Document:

WWW.EXFILE.COM, INC. -- 14508 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.3 TO FORM 8-K

    
 

    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.

    3200
      NW
      Yeon Avenue

    Portland,
      OR 97296

    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 

    

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        -8-WWW.EXFILE.COM, INC. -- 14508 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.4 TO FORM 8-K

     

    EXHIBIT
      10.4

    Non-Employee
      Director Compensation Summary1

     

    The
      following is a summary of the compensation provided to our non-employee
      directors effective as of July 26, 2006.

     

     

    
      	
              Annual
                fee for all non-employee directors

            	 	
              $

            	
              35,000

            	 
	
              Board
                meeting and Board committee meeting fees (where committee meeting
                held
                other than on the same day as a meeting of the Board)

            	 	
              $

            	
              1,200

            	 
	
              Chairperson
                retainer - Audit Committee

            	 	
              $

            	
              5,000

            	 
	
              Chairperson
                retainer - Compensation Committee

            	 	
              $

            	
              5,000

            	 
	
              Chairperson
                retainer - Nominating and Corporate Governance Committee

            	 	
              $

            	
              5,000

            	 
	
              Annual
                grant of deferred stock units (“DSUs”) relating to Class A common stock to
                each non-employee directors (commencing with the 2007 annual meeting
                of
                shareholders), which will become fully vested based on continued
                Board
                service on the day before the next annual meeting 

            	 	
              $

            	
              87,500

            	 

    

     

     In
      order to move from a cycle of granting non-employee director equity awards
      each
      year in June to a cycle of granting the awards in January at the time of the
      annual meeting, the Company will grant a one-time award of DSUs to each
      non-employee director, effective as of August 31, 2006. The DSUs will become
      fully vested on the day before the 2007 annual meeting, subject to continued
      Board service. The one-time grants will be for the number of DSUs equal to
      $43,750 divided by the market price of the Common Stock on August 31,
      2006.

    

    Non-employee
      directors may defer cash fees pursuant to the terms of the Company’s Deferred
      Compensation Plan for Non-Employee Directors and may elect to receive Class
      A
      Common Stock under DSUs in installments pursuant to that plan.

    

    Each
      director may enter into an Indemnity Agreement with the Company pursuant to
      which the Company will be contractually obligated to indemnity the director
      in
      connection with claims or proceedings involving the director (by reason of
      serving as a director of the Company), as provided in the agreement.

    

    The
      Company’s directors are reimbursed for expenses incurred in attending Board and
      Board committee meetings.

    _________________________

    1
      The
      Chairman of the Board may receive additional compensation as determined by
      the
      Compensation Committee.

     

    
      
         

      

      
        -1-

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