Exhibit 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this
“Agreement”) is made and entered into as of the ___day
of ___, ___, by and between Back Yard Burgers, Inc., a Delaware
corporation (the “Company”), and the undersigned (the
“Indemnitee”).
RECITALS
WHEREAS, it is essential to the
Company that it attract and retain as directors and officers the
most capable persons available; and
WHEREAS, both the Company and the
Indemnitee recognize the increased risk of litigation and other
claims being asserted against directors and officers of public
companies in the current environment; and
WHEREAS, the Indemnitee currently is
serving as a director or officer of the Company, and the Company
desires that the Indemnitee continue to serve in such capacity. The
Indemnitee is willing to continue to serve in such capacity if the
Indemnitee is adequately protected against the risks associated
with such service; and
WHEREAS, Section 145 of the
General Corporation Law of the State of Delaware (the
“DGCL”), under which law the Company is organized,
empowers a corporation to indemnify a person serving as a director
or officer 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 Section 145 of the DGCL and the Certificate of
Incorporation of the Company specify that the indemnification set
forth in Section 145 and in the Certificate of Incorporation,
respectively, shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any law
(common or statutory), agreement, vote of stockholders or
disinterested Directors or otherwise; and
WHEREAS, the Company and the
Indemnitee have concluded that the indemnities available under the
Company’s Certificate of Incorporation, Bylaws and any
insurance now or hereafter in effect need to be supplemented to
provide the Indemnitee, as permitted by law, with the maximum
protection against the risks associated with the Indemnitee’s
service to the Company; and
WHEREAS, in recognition of the
Indemnitee’s need for additional protection against personal
liability in order to enhance the Indemnitee’s continued
service to the Company in an effective manner, and in order to
induce the Indemnitee to continue to provide services to the
Company as a director or officer thereof, the Company wishes to
provide in this Agreement for the indemnification of Indemnitee to
the fullest extent permitted by law and as set forth in this
Agreement.
NOW THEREFORE, in consideration of
the foregoing, the covenants contained herein and the
Indemnitee’s continued service to the Company, the Company
and the Indemnitee, intending to be legally bound, hereby agree as
follows:
Section 1. Definitions.
The following terms, as used herein,
shall have the respective meanings set forth below:
“Affiliate” of any
specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this
definition, “control” when used with respect to any
specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms “controlling” and “controlled”
have meanings relative to the foregoing.
“Change in Control” shall
be deemed to have taken place if: (i) any person or entity,
including a “group” as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, other than the
Company or a wholly-owned subsidiary thereof or any employee
benefit plan of the Company or any of its subsidiaries, becomes the
beneficial owner of the Company securities having 50% or more of
the combined voting power of the then outstanding securities of the
Company that may be cast for the election of directors of the
Company (other than as a result of an issuance of securities
initiated by Company in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, sale of
substantially all of the assets or contested election, or any
combination of the foregoing transactions less than a majority of
the combined voting power of the then-outstanding securities of the
Company or any successor corporation or entity entitled to vote
generally in the election of the directors of the Company or such
other corporation or entity after such transaction is held in the
aggregate by the holders of the Company securities entitled to vote
generally in the election of directors of the Company immediately
prior to such transaction; or (iii) during any period of two
consecutive years, individuals who at the beginning of any such
period constitute the Board of Directors of the Company cease for
any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company’s
stockholders, of each director of the Company first elected during
such period was approved by a vote of at least two-thirds of the
directors of the Company then still in office who were directors of
the Company at the beginning of any such period.
“Claim” means
(a) any threatened, pending or completed action, suit,
proceeding or arbitration, court-ordered mediation or other formal
alternative dispute resolution mechanism, or (b) any inquiry,
hearing or government investigation, whether conducted by the
Company or any other Person, that the Indemnitee in good faith
believes might lead to the institution of any such action, suit,
proceeding or arbitration or other alternative dispute resolution
mechanism, in each case whether civil, criminal, administrative or
other (whether or not the claims or allegations therein are
groundless, false or fraudulent) and includes, without limitation,
those brought by or in the name of the Company or any director or
officer of the Company.
“Company Agent” means any
director, officer, manager or in-house counsel of the Company, any
Subsidiary or any Other Enterprise.
“Covered Event” means any
event or occurrence on or after the date of this Agreement related
to the fact that the Indemnitee is or was a Company Agent or
related to anything done or not done by the Indemnitee in any such
capacity, and includes, without limitation, any such event
2
or
occurrence (a) arising from performance of the
responsibilities, obligations or duties imposed by ERISA or any
similar applicable provisions of state or common law, or
(b) arising from any merger, consolidation or other business
combination involving the Company, any Subsidiary or any Other
Enterprise, including without limitation any sale or other transfer
of all or substantially all of the business or assets of the
Company, any Subsidiary or any Other Enterprise; provided, however,
that in any such case, the Indemnitee acted in good faith and in a
manner which such Indemnitee 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 such Indemnitee’s conduct was unlawful.
“D&O Insurance” means
the directors’ and officers’ liability insurance
maintained by or for the benefit of the Company, its directors or
officers and any replacement or substitute policies.
“Determination” means a
determination made by (a) a majority vote of Disinterested
Directors even if less than a quorum; (b) Independent Legal
Counsel, in a written opinion addressed to the Company and the
Indemnitee; (c) the stockholders of the Company; or (d) a
decision by a court of competent jurisdiction not subject to
further appeal.
“Disinterested Director”
shall be a director of the Company who is not or was not a party to
the Claim giving rise to the subject matter of a
Determination.
“Expenses” includes
attorneys’ fees and all other costs, travel expenses, fees of
experts, transcript costs, filing fees, witness fees, telephone
charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatsoever paid or incurred
in connection with investigating, prosecuting or defending, being a
witness in or participating in (including on appeal), or preparing
to prosecute or defend, be a witness in or participate in any
Claim, for which the Indemnitee is or becomes legally obligated to
pay (not otherwise prohibited under Delaware law).
“Independent Legal
Counsel” shall mean a law firm or a member of a law firm that
(a) neither is nor in the past five years has been retained to
represent in any material matter the Company, any Subsidiary, the
Indemnitee or any other party to the Claim, (b) under
applicable standards of professional conduct then prevailing would
not have a conflict of interest in representing either the Company
or the Indemnitee in an action to determine the Indemnitee’s
rights to indemnification under this Agreement and (c) is
reasonably acceptable to the Company and the Indemnitee.
“Loss” means any amount
which the Indemnitee is legally obligated to pay as a result of any
Claim (and not otherwise prohibited under Delaware law), including,
without limitation (a) all judgments, penalties and fines, and
amounts paid or to be paid in settlement, (b) all interest,
assessments and other charges paid or payable in connection
therewith and (c) any federal, state, local or foreign taxes
imposed (net of the value to the Indemnitee of any tax benefits
resulting from tax deductions or otherwise as a result of the
actual or deemed receipt of any payments under this
Agreement).
3
“Other Enterprise” means
any not-for-profit organization to which the Indemnitee renders
service at the request of the Company or any Subsidiary.
“Parent” shall have the
meaning set forth in the regulations of the Securities and Exchange
Commission under the Securities Act of 1933, as amended; provided
the term “Parent” shall not include the board of
directors of a corporation in its capacity as a board of
directors.
“Person” means any
individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government (or any subdivision, department, commission or agency
thereof), and includes without limitation any “person”,
as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.
“Subsidiary” means any
corporation of which more than 50% of the outstanding stock having
ordinary voting power to elect a majority of the board of directors
of such corporation is now or hereafter owned, directly or
indirectly, by the Company.
“Voting Securities” means
any securities of the Company which vote generally in the election
of directors.
Section 2. Indemnification
2.1. General Indemnity
Obligation.
2.1.1.
Subject to the remaining provisions of this Agreement, the Company
hereby indemnifies and holds the Indemnitee harmless for any Losses
or Expenses arising from any Claims relating to (or arising in
whole or in part out of) any Covered Event, including without
limitation, any Claim the basis of which is any actual or alleged
breach of duty, neglect, error, misstatement, misleading statement,
omission or other act done or attempted by the Indemnitee in the
capacity as a Company Agent, whether or not the Indemnitee is
acting or serving in such capacity at the date of this Agreement or
at the time the Claim is initiated.
2.1.2.
Notwithstanding any other provision of this Agreement, the Company
hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, whether by statute or judicial decision. In the
event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member
of its board of directors or an officer, such changes, to the
extent not otherwise required by such law, statute or rule to be
applied to this Agreement shall have no effect on this Agreement or
the parties’ rights and obligations hereunder. However, to
the extent that such change in law permits the Company to provide
broader indemnification than permitted prior to giving effect
thereto, then such provision shall be applied to this Agreement and
the parties’ corresponding rights and obligations
hereunder.
2.1.3.
The Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim voluntarily initiated
by the Indemnitee, and not by way of defense, against the Company
or any director or officer of the Company, unless the Company has
joined in or consented to the initiation of such Claim; provided,
the provisions of this Section 2.1.3 shall not apply
(i) following a Change in Control to Claims seeking
enforcement of this
4
Agreement, the Certificate of Incorporation or Bylaws of the
Company or (ii) absent a Change in Control, to Claims seeking
enforcement of this Agreement, the Certificate of Incorporation or
Bylaws of the Company, but in the case of (i) or
(ii) only if the Indemnitee is ultimately determined to be
entitled to indemnification.
2.1.4.
If the Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of the
Losses or Expenses paid with respect to a Claim but not, however,
for the total amount thereof, the Company shall nevertheless
indemnify and hold the Indemnitee harmless against the portion
thereof to which the Indemnitee is entitled.
2.1.5.
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 or all Claims relating to (or arising
in whole or in part out of) a Covered Event or in defense of any
issue or matter therein, including dismissal without prejudice, the
Company shall indemnify and hold the Indemnitee harmless against
all Expenses incurred in connection therewith.
2.2. Indemnification for Serving
as Witness and Certain Other Claims. Notwithstanding any other
provision of this Agreement, the Company hereby indemnifies and
holds the Indemnitee harmless for all Expenses in connection with
(a) the preparation to serve or service as a witness in any
Claim in which the Indemnitee is not a party, if such actual or
proposed service as a witness arose by reason of the Indemnitee
having served as a Company Agent on or after the date of this
Agreement and (b) any Claim initiated by the Indemnitee on or
after the date of this Agreement (i) for recovery under any
D&O Insurance; or (ii) for enforcement of this Agreement,
the Certificate of Incorporation or Bylaws of the Company, but, in
the case of (i), only if the Indemnitee is ultimately determined to
be entitled to recovery under any D&O Insurance and, in the
case of (ii), only if the Indemnitee is ultimately determined to be
entitled to indemnification.
Section 3. Limitation on Indemnification.
3.1. Coverage Limitations. No
indemnification is available pursuant to the provisions of this
Agreement:
3.1.1.
If such indemnification is not lawful;
3.1.2.
If the Indemnitee’s conduct giving rise to the Claim with
respect to which indemn
|
