INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement, dated as of November 13, 2006, is
made by and between COLLEGIATE PACIFIC INC., a Delaware corporation
(the “ Company ”), and Terrence M. Babilla
, a director, officer or key employee of the Company or one
of the Company’s Subsidiaries (the “ Indemnitee
”).
The following
recitals are true and constitute the basis for this Indemnification
Agreement:
A. The Company
is aware that competent and experienced persons are increasingly
reluctant to serve as representatives of corporations unless they
are protected by comprehensive liability insurance and/or
indemnification, due to increased exposure to litigation costs and
risks resulting from their service to such corporations, and due to
the fact that the exposure frequently bears no reasonable
relationship to the compensation of such
representatives;
B. Plaintiffs
often seek damages in such large amounts and the costs of
litigation may be so substantial (whether or not the case is
meritorious), that the defense and/or settlement of such litigation
is often beyond the personal resources of
representatives;
C. The Company
believes that it is unfair for its representatives and the
representatives of its Subsidiaries (as defined below) to assume
the risk of large judgments and Expenses (as defined below) that
may be incurred in cases in which the representative received no
personal profit and in cases where the director or officer was not
culpable;
D. The Company
recognizes that the issues in controversy in litigation against a
representative of a corporation such as the Company or a Subsidiary
of the Company are often related to the knowledge, motives and
intent of such representatives, that he or she is usually the only
witness with knowledge of the essential facts and exculpating
circumstances regarding such matters and that the long period of
time which usually elapses before the trial or other disposition of
such litigation often extends beyond the time that the
representative can reasonably recall such matters; and may extend
beyond the normal time for retirement for such director or officer
with the result that he or she, after retirement or in the event of
his or her death, his or her spouse, heirs, executors or
administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage
such a representatives from serving in that position;
E. Based upon
their experience as business managers, the Board of Directors of
the Company (the “ Board ”) has concluded that,
to retain and attract talented and experienced individuals to serve
as representatives of the Company and its Subsidiaries and to
encourage such individuals to take the business risks necessary for
the success of the Company and its Subsidiaries, it is necessary
for the Company to contractually indemnify its representatives and
the representatives of its Subsidiaries, and to assume for itself
maximum liability for Expenses and damages in connection with
claims against such representatives in connection with their
service to the Company and its Subsidiaries, and has further
concluded that the failure to provide such contractual
indemnification could result in great harm to the Company and its
Subsidiaries and the Company’s stockholders;
F.
Section 145 of the General Corporation Law of Delaware, under
which the Company is organized (“ Section 145
”), empowers the Company to indemnify by agreement its
officers, directors, employees and agents, and persons who serve,
at the request of the Company, as directors, officers, employees or
agents of other corporations or enterprises, and expressly provides
that the indemnification provided by Section 145 is not
exclusive;
G. The Company
desires and has requested the Indemnitee to serve or continue to
serve as a representatives of the Company and/or the Subsidiaries
of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or
the Subsidiaries of the Company; and
H. The
Indemnitee is willing to serve, or to continue to serve, the
Company and/or the Subsidiaries of the Company; provided that he or
she is furnished the indemnity provided for herein.
NOW, THEREFORE,
the parties hereto, intending to be legally bound, hereby agree as
follows:
(a)
Affiliate . For purposes of this Indemnification Agreement,
“ Affiliate ” of the Company means any
corporation, partnership, joint venture, trust or other enterprise
in respect of which the Indemnitee is or was or will be serving as
a director, officer, advisory director, trustee, manager, member,
partner, employee, agent, attorney, consultant, member of the
entity’s governing body (whether constituted as a board of
directors, board of managers, general partner or otherwise),
fiduciary, or in any other similar capacity at the direct or
indirect request of the Company, and including, but not limited to,
any employee benefit plan of the Company or a Subsidiary or
Affiliate of the Company.
(b)
Agent . For the purposes of this Indemnification Agreement,
“ Agent ” of the Company means any person who is
or was a director, officer, employee, attorney or other agent of
the Company or a Subsidiary of the Company; or is or was serving at
the request of, for the convenience of, or to represent the
interest of the Company or a Subsidiary of the Company as a
director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise;
or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the
Company or a Subsidiary of the Company, or was a director, officer,
employee or agent of another enterprise at the request of, for the
convenience of, or to represent the interests of such predecessor
corporation.
(c)
Expenses . For purposes of this Indemnification Agreement,
“ Expenses ” means all direct and indirect costs
of any type or nature whatsoever (including, without limitation,
all attorneys’ fees and related disbursements, and other
out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense or
appeal of, or being a witness in, a Proceeding (as defined below)
or establishing or enforcing a right to indemnification under this
Indemnification Agreement, Section 145 or otherwise; provided,
however, that Expenses shall not include any judgments, fines,
ERISA excise taxes or penalties or amounts paid in settlement of a
Proceeding.
(d)
Other Liabilities . For purposes of this Indemnification
Agreement, “ Other Liabilities ” means any and
all liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA (or other benefit plan related) excise
taxes or penalties, and amounts paid in settlement and all
interest, taxes, assessments and other charges paid or payable in
connection with or in respect of any
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Expenses or any
such judgments, fines, ERISA (or other benefit plan related) excise
taxes or penalties, or amounts paid in settlement).
(e)
Proceeding . For the purposes of this Indemnification
Agreement, “ Proceeding ” means any threatened,
pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type
whatsoever, including any arbitration or other alternative dispute
resolution and including any appeal of any of the
foregoing.
(f)
Subsidiary . For purposes of this Indemnification Agreement,
“ Subsidiary ” means any corporation of which
more than 50% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or
more other subsidiaries, or by one or more other
subsidiaries.
2.
Agreement to Serve . The Indemnitee agrees to serve and/or
continue to serve as an Agent of the Company, at the will of the
Company (or under separate agreement, if such agreement exists), in
the capacity the Indemnitee currently serves as an Agent of the
Company, so long as he or she is duly appointed or elected, and is
and remains qualified to serve in such capacity, in accordance with
the applicable provisions of the Bylaws of the Company or any
Subsidiary of the Company and until the resignation, removal,
termination, permanent disability or death of the Indemnitee;
provided, however, that nothing contained in this Indemnification
Agreement is intended to create any right to continued employment
or other form of service by the Indemnitee.
3.
Mandatory Indemnification . The Company shall indemnify the
Indemnitee to the fullest extent not prohibited by the provisions
of the Company’s Bylaws and the Delaware General Corporation
Law (“ DGCL ”), as the same may be amended from
time to time (but only to the extent that such amendment permits
the Company to provide broader indemnification rights than the
Bylaws or the DGCL permitted prior to the adoption of such
amendment) as follows, subject to the limitations set forth in
Section 10 below:
(a)
Third Party Actions . If the Indemnitee is a person who was
or is a party to, or witness in, or is threatened to be made a
party to, or witness in, any Proceeding (other than an action by or
in the right of the Company, which actions are addressed in Section
3(b) below) by reason of the fact that he or she is or was an Agent
of the Company, or by reason of anything done or not done by the
Indemnitee in any such capacity, against any and all Expenses and
Other Liabilities actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense,
settlement or appeal of such Proceeding if he or she acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to
any criminal action or Proceeding, had no reasonable cause to
believe his or her conduct was unlawful; and
(b)
Derivative Actions . If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any Proceeding
by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he or she is or was an Agent of
the Company, or by reason of anything done or not done by the
Indemnitee in any such capacity, against any amounts paid in
settlement of any such Proceeding, to the maximum extent permitted
by law, and all Expenses actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense,
settlement, or appeal of such Proceeding if the Indemnitee acted in
good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of
any claim, issue or matter as to which such person shall have been
finally adjudged to be liable to the Company, unless and only to
the extent that the Court of Chancery of the State of Delaware
(“ Court of Chancery ”) or the court in which
such Proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances
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of the case,
such person is fairly and reasonably entitled to indemnity for such
amounts which the Court of Chancery or such other court shall deem
proper.
4.
Determination of “Good Faith” . For purposes of
any determination of “good faith” hereunder, the
Indemnitee shall be deemed to have acted in good faith if in taking
such action the Indemnitee relied on the records or books of
account of the Company or a Subsidiary or Affiliate of the Company,
including financial statements, or on information, opinions,
reports or statements provided to the Indemnitee by the officers or
other employees of the Company or a Subsidiary or Affiliate of the
Company in the course of their duties, or on the advice of legal
counsel for the Company or a Subsidiary or Affiliate of the
Company, or on information or records given or reports made to the
Company or a Subsidiary or Affiliate of the Company by an
independent certified public accountant or by an appraiser or other
expert selected by the Company or a Subsidiary or Affiliate of the
Company, or by any other person (including legal counsel,
accountants and financial advisors) as to matters the Indemnitee
reasonably believes are within such other person’s
professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company. In connection with
any determination as to whether the Indemnitee is entitled to be
indemnified hereunder, the Reviewing Party (as defined below) or
court shall presume that the Indemnitee has satisfied the
applicable standard of conduct and shall be entitled to
indemnification, and the burden of proof shall be on the Company to
establish that the Indemnitee is not so entitled. The provisions of
this Section 4 shall not be deemed to be exclusive or to limit
in any way the other circumstances in which the Indemnitee may be
deemed to have met the applicable standard of conduct set forth in
this Indemnification Agreement. In addition, the knowledge and/or
actions, or failures to act, of any other person serving the
Company or a Subsidiary or Affiliate of the Company as an
indemnifiable person shall not be imputed to the Indemnitee for
purposes of determining the right to indemnification
hereunder.
5.
Exception for Amounts Covered by Insurance and Other Sources
. Notwithstanding the foregoing, the Company shall not be obligated
to indemnify the Indemnitee for Expenses or Other Liabilities of
any type whatsoever (including, but not limited to judgments,
fines, ERISA excise taxes or penalties and amounts paid in
settlement) to the extent such have been paid directly to the
Indemnitee by any directors and officers insurance (
“D&O Insurance" ) maintained by the Company or
other indemnity arrangements with third parties.
6.
Partial Indemnification and Contribution .
(a)
Partial Indemnification . If the Indemnitee is entitled
under any provision of this Indemnification Agreement to
indemnification by the Company for some or a portion of any
Expenses or Other Liabilities, but not entitled, however, to
indemnification for all of the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for such total amount
except as to the portion thereof to which the Indemnitee is not
entitled.
(b)
Contribution . If the Indemnitee is not entitled to the
indemnification provided in Section 3 above for any reason
other than the statutory limitations set forth in the DGCL, then in
respect of any threatened, pending or completed Proceeding in which
the Company is jointly liable with the Indemnitee (or would be
adjoined in such Proceeding), the Company shall contribute to the
amount of Expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by the Indemnitee in such proportion
as is appropriate to reflect (i) 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 Proceeding), on the one
hand, and the Indemnitee, on the other hand, from the transaction
from which such Proceeding arose and (ii) 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 Proceeding),
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on the one
hand, and of the Indemnitee, on the other hand, in connection with
the events which resulted in such Expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable
considerations. The relative fault on 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
Proceeding), on the one hand, and of the Indemnitee, on the other
hand, shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent th
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