INDEMNIFICATION
AGREEMENT
This Indemnification Agreement, dated as of
[__________] , 2008, is made by and between SPORT SUPPLY
GROUP, INC., a Delaware corporation (the “ Company
”), and [___________] , 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.
2
(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 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
3
(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 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.
4
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), 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
correc
|
