ENCORE WIRE CORPORATION STOCK OPTION AGREEMENT
Exhibit 10.12
ENCORE WIRE CORPORATION
THIS AGREEMENT, made as of this day of , by and between Encore Wire
Corporation, a Delaware corporation (the “Company”), and (“Employee”);
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined that it is desirable to grant an
option under the Encore Wire Corporation 1999 Stock Option Plan (the “Plan”) to Employee, who is
currently employed by the Company or an affiliate of the Company;
NOW, THEREFORE, the Company and Employee hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings, respectively:
| (a) | “Affiliate” shall have the meaning set forth in Section 2(a) of the Plan and
shall include any party now or hereafter coming within that definition. |
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| (b) | “Common Stock” shall have the meaning set forth in Section 2(e) of the Plan. |
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| (c) | “Fair Market Value” shall have the meaning set forth in Section 2(h) of the
Plan. |
2. Option. The Company hereby grants to Employee the option to purchase, as
hereinafter set forth, shares of the Common Stock of the Company at a price of $
per share, for a period commencing on the date provided in Section 4 hereof and terminating on the
first to occur of (i) the expiration of ten years from the date of this Agreement, or (ii) when the
employment of Employee by the Company or any of its Affiliates terminates for any reason; provided,
however, that if said employment terminates less than ten years from the date hereof other than by
reason of death or disability, then Employee may exercise this option, to the extent he was
entitled to do so at the date of termination of employment, at any time within three months after
such termination, but not after the expiration of the ten-year period; provided further that if
said employment terminates less than ten years from the date hereof by reason of Employee’s
becoming permanently and totally disabled (within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended), then Employee (or Employee’s legal representative if Employee is
legally incompetent) may exercise this option, to the extent he was entitled to do so at the date
of such termination, at any time within one year after such termination but not after the
expiration of the ten-year period; and provided further that if said employment terminates less
than ten years from the date hereof by reason of Employee’s death, then the executor or
administrator of Employee’s estate or anyone who shall have acquired this option by will or
pursuant to the laws of descent and distribution may exercise this option, to the extent Employee
was entitled to do so on the date of his death, at any time within one year after such death but
not after the expiration of the ten-year period. Anything to the contrary herein notwithstanding,
the option granted hereunder shall terminate immediately upon the Employee’s termination of
employment on account of fraud, dishonesty or the performance of other acts detrimental to the
Company. A transfer of employment without interruption of service between or among the Company and
any of its Affiliates shall not be considered a termination of employment for purposes of this
Agreement. This option is intended to qualify as an incentive stock option as defined in Internal
Revenue Code Section 422.
3. Exercise During Employment. Except as provided in Section 2 hereof, this option
may not be exercised unless Employee is at the time of exercise an employee of the Company or an
Affiliate.
4. Vesting. Subject to the provisions of Sections 2 and 3 hereof, this option may
only be exercised in accordance with the following:
| (a) | a number of whole shares of Common Stock which does not exceed twenty percent
of the shares of Common Stock in respect of which this option is granted may be
purchased in whole at any time, or in part from time to time, on or after the first
anniversary of the date of this Agreement; |
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| (b) | an additional number of whole shares of Common Stock which does not exceed
twenty percent of the shares of Common Stock in respect of which this option is granted
may be purchased in whole at any time, or in part from time to time, on or after the
second anniversary of the date of this Agreement; |
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| (c) | an additional number of whole shares of Common Stock which does not exceed
twenty percent of the shares of Common Stock in respect of which this option is granted
may be purchased in whole at any time, or in part from time to time, on or after the
third anniversary of the date of this Agreement; |
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| (d) | an additional number of whole shares of Common Stock which does not exceed
twenty percent of the shares of Common Stock in respect of which this option is granted
may be purchased in whole at any time, or in part from time to time, on or after the
fourth anniversary of the date of this Agreement; and |
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| (e) | the remaining shares of Common Stock in respect of which this option is granted
may be purchased in whole at any time, or in part from time to time, on or after the
fifth anniversary of the date of this Agreement; |
provided, however, that notwithstanding the foregoing, all shares of Common Stock
in respect of which this option is granted shall become immediately purchasable upon a Change in
Control, as defined below.
For purposes of this Agreement, “Change in Control” means a change in control of the
Company after the date of this Agreement in any one of the following circumstances: (i) any person
shall have become the beneficial owner of or shall have acquired, directly or indirectly,
securities of the Company representing 50% or more (in addition to his current holdings) of the
combined voting power of the Company’s then outstanding voting securities without prior approval of
at least two-thirds of the members of the Board of Directors of the Company in office immediately
prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger,
consolidation, sale of assets, or other reorganization, or a proxy contest, as a consequence of
which the members of the Board of Directors of the Company in office immediately prior to such
transaction or event constitute less than a majority of the Board thereafter; or (iii) during any
period of two consecutive years, individuals who at the beginning of such period constituted the
Board of Directors of the Company (including for this purpose any new director whose election or
nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board.
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Notwithstanding the foregoing, if Employee terminates employment with the Company and its
Affiliates on or after the date Employee reaches age 60 and following the 10th
anniversary of Employee’s most recent date of hire with the Company or one of its Affiliates, all
remaining shares of
Common Stock in respect of which this option is granted that have not otherwise vested
pursuant to this Section 4 shall immediately vest on the date Employee’s employment terminates and
may be purchased in whole at any time, or in part from time to time, within the time periods
permitted under Section 2.
5. Manner of Exercise. This option may be exercised by written notice signed by the
person entitled to exercise the same and delivered to the President of the Company or sent by
United States registered mail addressed to the Company (for the attention of the President) at its
corporate office in McKinney, Texas. Such notice shall state the number of shares of Common Stock
as to which the option is exercised and shall be accompanied by the full amount of the purchase
price of such shares.
6. Payment. The purchase price for the option shares may be paid in cash or, in whole
or in part, by the surrender of issued and outstanding shares of Common Stock of the Company which
shall be credited against the purchase price at the Fair Market Value of the shares surrendered on
the date of exercise of the option.
7. Delivery of Shares. Delivery of the certificates representing the shares of Common
Stock purchased upon exercise of this option shall be made promptly after receipt of notice of
exercise and payment of the purchase price and the amount of any withholding taxes to the Company,
if required, provided that the Company shall have such time as it reasonably deems necessary to
qualify or register such shares under any law or governmental rule or regulation that it deems
necessary or desirable.
8. Adjustments. In the event that, before delivery by the Company of all the shares
of Common Stock in respect of which this option is granted, the Company shall have effected a
Common Stock split or dividend payable in Common Stock, or the outstanding Common Stock of the
Company shall have been combined into a smaller number of shares, the shares of Common Stock still
subject to this option shall be increased or decreased to reflect proportionately the increase or
decrease in the number of shares outstanding, and the purchase price per share shall be decreased
or increased to make the aggregate purchase price for all the shares then subject to this option
the same as immediately prior to such stock split, stock dividend or combination. In the event of
a reclassification of the shares of Common Stock not covered by the foregoing, or in the event of a
liquidation or reorganization (including a merger, consolidation, spin-off or sale of assets) of
the Company or an Affiliate, the Board of Directors of the company shall make such adjustments, if
any, as it may deem appropriate in the number, purchase price and kind of shares still subject to
this option.
9. Transferability. This option is not transferable otherwise than by will and the
laws of descent and distribution and during the lifetime of Employee is exercisable only by
Employee or, if Employee is legally incompetent, by Employee’s legal representative.
10. Employment. As consideration for the Company’s grant of this option,
Employee agrees not to leave the employ of the Company or any Affiliate voluntarily for a period of
one year after the date of this Agreement. Nothing in this Agreement, however, confers upon
Employee any right to continue in the employ of the Company or any Affiliate, nor shall this
Agreement interfere in any manner with the right of the Company or any Affiliate to terminate the
employment of Employee with or without cause at any time.
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11. Notice of Disposition. As consideration for the Company’s grant of this option,
Employee agrees that if and when Employee disposes of any shares of Common Stock purchased by
Employee pursuant to this option, Employee shall promptly notify the Company of such disposition,
including the identity of the transferee of such shares of Common Stock and the consideration
received for the transfer of such shares.
12. Option Subject to Plan. By execution of this Agreement, Employee agrees that this
option and the shares of Common Stock to be received upon exercise hereof shall be governed by and
subject to all applicable provisions of the Plan.
13. Construction. This Agreement is governed by, and shall be construed and enforced
in accordance with, the laws of the State of Texas. Words of any gender used in this Agreement
shall be construed to include any other gender, unless the context requires otherwise. The
headings of the various sections of this Agreement are intended for convenience of reference only
and shall not be used in construing the terms hereof.
14. Application of Section 409A of the Internal Revenue Code. Options granted
pursuant to this Agreement are intended to be exempt from the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended, and this Agreement shall be interpreted in a manner
consistent with that intent; however, the Company makes no representation or guarantee as to the
tax consequences of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| The “Company” ENCORE WIRE CORPORATION |
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| By: | ||
| Name: | ||
| Title: | ||
| “Employee” | ||
| [Signature] | ||
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