Exhibit 10.16
FORM OF INDEMNITY AGREEMENT
This Indemnity Agreement, dated ______, 1996, is made and entered into by
and between Aviation Distributors, Inc., a Delaware corporation (the "Company"),
and ________ ("Indemnitee").
WHEREAS, Indemnitee is currently serving as a director, officer, employee
or agent of the Company or, at the Company's request, as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise;
WHEREAS, the Amended and Restated Bylaws (the "Bylaws") of the Company
provide that the Company will indemnify, in the manner and to the fullest extent
permitted by the Delaware General Corporation Law (the "DGCL"), certain persons
against specified expenses arising out of certain threatened, pending or
completed actions, suits or proceedings; and
WHEREAS, in order to induce Indemnitee to continue to serve the Company in
his or her present capacity, and to provide Indemnitee with specific contractual
assurance that the protection authorized by the Bylaws will be available to
Indemnitee, the Company wishes to enter into this Agreement.
NOW THEREFORE, the Company and Indemnitee hereby agree as follows:
Section 1. DEFINITIONS. The following terms, as used herein, shall
have the following meanings:
(a) "Covered Claim" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise;
PROVIDED, that (1) such claim is not for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provisions of any state law and (2) Indemnitee shall not be indemnified by the
Company if, with respect to such action, suit or proceeding, a Determination (as
defined below) is made that:
(i) Indemnitee did not act in good faith in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company;
(ii) in the case of any criminal action or
proceeding, Indemnitee had reasonable cause to believe his or her
conduct was unlawful; or
(iii) Indemnitee intentionally breached his or her
duty to the Company or its stockholders.
(b) "Determination" shall mean a determination, based upon the
facts known at the time, made by:
(i) the Board of Directors of the Company, by the
vote of a majority of the directors who are not parties to the action,
suit or proceeding in question, even though less than a quorum;
(ii) if there are no such disinterested directors, or
if such disinterested directors so direct, by independent legal
counsel in a written opinion;
(iii) the stockholders of the Company; or
(iv) a court of competent jurisdiction in a final,
nonappealable adjudication.
(c) "Payment" shall mean all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with a Covered Claim.
Section 2. INDEMNIFICATION. The Company shall indemnify and hold
harmless Indemnitee against and from any and all Payments to the extent that:
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(a) the Company shall not have advanced expenses to Indemnitee
pursuant to Article VIII, Section 6 of the Bylaws or otherwise and no
Determination shall have been made pursuant to such bylaw or the DGCL that
Indemnitee is not entitled to indemnification;
(b) Indemnitee shall not already have received payment on
account of such Payments from any third party, including, without limitation,
pursuant to one or more valid and collectible insurance policies; and
(c) such indemnification by the Company is not unlawful.
Notwithstanding anything contained in this Agreement to the contrary, except for
proceedings to enforce rights to indemnification or advancement of expenses
pursuant to Section 4 hereof, the Company shall have no obligation to indemnify
Indemnitee in connection with a proceeding (or part thereof) initiated by
Indemnitee unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors of the Company. Further, the Company shall have no
obligation to indemnify Indemnitee under this Agreement for any amounts paid in
a settlement of any action, suit or proceeding effected without the Company's
prior written consent, which consent shall not be unreasonably withheld. The
Company shall not settle any claim in any manner that would impose any
obligation on Indemnitee without Indemnitee's prior written consent, which
consent shall not be unreasonably withheld.
Section 3. INDEMNIFICATION PROCEDURE; ADVANCEMENTS OF EXPENSES.
(a) If at the time of receipt of any notice pursuant to Section
9 hereof the Company has directors' and officers' liability insurance in effect,
the Company shall give prompt notice of the commencement of such action, suit or
proceeding to the insurers in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Payments payable as a result of such action, suit or proceeding
in accordance with the terms of such policies.
(b) All expenses, including attorneys' fees, incurred by
Indemnitee in defending any Covered Claim shall be paid by the Company in
advance of the final disposition of such Covered Claim upon an undertaking by or
on behalf of Indemnitee to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Company as
authorized
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herein. Indemnitee hereby undertakes to and agrees that he or she will repay
the Company for any expenses advanced by or on behalf of the Company pursuant to
this Section 3(c) if it shall ultimately be determined by a court of competent
jurisdiction in a final, nonappealable adjudication that Indemnitee is not
entitled to indemnification under this Agreement.
(c) If the Company shall advance the expenses of any such
action, suit or proceeding pursuant to Section 3(c) hereof, it shall be entitled
to assume the defense of such action, suit or proceeding, if appropriate, with
counsel reasonably satisfactory to Indemnitee, upon delivery to Indemnitee of
written notice of its election so to do. After delivery of such notice, the
Company shall not be liable to Indemnitee under this Agreement for any expenses
subsequently incurred by Indemnitee in connection with such defense other than
reasonable expenses of investigation; PROVIDED, HOWEVER, that:
(i) Indemnitee shall have the right to employ
separate counsel in any such action, suit or proceeding provided that
the fees and expenses of such counsel incurred after delivery of
notice by the Company of its assumption of such defense shall be at
Indemnitee's own expense; and
(ii) the fees and expenses of counsel employed by
Indemnitee shall be at the expense of the Company if (x) the
employment of counsel by Indemnitee has previously been authorized by
the Company, (y) 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 (PROVIDED, that the Company shall not
be required to pay for more than one counsel to represent two or more
Indemnitees where such Indemnitees have reasonably concluded that
there is no conflict of interest among them in the conduct of such
defense) or (z) the Company shall not, in fact, have employed counsel
reasonably satisfactory to Indemnitee to assume the defense of such
action, suit or proceeding.
(d) All payments on account of the Company's advancement
obligations under Section 3(c) hereof shall be made within 20 days of
Indemnitee's written request therefor. All other payments on account of the
Company's obligations under this Agreement shall be made within 60 days of
Indemnitee's written request therefor, unless a Determination is made that the
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claims giving rise to Indemnitee's request are not payable under this Agreement.
Each request for payment hereunder shall be accompanied by evidence reasonably
satisfactory to the Company of Indemnitee's incurrence of the expenses for which
such payment is sought.
Section 4. ENFORCEMENT OF INDEMNIFICATION; BURDEN OF PROOF. If a
claim for indemnification or advancement of expenses under this Agreement is not
paid in full by or on behalf of the Company within the time period specified in
Section 3(e) hereof, Indemnitee may at any time thereafter bring suit against
the Company to recover the unpaid amount of such claim. In any such action, the
Company shall have the burden of proving that indemnification is not required
under this Agreement.
Section 5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some
portion of any Payments, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of any such
Payments to which Indemnitee is entitled.
Section 6. INTERPRETATION. All references in this Agreement to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; and references to "serving at the request of the Company"
shall include any service by Indemnitee as a director, officer, employee or
agent of the Company that imposes duties on, or involves services by, Indemnitee
with respect to an employee benefit plan, its participants or beneficiaries. If
Indemnitee acts in good faith and in a manner he or she reasonably believes to
be in the interests of the participants and beneficiaries of any employee
benefit plan, then, for purposes of Section 3(c)(i) hereof, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company."
Section 7. RIGHTS NOT EXCLUSIVE. The rights to indemnification and
advancement of expenses provided hereunder shall not be deemed exclusive of any
other rights to which Indemnitee may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office.
Section 8. SUBROGATION. In the event of payment under this Agreement
by or on behalf of the Company, the Company shall be subrogated to
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the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all papers that may be required and shall do all things that may
be necessary to secure such rights, including, without limitation, the execution
of such documents as may be necessary to enable the Company effectively to bring
suit to enforce such rights.
Section 9. NOTICE OF CLAIM. Promptly after receipt by Indemnitee of
notice of the commencement or threat of commencement of any civil, criminal,
administrative or investigative action, suit or proceeding, Indemnitee shall, if
indemnification with respect thereto may be sought from the Company under this
Agreement, notify the Company thereof in writing at its principal office and
directed to the Corporate Secretary (or such other address as the Company shall
designate in writing to Indemnitee); notice shall be deemed received if sent by
prepaid mail properly addressed, the date of such notice being the date
postmarked. In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.
Section 10. CHOICE OF LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to the principals of conduct of laws thereunder.
Section 11. JURISDICTION. The Company and Indemnitee hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action, suit or proceeding that arises
out of or relates to this Agreement, and agree that any action instituted under
this Agreement shall be brought only in the state courts of the State of
Delaware.
Section 12. COVERAGE. The provisions of this Agreement shall apply
to Indemnitee's service as a director, officer, employee or agent of the Company
or at the Company's request, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise with respect to all periods of such service prior to and after
the date of this Agreement, even though Indemnitee may have ceased such service
at the time of indemnification hereunder.
Section 13. ATTORNEYS' FEES. If any action, suit, or proceeding is
commenced in connection with or related to this Agreement, the prevailing party
shall be entitled to have its costs and expenses, including, without limitation,
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reasonable attorneys' fees and reasonable expenses of investigation, paid by the
losing party.
Section 14. SEVERABILITY. In the event that any provision of this
Agreement is determined by a court to require the Company to do or to fail to do
an act that is in violation of any applicable law, such provision shall be
limited or modified in its application to the minimum extent necessary to avoid
a violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
Section 15. SUCCESSORS AND ASSIGNS. The Agreement shall be binding
upon all successors and assigns of the Company, including any transferee of all
or substantially all of its assets and any successor by merger or otherwise by
operation of law, and shall be binding upon and inure to the benefit of the
heirs, executors and administrators of Indemnitee.
Section 16. DESCRIPTIVE HEADINGS. The descriptive headings in this
Agreement are included for the convenience of the parties only and shall not
affect the construction of this Agreement.
Section 17. COUNTERPARTS. This Agreement may be executed in two
counterparts, both of which taken together shall constitute one document.
Section 18. AMENDMENT. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing and
signed by each of the parties hereto.
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IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement
as of the date first written above.
AVIATION DISTRIBUTORS, INC.,
a Delaware corporation
By:__________________________________________
Name:
Title:
INDEMNITEE
_____________________________________________
Name:
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