INDEMNIFICATION AGREEMENT
Exhibit 10.29
THIS
INDEMNIFICATION AGREEMENT is entered into as of this 2nd day of December, 2009,
by and between Pioneer Power Solutions, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxxx ("Indemnitee").
RECITALS
A. The
Company is aware that because of the increased exposure to litigation costs,
talented and experienced persons are increasingly reluctant to serve or continue
serving as directors and officers of corporations unless they are protected by
comprehensive liability insurance and indemnification.
B. The
statutes and judicial decisions regarding the duties of directors and officers
are often difficult to apply, ambiguous, or conflicting, and therefore fail to
provide such directors and officers with adequate guidance regarding the proper
course of action.
C. The
Board of Directors of the Company (the "Board") has concluded that, to retain
and attract talented and experienced individuals to serve as officers and
directors of the Company and its subsidiaries and to encourage such individuals
to take the business risks necessary for the success of the Company and its
subsidiaries, the Company should contractually indemnify its officers and
directors, and the officers and directors of its subsidiaries, in connection
with claims against such officers and directors in connection with their
services to the Company and its subsidiaries, and has further concluded that the
failure to provide such contractual indemnification could be detrimental to the
Company, its subsidiaries and stockholders.
NOW,
THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
1. Definitions.
(a) Agent. "Agent" with
respect to the Company means any person who is or was a director, officer,
employee or other agent of the Company or a Subsidiary of the Company; or is or
was serving at the request of, for the convenience of, or to represent the
interests of, the Company or a Subsidiary of the Company as a director, officer,
employee or agent of another entity or enterprise; or was a director, officer,
employee or agent of a predecessor corporation of the Company or a Subsidiary of
the Company, or was a director, officer, employee or agent of another entity or
enterprise at the request of, for the convenience of, or to represent the
interests of such predecessor
corporation.
(b) Expenses. "Expenses"
means all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees, costs of investigation and related
disbursements) incurred by the Indemnitee in connection with the investigation,
settlement, defense or appeal of a claim or Proceeding covered hereby or
establishing or enforcing a right to indemnification under this
Agreement.
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(c) Proceeding.
"Proceeding" means any threatened, pending, or completed claim, suit or action,
whether civil, criminal, administrative, investigative or
otherwise.
(d) Subsidiary.
"Subsidiary" means any corporation or other entity of which more than 10% of the
outstanding voting securities or interests is owned directly or indirectly by
the Company, and one or more other Subsidiaries, taken as a whole.
2. Maintenance of Liability
Insurance.
(a) The
Company hereby covenants and agrees with Indemnitee that, subject to Section
2(b), the Company shall obtain and maintain in full force and effect directors'
and officers' liability insurance ("D&O Insurance") in reasonable amounts as
the Board of Directors shall determine from established and reputable insurers,
but no less than the amounts in effect upon initial procurement of the D&O
Insurance. In all policies of D&O Insurance, Indemnitee shall be named as an
insured.
(b) Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain
D&O Insurance if the Company determines in good faith that the premium costs
for such insurance are (i) disproportionate to the amount of coverage provided
after giving effect to exclusions, and (ii) substantially more burdensome to the
Company than the premiums charged to the Company for its initial D&O
Insurance.
3. Mandatory
Indemnification. The Company shall defend, indemnify and hold harmless
Indemnitee:
(a) Third Party Actions.
If Indemnitee is a person who was or is a party or is threatened to be made a
party to any Proceeding (other than an action by or in the right of the Company)
by reason of the fact that Indemnitee is or was or is claimed to be an Agent of
the Company, or by reason of anything done or not done by Indemnitee in any such
capacity, against any and all Expenses and liabilities of any type whatsoever
(including, but not limited to, legal fees, judgments, fines, ERISA excise taxes
or penalties, and amounts paid in settlement) incurred by such person in
connection with the investigation, defense, settlement or appeal of such
Proceeding, so long as
Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or Proceeding, had no reasonable cause to believe such person's
conduct was unlawful.
(b) Actions by or in the Right
of the Company. If Indemnitee is a person who was or is a party or is
threatened to be made a party to any Proceeding by or in the right of the
Company by reason of the fact that he is or was an Agent of the Company, or by
reason of anything done or not done by him in any such capacity, against any and
all Expenses and liabilities or any type whatsoever (including, but not limited
to, legal fees, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by such person in connection with the
investigation, defense, settlement or appeal of such Proceeding, so long as the
Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company; except
that no indemnification under this subsection shall be made, and Indemnitee
shall repay all amounts previously advanced by the Company, in respect of any
claim, issue or matter for which such person is judged in a final,
non-appealable decision to be liable to the Company by a court of competent
jurisdiction, unless and only to the extent that the court in which such
Proceeding was brought shall determine that Indemnitee is fairly and reasonably
entitle to indemnity.
(c) Actions Where Indemnitee Is
Deceased. If Indemnitee is a person who was or is a party or is
threatened to be made a party to any Proceeding by reason of the fact that he is
or was an Agent of the Company, or by reason of anything done or not done by him
in any such capacity, and prior to, during the pendency of, or after completion
of, such Proceeding, the Indemnitee shall die, then the Company shall defend,
indemnify and hold harmless the estate, heirs and legatees of the Indemnitee
against any and all Expenses and liabilities incurred by or for such persons or
entities in connection with the investigation, defense, settlement or appeal of
such Proceeding on the same basis as provided for the Indemnitee in Sections
3(a) and 3(b) above.
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The
Expenses and liabilities covered hereby shall be net of any payments by D&O
Insurance carriers or others.
4. Partial
Indemnification. If Indemnitee is found under Section 3, 7 or 10 hereof
not to be entitled to indemnification for all of the Expenses and liabilities
relating to a Proceeding, the Company shall indemnify the Indemnitee for any
portion of such Expenses not specifically precluded by the operation of such
Section 3, 7 or 10.
5. Mandatory Advancement of
Expenses. Until a determination to the contrary under Section 7 hereof is
made, and unless the provisions of Section 10 apply, the Company shall advance
all Expenses incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any Proceeding to which Indemnitee is a party
or is threatened to be made a party covered by the indemnification in Section 3
hereof. If required by law, as a condition to such advances, Indemnitee shall,
at the request of the Company, undertake in a reasonable manner to repay such
amounts advanced if it shall ultimately be determined by a final order of a
court that Indemnitee is not entitled to be indemnified by the Company by the
terms hereof or under applicable law. Subject to Section 6 hereof, the advances
to be made hereunder shall be paid by the Company to Indemnitee within 20 days
following delivery of a written request by Indemnitee to the Company, which
request shall be accompanied by vouchers, invoices and similar evidence
documenting the amounts requested.
6. Indemnification
Procedures.
(a) Promptly
after receipt by Indemnitee of notice to him of the commencement or threat of
any Proceeding or claim covered hereby, Indemnitee shall notify the Company of
the commencement or threat thereof, provided that any failure to so notify shall
not relieve the Company of any of its obligations hereunder, except to the
extent that such failure or delay increases the liability of the Company
hereunder.
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(b) If,
at the time of the receipt of a notice pursuant to Section 6(a) above, the
Company has D&O Insurance in effect, the Company shall give prompt notice of
the Proceeding or claim to its 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 all amounts payable
as a result of such Proceeding or claim in accordance with the terms of such
policies, and Indemnitee shall not take any action (by waiver, settlement or
otherwise) which would adversely affect the ability of the Company to obtain
payment from its insurers.
(c) If
the Company shall be obligated to pay the Expenses of Indemnitee, the Company
may (and shall if requested by Indemnitee in writing) assume the defense of the
Proceeding to which the Expenses relate, in which event the Company shall
deliver a notice of assumption to Indemnitee. Any counsel employed by the
Company in connection with the defense of such Proceeding shall be subject to
approval by Indemnitee, such approval not to be unreasonably withheld or
delayed. The Company will not be liable to Indemnitee under this Agreement for
any fees or expenses of counsel incurred by Indemnitee after delivery of such
notice of assumption with respect to such Proceeding;
provided; however, that if Indemnitee
shall have provided the Company with an opinion of counsel stating that there is
a strong argument that a conflict of interest exists between the Company and
Indemnitee in the conduct of any such defense, the fees and Expenses of
Indemnitee's counsel shall be at the expense of the Company. Notwithstanding the
fact that the Company assumes the defense of a Proceeding pursuant to the
preceding sentence, Indemnitee shall have the right to employ his or her own
counsel in any such Proceeding at Indemnitee's expense.
7. Determination of Right to
Indemnification.
(a) To
the extent Indemnitee has been successful on the merits or otherwise in defense
of any Proceeding, claim, issue or matter covered hereby, Indemnitee need not
repay any of the Expenses advanced in connection with the investigation, defense
or appeal of such Proceeding.
(b) If
Section 7(a) is inapplicable, the Company shall remain obligated to indemnify
Indemnitee, and Indemnitee need not repay Expenses previously advanced, unless
the Company, by motion before a court of competent jurisdiction, obtains an
order for preliminary or permanent relief suspending or denying the obligation
to advance or indemnify for Expenses.
(c) Notwithstanding
any other provision in this Agreement to the contrary, the Company shall
indemnify Indemnitee against all Expenses incurred by Indemnitee in connection
with any Proceeding under Section 7(b) and against all Expenses incurred by
Indemnitee in connection with any other Proceeding between the Company and
Indemnitee involving the interpretation or enforcement of the rights of
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that the material claims and/or defenses of Indemnitee in any such Proceeding
were frivolous or made in bad faith.
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8. Certificate of Incorporation
and Bylaws. The Company agrees that the Company's Certificate of
Incorporation and Bylaws in effect on the date hereof shall not be amended to
reduce, limit, hinder or delay (i) the rights of Indemnitee granted hereby, or
(ii) the ability of the Company to indemnify Indemnitee as required
hereby.
9. Witness Expenses. The
Company agrees to compensate Indemnitee for the reasonable value of his time
spent, and to reimburse Indemnitee for all Expenses (including attorneys' fees
and travel costs) incurred by him, in connection with being a witness, or if
Indemnitee is threatened to be made a witness, with respect to any Proceeding,
by reason of his serving or having served as an Agent of the
Company.
10. Exceptions.
Notwithstanding any other provision hereunder to the contrary, the Company shall
not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated by
Indemnitee. To indemnify or advance Expenses to Indemnitee with respect
to Proceedings or claims initiated or brought voluntarily by Indemnitee and not
by way of defense (other than Proceedings brought to establish or enforce a
right to indemnification under this Agreement or the provisions of the Company's
Certificate of Incorporation or Bylaws unless a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
Proceeding were not made in good faith or were frivolous).
(b) Unauthorized
Settlements. To indemnify Indemnitee under this Agreement for any amounts
paid in settlement of a Proceeding covered hereby without the prior written
consent of the Company to such settlement.
11. Non-exclusivity. This
Agreement is not the exclusive arrangement between the Company and Indemnitee
regarding the subject matter hereof and shall not diminish or affect any other
rights which Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation or By-laws, under other agreements, or
otherwise.
12. Continuation After
Term. Indemnitee's rights hereunder shall continue after the Indemnitee
has ceased acting as a director or Agent of the Company and the benefits hereof
shall inure to the benefit of the heirs, executors and administrators of
Indemnitee.
13. Severability. If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable, provisions of the Agreement shall not in any way be affected
or impaired thereby, and to the fullest extent possible, the provisions of this
Agreement shall be construed or altered by the court so as to remain enforceable
and to provide Indemnitee with as many of the benefits contemplated hereby as
are permitted under law.
14. Counterparts, Modification
and Waiver. This Agreement may be signed in counterparts. This Agreement
constitutes a separate agreement between the Company and Indemnitee and may be
supplemented or amended as to Indemnitee only by a written instrument signed by
the Company and Indemnitee, with such amendment binding only the Company and
Indemnitee. All waivers must be in a written document signed by the party to be
charged. No waiver of any of the provisions of this Agreement shall be implied
by the conduct of the parties. A waiver of any right hereunder shall not
constitute a waiver of any other right hereunder.
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15. Notices. All notices,
demands, consents, requests, approvals and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been
properly given if hand delivered (effective upon receipt or when refused), or if
sent by a courier freight prepaid (effective upon receipt or when refused), in
the case of the Company, at the addresses listed below, and in the case of
Indemnitee, at Indemnitee's address of record at the office of the Company, or
to such other addresses as the parties may notify each other in
writing.
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c/o
Provident Industries, Inc.
c/o
Clinton Group
0
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
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|
Xxx
Xxxx, XX 00000
Attention:
Chief Financial Officer
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To
Indemnitee:
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At
the Indemnitee's residence
address
and facsimile number on
the
records of the Company from
time
to time.
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16. Evidence of Coverage.
Upon request by Indemnitee, the Company shall provide evidence of the liability
insurance coverage required by this Agreement. The Company shall promptly notify
Indemnitee of any change in the Company's D&O Insurance
coverage.
18. Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York.
[Signature page follows
immediately]
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IN
WITNESS WHEREOF, the parties hereto have entered into this Indemnification
Agreement effective as of the date first above written.
| PIONEER POWER SOLUTIONS, INC. | |||
|
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By:
|
/s/Xxxxxx X. Xxxxxxx | |
| Name: Xxxxxx X. Xxxxxxx | |||
| Title: Chief Executive Officer | |||
| EXECUTIVE | |||
| Xxxxxx X. Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | |||
[Signature
page to Indemnification Agreement]
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