WWW.EXFILE.COM, INC. -- 14508 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.2 TO FORM 8-K


    


    EXHIBIT
      10.2


    


    


    


    


    


    


    SCHNITZER
      STEEL INDUSTRIES, INC.

    


    DEFERRED
      COMPENSATION PLAN

    


    FOR
      NON-EMPLOYEE DIRECTORS

    


    EFFECTIVE
      AUGUST 31, 2006

     

     

     

     

     

     

     

     

     

     

     

     

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    TABLE
      OF CONTENTS

     

    

      
        	 	 	
                PAGE

              
	 	 	 
	
                1.

              	
                Purpose;
                  Effective Date

              	
                1

              
	 	 	 
	
                2.

              	
                Eligibility

              	
                1

              
	 	 	 
	
                3.

              	
                Deferral
                  Elections

              	
                1

              
	 	 	 
	
                4.

              	
                Accounts

              	
                2

              
	 	 	 
	
                5.

              	
                Payment
                  of Benefits

              	
                4

              
	 	 	 
	
                6.

              	
                Administration

              	
                6

              
	 	 	 
	
                7.

              	
                Claims
                  Procedure

              	
                6

              
	 	 	 
	
                8.

              	
                Amendment
                  and Termination of the Plan

              	
                7

              
	 	 	 
	
                9.

              	
                Miscellaneous

              	
                8

              


      

    

     

     

     

    
 

    
      
         

      

      
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    SCHNITZER
      STEEL INDUSTRIES, INC.

    


    DEFERRED
      COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS 


    


    1.  Purpose;
      Effective Date.
      The
      Board of Directors (the “Board”) of Schnitzer Steel Industries, Inc. (the
“Company”) adopts this Deferred Compensation Plan for Non-Employee Directors
      (the “Plan”) for
      the
      purpose of providing an unfunded nonqualified deferred compensation plan for
      non-employee directors. The Plan is effective as of August 31, 2006,
      although initial deferral elections may be submitted at any time after August
      1,
      2006.

     

    2.  Eligibility.
      Persons
      eligible to defer compensation under the Plan shall consist of non-employee
      directors of the Company (“Directors”)

     

    3.  Deferral
      Elections.
      A
      Director may elect to defer compensation under the Plan by submitting a
“Participation Agreement” to the Company on a form specified by the Company no
      later than the applicable deferral deadline. Any Director who has submitted
      a
      Participation Agreement or who has vested deferred stock units (“DSUs”) granted
      under the 1993 Stock Incentive Plan that have been credited under the Plan
      is
      hereafter referred to as a “Participant.” A Participation Agreement submitted by
      a Participant shall automatically continue from year to year and shall be
      irrevocable with respect to compensation once the deferral deadline for that
      compensation has passed, but the Participant may modify or terminate a
      Participation Agreement for compensation payable in any year by submitting
      a
      revised Participation Agreement or otherwise giving written notice to the
      Company at any time on or prior to the deferral deadline for that
      compensation.

     

    (a)  Elections
      by Continuing Directors.

     

    (i)  Fees.
      A
      Director may elect to defer receipt of all or any portion of the annual
      retainer, meeting fees and any other cash fees payable for service as a director
      (“Fees”). The deferral deadline for an election to defer Fees for services
      performed in any calendar year shall be the last day of the prior calendar
      year;
      provided however, that the deferral deadline for an election to defer Fees
      for
      services performed in the last four months of 2006 shall be August 31,
      2006.

     

    (ii)  Deferred
      Stock Units.
      When
      DSUs become vested, the number of shares of the Company’s Class A Common
      Stock (“Common Stock”) subject to the DSU (“DSU Shares”) shall be credited
      to the Director’s Account under the Plan pursuant to Section 4(b). A
      Director may elect to receive all or any portion of any DSU Shares in
      installments as provided in this Plan rather than in a lump sum following
      termination of Board service as provided in the DSU award agreement. Except
      as
      provided in Section 5(f), the deferral deadline for such an election with
      respect to DSU Shares awarded in exchange for services performed in any calendar
      year shall be the last day of the prior calendar year provided however, that
      the
      deferral deadline for an election to defer DSUs to vest over a service period
      beginning August 31, 2006 shall be August 31, 2006. For example, if an award
      of
      DSUs is made on August 31, 2006 that will vest based on continued board service
      beginning August 31, 2006, the deferral deadline shall be August 31, 2006;
      and
      if an award of DSUs is made in January 2007 

     

    
      
         

      

      
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    that
      will
      vest based on continued board service until January 2008, the deferral deadline
      shall be December 31, 2006. 

     

    (b)  New
      Directors.
      A
      person who first becomes a Director during a calendar year may elect to defer
      any of the types of compensation referred to in paragraph (a) above that is
      payable solely for services performed during the remainder of the calendar
      year
      after submission of the Participation Agreement, subject to all of the
      provisions of paragraph (a), except that the
      election shall be made prior to the date the person becomes a
      Director.

     

    4.  Accounts.

     

    (a)  Accounts.
      The
      Company shall establish on its books one or two separate accounts (individually,
      an “Account” and collectively, the “Accounts”) for each Participant: a Stock
      Account, which shall be denominated in shares of Common Stock, including
      fractional shares, and a Cash Account, which shall be denominated in U.S.
      dollars. 

     

    (b)  Allocation
      of Deferrals Among Accounts; Transfers Among Accounts.
      DSU
      Shares shall be credited solely to the Stock Account. Fees deferred by a
      Director shall be credited to the Stock Account or the Cash Account as elected
      by the Director at the time the Director elects to defer Fees. An election
      between the Stock Account and the Cash Account shall be irrevocable as to the
      deferred Fees covered by the election. The
      credit for Fees shall be entered on the Company’s books of account at the time
      that Fees are paid to other Directors who do not elect to defer the payment
      of
      such Fees. The credit for DSU Shares shall be entered on the Company’s books of
      account as of the date the DSU Shares become vested. Subject
      to such rules and conditions as may be approved by the Committee, Participants
      may elect to transfer amounts previously credited to the Cash Account to the
      Stock Account. No transfers may be made out of a Stock Account unless otherwise
      permitted under Section 4(f)(iv).

     

    (c)  Valuation
      of Stock; Dividend Credits.
      With
      respect to each amount of Fees deferred to a Director’s Stock Account, the Stock
      Account shall be credited with a number of shares equal to the deferred Fees
      divided by the closing market price of the Common Stock on the day the deferred
      Fees would have been paid if not for the deferral. As of each date for payment
      of dividends on the Common Stock, each Stock Account shall be credited with
      an
      additional number of shares (including fractional shares) equal to the total
      amount of dividends that would have been paid on the number of shares recorded
      as the balance of that Account as of the record date for such dividend divided
      by the closing market price for the Common Stock on such dividend payment
      date.

     

    (d)  Cash
      Account Interest.
      Interest shall be credited to the Cash Account of each Participant as of the
      last day of each calendar quarter. The rate of interest to be applied at the
      end
      of each calendar quarter shall be the average interest rate paid by the Company
      on borrowings under the Company’s senior revolving credit agreement (or if there
      are no borrowings in a quarter, at the prime rate) plus 2%. Interest shall
      be
      calculated for each calendar quarter based upon the average daily balance of
      the
      Participant’s Cash Account during the quarter.

     

    
      
         

      

      
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    (e)  Statement
      of Account.
      At the
      end of each calendar quarter, a report shall be issued by the Company to each
      Participant setting forth the balances of the Participant’s Accounts under the
      Plan.

     

    (f)  Effect
      of Corporate Transaction on Stock Accounts.
      At the
      time of consummation of a Corporate Transaction (as defined below), if any,
      the
      amount credited to a Participant’s Stock Account shall be converted into a
      credit for cash or common stock of the acquiring company (“Acquiror Stock”)
      based on the consideration received by shareholders of the Company in the
      Corporate Transaction, as follows:

     

    (i)  Stock
      Transaction.
      If
      holders of Common Stock receive Acquiror Stock in the Corporate Transaction,
      then (1) the amount credited to each Participant’s Stock Account shall be
      converted into a credit for the number of shares of Acquiror Stock that the
      Participant would have received as a result of the Corporate Transaction if
      the
      Participant had actually held the Common Stock credited to his or her Stock
      Account immediately prior to the consummation of the Corporate Transaction,
      and
      (2) Stock Accounts will thereafter be denominated in shares of Acquiror Stock
      and ongoing deferral and crediting of Fees and DSU Shares, if any, shall
      continue to be made into the Stock Accounts as so denominated in accordance
      with
      the terms of the DSUs and outstanding deferral elections.

     

    (ii)  Cash
      or Other Property Transaction.
      If
      holders of Common Stock receive cash or other property in the Corporate
      Transaction, then (1) the amount credited to a Participant’s Stock Account shall
      be transferred to the Participant’s Cash Account and converted into a cash
      credit for the amount of cash or the value of the property that the Participant
      would have received as a result of the Corporate Transaction if the Participant
      had actually held the Common Stock credited to his or her Stock Account
      immediately prior to the consummation of the Corporate Transaction, and (2)
      Stock Accounts shall no longer exist under the Plan and all ongoing deferrals,
      if any, shall thereafter be made into Cash Accounts.

     

    (iii)  Combination
      Transaction.
      If
      holders of Common Stock receive Acquiror Stock and cash or other property in
      the
      Corporate Transaction, then (1) the amount credited to each Participant’s Stock
      Account shall be converted in part into a credit for Acquiror Stock under
      Section 4(f)(i) and in part into a credit for cash under Section 4(f)(ii) in
      the
      same proportion as such consideration is received by shareholders, and (2)
      ongoing deferral and crediting of Fees and DSU Shares, if any, shall continue
      to
      be made into the Stock Accounts as provided in Section 4(f)(i) in accordance
      with the terms of the DSUs and outstanding deferral elections. 

     

    (iv)  Election
      Following Stock Transaction.
      For a
      period of 12 months following the consummation of any Corporate Transaction
      which results in Participants having Stock Accounts denominated in Acquiror
      Stock, each Participant shall have a one-time right to elect to transfer the
      entire amount in the Participant’s Stock Account into the Participant’s Cash
      Account. Such election shall be made by written notice to the Company and shall
      be effective on the date received by the Company. If such an election is made,
      the amount of cash to be credited to the Participant’s Cash Account shall be
      determined by multiplying the number of shares of Acquiror Stock in the
      Participant’s Stock Account by the closing market price of the Acquiror


     

    
      
         

      

      
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    Stock
      reported for the effective date of the election or, if such day is not a trading
      day, the next trading day.

     

    (v)  For
      purposes of this Plan, a “Corporate Transaction” shall mean any of the
      following:

     

    (1)  any
      consolidation, merger or plan of share exchange involving the Company (a
“Merger”) pursuant to which shares of Common Stock would be converted into cash,
      securities or other property; 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.

     

    5.  Payment
      of Benefits.

     

    (a)  Plan
      Benefits.
      The
      Company shall pay Plan benefits to each Participant equal to the Participant’s
      Accounts. Each Participation Agreement shall include an election by the
      Participant as to the term of benefit payments with respect to amounts deferred
      under the Participation Agreement. Except as otherwise provided in this Section
      5, such elections shall be irrevocable with respect to compensation once the
      deferral deadline for that compensation has passed. Participants may make
      different payment elections with respect to subsequent deferrals of
      compensation, but no Participant may at any time have compensation deferred
      under the Plan payable under more than two different payment
      elections.

     

    (b)  Commencement
      of Payments.
      Benefits shall commence in January of the year following the year in which
      service as a Director of the Company ceases.
      If a
      Director has not filed a deferral election with respect to DSU Shares, all
      amounts representing the DSU Shares shall be paid to the Director in a lump
      sum
      in January of the year following the year in which service as a director ceases.
      

     

    (c)  Term
      of Payments.
      Participants may elect in their Participation Agreements to have benefits from
      their Accounts paid in (i) up to 15 annual installments, (ii) a single lump
      sum
      payment, or (iii) a combination of a partial lump sum payment (expressed as
      a
      percentage) and the remainder in up to 15 annual installments.

     

    (d)  Form
      of Payments.
      Benefits payable to a Participant from a Stock Account shall be paid as a
      distribution of Common Stock plus cash for fractional shares. Benefits payable
      to a Participant from a Cash Account shall be paid in cash.

     

    (e)  Payment
      Timing and Valuation.
      All
      lump sum payments or installment payments due under the Plan in any year shall
      be paid on a date in January determined by the Company. All payments shall
      be
      based on Account balances as of the close of business on the last trading day
      of
      the immediately preceding year. Each partial lump sum payment and installment
      payment to a Participant shall be paid in the same proportion from each of
      the
      Accounts of the Participant subject to the applicable payment election. The
      amount of each installment payment from each Account shall be determined by
      dividing the Account balance by the number of remaining installments, including
      the current installment to be paid.

     

    
      
         

      

      
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    (f)  Modification
      of Payment Elections.
      After a
      Participant’s election under Section 5(c) regarding the term of any benefit
      payments has otherwise become irrevocable or after the deferral deadline for
      a
      deferral election under Section 3 with respect to DSU Shares has passed, the
      Participant may elect to change such term of payments (including a change from
      lump sum payment with respect to DSU Shares), provided (1) no such change shall
      be effective unless the change election is made in writing delivered to the
      Company no later than the last day of the second year preceding the year in
      which payment of such benefits would otherwise have commenced and (2) the change
      election must include an election to defer commencement of payment of benefits
      for a period of not less than five (5) years from the year in which payment
      of
      such benefits would otherwise have commenced; provided, however, that all
      payments under any such change election must be completed by the fifteenth
      year
      following the year in which service as a Director ceases. 

     

    (g)  Designation
      of Beneficiaries; Death.

     

    (i)  Each
      Participant shall have the right, at any time, to designate any person or
      persons as the Participant’s beneficiary or beneficiaries (both primary as well
      as secondary) to whom benefits under this Plan shall be paid in the event of
      the
      Participant’s death prior to complete distribution of the benefits due under the
      Plan. If greater than fifty percent (50%) of the benefit is designated to a
      beneficiary other than the Participant’s spouse, such beneficiary designation
      shall be consented to by the Participant’s spouse. Each beneficiary designation
      shall be in written form prescribed by the Company and will be effective only
      if
      filed with the Company during the Participant’s lifetime. Such designation may
      be changed by the Participant at any time without the consent of a beneficiary,
      subject to the spousal consent requirement above. If no designated beneficiary
      survives the Participant, the balance of the Participant’s benefits shall be
      paid to the Participant’s surviving spouse or, if no spouse survives, to the
      Participant’s estate.

     

    (ii)  Upon
      the
      death of a Participant, any benefits payable to a surviving spouse as
      beneficiary shall be paid in accordance with the payment elections for such
      benefits that would have applied if the Participant had not died, and any
      benefits payable to any other beneficiary (including a secondary beneficiary
      following the death of a surviving spouse) shall be paid in a single lump sum
      payment in January of the year following death.

     

    (h)  Unforeseeable
      Emergency.
      Notwithstanding the foregoing provisions of this Section 5, an accelerated
      payment from a Participant’s Accounts may be made to the Participant (or to the
      Participant’s beneficiary following the Participant’s death) in the sole
      discretion of the Committee based upon a finding that the Participant (or the
      Participant’s beneficiary following
      the
      Participant’s death) has suffered an Unforeseeable Emergency. For this purpose,
“Unforeseeable Emergency” means a severe financial hardship to the Participant
      (or the Participant’s beneficiary following the Participant’s death) resulting
      from a sudden and unexpected illness or accident of the Participant (or the
      Participant’s beneficiary following the Participant’s death) or a dependent of
      the Participant (or the Participant’s beneficiary following the Participant’s
      death), loss of the Participant’s (or the Participant’s beneficiary following
      the Participant’s death) property due to casualty, or other similar
      extraordinary and unforeseeable circumstances arising as a result of events
      beyond the control of the Participant (or the Participant’s beneficiary
      following the Participant’s death). Unforeseeable Emergency shall be


     

    
      
         

      

      
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    determined
      by the Committee on the basis of information supplied by the Participant (or
      the
      Participant’s beneficiary following the Participant’s death) in accordance with
      uniform guidelines promulgated from time to time by the Committee. The amount
      of
      any accelerated payment under this Section 5(h) shall be limited to the amount
      reasonably necessary to meet the Participant’s (or the beneficiary’s following
      the Participant’s death) needs resulting from the Unforeseeable Emergency, after
      taking into account insurance and other potential sources of funds to meet
      such
      needs, plus the amount reasonably necessary to cover income and withholding
      taxes on the accelerated payment. Any such accelerated payment shall be paid
      as
      promptly as practicable following approval by the Committee and shall be paid
      pro-rata from the Participant’s Accounts based on the account balances as of the
      close of business on the day prior to the payment date.

     

    (i)  Payment
      to Guardian.
      If a
      benefit under the Plan is payable to a minor or a person declared incompetent
      or
      to a person incapable of handling the disposition of his property, the Committee
      may direct payment of such Plan benefit to the guardian, legal representative
      or
      person responsible for the care and custody of such minor, incompetent or
      person. The Committee may require proof of incompetence, minority, incapacity
      or
      guardianship as it may deem appropriate prior to distribution of the Plan
      benefit. Such distribution shall completely discharge the Committee and the
      Company from all liability with respect to such benefit.

     

    (j)  Withholding;
      Payroll Taxes.
      The
      Company shall withhold from payments made hereunder any taxes required to be
      withheld from such payments under federal, state or local law.

     

    6.  Administration.

     

    (a)  Committee
      Duties.
      This
      Plan shall be administered by the Compensation Committee of the Board (the
      “Committee”). The Committee shall have responsibility for the general
      administration of the Plan and for carrying out its intent and provisions.
      The
      Committee shall interpret the Plan and have such powers and duties as may be
      necessary to discharge its responsibilities. The Committee may, from time to
      time, employ other agents and delegate to them such administrative duties as
      it
      sees fit, and may from time to time consult with counsel who may be counsel
      to
      the Company.

     

    (b)  Binding
      Effect of Decisions.
      The
      decision or action of the Committee in respect of any question arising out
      of or
      in connection with the administration, interpretation and application of the
      Plan and the rules and regulations promulgated hereunder shall be final and
      conclusive and binding upon all persons having any interest in the
      Plan.

     

    7.  Claims
      Procedure.

     

    (a)  Claim.
      Any
      person claiming a benefit, requesting an interpretation or ruling under the
      Plan, or requesting information under the Plan shall present the request in
      writing to the Committee, which shall respond in writing as soon as
      practicable.

     

    (b)  Denial
      of Claim.
      If the
      claim or request is denied, the written notice of denial shall
      state:

     

    
      
         

      

      
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    (i)  The
      reasons for denial, with specific reference to the Plan provisions on which
      the
      denial is based;

     

    (ii)  A
      description of any additional material or information required and an
      explanation of why it is necessary; and

     

    (iii)  An
      explanation of the Plan’s claim review procedure.

     

    (c)  Review
      of Claim.
      Any
      person whose claim or request is denied or who has not received a response
      within thirty (30) days may request review by notice given in writing to the
      Committee. The claim or request shall be reviewed by the Committee who may,
      but
      shall not be required to, grant the claimant a hearing. On review, the claimant
      may have representation, examine pertinent documents, and submit issues and
      comments in writing.

     

    (d)  Final
      Decision.
      The
      decision on review shall normally be made within sixty (60) days. If an
      extension of time is required for a hearing or other special circumstances,
      the
      claimant shall be notified and the time limit shall be one hundred twenty (120)
      days. The decision shall be in writing and shall state the reasons and the
      relevant Plan provisions. All decisions on review shall be final and bind all
      parties concerned.

     

    8.  Amendment
      and Termination of the Plan.

     

    (a)  Amendment.
      The
      Board may at any time amend the Plan in whole or in part; provided, however,
      that no amendment shall affect the terms of any previously deferred amounts
      or
      the terms of any irrevocable Participation Agreement of any
      Participant.

     

    (b)  Termination.
      The
      Board may at any time partially or completely terminate the Plan if, in its
      judgment, the tax, accounting, or other effects of the continuance of the Plan,
      or potential payments thereunder, would not be in the best interests of the
      Company.

     

    (i)  Partial
      Termination.
      The
      Board may partially terminate the Plan by instructing the Committee not to
      accept any additional Participation Agreements and terminating all existing
      Participation Agreements to the extent such Participation Agreements have not
      yet become irrevocable. In the event of such a partial termination, the Plan
      shall continue to operate and be effective with regard to all compensation
      deferred prior to the effective date of such partial termination.

     

    (ii)  Complete
      Termination.
      The
      Board may completely terminate the Plan as provided in this Section 8(b)(ii).
      In
      connection with any complete termination, the Company shall take all actions
      necessary so that Participants do not incur any taxes under Section 409A of
      the
      Internal Revenue Code. 

     

    (1)  In
      the
      event the Board causes a complete termination of the Plan (other than in
      connection with a Change in Control Event as provided in Section 8(b)(ii)(2)),
      the Plan shall continue to operate as in a partial termination except as
      provided in this Section 8(b)(ii)(1). For a period selected by the Board of
      at
      least twelve (12) months from the date the Board takes action to terminate
      the
      Plan, the Plan shall continue to pay benefits otherwise payable under the terms
      of the Plan absent termination 

     

    
      
         

      

      
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    of
      the
      Plan. On a date selected by the Board that is more than twelve (12) months
      from
      the date the Board took action to terminate the Plan, the Plan shall cease
      to
      operate, the Company shall determine the balance of each Participant’s Accounts
      as of the close of business on such date and the Company shall pay out such
      Account balances to the Participants in a single lump sum payment as soon as
      practicable after such date, but in no event shall such distribution be made
      later than 24 months after the date the Board took action to terminate the
      Plan.


     

    (2)  The
      Board
      may completely terminate the Plan at any time during the thirty (30) days
      preceding or the twelve (12) months following a Change in Control Event (as
      defined in the proposed regulations under Section 409A of the Internal Revenue
      Code in effect as of the effective date of the Plan or in any revised or final
      regulations adopted after the effective date of the Plan). In that event, on
      the
      effective date of the complete termination, the Plan shall cease to operate,
      the
      Company shall determine the balance of each participant’s Accounts as of the
      close of business on such effective date, and the Company shall pay out such
      Account balance to the Participants in a single lump sum payment as soon as
      practicable after such effective date and in no event later than twelve (12)
      months after such effective date.

     

    9.  Miscellaneous.

     

    (a)  Unsecured
      General Creditor.
      The
      Accounts shall be established solely for the purpose of measuring the amounts
      owed to a Participants or beneficiaries under the Plan. Participants and their
      beneficiaries, heirs, successors and assigns shall have no legal or equitable
      rights, interest or claims in any property or assets of the Company, nor shall
      they be beneficiaries of, or have any rights, claims or interests in any mutual
      funds, other investment products or the proceeds therefrom owned or which may
      be
      acquired by the Company. Except as may be provided in Section 9(b), such mutual
      funds, other investment products or other assets of the Company shall not be
      held under any trust for the benefit of the Participants, their beneficiaries,
      heirs, successors or assigns, or held in any way as collateral security for
      the
      fulfilling of the obligations of the Company under the Plan. Any and all of
      the
      Company’s assets shall be, and remain, the general, unpledged, unrestricted
      assets of the Company. The Company’s obligation under the Plan shall be that of
      an unfunded and unsecured promise to pay money in the future, and the rights
      of
      Participants and beneficiaries shall be no greater than those of unsecured
      general creditors of the Company.

     

    (b)  Trust
      Fund.
      The
      Company shall be responsible for the payment of all benefits provided under
      the
      Plan. The Company may establish one or more trusts, with such trustees as the
      Board may approve, for the purpose of providing for the payment of such
      benefits, but the Company shall have no obligation to contribute to such trusts
      except as specifically provided in the applicable trust documents. Such trust
      or
      trusts shall be irrevocable, but the assets thereof shall be subject to the
      claims of the Company’s creditors. To the extent any benefits provided under the
      Plan are actually paid from any such trust, the Company shall have no further
      obligation with respect thereto, but to the extent not so paid, such benefits
      shall remain the obligation of, and shall be paid by, the Company.

     

    
      
         

      

      
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    (c)  Non-assignability.
      Neither
      a Participant nor any other person shall have the right to commute, sell,
      assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
      hypothecate or convey in advance of actual receipt the amounts, if any, payable
      hereunder, or any part thereof, which are, and all rights to which are,
      expressly declared to be non-assignable and nontransferable. No part of the
      amounts payable shall, prior to actual payment, be subject to seizure or
      sequestration for the payment of any debts, judgments, alimony or separate
      maintenance owed by a Participant or any other person, nor be transferable
      by
      operation of law in the event of a Participant’s or any other person’s
      bankruptcy or insolvency.

     

    (d)  Governing
      Law.
      The
      provisions of this Plan shall be construed and interpreted according to the
      laws
      of the State of Oregon, except as preempted by federal law.

     

    (e)  Validity.
      In case
      any provision of this Plan shall be held illegal or invalid for any reason,
      said
      illegality or invalidity shall not affect the remaining parts hereof, but this
      Plan shall be construed and enforced as if such illegal and invalid provisions
      had never been inserted herein.

     

    (f)  Notice.
      Any
      notice or filing required or permitted to be given to the Company or the
      Committee under the Plan shall be sufficient if in writing and hand delivered,
      or sent by registered or certified mail, to the Secretary of the Company. Such
      notice shall be deemed given as of the date of delivery or, if delivery is
      made
      by mail, as of the date shown on the postmark on the receipt for registration
      or
      certification.

     

    (g)  Successors.
      The
      provisions of this Plan shall bind and inure to the benefit of the Company
      and
      its successors and assigns. The term successors as used herein shall include
      any
      corporate or other business entity which shall, whether by merger,
      consolidation, purchase or otherwise acquire all or substantially all of the
      business and assets of the Company, and successors of any such corporation
      or
      other business entity.

     

    The
      foregoing Plan was approved by the Board of Directors of Schnitzer Steel
      Industries, Inc. on ____________, 2006.

    


    
      	 	 	
              
                SCHNITZER
                  STEEL INDUSTRIES, INC.

              

            
	 	
               

            
	 
 	 
 	 
 
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