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EXHIBIT 10.16
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this day of , 1996, by and among (the "Indemnified Party"), and ECHELON
INTERNATIONAL CORPORATION, a Florida corporation (the "Corporation").
WITNESSETH:
WHEREAS, it is essential to the Corporation to retain and attract as
Directors, officers and key employees the most capable persons available; and
WHEREAS, the substantial increase in corporate litigation subjects
directors and officers to expensive litigation risks at the same time that the
availability of directors' and officers' liability insurance is severely
limited; and
WHEREAS, in addition, the statutory indemnification provisions of the
Florida Business Corporation Act expressly provide that they are non-exclusive;
and
WHEREAS, the Indemnified Party does not regard the protection available
under the Articles of Incorporation and Bylaws of the Corporation and insurance,
if any, as adequate in the present circumstances, and considers it necessary and
desirable to his service as a Director, officer and key employee to have
adequate protection, and the Corporation desires the Indemnified Party to
continue to serve in such capacity and to have such protection.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, it is hereby agreed as
follows:
1. INDEMNIFICATION GENERALLY.
(a) GRANT OF INDEMNITY.
(i) Subject to and upon the terms and conditions of
this Agreement, the Corporation shall indemnify and hold harmless the
Indemnified Party in respect of any and all costs, claims, losses, damages and
expenses that may be incurred or suffered by the Indemnified Party as a result
of or arising out of prosecuting, defending, settling or investigating:
(1) any threatened, pending or completed
claim, demand, inquiry, investigation, action, suit or
proceeding, whether formal or informal, or whether brought by
or in the right of the Corporation, and whether of a civil,
criminal, administrative or investigative nature, in which the
Indemnified Party may be or may
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have been involved as a party or otherwise, arising out of the
fact that the Indemnified Party is or was a director, officer,
employee, independent contractor or stockholder of the
Corporation or any of its "affiliates" (as such term is
defined in the rules and regulations promulgated by the
Securities and Exchange Commission under the Securities Act of
1933), or served as a director, officer, employee, independent
contractor or stockholder in or for any person, firm,
partnership, corporation or other entity at the request of the
Corporation (including without limitation service as a trustee
or in any fiduciary or similar capacity for or in connection
with any employee benefit plan maintained by the Corporation
or for the Corporation's employees, or service on any trade
association, civic, religious, educational or charitable
boards or committees);
(2) any attempt (regardless of its success)
by any person to charge or cause the Indemnified Party to be
charged with wrongdoing or with financial responsibility for
damages arising out of or incurred in connection with the
matters indemnified against in this Agreement; or
(3) any expense, interest, assessment, fine,
tax (including any excise tax), judgment or settlement payment
arising out of or incident to any of the matters indemnified
against in this Agreement including reasonable fees and
disbursements of legal counsel, legal assistants, experts,
accountants, consultants and investigators, before and at
trial, in appellate proceedings and otherwise (collectively,
the "Expenses").
(ii) The obligation of the Corporation under this
Agreement is not conditioned in any way on any attempt by the Indemnified Party
to collect from an insurer any amount under a liability insurance policy.
(iii) In no case shall any indemnification be
provided under this Agreement to the Indemnified Party by the Corporation:
(1) in any action or proceeding brought by or in the name or
interest of the Indemnified Party against the Corporation;
(2) in any action or proceeding brought by the Corporation
against the Indemnified Party, which action is initiated at the
direction of the Board of Directors of the Corporation; or
(3) for any "Nonindemnifiable Conduct" (as such term is
defined in Section 1(g)(ii), but no limitation contained in this
Section 1(a)(iii)(3) shall prohibit or otherwise restrict, or provide
the Corporation with a basis to withhold payments with
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respect to, the indemnification of the Indemnified Party, subject to
the repayment provisions of Section 1(g), unless and until it is
determined by a court of competent jurisdiction from which no appeal
may be taken that the Indemnified Party's actions or omissions
constitute such "Nonindemnifiable Conduct."
(b) CLAIMS FOR INDEMNIFICATION.
(i) Whenever any claims shall arise for
indemnification under this Agreement, the Indemnified Party shall notify the
Corporation promptly and in any event within 30 days after the Indemnified Party
has actual knowledge of the facts constituting the basis for such claim. The
notice shall specify all facts known to the Indemnified Party giving rise to
such indemnification right and the amount or an estimate of the amount of
liability (including estimated Expenses) arising therefrom. A delay by the
Indemnified Party in providing such notice shall not relieve the Corporation
from its obligations under this Agreement unless and only to the extent that the
Corporation is materially and adversely affected by the delay.
(ii) Any indemnification required under this
Agreement shall be made promptly after receipt by the Corporation of the written
notification specified in Section 1(b)(i) and a determination of the amount
required to be indemnified. The provisions of this Section 1(b)(ii) shall not
override or otherwise limit the right of the Indemnified Party to be indemnified
with respect to expenses incurred with respect to a Third Party Claim (as such
term is defined in Section 1(c)(i)) in accordance with the provisions contained
in the last two sentences of Section 1(c)(ii).
(c) RIGHTS TO DEFEND OR SETTLE; THIRD PARTY CLAIMS, ETC.
(i) If the facts giving rise to any indemnification
right under this Agreement shall involve any actual or threatened claim or
demand against the Indemnified Party, or any possible claim by the Indemnified
Party against any third party, such claim shall be referred to as a "Third Party
Claim." If the Corporation provides the Indemnified Party with an agreement in
writing in form and substance satisfactory to the Indemnified Party and his
counsel, agreeing to indemnify, defend or prosecute and hold the Indemnified
Party harmless from all costs, claims, losses, damages, expenses and liability
arising from any Third Party Claim (an "Agreement of Indemnity"), and
demonstrating to the satisfaction of the Indemnified Party the financial
wherewithal to accomplish such indemnification, the Corporation may at its own
expense undertake full responsibility for the defense or prosecution of such
Third Party Claim. The Corporation may contest or settle any such Third Party
Claim for money damages on such terms and conditions as it deems appropriate but
shall be obligated to consult in good faith with the Indemnified Party and not
to contest or settle any Third Party Claim involving injunctive or equitable
relief against or affecting the Indemnified Party or his properties or assets
without the prior written consent of the Indemnified Party, such consent not to
be withheld unreasonably. The Indemnified Party may participate at his own
expense and with his own counsel in defense or prosecution of a Third Party
Claim pursuant to this Section 1(c)(i), and
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such participation shall not relieve the Corporation of its obligation to
indemnify the Indemnified Party under this Agreement.
(ii) If the Corporation fails to deliver a
satisfactory Agreement of Indemnity and evidence of financial wherewithal within
10 days after receipt of notice pursuant to Section 1(b), the Indemnified Party
may contest or settle the Third Party Claim on such terms as it sees fit but
shall not reach a settlement with respect to the payment of money damages
without consulting in good faith with the Corporation. The Corporation may
participate at its own expense and with its own counsel in defense or
prosecution of a Third Party Claim pursuant to this Section 1(c)(ii), but any
such participation shall not relieve the Corporation of its obligations to
indemnify the Indemnified Party under this Agreement. All Expenses incurred in
defending or prosecuting any Third Party Claim shall be paid promptly by the
Corporation as the suit or other matter is proceeding, upon the submission of
bills therefor or other satisfactory evidence of such expenditures during the
pendency of any matter as to which indemnification is available under this
Agreement. The failure to make such payments within 10 days after submission of
evidence of those expenses shall constitute a breach of a material obligation of
the Corporation under this Agreement.
(iii) If by reason of any Third Party Claim a lien,
attachment, garnishment or execution is placed upon any of the property or
assets of the Indemnified Party, the Corporation shall promptly furnish a
satisfactory indemnity bond to obtain the prompt release of such lien,
attachment, garnishment or execution.
(iv) The Indemnified Party shall cooperate in the
defense of any Third Party Claim that is controlled by the Corporation, but the
Indemnified Party shall continue to be entitled to indemnification and
reimbursement for all costs and expenses incurred by him in connection therewith
as provided in this Agreement.
(d) COOPERATION. The parties to this Agreement shall execute
such powers of attorney as may be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may be reasonably
related to any such claim or action, shall provide to the counsel, accountants
and other representatives of each party access during normal business hours to
all properties, personnel, books, records, contracts, commitments and all other
business records of such other party and will furnish to such other party copies
of all such documents as may be reasonably requested (certified, if requested).
(e) CHOICE OF COUNSEL. In all matters as to which
indemnification is or may be available to the Indemnified Party under this
Agreement, the Indemnified Party shall be free to choose and retain counsel,
provided that the Indemnified Party shall secure the prior written consent of
the Corporation as to such selection, which consent shall not be unreasonably
withheld.
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(f) CONSULTATION. If the Indemnified Party desires to retain
the services of an attorney prior to the determination by the Corporation as to
whether it will undertake the defense or prosecution of the Third Party Claim as
provided in Section 1(c), the Indemnified Party shall notify the Corporation of
such desire in the notice delivered pursuant to Section 1(b)(i), and such notice
shall identify the counsel to be retained. The Corporation shall then have 10
days within which to advise the Indemnified Party whether it will assume the
defense or prosecution of the Third Party Claim in accordance with Section
1(c)(i). If the Indemnified Party does not receive an affirmative response
within such 10 day period, he shall be free to retain counsel of his choice, and
the indemnity provided in Section 1(a) shall apply to the reasonable Expenses of
such counsel incurred after the expiration of such 10 day period. Any Expenses
incurred prior to the expiration of such 10 day period shall not be covered by
the indemnity of Section 1(a).
(g) REPAYMENT.
(i) Notwithstanding the other provisions of this
Agreement to the contrary, if the Corporation has incurred any cost, damage or
expense under this Agreement paid to or for the benefit of the Indemnified Party
and it is determined by a court of competent jurisdiction from which no appeal
may be taken that the Indemnified Party's actions or omissions constitute
"Nonindemnifiable Conduct" as that term is defined in Section 1(g)(ii), the
Indemnified Party shall and does hereby undertake in such circumstances to
reimburse the Corporation for any and all such amounts previously paid to or for
the benefit of the Indemnified Party. Such reimbursement shall be without
interest, except that interest calculated as provided in Section 5(h)(ii) shall
begin to accrue 20 days after such a determination of Nonindemnifiable Conduct.
(ii) For these purposes, "Nonindemnifiable Conduct"
shall mean an action or omission of the Indemnified Party material to the cause
of action to which the indemnification under this Agreement relates, which
action or omission is determined to involve:
(1) a violation of the criminal law, unless
the Indemnified Party had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his
conduct was unlawful;
(2) a transaction from which the Indemnified
Party derived an improper personal benefit;
(3) willful misconduct or a conscious
disregard for the best interests of the Corporation (when
indemnification is sought in a proceeding by or in the right
of the Corporation to procure a judgment in favor of the
Corporation or when indemnification is sought in a proceeding
by or in the right of a stockholder); or
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(4) conduct pursuant to then applicable law
that prohibits such indemnification.
2. TERM.
This Agreement shall be effective upon its execution by all
parties and shall continue in full force and effect until seven years after the
date of this Agreement, or seven years after the termination of the Indemnified
Party's employment or term of office with the Corporation or any of its
affiliates, whichever is later, provided that such term shall be extended by any
period of time during which the Corporation is in breach of a material
obligation to the Indemnified Party, plus ninety days. Such term shall also be
extended with respect to each Third Party Claim then pending and as to which
notice under Section 1(b) has theretofore been given by the Indemnified Party to
the Corporation, and this Agreement shall continue to be applicable to each such
Third Party Claim.
3. REPRESENTATIONS AND AGREEMENTS OF THE CORPORATION.
(a) AUTHORITY. The Corporation represents, covenants and
agrees that it has the corporate power and authority to enter into this
Agreement and to carry out its obligations under this Agreement. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by the
Board of Directors of the Corporation. This Agreement is a valid and binding
obligation of the Corporation and is enforceable against the Corporation in
accordance with its terms.
(b) NONCONTESTABILITY. The Corporation represents, covenants
and agrees that it will not initiate, and will use its best efforts to cause
each of its affiliates not to initiate, any action, suit or proceeding
challenging the validity or enforceability of this Agreement.
(c) GOOD FAITH JUDGMENT. The Corporation represents, covenants
and agrees that it will exercise good faith judgment in determining the
entitlement of the Indemnified Party to indemnification under this Agreement.
4. RELATIONSHIP OF THIS AGREEMENT TO OTHER INDEMNITIES.
(a) NONEXCLUSIVITY.
(i) This Agreement and all rights granted to the
Indemnified Party under this Agreement are in addition to and are not deemed to
be exclusive with or of any other rights that
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may be available to the Indemnified Party under any Articles of Incorporation,
bylaw, statute, agreement, or otherwise.
(ii) The rights, duties and obligations of the
Corporation and the Indemnified Party under this Agreement do not limit,
diminish or supersede the rights, duties and obligations of the Corporation and
the Indemnified Party with respect to the indemnification afforded to the
Indemnified Party under any liability insurance, the Florida Business
Corporation Act, or under the Bylaws or the Articles of Incorporation of the
Corporation. In addition, the Indemnified Party's rights under this Agreement
will not be limited or diminished in any respect by any amendment to the Bylaws
or the Articles of Incorporation of the Corporation.
(b) AVAILABILITY, CONTRIBUTION, ETC.
(i) The availability or nonavailability of
indemnification by way of insurance policy, Articles of Incorporation, bylaw,
vote of stockholders, or otherwise from the Corporation to the Indemnified Party
shall not affect the right of the Indemnified Party to indemnification under
this Agreement, provided that all rights under this Agreement shall be subject
to applicable statutory provisions in effect from time to time.
(ii) Any funds received by the Indemnified Party by
way of indemnification or payment from any source other than from the
Corporation under this Agreement shall reduce any amount otherwise payable to
the Indemnified Party under this Agreement.
(iii) If the Indemnified Party is entitled under any
provision of this Agreement to indemnification by the Corporation for some
claims, issues or matters, but not as to other claims, issues or matters, or for
some or a portion of the expenses, judgments, fines or penalties actually and
reasonably incurred by him or amounts actually and reasonably paid in settlement
by him in the investigation, defense, appeal or settlement of any matter for
which indemnification is sought under this Agreement, but not for the total
amount thereof, the Corporation shall indemnify the Indemnified Party for the
portion of such claims, issues or matters or expenses, judgments, fines,
penalties or amounts paid in settlement to which the Indemnified Party is
entitled.
(iv) If for any reason a court of competent
jurisdiction from which no appeal can be taken rules that the indemnity provided
under this Agreement is unavailable, or if for any reason the indemnity under
this Agreement is insufficient to hold the Indemnified Party harmless as
provided in this Agreement, then, in any such event, the Corporation shall
contribute to the amounts paid or payable by the Indemnified Party in such
proportion as equitably reflects the relative benefits received by, and fault
of, the Indemnified Party and the Corporation and its affiliates.
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5. MISCELLANEOUS.
(a) NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
telephone line facsimile transmission or other similar electronic or digital
transmission method; the day after it is sent, if sent by recognized overnight
delivery service with all fees payable by the sender; and five days after it is
sent, if mailed, first class mail, postage prepaid. In each case notice shall be
sent to:
if to the Indemnified Party:
if to the Corporation:
With a copy to:
or to such other address as either party may have specified in writing to the
other using the procedures specified above in this Section 5(a).
(b) GOVERNING LAW. This Agreement shall be construed pursuant
to and governed by the substantive laws of the State of Florida (but any
provision of Florida law shall not apply if the application of such provision
would result in the application of the law of a state or jurisdiction other than
Florida).
(c) SEVERABILITY. Any provision of this Agreement that is
determined by a court of competent jurisdiction to be prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or non-
authorization without invalidating the remaining provisions hereof or affecting
the validity, enforceability or legality of such provision in any other
jurisdiction. In any such case, such determination shall not affect any other
provision of this Agreement, and the remaining provisions of this Agreement
shall remain in full force and effect. If any provision or term of this
Agreement is susceptible to two or more constructions or interpretations, one or
more of which would render the provision or term void or unenforceable, the
parties agree that a construction or interpretation which renders the term or
provision valid shall be favored.
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(d) SPECIFIC ENFORCEMENT; PRESUMPTION.
(i) The parties agree and acknowledge that in the
event of a breach by the Corporation of its obligation promptly to indemnify the
Indemnified Party as provided in this Agreement, or breach of any other material
provision of this Agreement, damages at law will be an insufficient remedy to
the Indemnified Party. Accordingly, the parties agree that, in addition to any
other remedies or rights that may be available to the Indemnified Party, the
Indemnified Party shall also be entitled, upon application to a court of
competent jurisdiction, to obtain temporary or permanent injunctions to compel
specific performance of the obligations of the Corporation under this Agreement.
(ii) There shall exist in any action to enforce the
rights of the Indemnified Party under this Agreement a rebuttable presumption
that the Indemnified Party has met the applicable standard(s) of conduct and is
therefore entitled to indemnification pursuant to this Agreement, and the burden
of proving that the relevant standards have not been met by the Indemnified
Party shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors or independent legal counsel) prior to the
commencement of such action to have made a determination that indemnification is
proper in the circumstances because the Indemnified Party has met the applicable
standard of conduct, nor an actual determination by the Corporation (including
its Board of Directors or independent legal counsel) that the Indemnified Party
has not met such applicable standard of conduct, shall (X) constitute a defense
to the action, (Y) create a presumption that the Indemnified Party has not met
the applicable standard of conduct, or (Z) otherwise alter the presumption in
favor of the Indemnified Party referred to in the preceding sentence.
(e) COST OF ENFORCEMENT; INTEREST.
(i) If the Indemnified Party engages the services of
an attorney or any other third party or in any way initiates legal action to
enforce his rights under this Agreement, including but not limited to the
collection of monies due from the Corporation to the Indemnified Party, the
prevailing party shall be entitled to recover all reasonable costs and expenses
(including reasonable attorneys' fees before and at trial, in appellate
proceedings and otherwise). Should the Indemnified Party prevail, such costs and
expenses shall be in addition to monies otherwise due him under this Agreement.
(ii) If any monies shall be due the Indemnified Party
from the Corporation under this Agreement and shall not be paid within 30 days
from the date of written request for pay ment, interest shall accrue on such
unpaid amount at the rate of 2% per annum in excess of the prime rate published
from time to time in The Wall Street Journal in its "Money Rates" column or any
similar or successor column or feature, or such lower rate as may be required to
comply with applicable law from the date when due until it is paid in full.
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(f) APPLICATION TO THIRD PARTIES, ETC. Nothing in this
Agreement, whether express or implied, is intended or should be construed to
confer upon, or to grant to, any person, except the Corporation, the Indemnified
Party and their respective heirs, assignees and successors, any claim, right or
remedy under or because of this Agreement or in any provision of it. This
Agreement shall be binding upon and inure to the benefit of the successors in
interest and assigns, heirs and personal representatives, as the case may be, of
the parties, including any successor corporation resulting from a merger,
consolidation, recapitalization, reorganization, sale of all or substantially
all of the assets of the Corporation, or any other transaction resulting in the
successor corporation assuming the liabilities of the Corporation under this
Agreement (by operation of law or otherwise).
(g) CONSTRUCTION. As used in this Agreement, (1) the word
"including" is always without limitation; (2) the words in the singular number
include words of the plural number and vice versa; and (3) the word "person"
includes a trust, corporation, association, partnership, joint venture, business
trust, unincorporated organization, limited liability company, government,
public body or authority, any governmental agency or department, and any other
entity, as well as a natural person.
(h) FURTHER ASSURANCES. The parties to this Agreement will
execute and deliver, or cause to be executed and delivered, such additional or
further documents, agreements or instruments and shall cooperate with one
another in all respects for the purpose of carrying out the transactions
contemplated by this Agreement.
(i) VENUE; PROCESS. The parties to this Agreement agree that
jurisdiction and venue in any action brought pursuant to this Agreement to
enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in the Circuit Court of the State of Florida in and
for Hillsborough County, or in the United States District Court for the Middle
District of Florida, Tampa Division. The parties agree that they will not object
that any action commenced in the foregoing jurisdictions is commenced in a forum
non conveniens. The parties further agree that the mailing by certified or
registered mail, return receipt requested, of any process required by any such
court shall constitute valid and lawful service of process against them, without
the necessity for service by any other means provided by statute or rule of
court.
(j) WAIVER AND DELAY. No waiver or delay in enforcing the
terms of this Agreement shall be construed as a waiver of any subsequent breach.
No action taken by the Indemnified Party shall constitute a waiver of his rights
under this Agreement.
(k) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be considered an original, but all of which
together shall constitute one and the same instrument.
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(l) HEADINGS. The headings of the various sections in this
Agreement are inserted for the convenience of the parties and shall not affect
the meaning, construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
INDEMNIFIED PARTY:
_____________________________
ECHELON INTERNATIONAL
CORPORATION
By:__________________________
