BACK YARD BURGERS INC
EX-10.22 SEVERANCE AGREEMENT LATTIMORE M. MICHAEL
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>2
<FILENAME>g91805exv10w22.txt
<DESCRIPTION>EX-10.22 SEVERANCE AGREEMENT LATTIMORE M. MICHAEL
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.22

                              SEVERANCE AGREEMENT

      THIS AGREEMENT, dated October 11, 2004, is made by and between Back Yard
Burgers, Inc., a Delaware corporation (as hereinafter defined, the
"Corporation"), and Lattimore M. Michael (as hereinafter defined, the
"Executive").

      WHEREAS, the Board of Directors of the Corporation (as hereinafter
defined, the "Board") recognizes that the services of the Executive are integral
to the success of the operations of the Company, and the possibility of a Change
in Control (as hereinafter defined) of the Corporation and the uncertainty it
could cause, may result in the departure or distraction of key management
employees of the Corporation to the detriment of the Corporation and its
stockholders; and

      WHEREAS, the Executive is a key management employee of the Corporation;
and

      WHEREAS, the Board has determined that the Corporation should encourage
the continued employment of the Executive by the Corporation and the continued
dedication of the Executive to his assigned duties without distraction as a
result of the circumstances arising from the possibility of a Change in Control;

      NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Corporation and the Executive hereby agree as follows:

      1. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings indicated below:

            (A) "Board" shall mean the Board of Directors of the Corporation, as
      constituted from time to time.

            (B) "Cause" for termination by the Corporation of the Executive's
      employment shall mean (i) the willful failure by the Executive
      substantially to perform the Executive's duties with the Corporation,
      other than any failure resulting from the Executive's incapacity due to
      physical or mental illness or any actual or anticipated failure after the
      issuance of a Notice of Termination for Good Reason by the Executive in
      accordance with paragraph (A) of Section 5, that continues for at least 30
      days after the Board delivers to the Executive a written demand for
      performance that identifies specifically and in detail the manner in which
      the Board believes that the Executive willfully has failed substantially
      to perform the Executive's duties; or (ii) the willful engaging by the
      Executive in misconduct that is demonstrably and materially injurious to
      the Corporation, monetarily. For purposes of this definition, no act, or
      failure to act, on the Executive's part shall be deemed "willful" unless
      done, or omitted to be done, by the Executive not in good faith and
      without reasonable belief that the Executive's act, or failure to act, was
      in the best interest of the Corporation.

            (C) A "Change in Control" shall mean, if subsequent to the date of
      this Agreement:

<PAGE>

                  (i) Any "person," as defined in Section 13(d) and 14(d) of the
            Securities Exchange Act of 1934, as amended (the "Exchange Act"),
            other than the Corporation, any of its subsidiaries, or any employee
            benefit plan maintained by the Corporation or any of its
            subsidiaries, becomes the "beneficial owner" (as defined in Rule
            l3d-3 under the Exchange Act) of (A) l5% or more, but no greater
            than 50%, of the outstanding voting capital stock of the
            Corporation, unless prior thereto, the Continuing Directors approve
            the transaction that results in the person becoming the beneficial
            owner of 15% or more, but no greater than 50%, of the outstanding
            voting capital stock of the Corporation or (B) more than 50% of the
            outstanding voting capital stock of the Corporation, regardless
            whether the transaction or event by which the foregoing 50% level is
            exceeded is approved by the Continuing Directors;

                  (ii) At any time Continuing Directors no longer constitute a
            majority of the directors of the Corporation; or

                  (iii) The consummation of (A) a merger or consolidation of the
            Corporation, statutory share exchange, or other similar transaction
            with another corporation, partnership, or other entity or enterprise
            in which either the Corporation is not the surviving or continuing
            corporation or shares of common stock of the Corporation are to be
            converted into or exchanged for cash, securities other than common
            stock of the Corporation, or other property, (B) a sale or
            disposition of all or substantially all of the assets of the
            Corporation, or (C) the dissolution of the Corporation.

            (D) "Code" shall mean the Internal Revenue Code of 1986, as amended
      from time to time.

            (E) "Continuing Directors" means directors who were directors of the
      Corporation as of the date hereof or who are appointed, elected or
      nominated to the board in accordance with the following sentence. It being
      understood that any person becoming a member of the board subsequent to
      the date hereof whose appointment was approved by a vote of at least a
      majority of the Continuing Directors remaining in office at the time of
      appointment or whose election or nomination for election by the
      Corporation's stockholders was approved by a vote of at least a majority
      of the Continuing Directors remaining in office at the time of election or
      nomination shall be, for purposes of this Agreement, considered as though
      such person were a Continuing Director on the date hereof.

            (F) "Corporation" shall mean Back Yard Burgers, Inc. and any
      successor to its business or assets, by operation of law or otherwise.

            (G) "Date of Termination" shall have the meaning stated in paragraph
      (B) of Section 5 hereof.

            (H) "Disability" shall be deemed the reason for the termination by
      the Corporation of the Executive's employment, if, as a result of the
      Executive's incapacity

                                       2

<PAGE>

      due to physical or mental illness, the Executive shall have been absent
      from the full-time performance of the Executive's duties with the
      Corporation for a period of six consecutive months, the Corporation shall
      have given the Executive a Notice of Termination for Disability, and,
      within 20 business days after the Notice of Termination is given, the
      Executive shall not have returned to the full-time performance of the
      Executive's duties.

            (I) "Executive" shall mean the individual named in the first
      paragraph of this Agreement.

            (J) "Good Reason" for termination by the Executive of the
      Executive's employment shall mean the occurrence, without the Executive's
      express written consent, of any one of the following:

                  (i) the assignment to the Executive of any duties inconsistent
            with the Executive's status as an executive officer of the
            Corporation or a substantial adverse alteration in the nature or
            status of the Executive's responsibilities from those in effect
            immediately prior to the Change in Control;

                  (ii) a reduction by the Corporation in the Executive's annual
            base salary to any amount less than the Executive's annual base
            salary as in effect immediately prior to the Change in Control;

                  (iii) the relocation of the principal executive offices of the
            Corporation to a location more than 35 miles from the location of
            such offices immediately prior to the Change in Control or the
            Corporation's requiring the Executive to be based anywhere other
            than the principal executive offices of the Corporation except for
            required business travel to an extent substantially consistent with
            the Executive's business travel obligations immediately prior to the
            Change in Control;

                  (iv) the failure by the Corporation to pay to the Executive
            any portion of the Executive's current compensation, or to pay to
            the Executive any deferred compensation under any deferred
            compensation program of the Corporation, within five (5) days after
            notice from the Executive of the date the compensation was due;

                  (v) the failure by the Corporation to continue in effect any
            compensation plan(s), singularly or in aggregate, in which the
            Executive participates immediately prior to the Change in Control
            that is material to the Executive's total compensation, including
            but not limited to, stock option, restricted stock, stock
            appreciation right, incentive compensation, bonus, and other plans,
            unless an equitable alternative arrangement embodied in an ongoing
            substitute or alternative plan has been made, or the failure by the
            Corporation to continue the Executive's participation therein (or in
            a substitute or alternative plan) on a basis not materially less
            favorable, both in terms of the amount of

                                       3

<PAGE>

            compensation provided and the level of the Executive's participation
            relative to other participants, than existed immediately prior to
            the Change in Control;

                  (vi) the failure by the Corporation to continue to provide the
            Executive with benefits substantially similar to those enjoyed by
            the Executive under any of the Corporation's pension,
            profit-sharing, life insurance, medical, health and accident,
            disability, or other employee benefit plans in which the Executive
            was participating immediately prior to the Change in Control; the
            failure by the Corporation to continue to provide the Executive any
            material fringe benefit or perquisite enjoyed by the Executive
            immediately prior to the Change in Control; or the failure by the
            Corporation to provide the Executive with the number of paid
            vacation days to which the Executive is entitled in accordance with
            the Corporation's normal vacation policy in effect immediately prior
            to the Change in Control; or

                  (vii) any purported termination by the Corporation of the
            Executive's employment that is not effected in accordance with a
            Notice of Termination satisfying the requirements of paragraph (A)
            of Section 5 hereof.

            (K) "Notice of Termination" shall have the meaning stated in
      paragraph (A) of Section 5 hereof.

            (L) "Payment Trigger" shall mean the occurrence of a Change in
      Control during the term of this Agreement concurrent with or followed by,
      at any time before the end of the 24th month immediately following the
      month in which the Change in Control occurred, the termination of the
      Executive's employment with the Corporation for any reason other than (A)
      by the Executive without Good Reason, (B) by the Corporation as a result
      of the Disability of the Executive or with Cause, or (C) as a result of
      the death of the Executive.

            (M) "Person" shall have the meaning given in Section 3(a)(9) of the
      Securities Exchange Act of 1934, as amended from time to time, as modified
      and used in Sections 13(d) and 14(d) thereof; except that, a Person shall
      not include (i) the Corporation, (ii) a trustee or other fiduciary holding
      securities under an employee benefit plan of the Corporation, or (iii) an
      underwriter temporarily holding securities pursuant to an offering of such
      securities.

            (N) "Subsidiary" shall mean any corporation or other entity or
      enterprise, whether incorporated or unincorporated, of which at least a
      majority of the securities or other interests having by their terms
      ordinary voting power to elect a majority of the board of directors or
      others serving similar functions with respect to such corporation or other
      entity or enterprise is owned by the Corporation or other entity or
      enterprise of which the Corporation directly or indirectly owns securities
      or other interests having all the voting power.

                                       4

<PAGE>

      2. TERM OF AGREEMENT.

            (A) This Agreement shall become effective on the date hereof and,
      subject to the second sentence of this Section 2, shall continue in effect
      until the earliest of (i) a Date of Termination in accordance with Section
      5 or the death of the Executive shall have occurred prior to a Change in
      Control, (ii) if a Payment Trigger shall have occurred during the term of
      this Agreement, the performance by the Corporation of all its obligations,
      and the satisfaction by the Corporation of all its obligations and
      liabilities, under this Agreement, (iii) the two (2) year anniversary of
      the date of this Agreement if, as of that two (2) year anniversary, a
      Change in Control shall not have occurred and be continuing, or (iv) in
      the event, as of the two (2) year anniversary of the date of this
      Agreement, a Change in Control shall have occurred and be continuing,
      either the expiration of such period thereafter within which a Payment
      Trigger does not or can not occur or the ensuing occurrence of a Payment
      Trigger and the performance by the Corporation of all of its obligations
      and liabilities under this Agreement. Any Change in Control during the
      term of this Agreement that for any reason ceases to constitute a Change
      in Control or is not followed by a Payment Trigger shall not effect a
      termination or lapse of this Agreement. Any transfer of the Executive's
      employment from the Corporation to a Subsidiary, from a Subsidiary to the
      Corporation, or from one Subsidiary to another Subsidiary shall not
      constitute a termination of the Executive's employment for purposes of
      this Agreement.

      3. GENERAL PROVISIONS.

            (A) The Corporation hereby represents and warrants to the Executive
      that the execution and delivery of this Agreement and the performance by
      the Corporation of the actions contemplated hereby have been duly
      authorized by all necessary corporate action on the part of the
      Corporation. This Agreement is a legal, valid and legally binding
      obligation of the Corporation enforceable in accordance with its terms.

            (B) No amount or benefit shall be payable under this Agreement
      unless there shall have occurred a Payment Trigger during the term of this
      Agreement. In no event shall payments in accordance with this Agreement be
      made in respect of more than one Payment Trigger.

            (C) This Agreement shall not be construed as creating an express or
      implied contract of employment and, except as otherwise agreed in writing
      between the Executive and the Corporation, the Executive shall not have
      any right to be retained in the employ of the Corporation. Notwithstanding
      the immediately preceding sentence or any other provision of this
      Agreement, no purported termination of the Executive's employment that is
      not effected in accordance with a Notice of Termination satisfying
      paragraph (A) of Section 5 shall be effective for purposes of this
      Agreement. The Executive's right, following the occurrence of a Change in
      Control, to terminate his employment under this Agreement for Good Reason
      shall not be affected by the Executive's Disability or incapacity. The
      Executive's continued employment shall not constitute consent to, or a
      waiver of rights with respect to, any act or failure to act constituting
      Good Reason under this Agreement.

                                       5

<PAGE>

      4. COMPENSATION DUE UPON A PAYMENT TRIGGER.

            (A) The Corporation shall pay to the Executive the payments and
      provide the benefits described in this Section 4 upon the occurrence of a
      Payment Trigger during the term of this Agreement.

            (B) Upon the occurrence of a Payment Trigger during the term of this
      Agreement: (i) the Corporation shall pay to the Executive a lump sum
      payment, in cash, equal to the sum of (a) the higher of the Executive's
      annual base salary in effect immediately prior to the occurrence of the
      Change in Control or the Executive's annual base salary in effect
      immediately prior to the Payment Trigger, plus (b) Executive's bonus for
      the fiscal year immediately preceding the year in which such termination
      occurs; and (ii) any then unvested stock option awards previously granted
      to Executive by the Corporation shall become immediately one-hundred
      percent vested - any portion of a stock option award accelerated pursuant
      to this Section 4 shall be exercisable pursuant to the terms of the stock
      option plan and the stock option award agreement applicable to such award.

            (C) Notwithstanding any provision of any incentive compensation
      plan, the Corporation shall pay to the Executive a lump sum amount, in
      cash, equal to the amount of any incentive compensation that has been
      allocated or awarded to the Executive for a completed fiscal year or other
      measuring period preceding the occurrence of a Payment Trigger under any
      incentive compensation plan but has not yet been paid to the Executive.

            (D) Upon the occurrence of a Payment Trigger during the term of this
      Agreement, Executive and his spouse shall be entitled to obtain healthcare
      coverage under any group health plan maintained by the Corporation until
      such time as Executive shall become eligible to obtain healthcare coverage
      under Medicare; provided, however, the Corporation shall not be obligated
      to pay any premiums on behalf of Executive in connection with Executive's
      coverage under any health care plan maintained by the Corporation. If
      Executive does not qualify for coverage under the Corporation's group
      health plans after reasonable efforts by the Corporation to obtain such
      coverage for the Executive, the Corporation shall make available to
      Executive individual healthcare coverage having substantially the same
      terms as the Corporation's group health plan and at the same cost to
      Executive as the Corporation's group health plan. In the event Executive,
      at any time while Executive is receiving benefits under this Section 4(D),
      accepts employment that makes available healthcare coverage to the
      Executive and his spouse, the Corporation's obligations under this Section
      4(D) shall cease.

            (E) The payments provided for in paragraphs (B) and (C) of this
      Section 4 shall be made not later than the fifth day following the
      occurrence of a Payment Trigger, unless the amounts of such payments
      cannot be finally determined on or before that day, in which case, the
      Corporation shall pay to the Executive on that day an estimate, as
      reasonably determined in good faith by the Corporation, of the minimum
      amount of the payments to which the Executive is clearly entitled and
      shall pay the remainder of the payments.

                                       6

<PAGE>

      5. TERMINATION PROCEDURES.

            (A) During the term of this Agreement, any purported termination of
      the Executive's employment (other than by reason of death) shall be
      communicated by written Notice of Termination from one party hereto to the
      other party hereto in accordance with Section 10 hereof. For purposes of
      this Agreement, a "Notice of Termination" shall mean a written notice that
      indicates the specific termination provision in this Agreement relied
      upon, and, if applicable, the notice shall set forth in reasonable detail
      the facts and circumstances claimed to provide a basis for termination of
      the Executive's employment under the provision so indicated. Further, a
      Notice of Termination for Cause shall include a copy of a resolution duly
      adopted by the affirmative vote of not less than a majority of the entire
      membership of the Board at a meeting of the Board that was called and held
      for the purpose of considering the termination finding that, in the
      informed, reasonable, good faith judgment of the Board, the Executive was
      guilty of conduct set forth in the definition of Cause in Section 1(B),
      and specifying the particulars thereof in detail.

            (B) "Date of Termination" with respect to any purported termination
      of the Executive's employment during the term of this Agreement (other
      than by reason of death) shall mean (i) if the Executive's employment is
      terminated for Disability, 20 business days after Notice of Termination is
      given (provided that the Executive shall not have returned to the
      full-time performance of the Executive's duties during that 20 business
      day period) and (ii) if the Executive's employment is terminated for any
      other reason, the date specified in the Notice of Termination, which, in
      the case of a termination by the Corporation, shall not be less than ten
      (10) business days except in the case of a termination for Cause, and, in
      the case of a termination by the Executive, shall not be less than ten
      (10) business days nor more than 20 business days, respectively, after the
      date such Notice of Termination is given.

      6. NO MITIGATION. The Executive shall not be required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive by the Corporation pursuant to this Agreement. Further, the amount of
any payment or benefit provided for in this Agreement shall not be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Corporation, or otherwise.

      7. DISPUTES.

            (A) If a dispute or controversy arises out of or in connection with
      this Agreement, the parties shall first attempt in good faith to settle
      the dispute or controversy by mediation under the Commercial Mediation
      Rules of the American Arbitration Association before resorting to
      arbitration or litigation. Thereafter, any remaining unresolved dispute or
      controversy arising out of or in connection with this Agreement shall,
      upon a written notice from the Executive to the Corporation either before
      suit thereupon is filed or within 20 business days thereafter, be settled
      exclusively by arbitration in accordance with the Commercial Arbitration
      Rules of the American Arbitration Association in a city located within the
      continental United States designated

                                       7

<PAGE>

      by the Executive and reasonably acceptable to the Corporation. Judgment
      may be entered on the arbitrator's award in any court having jurisdiction.
      The Executive shall, however, be entitled to seek specific performance of
      the Corporation's obligations hereunder during the pendency of any dispute
      or controversy arising under or in connection with this Agreement.

            (B) Any legal action concerning this Agreement, other than a
      mediation or an arbitration described in paragraph (A) of this Section 7,
      whether instituted by the Corporation or the Executive, shall be brought
      and resolved only in a state court of competent jurisdiction located in
      the territory that encompasses the city, county, or parish in which the
      Executive's principal residence is located at the time such action is
      commenced. The Corporation hereby irrevocably consents and submits to and
      shall take any action necessary to subject itself to the personal
      jurisdiction of that court and hereby irrevocably agrees that all claims
      in respect of the action shall be instituted, heard, and determined in
      that court. The Corporation agrees that such court is a convenient forum,
      and hereby irrevocably waives, to the fullest extent it may effectively do
      so, the defense of an inconvenient forum to the maintenance of the action.
      Any final judgment in the action may be enforced in other jurisdictions by
      suit on the judgment or in any other manner provided by law.

            (C) The Corporation shall pay all costs and expenses, including
      attorneys' fees and disbursements, of the Corporation and the Executive in
      connection with any legal proceeding (including arbitration), whether or
      not instituted by the Corporation or the Executive, relating to the
      interpretation or enforcement of any provision of this Agreement, that is
      resolved in favor of the Executive pursuant to a final, unappealable
      judgment. The Executive shall pay all costs and expenses, including
      attorneys' fees and disbursements, of the Corporation and the Executive in
      connection with any legal proceeding (including arbitration), whether or
      not instituted by the Corporation or the Executive, relating to the
      interpretation or enforcement of any provision of this Agreement, that is
      resolved in favor of the Corporation pursuant to a final, unappealable
      judgment. The non-prevailing party, as set forth above, shall pay
      prejudgment interest on any money judgment obtained by the prevailing
      party as a result of such proceeding, calculated at the rate provided in
      Section 1274(b)(2)(B) of the Code.

      8. SUCCESSORS; BINDING AGREEMENT.

            (A) In addition to any obligations imposed by law upon any successor
      to the Corporation, the Corporation shall require any successor (whether
      direct or indirect, by purchase, merger, consolidation, or otherwise) to
      all or substantially all of the business or assets of the Corporation
      expressly to assume and agree to perform this Agreement in the same manner
      and to the same extent that the Corporation would be required to perform
      it if no such succession had taken place. Failure of the Corporation to
      obtain the assumption and agreement prior to the effectiveness of any
      succession shall be a breach of this Agreement and shall entitle the
      Executive to compensation from the Corporation in the same amount and on
      the same terms as the Executive would be entitled to hereunder if the
      Executive were to terminate his employment for Good Reason immediately
      after a Change in Control and during the term of this Agreement, except
      that, for purposes of

                                       8

<PAGE>

      implementing the foregoing, the date on which any succession becomes
      effective shall be deemed the Payment Trigger occasioned by the foregoing
      deemed termination of employment for Good Reason immediately following a
      Change in Control. The provisions of this Section 8 shall continue to
      apply to each subsequent employer of Executive bound by this Agreement in
      the event of any merger, consolidation, or transfer of all or
      substantially all of the business or assets of that subsequent employer.

            (B) This Agreement shall inure to the benefit of and be enforceable
      by the Executive's personal or legal representatives, executors,
      administrators, successors, heirs, distributees, devisees, and legatees.
      If the Executive shall die while any amount would be payable to the
      Executive hereunder (other than amounts which, by their terms, terminate
      upon the death of the Executive) if the Executive had continued to live,
      the amount, unless otherwise provided herein, shall be paid in accordance
      with the terms of this Agreement to the executors, personal
      representatives, or administrators of the Executive's estate.

      9. EXCLUSIVE REMEDY. In the event of a Payment Trigger, the provisions of
Section 4 are intended to be and are exclusive and in lieu of any other rights
or remedies to which Executive or the Corporation may otherwise be entitled
(including any contrary provisions in any written or oral employment agreement
or arrangement Executive may have with the Company, including, but not limited
to, that certain Executive Employment Agreement, dated as of April 15, 1993,
between the Executive and the Corporation), whether at law, tort or contract, in
equity, or under this Agreement. Executive shall not be entitled to any
severance benefits, compensation or other payments or rights upon a Payment
Trigger other than those benefits expressly set forth in Section 4.

      10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:

      To the Corporation:  Back Yard Burgers, Inc.
                           1657 N. Shelby Oaks Drive, Suite 105
                           Memphis, Tennessee 38134-7401
                           Attention:  President

      To the Executive:    Lattimore M. Michael

                           __________________________
                           __________________________

      11. MISCELLANEOUS. No provision of this Agreement may be modified, waived,
or discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by the Executive and an officer of the Corporation
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with,

                                       9

<PAGE>

any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of Tennessee. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state, or local law and any additional withholding to which the
Executive has agreed.

      12. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

      13. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

                                       10

<PAGE>

      IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
set forth above.

                                    BACK YARD BURGERS, INC.

                                    By: /s/ Michael G. Webb
                                        ------------------------------------
                                    Name: Michael G. Webb
                                    Title: Chief Financial Officer

                                    /s/ Lattimore M. Michael
                                    ----------------------------------------
                                    Lattimore M. Michael

                                       11

</TEXT>
</DOCUMENT>
