INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (the “Agreement”), dated as
of
, 200 is made and effective
as of the date set forth in Section 14 of the Agreement, by
and between Sport Chalet, Inc., a Delaware corporation (the
“Corporation”), and
, a director and/or officer of the Corporation (the
“Indemnitee”).
A.
The Corporation and the Indemnitee recognize that the present state
of the law relating to director and officer liability is too
uncertain to provide the Corporation’s directors and officers
with adequate and reliable advance knowledge or guidance with
respect to the legal risks and potential liabilities to which they
may become personally exposed as a result of performing their
duties for the Corporation;
B.
The Corporation and the Indemnitee are aware of the substantial
growth in the number of lawsuits filed against corporate directors
and officers in connection with their activities in such capacities
and by reason of their status as such;
C.
The Corporation and the Indemnitee recognize that the cost of
defending against such lawsuits, whether or not meritorious, is
typically beyond the financial resources of most directors and
officers of the Corporation;
D.
The Corporation and the Indemnitee recognize that the legal risks
and potential liabilities, and the threat thereof, associated with
proceedings filed against the directors and officers of the
Corporation bear no reasonable relationship to the amount of
compensation received by the Corporation’s directors and
officers;
E.
The Corporation, after reasonable investigation prior to the date
hereof, has determined that the liability insurance coverage
available to the Corporation as of the date hereof is inadequate,
unreasonably expensive or both. The Corporation believes,
therefore, that the interest of the Corporation’s
stockholders would be best served by a combination of (i) such
insurance as the Corporation may elect to obtain as provided in
Section 8 below and (ii) a contract with its directors
and officers, including the Indemnitee, to indemnify them to the
fullest extent permitted by law (as in effect on the date hereof,
or, to the extent any amendment may expand such permitted
indemnification, as hereafter in effect) against personal liability
for actions taken in the performance of their duties to the
Corporation;
F.
The Corporation’s Certificate of Incorporation and Bylaws
authorize the indemnification of the directors and officers of the
Corporation, subject to the limitations set forth in
Section 145 of the Delaware General Corporation Law (the
“DGCL”);
G.
The Board of Directors of the Corporation has concluded that, to
retain and attract talented and experienced individuals to serve as
directors and officers of the Corporation and to encourage such
individuals to take the business risks necessary for the
1
success of the
Corporation, it is necessary for the Corporation to contractually
indemnify its directors and officers, and to assume for itself
liability for expenses and damages in connection with certain
claims against such directors and officers in connection with their
service to the Corporation, and has further concluded that the
failure to provide such contractual indemnification could result in
great harm to the Corporation and its stockholders;
H.
The Corporation desires and has requested the Indemnitee to serve
or continue to serve as a director or officer of the Corporation,
free from undue concern for the risks and potential liabilities
associated with such services to the Corporation; and
I.
The Indemnitee is willing to serve, or continue to serve, the
Corporation, provided, and on the expressed condition, that he or
she is furnished with the indemnification provided for
herein.
NOW,
THEREFORE, the Corporation and Indemnitee agree as
follows:
a. “Expenses”
means, for the purposes of this Agreement, all direct and indirect
costs of any type or nature whatsoever (including, without
limitation, any fees and disbursements of Indemnitee’s
counsel, accountants and other experts and other out-of-pocket
costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, preparation, defense or appeal
of a Proceeding; provided, however, that Expenses shall not include
judgments, fines, penalties or amounts paid in settlement of a
Proceeding.
b. “Other
enterprise” includes, for the purposes of this Agreement,
employee benefit plans; references to “fines” includes
any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to “serving at the request of
the Corporation” includes any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or its
beneficiaries; and if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan,
Indemnitee shall be deemed to have acted in a manner “not
opposed to the best interests of the Corporation” as referred
to in this Agreement.
c.
“Proceeding” means, for the purposes of this Agreement,
any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including
an action brought by or in the right of the Corporation) in which
Indemnitee may be or may have been involved as a party or
otherwise, by reason of the fact that Indemnitee is or was a
director or officer of the Corporation, by reason of any action
taken by Indemnitee or of any inaction on Indemnitee’s part
while acting as such director or officer or by reason of the fact
that Indemnitee is or was serving at the request of the Corporation
as a director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other
enterprise, or was a director and/or officer of the foreign or
domestic corporation which was a predecessor corporation to the
Corporation or of another enterprise at the request of such
predecessor corporation, whether or not Indemnitee is serving in
such
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capacity at the time any
liability or expense is incurred for which indemnification or
reimbursement can be provided under this Agreement.
2.
Agreement to Serve . In consideration of the protection
afforded by this Agreement, if Indemnitee is a director of the
Corporation, Indemnitee agrees to serve at least for the balance of
the current term as a director and not to resign voluntarily during
such period without the written consent of a majority of the Board
of Directors. If Indemnitee is an officer of the Corporation not
serving under an employment contract, Indemnitee agrees to serve in
such capacity at least for the balance of the current fiscal year
of the Corporation and not to resign voluntarily during such period
without the written consent of a majority of the Board of
Directors. Following the applicable period set forth above,
Indemnitee agrees to serve or continue to serve in such capacity as
a director or officer of the Corporation to the best of his or her
abilities at the will of the Corporation or under separate
contract, if such contract exists, for so long as Indemnitee is
duly elected or appointed and qualified or until such time as
Indemnitee tenders his or her resignation in writing. Nothing
contained in this Agreement is intended to create in Indemnitee any
right to continued employment.
a.
Third Party Proceedings . The Corporation shall, except to
the extent prohibited by the DGCL or any other applicable law,
rule, regulation or order, indemnify Indemnitee against Expenses,
judgments, fines, penalties or amounts paid in settlement (if the
settlement is approved in advance by the Corporation) actually and
reasonably incurred by Indemnitee in connection with a Proceeding
(other than a Proceeding by or in the right of the Corporation) if
Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee’s
conduct was unlawful. The termination of any Proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a
manner which Indemnitee reasonably believed to be in or not opposed
to the best interests of the Corporation, or, with respect to any
criminal Proceeding, had no reasonable cause to believe that
Indemnitee’s conduct was unlawful.
b.
Proceedings by or in the Right of the Corporation . To the
fullest extent permitted by law, the Corporation shall indemnify
Indemnitee against Expenses and amounts paid in settlement actually
and reasonably incurred by Indemnitee in connection with a
Proceeding by or in the right of the Corporation to procure a
judgment in its favor if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Corporation. Notwithstanding the
foregoing, no indemnification shall be made in respect of any
claim, issue or matter as to which the Indemnitee shall have been
adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery or the court in which the
proceeding is or was pending shall determine upon application that,
in view of all the circumstances of the case, the Indemnitee is
fairly and reasonably entitled to indemnity for expenses and then
only to the extent that the court shall determine.
c.
Scope . Notwithstanding any other provision of this
Ag
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