EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the
“Agreement”) is entered into as of March 3, 2008
(“Effective Date”), by and between UDR, Inc., a
Maryland corporation (the “Company”), and Warren L.
Troupe (the “Indemnitee”).
WHEREAS, the Indemnitee, at the
request of the Company, is serving as an officer or a member of the
Board of Directors (“Board”) of the Company and in such
capacity is performing a valuable service for the Company;
WHEREAS, the law of the State of
Maryland, the Company’s state of formation, permits the
Company to enter into contracts with its officers or members of its
Board with respect to indemnification of such persons; and
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WHEREAS, to induce the Indemnitee to
continue to provide services to the Company as an officer or a
member of the Board, 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 the Company’s Articles of Restatement or
Amended and Restated Bylaws (as amended collectively the
“Charter Documents”), or any acquisition transaction
relating to the Company, the Company desires to provide the
Indemnitee with protection against personal liability to the
fullest extent permitted by law.
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, the Company and
the Indemnitee hereby agree as follows:
1. Definitions .
For purposes of this Agreement:
(a) “Change in
Control” shall mean 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 (the “Exchange Act”),
whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, a Change
in Control shall be deemed to have occurred if, after the Effective
Date, any of the following events shall occur:
(I) An
acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by
any “Person” (as the term person is used for purposes
of Section 13(d) or 14(d) of the Exchange Act, immediately after
which such Person has “Beneficial Ownership” (within
the meaning of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of 30% or more of the combined voting power
of the Company’s then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control
has occurred, Voting Securities which are acquired in a
“Non-Control Acquisition” (as hereinafter defined)
shall not constitute an acquisition which would cause a Change in
Control. A “Non-Control Acquisition” shall mean an
acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company or
(y) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned
directly or indirectly by the Company (a “Subsidiary”),
(ii) the Company or any Subsidiary or (iii) any Person in
connection with a “Non-Control Transaction” (as
hereinafter defined);
(II) Approval
by stockholders of the Company of:
(A) A
merger, consolidation or reorganization involving the Company
unless:
(1) the
stockholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly,
immediately following such merger, consolidation or reorganization,
at least seventy percent (70%) of the combined voting power of the
outstanding Voting Securities of the corporation or other entity
resulting from such merger or consolidation or reorganization (the
“Surviving Corporation”) in substantially the same
proportion as among themselves as their ownership of the Voting
Securities immediately before such merger, consolidation or
reorganization; and
(2) the
individuals who were members of the incumbent Board immediately
prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least a majority of
the members of the board of directors or board of trustees of the
Surviving Corporation or a corporation or other entity beneficially
owning, directly or indirectly, a majority of the Voting Securities
of the Surviving Corporation;
(A
transaction meeting the conditions described in clauses
(1) and (2) of Section 1(a)(II)(A) shall herein be
referred to as a “Non-Control Transaction);
(B) A
complete liquidation or dissolution of the Company; or
(C) An
agreement for the sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than to an
entity of which the Company directly or indirectly owns at least
70% of the Voting Securities).
(III) There
occurs a proxy contest, as a consequence of which members of the
Board in office immediately prior thereto constitute less than a
majority of the Board thereafter; or
(IV) During
any period of two consecutive years, individuals who at the
beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election
by the Company’s stockholders was approved by a vote of at
least two-thirds of the directors then still in office who were
directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the “Subject
Person”) acquired Beneficial Ownership of more than 30% of
the outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportionate number
of shares Beneficially Owned by the Subject Person, provided that
if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by
the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
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(b) “Corporate
Status” means the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Company 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 the Company.
(c) “Disinterested
Director” means a director of the Company 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) “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to
time.
(e) “Expenses” shall
include all reasonable 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,
selected by the Board by the vote required for determination of the
Indemnitee’s entitlement to indemnification as provided in
clause (ii) of Section 9(b) hereof, that (i) is
experienced in matters of corporation law and (ii) has not,
and, as to such law firm, no member presently is, or in the past
five years has been, retained to represent (x) the Company or
the Indemnitee in any matter material to either such party, or
(y) any other party to the Proceeding giving rise to a claim
for indemnification hereunder. Notwithstanding the foregoing, the
term “Independent Counsel” shall not include any person
who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the
Indemnitee’s rights under this Agreement, unless such
conflict of interest is waived by both the Company and the
Indemnitee.
(g) “Liabilities”
means all liabilities, and losses (including judgments, fines,
ERISA excise taxes or penalties, and amounts paid or to be paid in
settlement, and any interest, assessments, or other charges imposed
thereon, and any federal, state, local, or foreign taxes imposed on
any director or officer as a result of the actual or deemed receipt
of any payments under this Agreement).
(h) “Proceeding”
includes any threatened, pending or completed 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 (i) initiated by the Indemnitee
pursuant to Section 12 of this Agreement to enforce such
Indemnitee’s rights under this Agreement or (ii) pending
or completed on or before the Effective Date, unless otherwise
specifically agreed in writing by the Company and the
Indemnitee.
2. Indemnification
— General . The Company shall indemnify, and advance
Expenses to, the Indemnitee (i) as provided in this Agreement
and (ii) otherwise to the fullest
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extent
permitted by Maryland law in effect on the date hereof and as
amended from time to time (provided, however, that no change in
Maryland law shall have the effect of reducing the benefits
available to the Indemnitee hereunder based on Maryland law as in
effect on the date hereof). The rights of the 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”).
3. Proceedings Other than
Proceedings by or in the Right of the Company . The
Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3 if, by reason of Indemnitee’s
Corporate Status, Indemnitee is, or is threatened to be, made a
party to or a witness in any Proceeding, other than a Proceeding by
or in the right of the Company. The Company shall also indemnify
Indemnitee’s spouse (whether by statute or at common law and
without regard to the location of the governing jurisdiction) and
children to the same extent and subject to the same limitations
applicable to Indemnitee hereunder for claims arising out of the
status of such person as a spouse or child of Indemnitee, including
claims seeking damages from marital property (including community
property) or property held by such Indemnitee and such spouse or
child or property transferred to such spouse or child, but such
indemnity shall not otherwise extend to protect the spouse or child
against liabilities caused by the spouse’s or child’s
own acts. Pursuant to this Section 3, the Indemnitee shall be
indemnified against all Liabilities and all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection with a Proceeding by reason of his Corporate Status
unless it is established that (i) the act or omission of the
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) the Indemnitee
actually received an improper personal benefit in money, property
or services, or (iii) in the case of any criminal Proceeding, the
Indemnitee had reasonable cause to believe that his conduct was
unlawful.
4. Proceedings by or in
the Right of the Company . The Indemnitee shall be entitled
to the rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, Indemnitee is, or is
threatened to be, made a party to or a witness in any Proceeding
brought by or in the right of the Company to procure a judgment in
its favor. Pursuant to this Section 4, the Indemnitee shall be
indemnified against all amounts paid in settlement and all Expenses
actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such Proceeding unless
it is established that (i) the act or omission of the
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) the
Indemnitee actually received an improper personal benefit in money,
property or services.
5. Court-Ordered
Indemnification . Notwithstanding any other provision of
this Agreement, a court of appropriate jurisdiction, upon
application of the Indemnitee and such notice as the court shall
require, may order indemnification in the following
circumstances:
(a) if it determines that the
Indemnitee is entitled to reimbursement under Section 2-418(d)(1)
of the MGCL, the court shall order indemnification, in which case
the Indemnitee shall be entitled to recover the Expenses of
securing such reimbursement; or
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(b) if it determines that the
Indemnitee is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the
Indemnitee (i) has met the standards of conduct set forth in
Section 2-418(b) of the MGCL or (ii) has been adjudged
liable for receipt of an improper personal benefit under
Section 2-418(c) of the MGCL, the court may order such
indemnification as the court shall deem proper. However,
indemnification with respect to any Proceeding by or in the right
of the Company or in which liability shall have been adjudged in
the circumstances described in Section 2-418(c) of the MGCL
shall be limited to Expenses.
6. Expenses of a
Successful Party . Notwithstanding any other provision of
this Agreement and without limiting the effect of any such
provision, to the extent that the Indemnitee is, by reason of such
Indemnitee’s Corporate Status, made a party to and is
successful, on the merits or otherwise, in the defense of any
Proceeding, 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, 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 the
Indemnitee under this Section 6 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 Section 6, the term “successful on
the merits or otherwise” shall include, but not be limited
to, (i) any termination, withdrawal or dismissal (with our
without prejudice) of any Proceeding 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 settlement or
(iii) the settlement of any Proceeding, pursuant to which
Indemnitee pays less than $10,000.
7. 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.
8. Advancement of
Expenses . The Company shall advance all reasonable
Expenses actually and reasonably incurred by or on behalf of the
Indemnitee in connection with any Proceeding (other than a
proceeding brought to enforce indemnification under this Agreement,
applicable law, the Charter Documents, any agreement or a
resolution of the stockholders entitled to vote in the election of
directors) within 20 days after the receipt by the Company of
a statement from the Indemnitee requesting such advance from time
to time, whether prior to, during 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 a written affirmation by the Indemnitee
of the 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 the 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 the 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
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have not
been successfully resolved as described in Section 6. To the
extent that Expenses advanced to the 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 8 shall be an unlimited
general obligation by or on behalf of the Indemnitee and shall be
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