitled to recover their costs and expenses, including, without limitation, reasonable attorneys’ fees.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, each of the Parties hereto has executed this Management Agreement as of the date first written above.

 

	
 
    	
Starwood   Capital Group Global, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ellis F. Rinaldi
    
	
 
    	
 
    	
Name:   Ellis F. Rinaldi
    
	
 
    	
 
    	
Title:   Executive Vice President, SCGG GP, L.L.C., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Waypoint   Real Estate Group Holdco, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gary Beasley
    
	
 
    	
 
    	
Name:   Gary Beasley
    
	
 
    	
 
    	
Title:   Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Starwood   Waypoint Residential Trust
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Andrew Sossen
    
	
 
    	
 
    	
Name:   Andrew Sossen
    
	
 
    	
 
    	
Title:   General Counsel and Secretary
    

 

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Schedule 1

 

Officers of SRP

 

	
Name
    	
 
    	
Position Held
    
	
Gary   M. Beasley
    	
 
    	
Co-Chief   Executive Officer
    
	
Douglas   R. Brien
    	
 
    	
Co-Chief   Executive Officer
    
	
Colin   T. Wiel
    	
 
    	
Chief   Investment Officer
    
	
Nina   A. Tran
    	
 
    	
Chief   Financial Officer
    
	
Scott   T. Gable
    	
 
    	
Chief   Operating Officer
    
	
S.   Ali Nazar
    	
 
    	
Chief   Technology Officer
    
	
Tamra   D. Browne
    	
 
    	
General   CounselEXHIBIT 10.5

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT, dated as of                               , 2014 (this “Agreement”), is made by and between Starwood Waypoint Residential Trust, a Maryland real estate investment trust (the “Company”), and                                                      (“Indemnitee”).

 

WHEREAS, the Articles of Amendment and Restatement, as amended and supplemented from time to time, of the Company (the “Charter”) and the Bylaws, as amended and supplemented from time to time, of the Company (the “Bylaws”) provide for indemnification by the Company of its trustees and officers as provided therein, and Indemnitee has been serving and continues to serve as a trustee and/or officer of the Company partly in reliance on such provision;

 

WHEREAS, to provide Indemnitee with additional contractual assurance of protection against personal liability in connection with certain proceedings described below, the Company desires to enter into this Agreement;

 

WHEREAS, in order to induce Indemnitee to serve or continue to serve as a trustee and/or officer of the Company and in consideration of Indemnitee’s so serving, the Company desires to indemnify Indemnitee and to make arrangements pursuant to which Indemnitee may be advanced or reimbursed expenses incurred by Indemnitee in certain proceedings described below, according to the terms and conditions set forth below;

 

NOW, THEREFORE, the Company and Indemnitee, intending to be legally bound, hereby agree as follows:

 

1.                                      (a)                                 Third-Party Proceedings.  The Company shall indemnify Indemnitee to the maximum extent permitted by Maryland law, except as otherwise provided in Section 3 of this Agreement, if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed suit, action, claim, proceeding, arbitration or alternative dispute resolution mechanism, investigation, administrative hearing, whether civil, criminal, administrative or investigative (any such suit, action, proceeding, arbitration or alternative dispute resolution mechanism, investigation, administrative hearing being referred to herein as a “Proceeding”) (other than an action by or in the right of the Company or any Subsidiary (as defined below) of the Company) by reason of the fact that Indemnitee is or was an officer, trustee, employee or agent of the Company or any subsidiary or affiliated entity (each, a “Subsidiary”) of the Company, by reason of any action or inaction on the part of Indemnitee while an officer, trustee, employee or agent of the Company or any Subsidiary of the Company or by reason of the fact that Indemnitee is or was serving at the request of the Company as an officer, trustee, employee or agent of another Person (as defined in Section 5(d)), against expenses (including reasonable attorneys’ fees, investigation expenses, expert witnesses’ and other expenses), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with the defense and/or settlement of such Proceeding (collectively, “Expenses”) if Indemnitee (i) acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its shareholders, (ii) did

 

 

not actually receive an improper personal benefit in money, property or services and (iii) with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

 

(b)                                 Proceedings by or in the Right of the Company or any Subsidiary.  The Company shall indemnify Indemnitee to the maximum extent permitted by Maryland law, except as otherwise provided in Section 3 of this Agreement, if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed Proceeding by or in the right of the Company or any Subsidiary of the Company by reason of the fact that Indemnitee is or was an officer, trustee, employee or agent of the Company or any Subsidiary of the Company or by reason of the fact that Indemnitee is or was serving at the request of the Company as an officer, trustee, employee or agent of another Person, against Expenses in each case to the extent actually and reasonably incurred by Indemnitee if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its shareholders, provided that no indemnification shall be made in respect of any Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company and its shareholders unless and only to the extent that the Circuit Court of the State of Maryland, or the court in which such Proceeding shall have been brought or is pending, shall determine that in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for expenses, and then only to the extent that the court shall determine.

 

(c)                                  Selection of Counsel.  If the Company shall be obligated under Section 1(a) or (b) hereof to pay Expenses of Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee (who shall not unreasonably withhold such approval), 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 Company, 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 counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized in writing 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 and shall have notified the Company in writing thereof, (C) Indemnitee shall have reasonably concluded that there may be a conflict of interest between Indemnitee and other indemnitees of the Company being represented by counsel retained by the Company in the same Proceeding and shall have notified the Company in writing thereof, or (D) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding within a reasonable time frame, then the reasonable fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

 

2.                                      Contribution.  If, when Indemnitee has met the applicable standard of conduct, the indemnification provisions set forth in Section 1 should, under applicable law, be to any extent unenforceable, then the Company agrees that it shall be treated as though it is or was a party to the threatened, pending or completed Proceeding in which Indemnitee is or was involved and that the Company shall contribute to the amounts paid or payable by Indemnitee as a result of Expenses in third-party Proceedings in such proportion as is appropriate to reflect the relative

 

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fault of the Company on the one hand and Indemnitee on the other in connection with such action or inaction, or alleged action or inaction, as well as any other relevant equitable considerations.

 

For purposes of this Section 2, the relative fault shall be determined by reference to, among other things, the fault of the Company and all of its trustees, officers, employees and agents (other than Indemnitee), as a group and treated as one entity, and such group’s relative intent, knowledge, access to information and opportunity to have altered or prevented the action or inaction, or alleged action or inaction, forming the basis for the threatened, pending or contemplated Proceeding, and Indemnitee’s relative fault in light of such factors on the other hand.

 

3.                                      Limitations to Rights of Indemnification and Advancement of Expenses.  Except as otherwise provided in Section 9 of this Agreement, Indemnitee shall not be entitled to indemnification or advancement of Expenses (collectively, “Indemnified Amounts”) under this Agreement:

 

(a)                                 with respect to any Proceeding initiated, brought or made by or on behalf of Indemnitee (i) against the Company, unless a Change in Control (as defined in Section 3(h) of this Agreement) shall have occurred, or (ii) against any Person other than the Company, unless approved in advance by the Board of Trustees of the Company (the “Board”);

 

(b)                                 on account of any Proceeding in which it shall be determined by final judgment by a court having jurisdiction in the matter that Indemnitee intentionally caused or intentionally contributed to the injury complained of, with the knowledge that such injury would occur;

 

(c)                                  on account of Indemnitee’s conduct which shall be determined by final judgment by a court having jurisdiction in the matter that Indemnitee was knowingly fraudulent, deliberately dishonest or engaged in willful misconduct or that Indemnitee received an improper personal benefit in money, property or services;

 

(d)                                 for any Indemnified Amounts incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to enforce or interpret this Agreement, to the extent that a court of competent jurisdiction determines that any of the material assertions made by Indemnitee in such Proceeding was not made in good faith or was frivolous;

 

(e)                                  for any Indemnified Amounts which have been paid to Indemnitee by an insurance carrier under a policy of officers’ and trustees’ liability insurance maintained by the Company;

 

(f)                                   if the Company has a class of equity securities registered pursuant to Section 12 of the Exchange Act (as hereinafter defined), for any Indemnified Amounts or the payment of profits 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 (the “Exchange Act”), or any similar successor statute; or

 

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(g)                                  if it shall be determined by final judgment by a court having jurisdiction in the matter that such indemnification is not lawful.

 

(h)                                 “Change in Control” means the occurrence of any of the following events:

 

(i)                                     the Company is merged, consolidated or reorganized into or with another corporation or other entity and, as a result of such merger, consolidation or reorganization, less than a majority of the combined voting power of the then-outstanding securities of such corporation or entity immediately after such transaction are held in the aggregate by the holders of voting stock immediately prior to such transaction;

 

(ii)                                  the Company sells or otherwise transfers all or substantially all of its assets to another corporation or other entity in which, after giving effect to such sale or transfer, the holders of voting stock of the Company immediately prior to such sale or transfer hold in the aggregate less than a majority of the combined voting power of the then-outstanding securities of such other corporation;

 

(iii)                               if the Company has a class of equity securities registered pursuant to Section 12 of the Exchange Act, there is a report filed on Schedule 13D or Schedule TO (or any successor schedule, form or report or item therein), each as promulgated pursuant to the Exchange Act, disclosing that any person or entity, other than any shareholder of the Company (and its affiliates) owning 10% or more of the Company’s voting stock on the date hereof has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing 50% or more of the combined voting power of the Company’s voting stock; or

 

(iv)                              if, during any period of two (2) consecutive years, individuals who at the beginning of any such period constitute the Board cease for any reason to constitute at least a majority thereof; provided, however, that for purposes of this clause (iv) each trustee of the Company who is first elected, or first nominated for election by the Company’s shareholders, by a vote of at least a majority of the trustees of the Company (or a committee of the Board) then still in office who were trustees of the Company at the beginning of any such period shall be deemed to have been a trustee of the Company at the beginning of such period.

 

Notwithstanding the provisions of clause (iii) above, unless otherwise determined in the specific case by majority vote of the Board, a “Change in Control” shall not be deemed to have occurred solely because the Company, any Subsidiary or any employee stock ownership plan or other employee benefit plan of the Company or any Subsidiary either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule TO or Schedule 14A (or any successor schedule, form or report or item therein) under the Exchange Act disclosing beneficial ownership by it of shares of voting stock of the Company, whether in excess of 50% or otherwise.

 

(i)                                     “Affiliate” means (i) any person directly or indirectly controlling, controlled by or under common control with any such other person, (ii) any officer or general

 

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partner of such other person, and (iii) any legal entity for which such person acts an executive officer or general partner.

 

4.                                      Procedure for Determination of Entitlement to Indemnification.

 

(a)                                 To obtain indemnification under this Agreement, Indemnitee shall submit to the Secretary of the Company a written request for payment of the appropriate Indemnified Amounts, including with such request such documentation and information as is reasonably available to Indemnitee and reasonably necessary to determine whether and to what extent Indemnitee is entitled to such Indemnified Amounts.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

 

(b)                                 The Company shall pay Indemnitee the appropriate Indemnified Amounts unless it is established that Indemnitee has not met any applicable standard of conduct set forth in the Charter, the Bylaws or Maryland law or is not otherwise entitled to receive the Indemnified Amounts under this Agreement.  For purposes of determining whether Indemnitee is entitled to Indemnified Amounts, in order to deny indemnification to Indemnitee the Company has the burden of proof in establishing that Indemnitee did not meet the applicable standard of conduct.  In this regard, a termination of any Proceeding by judgment, order or settlement does not create a presumption that Indemnitee did not meet the requisite standard of conduct; provided, however, that the termination of any criminal proceeding by conviction, or a pleading of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that Indemnitee did not meet the applicable standard of conduct.

 

(c)                                  Any determination that Indemnitee has not met the applicable standard of conduct required to qualify for indemnification or is not otherwise entitled to receive the Indemnified Amounts under this Agreement shall be made either (i) by the Board by a majority vote of a quorum consisting of trustees who were not parties of such Proceeding or (ii) by Independent Counsel (as defined below); provided that the manner in which (and, if applicable, the Independent Counsel by which) the right to indemnification is to be determined shall be approved in advance in writing by both the highest ranking executive officer of the Company who is not party to such action (sometimes hereinafter referred to as the “Senior Officer”) and by Indemnitee.  In the event that such parties are unable to agree on the manner in which any such determination is to be made, such determination shall be made by Independent Counsel retained by the Company for such purpose, provided that such counsel is approved in advance in writing by both the Senior Officer and Indemnitee.  The reasonable fees and expenses of such Independent Counsel in connection with making said determination contemplated hereunder shall be paid by the Company, and, if requested by such counsel, the Company shall give such counsel an appropriate written agreement with respect to the payment of their reasonable fees and expenses and such other matters as may be reasonably requested by such counsel.  Indemnitee may make a written objection to the identity of the Independent Counsel so selected by the Company.  Such objection may be asserted only on the ground that the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit.  Either the Company or Indemnitee may petition a court in the State of Maryland for resolution of any such objection which shall have been made.

 

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The party with respect to whom an objection is favorably resolved shall be paid all reasonable fees and expenses incident to the procedures of this Section 4(c).  Upon the due commencement of any judicial proceeding pursuant to Section 11 of this Agreement, the Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

(d)                                 The Company will use its commercially reasonable efforts to conclude as soon as practicable any required determination pursuant to subsection (c) above and promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.  Indemnitee shall cooperate with the Person or Persons making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person or Persons upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination.  Payment of any applicable Indemnified Amounts will be made to Indemnitee within ten (10) days after any determination of Indemnitee’s entitlement to such payment.

 

(e)                                  Notwithstanding the foregoing, Indemnitee may, at any time after sixty (60) days after a claim for Indemnified Amounts has been filed with the Company (or upon receipt of written notice that a claim for Indemnified Amounts has been rejected, if earlier) and before three (3) years after a claim for Indemnified Amounts has been filed, petition a court of competent jurisdiction within the State of Maryland to determine whether Indemnitee is entitled to indemnification under the provisions of this Agreement, and such court shall thereupon have the exclusive authority to make such determination unless and until such court dismisses or otherwise terminates such action without having made such determination.  The court shall, as petitioned, make an independent determination of whether Indemnitee is entitled to indemnification as provided under this Agreement, irrespective of any prior determination made by the Board or Independent Counsel.  If the court shall determine that Indemnitee is entitled to indemnification as to any claim, issue or matter involved in the Proceeding with respect to which there has been no prior determination pursuant to this Agreement or with respect to which there has been a prior determination that Indemnitee was not entitled to indemnification hereunder, the Company shall pay Expenses actually and reasonably incurred by Indemnitee in connection with such judicial determination.

 

(f)                                   “Independent Counsel” means a law firm or a member of a law firm that neither at the time in question, nor in the five (5) years immediately preceding such time has been retained to represent (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification under this Agreement.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then prevailing under the laws of the State of Maryland, would be precluded from representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

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5.                                      Presumptions and Effect of Certain Proceedings.

 

(a)                                 In making a determination, with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 4 of this Agreement, and the Company shall bear the burden of proof to rebut that presumption in connection with the making by any Person or Persons of any determination contrary to that presumption.

 

(b)                                 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 Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company and its shareholders or, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(c)                                  Indemnitee’s conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in and beneficiaries of the plan shall be deemed to be conduct that Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its shareholders.

 

(d)                                 For purposes of any determination hereunder, Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and its shareholders or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action was based on (i) the records or books of account of the Company or another Person, including financial statements, (ii) information supplied to him by the officers of the Company or another Person in the course of their duties, (iii) the advice of legal counsel for the Company or another Person, or (iv) information or records given or reports made to the Company or another Person by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or another Person.  The term “Person” as used in this Agreement shall mean any other individual or corporation or any partnership, joint venture, trust, employee benefit plan or other entity or enterprise.

 

6.                                      Success on Merits or Otherwise.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding or in defense of any claim, issue or matter therein, he shall be indemnified against Expenses actually and reasonably incurred by him in connection with the investigation, defense, settlement or appeal thereof.  For purposes of this Section 6, the term “successful on the merits or otherwise” shall include, but not be limited to, (i) any termination, withdrawal or dismissal (with or without prejudice) of any Proceeding (or any claim, issue or matter therein) against Indemnitee without any express finding of liability or guilt against him, (ii) the expiration of 180 days after the making of any claim or threat of a Proceeding without the institution of the same and without any promise of payment or payment made to induce a

 

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settlement or (iii) the settlement of any Proceeding (or any claim, issue or matter therein) pursuant to which Indemnitee pays less than Ten Thousand Dollars ($10,000.00).

 

7.                                      Partial Indemnification.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses of Indemnitee in connection with any Proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

8.                                      Costs.  The Company shall also be solely responsible for paying (i) all reasonable expenses incurred by Indemnitee to enforce this Agreement, including, but not limited to, the costs incurred by Indemnitee to obtain court-ordered indemnification pursuant to Section 11, regardless of the outcome of any such application or proceeding, and (ii) all costs of defending any Proceedings challenging payments to Indemnitee under this Agreement.

 

9.                                      Advance of Expenses.

 

(a)                                 Indemnitee hereby is granted the right to receive in advance of a final, nonappealable judgment or other final adjudication of a Proceeding (a “Final Determination”) the amount of any Expenses incurred by Indemnitee in connection with any Proceeding (such amounts so expended or incurred being referred to as “Advanced Amounts”).

 

(b)                                 In making any written request for Advanced Amounts, Indemnitee shall submit to the Company a schedule setting forth in reasonable detail the dollar amount of Expenses expended or incurred and expected to be expended.  Each such listing shall be supported by the bill, agreement or other documentation relating thereto, each of which shall be appended to the schedule as an exhibit.  In addition, before Indemnitee may receive Advanced Amounts from the Company, Indemnitee shall provide to the Company (i) a written affirmation of Indemnitee’s good faith belief that the applicable standard of conduct set forth in the Charter, the MGCL and the Bylaws required for indemnification by the Company has been satisfied by Indemnitee, and (ii) a written undertaking by or on behalf of Indemnitee to repay the Advanced Amounts if it shall ultimately be determined that Indemnitee has not satisfied any applicable standard of conduct or is not otherwise entitled to receive indemnification under this Agreement.  The written undertaking required from Indemnitee shall be an unlimited general obligation of Indemnitee but need not be secured.  The Company shall pay to Indemnitee all Advanced Amounts within twenty (20) days after receipt by the Company of all information and documentation required to be provided by Indemnitee pursuant to this subsection.

 

10.                               Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of any event or occurrence related to the fact that Indemnitee is or was an officer, trustee, employee or agent of the Company or any Subsidiary of the Company, or is or was serving at the request of the Company as an officer, trustee, employee or agent of another Person, a witness in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

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11.                               Enforcement.

 

(a)                                 If a claim for indemnification or advancement of Expenses made to the Company pursuant to Section 4 or 9 is not timely paid in full to Indemnitee by the Company as required by Section 4 or 9, respectively, Indemnitee shall be entitled to seek judicial enforcement of the Company’s obligations to make such payment in an appropriate court of the State of Maryland or Illinois.  In the event that a determination is made that Indemnitee is not entitled to indemnification or advancement of Expenses hereunder, (i) Indemnitee may seek a de novo adjudication of Indemnitee’s entitlement to such indemnification or advancement by an appropriate court of the State of Maryland or Illinois; (ii) any such judicial proceeding shall not in any way be prejudiced by, and Indemnitee shall not be prejudiced in any way by, such adverse determination; and (iii) in any such judicial proceeding the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses under this Agreement.  Indemnitee shall commence a proceeding seeking an adjudication of Indemnitee’s right to indemnification or advancement of Expenses pursuant to the preceding sentence within six (6) months following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 11(a).

 

(b)                                 The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to the provisions of Section 11(a) that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.

 

(c)                                  In any action brought under this Section 11, it shall be a defense to a claim for indemnification (other than an action brought to enforce a claim for advancement of expenses) that Indemnitee has not met the standards of conduct which make it permissible under the Charter, the MGCL and the Bylaws for the Company to indemnify Indemnitee for the amount claimed.  The burden of proving such defense shall be on the Company.

 

12.                               Liability Insurance and Funding.  To the extent the Company maintains an insurance policy or policies providing trustees’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any trustee or officer of the Company.  If, at the time of the receipt of a notice of a claim pursuant to Section 4 hereof, the Company has trustees’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of any Proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.  The Company shall have no obligation to obtain or maintain such insurance.

 

13.                               Merger or Consolidation.  In the event that the Company shall be a constituent corporation in a merger, consolidation or other reorganization, the Company shall require as a condition thereto, (a) if it shall not be the surviving, resulting or acquiring corporation therein, the surviving, resulting or acquiring corporation to agree to indemnify Indemnitee to the full extent provided herein, and (b) whether or not the Company is the surviving, resulting or

 

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acquiring corporation therein, Indemnitee shall also stand in the same position under this Agreement with respect to the surviving, resulting or acquiring corporation as Indemnitee would have with respect to the Company if the Company’s separate existence had continued; provided, however, that in the event the surviving entity in any such merger or consolidation shall be formed in a state other than the State of Maryland under the MGCL or in Maryland under another statute and the laws of such other state or such statute provide greater rights of indemnification and advancement of Expenses than are provided under the MGCL or the law of Maryland, the Indemnitee shall have such rights to the extent they are greater as provided pursuant to the laws of such other state or such other statute.

 

14.                               Nondisclosure of Payments.  Except as expressly required by federal securities laws or other applicable laws or regulations or by judicial process, Indemnitee shall not disclose any payments made under this Agreement, whether indemnification or advancement of Expenses, unless prior written approval of the Company is obtained.

 

15.                               Nonexclusivity and Severability; Subrogation.

 

(a)                                 The right to indemnification and advancement of Expenses provided by this Agreement shall not be exclusive of any other rights to which Indemnitee may be entitled under the Charter, the Bylaws, the MGCL, Maryland law or any other statute, insurance policy, agreement, vote of shareholders of the Company or of the Board (or otherwise), both as to actions in his official capacity and as to actions in another capacity while holding such office, and shall continue after Indemnitee has ceased to be a trustee or officer of the Company and shall inure to the benefit of his heirs, executors and administrators; provided, however, that to the extent Indemnitee otherwise would have any greater right to indemnification and/or advancement of Expenses under any provision of the Charter, the Bylaws or any provision of the MGCL or Maryland law, Indemnitee shall be deemed to have such greater right pursuant to this Agreement; and, provided, further, that to the extent that any change is made to the MGCL or Maryland law (whether by legislative action or judicial decision), the Charter and/or the Bylaws that permits any greater right to indemnification and/or advancement of Expenses than that provided under this Agreement as of the date hereof, Indemnitee shall be deemed to have such greater right pursuant to this Agreement.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee prior to such amendment, alteration or repeal.

 

(b)                                 If any provision or provisions of this Agreement are 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, all portions of any provisions of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not themselves 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, all portions of any provisions of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

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(c)                                  In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of 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 the Company to bring suit to enforce such rights.

 

16.                               Notices.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressed, on the date of such receipt, of (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked.  Addresses for notice to either party are as shown on the signature page of this Agreement or as subsequently modified by written notice.

 

17.                               Mutual Acknowledgement.  Both the Company and Indemnitee acknowledge that in certain instances federal law or public policy may override applicable state law and prohibit the Company from indemnifying Indemnitee under this Agreement or otherwise.  For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws and federal legislation prohibits indemnification for certain ERISA violations.  Indemnitee understands and acknowledges that the Company shall not be required to provide indemnification or advance Expenses in violation of any law or public policy.

 

18.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without giving effect to principles of conflict of laws.

 

19.                               Consent to Jurisdiction.  The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the States of Maryland and Illinois for all purposes in connection with any action, suit or proceeding which arises out of or relates to this Agreement.

 

20.                               Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforcement is sought needs to be produced to evidence the existence of this Agreement.

 

21.                               Modification; Survival.  This Agreement may be modified only by an instrument in writing signed by both parties hereto.  The provisions of this Agreement shall survive the death, disability or incapacity of Indemnitee or the termination of Indemnitee’s service as a tustee or officer of the Company and shall inure to the benefit of Indemnitee’s heirs, executors and administrators.

 

22.                               Waiver.  Failure to insist upon strict compliance with any of the terms or provisions hereof shall not be deemed a waiver of such term or provision, nor shall any waiver or relinquishment of any right or remedy hereunder at any one or more times be deemed a waiver of such right or remedy at any other time or times.  Such waiver of any term or condition of this

 

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Agreement shall not affect any other term or condition of this Agreement which shall remain in full force and effect.

 

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the date first above written.

 

	
 
    	
INDEMNITEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
STARWOOD WAYPOINT RESIDENTIAL TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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