EXHIBIT 10.28
INDEMNIFICATION AGREEMENT
This Agreement is made effective as of April 1, 2003, by and between
Sport Supply Group, Inc., a Delaware corporation (the "Company"), and Xxxx
Xxxxxxx ("Director").
W I T N E S S E T H:
WHEREAS, public companies have experienced increasing difficulty in
obtaining directors' and officers' liability insurance, significantly higher
premiums than had historically been charged, and reductions in the coverage
of such insurance; and
WHEREAS, although the Company currently maintains such insurance, there
can be no assurance that such insurance will be available to the Company and
Director in the future, and that the cost of such insurance, if obtainable,
may not be acceptable to the Company; and
WHEREAS, the Company, in order to induce Director to serve or to
continue to serve the Company, has agreed to provide Director with the
benefits contemplated by this Agreement;
NOW, THEREFORE, in consideration of the promises, conditions,
representations, and warranties set forth herein, the Company and Director
hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
"Change in Control" shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Act")), other than
Xxxxxxx Radio Corp. (including all of its successors and assigns, and
any stockholder of Xxxxxxx Radio Corp. receiving the Company's common
stock as a result of a pro rata distribution of the Company's Common
Stock made by Xxxxxxx Radio Corp.) or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 20% or more of the total voting power
represented by the Company's then outstanding voting securities, (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of Directors
or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease, for any reason, to constitute a majority of the Board of
Directors, (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the total
voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for sale or
disposition by the Company of all or substantially all of the Company's
assets.
"Claim" means any threatened, pending, or completed action, suit,
or proceeding, or any inquiry or investigation, whether conducted by or
on behalf of the Company or any other party, that Director in good
faith believes might lead to the institution of any such action, suit,
or proceeding, whether civil, criminal, administrative, investigative,
or other.
"Covered Act" means any breach of duty, neglect, error,
misstatement, misleading statement, omission, or other act done or
wrongfully attempted by Director or any of the foregoing alleged by any
claimant or any event or occurrence related to the fact that Director
is or was a director, officer, employee, agent, or fiduciary of the
Company or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent, or fiduciary of another
corporation, partnership, joint venture, trust, or other entity.
"Determination" means a determination, based on the facts known at
the time, by:
(i) A majority vote of a quorum of disinterested directors;
(ii) Special, independent legal counsel in a written opinion
prepared at the request of a majority of a quorum of disinterested
directors or pursuant to Section 4(a);
(iii) A majority of the disinterested stockholders of the
Company; or
(iv) A final adjudication by a court of competent
jurisdiction.
"Determined" shall have a correlative meaning.
"Excluded Claim" means any Claim:
(i) Based upon or attributable to Director gaining in fact
any personal profit or advantage to which Director is not
entitled;
(ii) For the return by Director of any remuneration paid to
Director without the previous approval of the stockholders of the
Company which is illegal;
(iii) For an accounting of profits in fact made from the
purchase or sale by Director of securities of the Company within
the meaning of Section 16 of the Act or similar provisions of any
state law;
(iv) Resulting from Director's knowingly fraudulent,
dishonest, or willful misconduct; or
(v) Any claim for which indemnification is prohibited by
applicable law.
"Expenses" means any expense incurred by Director as a result of a
Claim or Claims made against him for Covered Acts including, without
limitation, attorneys' fees and all other costs, expenses, and
obligations paid or incurred in connection with investigating,
defending, being a witness in, or participating in (including on
appeal), or preparing to defend, be a witness in, or participate in any
Claim relating to any Covered Act, but shall not include Fines.
"Fines" means any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto.
"Losses" means any amount that Director is legally obligated to
pay as a result of a Claim or Claims made against him for Covered Acts
including, without limitation, damages and judgments and sums paid in
settlement of a Claim or Claims, but shall not include Fines.
2. Maintenance of Directors' and Officers' Liability Insurance.
(a) The Company hereby covenants and agrees that, so long as
Director shall continue to serve as a director of the Company and
thereafter so long as Director shall be subject to any Claim for any
Covered Act, the Company, subject to Section 2(c), shall use its best
efforts to maintain in full force and effect directors' and officers'
liability insurance.
(b) In all policies of directors' and officers' liability
insurance maintained by the Company, Director shall be named as an
insured in such a manner as to provide Director the same rights and
benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
(c) The Company shall have no obligation to maintain directors'
and officers' liability insurance if the Board of Directors of the
Company determines in good faith that such insurance is not reasonably
available, the premium costs for such insurance is disproportionate to
the amount of coverage provided, or the coverage provided by such
insurance is limited by exclusions so as to provide an insufficient
benefit.
3. Indemnification. The Company shall indemnify Director and hold
him harmless from any and all Losses, Expenses, and Fines to the fullest
extent authorized, permitted, or not prohibited (i) by the General
Corporation Law of the State of Delaware (the "GCL"), or any other
applicable law (including judicial, regulatory, or administrative
interpretations or readings thereof), the Company's Amended and Restated
Certificate of Incorporation, or Amended and Restated Bylaws as in effect on
the date hereof, or (ii) by any amendment thereof or other statutory
provisions authorizing or permitting such indemnification that is adopted
after the date hereof, subject to the further provisions of this Agreement.
In the event that after the date hereof the Company provides any greater
right of indemnification, in any respect, to any other person serving as an
officer or director of the Company, then such greater right of
indemnification shall inure to the benefit of and shall be deemed to be
incorporated in this Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify Director
for and hold him harmless from any Loss, Expense, or Fine which has
been Determined to constitute an Excluded Claim, provided that in the
event of a Change in Control, then with respect to all matters
thereafter arising concerning the rights of Director to indemnity
payments and Expense advances under this Agreement, or any other
agreements or bylaws now or hereafter in effect relating to Claims for
Covered Acts, a Determination with respect to an Excluded Claim shall
be made only by a court of competent jurisdiction or by special,
independent legal counsel selected by Director and approved by the
Company (which approval shall not be unreasonably withheld), and who
has not otherwise performed services for the Company or Director. In
the event that Director and the Company are unable to agree on the
selection of the special, independent legal counsel, such special,
independent legal counsel shall be selected by lot from among at least
five law firms designated by Director, each in the State of Delaware or
Dallas, Texas, having more than thirty-five (35) attorneys and having a
rating of "av" or better in the then current Xxxxxxxxxx-Xxxxxxx Law
Directory. Such selection shall be made in the presence of Director
(and Director's legal counsel or either of them, as Director may
elect). Such special, independent legal counsel, among other things,
shall determine whether and to what extent Director would be permitted
to be indemnified under applicable law and shall render its written
opinion to the Company and Director to such effect.
If there has been a Determination that the Company is not
obligated to indemnify Director as a result of an Excluded Claim
(whether by special, independent legal counsel or otherwise), Director
shall have the right to commence litigation in any court in the State
of Delaware having subject matter jurisdiction thereof, and in which
venue is proper, challenging any such Determination; provided that the
Company shall be entitled to be reimbursed by Director (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid
with respect to such Excluded Claim (only upon a final judicial
Determination that Director is not entitled to indemnification made
with respect thereto as to which all rights of appeal therefrom have
been exhausted or lapsed) and the Company shall be obligated to
indemnify or advance any additional amounts to Director until such a
judicial Determination has been made.
(b) The Company shall use its best efforts to make the
Determination contemplated herein promptly. Upon request by Director,
in connection with any matter for which indemnification or
reimbursement may be sought hereunder, the Company agrees to promptly
make a Determination whether such matter constitutes an Excluded Claim.
In this connection, the Company agrees:
(i) if the Determination is to be made by a majority of
disinterested directors of the Company or a committee thereof,
such Determination shall be made not later than fifteen (15) days
after a written request for a Determination (a "Request") is
delivered to the Company by Director;
(ii) if the Determination is to be made by special,
independent legal counsel, such Determination shall be made not
later than ninety (90) days after a Request is delivered to the
Company by Director; and
(iii) if the Determination is to be made by the
stockholders of the Company, such Determination shall be made not
later than one hundred fifty (150) days after a Request is
delivered to the Company by Director.
The failure to make a Determination within the above-specified
time periods shall constitute a Determination approving full
indemnification or reimbursement of Director. All costs of making the
Determination shall be borne solely by the Company.
(c) The Company shall have no obligation to indemnify Director
and hold him harmless for any Loss, Expense, or Fine to the extent that
Director is actually and finally reimbursed for such Loss, Expense, or
Fine by the Company pursuant to the Company's Amended and Restated
Bylaws or otherwise.
(d) The Company shall have no obligation to indemnify Director
and hold him harmless for any Fines to the extent that such
indemnification is prohibited by the GCL.
5. Indemnification Procedures.
(a) Promptly after receipt by Director of notice of the
commencement of or the threat of commencement of any Claim, Director
shall, if indemnification with respect thereto is being sought from the
Company under this Agreement, notify the Company of the commencement
thereof, provided that failure to so notify the Company shall not
relieve the Company from any liability that it may have to Director
under this Agreement unless such failure materially and adversely
affects the rights of the Company thereunder.
(b) If, at the time of the receipt of such notice, the Company
has directors' and officers' liability insurance in effect, the Company
shall give prompt and proper notice of the commencement of such Claim
to the insurer. The Company shall thereafter take all necessary or
desirable action to pay or to cause such insurer to pay, on behalf of
Director, all Losses, Expenses, and Fines payable as a result of such
Claim in accordance with the terms of such policies.
(c) To the extent the Company does not, at the time of the
commencement of or the threat of commencement of such Claim, have
applicable directors' and officers' liability insurance, or if the full
amount of any Expenses arising out of such action, suit, or Claim will
not be payable under such insurance then in effect, the Company shall
be obligated to pay the Expenses relating to any such Claim in advance
of the final disposition thereof and the Company, if appropriate, shall
be entitled to assume the defense of such Claim, with counsel
satisfactory to Director, upon the delivery to Director of written
notice of its election so to do. After delivery of such notice, the
Company will not be liable to Director under this Agreement for any
legal or other Expenses subsequently incurred by Director in connection
with such defense other than reasonable costs of investigation,
provided that Director shall have the right to employ its counsel in
any such Claim but the fees and expenses of such counsel incurred after
delivery of notice from the Company of its assumption of such defense
shall be at the Director's expense, provided further that if (i) the
employment of counsel by Director has been previously authorized by the
Company, (ii) Director shall have reasonably concluded that there may
be a conflict of interest between the Company and Director in the
conduct of any such defense, or (iii) the Company shall not, in fact,
have employed counsel to assume the defense of such action, the fees
and expenses of counsel shall be at the expense of the Company.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made promptly, but in any
event within thirty (30) days of Director's written request therefor,
provided that all payments on account of the Company's obligations
under Paragraph 5(c) of this Agreement prior to the final disposition
of any Claim, shall be made within ten (10) days of Director's written
request therefor.
(e) Director agrees that he will reimburse the Company for all
Losses, Expenses, and Fines paid by the Company on behalf of Director
in connection with any Claim against Director in the event and only to
the extent that a Determination shall have been made by a court in a
final adjudication from which there is no further right of appeal that
the Director is not entitled to be indemnified by the Company for such
amounts because the Claim is an Excluded Claim or because Director is
otherwise not entitled to payment under this Agreement.
6. Final Determination; Settlement. The Company shall pay all Losses
or Fines for which Director is indemnified hereunder upon final
determination thereof. The Company shall have no obligation to indemnify
Director under this Agreement for any amounts paid in settlement of any
Claim effected without the Company's prior written consent. The Company
shall not settle any claim in any manner which would impose any Fine or any
obligation on Director without Director's written consent. Neither the
Company nor Director shall unreasonably withhold their consent to any
proposed settlement.
7. Rights Not Exclusive. The rights provided hereunder shall not be
deemed exclusive of any other rights to which Director may be entitled under
any charter provision, bylaw, agreement, vote of stockholders or of
disinterested directors or otherwise, both as to action in his official
capacity and as to action in any other capacity by holding such office, and
shall continue after Director ceases to serve the Company as a director.
8. Enforcement.
(a) Director's right to indemnification shall be enforceable by
Director only in the state courts of the State of Delaware and shall be
enforceable notwithstanding any adverse Determination. In any such
action, if a prior adverse Determination has been made, the burden of
proving that indemnification is required under this Agreement shall be
on Director. The Company shall have the burden of proving that
indemnification is not required under this Agreement if no prior
adverse Determination shall have been made.
(b) In the event that any action is instituted by Director under
this Agreement, or to enforce or interpret any of the terms of this
Agreement, Director shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees, incurred by Director with
respect to such action, unless the court determines that each of the
material assertions made by Director as a basis for such action were
not made in good faith or were frivolous.
9. Severability. In the event that any provision of this Agreement
is determined by a court to require the Company to do or to fail to do an
act which is in violation of applicable law, such provision shall be limited
or modified in its application to the minimum extent necessary to avoid a
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with its terms.
10. Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.
11. Consent to Jurisdiction. The Company and Director each hereby
irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding that
arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the state courts of
the State of Delaware.
12. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all
or substantially all of its assets and any successor by merger or otherwise
by operation of law) and (ii) shall be binding on and inure to the benefit
of the heirs, personal representatives, and estate of Director.
13. Amendment. No amendment, modification, termination, or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
14. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Director, who shall execute all instruments
required and shall do everything that may be necessary to secure such
rights, including the execution of such documents as may be necessary to
enable the Company effectively to bring suit to enforce such rights.
IN WITNESS WHEREOF, the Company and Director have executed this
Agreement as of the day and year first above written.
SPORT SUPPLY GROUP, INC.
By: _____________________________
Xxxx X. Xxxxxx
President
_____________________________
Xxxx Xxxxxxx
Director
