|
Exhibit
10.23
INDEMNIFICATION
AGREEMENT
This Indemnification
Agreement (“Agreement”) is made as of December 6,
2007 by and between PAETEC Holding Corp., a Delaware corporation
(the “Company”), and
(“Indemnitee”).
RECITALS
WHEREAS, highly competent
persons have become more reluctant to serve publicly-held
corporations as directors, officers or in other capacities unless
they are provided with adequate protection through insurance or
adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities
on behalf of the corporation.
WHEREAS, the Board of
Directors of the Company (the “Board”) has determined
that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole
expense, liability insurance to protect persons serving the Company
and its subsidiaries from certain liabilities. Although the
furnishing of such insurance has been a customary and widespread
practice among United States-based corporations and other business
enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the
future only at higher premiums and with more exclusions. At the
same time, directors, officers, and other persons in service to
corporations or business enterprises are being increasingly
subjected to expensive and time-consuming litigation relating to,
among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself. The
Bylaws of the Company require indemnification of the officers and
directors of the Company. Indemnitee may also be entitled to
indemnification pursuant to the General Corporation Law of the
State of Delaware (the “DGCL”). The Bylaws and the DGCL
expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts
may be entered into between the Company and members of the board of
directors, officers and other persons with respect to
indemnification.
WHEREAS, the uncertainties
relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons.
WHEREAS, the Board has
determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of 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
persons 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 will not be so indemnified.
WHEREAS, this Agreement is a
supplement to and in furtherance of the Bylaws of the Company and
any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder.
WHEREAS, Indemnitee does not
regard the protection available under the Company’s Bylaws
and insurance as adequate in the present circumstances, and may not
be willing to serve as an officer or director without adequate
protection, and the Company desires Indemnitee to serve in such
capacity. Indemnitee is willing to serve, continue to serve and to
take on additional service for or on behalf of the Company on the
condition that he be so indemnified.
NOW, THEREFORE, in
consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services
to the Company. Indemnitee agrees to serve as an officer of the
Company. Indemnitee may at any time and for any reason resign from
such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company
shall have no obligation under this Agreement to continue
Indemnitee in such position. This Agreement shall not be deemed an
employment contract between the Company (or any of its subsidiaries
or any Enterprise) and Indemnitee. Indemnitee specifically
acknowledges that Indemnitee’s employment with the Company
(or any of its subsidiaries or any Enterprise), if any, is at will,
and the Indemnitee may be discharged at any time for any reason,
with or without cause, except as may be otherwise provided in any
written employment contract (or other applicable written agreement)
between Indemnitee and the Company (or any of its subsidiaries or
any Enterprise), other applicable formal severance policies duly
adopted by the Board, or by the Company’s Certificate of
Incorporation, the Company’s Bylaws, and the DGCL. The
foregoing notwithstanding, this Agreement shall continue in force
after Indemnitee has ceased to serve as an officer of the
Company.
Section 2.
Definitions. As used in this Agreement:
(a) A “Change in
Control” shall be deemed to occur upon the earliest to occur
after the date of this Agreement of any of the following
events:
i. Acquisition of Stock by
Third Party. Any Person (as defined below) is or becomes the
Beneficial Owner (as defined below), directly or indirectly, of
securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the
Company’s then outstanding securities;
ii. Change in Board. During
any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose
election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the members of the
Board;
-2-
iii. Corporate Transactions.
The effective date of a merger or consolidation of the Company with
any other entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 51% of
the combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation
and with the power to elect at least a majority of the board of
directors or other governing body of such surviving
entity;
iv. Liquidation. The approval
by the stockholders of the Company of a complete liquidation of the
Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets;
and
v. Other Events. There occurs
any other event of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A (or
a response to any similar item on any similar schedule or form)
promulgated under the Exchange Act (as defined below), whether or
not the Company is then subject to such reporting
requirement.
For purposes of this Section 2(a),
the following terms shall have the following meanings:
(A) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
(B) “Person”
shall have the meaning as set forth in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that Person shall exclude
(i) the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
and (iii) 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.
(C) “Beneficial
Owner” shall have the meaning given to such term in Rule
13d-3 under the Exchange Act; provided, however, that Beneficial
Owner shall exclude any Person otherwise becoming a Beneficial
Owner by reason of the stockholders of the Company approving a
merger of the Company with another entity.
(b) “Corporate
Status” describes the status of a person who is or was a
director, officer, employee or agent of the Company or of any other
corporation, limited liability company, partnership or joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the
Company.
-3-
(c) “Disinterested
Director” means a director of the Company who is not and was
not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.
(d) “Enterprise”
shall mean the Company and any other corporation, 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, employee, agent or
fiduciary.
(e) “Expenses”
shall include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily 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. Expenses also shall
include (i) 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, and
(ii) for purposes of Section 13(d) only, Expenses
incurred by Indemnitee in connection with the interpretation,
enforcement or defense of Indemnitee’s rights under this
Agreement, by litigation or otherwise. Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
(f) “Independent
Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is,
nor in the past five years has been, retained to represent:
(i) the Company or Indemnitee in any matter material to either
such party (other than with respect to matters concerning the
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements), or (ii) any other party
to the 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 Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. The Company agrees
to pay the reasonable fees and expenses of the Independent Counsel
referred to above and to fully indemnify such counsel against any
and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant
hereto.
(g) The term
“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 legislative, or investigative nature,
including any appeal therefrom, in which Indemnitee was, is or will
be involved as a party, potential party, non-party witness or
otherwise by reason of the fact that Indemnitee is or was a
director or officer of the Company, by reason of any action taken
by him or of any action on his part while acting as director or
officer of the Company, or by reason of the fact that he is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, limited liability
company, partnership, joint venture, trust or other enterprise, in
each case whether or not 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; except one initiated by an Indemnitee to enforce
his rights under this Agreement.
-4-
(h) Reference to “other
enterprise” shall include employee benefit plans; references
to “fines” shall include any excise tax assessed with
respect to any employee benefit plan; references to “serving
at the request of the Company” shall include any service as a
director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the best interests
of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in manner “not opposed to the
best interests of the Company” as referred to in this
Agreement.
Section 3. Indemnity
in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3
if Indemnitee is, or is threatened to be made, a party to or a
participant 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, Indemnitee shall be indemnified to the
fullest extent permitted by applicable law against all Expenses,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee or on his behalf in connection
with such Proceeding or any claim, issue or matter therein, if
Indemnitee 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, in the case of a criminal proceeding had no reasonable
cause to believe that his conduct was unlawful.
Section 4. Indemnity
in Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of
this Section 4 if Indemnitee is, or is threatened to be made,
a party to or a participant in any Proceeding by or in the right of
the Company to procure a judgment in its favor. Pursuant to this
Section 4, Indemnitee shall be indemnified to the fullest
extent permitted by applicable law against all Expenses actually
and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company. No indemnification for Expenses shall be made under this
Section 4 in respect of any claim, issue or matter as to which
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 of Chancery or any court in which the Proceeding was brought
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.
Section 5.
Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this
Agreement, to the fullest extent permitted by applicable law and to
the extent that Indemnitee is a party to (or a participant in) and
is successful, on the merits or otherwise, in any Proceeding or in
defense of any claim, issue or matter therein, in whole or in part,
the
-5-
Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in
connection therewith. If Indemnitee 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 Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or
matter. If the Indemnitee is not wholly successful in such
Proceeding, the Company also shall indemnify Indemnitee against all
Expenses reasonably incurred in connection with a claim, issue or
matter related to any claim, issue, or matter on which the
Indemnitee was successful. For purposes of this Section 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.
Section 6.
Indemnification For Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the fullest extent
permitted by applicable law and to the extent that Indemnitee is,
by reason of his Corporate Status, a witness in any Proceeding to
which Indemnitee is not a party, he shall be indemnified against
all Expenses actually and reasonably incurred by him or on his
behalf in connection therewith.
Section 7. Additional
Indemnification.
(a) Notwithstanding any
limitation in Sections 3, 4, or 5, the Company shall indemnify
Indemnitee to the fullest extent permitted by applicable law if
Indemnitee is a party to or threatened to be made a party to 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 and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with the
Proceeding.
(b) For purposes of
Section 7(a), the meaning of the phrase “to the fullest
extent permitted by applicable law” shall include, but not be
limited to:
i. to the fullest extent
permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the
corresponding provision of any amendment to or replacement of the
DGCL, 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 officers and
directors.
Section 8.
Exclusions. Notwithstanding any provision in this Agreement,
the Company shall not be obligated under this Agreement to make any
indemnity in connection with any claim made against
Indemnitee:
(a) for which payment has
actually been made to or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect
to any excess beyond the amount paid under any insurance policy or
other indemnity provision; or
-6-
(b) for (i) an
accounting of profits made from the purchase and sale (or sale and
purchase) by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Exchange Act (as defined in
Section 2(a) hereof) or similar provisions of state statutory
law or common law, or (ii) any reimbursement of the Company by
the Indemnitee of any bonus or other incentive-based or
equity-based compensation or of any profits realized by the
Indemnitee from the sale of securities of the Company, as required
in each case under the Exchange Act (including any such
reimbursements that arise from an accounting restatement of the
Company pursuant to Section 304 of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”), or the payment to the
Company of profits arising from the purchase and sale by Indemnitee
of securities in violation of Section 306 of the
Sarbanes-Oxley Act), or
(c) except as provided in
Section 13(d) of this Agreement, in connection with any
Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated
by Indemnitee against the Company or its directors, officers,
employee
|
