EXHIBIT 10.19
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made effective as of the 1st day of
December, 2003, between Ardent Health Services LLC, a Delaware limited
liability company (the "Company"), and R. Xxxx Xxxxxxx (the "Indemnitee").
WITNESSETH:
WHEREAS, it is essential to the Company and its stockholders to
attract and retain qualified and capable directors, officers, employees, agents
and fiduciaries; and
WHEREAS, it is the policy of the Company to indemnify its directors
and officers so as to provide them with the maximum possible protection
permitted by law; and
WHEREAS, in recognition of Indemnitee's need for protection against
personal liability in order to induce Indemnitee to serve or continue to serve
the Company in an effective manner, and, in the case of directors and officers,
to supplement the Company's directors' and officers' liability insurance
coverage, the Company wishes to provide the Indemnitee with the benefits
contemplated by this Agreement; and
WHEREAS, as a result of the provision of such benefits Indemnitee has
agreed to serve or to continue to serve the Company;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have
the following respective meanings:
(a) An Affiliate: of a specified Person is a Person who
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified. The term
Associate used to indicate a relationship with any Person shall mean (i) any
corporation or organization (other than the Company or a Subsidiary) of which
such Person is an officer or partner or is, directly, or indirectly, the
Beneficial Owner of ten (10) percent or more of any class of Equity Securities,
(ii) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity (other than an Employee Plan Trustee), (iii) any
Relative of such Person, or (iv) any officer or director of any corporation
controlling or controlled by such Person.
(b) Beneficial Ownership: shall be determined, and a
Person shall be the Beneficial Owner of all securities which such Person is
deemed to own beneficially, pursuant to Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (or any
successor rule or statutory provision), or, if said Rule 13d-3 shall be
rescinded and there shall be no successor rule or statutory provision thereto,
pursuant to said Rule 13d-3 as in effect on the date hereof; provided, however,
that a Person shall, in any event, also be deemed to be the Beneficial Owner of
any Voting Shares: (A) of which such Person or
any of its Affiliates or Associates is, directly or indirectly, the Beneficial
Owner, or (B) of which such Person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants, or options, or otherwise, or (ii) sole or shared voting or investment
power with respect thereto pursuant to any agreement, arrangement,
understanding, relationship or otherwise (but shall not be deemed to be the
Beneficial Owner of any Voting Shares solely by reason of a revocable proxy
granted for a particular meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, with respect to shares of which
neither such Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner), or (C) of which any other Person is, directly or indirectly,
the Beneficial Owner if such first mentioned Person or any of its Affiliates or
Associates acts with such other Person as a partnership, syndicate or other
group pursuant to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares of capital stock of
the Company; and provided further, however, that (i) no director or officer of
the Company, nor any Associate or Affiliate of any such director or officer,
shall, solely by reason of any or all of such directors and officers acting in
their capacities as such, be deemed for any purposes hereof, to be the
Beneficial Owner of any Voting Shares of which any other such director or
officer (or any Associate or Affiliate thereof) is the Beneficial Owner and
(ii) no trustee of an employee stock ownership or similar plan of the Company
or any Subsidiary ("Employee Plan Trustee") or any Associate or Affiliate of
any such Trustee, shall, solely by reason of being an Employee Plan Trustee or
Associate or Affiliate of an Employee Plan Trustee, be deemed for any purposes
hereof to be the Beneficial Owner of any Voting Shares held by or under any
such plan.
(c) A Change in Control: shall be deemed to have
occurred if (A) any Person (other than (i) the Company or any Subsidiary, (ii)
any pension, profit sharing, employee stock ownership or other employee benefit
plan of the Company or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity, or (iii) any Person who
is as of the date and time of this Agreement the Beneficial Owner of 20% or
more of the total voting power of the Voting Shares) is or becomes, after the
date of this Agreement, the Beneficial Owner of 20% or more of the total voting
power of the Voting Shares, (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election or appointment by
the Board of Directors or nomination or recommendation for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) 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 (C) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Shares of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Shares of the surviving entity) at least 80% of the total
voting power represented by the Voting Shares of the Company or such surviving
entity outstanding, or the stockholders of the Company approve a plan of
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.
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(d) Claim: means any threatened, pending or completed
action, suit, arbitration or proceeding, or any inquiry or investigation,
whether brought by or in the right of the Company or otherwise, that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
arbitration or proceeding, whether civil, criminal, administrative,
investigative or other, or any appeal therefrom.
(e) Equity Security: shall have the meaning given to
such term under Rule 3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on the date hereof.
(f) D&O Insurance: means any valid directors' and
officers' liability insurance policy maintained by the Company for the benefit
of the Indemnitee, if any.
(g) Determination: means a determination, and
"Determined" means a matter which has been determined based on the facts known
at the time, by: (i) a majority vote of disinterested directors, even though
less than an quorum, or (ii) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such disinterested directors or if such disinterested directors so
direct, by independent legal counsel in a written opinion, or, in the event
there has been a Change in Control, by (A) Special Independent Counsel (in a
written opinion) selected by Indemnitee as set forth in Section 6, or (B) the
Board of Directors of the Company or of the ultimate parent entity of the
Company as set forth in Section 6, or (iii) a majority of the disinterested
stockholders of the Company, or (iv) a final adjudication by a court of
competent jurisdiction.
(h) Excluded Claim: means any payment for Losses or
Expenses in connection with any Claim: (i) based upon or attributable to
Indemnitee gaining in fact any personal profit or advantage to which Indemnitee
is not entitled; or (ii) for the return by Indemnitee of any remuneration paid
to Indemnitee without the previous approval of the stockholders of the Company
which is illegal; or (iii) for an accounting of profits in fact made from the
purchase or sale by Indemnitee of securities of the Company within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, or similar
provisions of any state law; or (iv) resulting from Indemnitee's knowingly
fraudulent, dishonest or willful misconduct; or (v) the payment of which by the
Company under this Agreement is not permitted by applicable law.
(i) Expenses: means any reasonable expenses incurred by
Indemnitee as a result of a Claim or Claims made against Indemnitee for
Indemnifiable Events including, without limitation, attorneys' fees and all
other costs, expenses and obligations paid or incurred 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.
(j) Fines: means any fine, penalty or, with respect to
an employee benefit plan, any excise tax or penalty assessed with respect
thereto.
(k) Indemnifiable Event: means any event or occurrence,
occurring prior to or after the date of this Agreement, related to the fact
that Indemnitee is or was a director, officer, employee, trustee, agent or
fiduciary of the Company or any of its Affiliates, or is or
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was serving at the request of the Company 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 Indemnitee, including, but not limited to, any breach of duty,
neglect, error, misstatement, misleading statement, omission, or other act done
or wrongfully attempted by Indemnitee, or any of the foregoing alleged by any
claimant, in any such capacity.
(1) Losses: means any amounts or sums which Indemnitee
is legally obligated to pay as a result of a Claim or Claims made against
Indemnitee for Indemnifiable Events including, without limitation, damages,
judgments and sums or amounts paid in settlement of a Claim or Claims, and
Fines.
(m) Person: means any individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
(n) Relative: means a Person's spouse, parents,
children, siblings, mothers- and father-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law.
(o) Reviewing Party: means any appropriate person or
body consisting of a member or members of the Company's Board of Directors or
any other person or body appointed by the Board (including the Special
Independent Counsel referred to in Section 6) who is not a party to the
particular Claim for which Indemnitee is seeking indemnification.
(p) Subsidiary: means any corporation of which fifty
percent of any class of Equity Security is owned, directly or indirectly, by
the Company.
(q) Voting Shares: means any issued and outstanding
shares of capital stock of the Company entitled to vote generally in the
election of directors.
2. Basic Indemnification Agreement. In consideration of, and as
an inducement to, the Indemnitee rendering valuable services to the Company,
the Company agrees that in the event Indemnitee 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 Company will advance Expenses to and indemnify
Indemnitee to the fullest extent authorized by law, against any and all
Expenses and Losses (including all interest, assessments and other charges paid
or payable in connection with or in respect of such Expenses and Losses) of
such Claim, whether or not such Claim proceeds to judgment or is settled or
otherwise is brought to a final disposition, subject in each case, to the
further provisions of this Agreement.
3. Limitations on Indemnification. Notwithstanding the
provisions of Section 2, Indemnitee shall not be indemnified and held harmless
from any Losses or Expenses (a) which have been Determined, as provided herein,
to constitute an Excluded Claim; (b) to the extent Indemnitee is indemnified by
the Company and has actually received payment pursuant to the Limited Liability
Company Agreement of the Company (the "LLC Agreement"), D&O Insurance, or
otherwise; or (c) other than pursuant to the last sentence of Section 4(d) or
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Section 13, in connection with any Claim initiated by Indemnitee, unless the
Company has joined in or the Board of Directors has authorized such Claim.
4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of
any Claim, Indemnitee shall, if indemnification with respect thereto may be
sought from the Company under this Agreement, notify the Company of the
commencement thereof, and Indemnitee agrees further not to make any admission
or effect any settlement with respect to such Claim without the consent of the
Company, except any Claim with respect to which the Indemnitee has undertaken
the defense in accordance with the second to last sentence of Section 4(d).
(b) If, at the time of the receipt of such notice, the
Company has D&O Insurance in effect, the Company shall give prompt notice of
the commencement of Claim to the insurers in accordance with the procedures set
forth in the respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such Claim.
(c) To the extent the Company does not, at the time of
the Claim have applicable D&O Insurance, or if a Determination is made that any
Expenses arising out of such Claim will not be payable under the D&O Insurance
then in effect, the Company shall be obligated to pay the Expenses of any Claim
in advance of the final disposition thereof and the Company, if appropriate,
shall be entitled to assume the defense of such Claim, with counsel
satisfactory to Indemnitee, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, the Company will not
be liable to Indemnitee under this Agreement for any legal or other Expenses
subsequently incurred by the Indemnitee in connection with such defense other
than reasonable Expenses of investigation; provided that Indemnitee shall have
the right to employ its counsel in such Claim but the fees and expenses of such
counsel incurred after delivery of notice from the Company of its assumption of
such defense shall be at the Indemnitee's expense; provided further that if:
(i) the employment of counsel by Indemnitee has been previously authorized by
the Company; (ii) Indemnitee shall have reasonably concluded that there may be
a conflict of interest between the Company and Indemnitee in the conduct of any
such defense; or (iii) the Company shall not, in fact, have employed counsel to
assume the defense of such action, the reasonable fees and expenses of counsel
shall be at the expense of the Company. In addition, Indemnitee shall have the
right to appeal any Determination to a court of competent jurisdiction, and if
successful shall be entitled to receive indemnification against and for Losses
and Expenses incurred in connection with such appeal.
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall be made within thirty
(30) days of Indemnitee's written request therefor unless a Determination is
made that the Claims giving rise to Indemnitee's request are Excluded Claims or
otherwise not payable under this Agreement, provided that all payments on
account of the Company's obligation to pay Expenses under Section 4(c) of this
Agreement prior to the final disposition of any Claim shall not be subject to
any such Determination but shall be subject to Section 4(e) of this Agreement.
In the event the Company takes the position that the Indemnitee is not entitled
to indemnification in connection with the proposed
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settlement of any Claim, the Indemnitee shall have the right at its own expense
to undertake defense of any such Claim, insofar as such proceeding involves
Claims against the Indemnitee, by written notice given to the Company within
ten (10) days after the Company has notified the Indemnitee in writing of its
contention that the Indemnitee is not entitled to indemnification. If it is
subsequently determined in connection with such proceeding that the
Indemnifiable Events are not Excluded Claims and that the Indemnitee,
therefore, is entitled to be indemnified under the provisions of Section 2
hereof, the Company shall promptly indemnify the Indemnitee.
(e) Indemnitee hereby expressly undertakes and agrees to
reimburse the Company for all Losses and Expenses paid by the Company in
connection with any Claim against Indemnitee in the event and only to the
extent that a Determination shall have been made by a court of competent
jurisdiction in a decision from which there is no further right to appeal that
Indemnitee is not entitled to be indemnified by the Company for such Losses and
Expenses because the Claim is an Excluded Claim or because Indemnitee is
otherwise not entitled to payment under this Agreement.
5. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any Claim
effected without the Company's prior written consent. The Company shall not
settle any Claim in which it takes the position that Indemnitee is not entitled
to indemnification in connection with such settlement without the consent of
the Indemnitee, nor shall the Company settle any Claim in any manner which
would impose any Fine or any obligation on Indemnitee, without Indemnitee's
written consent. Neither the Company nor Indemnitee shall unreasonably withhold
their consent to any proposed settlement.
6. Change in Control; Extraordinary Transactions. The Company
and Indemnitee agree that if there is a Change in Control of the Company (other
than a Change in Control which has been approved by a majority of the Company's
Board of Directors who were directors immediately prior to such Change in
Control), then all Determinations thereafter with respect to the rights of
Indemnitee to be paid Losses and Expenses under this Agreement shall be made
only by a special independent counsel (the "Special Independent Counsel")
selected by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld) or by a court of competent jurisdiction. The Company and
the Indemnitee agree that if there is a Change of Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change of Control then all Determinations thereafter
with respect to the rights of Indemnitee to be paid Losses and Expenses under
this Agreement shall be made by a majority vote of a quorum of disinterested
directors of the Company or, if the Company is a subsidiary of any other
Person, then by a majority vote of a quorum of disinterested directors of the
ultimate parent entity of the Company, or, in either case, by a court of
competent jurisdiction. The Company shall pay the reasonable fees of such
Special Independent Counsel and shall indemnify such Special Independent
Counsel against any and all reasonable expenses (including reasonable
attorneys' fees), claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.
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The Company covenants and agrees that, in the event of a Change in
Control of the sort set forth in clause (B) of Section l(c), the Company will
use its best efforts (a) to have the obligations of the Company under this
Agreement expressly assumed by the surviving, purchasing or succeeding entity,
or (b) otherwise to adequately provide for the satisfaction of the Company's
obligations under this Agreement, in a manner reasonably acceptable to the
Indemnitee.
7. No Presumption. For purposes of this Agreement, the
termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not, of itself, create a presumption that Indemnitee 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.
8. Non-exclusivity, Duration, Etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may have under
the LLC Agreement, applicable law, any vote of stockholders or disinterested
directors or otherwise, both as to action in the Indemnitee's official capacity
and as to action in any other capacity by holding such office, and the rights
and obligations under this Agreement shall continue in full force and effect
after the Indemnitee ceases to serve the Company as a director, officer,
employee, agent or fiduciary, and for so long as the Indemnitee shall be
subject to any Claim by reason of (or arising in part out of) an Indemnifiable
Event and until all applicable statutes of limitation have expired. To the
extent that a change in the applicable laws of the State of Delaware (whether
by statute or judicial decision) permits greater indemnification by agreement
than would be afforded currently under the LLC Agreement and this Agreement, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.
9. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee, if an officer or director of the Company, 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 director or officer of the
Company.
10. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, 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 Company effectively to
bring suit to enforce such rights.
11. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Losses of a Claim but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to any Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all
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Expenses incurred in connection therewith. In connection with any Determination
as to whether Indemnitee is entitled to be indemnified hereunder the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.
12. Liability of Company. The Indemnitee agrees that neither the
stockholders nor the directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the
Company's obligations under this Agreement and the Indemnitee shall look solely
to the assets of the Company for satisfaction of any claims hereunder.
13. Enforcement.
(a) Indemnitee's right to indemnification and other
rights under this Agreement shall be specifically enforceable by Indemnitee
only in the state or Federal courts of the States of California, Delaware, New
York or Tennessee and shall be enforceable notwithstanding any adverse
Determination by the Company's Board of Directors, independent legal counsel,
the Special Independent Counsel or the Company's stockholders and no such
Determination shall create a presumption that Indemnitee is not entitled to be
indemnified hereunder. In any such action, the Company shall have the burden of
proving that indemnification is not required under this Agreement.
(b) In the event that any action is instituted by
Indemnitee under this Agreement, or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
reasonable expenses, including reasonable counsel fees, incurred by Indemnitee
with respect to such action, unless the court determines that each of the
material assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous.
14. Severability. In the event that any provision of this
Agreement is determined by a court to require the Company to do or to fail to
do an act which is in violation of applicable law, such provision (including
any provision within a single section, paragraph or sentence) shall be limited
or modified in its application to the minimum extent necessary to avoid a
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms
to the fullest extent permitted by law.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State, without
reference to the choice of law provisions of such State.
16. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the States of
California, Delaware, New York and Tennessee for all purposes in connection
with any action or proceeding which arises out of or relates to this Agreement
and agree that any action instituted under this Agreement shall be brought only
in the state and Federal courts of the States of California, Delaware, New York
and Tennessee.
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17. Notices. All notices, or other communications required or
permitted hereunder shall be sufficiently given for all purposes if in writing
and personally delivered, telegraphed, telexed, sent by facsimile transmission
or sent by registered or certified mail, return receipt requested, with postage
prepaid addressed as follows, or to such other address as the parties shall
have given notice of pursuant hereto:
(a) If to the Company, to:
Ardent Health Services LLC
Xxx Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
(b) If to the Indemnitee, to:
Mr. R. Xxxx Xxxxxxx
Ardent Health Services LLC
Xxx Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
18. Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original and all of which, when taken together, shall
constitute one and the same instrument.
19. Successors and Assigns. This Agreement shall be (i) binding
upon all successors and assigns of the Company, 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, and (ii) shall
be binding upon and inure to the benefit of any successors and assigns, heirs,
and personal or legal representatives of Indemnitee.
20. Amendment; Waiver. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
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IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the day and year first above written.
ARDENT HEALTH SERVICES LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxxx
---------------------------------
Title: President and CEO
--------------------------------
INDEMNITEE
By: /s/ R. Xxxx Xxxxxxx
-----------------------------------
Name: R. Xxxx Xxxxxxx
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