INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT dated as of May 28,1998 (the "Agreement")
by and between LIPA ACQUISITION CORP., ("ACQUISITION"), a New York Corporation
located at 000 Xxxxx Xxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxx Xxxx, 00000 (the
"Indemnitor"), and each individual identified on Schedule I attached hereto and
hereby made part hereof (each an "Indemnitee," collectively, the "Indemnitees").
W I T N E S S E T H
WHEREAS, each Indemnitee has agreed to serve, currently serves, or has
served as a director or officer of the Indemnitor, or as a director or officer
of Long Island Lighting Company (doing business as "LIPA") subsequent to May 28,
1998, or as a trustee or officer of Long Island Power Authority (the
"Authority"), or as a director or officer of any subsidiary of the Authority
(other than LIPA), or while such director, officer or trustee, has agreed to
serve, currently serves, or has served, at the request of the Indemnitor, LIPA
(subsequent to May 28, 1998), the Authority or any subsidiary of the Authority
(other than LIPA), any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, and
WHEREAS, the Indemnitor desires to indemnify each Indemnitee to the
fullest extent permitted by law and each Indemnitee desires to be so indemnified
by the Indemnitor,
NOW THEREFORE, in consideration of each Indemnitee's past, present or
future service, and in order to induce the continued and/or future service of
each current and/or future Indemnitee, the parties hereby agree as follows:
1. Indemnification.
(a) The Indemnitor shall indemnify and hold harmless each Indemnitee to
the fullest extent permitted by law against any and all expenses (including,
without limitation, investigation expenses and expert witnesses' and attorneys'
fees and expenses), losses, judgments, fines and amounts paid in settlement
actually incurred by an Indemnitee (net of any related insurance proceeds or
other indemnification payments received, paid to, or on behalf of such
Indemnitee as described in Section 4(b)) in connection with any present or
future threatened, pending or completed claim, action, suit or proceeding
whether civil, criminal, administrative or investigative (a "Proceeding"),
whether or not such Proceeding is by or in the right of the Indemnitor, based
upon, arising from, relating to, or by reason of the fact that such Indemnitee
was, is, shall be or shall have been a director or officer of the Indemnitor, or
a director or officer of LIPA subsequent to May 28, 1998, or a trustee or
officer of the Authority, or a director or officer of any subsidiary of the
Authority (other than LIPA), or while such director, officer or trustee, has
agreed to serve, currently serves, or has served, at the request of the
Indemnitor, LIPA (subsequent to May 28, 1998), the Authority or any subsidiary
of the Authority (other than LIPA), any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity;
provided that no indemnification may be made to or on behalf of any Indemnitee
if a judgment or other final adjudication adverse to such Indemnitee establishes
that such Indemnitee's acts were committed in bad faith or were the result of
active and deliberate dishonesty, and were material to the cause of the action
so adjudicated, or that such Indemnitee
personally gained in fact a financial profit or other advantage to which such
Indemnitee was not legally entitled, and further, provided that no such
indemnification shall be required with respect to any settlement or other
nonadjudicated disposition of any Proceeding unless the Indemnitor has given its
prior consent to such settlement or disposition, such consent not to be
unreasonably withheld.
(b) To the extent an Indemnitee has been successful, on the merits or
otherwise, in the defense of a Proceeding or in the defense of any claim, issue
or matter involved therein, such Indemnitee shall be entitled as a matter of
right to indemnification as authorized in Section 1 (a) upon receipt by the
Indemnitor of a statement from such Indemnitee requesting such indemnification
without further determination of entitlement to indemnification by the
Indemnitor. Any other indemnification under Section 1 (a), unless awarded by a
court, shall be made by the Indemnitor only if authorized in a specific case,
(i) by the Board of Directors of the Indemnitor, acting by a quorum of its
directors who are not parties to such action or proceeding, upon a finding that
the Indemnitee has met the standard of conduct so forth in Section 1 (a),
(ii) if such a quorum is not obtainable or, even if obtainable, a quorum
of disinterested directors so directs, (x) by the Board of Directors the
Indemnitor upon the opinion in writing of independent legal counsel reasonably
acceptable to the Indemnitee and the Indemnitor, that indemnification is proper
in the circumstances because the applicable standard of conduct set forth in
Section 1 (a) has been met by such Indemnitee, or (y) by the shareholders of the
Indemnitor upon a finding that such Indemnitee has met the applicable standard
of conduct set forth in Section 1 (a).
(c) The termination of any such Proceeding by judgment, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not in
itself create a presumption that the Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of the action or that such Indemnitee personally gained in fact a
financial profit or other advantage to which such Indemnitee was not legally
entitled. In making a determination of entitlement pursuant to Section 1 (b) or
Section 3, the person or entity making such determination shall presume that
such Indemnitee is entitled to indemnification.
2. Method of Payment.
(a) Each Indemnitee shall, upon making a written request to the
Indemnitor, be entitled to receive promptly from the Indemnitor, and the
Indemnitor shall promptly pay to such Indemnitee, by check payable in next-day
funds, the amount such Indemnitee is entitled to receive from the Indemnitor
pursuant to Section 1 ("Indemnified Amounts"). In making any such written
request, an Indemnitee shall submit to the Indemnitor a schedule setting forth
in reasonable detail the amount expended (or incurred and expected to be
expended) for each Indemnified Amount accompanied by a copy of the relevant xxxx
or other documentation.
(b) Amounts reasonably expected to be incurred or expended by the
Indemnitee within six (6) months next succeeding a request by such Indemnitee as
described below for expenses. including attorneys' fees, in defending any
Proceeding in advance of the final
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disposition thereof ("Advanced Amount") shall be paid by the Indemnitor upon
such Indemnitee's written request, which shall include a schedule setting forth
in reasonable detail the amount expended, or reasonably expected to be expended
within the next six (6) months, by such Indemnitee, accompanied by any relevant
documentation. An Indemnitee may make as many requests for an Advanced Amount
under this Section 2(b) as such Indemnitee may deem reasonably necessary to
cover Indemnified Amounts.
(c) Each Indemnitee hereby agrees to repay all Indemnified Amounts and
Advanced Amounts to the Indemnitor within ten (10) days following the final
resolution of any Proceeding to which such Indemnified Amounts and/or Advanced
Amounts relate, if, and to the extent, it is determined that such Indemnitee is
not entitled to indemnification with respect thereto pursuant to Section 1.
(d) In the event that an Indemnitee is entitled to indemnification
pursuant to Section 1, such Indemnitee shall have the right to seek payment for
that portion of Indemnified Amounts which is in excess of Advanced Amounts
received by such Indemnitee (the "Unadvanced Indemnified Amount") by following
the procedures set forth in Section 2(a); provided that the schedule of
Indemnified Amounts shall in addition set forth each and every Advanced Amount
received as of the date of such listing in order to calculate the net Unadvanced
Indemnified Amounts. If an Indemnitee is entitled to indemnification pursuant to
Section 1 and the total of the Advanced Amounts theretofore received by such
Indemnitee exceeds the total amount of Indemnified Amounts, such Indemnitee
shall pay the amount of the difference to the Indemnitor within thirty (30) days
after a determination of the amount of such excess.
3. Enforcement of Rights under this Agreement.
The rights to indemnification or advances pursuant to this Agreement shall
be enforceable by any Indemnitee at such Indemnitee's election (i) in any court
of competent jurisdiction, or (ii) by arbitration by a single arbitrator in
accordance with the rules of the American Arbitration Association and such
Indemnitee's costs and expenses incurred in connection with the Indemnitee's
efforts to establish his or her right to indemnification or advances in any such
judicial or arbitration proceeding shall be paid by the Indemnitor, if the
Indemnitee is successful. If an Indemnitee elects to proceed by arbitration, the
arbitrator shall render his or her decision and notify the parties of such
decision within thirty (30) days following the initiation of arbitration. The
Indemnitor agrees to be subject to the jurisdiction of and be bound by the
determination of any court or arbitration in which such proceeding shall have
been commenced, continued or appealed. Further, the Indemnitor shall not oppose
an Indemnitee's claim by reason of any prior determination made pursuant to this
Agreement and shall limit its defense to the merits of the claim. Further, any
adjudication or arbitration shall be conducted de novo, without prejudice in any
manner whatsoever by reason of any prior determination by the Indemnitor. In any
such judicial or arbitration proceeding, the Indemnitor shall have the burden of
proving by the preponderance of the evidence that the Indemnitee is not entitled
to indemnification or advances hereunder. Neither the failure of the Indemnitor
(including its Board of Directors, independent legal counsel or shareholders) to
have made a determination that an Indemnitee is entitled to indemnification or
advances in neither the circumstances nor an actual determination by the
Indemnitor (including its Board of Directors, independent legal counsel or
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shareholders) that such Indemnitee is not so entitled shall be a defense to an
action or create a presumption that such Indemnitee is not so entitled.
4. Rights to Indemnification and Advances Not Exclusive.
(a) The rights to indemnification and advances hereunder shall not be
deemed exclusive of, or in limitation of, any other rights to which an
Indemnitee may be entitled under any law, agreement, provision of the
certificate of incorporation or by-laws of the Indemnitor, vote of the
shareholders or disinterested Directors of the Indemnitor or otherwise, both as
to action in such Indemnitee's official capacity and as to action in another
capacity while holding such office, and shall continue after an Indemnitee has
ceased to be a director or officer of the Indemnitor, or a director or officer
of LIPA or a trustee or officer of the Authority, or a director or officer of
any subsidiary of the Authority (other than LIPA), or to serve, at the request
of the Indemnitor, LIPA (subsequent to May 28, 1998), the Authority or any
subsidiary of the Authority (other than LIPA), any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity.
(b) If an Indemnitee shall receive payment from any insurance carrier or
from the plaintiff in any Proceeding or indemnification payments from any entity
if the Proceeding involves such Indemnitee's service with such entity in respect
of Indemnified Amounts after payments on account of all or any part of such
indemnified Amounts have been made by the Indemnitor, such Indemnitee shall
reimburse the Indemnitor the amount, if any, by which the sum of such payments
by such insurance carrier, such enterprise and such plaintiff and payments by
the Indemnitor to such Indemnitee exceed the Indemnified Amounts; provided that
any such insurance proceeds or payments required to be reimbursed to the
insurance carrier or enterprise shall not be payments to such Indemnitee for
purposes of this Section 4(b). Upon payment of Indemnified Amounts hereunder,
the Indemnitor shall, to the extent not prohibited under such insurance
policies, be subrogated to such Indemnitee's rights against any insurance
carrier or enterprise in respect of such Indemnified Amounts.
5. Protection Pending Determination of Entitlement.
During the interval between the Indemnitor's receipt of any Indemnitee's
request for indemnification and the later to occur of (a) payment in full to
such Indemnitee of the Indemnified Amounts, or (b) a final determination (if
required) pursuant to Sections 1(b) or 3 that such Indemnitee is not entitled to
indemnification, the Indemnitor shall protect such Indemnitee against loss
which, for purposes of this Agreement, shall mean the taking of the necessary
steps (whether or not such steps require expenditures to be made by the
Indemnitor at that time) to stay, pending a final determination of such
Indemnitee's entitlement to indemnification (and, if such Indemnitee is so
entitled, the payment thereof), the execution, enforcement or collection of any
judgments, penalties, fines or any other amounts for which such Indemnitee may
be liable in order to avoid such Indemnitee's being or becoming in default with
respect to any such amounts (such necessary steps to include, but not be limited
to, the procurement of a surety bond to achieve such stay), within three (3)
days after receipt of such Indemnitee's written request therefor, together with
a written undertaking by such Indemnitee to repay, no later than twenty (20)
days following receipt of a statement therefor from the Indemnitor, amounts (if
any) expended by the Indemnitor for such purpose, if it is ultimately
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determined (if such determination is required) pursuant to Sections 1 (b) or 3
that such Indemnitee is not entitled to be indemnified against such judgments,
penalties, fines or other amounts, provided that in no event shall the
Indemnitor pay the amount of any such judgment, penalty, fine or other amount
except pursuant to Sections 1 (b) or 3.
6. Successors; Binding Agreement, Retroactive Effect.
(a) The Indemnitor shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business or assets, by agreement in form and substance
reasonably satisfactory to each Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Indemnitor would be required to perform if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable by
each Indemnitee's personal or legal representatives, executors, administrators,
successors, heirs, distributees and devisees. If an Indemnitee should die while
any amounts would still be payable to such Indemnitee hereunder if such
Indemnitee had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such
Indemnitee's devisee or other designee, or if there be no such designee, to such
Indemnitee's estate.
(c) This Agreement is intended to be retroactive for the benefit of each
Indemnitee and the full benefits hereof shall be available in respect of an
alleged or actual occurrence, acts or failures to act prior to the date of this
Agreement.
7. Notice.
All notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been given upon receipt
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight delivery service to the address set forth in the
forepart of this Agreement with respect to the Indemnitor and to the address set
forth in Schedule I with respect to an Indemnitee or to such other address as
the Indemnitor may have furnished to the Indemnitees or an Indemnitee may have
furnished to the Indemnitor, in each case in writing in accordance herewith.
8. Severability.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable under any particular circumstances or for any
reason whatsoever (a) the validity, legality and enforceability of the remaining
provisions of this Agreement, including, without limitation, all other portions
of any Section, paragraph or clause of this Agreement that contains any
provision that has been found to be invalid, illegal or unenforceable, that are
not themselves invalid, illegal or unenforceable), or the validity, legality or
enforceability under any other circumstances shall not in any way be affected or
impaired thereby and (b) to the fullest extent possible consistent with
applicable law, the provisions of this Agreement (including, without limitation,
all other portions of any Section, paragraph or clause of this Agreement that
contains any such provision that has been found to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable shall
be deemed revised, and shall be construed
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so as to give effect to the intent manifested by this Agreement (including the
provision held invalid, illegal or unenforceable).
9. Miscellaneous.
This Agreement may not be modified or amended, waived or discharged unless
agreed to in writing by the Indemnitor and by each Indemnitee against whom such
modification, amendment, waiver or discharge is sought to be asserted. No waiver
by any party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
any other party shall be deemed a waiver of similar or dissimilar provisions or
conditions. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof. Each Indemnitee seeking to obtain the benefits of
this Agreement may, as a condition to receiving such benefits, be required by
the Indemnitor to execute a counterpart of this Agreement.
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IN WITNESS WHEREOF, the Indemnitor has caused this Agreement to be duly
executed, all as of the day and year first above written.
LIPA ACQUISITION CORP.
By: /s/Xxxxxxx Xxxxxx
----------------------------------
Name:
Title:
Accepted and agreed, as
of May 28, 1998, pursuant
to Section 6 hereof
LONG ISLAND LIGHTING COMPANY
By: /s/Xxxxxxx Xxxxxx
---------------------------------
Name:
Title:
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SCHEDULE I
Schedule of Indemnitees
Indemnitee Address
---------- -------
Xxxxxxx X. Xxxxxx __________________________________
Xxxxxxx X. Xxxx __________________________________
Xxxxxxx Xxxxxxxx __________________________________
Xxxxxx Xxxxxxxx __________________________________
Xxxxxx X. Xxxxxxx __________________________________
Xxxxxxx X. Xxxxxxxxxx __________________________________
Xxxxxxx X. Xxxxxxx __________________________________
Xxxxxx Xxxxxxx __________________________________
Xxxxxx X. Xxxxxxx __________________________________
Xxxxxx XxXxxxxx __________________________________
Xxxxx X. Xxxxxx __________________________________
Xxxxxx Xxxxx __________________________________
Xxxxxxx Xxxxxxxx __________________________________
Xxxxxxxx Xxxxxxxxx __________________________________
Xxxxx X. Xxxx __________________________________
Xxxxx Xxxx __________________________________
Xxxxxxx Xxxxxx __________________________________
Xxxxx X. Xxxxxxx __________________________________
Xxxxx X. Xxxxx __________________________________
Xxxxxxx Xxxxxxxx __________________________________
Xxxxxx Xxxxxxx __________________________________
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Xxxxxxx X. Xxxxxxxx __________________________________
Anastasia Song __________________________________
Xxxx X. Xxxxxxxx __________________________________
Xxxxx Xxxxxx __________________________________
Xxxxxx X. Xxxxxx __________________________________
Xxxxxxx X. Xxxxxxxx __________________________________
Xxxxxx X. Xxxx __________________________________
In addition to those persons identified by name in this Schedule I, each person
who has agreed to serve, currently serves, or has served as a director or
officer of the Indemnitor, or as a director or officer of Long Island Lighting
Company (doing business as "LIPA") subsequent to May 29, 1998, or as a trustee
or officer of Long Island Power Authority (the "Authority"), or as a director or
officer of any subsidiary of the Authority (other than LIPA), or while such
director, officer or trustee, has agreed to serve, currently serves, or has
served, at the request of the Indemnitor, LIPA (subsequent to May 28, 1998), the
Authority or any subsidiary of the Authority (other than LIPA), any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity shall be deemed an Indemnitee for all purposes of the
Indemnification Agreement to which this Schedule I is attached.
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