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 XXXXXX X. XXXXXXXXX, 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,
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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 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,
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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.
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,
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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 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
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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 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
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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.
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.
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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.
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
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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: Xxxxxx X. Xxxxxxxxx
0 Xxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
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
---------------------------------------
Its: President and CEO
--------------------------------------
INDEMNITEE:
/s/ XXXXXX X. XXXXXXXXX
------------------------------------------
Xxxxxx X. Xxxxxxxxx
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