PIONEER POWER SOLUTIONS, INC. DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
Exhibit 10.31
This
Director and Officer Indemnification Agreement, dated as of December 2nd,
2009 (this “Agreement”),
is made by and between Pioneer Power Solutions, Inc., a Delaware corporation
(the “Company”),
and Xxxxx X. Xxxxxx (the “Indemnitee”).
RECITALS:
A. Section
141 of the Delaware General Corporation Law provides that the business and
affairs of a corporation shall be managed by or under the direction of its board
of directors.
B. By
virtue of the managerial prerogatives vested in the directors and officers of a
Delaware corporation, directors and officers act as fiduciaries of the
corporation and its stockholders.
C. Thus,
it is critically important to the Company and its stockholders that the Company
be able to attract and retain the most capable persons reasonably available to
serve as directors and officers of the Company.
D. In
recognition of the need for corporations to be able to induce capable and
responsible persons to accept positions in corporate management, Delaware law
authorizes (and in some instances requires) corporations to indemnify their
directors and officers, and further authorizes corporations to purchase and
maintain insurance for the benefit of their directors and officers.
E. The
Delaware courts have recognized that indemnification by a corporation serves the
dual policies of (1) allowing corporate officials to resist unjustified
lawsuits, secure in the knowledge that, if vindicated, the corporation will bear
the expense of litigation, and (2) encouraging capable women and men to serve as
corporate directors and officers, secure in the knowledge that the corporation
will absorb the costs of defending their honesty and integrity.
F. The
number of lawsuits challenging the judgment and actions of directors and
officers of Delaware corporations, the costs of defending those lawsuits and the
threat to personal assets have all materially increased over the past several
years, chilling the willingness of capable women and men to undertake the
responsibilities imposed on corporate directors and officers.
G. Recent
federal legislation and rules adopted by the Securities and Exchange Commission
and the national securities exchanges have exposed such directors and officers
to new and substantially broadened civil liabilities.
H. Under
Delaware law, a director’s or officer’s right to be reimbursed for the costs of
defense of criminal actions, whether such claims are asserted under state or
federal law, does not depend upon the merits of the claims asserted against the
director or officer and is separate and distinct from any right to
indemnification the director may be able to establish.
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I. Indemnitee
is, or will be, a director and/or officer of the Company and his or her
willingness to serve in such capacity is predicated, in substantial part, upon
the Company’s willingness to indemnify him or her in accordance with the
principles reflected above, to the fullest extent permitted by the laws of the
State of Delaware, and upon the other undertakings set forth in this
Agreement.
J. Therefore,
in recognition of the need to provide Indemnitee with substantial protection
against personal liability, in order to procure Indemnitee’s continued service
as a director and/or officer of the Company and to enhance Indemnitee’s ability
to serve the Company in an effective manner, and in order to provide such
protection pursuant to express contract rights (intended to be enforceable
irrespective of, among other things, any amendment to the Company’s certificate
of incorporation or bylaws (collectively, the “Constituent
Documents”), any change in the composition of the Company’s Board of
Directors (the “Board”)
or any change-in-control or business combination transaction relating to the
Company), the Company wishes to provide in this Agreement for the
indemnification and advancement of Expenses to Indemnitee on the terms, and
subject to the conditions, set forth in this Agreement.
K. In
light of the considerations referred to in the preceding recitals, it is the
Company’s intention and desire that the provisions of this Agreement be
construed liberally, subject to their express terms, to maximize the protections
to be provided to Indemnitee hereunder.
AGREEMENT:
NOW,
THEREFORE, the parties hereby agree as follows:
1. Certain
Definitions. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
“Change in
Control” shall have occurred at such time, if any, as Incumbent Directors
cease for any reason to constitute a majority of Directors. For
purposes of this Section 1(a), “Incumbent
Directors” means the individuals who, as of the date hereof, are
Directors of the Company and any individual becoming a Director subsequent to
the date hereof whose election, nomination for election by the Company’s
stockholders, or appointment, was approved by a vote of at least a majority of
the then Incumbent Directors (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without objection to such nomination); provided, however, that an
individual shall not be an Incumbent Director if such individual’s election or
appointment to the Board occurs as a result of an actual or threatened election
contest (as described in Rule 14a-12(c) of the Securities Exchange Act of 1934,
as amended) with respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board.
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“Claim”
means (i) any threatened, asserted, pending or completed claim, demand, action,
suit or proceeding, whether civil, criminal, administrative, arbitrative,
investigative or other, and whether made pursuant to federal, state or other
law; and (ii) any inquiry or investigation, whether made, instituted or
conducted by the Company or any other Person, including, without limitation, any
federal, state or other governmental entity, that Indemnitee reasonably
determines might lead to the institution of any such claim, demand, action, suit
or proceeding. For the avoidance of doubt, the Company intends
indemnity to be provided hereunder in respect of acts or failure to act prior
to, on or after the date hereof.
“Controlled
Affiliate” means any corporation, limited liability company, partnership,
joint venture, trust or other entity or enterprise, whether or not for profit,
that is directly or indirectly controlled by the Company. For
purposes of this definition, “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of an entity or enterprise, whether
through the ownership of voting securities, through other voting rights, by
contract or otherwise; provided that direct or
indirect beneficial ownership of capital stock or other interests in an entity
or enterprise entitling the holder to cast 15% or more of the total number of
votes generally entitled to be cast in the election of directors (or persons
performing comparable functions) of such entity or enterprise shall be deemed to
constitute control for purposes of this definition.
“Disinterested
Director” means a director of the Company who is not and was not a party
to the Claim in respect of which indemnification is sought by
Indemnitee.
“Expenses”
means attorneys’ and experts’ fees and expenses and all other costs and expenses
paid or payable in connection with investigating, defending, being a witness in
or participating in (including on appeal), or preparing to investigate, defend,
be a witness in or participate in (including on appeal), any Claim.
“Indemnifiable
Claim” means any Claim based upon, arising out of or resulting from (i)
any actual, alleged or suspected act or failure to act by Indemnitee in his or
her capacity as a director, officer, employee or agent of the Company or as a
director, officer, employee, member, manager, trustee or agent of any other
corporation, limited liability company, partnership, joint venture, trust or
other entity or enterprise, whether or not for profit, as to which Indemnitee is
or was serving at the request of the Company, (ii) any actual, alleged or
suspected act or failure to act by Indemnitee in respect of any business,
transaction, communication, filing, disclosure or other activity of the Company
or any other entity or enterprise referred to in clause (i) of this sentence, or
(iii) Indemnitee’s status as a current or former director, officer, employee or
agent of the Company or as a current or former director, officer, employee,
member, manager, trustee or agent of the Company or any other entity or
enterprise referred to in clause (i) of this sentence or any actual, alleged or
suspected act or failure to act by Indemnitee in connection with any obligation
or restriction imposed upon Indemnitee by reason of such status. In
addition to any service at the actual request of the Company, for purposes of
this Agreement, Indemnitee shall be deemed to be serving or to have served at
the request of the Company as a director, officer, employee, member, manager,
trustee or agent of another entity or enterprise if Indemnitee is or was serving
as a director, officer, employee, member, manager, agent, trustee or other
fiduciary of such entity or enterprise and (i) such entity or enterprise is or
at the time of such service was a Controlled Affiliate, (ii) such entity or
enterprise is or at the time of such service was an employee benefit plan (or
related trust) sponsored or maintained by the Company or a Controlled Affiliate,
or (iii) the Company or a Controlled Affiliate (by action of the Board, any
committee thereof or the Company’s Chief Executive Officer (“CEO”) (other than
as the CEO him or herself)) caused or authorized Indemnitee to be nominated,
elected, appointed, designated, employed, engaged or selected to serve in such
capacity.
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“Indemnifiable
Losses” means any and all Losses relating to, arising out of or resulting
from any Indemnifiable Claim; provided, however, that
Indemnifiable Losses shall not include Losses incurred by Indemnitee in respect
of any Indemnifiable Claim (or any matter or issue therein) as to which
Indemnitee shall have been adjudged liable to the Company, unless and only to
the extent that the Delaware Court of Chancery or the court in which such
Indemnifiable Claim was brought shall have determined upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnification for
such Expenses as the court shall deem proper.
“Independent
Counsel” means a nationally recognized law firm, or a member of a
nationally recognized law firm, that is experienced in matters of Delaware
corporate law and neither presently is, nor in the past five years has been,
retained to represent: (i) the Company (or any subsidiary) or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements) or (ii) any other named
(or, as to a threatened matter, reasonably likely to be named) party to the
Indemnifiable Claim giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.
“Losses”
means any and all Expenses, damages, losses, liabilities, judgments, fines,
penalties (whether civil, criminal or other) and amounts paid or payable 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.
“Person”
means any individual, entity or group, within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended.
“Standard of
Conduct” means the standard for conduct by Indemnitee that is a condition
precedent to indemnification of Indemnitee hereunder against Indemnifiable
Losses relating to, arising out of or resulting from an Indemnifiable
Claim. The Standard of Conduct is (i) good faith and a reasonable
belief by Indemnitee that his action was in or not opposed to the best interests
of the Company and, with respect to any criminal action or proceeding, that
Indemnitee had no reasonable cause to believe that his conduct was unlawful, or
(ii) any other applicable standard of conduct that may hereafter be substituted
under Section 145(a) or (b) of the Delaware General Corporation Law or any
successor to such provision(s).
2. Indemnification
Obligation. Subject only to Section 7 and to the proviso in
this Section, the Company shall indemnify, defend and hold harmless Indemnitee,
to the fullest extent permitted or required 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 any and
all Indemnifiable Claims and Indemnifiable Losses; provided, however, that,
except as provided in Section 5, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with (i) 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, or (ii) the purchase and sale by Indemnitee of securities in violation of
Section 16(b) of the Securities Exchange Act of 1934, as amended. The
Company acknowledges that the foregoing obligation may be broader than that now
provided by applicable law and the Company’s Constituent Documents and intends
that it be interpreted consistently with this Section and the recitals to this
Agreement.
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3. Advancement of
Expenses.
Indemnitee shall have the right to advancement by the Company prior to the final
disposition of any Indemnifiable Claim of any and all actual and reasonable
Expenses relating to, arising out of or resulting from any Indemnifiable Claim
paid or incurred by Indemnitee. Without limiting the generality or
effect of any other provision hereof, Indemnitee’s right to such advancement is
not subject to the satisfaction of any Standard of Conduct. Without
limiting the generality or effect of the foregoing, within five business days
after any request by Indemnitee that is accompanied by supporting documentation
for specific reasonable Expenses to be reimbursed or advanced, the Company
shall, in accordance with such request (but without duplication), (a) pay such
Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount
sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses;
provided that
Indemnitee shall repay, without interest, any amounts actually advanced to
Indemnitee that, at the final disposition of the Indemnifiable Claim to which
the advance related, were in excess of amounts paid or payable by Indemnitee in
respect of Expenses relating to, arising out of or resulting from such
Indemnifiable Claim. In connection with any such payment, advancement
or reimbursement, at the request of the Company, Indemnitee shall execute and
deliver to the Company an undertaking, which need not be secured and shall be
accepted without reference to Indemnitee’s ability to repay the Expenses, by or
on behalf of the Indemnitee, to repay any amounts paid, advanced or reimbursed
by the Company in respect of Expenses relating to, arising out of or resulting
from any Indemnifiable Claim in respect of which it shall have been determined,
following the final disposition of such Indemnifiable Claim and in accordance
with Section 7, that Indemnitee is not entitled to indemnification
hereunder.
4. Indemnification for
Additional Expenses. Without limiting the
generality or effect of the foregoing, the Company shall indemnify and hold
harmless Indemnitee against and, if requested by Indemnitee, shall reimburse
Indemnitee for, or advance to Indemnitee, within five business days of such
request accompanied by supporting documentation for specific Expenses to be
reimbursed or advanced, any and all actual and reasonable Expenses paid or
incurred by Indemnitee in connection with any Claim made, instituted or
conducted by Indemnitee for (a) indemnification or reimbursement or advance
payment of Expenses by the Company under any provision of this Agreement, or
under any other agreement or provision of the Constituent Documents now or
hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under
any directors’ and officers’ liability insurance policies maintained by the
Company; provided,
however, if it is ultimately determined that the Indemnitee is not
entitled to such indemnification, reimbursement, advance or insurance recovery,
as the case may be, then the Indemnitee shall be obligated to repay any such
Expenses to the Company; provided further, that,
regardless in each case of whether Indemnitee ultimately is determined to be
entitled to such indemnification, reimbursement, advance or insurance recovery,
as the case may be, Indemnitee shall return, without interest, any such advance
of Expenses (or portion thereof) which remains unspent at the final disposition
of the Claim to which the advance related.
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5. 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
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
6. Procedure for
Notification. To obtain indemnification under this Agreement
in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall
submit to the Company a written request therefore, including a brief description
(based upon information then available to Indemnitee) of such Indemnifiable
Claim or Indemnifiable Loss. If, at the time of the receipt of such
request, the Company has directors’ and officers’ liability insurance in effect
under which coverage for such Indemnifiable Claim or Indemnifiable Loss is
potentially available, the Company shall give prompt written notice of such
Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in
accordance with the procedures set forth in the applicable
policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
Indemnifiable Claims and Indemnifiable Losses in accordance with the terms of
such policies. The Company shall provide to Indemnitee a copy of such
notice delivered to the applicable insurers, substantially concurrently with the
delivery thereof by the Company. The failure by Indemnitee to timely
notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not
relieve the Company from any liability hereunder unless, and only to the extent
that, the Company did not otherwise learn of such Indemnifiable Claim or
Indemnifiable Loss and to the extent that such failure results in forfeiture by
the Company of substantial defenses, rights or insurance coverage.
7. Determination of Right
to Indemnification.
To the
extent that Indemnitee shall have been successful on the merits or otherwise in
defense of any Indemnifiable Claim or any portion thereof or in defense of any
issue or matter therein, including, without limitation, dismissal without
prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses
relating to, arising out of or resulting from such Indemnifiable Claim in
accordance with Section 2 and no Standard of Conduct Determination (as defined
in Section 7(b)) shall be required.
To the
extent that the provisions of Section 7(a) are inapplicable to an Indemnifiable
Claim that shall have been finally disposed of, any determination of whether
Indemnitee has satisfied the applicable Standard of Conduct (a “Standard of
Conduct Determination”) shall be made as follows: (i) if a
Change in Control shall not have occurred, or if a Change in Control shall have
occurred but Indemnitee shall have requested that the Standard of Conduct
Determination be made pursuant to this clause (i), (A) by a majority vote of the
Disinterested Directors, even if less than a quorum of the Board, (B) if such
Disinterested Directors so direct, by a majority vote of a committee of
Disinterested Directors designated by a majority vote of all Disinterested
Directors, or (C) if there are no such Disinterested Directors, or if a majority
of the Disinterested Directors so direct, by Independent Counsel in a written
opinion addressed to the Board, a copy of which shall be delivered to
Indemnitee; and (ii) if a Change in Control shall have occurred and Indemnitee
shall not have requested that the Standard of Conduct Determination be made
pursuant to clause (i) above, by Independent Counsel in a written opinion
addressed to the Board, a copy of which shall be delivered to
Indemnitee.
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If (i)
Indemnitee shall be entitled to indemnification hereunder against any
Indemnifiable Losses pursuant to Section 7(a), (ii) no determination of whether
Indemnitee has satisfied any applicable standard of conduct under Delaware law
is a legally required condition precedent to indemnification of Indemnitee
hereunder against any Indemnifiable Losses, or (iii) Indemnitee has been
determined or deemed pursuant to Section 7(b) to have satisfied the applicable
Standard of Conduct, then the Company shall pay to Indemnitee, within five
business days after the later of (x) the Notification Date in respect of the
Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are
related, out of which such Indemnifiable Losses arose or from which such
Indemnifiable Losses resulted, and (y) the earliest date on which the applicable
criterion specified in clause (i), (ii) or (iii) above shall have been
satisfied, an amount equal to the amount of such Indemnifiable
Losses. Nothing herein is intended to mean or imply that the Company
is intending to use Section 145(f) of the Delaware General Corporation Law to
dispense with a requirement that Indemnitee meet the applicable Standard of
Conduct where it is otherwise required by such statute.
If a
Standard of Conduct Determination is required to be, but has not been, made by
Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall
be selected by the Board or a committee of the Board, and the Company shall give
written notice to Indemnitee advising him or her of the identity of the
Independent Counsel so selected. If a Standard of Conduct
Determination is required to be, or to have been, made by Independent Counsel
pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by
Indemnitee, and Indemnitee shall give written notice to the Company advising it
of the identity of the Independent Counsel so selected. In either
case, Indemnitee or the Company, as applicable, may, within five business days
after receiving written notice of selection from the other, deliver to the other
a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not satisfy the criteria set forth in the definition of
“Independent Counsel” in Section 1(h), and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper
and timely objection, the Person so selected shall act as Independent
Counsel. If such written objection is properly and timely made and
substantiated, (i) the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit and (ii) the non-objecting party
may, at its option, select an alternative Independent Counsel and give written
notice to the other party advising such other party of the identity of the
alternative Independent Counsel so selected, in which case the provisions of the
two immediately preceding sentences and clause (i) of this sentence shall apply
to such subsequent selection and notice. If applicable, the
provisions of clause (ii) of the immediately preceding sentence shall apply to
successive alternative selections. If no Independent Counsel that is
permitted under the foregoing provisions of this Section 7(d) to make the
Standard of Conduct Determination shall have been selected within 30 calendar
days after the Company gives its initial notice pursuant to the first sentence
of this Section 7(d) or Indemnitee gives its initial notice pursuant to the
second sentence of this Section 7(d), as the case may be, either the Company or
Indemnitee may petition the Court of Chancery of the State of Delaware for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person or firm selected by the Court or
by such other person as the Court shall designate, and the person or firm with
respect to whom all objections are so resolved or the person or firm so
appointed will act as Independent Counsel. In all events, the Company
shall pay all of the actual and reasonable fees and expenses of the Independent
Counsel incurred in connection with the Independent Counsel’s determination
pursuant to Section 7(b).
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8. Cooperation. Indemnitee
shall cooperate with reasonable requests of the Company in connection with any
Indemnifiable Claim and any individual or firm making such Standard of Conduct
Determination, including providing to such Person documentation or information
which is not privileged or otherwise protected from disclosure and which is
reasonably available to Indemnitee and reasonably necessary to defend the
Indemnifiable Claim or make any Standard of Conduct Determination without
incurring any unreimbursed cost in connection therewith. The Company
shall indemnify and hold harmless Indemnitee against and, if requested by
Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within
five business days of such request accompanied by supporting documentation for
specific costs and expenses to be reimbursed or advanced, any and all costs and
expenses (including attorneys’ and experts’ fees and expenses) actually and
reasonably incurred by Indemnitee in so cooperating with the Person defending
the Indemnifiable Claim or making such Standard of Conduct
Determination.
9. Presumption of
Entitlement. Notwithstanding any other provision hereof, in
making any Standard of Conduct Determination, the Person making such
determination shall presume that Indemnitee has satisfied the applicable
Standard of Conduct.
10. 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 applicable
Standard of Conduct or that indemnification hereunder is otherwise not
permitted.
11. 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 (a) to the extent that Indemnitee otherwise would have any
greater right to indemnification under any Other Indemnity Provision, Indemnitee
will without further action be deemed to have such greater right hereunder, and
(b) 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 may not, without the consent of
Indemnitee, 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.
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12. Liability Insurance and
Funding. For the duration of Indemnitee’s service as a
director and/or officer of the Company and for a reasonable period of time
thereafter, which such period shall be determined by the Company in its sole
discretion, the Company shall use commercially reasonable efforts (taking into
account the scope and amount of coverage available relative to the cost thereof)
to cause to be maintained in effect policies of directors’ and officers’
liability insurance providing coverage for directors and/or officers of the
Company, and, if applicable, that is substantially comparable in scope and
amount to that provided by the Company’s current policies of directors’ and
officers’ liability insurance. Upon reasonable request, the Company
shall provide Indemnitee or his or her counsel with a copy of all directors’ and
officers’ liability insurance applications, binders, policies, declarations,
endorsements and other related materials. In all policies of
directors’ and officers’ liability insurance obtained by the Company, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company’s directors and officers most favorably insured by such
policy. Notwithstanding the foregoing, (i) the Company may, but shall
not be required to, create a trust fund, grant a security interest or use other
means, including, without limitation, a letter of credit, to ensure the payment
of such amounts as may be necessary to satisfy its obligations to indemnify and
advance expenses pursuant to this Agreement and (ii) in renewing or seeking to
renew any insurance hereunder, the Company will not be required to expend more
than 2.0 times the premium amount of the immediately preceding policy period
(equitably adjusted if necessary to reflect differences in policy
periods).
13. Subrogation. In
the event of payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the related rights of recovery of
Indemnitee against other Persons (other than Indemnitee’s successors), including
any entity or enterprise referred to in clause (i) of the definition of
“Indemnifiable Claim” in Section 1(f). Indemnitee shall execute all
papers reasonably required to evidence such rights (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).
14. No Duplication of
Payments. The Company shall not be liable under this Agreement
to make any payment to Indemnitee in respect of any Indemnifiable Losses to the
extent Indemnitee has otherwise already actually received payment (net of
Expenses incurred in connection therewith) under any insurance policy, the
Constituent Documents and Other Indemnity Provisions or otherwise (including
from any entity or enterprise referred to in clause (i) of the definition of
“Indemnifiable Claim” in Section 1(f)) in respect of such Indemnifiable Losses
otherwise indemnifiable hereunder.
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15. Defense of
Claims. Subject to the provisions of applicable policies of
directors’ and officers’ liability insurance, if any, the Company shall be
entitled to participate in the defense of any Indemnifiable Claim or to assume
or lead the defense thereof with counsel reasonably satisfactory to the
Indemnitee; provided
that if Indemnitee determines, after consultation with counsel selected by
Indemnitee, that (a) the use of counsel chosen by the Company to represent
Indemnitee would present such counsel with an actual or potential conflict, (b)
the named parties in any such Indemnifiable 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, (c) any such
representation by such counsel would be precluded under the applicable standards
of professional conduct then prevailing, or (d) Indemnitee has interests in the
claim or underlying subject matter that are different from or in addition to
those of other Persons against whom the Claim has been made or might reasonably
be expected to be made, then Indemnitee shall be entitled to retain separate
counsel (but not more than one law firm plus, if applicable, local counsel in
respect of any particular Indemnifiable Claim for all indemnitees in
Indemnitee’s circumstances) at the Company’s expense. The Company
shall not be liable to Indemnitee under this Agreement for any amounts paid in
settlement of any threatened or pending Indemnifiable Claim effected without the
Company’s prior written consent. The Company shall not, without the
prior written consent of the Indemnitee, effect any settlement of any threatened
or pending Indemnifiable Claim which the Indemnitee is or could have been a
party unless such settlement solely involves the payment of money and includes a
complete and unconditional release of the Indemnitee from all liability on any
claims that are the subject matter of such Indemnifiable
Claim. Neither the Company nor Indemnitee shall unreasonably withhold
its consent to any proposed settlement; provided that Indemnitee may
withhold consent to any settlement that does not provide a complete and
unconditional release of Indemnitee.
16. Mutual
Acknowledgment. Both the Company and the
Indemnitee acknowledge that in certain instances, Federal law or applicable
public policy may prohibit the Company from indemnifying its directors and
officers under this Agreement or otherwise. Indemnitee understands
and acknowledges that the Company may be required in the future to undertake to
the Securities and Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the Company’s right
under public policy to indemnify Indemnitee and, in that event, the Indemnitee’s
rights and the Company’s obligations hereunder shall be subject to that
determination.
17. Successors and Binding
Agreement.
This
Agreement shall 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 shall not otherwise be assignable or delegatable by the
Company.
This
Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s
personal or legal representatives, executors, administrators, heirs,
distributees, legatees and other successors.
This
Agreement is personal in nature and neither of the parties hereto shall, without
the consent of the other, assign or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Sections 17(a) and
17(b). Without limiting the generality or effect of the foregoing,
Indemnitee’s right to receive payments hereunder shall 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 17(c), the Company shall have no liability to pay any amount so
attempted to be assigned or transferred.
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18. Notices. For
all purposes of this Agreement, all communications, including without limitation
notices, consents, requests or approvals, required or permitted to be given
hereunder must be in writing and shall be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), 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 Indemnitee at the applicable address 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.
19. Governing Law. The validity,
interpretation, construction and performance of this Agreement shall 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. The Company and Indemnitee each hereby irrevocably consent to
the jurisdiction of the Chancery Court of the State of Delaware for all purposes
in connection with any action or proceeding which arises out of or relates to
this Agreement, waive all procedural objections to suit in that jurisdiction,
including, without limitation, objections as to venue or inconvenience, agree
that service in any such action may be made by notice given in accordance with
Section 18 and also agree that any action instituted under this Agreement shall
be brought only in the Chancery Court of the State of Delaware.
20. 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 shall not be affected, and the provision so held to
be invalid, unenforceable or otherwise illegal shall be reformed to the extent,
and only to the extent, necessary to make it enforceable, valid or
legal. In the event that any court or other adjudicative body shall
decline to reform any provision of this Agreement held to be invalid,
unenforceable or otherwise illegal as contemplated by the immediately preceding
sentence, the parties thereto shall take all such action as may be necessary or
appropriate to replace the provision so held to be invalid, unenforceable or
otherwise illegal with one or more alternative provisions that effectuate the
purpose and intent of the original provisions of this Agreement as fully as
possible without being invalid, unenforceable or otherwise illegal.
21. 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 shall 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.
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22. Certain Interpretive
Matters. Unless the context of this Agreement otherwise
requires, (1) “it” or “its” or words of any gender include each other gender,
(2) words using the singular or plural number also include the plural or
singular number, respectively, (3) the terms “hereof,” “herein,” “hereby” and
derivative or similar words refer to this entire Agreement, (4) the terms
“Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article,
Section, Annex or Exhibit of or to this Agreement, (5) the terms “include,”
“includes” and “including” will be deemed to be followed by the words “without
limitation” (whether or not so expressed), and (6) the word “or” is disjunctive
but not exclusive. Whenever this Agreement refers to a number of
days, such number will refer to calendar days unless business days are specified
and whenever action must be taken (including the giving of notice or the
delivery of documents) under this Agreement during a certain period of time or
by a particular date that ends or occurs on a non-business day, then such period
or date will be extended until the immediately following business
day. As used herein, “business
day” means any day other than Saturday, Sunday or a United States federal
holiday.
23. Entire
Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter of this
Agreement. Any prior agreements or understandings between the parties
hereto with respect to indemnification are hereby terminated and of no further
force or effect. This Agreement is not the exclusive means of
securing indemnification rights of Indemnitee and is in addition to any rights
Indemnitee may have under any Constituent Documents.
24. Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original but all of which together shall constitute one and the
same agreement.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
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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.
| PIONEER POWER SOLUTIONS, INC. | |||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxx | |
| Name: Xxxxxx X. Xxxxxxx | |||
| Title: Chief Executive Officer | |||
| INDEMNITEE: | |||
| /s/ Xxxxx X. Xxxxxx | |||
| Name: Xxxxx X. Xxxxxx | |||
Signature
Page to Director and Officer Indemnification Agreement
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