WWW.EXFILE.COM, INC. -- 14508 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.1 TO FORM 8-K


    EXHIBIT
      10.1

    DEFERRED
      STOCK UNIT

    AWARD
      AGREEMENT

     
      

    This
      Award Agreement (the “Agreement”) is entered into as of  ____________ (the
“Award Date”) by and between Schnitzer Steel Industries, Inc, an Oregon
      corporation (the “Company”), and ____________ , a non-employee director of the
      Company (the “Recipient”), for the award of deferred stock units with respect to
      the Company’s Class A Common Stock (“Common Stock”). 

     
      

    The
      award
      of deferred stock units to the Recipient is made pursuant to Section 8 of the
      Company’s 1993 Stock Incentive Plan (the “Plan”) and the Recipient desires to
      accept the award subject to the terms and conditions of this Agreement.


     
      

    IN
      CONSIDERATION of the mutual covenants and agreements set forth in this
      Agreement, the parties agree to the following. 

     
      

    1. Award
      and Terms of Deferred Stock Units.
      The
      Company awards to the Recipient under the Plan _________ deferred stock units
      (the “Award”), subject to the restrictions, terms and conditions set forth in
      this Agreement. 

     
      

    (a)    Rights
      under Deferred Stock Units.
      A
      deferred stock unit (a “DSU”) represents the unfunded, unsecured right to
      require the Company to deliver to the Recipient one share of Common Stock for
      each DSU.  The number of shares of Common Stock deliverable with respect to
      each DSU is subject to adjustment as determined by the Board of Directors of
      the
      Company as to the number and kind of shares of stock deliverable upon any
      merger, reorganization, consolidation, recapitalization, stock dividend,
      spin-off or other change in the corporate structure affecting the Common Stock
      generally. 

     
      

    (b)    Vesting
      Date.
      The
      DSUs awarded under this Agreement shall initially be 100% unvested and subject
      to forfeiture.  Subject to Sections 1(c) and (d), the DSUs shall vest
      in full on the day before the 2007 annual meeting of shareholders (the “Vesting
      Date”) if the Recipient is a director of the Company on the Vesting Date and has
      served as a director of the Company continuously from the Award Date to the
      Vesting Date. 

     
      

    (c)    Acceleration
      on Death or Disability.
      If the
      Recipient ceases to be a director of the Company by reason of the Recipient’s
      death or physical disability, all outstanding but unvested DSUs shall become
      immediately vested. The term “disability” means a medically determinable mental
      or physical impairment that, in the opinion of the Board of Directors, causes
      the Recipient to be unable to perform his or her duties as a director of the
      Company. 

    


    (d)    Acceleration
      of DSUs on a Change in Control.
      Upon a
      Change in Control of the Company, all outstanding but unvested DSUs shall become
      immediately vested. For purposes of this Agreement, a “Change in Control” of the
      Company shall mean the occurrence of any of the following events:

     

    (i)    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 or continuing corporation immediately after the Merger,
      disregarding any Voting 

     

    
      
         

      

      
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    Securities
      issued or retained by such holders in respect of securities of any other party
      to the Merger;

     

    (ii)    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;


     

    (iii)    At
      any
      time during a period of two consecutive years, individuals who at the beginning
      of such period constituted the Board of Directors (“Incumbent Directors”) shall
      cease for any reason to constitute at least a majority thereof, unless each
      new
      director elected during such two-year period was nominated or elected by
      two-thirds of the Incumbent Directors then in office and voting (with new
      directors nominated or elected by two-thirds of the Incumbent Directors also
      being deemed to be Incumbent Directors); or

     

    (iv)    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 fifty percent (50%) 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 of Directors, no Change in Control shall be deemed to have occurred for
      purposes of this Agreement if (1) the Recipient acquires (other than on the
      same
      basis as all other holders of the Company Common Stock) an equity interest
      in an
      entity that acquires the Company in a Change in Control otherwise described
      under subparagraph (i) or (ii) above, or (2) the Recipient is part of 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 (iv) above. 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, a wholly
      owned subsidiary of the Company or any employee benefit plan(s) sponsored by
      the
      Company.

     

    (e)    Forfeiture
      of DSUs on Termination of Service.
      If the
      Recipient ceases to be a director of the Company for any reason that does not
      result in acceleration of vesting pursuant to Section 1(c) or 1(d), the
      Recipient shall immediately forfeit all outstanding but unvested DSUs awarded
      pursuant to this Agreement and the Recipient shall have no right to receive
      the
      related Common Stock. 

     
      

    (f)    Restrictions
      on Transfer.
      The
      Recipient may not sell, transfer, assign, pledge or otherwise encumber or
      dispose of the DSUs subject to this Agreement. The Recipient may designate
      beneficiaries to receive the shares of Common Stock underlying the DSUs subject
      to this Agreement if the Recipient dies before delivery of the shares of Common
      Stock by so indicating on a form supplied by the Company. If the Recipient
      fails
      to designate a beneficiary, such Common Stock will be delivered as provided
      in
      the Company’s Deferred Compensation Plan for Non-Employee Directors (the
“Deferred Compensation Plan”).

     

    
      
         

      

      
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    (g)    No
      Voting Rights; Dividend Equivalents.
      The
      Recipient shall have no rights as a shareholder with respect to the DSUs or
      the
      Common Stock underlying the DSUs until the underlying Common Stock is issued
      to
      the Recipient. The Recipient will not be entitled to receive cash payments
      representing any cash dividends paid with respect to the Common Stock underlying
      the DSUs. Following the Vesting Date, the DSUs shall be credited to the
      Recipient’s account under the Deferred Compensation Plan and dividend
      equivalents with respect to the DSUs shall thereafter be credited to Recipient’s
      account as provided in the Deferred Compensation Plan.

     
      

    (g)    Delivery
      Date for the Shares Underlying the DSU. The
      Company shall not issue any shares underlying the DSUs, and the Recipient shall
      have no right to receive any shares of Common Stock underlying the DSUs (even
      to
      the extent vested), while the Recipient is serving as a director of the Company.
      When the Recipient ceases to serve as a director of the Company for any reason,
      the Company shall, subject to any deferral elections made by the Recipient
      as
      provided in this paragraph Section 1(g) and the terms of the Deferred
      Compensation Plan, deliver shares of Common Stock represented by vested DSUs
      to
      the Recipient as provided in the Deferred Compensation Plan (the date of
      delivery of such shares is referred to as a “delivery date”).  The shares
      of Common Stock will be issued in the Recipient’s name or, in the event of the
      Recipient’s death or disability, to the Recipient’s beneficiary or as provided
      in the Deferred Compensation Plan. The Recipient may elect to defer the receipt
      of the shares underlying the DSUs beyond the delivery date provided for in
      this
      Section 1(g) pursuant to the terms of the Deferred Compensation
      Plan.

    


    (h)    Taxes
      and Tax Withholding.
      

    


    (i)    The
      Company
      shall be entitled to withhold from any delivery of Common Stock hereunder any
      income or other tax withholding obligations arising as a result of this Award,
      in amounts determined by the Company. 

    


    (ii)    The
      Recipient acknowledges and agrees that no election under Section 83(b) of the
      Internal Revenue Code can or will be made with respect to the DSUs.



    


    2.    Miscellaneous.
      

     
      

    (a)    Entire
      Agreement.
      This
      Agreement, the Plan and the Deferred Compensation Plan constitute the entire
      agreement of the parties with regard to the subjects hereof.

    


    (b)    Interpretation
      of the Plan and the Agreement.
      The
      Compensation Committee of the Board of Directors (the “Administrator”), shall
      have the sole authority to interpret the provisions of this Agreement, the
      Plan
      and the Deferred Compensation Plan, and all determinations by it shall be final
      and conclusive.

    


    (c)    Electronic
      Delivery.
      The
      Recipient consents to the electronic delivery of any prospectus and any other
      documents relating to this Award in lieu of mailing or other form of delivery.
      

     
      

    (d)    Rights
      and Benefits.
      The
      rights and benefits of this Agreement shall inure to the benefit of and be
      enforceable by the Company’s successors and assigns and, subject to the


     

    
      
         

      

      
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    restrictions
      on transfer of this Agreement, be binding upon the Recipient’s heirs, executors,
      administrators, successors and assigns. 

     
      

    (e)    Further
      Action.
      The
      parties agree to execute such further instruments and to take such further
      action as may reasonably be necessary to carry out the intent of this Agreement.
      

    


    (f)    Governing
      Law.
      This
      Agreement and the Plan will be interpreted under the laws of the state of
      Oregon, exclusive of choice of law rules. 

    


    (g)    Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original. 

     
      

     
      

    
      	
               
                

            	
              SCHNITZER
                STEEL INDUSTRIES, INC.

            
	
               
                

            	
               
                

            
	
               
                

            	
               
                

            
	
               
                

            	
              By:
                

            	
               
                

            	
               
                

            
	
               
                

            	
               
                

            	
              Authorized
                Officer 

            
	
               
                

            	
               
                

            
	
               
                

            	
               
                

            
	
               
                

            	
               
                

            	
               
                

            
	
               
                

            	
              Recipient
                

            


    

     

     

     
      


    
      
         

      

      
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