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EXHIBIT 10.2
NORTHWESTERN STEEL AND WIRE COMPANY
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is entered into as of this 1st day of
February, 1997, by and between NORTHWESTERN STEEL AND WIRE COMPANY, an Illinois
corporation (the "COMPANY"), and ______________ ("INDEMNITEE").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance or adequate
indemnification due to increased exposure to litigation costs and risk
resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of
such directors and officers;
B. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so great (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is usually beyond the personal
resources of directors and officers;
C. Based upon their experience as business managers, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and
attract talented and experienced individuals to serve as directors and officers
of the Company, it is appropriate for the Company to contractually indemnify
its directors and officers, and to assume for itself liability for expenses and
damages in connection with claims against such directors and officers in
connection with their service to the Company; and
D. The Company believes that it is fair and proper to protect the
directors and officers of the Company from the risk of judgments, settlements
and other expenses which may occur as a result of their service to the Company.
NOW, THEREFORE, the parties, intending to be legally bound, for good
and valuable consideration, hereby agree as follows:
E. DEFINITIONS.
1. AGENT. "AGENT" means a director or officer of the Company serving
as such and any such person who serves, at the Company's request, as a
trustee, committee member or fiduciary of any Company employee benefit
plan or program, or a director or officer of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise.
2. COMPANY. "COMPANY" means Northwestern Steel and Wire Company, an
Illinois corporation, its successors or assigns, or any Subsidiary of the
Company. "SUBSIDIARY" means, and "SUBSIDIARIES" include, (i) any
corporation of which more than
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fifty percent (50%) of the outstanding voting securities are owned
directly or indirectly by the Company, or which is otherwise controlled by
the Company, and (ii) any partnership, joint venture, trust, or other
entity of which more than fifty percent (50%) of the equity interest is
owned directly or indirectly by the Company, or which is otherwise
controlled by the Company.
3. LIABILITIES. "LIABILITIES" means losses, claims, damages,
liabilities, obligations, penalties, judgments, fines, settlement
payments, awards, costs, expenses and disbursements (and any and all
costs, expenses or disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise), including, without
limitation, all reasonable attorneys' fees, costs, expenses and
disbursements, as and when incurred.
4. PROCEEDING. "PROCEEDING" means any threatened, pending, or
completed action, suit or other proceeding whether civil, criminal,
administrative, investigative or any other type whatsoever.
5. CONTROL. "CONTROL" means the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of the person or entity whether through the ownership of
voting securities, by contract, or otherwise.
F. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue
to serve as an Agent of the Company, at its will, in the capacity
Indemnitee currently serves as an Agent of the Company; provided,
however, that nothing contained in this Agreement is intended to (i)
restrict the ability of the Indemnitee to resign at any time and for any
reason from such position, or (ii) create any right to continued
employment or service of the Indemnitee in such or any other position.
G. INDEMNIFICATION OF AGENT.
1. THIRD PARTY ACTIONS. If Indemnitee is a person who was or is a
party or is threatened to be made a party to any Proceeding (other than an
action by or in the right of the Company) by reason of the fact that
Indemnitee is or was an Agent of the Company, or by reason of anything
done or not done by Indemnitee in any such capacity or otherwise at the
request of the Company or of its officers, directors or shareholders, the
Company shall indemnify, defend and hold harmless the Indemnitee against
any and all Liabilities actually and reasonably incurred by the Indemnitee
in connection with the investigation, defense, settlement or appeal of
such Proceeding, so long as the Indemnitee acted in good faith and in a
manner the Indemnitee reasonably believed to be in, or not opposed to, the
best interests of the Company, and, with respect to any criminal action or
Proceeding, if the Indemnitee had no reasonable cause to believe his
conduct was unlawful.
2. DERIVATIVE ACTIONS. If Indemnitee is a person who was or is a
party or is threatened to be made a party to any Proceeding by or in the
right of the Company to
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procure a judgment in its favor by reason of the fact that such person
is or was an Agent of the Company, or by reason of anything done or not
done by such person in any such capacity or otherwise at the request of
the Company or of its officers, directors or shareholders, the Company
shall indemnify, defend and hold harmless the Indemnitee against all
Liabilities actually and reasonably incurred by such person in connection
with the investigation, defense, settlement or appeal of such Proceeding,
if Indemnitee acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company; provided,
however, that no indemnification under this SECTION 3(B) shall be made in
respect of any claim, issue or matter for which such person is adjudged to
be liable in the performance of his duties to the Company, unless, and
only to the extent that, the court in which such 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 for such Liabilities as the
court shall deem proper.
3. ACTIONS WHERE INDEMNITEE IS DECEASED. If Indemnitee is a person
who was or is a party or is threatened to be made a party to any
Proceeding by reason of the fact that he is or was an Agent of the
Company, or by reason of anything done or not done by Indemnitee in any
such capacity, and prior to, during the pendency of, or after completion
of, such Proceeding, the Indemnitee shall die, then the Company shall
indemnify, defend and hold harmless the estate, heirs and legatees of the
Indemnitee against any and all Liabilities incurred by such estate, heirs
or legatees in connection with the investigation, defense, settlement or
appeal of such Proceeding on the same basis as provided for the Indemnitee
in SECTIONS 3(A) AND 3(B) above.
The Liabilities covered hereby shall be net of any payments to or on behalf of
the Indemnitee by D&O Insurance carriers or others with respect to the subject
Proceeding.
H. INDEMNIFICATION AS WITNESS. Notwithstanding any other provision
of this Agreement, to the extent the Indemnitee is, by reason of the fact that
he is or was an Agent of the Company, involved in any investigative Proceeding,
including but not limited to testifying as a witness or furnishing documents in
response to a subpoena or otherwise, the Indemnitee shall be indemnified
against any and all Liabilities actually and reasonably incurred by or for him
in connection therewith.
I. ADVANCEMENT OF LIABILITIES. Subject to the provisions of SECTION
6(C), until a determination that Indemnitee is not entitled to be indemnified
by the Company under the terms hereof, and unless the provisions of SECTION 9
apply, the Company shall reimburse Indemnitee for Liabilities previously paid
by Indemnitee and may advance Liabilities which the Company reasonably
determines will be due and payable by Indemnitee within a reasonable time after
a request for advancement is made by Indemnitee. The execution and delivery of
this Agreement by the Company evidences the specific approval by the Board of
the reimbursement and advancement of Liabilities as provided for in this
SECTION 5. As a condition to such reimbursement and/or advancement, Indemnitee
shall, at the request of the Company, undertake in a manner satisfactory
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to the Company to repay such amounts reimbursed and/or advanced, without
interest, if it shall ultimately be determined pursuant to SECTION 7 OR 9 below
that Indemnitee is not entitled to be indemnified by the Company under the
terms of this Agreement. Subject to the foregoing, the reimbursement and/or
advances to be made hereunder shall be paid by the Company to Indemnitee within
twenty (20) business days following delivery of a written request by Indemnitee
to the Company, which request shall be accompanied by vouchers, invoices and
similar evidence documenting the amounts incurred or to be incurred by
Indemnitee.
J. INDEMNIFICATION PROCEDURES.
1. NOTICE BY INDEMNITEE. Promptly after receipt by the Indemnitee of
notice of the commencement or threat of commencement of any Proceeding,
the Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement,
notify the Company of the commencement or threat of commencement thereof,
provided that any failure to so notify the Company shall not relieve the
Company of its obligations hereunder, except to the extent that such
failure or delay increases the liability of the Company hereunder.
2. D & O INSURANCE. The Company has no obligations to carry D&O
Insurance; however, if the Company receives notice from Indemnitee
pursuant to SECTION 6(A) hereof, and the Company has D&O Insurance in
effect at that time, the Indemnitee shall not take any action (by waiver,
settlement or otherwise) which would adversely affect the ability of the
Company to obtain payment from its insurers.
3. ASSUMPTION OF DEFENSE. In the event the Company shall be
obligated under this Agreement to pay the Liabilities of Indemnitee, the
Company shall be entitled to assume the defense (with counsel reasonably
acceptable to Indemnitee, approval thereof not to be unreasonably
withheld) of the Proceeding to which the Liabilities relate. The Company
agrees to promptly notify Indemnitee upon its election to assume such
defense. Once the Company (a) provides Indemnitee with notice of its
election to assume such defense and (b) obtains approval from Indemnitee
of the counsel retained, the Company will not be liable to Indemnitee
under this Agreement for any attorney's fees or other Liabilities
subsequently incurred by the Indemnitee with respect to such Proceeding,
unless (i) the Liabilities incurred by the Indemnitee were previously
authorized by the Company or (ii) counsel for the Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of any such defense.
K. DETERMINATION OF RIGHT TO INDEMNIFICATION.
1. SUCCESSFUL PROCEEDING. To the extent Indemnitee has been
successful, on the merits or otherwise, in defense of any Proceeding
referred to in SECTIONS 3(A) OR 3(B) above, the Company shall indemnify
the Indemnitee against Liabilities incurred by him in connection
therewith. If Indemnitee is not wholly successful in such Proceeding, but
is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or
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matters in such Proceeding, the Company shall indemnify Indemnitee
against all Liabilities actually or reasonably incurred by or for him in
connection with each successfully resolved claim, issue or matter. For
purposes of this SECTION 7(A), and without limitation, the termination of
any Proceeding, or any claim, issue, or matter in such a Proceeding, by
dismissal, with or without prejudice, shall be deemed to be a successful
result as to such Proceeding, claim, issue, or matter, so long as there
has been no finding (either adjudicated or pursuant to SECTION 7(C) below)
that Indemnitee (i) did not act in good faith, (ii) did not act in a
manner reasonably believed to be in or not opposed to the best interests
of the Company, or (iii) with respect to any criminal proceeding, had
reasonable grounds to believe his conduct was unlawful.
2. OTHER PROCEEDINGS. In the event that SECTION 7(A) above is
inapplicable, the Company shall nevertheless indemnify the Indemnitee,
unless and only to the extent that the forum listed in SECTION 7(C) below
determines that the Indemnitee has not met the applicable standard of
conduct set forth in SECTIONS 3(A) OR 3(B) above required to entitle
Indemnitee to such indemnification.
3. FORUM IN EVENT OF DISPUTE. The determination that indemnification
of the Indemnitee is proper in the circumstances because he has met the
applicable standard of conduct set forth in SECTIONS 3(A) OR 3(B) shall be
made by (i) the Board, by a majority vote of a quorum consisting of
directors who are not parties to such Proceeding, or (ii) if such quorum
is not obtainable, or even if obtainable, if a quorum of disinterested
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the shareholders. The choice of which forum shall make the
determination shall be made by the Board. The forum shall act in the
utmost good faith to assure the Indemnitee a complete opportunity to
present to the forum his case that Indemnitee has met the applicable
standard of conduct.
4. APPEAL TO COURT. Notwithstanding a determination by any forum
listed in SECTION 7(C) above that Indemnitee is not entitled to
Indemnification with respect to a specific Proceeding, the Indemnitee
shall have the right to apply to the court in which that Proceeding is or
was pending or any other court of competent jurisdiction for the purpose
of enforcing the Indemnitee's right to indemnification pursuant to this
Agreement. In the event of any dispute between the parties concerning
their respective rights and obligations hereunder, the Company shall have
the burden of proving that the Company is not obligated to make the
payment or advance claimed by Indemnitee.
5. INDEMNITY FOR LIABILITIES IN ENFORCEMENT OF AGREEMENT.
Notwithstanding any other provision in this Agreement to the contrary, the
Company shall indemnify Indemnitee against all Liabilities incurred by the
Indemnitee in connection with any other Proceeding between the Company and
Indemnitee involving the interpretation or enforcement of the rights of
the Indemnitee under this Agreement unless a court of competent
jurisdiction finds that the material claims and/or defenses of Indemnitee
in any such Proceeding were frivolous or made in bad faith.
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L. CONTRIBUTION. If and to the extent that a final adjudication shall
specify that the Company is not obligated to indemnify Indemnitee under this
Agreement for any reason (including but not limited to the exclusion set forth
in Section 9 hereof), then in respect of any Proceeding in which the Company is
jointly liable with Indemnitee (or would be so liable if joined in such action,
suit or proceeding), the Company shall contribute to the amount of Liabilities
reasonably incurred and paid or payable by Indemnitee in connection with such
Proceeding in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and Indemnitee on the other
hand from the transaction with respect to which such Proceeding arose, and (ii)
the relative fault of the Company on the one hand and of Indemnitee on the
other hand in connection with the circumstances which resulted in such
Liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of Indemnitee on the other
hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such Liabilities. The Company agrees
that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
M. EXCEPTIONS.
1. CLAIMS INITIATED BY INDEMNITEE. Any other provision herein to the
contrary notwithstanding, the Company shall not be obligated pursuant to
the terms of this Agreement to indemnify or advance Liabilities to the
Indemnitee with respect to Proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with
respect to Proceedings brought to establish or enforce a right to
indemnification under this Agreement, but such indemnification or
advancement of expenses may be provided by the Company in specific cases
if the Board finds it to be appropriate.
2. UNAUTHORIZED SETTLEMENTS. Any other provision herein to the
contrary notwithstanding, the Company shall not be obligated pursuant to
the terms of this Agreement to indemnify the Indemnitee under this
Agreement for any amount paid in settlement of a Proceeding without the
prior written consent of the Company to such settlement.
3. NO DUPLICATIVE PAYMENT. The Company shall not be liable under
this Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise.
N. CONTINUATION OF INDEMNITY. All obligations of the Company
contained herein shall be irrevocable and shall continue during the period
Indemnitee is an Agent of the Company and thereafter so long as Indemnitee
shall be subject to any possible claim or threatened or pending Proceeding by
reason of the fact that Indemnitee was an Agent of the Company.
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O. NON-EXCLUSIVITY. The provisions for indemnification and
advancement of Liabilities set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Articles of Incorporation or By-laws, the vote of the
Company's shareholders or disinterested directors, other agreements or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying a position as an Agent of the Company.
P. DISCLOSURE OF PAYMENTS. In the event that the Company makes any
payment, advance or reimbursement for Liabilities to Indemnitee under this
Agreement, the Company shall make such disclosures as are required by the
Illinois Business Corporation Act of 1983.
Q. INTERPRETATION OF AGREEMENT. It is understood that the parties hereto
intend this Agreement to be interpreted and enforced so as to provide
indemnification to Indemnitee to the fullest extent now or hereafter permitted
by law.
R. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of the Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable) shall not in any way be effected or impaired thereby,
and (ii) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal, or unenforceable,
that are not themselves invalid, illegal, or unenforceable) shall be construed
so as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable and to give effect to SECTION 13 hereof.
S. SUBROGATION. In the event that the Company makes any 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 and do all things that may be necessary to secure such rights, including
but not limited to the execution of such documents as shall be necessary to
enable the Company effectively to bring suit to enforce such rights.
T. MODIFICATION AND WAIVER. 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.
U. SURVIVAL, SUCCESSORS, AND ASSIGNS. The Indemnitee's rights under
this Agreement shall continue after the Indemnitee has ceased acting as an
Agent of the Company. The terms of this Agreement shall be binding on and
inure to the benefit of the Company and its successors and assigns and shall be
binding on and inure to the benefit of Indemnitee and Indemnitee's heirs,
executors, and administrators.
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V. NOTICES. All notices, demands, consents, requests, approvals and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been properly given if hand delivered (effective upon
receipt or when refused), or if sent by courier freight prepaid (effective upon
receipt or when refused), in the case of the Company, at the addresses listed
below, and in the case of Indemnitee, at Indemnitee's address of record at the
office of the Company, or to such other addresses as the parties may notify
each other in writing.
To Company: Northwestern Steel and Wire Company
121 Wallace Street
Sterling, Illinois 61081
Attention: Chief Executive Officer
with a copy to: Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, IL 60661-3693
Attention: Herbert S. Wander, Esq.
W. GOVERNING LAW. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Illinois, without regard to
the application of the laws of the State of Illinois regarding conflicts of
laws.
X. CONSENT TO JURISDICTION. The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Illinois
for all purposes in connection with any action or proceeding which arises out
of or relates to this Agreement.
Y. COUNTERPARTS. This agreement may be executed in counterparts, each of
which when so executed and delivered shall be deemed an original, and such
counterparts together shall constitute one instrument.
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The parties hereto have entered into this Indemnity Agreement effective as
of the date first above written.
NORTHWESTERN STEEL AND WIRE COMPANY
By:
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INDEMNITEE:
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(Sign Name)
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(Print Address)
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