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Exhibit
10.4
INDEMNIFICATION
AGREEMENT
This Agreement (this “
Agreement ”) is made as of the
day of August, 2007, by and between
Distributed Energy Systems Corp., a Delaware corporation (the
“ Corporation ), and
(the “ Indemnitee ”), a director or officer of
the Corporation.
WHEREAS, it is essential to
the Corporation to retain and attract as directors and officers the
most capable persons available, and
WHEREAS, the substantial
increase in corporate litigation subjects directors and officers to
expensive litigation risks at the same time that the availability
of directors’ and officers’ liability insurance has
been severely limited, and
WHEREAS, it is now and has
always been the express policy of the Corporation to indemnify its
directors and officers, and
WHEREAS, the Indemnitee does
not regard the protection available under the Corporation’s
Certificate of Incorporation and insurance as adequate in the
present circumstances, and may not be willing to serve or continue
to serve as a director or officer without adequate protection,
and
WHEREAS, the Corporation
desires the Indemnitee to serve, or continue to serve, as a
director or officer of the Corporation.
NOW THEREFORE, the
Corporation and the Indemnitee do hereby agree as
follows:
1. Agreement to Serve
. The Indemnitee agrees to serve or continue to serve as a director
or officer of the Corporation for so long as the Indemnitee is duly
elected or appointed or until such time as the Indemnitee tenders a
resignation in writing. Indemnitee may at any time and for any
reason resign from such position(s), subject to any other
contractual obligation or any obligation imposed by operation of
law, and such resignation shall have no effect on the
Corporation’s obligations hereunder.
2. Definitions . As
used in this Agreement:
(a) The term “
Proceeding ” shall include any threatened, pending or
completed action, suit, arbitration, alternative dispute resolution
proceeding, investigation, administrative hearing or other
proceeding, whether brought by or in the right of the Corporation
or otherwise and whether of a civil, criminal, administrative or
investigative nature, and any appeal therefrom.
(b) The term “
Corporate Status ” shall mean the status of a person
who is or was, or has agreed to become, a director or officer of
the Corporation, or is or was serving, or has agreed to serve, at
the request of the Corporation, as a director, officer, fiduciary,
partner, trustee, member, employee or agent of, or in a similar
capacity with, another corporation, partnership, joint venture,
trust, limited liability company or other enterprise.
(c) The term “
Expenses ” shall be broadly construed and shall
include, without limitation, attorneys’ fees, retainers,
court costs, transcript costs, fees and expenses of
experts,
travel expenses, food and lodging
expenses while traveling, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees and other
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, or being or preparing to be a witness in any
Proceeding, but shall not include the amount of judgments, fines or
penalties against Indemnitee or amounts paid in settlement in
connection with such matters.
(d) The term “
Change in Control ” shall mean:
(i) the acquisition by an
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 (the “ Exchange Act ”)) (a
“ Person ”) of beneficial ownership of any
capital stock of the Corporation if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 50% or more of either
(x) the then-outstanding shares of common stock of the
Corporation (the “ Outstanding Corporation Common
Stock ”) or (y) the combined voting power of the
then-outstanding securities of the Corporation entitled to vote
generally in the election of directors (the “ Outstanding
Corporation Voting Securities ”); provided ,
however , that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control:
(A) any acquisition directly from the Corporation (excluding
an acquisition pursuant to the exercise, conversion or exchange of
any security exercisable for, convertible into or exchangeable for
common stock or voting securities of the Corporation, unless the
Person exercising, converting or exchanging such security acquired
such security directly from the Corporation or an underwriter or
agent of the Corporation), (B) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation, or
(C) any acquisition by any corporation pursuant to a Business
Combination (as defined below) which complies with clauses
(x) and (y) of subsection (iii) of this definition;
or
(ii) such time as the
Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of
a successor corporation to the Corporation), where the term “
Continuing Director ” means at any date a member of
the Board (x) who was a member of the Board on the date of
this Agreement or (y) who was nominated or elected subsequent
to such date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or
whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the
time of such nomination or election; provided ,
however , that there shall be excluded from this clause
(y) any individual whose initial assumption of office occurred
as a result of an actual or threatened election contest 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, and any individual whose initial
assumption of office occurred pursuant to any right granted to a
securityholder of the Corporation to nominate, elect or appoint, or
have nominated, elected or appointed, one or more directors;
or
(iii) the consummation of a
merger, consolidation, reorganization, recapitalization or share
exchange involving the Corporation (a “ Business
Combination ”), unless, immediately following such
Business Combination, each of the following two conditions is
satisfied: (x) all or substantially all of the individuals and
entities who were the beneficial
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owners of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the
election of directors, respectively, of the resulting or acquiring
corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such
transaction owns the Corporation or substantially all of the
Corporation’s assets either directly or through one or more
subsidiaries) (such resulting or acquiring corporation is referred
to herein as the “ Acquiring Corporation ”) in
substantially the same proportions as their ownership of the
Outstanding Corporation Common Stock and Outstanding Corporation
Voting Securities, respectively, immediately prior to such Business
Combination and (y) no Person (excluding the Acquiring
Corporation or any employee benefit plan (or related trust)
maintained or sponsored by the Corporation or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 30% or more
of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the
then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that
such ownership existed prior to the Business
Combination).
(e) The term “
Special Independent Counsel ” shall mean a law firm,
or a member of a law firm, that is experienced in matters of
corporation law and neither currently is, nor in the past three
years has been, retained to represent: (i) the Corporation, an
affiliate of the Corporation or the Indemnitee in any matter
material to such party or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “ Special
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 Corporation or the Indemnitee in an action to determine
the Indemnitee’s rights under this Agreement.
(f) References to “
other enterprise ” shall include employee benefit
plans; references to “ fines ” shall include any
excise tax assessed with respect to any employee benefit plan;
references to “ serving at the request of the
Corporation ” shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties
on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants,
or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interests of
the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner “ not opposed to
the best interests of the Corporation ” as referred to in
this Agreement.
3. Indemnity of
Indemnitee . Subject to Sections 6, 7 and 9, the Corporation
shall indemnify the Indemnitee in connection with any Proceeding as
to which the Indemnitee is, was or is threatened to be made a party
(or is otherwise involved) by reason of the Indemnitee’s
Corporate Status, to the fullest extent permitted by law (as such
may be amended from time to time).
4. Indemnification of
Expenses of Successful Party . Notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee has
been successful, on the merits or otherwise, in defense of any
Proceeding or in defense of any claim, issue or matter
therein
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(other than a Proceeding referred to in
Section 6), the Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred by or on behalf of the
Indemnitee in connection therewith. Without limiting the foregoing,
if any Proceeding or any claim, issue or matter therein is disposed
of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the
Indemnitee, (ii) an adjudication that the Indemnitee was
liable to the Corporation, (iii) a plea of guilty or nolo
contendere by the Indemnitee, (iv) an adjudication that
the Indemnitee did not act in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and (v) with respect to any
criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his or her conduct was unlawful, the
Indemnitee shall be considered for the purposes hereof to have been
wholly successful with respect thereto.
5. Indemnification for
Expenses of a Witness . To the extent that the Indemnitee is,
by reason of the Indemnitee’s Corporate Status, a witness in
any Proceeding to which the Indemnitee is not a party, the
Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by or on behalf of the Indemnitee in connection
therewith.
6. Exceptions to Right of
Indemnification . Notwithstanding anything to the contrary to
this Agreement, except as set forth in Section 10, the
Corporation shall not indemnify the Indemnitee in connection with a
Proceeding (or part thereof) initiated by the Indemnitee unless
(a) the initiation thereof was approved by the Board of
Directors of the Corporation or (b) the Proceeding was
commenced following a Change in Control. Notwithstanding anything
to the contrary in this Agreement, the Corporation shall not
indemnify the Indemnitee to the extent the Indemnitee is reimbursed
from the proceeds of Corporation D&O Insurance (as defined
below), and in the event the Corporation makes any indemnification
payments to the Indemnitee and the Indemnitee is subsequently
reimbursed from the proceeds of insurance, the Indemnitee shall
promptly refund such indemnification payments to the Corporation to
the extent of such insurance reimbursement. Nothing contained in
this Agreement shall obligate the Indemnitee to file a claim or
otherwise pursue collection under any insurance policy other than
the Corporation D&O Insurance with respect to any
matter.
7. Notification and
Defense of Claim . As a condition precedent to the
Indemnitee’s right to be indemnified, the Indemnitee must
notify the Corporation in writing as soon as practicable of any
Proceeding for which indemnity will or could be sought; but the
omission so to notify the Corporation will not relieve it from any
liability that it may have to Indemnitee if such omission does not
actually prejudice the Corporation’s rights and, if such
omission does prejudice the Corporation’s rights, it will
relieve the Corporation from liability only to the extent of such
prejudice; nor will such omission relieve the Corporation from any
liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any Proceeding of which the Corporation
is so notified, the Corporation will be entitled to participate
therein at its own expense and/or to assume the defense thereof at
its own expense, with legal counsel reasonably acceptable to the
Indemnitee. After notice from the Corporation to the Indemnitee of
its election so to assume such defense, the Corporation shall not
be liable to the Indemnitee for any legal or other expenses
subsequently incurred by the Indemnitee in connection with such
Proceeding, other than as provided below in this Section 7.
The Corporation shall only have the right to assume the defense of
any Proceeding if it acknowledges in writing that the Indemnitee is
entitled to indemnification hereunder with respect thereto, which
acknowledgement shall be
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subject to any subsequent determination
pursuant to Section 9 of this Agreement that Indemnitee is not
entitled to such indemnification. The Indemnitee shall have the
right to employ his or her own counsel in connection with such
Proceeding, but the fees and expenses of such counsel incurred
after notice from the Corporation of its assumption of the defense
thereof shall be at the expense of the Indemnitee unless
(i) the employment of counsel by the Indemnitee has been
authorized by the Corporation, (ii) counsel to the Indemnitee
shall have reasonably concluded that there may be a conflict of
interest or position on any significant issue between the
Corporation and the Indemnitee in the conduct of the defense of
such Proceeding or (iii) the Corporation shall not in fact
have employed counsel to assume the defense of such Proceeding, in
each of which cases the fees and expenses of counsel for the
Indemnitee shall be at the expense of the Corporation, except as
otherwise expressly provided by this Agreement, and provided that
Indemnitee’s counsel shall cooperate reasonably with the
Corporation’s counsel to minimize the cost of defending
claims against the Corporation and the Indemnitee. The Corporation
shall not be entitled, without the consent of the Indemnitee, to
assume the defense of any claim brought by or in the right of the
Corporation or as to which counsel for the Indemnitee shall have
reasonably made the conclusion provided for in clause
(ii) above. The Corporation shall not be required to indemnify
the Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding effected without it
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