Exhibit 10
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement (this
“Agreement” ) dated the
day of
,
2004, by and between Lancer Corporation, a Texas corporation (the
“Company” ), and
,
an individual ( “Indemnitee”
).
RECITALS
A. Competent and experienced
persons are reluctant to serve or to continue to serve as directors
and officers of corporations or in other capacities unless they are
provided with adequate protection through insurance or
indemnification (or both) against claims against them arising out
of their service and activities on behalf of the
corporation.
B. The current uncertainties
relating to the availability of adequate insurance have increased
the difficulty for corporations of attracting and retaining
competent and experienced persons to serve in such
capacity.
C. The Board of Directors of
the Company (the “ Board of Directors ”)
has determined that the continuation of present trends in
litigation will make it more difficult to attract and retain
competent and experienced persons to serve as directors and
officers of the Company, that this situation is detrimental to the
best interests of the Company’s stockholders and that the
Company should act to assure such persons that there will be
increased certainty of adequate protection in the
future.
D. As a supplement to
and in the furtherance of the Company’s Articles of
Incorporation, as amended (the “ Articles
”), and Bylaws, as amended (the “
Bylaws ”), it is reasonable, prudent, desirable
and necessary for the Company contractually to obligate itself to
indemnify, and to pay in advance expenses on behalf of, officers
and directors to the fullest extent permitted by law so that they
will serve or continue to serve the Company free from concern that
they will not be so indemnified and that their expenses will not be
so paid in advance;
E. This Agreement is not a
substitute for, nor does it diminish or abrogate any rights of
Indemnitee under, the Articles and the Bylaws or any resolutions
adopted pursuant thereto (including any contractual rights of
Indemnitee that may exist).
F. Indemnitee is a director
and/or officer of the Company and his or her willingness to
continue to serve in such capacity is predicated, in substantial
part, upon the Company’s willingness to indemnify him or her
to the fullest extent permitted by the laws of the State of Texas
and upon the other undertakings set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE,
in consideration of the premises and
covenants contained herein, the Company and Indemnitee hereby agree
as follows:
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ARTICLE 1
CERTAIN DEFINITIONS
Capitalized terms used but not
otherwise defined in this Agreement have the meanings set forth
below:
“ Change of
Control ” means the occurrence of any of the
following events:
(a)
The acquisition after the date of this Agreement by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “
Exchange Act ”)) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20 % or more of either the then-outstanding shares
of common stock of the Company (the “ Outstanding
Company Common Stock ”) or the combined voting power
of the then-outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “
Outstanding Company Voting Securities ”);
provided, however, that none of the following acquisitions
will constitute a Change of Control:
(i)
Any acquisition directly from the Company or any Controlled
Affiliate of the Company;
(ii)
Any acquisition by the Company or any Controlled Affiliate of the
Company;
(iii) Any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Controlled Affiliate
of the Company; or
(iv) Any
acquisition by any entity or its security holders pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of
paragraph (c) of this definition.
(b)
Individuals who, as of the date of this Agreement, constitute the
Board of Directors (the “ Incumbent Directors
”) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that
any individual who becomes a director of the Company subsequent to
the date of this Agreement and whose election or appointment by the
Board of Directors or nomination for election by the
Company’s stockholders was approved by a vote of at least a
majority of the then Incumbent Directors will be considered as an
Incumbent Director, unless such individual’s initial
assumption of office occurs as a result of an actual or threatened
election contest 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 or entity other than the
Company;
(c)
Consummation of a reorganization, merger, statutory share exchange
or consolidation or similar corporate transaction involving
the Company or any of its Subsidiaries, a sale or other disposition
of all or substantially all of the assets of the Company or an
acquisition of assets or stock of another entity by the Company or
any of its Subsidiaries (each a “ Business
Combination ”) unless, in each case, following such
Business Combination (i) all or substantially all of the
individuals and entities that were the beneficial owners of the
Outstanding Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the
then-outstanding
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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
corporation resulting from such Business Combination (including a
corporation that, as a result of such Business Combination, 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 as their ownership immediately
prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the
case may be, (ii) no person or entity (excluding (A) any entity
resulting from such Business Combination or (B) any employee
benefit plan (or related trust) of the Company or corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly 20% or more of either the then- outstanding
shares of common stock of the corporation 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 such Business
Combination, and (iii) 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, providing for such Business Combination;
or
(d)
Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
“ Corporate
Status ” means the status of a person who is or was a
director, officer, employee, partner, member, manager, trustee,
fiduciary or agent of the Company or of any other Enterprise which
such person is or was serving at the request of the Company.
In addition to any service at the actual request of the Company,
Indemnitee will be deemed, for purposes of this Agreement, to be
serving or to have served at the request of the Company as a
director, officer, employee, partner, member, manager, trustee,
fiduciary or agent of another Enterprise if Indemnitee is or was
serving as a director, officer, employee, partner, member, manager,
fiduciary, trustee or agent of such Enterprise and (i) such
Enterprise is or at the time of such service was a Controlled
Affiliate, (ii) such Enterprise is or at the time of such service
was an employee benefit plan (or related trust) sponsored on
maintained by the Company or a Controlled Affiliate or (ii) the
Company or a Controlled Affiliate directly or indirectly caused
Indemnitee to be nominated, elected, appointed, designated,
employed, engaged or selected to serve in such capacity.
“ Controlled Affiliate
” means any corporation, limited liability company,
partnership, joint venture, trust or other Enterprise, whether or
not for profit, that is directly or indirectly controlled by the
Company. For purposes of this definition, the term
“control” means the possession, directly or indirectly,
of the power to direct, or cause the direction of, the
management or policies of an Enterprise, whether through the
ownership of voting securities, through other voting rights, by
contract or otherwise; provided, however, that direct
or indirect beneficial ownership of capital stock or other
interests in an Enterprise entitling the holder to cast 30% or more
of the total number of votes generally entitled to be cast in the
election of directors (or persons performing comparable functions)
of such Enterprise will be deemed to constitute
“control” for purposes of this definition.
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“Disinterested
Director” means
a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by
Indemnitee.
“Enterprise”
means the Company and any other
corporation, partnership, limited liability company, joint venture,
employee benefit plan, trust or other entity or other enterprise of
which Indemnitee is or was serving at the request of the Company in
a Corporate Status.
“Expenses”
means all attorney’s
fees, disbursements and retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, fax
transmission charges, secretarial services, delivery service
fees and all other disbursements or expenses paid or incurred
in connection with prosecuting, defending, preparing to prosecute
or defend, investigating, being or preparing to be a witness
in, or otherwise participating in, a Proceeding, or in
connection with seeking indemnification under this
Agreement. Expenses will also include Expenses paid or
incurred in connection with any appeal resulting from any
Proceeding, including the premium, security for and other costs
relating to any appeal bond or its equivalent. Expenses,
however, will not include amounts paid in settlement by Indemnitee
or the amount of judgments or fines against Indemnitee.
“Independent
Counsel” means
an attorney or firm of attorneys that is experienced in matters of
corporation law and neither currently is, nor in the past five (5)
years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party (other than
with respect to matters concerning the Indemnitee under this
Agreement and/or the indemnification provisions of the Articles or
Bylaws, or of other indemnitees under similar indemnification
agreements), or (ii) any other party to the Proceeding giving rise
to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “Independent Counsel” does not
include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this
Agreement.
“ Losses ”
means any loss, liability, judgments, damages, amounts paid in
settlement, fines (including excise taxes and penalties assessed
with respect to employee benefit plans), penalties (whether civil,
criminal or otherwise) and all interest, assessments and other
charges paid or payable in connection with or in respect of any of
the foregoing.
“Proceeding”
means any threatened, pending or
completed action, suit, claim, demand, arbitration, alternate
dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed
proceeding, including any and all appeals, whether brought by or in
the right of the Company or otherwise, whether civil, criminal,
administrative or investigative, whether formal or informal, and in
each case whether or not commenced prior to the date of this
Agreement, in which Indemnitee was, is or will be involved as a
party or otherwise, by reason of or relating to Indemnitee’s
Corporate Status and by reason of or relating to either (i) any
action or alleged action taken by Indemnitee (or failure or alleged
failure to act) or of any action or alleged action (or failure or
alleged failure to act) on Indemnitee’s part, while
acting in his or her Corporate Status or (ii) the fact that
Indemnitee is or was serving at the request of the Company as
director, officer, employee, partner, member, manager, trustee,
fiduciary or agent of another Enterprise, in each case whether or
not serving in such capacity at the time any Loss or Expense is
paid or incurred for which indemnification or advancement
of
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Expenses can be provided under this Agreement,
except one initiated by Indemnitee to enforce his or her rights
under this Agreement. For purposes of this definition, the
term “threatened” will be deemed to include
Indemnitee’s good faith belief that a claim or other
assertion may lead to institution of a Proceeding.
References to “ serving
at the request of the Company ” include any service
as a director, officer, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer,
employee or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith
and in a manner he or she reasonably believed to be in the best
interests of the participants and beneficiaries of an employee
benefit plan will be deemed to have acted in a manner “
not opposed to the best interests of the Company
” as referred to under applicable law or in this
Agreement.
ARTICLE 2
SERVICES TO THE COMPANY
2.1
Services to the Company. Indemnitee
agrees to serve as a [director][officer] of the Company. Indemnitee
may at any time and for any reason resign from such position
(subject to any other contractual obligation or any obligation
imposed by operation of law), in which event the Company will have
no obligation under this Agreement to continue Indemnitee in such
position. This Agreement will not be construed as giving
Indemnitee any right to be retained in the employ of the Company
(or any other Enterprise).
ARTICLE 3
INDEMNIFICATION
3.1
Company Indemnification. Except as otherwise provided
in this Article 3 , if Indemnitee was, is or becomes a party
to, or was or is threatened to be made a party to, or was or is
otherwise involved in, any Proceeding, the Company will indemnify
and hold harmless Indemnitee to the fullest extent permitted by the
Articles, Bylaws and applicable law, as the same exists or may
hereafter be amended, interpreted or replaced (but in the case of
any such amendment, interpretation or replacement, only to the
extent that such amendment, interpretation or replacement permits
the Company to provide broader indemnification rights than were
permitted prior thereto), against any and all Expenses and Losses,
and any federal, state, local or foreign taxes imposed as a result
of the actual or deemed receipt of any payments under this
Agreement, that are actually and reasonably paid or incurred by
Indemnitee in connection with such Proceeding. For purposes
of this Agreement, the meaning of the phrase “
to the fullest extent permitted
by law ” will include to the
fullest extent permitted by Article 2.02-1 of the Texas Business
Corporation Act (“ TBCA ”) or any section that
replaces or succeeds Article 2.02-1 of the TBCA with respect to
such matters.
3.2
Mandatory Indemnification if Indemnitee is Wholly or Partly
Successful. Notwithstanding any other
provision of this Agreement (other than Section 6.9 ), to
the extent that Indemnitee has been successful, on the merits or
otherwise, in defense of any Proceeding or any part thereof, the
Company will indemnify Indemnitee against all Expenses that are
actually and reasonably paid or incurred by Indemnitee in
connection therewith. If Indemnitee is not
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wholly successful in such Proceeding, but is
successful, on the merits or otherwise, as to one or more but fewer
than all claims, issues or matters in such Proceeding, the Company
will indemnify and hold harmless Indemnitee against all Expenses
paid or incurred by Indemnitee in connection with each successfully
resolved claim, issue or matter on which Indemnitee was
successful. For purposes of this Section 3.2 ,
the termination of any Proceeding, or any claim, issue or matter in
such Proceeding, by dismissal with or without prejudice will be
deemed to be a successful result as to such Proceeding, claim,
issue or matter.
3.3
Indemnification for Expenses of a Witness.
Notwithstanding
any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his or her Corporate Status, a witness
in any Proceeding to which Indemnitee is not a party, the Company
will indemnify Indemnitee against all Expenses actually and
reasonably paid or incurred by Indemnitee on his or her behalf in
connection therewith.
3.4
Exclusions. Notwithstanding any other
provision of this Agreement, the Company will not be obligated
under this Agreement to provide indemnification in connection with
the following:
(a)
Any Proceeding (or part of any Proceeding) initiated or brought
voluntarily by Indemnitee against the Company or its directors,
officers, employees or other indemnities, unless the Board of
Directors has authorized or consented to the initiation of the
Proceeding (or such part of any Proceeding); provided,
however, that nothing in this Section 3.4(a) shall limit
the right of Indemnitee to be indemnified under Section 8.4
.
(b)
For an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company
within the meaning of Section 16(b) of the Exchange Act or any
similar successor statute.
ARTICLE 4
ADVANCEMENT OF EXPENSES
4.1
Expense Advances. Except as set forth in
Section 4.2 , the Company will, if requested by Indemnitee,
advance, to the fullest extent permitted by law, to Indemnitee
(hereinafter an “ Expense Advance ”) any and all Expenses
actually and reasonably paid or incurred by Indemnitee in
connection with any Proceeding (whether prior to or after its final
disposition). Indemnitee’s right to each Expense
Advance will not be subject to the satisfaction of any standard of
conduct and will be made without regard to Indemnitee’s
ultimate entitlement to indemnification under the other provisions
of this Agreement, or under provisions of the Articles or Bylaws or
otherwise. Each Expense Advance will be unsecured and
interest free and will be made by the Company without regard to
Indemnitee’s ability to repay the Expense Advance;
provided, however, that, if applicable law requires,
an Expense Advance will be made only upon delivery to the Company
of an undertaking (hereinafter an “ Undertaking ”), by or on behalf of
Indemnitee, to repay such Expense Advance if it is ultimately
determined, by final decision by a court or arbitrator, as
applicable, from which there is no further right to appeal, that
Indemnitee is not entitled to be indemnified for such Expenses
under the Articles, Bylaws, the TBCA, this Agreement or
otherwise. An Expense eligible for an Expense Advance will
include
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any and all reasonable Expenses incurred
pursuing an action to enforce the right of advancement provided for
in this Article 4 , including Expenses incurred preparing
and forwarding statements to the Company to support the Expense
Advances claimed.
4.2
Exclusions. Indemnitee will not be
entitled to any Expense Advance in connection with any of the
matters for which indemnity is excluded pursuant to Section
3.4 .
4.3
Timing. An Expense Advance pursuant
to Section 4.1 will be made within ten (10) business days
after the receipt by the Company of a written statement or
statements from Indemnitee requesting such Expense Advance (which
statement or statements will include, if requested by the Company,
reasonable detail underlying the Expenses for which the Expense
Advance is requested), whether such request is made prior to or
after final disposition of such Proceeding. Such request must
be accompanied by or preceded by the Undertaking, if then required
by the TBCA or any other applicable law.
ARTICLE 5
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
5.1
Contribution by Company. To the fullest extent
permitted by law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee for any reason whatsoever,
the Company, in lieu of indemnifying Indemnitee, will contribute to
the amount of Expenses and Losses actually and reasonably incurred
or paid by Indemnitee in connection with any Proceeding in
proportion to the relative benefits received by the Company and all
officers, directors and employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such Proceeding), on the one hand, and Indemnitee, on the
other hand, from the transaction from which such Proceeding arose;
provided, however , that the proportion determined on the
basis of relative benefit may, to the extent necessary to conform
to law, be further adjusted by reference to the relative fault of
the Company and all officers, directors and employees of the
Company other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, in connection with the
events that resulted in such Expenses and Losses, as well as any
other equitable considerations which applicable law may require to
be considered. The relative fault of the Company and all officers,
directors and employees of the Company other than Indemnitee who
are jointly liable with Indemnitee (or would be if joined in such
Proceeding), on the one hand, and Indemnitee, on the other hand,
will be determined by reference to, among other things, the degree
to which their actions were motivated by intent to gain personal
profit or advantage, the degree to which their liability is primary
or secondary, and the degree to which their conduct was active or
passive.
5.2
Indemnification for Contribution Claims by Others.
To the fullest
extent permitted by law, the Company will fully indemnify and hold
Indemnitee harmless from any claims of contribution which may be
brought by other officers, directors or employees of the Company
who may be jointly liable with Indemnitee for any Loss or Expense
arising from a Proceeding.
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ARTICLE 6
PROCEDURES AND PRESUMPTIONS FOR THE
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION
6.1
Notification of Claims; Request for Indemnification
.
Indemnitee agrees to notify promptly the Company in writing of any
claim made against Indemnitee for which indemnification will or
could be sought under this Agreement; provided, however ,
that a delay in giving such notice will not deprive Indemnitee of
any right to be indemnified under this Agreement unless, and then
only to the extent that, the Company did not otherwise learn of the
Proceeding and such delay is materially prejudicial to the
Company’s ability to defend such Proceeding; and,
provided, further, that notice will be deemed to have been
given without any action on the part of Indemnitee in the event the
Company is a party to the same Proceeding. The omission to notify
the Company will not relieve the Company from any liability for
indemnification which it may have to Indemnitee otherwise than
under this Agreement. Indemnitee may deliver to the Company a
written request to have the Company indemnify and hold harmless
Indemnitee in accordance with this Agreement. Subject to
Section 6.9 , such request may be delivered from time to
time and at such time(s) as Indemnitee deems appropriate in his or
her sole discretion. Following such a written request for
indemnification, Indemnitee’s entitlement to indemnification
shall be determined according to Section 6.2 . The
Secretary of the Company will, promptly upon receipt of such a
request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification. The
Company will be entitled to participate in any Proceeding at its
own expense.
6.2
Determination of Right to Indemnification . Upon written request
by Indemnitee for indemnification pursuant to Section 6.1
hereof with respect to any Proceeding, a determination, if, but
only if, required by applicable law, with respect to
Indemnitee’s entitlement thereto will be made by one of the
following, at the election of Indemnitee as: (1) so long as
there are Disinterested Directors with respect to such Proceeding,
a majority vote of the Disinterested Directors, even though less
than a quorum of the Board of Directors, (2) so long as there are
Disinterested Directors with respect to such Proceeding, a
committee of such Disinterested Directors designated by a majority
vote of such Disinterested Directors, even though less than a
quorum of the Board of Directors or (3) Independent Counsel in a
written opinion delivered to the Board of Directors, a copy of
which will also be delivered to Indemnitee. The election by
Indemnitee to use a particul
