EXHIBIT 10.10
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of
____________, 2007 (the "Effective Date") by and between Skilled
Healthcare Group, Inc., a Delaware corporation (the "Company"), and
______________ who serves as a director and/or officer of the Company
("Indemnitee").
WHEREAS, highly competent persons have become more reluctant to
serve corporations as directors or officers unless they are provided with
adequate protection through insurance and/or indemnification against the
risks of claims being asserted against them arising out of their service
to and activities on behalf of such corporations; and
WHEREAS, the board of directors of the Company (the "Board") has
determined that, in order to help attract and retain qualified individuals
as directors and officers, the best interests of the Company and its
investors will be served by attempting to maintain, on an ongoing basis,
at the Company's sole expense, insurance to protect persons serving the
Company and its subsidiaries as directors or officers from certain
liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations
and other business enterprises for many years, the Company believes that,
given current market conditions and trends, such insurance may be
available to it in the future only at higher premiums and with more
exclusions. At the same time, directors and officers in service to
corporations or business enterprises are being increasingly subjected to
expensive and time-consuming litigation; and
WHEREAS, the Board has determined that, in order to help attract and
retain qualified individuals as directors and officers, the best interests
of the Company and its investors will be served by assuring such
individuals that the Company will indemnify them to the maximum extent
permitted by law; and
WHEREAS, the Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") of the Company permit, and the By-Laws
(the "By-Laws") of the Company require, indemnification of the officers
and directors of the Company, and Indemnitee may also be entitled to
indemnification pursuant to the Delaware General Corporation Law ("DGCL");
and
WHEREAS, the Certificate of Incorporation, the By-Laws and the DGCL
expressly provide that the indemnification provisions set forth therein
are not exclusive, and thereby contemplate that contracts may be entered
into between the Company and its directors and officers with respect to
indemnification and the advancement of defense costs; and
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests
of the Company's investors
and that the Company should act to assure such persons that there will be
increased certainty of such protection in the future; and
WHEREAS, it therefore is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify, and to advance
defense costs on behalf of, such persons to the fullest extent permitted
by applicable law so that they will serve or continue to serve the Company
free from undue concern that they will not be so indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of the
Certificate of Incorporation, By-Laws and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor shall it be
deemed to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, the Board recognizes that the Indemnitee does not regard
the protection available under the Company's Certificate of Incorporation,
the By-Laws and insurance program as adequate in the present
circumstances, and may not be willing to serve or continue to serve as a
director, officer or in such other capacity as the Company may request
without adequate protection, and the Company desires Indemnitee to serve
in such capacity; and
WHEREAS, Indemnitee is willing to serve, and continue to serve, as a
member of the Board (and any committee thereof) or as an officer of the
Company, on the condition that he or she be indemnified as provided for
herein.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree
as follows:
1. SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve, at
the will of the Company, as a director or officer of the Company for so long as
Indemnitee is duly elected or appointed or until Indemnitee tenders his or her
resignation. This Agreement shall not serve as a binding commitment on the part
of Indemnitee to continue to serve in such capacity, or on the part of the
Company to cause him or her to be nominated to successive terms as a director or
officer or to not otherwise be removed for cause or without cause, as permitted
under law.
2. DEFINITIONS. As used in this Agreement:
(a) "Beneficial Owner" shall have the meaning given to such term
in Rule 13d-3 issued under the Exchange Act; provided, however, that
Beneficial Owner shall exclude any Person becoming a Beneficial Owner by
reason of the stockholders of the Company approving a merger of the
Company with another entity.
(b) A "Change in Control" shall be deemed to occur upon the
earliest to occur after the date of this Agreement of any of the following
events:
2
(i) Acquisition of Stock by Third Party. Any Person (as
defined below, but excluding any subsidiary or employee benefit plan of
the Company), subsequent to the date of this Agreement, becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities entitled to vote generally in
the election of directors, unless (1) the change in the relative
Beneficial Ownership of the Company's securities by any Person results
solely from a reduction in the aggregate number of outstanding shares of
securities entitled to vote generally in the election of directors, or (2)
such acquisition was approved in advance by the Continuing Directors (as
defined below) and such acquisition would not constitute a Change in
Control under part (iii) of this definition; provided, however, that the
current ownership of more that 50% of the voting power of the Company by
Onex Partners LP and Onex Corporation or the transfer of such voting power
by Onex Partners LP or Onex Corporation to its partners or stockholders
respectively, or to its directly or indirectly wholly-owned subsidiaries,
shall not be considered a Change of Control;
(ii) Change in Board of Directors. Individuals who, as of the
date hereof, constitute the Board, and any new director whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two thirds of the directors then still in
office who were directors on the date hereof or whose election for
nomination for election was previously so approved (collectively, the
"Continuing Directors"), cease for any reason to constitute at least a
majority of the members of the Board;
(iii) Corporate Transactions. The effective date of a
reorganization, merger or consolidation of the Company (a "Business
Combination"), in each case, unless, following such Business Combination:
(1) all or substantially all of the individuals and entities who were the
Beneficial Owners of securities entitled to vote generally in the election
of directors immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 51% of the combined voting power of
the then outstanding securities entitled to vote generally in the election
of directors of the Company resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination, of the securities entitled to vote generally
in the election of directors; (2) no Person (excluding any corporation
resulting from such Business Combination) is the Beneficial Owner,
directly or indirectly, of 15% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the election of
directors of such corporation except to the extent that such ownership
existed prior to the Business Combination; and (3) at least a majority of
the Board resulting from such Business Combination were Continuing
Directors at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
3
(iv) Liquidation. The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement or series
of agreements for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than factoring the
Company's current receivables or escrows due (or, if such approval is not
required, the decision by the Board to proceed with such a liquidation,
sale, or disposition in one transaction or a series of related
transactions); or
(v) Other Events. There occurs any other event of a nature
that would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange Act (as defined below),
whether or not the Company is then subject to such reporting requirement.
(c) "Corporate Status" shall describe the status of a person who
is or was a director, officer, trustee, partner, member, fiduciary,
employee or agent of the Company or of any other Enterprise (as defined
below), which such person is or was serving at the request of the Company.
(d) "Disinterested Director" shall mean a director of the Company
who is not and was not a party to the Proceeding (as defined below) in
respect of which indemnification is sought by Indemnitee.
(e) "Enterprise" shall mean any corporation, limited liability
company, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the
Company as a director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent.
(f) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(g) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts and accountants,
witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types and amounts customarily incurred in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding (as defined below). Expenses also shall
include costs incurred in connection with any appeal resulting from any
Proceeding (as defined below), including, without limitation, the premium,
security for, and other costs relating to any bond, supersedeas bond, or
other appeal bond or its equivalent. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.
(h) "Independent Counsel" shall mean a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five (5) years has been, retained to
represent: (i) the Company or Indemnitee in
4
any matter material to either such party (other than with respect to
matters concerning the Indemnitee under this Agreement, or other
indemnitees under similar indemnification agreements), or (ii) any other
party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
(i) References to "fines" shall include any excise tax assessed
on a person with respect to any employee benefit plan pursuant to
applicable law.
(j) References to "serving at the request of the Company" shall
include any service provided at the request of the Company as a director,
officer, trustee, administrator, partner, member, fiduciary, employee or
agent of the Company which imposes duties on, or involves services by,
such director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries.
(k) "Person" shall have the meaning set forth in Sections 13(d)
and 14(d) of the Exchange Act; provided, however, that Person shall
exclude (i) the Company and (ii) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a subsidiary
of the Company.
(l) Any action taken or omitted to be taken by a person for a
purpose which he or she reasonably believed to be in the interests of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have been taken in "good faith" and for a purpose which is "not opposed
to the best interests of the Company", as such terms are referred to in
this Agreement and used in the DGCL.
(m) The term "Proceeding" shall include any threatened, pending
or completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, inquiry, administrative hearing or any other
actual, threatened or completed proceeding, whether brought in the right
of the Company or otherwise and whether of a civil, criminal,
administrative or investigative nature, including any related appeal, in
which Indemnitee was, is or will be involved as a party or witness or
otherwise by reason of the fact that Indemnitee is or was a director,
officer, trustee, administrator, partner, member, fiduciary, employee or
agent of the Company, by reason of any action taken or not taken by him or
her while acting as director, officer, trustee, administrator, partner,
member, fiduciary, employee or agent of the Company, or by reason of the
fact that he or she is or was serving at the request of the Company as a
director, officer, trustee, administrator, partner, member, fiduciary,
employee or agent of any other Enterprise, in each case whether or not
serving in such capacity at the time any liability or expense is incurred
for which indemnification, reimbursement, or advancement of expenses can
be provided under this Agreement.
5
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall indemnify and
hold harmless Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee is made, or is threatened to be made, a party to or a participant in
(as a witness or otherwise) any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 3, Indemnitee shall be indemnified and held harmless against all
judgments, fines, penalties, amounts paid in settlement (if such settlement is
approved in writing in advance by the Company, which approval shall not be
unreasonably withheld) (including, without limitation, all interest, assessments
and other charges paid or payable in connection with or in respect of any of the
foregoing) (collectively, "Losses") and Expenses actually and reasonably
incurred by Indemnitee or on his or her behalf in connection with such
Proceeding or any action, discovery event, claim, issue or matter therein or
related thereto, if Indemnitee acted in good faith, for a purpose which he or
she reasonably believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal Proceeding, in addition, had no
reasonable cause to believe that his or her conduct was unlawful.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company
shall indemnify Indemnitee in accordance with the provisions of this Section 4
if Indemnitee is made, or is threatened to be made, a party to or a participant
in (as a witness or otherwise) any Proceeding by or in the right of the Company
to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall
be indemnified and held harmless against all Expenses actually and reasonably
incurred by him or her or on his or her behalf in connection with the defense or
settlement of such Proceeding or any action, discovery event, claim, issue or
matter therein or related thereto, if Indemnitee acted in good faith, for a
purpose which he or she reasonably believed to be in or not opposed to the best
interests of the Company. No indemnification, however, shall be made under this
Section 4 in respect of any claim, issue or matter as to which Indemnitee shall
have been adjudged to be liable to the Company, unless and only to the extent
that the court in which the Proceeding was brought or, if no Proceeding was
brought in a court, any court of competent jurisdiction, determines upon
application that, in view of all the circumstances of the case, Indemnitee
fairly and reasonably is entitled to indemnification for such portion of the
Expenses as the court deems proper.
5. INDEMNIFICATION FOR EXPENSES WHERE INDEMNITEE IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding and in addition to the provisions of Section 3 and 4
of this Agreement, to the extent that Indemnitee is a party to a Proceeding and
is successful, on the merits or otherwise, in the defense of any claim, issue or
matter therein, the Company shall indemnify and hold harmless Indemnitee against
all Expenses actually and reasonably incurred by him or her or on his or her
behalf in connection with such successful defense. For the avoidance of doubt,
if Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or her or on his or her behalf
in connection with each successfully resolved claim, issue or matter. For
purposes of this Section 5, and without limitation, the termination of any
claim, issue or matter in such a Proceeding by withdrawal or dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.
6
6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. To the extent that
Indemnitee is, by reason of his or her Corporate Status, a witness in or
otherwise incurs Expenses in connection with any Proceeding to which Indemnitee
is not a party, he or she shall be indemnified and held harmless by the Company
against all Expenses actually and reasonably incurred by him or her or on his or
her behalf in connection therewith.
7. ADDITIONAL INDEMNIFICATION.
(a) Notwithstanding any limitation in Sections 3, 4, or 5 hereof
or in Section 145 of the DGCL or other applicable statutory provision, the
Company shall indemnify Indemnitee to the fullest extent permitted by law
if Indemnitee is made, or is threatened to be made, a party to any
Proceeding (including a Proceeding by or in the right of the Company to
procure a judgment in its favor) against all Losses and Expenses actually
and reasonably incurred by Indemnitee in connection with the Proceeding,
provided that no indemnification shall be made under this Section 7(a) on
account of Indemnitee's conduct which constitutes a breach of Indemnitee's
duty of loyalty to the Company or its investors or is an act or omission
not in good faith or which involves intentional misconduct or a knowing
violation of the law.
(b) For purposes of Sections 7(a), the meaning of the phrase "to
the fullest extent permitted by law" shall include, but not be limited to:
(i) to the fullest extent authorized or permitted by the
then-applicable provisions of the DGCL or other applicable statutory
provision, that authorize or contemplate indemnification by agreement, or
the corresponding provision of any amendment to or replacement of the DGCL
or other applicable statutory provision, and
(ii) to the fullest extent authorized or permitted by any
amendments to or replacements of the DGCL or other applicable statutory
provision, adopted after the date of this Agreement that increase the
extent to which a corporation limited liability company or partnership, as
applicable, may indemnify its officers, directors or persons holding
similar fiduciary responsibilities.
(c) Indemnitee shall be entitled to the prompt payment of all
Expenses reasonably incurred in enforcing successfully (fully or
partially) this Agreement.
8. CONTRIBUTION. To the fullest extent permissible under applicable law,
if the indemnification provided for in this Agreement is unavailable to
Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu
of indemnifying Indemnitee, shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid
or to be paid in settlement and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in such proportion as
is deemed fair and reasonable in light of all of the circumstances of such
Proceeding in order to reflect (i) the relative benefits received by the
Company, on the one hand, and Indemnitee, on the other, as a result of the
event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the
7
relative fault of the Company, on the one hand (and its directors, officers,
employees and agents) and Indemnitee, on the other, in connection with such
event(s) and/or transaction(s).
9. EXCLUSIONS. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:
(a) for which payment actually has been received by or on behalf
of Indemnitee under any insurance policy or other indemnity provision,
except with respect to any excess beyond the amount actually received
under such insurance policy or other indemnity provision; or
(b) for an accounting of profits made from the purchase and sale
(or sale and purchase) by Indemnitee of securities of the Company or any
subsidiary of the Company within the meaning of Section 16(b) of the
Exchange Act, as amended, or similar provisions of state blue sky law,
state statutory law or common law; or
(c) prior to a Change in Control, in connection with any
Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by
Indemnitee against the Company (other than any Proceeding referred to in
Sections 14(d) or (e) below or any other Proceeding commenced to recover
any Expenses referred to in Section 7(c) above) or its directors,
officers, employees or other indemnitees, unless (i) the Board authorized
the Proceeding (or any part of any Proceeding) prior to its initiation or
(ii) the Company provides the indemnification, in its sole discretion,
pursuant to the powers vested in the Company under applicable law; or
(d) if the funds at issue were paid pursuant to a settlement
approved by a court and indemnification would be inconsistent with any
condition with respect to indemnification expressly imposed by the court
in approving the settlement.
10. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
(a) The Company shall advance pursuant to this Section 10(a) the
Expenses incurred by Indemnitee in connection with any Proceeding within
thirty (30) days after the receipt by the Company of a written statement
or statements requesting such advances from time to time, whether prior to
or after final disposition of any Proceeding. Advances shall be unsecured
and interest free. Advances shall be made without regard to Indemnitee's
ability to repay such advances. Advances shall include any and all
reasonable Expenses incurred pursuing an action to enforce such right to
receive advances. Notwithstanding any provision of this Agreement to the
contrary, the Indemnitee shall be entitled to advances of Expenses
incurred by him or her or on his or her behalf in connection with a
Proceeding that Indemnitee claims is covered by Sections 3 and 4 hereof,
prior to a final determination of eligibility for indemnification and
prior to the final disposition of the Proceeding, upon the execution and
delivery to the Company of an undertaking by or on behalf of the
Indemnitee providing that the Indemnitee will
8
repay such advances to the extent that it ultimately is determined that
Indemnitee is not entitled to be indemnified by the Company. This Section
10(a) shall not apply to any claim made by Indemnitee for which indemnity
is excluded pursuant to Section 9.
(b) The Company will be entitled to participate in the Proceeding
at its own expense.
(c) The Company shall not settle any action, claim or Proceeding
(in whole or in part) which would impose any Expense, judgment, fine,
penalty or limitation on the Indemnitee without the Indemnitee's prior
written consent, which consent shall not be unreasonably withheld.
11. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
(a) Within sixty (60) days after the actual receipt by Indemnitee
of written notice that he or she is a party to or is requested to be a
participant in (as a witness or otherwise) any Proceeding, Indemnitee
shall submit to the Company a written notice identifying the Proceeding.
The failure by the Indemnitee to notify the Company within such 60-day
period will not relieve the Company from any liability which it may have
to Indemnitee (i) other than under this Agreement, and (ii) under this
Agreement, provided that if the Company can establish that such failure to
notify the Company in a timely manner resulted in actual prejudice to the
Company, then the Company will be relieved from liability under this
Agreement only to the extent of such actual prejudice.
(b) Indemnitee shall at the time of giving such notice pursuant
to Section 11(a) or thereafter deliver to the Company a written
application for indemnification. Such application may be delivered at such
time as Indemnitee deems appropriate in his or her sole discretion.
Following delivery of such a written application for indemnification by
Indemnitee, the Indemnitee's entitlement to indemnification shall be
determined promptly according to Section 12(a) of this Agreement and the
outcome of such determination shall be reported to Indemnitee in writing
within forty-five (45) days of the submission of such application.
12. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a) Upon written application by Indemnitee for indemnification
pursuant to Section 11(b) or written statement by Indemnitee for advances
of Expenses pursuant to Section 10(a), a determination with respect to
Indemnitee's entitlement thereto pursuant to the mandatory terms of this
Agreement, pursuant to statute, or pursuant to other sources of right to
indemnity, shall be made in the specific case: (i) by a majority vote of
the Disinterested Directors, whether or not such directors otherwise would
constitute a quorum of the Board; (ii) by a committee of Disinterested
Directors designated by a majority vote of such directors, whether or not
such directors would otherwise constitute a quorum of the Board, (iii) if
there are no Disinterested Directors, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee or
(iv) by the stockholders of the Company. Indemnitee shall
9
reasonably cooperate with the person, persons or entity making the
determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable
advance request any documentation or information which is not privileged
or otherwise protected from disclosure and which is reasonably available
to Indemnitee and reasonably necessary to such determination. Any costs or
Expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making
such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless from any
such costs and Expenses.
(b) If it is determined that Indemnitee is entitled to the
indemnification requested by the Indemnitee in a written application
submitted to the Company pursuant to Section 11(b), payment to Indemnitee
shall be made within ten (10) days after such determination. All advances
of Expenses requested in a written statement by Indemnitee pursuant to
Section 10(a) prior to a final determination of eligibility for
indemnification shall be paid in accordance with Section 10.
(c) In the event the determination of entitlement to
indemnification or advancement of Expenses is to be made by Independent
Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be
selected as provided in this Section 12(c). If a Change in Control shall
not have occurred, the Independent Counsel shall be selected by the Board,
and the Company shall give written notice to Indemnitee advising him or
her of the identity of the Independent Counsel so selected. If a Change in
Control shall have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by
the Board, in which event the preceding sentence shall apply), and
Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within ten (10) days
after such written notice of selection shall have been received, deliver
to the Company or to Indemnitee, as the case may be, a written objection
to such selection; provided, however, that such objection may be asserted
only on the ground that the Independent Counsel so selected does not meet
the requirements of "Independent Counsel" as defined in Section 2 of this
Agreement, and the objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the
person so selected shall act as Independent Counsel. If a written
objection is made and substantiated, the Independent Counsel so selected
may not serve as Independent Counsel unless and until such objection is
withdrawn or a court of competent jurisdiction has determined that such
objection is without merit. If, within twenty (20) days after submission
by Indemnitee of a written request for advancement of Expenses or
indemnification pursuant to Section 10(a) or 11(b) hereof, no Independent
Counsel shall have been selected and not objected to, either the Company
or Indemnitee may petition a court of competent jurisdiction for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the court or by
such other person as the court shall
10
designate, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under
Section 12(a) hereof.
(d) The Company shall pay the reasonable fees and expenses of the
Independent Counsel and to fully indemnify such Independent Counsel
against any and all Expenses, claims, liabilities and damages arising out
of or relating to this Agreement or its engagement pursuant hereto.
(e) Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 14(a) of this Agreement, any Independent
Counsel shall be discharged and relieved of any further responsibility in
such capacity (subject to the applicable standards of professional conduct
then prevailing).
13. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) Presumption in Favor of Indemnitee. In making a determination
with respect to entitlement to indemnification or advancement of Expenses
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification or advancement of
Expenses under this Agreement if Indemnitee has submitted an application
for advancement of Expenses in accordance with Section 10(a) of this
Agreement or indemnification in accordance with Section 11(b) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption.
(b) No Presumption Against Indemnitee. Neither the failure of the
Company (including by its directors or Independent Counsel) to have made a
determination prior to the commencement of any action pursuant to this
Agreement nor an actual determination by the Company (including by its
directors or Independent Counsel) that Indemnitee has not met the
applicable standard of conduct for indemnification shall be a defense to
the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.
(c) Sixty Day Period for Determination. If the person, persons or
entity empowered or selected under Section 12 of this Agreement to
determine whether Indemnitee is entitled to indemnification or advancement
of Expenses shall not have made a determination within sixty (60) days
after receipt by the Company of an application therefor, a determination
of entitlement to indemnification or advancement of Expenses shall be
deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the application
for indemnification or advancement of Expenses, or (ii) a prohibition of
such indemnification under applicable law; provided, however, that such
60-day period may be extended for a reasonable time, not to exceed an
additional thirty (30) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto.
11
(d) No Presumption from Termination of a Proceeding. The
termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not of itself adversely affect the
right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and for a purpose which he or she
reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his or her conduct was unlawful.
(e) Reliance as Safe Harbor. For purposes of any determination of
good faith, Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action or failure to act is based on the records or books of
account of the Company or any Enterprise other than the Company, including
financial statements, or on information supplied to Indemnitee by the
officers of the Company or any Enterprise other than the Company in the
course of their duties, or on the advice of legal counsel for the Company
or any Enterprise other than the Company or on information or records
given or reports made to the Company or any Enterprise other than the
Company by an independent certified public accountant or by an appraiser
or other expert selected by the Company or any Enterprise other than the
Company, except if the Indemnitee knew or had reason to know that such
records or books of account of the Company, information supplied by the
officers of the Company, advice of legal counsel or information or records
given or reports made by an independent certified public accountant or by
an appraiser or other expert were materially false or materially
inaccurate. The provisions of this Section 13(e) shall not be deemed to be
exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed or found to have met any applicable standard of
conduct.
(f) Actions of Others. The knowledge and/or actions, or failure
to act, of any other director, officer, trustee, administrator, partner,
member, fiduciary, employee or agent of the Company or any Enterprise
other than the Company shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.
14. REMEDIES OF INDEMNITEE.
(a) Adjudication/Arbitration. In the event that (i) a
determination is made pursuant to Section 12 of this Agreement that
Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 10 of this
Agreement, (iii) subject to Section 13(b), no determination of entitlement
to indemnification shall have been made pursuant to Section 12(a) of this
Agreement within 60 days after receipt by the Company of the application
for indemnification, or (iv) payment of indemnification is not made
pursuant to Sections 3, 4, 5, 6, 7 and 12(b) of this Agreement within ten
(10) days after a determination has been made that Indemnitee is entitled
to indemnification, or after receipt by the Company of a written request
for any additional monies owed with respect to a Proceeding as to which it
already has been determined that Indemnitee is entitled to
indemnification, Indemnitee
12
shall be entitled to an adjudication by a court of his or her entitlement
to such indemnification or advancement of Expenses. Alternatively,
Indemnitee, at his or her option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. The Company shall not
oppose Indemnitee's right to seek any such adjudication or award in
arbitration.
(b) Indemnitee Not Prejudiced by Prior Adverse Determination. In
the event that a determination shall have been made pursuant to Section
12(a) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant
to this Section 14 shall be conducted in all respects as a de novo trial,
or arbitration, on the merits, and Indemnitee shall not be prejudiced by
reason of the prior adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Section 14, the Company shall have
the burden of proving Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) Company Bound by Prior Determination. If a determination
shall have been made pursuant to Section 12(a) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make
Indemnitee's statement not materially misleading, in connection with the
application for indemnification, or (ii) a prohibition of such
indemnification under applicable law.
(d) Expenses. In the event that Indemnitee, pursuant to this
Section 14, seeks a judicial adjudication of or an award in arbitration to
enforce his or her rights under, or to recover damages for breach of, this
Agreement, Indemnitee shall be entitled to recover from the Company, and
shall be jointly and severally indemnified by the Company against, any and
all Expenses actually and reasonably incurred by him or her in such
judicial adjudication or arbitration if it shall be determined in such
judicial adjudication or arbitration that Indemnitee is entitled to
receive all or part of the indemnification or advancement of Expenses
sought which the Company had disputed prior to the commencement of the
judicial proceeding or arbitration.
(e) Advances of Expenses. If requested by Indemnitee, the Company
shall (within ten (10) days after receipt by the Company of a written
request therefore) advance to Indemnitee the Expenses which are incurred
by Indemnitee in connection with any judicial proceeding or arbitration
brought by Indemnitee for indemnification or advance of Expenses from the
Company under this Agreement or under any directors' and officers'
liability insurance policies maintained by the Company, if the Indemnitee
has submitted an undertaking to repay such Expenses if Indemnitee
ultimately is determined to not be entitled to such indemnification,
advancement of Expenses or insurance recovery, as the case may be. The
Indemnitee's financial ability to repay any such advances shall not be a
basis for the Company to decline to make such advances.
13
(f) Precluded Assertions by the Company. The Company shall be
precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 14 that the procedures and presumptions
of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company
is bound by all the provisions of this Agreement.
15. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) Rights of Indemnitee Not Exclusive. The rights of
indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the
Certificate of Incorporation, or the By-Laws, any agreement, vote of
investors or a resolution of directors, members, partners, or otherwise.
No right or remedy herein conferred by this Agreement is intended to be
exclusive of any other right or remedy, and every other right and remedy
shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent or subsequent assertion or
employment of any other right or remedy.
(b) Survival of Rights. No amendment, alteration or repeal of
this Agreement or of any provision hereof shall limit or restrict any
right of Indemnitee under this Agreement in respect of any action taken or
omitted by such Indemnitee in his or her Corporate Status prior to such
amendment, alteration or repeal.
(c) Change of Law. To the extent that a change in Delaware law,
whether by statute or judicial decision, permits greater indemnification
or advancement of Expenses than would be afforded currently under the
Certificate of Incorporation or the By-Laws, or this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy and be conferred
by this Agreement the greater benefits so afforded by such change.
(d) Insurance. To the extent that the Company maintains an
insurance policy or policies providing liability insurance for directors,
officers, trustees, administrators partners, members, fiduciaries,
employees, or agents of the Company or of any other Enterprise which such
person serves at the request of the Company, 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 such director, trustee,
partner, member, fiduciary, officer, employee or agent under such policy
or policies. If, at the time the Company receives notice from any source
of a Proceeding as to which Indemnitee is a party or a participant (as a
witness or otherwise) the Company has director and officer liability
insurance in effect that covers Indemnitee, the Company shall give prompt
notice of such Proceeding 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 the Indemnitee,
14
all amounts payable as a result of such Proceeding in accordance with the
terms of such policies.
(e) 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, who shall execute all
papers required and take all action necessary to secure such rights,
including execution of such documents as are necessary to enable the
Company to bring suit to enforce such rights.
(f) Other Payments. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable (or for
which advancement is provided hereunder) if and to the extent that
Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
(g) Other Indemnification. The Company's obligation to indemnify
or advance Expenses hereunder to Indemnitee who is or was serving at the
request of the Company as a director, officer, trustee, administrator
partner, member, fiduciary, employee or agent of any other Enterprise
shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from such Enterprise.
16. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as any of the following: a director, officer, agent
or employee of the Company or as a director, officer, trustee, administrator
partner, member, fiduciary, employee or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other Enterprise
which Indemnitee served at the request of the Company; or (b) one (1) year after
the final termination of any Proceeding (including after the expiration of any
rights of appeal) then pending in respect of which Indemnitee is granted rights
of indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 14 of this Agreement (including any
rights of appeal of any Proceeding commenced pursuant to Section 14). This
Agreement shall be binding upon the Company and its respective successors and
assigns and shall inure to the benefit of Indemnitee and his or her heirs,
executors and administrators.
17. 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 permitted 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
15
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.
18. ENFORCEMENT.
(a) The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve, or to continue to serve, as a
director or officer of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving or continuing to
serve as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter hereof.
19. MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing 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 provisions of this Agreement
nor shall any waiver constitute a continuing waiver.
20. SUCCESSORS AND BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise)
and any acquiror of all or substantially all of the business or assets of
the Company by agreement in form and substance reasonably satisfactory to
Indemnitee and/or his or her counsel, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent the
Company would be required to perform it if no such succession had taken
place.
(b) This Agreement will be binding upon and inure to the benefit
of the Company and any successor to the Company, including, without
limitation, any person acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor will thereafter be deemed the "Company" for purposes of this
Agreement), but will not otherwise be assignable or delegatable by the
Company.
(c) This Agreement will inure to the benefit of and be
enforceable by the Indemnitee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, legatees and
other successors.
(d) This Agreement is personal in nature and neither of the
parties hereto will, without the consent of the other, assign or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 20(a), (b) and (c). Without limiting the generality
or effect of the foregoing, Indemnitee's right to
16
receive payments hereunder will not be assignable, whether by pledge,
creation of a security interest or otherwise, other than by a transfer by
the Indemnitee's will, devise, a grantor's trust instrument under which
the Indemnitee or his estate is the sole beneficiary, or by the laws of
descent and distribution, and, in the event of any attempted assignment or
transfer contrary to this Section 20(d), the Company will have no
liability to pay any amount so attempted to be assigned or transferred.
21. NOTICES. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
if: (i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, on the date of such receipt, or
(ii) mailed by certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature
page of this Agreement, or such other address as Indemnitee subsequently
shall provide in writing to the Company.
(b) If to the Company to:
Skilled Healthcare Group, Inc.
27442 Portola Parkway, Suite 200
Foothill Ranch, California 92610
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee in
writing by the Company.
22. APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its conflict of laws, principles or rules. Except with respect to any
arbitration commenced by Indemnitee pursuant to Section 14 of this Agreement,
the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that
any action or proceeding arising out of or in connection with this Agreement
shall be brought only in the Chancery Court of the State of Delaware (the
"Delaware 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 Delaware Court for purposes of any action or
proceeding arising out of or in connection with this Agreement, (iii)
irrevocably appoint, to the extent such party is not a resident of the State of
Delaware, CT Corporation, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19808 as its agent in the State of Delaware as such party's agent for
acceptance of legal process in connection with any such action or proceeding
against such party with the same legal force and validity as if served upon such
party personally within the State of Delaware, (iv) waive any objection to the
laying of venue of any such action or proceeding in the Delaware Court, and (v)
waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.
17
23. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced to evidence the existence of this Agreement.
24. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate. The headings of the paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
[The remainder of this page is intentionally left blank.]
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the day and year first above written.
SKILLED HEALTHCARE GROUP, INDEMNITEE
INC.
By:
___________________________ Name:
__________________________
Name:
___________________________
Title: Address for Notices to Indemnitee:
___________________________
__________________________________
__________________________________
__________________________________
19