Document:

Exhibit 10.1

 

EXTENSION
AGREEMENT

 

THIS AGREEMENT made as of the 10th day of September, 2004

 

AMONG:

 

707932 Ontario Limited,

(the “Landlord”)

 

- and -

 

Tucows Inc. and Tucows.com Co.

(collectively, the “Tenant”)

 

- and -

 

Tucows International Corporation

(the “Original Tenant”)

 

WHEREAS:

 

A.                                   By a lease dated the 10th
day of December, 1999 (the “Lease”), the Landlord leased to Tucows
International Corporation, for an initial term (the “Term”) of 5 years, commencing
on the 1st day January, 2000 and expiring on the 31st day
of December, 2004, certain premises (the “Leased Premises”) designated as the ground
floor of the Building municipally known as 78 Mowat Avenue, Toronto, Ontario,
comprising an area of approximately 18,426 square feet of Rentable Area, shown
outlined in red on the plan attached to the Lease as Schedule “B”;

 

B.                                     The original tenant was Tucows
International Corporation. In 2001, an internal corporate reorganization
occurred, and Tucows Inc. became the public parent of Tucows.com Co., which has
been fulfilling the Lease obligations of Tucows International Corporation,
since that time;

 

C.                                     Whereas Tucows International
Corporation is substantially without assets, and the parties

 

 

wish to amend the Lease to reflect commercial
reality;

 

D.                                    Pursuant
to Section 10.3 of the Lease the Tenant has the option to extend the Term of the
Lease upon the same terms and conditions contained in the Lease, except for:

i)                                         any further option to extend the
Term;

ii)                                      the obligation of the Landlord to
pay any Tenant’s allowance or perform any Landlord’s Work, in, on, or to the
Leased Premises; and

iii)                                   the rent to be paid;

 

E.                                      In lieu of the Tenant’s option to
extend the Lease set out in Section 10.3 of the Lease, the Landlord and
the Tenant have agreed to extend the Term of the Lease for a further period of
7 years from the 1st day of January, 2005 upon the terms and
conditions contained in this Agreement.

 

NOW
THEREFORE THE PARTIES AGREE AS FOLLOWS:

 

1.                                       The consideration for this Agreement
is the mutual covenants and agreements between the parties and the sum of One
Dollar ($1.00) that has been paid by each of the parties to the other, the
receipt and sufficiency of which is acknowledged.

 

2.                                       The Original Tenant hereby confirms
that it has assigned all of its right, title and interest in and to the Lease
and the Leased Premises, to the Tenant.

 

3.                                       The Term of the Lease is hereby
extended for a further period of 7 years, commencing on the 1st day
of January, 2005 (the “Commencement Date”) and expiring on the 31st
day of December, 2011 (the “Extended Term”) upon the same terms,
covenants and conditions as are contained in the Lease as amended by this
Agreement, including that:

 

a.               Subject to Paragraph 4 of this Agreement, the
Tenant will accept the Leased Premises in an “as is” condition;

 

b.              Subject to Paragraph 4 of this Agreement, the
Landlord has no responsibility or liability for making any renovations,
alterations or improvements in or to the Leased Premises (but nothing herein
derogates from its existing obligations, if any, under the Lease to make
repairs); and

 

c.               all further renovations, alterations or
improvements in or to the Leased Premises are the sole responsibility of the
Tenant (other than repairs which Landlord is obligated under the Lease to
perform at its expense), and shall be undertaken and completed at the Tenant’s
expense and strictly in accordance with the provisions of the Lease.

 

4.                                       The Tenant and the Landlord
acknowledge and agree that the Lease is hereby amended to provide as follows:

 

 

a.               in addition to the Leased Premises, the Tenant
shall Lease from the Landlord during the Extended Term, certain premises
located on the second floor of the Building, comprising exactly 8,511 square
feet of Rentable Area (the “Additional Premises”);

 

b.              the Tenant shall pay to the Landlord as Basic
Rent for the Leased Premises during the Extended Term the following:

 

Year 1:            the annual sum of $221,112 payable
in equal consecutive monthly instalments of $18,426 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $12.00 per square foot of the Rentable Area of the Leased Premises;

 

Year 2:            the annual sum of $230,325 payable
in equal consecutive monthly instalments of $19,193.75 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $12.50 per square foot of the Rentable Area of the Leased Premises;

 

Year 3:            the annual sum of $239,538 payable
in equal consecutive monthly instalments of $19,961.50 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $13.00 per square foot of the Rentable Area of the Leased Premises;

 

Year 4:            the annual sum of $248,751 payable
in equal consecutive monthly instalments of $20,729.25 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $13.50 per square foot of the Rentable Area of the Leased Premises;

 

Year 5:            the annual sum of $257,964 payable
in equal consecutive monthly instalments of $21,497 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $14.00 per square foot of the Rentable Area of the Leased Premises;

 

Year 6:            the annual sum of $267,177 payable
in equal consecutive monthly instalments of $22,264.75 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $14.50 per square foot of the Rentable Area of the Leased Premises;

 

Year 7:            the annual sum of $276,390 payable
in equal consecutive monthly instalments of $23,032.50 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $15.00 per square foot of the Rentable Area of the Leased Premises;

 

c.               the Tenant shall pay to the Landlord as Basic
Rent for the Additional Premises during the Extended Term the following:

 

 

Year 1:            the annual sum of $102,132 payable
in equal consecutive monthly instalments of $8,511 each in advance on the first
day of each calendar month during such period, based upon an annual rate of
$12.00 per square foot of the Rentable Area of the Additional Premises;

 

Year 2:            the annual sum of $106,387.50
payable in equal consecutive monthly instalments of $8,865.63 each in advance
on the first day of each calendar month during such period, based upon an
annual rate of $12.50 per square foot of the Rentable Area of the Additional
Premises;

 

Year 3:            the annual sum of $110,643 payable
in equal consecutive monthly instalments of $9,220.25 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $13.00 per square foot of the Rentable Area of the Additional Premises;

 

Year 4:            the annual sum of $114,898.50
payable in equal consecutive monthly instalments of $9,574.88 each in advance
on the first day of each calendar month during such period, based upon an
annual rate of $13.50 per square foot of the Rentable Area of the Additional
Premises;

 

Year 5:            the annual sum of $119,154 payable
in equal consecutive monthly instalments of $9,929.50 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $14.00 per square foot of the Rentable Area of the Additional Premises;

 

Year 6:            the annual sum of $123,409.50
payable in equal consecutive monthly instalments of $10,284.13 each in advance
on the first day of each calendar month during such period, based upon an
annual rate of $14.50 per square foot of the Rentable Area of the Additional
Premises;

 

Year 7:            the annual sum of $127,665 payable
in equal consecutive monthly instalments of $10,638.75 each in advance on the
first day of each calendar month during such period, based upon an annual rate
of $15.00 per square foot of the Rentable Area of the Additional Premises;

 

d.              Except as otherwise specifically set out in
this Agreement, the Tenant shall pay to the Landlord during the Extended Term
Additional Rent for the Additional Premises, in accordance the same terms and
provisions governing the Tenant’s payment of Additional Rent for the Leased Premises
under the Lease;

 

e.               The exact Rentable Area of the Additional
Premises throughout the Extended Term or any renewals thereof shall be 8,511
square feet, excluding the existing mezzanine and deck.  The Tenant and Landlord agree and acknowledge
that the Tenant shall be entitled to exclusive use of, but will not be charged
Basic or Additional Rent on the

 

 

existing mezzanine or deck located in the Additional Premises, provided
that the Tenant uses the mezzanine solely for the purpose of storage and access.  If the Tenant elects, at its sole option, to
use any part of the existing mezzanine for any purpose other than storage or
access the Landlord shall have the right to re-measure the Additional Premises
and include the existing mezzanine in the determination of the Rentable Area of
the Additional Premises, and charge Basic and Additional Rent based on the new
Rentable Area calculation of the Additional Premises, from the date upon which
the non-storage and non-access use commenced.

 

f.                 The Tenant shall not be required to pay Basic
or Additional Rent for the Leased Premises for six months during the Extended
Term, being the first, second, third, tenth, eleventh and twelfth months of the
Extended Term.  The Tenant shall not be
required to pay Basic or Additional Rent for the Additional Premises for a
period of six months, being the first six months of the Extended Term
(collectively, the “Rent Free Period”).  During the Rent Free Period, the Tenant
shall pay all utility and parking costs and shall be required to comply with
all other terms and conditions of the Lease, as amended by this Agreement;

 

g.              Provided the Tenant has signed this Agreement
and delivered certificates of insurance in accordance with the requirements
under the Lease before 11:59 pm September 1, 2004, the Tenant shall be
permitted to take early possession of the Additional Premises and mezzanine and
deck as of October 1, 2004, until December 31, 2004, for the purposes
of completion of the Tenant’s Work and the installation of telephone and communications
systems, computer equipment and furniture in the Additional Premises (the “Fixturing
Period”).  All terms and
conditions of the Lease shall apply during the Fixturing Period, save and
except that no Basic or Additional Rent shall be payable for the Additional
Premises, mezzanine, or deck.  The
Tenant shall be responsible during the Fixturing Period for the payments of all
parking and utility charges.  The Tenant
shall be allowed to conduct its business in the Additional Premises, mezzanine
and deck during the Fixturing Period. If Tenant has not signed this Agreement
by September 1, or delivered the insurance certificates by that date, then
the early occupancy period shall be delayed, at Landlord’s option, for one
business day for each business day of delay in Tenant’s satisfaction of the two
conditions.

 

h.              The Tenant and Landlord acknowledge and agree
that the deck shall form part of the Leased Premises.

 

i.                  The Tenant shall have the right
during the Fixturing Period, Extended Term and any extension thereof, to make
improvements to the Leased Premises and Additional Premises at its sole cost,
which it deems necessary and required to carry on its business (the “Tenant’s
Work”), provided that all such work shall be subject to the prior
written approval of the Landlord and shall be subject to and performed in

 

 

accordance with the provisions of the Lease and good construction
practices by competent contractors in compliance with all relevant applicable
municipal and provincial laws, by-laws and regulations.  All of the Tenant’s Work shall be performed
by the Tenant in accordance with approved plans and specifications. Any
variance from the said plans and specifications shall require further written
approval of the Landlord.

 

j.                 Tenant shall be entitled to 25
parking spaces in the Building parking area which shall include 5 reserved
parking spaces and three unreserved parking spaces in the parking area east of
the Building, and 17 unreserved parking spaces in the parking area located
south of the Building accessed from Liberty Street. Tenant shall comply with
the generally applicable rules and regulations that govern the parking areas.
The parking rate shall be the then generally applicable current parking rate
for the Building and shall be subject to change from time to time. If the
operator of the Building parking area has any additional parking spaces
available, Tenant may lease additional spaces directly from the parking area
operator. Furthermore, provided the Landlord obtains, from time to time, from
the City of Toronto a parking license or permit granting use (the “License”),
the Landlord will provide (in addition to the parking spaces permitted under
the Lease) up to 9 additional unreserved parking spaces (“Additional Parking”) on Mowat
Avenue, in accordance with the same terms and conditions as the set out in the
Lease, at the current parking rate (but subject to the limitations of the
License from the City of Toronto). The Tenant shall be allowed to use the
Additional Parking until the earlier of: a) the expiry of the License; or b)
the expiry of the Extended Term.  In the
event that operator of the parking facilities of the Building has any
additional parking spaces available from time to time, the Tenant may lease
those additional spaces directly from the parking facilities operator.

 

k.             If the Tenant is not in default
under this Lease or this Agreement, it shall have the option to Renew the Lease
for one (1) additional term of 5 years (the “Renewal Term”) upon the same
terms and conditions as contained in Section 10.3 of the Lease (as amended
by this Agreement), save and except for the rent to be paid. For these
purposes, Section 10.3 of the Lease is hereby amended as follows:

 

 i.              The words “prior to the expiration of the initial
Term” in clause 10.3(2) of the Lease are deleted and replaced with
the following: “prior to the expiration of the Extended Term”; and,

ii.             All other references to “initial Term”
and/or “original
Term” in Section 10.3 are deleted and replaced by the words “Extended Term”.

 

l.                  The Landlord agrees to notify the
Tenant in writing on the anniversary of the Commencement Date of each year of
the Extended Term, of any upcoming vacant space for the next calendar year in
the Building or at 1195-1209 King Street West, Toronto, Ontario, of which the
Landlord is aware to the best of its knowledge. The

 

 

Tenant shall have five business days from receipt of the Landlord’s
notice to advise the Landlord in writing whether it wishes to rent the said
vacant space, subject to any existing renewal options and first rights of
refusal to lease in favour of a third party, which shall take priority over the
Tenant’s right to lease the vacant space. , If the Landlord fails to receive
such written notice from the Tenant within the required 5 business days, it
shall be entitled to rent the space to a third party on the same terms and
conditions as set out in the Lease including any rights of renewal and Rent.

 

m.            The Tenant and Landlord agree and
acknowledge that the words “a single sign” are hereby deleted from the second
sentence of Section 8.6 of the Lease and are replaced with the words “two
signs”.

 

n.              The Landlord agrees to complete
to following work to the Leased Premises and Additional Premises at its sole
cost:

 

i.  install an
enclosed interior staircase from the Leased Premises to the Additional Premises
in the southwest corner of the parking lot adjacent to the Building, in a
location to be determined by the Landlord acting reasonably, in consultation
with Tenant, and in a manner to minimize disruption to the Tenant’s existing
business; and

ii.  ensure
that the existing mechanical, electrical, plumbing and sprinkler systems
serving the Additional Premises are in good working order as of the
Commencement Date.

 

(collectively, the “Landlord’s Work”)

 

The Landlord shall complete the Landlord’s Work using good construction
practices by competent contractors and in accordance with relevant and
applicable municipal and provincial laws, by-laws or regulations.  Any work not specifically included as
Landlord’s Work shall be the responsibility of the Tenant.  The Landlord agrees to use its best efforts
to complete the Landlord’s Work as expeditiously as possible.

 

5.                                       The Tenant represents and warrants
that it has the right, full power and authority to agree to the amendments to
the Lease, and other provisions contained in this Agreement.

 

6.                                       All obligations of Tucows Inc. and
Tucows.com Co. under the Lease, as amended hereby, shall be deemed to be joint
and several.

 

7.                                       The parties confirm that the terms,
covenants and conditions of the Lease remain unchanged and in full force and
effect, except as modified by this Agreement. 
It is understood and agreed that all terms and expressions when used in
this Agreement, unless a contrary intention is expressed herein, have the same
meaning as they have in the Lease.

 

8.                                       This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns, as the case may be.

 

 

IN WITNESS WHEREOF the parties hereto have duly
executed this Agreement at Toronto, Ontario, this 10th day of September, 2004.

 

	
   

  	
   

  	
  707932 Ontario Limited (Landlord)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
    /s/  Marcy Lipson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  I/We have the
  authority to bind the Corporation.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tucows Inc. and Tucows.com
  Co. (Tenant and assignee)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/  Michael Cooperman

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/  Michael Cooperman

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  I/We have the
  authority to bind the Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tucows International Inc.
  (Original Tenant and assignor)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
  /s/  Michael Cooperman

  	
   

  
	
   

  	
   

  	
    Authorized
  Signing OfficerExhibit 10.1

 

LANCER CORPORATION

MANAGEMENT SEVERANCE AGREEMENT

 

THIS
AGREEMENT is made and entered into as of September 15, 2004, by and between
Lancer Corporation, a Texas corporation (“Lancer”), and Christopher D. Hughes
(“Executive”);

 

WHEREAS,
Lancer recognizes Executive’s expertise in connection with Executive’s
employment by Lancer;

 

WHEREAS,
Lancer desires to provide for a severance payment in the event Executive’s
employment is terminated by Lancer without Cause or by Executive for Good
Reason.

 

NOW,
THEREFORE, in consideration of the following promises, mutual agreements and
covenants and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties, intending to be legally bound
hereby, agree as follows:

 

1.             Definition
of Terms.

 

“Cause” shall
mean any of the following:

 

(A) conviction for, or guilty plea to, a felony or a crime involving
moral turpitude, which shall include independently verified substance abuse
involving drugs or alcohol as specified in the Lancer Drug and Alcohol Policy;
or

 

(B) action or inaction, which in the reasonable judgment of a majority of
the Board of Directors of Lancer, constitutes willful dishonesty, larceny,
fraud or gross negligence by Executive in the performance of Executive’s duties
to Lancer, or willful misrepresentation to shareholders, directors or officers
of Lancer; or

 

(C) willful failure, after 10 business days notice, to materially follow
the written policies of Lancer.

 

“Change of Control” shall after the date hereof mean any of the following:

 

(A)
the sale of all or substantially all of the assets of Lancer and its
subsidiaries; or

 

(B) the acquisition, directly or indirectly, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1933 (the “Exchange Act”) of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of securities
representing 40 percent or more of either (a) the then outstanding shares of
Common Stock (the “Outstanding Company Common Stock”) or (b) the combined
voting power of the then outstanding voting securities of Lancer entitled to
vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following acquisitions
shall not constitute a 

 

1

 

Change
of Control:

 

(i)
any acquisition of voting securities directly from Lancer, or

 

(ii)
any acquisition of voting securities by Lancer, or

 

(iii)
any acquisition of voting securities by any employee benefit plan (or related
trust) sponsored or maintained by Lancer or by any corporation controlled by
Lancer, or

 

(iv)
any acquisition of voting securities by any corporation pursuant to a
reorganization, merger or consolidation which does not substantially change the
proportional ownership in the outstanding Lancer common stock and outstanding
Lancer voting securities prior to the reorganization.

 

“Effective Annual Salary” means the Executive’s annual base
salary (excluding any bonus paid or accrued, and any other payment made or
accrued for Executive’s services) for the current calendar year at the time of
the resignation, termination or Change of Control.

 

“Good Reason”
means either of the following:

 

(A) notice in writing is given to Executive of Executive’s relocation,
without Executive’s consent, to a place of business outside the San Antonio,
Texas area, or

 

(B) a substantial diminution of Executive’s base salary compensation from
the amount in effect on the date hereof.

 

“Term” means the earliest of the following to occur:

 

(A) five years from the date of this Agreement; or

 

(B) three years after a Change of Control.

 

2.             Severance
Payments. In the event that, any
time during the Term, Executive terminates his employment hereunder for Good
Reason or Executive’s employment is terminated hereunder without Cause, Lancer
shall make payment to Executive (or in the case of his death, the legal
representative of Executive’s estate or such other person or persons as Executive
shall have designated by written notice to Lancer) equal to the Executive’s
Effective Annual Salary for a period of eighteen (18) months from the date of
termination (with the first and last month to be prorated if necessary) and
Lancer shall also make payment to Executive, on a pro rata basis, any bonus
earned and declared by Lancer for the calendar year covering the time of the
termination. The bonus pro-rata computation shall be calculated to be the
product of (1) a fraction, the numerator of which is equal to the number of
days worked by Executive during the year in which Executive’s employment was
terminated and the denominator of which 

 

2

 

is
equal to 365, and (2) the total annual bonus which would have been applicable
to Executive pursuant to the bonus plan which was effective at the time of the
employment termination. Additionally, any performance based computations under
the effective bonus plan shall be pro-rated, if possible, on a similar pro-rata
basis. The payments made pursuant to this Agreement shall be made, at Lancer’s
option, either (A) in a lump sum or (B) in a manner which is substantially
similar to the manner in which Executive was paid during his employment as an
Executive, or otherwise complies with Lancer’s current payment procedures for
Executives.

 

3.             Release of
Claims.  Executive agrees that acceptance of the severance
payment defined herein, shall fully and forever RELEASE,
AQUIT, and DISCHARGE
the Lancer, its affiliates, and all of such entities’ officers, directors,
shareholders, partners, agents, servants, employees, independent contractors,
attorneys, insurance companies and the successors and assigns of each from any
and all damages, claims, demands, causes of action, actions, rights, lawsuits,
grievances, complaints, arbitrations, charges, allegations, petitions, appeals,
pleas, challenges, hearings, trials, judgments and executions of any and every
kind or description whatsoever, in law and/or in equity, which he ever had,
claims to have had, or may now have, whether known or unknown, vested,
contingent, executory or otherwise, which relate, directly or indirectly to (1)
Executive’s employment with Lancer or its affiliates, (2) claims Executive may
have to employment and/or reinstatement in the future with Lancer or its
affiliates; (3) claims for wrongful discharge, negligence, civil theft, quantum
meruit, breach of contract, tortuous interference with contract, breach of any
covenants of good faith and fair dealing, emotional distress, loss of credit,
promissory estoppel, loss or interference with any type of third-party
relationship, violation of any federal or state constitutional rights, assault,
battery, invasion of privacy, defamation, libel, slander, fraud or misrepresentation
and any personal (physical, mental or emotional) and property damages, losses
and/or injuries, (4) claims of retaliation and/or discrimination under any and
all federal, state, county, and municipal statutes, laws, regulations, rules
and ordinances, including, but not limited to: filing a worker’s compensation
claim, race, religion, national origin, sex, color, creed, sexual preference,
whistleblower, handicap, disability and/or age; (5) claims for and/or related
to wages, salary, stock options, compensation, commissions, bonuses, expenses,
benefits, reimbursements, holidays, vacations, insurance benefits and/or
coverage (including COBRA, health, medical, life, disability, social security,
and/or unemployment compensation); (6) claims that the parties being released
have acted improperly, illegally, unconscionably, or unethically in any manner
whatsoever at any time prior to the execution of this Release; provided,
however, that nothing contained in this Section 3, or anywhere else
in this Agreement shall release Lancer or its affiliates from any obligations,
nor shall Executive give up any rights under (a) any equity grant agreement
(such as a stock option) held by Executive at the time this release becomes
effective, (b) any liability insurance policies which cover Executive, or (c)
any indemnification agreement or provisions under which Executive is a party or
is covered. Further, Executive hereby agrees that Lancer shall not be obligated
to make the severance payments described herein unless Executive agrees to
execute a final release of claims, fairly restating the provisions contained in
this Section 3 after Executive’s employment is terminated, if Lancer
should so require such execution, in its sole discretion.

 

4.             Covenant
Not to Compete. As an
inducement for Lancer to enter into this Agreement and for good and valuable
consideration, including but not limited to access to confidential and
proprietary information and trade secrets provided to Executive by Lancer, the 

 

3

 

receipt and sufficiency
of which is hereby acknowledged, Executive agrees as follows: during the period commencing on the date hereof
and ending two (2) years from the date of termination of Executive’s
employment, Executive shall not,

 

(A)
be employed by or render any services to any person, firm or corporation
engaged in any business which is directly in competition with Lancer in the
design, engineering, manufacturing and/or marketing of fountain soft drink,
beer, milk, and citrus beverage dispensing systems or frozen beverage
dispensing systems (“Competitive Business”); or

 

(B)
engage in any Competitive Business for his or its own account; or

 

(C) be associated with or interested in any Competitive Business as an
individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity; or

 

(D) employ or retain, or have or cause any other person or entity to
employ or retain, any person who was employed or retained by Lancer while
Executive was employed by Lancer; or

 

(E) solicit, interfere with, or endeavor to entice away from Lancer, for
the benefit of a Competitive Business, any of its customers or other persons
with whom Lancer has a contractual relationship;

 

provided, however, that this Section 4
shall be effective if and only if the Executive’s termination (whether for Good
Reason, not for Good Reason, for Good Cause or not for Good Cause) occurs
during the Term.

 

Notwithstanding
the foregoing, this provision shall not preclude Executive from investing his
personal assets in the securities of any corporation or other business entity
which is engaged in a Competitive Business if such securities are traded on a
national stock exchange or in the over-the-counter market and if such
investment does not result in his beneficially owning, at any time, more than
1% of the publicly-traded equity securities of such Competitive Business.

 

5.             Amendment;
Waiver; Assignment.  This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by both
parties.  Any such modification,
amendment or waiver on the part of Lancer shall have been previously approved
by the Board.  The waiver by either party
of compliance with any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any other provision of this Agreement,
or of any subsequent breach by such party of any provision of this Agreement.
This Agreement shall be binding upon any successor to Lancer, by merger or
otherwise. Lancer may assign this Agreement to any of its affiliates. Executive
may not assign the Agreement.

 

6.             Withholding.  Payments
to Executive of all compensation contemplated under this Agreement shall be
subject to all applicable legal requirements with respect to the withholding of
taxes and similar deductions. Additionally, if Executive owes any moneys to 

 

4

 

Lancer
on the Severance Date, Executive’s signature below constitutes Executive’s
written consent to deduct from any Severance Pay amounts that Executive owes
Lancer.

 

7.             Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF
LAWS.

 

8.             Supersedes
Previous Agreements.  This Agreement supersedes all previously
executed employment agreements, prior or contemporaneous negotiations,
commitments, agreements and writings with respect to the subject matter hereof
except that the Lancer Corporation Employee Agreement (Coverage Inventions,
Discoveries, Copyrightable Material and Confidential Matter), Lancer Policies
and Procedures, and Lancer Code of Business Conduct shall remain in full force
and effect.  All such other negotiations,
commitments, agreements and writings shall have no further force or effect, and
the parties to any such other negotiation, commitment, agreement or writing
shall have no further rights or obligations thereunder.

 

9.             Voluntary
Agreement.  Executive understands the significance and
consequences of this Agreement and acknowledges that Lancer has not coerced
Executive’s acceptance thereof, and has signed this Agreement only after full
reflection and analysis.  Executive
expressly confirms that the Agreement is to be given full force and effect
according to all of its terms. Executive was advised to seek legal counsel
prior to signing the Agreement.

 

10.          Confidentiality.  Executive agrees that the
following matters are and shall remain strictly confidential and he will not,
during the employment relationship and for a period of five (5) years after the
employment relationship terminates, except as may be required by law, subpoena,
court order or other legal process or as described below, broadcast, publicize,
disclose or disseminate or cause, knowingly permit or authorize the
broadcasting, publication, disclosure or dissemination to any person, firm,
organization, or entity of any and every type, public or private, for any
reason, at any time, without the prior written consent of Lancer, any of the
following information: (1) any financial, proprietary or personnel related
information of any of the Lancer entities, (2) any strategic or management
decisions made by any of the Lancer entities, (3) the existence or outcome of
any investigation regarding the activities of any shareholder, partner,
officer, director, employee, agent or servant conducted by the management or
board of directors of any of the Lancer entities, (4) the existence, or outcome
of, any governmental, professional or business entity investigation of the
activities of any shareholder, partner, officer, director, employee, agent or
servant of any of the Lancer entities, (5) any fact or information obtained by
Executive because of or by virtue of his employment with Lancer.
Notwithstanding anything to the contrary contained in this Section 10,
Executive shall not be prohibited from disclosing any information (a) in
furtherance of Executive’s employment with Lancer when Executive believes in
good faith that such disclosure is in the best interest of Lancer and/or its
affiliates, (b) which may be required pursuant to agreement with Lancer or its
affiliates and any third party, or (c) which becomes generally available to the
public other than as a result of a disclosure by Executive.

 

5

 

11.          Non-Disparagement.  Executive shall refrain, both during the
employment relationship and for a period of five (5) years after the employment
relationship terminates, from publishing any oral or written statements, to any
person or entity (other than, during the employment relationship, to Lancer or
any of its affiliates, or any of such entities’ officers, employees, agents, or
representatives) that damage or disparage the reputation of any of Lancer or
its affiliates, or any of such entities’ officers, employees, agents or representatives.

 

12.          Legal Remedy.  Executive acknowledges that
money damages may not be a sufficient remedy for any violation of the
prohibitions set forth in Sections 10 and 11 of this Agreement.
Therefore, Lancer shall be entitled to specific performance and injunctive
relief, without bond, as remedies for any breach or threatened breach of those
prohibitions. Such remedies shall not be deemed to be the exclusive remedies
for a breach of this Agreement, but shall be in addition to all other remedies
available at law or equity.

 

13.
Severability.  Whenever
possible, each provision and term of this Agreement will be interpreted in a
manner to be effective and valid but if any provision or term of this Agreement
is held to be prohibited by law or invalid, then such provision or term will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If
any of the covenants set forth in this Agreement are held by a court of
competent jurisdiction to contain limitations as to time, geographical area or
scope of activity to be restrained that are not reasonable and impose a greater
restraint than is necessary to protect the goodwill or other business interest
of Lancer or its affiliates, the court shall reform the covenants to the extent
necessary to cause the limitations contained in the covenants as to time,
geographical area and scope of activity to be restrained to be reasonable and
to impose a restraint that is not greater than necessary to protect the
goodwill or other business interest of Lancer or its affiliates and enforce the
covenants as reformed.

 

IN
WITNESS WHEREOF, this Agreement has been executed by a duly authorized officer
of Lancer and by Executive in Executive’s individual capacity as of the date
first written above.

 

 

	
  Lancer:

  	
  LANCER
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  STONEWALL J. FISHER, III

  	
   

  
	
   

  	
  Name:

  	
  Stonewall
  J. Fisher

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President - Legal Affairs

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executive:

  	
  /s/
  CHRISTOPHER D. HUGHES

  	
   

  
	
   

  	
  Christopher
  D. Hughes

  
						

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]