Indemnity Agreement - AvalonBay Communities Inc.
In October, 1998, the Company entered into the attached indemnity
agreement with each of the then current directors of the Company.
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INDEMNITY AGREEMENT
AGREEMENT, as of October __, 1998 (the "Agreement"), between AvalonBay
Communities, Inc., a Maryland corporation (the "Company") and _____________ (the
"Indemnitee").
WHEREAS, it is essential to the success of the Company to retain and
attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee has agreed to serve as a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies in today's environment;
WHEREAS, the Bylaws (the "Bylaws") and the Articles of Incorporation (the
'Articles") of the Company require the Company to indemnify and advance expenses
to its directors and officers to the fullest extent provided by law, and the
Indemnitee has agreed to serve as a director of the Company in part in reliance
on such provisions in the Bylaws and Articles;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner and Indemnitee's reliance on the foregoing
provisions in the Bylaws and Articles, and in part to provide Indemnitee with
specific contractual protections in addition to those protections promised
Indemnitee in the Bylaws and Articles and with specific contractual assurance
that the protection promised by such provisions in the Bylaws and Articles will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such provisions in the Bylaws or Articles or any change in the
composition of the Company's Board of Directors or any acquisition transaction
relating to the Company), the Company wishes to provide in this Agreement for
the indemnification of and the advancing of expenses to Indemnitee to the
fullest extent permitted by law, in addition to any other right to
indemnification to which Indemnitee may be entitled, and as set forth in this
Agreement and, to the extent insurance is maintained, for the continued coverage
of Indemnitee under the Company's directors' and officers' liability insurance
policies;
WHEREAS, each of the directors of the Company, including the Indemnitee,
has one or more previous agreements entitled "Indemnification Agreement" or
"Indemnity Agreement" with the Company or its predecessor Avalon Properties,
Inc. (the "Prior Agreements"); and
WHEREAS, the Company desires to replace and supersede the different forms
of Prior Agreements with a new form of agreement for all of the directors of the
Company.
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NOW THEREFORE, in consideration of the premises and of the Indemnitee
agreeing to continue to serve as a director of the Company, and intending to be
legally bound hereby, the parties agree as follows:
1. Certain Definitions.
(a) Change in Control. Change in control shall be deemed to have
occurred upon any of the following events:
(i) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
twenty percent (20%) or more of the combined voting power of the Company's then
outstanding voting securities (the "Voting Securities"), provided, however, that
for purposes of this Section 1(a)(i), the Voting Securities acquired directly
from the Company by any Person shall be excluded from the determination of such
Person's Beneficial Ownership of voting securities (but such Voting Securities
shall be included in the calculation of the total number of Voting Securities
then outstanding); or
(ii) The individuals who, as of the date hereof, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's shareholders, of any new director is hereafter
approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board; or
(iii) Approval by shareholders of the Company of (A) a merger or
consolidation involving the Company if the shareholders of the Company
immediately before such merger or consolidation do not own, directly or
indirectly immediately following such merger or consolidation, more than eighty
percent (80%) of the combined voting power of the outstanding voting securities
of the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger or consolidation or (B) a complete liquidation or dissolution
of the Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
(iv) Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because twenty percent (20%) or more of the then
outstanding Voting Securities is acquired by (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the
Company or any of its subsidiaries or (ii) any corporation which, immediately
prior to such acquisition, is owned directly or indirectly by the shareholders
of the Company in the same proportion as their ownership of stock in the Company
immediately prior to such acquisition. Nor shall a Change in Control be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of 20%
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or more of the outstanding Voting Securities as a result of the subsequent
acquisition of Voting Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional 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.
(b) Claim. Any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether threatened, commenced or
conducted by the Company or any other party, that Indemnitee in good faith
believes might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or other.
(c) Expenses. Expenses consist of attorneys' fees and all other costs,
charges and expenses paid or incurred in connection with investigating,
defending, settling, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in, any Claim
relating to any Indemnifiable Event.
(d) Indemnifiable Event. Any event or occurrence related to the fact
that Indemnitee is, was or has agreed to become a director, officer, employee,
agent or fiduciary of the Company, or is, is deemed to be, or was serving or has
agreed to serve in any capacity, at the request of the Company, in any other
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by Indemnitee in any such
capacity. For the purposes of the preceding sentence, the term "Company" shall
be deemed to include Avalon Properties, Inc., a Maryland corporation which was
merged into the Company on June 4, 1998.
(e) Potential Change in Control. A potential change in control shall
be deemed to have occurred if (i) the Company enters into an agreement or
arrangement, the consummation of which would result in the occurrence of a
Change in Control; (ii) any person (including the Company) publicly announces an
intention to take or to begins taking actions which if completed would
constitute a Change in Control; or (iii) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(f) Voting Securities. Any securities of the Company which vote
generally in the election of directors.
2. Indemnification; Expenses; Procedure.
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(a) Basic Indemnification Agreement. In the event Indemnitee was, is
or becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason of (or
arising in part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee (without regard to the negligence or other fault of the Indemnitee)
to the fullest extent permitted by applicable law, as soon as practicable but in
no event later than thirty days after written demand is presented to the
Company, against any and all Expenses, judgments, fines, penalties, excise taxes
and amounts paid or to be paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties, excise taxes or amounts paid or
to be paid in settlement) of or in connection with such Claim, provided,
however, that the Company shall not be required to indemnify Indemnitee for
amounts paid or to be paid in settlement unless such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld, or
subsequently deemed reasonable by the Company, a court of appropriate
jurisdiction, or an independent legal counsel chosen and approved by both the
Company and Indemnitee. The Company's obligation to indemnify Indemnitee under
this paragraph shall be deemed mandatory in all cases without regard to the
fault or negligence of Indemnitee unless it is determined, by final
adjudication, that the liability imposed upon Indemnitee was the result of
Indemnitee's actual improper receipt of a personal benefit or profit or of
Indemnitee's active and deliberate dishonesty to the Company. The Company shall
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. If Indemnitee makes a request to be
indemnified under this Agreement (which request need not be made prior to the
incurrence of any Indemnifiable Expenses), the Board of Directors (acting by
majority vote of a quorum consisting of directors who are not parties to the
Claim with respect to the Indemnifiable Event or by majority vote of a committee
of two or more directors who are duly designated to act on the matter by the
full Board, or, if such a quorum is not obtainable and no such committee has
been designated, acting upon an opinion in writing of special independent legal
counsel selected by majority vote of the full Board of Directors ("Board
Action")) shall, as soon as practicable but in no event later than thirty days
after such request, authorize such indemnification. Notwithstanding anything in
the Company's Restated Articles of Incorporation, as amended from time to time,
(the "Articles"), the Company's Bylaws, as amended from time to time, (the
"Bylaws") or this Agreement to the contrary, following a Change in Control
Indemnitee shall, unless prohibited by law, be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated by Indemnitee.
(b) Advancement of Expenses. Notwithstanding anything in the Articles,
the Bylaws or this Agreement to the contrary, if so requested by Indemnitee, the
Company shall advance (within ten business days of such request) any and all
Expenses relating to a
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Claim to Indemnitee (an "Expense Advance"), upon the receipt of a written
undertaking by or on behalf of Indemnitee (and without regard to any
determination of Indemnitee's financial ability to repay such Expense Advance)
to repay such Expense Advance if a judgment or other final adjudication adverse
to Indemnitee establishes that Indemnitee, with respect to such Claim, is not
eligible for indemnification.
(c) Notice to Insurers. If, at the time of the receipt of a notice of
a Claim pursuant to Section 2(c) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such 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 the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(d) Selection of Counsel. In the event the Company shall be obligated
under Section 2(b) hereof to pay the Expenses of any proceeding against
Indemnitee, the Company, unless the Indemnitee determines that a conflict of
interest exists between the Indemnitee and the Company with respect to a
particular Claim, shall be entitled to assume the defense of such proceeding,
with counsel approved by Indemnitee, which approval shall not be unreasonably
withheld, upon the delivery to Indemnitee of written notice of its election to
do so and of written notice that it is so obligated. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will be 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 own separate counsel in any such proceeding in addition to
or in place of any counsel retained by the Company on behalf of Indemnitee at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding, then the
fees and expenses of Indemnitee's counsel shall be at the expense of the
Company.
(e) Litigation Concerning Right to Indemnification. If there has been
no Board Action or Arbitration (as defined in Section 3), or if Board Action
determines that Indemnitee would not be permitted to be indemnified, in any
respect, in whole or in part, in accordance with Section 2(a) of this Agreement,
Indemnitee shall have the right to commence litigation in the court which is
hearing the action or proceeding relating to the Claim for which indemnification
is sought or in any court having subject matter jurisdiction thereof and in
which venue is proper seeking an initial determination by the court or
challenging any Board Action or any aspect thereof, and the Company hereby
consents to service of process and to appear in any such proceeding.
Notwithstanding anything in the Articles, the Bylaws or this Agreement to the
contrary, if Indemnitee has commenced legal proceedings in a court of competent
jurisdiction or Arbitration to secure a determination that Indemnitee should be
indemnified under this Agreement, the Articles, the Bylaws or applicable law,
any Board
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Action that Indemnitee would not be permitted to be indemnified in accordance
with Section 2(a) of this Agreement shall not be binding in the event that such
legal proceedings are finally adjudicated. Any Board Action not followed by such
litigation or Arbitration shall be conclusive and binding on the Company and
Indemnitee.
3. Change in Control. The Company agrees that if there is a Change in
Control, Indemnitee, by giving written notice to the Company and the American
Arbitration Association (the "Notice"), may require that any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration (the "Arbitration") in San Jose, California or, at the
election of the Indemnitee, Alexandria, Virginia, in accordance with the Rules
of the American Arbitration Association (the "Rules"). The Arbitration shall be
conducted by a panel of three arbitrators selected in accordance with the Rules
within thirty days of delivery of the Notice. The decision of the panel shall be
made as soon as practicable after the panel has been selected, and the parties
agree to use their reasonable efforts to cause the panel to deliver its decision
within ninety days of its selection. The Company shall pay all fees and expenses
of the Arbitration. The Arbitration shall be conclusive and binding on the
Company and Indemnitee, and the Company or Indemnitee may cause judgment upon
the award rendered by the arbitrators to be entered in any court having
jurisdiction thereof.
4. Establishment of Trust. In the event of a Potential Change in Control
or a Change in Control, the Company shall, promptly upon written request by
Indemnitee, create a Trust for the benefit of Indemnitee and from time to time,
upon written request by or on behalf of Indemnitee to the Company, shall fund
such Trust in an amount, as set forth in such request, sufficient to satisfy any
and all Expenses reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for and defending any Claim
relating to an Indemnifiable Event, and any and all judgments, fines, penalties
and settlement amounts of any and all Claims relating to an Indemnifiable Event
from time to time actually paid or claimed, reasonably anticipated or proposed
to be paid. The terms of the Trust shall provide that upon a Change in Control
(i) the Trust shall not be revoked or the principal thereof invaded, without the
written consent of Indemnitee; (ii) the Trustee shall advance, within ten
business days of a request by Indemnitee, any and all Expenses to Indemnitee,
not advanced directly by the Company to Indemnitee (and Indemnitee hereby agrees
to reimburse the Trust under the circumstances under which Indemnitee would be
required to reimburse the Company under Section 2(b) of this Agreement); (iii)
the Trust shall continue to be funded by the Company in accordance with the
funding obligation set forth above; (iv) the Trustee shall promptly pay to
Indemnitee all amounts for which Indemnitee shall be entitled to indemnification
pursuant to this Agreement or otherwise; and (v) all unexpended funds in such
Trust shall revert to the Company upon a final determination by Board Action or
Arbitration or a court of competent jurisdiction, as the case may be, that
Indemnitee has been fully indemnified under the terms of this Agreement. The
Trustee shall be an independent third party chosen by Indemnitee. Nothing in
this Section 4 shall relieve the Company of any of its obligations under this
Agreement.
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5. Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all expenses (including without limitation attorneys'
fees, subject to Section 20 hereof) and, if requested by Indemnitee, shall
(within ten business days of such request) advance such expenses to Indemnitee,
which are incurred by Indemnitee in connection with any claim asserted by or
action brought by Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under law, the Articles, the Bylaws, this Agreement, or
any other agreement now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be
paid in settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any or all Claims relating in whole or
in part to an Indemnifiable Event or in defense of any issue or matter therein,
including, without limitation, dismissal without prejudice, Indemnitee shall be
presumed to be entitled to indemnification against any and all Expenses,
judgments, fines, penalties, excise taxes and amounts paid or to be paid in
settlement of such Claim or Claims in connection with any determination made or
to be made by Board Action, Arbitration or a court of competent jurisdiction
whether and to what extent Indemnitee is entitled to be indemnified hereunder,
and the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
7. No Presumption. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contenders, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law or this
Agreement.
8. Contribution. In the event that the indemnification provided for in
this Agreement is unavailable to Indemnitee for any reason whatsoever, the
Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in connection with
any Claim relating to an Indemnifiable Event, in such proportion as is deemed
fair and reasonable in light of all of the circumstances of such action by Board
Action or Arbitration or by the court before which such action was brought in
order to reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving cause to
such action; and/or (ii) the relative fault of the Company (and its other
directors, officers, employees and agents) and Indemnitee in connection with
such event(s) and/or transaction(s). Indemnitee's right to contribution under
this Section 8
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shall be determined in accordance with, pursuant to and in the same manner as,
the provisions in Sections 2 and 3 hereof relating to Indemnitee's right to
indemnification under this Agreement.
9. Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
precedent to Indemnitee's right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any Claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Such notice shall contain the written affirmation of the Indemnitee
that the standard of conduct necessary for indemnification hereunder has been
satisfied. Notice to the Company shall be directed to the Secretary of the
Company in the manner provided in Section 19 hereof. Indemnitee shall give the
Company such information and cooperation with respect to such Claim as it may
reasonably require and as shall be within Indemnitee's power. A delay or defect
in the notice under this Section 9 shall not invalidate the Indemnitee's right
to indemnity under this Agreement unless, and only to the extent that, such
delay or defect materially prejudices the defense of the Claim or the
availability to the Company of insurance coverage for such Claim. Failure to
give notice under this Section shall not be a defense if the Company has actual
notice of the Indemnitee's claim for indemnification.
10. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall be
in addition to any other rights Indemnitee may have under the Articles or Bylaws
or applicable law, and nothing herein shall be deemed to diminish or otherwise
restrict Indemnitee's right to indemnification under any such other provision.
To the extent applicable law or the Articles or the Bylaws of Company, as in
effect on the date hereof or at any time in the future, permit greater
indemnification than as provided for in this Agreement, the parties hereto agree
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such law or provision of the Articles or Bylaws and this Agreement shall be
deemed amended without any further action by the Company or Indemnitee to grant
such greater benefits. Indemnitee may elect to have Indemnitee's rights
hereunder interpreted on the basis of applicable law in affect at the time of
execution of this Agreement, at the time of the occurrence of the Indemnifiable
Event giving rise to a claim or at the time indemnification is sought.
11. Liability Insurance.
(a) To the extent the Company maintains at any time an insurance
policy or policies providing directors' 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 other
Company director or officer under such insurance policy. The purchase and
maintenance of such insurance shall not in any way limit or affect the rights
and obligations of the parties hereto, and the execution and delivery of this
Agreement shall not in any way be construed to limit or affect the rights and
obligations of the Company and/or of the other parties under any such insurance
policy.
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(b) For seven years after the Indemnitee no longer serves as a
director or officer of the Company, the Company (or its successor or successors)
shall continue to provide directors' and officers' liability insurance for
events occurring during his service with the Company on terms no less favorable
in terms of coverage and amount than such insurance maintained by the Company at
the date of the Indemnitee's separation from the Company. In the event such
coverage is not available, the maximum available coverage shall be maintained
pursuant to this covenant.
12. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or on behalf of the Company or any affiliate of
the Company against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause of action of the
Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action such shorter period shall govern.
13. Amendments Etc. Except as provided in Section 10 hereof, no
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
14. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery with respect to such payment of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
15. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw or otherwise) of the amounts otherwise
Indemnifiable hereunder.
16. Binding Effect, Etc. This Agreement shall be binding upon and inure
to the benefit of and be enforceable against and by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company), spouses, heirs and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place, but the absence of any such
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writing shall not be a defense to any claim for indemnity made hereunder. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as a director and/or officer of the Company or of any other enterprise at
the Company's request.
17. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
18. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement to indemnify the Indemnitee in the following circumstances:
(a) Insured Claims. The Company shall not be obligated to indemnify
Indemnitee for expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) to the extent that Indemnitee has otherwise actually
received payment, or payments have been made on behalf of Indemnitee, with
respect to such expense or liability (under any insurance policy, provision of
the Company's Articles or Bylaws, or otherwise) of amounts otherwise
Indemnifiable hereunder; or
(b) Claims Under Section 16(b). The Company shall not be obligated to
indemnify Indemnitee for expenses and 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, or any similar successor
statute.
19. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by certified registered
mail, return receipt requested, with postage prepaid:
(a) If to Indemnitee, to:
[FILL IN NAME AND ADDRESS]
or to such other person or address which Indemnitee shall furnish to the Company
in writing pursuant to the above.
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(b) If to the Company, to:
AvalonBay Communities, Inc.
4340 Stevens Creek Boulevard, Suite 275
San Jose, California 95129
ATTN: Secretary
or to such person or address as the Company shall furnish to Indemnitee in
writing pursuant to the above.
20. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, a court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
21. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland, which laws are
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute a single agreement.
23. Prior Agreements. This Agreement replaces and supersedes any Prior
Agreements to which the Indemnitee is a party.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first set forth above.
AVALONBAY COMMUNITIES, INC.
By:
------------------------------
Name:
Title:
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<PAGE> 13
INDEMNITEE
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