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Exhibit 10.11
CAMELOT MUSIC HOLDINGS, INC.
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INDEMNITY AGREEMENT
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THIS AGREEMENT is made as of the ____ day of ________, 1998,
by and between CAMELOT MUSIC HOLDINGS, INC., a Delaware corporation (the
"Corporation"), and ____________________ ("Indemnitee"), a Director of the
Corporation.
WHEREAS, it is essential to the Corporation to retain and
attract as Directors and/or Officers the most capable persons available; and
WHEREAS, the substantial increase in corporate litigation
subjects directors and officers to expensive litigation risks at the same time
that the availability of directors' and officers' liability insurance has been
severely limited; and
WHEREAS, it is now the express policy of the Corporation to
indemnify its Directors and/or Officers so as to provide them with the maximum
possible protection permitted by law; and
WHEREAS, in addition, because the statutory indemnification
provisions of the Delaware General Corporation Law expressly provide that they
are non-exclusive, it is the policy of the Corporation to indemnify directors
and officers of the Corporation who have entered into settlements of derivative
suits provided they have not breached the applicable statutory standard of
conduct; and
WHEREAS, Indemnitee does not regard the protection available
under the Corporation's Certificate of Incorporation and insurance, if any, as
adequate in the present circumstances, and considers it necessary and desirable
to his or her service as a Director and/or Officer to have adequate protection,
and the Corporation desires Indemnitee to serve in such capacity; and
WHEREAS, the Delaware General Corporation Law provides that
indemnification of directors and officers of a corporation may be authorized by
agreement, and thereby contemplates that contracts of this nature may be entered
into between the Company and Indemnitee with respect to indemnification of
Indemnitee as a Director and/or Officer of the Corporation.
NOW, THEREFORE, the Corporation and Indemnitee do hereby agree
as follows:
1. AGREEMENT TO SERVE. Indemnitee agrees to serve or continue
to serve as a Director of the Corporation for so long as he or she is duly
elected or appointed or until such time as he or she tenders his or her
resignation in writing.
2. DEFINITIONS. As used in this Agreement:
(a) The term "Proceeding" shall include any
threatened, pending, or completed action, suit or proceeding, whether
brought by or
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in the right of the Corporation or otherwise and whether of a civil,
criminal, administrative or investigative nature, 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 and/or Officer of the
Corporation, by reason of any action taken by Indemnitee or of any
inaction on his or her part while acting as such a Director and/or
Officer, or by reason of the fact that he or she is or was serving at
the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise; in each case whether or not he or
she is acting or serving in any such capacity at the time any liability
or expense is incurred for which indemnification or reimbursement can
be provided under this Agreement.
(b) The term "Expenses" shall include, without
limitation, expenses of investigations, judicial or administrative
proceedings or appeals, attorneys' fees and disbursements and any
expenses of establishing a right to indemnification under Paragraph 8
of this Agreement, but shall not include the amount of judgments, fines
or penalties against or settlements paid by Indemnitee.
(c) References to "other enterprise" shall include,
without limitation, employee benefit plans; references to "fines" shall
include, without limitation, any excise tax assessed with respect to
any employee benefit plan; references to "serving at the request of the
Corporation" shall include, without limitation, any service as a
Director and/or Officer of the Corporation which imposes duties on, or
involves services by, such Director and/or Officer with respect to an
employee benefit plan, its participants or beneficiaries; and a person
who acted in good faith and in a manner he or she reasonably believed
to be in the best interests of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in
this Agreement.
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Corporation shall
indemnify Indemnitee in accordance with the provisions of this Paragraph 3 if
Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any Proceeding (other than a Proceeding by or in the right of the
Corporation to procure a judgment in its favor) by reason of the fact that
Indemnitee is or was a Director and/or Officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against all Expenses, judgments, settlements, fines
and penalties, actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of such Proceeding, but only if Indemnitee acted in
good faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe that his or her conduct was
unlawful. The termination of any such Proceeding by judgment, order of court,
settlement, conviction or upon a plea of nolo contendere, or its
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equivalent, shall not, of itself, create a presumption that Indemnitee did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, and with respect to any
criminal proceeding, that such person had reasonable cause to believe that his
or her conduct was unlawful.
4. INDEMNITY FOR EXPENSES IN PROCEEDINGS BY OR IN THE RIGHT OF
THE CORPORATION. The Corporation shall indemnify Indemnitee in accordance with
the provisions of this Paragraph 4 if Indemnitee is a party to or threatened to
be made a party to any Proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a Director and/or Officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee,
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against all Expenses actually and reasonably incurred by Indemnitee
in connection with the defense or settlement of such Proceeding, but only if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the Corporation, except that no
indemnification for Expenses shall be made under this Paragraph 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been adjudged to be
liable to the Corporation, unless and only to the extent that any 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,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper.
5. INDEMNITY FOR AMOUNTS PAID IN SETTLEMENT IN PROCEEDINGS BY
OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify Indemnitee
in accordance with the provisions of this Paragraph 5 if Indemnitee is a party
to or threatened to be made a party to any Proceeding by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a Director and/or Officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise, against all amounts actually and reasonably paid in
settlement by Indemnitee in connection with any such Proceeding, but only if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the Corporation.
6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
7. ADVANCES OF EXPENSES. Any Expenses incurred by or on behalf
of Indemnitee pursuant to Paragraphs 3 and 4 in any Proceeding shall be paid by
the Corporation in advance upon the written request of Indemnitee if Indemnitee
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shall undertake to repay such amount to the extent that it is ultimately
determined that Indemnitee is not entitled to indemnification hereunder.
8. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION;
PROCEDURE UPON APPLICATION. Any indemnification under Paragraphs 3, 4 and 5
shall be made no later than thirty (30) days after receipt by the Corporation of
the written request of Indemnitee, unless a determination is made within said
thirty-day period by (a) the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such Proceeding, or (b)
independent legal counsel, agreed to by the Corporation, in a written opinion
(which counsel shall be appointed if such a quorum is not obtainable), that the
Indemnitee has not met the relevant standards for indemnification set forth in
Paragraphs 3, 4 or 5.
The right to indemnification or advances as provided by this
Agreement shall be enforceable by Indemnitee in any court of competent
jurisdiction. There shall exist in such action a rebuttable presumption that
Indemnitee has met the applicable standard(s) of conduct and is therefore
entitled to indemnification pursuant to this Agreement, and the burden of
proving that the relevant standards have not been met by Indemnitee shall be on
the Corporation. Neither the failure of the Corporation (including its Board of
Directors or independent legal counsel) prior to the commencement of such action
to have made a determination that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation (including its Board of Directors or
independent legal counsel) that Indemnitee has not met such applicable standard
of conduct, shall (i) constitute a defense to the action, (ii) create a
presumption that Indemnitee has not met the applicable standard of conduct, or
(iii) otherwise alter the presumption in favor of Indemnitee referred to in the
preceding sentence. Indemnitee's expenses reasonably incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation.
9. ALLOWANCE FOR COMPLIANCE WITH SEC REQUIREMENTS. Indemnitee
acknowledges that the Securities and Exchange Commission ("SEC") has expressed
the opinion that indemnification of directors and officers from liabilities
under the Securities Act of 1933 ("Act") is against public policy as expressed
in the Act and, is therefore, unenforceable. Indemnitee hereby agrees that it
will not be a breach of this Agreement for the Corporation to undertake with the
Commission in connection with the registration for sale of any stock or other
securities of the Corporation from time to time that, in the event a claim for
indemnification against such liabilities (other than the payment by the
Corporation of expenses incurred or paid by a director or officer of the
Corporation in the successful defense of any action, suit or proceeding) is
asserted in connection with such stock or other securities being registered, the
Corporation will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of competent jurisdiction on
the question of whether or not such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
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of such issue. Indemnitee further agrees that such submission to a court of
competent jurisdiction shall not be a breach of this Agreement.
10. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The
indemnification provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may be entitled under the Certificate of
Incorporation or the By-Laws of the Corporation, any agreement, any vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Delaware, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
The indemnification under this Agreement shall continue as to
Indemnitee even though he or she may have ceased to be a Director and/or Officer
and shall inure to the benefit of the heirs, executors and personal
representatives of Indemnitee.
11. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Corporation for some
claims, issues or matters, but not as to other claims, issues or matters, or for
some or a portion of the Expenses, judgments, fines or penalties actually and
reasonably incurred by Indemnitee or amounts actually and reasonably paid in
settlement by Indemnitee in the investigation, defense, appeal or settlement of
any Proceeding, but not for the total amount thereof, the Corporation shall
nevertheless indemnify Indemnitee for the portion of such claims, issues or
matters or Expenses, judgments, fines, penalties or amounts paid in settlement
to which Indemnitee is entitled.
12. REIMBURSEMENT TO CORPORATION BY INDEMNITEE; LIMITATION ON
AMOUNTS PAID BY CORPORATION. To the extent Indemnitee has been indemnified by
the Corporation hereunder and later receives payments from any insurance carrier
covering the same Expenses, judgments, fines, penalties or amounts paid in
settlement so indemnified by the Corporation hereunder, Indemnitee shall
immediately reimburse the Corporation hereunder for all such amounts received
from the insurer.
Notwithstanding anything contained herein to the contrary,
Indemnitee shall not be entitled to recover amounts under this Agreement which,
when added to the amount of indemnification payments made to, or on behalf of,
Indemnitee, under the Certificate of Incorporation or By-Laws of the
Corporation, in the aggregate exceed the Expenses, judgments, fines, penalties
and amounts paid in settlement actually and reasonably incurred by Indemnitee
("Excess Amounts"). To the extent the Corporation has paid Excess Amounts to
Indemnitee, Indemnitee shall be obligated to immediately reimburse the
Corporation for such Excess Amounts.
13. CONTINUATION OF RIGHTS AND OBLIGATIONS. All rights and
obligations of the Corporation and Indemnitee hereunder shall continue in full
force and effect despite the subsequent amendment or modification of the
Corporation's Certificate of Incorporation or By-Laws, as such are in effect on
the date hereof, and such rights and obligations shall not be affected by any
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such amendment or modification, any resolution of directors or stockholders of
the Corporation, or by any other corporate action which conflicts with or
purports to amend, modify, limit or eliminate any of the rights or obligations
of the Corporation and/or Indemnitee hereunder.
14. AMENDMENT AND MODIFICATION. This Agreement may only be
amended, modified or supplemented by the written agreement of the Corporation
and Indemnitee.
15. ASSIGNMENT. This Agreement shall not be assigned by the
Corporation or Indemnitee without the prior written consent of the other party
thereto, except that the Corporation may freely assign its rights and
obligations under this Agreement to any subsidiary for whom Indemnitee is
serving as a director and/or officer thereof; provided, however, that no
permitted assignment shall release the assignor from its obligations hereunder.
Subject to the foregoing, this Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, including, without limitation, any successor
to the Corporation by way of merger, consolidation and/or sale or disposition of
all or substantially all of the capital stock of the Corporation.
16. SAVING CLAUSE. If this Agreement or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines, penalties and amounts paid in settlement with respect to any Proceeding
to the full extent permitted by any applicable portion of this Agreement that
shall not have been invalidated or by any other applicable law.
17. COUNTERPARTS. This Agreement may be executed in two or
more fully or partially executed counterparts each of which shall be deemed an
original binding the signer thereof against the other signing parties, but all
counterparts together shall constitute one and the same instrument. Executed
signature pages may be removed from counterpart agreements and attached to one
or more fully executed copies of this Agreement.
18. NOTICE. Indemnitee shall, as a condition precedent to his
or her right to be indemnified under this Agreement, give to the Corporation
notice in writing as soon as practicable of any claim made against him for which
indemnity will or could be sought under this Agreement. Notice to the
Corporation shall be directed to the Corporation at its headquarters located at
0000 Xxxxxxx Xxxxxx X.X., Xxxxx Xxxxxx, Xxxx 00000-0000, Attention: Chairman (or
such other address as the Corporation shall designate in writing to Indemnitee).
Notice shall be deemed received three days after the date postmarked if sent by
prepaid mail, properly addressed. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably require within
Indemnitee's power.
19. APPLICABLE LAW. All matters with respect to this
Agreement, including, without limitation, matters of validity, construction,
effect and performance shall be governed by the internal laws of the State of
Delaware
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applicable to contracts made and to be performed therein between the residents
thereof (regardless of the laws that might otherwise be applicable under
principles of conflicts of law).
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be duly executed and signed as of the day and year first above
written.
CAMELOT MUSIC HOLDINGS, INC.
THE "CORPORATION"
By
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Its
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"INDEMNITEE"
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