INDEPENDENT DIRECTOR AGREEMENT
This
INDEPENDENT DIRECTOR AGREEMENT (the “Agreement”) is made and entered into as of
this 29th day of April, 2010, effective as of May 17, 2010 (the “Effective
Date”), by and between LianDi Clean Technology Inc., a Nevada corporation (the
“Company”), and Xxxxxxx Xxxx, a citizen of China, with a permanent residence at
16/F Zhongshen International Building, Hongling Rd., Shenzhen, People’s Republic
of China (the “Independent Director”).
WHEREAS,
the Company desires to engage the Independent Director, and the Independent
Director desires to serve, as a non-employee director of the Company, subject to
the terms and conditions contained in this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the receipt of which is hereby acknowledged, the Company and the
Independent Director, intending to be legally bound, hereby agree as
follows:
1.
DEFINITIONS.
(a)
“Corporate Status” describes the capacity of the Independent Director with
respect to the Company and the services performed by the Independent Director in
that capacity.
(b)
“Entity” shall mean any corporation,
partnership, limited liability company, joint venture, trust, foundation,
association, organization or other legal entity.
(c)
“Proceeding” shall mean any threatened,
pending or completed claim, action, suit, arbitration, alternate dispute
resolution process, investigation, administrative hearing, appeal, or any other
proceeding, whether civil, criminal, administrative or investigative, whether
formal or informal, including a proceeding initiated by the Independent Director
pursuant to Section 12 of this Agreement to enforce the Independent Director’s
rights hereunder.
(d)
“Expenses” shall mean all reasonable fees,
costs and expenses, approved by the Company in advance and reasonably incurred
in connection with any Proceeding, including, without limitation, attorneys’
fees, disbursements and retainers, fees and disbursements of expert witnesses,
private investigators, professional advisors (including, without limitation,
accountants and investment bankers), court costs, transcript costs, fees of
experts, travel expenses, duplicating, printing and binding costs, telephone and
fax transmission charges, postage, delivery services, secretarial services, and
other disbursements and expenses.
(e)
“Liabilities” shall mean judgments, damages,
liabilities, losses, penalties, excise taxes, fines and amounts paid in
settlement.
(f)
“Parent” shall mean any corporation or other
entity (other than the Company) in any unbroken chain of corporations or other
entities ending with the Company, if each of the corporations or entities, other
than the Company, owns stock or other interests possessing 50% or more of the
economic interest or the total combined voting power of all classes of stock or
other interests in one of the other corporations or entities in the
chain.
(g)
“Subsidiary” shall mean any corporation or
other entity (other than the Company) in any unbroken chain of corporations or
other entities beginning with the Company, if each of the corporations or
entities, other than the last corporation or entity in the unbroken chain, owns
stock or other interests possessing 50% or more of the economic interest or the
total combined voting power of all classes of stock or other interests in one of
the other corporations or entities in the chain.
2.
SERVICES OF INDEPENDENT DIRECTOR. While this
Agreement is in effect, the Independent Director shall perform duties as an
independent director and/or a member of the committees of the Board, be
compensated for such and be reimbursed expenses in accordance with the Schedule
A attached to this Agreement, subject to the following.
(a)
The Independent Director will perform services
as is consistent with Independent Director’s position with the Company, as
required and authorized by the By-Laws and Articles of Incorporation of the
Company, and in accordance with high professional and ethical standards and all
applicable laws and rules and regulations pertaining to the Independent
Director’s performance hereunder, including without limitation, laws, rules and
regulations relating to a public company.
(b)
The Independent Director is solely responsible
for taxes arising out of any compensation paid by the Company to the Independent
Director under this Agreement, and the Independent Director understands that
he/she will be issued a U.S. Treasury form 1099 for any compensation paid to
him/her by the Company. The Independent Director acknowledges and agrees
that because he is not an employee of the Company the Company will not withhold
any amounts for taxes from any of his payments under the Agreement.
(c)
The Company may offset any and all monies
payable to the Independent Director to the extent of any monies owing to the
Company from the Independent Director.
(d)
The rules and regulations of the Company
notified to the Independent Director, from time to time, apply to the
Independent Director. Such rules and regulations are subject to change by the
Company in its sole discretion. Notwithstanding the foregoing, in the event of
any conflict or inconsistency between the terms and conditions of this Agreement
and rules and regulations of the Company, the terms of this Agreement
control.
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3.
REQUIREMENTS OF INDEPENDENT DIRECTOR. During
the term of the Independent Director’s services to the Company hereunder,
Independent Director shall observe all applicable laws and regulations relating
to independent directors of a public company as promulgated from to time, and
shall not: (1) be an employee of the Company or any Parent or Subsidiary; (2)
accept, directly or indirectly, any consulting, advisory, or other compensatory
fee from the Company other than as a director and/or a member of a committee of
the Board; (3) be an affiliated person of the Company or any Parent or
Subsidiary, as the term “affiliate” is defined in 17 CFR 240.10A-3(e)(1), other
than in his capacity as a director and/or a member of a committee of the Board;
(4) possess an interest in any transaction with the Company or any Parent or
Subsidiary, for which disclosure would be required pursuant to 17 CFR
229.404(a), other than in his capacity as a director and/or a member of a
committee of the Board committees; (5) be engaged in a business relationship
with the Company or any Parent or Subsidiary, for which disclosure would be
required pursuant to 17 CFR 229.404(a), except that the required beneficial
interest therein shall be modified to be 5% hereby.
4.
REPORT OBLIGATION. While this Agreement is in
effect, the Independent Director shall immediately report to the Company in the
event: (1) the Independent Director knows or has reason to know or should have
known that any of the requirements specified in Section 3 hereof is not
satisfied or is not going to be satisfied; and (2) the Independent Director
simultaneously serves on an audit committee of any other public
company.
5.
TERM AND TERMINATION. The term of this
Agreement and the Independent Director’s services hereunder shall be for one (1)
year from the Effective Date, unless terminated as provided for in this Section
5. This Agreement and the Independent Director’s services hereunder shall
terminate upon the earlier of the following:
(a)
Removal of the Independent Director as a
director of the Company, upon proper Board or stockholder action in accordance
with the By-Laws and Articles of Incorporation of the Company and applicable
law;
(b)
Resignation of the Independent Director as a
director of the Company upon written notice to the Board of Directors of the
Company; or
(c)
Termination of this Agreement by the Company,
in the event any of the requirements specified in Section 3 hereof is not
satisfied, as determined by the Company in its sole discretion.
6.
LIMITATION OF LIABILITY. In no event shall the
Independent Director be individually liable to the Company or its shareholders
for any damages for breach of fiduciary duty as an independent director of the
Company, unless the Independent Director’s act or failure to act involves
intentional misconduct, fraud or a knowing violation of law.
7.
AGREEMENT OF INDEMNITY. The Company agrees to
indemnify the Independent Director as follows:
(a)
Subject to the exceptions contained in Section
8(a) below, if the Independent Director 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 Independent Director’s Corporate Status, the
Independent Director shall be indemnified by the Company against all Expenses
and Liabilities incurred or paid by the Independent Director in connection with
such Proceeding (referred to herein as “INDEMNIFIABLE EXPENSES” and
“INDEMNIFIABLE LIABILITIES,” respectively, and collectively as “INDEMNIFIABLE
AMOUNTS”).
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(b)
Subject to the exceptions contained in Section
8(b) below, if the Independent Director was or is a party or is threatened to be
made a party to any Proceeding by or in the right of the Company, to procure a
judgment in its favor by reason of the Independent Director’s Corporate Status,
the Independent Director shall be indemnified by the Company against all
Indemnifiable Expenses.
(c)
For purposes of this Agreement, the
Independent Director shall be deemed to have acted in good faith in conducting
the Company’s affairs as an independent director of the Company and/or a member
of a committee of the Board of the Company, if the Independent Director: (i)
exercised or used the same degree of diligence, care, and skill as an ordinarily
prudent man would have exercised or used under the circumstances in the conduct
of his own affairs; or (ii) took, or omitted to take, an action in reliance upon
advise of counsels or other professional advisors for the Company, or upon
statements made or information furnished by other directors, officers or
employees of the Company, or upon a financial statement of the Company provided
by a person in charge of its accounts or certified by a public accountant or a
firm of public accountants, which the Independent Director had reasonable
grounds to believe to be true.
8.
EXCEPTIONS TO INDEMNIFICATION. Director shall
be entitled to indemnification under Sections 7(a) and 7(b) above in all
circumstances other than the following:
(a)
If indemnification is requested under Section
7(a) and it has been adjudicated finally by a court or arbitral body of
competent jurisdiction that, in connection with the subject of the Proceeding
out of which the claim for indemnification has arisen, (i) the Independent
Director failed to act in good faith and in a manner the Independent Director
reasonably believed to be in or not opposed to the best interests of the
Company, (ii) the Independent Director had reasonable cause to believe that the
Independent Director’s conduct was unlawful, or (iii) the Independent Director’s
conduct constituted willful misconduct, fraud or knowing violation of law, then
the Independent Director shall not be entitled to payment of Indemnifiable
Amounts hereunder.
(b)
If indemnification is requested under Section
7(b) and
(i)
it has been adjudicated finally by a court or
arbitral body of competent jurisdiction that, in connection with the subject of
the Proceeding out of which the claim for indemnification has arisen, the
Independent Director failed to act in good faith and in a manner the Independent
Director reasonably believed to be in or not opposed to the best interests of
the Company, including without limitation, the breach of Section 4 hereof by the
Independent Director, the Independent Director shall not be entitled to payment
of Indemnifiable Expenses hereunder; or
(ii)
it has been adjudicated finally by a court or
arbitral body of competent jurisdiction that the Independent Director is liable
to the Company with respect to any claim, issue or matter involved in the
Proceeding out of which the claim for indemnification has arisen, including,
without limitation, a claim that the Independent Director received an improper
benefit or improperly took advantage of a corporate opportunity, the Independent
Director shall not be entitled to payment of Indemnifiable Expenses hereunder
with respect to such claim, issue or matter.
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9.
WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding
any other provision of this Agreement, and without limiting any such provision,
to the extent that the Independent Director is, by reason of the Independent
Director’s Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, the Independent Director shall be indemnified in
connection therewith. If the Independent Director is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify the Independent Director against those Expenses reasonably
incurred by the Independent Director or on the Independent Director’s behalf in
connection with each successfully resolved claim, issue or matter. For purposes
of this section, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
10.
ADVANCES AND INTERIM EXPENSES. The Company may
pay to the Independent Director all Indemnifiable Expenses incurred by the
Independent Director in connection with any Proceeding, including a Proceeding
by or in the right of the Company, in advance of the final disposition of such
Proceeding, if the Independent Director furnishes the Company with a written
undertaking, to the satisfaction of the Company, to repay the amount of such
Indemnifiable Expenses advanced to the Independent Director in the event it is
finally determined by a court or arbitral body of competent jurisdiction that
the Independent Director is not entitled under this Agreement to indemnification
with respect to such Indemnifiable Expenses.
11.
PROCEDURE FOR PAYMENT OF INDEMNIFIABLE
AMOUNTS. The Independent Director shall submit to the Company a written request
specifying the Indemnifiable Amounts, for which the Independent Director seeks
payment under Section 7 hereof and the Proceeding of which has been previously
notified to the Company and approved by the Company for indemnification
hereunder. At the request of the Company, the Independent Director shall furnish
such documentation and information as are reasonably available to the
Independent Director and necessary to establish that the Independent Director is
entitled to indemnification hereunder. The Company shall pay such Indeminfiable
Amounts within thirty (30) days of receipt of all required
documents.
12.
REMEDIES OF INDEPENDENT DIRECTOR.
(a)
RIGHT TO PETITION COURT. In the event that the
Independent Director makes a request for payment of Indemnifiable Amounts under
Sections 7, 9-11 above, and the Company fails to make such payment or
advancement in a timely manner pursuant to the terms of this Agreement, the
Independent Director may petition the appropriate judicial authority to enforce
the Company’s obligations under this Agreement.
(b)
BURDEN OF PROOF. In any judicial proceeding
brought under Section 12 (a) above, the Company shall have the burden of proving
that the Independent Director is not entitled to payment of Indemnifiable
Amounts hereunder.
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(c)
EXPENSES. The Company agrees to reimburse the
Independent Director in full for any Expenses incurred by the Independent
Director in connection with investigating, preparing for, litigating, defending
or settling any action brought by the Independent Director under Section 12 (a)
above, or in connection with any claim or counterclaim brought by the Company in
connection therewith.
(d)
VALIDITY OF AGREEMENT. The Company shall be
precluded from asserting in any Proceeding, including, without limitation, an
action under Section 12 (a) above, that the provisions of this Agreement are not
valid, binding and enforceable or that there is insufficient consideration for
this Agreement and shall stipulate in court that the Company is bound by all the
provisions of this Agreement.
(e)
FAILURE TO ACT NOT A DEFENSE. The failure of
the Company (including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) to make a determination concerning
the permissibility of the payment of Indemnifiable Amounts or the advancement of
Indemnifiable Expenses under this Agreement shall not be a defense in any action
brought under Section 12 (a) above.
13.
PROCEEDINGS AGAINST COMPANY. Except as
otherwise provided in this Agreement, the Independent Director shall not be
entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable
Expenses with respect to any Proceeding brought by the Independent Director
against the Company, any Entity which it controls, any director or officer
thereof, or any third party, unless the Company has consented to the initiation
of such Proceeding. This section shall not apply to counterclaims or affirmative
defenses asserted by the Independent Director in an action brought against the
Independent Director.
14.
INSURANCE. The Company may, at its discretion,
obtain and maintain a policy or policies of director and officer liability
insurance, in an amount not less than $10,000,000, of which the Independent
Director will be named as an insured, providing the Independent Director with
coverage for Indemnifiable Amounts and/or Indemnifiable Expenses in accordance
with said insurance policy or policies (“D&O INSURANCE”); provided
that:
(a)
The Independent Director agrees that, while
the Company has valid and effective D&O Insurance, and except as provided in
(c) of this section, Sections 7-13 of this Agreement shall not apply, and the
Company’s indemnification obligation to the Independent Director under this
Agreement shall be deemed fulfilled by virtue of purchasing and maintaining such
insurance policy or policies, in accordance with the terms and conditions
thereof and subject to exclusions stated thereon. The Independent Director
agrees that the Company shall have no obligation to challenge the decisions made
by the insurance carrier(s) (“INSURANCE CARRIER”) relating to any claims made
under such insurance policy or policies;
(b)
The Independent Director agrees that the
Company’s indemnification obligation to the Independent Director under (a) of
this section shall be deemed discharged and terminated, in the event the
Insurance Carrier refused payment for any Proceedings against the Independent
Director due to the acts or omissions of the Independent Director;
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(c)
While the D&O Insurance is valid and
effective, the Company agrees that it shall indemnify the Independent Director
for the Indemnifiable Amounts and Indemnifiable Expenses, to the extent that any
Proceedings are coverable by D&O Insurance, but in excess of the policy
amount, in accordance with Sections 7-13 of this Agreement; and
(d)
While the D&O Insurance is valid and
effective, this Section 14 states the entire and exclusive remedy of the
Independent Director with respect to the indemnification obligation of the
Company to the Independent Director under this Agreement.
15.
SUBROGATION. In the event of any payment of
Indemnifiable Amounts under this Agreement or the D&O Insurance, the Company
or its Insurance Carrier, as the case may be, shall be subrogated to the extent
of such payment to all of the rights of contribution or recovery of the
Independent Director against other persons, and the Independent Director shall
take, at the request of the Company, all reasonable action necessary to secure
such rights, including the execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
16.
AUTHORITY. Each party has all necessary power
and authority to enter into, and be bound by the terms of, this Agreement, and
the execution, delivery and performance of the undertakings contemplated by this
Agreement have been duly authorized by each party hereto:
17.
SUCCESSORS AND ASSIGNMENT. This Agreement
shall (a) be binding upon and inure to the benefit of all successors and assigns
of the Company (including any transferee of all or a substantial portion of the
business, stock and/or assets of the Company and any direct or indirect
successor by merger or consolidation or otherwise by operation of law), and (b)
be binding on and shall inure to the benefit of the heirs, personal
representatives, executors and administrators of the Independent Director. The
Independent Director has no power to assign this Agreement or any rights and
obligations hereunder.
18.
CHANGE IN LAW. To the extent that a change in
applicable law (whether by statute or judicial decision) shall mandate broader
or narrower indemnification than is provided hereunder, the Independent Director
shall be subject to such broader or narrower indemnification and this Agreement
shall be deemed to be amended to such extent.
19.
SEVERABILITY. Whenever possible, each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this
Agreement, or any clause thereof, shall be determined by a court of competent
jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such
provision or clause shall be limited or modified in its application to the
minimum extent necessary to make such provision or clause valid, legal and
enforceable, and the remaining provisions and clauses of this Agreement shall
remain fully enforceable and binding on the parties.
20.
MODIFICATIONS AND WAIVER. Except as provided
in Section 18 hereof with respect to changes in applicable law which broaden or
narrow the right of the Independent Director to be indemnified by the Company,
no supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by each of the parties hereto. No delay in exercise
or non-exercise by the Company of any right under this Agreement shall operate
as a current or future waiver by it as to its same or different rights under
this Agreement or otherwise.
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21.
NOTICES. All notices, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given (a) when delivered by hand, (b) when transmitted by facsimile
and receipt is acknowledged, or (c) if mailed by certified or registered mail
with postage prepaid, on the third business day after the date en which it is so
mailed:
If
to Independent Director, to: Xxxxxxx Xxxx, 16/F
Zhongshen International Building, Hongling Rd, Shenzhen, People’s Republic of
China.
If
to the Company, to: Xxxxxxxxx Xxx, CEO, LianDi Clean Technology Inc., 4th Floor,
Tower B. Wanliuxingui Building, Xx. 00 Xxxxxxxxxxxxx Xxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx, Xxxxx 100089, or to such other address as may have been furnished in
the same manner by any party to the others.
22.
GOVERNING LAW. This Agreement shall be
governed by and construed and enforced under the laws of the State of New
York.
23.
CONSENT TO JURISDICTION. The parties hereby
consent to the jurisdiction of the courts having jurisdiction over matters
arising in New York County, New York for any proceeding arising out of or
relating to this Agreement. The parties agree that in any such proceeding, each
party shall waive, if applicable, inconvenience of forum and right to a
jury.
24.
AGREEMENT GOVERNS. This Agreement is to be
deemed consistent wherever possible with relevant provisions of the By-Laws and
Articles of Incorporation of the Company; however, in the event of a conflict
between this Agreement and such provisions, the provisions of this Agreement
shall control.
25.
INDEPENDENT CONTRACTOR. The parties
understand, acknowledge and agree that the Independent Director’s relationship
with the Company is that of an independent contractor and nothing in this
Agreement is intended to or should be construed to create a relationship other
than that of independent contractor. Nothing in this Agreement shall be
construed as a contract of employment/engagement between the Independent
Director and the Company or as a commitment on the part of the Company to retain
the Independent Director in any capacity, for any period of time or under any
specific terms or conditions, or to continue the Independent Director’s service
to the Company beyond any period.
26.
ARBITRATION. Any dispute, controversy or claim
arising out of or relating to this Agreement or the breach thereof, shall be
settled by arbitration, before one arbitrator in accordance with the rules of
the American Arbitration Association then in effect and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. The
arbitrator will be selected, by the parties, from a panel of attorney
arbitrators. The parties agree that any arbitration shall be held in New York,
New York. The language of the arbitration shall be in English. The arbitrator
will have no authority to make any relief, finding or award that does not
conform to the terms and conditions of this Agreement. Each party shall bear its
own attorneys’ or expert fees and any and all other party specific costs. Either
party, before or during any arbitration, may apply to a court having
jurisdiction for a restraining order or injunction where such relief is
necessary to protect its interests. Prior to initiation of arbitration, the
aggrieved party will give the other party written notice, in accordance with
this Agreement, describing the claim as to which it intends to initiate
arbitration.
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27.
ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement between the Company and the Independent Director with
respect to the subject matter hereof, and supersedes all prior understandings
and agreements with respect to such subject matter.
IN
WITNESS WHEREOF, the parties hereto have executed this Independent Director
Agreement as of the day and year first above written.
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AGREED
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AGREED
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Independent
Director
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| /s/ Xxxxxxxxx Xxx |
/s/ Xxxxxxx Xxxx
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Name:
Xxxxxxxxx Xxx
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Name:
Xxxxxxx Xxxx
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Title:
CEO
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SCHEDULE
A
I
POSITION:
INDEPENDENT
DIRECTOR.
II. COMPENSATION:
FEES. For
all services rendered by the Independent Director pursuant to this Agreement,
both during and outside of normal working hours, including but not limited to,
attending all required meetings of the Board or applicable committees thereof,
executive sessions of the independent directors, reviewing filing reports and
other corporate documents as requested by the Company, providing comments and
opinions as to business matters as requested by the Company, the Company agrees
to pay to the Independent Director a fee in cash of $300 per month during the
Term (the “Base Fee”). The Base Fee shall be paid in cash to the
Independent Director on a monthly basis in equal installments on the last day of
each calendar month.
STOCK.
The Independent Director shall be granted (i) on the
date of execution of this Agreement, a 5-year
option to purchase up to 5,000 shares of common stock of the Company at the fair
market value of the common stock on the
date of the grant, such shares
vesting in equal quarterly installments for the one year period following the
date of grant, and (ii) on the one-year anniversary of the execution of this
Agreement, an additional 5-year
option to purchase up to 5,000 shares of common stock of the Company at the fair
market value of the common stock on the
date of the grant, such shares vesting
in equal quarterly
installments for the
one year period following the date of grant. Any
such award shall
be in accordance with the equity incentive plans as may be adopted by the
Company, from time to time. The Independent Director’s rights in respect to any
grant shall be determined solely by the Compensation Committee of the Company
and are subject to execution by Independent Director of any applicable
agreements as established and requested by the Company pursuant to the equity
incentive plans.
EXPENSES.
During the term of the Independent Director’s service as a director of the
Company, the Company shall promptly reimburse the Independent Director for all
expenses incurred by him/her in connection with attending (a) all meetings of
the Board or applicable committees thereof, (b) executive sessions of the
independent directors, and (c) stockholder meetings, as a director or a member
of any committee of the Board , provided that any such expenses over $1,000
shall be approved by the Company in writing in advance. In addition, the
Independent Director shall rely on the Company to arrange all hotel
accommodations in connection with any such meetings the Independent Director
must attend. The amount of such expenses eligible for reimbursement by the
Company during a calendar year shall not affect such expenses eligible for
reimbursement by the Company in any other calendar year, and the reimbursement
of any such eligible expenses shall be made on or before the last day of the
calendar year next following the calendar year in which the expense was
incurred.
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NO OTHER
BENEFITS OR COMPENSATION. The Independent Director acknowledges and agrees that
he/she is not granted and is not entitled to any other benefits or compensation
from the Company for the services provided under this Agreement except expressly
provided for in this Schedule A.
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AGREED
|
AGREED
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Independent
Director
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/s/ Xxxxxxxxx Xxx
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/s/ Xxxxxxx Xxxx
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Name: Xxxxxxxxx
Xxx
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Name: Xxxxxxx
Xxxx
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Title: CEO
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11
