Document:

Exhibit 4.6

 

FIFTH SUPPLEMENTAL INDENTURE

 

dated as of September 6,
2005

 

among

 

K. HOVNANIAN
ENTERPRISES, INC.

 

HOVNANIAN
ENTERPRISES, INC.

 

The Other
Guarantors Party Hereto

 

and

 

WACHOVIA BANK,
NATIONAL ASSOCIATION,

 

as Trustee

 

 

61⁄2% Senior
Notes due 2014

 

 

THIS FIFTH SUPPLEMENTAL
INDENTURE (this “Fifth Supplemental Indenture”), entered into as of
September 6, 2005, among K. Hovnanian Enterprises, Inc., a California
corporation (the “Issuer”), Hovnanian Enterprises, Inc. (“Hovnanian”),
each of the entities listed on Schedule I hereto (each, an “Undersigned”)
and Wachovia Bank, National Association, as trustee (the “Trustee”).

 

RECITALS

 

WHEREAS,
the Issuer, Hovnanian, the Guarantors party thereto and the Trustee entered
into the Indenture dated as of November 3, 2003, as supplemented by the
First Supplemental Indenture dated as of November 3, 2003, the Second
Supplemental Indenture dated as of March 18, 2004, the Third Supplemental
Indenture dated as of July 15, 2004, and the Fourth Supplemental Indenture
dated as of April 19, 2005 (as supplemented, the “Indenture”), relating to
the Issuer’s 61⁄2% Senior Notes due 2014 (the “Notes”);

 

WHEREAS,
as a condition to the purchase of the Notes by the Holders, Hovnanian agreed
pursuant to the Indenture to cause any newly acquired or created Restricted
Subsidiaries to provide Guarantees of the Notes, subject to certain
limitations.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and intending to be legally bound, the parties hereto hereby agree as
follows:

 

SECTION 1.                                Capitalized
terms used herein and not otherwise defined herein are used as defined in the
Indenture.

 

SECTION 2.                                Each
Undersigned, by its execution of this Fifth Supplemental Indenture, agrees to
be a Guarantor under the Indenture and to be bound by the terms of the
Indenture applicable to Guarantors, including, but not limited to, Article Thirteen
of the Base Indenture and Article 5 of the First Supplemental
Indenture.  Each Undersigned will also
execute a Guarantee Notation in respect of the Notes.

 

SECTION 3.                                This
Fifth Supplemental Indenture shall be governed by and construed in accordance
with the laws of the State of New York.

 

SECTION 4.                                This
Fifth Supplemental Indenture may be signed in various counterparts which
together will constitute one and the same instrument.

 

SECTION 5.                                This
Fifth Supplemental Indenture is an amendment supplemental to the Indenture and
the Indenture and this Fifth Supplemental Indenture will henceforth be read
together.

 

[signature page follows]

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental
Indenture to be duly executed as of the date first above written.

 

 

	
   

  	
  K. HOVNANIAN
  ENTERPRISES, INC.,

  
	
   

  	
  as Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER S.
  REINHART

  	
   

  
	
   

  	
   

  	
  Name: Peter S.
  Reinhart

  
	
   

  	
   

  	
  Title: Senior
  Vice President and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOVNANIAN
  ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  PETER S. REINHART

  	
   

  
	
   

  	
   

  	
  Name: Peter S.
  Reinhart

  
	
   

  	
   

  	
  Title: Senior
  Vice President and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  On behalf of
  each of the entities listed on

  Schedule I hereto

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER S.
  REINHART

  	
   

  
	
   

  	
   

  	
  Name: Peter S.
  Reinhart

  
	
   

  	
   

  	
  Title: Senior
  Vice President and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WACHOVIA BANK,
  NATIONAL

  ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STEPHANIE
  ROCHE

  	
   

  
	
   

  	
   

  	
  Name:  Stephanie Roche

  
	
   

  	
   

  	
  Title:  Vice President

  

 

 

	
  GUARANTORS

  	
   

  	
  State of

  Incorporation or

  Formation

  
	
  K. HOVNANIAN AT SCOTCH
  PLAINS, INC.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT SKYE
  ISLE, INC.

  	
   

  	
  CA

  
	
  HOVNANIAN LAND
  INVESTMENT GROUP OF NEW JERSEY, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT
  ALLENTOWN, L.L.C.

  	
   

  	
  PA

  
	
  K. HOVNANIAN AT
  BARNEGAT II, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT DOVER,
  L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT
  EASTLAKE L.L.C.

  	
   

  	
  CA

  
	
  K. HOVNANIAN AT EGG
  HARBOR TOWNSHIP II, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT FIRST
  HOMES, L.L.C.

  	
   

  	
  FL

  
	
  K. HOVNANIAN AT
  HIGHLAND SHORES, L.L.C.

  	
   

  	
  MN

  
	
  K. HOVNANIAN AT LITTLE
  EGG HARBOR TOWNSHIP II, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT
  MILLVILLE III, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT NEW
  WINDSOR, L.L.C.

  	
   

  	
  NY

  
	
  K. HOVNANIAN AT OSTER
  HOMES, L.L.C.

  	
   

  	
  OH

  
	
  K. HOVNANIAN AT
  PARSIPPANY-TROY HILLS, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT
  PHILADELPHIA III, L.L.C.

  	
   

  	
  PA

  
	
  K. HOVNANIAN AT
  PHILADELPHIA IV, L.L.C.

  	
   

  	
  PA

  
	
  K. HOVNANIAN AT PRADO,
  L.L.C.

  	
   

  	
  CA

  
	
  K. HOVNANIAN AT RED
  BANK, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT RED
  BANK I, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT
  TOWNGATE, L.L.C.

  	
   

  	
  CA

  
	
  K. HOVNANIAN AT UNION
  TOWNSHIP II, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN AT WARREN
  TOWNSHIP, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN T&C
  INVESTMENT, L.L.C.

  	
   

  	
  NJ

  
	
  K. HOVNANIAN T&C
  MANAGEMENT CO., L.L.C.

  	
   

  	
  CA

  
	
  MIDWEST BUILDING
  PRODUCTS & CONTRACTOR SERVICES, L.L.C.

  	
   

  	
  OH

  
	
  NORTH MANATEE, L.L.C.

  	
   

  	
  FL

  

 

 

	
  PADDOCKS, L.L.C.

  	
   

  	
  MD

  
	
  PINE AYR, L.L.C.

  	
   

  	
  MD

  
	
  K. HOVNANIAN HOMES AT
  MAXWELL PLACE, L.L.C.

  	
   

  	
  MDwww.EXFILE.com    888.775.4789              SCHNITZER STEEL INDUSTRIES, INC.   EXHIBIT 10.1 TO FORM 8-K

    EXHIBIT
      10.1

    

    SCHNITZER
      STEEL INDUSTRIES, INC.

    EMPLOYMENT
      AGREEMENT

     

    
      
        	
                John
                  D. Carter

              	 	
                Executive

              
	 	 	 
	 	 	 
	
                Schnitzer
                  Steel Industries, Inc.,

              	 	
                Company

              
	
                PO
                  Box 10047

              	 	 
	
                Portland,
                  OR 97296-0047

              	 	 

      

    

     

     

    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.
      The
      effective date of this Agreement is February 17, 2006, and this Agreement
      governs the terms and conditions of Executive’s employment through August 31,
      2009. This Agreement replaces and supersedes the Agreement of Initial Employment
      Terms dated July 18, 2005 between the Company and Executive. This Agreement
      has
      been approved by the Compensation Committee of the Company’s Board of Directors
      (the “Compensation
      Committee”).

     

    2.  Employment
      At-Will.
      The
      Company employs Executive as President and Chief Executive Officer of the
      Company on the terms and conditions set forth in this Agreement.
      Executive serves as President and Chief Executive Officer of the Company at
      the
      pleasure of the Board of Directors. Executive’s employment is at will and may be
      terminated at any time, for any reason or no reason, upon notice by either
      the
      Company or Executive, subject to the obligations of the Company and Executive
      as
      provided in this Agreement. Termination of Executive as President and Chief
      Executive Officer, for any reason, shall constitute the resignation by
      Executive, effective upon such termination as a director and officer of the
      Company. Upon request, Executive shall provide the Company with additional
      written evidence of any such resignation.

     

    3.  Change
      in Control Severance Agreement.
      The
      Company and the Executive have entered into a Change in Control Severance
      Agreement dated February 17, 2006 (the “Change
      in Control Agreement”).

     

    4.  Annual
      Salary and Bonus.

     

    (a)  Base
      Salary.
      Beginning January 1, 2006, Executive’s base salary (the
      “Base
      Salary”)
      shall
      be at the annual rate of $750,000.
      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
      Compensation Committee. 

     

    (b)  Annual
      Performance Bonus for Fiscal Year Ended August 31, 2006.
      Executive’s target cash bonus for the fiscal year ending August 31, 2006 shall
      be $750,000. The actual amount of Executive’s bonus for this period shall be
      determined by the Compensation Committee in its sole discretion based on its
      judgment regarding Executive’s performance during fiscal year 2006, and may be
      more or less than the target amount. There is no pre-determined minimum or
      maximum amount of the bonus. Bonus payment for performance during fiscal year
      2006 will be on the basis of a review and discussion by the Compensation
      Committee, and will include consideration of a variety of financial and
      organizational objectives and the overall performance of the Company, as well
      as
      the achievement of personal goals agreed with the Compensation Committee. The
      bonus provided for in this Section 4(b) shall be payable to Executive on a
      date
      selected by the Company between September 1 and November 15, 2006, and is
      subject to withholding for taxes and other proper deductions. 

     

    (c)  Annual
      Performance Bonus for Fiscal Years ending August 31, 2007, 2008 and
      2009.
      At the
      beginning of fiscal year 2007, 2008 and 2009 (and in any event no later than
      90
      days into the fiscal year) the Compensation Committee will establish a bonus
      program for that fiscal year for Executive that will have two components: a
      component based on objective Company financial measures and a component based
      on
      management objectives (MBO). The first component will set forth objective
      Company financial performance criteria that will determine the amount of
      Executive’s bonus. The plan will specify bonus amounts higher and lower than the
      target for Company performance based on the predetermined objectives. The
      Compensation Committee will establish the objective Company financial
      performance criteria in consultation with Executive. The Committee may determine
      in advance adjustments to GAAP for specific items that will be taken into
      account for the purpose of determining the Company’s financial performance for
      the bonus determination. The second component will be based on MBO performance
      criteria. At the beginning of each fiscal year the Compensation Committee,
      in
      consultation with Executive, will establish management objectives for Executive.
      The Compensation Committee and Executive will strive to establish objectives
      that are clearly understood and measurable. The plan will specify bonus amounts
      higher or lower than the target for performance based on the objectives. At
      the
      end of the fiscal year, the Compensation Committee will review Executive’s
      performance, and determine the extent to which the objectives have been met
      and
      the applicable bonus amount. For FY 2007, the target annual bonus under the
      combined bonus plan will be 1x Base Salary, and the Company financial
      performance component will apply to 50% of the bonus target and the MBO
      component will apply to 50% of the bonus target. The same shall apply for FY2008
      and 2009 unless otherwise determined by the Compensation Committee in
      consultation with Executive. The bonus for a fiscal year shall be payable to
      Executive on a date selected by the Company between September 1 and November
      15
      , 2006 in the next fiscal year, and is subject to withholding for taxes and
      other proper deductions.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.  Options
      and Other Benefits.

     

    (a)  Option
      Grants.
      The
      amount and terms of any stock option grants after the date of this Agreement
      shall be in the discretion of the Compensation Committee.

     

    (b)  Benefits.
      Executive shall be entitled to participate in the Company’s employee benefit
      plans, insurance, executive medical coverage, sick leave, holidays, auto
      allowance and such other benefits as the Company from time to time may generally
      provide to its most senior officers, except that Executive shall not be a
      participant in the Company’s Supplemental Executive Retirement Bonus Plan
      (“SERBP”)
      or the
      Company’s Economic Value Added Bonus Program. If Executive’s employment
      continues beyond June 1, 2006, Executive will also become eligible for
      retirement benefits, including the SERBP, subject to the Compensation
      Committee’s review and approval regarding the terms and conditions of such
      benefits.

     

    (c)  Long
      Term Incentive Plan.
      Executive is eligible to participate in the Company’s long term incentive
      programs (“LTIP”),
      and
      awards to Executive under the LTIP will be made at the discretion of the
      Compensation Committee in accordance with the modified LTIP now in effect for
      the Company, or as later modified by the Company.

     

    6.  Definitions.
      The
      following terms shall have the following meanings for purposes of this
      Agreement:

     

    (a)  “Cause”
shall
      mean (i) the willful and continued failure by Executive to perform
      substantially his assigned duties with the Company (other than any such failure
      resulting from his incapacity due to physical or mental illness) after a demand
      for substantial performance is delivered to Executive
      by the
      Chairman of the Board of the Company which specifically identifies the manner
      in
      which the Chairman of the Board believes that Executive has not substantially
      performed his duties or (ii) the willful engaging by Executive in illegal
      conduct which is materially and demonstrably injurious to the Company. For
      purposes of this Section 6(a) (ii), no act, or failure to act, on Executive’s
      part
      shall be considered “willful” unless done, or omitted to be done, by Executive
      in knowing bad faith and without reasonable belief that his 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 pursuant to a resolution duly adopted
      by the Board or based upon the advice of counsel for the Company shall be
      conclusively presumed to be done, or omitted to be done, by Executive in good
      faith and in the best interests of the Company. Notwithstanding the foregoing,
      Executive shall not be deemed to have been terminated for Cause unless and
      until
      there shall have been delivered to Executive a copy of a resolution duly adopted
      by the affirmative vote of not less than three-quarters of the entire membership
      of the Board at a meeting of the Board called and held for the purpose (after
      reasonable notice to Executive and an opportunity for Executive, together with
      his counsel, to be heard before the Board), finding that in the good faith
      opinion of the Board Executive were guilty of the conduct set forth above in
      (i)
      or (ii) of this Section 6(a)) and specifying the particulars thereof in
      detail.

     

    (b)  “Disability”
shall
      mean Executive’s
      absence from his duties with the Company on a full-time basis for one hundred
      eighty (180) consecutive days as a result of his incapacity due to physical
      or
      mental illness, unless within thirty (30) days after notice of 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    termination
      is given to Executive following such absence he shall have returned to the
      full-time performance of his duties.

     

    (c)  “Good
      Reason”
shall
      mean termination by Executive of Executive’s employment with the Company based
      on any of the following events:

     

    (i)  a
      change
      in Executive’s status, title, positions or responsibilities as President and
      Chief Executive Officer or the assignment to Executive of any duties or
      responsibilities which are inconsistent with such status, title or positions,
      or
      any removal of Executive from or any failure to reappoint or reelect Executive
      to such positions, except in connection with the termination of Executive’s
      employment for Cause or Disability or as a result of Executive’s death or by
      Executive other than for Good Reason;

     

    (ii)  a
      reduction by the Company in Executive’s base salary;

     

    (iii)  the
      failure by the Company to provide to Executive the compensation and benefits
      as
      provided in Section 4 of this Agreement;

     

    (iv)  the
      failure by the Company to provide and credit Executive with the number of paid
      vacation days to which Executive is then entitled in accordance with the
      Company’s normal vacation policy;

     

    (v)  the
      Company’s requiring Executive to be based more than 30 miles from where
      Executive’s office is located as of the date of this Agreement except for
      required travel on the Company’s business to an extent substantially consistent
      with the business travel obligations which Executive undertook as of the date
      of
      this Agreement;

     

    (vi)  the
      failure by the Company to obtain from any Successor (as defined in Section
      10 of
      this Agreement) the assent to this Agreement contemplated by Section 10;
      or

     

    (vii)  the
      failure by the Company to pay Executive any portion of Executive’s current
      compensation, to credit any deferred compensation plan account of Executive
      in
      accordance with Executive’s previous election, or to pay Executive any portion
      of an installment of deferred compensation under any plan in which Executive
      participated, within seven (7) days of the date such compensation is
      due.

     

    Notwithstanding
      any provision in this Agreement to the contrary, Executive may terminate his
      employment for “Good Reason” only if (1) within 30 days after notice to
      Executive of the occurrence of any of the circumstances giving rise to “Good
      Reason,” Executive gives written notice to the Company of Executive’s believe
      that Good Reason exists and of his intention to terminate his employment for
      Good Reason and (2) within 30 days of such notice from Executive the
      circumstances giving rise to Good Reason are not fully corrected.

     

    7.  Effect
      of Termination of Employment.

     

    (a)  Termination by
      the Company for Cause or by
      Executive
      without Good Reason.
      If the
      Company terminates Executive’s employment for Cause
      or
      Executive 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    terminates
      his employment
      without
      good reason, Executive shall be entitled to receive only (i)
      the
      Base
      Salary and any other compensation or benefits which have been earned or become
      payable as of the date of termination but which have not yet been paid to
      Executive,
      (ii)
      all paid time off accrued but untaken through the effective date of such
      termination, and (iii) reimbursement of expenses incurred through the effective
      date of such termination pursuant to the Company normal expense reimbursement
      policy. The amounts described in clauses (i) through (iii) of the foregoing
      are
      referred to as the “Accrued
      Obligations.”

     

    (b)  Termination
      by the Company Without Cause
      or by Executive for Good Reason.
      If
      the
      Company terminates Executive’s employment without Cause
      or
      Executive terminates his employment for Good Reason at any time before September
      1, 2009 and not under circumstances that would give rise to severance payments
      to Executive under the Change in Control Agreement: 

     

    (i)  Executive
      shall be entitled to receive the Accrued
      Obligations; 

     

    (ii)  Executive
      shall be entitled to receive a severance
      payment (subject to applicable taxes and withholding) in
      a lump
      sum in an amount equal to two times Executive’s annualized rate of Base
      Salary
      in
      effect immediately prior to the time of termination
      plus two
      times Executive’s target annual bonus in effect immediately prior to the
      termination;

     

    (iii)  Executive
      shall be paid a prorata portion of the target bonus for the fiscal year in
      which
      the termination occurs (based on the portion of the year worked);
      and

     

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

     

    (c)  Death.
      If
      Executive’s employment is terminated as a result of Executive’s death, Executive
      shall be entitled to receive the Accrued
      Obligations.
      

     

    (d)  Disability.
      If
      Executive’s employment is terminated as a result of Executive’s Disability,
      Executive shall be entitled to receive the Accrued
      Obligations.

     

    (e)  Date
      of Payment.
      Except
      as otherwise provided in this Agreement, all cash payments and lump-sum awards
      required to be made pursuant to the provisions of this Section 7
      shall be
      made no later than the 30th day following the effective date of Executive’s
      termination.

     

    (f)  Release
      of Claims.
      The
      Company shall have the right to require Executive to execute an appropriate
      general release of claims relating to his employment at the Company and
      termination of employment at the Company that could be brought by Executive
      hereunder as a condition to Executive’s receipt of any payments pursuant to this
      Section 7.

     

    (g)  Options,
      Performance Shares and Restricted Stock.
      The
      options, performance shares and restricted stock 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 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    award
      agreement; provided that the accelerated vesting provisions of Section 7(b)(iv)
      shall, if triggered, control in the event of any inconsistency with any such
      agreement. 

     

    (h)  No
      Obligation of Executive to Mitigate.
      The
      amount of any payment provided for in this Section 7 shall not be reduced,
      offset or subject to recovery by the Company by reason of any compensation
      earned by Executive as the result of employment by another employer after the
      date of termination.

     

    (i)  280G
      Excise Tax Gross Up Provision.
      If
      any of
      the payments provided for in Section 7(b) 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 Company
      shall pay to Executive at the time any such payment is paid an additional amount
      (the “Gross-Up Payment”) such that the net amount retained by Executive, after
      deduction of any Excise Tax on the payments and any federal, state and local
      income tax and Excise Tax upon the Gross-Up Payment, shall be equal to the
      payment provided for in Section 7(b). For purposes of determining the amount
      of
      the Gross-Up Payment, Executive 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 Executive’s
      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, Executive 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 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. The Company shall withhold the
      Excise Tax in accordance with section 4999(b) of the Code, and shall withhold
      federal, state and local income taxes from payments under Section 7(b) and
      Gross-Up Payments as required by law.

     

    8.  Withholding.
      Payment
      of all compensation under this Agreement, including but not limited to the
      Base
      Salary and Annual Performance Bonus, shall be subject to all applicable federal,
      state and local tax withholding.

     

    9.  Attorneys’
      Fees.
      Each
      party shall bear his or its own costs and attorneys’ fees which have been or may
      be incurred in connection with the negotiation of this Agreement. The Company
      shall pay to Executive all reasonable legal fees and related expenses incurred
      by Executive in good faith as a result of Executive seeking to obtain or enforce
      in good faith any right or benefit provided by this Agreement.

     

    10. 
Successors;
      Binding Agreement.
      

     

    (a)  Upon
      Executive’s written request, the Company will seek to have any Successor (as
      hereinafter defined), by agreement in form and substance satisfactory to
      Executive, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.

     

    (b)  This
      Agreement shall inure to the benefit of and be enforceable by Executive’s
      personal or legal representatives, executors, administrators, successors, heirs,
      distributees, devisees and legatees. If Executive should die while any amount
      would still be payable to Executive 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 Executive’s devisee, legatee or other designee
      or, if there be no such designee, to Executive’s estate.

     

    11.  Survival.
      The
      respective obligations of, and benefits afforded to, the Company and Executive
      as provided in Sections 7, 9 and 15 of this Agreement shall survive termination
      of Executive’s employment and this Agreement.

     

    12.  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 Company as set
      forth on the first page of this Agreement or Executive as set forth in the
      Company’s records, provided that all notices to the Company shall be directed to
      the attention of the Chairman of the Board 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.

     

    13.  Miscellaneous.
      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 Chairman of the Board 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.

     

    14.  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.

     

    15.  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 Executive shall be entitled to
      seek
      specific performance of Executive’s 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 15.

     

    16.  Related
      Agreements.
      To the
      extent that any provision of any other agreement between the Company or any
      of
      its subsidiaries and Executive 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.

     

    17.  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.

     

    Dated:   
      February 17, 2006

     

    

    SCHNITZER
      STEEL INDUSTRIES, INC.

     

    
      	 	 	 	 
	By: 
              /s/ 
              Ralph R. Shaw	 	 	/s/ 
              John D. Carter
	
              
                

              

              
                Name: 
                  Ralph R. Shaw

                Title:   
                  Chairman of Compensation

                Committee
                  of the Board of Directors 

              

            	 	 	
              
John
              D. Carter

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