DEFERRED STOCK UNIT AWARD AGREEMENT
EXHIBIT
10.1
DEFERRED
STOCK UNIT
This
Award Agreement (the “Agreement”) is entered into as of ____________ (the
“Award Date”) by and between Schnitzer Steel Industries, Inc, an Oregon
corporation (the “Company”), and ____________ , a non-employee director of the
Company (the “Recipient”), for the award of deferred stock units with respect to
the Company’s Class A Common Stock (“Common Stock”).
The
award
of deferred stock units to the Recipient is made pursuant to Section 8 of the
Company’s 1993 Stock Incentive Plan (the “Plan”) and the Recipient desires to
accept the award subject to the terms and conditions of this Agreement.
IN
CONSIDERATION of the mutual covenants and agreements set forth in this
Agreement, the parties agree to the following.
1. Award
and Terms of Deferred Stock Units.
The
Company awards to the Recipient under the Plan _________ deferred stock units
(the “Award”), subject to the restrictions, terms and conditions set forth in
this Agreement.
(a) Rights
under Deferred Stock Units.
A
deferred stock unit (a “DSU”) represents the unfunded, unsecured right to
require the Company to deliver to the Recipient one share of Common Stock for
each DSU. The number of shares of Common Stock deliverable with respect to
each DSU is subject to adjustment as determined by the Board of Directors of
the
Company as to the number and kind of shares of stock deliverable upon any
merger, reorganization, consolidation, recapitalization, stock dividend,
spin-off or other change in the corporate structure affecting the Common Stock
generally.
(b) Vesting
Date.
The
DSUs awarded under this Agreement shall initially be 100% unvested and subject
to forfeiture. Subject to Sections 1(c) and (d), the DSUs shall vest
in full on the day before the 2007 annual meeting of shareholders (the “Vesting
Date”) if the Recipient is a director of the Company on the Vesting Date and has
served as a director of the Company continuously from the Award Date to the
Vesting Date.
(c) Acceleration
on Death or Disability.
If the
Recipient ceases to be a director of the Company by reason of the Recipient’s
death or physical disability, all outstanding but unvested DSUs shall become
immediately vested. The term “disability” means a medically determinable mental
or physical impairment that, in the opinion of the Board of Directors, causes
the Recipient to be unable to perform his or her duties as a director of the
Company.
(d) Acceleration
of DSUs on a Change in Control.
Upon a
Change in Control of the Company, all outstanding but unvested DSUs shall become
immediately vested. For purposes of this Agreement, a “Change in Control” of the
Company shall mean the occurrence of any of the following events:
(i) Any
consolidation, merger or plan of share exchange involving the Company (a
“Merger”) as a result of which the holders of outstanding securities of the
Company ordinarily having the right to vote for the election of directors
(“Voting Securities”) immediately prior to the Merger do not continue to hold at
least 50% of the combined voting power of the outstanding Voting Securities
of
the surviving or continuing corporation immediately after the Merger,
disregarding any Voting
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Securities
issued or retained by such holders in respect of securities of any other party
to the Merger;
(ii) Any
sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company;
(iii) At
any
time during a period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors (“Incumbent Directors”) shall
cease for any reason to constitute at least a majority thereof, unless each
new
director elected during such two-year period was nominated or elected by
two-thirds of the Incumbent Directors then in office and voting (with new
directors nominated or elected by two-thirds of the Incumbent Directors also
being deemed to be Incumbent Directors); or
(iv) Any
Person shall, as a result of a tender or exchange offer, open market purchases,
or privately negotiated purchases from anyone other than the Company, have
become the beneficial owner (within the meaning of Rule 13d 3 under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Securities
representing fifty percent (50%) or more of the combined voting power of the
then outstanding Voting Securities.
Notwithstanding
anything in the foregoing to the contrary, unless otherwise determined by the
Board of Directors, no Change in Control shall be deemed to have occurred for
purposes of this Agreement if (1) the Recipient acquires (other than on the
same
basis as all other holders of the Company Common Stock) an equity interest
in an
entity that acquires the Company in a Change in Control otherwise described
under subparagraph (i) or (ii) above, or (2) the Recipient is part of group
that
constitutes a Person which becomes a beneficial owner of Voting Securities
in a
transaction that otherwise would have resulted in a Change in Control under
subparagraph (iv) above. For purposes of this Agreement, the term “Person” shall
mean and include any individual, corporation, partnership, group, association
or
other “person”, as such term is used in Section 14 (d) of the Securities
Exchange Act of 1934 (the “Exchange Act”), other than the Company, a wholly
owned subsidiary of the Company or any employee benefit plan(s) sponsored by
the
Company.
(e) Forfeiture
of DSUs on Termination of Service.
If the
Recipient ceases to be a director of the Company for any reason that does not
result in acceleration of vesting pursuant to Section 1(c) or 1(d), the
Recipient shall immediately forfeit all outstanding but unvested DSUs awarded
pursuant to this Agreement and the Recipient shall have no right to receive
the
related Common Stock.
(f) Restrictions
on Transfer.
The
Recipient may not sell, transfer, assign, pledge or otherwise encumber or
dispose of the DSUs subject to this Agreement. The Recipient may designate
beneficiaries to receive the shares of Common Stock underlying the DSUs subject
to this Agreement if the Recipient dies before delivery of the shares of Common
Stock by so indicating on a form supplied by the Company. If the Recipient
fails
to designate a beneficiary, such Common Stock will be delivered as provided
in
the Company’s Deferred Compensation Plan for Non-Employee Directors (the
“Deferred Compensation Plan”).
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(g) No
Voting Rights; Dividend Equivalents.
The
Recipient shall have no rights as a shareholder with respect to the DSUs or
the
Common Stock underlying the DSUs until the underlying Common Stock is issued
to
the Recipient. The Recipient will not be entitled to receive cash payments
representing any cash dividends paid with respect to the Common Stock underlying
the DSUs. Following the Vesting Date, the DSUs shall be credited to the
Recipient’s account under the Deferred Compensation Plan and dividend
equivalents with respect to the DSUs shall thereafter be credited to Recipient’s
account as provided in the Deferred Compensation Plan.
(g) Delivery
Date for the Shares Underlying the DSU. The
Company shall not issue any shares underlying the DSUs, and the Recipient shall
have no right to receive any shares of Common Stock underlying the DSUs (even
to
the extent vested), while the Recipient is serving as a director of the Company.
When the Recipient ceases to serve as a director of the Company for any reason,
the Company shall, subject to any deferral elections made by the Recipient
as
provided in this paragraph Section 1(g) and the terms of the Deferred
Compensation Plan, deliver shares of Common Stock represented by vested DSUs
to
the Recipient as provided in the Deferred Compensation Plan (the date of
delivery of such shares is referred to as a “delivery date”). The shares
of Common Stock will be issued in the Recipient’s name or, in the event of the
Recipient’s death or disability, to the Recipient’s beneficiary or as provided
in the Deferred Compensation Plan. The Recipient may elect to defer the receipt
of the shares underlying the DSUs beyond the delivery date provided for in
this
Section 1(g) pursuant to the terms of the Deferred Compensation
Plan.
(h) Taxes
and Tax Withholding.
(i) The
Company
shall be entitled to withhold from any delivery of Common Stock hereunder any
income or other tax withholding obligations arising as a result of this Award,
in amounts determined by the Company.
(ii) The
Recipient acknowledges and agrees that no election under Section 83(b) of the
Internal Revenue Code can or will be made with respect to the DSUs.
2. Miscellaneous.
(a) Entire
Agreement.
This
Agreement, the Plan and the Deferred Compensation Plan constitute the entire
agreement of the parties with regard to the subjects hereof.
(b) Interpretation
of the Plan and the Agreement.
The
Compensation Committee of the Board of Directors (the “Administrator”), shall
have the sole authority to interpret the provisions of this Agreement, the
Plan
and the Deferred Compensation Plan, and all determinations by it shall be final
and conclusive.
(c) Electronic
Delivery.
The
Recipient consents to the electronic delivery of any prospectus and any other
documents relating to this Award in lieu of mailing or other form of delivery.
(d) Rights
and Benefits.
The
rights and benefits of this Agreement shall inure to the benefit of and be
enforceable by the Company’s successors and assigns and, subject to the
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restrictions
on transfer of this Agreement, be binding upon the Recipient’s heirs, executors,
administrators, successors and assigns.
(e) Further
Action.
The
parties agree to execute such further instruments and to take such further
action as may reasonably be necessary to carry out the intent of this Agreement.
(f) Governing
Law.
This
Agreement and the Plan will be interpreted under the laws of the state of
Oregon, exclusive of choice of law rules.
(g) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original.
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SCHNITZER
STEEL INDUSTRIES, INC.
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By:
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Authorized
Officer
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Recipient
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