ENCORE WIRE CORPORATION FORM OF INDEMNIFICATION AGREEMENT
Exhibit 10.11
ENCORE WIRE CORPORATION
FORM OF
This Indemnification Agreement (“Agreement”) is effective as of , 20 , by and
between Encore Wire Corporation, a Delaware corporation (the “Company”), and the indemnitee listed
on the signature page hereto (“Indemnitee”).
WHEREAS, the Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve the Company and its related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services to the Company, the
Company wishes to provide for the indemnification of, and the advancement of expenses to,
Indemnitee to the maximum extent permitted by law;
WHEREAS, the Company and Indemnitee recognize the difficulty in obtaining liability insurance
for the Company’s directors and officers, the significant increases in the cost of such insurance
and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate
litigation in general, subjecting directors and officers to expensive litigation risks at the same
time as the availability and coverage of liability insurance has been severely limited;
WHEREAS, the Company’s Bylaws expressly provide that the indemnification provisions set forth
therein are not exclusive, and contemplate that contracts may be entered into between the Company
and its directors or officers with respect to indemnification;
WHEREAS, the Company and Indemnitee desire to continue to have in place the additional
protection provided by an indemnification agreement and to provide indemnification and advancement
of expenses to the Indemnitee to the maximum extent permitted by Delaware law;
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Certain Definitions.
(a) “Change in Control” shall mean, and shall be deemed to have occurred if, on or after the
date of this Agreement, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company,
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or
indirectly, of securities of the Company representing at least 50% of the total voting power
represented by the Company’s then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of Directors or
nomination for election by the Company’s stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least 50% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding immediately after such
merger or consolidation, (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of the Company’s assets;
or (v) there occurs any other event of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject
to such reporting requirement.
(b) “Claim” shall mean any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, whether instituted by or in the right of the Company or
by any other party, or any hearing, inquiry or investigation that Indemnitee in good faith
believes might lead to the institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or other.
(c) References to the “Company” shall include, in addition to Encore Wire Corporation, any
constituent corporation (including any constituent of a constituent) absorbed in a consolidation
or merger to which Encore Wire Corporation (or any of its wholly owned subsidiaries) is a party
which, if its separate existence had continued, would have had power and authority to indemnify
its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a
director, officer, employee, agent or fiduciary of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had continued.
(d) “Covered Event” shall mean any event or occurrence related to the fact that Indemnitee is
or was a director or officer of the Company, or any subsidiary of the Company, or is or was
serving at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action or inaction on the part of Indemnitee while serving in such capacity.
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(e) “Expenses” shall mean any and all expenses (including attorneys’ fees) and all other
costs, expenses and obligations actually incurred by Indemnitee in connection with investigating,
defending, being a witness in or participating in (including on appeal), or preparing to defend,
to be a witness in or to participate in, any Claim.
(f) “Independent Counsel” shall mean a law firm, or a member of a law firm, that is
experienced in matters of corporate law and neither presently is, nor in the past five 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 rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements), or (ii) any other party to
any Claim giving rise to indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall 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.
(g) References to “other enterprises” shall include employee benefit plans; references to
“fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit
plan; and references to “serving at the request of the Company” shall include any service as a
director, officer, employee, agent or fiduciary of the Company which imposes duties on, or
involves services by, such director, officer, employee, agent or fiduciary with respect to an
employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner
“not opposed to the best interests of the Company” as referred to in this Agreement.
(h) “Reviewing Party” shall mean the (i) member or members of the Company’s Board of
Directors who is not a party to the particular Claim, issue or matter for which Indemnitee is
seeking indemnification, or (ii) Independent Legal Counsel.
(i) “Voting Securities” shall mean any securities of the Company that vote generally in the
election of directors.
2. Indemnification.
(a) In the event Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other participant in, a
Claim by reason of (or arising in part out of) a Covered Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no
later than thirty days after written demand is presented to the Company, against any and all
Expenses, liabilities, losses, judgments, fines, excise taxes, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid
or payable in connection with or in respect of such Expenses, liabilities, losses,
judgments, fines, excise taxes, penalties or amounts paid in settlement) of such Claim. The
Company shall advance any and all Expenses actually incurred by Indemnitee (an “Expense
Advance”), and such advancement shall be made within ten (10) days after the
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receipt by the
Company of a statement or statements (together with copies of summary invoices or other
evidence that Indemnitee actually incurred such Expenses) from Indemnitee requesting such
advance or advances from time to time, whether prior to or after final disposition of a
Claim. Expense Advances shall be made without regard to the ability of Indemnitee to repay
such amounts. Any such Expense Advances shall be made on an unsecured basis and be
interest-free.
(b) Notwithstanding the foregoing, (i) the obligations of the Company under Section
2(a) shall be subject to the condition that the Reviewing Party shall not have determined
(in a written opinion, in any case in which the Independent Legal Counsel referred to in
Section 3 hereof is involved) that Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant
to Section 2(a) shall be subject to the condition that, if, when and to the extent that the
Reviewing Party ultimately determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to reimburse the Company within 30 days after
the Company makes written demand for payment) for all such amounts theretofore paid by
giving Indemnitee written demand for repayment within 10 days after such determination is
made; provided, however, that if Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). If there has not been a Change
in Control, the Reviewing Party shall be members of the Company’s Board of Directors who are
not a party to the particular Claim, issue or matter for which Indemnitee is seeking
indemnification, and if there has been such a Change in Control or if no such disinterested
directors are available, the Reviewing Party shall be the Independent Legal Counsel referred
to in Section 3 hereof. If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of Texas or Delaware having subject matter
jurisdiction thereof and in which venue is proper seeking an initial determination by the
court or challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents to service of
process and to appear in any such proceeding. In the event that the Indemnitee does not
commence such litigation following a determination by the Reviewing Party, such
determination by the Reviewing Party shall be conclusive and binding on the Company and
Indemnitee.
(c) The Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any action or Claim effected without its written consent.
The Company shall not settle any action or claim in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee’s written
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consent. Neither the
Company nor Indemnitee will unreasonably withhold their consent to any proposed settlement.
3. Change in Control. The Company agrees that if there is a Change in Control of the
Company, then with respect to all matters thereafter arising concerning the rights of Indemnitee to
indemnity payments and Expense Advances under this Agreement or any other agreement or Company
charter or by-law provision now or hereafter in effect relating to Claims for Covered Events, the
Company shall seek legal advice only from Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among
other things, shall render its written opinion to the Company and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company
agrees to pay the reasonable fees and expenses of the Independent Legal Counsel referred to above
and to fully indemnify such counsel against any and all expenses (including attorneys’ fees),
claims, liabilities and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
4. Indemnification for Additional Expenses. The Company shall, to the maximum extent
permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten business days of such request) advance such Expenses to Indemnitee,
which are incurred by Indemnitee in connection with any action brought by Indemnitee for (i)
indemnification or Expense Advances under this Agreement or any other agreement or Company charter
or by-law provision now or hereafter in effect relating to Claims for Covered Events, or (ii)
recovering under any directors’ and officers’ liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may be.
5. Additional Indemnification Rights; Nonexclusivity.
(a) The Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically authorized
by the other provisions of this Agreement, the Company’s Certificate of Incorporation, the
Company’s Bylaws or by statute. In the event of any change after the date of this Agreement
in any applicable law, statute or rule which expands the right of a Delaware corporation to
indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits afforded by such change. In the event of any change in any applicable law,
statute or rule which narrows the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties’ rights and obligations hereunder.
(b) The indemnification and the payment of Expense Advances provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the Company’s
Certificate of Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the DGCL, or otherwise. The indemnification and
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the payment of
Expense Advances provided under this Agreement shall continue as to Indemnitee for any
action taken or not taken while serving in an indemnified capacity even though subsequent
thereto Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under this Agreement
to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance policy, provision of the Company’s
Certificate of Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of Expenses incurred in
connection with any Claim, but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.
9. Binding Effect; Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their respective successors,
assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise
to all or substantially all of the business or assets of the Company), spouses, heirs and personal
and legal representatives. The Company shall require and cause any successor (whether direct or
indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially all,
or a substantial part, of the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform if no such
succession had taken place.
10. Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given if (i) delivered by hand and signed
for by the party addressed, on the date of such delivery, (ii) mailed by domestic certified or
registered mail with postage prepaid, on the third business day after the date postmarked, (iii)
mailed by reputable overnight courier and receipted for by the party to whom said notice or other
communication shall have been directed or (iv) sent by facsimile transmission, with receipt
confirmed. Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
11. Severability. The provisions of this Agreement shall be severable in the event
that any of the provisions hereof (including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall
be
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construed so as to give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
12. Choice of Law. This Agreement, and all rights, remedies, liabilities, powers and
duties of the parties to this Agreement, shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of conflicts of laws.
13. Consent to Jurisdiction. Except as provided in Section 2(b), the Company and
Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this Agreement shall be
commenced, prosecuted and continued only in the Court of Chancery of the State of Delaware in and
for New Castle County, which shall be the exclusive and only proper forum for adjudicating such a
claim.
14. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all documents required and shall do all acts that may be necessary to secure such rights
and to enable the Company effectively to bring suit to enforce such rights.
15. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed by both the
parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to be or
shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver.
16. Integration and Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supersedes and merges all previous written and oral
negotiations, commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.
17. No Construction as Employment Agreement. Nothing contained in this Agreement
shall be construed as giving Indemnitee any right to be retained in the employ of the Company or
any of its subsidiaries or affiliated entities.
18. Duration of Agreement. This Agreement shall continue until and terminate upon the
later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a director of
the Company; (b) one year after the final termination of all pending Claims in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses hereunder; or (c) one
year after the expiration of all statutes of limitation applicable to possible Claims.
19. INDEMNIFICATION FOR NEGLIGENCE. INDEMNITEE SHALL BE INDEMNIFIED AND EXPENSES
SHALL BE ADVANCED WHETHER OR NOT THE CLAIMS OR COVERED ACTS ARE IN ANY WAY OR TO THE EXTENT RELATED
TO OR ARISING FROM OR CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENCT ACT OR OMISSION OF ANY KIND BY
INDEMNITEE TO THE
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EXTENT THAT INDEMNIFICATION AND EXPENSE ADVANCE IS ALLOWED PURSUANT TO THE TERMS
OF THIS AGREEMENT.
20. Internal Revenue Code Section 409A Compliance. This Agreement is not intended to
provide for a deferral of compensation for purposes of Section 409A of the Internal Revenue Code of
1986, as amended, and the regulations and other guidance thereunder because it is intended to be an
indemnification plan or agreement as described in Treasury Regulation Section 1.409A-1(b)(10). In
the event that an indemnification payment provided for in this Agreement does not meet the
exception for indemnification plans or agreements described in Treasury Regulation Section
1.409A-1(b)(10), then notwithstanding any provision of this Agreement to the contrary, payment of
such an indemnification payment will be made on or before the last day of the calendar year
following the calendar year in which the expense related to the payment is incurred.
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[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement effective
as of the date first above written.
| COMPANY: ENCORE WIRE CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | Encore Wire Corporation 0000 Xxxxxxxx Xxxxx XxXxxxxx, Xxxxx 00000 Facsimile: |
|||
| INDEMNITEE: |
||||
| (Signature) | ||||
| (Print Name) | ||||
| Address: | ||||
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