Document:

exhibit_10_3_SecondLoanMod

Second Loan Modification Agreement

This Second Loan Modification Agreement (this "Agreement") is made on October 4, 2012, by and among Sun Blueberry Hill LLC, a Michigan limited liability company (“Sun Blueberry Hill”); Sun Grand Lake LLC, a Michigan limited liability company (“Sun Grand Lake”); Sun Three Lakes LLC, a Michigan limited liability company (“Sun Three Lakes”); Sun Club Naples LLC, a Michigan limited liability company (“Sun Club Naples”); Sun Naples Gardens LLC, a Michigan limited liability company (“Sun Naples Gardens”); and Sun North Lake Estates LLC, a Michigan limited liability company (“Sun North Lake Estates”) (collectively, “Borrower”), Sun Communities Operating Limited Partnership, a Michigan limited partnership (the "Guarantor"), Bank of America, N.A., a national banking association (“Bank of America”), The PrivateBank and Trust Company, an Illinois state chartered bank ( “The PrivateBank”) (Bank of America and The PrivateBank are collectively referred to herein as the “Lenders” and individually, a “Lender”), and Bank of America, N.A., a national banking association, acting on behalf of the Lenders, as Administrative Agent (the “Administrative Agent”).

RECITALS:

WHEREAS, Bank of America is the owner and holder of an Amended and Restated Promissory Note dated March 29, 2012, executed and delivered by the Borrower and payable to Bank of America in the original principal amount of $21,000,000.00 (as renewed, extended, modified, amended or restated from time to time, the "Bank of America Note"), which Bank of America Note evidences the Borrower's obligations to Bank of America in connection with a loan in the original principal amount of the Bank of America Note (the "Bank of America Loan");

WHEREAS, The PrivateBank is the owner and holder of an Amended and Restated Promissory Note dated March 29, 2012, executed and delivered by the Borrower and payable to The PrivateBank in the original principal amount of $15,000,000.00 (as renewed, extended, modified, amended or restated from time to time, the "The PrivateBank Note"), which The PrivateBank Note evidences the Borrower's obligations to The PrivateBank in connection with a loan in the original principal amount of The PrivateBank Note (the "The PrivateBank Loan");

WHEREAS, the Bank of America Note and The PrivateBank Note were issued pursuant to a Term Loan Agreement dated December 15, 2011, as modified March 29, 2012, by and among the Lenders, the Administrative Agent and the Borrower (as amended, modified, supplemented or restated from time to time, the "Loan Agreement");

WHEREAS, the Borrower's obligations under the Bank of America Note and The PrivateBank Note are secured by, among other things, a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated December 15, 2011, from Sun Club Naples to the Administrative Agent, as agent for the Lenders, recorded December 21, 2011 in the Collier County, Florida, Clerk’s Office in OR 4748, page 2645, as modified by a Modification Agreement (Mortgage, Assignment of Rents, Security Agreement and Fixture Filing) dated March 29, 2012, recorded April 23, 2012 in the Collier County, Florida, Clerk’s Office in OR 4788, page 3121; a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated December 15, 2011, from Sun Naples Gardens to the Administrative Agent, as agent for the Lenders, recorded December 21, 2011 in the Collier County, Florida, Clerk’s Office in OR 4748, page 2753, as modified by a Modification Agreement (Mortgage, Assignment of Rents, Security Agreement and Fixture Filing) dated March 29, 2012, recorded April 23, 2012 in the Collier County, Florida, Clerk’s Office in OR 4788, page 3126; a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated December 15, 2011, from Sun North Lake Estates to the Administrative Agent, as agent for the Lenders, recorded December 20, 2011 in the Glades County, Florida, Clerk’s Office in OR 298, page 518, as modified by a Modification Agreement (Mortgage, Assignment of Rents, Security Agreement and Fixture Filing) dated March 29, 2012, recorded April 20, 2012 in the Glades County, Florida, Clerk’s Office as Instrument No. 201222000851; a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated March 29, 2012, from Sun Blueberry Hill to the Administrative Agent, as agent for the Lenders, recorded April 23, 2012 in the Sumter County, Florida, Clerk’s Office as 

Page 1

Instrument No. 201260012143; a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated March 29, 2012, from Sun Grand Lake to the Administrative Agent, as agent for the Lenders, recorded April 23, 2012 in the Marion County, Florida, Clerk’s Office in OR BK 05665, pages 0627-0652, and; a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing dated March 29, 2012, from Sun Three Lakes to the Administrative Agent, as agent for the Lenders, recorded April 19, 2012 in the Pasco County, Florida, Clerk’s Office in OR BK 8686, page 2670 (as amended, supplemented, modified, restated, renewed or extended from time to time, collectively, the "Mortgages"), covering certain real property and improvements thereon, more particularly described therein (each a “Property” and collectively, the "Property");

WHEREAS, the Borrower's obligations under the Bank of America Note and The PrivateBank Note are guaranteed by the Guarantor pursuant to a Limited Guaranty Agreement dated December 15, 2011 (as amended, supplemented, modified, restated or renewed from time to time, the "Guaranty");

WHEREAS, the Borrower's obligations under the Bank of America Note and The PrivateBank Note and the other Loan Documents (hereinafter defined) are hereinafter collectively called the "Obligations"; the Bank of America Note and The PrivateBank Note, the Mortgages, the Loan Agreement, the Guaranty, and all other documents previously, now or hereafter executed and delivered to evidence, secure, guarantee, or in connection with, the Obligations, as the same may from time to time be renewed, extended, amended, supplemented or restated, are hereinafter collectively called the "Loan Documents"; and all liens, security interests, assignments, superior titles, rights, remedies, powers, equities and priorities securing the Bank of America Note and The PrivateBank Note or providing recourse to Lender with respect thereto are hereinafter collectively called the "Liens"; 

WHEREAS, the Borrower has advised the Administrative Agent that, for the fiscal period ending June 30, 2012, they failed to comply with the covenant contained in Section 6.21 of the Loan Agreement, which required the Borrower to maintain a Debt Service Coverage Ratio of at least 1.30 to 1.00 (the “Defaulted Covenant”); 

WHEREAS, the Borrower acknowledges and agrees that, as a result of the occurrence of such Defaulted Covenant, upon the expiration of the applicable notice and cure period provided for in the Loan Agreement, an Event of Default would occur under the Loan Agreement; and 

WHEREAS, the Borrower has requested that the Administrative Agent, on behalf of the Lenders, waive compliance by the Borrower with the Defaulted Covenant for such fiscal period, as well as any Event of Default arising therefrom and the Administrative Agent and the Lenders are agreeable thereto on the terms and conditions provided herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Administrative Agent and the Lenders now agree as set forth below.

1.Recitals.  The parties hereto acknowledge and agree that the recitals set forth above are true and correct and are incorporated herein by this reference; provided, however, that such recitals shall not be deemed to modify the express provisions hereinafter set forth.  Capitalized terms used herein but not defined shall have the meanings given them in the Loan Agreement.

1.    Paydown of Loans.  Simultaneously with the execution of this Agreement, the Borrower shall make a voluntary paydown of the Bank of American Loan, in the principal amount of $3,500,000.00, reducing the outstanding principal balance of such loan to $17,370,062.47, and shall make a voluntary paydown of the PrivateBank Loan, in the principal amount of $2,500,000.00, reducing the outstanding principal balance of such loan to $12,407,187.53.

Page 2

2.    Waiver of Covenant Default.  In consideration of the paydowns of the Bank of America Loan and the PrivateBank Loan provided for in paragraph 2, the Administrative Agent, on behalf of the Lenders, hereby waives:  (a) compliance by the Borrower with the Defaulted Covenant for the fiscal period ending June 30, 2012, (b) the Event of Default that would occur by reason of the Borrower’s failure to comply with the Defaulted Covenant, upon the expiration of the applicable notice and cure period, solely for such fiscal period, and (c) the Bank’s remedies under the Loan Agreement with respect to the Defaulted Covenant and the subsequent Event of Default which would occur upon the expiration of the applicable notice and cure period.  Administrative Agent acknowledges and agrees that the Borrower’s failure to comply with the Defaulted Covenant has been cured in accordance with the terms of this Agreement and that no Event of Default has occurred under the Loan Agreement or other Loan Documents as a result of Borrower’s failure to comply with the Defaulted Covenant.  This waiver shall be narrowly construed and shall neither extend to any other violations under, or default of, the Loan Agreement, including but not limited to, a violation of the foregoing covenant (as herein amended) for any future period of time, except as provided for in paragraph 5 below, nor shall this waiver prejudice any rights or remedies which the Administrative Agent, on behalf of the Lenders, may have or be entitled to with respect to such future violations or defaults.

3.    Amendment to Loan Agreement.  Section 6.21 of the Loan Agreement is hereby amended in its entirety to read as follows:

6.21    Debt Service Coverage Ratio.

Borrower shall maintain a Debt Service Coverage Ratio of at least 1.30 to 1.00, as of the end of each fiscal quarter ending on or after March 31, 2012 and on or before March 31, 2013, and a Debt Service Coverage Ratio of at least 1.35 to 1.00, as of the end of each fiscal quarter ending on or after June 30, 2013.  If the Borrower exercises the extension option provided for in the Notes, Borrower shall maintain a Debt Service Coverage Ratio of at least 1.40 to 1.00, as of the end of each fiscal quarter ending on or after March 31, 2015.  The Debt Service Coverage Ratio may be satisfied by a voluntary paydown of the Loan by Borrower, subject to the satisfaction of any conditions to prepayment, as set forth in Section 4 of the Notes.

4.    Waiver of Covenant Compliance.  Notwithstanding the amendment to Section 6.21 of the Loan Agreement provided in paragraph 4 above, the Borrower shall not be required to comply with the covenant contained in Section 6.21 of the Loan Agreement for the fiscal quarters ending September 30, 2012 and December 31, 2012, and the Administrative Agent, on behalf of the Lenders, hereby waives any requirement for such compliance and any default or Event of Default that would otherwise arise as a result of such noncompliance.  The Borrower shall again be required to comply with the covenant contained in Section 6.21 of the Loan Agreement, as herein amended, for the fiscal quarter ending March 31, 2013 and thereafter.  Borrower shall continue to be required to furnish the financial information provided for in Section 6.8 of the Loan Agreement for the fiscal quarters ending September 30, 2012 and December 31, 2012, notwithstanding the Administrative Agent’s waiver of compliance with the covenant contained in Section 6.21 of the Loan Agreement for such fiscal quarters as provided in this paragraph.

5.    Amendment to Guaranty.  The limitation on the Guarantor’s Obligations (as defined in the Guaranty) to the Guaranteed Amount (as defined in the Guaranty) provided in the second paragraph of Section 1 of the Guaranty (the “Guaranty Limitation”) is hereby removed and, subject to the following proviso, the Guarantor shall hereafter have unlimited liability for the Guaranteed Obligations (as defined in the Guaranty) in accordance with the terms and provisions of the Guaranty (other than the second paragraph of Section 1); provided, however, that if the Borrower fully complies with the Debt Service Coverage Ratio covenant contained in Section 6.21 of the Loan Agreement, as herein amended, for three consecutive fiscal quarters, provided no Event of Default has then occurred and is continuing, as of the end of the third such fiscal quarter, the Guaranty Limitation shall thereupon be deemed reinstated and shall thereafter be in full force and effect.

Page 3

6.    Modification Fee.  In order for this Agreement to be effective, prior to or simultaneously with the execution and delivery hereof, the Borrower shall pay to the Administrative Agent, for the accounts of Bank of America and The PrivateBank on a pro-rata basis, a modification fee in the amount of $10,000.00.

7.    Borrower's Representations and Warranties.  The Borrower hereby reaffirms all of the representations and warranties set forth in the Loan Documents, and further represents and warrants that (a) Each Borrower is the sole legal and beneficial owner of the Property covered by its respective Mortgage; (b) the execution and delivery of this Agreement do not contravene, result in a breach of, or constitute a default under, any mortgage, loan agreement, indenture or other contract or agreement to which any Borrower is a party or by which any Borrower or any of its properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both), and do not violate or contravene any law, order, decree, rule, regulation or restriction to which any Borrower or any Property is subject; (c) this Agreement constitutes the legal, valid and binding obligations of each Borrower enforceable in accordance with its terms; (d) the execution and delivery of, and performance under, this Agreement are within each Borrower's power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action, and are not in contravention of any law, or of any Borrower's articles of organization or operating agreement or of any indenture, agreement or undertaking to which any Borrower is a party or by which it is bound; (e) there exists no default under the Bank of America Note or The PrivateBank Note or any other Loan Document; (f) there are no offsets, claims, counterclaims, cross-claims or defenses with respect to the Obligations; and (g) each Borrower is duly organized and legally existing under the laws of the state of its organization and is duly qualified to do business in the state of Florida.  Each Borrower further represents and warrants that, except as disclosed in writing to the Administrative Agent, there is no suit, judicial or administrative action, claim, investigation, inquiry, proceeding or demand pending (or, to any Borrower's knowledge, threatened) against (i) any Borrower, or (ii) which affects the Property or any Borrower's title to its respective Property, or (iii) which affects the validity enforceability or priority of any of the Loan Documents.  Each Borrower agrees to indemnify and hold the Lender harmless against any loss, claim, damage, liability or out-of-pocket expense (including, without limitation, reasonable attorneys' fees) incurred as a result of any representation or warranty made by that Borrower herein which proves to be untrue or inaccurate in any material respect, and any such occurrence shall constitute a default under the Loan Documents.

8.    Renewal; Lien Continuation; No Novation.  The Borrower hereby renews the Obligations and promises to pay and perform all Obligations as modified by this Agreement.  The Liens are hereby ratified and confirmed as valid, subsisting and continuing to secure the Obligations, as modified hereby.  Nothing herein shall in any manner diminish, impair, waive or extinguish the Bank of America Note, The PrivateBank Note, the Obligations or the Liens.  The execution and delivery of this Agreement shall not constitute a novation of the debt evidenced and secured by the Loan Documents.

9.    Default.  A default under this Agreement shall constitute a default under the Bank of America Note and the PrivateBank Note and other Loan Documents. 

10.    Miscellaneous.  To the extent of any conflict between the Loan Documents and this Agreement, this Agreement shall control.  Unless specifically modified hereby, all terms of the Loan Documents shall remain in full force and effect.  This Agreement (a) shall bind and benefit the parties hereto and their respective heirs, beneficiaries, administrators, executors, receivers, trustees, successors and assigns; (b) shall be governed by the laws of the State of Michigan and United States federal law; and (c) may be executed in several counterparts, and by the parties hereto on separate counterparts, and each counterpart, when executed and delivered, shall constitute an original agreement enforceable against all who signed it without production of or accounting for any other counterpart, and all separate counterparts shall constitute the same agreement.

11.    Course of Dealing.  The Administrative Agent, the Lenders and Borrower hereby acknowledge and agree that at no time shall any prior or subsequent course of conduct by Borrower, Administrative Agent or Lenders directly or indirectly limit, impair or otherwise adversely affect any of Administrative Agent’s or any Lender’s rights, interests or remedies 

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in connection with the Bank of America Loan and The PrivateBank Loan and the Loan Documents or obligate Administrative Agent or any Lender to agree to, or to negotiate or consider an agreement to, any waiver of any obligation or default by Borrower under any Loan Document or any amendment to any term or condition of any Loan Document.

12.    Reaffirmation of Guaranty.  The Guarantor, by signature below as such, for a valuable consideration, the receipt and adequacy of which are hereby acknowledged, hereby consents to and joins in this Agreement and hereby declares to and agrees with the Administrative Agent and the Lenders that the Guaranty is and shall continue in full force and effect for the benefit of Administrative Agent and the Lenders with respect to the Obligations, as amended by this Agreement, that there are no offsets, claims, counterclaims, cross-claims or defenses of the Guarantor with respect to the Guaranty nor, to Guarantor's knowledge, with respect to the Obligations, that the Guaranty is not released, diminished or impaired in any way by this Agreement or the transactions contemplated hereby, and that the Guaranty is hereby ratified and confirmed in all respects.  Guarantor hereby reaffirms all of the representations and warranties set forth in the Guaranty.  Guarantor acknowledges that without this consent and reaffirmation, the Administrative Agent and the Lenders would not execute this Agreement or otherwise consent to its terms. 

13.    Release of Claims.  The Borrower and the Guarantor, for themselves and for each of their respective heirs, personal representatives, successors and assigns, hereby release and waive all claims and/or defenses they now or hereafter may have against the Administrative Agent or any Lender and their successors and assigns on account of any occurrence relating to the Bank of America Loan, The PrivateBank Loan, the Loan Documents and/or the Property which accrued prior to the date hereof.  This release and waiver shall be effective as of the date of this Agreement and shall be binding upon the Borrower and the Guarantor and each of their respective heirs, personal representatives, successors and assigns, and shall inure to the benefit of the Administrative Agent and the Lenders and their successors and assigns.  The terms “Administrative Agent” and “Lender” as used herein shall include, but shall not be limited to, their present and former officers, directors, employees, agents and attorneys.

[Signature Page Follows]

Page 5

IN WITNESS WHEREOF, Borrower, Administrative Agent and Lenders have caused this Agreement to be executed as of the date first above written.
BORROWER:
Sun Blueberry Hill LLC,
a Michigan limited liability company

		
	By:
	Sun Communities Operating Limited Partnership,

a Michigan limited partnership
		
	Title:
	Sole Member

		
	By:
	Sun Communities, Inc., a Maryland corporation

		
	Title:
	General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Sun Grand Lake LLC,
a Michigan limited liability company

		
	By:
	Sun Communities Operating Limited Partnership,

a Michigan limited partnership
		
	Title:
	Sole Member

		
	By:
	Sun Communities, Inc., a Maryland corporation

		
	Title:
	General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Sun Three Lakes LLC,
a Michigan limited liability company

		
	By:
	Sun Communities Operating Limited Partnership,

a Michigan limited partnership
		
	Title:
	Sole Member

		
	By:
	Sun Communities, Inc., a Maryland corporation

		
	Title:
	General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Page 6

Sun Club Naples LLC,
a Michigan limited liability company

		
	By:
	Sun Communities Operating Limited Partnership,

a Michigan limited partnership
		
	Title:
	Sole Member

		
	By:
	Sun Communities, Inc., a Maryland corporation

		
	Title:
	General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Sun Naples Gardens LLC,
a Michigan limited liability company

		
	By:
	Sun Communities Operating Limited Partnership,

a Michigan limited partnership
		
	Title:
	Sole Member

		
	By:
	Sun Communities, Inc., a Maryland corporation

		
	Title:
	General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Sun North Lake Estates LLC,
a Michigan limited liability company

		
	By:
	Sun Communities Operating Limited Partnership,

a Michigan limited partnership
		
	Title:
	Sole Member

		
	By:
	Sun Communities, Inc., a Maryland corporation

		
	Title:
	General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Page 7

ADMINISTRATIVE AGENT:

Bank of America, N.A.,
a national banking association

By:  /s/ Shannon Westberg                             
Name:  Shannon Westberg
Title:  Senior Vice President

Page 8

LENDER:

Bank of America, N.A.,
a national banking association

By:  /s/ Shannon Westberg                             
Name:  Shannon Westberg
Title:  Senior Vice President

Page 9

LENDER:

The PrivateBank and Trust Company,
an Illinois state chartered bank

By:  /s/ Stephen A. Anderson                       
Name:  Stephen A. Anderson
Title:  Managing Director

Page 10

GUARANTOR:

Sun Communities Operating Limited Partnership,
a Michigan limited partnership

By:    Sun Communities, Inc., a Maryland corporation
Its:    General Partner

By:  /s/ Karen Dearing                                
Name:  Karen Dearing
Title:  Executive Vice President

Page 11SCHN Ex10.29_8.31.2012

Exhibit 10.29
 
SCHNITZER STEEL INDUSTRIES, INC.
EMPLOYMENT AGREEMENT

Patrick L. Christopher - Executive
268 High Street
Winchester, MA 01890

Schnitzer Steel Industries, Inc. - Company
3200 NW Yeon Avenue
Portland, Oregon 97210

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the Company and Executive agree as follows.

1.    Effective Date and Term.   This Employment Agreement (this “Agreement”) is entered into on March 13, 2012 (the “Effective  Date”) upon Executive’s promotion to Senior Vice President of the Company and President of the Company’s Metals Recycling Business. This Agreement governs the terms and conditions of Executive’s employment from the Effective Date through March 13, 2015 (the “Term”), provided however, that the provisions of Sections 5, 7 & 8, Covenant Not to Compete, Non-Disclosure and Non-Solicitation shall  survive  after expiration of the Term and the termination of this Agreement.

2.    Employment at Will.   During the Term, the Company will employ Executive as Senior Vice President of the  Company and  President  of  the  Company’s Metals  Recycling Business,  or in  such other  capacity  as  the  parties may mutually agree,  on the terms  and conditions set forth in  this  Agreement. Executive’s employment is  at will subject to the obligations of the Company and Executive as provided in this Agreement.

3.    Annual Salary, Bonus.

(a)    Base Salary.   Beginning on the Effective Date, Executive’s base salary (the “Base Salary”) shall be at the annual rate of $550,000. Base Salary shall be payable in installments on regular Company paydays, subject to withholding for taxes and other proper deductions. Base Salary for any partial period of employment shall be prorated. Executive’s performance and the amount of the Base Salary shall be reviewed annually in connection with the Company’s normal compensation review and bonus cycle for executive officers, and the Base Salary may be increased from time to time in the sole discretion of the Committee.

(b)    Annual Performance Bonus.

(i)    Executive’s bonus under the Company’s Annual Incentive Compensation Plan (“AICP”) for the fiscal year ended August 31,2012 (the “2012  Fiscal Year”) shall be determined and paid as follows:
		
	1. 
	$150,000 shall be payable to Executive on April 20, 2012 in consideration of Executive having developed and commenced the implementation of an SG&A cost reduction program for the Company’s Metals Recycling Business.

		
	2. 
	$400,000 shall be payable to Executive if the cost saving measures set forth in Exhibit A for the 2012 Fiscal Year are achieved.

(ii)    For fiscal years after the 2012 Fiscal Year, Executive’s target bonus (as a percentage of Base Salary) under the AICP shall be determined by the Committee but shall not be less than 75%. The Committee shall determine the other terms of Executive’s awards under the AICP for fiscal years after the 2012 Fiscal Year.

4.    Equity Grants and Other Benefits.

(a)    Equity Grants.   The amount and terms of any restricted stock grants and any other equity-based awards shall be as determined by the Committee.

(b)    Benefits.   Executive and the Company shall continue to be subject to the existing Change in Control Agreement between the Company and Executive. Executive shall be entitled to participate in the Company’s other employee benefit plans, insurance, executive medical coverage, sick leave, holiday, and auto allowance as the Company from time to time may generally provide to its senior vice presidents.

5.    Covenant Not to Compete.

(a)    During Executive’s employment by the Company, under the terms of this Employment Agreement or otherwise, and for a period of one (1) year following termination of Executive’s employment for any reason (the “Restriction Period”), Executive will not, directly or indirectly, own, manage, control, or participate in the ownership, management or control of, or be employed by, consult for, or be connected in any manner with, any business that is located within 75 miles of any of the Company’s metal recycling facilities and is engaged in the metals recycling business.

(b)    As additional consideration for the covenants set forth herein:

(i)    If Executive is terminated without cause or resigns for good reason, Executive will receive (i) a monthly payment equal to 100% of Executive’s last monthly base salary for the duration of the Restriction Period; and (ii) promptly following the end of the Restriction Period, a cash payment equal to the average of the Executive’s AICP bonus for the last three (3) fiscal years immediately preceding the termination.

(ii)    If  Executive is terminated for cause, or resigns without good reason, no additional consideration will be owed to Executive and the covenant not to compete will remain enforceable.

(iii)    For this purpose “cause” shall mean: (i) insubordination, (ii) acts of dishonesty, (iii) involvement in illegal activities where such involvement in illegal activities violates Company policies, places the Company at risk or has or could damage the Company’s reputation in the community or any of its related or subsidiary companies, (iv) violation of the Company’s anti-harassment or anti-discrimination policy, or (v) gross neglect of Executive’s duties or willful misconduct that, in either case, results in economic harm to the Company or harm to the Company’s reputation.

(iv)    For this purpose, “good reason” shall mean (i) a change in Executive’s  position  that  constitutes a  diminution of Executive’s responsibilities or (ii) a reduction in Executive’s base salary and benefits.

6.    AICP, Performance Shares and Restricted Stock.   Payment of any bonuses under the AICP shall, in the event of Executive’s termination, be governed by the terms of the AICP. Vested but unexercised options, performance shares and restricted stock units awarded to Executive by the Company shall, in the event of a termination of Executive’s employment, be governed by the provisions of the applicable plan and award agreement.

7.     Non-Disclosure.

(a)    “Protected Information” means all proprietary information, in whatever form and format, of the Company, all information provided to the Company by third parties which the Company is obligated to keep confidential, and all of the Company’s “trade secrets” as defined in ORS 646.461(4).

(b)    During the period of employment by the Company and forever thereafter, Executive will hold in confidence and protect all Protected Information and will not, at any time, directly or indirectly, use any Protected Information for any purpose outside the scope of Executive’s employment with the Company or disclose any Protected Information to any third person or organization without the prior written consent of the Company. Specifically, but not by way of limitation, Executive will not ever copy, transmit, reproduce, summarize, quote, publish or make any commercial or other use whatsoever of any Protected Information without the prior written consent of the Company.

8.    Non-Solicitation.   During the term of Executive’s employment and for a period of one (1) year following termination of Executive’s employment, for any reason, Executive agrees that he will not directly or indirectly:

(i)    attempt to influence any of the Company’s customers, who were customers during the twelve (12) month period preceding Executive’s termination date, to divert their business to a competitor or to obtain bids, quotes or services from any competing business; or

(ii)    attempt to employ, either directly or indirectly, any persons who are or were employees of the Company within the twelve (12) month period preceding Executive’s termination date.

9.     General Provisions.

(a)    Entire Agreement.   This Agreement contains the entire understanding and agreement of the parties with respect to the subject matter hereof, is intended fully to integrate the parties’ agreement, and supersedes any prior negotiations, understandings or agreement, oral or written, with respect to the subject matter hereof, including but not limited to the employment  letter dated September 13, 2005.

(b)    Applicable Law/Jurisdiction.   This Agreement shall be construed according to the laws of the State of Oregon. Employee further hereby submits to the jurisdiction of, and agrees that exclusive jurisdiction over and venue for any action or proceeding arising  out of or relating to this Agreement shall lie in the state  and federal courts located in Oregon.

SCHNITZER STEEL INDUSTRIES, INC.

	
			
	/s/ Tamara L. Lundgren
	 
	/s/ Patrick L. Christopher

	Tamara L. Lundgren
	 
	Patrick L. Christopher

	President and Chief Executive Officer
	 
	 

Exhibit A 
Performance Measures Bonus
The bonus will be based on achieving a reduction of 5% in SGA expenses of the Metals Recycling Business compared to the FY12 Forecast (3+9 completed in December 2011), using comparable assumptions to those on which the reduction targets were set, adjusted where necessary for (1) changes in the performance of the business relative to forecast, such as material changes in sales volumes, and (2) unforecasted non-operating items, such as environmental charges and litigation reserves, to be determined by the Compensation Committee in its sole discretion.

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