Document:

f8kex10vii_pioneer.htm

     

    Exhibit
10.7

     

    EMPLOYMENT
AND NON-COMPETITION AGREEMENT

     

    THIS
EMPLOYMENT AND NON-COMPETITION AGREEMENT, is entered into as of this 2nd day
of December, 2009 by and between Pioneer Power Solutions, Inc. (the “Company”),
a Delaware corporation, c/o Provident Industries, c/o Clinton Group, 9 West
57th
Street, 26th
Floor, New York, New York 10019 and Nathan Mazurek, c/o Provident Industries,
c/o Clinton Group, 9 West 57th
Street, 26th
Floor, New York, New York 10019 (the “Executive”).

     

    W I T N E S S E T
H:

     

    WHEREAS,
the Company desires to employ the Executive and the Executive desires to be
employed by the Company; and

     

    WHEREAS,
the Company and the Executive desire to set forth the terms and conditions of
such employment.

     

    NOW
THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the adequacy and receipt
of which is hereby acknowledged, the parties hereto agree as
follows:

     

    1. Term of Employment.
The Company hereby agrees to employ the Executive and the Executive hereby
accepts employment, in accordance with the terms and conditions set forth
herein, for a term (the “Employment Term”) commencing on the date of the
consummation of the share exchange by and among the Company, Pioneer
Transformers Ltd. and Provident Pioneer Partners, L.P., a Delaware limited
partnership (the “Share Exchange”), and terminating, unless otherwise terminated
earlier in accordance with Section 5 hereof, on the third anniversary of the
Share Exchange (the “Original Employment Term”), provided that the Employment
Term shall be automatically extended, subject to earlier termination as provided
in Section 5 hereof, for successive additional two (2) year periods (the
“Additional Terms”), unless, at least one hundred eighty (180) days prior to the
end of the Original Employment Term or the then Additional Term, the Company or
the Executive has notified the other in writing that the Employment Term shall
terminate at the end of the then current term.

     

    2. Position and
Responsibilities. During the Employment Term, the Executive shall serve
as the Chief Executive Officer and Chief Financial Officer of the Company and
the Executive shall report exclusively to the Board of Directors of the Company
(the “Board”). During the Employment Term, the Company shall recommend the
Executive for election as a director. The Executive shall have all of the
duties, authorities, powers and responsibilities commensurate with all of the duties, authorities, powers and responsibilities of a
chief executive officer. The Executive shall devote substantially all of his
business time, attention and energies to the performance of his duties
hereunder, provided that the foregoing shall not prevent the Executive from
participating in charitable, community or industry affairs, from managing his
and his family’s personal investments and from serving on the boards of
directors of not-for-profit companies to the extent such activities do not
interfere with the performance of his duties hereunder.

     

     

    
      
        
        

      

      
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    3. Compensation and Benefits. The
Company shall pay and provide the Executive the following:

     

    3.1. Base Salary. The
Company shall pay the Executive a base salary (the “Base Salary”) at an annual
rate of not less than Two Hundred Fifty Thousand Dollars ($250,000) per year in
accordance with the Company’s normal payroll practices for senior executives.
Base Salary shall be increased to Two Hundred Seventy-Five Thousand Dollars
($275,000) and to Three Hundred Thousand Dollars ($300,000) on the first and
second anniversaries, respectively, of the date hereof.  Once
increased, Base Salary shall not be reduced and shall thereafter, as increased,
shall be the Base Salary hereunder.

     

    3.2. Annual Bonus. In
addition to the Base Salary set forth in 3.1 above, the Executive shall be
entitled to such bonus compensation as the Board may determine from time to time
in its sole discretion, but not to exceed 50% of the Executive’s Base Salary
(which percentage may be increased in the discretion of the Board).

     

    3.3. Employee Benefits.
The Executive shall, to the extent eligible, be entitled to participate at a
level commensurate with his position in all employee benefit, fringe benefit,
welfare, retirement, savings and incentive plans and programs generally provided
by the Company to its senior executives from time to time.

     

    3.4. Vacation. The
Executive shall be entitled to paid vacation in accordance with the standard
written policies of the Company with regard to vacations of senior executives,
but in no event less than six (6) weeks per calendar year (with proration for
partial years).

     

    4. Expenses. Upon
submission of appropriate documentation, the Company shall pay, or reimburse,
the Executive for all ordinary and necessary business expenses (including, but
not limited to, travel and entertainment expenses) which the Executive incurs in
connection with the performance of his duties hereunder.

     

    5. Termination of Employment
and the Employment Term. The Executive’s employment with the Company and
the Employment Term shall terminate upon the occurrence of the first of the
following events:

     

    5.1. Death. Automatically
on the date of the Executive’s death.

     

    5.2. Disability. Upon
thirty (30) days’ written notice by the Company to the Executive of a
termination due to Disability, provided such notice is delivered during the
period of Disability. “Disability” shall mean the inability of the Executive,
due to injury, illness, disease or bodily or mental infirmity, to engage in the
performance of his material duties hereunder for a period of more than one
hundred eighty (180) days in any twelve (12) month period.

     

    
      
        
        

      

      
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    5.3. For Cause.
Immediately upon written notice by the Company to the Executive of a termination
for Cause, provided such notice is given within ninety (90) days after the
discovery by the Board of the Cause event and has been approved by at least
two-thirds of the directors then in office (other than the Executive) at a
meeting at which the Executive and his counsel had the right to appear and
address after receiving at least five (5) business days written notice of the
meeting and reasonable detail of the facts and circumstances claimed to provide
a basis for such termination. “Cause” shall mean: (i) an act or acts of willful
and material misrepresentation, fraud or willful dishonesty (other than good
faith expense account disputes) by the Executive which is intended to result in
his substantial personal enrichment at the expense of the Company; (ii) any
willful misconduct by the Executive with regard to the Company that has a
material adverse impact on the Company; (iii) any material, willful and knowing
violation by the Executive of any fiduciary duties owed by him to the Company
which has a material adverse impact on the Company; (iv) the Executive’s
conviction of, or pleading nolo contendere or guilty to, a felony (other than
(x) a traffic infraction or (y) vicarious liability solely as a result of his
position provided that the Executive did not have actual knowledge of the
actions or inactions creating the violation of the law or the Executive relied
in good faith on the advice of counsel with regard to the legality of such
action or inaction); or (v) any other material breach by the
Executive of this Agreement that is not cured by the Executive within twenty
(20) days after receipt by the Executive of a written notice from the Company of
such breach specifying the details thereof. No action or inaction should be
deemed willful if not demonstrably willful and if taken or not taken by the
Executive in good faith as not being adverse to the best interests of the
Company. Reference in this Section 5.3 to the Company shall also include direct
and indirect subsidiaries of the Company.

     

    5.4. Without
Cause.  Upon sixty (60) days’ written notice by the Company to
the Executive of a termination Without Cause. “Without Cause” shall mean any
reason other than death of the Executive, Disability or Cause.  In the
event the Company terminates the Executive’s employment pursuant to this Section
5.4, the Company shall continue to pay the Executive the Base Salary for the
remainder of the Original Employment Term or the Additional Term, as the case
may be, as if this Agreement had not been previously terminated pursuant to this
Section 5.4.

     

    6.  Non-Competition/Non-Solicitation.

     

    6.1. Non-Competition. The
Executive agrees that during the Specified Period (as defined below), the
Executive shall not, directly or indirectly, be engaged as a principal in any
other business, activity or conduct which competes with the business of the
Company (or be an employee, consultant, director, principal, shareholder or
adviser of, or otherwise be affiliated with, any such business, activity or
conduct), provided that competition shall not include: (i) holding five percent
(5%) or less of an interest in the equity or debt of any publicly traded
company, (ii) engaging in any activity with the prior written approval of the
Board, or (iii) being involved only in a noncompeting portion of a business
which is in competition with the business of the Company (but only if such
non-competing portion of the business is conducted as a separate business unit,
and the Executive has no direct or indirect involvement with the operations of
the competing business unit (with the burden of so demonstrating being on the
Executive) and the foregoing shall not affect the Executive’s obligations of
confidentiality). For purposes of this Section 6, “Company” shall mean the
Company and its subsidiaries and affiliates. The “Specified Period” means the
Executive’s period of employment and the four (4) year period thereafter,
provided that in the event the Executive is terminated without Cause or due to
his Disability or the Executive voluntarily terminates his employment following
a breach by the Company of this Agreement, the Specified Period will terminate
two (2) years after the termination of his employment.

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    6.2. Non-Solicitation. The
Executive agrees that during the Specified Period the Executive shall not,
directly or indirectly, (i) solicit any customer, client, supplier, or middleman
of the Company or induce any customer, client, supplier, or middleman of the
Company to terminate, or otherwise to cease, reduce, or diminish in any way its
relationship with the Company or (ii) solicit or induce, or attempt to solicit
or induce, any non-clerical employee(s), sales representative(s), agent(s), or
consultant(s) of the Company to terminate such person’s employment,
representation or other association with the Company for the purpose of
affiliating with any entity with which the Executive is associated.

     

    6.3. Confidentiality. The
Executive specifically acknowledges that any trade secrets or confidential
business and technical information of the Company or its vendors, suppliers or
customers, whether reduced to writing, maintained on any form of electronic
media, or maintained in mind or memory and whether compiled by the Executive or
the Company (collectively, “Confidential Information”), derives independent
economic value from not being readily known to or ascertainable by proper means
by others; that reasonable efforts have been made by the
Company to maintain the secrecy of such information; that such information is
the sole property of the Company or its vendors, suppliers, or customers and
that any retention, use or disclosure of such information by the Executive
during the Employment Term (except in the course of performing duties and
obligations of employment with the Company) or any time after termination
thereof, shall constitute misappropriation of the trade secrets of the Company
or its vendors, suppliers, or customers, provided that Confidential Information
shall not include: (i) information that is at the time of disclosure public
knowledge or generally known within the industry; (ii) information deemed in
good faith by the Executive, while employed by the Company, desirable to
disclose in the course of performing the Executive’s duties; (iii) information
the disclosure of which the Executive in good faith deems necessary in defense
of the Executive’s rights provided such disclosure by the Executive is limited
to only disclose as necessary for such purpose; or (iv) information disclosed by
the Executive to comply with a court, or other lawful compulsory, order
compelling him to do so, provided the Executive gives the Company prompt notice
of the receipt of such order and the disclosure by the Executive is limited to
only disclosure necessary for such purpose.

     

    6.4. Return of Property.
Upon the termination of the Executive’s employment or at any other time upon
written request by the Company, the Executive shall promptly deliver to the
Company all records, files, memoranda, designs, data, reports, drawings, plans,
computer programs, software and other documents (and all copies or reproductions
of such materials in his possession or control) belonging to the Company.
Notwithstanding the foregoing, the Executive may retain his rolodex, Microsoft
Outlook Contacts file or similar electronic file and similar phone directories
(collectively, the “Rolodex”), to the extent the Rolodex does not contain
information other than name, address, telephone number, e-mail address and
similar information.

     

     

    
      
        
        

      

      
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    6.5. Scope of
Restrictions/Remedies. If, at the time of enforcement of this Section 6,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. In the event of a material breach or threatened
material breach of this Section 6, the Company, in addition to its other
remedies at law or in equity, shall be entitled to injunctive or other equitable
relief in order to enforce or prevent any violations of the provisions of this
Section 6. The Company agrees that it will not assert to enjoin or otherwise
limit the Executive’s activities based on an argument of inevitable disclosure
of confidential information. Upon written request of the Executive, the Company
shall within thirty (30) days notify the Executive in writing whether or not in
good faith it believes that any proposed activities would be in competition and,
if it so determines that such activity is not in competition or does not reply
within thirty (30) days, the Company shall be deemed to waive any right to treat
such activities as competition under Section 6.1 hereof unless the facts are
otherwise than as presented by the Executive or there is a change thereafter in
such activities.

     

    7. Indemnification/Liability
Insurance. The Company shall concurrently with the execution and delivery
of this Agreement enter into an Indemnification Agreement with the Executive (in
substantially the same form attached as Appendix A hereto).
The Company shall cover the Executive under directors and officers liability
insurance both during and, while potential liability exists, after the
Employment Term in the same amount and to the same extent, if any, as the
Company covers its other officers and directors.

     

    8. Assignment. This
Agreement may and shall be assigned or transferred to, and shall be binding upon
and shall inure to the benefit of, any Successor of the Company, and any such
Successor shall be deemed substituted for all purposes of the “Company” under
the terms of this Agreement. “Successor” shall mean any person, firm,
corporation or business entity which at any time, whether by merger, share
exchange, purchase, or otherwise, acquires all or substantially all of the
assets of the Company. Notwithstanding such assignment, the Company shall
remain, with such successor, jointly and severally liable for all its
obligations hereunder. Except as herein provided, this Agreement may not
otherwise be assigned by the Company. This Agreement is not assignable by the
Executive. This Agreement shall inure to the benefit of and be enforceable by
the Executive’s personal or legal representatives, executors, and
administrators, successors, heirs, distributees, devisees, and legatees. If the
Executive should die after a termination while any amounts payable to the
Executive hereunder remain outstanding, all such amounts, unless otherwise
provided herein, shall be paid to the Executive’s devisee, legatee, or other
designee or, in the absence of such designee, to the Executive’s
estate.

     

     

    
      
        
        

      

      
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    9. Legal
Remedies.

     

    9.1. Notices. All notices
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, or one (1) day after sending by express mail or other
“overnight mail service,” or three (3) days after sending by certified or
registered mail, postage prepaid, return receipt requested. Notice shall be sent
as follows: if to the Executive, to the address as listed in the Company’s
records, and if to the Company, to the address set forth on the first page of
this Agreement, attention of Chief Financial Officer. Either party may change
the notice address by notice given as aforesaid.

     

    9.2. Arbitration. All
disputes and controversies arising under or in connection with this Agreement,
other than the seeking of injunctive or other equitable relief pursuant to
Section 6 hereof, shall be settled exclusively by arbitration in New York City,
New York, or such other location agreed by the parties hereto, in accordance
with the rules for expedited resolution of commercial disputes of the American
Arbitration Association (“AAA”) then in effect. The determination of the
arbitrators shall be final and binding on the parties. Judgment may be entered
on the award of the arbitrator in any court having proper jurisdiction. All
expenses of the AAA and the arbitrator shall be borne as determined by the
arbitrator.

     

    10. Miscellaneous.

     

    10.1. Entire Agreement.
This Agreement supersedes any prior agreements or understandings, oral or
written, between the parties hereto with respect to the subject matter
hereof.

     

    10.2. Modification. This
Agreement shall not be varied, altered, modified, canceled, changed, or in any
way amended, nor any provision hereof waived, except by mutual agreement of the
parties in a written instrument executed by the parties hereto or their legal
representatives.

     

    10.3. Severability. In the
event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.

     

    10.4. Counterparts. This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed to be an original, but all of which together will constitute one and
the same Agreement.

     

    10.5. Tax Withholding. The
Company may withhold from any benefits payable under this Agreement all federal,
state, city, or other taxes as may be required pursuant to any law or
governmental regulation or ruling.

     

    10.6. Governing Law. The
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the state of New York, without regard to any otherwise applicable
principles of conflicts of laws.

     

    [Signature
page follows immediately]

     

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the Executive and the Company have executed this Agreement, as
of the day and year first above written.

     

    

     

    PIONEER
POWER SOLUTIONS, INC.

     

    By:       /s/ Nathan J.
Mazurek

    Name:
Nathan J. Mazurek

    Title:
Chief Executive Officer

     

     

    EXECUTIVE

     

    /s/ Nathan J.
Mazure

    Nathan J.
Mazurek

     

    

    
      [Signature page to Employment
Agreement]

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

     

    APPENDIX
A

     

    INDEMNIFICATION
AGREEMENT

     

     

    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 Nathan J. Mazurek ("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.

     

     

    
      
        
        

      

      
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    (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.

     

    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.

     

    (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.

     

     

    
      
        
        

      

      
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    (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.

     

    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.

     

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

     

    
      	
              To Company:

            	
              Pioneer
      Power Solutions, Inc.

            
	 
      	
              c/o
      Provident Industries, Inc.

              c/o
      Clinton Group

              9
      West 57th
      Street, 26th
      Floor

            
	 
      	
              New
      York, NY 10019

              Attention:
      Chief Financial Officer

            
	 
      	 
      
	
              To
      Indemnitee:

            	
              At
      the Indemnitee's residence address and facsimile number on the records of
      the Company from time to time.

            

    

     

    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]

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

    

     

    IN
WITNESS WHEREOF, the parties hereto have entered into this Indemnification
Agreement effective as of the date first above written.

     

     

    

     

    PIONEER
POWER SOLUTIONS, INC.

     

    By:       /s/ Nathan J.
Mazurek

    Name:
Nathan J. Mazurek

    Title:
Chief Executive Officer

     

    EXECUTIVE

     

    /s/ Nathan J.
Mazure

    Nathan J.
Mazurek

    

    
 

    

    
 

    

    

    

    
       
[Signature
page to Indemnification Agreement]f8kex10viii_pioneer.htm

     

    Exhibit
10.8

     

    PIONEER
POWER SOLUTIONS, INC.

     

    2009
EQUITY INCENTIVE PLAN

     

    1.          
  Purpose of the
Plan.

     

    This 2009
Equity Incentive Plan (the “Plan”) is intended as
an incentive, to retain in the employ of and as directors, officers,
consultants, advisors and employees to Pioneer Power Solutions, Inc., a Delaware
corporation (the “Company”), and any
Subsidiary of the Company, within the meaning of Section 424(f) of the United
States Internal Revenue Code of 1986, as amended (the “Code”), persons of
training, experience and ability, to attract new directors, officers,
consultants, advisors and employees whose services are considered valuable, to
encourage the sense of proprietorship and to stimulate the active interest of
such persons in the development and financial success of the Company and its
Subsidiaries.

     

    It is
further intended that certain options granted pursuant to the Plan shall
constitute incentive stock options within the meaning of Section 422 of the Code
(the “Incentive
Options”) while certain other options granted pursuant to the Plan shall
be nonqualified stock options (the “Nonqualified
Options”).  Incentive Options and Nonqualified Options are
hereinafter referred to collectively as “Options.”

     

    The
Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
that transactions of the type specified in subparagraphs (c) to (f) inclusive of
Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be
exempt from the operation of Section 16(b) of the Exchange
Act.  Further, the Plan is intended to satisfy the performance-based
compensation exception to the limitation on the Company’s tax deductions imposed
by Section 162(m) of the Code with respect to those Options for which
qualification for such exception is intended.  In all cases, the
terms, provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company’s intent as stated in this Section
1.

     

    2.          
  Administration of
the Plan.

     

    The Board
of Directors of the Company (the “Board”) shall appoint
and maintain as administrator of the Plan a Committee (the “Committee”)
consisting of two or more directors who are (i) “Independent Directors” (as such
term is defined under the rules of the NASDAQ Stock Market), (ii) “Non-Employee
Directors” (as such term is defined in Rule 16b-3) and (iii) “Outside Directors”
(as such term is defined in Section 162(m) of the Code), which shall serve at
the pleasure of the Board.  The Committee, subject to Sections 3, 5
and 6 hereof, shall have full power and authority to designate recipients of
Options and restricted stock (“Restricted Stock”)
and to determine the terms and conditions of the respective Option and
Restricted Stock agreements (which need not be identical) and to interpret the
provisions and supervise the administration of the Plan.  The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options.  To the extent any Option does not qualify as an
Incentive Option, it shall constitute a separate Nonqualified
Option.

     

    Subject
to the provisions of the Plan, the Committee shall interpret the Plan and all
Options and Restricted Stock granted under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options or Restricted Stock granted under the Plan in the
manner and to the extent that the Committee deems desirable to carry into effect
the Plan or any Options or Restricted Stock.  The act or determination
of a majority of the Committee shall be the act or determination of the
Committee and any decision reduced to writing and signed by all of the members
of the Committee shall be fully effective as if it had been made by a majority
of the Committee at a meeting duly held for such purpose.  Subject to
the provisions of the Plan, any action taken or determination made by the
Committee pursuant to this and the other Sections of the Plan shall be
conclusive on all parties.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In the
event that for any reason the Committee is unable to act or if the Committee at
the time of any grant, award or other acquisition under the Plan does not
consist of two or more Non-Employee Directors, or if there shall be no such
Committee, or if the Board otherwise determines to administer the Plan, then the
Plan shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to the
Board, and any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3;
provided, however, that grants
to the Company’s Chief Executive Officer or to any of the Company’s other four
most highly compensated officers that are intended to qualify as
performance-based compensation under Section 162(m) of the Code may only be
granted by the Committee.

     

    3.           Designation of Optionees and
Grantees.

     

    The
persons eligible for participation in the Plan as recipients of Options (the
“Optionees”) or
Restricted Stock (the “Grantees” and
together with Optionees, the “Participants”) shall
include directors, officers and employees of, and consultants and advisors to,
the Company or any Subsidiary; provided that Incentive Options may only be
granted to employees of the Company and any Subsidiary. In selecting
Participants, and in determining the number of shares to be covered by each
Option or award of Restricted Stock granted to Participants, the Committee may
consider any factors it deems relevant, including, without limitation, the
office or position held by the Participant or the Participant’s relationship to
the Company, the Participant’s degree of responsibility for and contribution to
the growth and success of the Company or any Subsidiary, the Participant’s
length of service, promotions and potential. A Participant who has been granted
an Option or Restricted Stock hereunder may be granted an additional Option or
Options, or Restricted Stock if the Committee shall so determine.

     

    4.           Stock Reserved for the
Plan.

     

    Subject
to adjustment as provided in Section 8 hereof, a total of 1,600,000 shares of
the Company’s common stock, par value $0.001 per share (the “Stock”), shall be
subject to the Plan.  The maximum number of shares of Stock that may
be subject to Options granted under the Plan to any individual in any calendar
year shall not exceed 1,600,000 shares, and the method of counting such shares
shall conform to any requirements applicable to performance based compensation
under Section 162(m) of the Code, if qualification as performance based
compensation under Section 162(m) is intended. The shares of
Stock subject to the Plan shall consist of unissued shares, treasury shares or
previously issued shares held by any Subsidiary of the Company, and such number
of shares of Stock shall be and is hereby reserved for such
purpose.  Any of such shares of Stock that may remain unissued and
that are not subject to outstanding Options at the termination of the Plan shall
cease to be reserved for the purposes of the Plan, but until termination of the
Plan the Company shall at all times reserve a sufficient number of shares of
Stock to meet the requirements of the Plan.  Should any Option or
award of Restricted Stock expire or be canceled prior to its exercise or vesting
in full or should the number of shares of Stock to be delivered upon the
exercise or vesting in full of an Option or award of Restricted Stock be reduced
for any reason, the shares of Stock theretofore subject to such Option or
Restricted Stock may be subject to future Options or Restricted Stock under the
Plan, except where such reissuance is inconsistent with the provisions of
Section 162(m) of the Code where qualification as performance-based compensation
under Section 162(m) of the Code is intended.

     

    5.           Terms and Conditions of
Options.

     

    Options
granted under the Plan shall be subject to the following conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:

     

    (a)           Option
Price.  The purchase price of each share of Stock purchasable
under an Incentive Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided, however, that with
respect to an Optionee who, at the time such Incentive Option is granted, owns
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or of any
Subsidiary, the purchase price per share of Stock shall be at least 110% of the
Fair Market Value per share of Stock on the date of grant.  The
purchase price of each share of Stock purchasable under a Nonqualified Option
shall not be less than 100% of the Fair Market Value of such share of Stock on
the date the Option is granted.  The exercise price for each Option
shall be subject to adjustment as provided in Section 8 below.  “Fair Market Value”
means the closing price on the final trading day immediately prior to the grant
date of the Stock on the principal securities exchange on which shares of Stock
are listed (if the shares of Stock are so listed), or on the NASDAQ Stock Market
or OTC Bulletin Board (if the shares of Stock are regularly quoted on the NASDAQ
Stock Market or OTC Bulletin Board, as the case may be), or, if not so listed,
the mean between the closing bid and asked prices of publicly traded shares of
Stock in the over the counter market, or, if such bid and asked prices shall not
be available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Committee in a manner
consistent with the provisions of the Code.  Anything in this Section
5(a) to the contrary notwithstanding, in no event shall the purchase price of a
share of Stock be less than the minimum price permitted under the rules and
policies of any national securities exchange on which the shares of Stock are
listed.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

     

    (b)           Option
Term.  The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten years after the date such
Option is granted and in the case of an Incentive Option granted to an Optionee
who, at the time such Incentive Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, no such Incentive
Option shall be exercisable more than five years after the date such Incentive
Option is granted.

     

    (c)           Exercisability.  Subject
to Section 5(j) hereof, Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
the time of grant; provided, however, that in the
absence of any Option vesting periods designated by the Committee at the time of
grant, Options shall vest and become exercisable as to one-third of the total
number of shares subject to the Option on each of the first, second and third
anniversaries of the date of grant; and provided further that no Options shall
be exercisable until such time as any vesting limitation required by Section 16
of the Exchange Act, and related rules, shall be satisfied if such limitation
shall be required for continued validity of the exemption provided under Rule
16b-3(d)(3).

     

    Upon the
occurrence of a “Change in Control” (as hereinafter defined), the Committee may
accelerate the vesting and exercisability of outstanding Options, in whole or in
part, as determined by the Committee in its sole discretion.  In its
sole discretion, the Committee may also determine that, upon the occurrence of a
Change in Control, each outstanding Option shall terminate within a specified
number of days after notice to the Optionee thereunder, and each such Optionee
shall receive, with respect to each share of Company Stock subject to such
Option, an amount equal to the excess of the Fair Market Value of such shares
immediately prior to such Change in Control over the exercise price per share of
such Option; such amount shall be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or a
combination thereof, as the Committee shall determine in its sole
discretion.

     

    For
purposes of the Plan, unless otherwise defined in an employment agreement
between the Company and the relevant Optionee, a Change in Control shall be
deemed to have occurred if:

     

    (i)           a
tender offer (or series of related offers) shall be made and consummated for the
ownership of 50% or more of the outstanding voting securities of the Company,
unless as a result of such tender offer more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time immediately prior
to the commencement of such offer), any employee benefit plan of the Company or
its Subsidiaries, and their affiliates;

     

    (ii)           the
Company shall be merged or consolidated with another corporation, unless as a
result of such merger or consolidation more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time immediately prior
to such transaction), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates;

     

    (iii)           the
Company shall sell substantially all of its assets to another corporation that
is not wholly owned by the Company, unless as a result of such sale more than
50% of such assets shall be owned in the aggregate by the stockholders of the
Company (as of the time immediately prior to such transaction), any employee
benefit plan of the Company or its Subsidiaries and their affiliates;
or

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (iv)           a
Person (as defined below) shall acquire 50% or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record), unless as a result of such acquisition more than 50% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the stockholders of the Company (as of the time immediately
prior to the first acquisition of such securities by such Person), any employee
benefit plan of the Company or its Subsidiaries, and their
affiliates.

     

    Notwithstanding
the foregoing, if Change of Control is defined in an employment agreement
between the Company and the relevant Optionee, then, with respect to such
Optionee, Change of Control shall have the meaning ascribed to it in such
employment agreement.

     

    For
purposes of this Section 5(c), ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange
Act.  In addition, for such purposes, “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; provided, however, that a
Person shall not include (A) the Company or any of its Subsidiaries; (B) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Subsidiaries; (C) an underwriter temporarily holding
securities pursuant to an offering of such securities; or (D) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportion as their ownership of stock of the
Company.

     

    (d)           Method of
Exercise.  Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the
Committee.  As determined by the Committee, in its sole discretion, at
or after grant, payment in full or in part may be made at the election of the
Optionee (i) in the form of Stock owned by the Optionee (based on the Fair
Market Value of the Stock which is not the subject of any pledge or security
interest, (ii) in the form of shares of Stock withheld by the Company from the
shares of Stock otherwise to be received with such withheld shares of Stock
having a Fair Market Value equal to the exercise price of the Option, or (iii)
by a combination of the foregoing, such Fair Market Value determined by applying
the principles set forth in Section 5(a), provided that the combined value of
all cash and cash equivalents and the Fair Market Value of any shares
surrendered to the Company is at least equal to such exercise price and except
with respect to (ii) above, such method of payment will not cause a
disqualifying disposition of all or a portion of the Stock received upon
exercise of an Incentive Option.  An Optionee shall have the right to
dividends and other rights of a stockholder with respect to shares of Stock
purchased upon exercise of an Option at such time as the Optionee (i) has given
written notice of exercise and has paid in full for such shares, and (ii) has
satisfied such conditions that may be imposed by the Company with respect to the
withholding of taxes.

     

    (e)           Non-transferability of
Options.  Options are not transferable and may be exercised
solely by the Optionee during his lifetime or after his death by the person or
persons entitled thereto under his will or the laws of descent and
distribution.  The Committee, in its sole discretion, may permit a
transfer of a Nonqualified Option to (i) a trust for the benefit of the
Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his
or her benefit) or (iii) pursuant to a domestic relations order.  Any
attempt to transfer, assign, pledge or otherwise dispose of, or to subject to
execution, attachment or similar process, any Option contrary to the provisions
hereof shall be void and ineffective and shall give no right to the purported
transferee.

     

    (f)           Termination by
Death.  Unless otherwise determined by the Committee, if any
Optionee’s employment with or service to the Company or any Subsidiary
terminates by reason of death, the Option may thereafter be exercised, to the
extent then exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the estate or by
the legatee of the Optionee under the will of the Optionee, for a period of one
(1) year after the date of such death (or, if later, such time as the Option may
be exercised pursuant to Section 14(d) hereof) or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

     

    (g)           Termination by Reason of
Disability.  Unless otherwise determined by the Committee, if
any Optionee’s employment with or service to the Company or any Subsidiary
terminates by reason of Disability (as defined below), then any Option held by
such Optionee may thereafter be exercised, to the extent it was exercisable at
the time of termination due to Disability (or on such accelerated basis as the
Committee shall determine at or after grant), but may not be exercised after
ninety (90) days after the date of such termination of employment or service
(or, if later, such time as the Option may be exercised pursuant to Section
14(d) hereof) or the expiration of the stated term of such Option, whichever
period is shorter; provided, however, that, if the
Optionee dies within such ninety (90) day period, any unexercised Option held by
such Optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of one (1) year after the date of
such death (or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or for the stated term of such Option, whichever period is
shorter.  “Disability” shall mean an Optionee’s total and permanent
disability; provided,
that if Disability is defined in an employment agreement between the Company and
the relevant Optionee, then, with respect to such Optionee, Disability shall
have the meaning ascribed to it in such employment agreement

     

    (h)           Termination by Reason of
Retirement.  Unless otherwise determined by the Committee, if
any Optionee’s employment with or service to the Company or any Subsidiary
terminates by reason of Normal or Early Retirement (as such terms are defined
below), any Option held by such Optionee may thereafter be exercised to the
extent it was exercisable at the time of such Retirement (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after ninety (90) days after the date of such termination of
employment or service (or, if later, such time as the Option may be exercised
pursuant to Section 14(d) hereof) or the expiration of the stated term of such
Option, whichever date is earlier; provided, however, that, if the
Optionee dies within such ninety (90) day period, any unexercised Option held by
such Optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one (1) year after the date of
such death (or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or for the stated term of such Option, whichever period is
shorter.

     

    For
purposes of this paragraph (h), “Normal Retirement”
shall mean retirement from active employment with the Company or any Subsidiary
on or after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement”
shall mean retirement from active employment with the Company or any Subsidiary
pursuant to the early retirement provisions of the applicable Company or
Subsidiary pension plan or if no such pension plan, age 55.

     

    (i)           Other
Terminations.  Unless otherwise determined by the Committee
upon grant, if any Optionee’s employment with or service to the Company or any
Subsidiary is terminated by such Optionee for any reason other than death,
Disability, Normal or Early Retirement or Good Reason (as defined below), the
Option shall thereupon terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment or service may be
exercised for the lesser of ninety (90) days after the date of termination (or,
if later, such time as the Option may be exercised pursuant to Section 14(d)
hereof) or the balance of such Option’s term, which ever period is
shorter.  The transfer of an Optionee from the employ of or service to
the Company to the employ of or service to a Subsidiary, or vice versa, or from
one Subsidiary to another, shall not be deemed to constitute a termination of
employment or service for purposes of the Plan.

     

    (i)           In
the event that the Optionee’s employment or service with the Company or any
Subsidiary is terminated by the Company or such Subsidiary for “cause” any
unexercised portion of any Option shall immediately terminate in its
entirety.  For purposes hereof, unless otherwise defined in an
employment agreement between the Company and the relevant Optionee, “Cause”
shall exist upon a good-faith determination by the Board, following a hearing
before the Board at which an Optionee was represented by counsel and given an
opportunity to be heard, that such Optionee has been accused of fraud,
dishonesty or act detrimental to the interests of the Company or any Subsidiary
of Company or that such Optionee has been accused of or convicted of an act of
willful and material embezzlement or fraud against the Company or of a felony
under any state or federal statute; provided, however, that it is
specifically understood that “Cause” shall not include any act of commission or
omission in the good-faith exercise of such Optionee’s business judgment as a
director, officer or employee of the Company, as the case may be, or upon the
advice of counsel to the Company.  Notwithstanding the foregoing, if
Cause is defined in an employment agreement between the Company and the relevant
Optionee, then, with respect to such Optionee, Cause shall have the meaning
ascribed to it in such employment agreement.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

     

     

    (ii)           In
the event that an Optionee is removed as a director, officer or employee by the
Company at any time other than for “Cause” or resigns as a director, officer or
employee for “Good Reason” the Option granted to such Optionee may be exercised
by the Optionee, to the extent the Option was exercisable on the date such
Optionee ceases to be a director, officer or employee.  Such Option
may be exercised at any time within one (1) year after the date the Optionee
ceases to be a director, officer or employee (or, if later, such time as the
Option may be exercised pursuant to Section 14(d) hereof), or the date on which
the Option otherwise expires by its terms; which ever period is shorter, at
which time the Option shall terminate; provided, however, if the
Optionee dies before the Options terminate and are no longer exercisable, the
terms and provisions of Section 5(f) shall control.  For purposes of
this Section 5(i), and unless otherwise defined in an employment agreement
between the Company and the relevant Optionee, Good Reason shall exist upon the
occurrence of the following:

     

    
      	
               
      

            	
              (A)

            	
              the
      assignment to Optionee of any duties inconsistent with the position in the
      Company that Optionee held immediately prior to the
      assignment;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a
      Change of Control resulting in a significant adverse alteration in the
      status or conditions of Optionee’s participation with the Company or other
      nature of Optionee’s responsibilities from those in effect prior to such
      Change of Control, including any significant alteration in Optionee’s
      responsibilities immediately prior to such Change in Control;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      failure by the Company to continue to provide Optionee with benefits
      substantially similar to those enjoyed by Optionee prior to such
      failure.

            

    

     

    Notwithstanding
the foregoing, if Good Reason is defined in an employment agreement between the
Company and the relevant Optionee, then, with respect to such Optionee, Good
Reason shall have the meaning ascribed to it in such employment
agreement.

     

    (j)           Limit on Value of Incentive
Option.  The aggregate Fair Market Value, determined as of the
date the Incentive Option is granted, of Stock for which Incentive Options are
exercisable for the first time by any Optionee during any calendar year under
the Plan (and/or any other stock option plans of the Company or any Subsidiary)
shall not exceed $100,000.

     

    6.           Terms and Conditions of Restricted
Stock.

     

    Restricted
Stock may be granted under this Plan aside from, or in association with, any
other award and shall be subject to the following conditions and shall contain
such additional terms and conditions (including provisions relating to the
acceleration of vesting of Restricted Stock upon a Change of Control), not
inconsistent with the terms of the Plan, as the Committee shall deem
desirable:

     

    (a)           Grantee
rights.  A Grantee shall have no rights to an award of
Restricted Stock unless and until Grantee accepts the award within the period
prescribed by the Committee and, if the Committee shall deem desirable, makes
payment to the Company in cash, or by check or such other instrument as may be
acceptable to the Committee.  After acceptance and issuance of a
certificate or certificates, as provided for below, the Grantee shall have the
rights of a stockholder with respect to Restricted Stock subject to the
non-transferability and forfeiture restrictions described in Section 6(d)
below.

     

    (b)           Issuance of
Certificates.  The Company shall issue in the Grantee’s name a
certificate or certificates for the shares of Common Stock associated with the
award promptly after the Grantee accepts such award.

     

    (c)           Delivery of
Certificates.  Unless otherwise provided, any certificate or
certificates issued evidencing shares of Restricted Stock shall not be delivered
to the Grantee until such shares are free of any restrictions specified by the
Committee at the time of grant.

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (d)           Forfeitability,
Non-transferability of Restricted Stock.  Shares of Restricted
Stock are forfeitable until the terms of the Restricted Stock grant have been
satisfied.  Shares of Restricted Stock are not transferable until the
date on which the Committee has specified such restrictions have
lapsed.  Unless otherwise provided by the Committee at or after grant,
distributions in the form of dividends or otherwise of additional shares or
property in respect of shares of Restricted Stock shall be subject to the same
restrictions as such shares of Restricted Stock.

     

    (e)           Change of
Control.  Upon the occurrence of a Change in Control as defined
in Section 5(c), the Committee may accelerate the vesting of outstanding
Restricted Stock, in whole or in part, as determined by the Committee, in its
sole discretion.

     

    (f)           Termination of
Employment.  Unless otherwise determined by the Committee at or
after grant, in the event the Grantee ceases to be an employee or otherwise
associated with the Company for any other reason, all shares of Restricted Stock
theretofore awarded to him which are still subject to restrictions shall be
forfeited and the Company shall have the right to complete the blank stock
power.  The Committee may provide (on or after grant) that
restrictions or forfeiture conditions relating to shares of Restricted Stock
will be waived in whole or in part in the event of termination resulting from
specified causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.

     

    7.          
 Term of
Plan.

     

    No Option
or award of Restricted Stock shall be granted pursuant to the Plan on or after
the date which is ten years from the effective date of the Plan, but Options and
awards of Restricted Stock theretofore granted may extend beyond that
date.

     

    8.         
  Capital Change of
the Company.

     

    In the
event of any merger, reorganization, consolidation, recapitalization, stock
dividend, or other change in corporate structure affecting the Stock, the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each Optionee’s proportionate interest shall be
maintained (to the extent possible) as immediately before the occurrence of such
event.  The Committee shall, to the extent feasible, make such other
adjustments as may be required under the tax laws so that any Incentive Options
previously granted shall not be deemed modified within the meaning of Section
424(h) of the Code.  Appropriate adjustments shall also be made in the
case of outstanding Restricted Stock granted under the Plan.

     

    The
adjustments described above will be made only to the extent consistent with
continued qualification of the Option under Section 422 of the Code (in the case
of an Incentive Option) and Section 409A of the Code.

     

    9.          
 Purchase for
Investment/Conditions.

     

    Unless
the Options and shares covered by the Plan have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or
the Company has determined that such registration is unnecessary, each person
exercising or receiving Options or Restricted Stock under the Plan may be
required by the Company to give a representation in writing that he is acquiring
the securities for his own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof.  The
Committee may impose any additional or further restrictions on awards of Options
or Restricted Stock as shall be determined by the Committee at the time of
award.

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    10.           Taxes.

     

    (a)           The
Company may make such provisions as it may deem appropriate, consistent with
applicable law, in connection with any Options or Restricted Stock granted under
the Plan with respect to the withholding of any taxes (including income or
employment taxes) or any other tax matters.

     

    (b)           If
any Grantee, in connection with the acquisition of Restricted Stock, makes the
election permitted under Section 83(b) of the Code (that is, an election to
include in gross income in the year of transfer the amounts specified in Section
83(b)), such Grantee shall notify the Company of the election with the Internal
Revenue Service pursuant to regulations issued under the authority of Code
Section 83(b).

     

    (c)           If
any Grantee shall make any disposition of shares of Stock issued pursuant to the
exercise of an Incentive Option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions), such
Grantee shall notify the Company of such disposition within ten (10) days
hereof.

     

    11.           Effective Date of
Plan.

     

    The Plan
shall be effective on December 2,  2009; provided, however, that if,
and only if, certain options are intended to qualify as Incentive Stock Options,
the Plan must subsequently be approved by majority vote of the Company’s
stockholders no later than December 2, 2009, and further, that in the event
certain Option grants hereunder are intended to qualify as performance-based
compensation within the meaning of Section 162(m) of the Code, the requirements
as to stockholder approval set forth in Section 162(m) of the Code are
satisfied.

     

    12.           Amendment and
Termination.

     

    The Board
may amend, suspend, or terminate the Plan, except that no amendment shall be
made that would impair the rights of any Participant under any Option or
Restricted Stock theretofore granted without the Participant’s consent, and
except that no amendment shall be made which, without the approval of the
stockholders of the Company would:

     

    (a)           materially
increase the number of shares that may be issued under the Plan, except as is
provided in Section 8;

     

    (b)           materially
increase the benefits accruing to the Participants under the Plan;

     

    (c)           materially
modify the requirements as to eligibility for participation in the
Plan;

     

    (d)           decrease
the exercise price of an Incentive Option to less than 100% of the Fair Market
Value per share of Stock on the date of grant thereof or the exercise price of a
Nonqualified Option to less than 100% of the Fair Market Value per share of
Stock on the date of grant thereof; or

     

    (e)           extend
the term of any Option beyond that provided for in Section 5(b).

     

    (f)           except
as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price
of outstanding Options or effect repricing through cancellations and re-grants
of new Options.

     

    Subject
to the forgoing, the Committee may amend the terms of any Option theretofore
granted, prospectively or retrospectively, but no such amendment shall impair
the rights of any Optionee without the Optionee’s consent.

     

    It is the
intention of the Board that the Plan comply strictly with the provisions of
Section 409A of the Code and Treasury Regulations and other Internal Revenue
Service guidance promulgated thereunder (the “Section 409A Rules”)
and the Committee shall exercise its discretion in granting awards hereunder
(and the terms of such awards), accordingly.  The Plan and any grant
of an award hereunder may be amended from time to time (without, in the case of
an award, the consent of the Participant) as may be necessary or appropriate to
comply with the Section 409A Rules.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

     

    13.           Government
Regulations.

     

    The Plan,
and the grant and exercise of Options or Restricted Stock hereunder, and the
obligation of the Company to sell and deliver shares under such Options and
Restricted Stock shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies, national securities
exchanges and interdealer quotation systems as may be required.

     

    14.           General
Provisions.

     

    (a)           Certificates.  All
certificates for shares of Stock delivered under the Plan shall be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, or other securities commission having jurisdiction, any
applicable Federal or state securities law, any stock exchange or interdealer
quotation system upon which the Stock is then listed or traded and the Committee
may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.

     

    (b)           Employment
Matters.  Neither the adoption of the Plan nor any grant or
award under the Plan shall confer upon any Participant who is an employee of the
Company or any Subsidiary any right to continued employment or, in the case of a
Participant who is a director, continued service as a director, with the Company
or a Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the employment of any of its
employees, the service of any of its directors or the retention of any of its
consultants or advisors at any time.

     

    (c)           Limitation of
Liability.  No member of the Committee, or any officer or
employee of the Company acting on behalf of the Committee, shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan, and all members of the Committee and each and
any officer or employee of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.

     

    (d)           Registration of
Stock.  Notwithstanding any other provision in the Plan, no
Option may be exercised unless and until the Stock to be issued upon the
exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States.  The Company shall not be
under any obligation to register under applicable federal or state securities
laws any Stock to be issued upon the exercise of an Option granted hereunder in
order to permit the exercise of an Option and the issuance and sale of the Stock
subject to such Option, although the Company may in its sole discretion register
such Stock at such time as the Company shall determine.  If the
Company chooses to comply with such an exemption from registration, the Stock
issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company’s transfer
agent.

     

    15.           Non-Uniform
Determinations.

     

    The
Committee’s determinations under the Plan, including, without limitation, (i)
the determination of the Participants to receive awards, (ii) the form, amount
and timing of such awards, (iii) the terms and provisions of such awards and
(ii) the agreements evidencing the same, need not be uniform and may be made by
it selectively among Participants who receive, or who are eligible to receive,
awards under the Plan, whether or not such Participants are similarly
situated.

     

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

     

     

    16.           Governing Law.

     

    The
validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the internal laws of
the State of Delaware, without giving effect to principles of conflicts of laws,
and applicable federal law.

     

     

    

     

     

     

     

     

     

     -10-

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