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 PARTICULAR PERSON, PERSONS OR
ENTITY TO MAKE SUCH DETERMINATION IS TO BE INCLUDED IN THE WRITTEN REQUEST FOR
INDEMNIFICATION SUBMITTED BY INDEMNITEE (AND IF NO ELECTION IS MADE IN THE
REQUEST IT WILL BE ASSUMED THAT INDEMNITEE HAS ELECTED THE INDEPENDENT COUNSEL
TO MAKE SUCH DETERMINATION).  THE PERSON, PERSONS OR ENTITY CHOSEN TO MAKE A
DETERMINATION UNDER THIS AGREEMENT OF THE INDEMNITEE’S ENTITLEMENT TO
INDEMNIFICATION WILL ACT REASONABLY AND IN GOOD FAITH IN MAKING SUCH
DETERMINATION.

 

6.3          SELECTION OF INDEPENDENT COUNSEL.  IF THE DETERMINATION OF
ENTITLEMENT TO INDEMNIFICATION PURSUANT TO SECTION 6.2 WILL BE MADE BY AN
INDEPENDENT COUNSEL, THE INDEPENDENT COUNSEL WILL BE SELECTED AS PROVIDED IN
THIS SECTION 6.3.  THE INDEPENDENT COUNSEL WILL BE SELECTED BY INDEMNITEE
(UNLESS INDEMNITEE REQUESTS THAT SUCH SELECTION BE MADE BY THE BOARD OF
DIRECTORS, IN WHICH EVENT THE IMMEDIATELY FOLLOWING SENTENCE WILL APPLY) AND
INDEMNITEE WILL GIVE WRITTEN NOTICE TO THE COMPANY ADVISING IT OF THE IDENTITY
OF THE INDEPENDENT COUNSEL SO SELECTED   IF THE INDEPENDENT COUNSEL IS SELECTED
BY THE BOARD OF DIRECTORS, THE

 

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Company will give written notice to Indemnitee advising him or her of the
identity of the Independent Counsel so selected. In either event, Indemnitee or
the Company, as the case may be, may, within ten (10) business days after such
written notice of selection is given, deliver to the Company or to Indemnitee,
as the case may be, a written objection to such selection; provided, however,
that such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent Counsel” as
defined in this Agreement, and the objection will set forth with particularity
the factual basis of such assertion. Absent a proper and timely objection, the
person so selected will act as Independent Counsel. If a written objection is
made and substantiated, the Independent Counsel selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within thirty (30) days
after submission by Indemnitee of a written request for indemnification pursuant
to Section 6.1, no Independent Counsel is selected, or an Independent Counsel
for which an objection thereto has been properly made remains unresolved, either
the Company or Indemnitee may petition an appropriate court of the State of
Texas or any other court of competent jurisdiction for resolution of any
objection which has been made by the Company or Indemnitee to the other’s
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court
may designate, and the person with respect to whom all objections are so
resolved or the person so appointed will act as Independent Counsel under
Section 6.2. The Company will pay any and all fees and expenses incurred by such
Independent Counsel in connection with acting pursuant to Section 6.2 hereof,
and the Company will pay all fees and expenses incident to the procedures of
this Section 6.3, regardless of the manner in which such Independent Counsel was
selected or appointed.

 

6.4          BURDEN OF PROOF.   IN MAKING A DETERMINATION WITH RESPECT TO
ENTITLEMENT TO INDEMNIFICATION HEREUNDER, THE PERSON, PERSONS OR ENTITY MAKING
SUCH DETERMINATION WILL PRESUME THAT INDEMNITEE IS ENTITLED TO INDEMNIFICATION
UNDER THIS AGREEMENT. ANYONE SEEKING TO OVERCOME THIS PRESUMPTION WILL HAVE THE
BURDEN OF PROOF AND THE BURDEN OF PERSUASION, BY CLEAR AND CONVINCING EVIDENCE.
IN MAKING A DETERMINATION WITH RESPECT TO ENTITLEMENT TO INDEMNIFICATION
HEREUNDER WHICH UNDER THIS AGREEMENT, THE ARTICLES, BYLAWS OR APPLICABLE LAW
REQUIRES A DETERMINATION OF INDEMNITEE’S GOOD FAITH AND/OR WHETHER INDEMNITEE
ACTED IN A MANNER WHICH HE OR SHE REASONABLY BELIEVED TO BE IN OR NOT OPPOSED TO
THE BEST INTERESTS OF THE COMPANY, THE PERSON, PERSONS OR ENTITY MAKING SUCH
DETERMINATION WILL PRESUME THAT INDEMNITEE HAS AT ALL TIMES ACTED IN GOOD FAITH
AND IN A MANNER HE OR SHE REASONABLY BELIEVED TO BE IN OR NOT OPPOSED TO THE
BEST INTERESTS OF THE COMPANY. ANYONE SEEKING TO OVERCOME THIS PRESUMPTION WILL
HAVE THE BURDEN OF PROOF AND THE BURDEN OF PERSUASION, BY CLEAR AND CONVINCING
EVIDENCE. INDEMNITEE WILL BE DEEMED TO HAVE ACTED IN GOOD FAITH IF INDEMNITEE’S
ACTION WITH RESPECT TO A PARTICULAR ENTERPRISE IS BASED ON THE RECORDS OR BOOKS
OF ACCOUNT OF SUCH ENTERPRISE, INCLUDING FINANCIAL STATEMENTS, OR ON INFORMATION
SUPPLIED TO INDEMNITEE BY THE OFFICERS OF SUCH ENTERPRISE IN THE COURSE OF THEIR
DUTIES, OR ON THE ADVICE OF LEGAL COUNSEL FOR SUCH ENTERPRISE OR ON INFORMATION
OR RECORDS GIVEN OR REPORTS MADE TO SUCH ENTERPRISE BY AN INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT OR BY AN APPRAISER OR OTHER EXPERT SELECTED BY SUCH
ENTERPRISE; PROVIDED, HOWEVER THIS SENTENCE WILL NOT BE DEEMED TO  LIMIT IN ANY
WAY THE OTHER CIRCUMSTANCES IN WHICH INDEMNITEE MAY BE DEEMED TO HAVE MET SUCH
STANDARD OF CONDUCT. IN ADDITION, THE KNOWLEDGE AND/OR ACTIONS, OR FAILURE TO
ACT, OF ANY OTHER DIRECTOR, OFFICER, AGENT OR EMPLOYEE OF SUCH ENTERPRISE WILL
NOT BE IMPUTED TO INDEMNITEE FOR PURPOSES OF DETERMINING THE RIGHT TO
INDEMNIFICATION UNDER THIS AGREEMENT.

 

9

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6.5          NO PRESUMPTION IN ABSENCE OF A DETERMINATION OR AS RESULT OF AN
ADVERSE DETERMINATION; PRESUMPTION REGARDING SUCCESS.  NEITHER THE FAILURE OF
ANY PERSON, PERSONS OR ENTITY CHOSEN TO MAKE A DETERMINATION AS TO WHETHER
INDEMNITEE HAS MET ANY PARTICULAR STANDARD OF CONDUCT OR HAD ANY PARTICULAR
BELIEF TO MAKE SUCH DETERMINATION, NOR AN ACTUAL DETERMINATION BY SUCH PERSON,
PERSONS OR ENTITY THAT INDEMNITEE HAS NOT MET SUCH STANDARD OF CONDUCT OR DID
NOT HAVE SUCH BELIEF, PRIOR TO OR AFTER THE COMMENCEMENT OF LEGAL PROCEEDINGS BY
INDEMNITEE TO SECURE A JUDICIAL DETERMINATION THAT INDEMNITEE SHOULD BE
INDEMNIFIED UNDER THIS AGREEMENT UNDER APPLICABLE LAW, WILL BE A DEFENSE TO
INDEMNITEE’S CLAIM OR CREATE A PRESUMPTION THAT INDEMNITEE HAS NOT MET ANY
PARTICULAR STANDARD OF CONDUCT OR DID NOT HAVE ANY PARTICULAR BELIEF.   IN
ADDITION, THE TERMINATION OF ANY PROCEEDING BY JUDGMENT, ORDER, SETTLEMENT
(WHETHER WITH OR WITHOUT COURT APPROVAL) OR CONVICTION, OR UPON A PLEA OF NOLO
CONTENDERE, OR ITS EQUIVALENT, WILL NOT CREATE A PRESUMPTION THAT INDEMNITEE DID
NOT MEET ANY PARTICULAR STANDARD OF CONDUCT OR HAVE ANY PARTICULAR BELIEF OR
THAT A COURT HAS DETERMINED THAT INDEMNIFICATION IS NOT PERMITTED BY THIS
AGREEMENT OR APPLICABLE LAW.   IN THE EVENT THAT ANY PROCEEDING TO WHICH
INDEMNITEE IS A PARTY IS RESOLVED IN ANY MANNER OTHER THAN BY FINAL ADVERSE
JUDGMENT (AS TO WHICH ALL RIGHTS OF APPEAL THEREFROM HAVE BEEN EXHAUSTED OR
LAPSED) AGAINST INDEMNITEE (INCLUDING, WITHOUT LIMITATION, SETTLEMENT OF SUCH
PROCEEDING WITH OR WITHOUT PAYMENT OF MONEY OR OTHER CONSIDERATION) IT WILL BE
PRESUMED THAT INDEMNITEE HAS BEEN SUCCESSFUL ON THE MERITS OR OTHERWISE IN SUCH
PROCEEDING. ANYONE SEEKING TO OVERCOME THIS PRESUMPTION WILL HAVE THE BURDEN OF
PROOF AND THE BURDEN OF PERSUASION, BY CLEAR AND CONVINCING EVIDENCE.

 

6.6          TIMING OF DETERMINATION.  THE COMPANY WILL USE ITS REASONABLE BEST
EFFORTS TO CAUSE ANY DETERMINATION REQUIRED TO BE MADE PURSUANT TO SECTION 6.2
TO BE MADE AS PROMPTLY AS PRACTICABLE AFTER INDEMNITEE HAS SUBMITTED A WRITTEN
REQUEST FOR INDEMNIFICATION PURSUANT TO SECTION 6.1.   IF THE PERSON, PERSONS OR
ENTITY CHOSEN TO MAKE A DETERMINATION DOES NOT MAKE SUCH DETERMINATION WITHIN
THIRTY (30) DAYS AFTER THE LATER OF THE DATE (A) THE COMPANY RECEIVES
INDEMNITEE’S REQUEST FOR INDEMNIFICATION PURSUANT TO SECTION 6.1 AND (B) ON
WHICH AN INDEPENDENT COUNSEL IS SELECTED PURSUANT TO SECTION 6.3, IF APPLICABLE
(AND ALL OBJECTIONS TO SUCH PERSON, IF ANY, HAVE BEEN RESOLVED), THE REQUISITE
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION WILL BE DEEMED TO HAVE BEEN MADE
AND INDEMNITEE WILL BE ENTITLED TO SUCH INDEMNIFICATION, SO LONG AS (I)
INDEMNITEE HAS FULFILLED HIS OR HER OBLIGATIONS PURSUANT TO SECTION 6.8 AND (II)
SUCH INDEMNIFICATION IS NOT PROHIBITED UNDER APPLICABLE LAW; PROVIDED, HOWEVER,
THAT SUCH THIRTY (30) DAY PERIOD MAY BE EXTENDED FOR A REASONABLE TIME, NOT TO
EXCEED AN ADDITIONAL FIFTEEN (15) DAYS, IF THE PERSON, PERSONS OR ENTITY MAKING
THE DETERMINATION WITH RESPECT TO ENTITLEMENT TO INDEMNIFICATION IN GOOD FAITH
REQUIRES SUCH ADDITIONAL TIME FOR THE OBTAINING OF OR EVALUATING OF
DOCUMENTATION AND/OR INFORMATION RELATING THERETO.

 

6.7          TIMING OF PAYMENTS.  ALL PAYMENTS OF EXPENSES, INCLUDING ANY
EXPENSE ADVANCE, AND OTHER AMOUNTS BY THE COMPANY TO THE INDEMNITEE PURSUANT TO
THIS AGREEMENT WILL BE MADE AS SOON AS PRACTICABLE AFTER A WRITTEN REQUEST OR
DEMAND THEREFOR BY INDEMNITEE IS PRESENTED TO THE COMPANY, BUT IN NO EVENT LATER
THAN TEN (10) BUSINESS DAYS AFTER (I) SUCH DEMAND IS PRESENTED OR (II) SUCH
LATER DATE AS A DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION IS MADE IN
ACCORDANCE WITH  SECTION 6.6, IF APPLICABLE; PROVIDED, HOWEVER, THAT AN EXPENSE
ADVANCE WILL BE MADE WITHIN THE TIME PROVIDED IN SECTION 4.3 HEREOF.

 

6.8          COOPERATION.  INDEMNITEE WILL COOPERATE WITH THE PERSON, PERSONS OR
ENTITY MAKING A DETERMINATION WITH RESPECT TO INDEMNITEE’S ENTITLEMENT TO
INDEMNIFICATION, INCLUDING

 

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providing to such person, persons or entity, upon reasonable advance request,
any documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination.  Any Expenses  incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination will be
borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company will indemnify Indemnitee
therefor and will hold Indemnitee harmless therefrom.

 

6.9          TIME FOR SUBMISSION OF REQUEST.  INDEMNITEE WILL BE REQUIRED TO
SUBMIT ANY REQUEST FOR INDEMNIFICATION PURSUANT TO THIS ARTICLE 6 WITHIN A
REASONABLE TIME, NOT TO EXCEED TWO (2) YEARS, AFTER ANY JUDGMENT, ORDER,
SETTLEMENT, DISMISSAL, ARBITRATION AWARD, CONVICTION, ACCEPTANCE OF A PLEA OF
NOLO CONTENDERE (OR ITS EQUIVALENT) OR OTHER FULL OR PARTIAL FINAL DETERMINATION
OR DISPOSITION OF THE PROCEEDING (WITH THE LATEST DATE OF THE OCCURRENCE OF ANY
SUCH EVENT TO BE CONSIDERED THE COMMENCEMENT OF THE TWO (2) YEAR PERIOD).

 

ARTICLE 7
LIABILITY INSURANCE

 

7.1          COMPANY INSURANCE.  SUBJECT TO SECTION 7.3, THE COMPANY WILL OBTAIN
AND MAINTAIN A POLICY OR POLICIES OF INSURANCE WITH ONE OR MORE REPUTABLE
INSURANCE COMPANIES  PROVIDING INDEMNITEE WITH COVERAGE IN SUCH AMOUNT AS WILL
BE DETERMINED BY THE BOARD OF DIRECTORS FOR LOSSES AND EXPENSES PAID OR INCURRED
BY INDEMNITEE AS A RESULT OF ACTS OR OMISSIONS OF INDEMNITEE IN HIS OR HER
CORPORATE STATUS, AND TO ENSURE THE COMPANY’S PERFORMANCE OF ITS INDEMNIFICATION
OBLIGATIONS UNDER THIS AGREEMENT; PROVIDED, HOWEVER, IN ALL POLICIES OF DIRECTOR
AND OFFICER LIABILITY INSURANCE OBTAINED BY THE COMPANY, INDEMNITEE WILL BE
NAMED AS AN INSURED PARTY IN SUCH MANNER AS TO PROVIDE INDEMNITEE WITH THE SAME
RIGHTS AND BENEFITS AS ARE AFFORDED TO THE MOST FAVORABLY INSURED DIRECTORS OR
OFFICERS, AS APPLICABLE, OF THE COMPANY UNDER SUCH POLICIES.  ANY REDUCTIONS TO
THE AMOUNT OF DIRECTOR AND OFFICER LIABILITY INSURANCE COVERAGE MAINTAINED BY
THE COMPANY AS OF THE DATE HEREOF WILL BE SUBJECT TO THE APPROVAL OF THE BOARD
OF DIRECTORS.

 

7.2          NOTICE TO INSURERS.  IF, AT THE TIME OF RECEIPT BY THE COMPANY OF A
NOTICE FROM ANY SOURCE OF A PROCEEDING AS TO WHICH INDEMNITEE IS A PARTY OR
PARTICIPANT, THE COMPANY WILL GIVE PROMPT NOTICE OF SUCH PROCEEDING TO THE
INSURERS IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE RESPECTIVE POLICIES,
AND THE COMPANY WILL PROVIDE INDEMNITEE WITH A COPY OF SUCH NOTICE AND COPIES OF
ALL SUBSEQUENT CORRESPONDENCE BETWEEN THE COMPANY AND SUCH INSURERS RELATED
THERETO.  THE COMPANY WILL THEREAFTER TAKE ALL NECESSARY OR DESIRABLE ACTIONS TO
CAUSE SUCH INSURERS TO PAY, ON BEHALF OF INDEMNITEE, ALL AMOUNTS PAYABLE AS A
RESULT OF SUCH PROCEEDING IN ACCORDANCE WITH THE TERMS OF SUCH POLICIES.

 

7.3          INSURANCE NOT REQUIRED.   NOTWITHSTANDING SECTION 7.1, THE COMPANY
WILL HAVE NO OBLIGATION TO OBTAIN OR MAINTAIN THE INSURANCE CONTEMPLATED BY
SECTION 7.1 IF THE BOARD OF DIRECTORS DETERMINES IN GOOD FAITH THAT SUCH
INSURANCE IS NOT REASONABLY AVAILABLE, IF THE PREMIUM COSTS FOR SUCH INSURANCE
ARE DISPROPORTIONATELY HIGH COMPARED TO THE AMOUNT OF COVERAGE PROVIDED, OR IF
THE COVERAGE PROVIDED BY SUCH INSURANCE IS LIMITED BY EXCLUSIONS SO AS TO
PROVIDE AN INSUFFICIENT BENEFIT.  THE COMPANY WILL PROMPTLY NOTIFY INDEMNITEE OF
ANY SUCH DETERMINATION NOT TO PROVIDE INSURANCE COVERAGE.

 

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ARTICLE 8
REMEDIES OF INDEMNITEE

 

8.1          ACTION BY INDEMNITEE.  IN THE EVENT THAT (I) A DETERMINATION IS
MADE PURSUANT TO ARTICLE 6 OF THIS AGREEMENT THAT INDEMNITEE IS NOT ENTITLED TO
INDEMNIFICATION UNDER THIS AGREEMENT, (II) AN EXPENSE ADVANCE IS NOT TIMELY MADE
PURSUANT TO SECTION 4.3 OF THIS AGREEMENT, (III) NO DETERMINATION  OF
ENTITLEMENT TO INDEMNIFICATION IS MADE WITHIN THE APPLICABLE TIME PERIODS
SPECIFIED IN SECTION 6.6 OR (IV) PAYMENT OF INDEMNIFIED AMOUNTS IS NOT MADE
WITHIN THE APPLICABLE TIME PERIODS SPECIFIED IN SECTION 6.7, INDEMNITEE WILL BE
ENTITLED TO AN ADJUDICATION IN AN APPROPRIATE COURT OF THE STATE OF TEXAS, OR IN
ANY OTHER COURT OF COMPETENT JURISDICTION, OF HIS OR HER ENTITLEMENT TO SUCH
INDEMNIFICATION OR PAYMENT OF AN EXPENSE ADVANCE.  ALTERNATIVELY, INDEMNITEE, AT
INDEMNITEE’S OPTION, MAY SEEK AN AWARD IN ARBITRATION TO BE CONDUCTED BY A
SINGLE ARBITRATOR PURSUANT TO THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION.  THE PROVISIONS OF TEXAS LAW (WITHOUT REGARD TO ITS
CONFLICT OF LAWS RULES) WILL APPLY TO ANY SUCH ARBITRATION.  THE COMPANY WILL
NOT OPPOSE INDEMNITEE’S RIGHT TO SEEK ANY SUCH ADJUDICATION OR AWARD IN
ARBITRATION.

 

8.2          DE NOVO REVIEW IF PRIOR ADVERSE DETERMINATION.  IN THE EVENT THAT A
DETERMINATION IS MADE PURSUANT TO ARTICLE 6 THAT INDEMNITEE IS NOT ENTITLED TO
INDEMNIFICATION, ANY JUDICIAL PROCEEDING OR ARBITRATION COMMENCED PURSUANT TO
THIS ARTICLE 8 WILL BE CONDUCTED IN ALL RESPECTS AS A DE NOVO TRIAL OR
ARBITRATION, AS APPLICABLE, ON THE MERITS AND INDEMNITEE WILL NOT BE PREJUDICED
BY REASON OF THAT ADVERSE DETERMINATION. IN ANY JUDICIAL PROCEEDING OR
ARBITRATION COMMENCED PURSUANT TO THIS ARTICLE 8, INDEMNITEE WILL BE PRESUMED TO
BE ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT, THE COMPANY WILL HAVE THE
BURDEN OF PROVING INDEMNITEE IS NOT ENTITLED TO INDEMNIFICATION AND THE COMPANY
MAY NOT REFER TO OR INTRODUCE EVIDENCE OF ANY DETERMINATION PURSUANT TO ARTICLE
6 ADVERSE TO INDEMNITEE FOR ANY PURPOSE. IF INDEMNITEE COMMENCES A JUDICIAL
PROCEEDING OR ARBITRATION PURSUANT TO THIS ARTICLE 8,  INDEMNITEE WILL NOT BE
REQUIRED TO REIMBURSE THE COMPANY FOR ANY EXPENSE ADVANCE MADE PURSUANT TO
ARTICLE 4 UNTIL A FINAL DETERMINATION IS MADE WITH RESPECT TO INDEMNITEE’S
ENTITLEMENT TO INDEMNIFICATION (AS TO WHICH ALL RIGHTS OF APPEAL HAVE BEEN
EXHAUSTED OR LAPSED).

 

8.3          COMPANY BOUND BY FAVORABLE DETERMINATION BY REVIEWING PARTY.   IF A
DETERMINATION IS MADE THAT INDEMNITEE IS ENTITLED TO INDEMNIFICATION PURSUANT TO
ARTICLE 6, THE COMPANY WILL BE BOUND BY SUCH DETERMINATION IN ANY JUDICIAL
PROCEEDING OR ARBITRATION COMMENCED PURSUANT TO THIS ARTICLE 8, ABSENT (I) A
MISSTATEMENT BY INDEMNITEE OF A MATERIAL FACT OR AN OMISSION OF A MATERIAL FACT
NECESSARY TO MAKE INDEMNITEE’S STATEMENTS IN CONNECTION WITH THE REQUEST FOR
INDEMNIFICATION NOT MATERIALLY MISLEADING OR (II) A PROHIBITION OF SUCH
INDEMNIFICATION UNDER LAW.

 

8.4          COMPANY BEARS EXPENSES IF INDEMNITEE SEEKS ADJUDICATION.   IN THE
EVENT THAT INDEMNITEE, PURSUANT TO THIS ARTICLE 8, SEEKS A JUDICIAL ADJUDICATION
OR ARBITRATION OF HIS OR HER RIGHTS UNDER, OR TO RECOVER DAMAGES FOR BREACH OF,
THIS AGREEMENT, ANY OTHER AGREEMENT FOR INDEMNIFICATION, THE INDEMNIFICATION OR
ADVANCEMENT OF EXPENSES PROVISIONS IN THE ARTICLES OR BYLAWS, PAYMENT OF
EXPENSES IN ADVANCE OR CONTRIBUTION HEREUNDER OR TO RECOVER UNDER ANY DIRECTOR
AND OFFICER LIABILITY INSURANCE POLICIES MAINTAINED BY THE COMPANY, THE COMPANY
WILL, TO THE FULLEST EXTENT PERMITTED BY LAW, INDEMNIFY AND HOLD HARMLESS
INDEMNITEE AGAINST ANY AND ALL EXPENSES WHICH ARE PAID OR INCURRED BY INDEMNITEE
IN CONNECTION WITH SUCH JUDICIAL

 

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adjudication or arbitration, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, payment of Expenses in
advance or contribution  or insurance recovery.  In addition, if requested by
Indemnitee, the Company will (within ten (10) business days after receipt by the
Company of the written request therefor), pay as an Expense Advance such
Expenses, to the fullest extent permitted by law.

 

8.5          COMPANY BOUND BY PROVISIONS OF THIS AGREEMENT.  THE COMPANY WILL BE
PRECLUDED FROM ASSERTING IN ANY JUDICIAL OR ARBITRATION PROCEEDING COMMENCED
PURSUANT TO THIS ARTICLE 8 THAT THE PROCEDURES AND PRESUMPTIONS OF THIS
AGREEMENT ARE NOT VALID, BINDING AND ENFORCEABLE AND WILL STIPULATE IN ANY SUCH
JUDICIAL OR ARBITRATION PROCEEDING THAT THE COMPANY IS BOUND BY ALL THE
PROVISIONS OF THIS AGREEMENT.

 

ARTICLE 9
NON-EXCLUSIVITY, SUBROGATION; NO DUPLICATIVE PAYMENTS;
MORE FAVORABLE TERMS

 

9.1          NON-EXCLUSIVITY.  THE RIGHTS OF INDEMNIFICATION AND TO RECEIVE
EXPENSE ADVANCES AS PROVIDED BY THIS AGREEMENT WILL NOT BE DEEMED EXCLUSIVE OF
ANY OTHER RIGHTS TO WHICH INDEMNITEE MAY AT ANY TIME BE ENTITLED UNDER
APPLICABLE LAW, THE ARTICLES, THE BYLAWS, ANY AGREEMENT, A VOTE OF STOCKHOLDERS,
A RESOLUTION OF THE DIRECTORS OR OTHERWISE. TO THE EXTENT INDEMNITEE OTHERWISE
WOULD HAVE ANY GREATER RIGHT TO INDEMNIFICATION OR PAYMENT OF ANY ADVANCEMENT OF
EXPENSES UNDER ANY OTHER PROVISIONS UNDER APPLICABLE LAW, THE ARTICLES, BYLAWS,
ANY AGREEMENT, VOTE OF STOCKHOLDERS, A RESOLUTION OF DIRECTORS OR OTHERWISE,
INDEMNITEE WILL BE ENTITLED UNDER THIS AGREEMENT TO SUCH GREATER RIGHT.  NO
AMENDMENT, ALTERATION OR REPEAL OF THIS AGREEMENT OR OF ANY PROVISION HEREOF
LIMITS OR RESTRICTS ANY RIGHT OF INDEMNITEE UNDER THIS AGREEMENT IN RESPECT OF
ANY ACTION TAKEN OR OMITTED BY SUCH INDEMNITEE PRIOR TO SUCH AMENDMENT,
ALTERATION OR REPEAL. TO THE EXTENT THAT A CHANGE IN THE TBCA, WHETHER BY
STATUTE OR JUDICIAL DECISION, PERMITS GREATER INDEMNIFICATION THAN WOULD BE
AFFORDED CURRENTLY UNDER THE ARTICLES, BYLAWS AND THIS AGREEMENT, IT IS THE
INTENT OF THE PARTIES HERETO THAT INDEMNITEE ENJOY BY THIS AGREEMENT THE GREATER
BENEFITS SO AFFORDED BY SUCH CHANGE. NO RIGHT OR REMEDY HEREIN CONFERRED IS
INTENDED TO BE EXCLUSIVE OF ANY OTHER RIGHT OR REMEDY, AND EVERY OTHER RIGHT AND
REMEDY WILL BE CUMULATIVE AND IN ADDITION TO EVERY OTHER RIGHT AND REMEDY GIVEN
HEREUNDER OR NOW OR HEREAFTER EXISTING AT LAW OR IN EQUITY OR OTHERWISE. THE
ASSERTION OR EMPLOYMENT OF ANY RIGHT OR REMEDY HEREUNDER, OR OTHERWISE, WILL NOT
PREVENT THE CONCURRENT ASSERTION OR EMPLOYMENT OF ANY OTHER RIGHT OR REMEDY.

 

9.2          SUBROGATION.  IN THE EVENT OF ANY PAYMENT BY THE COMPANY UNDER THIS
AGREEMENT, THE COMPANY WILL BE SUBROGATED TO THE EXTENT OF SUCH PAYMENT TO ALL
OF THE RIGHTS OF RECOVERY OF INDEMNITEE WITH RESPECT THERETO AND INDEMNITEE WILL
EXECUTE ALL PAPERS REQUIRED AND TAKE ALL ACTION NECESSARY TO SECURE SUCH RIGHTS,
INCLUDING EXECUTION OF SUCH DOCUMENTS AS ARE NECESSARY TO ENABLE THE COMPANY TO
BRING SUIT TO ENFORCE SUCH RIGHTS (IT BEING UNDERSTOOD THAT ALL OF INDEMNITEE’S
REASONABLE EXPENSES RELATED THERETO WILL BE BORNE BY THE COMPANY).

 

9.3          NO DUPLICATIVE PAYMENTS.  THE COMPANY WILL NOT BE LIABLE UNDER THIS
AGREEMENT TO MAKE ANY PAYMENT OF AMOUNTS OTHERWISE INDEMNIFIABLE (OR ANY EXPENSE
FOR WHICH ADVANCEMENT IS PROVIDED) HEREUNDER IF AND TO THE EXTENT THAT
INDEMNITEE HAS OTHERWISE ACTUALLY RECEIVED SUCH PAYMENT UNDER ANY INSURANCE
POLICY, CONTRACT, AGREEMENT OR OTHERWISE.  THE

 

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Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee in
respect of Proceedings relating to Indemnitee’s service at the request of the
Company as a director, officer, employee, partner, member, manager, trustee,
fiduciary or agent of any other Enterprise will be reduced by any amount
Indemnitee has actually received as indemnification or advancement of Expenses
from such other Enterprise.

 

9.4          MORE FAVORABLE TERMS.  IN THE EVENT THE COMPANY ENTERS INTO AN
INDEMNIFICATION AGREEMENT WITH ANOTHER OFFICER OR DIRECTOR, AS THE CASE MAY BE,
CONTAINING TERMS MORE FAVORABLE TO THE INDEMNITEE THEREOF THAN THE TERMS
CONTAINED HEREIN AND ABSENT SPECIAL CIRCUMSTANCES JUSTIFYING SUCH MORE FAVORABLE
TERMS, INDEMNITEE WILL BE AFFORDED THE BENEFIT OF SUCH MORE FAVORABLE TERMS AND
SUCH MORE FAVORABLE TERMS WILL BE DEEMED INCORPORATED BY REFERENCE HEREIN AS IF
SET FORTH IN FULL HEREIN.  AS PROMPTLY AS PRACTICABLE FOLLOWING THE EXECUTION
THEREOF, THE COMPANY WILL (A) SEND A COPY OF THE AGREEMENT CONTAINING MORE
FAVORABLE TERMS TO INDEMNITEE, AND (B) PREPARE, EXECUTE AND DELIVER TO
INDEMNITEE AN AMENDMENT TO THIS AGREEMENT CONTAINING SUCH MORE FAVORABLE TERMS.

 

ARTICLE 10
DEFENSE OF PROCEEDINGS

 

10.1        COMPANY ASSUMING THE DEFENSE.  SUBJECT TO SECTION 10.3 BELOW, IN THE
EVENT THE COMPANY IS OBLIGATED TO PAY IN ADVANCE THE EXPENSES OF ANY PROCEEDING
PURSUANT TO ARTICLE 4, THE COMPANY WILL BE ENTITLED, BY WRITTEN NOTICE TO
INDEMNITEE, TO ASSUME THE DEFENSE OF SUCH PROCEEDING, WITH COUNSEL APPROVED BY
INDEMNITEE, WHICH APPROVAL WILL NOT BE UNREASONABLY WITHHELD.  THE COMPANY WILL
IDENTIFY THE COUNSEL IT PROPOSES TO EMPLOY IN CONNECTION WITH SUCH DEFENSE AS
PART OF THE WRITTEN NOTICE SENT TO INDEMNITEE NOTIFYING INDEMNITEE OF THE
COMPANY’S ELECTION TO ASSUME SUCH DEFENSE, AND INDEMNITEE WILL BE REQUIRED,
WITHIN TEN (10) BUSINESS DAYS FOLLOWING INDEMNITEE’S RECEIPT OF SUCH NOTICE, TO
INFORM THE COMPANY OF ITS APPROVAL OF SUCH COUNSEL OR, IF IT HAS OBJECTIONS, THE
REASONS THEREFOR.  IF SUCH OBJECTIONS CANNOT BE RESOLVED BY THE PARTIES, THE
COMPANY WILL IDENTIFY  ALTERNATIVE COUNSEL, WHICH COUNSEL WILL ALSO BE SUBJECT
TO APPROVAL BY INDEMNITEE IN ACCORDANCE WITH THE PROCEDURE DESCRIBED IN THE
PRIOR SENTENCE.

 

10.2        RIGHT OF INDEMNITEE TO EMPLOY COUNSEL.  FOLLOWING APPROVAL OF
COUNSEL BY INDEMNITEE PURSUANT TO SECTION 10.1 AND RETENTION OF SUCH COUNSEL BY
THE COMPANY, THE COMPANY WILL NOT BE LIABLE TO INDEMNITEE UNDER THIS AGREEMENT
FOR ANY FEES AND EXPENSES OF COUNSEL SUBSEQUENTLY INCURRED BY INDEMNITEE WITH
RESPECT TO THE SAME PROCEEDING; PROVIDED, HOWEVER, THAT  (A) INDEMNITEE HAS THE
RIGHT TO EMPLOY COUNSEL IN ANY SUCH PROCEEDING AT INDEMNITEE’S EXPENSE AND (B)
THE COMPANY WILL BE REQUIRED TO PAY THE  FEES AND EXPENSES OF INDEMNITEE’S
COUNSEL IF (I) THE EMPLOYMENT OF COUNSEL BY INDEMNITEE HAS BEEN PREVIOUSLY
AUTHORIZED BY THE COMPANY, (II) INDEMNITEE REASONABLY CONCLUDES THAT  THERE IS
AN ACTUAL OR POTENTIAL CONFLICT BETWEEN THE COMPANY (OR ANY OTHER PERSON OR
PERSONS INCLUDED IN A JOINT DEFENSE)  AND  INDEMNITEE IN THE CONDUCT OF SUCH
DEFENSE OR REPRESENTATION BY SUCH COUNSEL RETAINED BY THE COMPANY OR  (III THE
COMPANY DOES NOT CONTINUE TO RETAIN THE COUNSEL APPROVED BY INDEMNITEE.

 

10.3        COMPANY NOT ENTITLED TO ASSUME DEFENSE.  NOTWITHSTANDING SECTION
10.1, THE COMPANY WILL NOT BE ENTITLED TO ASSUME THE DEFENSE OF ANY PROCEEDING
BROUGHT BY OR ON BEHALF OF

 

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the Company or any Proceeding as to which Indemnitee has reasonably made the
conclusion provided for in Section 10.2(b)(ii).

 

ARTICLE 11
SETTLEMENT

 

11.1        COMPANY’S PRIOR CONSENT REQUIRED.  NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, THE COMPANY WILL HAVE NO OBLIGATION TO INDEMNIFY
INDEMNITEE UNDER THIS AGREEMENT FOR ANY AMOUNTS PAID IN SETTLEMENT OF ANY
PROCEEDING EFFECTED WITHOUT THE COMPANY’S PRIOR WRITTEN CONSENT.

 

11.2        WHEN INDEMNITEE’S PRIOR CONSENT REQUIRED.  THE COMPANY WILL NOT,
WITHOUT THE PRIOR WRITTEN CONSENT OF INDEMNITEE, CONSENT TO THE ENTRY OF ANY
JUDGMENT AGAINST INDEMNITEE OR ENTER INTO ANY SETTLEMENT OR COMPROMISE WHICH (I)
INCLUDES AN ADMISSION OF FAULT OF INDEMNITEE, ANY NON-MONETARY REMEDY IMPOSED ON
INDEMNITEE OR A LOSS FOR WHICH INDEMNITEE IS NOT WHOLLY INDEMNIFIED HEREUNDER OR
(II) WITH RESPECT TO ANY PROCEEDING WITH RESPECT TO WHICH INDEMNITEE MAY BE OR
IS MADE A PARTY OR A PARTICIPANT OR MAY BE OR IS OTHERWISE ENTITLED TO SEEK
INDEMNIFICATION HEREUNDER, DOES NOT INCLUDE, AS AN UNCONDITIONAL TERM THEREOF,
THE FULL RELEASE OF INDEMNITEE FROM ALL LIABILITY IN RESPECT OF SUCH PROCEEDING,
WHICH RELEASE WILL BE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
INDEMNITEE. NEITHER THE COMPANY NOR INDEMNITEE WILL UNREASONABLY WITHHOLD ITS
CONSENT TO ANY PROPOSED SETTLEMENT; PROVIDED, HOWEVER, INDEMNITEE MAY WITHHOLD
CONSENT TO ANY SETTLEMENT THAT DOES NOT PROVIDE A FULL AND UNCONDITIONAL RELEASE
OF INDEMNITEE FROM ALL LIABILITY IN RESPECT OF SUCH PROCEEDING.

 

ARTICLE 12
ESTABLISHMENT OF TRUST

 

12.1        REQUEST BY INDEMNITEE.  IN THE EVENT A CHANGE OF CONTROL OCCURS
AFTER THE DATE OF THIS AGREEMENT, THE COMPANY WILL BE REQUIRED, UPON RECEIPT OF
A WRITTEN REQUEST FROM INDEMNITEE FOLLOWING INITIATION OF A PROCEEDING FOR WHICH
INDEMNITEE REASONABLY BELIEVES THAT HE OR SHE MAY BE ENTITLED TO INDEMNIFICATION
BY THE COMPANY UNDER THIS AGREEMENT, THE ARTICLES, THE BYLAWS OR OTHERWISE, TO
CREATE A TRUST (THE “TRUST”) FOR THE BENEFIT OF THE INDEMNITEE.  THE TRUSTEE OF
THE TRUST WILL BE SELECTED BY THE INDEMNITEE.

 

12.2        FUNDING OBLIGATIONS.  FOLLOWING A REQUEST FROM INDEMNITEE PURSUANT
TO SECTION 12.1 TO ESTABLISH THE TRUST WITH RESPECT TO A PARTICULAR PROCEEDING,
THE COMPANY WILL, FROM TIME TO TIME UPON WRITTEN REQUEST OF INDEMNITEE, FUND THE
TRUST IN AN AMOUNT SUFFICIENT TO SATISFY ANY AND ALL EXPENSES AND LOSSES
REASONABLY ANTICIPATED AT THE TIME OF SUCH REQUEST TO BE INCURRED BY OR ON
BEHALF OF INDEMNITEE IN CONNECTION WITH SUCH PROCEEDING, PROVIDED, HOWEVER, THAT
THE AGGREGATE AMOUNT THAT THE COMPANY MAY BE REQUIRED TO FUND IN THE TRUST WITH
RESPECT TO SUCH PROCEEDING WILL NOT, IN ANY EVENT, EXCEED [$100,000];  AND, 
PROVIDED, FURTHER, THAT THE AGGREGATE AMOUNT THAT THE COMPANY MAY BE REQUIRED TO
FUND IN ALL TRUSTS WITH RESPECT TO ALL PROCEEDINGS FOR WHICH THE COMPANY MAY BE
REQUIRED TO INDEMNIFY INDEMNITEE WILL NOT, IN ANY EVENT, EXCEED [$250,000]. THE
AMOUNT OR AMOUNTS TO BE DEPOSITED IN THE TRUST PURSUANT TO THE FOREGOING
OBLIGATION WILL BE DETERMINED BY MUTUAL AGREEMENT OF INDEMNITEE AND THE COMPANY,
AND IF THEY ARE UNABLE TO REACH SUCH AGREEMENT, THEN BY INDEPENDENT COUNSEL
(SELECTED AS PROVIDED IN SECTION 6.3).  THE TERMS OF THE TRUST WILL PROVIDE THAT
(I) EXCEPT UPON PRIOR WRITTEN CONSENT OF

 

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Indemnitee, the Trust will not be revoked or the principal thereof invaded, (ii)
the trustee will advance to Indemnitee, within ten (10) business days of a
written request by Indemnitee, any and all Expenses (and Indemnitee hereby
agrees to  execute the Undertaking contemplated by Section 4.1, if required at
the time any request for an Expense Advance is submitted to the trustee), (iii)
the Trust will continue to be funded by the Company in accordance with the
funding obligations set forth in this Section 12.2, (iv) the trustee will
promptly pay to Indemnitee any amounts to which Indemnitee is entitled to
indemnification pursuant to this Agreement or otherwise and (v) all unexpended
funds in the Trust will revert to the Company upon a final determination by the
person, persons or entity making a determination of entitlement to
indemnification pursuant to Article 6 or a court or arbitrator presiding over an
action commenced pursuant to Article 8, as the case may be, that Indemnitee has
been fully indemnified with respect to the Proceeding giving rise to the
establishment of the Trust.

 

ARTICLE 13
DURATION OF AGREEMENT

 

13.1        DURATION OF AGREEMENT.  THIS AGREEMENT WILL CONTINUE UNTIL AND
TERMINATE UPON THE LATEST OF (A) THE STATUTE OF LIMITATIONS APPLICABLE TO ANY
CLAIM THAT COULD BE ASSERTED AGAINST AN INDEMNITEE WITH RESPECT TO WHICH
INDEMNITEE MAY BE ENTITLED TO INDEMNIFICATION AND/OR AN EXPENSE ADVANCE UNDER
THIS AGREEMENT, (B) TEN (10) YEARS AFTER THE DATE THAT INDEMNITEE HAS CEASED TO
SERVE AS A DIRECTOR OR OFFICER OF THE COMPANY OR AS A DIRECTOR, OFFICER,
EMPLOYEE, PARTNER, MEMBER, MANAGER, FIDUCIARY OR AGENT OF ANY OTHER ENTERPRISE
WHICH INDEMNITEE SERVED AT THE REQUEST OF THE COMPANY, OR (C) IF, AT THE LATER
OF THE DATES REFERRED TO IN (A) AND (B) ABOVE, THERE IS PENDING A PROCEEDING IN
RESPECT OF WHICH INDEMNITEE IS GRANTED RIGHTS OF INDEMNIFICATION OR THE RIGHT TO
AN EXPENSE ADVANCE UNDER THIS AGREEMENT OR A PROCEEDING COMMENCED BY INDEMNITEE
PURSUANT TO ARTICLE 8 OF THIS AGREEMENT, ONE YEAR AFTER THE FINAL TERMINATION OF
SUCH PROCEEDING, INCLUDING ANY AND ALL APPEALS.

 

ARTICLE 14
MISCELLANEOUS

 

14.1        ENTIRE AGREEMENT.  THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AND UNDERSTANDING OF THE PARTIES IN RESPECT OF THE SUBJECT MATTER HEREOF AND
SUPERSEDES ALL PRIOR UNDERSTANDINGS, AGREEMENTS OR REPRESENTATIONS BY OR AMONG
THE PARTIES, WRITTEN OR ORAL, TO THE EXTENT THEY RELATE IN ANY WAY TO THE
SUBJECT MATTER HEREOF; PROVIDED, HOWEVER, IT IS AGREED THAT THE PROVISIONS
CONTAINED IN THIS AGREEMENT ARE A SUPPLEMENT TO, AND NOT A SUBSTITUTE FOR, ANY
PROVISIONS REGARDING THE SAME SUBJECT MATTER CONTAINED IN THE ARTICLES, THE
BYLAWS AND ANY EMPLOYMENT OR SIMILAR AGREEMENT BETWEEN THE PARTIES.

 

14.2        ASSIGNMENT; BINDING EFFECT; THIRD PARTY BENEFICIARIES.  NO PARTY MAY
ASSIGN EITHER THIS AGREEMENT OR ANY OF ITS RIGHTS, INTERESTS OR OBLIGATIONS
HEREUNDER WITHOUT THE PRIOR WRITTEN APPROVAL OF THE OTHER PARTY; PROVIDED,
HOWEVER, THAT THE COMPANY MAY  ASSIGN ALL (BUT NOT LESS THAN ALL) OF ITS RIGHTS,
OBLIGATIONS AND INTERESTS HEREUNDER TO ANY DIRECT OR INDIRECT SUCCESSOR TO ALL
OR SUBSTANTIALLY ALL OF THE BUSINESS OR ASSETS OF THE COMPANY BY PURCHASE,
MERGER, CONSOLIDATION OR OTHERWISE AND WILL  CAUSE SUCH SUCCESSOR TO BE BOUND BY
AND EXPRESSLY ASSUME THE TERMS AND PROVISIONS HEREOF.  ALL OF THE TERMS,
AGREEMENTS, COVENANTS, REPRESENTATIONS, WARRANTIES AND CONDITIONS OF THIS
AGREEMENT ARE BINDING UPON, AND INURE TO THE BENEFIT OF AND ARE

 

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enforceable by, the parties and their respective successors, permitted assigns,
heirs, executors and personal and legal representatives.  There are no third
party beneficiaries having rights under or with respect to this Agreement.

 

14.3        NOTICES.  ALL NOTICES, REQUESTS AND OTHER COMMUNICATIONS PROVIDED
FOR OR PERMITTED TO BE GIVEN UNDER THIS AGREEMENT MUST BE IN WRITING AND BE
GIVEN BY PERSONAL DELIVERY, BY CERTIFIED OR REGISTERED UNITED STATES MAIL
(POSTAGE PREPAID, RETURN RECEIPT REQUESTED), BY A NATIONALLY RECOGNIZED
OVERNIGHT DELIVERY SERVICE FOR NEXT DAY DELIVERY, OR BY FACSIMILE TRANSMISSION,
AS FOLLOWS (OR TO SUCH OTHER ADDRESS AS ANY PARTY MAY GIVE IN A NOTICE GIVEN IN
ACCORDANCE WITH THE PROVISIONS HEREOF):

 

If to Company:

 

Lancer Corporation
6655 Lancer Blvd.
San Antonio, Texas 78219
Attention: Chief Legal Officer
Facsimile: (210) 310-7252

 

with a copy (which will not constitute notice) to:

 

Akin Gump Strauss Hauer & Feld LLP
300 Convent, Suite 1500
San Antonio, TX  78205
Attention: Alan Schoenbaum
Facsimile: (210) 224-2035

 

If to Indemnitee:

 

 

 

Attention:

Facsimile:

 

with a copy (which will not constitute notice) to:

 

 

 

Attention:

Facsimile:

 

All notices, requests or other communications will be effective and deemed given
only as follows:  (i) if given by personal delivery, upon such personal
delivery, (ii) if sent by certified or registered mail, on the fifth business
day after being deposited in the United States mail, (iii) if sent for next day
delivery by overnight delivery service, on the date of delivery as confirmed by
written confirmation of delivery, (iv) if sent by facsimile, upon the
transmitter’s confirmation of receipt of such facsimile transmission, except
that if such confirmation is received after 5:00

 

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p.m. (in the recipient’s time zone) on a business day, or is received on a day
that is not a business day, then such notice, request or communication will not
be deemed effective or given until the next succeeding business day. Notices,
requests and other communications sent in any other manner, including by
electronic mail, will not be effective.

 

14.4        SPECIFIC PERFORMANCE; REMEDIES.  EACH PARTY ACKNOWLEDGES AND AGREES
THAT THE OTHER PARTY WOULD BE DAMAGED IRREPARABLY IF ANY PROVISION OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH ITS SPECIFIC TERMS OR WERE
OTHERWISE BREACHED.  ACCORDINGLY, THE PARTIES WILL BE ENTITLED TO AN INJUNCTION
OR INJUNCTIONS TO PREVENT BREACHES OF THE PROVISIONS OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THIS AGREEMENT AND ITS PROVISIONS IN ANY ACTION OR
PROCEEDING INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN BEXAR COUNTY,
TEXAS  HAVING JURISDICTION OVER THE PARTIES AND THE MATTER, IN ADDITION TO ANY
OTHER REMEDY TO WHICH THEY MAY BE ENTITLED, AT LAW OR IN EQUITY.  EXCEPT AS
EXPRESSLY PROVIDED HEREIN, THE RIGHTS, OBLIGATIONS AND REMEDIES CREATED BY THIS
AGREEMENT ARE CUMULATIVE AND IN ADDITION TO ANY OTHER RIGHTS, OBLIGATIONS OR
REMEDIES OTHERWISE AVAILABLE AT LAW OR IN EQUITY. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, NOTHING HEREIN WILL BE CONSIDERED AN ELECTION OF REMEDIES.

 

14.5        SUBMISSION TO JURISDICTION.  ANY PROCEEDING SEEKING TO ENFORCE ANY
PROVISION OF, OR BASED ON ANY MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS
AGREEMENT MAY ONLY BE BROUGHT IN A DISTRICT COURT OF THE STATE OF TEXAS SITTING
IN BEXAR COUNTY, WHICH WILL BE THE EXCLUSIVE AND ONLY PROPER FORUM FOR
ADJUDICATING SUCH PROCEEDING, AND EACH PARTY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURT (AND OF THE APPROPRIATE APPELLATE COURTS
THEREFROM) IN ANY SUCH PROCEEDING AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH  PROCEEDING IN ANY SUCH COURT OR THAT ANY SUCH
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 
PROCESS IN ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE SERVED ON ANY PARTY
ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF ANY SUCH
COURT.

 

14.6        HEADINGS.  THE ARTICLE AND SECTION HEADINGS CONTAINED IN THIS
AGREEMENT ARE INSERTED FOR CONVENIENCE ONLY AND WILL NOT AFFECT IN ANY WAY THE
MEANING OR INTERPRETATION OF THIS AGREEMENT.

 

14.7        GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW PRINCIPLES.

 

14.8        AMENDMENT.  THIS AGREEMENT MAY NOT BE AMENDED OR MODIFIED EXCEPT BY
A WRITING SIGNED BY ALL OF THE PARTIES.

 

14.9        EXTENSIONS; WAIVERS.  ANY PARTY MAY, FOR ITSELF ONLY, (I) EXTEND THE
TIME FOR THE PERFORMANCE OF ANY OF THE OBLIGATIONS OF ANY OTHER PARTY UNDER THIS
AGREEMENT, (II) WAIVE ANY INACCURACIES IN THE REPRESENTATIONS AND WARRANTIES OF
ANY OTHER PARTY CONTAINED HEREIN OR IN ANY DOCUMENT DELIVERED PURSUANT HERETO
AND (III) WAIVE COMPLIANCE WITH ANY OF THE AGREEMENTS OR CONDITIONS FOR THE
BENEFIT OF SUCH PARTY CONTAINED HEREIN.  ANY SUCH EXTENSION OR WAIVER WILL BE
VALID ONLY IF SET FORTH IN A WRITING SIGNED BY THE PARTY TO BE BOUND THEREBY. 
NO WAIVER BY ANY PARTY OF ANY DEFAULT, MISREPRESENTATION OR BREACH OF WARRANTY
OR COVENANT HEREUNDER, WHETHER INTENTIONAL OR NOT, MAY BE DEEMED TO EXTEND TO
ANY PRIOR OR SUBSEQUENT DEFAULT, MISREPRESENTATION

 

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or breach of warranty or covenant hereunder or affect in any way any rights
arising because of any prior or subsequent such occurrence.  Neither the failure
nor any delay on the part of any party to exercise any right or remedy under
this Agreement will operate as a waiver thereof, nor will any single or partial
exercise of any right or remedy preclude any other or further exercise of the
same or of any other right or remedy

 

14.10      SEVERABILITY.  THE PROVISIONS OF THIS AGREEMENT WILL BE DEEMED
SEVERABLE AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION WILL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF THE OTHER PROVISIONS HEREOF; PROVIDED
THAT IF ANY PROVISION OF THIS AGREEMENT, AS APPLIED TO ANY PARTY OR TO ANY
CIRCUMSTANCE, IS JUDICIALLY DETERMINED NOT TO BE ENFORCEABLE IN ACCORDANCE WITH
ITS TERMS, THE PARTIES AGREE THAT THE COURT JUDICIALLY MAKING SUCH DETERMINATION
MAY MODIFY THE PROVISION IN A MANNER CONSISTENT WITH ITS OBJECTIVES SUCH THAT IT
IS ENFORCEABLE, AND/OR TO DELETE SPECIFIC WORDS OR PHRASES, AND IN ITS MODIFIED
FORM, SUCH PROVISION WILL THEN BE ENFORCEABLE AND WILL BE ENFORCED.

 

14.11      COUNTERPARTS; EFFECTIVENESS.  THIS AGREEMENT MAY BE EXECUTED IN TWO
OR MORE COUNTERPARTS, EACH OF WHICH WILL BE DEEMED AN ORIGINAL BUT ALL OF WHICH
TOGETHER WILL CONSTITUTE ONE AND THE SAME INSTRUMENT.  THIS AGREEMENT WILL
BECOME EFFECTIVE WHEN ONE OR MORE COUNTERPARTS HAVE BEEN SIGNED BY EACH OF THE
PARTIES AND DELIVERED TO THE OTHER PARTIES, WHICH DELIVERY MAY BE MADE BY
EXCHANGE OF COPIES OF THE SIGNATURE PAGE BY FACSIMILE TRANSMISSION.

 

14.12      CONSTRUCTION.  THIS AGREEMENT HAS BEEN FREELY AND FAIRLY NEGOTIATED
AMONG THE PARTIES.  IF AN AMBIGUITY OR QUESTION OF INTENT OR INTERPRETATION
ARISES, THIS AGREEMENT WILL BE CONSTRUED AS IF DRAFTED JOINTLY BY THE PARTIES
AND NO PRESUMPTION OR BURDEN OF PROOF WILL ARISE FAVORING OR DISFAVORING ANY
PARTY BECAUSE OF THE AUTHORSHIP OF ANY PROVISION OF THIS AGREEMENT.  ANY
REFERENCE TO ANY LAW WILL BE DEEMED ALSO TO REFER TO SUCH LAW AS AMENDED AND ALL
RULES AND REGULATIONS PROMULGATED THEREUNDER, UNLESS THE CONTEXT REQUIRES
OTHERWISE.  THE WORDS “INCLUDE,” “INCLUDES,” AND “INCLUDING” WILL BE DEEMED TO
BE FOLLOWED BY “WITHOUT LIMITATION.” PRONOUNS IN MASCULINE, FEMININE, AND NEUTER
GENDERS WILL BE CONSTRUED TO INCLUDE ANY OTHER GENDER, AND WORDS IN THE SINGULAR
FORM WILL BE CONSTRUED TO INCLUDE THE PLURAL AND VICE VERSA, UNLESS THE CONTEXT
OTHERWISE REQUIRES. THE WORDS “THIS AGREEMENT,” “HEREIN,” “HEREOF,” “HEREBY,”
“HEREUNDER,” AND WORDS OF SIMILAR IMPORT REFER TO THIS AGREEMENT AS A WHOLE AND
NOT TO ANY PARTICULAR SUBDIVISION UNLESS EXPRESSLY SO LIMITED. THE PARTIES
INTEND THAT EACH REPRESENTATION, WARRANTY, AND COVENANT CONTAINED HEREIN WILL
HAVE INDEPENDENT SIGNIFICANCE. IF ANY PARTY HAS BREACHED ANY REPRESENTATION,
WARRANTY, OR COVENANT CONTAINED HEREIN IN ANY RESPECT, THE FACT THAT THERE
EXISTS ANOTHER REPRESENTATION, WARRANTY OR COVENANT RELATING TO THE SAME SUBJECT
MATTER (REGARDLESS OF THE RELATIVE LEVELS OF SPECIFICITY) WHICH THE PARTY HAS
NOT BREACHED WILL NOT DETRACT FROM OR MITIGATE THE FACT THAT THE PARTY IS IN
BREACH OF THE FIRST REPRESENTATION, WARRANTY, OR COVENANT.  TIME IS OF THE
ESSENCE IN THE PERFORMANCE OF THIS AGREEMENT.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

LANCER CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

INDEMNITEE

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

Print Name

 

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