EXHIBIT 10.13
BUILDERS FIRSTSOURCE, INC.
FORM OF DIRECTOR INDEMNIFICATION AGREEMENT
AGREEMENT, dated as of _______ ___, 2005 between Builders
FirstSource, Inc., a Delaware corporation (the "Company"), and [DIRECTOR]
("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors and
officers of public companies in today's environment;
WHEREAS, the Certificate of Incorporation and By-laws of the Company
require the Company to indemnify and advance expenses to its directors and
officers to the fullest extent permitted by law, and the Indemnitee is serving
as a director of the Company in part in reliance on such Certificate of
Incorporation and By-laws;
WHEREAS, the Board of Directors of the Company has determined that
the inability of the Company to retain and attract as directors the most capable
persons would be detrimental to the interests of the Company and that the
Company therefore should seek to assure such persons that indemnification will
be available in the future;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's continued
service to the Company in an effective manner, and Indemnitee's reliance on the
Company's Certificate of Incorporation and By-laws, and in part to provide
Indemnitee with specific contractual assurance that the protection promised by
such Certificate of Incorporation and By-laws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of such
Certificate of Incorporation or By-laws or any change in the composition of the
Company's Board of Directors or acquisition transaction relating to the
Company), the Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to the fullest
extent (whether partial or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies.
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, another enterprise,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement:
(a) Affiliate: means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For
purposes of this definition, "control," as used with respect to any
Person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or
more of the Voting Stock of a Person will be deemed to be control.
For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" have correlative
meanings.
(b) Change in Control: means the occurrence of any of the following:
(i) the direct or indirect sale, lease, transfer, conveyance or
other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of
all or substantially all of the properties or assets of the
Company and its Subsidiaries taken as a whole to any "person"
(as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) other than a Principal or a
Related Party of a Principal;
(ii) the adoption of a plan relating to the liquidation or
dissolution of the Company;
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation), the result of which
is that any "person" (as defined in subsection (i) above),
other than a Principal or a Related Party of a Principal,
becomes the Beneficial Owner, directly or indirectly, of more
than 30% of the Voting Stock of the Company, measured by
voting power rather than number of shares; or
(iv) after an Initial Public Offering, during any period of two
consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board
of Directors or whose nomination for election was approved by
a vote of a majority of the members of the Board of Directors
of the Company, which members comprising such majority are
then still in office
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and were either directors at the beginning of such period or
whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board of Directors of the Company, as applicable.
For purposes of this definition of Change in Control:
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the Beneficial
Ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended), such "person" will be
deemed to have beneficial ownership of all securities that such "person" has the
right to acquire by conversion or exercise of other securities, whether such
right is currently exercisable or is exercisable only after the passage of time.
The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding
meaning.
"Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (3) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests; and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person, but excluding from all of the foregoing any debt securities
convertible into Capital Stock, whether or not such debt securities include any
right of participation with Capital Stock.
"Initial Public Offering" means the initial offering and sale of Capital Stock
pursuant to a registration statement on Form S-1 that has been declared
effective by the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Principal" means JLL Building Products, LLC, a Delaware limited liability
company, JLL Partners, Inc., a Delaware corporation, and their respective
Affiliates.
"Related Party" means (1) any controlling stockholder, 80% (or more) owned
Subsidiary (as defined for purposes of this definition of Change in Control), or
immediate family member (in the case of an individual) of any Principal; or (2)
any trust, corporation, partnership, limited liability company or other entity,
the beneficiaries, stockholders, partners, members, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of any
one or more Principals and/or such other persons referred to in the immediately
preceding clause (1).
"Subsidiary" means (1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency and after giving
effect to any voting
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agreement or stockholders' agreement that effectively transfers voting power) to
vote in the election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and (2) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are that
Person or one or more Subsidiaries of that Person (or any combination thereof).
(c) Claim: means any threatened, asserted, pending or completed action,
suit or proceeding, or appeal thereof, or any inquiry or
investigation, whether instituted by the Company or any governmental
agency or any other party, that Indemnitee in good faith believes
might lead to the institution of any such action, suit or
proceeding, whether civil, criminal, administrative, investigative
or other, including any arbitration or other alternative dispute
resolution mechanism.
(d) Expenses: include attorneys' fees and all other costs, expenses and
obligations (including, without limitation, experts' fees, court
costs, retainers, transcript fees, duplicating, printing and binding
costs, as well as telecommunications, postage and courier charges)
paid or incurred in connection with investigating, defending, being
a witness in or participating in (including on appeal), or preparing
to investigate, defend, be a witness in or participate in, any Claim
relating to any Indemnifiable Event.
(e) Indemnifiable Amounts: means any and all Expenses, damages,
judgments, fines, penalties, ERISA excise taxes and amounts paid in
settlement (including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties, excise taxes or amounts paid in
settlement) arising out of or resulting from any Claim relating to
an Indemnifiable Event.
(f) Indemnifiable Event: means any event or occurrence, whether
occurring before, on or after the date of this Agreement, related to
the fact that Indemnitee is or was a director and/or officer or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or
fiduciary of another corporation, limited liability company,
partnership, joint venture, employee benefit plan, trust or other
entity or enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity.
(g) Independent Legal Counsel: means an attorney or firm of attorneys,
selected in accordance with the provisions of Section 3 hereof, who
is experienced in matters of corporate law and who shall not have
otherwise performed services for the Company or Indemnitee within
the last three years (other than with respect to matters concerning
the rights of
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Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements).
(h) Reviewing Party: means any appropriate individual or body consisting
of a member or members of the Company's Board of Directors or any
other individual or body appointed by the Board who is not a party
to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(i) Voting Stock: means any securities of the Company which vote
generally in the election of directors.
2. Basic Indemnification Arrangement; Advancement of Expenses.
(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) an
Indemnifiable 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 Indemnifiable Amounts.
(b) If so requested by Indemnitee, the Company shall advance (within
two business days of such request) any and all Expenses incurred by Indemnitee
(an "Expense Advance"). The Company shall, in accordance with such request (but
without duplication), either (i) pay such Expenses on behalf of Indemnitee, or
(ii) reimburse Indemnitee for such Expenses. Indemnitee's right to an Expense
Advance is absolute and shall not be subject to any prior determination by the
Reviewing Party that the Indemnitee has satisfied any applicable standard of
conduct for indemnification.
(c) Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
pursuant to this Agreement in connection with any Claim initiated by Indemnitee
unless (i) the Company has joined in or Company's Board of Directors has
authorized or consented to the initiation of such Claim or (ii) the Claim is one
to enforce Indemnitee's rights under this Agreement.
(d) Notwithstanding the foregoing, (i) the indemnification
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(b) shall be subject to the condition that, if,
when and to the extent that the Reviewing Party 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 to reimburse the
Company) for all such amounts theretofore paid (it being understood and agreed
that the foregoing agreement by Indemnitee shall be deemed to satisfy any
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requirement that Indemnitee provide the Company with an undertaking to repay any
Expense Advance if it is ultimately determined that the Indemnitee is not
entitled to indemnification under applicable law); 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). Indemnitee's undertaking to repay such Expense Advances
shall be unsecured and interest-free. If there has not been a Change in Control,
the Reviewing Party shall be selected by the Company's Board of Directors, and
if there has been such a Change in Control, 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 within thirty days after written demand is
presented to the Company or if the Reviewing Party determines that Indemnitee
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 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. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.
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 Company By-law or charter provision now or hereafter
in effect, 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 delayed, conditioned or 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 of the
Independent Legal Counsel and to indemnify fully 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 indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
advance such Expenses to Indemnitee subject to and in accordance with Section
2(b), which are incurred by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or an Expense Advance by the Company under
this Agreement or any Company By-law or charter provision now or hereafter in
effect and/or (ii) recovery 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, Expense Advance
or insurance recovery, as the case may be.
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5. Partial Indemnity, Etc. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
Expenses or other Indemnifiable Amounts in respect of a Claim but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any or
all Claims relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
6. Burden of Proof. In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder the Reviewing Party or court shall presume that the Indemnitee has
satisfied the applicable standard of conduct and is entitled to indemnification,
and the burden of proof shall be on the Company to establish, by clear and
convincing evidence, that Indemnitee is not so entitled.
7. Reliance as Safe Harbor. For purposes of this Agreement, Indemnitee
shall be deemed to have 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 if
Indemnitee's actions or omissions to act are taken in good faith reliance upon
the records of the Company, including its financial statements, or upon
information, opinions, reports or statements furnished to Indemnitee by the
officers or employees of the Company in the course of their duties, or by
committees of the Company's Board of Directors, or by any other Person
(including legal counsel, accountants and financial advisors) as to matters
Indemnitee reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the Company. In addition, the knowledge and/or actions, or failures to act,
of any director, officer, agent or employee of the Company shall not be imputed
to Indemnitee for purposes of determining the right to indemnity hereunder.
8. No Other Presumptions. For purposes of this Agreement, the termination
of any claim, action, suit or proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall 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 applicable
law. In addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by the
Reviewing Party that Indemnitee has not met such standard of conduct or did not
have such belief, prior to the commencement of legal proceedings by Indemnitee
to secure a judicial determination that Indemnitee should be indemnified under
applicable law shall 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.
9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's By-laws or
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charter or the Delaware General Corporation Law or otherwise. To the extent that
a change in applicable law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
Company's By-laws or charter or this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.
10. Liability Insurance. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for any Company
director or officer.
11. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action such
shorter period shall govern.
12. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
13. 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 papers reasonably required and
shall do everything that may be reasonably necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
14. 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, By-law, charter provision or otherwise) of the
amounts otherwise indemnifiable hereunder.
15. Defense of Claims. The Company shall be entitled to participate in the
defense of any Claim relating to an Indemnifiable Event or to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee; provided that
if Indemnitee believes, after consultation with counsel selected by Indemnitee,
that (i) the use of counsel chosen by the Company to represent Indemnitee would
present such counsel with an actual or potential conflict of interest, (ii) the
named parties in any such Claim (including any impleaded parties) include both
the Company and Indemnitee and Indemnitee concludes that there may be one or
more legal defenses available to him or
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her that are different from or in addition to those available to the Company, or
(iii) any such representation by such counsel would be precluded under the
applicable standards of professional conduct then prevailing, then Indemnitee
shall be entitled to retain separate counsel (but not more than one law firm
plus, if applicable, local counsel in respect of any particular Claim) at the
Company's expense. The Company shall not be liable to Indemnitee under this
Agreement for any amounts paid in settlement of any Claim relating to an
Indemnifiable Event effected without the Company's prior written consent. The
Company shall not, without the prior written consent of the Indemnitee, effect
any settlement of any Claim relating to an Indemnifiable Event which the
Indemnitee is or could have been a party unless such settlement solely involves
the payment of money and includes a complete and unconditional release of
Indemnitee from all liability on all claims that are the subject matter of such
Claim. Neither the Company nor Indemnitee shall unreasonably withhold or delay
its or his or her consent to any proposed settlement; provided that Indemnitee
may withhold consent to any settlement that does not provide a complete and
unconditional release of Indemnitee.
16. Binding Effect, Etc. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, (including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or
assets of the Company), assigns, spouses, heirs, executors and personal and
legal representatives. The Company shall require and cause any successor
(whether direct or indirect by purchase, merger, consolidation, or otherwise) to
all or substantially all of the business and/or assets of the Company, by
written agreement in form and substance satisfactory to Indemnitee and his or
her counsel, 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. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as an officer and/or
director of the Company or of any other entity or enterprise at the Company's
request.
17. 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 in any respect, and
the validity and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law.
18. Specific Performance, Etc. The parties recognize that if any provision
of this Agreement is violated by the Company, Indemnitee may be without an
adequate remedy at law. Accordingly, in the event of any such violation,
Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings,
either in law or at equity, to obtain damages, to enforce specific performance,
to enjoin such violation, or to obtain any relief or any combination of the
foregoing as Indemnitee may elect to pursue.
19. Counterparts. This Agreement may be executed in counterparts, each of
which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same agreement. Only one such counterpart
signed by the party
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against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.
20. Headings. The headings of the sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction or
interpretation thereof.
21. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
BUILDERS FIRSTSOURCE, INC.
By:_____________________________
Name:
Title:
_____________________________
[NAME]
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