INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (“Agreement”)
is
entered into as of _______________ by and between Neah Power Systems, Inc.
(“Company”),
and
____________ (“Indemnitee”).
RECITALS
A. It
is
important to the Company to attract and retain as directors the most capable
persons reasonably available.
B. Indemnitee
is
becoming or continuing as a director of the Company.
C. Both
the
Company and Indemnitee recognize the increased risk of litigation and other
claims being asserted against directors of companies in today’s environment.
D. The
Company’s Certificate of Incorporation and By-laws (the “Constituent
Documents”)
provide that the Company will indemnify its directors and the Company’s By-laws
provide that the Company will advance expenses in connection therewith, and
Indemnitee’s willingness to serve as a director of the Company is based in part
on Indemnitee’s reliance on such provisions.
E. 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 aforesaid provisions of
the Constituent Documents, and to provide Indemnitee with express contractual
indemnification (regardless of, among other things, any amendment to or
revocation of such provisions or any change in the composition of the Company’s
Board of Directors (the “Board”)
or any
acquisition or business combination transaction relating to the Company), the
Company wishes to provide in this Agreement for the indemnification of and
the
advancement of Expenses to Indemnitee 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.
NOW,
THEREFORE, the parties hereby agree as follows:
1. Definitions.
In addition to terms defined elsewhere herein, the following terms have the
following meanings when used in this Agreement with initial capital
letters:
(a) “Affiliate”
has
the
meaning given to that term in Rule 405 under the Securities Act of 1933,
provided, however, that for purposes of this Agreement the Company and its
subsidiaries will not be deemed to constitute Affiliates of Indemnitee or the
Indemnitee.
(b) “Claim”
means
any threatened, pending or completed action, suit or proceeding, or any inquiry
or investigation, whether instituted, made or conducted by the Company or any
other party, including without limitation any governmental entity, that
Indemnitee determines might lead to the institution of any such action, suit
or
proceeding, whether civil, criminal, administrative, arbitrative, investigative
or other.
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(c) “Expenses”
includes attorneys’ and experts’ fees, expenses and charges and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any Claim.
(d) “Indemnifiable
Losses”
means
any and all Expenses, damages, losses, liabilities, judgments, fines, penalties
and amounts paid in settlement (including without limitation all interest,
assessments and other charges paid or payable in connection with or in respect
of any of the foregoing) (collectively, “Losses”)
relating to, resulting from or arising out of any act or failure to act by
the
Indemnitee, or his or her status as any person referred to in clause (i) of
this
sentence, (i) in his or her capacity as a director, officer, employee or agent
of the Company, any of its Affiliates or any other entity as to which the
indemnitee is or was serving at the request of the Company as a director,
officer, employee, member, manager, trustee or agent of another corporation,
limited liability company, partnership, joint venture, trust or other entity
or
enterprise, whether or not for profit and (ii) in respect of any business,
transaction or other activity of any entity referred to in clause (i) of this
sentence.
2. Indemnification.
The
Company will indemnify and hold harmless Indemnitee, to the fullest extent
permitted by the laws of the State of Delaware in effect on the date hereof
or
as such laws may from time to time hereafter be amended to increase the scope
of
such permitted indemnification, against all Indemnifiable Losses relating to,
resulting from or arising out of any Claim. The failure by Indemnitee to notify
the Company of such Claim will not relieve the Company from any liability
hereunder unless, and only to the extent that, the Company did not otherwise
learn of the Claim and such failure results in forfeiture by the Company of
substantial defenses, rights or insurance coverage. Except as provided in
Section
16,
however, Indemnitee will not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee against the
Company or any director or officer of the Company unless the Company has joined
in or consented to the initiation of such Claim. If so requested by Indemnitee,
the Company will advance within two business days of such request any and all
Expenses to Indemnitee which Indemnitee determines reasonably likely to be
payable, provided, however, that Indemnitee will return, without interest,
any
such advance which remains unspent at the final conclusion of the Claim to
which
the advance related.
3. Additional
Expenses.
Without
limiting the generality or effect of the foregoing, the Company will indemnify
Indemnitee against and, if requested by Indemnitee, will within two business
days of such request advance to Indemnitee, any and all attorneys’ fees and
other Expenses paid or incurred by Indemnitee in connection with any Claim
asserted or brought by Indemnitee for (i) indemnification or advance payment
of
Expenses by the Company under this Agreement or any other agreement or under
any
provision of the Company’s Constituent Documents now or hereafter in effect
relating to Claims for Indemnifiable Losses 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.
4. Partial
Indemnity.
If
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of any Indemnifiable Loss but not for
all
of the total amount thereof, the Company will 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 Loss or in defense
of any issue or matter therein, including without limitation dismissal without
prejudice, Indemnitee will be indemnified against all Expenses incurred in
connection therewith. In connection with any determination as to whether
Indemnitee is entitled to be indemnified hereunder, there will be a presumption
that Indemnitee is so entitled, which presumption the Company may overcome
only
by its adducing clear and convincing evidence to the contrary.
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5. No
Other Presumption.
For
purposes of this Agreement, the termination of any Claim by judgment, order,
settlement (whether with or without court approval) or conviction, or upon
a
plea of nolo contendere or its equivalent, will 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.
6. Non-Exclusivity.
The
rights of Indemnitee hereunder will be in addition to any other rights
Indemnitee may have under the Constituent Documents, or the substantive laws
of
the Company’s jurisdiction of incorporation, any other contract or otherwise
(collectively, “Other
Indemnity Provisions”);
provided, however, that (i) to the extent that Indemnitee otherwise would have
any greater right to indemnification under any Other Indemnity Provision,
Indemnitee will be deemed to have such greater right hereunder and (ii) to
the
extent that any change is made to any Other Indemnity Provision which permits
any greater right to indemnification than that provided under this Agreement
as
of the date hereof, Indemnitee will be deemed to have such greater right
hereunder. The Company will not adopt any amendment to any of the Constituent
Documents the effect of which would be to deny, diminish or encumber
Indemnitee’s right to indemnification under this Agreement or any Other
Indemnity Provision.
7. Liability
Insurance.
To the
extent the Company maintains an insurance policy or policies providing
directors’ and officers’ liability insurance, Indemnitee will be covered by such
policy or policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any director of the Company. The Company will
not
be required to create a trust fund, grant a security interest, obtain a letter
of credit, or use other means to ensure the payment of such amounts as may
be
necessary to satisfy its obligations to indemnify and advance expenses pursuant
to this Agreement.
8. Subrogation.
In the
event of payment under this Agreement, the Company will be subrogated to the
extent of such payment to all of the related rights of recovery of Indemnitee
against other persons or entities (other than Indemnitee’s successors). The
Indemnitee will execute all papers reasonably required to evidence such rights
of recovery (all of Indemnitee’s reasonable Expenses, including attorneys’ fees
and charges, related thereto to be reimbursed by or, at the option of
Indemnitee, advanced by the Company).
9. No
Duplication of Payments.
The
Company will not be liable under this Agreement to make any payment in
connection with any Indemnifiable Loss made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (net of Expenses incurred
in
connection therewith) under any insurance policy, the Constituent Documents
and
Other Indemnity Provisions or otherwise of the amounts otherwise indemnifiable
hereunder.
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10. Defense
of Claims.
The
Company will be entitled to participate in the defense of any Claim or to assume
the defense thereof, with counsel reasonably satisfactory to the Indemnitee,
provided that in the event that (i) the use of counsel chosen by the Company
to
represent Indemnitee would present such counsel with an actual or potential
conflict, (ii) the named parties in any such Claim (including any impleaded
parties) include both the Company and Indemnitee and Indemnitee shall conclude
that there may be one or more legal defenses available to him or her that are
different from or in addition to those available to the Company, or (iii) any
such representation by the Company would be precluded under the applicable
standards of professional conduct then prevailing, then Indemnitee will be
entitled to retain separate counsel (but not more than one law firm in respect
of any particular Claim) at the Company’s expense. The Company will not, without
the prior written consent of the Indemnitee, effect any settlement of any
threatened or pending Claim which the Indemnitee is or could have been a party
unless such settlement solely involves the payment of money and includes an
unconditional release of the Indemnitee from all liability on any claims that
are the subject matter of such Claim.
11. Successors
and Binding Agreement.
(a) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially
all
of the business or assets of the Company, by agreement in form and substance
satisfactory to Indemnitee and his or her counsel, expressly to assume and
agree
to perform this Agreement in the same manner and to the same extent the Company
would be required to perform if no such succession had taken place. This
Agreement will be binding upon and inure to the benefit of the Company and
any
successor to the Company, including without limitation any person acquiring
directly or indirectly all or substantially all of the business or assets of
the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor will thereafter be deemed the “Company”
for
purposes of this Agreement), but will not otherwise be assignable or delegatable
by the Company.
(b) This
Agreement will inure to the benefit of and be enforceable by the Indemnitee’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, legatees and other successors.
(c) This
Agreement is personal in nature and neither of the parties hereto will, without
the consent of the other, assign or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Sections
11(a) and 11(b).
Without
limiting the generality or effect of the foregoing, Indemnitee’s right to
receive payments hereunder will not be assignable, whether by pledge, creation
of a security interest or otherwise, other than by a transfer by the
Indemnitee’s will or by the laws of descent and distribution, and, in the event
of any attempted assignment or transfer contrary to this Section
11(c),
the
Company will have no liability to pay any amount so attempted to be assigned
or
transferred.
12. Notices.
For all
purposes of this Agreement, all communications, including without limitation
notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), or five business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid or one business day after having been sent for next-day delivery by
a
nationally recognized overnight courier service, addressed to the Company (to
the attention of the Secretary of the Company) and to the Indemnitee at the
addresses shown on the signature page hereto, or to such other address as any
party may have furnished to the other in writing and in accordance herewith,
except that notices of changes of address will be effective only upon
receipt.
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13. Governing
Law.
The
validity, interpretation, construction and performance of this Agreement will
be
governed by and construed in accordance with the substantive laws of the State
of Delaware, without giving effect to the principles of conflict of laws of
such
State. Each party consents to non-exclusive jurisdiction of any Delaware state
or federal court or any court in any other jurisdiction in which a Claim is
commenced by a third person for purposes of any action, suit or proceeding
hereunder, waives any objection to venue therein or any defense based on forum
non conveniens or similar theories and agrees that service of process may be
effected in any such action, suit or proceeding by notice given in accordance
with Section
12.
14. Validity.
If any
provision of this Agreement or the application of any provision hereof to any
person or circumstance is held invalid, unenforceable or otherwise illegal,
the
remainder of this Agreement and the application of such provision to any other
person or circumstance will not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal will be reformed to the extent,
and
only to the extent, necessary to make it enforceable, valid or
legal.
15. Miscellaneous.
No
provision of this Agreement may be waived, modified or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Indemnitee
and the Company. No waiver by either party hereto at any time of any breach
by
the other party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, expressed or implied
with respect to the subject matter hereof have been made by either party that
are not set forth expressly in this Agreement. References to Sections are to
references to Sections of this Agreement.
16. Legal
Fees.
It is
the intent of the Company that the Indemnitee not be required to incur legal
fees and or other Expenses associated with the interpretation, enforcement
or
defense of Indemnitee’s rights under this Agreement by litigation or otherwise
because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Indemnitee hereunder. Accordingly,
without limiting the generality or effect of any other provision hereof, if
it
should appear to the Indemnitee that the Company has failed to comply with
any
of its obligations under this Agreement or in the event that the Company or
any
other person takes or threatens to take any action to declare this Agreement
void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Indemnitee the benefits
provided or intended to be provided to the Indemnitee hereunder, the Company
irrevocably authorizes the Indemnitee from time to time to retain counsel of
Indemnitee’s choice, at the expense of the Company as hereafter provided, to
advise and represent the Indemnitee in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or defense
of any litigation or other legal action, whether by or against the Company
or
any director, officer, stockholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Indemnitee’s entering into an attorney-client relationship with
such counsel, and in that connection the Company and the Indemnitee agree that
a
confidential relationship shall exist between the Indemnitee and such counsel.
Without respect to whether the Indemnitee prevails, in whole or in part, in
connection with any of the foregoing, the Company will pay and be solely
financially responsible for any and all attorneys’ and related fees and expenses
incurred by the Indemnitee in connection with any of the foregoing.
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17. Interpretation.
No
provision of this Agreement will be interpreted in favor of, or against, either
of the parties hereto by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to
which
any such provision is inconsistent with any prior draft hereof or
thereof.
18. Counterparts.
This
Agreement may be executed by facsimile and in one or more counterparts, each
of
which will be deemed to be an original but all of which together will constitute
one and the same agreement.
IN
WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly
authorized representative to execute this Agreement as of the date first above
written.
| INDEMNITEE: | |||
| ___________________________________________ | |||
| Name: ____________________________________________ |
| NEAH POWER SYSTEMS, INC. | ||
| |
|
|
| By: | _______________________________________________ | |
| Name: | _______________________________________________ | |
| Title: | _______________________________________________ | |
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