1
Exhibit 10.1
INDEMNIFICATION AGREEMENT
This Agreement, dated as of _______________ ___, 199__, is by and
between HASTINGS ENTERTAINMENT, INC., a Texas corporation (the "Company"), and
_____________________________ ("Indemnitee").
W I T N E S S E T H :
WHEREAS, the Company desires to have qualified persons serving as
officers of the Company and qualified persons serving as directors on its Board
of Directors who are willing to make decisions that in their judgment are in
the Company's best interest without any undue threat of personal liability;
WHEREAS, the Company's Amended and Restated Articles of Incorporation
("Articles of Incorporation") and the Company's Bylaws ("Bylaws") require
indemnification of each director or officer of the Company in his capacity as a
director or officer and, if serving at the request of the Company as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, in each of those capacities, against any and all liability and
reasonable expense that may be incurred by him in connection with or resulting
from (a) any threatened, pending, or completed action, suit, or proceeding
whether civil, criminal, administrative, arbitrative, or investigative
(collectively, a "Proceeding"), (b) an appeal in such a Proceeding, or (c) any
inquiry or investigation that could lead to such a Proceeding, to the fullest
extent permitted by the Texas Business Corporation Act ("Act"), as the same
exists or may be hereafter amended;
WHEREAS, the Company desires to grant to Indemnitee the maximum
indemnification for any Loss (hereinafter defined) permitted by the Articles of
Incorporation and Bylaws;
WHEREAS, developments with respect to the terms and availability of
directors' and officers' liability insurance and with respect to the
application, amendment, and enforcement of statutory, charter, and bylaw
indemnification provisions generally have raised questions concerning the
adequacy and reliability of the protection afforded to persons intended to be
protected thereunder; and
WHEREAS, in order to resolve such questions and thereby induce
Indemnitee to serve or to continue serving, as an officer or a director of the
Company, the Company has agreed to enter into this Agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's consent to serve or
continuing to serve in the position of director of the Company, the parties
hereto agree as follows:
1. Indemnity of Indemnitee. The Company shall indemnify
Indemnitee in his capacity as director, director nominee, and/or officer of the
Company, as the case may be, and, if serving at the request of the Company as a
director, director nominee, officer, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, trust partnership,
joint venture, sole proprietorship, employee benefit plan, or other enterprise,
in each
2
of those capacities, against any and all loss, liability and reasonable expense
that may be incurred by Indemnitee in connection with or resulting from (a) any
Proceeding, (b) an appeal in such a Proceeding, or (c) any inquiry or
investigation that could lead to such a Proceeding, all to the fullest extent
permitted by Article 2.02-1 of the Act. All indemnity obligations and/or
liabilities of the Company hereunder shall be without limit and without regard
to the cause or causes thereof or the negligence or gross negligence of any
person or persons (expressly including Indemnitee), whether such negligence or
gross negligence of Indemnitee be sole, joint or concurrent, active, or
passive. Expenses shall include, without limitation, damages, judgments,
fines, penalties, settlements and costs, attorneys' fees and disbursements and
costs of attachments or similar bonds, investigations, any excise tax assessed
with respect to any employee benefit plans and any expenses of establishing a
right to indemnification under this Agreement.
2. Continuation of Indemnity. All agreements and obligations of
the Company contained herein shall continue during the period Indemnitee is a
director, director nominee or officer of the Company, shall be retroactive to
the date Indemnitee first became a director, director nominee or officer
covering all periods of service from time to time, and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending, or completed Proceeding, any appeal in a Proceeding, and
any inquiry or investigation that could lead to a Proceeding, by reason of the
fact that Indemnitee was serving, or had consented to serve, in any capacity
referred to herein.
3. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of any claim against Indemnitee or the commencement of any
Proceeding, Indemnitee will, if a claim in respect thereof is to be made
against the Company under this Agreement, notify the Company of the assertion
of any such claim or the commencement thereof; but the omission so to notify
the Company will not relieve it from any liability under this Agreement unless
such delay in notification actually prejudiced the Company (and then only to
the extent the Company was actually prejudiced thereby) and in addition, the
Company shall not be relieved from any liability which it may have to
Indemnitee otherwise than under this Agreement. With respect to any such
Proceeding as to which Indemnitee notifies the Company of the commencement
thereof:
(a) The Company will be entitled to participate therein
at its own expense.
(b) Except as otherwise provided below, to the extent
that it may wish, the Company jointly with any other indemnifying
party similarly notified will be entitled to assume the defense
thereof with counsel satisfactory to Indemnitee, provided that,
notwithstanding the Company's assumption of such defense, Indemnitee
shall have the right to retain separate counsel and the Company shall
pay all reasonable fees and expenses of such counsel and all other
reasonable expenses of Indemnitee in connection with such Proceeding.
The Company shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct
of the defense of such action.
(c) The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of
any action or claim effected without its
-2-
3
written consent. The Company shall not settle any action or claim in
any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent. Neither the Company nor
Indemnitee will unreasonably withhold their consent to any proposed
settlement.
4. Advances of Expenses. Reasonable expenses (other than
judgments, penalties, fines and settlements) incurred by Indemnitee that are
subject to indemnification under this Agreement (and not paid, reimbursed or
advanced by others) shall be paid or reimbursed by the Company in advance of
the final disposition of the Proceeding within 30 days after the Company
receives a written request by Indemnitee accompanied by substantiating
documentation of such expenses, a written affirmation by Indemnitee of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this Agreement, and a written undertaking by or on behalf
of Indemnitee to repay the amount paid or reimbursed if it is ultimately
determined that he has not met those standards or that such reasonable expenses
do not constitute a Loss. The written undertaking described above shall be an
unlimited general obligation of Indemnitee and shall not be secured. Such
undertaking shall be without reference to the financial ability of Indemnitee
to make repayment.
5. Right of Indemnitee to Indemnification Upon Application:
Procedure Upon Application. Upon the written request of Indemnitee to be
indemnified pursuant to this Agreement (other than pursuant to Section 4
hereof), the Company shall cause the Reviewing Party (hereinafter defined) to
determine, within 45 days, whether or not the Indemnitee has met the relevant
standards for indemnification required by this Agreement. The termination of a
Proceeding by judgment, order, settlement, or conviction, or on a plea of nolo
contendere or its equivalent, shall not of itself create a presumption that
Indemnitee did not meet the requirements for indemnification required by this
Agreement. If a determination of indemnification is to be made by Independent
Legal Counsel (hereinafter defined), such Independent Legal Counsel shall
render its written opinion to the Company and Indemnitee as to what extent
Indemnitee will be permitted to be indemnified. The Company shall pay the
reasonable fees of Independent Legal Counsel and indemnify and hold harmless
such Indemnitee against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to the engagement of
Independent Legal Counsel pursuant hereto and the written opinion of such
Independent Legal Counsel.
6. Definitions. The terms defined in this Section 6 shall, for
purposes of this Agreement have the indicated meanings:
(a) "Loss" shall mean any and all judgments, penalties
(including excise and similar taxes), fines, settlements, and
reasonable expense (including attorneys' fees) actually incurred by
Indemnitee, after realization of or giving effect to all insurance,
bonding, indemnification and other payments or recoveries actually
received by or for the benefit of Indemnitee, directly or indirectly.
(b) "Reviewing Party" means, if a Change in Control
(hereinafter defined) has not occurred (or if a Change in Control has
occurred and such Change in Control has been approved by a majority of
the Board of Directors of the Company who were
-3-
4
directors of the Company immediately prior to such Change in Control),
(i) a majority of a quorum of directors of the Company who at the time
of voting upon a determination of indemnification are neither officers
or employees of the Company or members of the immediate family of an
officer or employee of the Company ("Interested Parties") nor parties
to that particular Proceeding to which Indemnitee is seeking
indemnification; or (ii) Independent Legal Counsel selected by a
majority of a quorum of directors who at the time of selecting such
Independent Legal Counsel are neither Interested Parties nor parties
to that particular Proceeding to which Indemnitee is seeking
indemnification, or if such a quorum cannot be obtained, by a majority
vote of a committee of the Board of Directors of the Company
designated to select such Independent Legal Counsel by a majority vote
of all directors of the Company, consisting solely of two or more
directors who at the time of such selection are neither Interested
Parties nor parties in that particular Proceeding to which Indemnitee
is seeking indemnification, or if such a quorum cannot be obtained and
such a committee cannot be established, by a majority vote of all
directors of the Company. "Reviewing Party" means if a Change in
Control has occurred, Independent Legal Counsel selected in the manner
set forth in (ii) above.
(c) "Change in Control" shall mean an event which shall
be deemed to have occurred if: (i) a merger or consolidation of the
Company with or into another corporation occurs in which the Company
shall not be the surviving corporation (for purposes of this
definition, the Company shall not be deemed the surviving corporation
in any such transaction if, as the result thereof, it becomes a
wholly-owned subsidiary of another corporation); (ii) a dissolution of
the Company occurs; (iii) a transfer of all or substantially all of
the assets or shares of stock of the Company in one transaction or a
series of related transactions to one or more other persons or
entities occurs; (iv) if any "person" or "group" as those terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than Excluded Persons,
becomes the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power
of the Company's then outstanding securities; or (v) during any period
of two consecutive years commencing on or after January 1, 1998,
individuals who at the beginning of the period constituted the Board
cease for any reason to constitute at least a majority, unless the
election of each director who was not a director at the beginning of
the period has been approved in advance by directors representing at
least two-thirds (2/3) of the directors then in office who were
directors at the beginning of the period. The term "Excluded Persons"
means Xxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx and any person, entity,
or group under the control of any of them, or a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company.
(d) "Independent Legal Counsel" shall mean an attorney,
selected in accordance with the provisions of Section 6(b) hereof, who
shall not have otherwise performed services for Indemnitee, the
Company, any person that controls the Company or any of the directors
of the Company, within five years preceding the time of such selection
(other than in connection with seeking indemnification under this
Agreement). Independent Legal Counsel shall not be any person who,
under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either
the
-4-
5
Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement, nor shall Independent Legal Counsel be any
person who has been sanctioned or censured for ethical violations of
applicable standards of professional conduct.
7. Enforceability. The right to indemnification or advances as
provided by this Agreement shall be enforceable by Indemnitee in any court of
competent jurisdiction. The burden of proof that indemnification is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors or Independent Legal Counsel) to have made a
determination prior to the commencement of such action that indemnification is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Company (including its Board of
Directors or Independent Legal Counsel) that Indemnitee has not met such an
applicable standard of conduct, shall be a defense to the action or create a
presumption that Indemnitee has not met the applicable standard of conduct.
8. Partial Indemnity; Expenses. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for
some or a portion of the expenses, judgments, fines, and penalties, but not for
the total amount thereof, the Company shall indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any or all Proceedings relating in
whole or in part to an event subject to indemnification hereunder or in defense
of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against expenses incurred for any Loss in
connection with such Proceeding, issue or matter, as the case may be.
9. Repayment of Expenses. Indemnitee shall reimburse the Company
for all reasonable expenses paid by the Company in defending any Proceeding
against Indemnitee in the event and only to the extent that it shall be
ultimately determined that Indemnitee is not entitled to be indemnified by the
Company for such expenses under the provisions of this Agreement.
10. Consideration. The Company expressly confirms and agrees that
it has entered into this Agreement and assumed the obligations imposed on the
Company hereby in order to induce Indemnitee to consent to serve, to serve,
and/or to continue serving as a director or officer, and acknowledges that
Indemnitee is relying upon this Agreement in consenting to serve and serving in
such capacity.
11. Indemnification Hereunder Not Exclusive. The indemnification
and advancement of expenses provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under any
other agreement, vote of shareholders, as a matter of law, or otherwise.
12. Subrogation. If a payment is made under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the right
of recovery of such Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights.
-5-
6
13. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision thereof shall be held to be invalid or unenforceable for any reason
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereto.
14. Notice. Any notice, consent, or other communication to be
given under this Agreement by any party to any other party shall be in writing
and shall be either (a) personally delivered, (b) mailed by registered or
certified mail, postage prepaid with return receipt requested, (c) delivered by
overnight express delivery service or same-day local courier service, or (d)
delivered by telex or facsimile transmission to the address set forth beneath
the signature of the parties below, or at such other address as may be
designated by the parties from time to time in accordance with this Section.
Notices delivered personally, by overnight express delivery service, or by
local courier service shall be deemed given as of actual receipt. Mailed
notices shall be deemed given three business days after mailing. Notices
delivered by telex or facsimile transmission shall be deemed upon receipt by
the sender of the answerback (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).
15. Governing Law: Binding Effect; Amendment and Termination:
Reimbursement.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Texas, without giving effect
to Texas principles of conflicts of laws.
(b) This Agreement shall be binding upon Indemnitee and
upon the Company, its successors, and assigns, and shall inure to the
benefit of Indemnitee, his heirs, executors, administrators, personal
representation, and assigns and to the benefit of the Company, its
successors, and assigns.
(c) No amendment, modification, termination, or
cancellation of this Agreement shall be effective unless in writing
signed by both parties hereto.
(d) If Indemnitee is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is
successful in such action, the Company shall reimburse Indemnitee for
all of Indemnitee's reasonable fees and expenses in bringing and
pursuing such action.
-6-
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
THE COMPANY:
HASTINGS ENTERTAINMENT, INC.
By:
---------------------------------
Printed Name:
--------------------
Title:
---------------------------
Address of the Company
0000 Xxxxxx Xxxxxxxxx, Xxxxx #0
Xxxxxxxx, Xxxxx 00000
Facsimile Number: (000) 000-0000
INDEMNITEE:
------------------------------------------
Address of Indemnitee:
------------------------------------------
------------------------------------------
Facsimile Number:
-------------------------
-7-
