EXHIBIT
10.1
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement is dated as of _______________,
20___ (this “ Agreement ”) and is between
Vanguard Health Systems, Inc., a Delaware corporation (the “
Company ”), and [ Name of
director/officer ] (“ Indemnitee
”).
BACKGROUND
The Company believes that, in order to attract and retain highly
competent persons to serve as directors or in other capacities,
including as officers, it must provide such persons with adequate
protection through indemnification against the risks of claims and
actions against them arising out of their services to and
activities on behalf of the Company.
The Company desires and has requested Indemnitee to serve as a [
director] [officer] of the Company and, in order to induce
the Indemnitee to serve as a [ director] [officer] of the
Company, the Company is willing to grant the Indemnitee the
indemnification provided for herein. Indemnitee is willing to so
serve on the basis that such indemnification be
provided.
The parties by this Agreement desire to set forth their agreement
regarding indemnification and the advancement of
expenses.
In consideration of Indemnitee’s service to the Company and
the covenants and agreements set forth below, and for other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows.
Section 1.
Indemnification.
To the fullest extent permitted by the General Corporation Law of
the State of Delaware (the “ DGCL ”):
(a) The Company
shall indemnify Indemnitee if Indemnitee was or is made or is
threatened to be made a party to, or is otherwise involved in, as a
witness or otherwise, any threatened, pending or completed action,
suit or proceeding (brought in the right of the Company or
otherwise), whether civil, criminal, administrative or
investigative and whether formal or informal, including appeals, by
reason of the fact that Indemnitee is or was or has agreed to serve
as a director, officer, employee or agent of the Company, or while
serving as a director or officer of the Company, is or was serving
or has agreed to serve at the request of the Company as a director,
officer, employee or agent (which, for purposes hereof, shall
include a trustee, fiduciary, partner or manager or similar
capacity) of another corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other
enterprise, or by reason of any action alleged to have been taken
or omitted in any such capacity.
(b) The indemnification
provided by this Section 1 shall be from and against all loss and
liability suffered and expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by or on behalf of Indemnitee in connection
with such action, suit or proceeding, including any
appeals.
Section 2.
Advance Payment of Expenses . To the fullest extent
permitted by the DGCL, expenses (including attorneys’ fees)
incurred by Indemnitee in appearing at, participating in or
defending any action, suit or proceeding or in connection with an
enforcement action as contemplated by Section 3(e), shall be paid
by the Company in advance of the final disposition of such action,
suit or proceeding within 30 days after receipt by the Company of a
statement or statements from Indemnitee requesting such advance
or
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advances from
time to time. The Indemnitee hereby undertakes to repay any amounts
advanced (without interest) to the extent that it is
ultimately determined that Indemnitee is
not entitled under this Agreement to be
indemnified by the Company in respect thereof. No other form of
undertaking shall be required of Indemnitee other than the
execution of this Agreement. This Section 2 shall be subject to
Section 3(b) and shall not apply to any claim made by Indemnitee
for which indemnity is excluded pursuant to Section 6.
Section 3.
Procedure for Indemnification: Notification and Defense of
Claim .
(a) Promptly after
receipt by Indemnitee of notice of the commencement of any action,
suit or proceeding, Indemnitee shall, if a claim in respect thereof
is to be made against the Company hereunder, notify the Company in
writing of the commencement thereof. The failure to promptly notify
the Company of the commencement of the action, suit or proceeding,
or of Indemnitee’s request for indemnification, will not
relieve the Company from any liability that it may have to
Indemnitee hereunder, except to the extent the Company is actually
and materially prejudiced in its defense of such action, suit or
proceeding as a result of such failure. To obtain indemnification
under this Agreement, Indemnitee shall submit to the Company a
written request therefor including such documentation and
information as is reasonably available to Indemnitee and is
reasonably necessary to enable the Company to determine whether and
to what extent Indemnitee is entitled to
indemnification.
(b) With respect to any
action, suit or proceeding of which the Company is so notified as
provided in this Agreement, the Company shall, subject to the last
two sentences of this paragraph, be entitled to assume the defense
of such action, suit or proceeding, with counsel reasonably
acceptable to Indemnitee, upon the delivery to Indemnitee of
written notice of its election to do so. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of
such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any subsequently incurred fees
of separate counsel engaged by Indemnitee with respect to the same
action, suit or proceeding unless the employment of separate
counsel by Indemnitee has been previously authorized in writing by
the Company. Notwithstanding the foregoing, if Indemnitee, based on
the advice of his or her counsel, shall have reasonably concluded
(with written notice being given to the Company setting forth the
basis for such conclusion) that, in the conduct of any such
defense, there is or is reasonably likely to be a conflict of
interest or position between the Company and Indemnitee with
respect to a significant issue, then the Company will not be
entitled, without the written consent of Indemnitee, to assume such
defense. In addition, the Company will not be entitled, without the
written consent of Indemnitee, to assume the defense of any claim
brought by or in the right of the Company.
(c) To the fullest
extent permitted by the DGCL, the Company’s assumption of the
defense of an action, suit or proceeding in accordance with
paragraph (b) above will constitute an irrevocable acknowledgement
by the Company that any loss and liability suffered by Indemnitee
and expenses (including attorneys’ fees), judgments, fines
and amounts paid in settlement by or for the account of Indemnitee
incurred in connection therewith are indemnifiable by the Company
under Section 1 of this Agreement.
(d) The determination
whether to grant Indemnitee’s indemnification request shall
be made promptly and in any event within 30 days following the
Company’s receipt of a request for indemnification in
accordance with Section 3(a). If the Company determines that
Indemnitee is entitled to such indemnification or, as contemplated
by paragraph (c) above, the Company has acknowledged such
entitlement, the Company will make payment to Indemnitee of the
indemnifiable amount within such 30 day period. If the Company is
not deemed to have so acknowledged such entitlement or the
Company’s determination of whether to grant
Indemnitee’s indemnification request shall not have been made
within such 30 day period, the requisite determination of
entitlement to indemnification shall, subject to Section 6,
nonetheless 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 request for indemnification, or
(ii) a prohibition of such indemnification under the
DGCL.
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(e) In the event
that (i) the Company determines in accordance with this Section 3
that Indemnitee is not entitled to indemnification under this
Agreement, (ii) the Company denies a request for indemnification,
in whole or in part, or fails to respond or make a determination of
entitlement to indemnification within 30 days following receipt of
a request for indemnification as described above, (iii) payment of
indemnification is not made within such 30 day period, (iv)
advancement of expenses is not timely made in accordance with
Section 2, or (v) the Company or any other person takes or
threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Indemnitee the
benefits provided or intended to be provided to Indemnitee
hereunder, Indemnitee shall be entitled to an adjudication in any
court of competent jurisdiction of his or her entitlement to such
indemnification or advancement of expenses. Indemnitee’s
expenses (including attorneys’ fees) incurred in connection
with successfully establishing Indemnitee’s right to
indemnification or advancement of expenses, in whole or in part, in
any such proceeding or otherwise shall also be indemnified by the
Company to the fullest extent permitted by the DGCL.
(f) Indemnitee
shall be presumed to be entitled to indemnification and advancement
of expenses. under this Agreement upon submission of a request
therefor in accordance with Section 2 or Section 3 of this
Agreement, as the case may be. The Company shall have the burden of
proof in overcoming such presumption, and such presumption shall be
used as a basis for a determination of entitlement to
indemnification and advancement of expenses unless the Company
overcomes such presumption by clear and convincing
evidence.
Section 4.
Insurance and Subrogation .
(a) The Company
shall use its reasonable best efforts to purchase and maintain a
policy or policies of insurance with reputable insurance companies
with A.M. Best ratings of “A” or better, providing
Indemnitee with coverage for any liability asserted against, and
incurred by, Indemnitee or on Indemnitee’s behalf by reason
of the fact that Indemnitee is or was or has agreed to serve as a
director, officer, employee or agent of the Company, or while
serving as a director or officer of the Company, is or was serving
or has agreed to serve at the request of the Company as a director,
officer, employee or agent (which, for purposes hereof, shall
include a trustee, fiduciary, partner or manager or similar
capacity) of another corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other
enterprise, or arising out of Indemnitee’s status as such,
whether or not the Company would have the power to indemnify
Indemnitee against such liability under the provisions of this
Agreement. Such insurance policies shall have coverage terms and
policy limits at least as favorable to Indemnitee as the insurance
coverage provided to any other director or officer of the Company.
If the Company has such insurance in effect at the time the Company
receives from Indemnitee any notice of the commencement of an
action, suit or proceeding, the Company shall give prompt notice of
the commencement of such action, suit or proceeding to the insurers
in accordance with the procedures set forth in the policy. The
Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, on behalf of Indemnitee, all amounts
payable as a result of such proceeding in accordance with the terms
of such policy.
(b) Subject to Section
9(b), in the event of any payment by the Company under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee with respect
to any insurance policy. Indemnitee 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 in accordance with
the terms of such insurance policy. The Company shall pay or
reimburse all expenses actually and reasonably incurred by
Indemnitee in connection with such subrogation.
(c) Subject to
Section 9(b), the Company shall not be liable under this Agreement
to make any payment of amounts otherwise indemnifiable hereunder
(including, but not limited to, judgments, fines and amounts paid
in settlement, and ERISA excise taxes or penalties) if and to the
extent that
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Indemnitee has
otherwise actually received such payment under this Agreement or
any insurance policy, contract, agreement or otherwise.
Section 5.
Certain Definitions . For purposes of
this Agreement, the following definitions shall apply:
(a) The term
“ action, suit or proceeding ” shall be
broadly construed and shall include, without limitation, the
investigation, preparation, prosecution, defense, settlement,
arbitration and appeal of, and the giving of testimony in, any
threatened, pending or completed claim, action, suit, arbitration,
alternative dispute mechanism or proceeding, whether civil,
criminal, administrative or investigative.
(b) The term “
by reason of the fact that Indemnitee is or was or has agreed
to serve as a director, officer, employee or agent of the Company,
or while serving as a director or officer of the Company, is or was
serving or has agreed to serve at the request of the Company as a
director, officer. employee or agent (which, for purposes hereof,
shall include a trustee, partner or manager or similar capacity) of
another corporation, limited liability company, partnership, joint
venture, trust, employee benefit plan or other enterprise
” shall be broadly construed and shall include, without
limitation, any actual or alleged act or omission to
act.
(c) The term
“ expenses ” shall be broadly construed
and shall include, without limitation, all direct and indirect
costs of any type or nature whatsoever (including, without
limitation, all attorneys’ fees and related disbursements,
appeal bonds, other out of pocket costs and reasonable compensation
for time spent by Indemnitee for which Indemnitee is not otherwise
compensated by the Company or any third party), actually and
reasonably incurred by Indemnitee in connection with either the
investigation, defense or appeal of an action, suit or proceeding
or establishing or enforcing a right to indemnification under this
Agreement or otherwise incurred in connection with a claim that is
indemnifiable hereunder.
(d) The term “.
judgments, fines and amounts paid in settlement
” shall be broadly construed and shall include, without
limitation, all direct and indirect payments of any type or nature
whatsoever, as well as any penalties or excise taxes assessed on a
person with respect to an employee benefit plan).
Section 6.
Limitation on Indemnification . Notwithstanding any
other provision herein to the contrary, the Company shall not be
obligated pursuant to this Agreement:
(a) Claims
Initiated by Indemnitee . Prior to a change of control, to
indemnify or advance expenses to Indemnitee with respect to an
action, suit or proceeding (or part thereof), however denominated,
initiated by Indemnitee, other than (i) an action, suit or
proceeding brought
