FORM OF INDEMNITY AGREEMENT
THIS Agreement is made as of April 24, 1997 by and between Oregon
Metallurgical Corporation, an Oregon corporation (the "Corporation"), and
_________________________, a director of the Corporation (the "Director").
WHEREAS, it is essential to the Corporation to retain and attract as
directors of the Corporation the most capable persons available and persons who
have significant experience in business, corporate and financial matters; and
WHEREAS, the Corporation has identified the Director as a person
possessing the background and abilities desired by the Corporation and desires
the Director to serve as a member of its Board of Directors; and
WHEREAS, corporate litigation subjects directors to expensive and
burdensome litigation risks at the same time that adequate coverage of
directors' liability insurance may be unavailable; and
WHEREAS, the Corporation and the Director recognize that serving as a
director of a corporation at times calls for subjective evaluations and
judgments upon which reasonable persons may differ and that, in that context, it
is anticipated and expected that directors of corporations will and do from time
to time commit actual or alleged errors or omissions in the good faith exercise
of their corporate duties and responsibilities; and
WHEREAS, it is now and has always been the policy of the Corporation to
indemnify its directors to the fullest extent not prohibited by law; and
WHEREAS, the Restated Articles of Incorporation as amended (the
"Articles"), of the Corporation provide for the indemnification of the directors
of the Corporation to the fullest extent not prohibited by law, including but
not limited to the Oregon Business Corporation Act (the "Act") and the Act
expressly provides that the indemnification provisions set forth therein are not
exclusive, and thereby contemplates that contracts may be entered into between
the Corporation and directors of the Corporation with respect to indemnification
of directors; and
WHEREAS, the Corporation and the Director desire to articulate clearly
in contractual form their respective rights and obligations with regard to the
Director's service on behalf of the Corporation and with regard to claims for
loss, liability, expense or damage which, directly or indirectly, may arise out
of or relate to such service.
FORM OF INDEMNITY AGREEMENT -1-
NOW, THEREFORE, the Corporation and the Director agree as follows:
1. Agreement to Serve
------------------. The Director shall serve or continue to
serve as a director of the Corporation and/or one of more of its subsidiaries
for so long as the Director is duly elected or appointed or until the Director
tenders a resignation in writing.
2. Definitions
-----------. As used in this Agreement:
(a) The term "Director" includes, unless the context requires
otherwise, the estate or personal representative of the Director.
(b) The term "Proceeding" includes, without limitation, any threatened,
pending or completed action, suit or proceeding, whether brought in the right of
the Corporation or otherwise, whether of a civil, criminal, administrative,
legislative or investigative nature, and whether formal or informal, internal or
external, in which the Director may be or may have been involved as a Party,
witness or otherwise, by reason of the fact that the Director is or was a
director of the Corporation or any of its subsidiaries, or is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, whether or not
serving in such capacity at the time any Liability or Expense is incurred for
which exculpation, indemnification or reimbursement can be provided under this
Agreement.
(c) The term "Expenses" includes, without limitation, expenses of
investigations, Proceedings or appeals, amounts paid in settlement by the
Director, attorney's, accountant and other professional fees and disbursements,
any other expenses or disbursements incurred in connection with any Proceeding,
and any expenses of establishing a right to indemnification under Section 10 of
this Agreement, but shall not include the amount of judgments or fines against
the Director.
(d) The term "Liability" includes, without limitation, the obligation
to pay a judgment, settlement, penalty, fine or reasonable Expenses incurred
with respect to a Proceeding.
(e) The term "Party" includes an individual who was, is or is
threatened to be made a named defendant or respondent in a Proceeding.
(f) References to "other enterprise" include, without limitation,
employee benefit plans; references to "fines" include, without limitation, any
excise tax assessed with respect to any employee benefit plan; references to
"serving at the request of the Corporation" include, without limitation, duties
imposed on or otherwise involving services by the Director to an employee
benefit plan, its participants, or its beneficiaries; and the Director's conduct
with respect to an employee benefit plan for a purpose the Director reasonably
believed to be in the interests of the participants in and beneficiaries of the
plan shall be deemed conduct that is "not opposed to the Corporation's best
interests."
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3. General Indemnity
-----------------. (a) The Corporation shall indemnify the Director
in accordance with the provisions of this Section 3, if the Director is made a
Party to any Proceeding because the Director is or was a director against all
Liability incurred in such Proceeding if the conduct of the Director was in good
faith and the Director reasonably believed that the Director's conduct was in
the best interests of the Corporation, or at least not opposed to the
Corporation's best interests, and, in the case of any criminal Proceeding, the
Director had no reasonable cause to believe that the Director's conduct was
unlawful. However, indemnification provided under this Section 3(a), subject to
the indemnification restrictions set forth in Section 3(b), in connection with
any Proceeding by or in the right of the Corporation is limited to the
reasonable Expenses incurred in connection with such Proceeding.
(b) The Corporation shall not indemnify the Director in accordance with
the provisions of this Section 3 in connection with any Proceeding by or in the
right of the Corporation in which the Director was adjudged liable to the
Corporation or in connection with any other Proceeding charging improper
personal benefit to the Director in which the Director was adjudged liable on
the basis that personal benefit was improperly received by the Director.
(c) Pursuant to this Agreement, the Corporation specifically shall, and
does, indemnify, to the fullest extent permitted by law, the Director against
any and all losses, claims, damages, Liabilities and Expenses, joint or several,
(or actions or Proceedings, whether commenced or threatened, in respect thereof)
to which the Director may become subject, as a result of serving as a director
of the Corporation, under the Securities Act of 1933, the Securities Exchange
Act of 1934 or any other statute or common law, including any amount paid in
settlement of any litigation, commenced or threatened, and to reimburse them for
any legal or other Expenses incurred by them in connection with investigating
any claims and defending any actions, insofar as any such losses, claims,
damages, Liabilities, Expenses or actions arise out or are based upon any untrue
statement or alleged untrue statement of a material fact regarding the
Corporation, or the omission or alleged omission to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4. Indemnification of Expenses of Successful Party
-----------------------------------------------. Notwithstanding any
other provision of this Agreement and unless limited in the Articles, the
Corporation shall indemnify the Director who was wholly successful, on the
merits or otherwise, in the defense of any Proceeding to which the Director was
a Party because of being a director of the Corporation against reasonable
Expenses incurred by the Director in connection with the Proceeding.
5. Additional Indemnification
--------------------------. (a) Notwithstanding any limitation in
Section 3, the Corporation shall indemnify the Director to the fullest extent
not prohibited by law if the Director is a Party to any Proceeding (including a
Proceeding by or in the right of the Corporation to procure a judgment in its
favor) involving a claim against the Director for breach of fiduciary duty by
the Director against all Liability actually and reasonably incurred by the
Director in connection with such Proceeding, provided that no indemnity shall be
FORM OF INDEMNITY AGREEMENT -3-
made on account of the Director's conduct which constitutes a breach of the
Director's duty of loyalty to the Corporation or its shareholders, is an act or
omission not in good faith or which involves intentional misconduct or a knowing
violation of the law, with respect to an unlawful distribution under the Act, or
from which the Director derived an improper personal benefit.
(b) Notwithstanding any limitation in Sections 3 or 5(a), the
Corporation shall indemnify the Director if the Director is a Party to any
Proceeding (including a Proceeding by or in the right of the Corporation to
procure a judgment in its favor) against all Liability actually and reasonably
incurred by the Director in connection with such Proceeding to the fullest
extent permitted by the Act, including the nonexclusivity provision of ORS
60.414(1) and any successor provision and including any amendments to the Act
adopted after the date of this Agreement that may increase the extent to which a
corporation may indemnify its directors.
(c) For purposes of this Agreement, the meaning of the phrase "to the
fullest extent not prohibited by law" shall include, but not be limited to:
(i) The fullest extent authorized or not prohibited by any
changes in the law, including but not limited to any amendments to or
replacements of the Act adopted after the date of this Agreement that increase
the extent to which a corporation may indemnify its directors; and
(ii) The fullest extent authorized by the provision of the Act
that authorizes or contemplates additional indemnification by agreement, or the
corresponding provision of any amendment to or replacement of the Act.
6. Exclusions
----------. Notwithstanding any provision in this Agreement,
the Corporation shall not be obligated under this Agreement to make any
indemnification in connection with any claim made against the Director:
(a) For which payment is made to or on behalf of the Director under any
insurance policy, except with respect to any excess beyond the amount of
required payment under such insurance policy, unless payment under such
insurance policy is not made after reasonable effort by the Director to obtain
payment;
(b) For any accounting of profits made from the purchase and sale by
the Director of securities of the Corporation within the meaning of Section
16(b) of the Securities Exchange Act of 1934, as amended, or any similar
provision of any state statutory or common law;
(c) For any transaction from which the Director derived an improper
personal benefit;
(d) If a court having jurisdiction in the matter shall finally
determine that such indemnification is not lawful under any applicable statute
or public policy (and, in this
FORM OF INDEMNITY AGREEMENT -4-
respect, both the Corporation and the Director have been advised that in the
opinion of the Securities and Exchange Commission indemnification for
liabilities arising under the Securities Act of 1933 is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable and
that claims for such indemnification should be submitted to appropriate courts
for adjudication unless, in the opinion of counsel, the matter has been settled
by controlling precedent); or
(e) In connection with any Proceeding (or part of any Proceeding)
initiated by the Director, or any Proceeding by the Director against the
Corporation or its directors, officers, employees or other persons entitled to
be indemnified by the Corporation, unless (i) the Corporation is expressly
required by law to make the indemnification, (ii) the Proceeding was authorized
by the Board of Directors of the Corporation, or (iii) the Director initiated
the Proceeding pursuant to Section 10 of this Agreement and the Director is
successful in whole or in part in the Proceeding.
7. Advances of Expenses
--------------------. The Corporation shall pay for or reimburse
the reasonable Expenses incurred by the Director who is a Party to any
Proceeding in advance of final disposition if the Director furnishes the
Corporation:
(a) A written affirmation of the Director's good faith belief that the
Director is entitled to be indemnified by the Corporation under this Agreement;
and
(b) A written undertaking, executed personally or on the Director's
behalf, to repay the advance if it is ultimately determined that the Director is
not entitled to be indemnified by the Corporation under this Agreement. Such
undertaking shall be an unlimited general obligation of the Director but need
not be secured.
Advances pursuant to this Section 7 shall be made no later than 10 days
after receipt by the Corporation of the affirmation and undertaking described in
this Section 7(a) and 7(b), and shall be made without regard to the Director's
financial ability to repay the amount advanced and without regard to the
Director's ultimate entitlement to indemnification under this Agreement. The
Corporation may establish a trust, escrow account or other secured funding
source for the payment of advances made and to be made pursuant to this Section
7 or of other Liability incurred by the Director in connection with any
Proceeding.
8. Nonexclusivity and Continuity of Rights
---------------------------------------. The indemnification and
advancement of Expenses provided by this Agreement shall not be deemed exclusive
of any other rights to which the Director may be entitled under any article of
incorporation, any bylaw, any other agreement, any general or specific action of
the Corporation's Board of Directors, any vote of shareholders, the Act or
otherwise. The indemnification and advancement of Expenses provided by this
Agreement shall continue as to the Director even though the Director may have
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of the Director.
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9. Procedure Upon Application for Indemnification
----------------------------------------------. (a) Any
indemnification under Sections 3, 5 and 7 shall be made no later than 45 days
after receipt of the written request of the Director, unless a determination is
made within such 45-day period by (a) the Board of Directors by a majority vote
of a quorum consisting of directors who were not at the time parties to the
applicable Proceeding, (b) if a quorum cannot be obtained, a majority vote of a
committee duly designated by the Board of Directors consisting solely of two or
more directors not at the time parties to the applicable Proceeding, provided
that the Director who is a Party to the applicable Proceeding may participate in
designation of such committee, (c) special legal counsel selected by the Board
of Directors or its committee or, if a quorum of the Board of Directors cannot
be obtained and a committee cannot be designated, the special legal counsel
shall be selected by majority vote of the full Board of Directors, including the
Director who is a Party to the applicable Proceeding, or (d) the shareholders.
(b) Authorization of indemnification and evaluation as to
reasonableness of Expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of Expenses shall be made by those entitled under this Section 9
to select such counsel.
10. Enforcement
-----------. (a) Unless the Corporation's Articles provide
otherwise, the Director who is a Party to a Proceeding may apply for
indemnification or advances to the court conducting the Proceeding or to another
court of competent jurisdiction if (i) the Corporation denies the claim for
indemnification or advances, in whole or in part or (ii) the Corporation does
not dispose of such claim within the time period required by this Agreement. On
receipt of an application, the court after giving any notice the court considers
necessary may order indemnification if it determines (i) the Director is
entitled to mandatory indemnification under Section 4 of this Agreement or
applicable law or (ii) the Director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not the
Director met the standard of conduct set forth in this Agreement or was adjudged
liable as described in Section 3(b), whether the Liability is based on a
judgment, settlement or proposed settlement or otherwise.
(b) It shall be a defense to any such enforcement action (other
than an action brought to enforce a claim for advancement of Expenses pursuant
to, and in compliance with, Section 7 of this Agreement) that the Director is
not entitled to indemnification under this Agreement. However, except as
provided in Section 11 of this Agreement, the Corporation shall have no defense
to an action brought to enforce a claim for advancement of Expenses pursuant to
Section 7 of this Agreement if the Director has tendered to the Corporation the
affirmation and undertaking required thereunder. The burden of proving by clear
and convincing evidence that indemnification is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its committee or special legal counsel) to have made a determination
prior to the commencement of such action that indemnification or advancement of
Expenses is proper in the circumstances because the Director has met the
applicable standard of conduct nor an actual determination by the Corporation
(including its Board of Directors, its committee
FORM OF INDEMNITY AGREEMENT -6-
or special legal counsel) that indemnification is improper because the Director
has not met such applicable standard of conduct shall be a defense to the action
or create a presumption that the Director is not entitled to indemnification
under this Agreement or otherwise. The Director's Expenses incurred in
connection with successfully establishing the Director's right to
indemnification or advances, in whole or in part, in any Proceeding shall also
be indemnified by the Corporation, whether or not an action to enforce these
rights is commenced.
(c) The termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the Director is not entitled to
indemnification under Sections 3 and 5 of this Agreement.
11. Notification and Defense of Claim
---------------------------------. Not later than 45 days after
receipt by the Director of notice of the commencement of any Proceeding, the
Director shall, if a claim in respect of the Proceeding is to be made against
the Corporation under this Agreement, notify the Corporation of the commencement
of the Proceeding. The omission to notify the Corporation shall not relieve the
Corporation from any Liability which it may owe to the Director otherwise than
under this Agreement. With respect to any Proceeding as to which the Director
notifies the Corporation of the commencement:
(a) The Corporation shall be entitled to participate in the Proceeding
at its own expense.
(b) Except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying Party similarly notified and
electing to assume such defense, assume the defense of the Proceeding with legal
counsel reasonably satisfactory to the Director. The Director shall have the
right to use separate legal counsel in the Proceeding, but the Corporation shall
not be liable to the Director under this Agreement, including Section 7 above,
for the fees and expenses of separate legal counsel incurred after notice from
the Corporation of its assumption of the defense, unless (i) the Director
reasonably concludes that there may be a conflict of interest between the
Corporation and the Director in the conduct of the defense of the Proceeding or
(ii) the Corporation does not use legal counsel to assume the defense of such
Proceeding. The Corporation shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Corporation or as to which the
Director shall have made the conclusion provided for in (i) above.
(c) If two or more persons who may be entitled to indemnification from
the Corporation, including the Director, are parties to any Proceeding, the
Corporation may require the Director to use the same legal counsel as the other
parties. The Director shall have the right to use separate legal counsel in the
Proceeding, but the Corporation shall not be liable to the Director under this
Agreement, including Section 7 above, for the fees and Expenses of separate
legal counsel incurred after notice from the Corporation of the requirement to
use the same legal counsel as the other parties, unless the Director reasonably
concludes that there may be a conflict of interest between the Director and any
FORM OF INDEMNITY AGREEMENT -7-
of the other parties required by the Corporation to be represented by the same
legal counsel.
(d) The Corporation shall not be liable to indemnify the Director under
this Agreement for any amounts paid in settlement of any Proceeding effected
without its written consent, which shall not be unreasonably withheld. The
Director shall permit the Corporation to settle any Proceeding that the
Corporation assumes the defense of, except that the Corporation shall not settle
any action or claim in any manner that would impose any penalty or limitation on
the Director or be otherwise prejudicial to his or her best interests without
the Director's written consent.
12. Partial Indemnification
-----------------------. If the Director is entitled under any
provision of this Agreement to indemnification by the Corporation for some or a
portion of the Liability actually and reasonably incurred by the Director in
connection with such Proceeding, but not, however, for the total amount thereof,
the Corporation shall nevertheless indemnify the Director for the portion of
such Liability to which the Director is entitled.
13. Severability
------------. If this Agreement or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
remainder of this Agreement shall continue to be valid and the Corporation shall
nevertheless indemnify the Director as to any Liability with respect to any
Proceeding, to the fullest extent permitted by any applicable portion of this
Agreement that shall not have been invalidated or by any other applicable law.
14. Subrogation
-----------. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Director. The Director shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable the Corporation effectively to enforce such rights.
15. Notices
-------. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) upon delivering by hand to the Party to whom the notice or other
communication shall have been directed, or (b) on the third business day after
the date on which it is mailed by certified or registered mail with postage
prepaid, addressed as follows:
(i) If to the Director, to the address indicated on the signature page
of this Agreement.
(ii) If to the Corporation, to
000 X.X. 00xx Xxxxxx
Xxxxxx, Xxxxxx 00000
or to any other address as either party may designate to the other in
writing.
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16. Counterparts
------------. This Agreement may be executed in any number of
counterparts, each of which shall constitute the original.
17. Applicable Law
--------------. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Oregon without regard to
the principles of conflict of laws.
18. Successors and Assigns
----------------------. This Agreement shall be binding upon the
Corporation and its successors and assigns.
19. Business Transactions
---------------------. The Corporation agrees that it shall not
effect any Triggering Event (as defined in the Rights Agreement dated as of
December 12, 1996) which has not been approved by the Continuing Directors (as
defined in the Rights Agreement dated December 12, 1996) of the Corporation,
unless the other party to the transaction agrees in writing to (a) use its best
efforts to maintain for the subsequent two year period any and all directors'
liability insurance in effect prior to any discussion or announcement relating
to such Triggering Event and (b) assume all obligations of the Corporation under
this Agreement and indemnify the Director and advance Expenses in accordance
with this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and signed as of the day and year first above written.
CORPORATION: DIRECTOR:
_______________________________________ ____________________________________
Xxxxxx X. Xxxxxxx, President
____________________________________
Address
____________________________________
FORM OF INDEMNITY AGREEMENT -9-
