Exhibit 10.4
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this
“Agreement”) is made and entered into as of
June 24, 2009 (the “Effective Date”), by and
between Government Properties Income Trust, a Maryland real estate
investment trust (the “Company”), and Adam D. Portnoy
(“Indemnitee”).
WHEREAS, Indemnitee currently serves
as the President and a Managing Trustee of the Company and may, in
connection therewith, be subjected to claims, suits or proceedings
arising from such service; and
WHEREAS, as an inducement to
Indemnitee to continue to serve as such President and Managing
Trustee, the Company has agreed to indemnify and to advance
expenses and costs incurred by Indemnitee in connection with any
such claims, suits or proceedings, to the maximum extent permitted
by law as hereinafter provided; and
WHEREAS, the parties by this
Agreement desire to set forth their agreement regarding
indemnification and advance of expenses;
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
Section 1.
Definitions
. For purposes of this
Agreement:
(a)
“Change in Control”
means a change in control of the Company occurring after the
Effective Date of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, as amended
(the “Act”), whether or not the Company is then subject
to such reporting requirement; provided , however ,
that, without limitation, such a Change in Control shall be deemed
to have occurred if after the Effective Date (i) any
“person” (as such term is used in Sections
13(d) and 14(d) of the Act) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of all the
Company’s then-outstanding securities entitled to vote
generally in the election of trustees without the prior approval of
at least two-thirds of the members of the Board of Trustees of the
Company (the “Board of Trustees”) in office immediately
prior to such person attaining such percentage interest;
(ii) there occurs a proxy contest, or the Company is a party
to a merger, consolidation, sale of assets, plan of liquidation or
other reorganization not approved by at least two-thirds of the
members of the Board of Trustees then in office, as a consequence
of which members of the Board of Trustees in office immediately
prior to such transaction or event
constitute less than a majority of the Board of
Trustees thereafter; or (iii) during any period of two
consecutive years, other than as a result of an event described in
clause (a)(ii) of this Section 1 , individuals who
at the beginning of such period constituted the Board of Trustees
(including for this purpose any new trustee whose election or
nomination for election by the Company’s shareholders was
approved by a vote of at least two-thirds of the trustees then
still in office who were trustees at the beginning of such period)
cease for any reason to constitute at least a majority of the Board
of Trustees.
(b)
“Corporate Status” means
the status of a person who is or was a director, trustee, officer
or agent of the Company and the status of a person who, while a
director, trustee, officer or agent of the Company, is or was
serving at the request of the Company as a director, trustee,
officer or agent of another foreign or domestic real estate
investment trust, corporation, partnership, limited liability
company, joint venture, trust, other enterprise or employee benefit
plan.
(c)
“Disinterested Trustee”
means a trustee of the Company who is not and was not a party to
the Proceeding in respect of which indemnification and/or advance
of Expenses is sought by Indemnitee.
(d)
“Expenses” means all
expenses, including, but not limited to, all reasonable
attorneys’ fees and costs, 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.
(e)
“Independent Counsel”
means a law firm, or a member of a law firm, selected by the
Indemnitee and reasonably acceptable to the Company, that is
experienced in matters of business law and that neither is, nor in
the past two years has been, retained to represent (i) the
Company or Indemnitee in any matter material to either such party
(other than with respect to matters concerning Indemnitee under
this Agreement or of other indemnities of the Company under similar
indemnification agreements), or (ii) any other party to or
participant or witness in the Proceeding giving rise to a claim for
indemnification or advance of Expenses hereunder.
(f)
“Proceeding” means any
threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative (including on appeal),
except one initiated by an Indemnitee pursuant to
Section 9 .
Section 2.
Indemnification -
General . The
Company shall indemnify, and advance Expenses to, Indemnitee
(a) as provided in this Agreement and (b) otherwise to
the maximum extent permitted by Maryland law in effect on the
Effective Date and as amended from time to
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time; provided , however , that no
change in Maryland law shall have the effect of reducing the
benefits available to Indemnitee hereunder based on Maryland law as
in effect on the Effective Date. The rights of Indemnitee
provided in this Section 2 shall include, without
limitation, the rights set forth in the other sections of this
Agreement, including any additional indemnification permitted by
Section 2-418(g) of the Maryland General Corporation Law
(“MGCL”), as applicable to a Maryland real estate
investment trust by virtue of Section 8-301(15) of the
Maryland REIT Law.
Section 3.
Proceedings Other Than Derivative
Proceedings by or in the Right of the Company
. Indemnitee shall be
entitled to the rights of indemnification provided in this
Section 3 if, by reason of his Corporate Status, he is,
or is threatened to be, made a party to any threatened, pending, or
completed Proceeding, other than a derivative Proceeding by or in
the right of the Company (or, if applicable, such other enterprise
at which Indemnitee is or was serving at the request of the
Company). Pursuant to this Section 3 , Indemnitee
shall be indemnified against all judgments, penalties, fines and
amounts paid in settlement and all Expenses incurred by him or on
his behalf in connection with a Proceeding by reason of
Indemnitee’s Corporate Status unless it is established that
(i) the act or omission of Indemnitee was material to the
matter giving rise to the Proceeding and (a) was committed in
bad faith or (b) was the result of active and deliberate
dishonesty, (ii) Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in
the case of any criminal Proceeding, Indemnitee had reasonable
cause to believe that his conduct was unlawful.
Section 4.
Derivative Proceedings by or in
the Right of the Company . Indemnitee shall be entitled to the
rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, he is, or is threatened to
be, made a party to any threatened, pending or completed derivative
Proceeding brought by or in the right of the Company (or, if
applicable, such other enterprise at which Indemnitee is or was
serving at the request of the Company) to procure a judgment in its
favor. Pursuant to this Section 4 , Indemnitee
shall be indemnified against all amounts paid in settlement and all
Expenses incurred by him or on his behalf in connection with such
Proceeding unless it is established that (i) the act or
omission of Indemnitee was material to the matter giving rise to
such a Proceeding and (a) was committed in bad faith or
(b) was the result of active and deliberate dishonesty or
(ii) Indemnitee actually received an improper personal benefit
in money, property or services.
Section 5.
Indemnification for Expenses of a
Party Who is Partly Successful . Without limitation on
Section 3 and Section 4 , if Indemnitee is
not wholly successful in any Proceeding covered by this Agreement,
but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify Indemnitee under this Section 5
for all Expenses incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter, allocated
on a reasonable and proportionate basis. For purposes of this
Section and without limitation, the termination of any claim,
issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
Section 6.
Advance of Expenses
. The Company shall advance
all Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding to which Indemnitee is, or is threatened to be,
made a party or a witness, within ten days after the receipt by the
Company of a
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statement or statements from Indemnitee
requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or
accompanied by a written affirmation by Indemnitee of
Indemnitee’s good faith belief that the standard of conduct
necessary for indemnification by the Company as authorized by law
and by this Agreement has been met and a written undertaking by or
on behalf of Indemnitee, in substantially the form attached hereto
as Exhibit A or in such form as may be required under
applicable law as in effect at the time of the execution thereof,
to reimburse the portion of any Expenses advanced to Indemnitee
relating to claims, issues or matters in the Proceeding as to which
it shall ultimately be established that the standard of conduct has
not been met and which have not been successfully resolved as
described in Section 5 . To the extent that
Expenses advanced to Indemnitee do not relate to a specific claim,
issue or matter in the Proceeding, such Expenses shall be allocated
on a reasonable and proportionate basis. The undertaking
required by this Section 6 shall be an unlimited
general obligation by or on behalf of Indemnitee and shall be
accepted without reference to Indemnitee’s financial ability
to repay such advanced Expenses and without any requirement to post
security therefor.
Section 7.
Procedure for Determination of
Entitlement to Indemnification .
(a)
To obtain indemnification under this
Agreement, Indemnitee shall submit to the Company a written
request, including such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly
upon receipt of such a request for indemnification, advise the
Board of Trustees in writing that Indemnitee has requested
indemnification.
(b)
Upon written request by Indemnitee
for indemnification pursuant to the first sentence of
Section 7(a) hereof, a determination, if required
by applicable law, with respect to Indemnitee’s entitlement
thereto shall promptly 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 Indemnitee; or (ii) if a Change of Control shall
not have occurred or if after a Change of Control Indemnitee shall
so request, (A) by the Board of Trustees (or a duly authorized
committee thereof) by a majority vote of a quorum consisting of
Disinterested Trustees (as herein defined), or (B) if a quorum
of the Board of Trustees consisting of Disinterested Trustees is
not obtainable or, even if obtainable, 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
Indemnitee, or (C) if so directed by a majority of the members
of the Board of Trustees, by the shareholders of the Company; and,
if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten
days after such determination. Indemnitee shall cooperate
with the person, persons or entity making such determination with
respect to Indemnitee’s entitlement to indemnification,
including providing to such person, persons or entity upon
reasonable advance request any documentation or information which
is not privileged or otherwise protected from disclosure and which
is reasonably available to Indemnitee and reasonably necessary to
such determination. Any Expenses incurred by Indemnitee in so
cooperating with the person, persons or entity
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making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company shall indemnify and
hold Indemnitee harmless therefrom.
(c)
The Company shall pay the fees and
expenses of Independent Counsel, if one is appointed pursuant to
this Section 7 .
Section 8.
Presumptions and Effect of
Certain Proceedings .
(a)
In making a determination with
respect to entitlement to indemnification hereunder, the person or
persons or entity 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 7(a) of this Agreement,
and the Company shall have the burden of proof to overcome that
presumption in connection with the making of any determination
contrary to that presumption.
(b)
The termination of any Proceeding by
judgment, order, settlement, conviction, a plea of nolo
contendere or its equivalent, or an entry of an order of
probation prior to judgment, does not create a presumption that
Indemnitee did not meet the requisite standard of conduct described
herein for indemnification.
Section 9.
Remedies of Indemnitee
.
(a)
If (i) a determination is made
pursuant to Section 7 that Indemnitee is not entitled
to indemnification under this Agreement, (ii) advance of
Expenses is not timely made pursuant to Section 6 ,
(iii) no determination of entitlement to indemnification shall
have been made pursuant to Section 7(b) within 30
days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made
pursuant to Section 5 within ten days after receipt by
the Company of a written request therefor, or (v) payment of
indemnification is not made within ten days after a determination
has been made that Indemnitee is entitled to indemnification,
Indemnitee shall (A) unless the Company demands arbitration as
provided by Section 16 , be entitled to an adjudication
in an appropriate court of the State of Maryland or in any other
court of competent jurisdiction or (B) be entitled to seek an
award in arbitration as provided by Se
