Exhibit 10.1
INDEMNIFICATION AGREEMENT
by
and between
COVANTA HOLDING CORPORATION
and
[
]
Dated as of ______ ___, 200__
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT (this
“ Agreement ”), dated as of
____________ ___, 200__, by and between Covanta Holding
Corporation, a Delaware corporation (the “ Company
”), and [
] , a natural person (“ Indemnitee
”).
R E C I
T A L
S
WHEREAS , highly competent
individuals have become more reluctant to serve publicly-traded
corporations as directors, officers or in other capacities unless
they are provided with adequate protection through insurance or
adequate indemnification against risks of claims and actions
against them arising out of their services to and activities on
behalf of such corporations;
WHEREAS , directors and
officers are increasingly being subjected to expensive and
time-consuming litigation relating to, among other things, matters
that traditionally would have been brought only against the
corporation itself;
WHEREAS , the Board of
Directors of the Company (the “ Board ”)
recognizes the limitations on the protection provided by liability
insurance and the uncertainties as to the scope and level of such
coverage that may be available in the future;
WHEREAS , the Board
recognizes the limitations on the protection provided by existing
indemnification arrangements pursuant to the Company’s
restated certificate of incorporation (the “ Charter
”) and restated bylaws (the “ Bylaws ”)
and the uncertainties as to its availability in any particular
situation;
WHEREAS , the Board believes
that, in light of the limitations and uncertainties in respect of
the protection provided by the Company’s liability insurance
and existing indemnification arrangements and the impact these
uncertainties may have on the Company’s ability to attract
and retain qualified individuals to serve or continue to serve the
Company as directors, officers or in other capacities, the Company
should act to assure such individuals that there will be increased
certainty with respect to such protection in the future;
WHEREAS , it is reasonable,
prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such
individuals to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from
undue concern that they may not be adequately protected;
WHEREAS , Indemnitee is
concerned that the protection provided under the Company’s
liability insurance and existing indemnification arrangements may
not be adequate and may not be willing to serve or continue to
serve the Company as a director, an officer or in any other
capacity without greater certainty concerning such protection, and
the Company desires Indemnitee to serve or continue to serve the
Company as a director, an officer or in another capacity and is
willing to provide such greater certainty; and
WHEREAS , this Agreement is a
supplement to, and in furtherance of, the Charter and the Bylaws
and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any
rights of Indemnitee thereunder.
A G R E
E M E N
T S
NOW, THEREFORE , in
consideration of the premises, covenants and agreements contained
herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the Company and Indemnitee covenant and
agree as follows:
ARTICLE I
DEFINITIONS
1.1 For purposes of this
Agreement:
(a) The
term “ agent ” shall mean any person who is or
was a director, an officer or an employee of the Company or a
subsidiary of the Company or any other person authorized by the
Company to act for or on behalf of the Company, including any
person serving in such capacity as a director, officer, employee,
fiduciary or other official of another corporation, partnership,
limited liability company, joint venture, trust or other enterprise
at the request of, for the convenience of, or to represent the
interests of the Company or a subsidiary of the Company.
(b) “
Agreement ” shall have the meaning ascribed to such
term in the Preamble.
(c) “
Beneficial Owner ” and “ Beneficial
Ownership ” shall have the meanings ascribed to such
terms in Rule 13d-3 promulgated under the Exchange Act as in
effect on the date hereof.
(d) “
Board ” shall have the meaning ascribed to such term
in the Recitals.
(e) “
Bylaws ” shall have the meaning ascribed to such term
in the Recitals.
(f) “
Change in Control ” shall mean the occurrence of any
of the following events, each of which shall be determined
independently of the others:
(i) any
Person, other than a holder of at least 10% of the outstanding
voting power of the Company as of the date hereof, becomes the
Beneficial Owner of a majority of the stock of the Company entitled
to vote in the election of directors of the Company;
(ii)
Continuing Directors cease to constitute a majority of the members
of the Board;
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(iii)
the stockholders of the Company adopt and consummate a plan of
complete or substantial liquidation or an agreement providing for
the distribution of all or substantially all of the assets of the
Company is entered into;
(iv)
the Company is a party to a merger, consolidation, other form of
business combination or a sale of all or substantially all of its
assets, with an unaffiliated third party, unless the business of
the Company following consummation of such merger, consolidation or
other business combination is continued following any such
transaction by a resulting entity (which may be, but need not be,
the Company) and the stockholders of the Company immediately prior
to such transaction hold, directly or indirectly, at least a
majority of the voting power of the resulting entity;
provided , however , that a merger or consolidation
effected to implement a recapitalization or similar transaction of
the Company shall not constitute a Change in Control; or
(v)
there is a Change in Control of the Company of a nature that is
reported in response to item 5.01 of Current Report on Form 8-K or
any similar item, schedule or form under the Exchange Act, as in
effect at the time of such change, whether or not the Company is
then subject to such reporting requirements;
provided , however , that for purposes of this
Agreement a Change in Control shall not be deemed to occur if the
Person or Persons deemed to have acquired control is or are a
holder of at least 10% of the outstanding voting power of the
Company as of the date hereof.
(g) “
Charter ” shall have the meaning ascribed to such term
in the Recitals.
(h) “
Company ” shall have the meaning ascribed to such term
in the Preamble.
(i) “
Continuing Directors ” shall mean the members of the
Board on the date hereof, provided , that any individual
becoming a member of the Board subsequent to the date hereof whose
election or nomination for election was supported by at least a
majority of the directors who then comprised the Continuing
Directors shall be considered to be a Continuing Director.
(j) “
Corporate Status ” describes the status of a person
who is or was a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent of the Company or of
any other Enterprise which such person is or was serving at the
request of the Company.
(k) “
D&O Liability Insurance ” shall have the meaning
ascribed to such term in Section 15.1 .
(l) “
Delaware Court ” shall mean the Court of Chancery of
the State of Delaware.
(m) “
DGCL ” shall mean the General Corporation Law of the
State of Delaware.
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(n) “
Disinterested Director ” shall mean a director of the
Company who is not and was not a party to the Proceeding in respect
of which indemnification or advancement of Expenses is sought by
Indemnitee.
(o) “
Enterprise ” shall mean the Company and any other
corporation, constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger to which the
Company is a party, limited liability company, partnership, joint
venture, trust, employee benefit plan or other enterprise of which
Indemnitee is or was serving at the request of the Company as a
director, officer, trustee, general partner, managing member,
fiduciary, employee or agent.
(p) “
Exchange Act ” shall mean the Securities Exchange Act
of 1934, as amended.
(q) “
Expenses ” means all costs and expenses (including,
without limitation, fees and expenses of counsel, retainers, court
costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage and delivery service fees and all other
disbursements or expenses) incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being
or preparing to be a witness in, or otherwise participating in, a
Proceeding. For avoidance of doubt, Expenses shall include expenses
incurred in connection with any appeal resulting from any
Proceeding including, without limitation, the premium, security for
and other costs relating to any cost bond, supersedeas bond or
other appeal bond or its equivalent; provided ,
however , that Expenses shall not include amounts paid in
settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.
(r) “
Indemnification Arrangements ” shall have the meaning
ascribed to such term in Section 16.2 .
(s) “
Indemnitee ” shall have the meaning ascribed to such
term in the Preamble.
(t) “
Independent Counsel ” shall mean a law firm, or a
member of a law firm, that is experienced in matters of corporate
law and neither currently is, nor in the three years preceding its
selection or appointment hereunder has been, retained to represent
(i) the Company or Indemnitee in any matter material to either
such party ( provided , that acting as an Independent
Counsel under this Agreement or in a similar capacity with respect
to any other indemnification arrangements between the Company and
its present or former directors or officers shall not be deemed a
representation of the Company or Indemnitee) or (ii) any other
party to the Proceeding giving rise to a claim for indemnification
or advancement of expenses 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 Indemnitee in an
action to determine Indemnitee’s rights under this
Agreement.
(u) The
“ Nominating and Governance Committee ” shall
mean the Nominating and Governance committee of the Board.
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(v) The
term “ Person ” shall have the meaning ascribed
to such term in Sections 13(d) and 14(d) of the Exchange Act as in
effect on the date hereof; provided , however , that
the term “Person” shall exclude: (i) the Company;
(ii) any Subsidiaries of the Company; (iii) any
employment benefit plan of the Company or of a Subsidiary of the
Company or of any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company; and (iv) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or of a Subsidiary of the Company or of
a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company.
(w) “
Proceeding ” shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought
in the right of the Company or otherwise, and whether of a civil,
criminal, administrative or investigative nature (including any
appeal therefrom), in which Indemnitee was, is or may be involved
as a party or otherwise by reason of the fact of his or her
Corporate Status or by reason of any action (or failure to act)
taken by him or her or of any action (or failure to act) on his or
her part while serving in any Corporate Status (in each case,
regardless of whether serving in such capacity at the time any
liability or expense is incurred for which indemnification,
reimbursement or advancement of expenses can be provided under this
Agreement), or any inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action,
suit or other proceeding.
(x) References
to “ serving at the request of the Company ”
shall include any service as a director, officer, employee, agent
or fiduciary of the Company or any other Enterprise which imposes
duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit
plan, its participants or beneficiaries; and if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in
the best interests of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in
a manner “ not opposed to the best interests of the
Company ” as referred to in this Agreement.
(y) The
term “ Subsidiary ”, with respect to any Person,
shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
(z) The
phrase “ to the fullest extent permitted by law
” shall mean (i) to the fullest extent permitted by the
DGCL as in effect on the date of this Agreement and (ii) to
the fullest extent authorized or permitted by any amendments to or
replacements of the DGCL adopted after the date of this Agreement
that increase the extent to which a corporation may indemnify its
directors and officers.
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ARTICLE II
SERVICES BY INDEMNITEE
2.1 Indemnitee agrees to
serve or continue to serve in his or her current capacity or
capacities as a director, officer, employee, agent or fiduciary of
the Company. Indemnitee may also serve, as the Company may
reasonably request from time to time, as a director, officer,
employee, agent or fiduciary of any other corporation, partnership,
limited liability company, association, joint venture, trust,
employee benefit plan or other Enterprise in which the Company has
an interest. Indemnitee and the Company each acknowledge that they
have entered into this Agreement as a means of inducing Indemnitee
to serve or continue to serve the Company in such capacities.
Indemnitee may at any time and for any reason resign from such
position or positions (subject to any other contractual obligation
or any obligation imposed by operation of law). The Company shall
have no obligation under this Agreement to continue Indemnitee in
any such position for any period of time and shall not be precluded
by the provisions of this Agreement from removing Indemnitee from
any such position at any time.
ARTICLE III
THIRD-PARTY PROCEEDINGS
3.1 The Company shall
indemnify and hold Indemnitee harmless in accordance with the
provisions of this Section 3.1 if Indemnitee was, is,
or is threatened to be made, a party to or a participant (as a
witness or otherwise) in any Proceeding, other than a Proceeding by
or in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3.1 , Indemnitee shall be
indemnified against all Expenses, judgments, liabilities, fines,
penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or
in respect of such Expenses, judgments, fines, penalties and
amounts paid in settlement) actually and reasonably incurred by
Indemnitee or on his or her behalf in connection with such
Proceeding or any claim, issue or matter therein, if Indemnitee
acted in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal action or Proceeding, had no
reasonable cause to believe that his or her conduct was
unlawful.
ARTICLE IV
INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY
4.1 The Company shall
indemnify and hold Indemnitee harmless in accordance with the
provisions of this Section 4.1 if Indemnitee was, is,
or is threatened to be made, a party to or a participant (as a
witness or otherwise) in any Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this
Section 4.1 , Indemnitee shall be indemnified against
all Expenses actually and reasonably incurred by Indemnitee or on
his or her behalf in connection with such Proceeding or any claim,
issue or matter therein, if Indemnitee acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the
best interests of the Company. No indemnification, hold harmless or
exoneration for Expenses shall be made under this
Section 4.1 in respect of any Proceeding, claim, issue
or matter as to which
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Indemnitee shall have been finally adjudged by a court to be liable
to the Company, unless and only to the extent that the Delaware
Court (or any court hearing appeals therefrom) shall determine upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnification, to be held harmless or to
exoneration.
ARTICLE V
INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR
PARTLY SUCCESSFUL
5.1 Any other provisions of
this Agreement notwithstanding, to the extent that Indemnitee is a
party to (or a participant in) and is successful, on the merits or
otherwise, in the defense of any Proceeding or any claim, issue or
matter therein, the Company shall indemnify and hold Indemnitee
harmless against all Expenses actually and reasonably incurred by
him or her or on his or her behalf in connection therewith. If
Indemnitee is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in any Proceeding,
the Company shall indemnify and hold Indemnitee harmless against
all Expenses actually and reasonably incurred by him or her or on
his or her behalf in connection with each successfully resolved
claim, issue or matter and any claim, issue or matter related to
each such successfully resolved claim, issue or matter. For
purposes of this Section 5.1 and without limitation,
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.
ARTICLE VI
INDEMNIFICATION FOR EXPENSES OF A WITNESS
6.1 Any other provision of
this Agreement notwithstanding, to the extent that Indemnitee is,
by reason of his or her Corporate Status, a witness in any
Proceeding to which Indemnitee is not a party, he or she shall be
indemnified and held harmless against all Expenses actually and
reasonably incurred by him or her or on his or her behalf in
connection therewith.
ARTICLE VII
ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION
RIGHTS
7.1 In addition to, and
without regard to any limitations on, the indemnification provided
for in Sections 3.1 , 4.1 or 5.1 , the
Company shall indemnify and hold Indemnitee harmless if Indemnitee
is, or is threatened to be made, a party to or participant in any
Proceeding (including a Proceeding by or in the right of the
Company to procure a judgment in its favor) against all Expenses,
judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties and amounts paid in settlement)
actually and reasonably incurred by Indemnitee or on his or her
behalf in connection with such Proceeding. The only limitation that
shall exist upon the Company’s obligations pursuant to this
Agreement shall be
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that the
Company shall not be obligated to make any payment to Indemnitee
that is finally determined (under the procedures, and subject to
the presumptions, set forth in Articles XII and XIII
) to be unlawful.
ARTICLE VIII
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
8.1 Whether or not the
indemnification provided in Sections 3.1 , 4.1 ,
5.1 and 7.1 hereof is available, if, for any reason,
Indemnitee shall be required to pay, in connection with any
Proceeding in which the Company is jointly liable with Indemnitee,
all or any portion of any judgments, liabilities, fines, penalties,
amounts to be paid in settlement and/or for Expenses, the Company
shall contribute to the amount actually and reasonably incurred and
paid or payable by Indemnitee, whether for judgments, liabilities,
fines, penalties, amounts paid or to be paid in settlement and/or
for Expenses in proportion to the relative benefits received by the
Company and all agents of the Company, other than Indemnitee, who
are jointly liable with Indemnitee, on the one hand, and
Indemnitee, on the other hand, from the transaction or transactions
from which such Proceeding arose; provided , however
, that the proportion determined on the basis of relative benefit
may, to the extent necessary to conform to law, be further adjusted
by reference to the relative fault of the Company and all agents of
the Company other than Indemnitee who are jointly liable with
Indemnitee, on the one hand, and Indemnitee, on the other hand, in
connection with the events that resulted in such judgments,
liabilities, fines, penalties, amounts paid or to be paid in
settlement and/or for Expenses, as well as any other equitable
considerations which applicable law may require to be considered.
The relative fault of the Company and all agents of the Company,
other than Indemnitee, who are jointly liable with Indemnitee, on
the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which
their actions were motivated by intent to gain personal profit or
advantage, the degree to which their liability is primary or
secondary and the degree to which their conduct is active or
passive. The Company shall not enter into any settlement in respect
of any Proceeding in which the Company is jointly liable with
Indemnitee unless such settlement provides for a full and final
release of all claims asserted against Indemnitee.
8.2 The Company shall
indemnify and hold Indemnitee harmless from any claims of
contribution which may be brought by agents of the Company, other
than Indemnitee, who may be jointly liable with Indemnitee in
respect of any Proceeding.
8.3 To the fullest extent
permissible under applicable law, if the indemnification and hold
harmless rights provided for in this Agreement are unavailable to
Indemnitee in whole or in part for any reason whatsoever, the
Company, in lieu of indemnifying and holding Indemnitee harmless,
shall contribute to the amount incurred by Indemnite
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