Exhibit 10.2
FORM OF
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT between
ZALE CORPORATION, a Delaware corporation (the
“Corporation”), and
(the “Indemnitee”).
W I T N E S S E T
H:
WHEREAS, it is essential to the
Corporation to attract and retain as directors the most capable
persons available;
WHEREAS, the Indemnitee has served
as or the Corporation has requested that the Indemnitee become a
member of the Board of Directors of the Corporation and the
Indemnitee has served or agreed so to serve in part upon the basis
of the indemnification and other agreements provided for and
referred to in this Agreement;
WHEREAS, both the Corporation and
the Indemnitee recognize the increased risk of litigation and other
claims being asserted against directors of public companies in
today’s environment;
WHEREAS, the Corporation’s
Restated Certificate of Incorporation requires the Corporation to
indemnify its directors as set forth therein and expressly
authorizes the Corporation to enter into agreements with its
directors for the purpose of providing for such indemnification,
and the Indemnitee has served or agreed to serve as a director of
the Corporation in part in reliance on such provisions;
WHEREAS, in recognition of the
Indemnitee’s need for substantial protection against personal
liability in order to enhance the Indemnitee’s commencement
of or continued service to the Corporation in an effective
manner, the difficulty of finding adequate director and officer
liability insurance coverage and the Indemnitee’s reliance on
the aforesaid provisions in the Corporation’s Restated
Certificate of Incorporation, and, in part to provide the
Indemnitee with specific contractual assurance that the protection
promised by such provisions will be available to the Indemnitee
(regardless of, among other things, any amendment to or revocation
of such provisions of the Restated Certificate of Incorporation,
future financial difficulties of the Corporation, any change in the
composition of the Corporation’s board of directors or the
occurrence of any acquisition transaction relating to the
Corporation);
WHEREAS, the Corporation wishes to
provide in this Agreement for the effective indemnification of and
the advancing of expenses to the Indemnitee as set forth in this
Agreement; and
WHEREAS, the Indemnitee may have
certain rights to indemnification provided by one or more
shareholder (the “Alternative Indemnitors”) which
Indemnitee and the Alternative Indemnitors intend to be secondary
to the primary obligation of the Corporation to indemnify
Indemnitee as set forth in this Agreement;
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NOW, THEREFORE, in consideration of
the premises and of the Indemnitee agreeing to serve or serving the
Corporation directly or, at its request, with another enterprise,
and intending to be legally bound hereby, the parties hereto agree
as follows:
1.
Indemnification
a.
Agreement to Indemnify
. Subject to Section 3 hereof,
the Corporation shall indemnify the Indemnitee to the full extent
permitted by law against expenses (including attorneys’ and
other professionals’ fees and other out- of-pocket expenses),
judgments, appeal bonds, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection
with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative in nature (“Proceeding”) in which the
Indemnitee was or is or is threatened to be made a party or in
which the Indemnitee testifies by reason of (i) the fact that
the Indemnitee is or was a director, officer, employee or agent at
any time or is or was at any time serving at the request of the
Corporation as a director, officer, employee, trustee or agent of
another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise and (ii) any acts or
omissions by the Indemnitee in such capacity, so long as the
Indemnitee acted or omitted to act in good faith and in a manner
that the Indemnitee (x) reasonably believed to be in or not
opposed to the best interests of the Corporation and (y) with
respect to any criminal action or proceeding, had reasonable cause
to believe was lawful; provided, however, that if a court of
competent jurisdiction, after exhaustion of all appeals there from,
adjudges the Indemnitee to be liable to the Corporation for any
amount or if the Indemnitee pays an amount in settlement to the
Corporation, the Corporation may indemnify the Indemnitee for such
amount only with the approval of such court. The expenses
indemnified hereunder shall include any out of pocket expenses
incurred by Indemnitee in connection with any action, suit or
proceeding to enforce the right of indemnification under this
Agreement.
b.
Primacy of the
Corporation’s Indemnification Obligation
. The Corporation acknowledges
that the Indemnitee may have certain rights to indemnification
provided by the Alternative Indemnitors. The Corporation
agrees that (i) it is the indemnitor of first resort (i.e.,
its obligations to Indemnitee are primary and any obligation of the
Alternative Indemnitors to provide indemnification to the
Indemnitee are secondary), (ii) it shall be liable for the
full amount of expenses (including attorneys’ and other
professionals’ fees and other out- of-pocket expenses),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the Indemnitee in connection with any
Proceeding, without regard to any rights Indemnitee may have
against the Alternative Indemnitors, and (iii) it
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irrevocably waives, relinquishes and
releases the Alternative Indemnitors from any and all claims
against the Alternative Indemnitors for contribution, subrogation
or any other recovery of any kind.
c.
Exclusions
. The Corporation shall not be
liable under this Agreement to make any payment to the
Indemnitee:
i.
for which payment has previously
been actually made to the Indemnitee under a valid and
collectible insurance policy, except in respect of any excess
beyond the amount of payment under such insurance;
ii.
for which payment has previously
been actually made to the Indemnitee by the Corporation other than
pursuant to this Agreement, except in respect of any excess beyond
the amount of such payment; and
iii.
for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of
the Corporation within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, as amended, or similar
provisions of any state law.
d.
Standards of
Indemnification . In
connection with any determination as to whether the Indemnitee is
entitled to be indemnified or advanced expenses hereunder, to the
maximum extent permitted by law, the burden of proof shall be on
the Corporation to establish that Indemnitee is not so
entitled. In connection with any action by the Indemnitee to
enforce this Agreement, to the maximum extent permitted by
law, neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of any action by the
Indemnitee under Section 5 hereof that indemnification of the
claimant is proper under the circumstances because the Indemnitee
has met the applicable standard of conduct, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the Indemnitee
has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct. For purposes of this
Agreement, the termination of any Proceeding by judgment, order,
settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Indemnitee did not act in good faith and in a
manner which the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation or with respect to
any criminal Proceeding, had reasonable cause to believe that the
conduct of the Indemnitee was unlawful.
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2.
Indemnification Against Expenses
of Successful Party .
Notwithstanding the other provisions
of this Agreement, after the Indemnitee has been successful on the
merits or otherwise, including the dismissal of a Proceeding
without prejudice or the settlement of a Proceeding without
admission of liability, in defense of any Proceeding or in defense
of any claim, issue or matter therein, the Corporation, in
accordance with Section 145(c) of the General Corporation
Law of the State of Delaware, shall indemnify the Indemnitee
against all expenses (including attorneys’ and other
professionals’ fees and other out-of-pocket expenses)
actually and reasonably incurred by the Indemnitee in connection
therewith.
3.
Determination of Right of
Indemnification .
Any indemnification under
Section 1 (unless otherwise ordered by a court) shall be made
by the Corporation only following receipt of a written demand by
the Indemnitee and only (x) if, in the specific case there has
been no determination that indemnification of the Indemnitee is not
proper in the circumstances because the Indemnitee has not met the
applicable standard of conduct set forth in Section 1 or
(y) if (but only if) required by Delaware law, upon a
determination that indemnification of the Indemnitee is proper in
the circumstances because the Indemnitee has met the
applicable standard of conduct set forth in Section 1. Any
such determination shall be made within 30 days from the date the
written request of the Indemnitee is received by the Corporation
either (i) by the Board of Directors by a majority vote of a
quorum consisting of directors who are not or were not
parties to such Proceeding, (ii) if such a quorum is not
obtainable or, even if obtainable if a quorum of disinterested
directors so directs, or, if a change in control (as defined below)
has occurred, by the written opinion of independent legal counsel
selected by the Board of Directors of the Corporation (or if a
change of control has so occurred, selected by the Indemnitee with
the consent of the Corporation, which consent shall not be
unreasonably withheld) or (iii) by the stockholders of the
Corporation.
A “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), other than a Trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation or a
corporation owned directly or indirectly by the stockholders
of the Corporation in substantially the same proportions as their
ownership of stock in the Corporation, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under
such Act), directly or indirectly of securities of the Corporation
representing 51% or more of the total voting power represented by
the Corporation’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 Corporation and any new director whose election by
the board of directors or nomination for election by the
Corporation’s stockholders was approved by a vote of at least
two-thirds 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 thereof, or (iii) the
stockholders
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of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the Voting
Securities of the Corporation 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 Corporation or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders
of the Corporation approve a plan of complete liquidation and
dissolution of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation’s assets; provided, however, that any transaction
that would otherwise be a change in control under clause
(iii) hereof which is approved and recommended in advance by
the Corporation’s board of directors shall not be deemed a
change in control. For purpose of the definition of change in
control, the term “Voting Securities” shall mean any
securities of the Corporation which vote generally in the election
of directors.
The term “independent legal
counsel” as used herein, means a law firm, an attorney or a
member of a law firm that is experienced in matters of corporate
law and neither at the time of engagement is, nor at any time
during the five years preceding the date of the engagement by
the Indemnitee has been, retained to represent (i) either the
Corporation or the Indemnitee in any matter material to either
party or (ii) any other party to a Proceeding giving rise to a
claim for indemnification hereunder. The term “independent
legal counsel” shall not include any person who, under the
applicable standards of professional conduct prevailing at the time
of the representation, would have a conflict of interest in
representing either the Corporation or the Indemnitee in an action
to determine the Indemnitee’s rights under the provisions of
the Corporation’s Restated Certificate of Incorporation,
Bylaws or any agreement upon which the Indemnitee relies to
establish the Indemnitee’s right to indemnification or
advancement of expenses.
The Corporation agrees to pay the
reasonable fees of the independent legal counsel and to indemnify
fully such independent legal counsel against any and all expenses
(including attorneys’ fees), claims, liabilities and damages
arising out of or relating to this Agreement or the engagement of
such independent legal counsel pursuant hereto.
4.
Advancement o
