INDEMNIFICATION AGREEMENT
Exhibit 10.1
This Indemnification Agreement (“Agreement”) made this 4th day of May, 2006 by and between Warwick
Valley Telephone Company (the “Company”), a New York corporation, and
(“Indemnitee”).
WITNESSETH:
WHEREAS, Section 722(a) of the Business Corporation Law of New York (the “BCL”) empowers
corporations to indemnify any person made, or threatened to be made, a party to an action or
proceeding ( other than one by or in the right of the Company to procure a judgment in its favor),
whether civil or criminal, including an action by or in the right of any other corporation of any
type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan
or other enterprise, which any director or officer of the Company served in any capacity at the
request of the Company, by reason of the fact that he, his testator or intestate, was a director or
officer of the Company, or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid
in settlement and reasonable expenses, including attorneys` fees actually and necessarily incurred
as a result of such action or proceeding, or any appeal therein, if such director or officer acted,
in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for
any other corporation or any partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interests of the Company and, in criminal actions or
proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful; and
WHEREAS, Section 722(c) of the BCL empowers corporations to indemnify any person made, or
threatened to be made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate, is or was a
director or officer of the corporation, or is or was serving at the request of the corporation as a
director or officer of any other corporation of any type or kind, domestic or foreign, of any
partnership, joint venture, trust, employee benefit plan or other enterprise, against amounts paid
in settlement and reasonable expenses, including attorneys’ fees, actually and necessarily incurred
by him in connection with the defense or settlement of such action, or in connection with an appeal
therein, if such director or officer acted, in good faith, for a purpose which he reasonably
believed to be in, or, in the case of service for any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under Section 722(c) may be made in respect of (1)
a threatened action, or a pending action which is settled or otherwise disposed of, or (2) any
claim, issue or matter as to which such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which the action was brought, or, if
no action was brought, any court of competent jurisdiction, determines upon application that, in
view of all the circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement amount and expenses as the court deems proper; and
WHEREAS, the Company and the Indemnitee further recognize the substantial amount of corporate
litigation in general, which subjects directors, officers, employees, controlling persons, agents
and fiduciaries to expensive litigation risks; and
WHEREAS, the Company and Indemnitee recognize the increasing expense of or difficulty in obtaining
liability insurance for the Company’s directors, officers, employees, controlling persons, agents
and fiduciaries, the significant increases in the cost of such insurance and the general reductions
in the coverage of such insurance; and
WHEREAS, highly competent persons have become more reluctant to serve as officers or directors of
publicly-held corporations unless they are provided with adequate protection through insurance and
indemnification against risks of claims and actions against them arising out of their service to,
and activities on behalf, of the corporation; and
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WHEREAS, the Indemnitee is concerned that the current protection available may not be adequate
under the present circumstances, and Indemnitee and other directors and officers of the Company may
not be willing to serve in such capacities without additional protection; and
WHEREAS, the Company’s directors and officers have certain existing indemnification arrangements
pursuant
to the Company’s Certificate of Incorporation and By-Laws and may be entitled to indemnification
pursuant to Section 722 et seq., but the protection provided by such indemnification is limited and
its availability is uncertain as to any particular situation; and
WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal
liability for services rendered to the Company, (ii) specific contractual assurance that the
protection promised by the Company’s Certificate of Incorporation and By-Laws will be available to
Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of
Incorporation or By-Laws or any change in the composition of the Board of Directors of the Company
or acquisition transaction relating to the Company), and (iii) an inducement to provide effective
services to the Company as a director or officer, as the case may be, the Company wishes to provide
in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) permitted under law (including, without limitation,
Section 721 of the BCL) and as set forth in this Agreement, and, to the extent insurance is
maintained, to provide for the continued coverage of Indemnitee under the Company’s directors and
officers liability insurance policies; and
WHEREAS, the Company wishes to obligate itself to advance such expenses to Indemnitee under the
circumstances contemplated by this Agreement and the Indemnitee wishes to have the Company so
obligate itself as a condition for continuing to serve as of
the Company; and
WHEREAS, Section 721 of the BCL specifically provides that the indemnification and advancement of
expenses granted pursuant to, or provided by, Sections 722 through 725 of the BCL shall not be
deemed exclusive of any other rights to which a director or officer seeking indemnification or
advancement of expenses may be entitled, provided that (1) any agreement providing for such other
rights is authorized by the By-Laws of the Company, and (2) no indemnification may be made to or on
behalf of any director or officer if a judgment or other final adjudication adverse to the director
or officer establishes that his acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was not legally
entitled.
WHEREAS, Article X, Section 3 of the Company’s By-Laws permits the Company to provide
indemnification to its officers and directors beyond that permitted by Section 722 et seq., as
required by Section 721; and
WHEREAS, the Board of Directors of the Company has authorized and directed the proper officers of
the Company to enter into this Agreement in the name of or on behalf of the Company;
NOW, THEREFORE, in consideration of the premises, the agreements herein set forth, and other good
and valuable consideration, the Company and Indemnitee hereby agree as follows:
ARTICLE I
Section 1.01. DEFINITIONS. As used in this Agreement, the following terms have the following
meanings, unless a Section of this Agreement specifically provides otherwise:
| 1. | “Agreement” means this Indemnification Agreement and any amendments pursuant to Section 7.01 of this Agreement. | ||
| 2. | “Board” means the Board of Directors of the Company. | ||
| 3. | “Change in Control” shall have occurred in any of the following circumstances occurring after the date of this Agreement: (i) an occurrence of an event required to be reported with respect to the Company in response to item 6(e) of Schedule 14A or Regulation 14A (or in response to any similar item on any similar schedule or form) under the Exchange Act, regardless of whether the Company is then subject to such reporting requirement; (ii) a Business |
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| Combination (as defined in Article Fifth of the Company’s Certificate of Incorporation) shall take place which has not been approved pursuant to Sub-paragraph 2(a) of such Article Fifth; (iii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) shall have become, without prior approval of the Company’s Board, the “beneficial owner” | |||
| (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then | |||
| 4. | outstanding voting securities (provided that as used in clause (iii), the term “person” excludes a trustee or other fiduciary holding securities under an employee benefit plan of the Company), (iv) there occurs a merger or consolidation of the Company with another 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 or resulting entity) more than 51% of the combined voting power of the voting securities of the surviving or resulting 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 or resulting entity; (v) all or substantially all the assets of the Company are sold or otherwise disposed of in a transaction or series of related transactions; (vi) the approval by the stockholders of the Company of a complete liquidation of the Company or the sale or other disposition of all or substantially all of the assets of the Company, or (vii) the individuals who on the date of this Agreement constitute the Board (including, for this purpose, any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who were directors on the date hereof or whose election or nomination was so approved) cease for any reason to constitute at least a majority of the members of the Board. | ||
| 5. | “Company” means Warwick Valley Telephone Company and any parent, affiliate, subsidiary and any successors (whether direct or indirect by purchase, merger, consolidation, or otherwise) and any assigns. | ||
| 6. | “Controlling Person” means any person who controls Indemnitee or Indemnitee’s Spouse or any person or entity who may be liable within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended. | ||
| 7. | “Disinterested Director” means 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, Indemnitee’s Spouse, or a Controlling Person. | ||
| 8. | “Expenses” means any and all costs and fees reasonably incurred in connection with any Proceeding including, without limitation, costs and fees reasonably incurred by counsel, consultants and experts, including all costs and fees reasonably incurred in connection with the enforcement of this Agreement. | ||
| 9. | “Independent Counsel” means the law firm or a member(s) of a law firm, that is experienced in matters of corporate law and neither currently is, nor in the past five years has, been retained by the Company or Indemnitee, Indemnitee’s Spouse or any Controlling Person with respect to any matter materially related to the Proceeding for which indemnification is being sought and otherwise complies with any requirements of independence that may be applicable. Prior service as Independent Counsel under this Agreement or in any similar capacity with respect to any dispute involving the Company shall be grounds for disqualification from serving as Independent Counsel. This Agreement is not intended to and does not supersede any obligation incumbent upon Independent Counsel pursuant to applicable standards of professional conduct. Independent Counsel shall be an independent decision-maker and shall not owe any fiduciary responsibility to, or have any attorney-client relationship with, any of the Company, Indemnitee, Indemnitee’s Spouse or any Controlling Person. | ||
| 10. | “Liabilities” means all judgments, fines (including any excise taxes assessed with respect to any employee benefit plan), penalties and amounts paid in settlement and other liabilities (including all interest, assessments and other charges paid or payable in connection with or in respect of any such amounts) arising out of or in connection with any Proceeding; provided that Liabilities shall not include any Expenses. |
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| 11. | “Proceeding” means any reasonably foreseeable, threatened, pending or completed action, suit, hearing, investigation or inquiry (whether internal or external), arbitration or other alternative dispute mechanism, or other proceeding, whether civil, criminal, administrative, regulatory, congressional or investigative investigations, including, without limitation any action, suit or hearing seeking injunctive or declarative relief regarding the existence of any fiduciary | ||
| 12. | duty, brought or conducted by any third party or by or in the right of the Company or an affiliate of the Company. | ||
| 13. | “Spouse” means the person with whom Indemnitee has entered into a lawful marriage, civil union or domestic partnership arrangement that has not been annulled, dissolved, or otherwise invalidated or terminated under the law of the jurisdiction in which it was entered. | ||
| 14. | “State” means any of the fifty states, the District of Columbia and any territory of the United States. | ||
| 15. | “To The Fullest Extent Authorized By Law” means (i) to the fullest extent permitted by the BCL 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 BCL adopted after the date of this Agreement that increases the extent to which a corporation may provide indemnification, and shall be understood to include indemnification for Liabilities and Expenses and the advancement of funds for Expenses to the extent permitted by the BCL for indemnification or advancement under an agreement permitted pursuant to Section 721, clause (iii) of the BCL, subject only to any prohibitions or limitations set forth expressly in the BCL as being applicable even with respect to such an agreement, such as the proviso set forth in Section 721 of the BCL immediately after such clause (iii). |
ARTICLE II
Section 2.01. SERVICES BY INDEMNITEE. Indemnitee hereby agrees to serve or continue to serve the
Company, for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his
resignation or is removed, subject to the terms of any retention agreement between Indemnitee and
the Company.
ARTICLE III
Section 3.01. INDEMNIFICATION GENERALLY. The Company will indemnify, pay on behalf of, or will
reimburse Indemnitee, Indemnitee’s Spouse and each Controlling Person who is or was made a party or
a witness or other participant in or is or was threatened to be made a party or a witness or other
participant in any Proceeding, by reason of the fact that such person was or may be deemed the
legal representative, or a director, officer, employee or agent of the Company or is or was or may
be deemed serving at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise against any and all
Expenses and Liabilities actually and reasonably incurred To The Fullest Extent Authorized By Law;
provided however, that no indemnification shall be made to or on behalf of Indemnitee if a judgment
or other final adjudication adverse to Indemnitee establishes that (i) Indemnitee’s acts were
committed in bad faith or were the result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or (ii) Indemnitee personally gained in fact a financial profit
or other advantage to which Indemnitee was not legally entitled. Any acts of Indemnitee which are
so finally adjudged or adjudicated to constitute intentional illegal conduct shall be presumed to
have been committed in bad faith.
Section 3.02. SUCCESSFUL DEFENSE; PARTIAL SUCCESS. Except to the extent set forth in the proviso
in Section 3.01, the obligation of the Company set forth in such Section is not limited to only
those circumstances in which Indemnitee, Indemnitee’s Spouse or any Controlling person is wholly or
partially successful on the merits or otherwise in the defense of any Proceeding.
Section 3.03. WITNESS EXPENSES. This Agreement shall not in any way limit or affect the Company’s
power to pay (in advance or otherwise) or reimburse expenses reasonably incurred by Indemnitee,
Indemnitee’s Spouse or any Controlling Person in connection with the appearance by any of them as a
witness in any Proceeding at a time when the person appearing as a witness has not been formally
named a defendant or respondent in or to such Proceeding.
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ARTICLE IV
Section 4.01. ADVANCES; WRITTEN REQUEST. The Company shall advance to Indemnitee, Indemnitee’s
Spouse and each Controlling Person any and all Expenses actually and reasonably incurred by such
person in connection with any Proceeding within 14 calendar days of receipt of a written request
for advancement, which may be delivered to the Company at such time and from time to time as
Indemnitee, Indemnitee’s Spouse or each Controlling Person deems appropriate in such person’s
discretion, whether prior to or after final disposition of any Proceeding.
Section 4.02. SUFFICIENCY OF WRITTEN REQUEST FOR ADVANCES. A written request for advancement that
conveys, without the need to do so verbatim, that Indemnitee, Indemnitee’s Spouse or the respective
Controlling Person believes in good faith that such person is entitled to advancement of expenses
under the terms of this Agreement shall be sufficient to invoke the right to advancement under
Section 4.01.
Section 4.03. PROMISE TO REPAY. Indemnitee, Indemnitee’s Spouse and each Controlling Person
hereby each agree and promise that such person shall promptly repay any and all advanced Expenses
to the Company if and to the extent it is ultimately determined, under the procedure set forth in
Section 723(b) of the BCL, that such person is not entitled to indemnification under Section 3.01
above or has received reimbursement or advances for Expenses in excess of the amount to which such
person is entitled.
ARTICLE V
Section 5.01. NOTICE TO COMPANY. Indemnitee, Indemnitee’s Spouse and each Controlling Person
shall notify the Company in writing as soon as reasonably practicable after being served with any
summons, citation, subpoena, complaint, indictment, information or other document relating to any
Proceeding with respect to which Indemnitee, Indemnitee’s Spouse or any Controlling Person intends
to seek indemnification or advancement of Expenses and Liabilities under this Agreement.
Section 5.02. NOTICE BY COMPANY. The Company shall notify Indemnitee, Indemnitee’s Spouse and
each Controlling Person in writing as soon as reasonably practicable after being served with any
summons, citation, subpoena, complaint, indictment, information or other document relating to any
Proceeding with respect to which Indemnitee, Indemnitee’s Spouse or any Controlling Person may be
entitled to indemnification or advancement under this Agreement.
Section 5.03. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (a) Upon the final disposition of
the matter that is the subject of the request for indemnification delivered pursuant to this
Article, a determination shall be made with respect to Indemnitee’s entitlement thereto in the
specific case in the manner set forth in section 723(b) of the BCL.
(b) If it is determined that Indemnitee, Indemnitee’s Spouse or a Controlling Person is entitled to
indemnification, payment to such person shall be made within 10 calendar days after such
determination.
Section 5.03. COOPERATION WITH INDEPENDENT COUNSEL. In connection with any determination of
entitlement to indemnification in the manner set forth in Section 723(b) of the BCL that involves
the use of Independent Counsel, Indemnitee, Indemnitee’s Spouse and each Controlling Person and the
Company agree to reasonably cooperate with the Independent Counsel including providing, upon
reasonable request, any documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to the party of whom the request was made and
reasonably necessary to such determination.
Section 5.04. PAYMENT OF INDEPENDENT COUNSEL. The Company agrees to pay all Expenses incurred by
Indemnitee, Indemnitee’s Spouse or each Controlling Person in so cooperating with Independent
Counsel in making such determination (irrespective of the determination as to Indemnitee,
Indemnitee’s Spouse or each Controlling Person’s entitlement to indemnification), and the Company
indemnifies and agrees to hold such persons harmless from such Expenses.
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Section 5.05. OBJECTIONS TO SELECTION OF INDEPENDENT COUNSEL. Following receipt of notice of the
selection of Independent Counsel, if any, the party receiving the notice may, within 10 calendar
days, deliver to the other party a written objection to such selection; provided that such
objection may be asserted only on the ground that Independent Counsel selected does not meet the
requirements of “Independent Counsel” as defined in Article I of this Agreement, and the objection
shall set forth with particularity the factual
basis for such assertion. Absent a proper and timely objection, the person selected shall act as
Independent Counsel. If a proper and timely objection is made, the person selected may not serve
as Independent Counsel unless and until such objection is withdrawn or the competent New York state
court (or, at Indemnitee’s option, pursuant to an arbitration) has determined that such objection
is without merit. If, within 20 days after receipt by the Company of a request for indemnification
pursuant to this Agreement, no Independent Counsel shall have been selected and not objected to,
either the Company or Indemnitee, Indemnitee’s Spouse or a Controlling Person may petition the
competent New York state court (or, at such person’s option an arbitration) for resolution of any
objection which shall have been made to the selection of Independent Counsel and/or for the
appointment of another person as Independent Counsel, and the person with respect to whom all
objections are so resolved or the person so appointed shall act as Independent Counsel.
Section 5.06. APPEAL RIGHT. Indemnitee, Indemnitee’s Spouse and each Controlling Person and the
Company shall have the right to appeal any decision of the Disinterested Directors, the Board or
Independent Counsel to the competent New York state court, or, at Indemnitee’s, Indemnitee’s
Spouse’s or the Controlling Person or Company’s sole option, to an arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. Any such adjudication or
arbitration shall be conducted in all respects as a de novo trial or arbitration on the merits. In
any such adjudication or arbitration the presumptions and burdens articulated in Article VI shall
apply.
Section 5.07. VALIDITY OF AGREEMENT. The Company shall not oppose the right of Indemnitee,
Indemnitee’s Spouse or any Controlling Person to seek any adjudication or arbitration sought under
the terms of this Agreement and shall be precluded from asserting that the procedures or
presumptions contained herein are not valid, binding or enforceable and shall stipulate in any such
adjudication or arbitration that the Company is bound by all of the provisions of this Agreement.
ARTICLE VI
Section 6.01. PRESUMPTIONS AND BURDENS OF PROOF. Indemnitee, Indemnitee’s Spouse and each
Controlling Person shall be entitled to a presumption that such person is entitled to
indemnification, advancement of fees or both under this Agreement if the notice requirement of
Section 5.01 has been met. The Company shall bear the burden of proving, by a preponderance of the
evidence that Indemnitee, Indemnitee’s Spouse or the Controlling Person is not entitled to
indemnification or advancement. Neither a determination by the Disinterested Directors, the Board
or by Independent Counsel against Indemnitee, Indemnitee’s Spouse or a Controlling Person, nor the
termination of any Proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo
contrendere, or its equivalent, shall create a presumption that Indemnitee, Indemnitee’s Spouse or
a Controlling Person is not entitled to indemnification or advancement or otherwise affect the
burden of proof or persuasion in any subsequent Proceeding.
ARTICLE VII
Section 7.01. AMENDMENT. This Agreement may not be modified or amended except by a written
instrument executed by or on behalf of each of the parties hereto.
Section 7.02. BINDING EFFECT. (a) The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on it in order to induce Indemnitee to
serve the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in
serving the Company.
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(b) This Agreement shall be binding upon, and inure to the benefit of, and be enforceable by the
parties hereto and their respective successors and permitted assigns, 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 Company, heirs, executors, administrators or other successors.
The Company shall require and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all or substantially all or a substantial part of the business or
assets of the Company, by written agreement in the form and substance reasonably satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement in the manner and to the same
extent that the Company would be required to perform if no such succession had taken place.
(c) The indemnification and advancement of expenses provided by this Agreement shall continue as to
a person who has ceased to be a director, officer, employee or agent or is deceased and shall inure
to the benefit of the heirs, executors, administrators or other successors of the estate of such
person.
(d) Except to the extent, if any, as may be required by the BCL with respect to agreements to
indemnify or advance expenses, all rights and obligations of the Company and Indemnitee,
Indemitee’s Spouse and any Controlling Person hereunder shall continue in full force and effect
despite the subsequent amendment or modification of the Company’s Certificate of Incorporation or
By-Laws, as such are in effect on the date hereof, and such rights and obligations shall not be
affected by any such amendment or modification, any resolution of directors or shareholders of the
Company, or by any other corporate action which conflicts with or purports to amend, modify, limit
or eliminate any of the rights or obligations of the Company and/or of Indemnitee, Indemnitee’s
Spouse or any Controlling Person hereunder, except as set forth in Section 7.01 hereof.
Section 7.03. CONSENT TO JURISDICTION. Except with respect to any arbitration commenced by
Indemnitee, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any
action, suit or other proceeding arising out of or in connection with this Agreement shall be
brought only in a competent New York state court and any New York court to which an appeal may be
taken in such action, suit or other proceeding (the “New York Court”), and not in any other state
or federal court in the United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the New York Court for purposes of any action, suit or
other proceeding arising out of or in connection with this Agreement, (iii) waive any objection to
the laying of venue of any such action, suit or other proceeding in the New York Court, and (iv)
waive, and agree not to plead or to make, any claim that any such action, suit or other proceeding
brought in the New York Court has been brought in an improper or inconvenient forum.
Section 7.04. CONTRIBUTION. To The Fullest Extent Authorized By Law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee, Indemnitee’s Spouse or any Controlling
Person for any reason, the Company, in lieu of indemnifying Indemnitee, Indemnitee’s Spouse and
each Controlling Person, shall contribute to the amount reasonably incurred whether for Liabilities
and/or Expenses in connection with a Proceeding or other expenses related to an indemnifiable event
or transaction under this Agreement, in such proportion as is deemed fair and reasonable in light
of all of the circumstances of such other proceeding in order to reflect the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
rise to such other proceeding; and/or the relative fault of the Company and Indemnitee in
connection with such event(s) and/or transaction(s).
Section 7.05. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.
Section 7.06. DEFENSE OF CLAIMS. The Company shall be entitled to participate in any proceeding
at its own expense. The Company shall not settle any Proceeding (in whole or in part) in a manner
that imposes any expense, liability or limitation on Indemnitee, Indemnitee’s Spouse or any
Controlling Person without his, her or its prior written consent unless the Company first
indemnifies such person. Such consent shall not be unreasonably withheld. Indemnitee,
Indemnitee’s Spouse or any Controlling Person shall not settle any Proceeding (in whole or in part)
in a manner that imposes any expense, liability or limitation on the Company without the Company’s
prior written consent. Such consent shall not be unreasonably withheld.
Section 7.07. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the
parties with respect to the matters covered herein and supersedes all prior oral or written
understandings or agreements with respect to the matters covered herein, except that, this
Agreement shall not supersede any
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indemnification provisions contained in any other agreement, between the Company and the Indemnitee
the primary purpose of which is to provide rights other than indemnification, including but not
limited to, employment and severance agreements. This Section shall not be construed to limit any
other rights Indemnitee, Indemnitiee’s Spouse, or each Controlling Person may have under the
Company’s Certificate of Incorporation and Bylaws, applicable law or otherwise.
Section 7.08. GOVERNING LAW. This Agreement and the legal relations among the parties hereto
shall be governed by, and construed and enforced in accordance with, the local law of the State of
New York.
Section 7.09. HEADINGS. The Article and Section headings in this Agreement are for convenience of
reference only, and shall not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.
Section 7.10. IMPUTATION. The knowledge or actions or failure to act on the part of any fiduciary
of the Company shall not be imputed to Indemnitee, Indemnitee’s Spouse or any Controlling Person
for purposes of determining entitlement to indemnification under this Agreement.
Section 7.11. LIABILITY INSURANCE. The Company shall obtain and maintain with reputable insurance
companies an insurance policy or policies providing general and/or directors and officers liability
insurance on terms with respect to coverage and amount (including with respect to the payment of
expenses) no less favorable than those of such policy or policies in effect on the date hereof
except for any changes approved by the Board prior to a Change in Control. Indemnitee 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 member of the Board. Upon request by Indemnitee, Indemnitee’s
Spouse or any Controlling Person, the Company shall provide to such person copies of any such
policy or policies in effect. The Company shall promptly notify Indemnitee, Indemnitee’s Spouse
and each Controlling Person of any material change in the insurance coverage.
Section 7.12. SEVERABILITY. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable To The Fullest Extent Authorized By Law;
(b) such provision or provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the
fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
Section 7.13. NOTICES. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered by hand
or by courier and receipted for by the party to whom said notice or other communication shall have
been directed, (b) if mailed by certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed or (c) if sent by facsimile transmission and
fax confirmation is received, on the next business day following the date on which such facsimile
transmission was sent. Addresses for notice to either party are as shown on the signature page of
this Agreement, or such other address as any party shall have given by written notice to the other
party as provided above.
Section 7.14. STATUTE OF LIMITATIONS. The Company agrees not to assert that a claim for
indemnification is barred by the statute of limitations as an affirmative defense or otherwise.
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Section 7.15. SUBROGATION. In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee,
Indemnitee’s Spouse and each Controlling Person, who shall execute all papers required and take all
actions necessary to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights. The Company shall not be liable under
this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which
advancement is provided hereunder) if and to the extent that Indemnitee, Indemnitee’s Spouse or any
Controlling Person has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise. The Company’s obligation to indemnify or advance expenses
hereunder to Indemnitee who is or was serving as a director, officer, employee, agent or fiduciary
of another partnership, joint venture, trust or other enterprise at the request of the Company
shall be reduced by any amount Indemnitee, Indemnitee’s Spouse or any Controlling Person has
actually received as indemnification or advancement of expenses from such partnership, joint
venture, trust or other enterprise.
Section 7.16. TRUST. The Company shall, within 30 days of receipt of written request by
Indemnitee, Indemnitee’s Spouse or any Controlling Person, establish a trust for the benefit of
Indemnitee, Indemnitee’s Spouse or the Controlling Person and from time to time within 10 days of
receipt of written request by Indemnitee, Indemnitee’s Spouse or any Controlling Person, fund the
trust in an amount sufficient to satisfy any and all Expenses anticipated in good faith to be
reasonably incurred in connection with any Proceeding as stated in Indemnitee’s, Indemnitee’s
Spouse’s or the Controlling Person’s written request that the trust be funded. Any dispute arising
under this Section shall be decided by Independent Counsel who shall be selected in accordance with
the terms of Article V. Any determination by Independent Counsel may be appealed by Indemnitee,
Indemnitee’s Spouse or any Controlling Person in accordance with the terms of Article V. The
presumptions and burdens of proof articulated in Article VI shall apply to any dispute arising
under this Section.
Section 7.17. USE OF CERTAIN TERMS. As used in this Agreement, the words “herein,” “hereof,” and
“hereunder” and other words of similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph, Section, or other subdivision. Whenever the context may
require, any pronoun used
in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 7.18. WAIVERS. The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively) only by a writing
signed by the party against which such waiver is to be asserted. Unless otherwise expressly
provided herein, no delay on the part of the party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any
party hereto of any right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof of the exercise of any other
right, power or privilege hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be effective as of the
date first above written.
| WARWICK VALLEY TELEPHONE COMPANY | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | ||||
| INDEMNITEE | ||||
| Name: | ||||
| Address: | ||||
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