Exhibit 10.37
INDEMNIFICATION AGREEMENT
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THIS INDEMNIFICATION AGREEMENT ("Agreement") is entered into as of February
21, 2001, by and between Gart Sports Company, a Delaware corporation ("Gart"),
and the individual reflected on the signature page hereto ("Indemnified Party").
WHEREAS, Gart and its wholly owned subsidiary GSC Acquisition Corp., a
Delaware corporation ("MergerSub"), are entering into an Agreement and Plan of
Merger dated as of the date hereof (as it may be amended from time to time, the
"Merger Agreement") which provides, among other things, for the merger of ▇▇▇▇▇▇
Sporting Goods, Inc., a Delaware corporation (the "Company"), with and into
MergerSub, with Merger Sub as the surviving corporation (the "Merger") in
exchange for cash and Gart common stock;
WHEREAS, in connection with the Merger Agreement, Gart and MergerSub have
required that Indemnified Party enter into an agreement with respect to
Indemnified Party's shares of common stock to vote to approve the Merger and the
Merger Agreement pursuant to that certain Voting Agreement dated as of the date
hereof (the "Voting Agreement");
WHEREAS, Indemnified Party has concluded that the Merger is in Indemnified
Party's best interests as a shareholder of the Company but recognizes that
litigation is common in the merger of public companies and, for this reason, is
not willing to execute the Voting Agreement without full indemnification;
WHEREAS, Gart and its board of directors (the "Board") have concluded that
Gart will receive a direct and indirect benefit from executing this Agreement
because the Indemnified Party will execute the Voting Agreement and vote to
approve the Merger;
WHEREAS, Gart has agreed to execute this Agreement to induce Indemnified
Party to execute the Voting Agreement; and
WHEREAS, Gart has agreed to indemnify Indemnified Party on the terms set
out herein;
NOW, THEREFORE, for and in consideration of the foregoing premises and the
mutual agreements made herein, the parties agree as follows:
1. Indemnification. GART SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS
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INDEMNIFIED PARTY AND INDEMNIFIED PARTY'S HEIRS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS (HEREINAFTER THE TERM "INDEMNIFIED PARTY" AND
"INDEMNIFIED PARTIES" SHALL INCLUDE INDEMNIFIED PARTY'S HEIRS, LEGAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS) FROM AND AGAINST ANY AND ALL CLAIMS,
ACTIONS, PROCEEDINGS, CAUSES OF ACTION, OR DEMANDS BROUGHT BY ANY PERSON,
ENTITY, OR AGENCY (THE "CLAIMS") GIVING RISE TO ANY ASSESSMENTS, LOSSES,
DAMAGES, LIABILITIES, JUDGMENTS, SETTLEMENTS, PENALTIES, COSTS, AND EXPENSES OF
ANY NATURE WHATSOEVER, INCLUDING ATTORNEYS' FEES AND EXPENSES AT THE TIME THEY
ARE INCURRED
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(THE "DAMAGES"), THAT ARE INCURRED BY INDEMNIFIED PARTY BY REASON OF OR
RESULTING FROM THIS AGREEMENT, THE VOTING AGREEMENT, OR ANY ACTS OR OMISSIONS BY
INDEMNIFIED PARTY RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, THE VOTING
AGREEMENT, OR THE MERGER AGREEMENT.
THE PARTIES HERETO AGREE THAT ANY RIGHT TO INDEMNIFICATION OF INDEMNIFIED
PARTY AS DESCRIBED IN THIS SECTION SHALL INCLUDE A RIGHT TO INDEMNIFICATION
WHETHER OR NOT THE CLAIMS ARE BASED IN WHOLE OR IN PART ON INDEMNIFIED PARTY'S
NEGLIGENT ACTS OR OMISSIONS.
2. Procedure for Indemnification. Promptly after receipt by Indemnified
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Party of notice of the commencement of any Claim, such Indemnified Party shall
give written notice to Gart of the existence of the Claim, but the failure so to
notify Gart shall not relieve Gart of any liability that it may have to
Indemnified Party hereunder, except to the extent of any actual, material
prejudice caused by such failure. Upon receiving notice of the existence of any
Claim, Gart shall be entitled to participate in defense of such Claim at its
sole expense and, to the extent that it may wish, to assume the defense thereof
at its sole expense with counsel reasonably satisfactory to Indemnified Party.
If Gart elects not to assume or fails to assume the defense of the Claim,
Indemnified Party shall be entitled to assume the defense of the Claim with
counsel of its own choice at the sole expense of Gart. If the Claim is asserted
against both Gart and Indemnified Party and if there is a conflict of interests
which renders it inappropriate for the same counsel to represent both Gart and
Indemnified Party, Gart shall be responsible for paying for separate counsel for
Indemnified Party. If there is a conflict of interests among more than one
Indemnified Party which renders it inappropriate for the same counsel to
represent all of the Indemnified Parties, Gart shall be responsible for paying
for separate counsel for each of the Indemnified Parties.
3. Settlement of Claim. If Gart elects to assume the defense of a Claim,
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(a) no compromise or settlement thereof may be effected by Gart without the
written consent (which shall not be unreasonably withheld) of Indemnified Party
unless the sole relief provided is monetary damages that are paid in full by
Gart, and (b) Gart shall have no liability with respect to any compromise or
settlement thereof effected by Indemnified Party without Gart's written consent
(which shall not be unreasonably withheld). If Gart does not elect to assume
the defense of a Claim, (a) no compromise or settlement thereof may be effected
by Indemnified Party without Gart's written consent (which shall not be
unreasonably withheld), and (b) Indemnified Party shall not be bound by any
compromise or settlement thereof effected by Gart if such Indemnified Party is
advised by counsel that the settlement is not in best interest of Indemnified
Party.
4. Indemnification For Expenses of a Witness. To the extent Indemnified
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Party is a witness in any Claim to which Indemnified Party is not party that
involves this Agreement, the Voting Agreement, the Merger Agreement or any other
subject matter relating to any of the aforementioned agreements or the Merger,
Indemnified Party shall be indemnified against all expenses actually and
reasonably incurred by Indemnified Party or on such Indemnified Party's behalf
in connection therewith.
5. Payment of Expenses. Indemnified Party shall submit periodic notices
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to Gart in reasonable detail of such Indemnified Party's costs and expenses,
including attorneys' fees and
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expenses, relating to any Claim, and Gart shall reimburse such Indemnified Party
within 10 business days of date of such notice.
6. Contribution. To the fullest extent permissible under applicable law,
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if the indemnification provided for in this Agreement is unavailable to
Indemnified Party for any reason whatsoever, Gart, in lieu of indemnifying
Indemnified Party, shall contribute to such Indemnified Party an amount equal to
Gart's Proportion, as defined below, of the total Damages incurred by such
Indemnified Party in connection with any Claim relating to an indemnifiable
event under this Agreement. The term "Gart's Proportion" shall mean the
quotient equal to (i) the total value of the consideration given in the Merger
by Gart to the shareholders of the Company, including cash and securities, minus
the value received by Indemnified Party divided by (ii) the total value of the
consideration given in the Merger by Gart to the shareholders of the Company,
including cash and securities. The parties agree that this calculation of the
contribution required under this section, if indemnification is not available,
is fair and reasonable based on the relative benefit received by Indemnified
Party in the Merger.
7. Representations and Warranties of Gart. Gart hereby represents and
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warrants to Indemnified Party as follows:
(a) Gart has full corporate power and corporate authority to execute,
deliver, and perform this Agreement and to fulfill the obligations stated
herein. The execution, delivery, and performance by Gart of this Agreement have
been duly authorized by Gart's Board. This Agreement has been duly executed and
delivered by Gart and constitutes a valid and legally binding obligation of
Gart, enforceable against Gart in accordance with its terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
(b) The execution, delivery, and performance by Gart of this Agreement
does not (i) conflict with or result in a violation of any provision of the
certificate of incorporation or bylaws of Gart, (ii) violate any applicable
state or federal law binding upon Gart, or (iii) violate any agreement or
obligation of Gart which could result in the invalidation of this Agreement as
an ultra ▇▇▇▇▇ act of Gart.
8. Legal Opinion. Prior to the execution hereof, Gart has caused its
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legal counsel to deliver to Indemnified Party a legal opinion in a form
satisfactory to the legal counsel for such Indemnified Party which opines as to
the validity and enforceability of this Agreement.
9. Severability. If any provision or provisions of this Agreement shall
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be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law, (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to give
the maximum effect to the intent of the parties hereto, and (c) to the fullest
extent
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possible, the provisions of this Agreement (including, without limitation, each
portion of any section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
therein.
10. Successors and Assigns. This Agreement shall be binding upon each
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party hereto and its respective successors and permitted assigns and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. The foregoing sentence notwithstanding, Gart shall not
assign this Agreement without the written consent of Indemnified Party.
11. Choice of Law. This Agreement and the rights, obligations and
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liabilities of the parties hereto shall be governed by and construed, determined
and enforced in accordance with the internal laws (as opposed to the conflicts
of law provisions) of the State of California.
12. Notice. Any notice or communication required or permitted hereunder
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shall be given in writing, sent by (a) personal delivery, or (b) expedited
delivery service with proof of delivery, or (c) United States mail, postage
prepaid, registered or certified mail, or (d) prepaid telegram, telex or
telecopy, addressed as follows:
To Gart: Gart Sports Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Irell & ▇▇▇▇▇▇▇ LLP
1800 Avenue of the Stars, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Indemnified Party: At the address reflected on the signature
page hereto
With a copy to: ▇▇▇▇▇▇▇▇ Knight ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of telegram, telex or telecopy, upon
receipt.
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13. Amendments. This Agreement may be amended only by a writing
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executed by each of the parties to this Agreement.
14. Counterparts. This Agreement, and any modifications or amendments
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hereto may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes, but
all such counterparts shall constitute one and the same instrument.
15. Construction. Whenever required by the context, the singular will
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include the plural and vice versa and the masculine will include the feminine
and neuter and vice versa.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Gart: Indemnified Party:
GART SPORTS COMPANY ________________________________________
By:________________________________
Name:______________________________ Address for notice:
Title:_____________________________
________________________________________
________________________________________
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