AGREEMENT OF INDEMNIFICATION OF DIRECTORS
AGREEMENT OF INDEMNIFICATION OF DIRECTORS, made and executed as of this
3rd day of February, 1997, by and between WASTE RECOVERY, INC., a Texas
corporation (the "Company"), and XXXXXXXX X. XXXXXXX, an individual resident
of the State of New York (the "Indemnitee");
P R E A M B L E
The Company is aware that, in order to induce highly competent persons to
serve the Company as directors or in other capacities, the Company must
provide such persons with adequate protection through insurance and
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the Company. The
difficulty of obtaining adequate directors and officers liability insurance
in the current market has increased the difficulty of attracting and
retaining such persons. The Board of Directors of the Company has determined
that (i) it is essential to the best interests of the Company's shareholders
that the Company act to assure such persons that there will be increased
certainty of such protection in the future, and that (ii) it is reasonable,
prudent and necessary for the Company contractually to obligate itself to
indemnify such persons to the fullest extent permitted by applicable law so
that they will continue to serve the Company free from undue concern that
they will not be so indemnified. The Indemnitee is willing to serve,
continue to serve, and take on additional service for or on behalf of the
Company on the condition that he be so indemnified;
NOW THEREFORE, for and in consideration of the premises and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Indemnitee do hereby agree as follows:
1. SERVICE BY THE INDEMNITEE. The Indemnitee will continue to serve as
a director of the Company faithfully and will discharge his duties and
responsibilities to the best of his ability so long as he is duly elected or
qualified in accordance with the provisions of the Amended and Restated
Articles of Incorporation and Bylaws of the Company and the Business
Corporation Act of the State of Texas or until his earlier death, resignation
or removal. The Indemnitee may at any time and for any reason resign from
such position (subject to any other contractual obligation or other
obligation imposed by operation of law), in which event the Company shall
have no obligation under this Agreement to continue the Indemnitee in any
such position. Nothing in this Agreement shall confer upon the Indemnitee
the right to continue in the employ of the Company or as a director of the
Company or affect the right of the Company to terminate the Indemnitee's
employment at any time in the sole discretion of the Company, with or without
cause, subject to any contract rights of the Indemnitee created or existing
otherwise than under this Agreement.
2. INDEMNIFICATION. The Company shall indemnify the Indemnitee to the
fullest extent permitted by the Business Corporation Act of the State of
Texas or other applicable law, as in effect from time to time. Without
diminishing the scope of the indemnification provided
by this Section 2, the rights of indemnification of the Indemnitee provided
hereunder shall include, but shall not be limited to, those rights
hereinafter set forth, except that no indemnification shall be paid to the
Indemnitee:
On account of any suit in which judgment is rendered against the
Indemnitee for disgorgement of profits made from the purchase or sale by
the Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any federal, state or local statutory law;
On account of conduct of the Indemnitee that is finally adjudged by a
court of competent jurisdiction to have been knowingly fraudulent or to
constitute willful misconduct;
In any circumstance where such indemnification is expressly prohibited
by applicable law;
With respect to liability for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy or under a valid
and enforceable indemnity clause, bylaw or agreement (other than this
Agreement), except in respect of any liability in excess of payment under
such insurance, clause, bylaw or agreement;
If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful (and, in this respect,
both the Company and the Indemnitee have been advised that it is the
position of the Securities and Exchange Commission that indemnification for
liabilities arising under the federal securities laws is against public
policy and is, therefore, unenforceable, and that claims for
indemnification should be submitted to the appropriate court for
adjudication); or
In connection with any proceeding (or part thereof) initiated by the
Indemnitee, or any proceeding by the Indemnitee against the Company or its
directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the Company, (iii)
such indemnification is provided by the Company in its sole discretion,
pursuant to the powers vested in the Company under applicable law, or (iv)
except as provided in Sections 10 and 13 hereof.
3. ACTIONS OR PROCEEDINGS OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. The Indemnitee shall be entitled to the indemnification rights
provided in this Section if he is or was a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative in
nature, other than an action by or in the right of the Company, by reason of
the fact that he is or was a director, officer, employee or agent of the
Company, or is or was serving
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at the request of the Company as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of any other
entity, including, but not limited to another corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other entity,
or by reason of any act or omission by him in any such capacity. Pursuant to
this Section 3, the Indemnitee shall be indemnified against all expenses
(including court costs and attorneys' fees), costs, judgments, penalties,
fines and amounts paid in settlement that were actually and reasonably
incurred by him in connection with such action, suit or proceeding
(including, but not limited to, the investigation, defense or appeal
thereof), if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, if he had no reasonable cause to
believe his conduct was unlawful.
4. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall be
entitled to the indemnification rights provided in this Section 4 if he is or
was a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of
another entity, including, but not limited to another corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan
or other entity, or by reason of any act or omission by him in any such
capacity. Pursuant to this Section 4, the Indemnitee shall be indemnified
against all expenses (including court costs and attorneys' fees), costs,
judgments, penalties, fines and amounts paid in settlement that were actually
and reasonably incurred by him in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or
appeal thereof), if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to be the best interests of the Company;
PROVIDED, HOWEVER, that no such indemnification shall be made in respect of
any claim, issue or matter as to which applicable law expressly prohibits
such indemnification by reason of any adjudication of liability of the
Indemnitee to the Company, unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, the Indemnitee is fairly and reasonably entitled to indemnity for
such expenses and costs which such court shall deem proper.
5. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Agreement, to the extent that
the Indemnitee has served on behalf of the Company as a witness or other
participant in any claim, action or proceeding, or has been successful, on
the merits or otherwise, in defense of any action, suit or proceeding
referred to in Sections 3 and 4 hereof, or in defense of any claim, issue or
matter therein, including, but not limited to, the dismissal of any action
without prejudice, he shall be indemnified against all costs, charges and
expenses (including court costs and attorneys' fees) actually and reasonably
incurred by him in connection therewith.
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6. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including court costs and attorneys' fees), costs,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the investigation, defense, appeal or
settlement of such suit, action, investigation or proceeding described in
Sections 3 or 4 hereof, but is not entitled to indemnification for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee for
the portion of such expenses (including court costs and reasonable attorneys'
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him to which the Indemnitee is entitled.
Without limiting the generality of the foregoing, if the action, suit,
investigation or proceeding is brought against the Indemnitee in his capacity
as a director, officer, employee or shareholder, the presumption shall be
that recovery is sought by reason of the Indemnitee's status as a director of
the Company.
7. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Upon written
request by the Indemnitee for indemnification pursuant to Section 3 or 4
hereof, the entitlement of the Indemnitee to indemnification pursuant to the
terms of this Agreement shall be determined by the following person or
persons, who shall be empowered to make such determination: (a) the Board of
Directors of the Company, by a majority vote of a quorum consisting of
Disinterested Directors (as defined in Section 18); or (b) if such a quorum
is not obtainable, by majority vote of a committee of two or more
Disinterested Directors designated to act in the matter by majority vote of
all directors; or (c) by Independent Counsel (as hereinafter defined) if the
Board of Directors, by the majority vote of Disinterested Directors, so
directs in a written opinion to the Board of Directors, a copy of which shall
be delivered to the Indemnitee. Such Independent Counsel shall be selected
by the majority vote of Disinterested Directors and reasonably approved by
the Indemnitee. Such determination of entitlement to indemnification shall
be made not later than 45 days after receipt by the Company of a written
request for indemnification by or on behalf of the Indemnitee. Such request
shall include documentation or information which is necessary for such
determination and which is reasonably available to the Indemnitee. Any costs
or expenses (including court costs and attorneys' fees) incurred by the
Indemnitee in connection with his request for indemnification hereunder shall
be borne by the Company. If the person making such determination shall
determine that the Indemnitee is entitled to indemnification as part (but not
all) of the application for indemnification, such person shall reasonably
prorate such partial indemnification among such claims, issues or matters.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors, or such other
person or persons as are empowered to make the determination pursuant to
Section 7, that the Indemnitee has made such request for determination. Upon
making such request for indemnification, the Indemnitee shall be presumed to
be entitled to indemnification hereunder and the Company shall have the
burden of proof in making of any determination contrary to such presumption.
If the person or persons so empowered to make such determination shall have
failed to make the requested indemnification within 45 days after receipt by
the Company of such request, the requisite determination of entitlement to
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indemnification shall be deemed to have been made and the Indemnitee shall be
absolutely entitled to such indemnification, absent actual and material fraud
in the request for indemnification. The termination of any action, suit,
investigation or proceeding described in Sections 3 or 4 hereof by judgment,
order, settlement or conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself: (a) create a presumption that the
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, that the Indemnitee had
reasonable cause to believe that his conduct was unlawful; or (b) otherwise
adversely affect the rights of the Indemnitee to indemnification, except as
may be provided herein.
9. ADVANCEMENT OF EXPENSES AND COSTS. All reasonable expenses and costs
actually incurred by the Indemnitee (including reasonable attorneys' fees,
retainers and advances of disbursements required of the Indemnitee) shall be
paid by the Company in advance of the final disposition of such action, suit
or proceeding, if so requested by the Indemnitee, within 30 days after the
receipt by the Company of a statement or statements from time to time. The
Indemnitee's entitlement to such expenses shall include those incurred in
connection with any proceeding by the Indemnitee seeking an adjudication or
award in arbitration pursuant to this Agreement. Such statement or
statements shall reasonably evidence the expenses and costs incurred by him
in connection therewith and shall include or be accompanied by an undertaking
by or on behalf of the Indemnitee to repay such amount if it is ultimately
determined that the Indemnitee is not entitled to be indemnified against such
expense and costs by the Company pursuant to this Agreement or otherwise.
10. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES. In the event that a determination is made
that the Indemnitee is not entitled to indemnification hereunder or if
payment has not been timely made following a determination of entitlement to
indemnification pursuant to Sections 7 and 8, or if expenses are not advanced
pursuant to Section 9, the Indemnitee shall be entitled to a final
adjudication in an appropriate court of the State of Texas or any other court
of competent jurisdiction of his entitlement to such indemnification or
advance. Alternatively, the Indemnitee may, at his option, seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of
the American Arbitration Association, such award to be made within 60 days
following the filing of the demand for arbitration. The Company shall not
oppose the Indemnitee's right to seek any such adjudication or award in
arbitration or any other claim. Such judicial proceeding or arbitration
shall be made DE NOVO and the Indemnitee shall not be prejudiced by reason of
a determination (if so made) that he is not entitled to indemnification. If
a determination is made or deemed to have been made pursuant to the terms of
Section 7 or Section 8 hereof that the Indemnitee is entitled to
indemnification, the Company shall be bound by such determination and shall
be precluded from asserting that such determination has not been made or that
the procedure by which such determination was made is not valid, binding and
enforceable. The Company further agrees to stipulate in any such court or
before any such arbitrator that the Company is bound by all the provisions of
this Agreement and is precluded from making any assertions to
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the contrary. If the court or arbitrator shall determine that the Indemnitee
is entitled to any indemnification hereunder, the Company shall pay all
reasonable expenses (including reasonable attorneys' fees) and costs actually
incurred by the Indemnitee in connection with such adjudication or award in
arbitration (including, but not limited to, any appellate proceedings).
11. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by the
Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the
commencement thereof, but the omission to so notify the Company will not
relieve the Company from any liability that it may have to the Indemnitee
except to the extent that the Company shows by clear and convincing evidence
that it has been materially and adversely prejudiced by such failure to give
timely notice. Notwithstanding any other provision of this Agreement, with
respect to any such action, suit or proceeding as to which the Indemnitee
gives notice to the Company of the commencement thereof:
The Company will be entitled to participate therein at its own
expense; and
Except as otherwise provided in this Section 11, to the extent that it
may wish, the Company, jointly with any other indemnifying party similarly
notified, shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnitee. After notice from the Company
to the Indemnitee of its election to so assume the defense thereof, the
Company shall not be liable to the Indemnitee under this Agreement for any
legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The Indemnitee shall have
the right to employ his own counsel in such action, suit or proceeding, but
the fees and expenses of such counsel incurred after notice from the
Company 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 Company, (ii) the Indemnitee shall have reasonably
concluded that there is a conflict of interest between the Company and the
Indemnitee in the conduct of the defense of such action, or (iii) the
Company shall not in fact have employed counsel to assume the defense of
the action, in each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on
behalf of the Company or as to which the Indemnitee shall have reasonably
reached the conclusion provided for in clause (ii) above.
The Company shall not be liable to indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner that would impose any penalty or limitation
on the Indemnitee without the Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent to any
proposed settlement.
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12. OTHER RIGHTS TO INDEMNIFICATION. The indemnification and
advancement of expenses (including court costs and attorneys' fees) and costs
provided by this Agreement shall not be deemed exclusive of any other rights
to which the Indemnitee may now or in the future be entitled under any
provision of the Bylaws of the Company, any provision of the Amended and
Restated Articles of Incorporation of the Company, any vote of shareholders
or Disinterested Directors, any provision of law or otherwise.
13. ATTORNEYS' FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the
event that the Indemnitee is subject to or intervenes in any proceeding in
which the validity or enforceability of this Agreement is at issue or seeks
an adjudication or award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, the Indemnitee, if he prevails
in whole or in part in such action, shall be entitled to recover from the
Company and shall be indemnified by the Company against any actual expenses
for attorneys' fees and disbursements reasonably incurred by him.
14. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of (a) 10 years after the Indemnitee has ceased to
occupy any of the positions or have any relationship described in Sections 3
and 4 of this Agreement, and (b) the final termination of all pending or
threatened actions, suits, proceedings or investigations to which the
Indemnitee may be subject by reason of the fact that he is or was a director,
officer, employee or agent of the Company or is or was serving at the request
of the Company as a director, officer, employee, partner, venturer,
proprietor, trustee, agent or similar functionary of any other entity,
including, but not limited to, another corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other entity,
or by reason of any act or omission by him in any such capacity. The
indemnification provided under this Agreement shall continue as to the
Indemnitee even though he may have ceased to be a director or officer of the
Company. This Agreement shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of the Indemnitee and his spouse,
successors, assigns, heirs, devisees, executors, administrators or other
legal representatives.
Notwithstanding anything in this Agreement to the contrary, this
Agreement shall terminate and be of no force or effect in the event that it
is not ratified and approved at the 1997 Annual Meeting of Shareholders of
the Company.
15. SEVERABILITY. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever,
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, but not limited to, all portions of any Sections
of this Agreement) containing any such provision held to be invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby, and
(b) to the fullest extent possible, the provisions of this Agreement
(including but not limited to, all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifest by the
provision held invalid, illegal or unenforceable.
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16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought shall be required to be produced to evidence the
existence of this Agreement.
17. CAPTIONS. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
18. DEFINITIONS. For purposes of this Agreement:
"Disinterested Director" shall mean a director of the Company who is
not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by the Indemnitee.
"Independent Counsel" shall mean a law firm or a member of a law firm
that neither is presently nor in the past five years has been retained to
represent (i) the Company or the Indemnitee in any matter material to
either such party, or (ii) any other party to the action, suit,
investigation or proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or the Indemnitee in an action to determine
the Indemnitee's right to indemnification under this Agreement.
19. MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
20. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly give if
(i) delivered by hand with receipt acknowledged by the party to whom said
notice or other communication shall have been directed or if (ii) mailed by
certified or registered mail, return receipt requested, with postage prepaid,
on the date shown on the return receipt:
If to the Indemnitee to: Xxxxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
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If to the Company, to: Waste Recovery, Inc.
000 Xxxxx Xxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
or to such other address as may be furnished to the Indemnitee by the Company
or to the Company by the Indemnitee, as the case may be.
21. GOVERNING LAW. The parties hereto agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of
the State of Texas, applied without giving effect to any conflicts-of-law
principles.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
WASTE RECOVERY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: Vice Chairman
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INDEMNITEE:
/s/ Xxxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxxx X. Xxxxxxx
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