WWW.EXFILE.COM, INC. -- 14281 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.2 TO FORM 8-K


    EXHIBIT
      10.2

    


    


    


    


    March
      24,
      2006

    


    


    Tamara
      L.
      Adler (Lundgren)

    Executive
      Vice President, Strategy & Investments

    President—Shared
      Services 

    Schnitzer
      Steel Industries, Inc.

    3200
      NW
      Yeon Avenue

    Portland,
      Oregon 97210

    


    Re:  Change
      in Control Severance Agreement

    


    Dear
      Tamara:

    


    Schnitzer
      Steel Industries, Inc., an Oregon corporation (the “Company”), considers the
      establishment and maintenance of a sound and vital management to be essential
      to
      protecting and enhancing the best interests of the Company. In this connection,
      the Company recognizes that, as is the case with many publicly held
      corporations, the possibility of a change in control may exist and that such
      possibility, and the uncertainty and questions which it may raise among
      management, may result in the departure or distraction of management personnel
      to the detriment of the Company, its customers and its shareholders.
      Accordingly, the Board of Directors of the Company (the “Board”) has determined
      that appropriate steps should be taken to reinforce and encourage the continued
      attention and dedication of members of the Company’s management to their
      assigned duties without distraction in circumstances arising from the
      possibility of a change in control of the Company.

    


    In
      order
      to induce you to remain in the employ of the Company, this letter agreement,
      which has been approved by the Compensation Committee of the Board, sets forth
      severance benefits which the Company agrees will be provided to you in the
      event
      your employment with the Company is terminated in connection with a Change
      in
      Control (as defined in Section 3 hereof) under the circumstances described
      below. 

    


           
      1. 
Agreement
      to Provide Services; Right to Terminate.

    


     
      (i) Except
      as
      otherwise provided in paragraph (ii) below, the Company or you may terminate
      your employment at any time, subject to the Employment Agreement dated March
      24,
      2006, and subject to the Company’s providing the benefits hereinafter specified
      in accordance with the terms hereof.

    


     

     

     

    
 

    
      
        
        

      

      
        
           

        

        
          

        

      

      
        
        

      

    

     
      (ii) In
      the
      event of a Potential Change in Control (as defined in Section 3 hereof),
      you agree that you will not leave the employ of the Company (other than as
      a
      result of Disability, as such term is hereinafter defined) and will render
      the
      services contemplated in the recitals to this Agreement until the earlier of
      (a)
      a date which is 60 days from the occurrence of such Potential Change in Control,
      or (b) a termination of your employment pursuant to which you become entitled
      under this Agreement to receive the benefits provided in Section 5(iii) below.
      

    


    2. 
Term
      of Agreement.
      This
      Agreement shall commence on the date hereof and shall continue in effect until
      August 31, 2009 or earlier termination of your employment; provided that, this
      Agreement shall continue in effect for a period of twenty-four (24) months
      beyond the term provided herein if a Change in Control shall have occurred
      during such term. 

    


    3. 
Change
      in Control; Potential Change in Control; Shareholder Approval;
      Person.

    


     (i)    
      For
      purposes of this Agreement, a “Change in Control” shall mean 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

    


    (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 (“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 (as hereinafter defined) 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 

     

    
      
        
        

      

      
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    meaning
      of Rule 13d-3 under the Securities Exchange Act of 1934), directly or
      indirectly, of Voting Securities representing twenty percent (20%) 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, no Change in Control shall be deemed to have occurred for purposes of
      this Agreement if (1) you acquire (other than on the same basis as all other
      holders of shares of Common Stock of the Company) an equity interest in an
      entity that acquires the Company in a Change in Control otherwise described
      under subparagraph (A) above, or (2) you are 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 under subparagraph
      (C)
      above.

    


    (ii) For
      purposes of this Agreement, a “Potential Change in Control” shall be deemed to
      have occurred if:

    


    (A) the
      Company enters into an agreement, the consummation of which would result in
      the
      occurrence of a Change in Control;

    


    (B) any
      Person (including the Company) publicly announces an intention to take or to
      consider taking actions which if consummated would constitute a Change in
      Control; or

    


    (C) the
      Board
      adopts a resolution to the effect that, for purposes of this Agreement, a
      Potential Change in Control has occurred.

    


    (iii) For
      purposes of this Agreement, “Shareholder Approval” shall be deemed to have
      occurred if the shareholders of the Company approve an agreement entered into
      by
      the Company, the consummation of which would result in the occurrence of a
      Change in Control.

    


    (iv) 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 or any employee benefit plan sponsored
      by the Company.

    


    4.            
      Termination
      Following Shareholder Approval or Change in Control.
      If a
      Change in Control occurs, you shall be entitled to the benefits provided in
      Section 5(iii) hereof in the event that (x) a Date of Termination (as defined
      in
      Section 4(v) below) of your employment with the Company occurred or occurs
      after
      the earlier of Shareholder Approval, if applicable, or the Change in Control
      and
      no later than twenty-four (24) months after the Change in Control, or (y) your
      employment with the Company is terminated by you for Good Reason (as defined
      below) based on an event occurring concurrent with or subsequent to the earlier
      of Shareholder Approval, if applicable, or the Change in Control and your Notice
      of Termination (as defined in Section 4(iv) below) in 

     

     

    
      
        
        

      

      
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    connection
      therewith shall have been given no later than twenty-four (24) months after
      the
      Change in Control; provided, however, that if any such termination is (a)
      because of your death, (b) by the Company for Cause (as defined below) or
      Disability, or (c) by you other than for Good Reason based on an event occurring
      concurrent with or subsequent to the earlier of Shareholder Approval, if
      applicable, or the Change in Control, then you shall not be entitled to the
      benefits provided in Section 5(iii) hereof.

    


    (i) Disability.
      Termination by the Company of your employment based on “Disability” shall mean
      termination because of your absence from your duties with the Company on a
      full-time basis for one hundred eighty (180) consecutive days as a result of
      your incapacity due to physical or mental illness, unless within thirty (30)
      days after Notice of Termination is given to you following such absence you
      shall have returned to the full-time performance of your duties.

    


    (ii) Cause.
      Termination by the Company of your employment for “Cause” shall mean termination
      upon (a) the willful and continued failure by you to perform substantially
      your assigned duties with the Company (other than any such failure resulting
      from your incapacity due to physical or mental illness) after a demand for
      substantial performance is delivered to you by the President & Chief
      Executive Officer of the Company which specifically identifies the manner in
      which such executive believes that you have not substantially performed your
      duties or (b) the willful engaging by you in illegal conduct which is materially
      and demonstrably injurious to the Company. For purposes of this paragraph (ii),
      no act, or failure to act, on your part shall be considered “willful” unless
      done, or omitted to be done, by you in knowing bad faith and without reasonable
      belief that your action or omission was in, or not opposed to, the best
      interests of the Company. Any act, or failure to act, based upon authority
      given
      by the President & Chief Executive Officer or based upon the advice of
      counsel for the Company shall be conclusively presumed to be done, or omitted
      to
      be done, by you in good faith and in the best interests of the Company.
      Notwithstanding the foregoing, you shall not be deemed to have been terminated
      for Cause unless and until there shall have been delivered to you a copy of
      a
      letter from the President and Chief Executive Officer, finding (after reasonable
      notice to you and an opportunity for you, together with your counsel, to be
      heard) that in his good faith opinion you were guilty of the conduct set forth
      above in (a) or (b) of this paragraph (ii) and specifying the particulars
      thereof in detail. 

    


    (iii) Good
      Reason.
      Termination by you of your employment with the Company for “Good Reason” shall
      mean termination by you of your employment with the Company based on any of
      the
      following events provided you give Notice of Termination after the occurrence
      of
      any of the following events and no later than 30 days after the later of (1)
      notice to you of such event, or (2) the Change in Control:

    


    (A) a
      change
      in your status, title, positions or responsibilities as EVP S&I--PSS or the
      assignment to you of any duties or responsibilities which are inconsistent
      with
      such status, title or positions, or any removal of you from or any failure
      to
      reappoint or reelect you to such positions, except in connection with the


     

     

    
      
        
        

      

      
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    termination
      of your employment for Cause or Disability or as a result of your death or
      by
      you other than for Good Reason;

    


    (B) a
      reduction by the Company in your base salary as in effect immediately prior
      to
      the earlier of Shareholder Approval, if applicable, or the Change in
      Control;

    


    (C) the
      failure by the Company to continue in effect any Plan (as hereinafter defined)
      in which you are participating immediately prior to the earlier of Shareholder
      Approval, if applicable, or the Change in Control (or Plans providing you with
      at least substantially similar benefits) other than as a result of the normal
      expiration of any such Plan in accordance with its terms as in effect
      immediately prior to the earlier of Shareholder Approval, if applicable, or
      the
      Change in Control, or the taking of any action, or the failure to act, by the
      Company which would adversely affect your continued participation in any of
      such
      Plans on at least as favorable a basis to you as is the case immediately prior
      to the earlier of Shareholder Approval, if applicable, or the Change in Control
      or which would materially reduce your benefits in the future under any of such
      Plans or deprive you of any material benefit enjoyed by you immediately prior
      to
      the earlier of Shareholder Approval, if applicable, or the Change in
      Control;

    


    (D) the
      failure by the Company to provide and credit you with the number of paid
      vacation days to which you are then entitled in accordance with the Company’s
      normal vacation policy as in effect immediately prior to the earlier of
      Shareholder Approval, if applicable, or the Change in Control;

    


    (E) the
      Company’s requiring you to relocate your residence, or change your base office
      locations from the locations currently in New York and Portland (or other
      offices in reasonable proximity within those cities) immediately prior to the
      earlier of Shareholder Approval, if applicable, or the Change in Control except
      for required travel on the Company’s business to an extent substantially
      consistent with the business travel obligations which you undertook on behalf
      of
      the Company prior to the earlier of Shareholder Approval, if applicable, or
      the
      Change in Control;

    


    (F) the
      failure by the Company to obtain from any Successor (as hereinafter defined)
      the
      assent to this Agreement contemplated by Section 7 hereof; 

    


    (G) any
      purported termination by the Company of your employment which is not effected
      pursuant to a Notice of Termination satisfying the requirements of paragraph
      (iv) below (and, if applicable, paragraph (ii) above); and for purposes of
      this
      Agreement, no such purported termination shall be effective; or

    


    
      
        
        

      

      
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    (H) the
      failure by the Company to pay you any portion of your current compensation,
      to
      credit your Deferred Compensation Plan account in accordance with your previous
      election, or to pay you any portion of an installment of deferred compensation
      under any Plan in which you participated, within seven (7) days of the date
      such
      compensation is due.

    


    For
      purposes of this Agreement, “Plan” shall mean any compensation plan such as an
      incentive, stock option or restricted stock plan or any employee benefit plan
      such as a thrift, pension, profit sharing, deferred compensation, medical,
      disability, accident, life insurance, or relocation plan or policy or any other
      plan, program or policy of the Company intended to benefit
      employees.

    


    (iv) Notice
      of Termination.
      Any
      purported termination by the Company or by you (other than termination due
      to
      your death, which shall terminate your employment automatically) following
      the
      earlier of Shareholder Approval, if applicable, or a Change in Control shall
      be
      communicated by Notice of Termination to the other party hereto. For purposes
      of
      this Agreement, a “Notice of Termination” shall mean a notice which shall
      indicate the specific termination provision in this Agreement relied upon and
      shall set forth in reasonable detail the facts and circumstances claimed to
      provide a basis for termination of your employment under the provision so
      indicated.

    


    (A)  
      With
      respect to any Notice of Termination given by you for Good Reason, such Notice
      of Termination may indicate that such termination for Good Reason shall be
      conditioned upon, and postponed until, the date on which it is finally
      determined, either by mutual written agreement of the parties or by the
      arbitrators in a proceeding as provided in Section 13 hereof, that Good Reason
      exists for such termination. If a Notice of Termination given by you for Good
      Reason indicates that such termination shall be so conditioned and postponed,
      then, if the Company disputes the existence of Good Reason, the Company shall,
      within thirty (30) days after the Notice of Termination is given, notify you
      that a dispute exists concerning the termination, whereupon Section 13 hereof
      shall apply to such dispute. If no such notice is given by the Company within
      such 30-day period, then a final determination that Good Reason exists shall
      be
      deemed to have occurred on the date thirty (30) days after the Notice of
      Termination for Good Reason is given.

    


    (B)  
      Notwithstanding
      anything to the contrary in this Agreement:

    


    (1) if,
      at
      any time before the Date of Termination determined pursuant to this Agreement
      with respect to any purported termination by you of your employment with the
      Company, there exists a basis for the Company to terminate your employment
      for
      Cause, then the Company may, regardless of whether or not you have given Notice
      of Termination for Good Reason and regardless of whether or not Good Reason
      exists, terminate your employment for Cause, in which event you shall not be
      entitled to the benefits provided in Section 5(iii) hereof, and

    


    
      
        
        

      

      
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    (2) if
      you
      die or your employment is terminated based on Disability after you have given
      Notice of Termination for Good Reason and before the Date of Termination
      determined under this Agreement with respect to that Notice of Termination,
      and
      it is subsequently finally determined that Good Reason existed at the time
      your
      employment terminated, then termination of your employment shall be deemed
      to
      have occurred for Good Reason (and not due to your death or Disability) and
      you
      shall be entitled to the benefits provided in Section 5(iii)
      hereof.

    


    (v) Date
      of Termination.
“Date
      of Termination” shall mean the date your employment with the Company is
      terminated following the earlier of Shareholder Approval, if applicable, or
      a
      Change in Control, which date shall be determined as follows:

    


    (A) if
      your
      employment is to be terminated for Disability, thirty (30) days after Notice
      of
      Termination is given (provided that, if you shall have returned to the
      performance of your duties on a full-time basis during such thirty (30) day
      period, then the termination for Disability contemplated by the Notice of
      Termination shall not occur),

    


    (B) if
      your
      employment is terminated due to your death, the date of your death,

    


    (C) if
      your
      employment is to be terminated by the Company other than for Disability, or
      if
      your employment is to be terminated by you without a claim of Good Reason,
      the
      date specified in the Notice of Termination, and

    


    (D) if
      your
      employment is to be terminated by you for Good Reason, the date ninety (90)
      days
      after the date on which a Notice of Termination is given, unless
      either:

    


    (1) an
      earlier date has been agreed to by the Company either in advance of, or after,
      receiving such Notice of Termination (in which case such earlier date shall
      be
      the Date of Termination),

    


    (2) pursuant
      to and in accordance with Section 4(iv) you have indicated in your Notice of
      Termination that you are conditioning your termination upon (and postponing
      such
      termination until) the date on which it is finally determined that Good Reason
      exists for such termination (in which case the later of such date as determined
      in accordance with Section 4(iv) above, or the date otherwise determined under
      this Section 4(v)(D), shall be the Date of Termination),

    


    (3) the
      Company shall not have notified you within fifteen (15) days after a Notice
      of
      Termination for Good Reason is given that it intends 

     

     

    
      
        
        

      

      
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    to
      fully
      correct the circumstances giving rise to Good Reason (in which case the date
      fifteen (15) days after the Notice of Termination shall be the Date of
      Termination), or

    


    (4) if
      the
      Company gives notice as provided in Section 4(v)(D)(3) and if the circumstances
      giving rise to Good Reason are fully corrected on or prior to the date that
      is
      ninety (90) days after such Notice of Termination was given, then the
      termination for Good Reason contemplated by such Notice of Termination shall
      not
      occur.

    


    5.    Compensation
      Upon Termination or During Disability.

    


    (i) During
      any period following the earlier of Shareholder Approval, if applicable, or
      a
      Change in Control that you fail to perform your duties as a result of incapacity
      due to physical or mental illness, you shall continue to receive your full
      base
      salary at the rate then in effect and any benefits or awards under any Plans
      shall continue to accrue during such period, to the extent not inconsistent
      with
      such Plans, until your employment is terminated pursuant to and in accordance
      with Sections 4(i) and 4(v) hereof. Thereafter, your benefits shall be
      determined in accordance with the Plans then in effect.

    


    (ii) If
      your
      employment shall be terminated for Cause or as a result of death following
      the
      earlier of Shareholder Approval, if applicable, or a Change in Control, the
      Company shall pay you your full base salary through the Date of Termination
      at
      the rate in effect just prior to the time a Notice of Termination is given
      plus
      any benefits or awards which pursuant to the terms of any Plans have been earned
      or become payable, but which have not yet been paid to you. Thereupon the
      Company shall have no further obligations to you under this
      Agreement.

    


    (iii) If
      a
      Change in Control occurs and either (a) after the earlier of Shareholder
      Approval, if applicable, or the Change in Control and no later than twenty-four
      (24) months after the Change in Control, a Date of Termination of your
      employment with the Company occurred or occurs as a result of a termination
      by
      the Company other than for Cause or Disability, or (b) your employment with
      the
      Company is terminated by you for Good Reason based on an event occurring
      concurrent with or subsequent to the earlier of Shareholder Approval, if
      applicable, or the Change in Control and your Notice of Termination in
      connection therewith shall have been given no later than twenty-four (24) months
      after the Change in Control, then, by no later than the fifth day following
      the
      later of the Date of Termination or the Change in Control (except as may
      otherwise be provided), you shall be entitled, without regard to any contrary
      provisions of any Plan, to a severance benefit as follows:

    


    (A) the
      Company shall pay your full base salary through the Date of Termination at
      the
      rate in effect just prior to the time a Notice of Termination is given plus
      any
      benefits or awards which pursuant to the terms of any Plans have been earned
      or
      become payable, but which have not yet been paid to you; 

     

     

    
      
        
        

      

      
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    provided,
      however, that with respect to a termination of your employment for Good Reason
      based on a reduction by the Company in your base salary as in effect immediately
      prior to the earlier of Shareholder Approval, if applicable, or the Change
      in
      Control, the Company shall pay your full base salary through the Date of
      Termination at the rate in effect just prior to such reduction plus any benefits
      or awards which pursuant to the terms of any Plans have been earned or become
      payable, but which have not yet been paid to you;

    


    (B) as
      severance pay and in lieu of any further salary for periods subsequent to the
      Date of Termination, the Company shall pay to you in a single payment an amount
      in cash equal to three (3) times the sum of (1) the greater of (i) your annual
      rate of base salary in effect on the Date of Termination or (ii) your annual
      rate of base salary in effect immediately prior to the earlier of Shareholder
      Approval, if applicable, or the Change in Control and (2) your target bonus
      as
      most recently established by the Board;

    


    (C) for
      a
      thirty-six (36) month period after the Date of Termination, the Company shall
      arrange to provide you, your spouse and your dependents with life, accident
      and
      health insurance benefits substantially similar to those which you were
      receiving immediately prior to the earlier of Shareholder Approval, if
      applicable, or the Change in Control. Notwithstanding the foregoing, the Company
      shall not provide any benefit otherwise receivable by you pursuant to this
      subparagraph (C) to the extent that a similar benefit is actually received
      by
      you from a subsequent employer during such thirty-six (36) month period, and
      any
      such benefit actually received by you shall be reported to the Company;
      and

    


    (D) all
      options to purchase Company common stock then held by you shall become
      immediately vested and exercisable in full and all performance shares and
      restricted stock then held by you shall become immediately vested and all
      forfeiture provisions shall lapse.

    


    (iv) The
      amount of any payment provided for in this Section 5 shall not be reduced,
      offset or subject to recovery by the Company by reason of any compensation
      earned by you as the result of employment by another employer after the Date
      of
      Termination, or otherwise. Your entitlements under Section (5)(iii) are in
      addition to, and not in lieu of, any rights, benefits or entitlements you may
      have under the terms or provisions of any Plan.

    


    6.    Tax
      Gross-Up Payments.

    


    (i) Whether
      or not your employment is terminated, if any of the payments provided for in
      Section 5(iii) or any other payment or benefit received or to be received by
      you
      in connection with a Change in Control or the termination of your employment
      (collectively, the “Change in Control Payments”) will be subject to the tax
      imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the
      “Code”), or any similar tax that may hereafter be imposed (the “Excise Tax”),
      the 

     

    
      
        
        

      

      
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    Company
      shall pay to you at the time any such Change in Control Payment is paid an
      additional amount (the “Gross-Up Payment”) such that the net amount retained by
      you, after deduction of any Excise Tax on the Change in Control Payments and
      any
      federal, state and local income tax and Excise Tax upon the Gross-Up Payment,
      shall be equal to the Change in Control Payments. For purposes of determining
      the amount of the Gross-Up Payment, you shall be deemed to pay federal income
      taxes at the highest marginal rate of federal income taxation in the calendar
      year in which the Gross-Up Payment is to be made and state and local income
      taxes at the highest marginal rate of taxation in the state and locality of
      your
      residence on the Date of Termination, net of the maximum reduction in federal
      income taxes which could be obtained from deduction of such state and local
      taxes. In the event that the Excise Tax is subsequently determined to be less
      than the amount taken into account hereunder, you shall repay to the Company
      at
      the time that the amount of such reduction in Excise Tax is finally determined
      the portion of the Gross-Up Payment directly and indirectly attributable to
      such
      reduction plus interest on the amount of such repayment at the rate provided
      for
      in section 1274(d) of the Code. In the event that the Excise Tax is determined
      to exceed the amount taken into account hereunder (including by reason of any
      Change in Control Payment the existence or amount of which cannot be determined
      at the time of the Gross-Up Payment), the Company shall make an additional
      Gross-Up Payment in respect of such excess (plus any interest payable to the
      taxing authorities with respect to such excess) at the time that the amount
      of
      such excess is finally determined.

    


    (ii) The
      Company shall withhold the Excise Tax determined under paragraph (i) above
      in
      accordance with section 4999(b) of the Code, and shall withhold federal, state
      and local income taxes from Change in Control Payments and Gross-Up Payments
      as
      required by law.

    


    7.    Successors;
      Binding Agreement.

    


    (i) Upon
      your
      written request, the Company will seek to have any Successor (as hereinafter
      defined), by agreement in form and substance satisfactory to you, assent to
      the
      fulfillment by the Company of its obligations under this Agreement. For purposes
      of this Agreement, “Successor” shall mean any Person that succeeds to, or has
      the practical ability to control (either immediately or with the passage of
      time), the Company’s business directly, by merger, consolidation or purchase of
      assets, or indirectly, by purchase of the Company’s Voting Securities or
      otherwise.

    


    (ii) This
      Agreement shall inure to the benefit of and be enforceable by your personal
      or
      legal representatives, executors, administrators, successors, heirs,
      distributees, devisees and legatees. If you should die while any amount would
      still be payable to you hereunder if you had continued to live, all such
      amounts, unless otherwise provided herein, shall be paid in accordance with
      the
      terms of this Agreement to your devisee, legatee or other designee or, if there
      be no such designee, to your estate.

    


    8.    Fees
      and Expenses.
      The
      Company shall pay to you all legal fees and related expenses incurred by you
      in
      good faith as a result of (i) your termination 

     

    
      
        
        

      

      
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    following
      the earlier of Shareholder Approval, if applicable, or a Change in Control
      (including all such fees and expenses, if any, incurred in contesting or
      disputing in good faith any such termination) or (ii) your seeking to obtain
      or
      enforce in good faith any right or benefit provided by this
      Agreement.

    


    9.    Survival.
      The
      respective obligations of, and benefits afforded to, the Company and you as
      provided in Sections 5, 6, 7(ii), 8 and 13 of this Agreement shall survive
      termination of this Agreement, but only with respect to a Change in Control
      occurring during the term of this Agreement.

    


    10.   Notice.
      For the
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement shall be in writing and shall be deemed to have been duly given
      when delivered or mailed by United States registered mail, return receipt
      requested, postage prepaid and addressed to the address of the respective party
      set forth on the first page of this Agreement, provided that all notices to
      the
      Company shall be directed to the attention of the President & CEO of the
      Company, with a copy to the Secretary of the Company, or to such other address
      as either party may have furnished to the other in writing in accordance
      herewith, except that notice of change of address shall be effective only upon
      receipt.

    


    11.   Amendment,
      Waiver; Applicable Law.
      No
      provision of this Agreement may be modified, waived or discharged unless such
      modification, waiver or discharge is agreed to in a writing signed by you and
      the President & CEO of the Company. No waiver by either party hereto at any
      time of any breach by the other party hereto of, or of compliance with, any
      condition or provision of this Agreement to be performed by such other party
      shall be deemed a waiver of similar or dissimilar provisions or conditions
      at
      the same or at any prior or subsequent time. No agreements or representations,
      oral or otherwise, express or implied, with respect to the subject matter hereof
      have been made by either party which are not expressly set forth in this
      Agreement. The validity, interpretation, construction and performance of this
      Agreement shall be governed by the laws of the State of Oregon.

    


    12.   Validity.
      The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this Agreement,
      which shall remain in full force and effect.

    


    13.   Arbitration.
      Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration in Portland, Oregon by three arbitrators
      in accordance with the rules of the American Arbitration Association then in
      effect. Judgment may be entered on the arbitrators’ award, which award shall be
      a final and binding determination of the dispute or controversy, in any court
      having jurisdiction; provided, however, that you shall be entitled to seek
      specific performance of your right to be paid until the Date of Termination
      during the pendency of any dispute or controversy arising under or in connection
      with this Agreement. The Company shall bear all costs and expenses of the
      arbitrators arising in connection with any arbitration proceeding pursuant
      to
      this Section 13.

    


    
      
        
        

      

      
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    14.   Related
      Agreements.
      To the
      extent that any provision of any other agreement between the Company or any
      of
      its subsidiaries and you shall limit, qualify or be inconsistent with any
      provision of this Agreement, then for purposes of this Agreement, while the
      same
      shall remain in force, the provision of this Agreement shall control and such
      provision of such other agreement shall be deemed to have been superseded,
      and
      to be of no force or effect, as if such other agreement had been formally
      amended to the extent necessary to accomplish such purpose.

    


    15.   Counterparts.
      This
      Agreement may be executed in several counterparts, each of which shall be deemed
      to be an original, but all of which together will constitute one and the same
      instrument.

    


    If
      this
      letter correctly sets forth our agreement on the subject matter hereof, kindly
      sign and return to the Company the enclosed copy of this letter which will
      then
      constitute our agreement on this subject.

     

    
      	 	 	 
	 	
              Sincerely,

              
                SCHNITZER
                  STEEL INDUSTRIES, INC.

              

            
	 
 	 
 	 
 
	 	By:  	/s/ 
John
              D.
              Carter
	 	
              

              John
                D. Carter

              President
                & CEO

            


    

     

     

    
      	
              Agreed
                to this 24th
                day

              
                of
                  March, 2006.

              

               

               

               

            	 	 	 
	/s/  
              Tamara L. Adler (Lundgren)	 	 	 
	
              

              Tamara
                L. Adler (Lundgren)

            	 	 	
            


    

    


    
 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
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