1
EXHIBIT 10.57
INDEMNITY AGREEMENT
BETWEEN
MCLEOD, INC.
AND
---------------------------------------
DATED AS OF
------------------------------
2
TABLE OF CONTENTS
1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Indemnifiable Event . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. Reviewing Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6. Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7. Special Independent Counsel . . . . . . . . . . . . . . . . . . . . . . 3
2. BASIC INDEMNIFICATION ARRANGEMENT . . . . . . . . . . . . . . . . . . . . . . . . 3
3. CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. . . . . . . . . . . . . . . . . . . . . . 5
5. LIMITATIONS ON SETTLEMENT AUTHORITY IN SOME CASES . . . . . . . . . . . . . . . . 6
6. PARTIAL INDEMNITY, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. NO PRESUMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. NON-EXCLUSIVITY, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. PERIOD OF LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11. AMENDMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12. SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. NO DUPLICATION OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. BINDING EFFECT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
15. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
16. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-i-
3
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement") is entered into as
______________, between McLeod, Inc., a Delaware corporation (the
"Corporation"), and _____________________ ("Director") [("Officer")] (1)/, a
director of the Corporation.
WHEREAS, both the Corporation and Director recognize the increased
risk of litigation and other claims being asserted against public companies in
today's environment;
WHEREAS, basic protection against undue risk of personal liability of
the Corporation officers and directors is expected to be provided through
insurance coverage providing reasonable protection at reasonable cost, and
Director expects such coverage to be available;
WHEREAS, the Corporation's Amended and Restated Certificate of
Incorporation (the "Certificate") and/or Amended and Restated Bylaws (the
"Bylaws") require the Corporation to indemnify and advance expenses to its
directors and officers to the full extent permitted by law, and Director has
been serving as a director or executive officer of the Corporation in part in
reliance on such provisions;
WHEREAS, in recognition of Director's need for substantial protection
against personal liability in order to insure and enhance Director's continued
service to the Corporation in an effective manner, and Director's reliance on
the aforesaid provisions in the Corporation's Certificate and/or Bylaws, and in
part to provide Director with specific contractual assurance that the
protection promised by such provisions will be available to Director
(regardless of, among other things, any amendment to or revocation of such
provisions of the Certificate and/or Bylaws, any change in the composition of
the Corporation's board of directors or the occurrence of any acquisition
transaction relating to the Corporation); and
WHEREAS, the Corporation wishes to provide in this Agreement for the
effective indemnification of and the advancing of expenses to Director to the
fullest extent (whether partial or complete) permitted by law and as set forth
in this Agreement, and, to the extent insurance is maintained, for the
continued coverage of Director under the Corporation's director and officer
liability insurance policies;
- ----------------------------------
(1)/ Global change of Director to Officer should be made if this Agreement
is to be used for an officer. Hereinafter, all references will be to Director
or director.
4
NOW THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS
1.1. CHANGE IN CONTROL
A "Change in Control" shall be deemed to have occurred if (i)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the board of directors of the Corporation and any new
director whose election by the board of directors or nomination for election by
the Corporation'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 a majority thereof, or (ii) the
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 80% of the total voting power represented by the Voting
Securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Corporation
approve a plan of complete liquidation and dissolution of the Corporation or an
agreement for the sale or disposition by the Corporation of all or
substantially all the Corporation's assets; provided, however, that a would-be
Change in Control under (ii) herein which is approved and recommended in
advance by the Corporation's board of directors shall not be deemed a Change in
Control.
1.2. CLAIM
A "Claim" is any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation (whether conducted by the
Corporation or any other party) that Director in good faith believes might lead
to the institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other.
1.3. EXPENSES
"Expenses" include attorneys' fees and all other costs,
expenses and obligations paid or incurred by or on behalf of Director (other
than amounts paid or payable directly or indirectly to Director or any person
or entity controlled by Director) in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
-2-
5
1.4. INDEMNIFIABLE EVENT
An "Indemnifiable Event" shall be any event or occurrence
related to the fact that Director is or was a director, officer, employee,
agent or fiduciary of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, trustee, agent or fiduciary
of another corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise, or by reason of anything done or not done by
Director in any such capacity.
1.5. REVIEWING PARTY
A "Reviewing Party" shall be any appropriate person or body
consisting of a member or members of the Corporation's board or directors or
any other person or body selected hereunder (including Special Independent
Counsel, as defined below) who is not a party to the particular Claim for which
Director is seeking indemnification. If there has not been Change in Control,
the Reviewing Party shall be selected by the Corporation's board of directors.
If there has been such a Change in Control, the Reviewing Party shall be
Special Independent Counsel.
1.6. VOTING SECURITIES
"Voting Securities" are any securities of the Corporation
which vote generally in the election of directors.
1.7. SPECIAL INDEPENDENT COUNSEL
"Special Independent Counsel" is counsel selected by Director
and approved by the Corporation (which approval shall not be unreasonably
withheld) and who has not, unless waived by the Corporation and Director,
otherwise performed services for the Corporation or Director within the last
ten years.
2. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Director was, is or becomes a party to
or witness or other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising in part out
of) an Indemnifiable Event, the Corporation shall indemnify Director to the
fullest extent permitted by law as soon as practicable but in any event no
later than thirty days after written demand is presented to the Corporation,
against any and all Expenses, judgments, fines, penalties and amounts paid or
owing in settlement (including all interest, assessments and other charges paid
or payable in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) paid or incurred by or on behalf of
Director in connection with such Claim. Director shall
-3-
6
give the Corporation written notice of all such Claims and the particulars
thereof as soon as practicable.
(b) If so requested by Director, the Corporation shall
advance (within ten business days of such request) any and all Expenses to
Director (an "Expense Advance"). In the event that any person (including,
without limitation, the Corporation) challenges the reasonableness of any
Expense Advance requested by Director, an affidavit provided to the Corporation
by Special Independent Counsel certifying that, in the view of such Special
Independent Counsel, the Expenses in question were reasonably incurred shall
finally and conclusively (but not exclusively) establish the reasonableness of
such Expenses for purposes of determining Director's entitlement to Expense
Advances, but not for purposes of later determining Director's entitlement to
indemnification pursuant to this Agreement at the conclusion of the underlying
action.
(c) Notwithstanding anything in this Agreement to the
contrary, (i) Director shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim (other than a claim for
indemnification (including, without limitation, indemnification pursuant to
Section 4 of this Agreement), Expense Advances, or expenses advanced pursuant
to Section 4 of this Agreement) initiated by Director against any party (other
than the Corporation or any director of officer of the Corporation) unless such
Claim was authorized by the board of directors of the Corporation, (ii) prior
to a Change in Control, Director shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim (other than a claim for
indemnification (including, without limitation, indemnification pursuant to
Section 4 of this Agreement), Expense Advances, or expenses advanced pursuant
to Section 4 of this Agreement) initiated by Director against the Corporation
or any director or officer of the Corporation unless the Corporation has joined
in or consented to the initiation of such Claim; (iii) the obligations of the
Corporation under Section 2(a) shall be subject to the condition that the
Reviewing Party shall not have determined in a writing stating the reasons
therefor that Director would not be permitted to be indemnified under
applicable law; and (iv) the obligation of the Corporation to make an Expense
Advance pursuant to Section 2(b) shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Director would
not be permitted to be so indemnified under applicable law, the Corporation
shall be entitled to be reimbursed by Director (who hereby agrees to reimburse
the Corporation) for all such amounts theretofore paid; provided, however, that
if Director has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Director should be indemnified
under applicable law, any determination made by the Reviewing Party that
Director would not be permitted to be indemnified under applicable law shall
not be binding and Director shall not be required to reimburse the Corporation
for any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).
-4-
7
(d) If the Reviewing Party determines that Director would
not be permitted to be indemnified in whole or in part under applicable law
(such determination to be made by the Reviewing Party independent of any
position of the Corporation on any aspect of the indemnification, including
without limitation the appropriateness of the amount of any settlement),
Director shall have the right to commence litigation in any court in the State
of Delaware or in the State(s) of Director's residence or employment, having
subject matter jurisdiction thereof, and in which venue is proper, seeking an
initial determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Corporation hereby consents to
service of process and to appear in any such proceeding. The Corporation and
Director hereby agree that Director's remedies at law are inadequate in the
event Director commences litigation to recover indemnification, Expense
Advances, or expenses to be advanced pursuant to Section 4 of this Agreement,
in each case withheld by the Corporation. Any determination by the Reviewing
Party otherwise shall be conclusive and binding on the Corporation and
Director.
3. CHANGE IN CONTROL
If there is a Change in Control of the Corporation, then with
respect to all matters thereafter arising concerning the rights of Director to
indemnity payments and Expense Advances under this Agreement or any other
agreement, or under the Corporation's Certificate and/or Bylaws now or
hereafter in effect, relating to Claims for Indemnifiable Events, the
Corporation shall seek legal advice only from Special Independent Counsel.
Such counsel, among other things, shall render its written opinion to the
Corporation and Director as to whether and to what extent Director would be
permitted to be indemnified under applicable law. The Corporation agrees to
pay the reasonable fees of the Special Independent Counsel referred to above
and to fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES.
The Corporation shall indemnify Director against any and all
expenses (including attorneys' fees) and, if requested by Director, shall,
within ten business days of such request, advance such expenses to Director,
which are incurred by or on behalf of Director (other than amounts paid or
payable directly or indirectly to Director or any person or entity controlled
by Director) in connection with any claim asserted against or action brought by
Director for (i) indemnification hereunder or advance payment of Expenses by
the Corporation under this Agreement (or any other agreement or the
Corporation's and/or Bylaws now or hereafter in effect) relating to Claims for
Indemnifiable Events, and/or (ii) recovery under any director and officer
liability insurance policies maintained by the Corporation, regardless of
-5-
8
whether Director ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
5. LIMITATIONS ON SETTLEMENT AUTHORITY IN SOME CASES
(a) If no Change in Control has occurred, Director shall
not independently negotiate settlement without first giving the Reviewing Party
and the Corporation twenty business days' notice. Thereafter, Director may
engage in such negotiations and may settle the case unless the Reviewing Party
and trial counsel for the Corporation handling the case (and in cases where
outside counsel is used, such outside counsel) advise Director that they have
investigated the Director's involvement in the event and have determined that
the matter is appropriate and legal for indemnity and all judgments, expenses
and costs will, if lawful, be paid by the Corporation; provided, however, that
such limitation on settlement negotiations shall not apply to actions by or in
the right of the Corporation against Director. The Reviewing Party and such
counsel shall also promptly give Director notice of any subsequent change or
reversal of any such prior determination of the Reviewing Party and such
counsel, stating the reasons for such change or reversal, after which notice
Director may independently negotiate and settle the case.
(b) In any case, the Corporation shall not unreasonably
withhold its consent to any proposed settlement.
6. PARTIAL INDEMNITY, ETC.
If Director is entitled under any provision of this Agreement
to indemnification by the Corporation for some or a portion of Expenses,
judgments, fines, penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Corporation shall
nevertheless indemnify Director for the portion thereof to which Director is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Director has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including dismissal without
prejudice, Director shall be indemnified against all Expenses incurred in
connection therewith. In connection with any determination by the Reviewing
Party as to whether Director is entitled to be indemnified hereunder, the
burden of proof shall be on the Corporation to establish that Director is not
so entitled.
-6-
9
7. NO PRESUMPTION
For purposes of this Agreement, the termination of any claim,
action, suit or proceeding, by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Director did not meet any
particular standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable law. The
termination of a suit by settlement shall be presumed to be a disposition
favorable to Director and in the best interests of the Corporation.
8. NON-EXCLUSIVITY, ETC.
The rights of Director hereunder shall be in addition to any
other rights Director may have under the Corporation's Certificate, Bylaws, the
Delaware General Corporation Law or any other law or agreement. To the extent
that a change in applicable law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently,
it is the intent of the parties hereto that Director shall enjoy by this
Agreement the greater benefits so afforded by such change.
9. LIABILITY INSURANCE
To the extent the Corporation maintains an insurance policy or
policies providing director and officer liability insurance, Director shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any the Corporation director
or officer.
10. PERIOD OF LIMITATIONS
No legal action shall be brought and no cause of action shall
be asserted by or on behalf of the Corporation or any affiliate of the
Corporation against Director, Director's spouse, heirs, executors or personal
or legal representatives after the expiration of two years from the date of
accrual of such cause of action, and any claim or cause of action of the
Corporation or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.
-7-
10
11. AMENDMENTS, ETC.
No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by both the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
12. SUBROGATION
In the event of payment under this Agreement, the Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of Director, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Corporation effectively to bring suit
to enforce such rights.
13. NO DUPLICATION OF PAYMENTS
The Corporation shall not be liable under this Agreement to
make any payment in connection with any claim made against Director to the
extent Director has otherwise actually received payment (under any insurance
policy, the Corporation's Certificate, Bylaws or otherwise) of the amounts
otherwise Indemnifiable hereunder.
14. BINDING EFFECT, ETC.
This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or assets of the
Corporation), assigns, spouses, heirs, and personal and legal representatives.
15. TERMINATION
This Agreement may be terminated by either party by giving the
other three months' written notice; provided, however, that the Corporation may
not terminate this Agreement unless the Corporation is concurrently terminating
all like Indemnity Agreements then in force. No termination of this Agreement,
automatic or otherwise, shall nullify any of the rights and obligations of
either Director or the Corporation hereunder in respect of any matter occurring
prior to the effective date of termination.
-8-
11
16. SEVERABILITY
The provisions of this Agreement shall be severable in the
event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
17. GOVERNING LAW
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Delaware applicable to contracts
made and to be performed in such state, without giving effect to the principles
of conflicts of laws.
McLEOD, INC.
By:
--------------------------------------
Name:
---------------------------
Title:
----------------------------
-----------------------------------------
Name:
---------------------------
Title:
----------------------------
-9-