Exhibit 10.49
NON-STATUTORY STOCK OPTION AGREEMENT
1993 STOCK INCENTIVE PLAN, AS AMENDED
          Pursuant to the 1993 Stock Incentive Plan, as amended of SCHNITZER
STEEL INDUSTRIES, INC., an Oregon corporation (the “Company”), the Company
grants to                                          (the “Optionee”), the right
and option (the “Option”) to purchase all or any part of                     
shares of the Company’s Class A Common Stock at a purchase price of
$                     per share, subject to the terms and conditions of this
agreement between the Company and the Optionee (this “Agreement”). By accepting
this Option grant, the Optionee agrees to all of the terms and conditions of the
Option grant. The terms and conditions of the Option grant set forth in attached
Exhibit A are incorporated into and made a part of this Agreement.
     1.       The Option is not intended to be an Incentive Stock Option, as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), and therefore is a Non-Statutory Stock Option.
     2.       The Vesting Reference Date for the Option is                     .
See paragraph 1 of Exhibit A.
     3.      The Grant Date for the Option is                     . The Option
shall continue in effect until the date ten years after the Grant Date unless
earlier terminated as provided in paragraphs 2, 5 and 6 of Exhibit A.

              SCHNITZER STEEL INDUSTRIES, INC.        
By: 
                   

Title
 
 
 
   

 

--------------------------------------------------------------------------------

 

EXHIBIT A TO STOCK OPTION AGREEMENT
     1.      Time of Exercise of Option. Until it expires or is terminated as
provided in paragraphs 2, 5 or 6, this Option may be exercised from time to time
to purchase shares up to the following limits:

          Years After Vesting       Reference Date   Percentage Exercisable
 
       
Less than 1
    0 %
1
    20 %
2
    40 %
3
    60 %
4
    80 %
5 or more
    100 %

     2. Termination of Employment.
          2.1      If the Optionee’s employment by the Company or any parent or
subsidiary of the Company terminates for any reason other than death,
disability, retirement or termination by the Company for cause, the Option may
be exercised at any time prior to the Expiration Date or the expiration of
90 days after the date of the termination, whichever is the shorter period, but
only if and to the extent the Optionee was entitled under paragraph 1 to
exercise the Option on the date of termination.
          2.2      If the Optionee’s employment by the Company or any parent or
subsidiary of the Company is terminated by the Company for cause, the Option may
be exercised at any time prior to the Expiration Date or the expiration of
30 days after the date of the termination, whichever is the shorter period, but
only if and to the extent the Optionee was entitled under paragraph 1 to
exercise the Option on the date of termination. The term “cause” means (A) the
conviction (including a plea of guilty or nolo contendere) of the Optionee of a
felony involving theft or moral turpitude or relating to the business of the
Company, other than a felony predicated on the Optionee’s vicarious liability,
(B) the Optionee’s continued failure or refusal to perform with reasonable
competence and in good faith any of the lawful duties assigned by (or any lawful
directions of) the Company that are commensurate with the Optionee’s position
with the Company (not resulting from any illness, sickness or physical or mental
incapacity), which continues after the Company has given notice thereof (and a
reasonable opportunity to cure) to the Optionee, (C) deception, fraud,
misrepresentation or dishonesty by Optionee in connection with the Optionee’s
employment with the Company, (D) any incident materially compromising the
Optionee’s reputation or ability to represent the Company with the public,
(E) any willful misconduct by the Optionee that substantially impairs the
Company’s business or reputation, or (F) any other willful misconduct by the
Optionee that is clearly inconsistent with the Optionee’s position or
responsibilities.

2

--------------------------------------------------------------------------------

 

          2.3      If the Optionee’s employment by the Company or any parent or
subsidiary of the Company is terminated because of death, disability or
retirement, the Option shall become fully exercisable and may be exercised at
any time prior to the Expiration Date or the expiration of 12 months after the
date of termination, whichever is the shorter period. The term “disability”
means a medically determinable physical or mental condition of the Optionee
resulting from bodily injury, disease, or mental disorder which is likely to
continue for the remainder of the Optionee’s life and which renders the Optionee
incapable of performing the job assigned to the Optionee by the Company or any
substantially equivalent replacement job. The term “retirement” means (A) normal
retirement after reaching age 65, (B) early retirement after reaching age 55 and
completing 10 years of service, or (C) early retirement after completing
30 years of service without regard to age. If the Optionee’s employment is
terminated by death, the Option shall be exercisable only by the person or
persons to whom the Optionee’s rights under the Option pass by the Optionee’s
will or by the laws of descent and distribution of the state or country of the
Optionee’s domicile at the time of death.
     3.      Method of Exercise of Option.
          3.1      The Option may be exercised only by notice in writing from
the Optionee to the Company of the Optionee’s intention to exercise, specifying
the number of shares the Optionee desires to purchase and the date on which the
Optionee desires to complete the transaction, which may not be more than 30 days
after receipt of the notice, and, unless in the opinion of counsel for the
Company such a representation is not required to comply with the Securities Act
of 1933, as amended, containing a representation that it is the Optionee’s
intention to acquire the shares for investment and not with a view to
distribution. On or before the date specified for completion of the purchase,
the Optionee must have paid the Company the full purchase price in cash or in
shares of Class A Common Stock previously acquired by the Optionee, valued at
fair market value. No shares shall be issued until full payment therefor has
been made.
          3.2      Upon notification of the amount due, if any, and prior to or
concurrently with delivery of the certificates representing the shares for which
the option was exercised, the Optionee shall pay to the Company amounts
necessary to satisfy any applicable federal, state, and local withholding tax
requirements. If additional withholding becomes required beyond any amount
deposited before delivery of the certificates, the Optionee shall pay such
amount to the Company on demand. If the Optionee fails to pay the amount
demanded, the Company shall have the right to withhold that amount from other
amounts payable by the Company to the Optionee, including salary, subject to
applicable law.
     4.      Nontransferability of Option. The Option may not be assigned or
transferred by the Optionee except by will, by the laws of descent and
distribution of the state or country of his or her domicile at the time of death
or pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement

3

--------------------------------------------------------------------------------

 

Income Security Act, and during the Optionee’s lifetime the Option may be
exercised only by the Optionee.
     5.      Changes in Capital Structure.
          5.1      If during the term of the Option the outstanding shares of
Class A Common Stock are increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company or of
another corporation, by reason of any reorganization, merger, consolidation,
plan of exchange, recapitalization, reclassification, stock split-up,
combination of shares, or dividend payable in shares, appropriate adjustment
shall be made by the Committee (as defined in the Plan) in the number and kind
of shares subject to the Option, or the unexercised portion thereof. Such
adjustments shall be made without change in the total price applicable to the
unexercised portion of the Option and with a corresponding adjustment in the
option price per share. Any such adjustment made by the Committee shall be
conclusive.
          5.2      In the event of dissolution of the Company or a merger,
consolidation, or plan of exchange affecting the Company, in lieu of making any
adjustments that may be provided for above in this paragraph 5 or in lieu of
having the Option continue unchanged, the Committee may, in its sole discretion,
by written notice provide a 30-day period prior to such event during which the
Option will be exercisable for 100 percent of the shares subject to the Option
and after which the Option will terminate.
     6.      Special Acceleration in Certain Events. Notwithstanding any other
provision in this Agreement, the Option shall, upon a change in control of the
Company, immediately become exercisable in full during the remainder of the term
of the Option; provided, however, that the Committee may, in its sole
discretion, by written notice provide a 30-day period prior to the change in
control of the Company during which the Optionee shall have the right to
exercise the Option, in whole or in part, without any limitation on
exercisability, and upon the expiration of such period, the Option shall
immediately terminate. The term “change in control of the Company” means the
occurrence of any of the following events:
     (A) The consummation of:
     (1) 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 corporation or a parent corporation of the surviving corporation
immediately after the Merger, disregarding any Voting Securities issued to or
retained by such holders in respect of securities of any other party to the
Merger; or

4

--------------------------------------------------------------------------------

 

     (2) 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;
     (B) At any time during a period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of the
Company (“Incumbent Directors”) shall cease for any reason to constitute at
least a majority thereof; provided, however, that the term “Incumbent Director”
shall also include each new director elected during such two-year period whose
nomination or election was approved by two-thirds of the Incumbent Directors
then in office; or
     (C) 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 20% or more of the combined voting power of the then
outstanding Voting Securities. For purposes of this paragraph 6, the term
“person” means and includes 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, other than the Company or any employee benefit
plan sponsored by the Company.
Notwithstanding anything in this paragraph 6 to the contrary, unless otherwise
determined by the Board of Directors of the Company, no change in control of the
Company shall be deemed to have occurred for purposes of this Agreement if
(1) the Optionee acquires (other than on the same basis as all other holders of
shares of Class A Common Stock of the Company) an equity interest in an entity
that acquires the Company in a change in control of the Company otherwise
described under subparagraph (A) of this paragraph 6, or (2) the Optionee is
part of a 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 of the Company under subparagraph (C) of this paragraph 6.
     7.      Conditions on Obligations. The Company shall not be obligated to
issue shares upon exercise of the Option if the Company is advised by its legal
counsel that such issuance would violate applicable state or federal laws,
including securities laws. The Company will use its best efforts to take any
steps required by state or federal law or applicable regulations in connection
with issuance of shares upon exercise of the Option.
     8.      No Right to Employment. Nothing in the Plan or this Agreement shall
confer upon the Optionee any right to be continued in the employment of the
Company or any parent or subsidiary of the Company, or to interfere in any way
with the right of the Company or any parent or subsidiary by whom the Optionee
is employed to terminate the Optionee’s employment at any time, for any reason,
with or without cause, or to decrease the Optionee’s compensation or benefits.

5

--------------------------------------------------------------------------------

 

     9.      Successors of Company. This Agreement shall be binding upon and
shall inure to the benefit of any successor or successors of the Company but
except as provided herein the Option may not be assigned or otherwise disposed
of by the Optionee.
     10.      Notices. Any notices under this Agreement must be in writing and
will be effective when actually delivered, except that any notice pursuant to
paragraphs 5.2 or 6 given by mail shall be effective when mailed. Mail shall be
directed to the Company at its headquarters office (attention: HR department) or
to such address as the Company may certify by notice to the other party. Mail
shall be directed to the Optionee at the most recent address provided by the
Optionee to the Company.

6