EXHIBIT 10.47
DIRECTOR INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this 16th day of August, 1999,
between ELECTROSOURCE, INC., a Delaware corporation
("Corporation") and Xxxxx X. Xxx ("Director").
WITNESSETH:
WHEREAS, Director is a member of the Board of Directors of
Corporation and in such capacity is performing a valuable service
for Corporation; and
WHEREAS, the Bylaws of the Corporation (the "Bylaws")
provide for the indemnification of the officers, directors,
agents and employees of Corporation; and
WHEREAS, such Bylaws and Section 145 of the Delaware General
Corporation Laws, as amended to date (the "State Statutes"),
specifically provide that they are not exclusive, and thereby
allow that contracts may be entered into between Corporation and
the members of its Board of Directors with respect to
indemnification of such directors; and
WHEREAS, in accordance with the authorization provided by
the State Statutes, Corporation has purchased and presently
maintains a policy or policies of Directors and Officers
Liability Insurance ("D&O Insurance") covering certain
liabilities which may be incurred by its directors and officers
in the performance of their services for Corporation; and
WHEREAS, recent developments with respect to the terms and
availability of D&O Insurance and with respect to the
application, amendment and enforcement of statutory and bylaw
indemnification provisions generally have raised questions
concerning the adequacy and reliability of the protection
afforded to directors thereby; and
WHEREAS, in order to resolve such questions and thereby
induce the Director to continue to serve as a member of the Board
of Directors of Corporation, Corporation has determined and
agreed to enter into this Agreement with Director.
NOW THEREFORE, in consideration of Director's continued
service as a Director after the date hereof, the parties hereto
agree as follows:
1. Indemnity of Director.
Corporation shall hold harmless and indemnify
Director to the full extent authorized or permitted by
the provisions of the State Statutes, or by any
amendment thereof or other statutory provisions
authorizing or permitting such indemnification which is
adopted after the date hereof.
2. Maintenance of Insurance and Self Insurance.
(a) Corporation represents that it presently has
in force and effect a policy of D&O Insurance with
the insurance company and in the amount as follows
(the "Insurance Policy"):
Insurer Policy No. Amount Deductible
National Union Fire Insurance Co. 008565962 $2,000,000 $100,000/$250,000 SEC
Subject only to the provisions of Section 2(b)
hereof, Corporation hereby agrees that, so long as
Director shall continue to serve as a director of
Corporation (or shall continue at the request of
Corporation to serve as a director, officer,
employee or agent of another corporation,
partnership, joint venture, trust or other
enterprise) and thereafter so long as Director
shall be subject to any possible claim or
threatened, pending or completed action, suit or
proceeding, whether civil, criminal or
investigative, by reason of the fact that Director
was a director of Corporation (or served in any of
said other capacities), Corporation will purchase
and maintain in effect for the benefit of Director
one or more valid, binding and enforceable policy
or policies of D&O Insurance providing, in all
respects, coverage at least comparable to that
presently provided pursuant to the Insurance
Policy.
(b) Corporation shall not be required to maintain
said policy or policies of D&O Insurance in effect
if said insurance is not reasonably available or
if, in the reasonable business judgment of the
then directors of Corporation, either (i) the
premium cost for such insurance is substantially
disproportionate to the amount of coverage; or
(ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient
benefit from such insurance.
(c) In the event Corporation does not purchase
and maintain in effect said policy or policies of
D&O Insurance pursuant to the provisions of
Section 2(b) hereof, Corporation agrees to hold
harmless and indemnify Director to the full extent
of the coverage which would otherwise have been
provided for the benefit of Director pursuant to
the Insurance Policy.
3. Additional Indemnity.
Subject only to the limitations set forth in
Section 4 hereof, and without limitation to Section 1
above, Corporation shall further hold harmless and
indemnify Director:
(a) Against any and all expenses (including
attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably
incurred by Director in connection with any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal,
administrative or investigative (including an
action by or in the right of the Corporation) to
which Director is or was a party or is threatened
to be made a party by reason of the fact that
Director is, was or at any time becomes a director
of the Corporation, or is or was serving or at any
time serves at the request of the Corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or
other enterprise; and
(b) Otherwise to the fullest extent that may be
provided to Director by Corporation under the
nonexclusivity provisions of Section 10.5 of the
Bylaws of the Corporation and the State Statutes.
4. Limitations on Additional Indemnity.
No indemnity pursuant to Section 3 hereof shall be paid
by Corporation:
(a) except to the extent the aggregate of losses
to be indemnified thereunder exceeds the amount of
such losses for which the Director is indemnified
either pursuant to Sections 1 or 2 hereof or
pursuant to any D&O Insurance purchased and
maintained by the Corporation; or
(b) in respect to remuneration paid to Director
if it shall be determined by the Reviewing Party
(as defined in Section 5 below), or by a final
judgment or other final adjudication, that such
remuneration was in violation of law; or
(c) if a determination of the Reviewing Party is
made, or if a judgment is rendered against a
Director, that an accounting must be made for
profits made from the purchase or sale by Director
of securities of Corporation in violation of the
provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local
statutory law; or
(d) on account of Director's conduct which is
determined by the Reviewing Party, or by a final
judgment or other final adjudication, to have been
knowingly fraudulent, deliberately dishonest or of
willful misconduct; or
(e) if the Reviewing Party or a Court having
jurisdiction in the matter shall determine that
such indemnification is not lawful.
5. Reviewing Party.
"Reviewing Party" means:
(a) the Board of Directors, provided that a
majority of directors are not parties to the
claim, or
(b) special, independent counsel selected and
appointed by the Board of Directors; or
(c) special, independent counsel approved or
chosen pursuant to Section 6 below.
Any determination by the Reviewing Party shall be
conclusive and binding on Corporation and Director. If
the Reviewing Party determines that Director would not
be permitted to be indemnified in whole or in part,
Director shall have the right to commence litigation in
the State of Delaware in any court of proper
jurisdiction seeking an order or judgment by the court
equivalent to the determination of the Reviewing Party
or challenging any such determination by the Reviewing
Party or any aspect thereof.
6. Change in Control of Corporation.
If there is a change in control of Corporation (as
defined below), then with respect to all matters
thereafter arising concerning the rights of Director to
indemnity payments and expense advances under this
Agreement, or any other agreements or Bylaws now or
hereafter in effect relating to director
indemnification, Corporation shall seek legal advice
and shall retain a Reviewing Party only from special,
independent counsel selected by Director and approved
by Corporation (which approval shall not be
unreasonably withheld), and who has not otherwise
performed services for Corporation or Director. In the
event that Director and Corporation are unable to
agree on the selection of the special, independent
counsel, such special, independent counsel shall be
selected by lot from among at least five law firms
designated by Director, each of such law firms having
more than 35 attorneys and having a rating of "av" or
better in the then current Xxxxxxxxxx-Xxxxxxx Law
Directory. Such selection shall be made in the
presence of Director (and Director's legal counsel or
either of them, as Director may elect). Such special,
independent counsel, among other relevant appropriate
matters, shall determine whether and to what extent
Director would be permitted to be indemnified under
applicable law and shall render its written opinion to
Corporation and Director to such effect. Corporation
shall pay the reasonable fees of the special,
independent counsel and shall fully indemnify such
counsel against any and all costs and expenses arising
out of or relating to this Agreement or its engagement
pursuant hereto.
"Change in control" of Corporation shall be deemed
to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Act")), other
than a trustee or other fiduciary holding securities
under an employee benefit plan of Corporation, is or
becomes the "beneficial owner" (as defined in rule
13d-3 under the Act), directly or indirectly, of
securities of Corporation representing 20% or more of
the total voting power represented by Corporation's
then outstanding voting securities; (ii) during any
period of two consecutive years, individuals who at the
beginning of such period constitute the Board of
Directors of Corporation and any new director whose
election by the Board of Directors or nomination for
election by Corporation's shareholders was approved by
a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved, cease, for any
reason, to constitute a majority of the Board of
Directors; or (iii) the shareholders of Corporation
approve a merger or consolidation of Corporation with
any other corporation, other than a merger or
consolidation that would result in the voting
securities of Corporation outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the
total voting power represented by the voting securities
of Corporation or the surviving entity, as the case may
be, or an agreement for sale or disposition by
Corporation of all or substantially all Corporation's
assets.
7. Continuation of Indemnity.
All agreements and obligations of Corporation
contained herein shall continue during the period
Director is a director of Corporation (or is or was
serving at the request of Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise),
and shall continue thereafter so long as Director shall
be subject to any possible claim or threatened, pending
or completed action, suit or proceeding, whether,
civil, criminal or investigative, by reason of the fact
that Director was a director of Corporation or serving
in any other capacity referred to herein.
8. Notification and Defense of Claim.
Promptly after receipt by Director of notice of
the commencement of any action, claim, suit or
proceeding, Director will, if a claim in respect
thereof is to be made against Corporation under this
Agreement, notify Corporation of the commencement
thereof; but the omission so to notify Corporation will
not relieve it from any liability which it may have to
Director otherwise than under this Agreement. With
respect to any such action, suit or proceeding as to
which Director notifies Corporation of the commencement
thereof;
(a) Corporation will be entitled to participate
therein at its own expense, and;
(b) Except as otherwise provided below, to the
extent that it may wish, Corporation jointly with
any other indemnifying party similarly notified
will be entitled to assume the defense thereof,
with counsel satisfactory to Director. After
notice from Corporation to Director of its
election so to assume the defense thereof,
Corporation will not be liable to Director under
this Agreement for any legal or other expenses
subsequently incurred by Director in connection
with the defense thereof other than reasonable
costs of investigation or as otherwise provided
below. Director shall have the right to employ
counsel in such action, suite or proceeding, but
the fees and expenses of such counsel incurred
after notice from Corporation of its assumption of
the defense thereof shall be at the expense of
Director unless (i) the employment of counsel by
Director has been authorized by Corporation; (ii)
Director shall have reasonably concluded that
there may be a conflict of interest between
Corporation and Director in the conduct of the
defense of such action; or (iii) Corporation
shall not in fact have employed counsel to assume
the defense of such action, in each of which cases
the fees and expenses of counsel shall be at the
expense of Corporation. Corporation shall not be
entitled to assume the defense of any action, suit
or proceeding brought by or on behalf of
Corporation or as to which Director shall have
made the conclusion provided for in (i) above.
(c) Corporation shall not be liable to indemnify
Director under this Agreement for any amounts paid
in settlement of any action or claim effected
without its written consent. Corporation shall
not settle any action or claim in any manner which
would impose any penalty or limitation on Director
without Director's written consent. Neither
Corporation nor Director will unreasonably
withhold its consent to any proposed settlement.
9. Advancement of Expenses.
Upon the request of Director, and except as
limited by paragraph 8(b) above, Corporation shall
reimburse Director for all reasonable expenses paid by
Director in defending any claim, civil or criminal
action, suit or proceeding for which Director is
entitled to be indemnified by Corporation for such
expenses under the provisions of the State Statutes,
the Bylaws, this Agreement or otherwise.
10. Repayment of Expenses.
Director shall reimburse Corporation for all
reasonable expenses paid or advanced to Director by
Corporation in defending any claim, civil or criminal
action, suit or proceeding against Director in the
event and only to the extent that it shall be
determined by the Reviewing Party that Director is not
entitled to be indemnified by Corporation for such
expenses under the provisions of the State Statutes,
the Bylaws, this Agreement or otherwise.
11. Enforcement.
(a) Corporation expressly confirms and agrees
that it has entered into this Agreement and
assumed the obligations imposed on Corporation
hereby in order to induce Director to continue as
a director of Corporation, and acknowledges that
Director is relying upon this Agreement in
continuing in such capacity.
(b) In the event Director is required to bring
any action to enforce rights or to collect moneys
due under this Agreement and is successful in
such action, Corporation shall reimburse Director
for all of Director's reasonable fees and expenses
in bringing and pursuing such action.
12. Severability.
Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the
others, so that if any provision hereof shall be held
to be valid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions
hereof.
13. Governing Law; Binding Effect; Amendment and
Termination.
(a) This Agreement shall be interpreted and
enforced in accordance with the laws of the State
of Delaware.
(b) This Agreement shall be binding upon Director
and upon Corporation, its successors and assigns,
and shall inure to the benefit of Director, his
heirs, personal representatives and assigns and
to the benefit of Corporation, its successors and
assigns.
(c) No amendment, modification, termination or
cancellation of this Agreement shall be effective
unless in writing, signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
ELECTROSOURCE, INC. DIRECTOR
By: /s/ /s/
Printed Name: Xxx X. Xxxxxxxxx Printed Name: Xxxxx X. Xxx
Title: Vice President/Finance
