EXHIBIT 10.21
INDEMNIFICATION AGREEMENT
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INDEMNIFICATION AGREEMENT, dated as of October 29, 2001, by and among
Kindred Healthcare, Inc. (formerly known as Vencor, Inc.), a Delaware
corporation (the "Company"), and the director and/or officer of the Company
whose name appears on the signature page of this Agreement ("Indemnitee").
RECITALS
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A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or officers or in other capacities
unless they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporations.
B. The Board of Directors of the Company (the "Board") has determined
that the Company should act to assure its directors and officers that there will
be increased certainty of such protection in the future.
C. The Company's certificate of incorporation and bylaws, in each case as
amended, provide that the Company shall indemnity its current directors and
officers to the full extent permitted by Delaware law.
D. It is reasonable, prudent and necessary for the Company contractually
to obligate itself to indemnify its directors and officers to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified.
E. Indemnitee is willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
AGREEMENT
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In consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:
1. Definitions.
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(a) For purposes of this Agreement:
(i) "Affiliate" shall mean any corporation, partnership,
joint venture, trust or other enterprise in respect of which Indemnitee is or
was or will be serving as a director or officer directly or indirectly at the
request of the Company, and including, but not limited to, service with respect
to an employee benefit plan.
(ii) "Disinterested Director" shall mean a director of the
Company who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
(iii) "Expenses" shall include, without limitation, all
reasonable attorneys' fees and costs, retainers, court costs, transcripts, fees
of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses incurred in connection with asserting or defending
claims.
(iv) "Fines" shall include any excise taxes assessed on
Indemnitee with respect to any employee benefit plan.
(v) "Independent Counsel" shall mean a law firm or lawyer
that neither is presently nor in the past year has been retained to represent:
(i) the Company or Indemnitee in any matter material to any such party or (ii)
any other party to the Proceeding giving rise to a claim for indemnification
hereunder in any matter material to such other party. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any firm or person
who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee's right to indemnification under
this Agreement. All Expenses of the Independent Counsel incurred in connection
with acting pursuant to this Agreement shall be borne by the Company.
(vi) "Losses" shall mean all expenses, liabilities, losses
and claims (including reasonable attorneys' fees and judgments, fines, excise
taxes under the Employee Retirement Income Security Act of 1974, as amended from
time to time, penalties and amounts to be paid in settlement) incurred in
connection with any Proceeding.
(vii) "Proceeding" shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative, and any appeal therefrom.
(b) For purposes of this Agreement, a person who acted in good
faith and in a manner such person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the Company" as
referred to in this Agreement; the term "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and references to the "Company" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify Indemnitee in its capacity as a director, officer, or employee or
agent, so that Indemnitee shall stand in the same position under this Agreement
with respect to the resulting or
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surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
2. Service by Indemnitee. Indemnitee agrees to continue to serve the
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Company or any Affiliate as a director and/or officer. Notwithstanding anything
contained herein, this Agreement shall not create a contract of employment
between the Company and Indemnitee, and the termination of Indemnitee's
relationship with the Company or an Affiliate by either party hereto shall not
be restricted by this Agreement.
3. Indemnification. The Company agrees to indemnify Indemnitee for,
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and hold Indemnitee harmless from and against, any Losses or Expenses at any
time incurred by or assessed against Indemnitee arising out of or in connection
with the service of Indemnitee as a director, officer, employee or agent of the
Company or of an Affiliate (collectively referred to as an "Officer or Director
of the Company") to the fullest extent permitted by the laws of the State of
Delaware or any other applicable law in effect on the date hereof or as such
laws may from time to time hereafter be amended to increase the scope of such
permitted indemnification. Without diminishing the scope of the indemnification
provided by this Section, the rights of indemnification of Indemnitee provided
hereunder shall include but shall not be limited to those rights set forth
hereinafter.
4. Action or Proceeding Other Than an Action by or in the Right of
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the Company. Indemnitee shall be entitled to the indemnification rights provided
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herein if Indemnitee is a person who was or is made a party or is threatened to
be made a party to or is involved (including, without limitation, as a witness)
in any Proceeding (other than an action by or in the right of the Company) by
reason of (a) the fact that Indemnitee is or was an Officer or Director of the
Company or any other entity which Indemnitee is or was or will be serving at the
request of the Company or (b) anything done or not done by Indemnitee in any
such capacity.
5. Actions by or in the Right of the Company. Indemnitee shall be
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entitled to the indemnification rights provided herein if Indemnitee is a person
who was or is a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any Proceeding brought by or in
the right of the Company to procure a judgment in its favor by reason of (a) the
fact that Indemnitee is or was an Officer or Director of the Company or any
Affiliate, or (b) anything done or not done by Indemnitee in any such capacity.
Pursuant to this Section, Indemnitee shall be indemnified against Losses or
Expenses incurred or suffered by Indemnitee or on Indemnitee's behalf in
connection with the defense or settlement of any Proceeding if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company or its stockholders.
Notwithstanding the foregoing provisions of this Section, no such
indemnification shall be made in respect of any claim, issue or matter as to
which Delaware law expressly prohibits such indemnification by reason of an
adjudication of liability of Indemnitee to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Losses and
Expenses which the Court of Chancery or such other court shall deem proper.
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6. Indemnification for Losses and Expenses of Party Who is Wholly or
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Partly Successful. Notwithstanding any other provision of this Agreement, to the
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extent that Indemnitee has been wholly successful on the merits or otherwise in
any Proceeding referred to in Sections 3, 4 or 5 hereof on any claim, issue or
matter therein, Indemnitee shall be indemnified against all Losses and Expenses
incurred by Indemnitee or on Indemnitee's behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company agrees to indemnify Indemnitee to the
maximum extent permitted by law against all Losses and Expenses incurred by
Indemnitee in connection with each successfully resolved claim, issue or matter.
In any review or Proceeding to determine the extent of indemnification, the
Company shall bear the burden of proving any lack of success and which amounts
sought in indemnity are allocable to claims, issues or matters which were not
successfully resolved. For purposes of this Section and without limitation, the
termination of any such claim, issue or matter by dismissal with or without
prejudice shall be deemed to be a successful resolution as to such claim, issue
or matter.
7. Payment for Expenses of a Witness. Notwithstanding any other
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provision of this Agreement, to the extent that Indemnitee is, by reason of the
fact that Indemnitee is or was an Officer or Director of the Company or any
Affiliate, as the case may be, a witness in any Proceeding, the Company agrees
to pay to Indemnitee all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee's behalf in connection therewith.
8. Advancement of Expenses and Costs. All Expenses incurred by or on
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behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred by
Indemnitee within three months) in connection with any Proceeding shall be paid
by the Company in advance of the final disposition of such Proceeding within
twenty days after the receipt by the Company of a statement or statements from
Indemnitee requesting from time to time such advance or advances, whether or not
a determination to indemnify has been made under Section 9. Indemnitee's
entitlement to such advancement of Expenses shall include those incurred in
connection with any Proceeding by Indemnitee seeking an adjudication or award in
arbitration pursuant to this Agreement. The financial ability of Indemnitee to
repay an advance shall not be a prerequisite to the making of such advance. Such
statement or statements shall reasonably evidence such Expenses incurred (or
reasonably expected to be incurred) by Indemnitee in connection therewith and
shall include or be accompanied by a written undertaking by or on behalf of
Indemnitee to repay such amount if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified therefor pursuant to the terms of
this Agreement.
9. Procedure for Determination of Entitlement to Indemnification.
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(a) When seeking indemnification under this Agreement (which
shall not include in any case the right of Indemnitee to receive payments
pursuant to Section 7 and Section 8 hereof, which shall not be subject to this
Section 9), Indemnitee shall submit a written request for indemnification to the
Company; provided, however, that no delay or failure on the part of the
Indemnitee in notifying the Company shall relieve the Company from any
obligation hereunder unless and solely to the extent the Company is materially
and adversely prejudiced thereby. Determination of Indemnitee's entitlement to
indemnification shall be made promptly, but in no event later than 60 days after
receipt by the Company of Indemnitee's written request
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for indemnification. The Secretary of the Company shall, promptly upon receipt
of Indemnitee's request for indemnification, advise the Board that Indemnitee
has made such request for indemnification.
(b) The entitlement of Indemnitee to indemnification under this
Agreement shall be determined, with respect to a person who is a director or
officer at the time of such determination, in the specific case (1) by the Board
of Directors by a majority vote of the Disinterested Directors, even though less
than a quorum, or (2) by a committee of the Disinterested Directors designated
by majority vote of the Disinterested Directors, even though less than a quorum,
or (3) if there are no Disinterested Directors, or if such Disinterested
Directors so direct, by Independent Counsel, or (4) by the stockholders. The
entitlement of the Indemnitee to indemnification shall be determined with
respect to any person who is not a director or officer at the time of such
determination by any means reasonably determined by the Company.
(c) In the event the determination of entitlement is to be made
by Independent Counsel, such Independent Counsel shall be selected by the Board
and approved by Indemnitee. Upon failure of the Board to so select such
Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by the American Arbitration Association of
New York, New York or such other person as such Association shall designate to
make such selection.
(d) If a determination is made pursuant to Section 9(b) that
Indemnitee is not entitled to indemnification to the full extent of Indemnitee's
request, Indemnitee shall have the right to seek entitlement to indemnification
in accordance with the procedures set forth in Section 10 hereof.
(e) If a determination with respect to entitlement to
indemnification shall not have been made within 60 days after receipt by the
Company of such request, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
absolutely entitled to such indemnification, absent (i) misrepresentation by
Indemnitee of a material fact in the request for indemnification or (ii) a final
judicial determination that all or any part of such indemnification is expressly
prohibited by law.
(f) The termination of any Proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
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shall not, of itself, adversely affect the rights of Indemnitee to
indemnification hereunder except as may be specifically provided herein, or
create a presumption that Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or its stockholders, or create a presumption that (with
respect to any criminal action or proceeding) Indemnitee had reasonable cause to
believe that Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if in taking such action
Indemnitee relied on the records or books of account of the Company or an
Affiliate, including financial statements, on information supplied to Indemnitee
by the officers of the Company or an Affiliate in the course of their duties,
on the advice of legal counsel for the Company or an Affiliate or on
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information or records given or reports made to the Company or an Affiliate by
an independent certified public accountant or by an appraiser or other expert
selected with reasonable care. The Company shall have the burden of establishing
the absence of good faith. The provisions of this Section 9(g) shall not be
deemed to be exclusive or to limit in any way the other circumstances in which
Indemnitee may be deemed to have met the applicable standard of conduct set
forth in this Agreement.
(h) The knowledge and/or actions, or failure to act, of any
other director, officer, agent or employee of the Company or an Affiliate shall
not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.
10. Remedies in Cases of Determination Not to Indemnify or to Advance
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Expenses.
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(a) In the event that (i) a determination is made that
Indemnitee is not entitled to indemnification hereunder, (ii) advances are not
made pursuant to Section 8 hereof or (iii) payment has not been timely made
following a determination of entitlement to indemnification pursuant to Section
9 hereof, Indemnitee shall be entitled to seek a final adjudication in the Court
of Chancery of the State of Delaware (or other court to the extent permitted by
the Delaware General Corporation Law) of Indemnitee's entitlement to such
indemnification or advance.
(b) In the event a determination has been made in accordance
with the procedures set forth in Section 9 hereof, in whole or in part, that
Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration referred to in Section 10(a) shall be de novo and Indemnitee shall
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not be prejudiced by reason of any such prior determination that Indemnitee is
not entitled to indemnification.
(c) If a determination is made or deemed to have been made
pursuant to the terms of Section 9 or 10 hereof that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration in the absence of (i) a misrepresentation of
a material fact by Indemnitee or (ii) a final judicial determination that all or
any part of such indemnification is expressly prohibited by law.
(d) To the extent deemed appropriate by the court, interest
shall be paid by the Company to Indemnitee at a reasonable interest rate for
amounts which the Company indemnifies or is obliged to indemnify Indemnitee for
the period commencing with the date on which Indemnitee requested
indemnification (or reimbursement or advancement of any Expenses) and ending
with the date on which such payment is made to Indemnitee by the Company.
11. Expenses Incurred by Indemnitee to Enforce this Agreement. All
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Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be borne
by the Company. In the event that Indemnitee is a party to or intervenes in any
Proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee, if Indemnitee
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prevails in whole in such action, shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any Expenses incurred by
Indemnitee. If it is determined that Indemnitee is entitled to indemnification
for part (but not all) of the indemnification so requested, Expenses incurred in
seeking enforcement of such partial indemnification shall be reasonably prorated
among the claims, issues or matters for which Indemnitee is entitled to
indemnification and for claims, issues or matters for which Indemnitee is not so
entitled.
12. Non-Exclusivity. The rights of indemnification and to
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receive advances as provided by this Agreement shall not be deemed exclusive of
any other rights to which Indemnitee may at any time be entitled under any law,
certificate of incorporation, by-law, other agreement, vote of stockholders or
resolution of directors or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while holding such office. To the
extent Indemnitee would be prejudiced thereby, no amendment, alteration,
rescission or replacement of this Agreement or any provision hereof shall be
effective as to Indemnitee with respect to any action taken or omitted by such
Indemnitee in Indemnitee's position with the Company or an Affiliate or any
other entity which Indemnitee is or was serving at the request of the Company
prior to such amendment, alteration, rescission or replacement.
13. Duration of Agreement. This Agreement shall apply to any
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claim asserted and any Losses and Expenses incurred in connection with any claim
asserted on or after the date on which Indemnitee began to occupy any of the
positions or have any of the relationships described in Section 3, 4 or 5 hereof
and shall continue until and terminate upon the later of: (a) ten years after
Indemnitee has ceased to occupy any of the positions or have any of the
relationships described in Section 3, 4 or 5 hereof; or (b) one year after the
final termination of all pending or threatened Proceedings of the kind described
herein with respect to Indemnitee. This Agreement shall be binding upon the
Company and its respective successors and assigns and shall inure to the benefit
of Indemnitee and Indemnitee's spouse, assigns, heirs, devisee, executors,
administrators or other legal representatives.
14. Maintenance of D&O Insurance.
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(a) The Company hereby covenants and agrees with
Indemnitee that, so long as Indemnitee shall continue to serve as an Officer or
Director of the Company and thereafter so long as Indemnitee shall be subject to
any possible claim or threatened, pending or completed Proceeding, whether
civil, criminal or investigative, by reason of the fact that Indemnitee was an
Officer or Director of the Company or any other entity which Indemnitee was
serving at the request of the Company, the Company shall maintain in full force
and effect (i) the directors' and officers' liability insurance issued by the
insurer and having the policy amount and deductible as currently in effect with
respect to directors and officers of the Company or any of its subsidiaries and
(ii) any replacement or substitute policies issued by one or more reputable
insurers providing in all respects coverage at least comparable to and in the
same amount as that currently provided under such existing policy (collectively,
"D&O Insurance").
(b) In all policies of D&O Insurance, the officers
and directors of the Company shall be named as insureds in such a manner as to
provide Indemnitee the same rights and benefits, subject to the same
limitations, as are accorded to the Company's directors or officers most
favorably insured by such policy.
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(c) Notwithstanding anything to the contrary set forth in
(a) above, the Company shall have no obligation to maintain D&O Insurance if the
Company determines in good faith that such insurance is not reasonably
available, the premium cost for such insurance is disproportionate to the amount
of coverage provided or the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit.
15. Severability. Should any part, term or condition hereof be
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declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions hereof shall not be affected
thereby, and the illegal or unenforceable portions hereof shall not be
considered to be a part hereof, while leaving the remaining portions hereof
intact.
16. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
17. Headings. Section headings are for convenience only and
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do not control or affect meaning or interpretation of any terms or provisions
hereof.
18. Modification and Waiver. No supplement, modification or
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amendment of this Agreement shall be binding unless executed in writing by each
of the parties hereto.
19. No Duplicative Payment. The Company shall not be liable
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under this Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment (net of Expenses incurred in collecting such payment) under any
insurance policy, contract, agreement or otherwise.
20. Notices. All notices, requests, demands and other
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communications provided for by this Agreement shall be in writing (including
telecopier or similar writing) and shall be deemed to have been given at the
time when mailed, enclosed in a registered or certified postpaid envelope, in
any general or branch office of the United States Postal Service, or sent by
Federal Express or other similar overnight courier service, addressed to the
address of the parties stated below or to such changed address as such party may
have fixed by notice or, if given by telecopier, when such telecopy is
transmitted and the appropriate answerback is received.
(a) If to Indemnitee, to the address appearing on the
signature page hereof.
(b) If to the Company, to:
Kindred Healthcare, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Senior Vice President and General Counsel
21. Governing Law. The parties agree that this Agreement
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shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Delaware without regard to its conflicts of law
rules.
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22. Entire Agreement. Subject to the provisions of Section 12
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hereof, this Agreement constitutes the entire understanding between the parties
and supersedes all proposals, commitments, writings, negotiations and
understandings, oral and written, and all other communications between the
parties relating to the subject matter hereof. This Agreement may not be amended
or otherwise modified except in writing duly executed by all of the parties. A
waiver by any party of any breach or violation of this Agreement shall not be
deemed or construed as a waiver of any subsequent breach or violation thereof.
23. Other Agreements. The Company hereby agrees with and
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represents to Indemnitee that all of its directors and officers who enter into
indemnification agreements with the Company will enter into agreements with the
same terms and conditions as this Agreement. Further, the Company hereby agrees
and represents that to the extent any of the directors and officers enter into
indemnification agreements with terms more favorable to such directors and
officers, this Agreement shall be amended (and shall be deemed to be amended) to
reflect such terms.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
KINDRED HEALTHCARE, INC.
By:____________________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President, Finance, Corporate
Controller and Treasurer
INDEMNITEE
Name:__________________________________
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