Item 6. Indemnification of Directors and Officers.
The certificate of incorporation of Sysco contains certain provisions permitted under the Delaware General Corporation Law (“DGCL”) relating to the liability of directors. These provisions eliminate a director’s personal liability to the Company or its stockholders for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving certain wrongful acts, such as:
•breach of the director’s duty of loyalty to us or our stockholders;
•acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
•the unlawful payment of dividends or unlawful stock repurchases or redemptions; and
•any transaction from which the director derives an improper personal benefit.
The charter documents of many of our subsidiary guarantors contain substantially similar provisions, subject to the laws of the relevant jurisdiction under which each is organized.
The certificate of incorporation of Sysco also provides for indemnification of Company directors and officers to the fullest extent permitted by Delaware law, and its bylaws contain substantially similar provisions that extend this protection to the directors and officers of Sysco’s subsidiaries as well. The bylaws also entitle these individuals to advancement of expenses, as incurred, in connection with a legal proceeding to the fullest extent permitted by Delaware law. These rights are deemed to have fully vested at the time the indemnitee assumes his or her position with Sysco and continue to apply after the individual has ceased to be a director or officer. The DGCL currently requires Sysco to indemnify a director or officer for all expenses incurred by him or her (including attorney’s fees) when he or she is successful (on the merits or otherwise) in defense of any proceeding brought by reason of the fact that he or she is or was a director or officer of Sysco. In addition, with respect to all proceedings other than proceedings by or in the right of the corporation, Delaware law allows Sysco to indemnify a director or officer against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement, even if the director or officer is not successful on the merits, if he or she:
•acted in good faith;
•acted in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; and
•in the case of a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except that indemnification extends only to expenses, including attorneys’ fees, incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, as amended, by-laws, disinterested director vote, stockholder vote, agreement, or otherwise. In addition, with respect to those subsidiaries organized under laws other than the DGCL, additional comparable indemnification and elimination of liability provisions may apply. In addition, certain of our employee benefit plans provide indemnification of directors and other agents against certain claims arising from administration of such plans. We also maintain liability insurance for our directors and officers covering, subject to certain exceptions, any actual or alleged negligent act, error, omission, misstatement, misleading statement, neglect or breach of duty by such directors or officers, individually or collectively, in the discharge of their duties in their capacity as directors and officers.