Exhibit 10.1
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this
“ Agreement ”) is made and entered into as of
December
, 2008 between NMH Holdings, Inc., a Delaware corporation (the
“ Company ”), and [name] (“
Indemnitee ”). The obligations of the Company
hereunder are guaranteed by National Mentor Holdings, Inc., a
Delaware corporation, on the terms and conditions set forth on the
signature page hereto.
WITNESSETH THAT:
WHEREAS, highly competent persons
have become more reluctant to serve corporations as directors,
officers or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising
out of their service to and activities on behalf of the
corporation;
WHEREAS, the Board of Directors of
the Company (the “ Board ”) has determined that,
in order to attract and retain qualified individuals, the Company
will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its
subsidiaries 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,
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, officers, and other persons in service to corporations
or business enterprises are being increasingly subjected to
expensive and time-consuming litigation relating to, among other
things, matters that traditionally would have been brought only
against the Company or business enterprise itself. The By-laws
and/or Certificate of Incorporation of the Company may require
indemnification of the officers and directors of the Company.
Indemnitee may also be entitled to indemnification pursuant to the
General Corporation Law of the State of Delaware (“
DGCL ”). The By-laws and Certificate of Incorporation
may expressly provide and the DGCL does 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 members of the board of directors, officers and other
persons with respect to indemnification;
WHEREAS, the uncertainties relating
to such insurance and to indemnification have increased the
difficulty of attracting and retaining such persons;
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
stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the
future;
WHEREAS, it is reasonable, prudent
and necessary for the Company contractually to obligate itself to
indemnify, and to advance expenses 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;
WHEREAS, this Agreement is a
supplement to and in furtherance of the By-laws and Certificate of
Incorporation of the Company and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to
diminish or abrogate any rights of Indemnitee thereunder;
and
WHEREAS, Indemnitee does not regard
the protection available under the Company’s By-laws and
Certificate of Incorporation and insurance as adequate in the
present circumstances, and may not be willing to serve as an
officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. Indemnitee is willing
to serve, continue to serve and to take on additional service for
or on behalf of the Company on the condition that he be so
indemnified; and
[WHEREAS, Indemnitee has certain
rights to indemnification and/or insurance provided by Vestar
Capital Partners V, L.P., Vestar Capital Partners
V-A, L.P., and/or Vestar Capital Partners
V-B, L.P.
(collectively, “ Vestar
”), which Indemnitee and Vestar intend to be secondary to the
primary obligation of the Company to indemnify Indemnitee as
provided herein, with the Company’s acknowledgement and
agreement to the foregoing being a material condition to
Indemnitee’s willingness to serve on the
Board.](1)
(1)
To be included in agreements with
Vestar directors.
NOW, THEREFORE, in consideration of
Indemnitee’s agreement to serve as an officer and/or director
from and after the date hereof, the parties hereto agree as
follows:
1.
Indemnity of
Indemnitee . The
Company hereby agrees to hold harmless and indemnify Indemnitee to
the fullest extent permitted by law, as such may be amended from
time to time. In furtherance of the foregoing indemnification, and
without limiting the generality thereof:
(a)
Proceedings Other Than
Proceedings by or in the Right of the Company
. Indemnitee shall be entitled
to the rights of indemnification provided in this
Section l(a) if, by reason of his Corporate
Status (as hereinafter defined), the Indemnitee is, or is
threatened to be made, a party to or participant in any Proceeding
(as hereinafter defined) other than a Proceeding by or in the right
of the Company. Pursuant to this Section 1(a) ,
Indemnitee shall be indemnified against all Expenses (as
hereinafter defined), judgments, penalties, fines and amounts paid
in settlement actually and reasonably incurred by him, or on his
behalf, in connection with such Proceeding or any claim, issue or
matter therein, if the Indemnitee acted in good faith and in a
manner the Indemnitee reasonably believed to be in or not opposed
to the best interests of the Company, and with respect to any
criminal Proceeding, had no reasonable cause to believe the
Indemnitee’s conduct was unlawful.
(b)
Proceedings by or in the Right of
the Company .
Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(b) if, by reason of
his Corporate Status, the Indemnitee is, or is threatened to be
made, a party to or participant in any Proceeding brought by or in
the right of the Company. Pursuant to this Section 1(b)
, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by the Indemnitee, or on the Indemnitee’s
behalf, in connection with such Proceeding if the Indemnitee acted
in good faith and in a manner the Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company;
provided, however, if applicable law so provides, no
indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company
unless and to the extent that the Court of Chancery of the State of
Delaware shall determine that such indemnification may be
made.
(c)
Indemnification for Expenses of a
Party Who is Wholly or Partly Successful . Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified to the
maximum extent permitted by law, as such may be amended from time
to time, against all Expenses actually and reasonably incurred by
him or on his 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 shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter
in such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or
matter.
2.
Additional Indemnity
. In addition to, and without
regard to any limitations on, the indemnification provided for in
Section 1 of this Agreement, the Company shall and
hereby does indemnify and hold harmless Indemnitee against all
Expenses, judgments, penalties, fines and amounts paid
in
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settlement actually and reasonably
incurred by him or on his behalf if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to or
participant in any Proceeding (including a Proceeding by or in the
right of the Company), including, without limitation, all liability
arising out of the negligence or active or passive wrongdoing of
Indemnitee. The only limitation that shall exist upon the
Company’s obligations pursuant to this Agreement shall be
that the Company shall not be obligated to make any payment to
Indemnitee that is finally determined (under the procedures, and
subject to the presumptions, set forth in Sections 6
and 7 hereof) to be unlawful.
3.
Contribution.
(a)
Whether or not the indemnification
provided in Sections 1 and 2 hereof is
available, in respect of any threatened, pending or completed
action, suit or proceeding in which the Company is jointly liable
with Indemnitee (or would be if joined in such action, suit or
proceeding), the Company shall pay, in the first instance, the
entire amount of any judgment or settlement of such action, suit or
proceeding without requiring Indemnitee to contribute to such
payment and the Company hereby waives and relinquishes any right of
contribution it may have against Indemnitee. The Company shall not
enter into any settlement of any action, suit or proceeding in
which the Company is jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding) unless such settlement
provides for a full and final release of all claims asserted
against Indemnitee.
(b)
Without diminishing or impairing the
obligations of the Company set forth in the preceding subparagraph,
if, for any reason, Indemnitee shall elect or be required to pay
all or any portion of any judgment or settlement in any threatened,
pending or completed action, suit or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), the Company shall contribute to
the amount of Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by
Indemnitee in proportion to the relative benefits received by the
Company and all officers, directors or employees of the Company,
other than Indemnitee, who are jointly liable with Indemnitee (or
would be if joined in such action, suit or proceeding), on the one
hand, and Indemnitee, on the other hand, from the transaction from
which such action, suit or proceeding arose; provided, however,
that the proportion determined on the basis of relative benefit
may, to the extent necessary to conform to law, be further adjusted
by reference to the relative fault of the Company and all officers,
directors or employees of the Company other than Indemnitee who are
jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee, on
the other hand, in connection with the events that resulted in such
expenses, judgments, fines or settlement amounts, as well as any
other equitable considerations which the Law may require to be
considered. The relative fault of the Company and all officers,
directors or employees of the Company, other than Indemnitee, who
are jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee, on
the other hand, shall be determined by reference to, among other
things, the degree to which their actions were motivated by intent
to gain personal profit or advantage, the degree to which their
liability is primary or secondary and the degree to which their
conduct is active or passive.
(c)
The Company hereby agrees to fully
indemnify and hold Indemnitee harmless from any claims of
contribution which may be brought by officers, directors or
employees of the Company, other than Indemnitee, who may be jointly
liable with Indemnitee.
(d)
To the fullest extent permissible
under applicable law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee 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,
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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 and Indemnitee as a result of the
event(s) and/or transaction(s) giving cause to such
Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officers, employees and agents) and Indemnitee in
connection with such event(s) and/or
transaction(s).
4.
Indemnification for Expenses of a
Witness .
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a
witness, or is made (or asked to) respond to discovery requests, in
any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
5.
Advancement of
Expenses .
Notwithstanding any other provision of this Agreement, the Company
shall advance all Expenses incurred by or on behalf of Indemnitee
in connection with any Proceeding by reason of Indemnitee’s
Corporate Status within thirty (30) days after the receipt by
the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by a
written undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified against such Expenses.
Any advances and undertakings to repay pursuant to this
Section 5 shall be unsecured and interest
free.
6.
Procedures and Presumptions for
Determination of Entitlement to Indemnification
. It is the intent of this
Agreement to secure for Indemnitee rights of indemnity that are as
favorable as may be permitted under the DGCL and public policy of
the State of Delaware. Accordingly, the parties agree that the
following procedures and presumptions shall apply in the event of
any question as to whether Indemnitee is entitled to
indemnification under this Agreement:
(a)
To obtain indemnification under this
Agreement, Indemnitee shall submit to the Company a written
request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that
Indemnitee has requested indemnification. Notwithstanding the
foregoing, any failure of Indemnitee to provide such a request to
the Company, or to provide such a request in a timely fashion,
shall not relieve the Company of any liability that it may have to
Indemnitee unless, and to the extent that, such failure actually
and materially prejudices the interests of the Company.
(b)
Upon written request by Indemnitee
for indemnification pursuant to the first sentence of
Section 6(a) hereof, a determination with respect
to Indemnitee’s entitlement thereto shall be made in the
specific case by one of the following four methods, which shall be
at the election of the board: (1) by a majority vote of the
disinterested directors, even though less than a quorum,
(2) by a committee of disinterested directors designated by a
majority vote of the disinterested directors, even though less than
a quorum, (3) if there are no disinterested directors or if
the disinterested directors so direct, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be
delivered to the Indemnitee, or (4) if so directed by the
Board of Directors, by the stockholders of the Company; provided
that from and after the date that a Change in Control occurs, a
determination with respect to Indemnitee’s entitlement
thereto shall be made in the specific case by Independent Counsel
in a written opinion to the Board of Directors, a copy of which
shall be delivered to the Indemnitee. For purposes hereof,
disinterested directors are those members of the board of directors
of the Company who are not parties to the action, suit or
proceeding in respect of which indemnification is sought by
Indemnitee.
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(c)
If the determination of entitlement
to indemnification is to be made by Independent Counsel pursuant to
Section 6(b) hereof, the Independent Counsel
shall be selected as provided in this Section 6(c) .
The Independent Counsel shall be selected by the Board of
Directors. Indemnitee may, within 10 days after such written
notice of selection shall have been given, deliver to the Company 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 13 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 selected may not serve as
Independent Counsel unless and until such objection is withdrawn or
a court has determined that such objection is without merit. If,
within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to
Section 6(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or
Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of
any objection which shall have been made by the Indemnitee to the
Company’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 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 6(b) hereof. The Company shall pay any
and all reasonable fees and expenses of Independent Counsel
incurred by such Independent Counsel in connection with acting
pursuant to Section 6(b) hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of
this Section 6(c) , regardless of the manner in which
such Independent Counsel was selected or appointed.
(d)
In making a determination with
respect to entitlement to indemnification hereunder, the person or
persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement.
Anyone seeking to overcome this presumption shall have the burden
of proof and the burden of persuasion by clear and convincing
evidence. Neither the failure of the Company (including by its
directors or independent legal counsel) to have made a
determination prior to the commencement of any action pursuant to
this Agr
