INDEMNITY AGREEMENT
EXHIBIT
10.3
INDEMNITY
AGREEMENT
THIS
AGREEMENT is made as of ____________, 2006 by and between Schnitzer Steel
Industries, Inc., an Oregon corporation (Company), and _______________
(Indemnitee), a director or officer of the Company.
RECITALS
A. It
is
essential to the Company to retain and attract as directors and officers the
most capable persons available.
B. The
increase in corporate litigation subjects directors and officers to expensive
litigation risks at the same time that the availability and coverage of
directors’ and officers’ liability insurance have been reduced.
C. It
is now
and always has been the express policy of the Company to indemnify its directors
and officers so as to provide them with the maximum possible protection
permitted by law.
D. The
2006
Restated Articles of Incorporation of the Company require indemnification of
the
directors and officers of the Company to the fullest extent permitted by law.
The Oregon Business Corporation Act (the “Act”) expressly provides that the
indemnification provisions set forth in the Act are not exclusive, and thereby
contemplates that contracts may be entered into between the Company and members
of the Board of Directors and officers with respect to indemnification of
directors and officers.
NOW,
THEREFORE, the Company and Indemnitee agree as follows:
1. Services
to the Company; Cooperation.
Indemnitee will serve or continue to serve as a director or officer of the
Company for so long as Indemnitee is duly elected or appointed or until
Indemnitee tenders a resignation in writing or is removed. Indemnitee agrees
to
cooperate with the Company in connection with any investigation or inquiry
undertaken at the direction of the Board of Directors of the Company or any
committee of the Board of Directors.
2. Definitions.
As used
in this Agreement:
(a) The
term
“Proceeding” shall include any threatened, pending or completed action, suit or
proceeding, arbitration, mediation or investigation, whether brought in the
right of the Company or otherwise and whether of a civil, criminal,
administrative or investigative nature, in which Indemnitee may be or may have
been involved as a party or otherwise, by reason of the fact that Indemnitee
is
or was a director or officer of the Company or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, whether or not serving
in
such capacity at the time any liability or expense is incurred for which
indemnification or reimbursement can be provided under this
Agreement.
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(b) The
term
“Expenses” includes, without limitation, expenses of investigations, judicial or
administrative proceedings or appeals, attorneys’ fees and disbursements and any
expenses of establishing a right to indemnification under Section 11 of this
Agreement, but shall not include amounts paid in settlement by Indemnitee or
the
amount of judgments or fines against Indemnitee.
(c) References
to
“other enterprise” shall include employee benefit plans; references to “fines”
shall include any excise tax assessed with respect to any employee benefit
plan;
references to “serving at the request of the Company” shall include any service
as a director, officer, employee or agent of the Company which imposes duties
on, or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries; and
a
person who acted in good faith and in a manner reasonably believed to be in
the
best interest of an employee benefit plan shall be deemed to have acted in
a
manner “not opposed to the best interests of the Company” as referred to in this
Agreement.
3. Indemnity
in Third-Party Proceedings.
The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee is a party to or threatened to be made a party to any
Proceeding (other than a Proceeding by or in the right of the Company to procure
a judgment in its favor) against all Expenses, judgments, fines and amounts
paid
in settlement actually and reasonably incurred by Indemnitee in connection
with
the Proceeding, but only if Indemnitee acted in good faith and in a manner
which
Indemnitee reasonably believed to be in or not opposed to the best interests
of
the Company and, in the case of a criminal proceeding, in addition, had no
reasonable cause to believe that Indemnitee’s conduct was unlawful.
4. Indemnity
in Proceedings by or in the Right of the Company.
The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 4 if Indemnitee is a party to or threatened to be made a party to any
Proceeding by or in the right of the Company to procure a judgment in its favor
against all Expenses actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of the Proceeding, but only if
Indemnitee acted in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company. No
indemnification for Expenses shall be made under this Section 4 in respect
of
any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent
that any court in which the Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity.
5. Indemnification
of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent that
Indemnitee has been successful, on the merits or otherwise, in defense of any
Proceeding or in defense of any claim, issue or matter therein, including the
dismissal of an action without prejudice, the Company shall indemnify Indemnitee
against all Expenses incurred in connection therewith.
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6. Additional
Indemnification.
(a) The
Company
agrees, as set forth in this Section 6(a), to indemnify Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification
may
not be specifically authorized by the Company’s Restated Articles of
Incorporation, the Company’s Bylaws, the Act or the other provisions of this
Agreement. Accordingly, notwithstanding any limitation in Sections 3, 4 or
5,
the Company shall indemnify Indemnitee to the fullest extent permitted by law
if
Indemnitee is a party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to procure a judgment
in its favor) against all judgments, fines, amounts paid in settlement and
Expenses actually and reasonably incurred by Indemnitee in connection with
the
Proceeding. No indemnity shall be made under this Section 6(a) on account of
Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty
to the Company or its shareholders or is an act or omission not in good faith
or
which involves intentional misconduct or a knowing violation of the
law.
(b) For
purposes
of Section 6(a), the meaning of the phrase “to the fullest extent permitted by
law” shall include, but not be limited to:
(i) to
the
fullest extent permitted 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, and
(ii) to
the
fullest extent authorized or permitted by 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 officers and directors.
(c) The
Company
agrees to indemnify Indemnitee for Expenses if Indemnitee is called, in
connection with a Proceeding, as a non-party witness by reason of the fact
that
Indemnitee is or was a director or officer of the Company.
7. Exclusions.
Notwithstanding any provision in this Agreement, the Company shall not be
obligated under this Agreement to make any indemnity in connection with any
claim made against Indemnitee:
(a) for
which
payment has actually been made to or on behalf of Indemnitee under any insurance
policy or other indemnity provision, except with respect to any excess beyond
the amount paid under any insurance policy or other indemnity
provision;
(b) for
any
transaction from which Indemnitee derived an improper personal
benefit;
(c) for
an
accounting of profits made from the purchase and sale (or sale and purchase)
by
Indemnitee of securities of the Company within the meaning of Section 16(b)
of
the Securities Exchange Act of 1934, as amended, or similar provisions of state
statutory or common law;
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(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 respect, both the Company and Indemnitee have been advised that
the Securities and Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws is against public policy
and is, therefore, unenforceable and that claims for indemnification should
be
submitted to appropriate courts for adjudication); or
(e) in
connection
with any Proceeding (or part of any Proceeding) initiated by Indemnitee, or
any
Proceeding by Indemnitee against the Company and its directors, officers,
employees or other indemnitees, unless (i) the Company is expressly required
by
law to make the indemnification, (ii) the Proceeding was authorized by the
Board
of Directors of the Company, (iii) the Company provides the indemnification,
in
its sole discretion, pursuant to the powers vested in the Company under
applicable law, or (iv) Indemnitee initiated the Proceeding pursuant to Section
11 of this Agreement and Indemnitee is successful in whole or in part in the
Proceeding.
8. Advances
of Expenses.
The
Company shall pay the expenses incurred by Indemnitee in any Proceeding in
advance at the written request of Indemnitee, if Indemnitee:
(a) furnishes
the
Company a written affirmation of the Indemnitee’s good faith belief that
Indemnitee is entitled to be indemnified by the Company under this Agreement;
and
(b) furnishes
the
Company a written undertaking to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be indemnified by
the
Company.
Advances
shall be made without regard to Indemnitee’s ability to repay the expenses and
without regard to Indemnitee’s ultimate entitlement to indemnification under the
other provisions of this Agreement. Advances made under this Section 8 shall
be
paid by the Company to Indemnitee as soon as practicable but in any event within
thirty (30) business days after written request by Indemnitee to the Company
pursuant to this Section 8. The Company’s obligation to advance expenses as
provided in this Section 8 is conditioned on Indemnitee’s actual cooperation
with investigations and inquiries, as provided in Section 1.
9. Notification
and Defense of Claim.
Not
later than thirty (30) days after receipt by Indemnitee of notice of the
commencement of any Proceeding, Indemnitee will, if a claim in respect of the
Proceeding is to be made against the Company under this Agreement, notify the
Company of the commencement of the Proceeding. The omission to notify the
Company will not relieve the Company from any liability which it may have to
Indemnitee otherwise than under this Agreement. With respect to any Proceeding
as to which Indemnitee notifies the Company of the commencement:
(a) The
Company
will be entitled to participate in the Proceeding at its own
expense.
(b) Except
as
otherwise provided below, the Company may, at its option and jointly with any
other indemnifying party similarly notified and electing to assume such defense,
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assume
the defense of the Proceeding, with legal counsel reasonably satisfactory to
the
Indemnitee. Indemnitee shall have the right to use separate legal counsel in
the
Proceeding, but the Company shall not be liable to Indemnitee under this
Agreement, including Section 8 above, for the fees and expenses of separate
legal counsel incurred after notice from the Company of its assumption of the
defense, unless (i) Indemnitee reasonably concludes that there may be a conflict
of interest between the Company and Indemnitee in the conduct of the defense
of
the Proceeding or (ii) the Company does not use legal counsel to assume the
defense of such Proceeding. The Company shall not be entitled to assume the
defense of any Proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have made the conclusion provided for in (i)
above.
(c) If
two or
more persons who may be entitled to indemnification from the Company, including
the Indemnitee, are parties to any Proceeding, the Company may require
Indemnitee to use the same legal counsel as the other parties. Indemnitee shall
have the right to use separate legal counsel in the Proceeding, but the Company
shall not be liable to Indemnitee under this Agreement, including Section 8
above, for the fees and expenses of separate legal counsel incurred after notice
from the Company of the requirement to use the same legal counsel as the other
parties, unless the Indemnitee reasonably concludes that there may be a conflict
of interest between Indemnitee and any of the other parties required by the
Company to be represented by the same legal counsel.
(d) The
Company
shall not be liable to indemnify Indemnitee under this Agreement for any amounts
paid in settlement of any Proceeding effected without its written consent,
which
shall not be unreasonably withheld. Indemnitee shall permit the Company to
settle any Proceeding the defense of which it assumes, except that 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 consent, which
may be given or withheld in Indemnitee’s sole discretion.
10. Procedure
Upon Application for Indemnification.
Any
indemnification under Sections 3, 4, 5 or 6 of this Agreement shall be made
no
later than 90 days after receipt of the written request of Indemnitee for
indemnification and shall not require that a determination be made in accordance
with the Act by the persons specified in the Act that indemnification is
required under this Agreement. However, unless it is ordered by a court in
an
enforcement action under Section 11 of this Agreement, no such indemnification
shall be made if a determination is made within such 90-day period by (a) the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the Proceeding, or (b) independent legal counsel in a
written opinion (which counsel shall be appointed if a quorum is not
obtainable), that the Indemnitee is not entitled to indemnification under this
Agreement.
11. Enforcement.
Indemnitee may enforce any right to indemnification or advances granted by
this
Agreement to Indemnitee in any court of competent jurisdiction if (a) the
Company denies the claim for indemnification or advances, in whole or in part,
or (b) the Company does not dispose of the claim within 90 days of a written
request for indemnification or advances. Indemnitee, in the enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting the claim. It shall be a defense to any such
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enforcement
action (other than an action brought to enforce a claim for advancement of
Expenses pursuant to Section 8 above, if Indemnitee has tendered to the Company
the required affirmation and undertaking) that Indemnitee is not entitled to
indemnification under this Agreement, but the burden of proving this defense
shall be on the Company. Neither a failure of the Company (including its Board
of Directors or its shareholders) to make a determination prior to the
commencement of the enforcement action that indemnification of Indemnitee is
proper in the circumstances, nor an actual determination by the Company
(including its Board of Directors or its shareholders) that indemnification
is
improper shall be a defense to the action or create a presumption that
Indemnitee is not entitled to indemnification under this Agreement or otherwise.
The termination of any Proceeding by judgment, order of court, settlement,
conviction or upon a plea of nolo-contendere, or its equivalent, shall not,
of
itself, create a presumption that Indemnitee is not entitled to indemnification
under this Agreement or otherwise.
12. Partial
Indemnification.
If
Indemnitee is entitled under any provisions of this Agreement to indemnification
by the Company for some or part of the Expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by Indemnitee in the
investigation, defense, appeal or settlement of any Proceeding but not, however,
for the total amount, the Company shall indemnify Indemnitee for the portion
of
the Expenses, judgments, fines and amounts paid in settlement to which
Indemnitee is entitled.
13. Nonexclusivity
and Continuity of Rights.
The
indemnification provided by this Agreement shall not be deemed exclusive of
any
other rights to which Indemnitee may be entitled under the Company’s Restated
Articles of Incorporation, the Company’s Bylaws, any other agreement, any vote
of shareholders or directors, the Act, or otherwise, both as to action in
Indemnitee’s official capacity and as to action in another capacity while
holding office. The indemnification under this Agreement shall continue as
to
Indemnitee even though Indemnitee ceases to be a director or officer and shall
inure to the benefit of the heirs and personal representatives of
Indemnitee.
14. Business
Combinations.
If any
person or group (as defined in Section 13(d)(3) of the Securities Exchange
Act
of 1934, as amended) acquires the legal right to elect a majority of the Board
of Directors of the Company in a transaction or series of transactions that
has
not received the prior approval of the Board of Directors of the Company, the
Company or its successor, as the case may be, shall, for a period of two years
following the date that such legal right is acquired (the “Trigger Date”),
maintain all directors and officers’ liability insurance in effect prior to the
Trigger Date that covers Indemnitee.
15. Severability.
If this
Agreement or any portion of it is invalidated on any ground by any court of
competent jurisdiction, the Company shall indemnify Indemnitee as to Expenses,
judgments, fines and amounts paid in settlement with respect to any Proceeding
to the full extent permitted by any applicable portion of this Agreement that
is
not invalidated or by any other applicable law or arrangement.
16. 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.
Indemnitee 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.
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17. Modification
and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both parties. No waiver of any of the provisions in
this
Agreement shall constitute a waiver of any other provisions of this Agreement
(whether or not similar) nor shall any waiver constitute a continuing waiver,
unless expressly stated in any waiver.
18. 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 delivery
if
delivered by hand to the party to whom the notice or other communication shall
have been directed, (b) upon delivery if mailed by certified or registered
mail
with postage prepaid or (c) upon delivery if sent by overnight mail or delivery
service:
(i) If
to
Indemnitee, at the address indicated on the signature page of this
Agreement.
(ii) If
to the
Company, to
Schnitzer
Steel Industries, Inc.
0000
XX
Xxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
President
or
to any
other address as may have been furnished to Indemnitee by the
Company.
19. Counterparts.
The
parties may execute this Agreement in two counterparts, each of which shall
constitute the original.
20. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the law of
the
state of Oregon.
21. Successors
and Assigns.
This
Agreement shall be binding upon the Company and its successors and
assigns.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the
day and year first written above.
| SCHNITZER STEEL INDUSTRIES, INC. | INDEMNITEE |
| By:___________________________ | By:___________________________ |
|
Signature
|
Signature
|
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|
Type or Print Name |
Type or Print Name |
|
Title |
Title |
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