Exhibit 10.11
FORM OF INDEMNIFICATION AGREEMENT
This Agreement is made as of the _______ day of _________________, by and
between Guitar Center, Inc., a Delaware corporation (the "COMPANY"), and the
undersigned [PROSPECTIVE] [OFFICER/DIRECTOR] of the Company (the "INDEMNITEE"),
with reference to the following facts:
The Indemnitee is willing, under certain circumstances, to [CONTINUE TO]
serve as an [OFFICER/DIRECTOR] of the Company. The Indemnitee has indicated
that he does not regard the indemnities available under the Company's Bylaws as
adequate to protect him against the risks associated with his service to the
Company. In this connection, the Company and the Indemnitee now agree that they
should enter into this Indemnification Agreement in order to provide greater
protection to Indemnitee against such risks of service to the Company.
Section 145 of the General Corporation Law of the State of Delaware, under
which Law the Company is organized, empowers corporations to indemnify a person
serving as a director, officer, employee or agent of the Company and a person
who serves at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, and said Section 145 and the Bylaws of the Company specify that the
indemnification set forth in said Section 145 and in the Bylaws, respectively,
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any Bylaw, agreement, vote of stockholders
or disinterested directors or otherwise.
In order to induce the Indemnitee to [CONTINUE TO] serve as a[N]
[OFFICER/DIRECTOR] of the Company and in consideration of his continued service,
the Company hereby agrees, as of the date first set forth above, to indemnify
the Indemnitee as follows:
1. INDEMNITY. The Company will indemnify the Indemnitee, his
executors, administrators or assigns, for any Expenses (as defined below) which
the Indemnitee is or becomes legally obligated to pay in connection with any
Proceeding. As used in this Agreement the term "PROCEEDING" shall include any
threatened, pending or completed claim, action, suit or proceeding, whether
brought by or in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which the Indemnitee may be
or may have been involved as a party or otherwise, by reason of the fact that
Indemnitee is or was, or has agreed to become, a director or officer of the
Company, by reason of any actual or alleged error or misstatement or misleading
statement made or suffered by the Indemnitee, by reason of any action taken by
him or of any inaction on his part while acting as such director or officer, or
by reason of the fact that he was serving at the request of the Company as a
director, trustee, officer, employee or agent of the Company or another
corporation, partnership, joint venture, trust or other enterprise; PROVIDED,
that in each such case Indemnitee acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, in the case of a criminal proceeding, in addition had no
reasonable cause to believe that his conduct was unlawful. As used in this
Agreement, the term "other enterprise" shall include (without limitation)
employee benefit plans and administrative committees thereof, and the term
"fines" shall include (without limitation) any excise tax assessed with respect
to any employee benefit plan.
2. EXPENSES. As used in this Agreement, the term "EXPENSES" shall
include (without limitation) damages, judgments, fines, penalties, settlements
and costs, attorneys' fees
and disbursements and costs of attachment or similar bonds, investigations, and
any expenses of establishing a right to indemnification under this Agreement.
3. ENFORCEMENT. If a claim or request under this Agreement is not
paid by the Company, or on its behalf, within thirty days after a written claim
or request has been received by the Company, the Indemnitee may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the Indemnitee shall be
entitled to be paid also the Expenses of prosecuting such suit. The Company
shall have the right to recoup from the Indemnitee the amount of any item or
items of Expenses theretofore paid by the Company pursuant to this Agreement, to
the extent such Expenses are not reasonable in nature or amounts; PROVIDED,
HOWEVER, that the Company shall have the burden of proving such Expenses to be
unreasonable. The burden of proving that the Indemnitee is not entitled to
indemnification for any other reason shall be upon the Company.
4. 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 Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
5. EXCLUSIONS. The Company shall not be liable under this Agreement
to pay any Expenses in connection with any claim made against the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible insurance policy;
(b) to the extent that the Indemnitee is indemnified and
actually paid otherwise than pursuant to this Agreement;
(c) in connection with a judicial action by or in the right of
the Company, in respect of any claim, issue or matter as to which the
Indemnitee shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless and only to
the extent that any court in which such action was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, the Indemnitee is fairly and reasonably
entitled to indemnity for such expenses as such court shall deem proper;
(d) with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification
under this Agreement or any other statute or law or as otherwise required
under the General Corporation Law of the State of Delaware, but such
indemnification or advancement of expenses may be provided by the Company
in specific cases if the Board has approved the initiation or bringing of
such suit;
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(e) if it is proved by final judgment in a court of law or other
final adjudication to have been based upon or attributable to the
Indemnitee's in fact having gained any personal profit or advantage to
which he was not legally entitled;
(f) for a disgorgement of profits made from the purchase and
sale by the Indemnitee of securities pursuant to Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any state statutory law or common law;
(g) brought about or contributed to by the dishonesty of the
Indemnitee seeking payment hereunder; however, notwithstanding the
foregoing, the Indemnitee shall be protected under this Agreement as to any
claims upon which suit may be brought against him by reason of any alleged
dishonesty on his part, unless a judgment or other final adjudication
thereof adverse to the Indemnitee shall establish that he committed (i)
acts of active and deliberate dishonesty, (ii) with actual dishonest
purpose and intent, (iii) which acts were material to the cause of action
so adjudicated;
(h) for any judgment, fine or penalty which the Company is
prohibited by applicable law from paying as indemnity or for any other
reason; or
(i) arising out of Indemnitee's breach of an employment
agreement with the company (if any) or any other agreement with the Company
or any of its subsidiaries.
6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
any other provision of this Agreement, to the extent that the 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 any and all Expenses incurred
in connection therewith.
7. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses, but not, however, for the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for the portion of such Expenses to
which the Indemnitee is entitled.
8. ADVANCE OF EXPENSES. Expenses incurred by the Indemnitee in
connection with any Proceeding, except the amount of any settlement, shall be
paid by the Company in advance upon request of the Indemnitee that the Company
pay such Expenses. The Indemnitee hereby undertakes to repay to the Company the
amount of any Expenses theretofore paid by the Company to the extent that it is
ultimately determined that such Expenses were not reasonable or that the
Indemnitee is not entitled to indemnification.
9. APPROVAL OF EXPENSES. No Expenses for which indemnity shall be
sought under this Agreement, other than those in respect of judgments and
verdicts actually rendered, shall be incurred without the prior consent of the
Company, which consent shall not be unreasonably withheld.
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10. ASSUMPTION OF DEFENSE. In the event the Company shall be
obligated to pay the expenses of any proceeding against the Indemnitee, the
Company, if appropriate, shall be entitled to assume the defense of such
proceeding with counsel approved by Indemnitee which approval shall not be
unreasonably withheld, upon the delivery to Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same proceeding, unless
(i) the employment of counsel by Indemnitee is authorized by the Company, (ii)
Indemnitee shall have reasonably concluded, based upon written advice of
counsel, that there may be a conflict of interest of such counsel retained by
the Company between the Company and Indemnitee in the conduct of such defense,
or (iii) the Company ceases or terminates the employment of such counsel with
respect to the defense of such proceeding, in any of which events then the fees
and expenses of Indemnitee's counsel shall be at the expense of the Company. At
all times, Indemnitee shall have the right to employ other counsel in any such
proceeding at Indemnitee's expense, and to participate in the defense of the
proceeding or claim through such counsel.
11. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that the action was not instituted in good faith or was frivolous. In the event
of an action instituted by or in the name of the Company under this Agreement,
Indemnitee shall be entitled to be paid all court costs and expenses, including
attorneys' fees, incurred by Indemnitee in defense of such action (including
with respect to Indemnitee's counterclaims and cross-claims made in such
action), unless as a part of such action the court determines that Indemnitee's
defenses to such action were not made in good faith or were frivolous.
12. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall,
from time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and
directors of the Company with coverage for losses from wrongful acts, or to
ensure the Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. Notwithstanding the foregoing, the Company shall have no obligation
to obtain or maintain such insurance if the Company determines in good faith
that such insurance is not reasonably available, or if the premium costs for
such insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company.
13. NOTICE OF CLAIM. The Indemnitee, as a condition precedent to his
right to be indemnified under this Agreement, shall give to the Company 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 Company
shall be given at its principal office and shall be directed to the Corporate
Secretary (or such other address as the Company shall designate in writing to
the Indemnitee); notice shall be deemed received if sent by prepaid mail
properly addressed, the date of such notice being the date postmarked. In
addition, the Indemnitee shall give the Company such
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information and cooperation as it may reasonably require and as shall be within
the Indemnitee's power.
14. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one instrument.
16. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. Nothing herein shall be
deemed to diminish or otherwise restrict the Indemnitee's right to
indemnification under any provision of the Certificate of Incorporation or
Bylaws of the Company and amendments thereto or under law.
17. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with Delaware law, without regard to the conflicts of law
provisions thereof.
18. SAVING CLAUSE. Wherever there is conflict between any provision
of this Agreement and any applicable present or future statute, law or
regulation contrary to which the Company and the Indemnitee have no legal right
to contract, the latter shall prevail, but in such event the affected provisions
of this Agreement shall be curtailed and restricted only to the extent necessary
to bring them within applicable legal requirements.
19. COVERAGE. The provisions of this Agreement shall apply with
respect to the Indemnitee's service as a[N] [OFFICER/DIRECTOR] of the Company
prior to the date of this Agreement and with respect to all periods of such
service after the date of this Agreement, even though the Indemnitee may have
ceased to be a[N] [OFFICER/DIRECTOR] of the Company.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
GUITAR CENTER, INC.
By
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Authorized Officer
"INDEMNITEE"
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NAME:
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