FORM OF DIRECTOR AND OFFICER
INDEMNIFICATION AGREEMENT
This Director and
Officer Indemnification Agreement, dated as of
, 2006 (this “ Agreement ”), is made by
and between The Lamson & Sessions Co., an Ohio corporation (the
“ Company ”), and [Name of the
Indemnitee] (the “ Indemnitee ”), a
director and/or officer of the Company.
A. The
Indemnitee is currently serving as a director and/or officer of the
Company, and the Company desires that the Indemnitee continue
serving in such capacity. The Indemnitee is willing, subject to
certain conditions, including the execution and performance of this
Agreement by the Company, to continue serving in such
capacity.
B. In
addition to the indemnification to which the Indemnitee is entitled
under the Amended Code of Regulations of the Company (the “
Regulations ”), the Company has obtained, at
its sole expense, insurance protecting the Company and its officers
and directors, including the Indemnitee, against certain losses
arising out of any threatened, pending or completed action, suit,
proceeding or claim to which such persons may be made or are
threatened to be made parties.
NOW, THEREFORE, in
order to induce the Indemnitee to continue to serve in
[his/her] current capacity with the Company, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Indemnitee agree
as follows:
1.
Certain Definitions . In addition to terms defined elsewhere
in this Agreement, the following terms have the following meanings
when used in this Agreement with initial capital
letters:
(a) “
Board ” means the Board of Directors of the
Company.
(b) A “
Change in Control ” shall have occurred if any
of the following events occur:
(i) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“ Person ”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of either: (A) the
then-outstanding shares of common stock of the Company (the “
Company Common Stock ”) or (B) the
combined voting power of the then-outstanding voting securities of
the Company entitled to vote generally in the election of directors
(“ Voting Stock ”); provided ,
however , that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control:
(1) any acquisition directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any subsidiary of the Company, or (4) any
acquisition by any Person pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii) of
this Section 1(b) ; or
(ii) Individuals
who, as of the date of this Agreement, constitute the Board of
Directors of the Company (the “ Incumbent Board
”) cease for any reason (other than death or disability) to
constitute at least a majority of the Board of Directors of the
Company; provided , however , that any individual
becoming a director subsequent to the date of this Agreement whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection
to such nomination) shall be considered as though such individual
were a member of the Incumbent Board, but excluding for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest
(within the meaning of Rule 14a-11 promulgated under the
Exchange Act) with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors of
the Company; or
(iii) Consummation
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a “ Business Combination ”), in
each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Company Common
Stock and Voting Stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then-outstanding shares of common stock and
the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the entity resulting from such Business Combination
(including an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in
substantially the same proportions relative to each other as their
ownership, immediately prior to such Business Combination, of the
Company Common Stock and Voting Stock of the Company, as the case
may be, (B) no Person (excluding any entity resulting from
such Business Combination or any employee benefit plan (or related
trust) sponsored or maintained by the Company or such entity
resulting from such Business Combination) beneficially owns,
directly or indirectly, 15% or more of, respectively, the
then-outstanding shares of common stock of the entity resulting
from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board
of Directors of the Company, providing for such Business
Combination; or
(iv) Approval by
the shareholders of the Company of a complete liquidation or
dissolution of the Company.
(c)
“ Exchange Act ” means the Securities
Exchange Act of 1934.
(d)
“ Independent Counsel ” means nationally
recognized legal counsel designated for such purpose by the
Indemnitee and reasonably acceptable to a majority of the members
of the Incumbent Board, even if less than a quorum, which shall not
be an attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services (in each
case in the past five years) for (x) the Company, (y) any
Person who may be indemnified in such action, suit, proceeding
or
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claim, or
(z) any holder of 5% or more of the then-outstanding shares of
any class of the Company Common Stock or Voting Stock.
(e)
“ ORC ” means the Ohio Revised
Code.
2.
Continued Service . The Indemnitee shall serve or continue
to serve as a director and/or officer of the Company so long as
[he/she] is duly elected in accordance with the Regulations
or until [he/she] resigns in writing or is removed from
office in accordance with applicable law.
3.
Initial Indemnity . (a) The Company shall indemnify the
Indemnitee if or when [he/she] is a party or is threatened
to be made a party to any threatened, pending or completed action,
suit, proceeding or claim, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the
Company), by reason of the fact that [he/she] is or was a
director and/or officer of the Company or is or was serving at the
request of the Company as a director, trustee, officer, employee,
member, manager or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in any such
capacity, against any and all costs, charges, expenses (including
fees and expenses of attorneys or others; all such costs, charges
and expenses being jointly referred to in this Agreement as “
Expenses ”), judgments, fines and amounts paid
in settlement actually incurred by the Indemnitee in connection
therewith, including any appeal of or from any judgment or
decision, (i) in the case of an Indemnitee that is a director of
the Company, unless it is proved by clear and convincing evidence
in a court of competent jurisdiction that the Indemnitee’s
action or failure to act involved an act or omission undertaken
with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company and
(ii) in the case of an Indemnitee that is an officer of the
Company but not a director of the Company, if the Indemnitee acted
in good faith and in a manner which [he/she] reasonably
believed to be in or not opposed to the best interests of the
Company. In addition, with respect to any criminal action or
proceeding, indemnification under this Agreement shall be made only
if the Indemnitee had no reasonable cause to believe
[his/her] conduct was unlawful. The termination of any
action, suit, proceeding or claim by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did
not satisfy the foregoing applicable standard of
conduct.
(b) The
Company shall indemnify the Indemnitee if or when [he/she]
is a party or is threatened to be made a party, to any threatened,
pending or completed action, suit, proceeding or claim by or in the
right of the Company to procure a judgment in its favor, by reason
of the fact that the Indemnitee is or was a director and/or officer
of the Company or is or was serving at the request of the Company
as a director, trustee, officer, employee, member, manager or agent
of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership, joint
venture, trust or other enterprise, or by reason of any action
alleged to have been taken or omitted in any such capacity, against
any and all Expenses, judgments, fines and amounts paid in
settlement actually incurred by the Indemnitee in connection
therewith, including any appeal of or from any judgment or
decision, (i) in the case of an Indemnitee that is a director
of the Company, unless it is proved by clear and convincing
evidence in a court of competent jurisdiction that the
Indemnitee’s action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best
interests of the Company and (ii) in the case of an Indemnitee
that is an officer of the Company but not a director of the
Company, if the Indemnitee acted in good faith and in a manner
which [he/she] reasonably believed to be in or not opposed
to the best interests of the Company. Notwithstanding the foregoing
provisions of this Section 3(b) , no indemnification
pursuant to this Section 3(b) shall be made (A) in
the case of an Indemnitee that is an officer but not a director of
the Company, in respect of any claim, issue or matter as to which
the Indemnitee is adjudged to be liable for negligence or
misconduct in the performance of [his/her] duty
to
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the Company
unless, and only to the extent that, the court of common pleas or
other court in which such action, suit, proceeding or claim was
brought determines, notwithstanding any adjudication of liability,
that in view of all the circumstances of the case the Indemnitee is
fairly and reasonably entitled to indemnity for such Expenses,
judgments, fines and amounts paid in settlement as such court of
common pleas or other court shall deem proper, or (B) in the
case of an Indemnitee that is a director of the Company, in respect
of any action, suit, proceeding or claim in which the only
liability asserted against the Indemnitee is pursuant to
Section 1701.95 of the ORC.
(c) Any
indemnification under Section 3(a) or
Section 3(b) (unless ordered by the court in which such
action, suit, proceeding or claim was brought) shall be made by the
Company only upon a determination relating to the specific case
that indemnification of the Indemnitee is proper in the
circumstances because [he/she] has met the applicable
standard of conduct set forth in Section 3(a) or
Section 3(b) . Prior to a Change in Control, such
determination shall be made (i) by a majority vote or consent
of a quorum consisting of directors [who are members of the
Incumbent Board and] who were not and are not parties to or
threatened with such action, suit, proceeding or claim (“
Disinterested Directors ”) or (ii) if such
a quorum of Disinterested Directors is not available or if a
majority of such quorum so directs, by Independent Counsel in a
written opinion to the Board (with a copy to the Indemnitee);
provided , however , that if the Indemnitee is no
longer serving as a director of the Company or as an officer of the
Company at the time that such action, suit, proceeding or claim is
initiated, then such determination shall be made by Independent
Counsel in a written opinion to the Board (with a copy to the
Indemnitee), unless the Indemnitee shall have elected in writing to
have such determination made by a majority vote or consent of a
quorum of Disinterested Directors, in which case such determination
shall be made by such quorum of Disinterested Directors. Following
a Change in Control, such determination shall be made by
Independent Counsel in a written opinion to the Board (with a copy
to the Indemnitee), unless the Indemnitee shall have elected in
writing to have such determination made by a majority vote or
consent of a quorum consisting of Disinterested Directors, in which
case such determination shall be made by such quorum of
Disinterested Directors.
(d) To
the extent that the Indemnitee has been successful on the merits or
otherwise, including the dismissal of an action without prejudice,
in defense of any action, suit, proceeding or claim referred to in
Section 3(a) or Section 3(b) , or in
defense of any claim, issue or matter therein, [he/she]
shall be indemnified against Expenses actually incurred by
[him/her] in connection therewith.
(e) Expenses
actually incurred by the Indemnitee in defending any action, suit,
proceeding or claim referred to in Section 3(a) or
Section 3(b) , or in defense of any claim, issue or
matter therein, shall be paid by the Company as they are incurred
in advance of the final disposition of such action, suit,
proceeding or claim under the procedure set forth in
Section 5(b) .
(f) For
purposes of this Agreement, references to “ other
enterprises ” shall include employee benefit plans;
references to “ fines ” shall include any
excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; and references to “ serving at
the request of the Company ” shall include any
service as a director, officer, employee, member, manager or agent
of the Company which imposes duties on, or involves services by,
the Indemnitee with respect to an employee benefit plan, its
participants or beneficiaries.
(g) No
amendment to the Articles of Incorporation of the Company (the
“ Articles ”) or the Regulations may
deny, diminish or encumber the Indemnitee’s rights to
indemnity pursuant to the Articles, the Regulations, the ORC or any
other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the “
Effective Date ”) upon which the amendment was
approved by the shareholders of the Company. In the event that the
Company shall purport to adopt any amendment to its Articles or
Regulations or take any other action the effect of which is to
deny, diminish
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or encumber the
Indemnitee’s rights to indemnity pursuant to the Articles,
the Regulations, the ORC or any such other law, such amendment
shall apply only to acts or failures to act occurring entirely
after the Effective Date.
4.
Additional Indemnification . (a) Pursuant to
Section 1701.13(E)(6) of the ORC, without limiting any right
which the Indemnitee may have pursuant to Section 3 or
any other provision of this Agreement or the Articles, the
Regulations, the ORC, any policy of insurance or otherwise, but
subject to any limitation on the maximum permissible indemnity
which may exist under applicable law at the time of any request for
indemnity under this Agreement and subject to the following
provisions of this Section 4 , the Company shall
indemnify the Indemnitee against any amount which [he/she]
is or becomes obligated to pay relating to or arising out of any
claim made against [him/her] because of any act, failure to
act or neglect or breach of duty, including any actual or alleged
error, misstatement or misleading statement, that [he/she]
commits, suffers, permits or acquiesces in while acting in
[his/her] capacity as a director and/or an officer of the
Company or at the request of the Company as a director, trustee,
officer, employee, member
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