Document:

Exhibit 10.1

    

     

    

    AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

    

    

    This Agreement and Plan of Merger and Reorganization (this “Agreement”) is entered into as of April __, 2021 by and among I-ON DIGITAL CORP., a corporation
      organized under the laws of the State of Delaware (the “Company”), CDI ACQUISITION CORP., a Delaware corporation (“Acquisition”), CARDIO DIAGNOSTICS, INC., a corporation
      organized under the laws of the State of Delaware (“CDI”), and the shareholders of CDI (the “CDI Shareholders”) The Company,
      Acquisition, CDI and the CDI Shareholders are sometimes hereinafter collectively referred to as the “Parties” and individually as a “Party.”

    

    

    WHEREAS, the Company is a Delaware
        corporation with 35,030,339 shares of common stock, par value $0.0001, issued and outstanding (the “I-On Common Stock”) and whose shares are quoted on over-the-counter
        stock markets under the symbol “IONI.”

    

    

    WHEREAS, Acquisition is a wholly-owned
        subsidiary of the Company with 1,000 shares of common stock, par value $0.0001 per share (the “Acquisition Stock”) issued and outstanding.

    

    

    WHEREAS, CDI is a Delaware corporation
        with 1,123,268 shares of common stock, par value $0.0001, issued and outstanding (the “CDI Shares”).

    

    

    WHEREAS, the Board of Directors of each
        of the Company, Acquisition, and CDI have determined that it is fair to, and in the best interests of, their respective companies and shareholders for Acquisition to be merged with and into CDI, with CDI as the surviving entity (the “Merger”), upon the terms and subject to the conditions set forth herein.

    

    

    WHEREAS, the Board of Directors of each
        of the Company, Acquisition and CDI shall approve the Merger in accordance with the Delaware General Corporation Law (“DGCL”) and upon the terms and subject to the conditions set forth herein, and in the
        Certificate of Merger attached as Exhibit A hereto (the “Certificate of Merger”).

    

    

    WHEREAS, simultaneously with the
        Merger, all of the equity interests in I-On Communications, Ltd., a company organized under the laws of the Republic of South Korea (“Communications”) and a wholly owned subsidiary of the Company, shall be
        transferred by the Company to certain other shareholders of the Company (collectively, the “Communications Shareholders”) in exchange for the return of Twenty Million (20,000,000) shares of the I-On Common
        Stock held by the Communications Shareholders (the “Exchange Shares”), as more fully set forth in that certain Equity Transfer Agreement attached hereto as Exhibit B (the “Transfer

          Agreement”).

    

    

    WHEREAS, prior to the consummation of
        the transactions contemplated in this Agreement, the requisite threshold of the Company’s shareholders shall have approved, and as such the Company shall have filed a Proxy Statement on Schedule 14A with the U.S. Securities and Exchange Commission
        for the approval of (a) the consummation of the transactions contemplated by the Transfer Agreement, (b) the name change of the Company to [“Cardio Diagnostics Holdings, Inc.”] and (c) the reverse split of the number of outstanding I-On shares on
        the basis of one share per every ten (10) to fifteen (15) shares of I-On Common Stock outstanding (the “Reverse Split” and collectively, with (a) and (b), the “Reorganization”).

    

    

    WHEREAS, simultaneously in connection
        with the consummation of the transactions contemplated by this Agreement, Jae Cheol Oh (“Jae”) shall sell to  CDI 500,000 shares of I-On Common Stock held by Jae for a purchase price of $250,000, as more fully set forth on that certain Stock
        Purchase Agreement attached hereto as Exhibit C (the “Jae Purchase Agreement”).

    

    

    WHEREAS, at the Effective Time (as
        hereinafter defined), and as more fully set forth in Section 1.6 of this Agreement, all of the equity in CDI held by the CDI Shareholders shall be converted into the right to receive 25,000,000 newly issued I-On Shares, to be issued to the CDI
        Shareholders in accordance with their pro rata ownership of CDI, and after completion of all of the transactions contemplated by this Agreement, after the consummation of the Transaction the CDI Shareholders shall be the majority shareholders of
        the Company.

    

    

    
      

      
        

      

    

    
    WHEREAS, for federal income tax
        purposes, it is intended that the Merger shall qualify to the extent possible as a tax-free reorganization within the meaning of Section 368(b) and/or Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”), as determined in good faith by the Company and CDI.

    

    

    NOW, THEREFORE, in consideration of the
        mutual agreements and covenants hereinafter set forth, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows:

    

    

    ARTICLE I

    PLAN OF MERGER

    

    

    1.1. Merger. Subject to the terms and conditions of this Agreement and the Certificate of Merger, Acquisition shall be merged with and into CDI in accordance with the provisions of the DGCL. At the Effective Time, the
        separate legal existence of Acquisition shall cease and CDI shall be the surviving entity in the Merger (sometimes hereinafter referred to as the “Surviving Company”) and shall continue its existence under
        the laws of the State of Delaware.

    

    

    1.2. Effective Time. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the Delaware. The time at which the Merger shall become effective as aforesaid is referred to
        hereinafter as the “Effective Time.”

    

    

    1.3. Closing. The closing of the Merger (the “Closing”) shall occur upon mutual satisfaction by the Parties of the closing conditions set forth in Articles V and VII hereof (the “Closing Date”). The Closing shall occur by the exchange of signatures, or at any location as determined by the Parties. At the Closing, all of the documents, certificates, agreements, and instruments referenced
        in Section 1.10 will be executed and delivered as described therein. At the Effective Time, all actions to be taken at the Closing shall be deemed to be taken simultaneously.

    

    

    1.4. Certificate of incorporation, Bylaws and Officers
          of the Surviving Company.

    

    

    (a) The Certificate of Incorporation of
        CDI, as in effect immediately prior to the Effective Time, attached as Exhibit D hereto, shall be the Certificate of Incorporation of the Surviving Company from and after the Effective Time until amended in
        accordance with applicable law and such Certificate of Incorporation.

    

    

    (b) The Bylaws of CDI, as in effect
        immediately prior to the Effective Time in the form attached as Exhibit E hereto, shall be the Bylaws of the Surviving Company from and after the Effective Time until amended in accordance with applicable
        law, the Certificate of Incorporation of the Surviving Company, and such Bylaws.

    

    

    (c) The officers listed in Exhibit F hereto shall comprise the officers of the Company and each shall hold their respective office or offices from and after the Effective Time until a successor shall have been elected and shall have
        qualified in accordance with applicable law, or as otherwise provided in the Certificate of Incorporation or Bylaws of the Company.

    

    

    1.5. Assets and Liabilities. At the Effective Time, the Surviving Company shall possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities
        and duties of each of Acquisition and CDI (collectively, the “Constituent Companies”); and all the rights, privileges, powers and franchises of each of the Constituent
        Companies, and all property, real, personal and mixed, and all debts due to any of the Constituent Companies on whatever account, as well as all other things in action or belonging to each of the Constituent Companies, shall be vested in the
        Surviving Company; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectively the property of the Surviving Company as they were of the several and respective Constituent
        Companies, and the title to any real estate vested by deed or otherwise in either of such Constituent Companies shall not revert or be in any way impaired by the Merger; but all rights of creditors and all liens upon any property of any of the
        Constituent Companies shall be preserved unimpaired, and all debts, liabilities and duties of the Constituent Companies shall thenceforth attach to the Surviving Company, and may be enforced against it to the same extent as if said debts,
        liabilities and duties had been incurred or contracted by it.

    

    

    
      

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    1.6. Manner and Basis of Converting Equity. At the
        Effective Time:

    

    

    (a) By virtue of the Merger and without
        any action on the part of the shareholders of the Company all of the shares of Acquisition Stock, outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be
        converted into the right to receive such proportionate number of CDI Shares, so that at the Effective Time, the Company shall be the holder of all of the issued and outstanding CDI Shares; and

    

    

    (b) all of the CDI Shares issued and
        outstanding immediately prior to the Effective time shall be converted into the right to receive: Twenty-Five Million (25,000,000) newly-issued shares of I-On Common Stock (the “Merger Shares”).

    

    

    (c) From and after the Effective Time,
        all such CDI Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of CDI Shares shall cease to have any rights with respect thereto, except the right to receive the consideration set
        forth in this Section 1.6 therefor upon the surrender of such CDI Shares in accordance with Section 2.2.

    

    

    (d) Adjustment to Stock
          Consideration. The applicable Merger Shares shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into the Merger
        Shares), cash dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Company Common Stock occurring on or after the date hereof and prior to the Effective Time; provided,
        however, that it is acknowledged and agreed that the Reverse Split shall have been deemed to occur prior the consummation of this transaction and as such shall not adjust the number of Merger Shares provided herein.

    

    

    1.7. Surrender and Exchange of
          Certificates. Promptly after the Effective Time and upon surrender of a certificate or certificates representing the CDI Shares that were outstanding immediately prior to the Effective Time or an affidavit and indemnification in form
        reasonably acceptable to counsel for the Company stating that such CDI Shareholders have lost their certificate or an affidavit or that such certificates have been destroyed, the Company shall cause its transfer agent (the “Transfer Agent”) to
        issue to the CDI Shareholders surrendering such certificate(s) or affidavit, a certificate or certificates registered in the name of such CDI Shareholders representing the number of shares of the Merger Shares as instructed by CDI at the Effective
        Time. Until the certificate(s) is or are surrendered, each certificate(s) that immediately prior to the Effective Time represented any outstanding shares of CDI Shares shall be deemed at and after the Effective Time to represent only the right to
        receive upon surrender as aforesaid pro rata portion of the Merger Shares as specified in Section 1.6(b) for the holder thereof or to perfect any rights of appraisal that such holder may have pursuant to the applicable provisions of the DGCL.

    

    

    (a)          Full Satisfaction.  All Merger
      Shares paid to the CDI Shareholders in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of CDI Common Stock formerly represented by such CDI Shareholders, and from and
      after the Effective Time, there shall be no further registration of transfers of shares of CDI Common Stock on the stock transfer books of the Surviving Company. If, after the Effective Time, certificates or book-entry shares for CDO Common Stock are
      presented to the Company or the Surviving Company, they shall be cancelled and exchanged as provided in this Section 1.6.

     

    (b)          No Fractional Shares.  No fractional shares of I-On Common Stock shall be issued upon the surrender of CDI Common
      Stock for exchange, no dividend or distribution with respect to Company Common Stock shall be payable on or with respect to any fractional share, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights
      of a shareholder of Company. Notwithstanding anything to the contrary contained herein, each holder of CDI Common Stock who would otherwise have been entitled to receive a fractional share of I-On Common Stock (after taking into account all CDI
      Common Stock owned by such Person) as a result of the Merger shall receive, in lieu thereof, an additional share of I-On Common Stock rounded up to the nearest whole share.

     

    
      

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    1.8. The Company Capital Stock. The Company agrees that it will cause the Merger Shares at the Effective Time pursuant to Section 1.6(b) to be available for such purposes. The Company further
        covenants that at the Closing, and including the issuance of the Merger Shares, the retirement and cancellation of the Exchange Shares and the effectuation of the Reverse Split on a 1 for 10 or 1 to 15 basis. There will be approximately 26,203,034
        shares of the I-On Common Stock issued and outstanding, and that, no other common or preferred stock or equity securities or any options, warrants, rights or other agreements or instruments convertible, exchangeable or exercisable into common or
        preferred stock or other equity securities shall be issued or outstanding.

    

    

    1.9. Operation of Surviving Company.
        CDI acknowledges that upon the effectiveness of the Merger, and the compliance by the Company and Acquisition with their respective duties and obligations hereunder, the Company shall have the absolute and unqualified right to deal with the assets
        and business of the Surviving Company as its own property subject only to the limitations on the disposition or use of such assets or the conduct of such business as existed prior to the Merger.

    

    

    1.10. Appointment of Officers and
          Directors. Simultaneously upon consummation of the Closing, the persons set forth on Exhibit G shall be appointed to serve as the Company’s officers
        and directors as set forth opposite each of their names to serve until such time as provided in the Bylaws of the Company.

    

    

    1.12. Closing Events. At the Closing, each of the respective parties shall execute, acknowledge, and deliver (or shall cause to be executed, acknowledged, and delivered) any and all officers’ certificates, opinions, financial
        statements, agreements, resolutions, rulings, or other instruments required by this Agreement to be so delivered at or prior to the Closing, and the documents and certificates provided in Sections 5.2, 5.4, 5.6,
          6.2, 6.4 and 6.5, together with such other items as may be reasonably requested by the parties and their respective legal counsel in order to effectuate or evidence the transactions contemplated
        hereby. If agreed to by the parties, the Closing may take place through the exchange of documents (other than the exchange of stock certificates) by fax, email and/or express courier.

    

    

    1.13. Exemption From Registration. The Company and CDI intend that the Merger Shares to be issued pursuant to the Merger will be issued in a transaction exempt from registration under the Securities Act of 1933, as amended (“Securities Act”) and from the qualification and registration requirements of any applicable state “Blue Sky” or securities laws.

    

    

    ARTICLE II

    REPRESENTATIONS, COVENANTS, AND

    WARRANTIES OF CDI

    

    

    CDI represents and warrants to the Company, to the knowledge of CDI, that the following representations and warranties in this Article II are true and
      complete as of the date hereof and as of the Closing Date (or in the case of representations and warranties that by their terms speak as of a specified date, as of such specified date), subject to the exceptions disclosed in the disclosure schedules
      attached hereto (the “Schedules”) (referencing the appropriate section and subsection numbers of this Agreement; provided, however, that the information set forth in one section or subsection of
      the Schedules shall be deemed to apply to each other section or subsection thereof to which its relevance is reasonably material to a Company on the face of such disclosure), which exceptions shall be deemed to be part of, and qualifications to, the
      representations and warranties contained in this Article II. For purposes of this Article II, the phrase “to the knowledge of CDI” or any phrase of similar import shall
      be deemed to refer to the actual knowledge of the executive officers of CDI immediately before the Closing.

    

    

    2.1. Organization. CDI is a
        corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. CDI has the power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders
        of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business in jurisdictions in which the character and location of the
        assets owned by it or the nature of the business transacted by it requires qualification except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have an
        CDI Material Adverse Effect (as hereinafter defined). The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision
        of CDI’s organizational documents. CDI has taken all action required by laws, its organizational documents, certificate of business registration, or otherwise to authorize the execution and delivery of this Agreement. CDI has full power, authority,
        and legal right and has taken or will take all action required by law, its organizational, and otherwise to consummate the transactions herein contemplated. For purposes of this Agreement, “CDI Material Adverse
          Effect” means a material adverse effect on the assets, business, condition (financial or otherwise) or results of operations of CDI or its subsidiaries taken as a whole.

    

    

    
      

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    2.2. Capitalization. As of the
        date of this Agreement, CDI’s authorized capital stock consists of 2,300,000 shares, par value $0.0001 of which 1,123,268 shares are issued and outstanding. All of the issued and outstanding CDI Shares are
        duly authorized, validly issued, fully paid, nonassessable and free of all pre-emptive rights. There are no other classes of equity, notes, or other indebtedness convertible into CDI Common Stock, outstanding or authorized options, warrants,
        rights, agreements, or commitments to which CDI is a party or which are binding upon CDI providing for the issuance or redemption of any of its membership interests. Except as set forth on Schedule 2.2 hereto, there are no agreements to
        which CDI is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under the Securities Act, or sale or transfer (including without limitation agreements relating to
        pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of CDI. To the knowledge of CDI, there are no agreements among other parties to which CDI is a party and by which it is bound with respect to the
        voting (including without limitation voting trusts or proxies) or sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of CDI. All of the issued and
        outstanding CDI Shares were issued in compliance with applicable federal and state securities laws.

    

    

    2.3. Financial Statements.

    

    

    (a) CDI shall have prepared and shall
        have delivered to the Company audited financial statements for the two fiscal years ended December 31, 2019 and  December 31, 2020 which shall have been prepared in conformity with generally accepted accounting principles consistently applied and
        shall be the subject of an unqualified opinion of a recognized firm of independent certified public accountants reasonably acceptable to the Company (the “CDI Audited Financial Statements”).  In addition, and on the Closing, CDI shall have prepared
        unaudited financial statements and notes thereto for the fiscal quarter closing within 60 days of the Closing Date, comparative to the same quarter in the preceding fiscal year including income statements, balance sheets and statements of cash flow
        and stockholders equity which shall have been prepared in conformity with generally accepted accounting principles consistently applied, be in Form 10-Q format and have been reviewed by CDI’s independent certified public accountants (the “CDI
        Unaudited Financial Statements” and, collectively with the CDI Audited Financial Statements, the “CDI Financial Statements”).

    

    

    (b) CDI has filed all income tax
        returns required to be filed by it from its inception to the date hereof. All such returns are complete and accurate in all material respects.

    

    

    (c) CDI has no liabilities with respect
        to the payment of federal, county, local, or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which CDI may be liable in its own right or as a transferee of the assets of,
        or as a successor to, any other corporation or entity.

    

    

    (d) No deficiency for any taxes has
        been proposed, asserted or assessed against CDI. There has been no tax audit, nor has there been any notice to CDI by any taxing authority regarding any such tax audit, or, to the knowledge of CDI, is any such tax audit threatened with regard to
        any taxes or CDI tax returns. CDI does not expect the assessment of any additional taxes of CDI for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of CDI.

    

    

    (e) The books and records, financial
        and otherwise, of CDI are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.

    

    

    2.4. Disclosure. No representation or warranty by CDI contained in this Agreement or in any of the agreements or other documents executed pursuant to this Agreement, and no statement contained in any document, certificate
        or other instrument delivered or to be delivered by or on behalf of CDI pursuant to this Agreement or therein, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of
        the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. CDI has disclosed to the Company all material information relating to the business of CDI or the transactions contemplated by
        this Agreement.

    

    

    
      

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    2.5. Undisclosed Liabilities. CDI has no material liability (whether known, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities which have arisen in the
        Ordinary Course of Business (as hereinafter defined) and (b) contractual and other liabilities incurred in the Ordinary Course of Business. As used in this Article II, “Ordinary Course of Business” means the
        ordinary course of CDI’s business, consistent with past custom and practice (including with respect to frequency and amount).

    

    

    2.6. Absence of Certain Changes or
          Events. Except as set forth in this Agreement, Schedule 2.6 hereto, since the date of the latest balance sheet included in the CDI Financial Statements:

    

    

    (a) except in the Ordinary Course of
        Business, there has not been (i) any material adverse change in the business, operations, properties, assets, or condition of CDI; or (ii) any damage, destruction, or loss to CDI (whether or not covered by insurance) materially and adversely
        affecting the business, operations, properties, assets, or condition of CDI; and

    

    

    (b) CDI has not (i) borrowed or agreed
        to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) not otherwise in the Ordinary Course of Business; (ii) paid any material obligation or liability not otherwise in the Ordinary
        Course of Business (absolute or contingent) other than current liabilities reflected in or shown on the most recent CDI balance sheet, and current liabilities incurred since that date in the Ordinary Course of Business; (iii) sold or transferred,
        or agreed to sell or transfer, any of its assets, properties, or rights not otherwise in the Ordinary Course of Business; (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party not
        otherwise in the Ordinary Course of Business if such amendment or termination is material, considering the business of CDI; or (v) issued, delivered, or agreed to issue or deliver any stock, bonds or other corporate securities including debentures
        (whether authorized and unissued or held as treasury stock).

    

    

    2.7. Litigation and Proceedings. There are no actions, suits, proceedings, or investigations pending or, to the knowledge of CDI, threatened by or against CDI, or affecting CDI, or its properties, at law or in equity, before any court or
        other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.

    

    

    2.8. No Conflict With Other
          Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute
        an event of default under, any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which CDI is a party or to which any of its properties or operations are subject.

    

    

    2.9. Contracts. CDI has provided, or will provide the Company, copies of all material contracts, agreements, franchises, license agreements, or other commitments to which CDI is a party or by which it or any of its assets,
        products, technology, or properties are bound.

    

    

    2.10. Compliance With Laws and
          Regulations. CDI has complied with all applicable statutes and regulations of any federal, state, county, or other governmental entity or agency thereof, except to the extent that
        noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of CDI.

    

    

    2.11. Approval of Agreement. The Board of Directors of CDI (the “CDI Directors”) and the CDI Shareholders will have authorized the execution and delivery of this Agreement by CDI and will have
        approved the transactions contemplated hereby prior to the Closing. This Agreement has been duly and validly executed and delivered by CDI and constitutes a valid and binding obligation of CDI, enforceable against CDI in accordance with its terms.

    

    

    2.12. Title and Related Matters. CDI has good and marketable title to all of its properties, interest in properties, and assets, real and personal, free and clear of all liens, pledges, charges, or encumbrances except statutory liens or
        claims not yet delinquent, those arising in the Ordinary Course of Business, and those disclosed in Schedule 2.12 hereto.

    

    

    
      

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    2.13. Governmental Authorizations. CDI has all licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date
        hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is
        required in connection with the execution and delivery by CDI of this Agreement and the consummation by CDI of the transactions contemplated hereby.

    

    

    2.14. Continuity of Business
          Enterprises. CDI has no commitment or present intention to liquidate CDI or sell or otherwise dispose of a material portion of its business or assets following the consummation of the
        transactions contemplated hereby.

    

    

    2.15. CDI Shareholders. The CDI Shareholders have full right, power, and authority to transfer, assign, convey, and deliver their respective CDI Shares; and delivery of such CDI Shares at the Closing will convey to the Company
        good and marketable title to such CDI Shares free and clear of any claims, charges, equities, liens, security interests, and encumbrances except for any such claims, charges, equities, liens, security interests, and encumbrances arising out of such
        CDI Shares being held by the Company.

    

    

    2.16. No Brokers. Except as set forth as Schedule 2.6, CDI has not entered into any contract with any person, firm or other entity that would obligate CDI or the Company to pay any commission, brokerage or finders’
        fee in connection with the transactions contemplated hereby.

    

    

    2.17. Subsidiaries. Except as set forth as Schedule 2.17, CDI has no subsidiaries.

    

    

    2.18. Intellectual Property. CDI owns or has the right to use all Intellectual Property (as hereinafter defined) necessary (a) to use, manufacture, market and distribute the products manufactured, marketed, sold or licensed, and to
        provide the services provided, by CDI to other parties (together, the “Customer Deliverables”) and (b) to operate the internal systems of CDI that are material to its business or operations, including,
        without limitation, computer hardware systems, software applications and embedded systems (the “Internal Systems”). The Intellectual Property owned by or licensed to CDI and incorporated in or underlying the
        Customer Deliverables or the Internal Systems is referred to herein as the “CDI Intellectual Property”). Each item of CDI Intellectual Property will be owned or available for use by the Company immediately
        following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing. CDI has taken all reasonable measures to protect the proprietary nature of each item of CDI Intellectual Property. To the knowledge of
        CDI, (i) no other person or entity has any rights to any of CDI Intellectual Property owned by CDI except pursuant to agreements or licenses entered into by CDI and such person in the ordinary course, and (ii) no other person or entity is
        infringing, violating or misappropriating any of CDI Intellectual Property. For purposes of this Agreement, “Intellectual Property” means all patents and patent applications, copyrights and registrations
        thereof, computer software, data and documentation, trade secrets and confidential business information, whether patentable or unpatentable and whether or not reduced to practice, know-how, manufacturing and production processes and techniques,
        research and development information, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, trademarks, service marks, trade names,
        domain names and applications and registrations therefor, and other proprietary rights relating to any of the foregoing.

    

    

    2.19. Certain Business
          Relationships With Affiliates. Except as set forth in Schedule 2.19 hereto, or as contemplated by employment agreements, consulting agreements and the agreements contemplated by the
        transactions contemplated by this Agreement, no affiliate of CDI (a) owns any property or right, tangible or intangible, which is used in the business of CDI, (b) has any claim or cause of action against CDI, or (c) owes any money to, or is owed
        any money by, CDI.

    

    

    
      

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    ARTICLE III

    REPRESENTATIONS, COVENANTS, AND

    WARRANTIES OF THE COMPANY AND ACQUISITION

    

    

    The Company and Acquisition represent and warrant to CDI that the following representations and warranties in this Article III are true and complete as of
      the date hereof and as of the Closing Date (or in the case of representations and warranties that by their terms speak as of a specified date, as of such specified date), subject to the exceptions disclosed in the disclosure schedules attached hereto
      (the “Schedules”) (referencing the appropriate section and subsection numbers of this Agreement; provided, however, that the information set forth in one section or subsection of the Schedules
      shall be deemed to apply to each other section or subsection thereof to which its relevance is reasonably Company on the face of such disclosure), which exceptions shall be deemed to be part of, and qualifications to, the representations and
      warranties contained in this Article III. For purposes of this Article III, the phrase “to the knowledge of the Company,” “to the knowledge of Acquisition,” or any
      phrase of similar import shall be deemed to refer to the actual knowledge of the executive officers of the Company or Acquisition, as applicable, immediately before the Closing.

    

    

    3.1. Organization.

    

    

    (a) The Company is a corporation duly
        organized, validly existing, and in good standing under the laws of the State of Delaware, and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of
        public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, and there is no jurisdiction in which it is not qualified in which the character and location of the
        assets owned by it or the nature of the business transacted by it requires qualification. Included in the Company Reports (as hereinafter defined) are complete and correct copies of the Certificate of
        Incorporation and Bylaws of the Company, and all amendments thereto, as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any
        provision of the Company’s Certificate of Incorporation or Bylaws. The Company has taken all action required by law, its Certificate of Incorporation, its Bylaws, or otherwise to authorize the execution and delivery of this Agreement, and the
        Company has full power, authority, and legal right and has taken all action required by law, its Certificate of Incorporation, Bylaws, or otherwise to consummate the transactions contemplated hereby.

    

    

    (b) Acquisition is a corporation duly
        organized, validly existing, and in good standing under the laws of the State of Delaware, and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of
        public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, and there is no jurisdiction in which it is not qualified in which the character and location of the
        assets owned by it or the nature of the business transacted by it requires qualification. Attached hereto as Exhibits H and I, respectively, are complete and
        correct copies of the Certificate of Incorporation and Bylaws of Acquisition, and all amendments thereto, as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated
        hereby will not, violate any provision of Acquisition’s Certificate of Incorporation or Bylaws. Acquisition has taken all action required by law, its Certificate of Incorporation, its Bylaws, or otherwise to authorize the execution and delivery of
        this Agreement, and Acquisition has full power, authority, and legal right and has taken all action required by law, its Certificate of Incorporation, Bylaws, or otherwise to consummate the transactions contemplated hereby.

    

    

    
      

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    3.2. Capitalization.

    

    

    (a) As of the date of this Agreement,
        the Company’s authorized capital stock consists of 110,000,000 shares, par value $0.0001 of which 100,000,000 are designated as I-On Common Stock of which 35,030,339 shares are outstanding and 10,000,000
        shares are designated blank check preferred stock of which no shares are issued and outstanding.  There are no outstanding or authorized options, warrants, rights, agreements, or commitments to which the Company is a party, or which are binding
        upon the Company providing for the issuance or redemption of any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, or similar rights with respect to the Company. There are no agreements to which the
        Company is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under the Securities Act, or sale or transfer (including without limitation agreements relating to
        pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Company. There are no agreements among other parties to which the Company is a party and by which it is bound, with respect to the voting
        (including without limitation voting trusts or proxies) or sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Company. All of the issued and
        outstanding shares of the Common Stock were issued in compliance with applicable federal and state securities laws. The Merger Shares to be issued at the Closing pursuant this Agreement, when issued and delivered in accordance with the terms
        hereof, shall be duly and validly issued, fully paid and nonassessable and free of all pre-emptive rights.

    

    

    (b) The authorized capital stock of
        Acquisition consists of 1,000 shares of common stock, par value $0.0001 per share, of which 100 shares will be issued and outstanding. All of the issued and outstanding shares of common stock of Acquisition are owned by the Company. All the issued
        and outstanding shares of common stock of Acquisition are duly authorized, validly issued, fully paid, nonassessable and free of all pre-emptive rights. There are no outstanding or authorized options, warrants, rights, agreements or commitments to
        which Acquisition is a party or which are binding upon Acquisition providing for the issuance or redemption of any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to
        Acquisition. There are no agreements to which Acquisition is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under the Securities Act, or sale or transfer (including
        without limitation agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of Acquisition.

    

    

    (c) Acquisition is a wholly-owned
        subsidiary of the Company that was formed specifically for the purpose of the Merger and that has not conducted any business or acquired any property, and will not conduct any business or acquire any property prior to the Closing Date.

    

    

    3.3. Financial Statements. The
        audited financial statements and unaudited interim financial statements of the Company included in the Company Reports (collectively, the “Company Financial Statements”) (a) complied as to form in all
        material respects with applicable accounting requirements and, as appropriate, the published rules and regulations of the SEC with respect thereto when filed, (b) were prepared in accordance with GAAP applied on a consistent basis throughout the
        periods covered thereby (except as may be indicated therein or in the notes thereto, and in the case of quarterly financial statements, as permitted by Form 10-Q under the Exchange Act), (c) fairly present the consolidated financial condition,
        results of operations and cash flows of the Company as of the respective dates thereof and for the periods referred to therein, and (d) are consistent with the books and records of the Company.

    

    

    3.4. Securities Act and Exchange Act
          Filings. The Company has furnished or made available to CDI complete and accurate copies, as amended or supplemented, of its (a) Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and (b) all other reports filed by the
        Company under Section 13 or 15(d) of the Exchange Act and all proxy or information statements filed by the Company under subsections (a) or (c) of Section 14 of the Exchange Act with the SEC since December 31, 2017 (such documents are collectively
        referred to herein as the “Company Reports”). The Company Reports constitute all of the documents required to be filed by the Company under Section 13 or subsections (a) or (c) of Section 14 of the Exchange
        Act with the SEC from July 3, 2013 through the date of this Agreement. The Company Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder when filed. Each the Company Report
        filed under the Exchange Act was filed on or before its due date (if any) or within the applicable extension period provided under the Exchange Act. As of their respective dates, the Company Reports did not contain any untrue statement of a
        material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

    

    

    3.5. Undisclosed Liabilities. Except as set forth in the Company Financial Statements, neither the Company nor any Subsidiary has any material liability (whether known or unknown, whether absolute or contingent, whether liquidated or
        unliquidated and whether due or to become due), except for (a) liabilities shown on the Company Reports, (d) liabilities which have arisen since the date of the Company Reports in the Ordinary Course of Business (as hereinafter defined) and (c)
        contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet. As used in this Article III, “Ordinary Course of Business”
        means the ordinary course of the Company’s business, consistent with past custom and practice (including with respect to frequency and amount).

    

    

    
      

      -9-

      
        

      

    

    3.6. Absence of Certain Changes or
          Events. Except as set forth in this Agreement, Schedule 3.6 hereto, or in the Company Reports, since the date of the latest balance sheet included in the Company Reports:

    

    

    (a) there has not been any material
        adverse change, financial or otherwise, in the business, operations, properties, assets, or condition of the Company or Acquisition (whether or not covered by insurance) materially and adversely affecting the business, operations, properties,
        assets, or condition of the Company or Acquisition;

    

    

    (b) neither the Company nor Acquisition
        has (i) amended its Certificate of Incorporation or Bylaws; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to
        purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are extraordinary or material considering the business of the Company or Acquisition; (iv) made any material change in its method of management,
        operation, or accounting; (v) entered into any other material transactions; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or
        employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its employees; or (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension,
        retirement, or other employee benefit plan, payment, or arrangement, made to, for, or with its officers, directors, or employees;

    

    

    (c) neither the Company nor Acquisition
        has (i) granted or agreed to grant any options, warrants, or other rights for its stocks, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any
        material obligation or liability (absolute or contingent) except liabilities incurred in the Ordinary Course of Business; (iii) paid or agreed to pay any material obligation or liability (absolute or contingent) other than current liabilities
        reflected in or shown on the most recent the Company Reports and current liabilities incurred since that date in the Ordinary Course of Business and professional and other fees and expenses incurred in connection with the preparation of this
        Agreement and the consummation of the transactions contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, property, or rights (except assets, property, or rights not used or useful in its business which, in
        the aggregate have a value of less than $25,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value of less than $25,000); (v) made or permitted any amendment or termination of any
        contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of the Company or Acquisition; or (vi) issued, delivered, or agreed to issue or deliver any stock, bonds, or other
        corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement;

    

    

    (d) to the knowledge of the Company, it
        has not become subject to any statute or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of the Company; and

    

    

    (e) to the knowledge of Acquisition, it
        has not become subject to any statute or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of Acquisition.

    

    

    3.7. Title and Related Matters.
        The Company has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the Company Reports or acquired after that date (except properties, interest in properties, and assets
        sold or otherwise disposed of since such date in the Ordinary Course of Business), free and clear of all liens, pledges, charges, or encumbrances except:

    

    

    (a) statutory liens or claims not yet
        delinquent;

    

    

    
      

      -10-

      
        

      

    

    (b) such imperfections of title and
        easements as do not and will not materially detract from or interfere with the present or proposed use of the properties subject thereto or affected thereby or otherwise materially impair present business operations on such properties; and

    

    

    (c) as described in the Company
        Reports.

    

    

    3.8. Litigation and Proceedings.
        There are no actions, suits, or proceedings pending or, to the knowledge of the Company, threatened by or against or affecting the Company, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign,
        or before any arbitrator of any kind except as specifically disclosed in the Company Reports.

    

    

    3.9. Contracts. The Company is
        not a party to any material contract, agreement, or other commitment, except as specifically disclosed in the Company Reports.

    

    

    3.10. No Conflict With Other
          Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute
        a default under, any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or to which it or any of its assets or operations are subject.

    

    

    3.11. Governmental Authorizations. Except as disclosed in the Company Reports, the Company is not required to have any licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its
        business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration,
        declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby.

    

    

    3.12. Compliance With Laws and Regulations. Except as
        disclosed in the Company Reports, the Company:

    

    

    (a) is in compliance with each
        applicable law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any governmental entity, except for any violations or defaults that, individually or in the aggregate, have not had and would not
        reasonably be expected to have a Company Material Adverse Effect (as hereinafter defined);

    

    

    (b) has complied with all federal and
        state securities laws and regulations, including being current in all of its reporting obligations under such federal and state securities laws and regulations;

    

    

    (c) has not, and the past and present
        officers, directors and affiliates of the Company have not, been the subject of, nor does any officer or director of the Company have any reason to believe that the Company or any of its officers, directors or affiliates will be the subject of, any
        civil or criminal proceeding or investigation by any federal or state agency alleging a violation of securities laws;

    

    

    (d) has not been the subject of any
        voluntary or involuntary bankruptcy proceeding, nor has it been a party to any material litigation;

    

    

    (e) has not, and the past and present
        officers, directors and affiliates have not, been the subject of, nor does any officer or director of the Company have any reason to believe that the Company or any of its officers, directors or affiliates will be the subject of, any civil,
        criminal or administrative investigation or proceeding brought by any federal or state agency having regulatory authority over such entity or person;

    

    

    (f) does not and will not immediately
        prior to the Closing, have any liabilities, contingent or otherwise and is not a party to any executory agreements;

    

    

    (g) is not a “blank check company” as
        such term is defined by Rule 419 adopted under the Securities Act; and

    

    

    
      

      -11-

      
        

      

    

    (h) is not a “shell company” as such
        term is defined by Rule 12b-2 adopted under the Exchange Act.

    

    

    For purposes of this Agreement, a “Company Material Adverse Effect” means a material adverse effect on the assets, business, condition (financial or otherwise)
      or results of operations of the Company or its subsidiaries taken as a whole.

    

    

    3.13. Insurance. The Company’s
        policies provide adequate and customary coverage for the operation of the Company’s business as currently operated and are sufficient for compliance by the Company with all requirements of law and all material agreements to which the Company is a
        party or by which any of the assets of Seller are bound. All of such policies are in full force and effect and are valid and enforceable in accordance with their terms, and Seller has complied with all terms and conditions of such policies,
        including premium payments. None of the insurance carriers has indicated to the Seller its intention to cancel, or alter the coverage under such policies. All applications for such policies are accurate in all material respects. The Company does
        not have any claim pending against any of the insurance carriers under such policies and there has been no actual or alleged occurrence of any kind which would give rise to any such claim and the Company has not made any claims under any policy at
        any time, except for those specified claims set forth on Schedule 3.13.

    

    

    3.14. Approval of Agreement. At the Closing, the board of directors of the Company (the “Company Board”) and the Shareholders of Acquisition shall have authorized the execution and delivery of
        this Agreement by the Company and Acquisition and have approved this Agreement and the transactions contemplated hereby.

    

    

    3.15. Material Transactions With
          Affiliates. Except as disclosed herein and in the Company Reports, there exists no material contract, agreement, or arrangement between the Company and any person who was at the time of
        such contract, agreement, or arrangement an officer, director, or person owning of record or known by the Company to own beneficially any common stock of the Company and which is to be performed in whole or in part after the date hereof or was
        entered into not more than three (3) years prior to the date hereof.

    

    

    3.16. Employment Matters. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Company Material Adverse
        Effect. None of the Company’s or any of its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
        collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to
        be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third
        party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all
        U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the
        aggregate, reasonably be expected to have a Company Material Adverse Effect.

    

    

    3.17. No Brokers. The Company has not entered into any contract with any person, firm or other entity that would obligate CDI or the Company to pay any commission, brokerage or finders’ fee in connection with the
        transactions contemplated herein.

    

    

    3.18. Subsidiaries. The Company’s subsidiaries are set forth on Schedule 3.18.

    

    

    3.19. Disclosure. No representation or warranty by the Company contained in this Agreement, and no statement contained in any document, certificate or other instrument delivered or to be delivered by or on behalf of the
        Company pursuant to this Agreement or therein, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order
        to make the statements herein or therein not misleading. the Company has disclosed to CDI all material information relating to the business of the Company or the transactions contemplated by this Agreement.

    

    

    
      

      -12-

      
        

      

    

    ARTICLE IV

    SPECIAL COVENANTS

    

    

    4.1. Current Report. In connection with the execution of the Agreement, the Company shall file a current report on Form 8-K relating to this Agreement and the transactions contemplated hereby (the “Current Report”). The Company shall cause the Current Report to be filed with the SEC no later than four (4) business days of the execution of the agreement and to otherwise comply with all requirements of applicable federal and
        state securities laws.

    

    

    4.2. Proxy Statement.

    

    

    (a)    As promptly as practicable after the date of this Agreement, the Company shall prepare, and following receipt of the Company Audited Financial Statements, file with the SEC a proxy statement
      relating to the Company Stockholder Meeting to be held in connection with the Merger (together with any amendments thereof or supplements thereto, the “Proxy Statement”). Each of the Parties shall reasonably cooperate with the other party and
      furnish, and cause its Representatives to furnish all information concerning itself and their Affiliates, as applicable, to the other Parties as the other Parties may reasonably request in connection with such actions and the preparation of the Proxy
      Statement. Without limiting the foregoing, each of the Company and CDI will use commercially reasonable efforts to cause to be delivered to the Company and CDI a letter of such company’s independent accounting firm, dated no more than two (2)
      Business Days before the date on which the definitive Proxy Statement is filed with the SEC (and reasonably satisfactory in form and substance to the Company and CDI), that is customary in scope and substance for letters delivered by independent
      public accountants in connection with proxy statements similar to the Proxy Statement.

    

    

    (b)   the Company covenants and agrees that the Proxy Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith) will (i) comply as to form in all material
      respects with the requirements of applicable U.S. federal securities laws and the DGCL, and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
      statements made therein, in light of the circumstances under which they were made, not misleading.  CDI covenants and agrees that the information supplied by or on behalf of CDI, concerning itself or its Affiliates, to the Company for inclusion in
      the Proxy Statement (including the CDI Financial Statements) will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make such information, in light of the
      circumstances under which they were made, not misleading. Notwithstanding the foregoing, neither party makes any covenant, representation or warranty with respect to statements made in the Proxy Statement (and the letter to stockholders, notice of
      meeting and form of proxy included therewith), if any, based on information provided by the other party or its Subsidiaries or any of their Representatives regarding such other party or its Affiliates, for inclusion therein.

    

    

    (c)    the Company shall use commercially reasonable efforts to cause the Proxy Statement to be mailed to the Company’s stockholders as promptly as practicable after the Proxy Statement has been
      filed with the SEC and either (i) the SEC has indicated that it does not intend to review the Proxy Statement or that its review of the Proxy Statement has been completed or (ii) at least ten (10) days shall have passed since the Proxy Statement was
      filed with the SEC without receiving any correspondence from the SEC commenting upon, or indicating that it intends to review, the Proxy Statement, all in compliance with applicable U.S. federal securities laws and the DGCL. If the Company,
      Acquisition or CDI become aware of any event or information that, pursuant to the Securities Act or the Exchange Act, should be disclosed in an amendment or supplement to the Proxy Statement, as the case may be, then such Party, as the case may be,
      shall promptly inform the other Parties thereof and shall cooperate with such other Parties in filing such amendment or supplement with the SEC and, if appropriate, in mailing such amendment or supplement to the Company stockholders.

    

    

    (d)    CDI shall reasonably cooperate with the Company and provide, and cause its Representatives to provide, the Company and its Representatives, with all true, correct and complete information
      regarding the Company or its Subsidiaries that is required by Law to be included in the Proxy Statement or reasonably requested by the Company to be included in the Proxy Statement.

    

    

    
      

      -13-

      
        

      

    

    (e)    As promptly as reasonably practicable following the date of this Agreement (i) CDI will furnish to the Company the CDI Financial Statements, suitable for inclusion in the Proxy Statement and
      prepared in accordance with GAAP as applied on a consistent basis (unless otherwise noted therein throughout the periods indicated) during the periods involved (except as may be indicated in the notes to such financial statements or, in the case of
      unaudited financial statements, as permitted by Form 10-Q of the SEC, and except that the unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments that are not reasonably expected to be
      material in amount) and on that basis will present fairly, in all material respects, the financial position and the results of operations, and cash flows of the Company or CDI, as applicable, as of the dates of and for the periods referred to
      therein.

    

    

    (f)     Each Party shall bear its own fees and expenses in connection with preparation of the Proxy, solicitation of proxies and the Company Shareholder Meeting. If required, the Company shall
      retain, and be responsible for the fees and expenses of a proxy solicitor, to be retained in connection with the solicitation of proxies for the  Company Shareholder Meeting. The Company shall also be responsible for all filing fees and printing,
      mailing and other costs incurred in connection with preparation and filing of the Proxy with the SEC and the solicitation of proxies for the Company Meeting.

    

    

    4.3. Company Stockholder Meeting.  
        The Company shall take all action necessary under applicable Law to call, give notice of and hold a meeting of the holders of the Company Common Stock to consider and vote to approve the Reorganization and the transactions contemplated by the
        Transfer Agreement, (collectively, the “Company Stockholder Matters” and such meeting, the “Company Stockholder Meeting”). The Company Stockholder Meeting shall be held as promptly as practicable after the date that the definitive Proxy Statement
        is filed with the SEC, and in any event no later than forty-five (45) days after such date. the Company shall take reasonable measures to ensure that all proxies solicited in connection with the  Company Stockholder Meeting are solicited in
        compliance with all applicable Law. Notwithstanding anything to the contrary contained herein, if on the date of the Company Stockholder Meeting, or a date preceding the date on which the  Company Stockholder Meeting is scheduled, the Company
        reasonably believes that (i) it will not receive proxies sufficient to obtain the Required Company Stockholder Vote, whether or not a quorum would be present or (ii) it will not have sufficient shares of Company Common Stock represented (whether in
        person or by proxy) to constitute a quorum necessary to conduct the business of the Company Stockholder Meeting, the Company may postpone or adjourn, or make one or more successive postponements or adjournments of, the Company Stockholder Meeting.

    

    

    4.4 Actions of CDI. Prior to the
        Closing, CDI shall cause and demonstrate to the Company the following actions have been taken by the written consent of the CDI Shareholders:

    

    

    (a) the approval of this Agreement and
        the transactions contemplated hereby; and

    

    

    (b) such other actions as the Company
        may determine are necessary or appropriate.

    

    

    4.5. Access to Properties and
          Records. The Company and CDI will each afford to the officers and authorized representatives of the other reasonable access to the properties, books, and records of the Company or CDI in
        order that each may have full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to
        the business and properties of the Company or CDI as the other shall from time to time reasonably request.

    

    

    4.6. Delivery of Books and Records. At the Closing, CDI shall deliver to the Company, CDI’s minute books, books of account, contracts, records, and all other books or documents.

    

    

    4.7. Actions Prior to Closing by
          Both Parties.

    

    

    (a) From and after the date of this
        Agreement until the Closing Date and except as permitted or contemplated by this Agreement, the Company, CDI and Acquisition will each: (i) carry on its business in substantially the same manner as it has heretofore; (ii) maintain and keep its
        properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty; (iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to
        that now maintained by it; (iv) perform in all material respects all of its obligation under material contracts, leases, and instruments relating to or affecting its assets, properties, and business; (v) use its best efforts to maintain and
        preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and (vi) fully comply with and perform in all material respects all obligations and duties imposed
        on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.

    

    

    
      

      -14-

      
        

      

    

    (b) Except as set forth herein, from
        and after the date of this Agreement until the Closing Date, none of the Company, CDI, or Acquisition will: (i) make any change in their organizational documents, charter documents or Bylaws; (ii) take any action described in Section 2.6 in the case of CDI, or in Section 3.6 in the case of the Company or Acquisition (all except as permitted therein or as disclosed in the applicable party’s
        schedules); (iii) enter into or amend any contract, agreement, or other instrument of any of the types described in such party’s schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the Ordinary
        Course of Business involving the sale of goods or services, or (iv) make or change any material tax election, settle or compromise any material tax liability or file any amended tax return.

    

    

    4.8. Indemnification.

    

    

    (a) Indemnification by CDI. CDI hereby agrees to defend and indemnify the Company and Acquisition and each of the officers, agents and directors of the Company and Acquisition as of the date of this Agreement against any loss,
        liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it
        or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in Article II. The indemnification provided for in this Section
          4.8(a) shall not survive the Closing and consummation of the transactions contemplated hereby but shall survive the termination of this Agreement pursuant to Section 7.1(b).

    

    

    (b) Indemnification by the Company. The Company hereby agrees to defend and indemnify CDI and each of the officers or agents of CDI as of the date of this Agreement against any loss, liability, claim, damage, or expense (including, but not
        limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it or they may become subject arising out of or based on
        any inaccuracy appearing in or misrepresentation made in Article III. The indemnification provided for in this Section 4.8(b) shall survive the Closing and
        consummation of the transactions contemplated hereby and shall survive the termination of this Agreement pursuant to Section 7.1(c). In addition, for the sake of clarity, the representations listed in
        Section 3.12, including Section 3.12(h), shall survive the Closing, and the Company shall be liable for, and shall pay, any and all damages, costs, expenses, legal fees, accounting fees, or other liabilities that occur based on a breach of the
        representation made in Section 3.12(h), including the filing of any “super” Form 8-K to provide Form 10 Information.

    

    

    ARTICLE V

    CONDITIONS PRECEDENT TO OBLIGATIONS OF

    THE COMPANY AND ACQUISITION

    

    

    The obligations of the Company and Acquisition under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:

    

    

    5.1. Accuracy of Representations;
          Performance. The representations and warranties made by CDI in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such
        representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement), and CDI shall have performed or complied with all covenants and conditions required by this Agreement to be performed
        or complied with by CDI prior to or at the Closing. The Company may request to be furnished with a certificate, signed by a duly authorized officer of CDI and dated the Closing Date, to the foregoing effect.

    

    

    5.2. Officer’s Certificates. The
        Company shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of CDI to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of CDI
        threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in a disclosure schedule, by or against CDI which might result in any material
        adverse change in any of the assets, properties, business, or operations of CDI.

    

    

    
      

      -15-

      
        

      

    

    

    

    5.3. No Material Adverse Change.
        Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of CDI, nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or
        create any material adverse change in the financial condition, business, or operations of CDI.

    

    

    5.4. Stockholders Approval. The
        Company should have obtained the affirmative vote of a majority of the votes of the I-On Shareholders cost at the I-On Shareholders Meeting.

    

    

    5.5 Other Items.

    

    

    (a) The Company shall have received
        such further documents, certificates, or instruments relating to the transactions contemplated hereby as the Company may reasonably request.

    

    

    (b) The Company shall have conducted a
        complete and satisfactory due diligence review of CDI, as determined in the Company’s sole and absolute discretion.

    

    

    (c) The transactions contemplated by
        this Agreement shall have been approved by the CDI Directors and the CDI Shareholders.

    

    

    (d) Any necessary third-party consents
        shall be obtained prior to Closing, including but not limited to consents necessary from CDI’s lenders, creditors, vendors and lessors, as applicable.

    

    

    (e) CDI shall have prepared and shall
        have delivered to the Company audited financial statements since inception through December 31, 2020 which shall have been prepared in conformity with generally accepted accounting principles consistently applied and shall be the subject of an
        unqualified opinion of a recognized firm of independent certified public accountants reasonably acceptable to the Company.  In addition, and on the Closing, CDI shall have prepared unaudited financial statements and notes thereto for the fiscal
        quarter closing within 60 days of the Closing Date, comparative to the same quarter in the preceding fiscal year including income statements, balance sheets and statements of cash flow and stockholders equity which shall have been prepared in
        conformity with generally accepted accounting principles consistently applied, be in Form 10-Q format and have been reviewed by CDI’s independent certified public accountants.

    

    

    (f)  Approval of the transactions
        contemplated by this Agreement by the Company Board and a majority of the holders of I-On Common Stock.

    

    

    (g)  The Company shall have received
        executed copies of the Jae Purchase Agreement from the applicable CDI Stockholders, to be released from escrow simultaneously with the execution of this Agreement.

    

    

    5.5. Delivery of Financial
          Statements. CDI shall have delivered the CDI Financial Statements required in Section 2.3(d); unless waived by the Company, but which shall be delivered not more than sixty (60) days following the Closing.

    

    

    5.6. Good Standing. The Company
        shall have received certificates of good standing from the State of [Delaware], dated as of a date within five (5) days prior to the Closing Date certifying that CDI is in good standing as a corporation in the State of Delaware and has filed all
        tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.

     

      

    
      

      -16-

      
        

      

    

    ARTICLE VI

    CONDITIONS PRECEDENT TO OBLIGATIONS OF CDI

    

    

    The obligations of CDI under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:

    

    

    6.1. Accuracy of Representations;
          Performance. The representations and warranties made by the Company and Acquisition in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force
        and effect as if such representations and warranties were made at and as of the Closing Date, and the Company and Acquisition shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied
        with by the Company and Acquisition prior to or at the Closing. CDI shall have been furnished with a certificate, signed by a duly authorized executive officer of the Company and dated the Closing Date, to the foregoing effect.

    

    

    6.2. Officer’s Certificate. CDI
        shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized executive officer of the Company to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of the
        Company threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement.

    

    

    6.3. No Material Adverse Change.
        Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of the Company nor shall any event have occurred which, with the lapse of time or the giving of notice, may
        cause or create any material adverse change in the financial condition, business, or operations of the Company.

    

    

    6.4. Good Standing. CDI shall
        have received certificates of good standing from the Secretary of State of Delaware, or other appropriate office, dated as of a date within five (5) days prior to the Closing Date certifying that the Company and Acquisition, respectively, are in
        good standing as corporation in the states of Delaware and have filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.

    

    

    6.5. Other Items.

    

    

    (a) CDI shall have received such
        further documents, certificates, or instruments relating to the transactions contemplated hereby as CDI may reasonably request.

    

    

    (b) CDI shall have conducted a complete
        and satisfactory due diligence review of the Company, as determined in the sole and absolute discretion of CDI.

    

    

    (c) The transactions contemplated by
        this Agreement shall have been approved by the  I-On Shareholders at the I-On Shareholders Meeting and the Board of Directors of the Company and Acquisition.

    

    

    (d) Any necessary third-party consents
        shall be obtained prior to Closing, including but not limited to consents necessary from the Company’s lenders, creditors, vendors and lessors, as applicable.

    

    

    (e) There shall have been no material
        adverse changes in the Company or Acquisition, financial or otherwise.

    

    

    (f)  The Parties shall have prepared
        and agreed upon the content of Form 8-K to be filed pursuant to Section 4.1 hereof.

    

    

    (h)  CDI shall have received an
        executed copy of the Jae Purchase Agreement from Jae, to be released from escrow simultaneously with the execution of this Agreement.

    

    

    (i)  The Company shall have completed a
        reverse stock split of between 1 and 10-to-15and shall have mailed a a Proxy Statement to its shareholders with respect thereto as set forth in Section 4.2 hereof.

     

    
      

      -17-

      
        

      

    

    (j) The Company shall have submitted

        an application to the Financial Industry Regulatory Authority (“FINRA”) to change its ticker symbol to one that is mutually agreed upon by the Company and CDI and obtain any requisite consent from FINRA with
        respect to the Merger and the Reorganization.

     

    ARTICLE VII

    TERMINATION

    

    

    7.1. Termination.

    

    

    (a) This Agreement may be terminated by
        either the CDI Directors or the Company Board at any time prior to the Closing Date if: (i) there shall be any actual or threatened action or proceeding before any court or any governmental body which shall seek to restrain, prohibit, or invalidate
        the transactions contemplated by this Agreement and which, in the judgment of such board of directors, made in good faith and based on the advice of its legal counsel, makes it inadvisable to proceed with the Merger contemplated by this Agreement;
        (ii) any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions or in the judgment of such board of directors, made in good faith and based on the advice of
        counsel, there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the Merger; (iii) there shall have
        been any change after the date of the latest balance sheets of CDI or the Company, respectively, in the assets, properties, business, or financial condition of CDI or the Company, which could have a materially adverse affect on the value of the
        business of CDI or the Company, respectively, as the case may be, dated as of the date of execution of this Agreement; or (iv) the Closing Date shall not have occurred by [May 31, 2021], or such other date
        as Company and CDI may agree upon in writing. In the event of termination pursuant to this Section 7.1(a), no obligation, right, or liability shall arise hereunder, and each party shall bear all of the
        expenses incurred by it in connection with the negotiation, drafting, and execution of this Agreement and the transactions contemplated hereby.

    

    

    (b) This Agreement may be terminated at
        any time prior to the Closing by action of the Company or Acquisition if CDI fails to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of CDI contained
        herein shall be inaccurate in any material respect, and, in either case if such failure is reasonably subject to cure, it remains uncured for three (3) days after notice of such failure is provided to CDI. If this Agreement is terminated pursuant
        to this Section 7.1(b), this Agreement shall be of no further force or effect, and no obligation, right, or liability shall arise hereunder.

    

    

    (c) This Agreement may be terminated at
        any time prior to the Closing by action of the CDI Directors if the Company or Acquisition fails to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of
        the Company or Acquisition contained herein shall be inaccurate in any material respect, and, in either case if such failure is reasonably subject to cure, it remains uncured for three (3) days after notice of such failure is provided to the
        Company. If this Agreement is terminated pursuant to this Section 7.1(c), this Agreement shall be of no further force or effect, and no obligation, right, or liability shall arise hereunder.

    

    

    ARTICLE VIII

    MISCELLANEOUS

    

    

    8.1. Governing Law. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to matters of state law, with the laws of Delaware. Any
        dispute arising under or in any way related to this Agreement will be determined exclusively in the Federal or State Courts, for the County of New York, State of New York.

    

    

    8.2. Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid
        telegram and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed, or telegraphed.

    

    

    
      

      -18-

      
        

      

    

    8.3. Attorney’s Fees. In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the breaching party or parties shall reimburse the
        non-breaching party or parties for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

    

    

    8.4. Confidentiality. The Company, on the one hand, and CDI, on the other hand, will keep confidential all information and materials regarding the other party designated by such party as confidential. The provisions of this Section 8.4 shall not apply to any information which is or shall become part of the public domain through no fault of the party subject to the obligation from a third party with a right to disclose such
        information free of obligation of confidentiality. The Company and CDI agree that no public disclosure will be made by either party of the existence of the transactions contemplated by this Agreement or any of its terms without first advising the
        other party and obtaining its prior written consent to the proposed disclosure, unless such disclosure is required by law, regulation or stock exchange rule.

    

    

    8.5. Expenses. Except as
        otherwise set forth herein or in the Letter of Intent executed between the Parties of February 10, 2021, each party shall bear its own costs and expenses associated with the transactions contemplated by this Agreement.

    

    

    8.6. Schedules; Knowledge. Each
        party is presumed to have full knowledge of all information set forth in the other party’s schedules delivered pursuant to this Agreement.

    

    

    8.7. Third Party Beneficiaries.
        This contract is solely between the Company, Acquisition and CDI and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor, or any other person or entity shall be deemed to be a third party
        beneficiary of this Agreement.

    

    

    8.8. Entire Agreement. This
        Agreement represents the entire agreement between the parties relating to the transaction. There are no other courses of dealing, understandings, agreements, representations, or warranties, written or oral, except as set forth herein.

    

    

    8.9. Survival. The
        representations and warranties of the respective parties shall survive the Closing and the consummation of the transactions contemplated hereby.

    

    

    8.10. Counterparts. This
        Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

    

    

    8.11. Amendment or Waiver. Every
        right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by
        the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with
        respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended.

    

    

    8.12. Press Releases and
          Announcements. No party shall issue any press release or public announcement relating to the subject matter of this Agreement without the prior written approval of the other parties; provided, however, that any party may make any public
        disclosure it believes in good faith is required by applicable law, regulation or stock market rule (in which case the disclosing party shall use reasonable efforts to advise the other parties and provide them with a copy of the proposed disclosure
        prior to making the disclosure).

    

    

    (Signature page to follow.)

    

    

    
      

      -19-

      
        

      

    

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above-written.

    

    

    	
            I-ON DIGITAL CORP.

          	 
	 	 
	
            By:

          	/s/ Jae Cheol Oh 

          	 
	 	
            Name: Jae Cheol Oh

          	 
	 	
            Title: Chief Executive Officer

          	 
	 	 	 
	
            CDI ACQUISITION CORP.

          	 
	 	 
	
            By:

          	/s/ Jae Cheol Oh 

          	 
	 	
            Name: Jae Cheol Oh

          	 
	 	
            Title: President

          	 
	 	 	 
	
            CARDIO DIAGNOSTICS, INC.

          	 
	 	 	 
	
            By:

          	 	 
	 	
            Name:

          	 
	 	
            Title:

          	 

    

    

    
      

      -20-

      
        

      

    

    Exhibit A

     

    Certificate of Merger

     

    (See attached)

     

    
      

      -21-

      
        

      

    

    Exhibit B

     

    Share Transfer Agreement

     

    (See attached)

     

    
      

      -22-

      
        

      

    

    Exhibit C

     

    Stock Purchase Agreement

     

    (See attached)

     

    
      

      -23-

      
        

      

    

    Exhibit D

     

    Certificate of Incorporation

     

    (See attached)

     

    
      

      -24-

      
        

      

    

    Exhibit E

     

    Bylaws

     

    (See attached)

     

    
      

      -25-

      
        

      

    

    Exhibit F

     

    Officers of Surviving Corporation

     

    
      

      -26-

      
        

      

    

    Exhibit G

     

    Company Officers

     

    
      

      -27-

      
        

      

    

    Exhibit H

     

    CDI Acquisition Certificate of Incorporation

     

    
      

      -28-

      
        

      

    

    Exhibit I

     

    CDI Acquisition Bylaws

     

     

    

    -29-schn-ex101_6.htm

					
	
 
	
 
	
 
	
 
	
Exhibit 10.1

 

 

 

 

SCHNITZER STEEL INDUSTRIES 
 DEFERRED COMPENSATION PLAN

 

 

 

 

 

 

 

			
	
 
	
 
	
 

 

 

 

SCHNITZER STEEL INDUSTRIES
DEFERRED COMPENSATION PLAN

Schnitzer Steel Industries, Inc. an Oregon corporation, (the “Company”) on behalf of itself and its Participating Affiliates, hereby adopts this Deferred Compensation Plan, effective April 30, 2021, for the purposes of attracting high quality employees and promoting in its key employees increased efficiency and an interest in the successful operation of the Company.  The Plan is intended to, and shall be interpreted to, comply in all respects with Internal Revenue Code Section 409A.  The Plan is intended to comply with those provisions of the Employee Retirement Income Security Act of 1974, as amended, applicable to an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees.”    

ARTICLE 1
Definitions

1.1 “Account(s)” shall mean the Company Contribution Accounts, Scheduled Distribution Accounts, Termination Accounts, and/or Stock Unit Accounts established for a particular Participant pursuant to Article 4 of the Plan.

1.2“Administrative Committee” shall mean the person or persons appointed to administer the Plan pursuant to Article 7 of the Plan.

1.3“Affiliate” means each corporation, partnership, limited liability company or other trade or business that is required to be considered, together with the Company as a single employer under Section 414(b) or (c) of the Code, but only for the period during which such other entity is so affiliated with the Company.  Notwithstanding the foregoing, in applying sections 1563(a)(1), (2) and (3) of the Code for purposes of determining a controlled group of corporations under section 414(b) of the Code and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses that are under common control for purposes of section 414(c) of the Code, the phrase “at least 50 percent” will be used instead of “at least 80 percent” at each place it appears in such sections.  For avoidance of doubt, the term Affiliate shall include foreign as well as domestic affiliates of the Company. 

1.4“Base Salary” shall mean the Participant’s base annual salary excluding incentive and discretionary bonuses, severance, commissions and other non-regular forms of compensation, before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans of the Employer.

1.5“Beneficiary” shall mean the person(s) or entity designated as such in accordance with Article 6 of the Plan.

1.6“Bonus” shall mean any amount paid to the Participant by the Employer in the form of discretionary or incentive compensation (excluding Performance-Based Compensation), or any other bonus paid to the Participant by the Employer, which is designated by the Administrative Committee as a Bonus eligible for deferral under the Plan, before reductions for 

			
	
 
	
 
	
 

 

Schnitzer Steel Industries Deferred Compensation Plan

contributions to or deferrals under any pension, deferred compensation or benefit plans of the Employer.

1.7“Change in Control” shall mean, with respect to the Company, any of the following events.

 

(a)The consummation of:

 

(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 corporation or a parent corporation of the surviving corporation immediately after the Merger, disregarding any Voting Securities issued to or retained by such holders in respect of securities of any other party to the Merger; or

 

(ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all (at least 40%), of the assets of the Company; 

 

(b)At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Company’s Board of Directors (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof; provided, however, that the term “Incumbent Director” shall also include each new director elected during such two-year period whose nomination or election was approved by two-thirds of the Incumbent Directors then in office; or 

 

(c)Any person 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 20% or more of the combined voting power of the then outstanding Voting Securities. For purposes of this Section 1.7, the term “person” means and includes 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, other than the Company or any employee benefit plan sponsored by the Company.  

Notwithstanding the foregoing, no Change in Control of the Company shall be deemed to have occurred if (1) the Participant acquires (other than on the same basis as all other holders of shares of Common Stock of the Company) an equity interest in an entity that acquires the Company in a Change in Control of the Company otherwise described under subparagraph (a) above, or (2) the Participant is part of a group that constitutes a person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a Change in Control of the Company under subparagraph (c) above.

Notwithstanding the foregoing, no event shall constitute a Change in Control for purposes of this Plan if it is not a change in the ownership or effective control of the Company, or in the 

2

Schnitzer Steel Industries Deferred Compensation Plan

ownership of a substantial portion of the assets thereof, within the meaning of Code Section 409A and the Treasury Regulations promulgated thereunder

1.8 “Code” shall mean the Internal Revenue Code of 1986, as subsequently amended, as interpreted by regulations, rulings, and applicable authorities. 

1.9 “Commissions” shall mean commissions payable to the Participant for the applicable Plan Year (as determined by the Administrative Committee in compliance with Code Section 409A) before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans of the Employer.

1.10“Company” shall have the meaning given to such term in the introductory paragraph. 

1.11“Company Contribution” shall mean the contribution by the Employer to the Participant’s Company Contribution Account pursuant to Section 3.2 of the Plan. 

1.12“Company Contribution Account” shall mean an Account established for Company Contributions pursuant to Article 4 of the Plan.

1.13“Compensation” shall mean all amounts eligible for deferral for a particular Plan Year (or other applicable performance period) under Section 3.1.1 of the Plan.  

1.14 “Distributable Amount” shall mean the vested balance in the applicable Account.

1.15“Eligible Employee” shall mean a management level or highly compensated employee of the Company or a Participating Affiliate selected by the Administrative Committee to be eligible to participate in the Plan.  

1.16“Employer” shall mean the Company or Participating Affiliate for which the relevant Participant performs services and from which such Participant is entitled to the payment of Compensation.

1.17 “Equity Awards” or “Stock Units” shall mean restricted or performance based equity unit awards of a right to receive common stock of the Company at a specified date in the future made by an Employer to an Eligible Employee under an equity compensation arrangement sponsored by the Company, or such other similar equity participation awards, as are specified as eligible for deferral under the Plan from time to time by the Administrative Committee, in its discretion and in compliance with all applicable laws.

1.18 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, as interpreted by regulations, rulings and applicable authorities.

1.19 “Hardship Distribution” shall mean a distribution by reason of an Unforeseeable Emergency pursuant to Section 5.7 of the Plan.

3

Schnitzer Steel Industries Deferred Compensation Plan

1.20 “Investment Subaccount” shall have the meaning given to such term in Section 4.1 of the Plan.

1.21“Participant” shall mean an Eligible Employee who has elected to participate and has made a Participant Election pursuant to Article 2 of the Plan, or has received a Company Contribution. 

1.22“Participant Election” shall mean an election regarding deferrals and/or distributions submitted by the Participant to the Administrative Committee on a timely basis pursuant to Article 3 of the Plan, which may include contributions, benefits, terms and conditions unique to such Participant.  The Participant Election may take the form of an electronic communication according to specifications established by the Administrative Committee.

1.23“Participating Affiliate” shall mean an Affiliate of the Company that has been designated and approved by the Administrative Committee as a Participating Affiliate and has adopted the Plan.  By adopting the Plan, a Participating Affiliate shall be deemed to agree to all of its terms, including (but not limited to) the provisions granting exclusive authority to the Administrative Committee to amend the Plan and the provisions granting exclusive authority to the Administrative Committee to administer and interpret the Plan. The Administrative Committee shall have the discretion to establish different rules and administrative practices applicable to foreign Participating Employers to the extent necessary or advisable to comply with applicable foreign laws. A Participating Affiliate may independently terminate participation in the Plan under the same terms and conditions provided for termination by the Company at the direction of the Administrative Committee under Section 9.1 of the Plan.  The liabilities incurred under the Plan to the Participants employed by each Employer shall be solely the liabilities of that Employer, and no other Employer will be liable for any benefits accrued by a Participant during any period when he or she was not employed by such Employer.

1.24“Payment Date” shall mean the date by which a lump sum payment under the Plan shall be made or the date by which installment payments under the Plan shall commence and shall, in all events, include only a qualifying distribution date, event or schedule under Code Section 409A.  The Payment Date for payments commencing upon Separation from Service shall be within ninety (90) days following Separation from Service and subsequent installments shall be made in January of each succeeding Plan Year.  In the case of death, the Administrative Committee shall be provided with documentation reasonably necessary to establish the fact of the Participant’s death and payment shall commence as soon as practicable following death within the discretionary payment period permitted under Code Section 409A.  The Payment Date of a Scheduled Distribution shall be January of the Plan Year specified by the Participant for such distribution.  Notwithstanding the foregoing, the Payment Date shall not be before the earliest date on which benefits may be distributed under Code Section 409A without the imposition of additional Code Section 409A taxes, as determined by the Administrative Committee and the Administrative Committee shall have discretion regarding the timing of payments to the extent permitted under Code Section 409A.  In the event that the Participant is a “key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof) of the Company, to the extent required by Code Section 409A, the Payment Date shall be no earlier than the earlier of (i) the first day of the seventh (7th) calendar month commencing after the Participant’s Separation from Service, or (ii) the Participant’s death.  Any payments delayed by reason of the preceding 

4

Schnitzer Steel Industries Deferred Compensation Plan

sentence shall be caught up and paid in a single lump sum on the first day such payments are permissible consistent with the application of Code Section 409A.   

1.25“Performance-Based Compensation” means Compensation where the amount of, or entitlement to, the Compensation is contingent upon the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months.  Organizational or individual performance criteria are considered pre-established if established in writing within ninety (90) days after the commencement of the period of service to which the criteria relate, provided that the attainment of performance objectives is substantially uncertain at the time the criteria are established.  The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in the complete and sole discretion of the Administrative Committee in accordance with Treasury Regulation Section 1.409A-1(e) and applicable authorities.

1.26“Plan” shall mean this Non-Qualified Deferred Compensation Plan.

1.27“Plan Year” shall mean the calendar year.

1.28“Retirement” shall mean the Participant’s Separation from Service, occurring on or after Retirement Age, for any reason, whether voluntary or involuntary, with or without cause or by reason of disability, but not by reason of the Participant’s death,.

1.29“Retirement Age” shall mean the date the Participant attains age fifty-five (55). 

1.30“Scheduled Distribution” shall mean the distribution elected by the Participant pursuant to Section 5.3 of the Plan. 

1.31“Scheduled Distribution Account” shall mean an Account established for amounts payable in the form of a Scheduled Distribution pursuant to Article 4 of the Plan.

1.32“Separation from Service” shall be interpreted consistently with the meaning of such term under Code Section 409A and shall mean, with respect to a given Participant, the date when, for any reason, including by reason of Retirement, death or disability, (but excluding approved leaves of absence of six (6) months or less, or a longer period if the right to return to employment after such period is protected by law or contract), the level of services provided by such Participant to the Employer (or any Affiliate under common ownership aggregated with the Company for purposes of Code Section 409A) in any capacity has permanently decreased to a level equal to no more than twenty percent (20%) of the average level of services performed by such Participant for the Employer during the immediately preceding thirty-six (36) month period (or the Participant’s full period of services to the Employer, if a lesser period).

1.33 “Stock Unit Account” shall mean the Account established for Equity Award deferrals as provided under Article 4 of the Plan.

1.34“Termination Account” shall mean an Account established for distribution of Participant deferrals elected to commence upon the Payment Date following Separation from Service pursuant to Article 4 of the Plan.

5

Schnitzer Steel Industries Deferred Compensation Plan

1.35 “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant resulting from an illness or accident involving the Participant or the Participant’s spouse, Beneficiary or dependent (as defined in Code Section 152, but without regard to subsections (b)(1), (b)(2) and (d)(1)(B) thereof), the loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant (but shall in all events correspond to the meaning of the term “unforeseeable emergency” in Code Section 409A).

ARTICLE 2
Participation

2.1Commencement of Participation. An Eligible Employee shall commence participation in the Plan as of the date specified in the enrollment materials provided by the Administrative Committee which designate him or her as an Eligible Employee if, and only if,  the Eligible Employee has completed all applicable Participant Elections and other documentation the Administrative Committee may reasonably request, during the enrollment period established by the Administrative Committee for such purpose.  

2.2Duration of Participation.  A Participant shall continue to be eligible to make deferrals and/or to receive Company Contributions under Article 3 until the earlier of the Participant’s Separation from Service or such time as the Administrative Committee shall determine that the Participant is no longer an Eligible Employee.  Notwithstanding the foregoing, the Participant’s deferral elections shall continue in place with respect to any Compensation for services performed during the Plan Year (or other applicable performance period) in which Separation from Service or termination of eligibility shall occur and a terminated Participant’s Accounts shall continue to be credited with notional earnings or losses as provided in Article 4 until such time as the total balance of all of the Participant’s Accounts shall have been fully distributed. 

ARTICLE 3
Deferrals, Contributions, and Elections

3.1Elections to Defer Compensation.

3.1.1Form of Elections.  A Participant may only elect to defer Compensation attributable to services provided after the time an election is made.  Participant Elections shall take such form and be subject to such specifications and limitations as may be prescribed by the Administrative Committee in the enrollment materials for a particular Plan Year (or applicable performance period) and shall take the form of a whole percentage, a dollar amount, a percentage up to a dollar amount, or a percentage in excess of a dollar amount, as specified by the Administrative Committee, of Base Salary, specified Bonuses, and specified Performance-Based Compensation.  Separate deferral elections may be made available for various types of Bonus or Performance-Based Compensation and applicable limitations specified by the Administrative Committee for the applicable Plan Year (or other performance period) as permitted in the complete and sole discretion of the Administrative Committee. 

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3.1.2Equity Award Deferrals.  A Participant may also elect to defer Equity Awards awarded or issued to the Participant for services performed in the applicable Plan Year (or other performance period), as determined in the complete and sole discretion of the Administrative Committee. 

3.1.3Section 401(k) Refund Based Deferrals.  A Participant may also elect to defer annual Compensation in an amount equal to specified refunded compensation from a Company sponsored Section 401(k) plan awarded to the Participant for services performed in the applicable Plan Year (or performance period), as determined in the complete and sole discretion of the Administrative Committee.

3.1.4Administration of Deferral Elections.  The Administrative Committee shall establish appropriate procedures for such deferral elections in compliance with Code Section 409A and, notwithstanding any contrary Plan provision, may further limit the classes of deferred Compensation and/or the minimum or maximum amount deferred by any Participant or group of Participants, or waive the foregoing limits for any Participant or group of Participants, for any reason, to the extent permitted under Code Section 409A.  Any such limitations that will be applicable with respect to a Plan Year (or other applicable performance period) shall be established by the Administrative Committee before any deferral elections with respect to Compensation for services performed during such Plan Year (or other applicable performance period) otherwise become irrevocable under the terms of the Plan.  Deferrals shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be reduced by the Administrative Committee as necessary to not exceed 100% of the cash Compensation of the Participant remaining after deduction of applicable employment taxes and income taxes thereon and other deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A.

3.1.5Initial Deferral Election.  An Eligible Employee shall make an initial election to defer Compensation during the enrollment period established by the Administrative Committee prior to the effective date of the Participant’s commencement of participation in the Plan and such election shall apply only to Compensation for services performed after such date.  The enrollment period shall generally occur prior to the beginning of the applicable Plan Year, but the Administrative Committee may establish a special enrollment period ending no later than thirty (30) days after an Eligible Employee first becomes eligible to participate in the Plan to allow deferrals by such Eligible Employee of eligible amounts earned during the balance of such Plan Year (as long as such Eligible Employee is not already a participant in another plan or arrangement which is aggregated with this Plan for purposes of Code Section 409A).  Eligibility for mid-year enrollment of rehired or newly Eligible Employees who have previously participated in the Plan shall be permitted only in compliance with all requirements of Code Section 409A, and as determined in the complete and sole discretion of the Administrative Committee. 

3.1.6Deferral Elections for Subsequent Plan Years.  A Participant may increase, decrease, terminate or recommence a deferral election with respect to Compensation for any subsequent Plan Year in which the Participant is eligible to participate in the Plan by making a Participant Election during the enrollment period established by the Administrative Committee prior to the beginning of the Plan Year in which the applicable services are performed, which 

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election shall be effective on the first day of the following Plan Year.  If a Participant does not submit a revised deferral election of a particular Plan Year, unless otherwise specified by the Administrative Committee in the enrollment materials, the Participant’s most recent deferral election shall govern. Notwithstanding the foregoing, in the event that a Participant’s outstanding election would result in distributions commencing prior to the earliest date permitted under the Plan or the vesting date of any such amounts, such deferrals or contributions shall be allocated to a separate Account payable on the earliest date permitted under the terms of the Plan, after vesting of such amounts.  In the absence of a valid distribution election applicable to any deferrals or contributions to the Plan, such amounts shall be allocated to the Termination Account established for such Participant under the terms of the Plan.   

3.1.7 Fiscal Year Compensation.  Notwithstanding the foregoing, the Administrative Committee may allow separate deferral elections with respect to any Bonuses which are determined on the basis of the Employer’s fiscal year or years and payable after the end of the applicable fiscal year or years.  The enrollment period established for deferral of such fiscal year Bonus compensation shall be made prior to the beginning of the fiscal year in which the applicable services are performed, in compliance with all requirements of Code Section 409A.

3.1.8Performance-Based Compensation.  Notwithstanding the foregoing, the Administrative Committee may allow deferral elections or changes in deferral elections to be made no later than six (6) months before the end of the applicable performance period solely with respect to the deferral of any Compensation which qualifies as Performance-Based Compensation, if such deferral or change is in compliance with Code Section 409A.  In order for an Eligible Employee to be eligible to defer Performance-Based Compensation in accordance with the deadline established in this Section, the Eligible Employee must have performed services continuously from the later of the beginning of the performance period for such Compensation or the date on which the performance criteria for such Compensation was established through the date on which such election is made; provided, however, that no such election may be made after such Compensation has become readily ascertainable, consistent with the requirements of Code Section 409A.

3.1.9Irrevocability of Deferral Election.  After the beginning of the Plan Year (or other deadline established for mid-year commencement of participation or deferral elections as permitted above), or such earlier time as may be specified by the Administrative Committee in its discretion, deferral elections with respect to Compensation for services performed during such Plan Year (or other applicable performance period) shall be irrevocable except that the Administrative Committee may cancel a Participant’s deferral election(s) to the extent permitted under Code Section 409A in the event of an Unforeseeable Emergency or as necessary for the Participant to receive a hardship distribution under the 401(k) Plan. A Participant whose deferral election(s) have been cancelled pursuant to this Section may later resume making deferrals under the Plan only in accordance with the foregoing provisions of Section 3.1 and the requirements of Code Section 409A.

3.2Company Contributions.  

3.2.1Discretionary Company Contributions.  The Employer shall have the discretion to make Company Contributions to the Plan at any time on behalf of any Participant.  

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Such Company Contributions, including but not limited to the terms of vesting thereof, shall be made in the complete and sole discretion of the Employer and no Participant shall have the right to receive any Company Contribution, regardless of whether Company Contributions are made on behalf of other Participants.  

3.3Distribution Elections.

3.3.1Initial Election.  At the time of making a deferral election under the Plan, the Participant shall designate the time and form of distribution of deferrals made pursuant to such election (together with notional earnings or losses credited thereon) from among the alternatives specified in Article 5, if eligible.    

3.3.2Modification of Election.  A distribution election with respect to previously deferred amounts may only be changed under the terms and conditions permitted under Code Section 409A and the Plan.  Except as expressly provided in Article 5 (or otherwise permitted under Code Section 409A), no acceleration of a distribution is permitted.  A subsequent election that delays payment or changes the form of payment shall be permitted if, and only if, all of the following requirements are met:

•the new election does not take effect until at least twelve (12) months after the date on which the new election is made;

•in the case of a new election related to a payment not described in Treasury Regulation Sections 1.409A-3(a)(2), 1.409A-3(a)(3) or 1.409A-3(a)(6), the election delays such payment for at least five (5) years from the date that payment would otherwise have been made (or, in the case of installment payments, the first installment payment would otherwise have been made), absent the new election; and

•in the case of a new election related to a payment described in Treasury Regulation Section 1.409A-3(a)(4), the election is made not less than twelve (12) months before the date on which payment would otherwise have been made (or, in the case of installment payments, the first installment payment would otherwise have been made) absent the new election.

For purposes of applying the above change limitations, each class year of deferral within an Account shall be treated as a separate deferral election and substantially level installment payments elected with respect of a single class year deferral shall be treated as a single payment election.  Election changes made pursuant to this Section shall be made at the discretion of, and in accordance with rules established by, the Administrative Committee, and shall comply with all requirements of Code Section 409A.

ARTICLE 4
Accounts, Crediting and Vesting

4.1Accounts.  Solely for recordkeeping purposes, a Termination Account and, if elected, a Scheduled Distribution Account, shall be maintained for each Participant and credited with the Participant’s deferrals as directed in the applicable Participant Election for each Plan Year. 

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One or more separate Company Contribution Accounts shall be maintained for the Participant and shall be credited with any Company Contributions at the time specified by the Administrative Committee. One or more separate Stock Unit Accounts may be maintained for the Participant and shall be credited with any deferred Equity Awards and shall be credited at the time specified by the Administrative Committee.  Each Account may be further divided into separate subaccounts for notional investment purposes (“Investment Subaccounts”) to accommodate the direction of investments as provided in Section 4.2.  

4.2Investment Direction and Crediting Rate.  Amounts, other than Stock Units, credited to a Participant’s Accounts shall be credited with notional earnings or losses in a manner determined in the discretion of the Administrative Committee.  Until such time as the Administrative Committee determines otherwise, Accounts other than Stock Unit Accounts shall be credited with notional earnings or losses based on the Participant’s choice among the investment alternatives or “funds” made available from time to time by the Administrative Committee.  The Administrative Committee may establish a procedure by which a Participant may choose among investment funds specified by the Administrative Committee and may change investment elections daily on each business day, subject to administrative feasibility.  At the discretion of the Administrative Committee, the Participant’s applicable Account balance shall reflect the notional earnings or losses on the investment funds selected by the Participant.  If an investment fund selected by a Participant sustains a loss, the Participant’s applicable Account shall be reduced to reflect such loss.  If the Participant fails to elect an investment alternative for a particular Account or Investment Subaccount, the notional crediting rate with respect to that Account or Investment Subaccount shall be based on the default investment alternative selected for this purpose by the Administrative Committee.  The Participant’s choice among investment funds shall be solely for purposes of the calculation of a notional crediting rate on the Participant’s applicable Accounts.  Notwithstanding any contrary provision of the Plan, the Company (and other Employers) shall have no obligation to set aside or invest funds as directed by the Participant and, whether or not the Company (or Employer) elects to invest funds as directed by the Participant, the Participant shall have no right to payment under the Plan other than as an unsecured general creditor of the Company (or Employer).  During payout, the Participant’s Accounts, other than Stock Unit Accounts, shall continue to be credited at the notional crediting rate specified by the Administrative Committee or as selected by the Participant from among the investment alternatives or rates made available by the Administrative Committee.  However, the Administrative Committee may in its sole discretion charge a reasonable administrative fee against Accounts maintained after a Participant’s Separation from Service other than by reason of Retirement, death or disability.  Installment payments shall be recalculated annually by dividing the applicable Account balance by the number of payments remaining without regard to anticipated notional earnings or losses, or in any other reasonable manner as may be determined from time to time by the Administrative Committee.

4.3Crediting of Stock Unit Accounts.  Stock Unit Accounts may be established under the Plan in the complete and sole discretion of the Administrative Committee and shall be subject to such additional terms and conditions as may be specified by the Administrative Committee from time to time.  The Administrative Committee shall determine when and if amounts credited to a Stock Unit Account may be diversified into another form of investment after such amounts have been credited to the Account for a minimum of six months and one day.  Amounts credited to a Stock Unit Account that remain notionally invested in the form of Company stock may be 

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distributed in the form of common stock of the Company or, in cash equal to the fair market value of the common stock of the Company as of the date of distribution, in the complete and sole discretion of the Administrative Committee, or subject to the terms and limitations of the applicable Stock Unit plan and award agreement.  Notwithstanding any other provisions of the Plan, no common stock shall be issued to a Participant in connection with a distribution under the Plan unless, and until, such Participant has executed such documentation as may be required by the Administrative Committee and agreed to comply with all applicable securities laws.  The Administrative Committee shall administer any Stock Unit Account consistent with the terms of the applicable Stock Unit plan and agreement.  The Administrative Committee shall have the discretion to make adjustments in the number of shares, or convert or allow a Participant to elect to convert shares, if any, payable with respect to Stock Units credited to a Stock Unit Account to an alternative form of investment under the Plan after any applicable vesting and/or holding period, as appropriate to accomplish the intent of the Plan and applicable Stock Unit plan and award agreement, all as may be directed by the Administrative Committee, in its complete and sole discretion.  Prior to any distribution of common stock, Participants shall have no rights as shareholders with respect to amounts or units credited to a Stock Unit Account, except that the deferral documentation may provide that the Participant shall be entitled to receive additional credits to a Stock Unit Account in the amount of any cash or stock dividends payable on shares of Company common stock equal in number to the vested Stock Units credited to such Stock Unit Account.  Any dividends payable on vested Stock Units credited to a Stock Unit Account (i) may be denominated in Stock Units and result in a credit of additional notional Stock Units to the applicable Stock Unit Account, or (ii) may be credited to a cash Investment Subaccount and thereafter credited with notional earnings as directed by the Administrative Committee.  Pursuant to Code Section 409A, any dividend equivalents shall be considered current earnings on the Stock Unit Account and shall be credited to the appropriate Account as of the date dividends are paid to shareholders of the Company and distributed at the same time and in the same form elected for the applicable Stock Unit Account.  

4.4Crediting of Accounts.  A Participant’s Accounts shall be credited as follows:

4.4.1Participant Deferrals.  As soon as administratively practicable after amounts would otherwise have been paid, issued or awarded to the Participant, as applicable, the Administrative Committee shall credit the Participant’s applicable Account with an amount equal to Compensation deferred by the Participant and shall allocate such amount to Investment Subaccounts in accordance with the Participant’s election under Section 4.2. or, in the case of a deferral of Equity Awards, to the applicable Stock Unit Account.

4.4.2Company Contributions.  On the date specified by the Administrative Committee for the crediting of a Company Contribution to the Plan on behalf of a Participant, the Administrative Committee shall credit the Participant’s Company Contribution Account with an amount equal to the Company Contribution and shall allocate such amount to Investment Subaccounts in accordance with the Participant’s election under Section 4.2.

4.4.3Distributions.  Distributions shall be deducted by the Administrative Committee from the applicable Account as of the end of the day on which such distributions are made.

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4.4.4Notional Earnings or Losses.  Each business day, a Participant’s Accounts (other than Stock Unit Accounts) shall be credited with notional earnings or losses in an amount equal to that determined by multiplying the balance credited to such Accounts or applicable Investment Subaccounts as of the prior day, less any distributions valued as of the end of the prior day, by the notional crediting rate for the corresponding fund as determined by the Administrative Committee. 

4.5Vesting of Accounts.  The Participant shall be vested at all times in amounts credited to the Participant’s Accounts, other than the Participant’s Company Contribution Accounts or Stock Unit Accounts.  Amounts credited to the Participant’s Company Contribution Accounts or Stock Unit Accounts shall vest in accordance with the vesting schedule and conditions, including, but not limited to, recoupment conditions, included in the award plan or agreement or determined and provided to the Participant at the time of contribution by the Administrative Committee.  

4.6Statement of Accounts.  The Administrative Committee shall make available to each Participant electronic statements at least annually setting forth the Participant’s Account balances as of the end of each Plan Year.

ARTICLE 5
Distributions and Benefits 

5.1Retirement Distributions.  Except as otherwise provided herein, in the event of a Participant’s Retirement, the Distributable Amount credited to the Participant’s Termination Accounts, Company Contribution Accounts and Stock Unit Accounts shall be paid to the Participant in a single lump sum unless the Participant has made an alternative benefit election on a timely basis pursuant to Section 3.3 to receive Retirement benefits in substantially equal annual installments over up to twenty (20) years.  Payments shall commence on the Payment Date following the Participant’s Retirement, or to the extent permitted by the Administrative Committee, in January of any one of the five (5) Plan Years commencing after Separation from Service.

5.2Termination Distributions.  Except as otherwise provided herein, in the event of a Participant’s Separation from Service, other than by reason of Retirement or death, the Distributable Amount credited to the Participant’s Termination Accounts, Company Contribution Accounts and Stock Unit Accounts shall be paid to the Participant in a single lump sum on the Payment Date following the Participant’s Retirement Age, unless the Participant has made an alternative benefit election on a timely basis pursuant to Section 3.3 to (i) receive the benefits in substantially equal annual installments over up to twenty (20) years and/or (ii) commence receipt of benefits on Separation from Service or in January of any one of the five (5) Plan Years commencing after Separation from Service.    

5.3Scheduled Distributions.  Each Participant shall be entitled to elect in accordance with Section 3.3 to allocate Participant deferrals or vested Company Contributions for the applicable class year to a Scheduled Distribution Account.  Distribution shall be made on the Payment Date in the Plan Year specified by the Participant for such class year deferrals (the “Scheduled Distribution Date”) unless preceded by the Participant’s death which shall be subject 

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to Section 5.4 below.  Notwithstanding the foregoing, the Scheduled Distribution Date shall never be earlier than the first day of the third (3rd) Plan Year commencing after the Plan Year in which the deferrals are credited to the Account or, if later, the applicable vesting date.  Payment from a Scheduled Distribution Account shall be paid in the form of a single lump sum, unless the Participant has made an alternative benefit election on a timely basis pursuant to Section 3.3 to receive the Scheduled Distribution in substantially equal annual installments over up to ten (10) years.  In the event that amounts are mistakenly credited to a Scheduled Distribution Account having no Scheduled Distribution Date or a noncompliant commencement date, payments from such Account shall commence on the earliest Scheduled Distribution Date permissible under the Plan (i.e., the third Plan Year commencing after the Plan Year in which the deferrals are credited to the Account or, if later, the applicable vesting date) and shall be distributed in the form of a single lump sum.  A Participant may delay a Scheduled Distribution only if such change complies with the change rules in Section 3.3. 

5.4Death Benefits.  In the event of the Participant’s death after Separation from Service but prior to complete distribution of all Plan benefits, the Employer shall pay to the Participant’s Beneficiary, the Distributable Amount of each such Account in the form of a single lump sum on the Payment Date following the Participant’s death, unless the Participant has made an alternative benefit election on a timely basis pursuant to Section 3.3 to receive benefits at the same time and in the same form they would otherwise have been paid to the Participant.  In the event of the Participant’s Separation from Service by reason of death, the Employer shall pay to the Participant’s Beneficiary, the Distributable Amount of each such Account in the form of a single lump sum on the Payment Date following the Participant’s death unless the Participant has made an alternative benefit election on a timely basis pursuant to Section 3.3 to receive pre-retirement benefits at the same time and in the same form they would otherwise have been paid to the Participant upon Retirement.

5.5Small Benefit Distribution.  Notwithstanding the foregoing, in the event the sum of all benefits payable to the Participant from all of the Participant’s Accounts at the time of the Participant’s Separation from Service (and all other amounts payable to the Participant under other arrangements which are aggregated with this Plan under Section Code 409A) is less than the applicable dollar amount under Code Section 402(g)(1)(B) for the calendar year of payment, the Administrative Committee may, in its complete and sole discretion, pay all benefits to the Participant under the Plan in a single lump sum on the Payment Date following Separation from Service, subject to compliance with all requirements of Code Section 409A. 

5.6Distribution on Change in Control.  If and only if the Participant has made an election at the time of establishing an Account to have amounts credited to such Account paid on a Change in Control, then, 

5.6.1if a Change in Control occurs before commencement of benefits from the applicable Account, the balance of such Account shall be distributed in the form of a single lump sum payable at the end of the fifteenth (15th) month following the month in which such Change in Control occurs, unless the Participant makes a timely election during the first three (3) months following the Change in Control in compliance with Section 3.3.2 to delay commencement of benefits from such Account by a minimum of five (5) years and to receive the benefits in the form 

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of a single lump sum or over a period of up to twenty (20) years in substantially equal annual installments, or  

5.6.2if a Change in Control occurs after commencement of benefits from the applicable Account, the balance of such Account shall continue to be distributed in the form elected by the Participant until fifteenth (15th) month following the month in which such Change in Control occurs, and shall then be distributed in the form of a single lump sum on such date, unless the Participant has made a timely election during the first three (3) months following the Change in Control in compliance with Section 3.3.2 to delay commencement of benefits from such Account as provided above.

5.7Hardship Distribution.  Upon a finding that the Participant has suffered an Unforeseeable Emergency, subject to compliance with Code Section 409A, the Administrative Committee may, at the request of the Participant, approve a complete cessation of current deferrals under the Plan or accelerate distribution of benefits in the amount reasonably necessary to alleviate such financial hardship.  The request to take a Hardship Distribution shall be made in the form and manner specified by the Administrative Committee.  The amount distributed pursuant to this Section with respect to an Unforeseeable Emergency shall not exceed the amount necessary to satisfy such financial emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan. The amount determined by the Administrative Committee as a Hardship Distribution shall be paid in a single cash lump sum as soon as practicable after the end of the calendar month in which the Hardship Distribution election is made and approved by the Administrative Committee. 

5.8Designated Payment Date.  Notwithstanding any contrary Plan provision, in accordance with Treasury Regulation Section 1.409A-3(d), a payment will be treated as made upon the date specified under the Plan (the “Designated Payment Date”) if the payment is made (a) at such date or a later date within the same taxable year of the applicable Participant or, if later, by the fifteenth (15th) day of the third calendar month following the Designated Payment Date, or no earlier than thirty (30) days before the Designated Payment Date, and (b) the Participant is not permitted, directly or indirectly, to designate the taxable year of any payment.

 

Payee Designations and Limitations

6.1Beneficiaries.  Each Participant may, pursuant to such procedures as the Administrative Committee may specify, designate one or more Beneficiaries to whom payment under the Plan shall be made in the event of the Participant’s death.  A Participant may designate different Beneficiaries (or may revoke a prior Beneficiary designation) at any time by delivering a new designation (or revocation of a prior designation) in accordance with Section 6.1.  Any designation will be effective only upon its receipt by the Administrative Committee or its designee in good form but shall cease to be effective when a revocation of that designation is received by the Administrative Committee or its designee.  The last effective designation received by the 

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Administrative Committee will supersede all prior designations.  However, if a Participant fails to designate a Beneficiary as provided above, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participant’s benefits, then the Administrative Committee shall direct the distribution of such benefits to the Participant’s surviving legal spouse, or, if the Participant is not survived by a legal spouse, to the Participant’s estate.  

6.2Payments to Minors.  In the event any amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead shall be paid (i) to that person’s living parent(s) to act as custodian, (ii) if that person’s parents are then divorced, and one parent is the sole custodial parent, to such custodial parent, to act as custodian, or (iii) if no parent of that person is then living and the Administrative Committee so determines, to a custodian selected by the Administrative Committee to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which the minor resides.  If no parent is living and the Administrative Committee decides not to select a custodian to hold the funds for the minor, then payment shall be made to the duly appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and currently acting within sixty (60) days after the date the amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the minor.

6.3Payments on Behalf of Persons Under Incapacity.  In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Administrative Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefor, the Administrative Committee may direct that such payment be made to any person found by the Administrative Committee, in its sole judgment, to have assumed the care and guardianship of such person.  Any payment made pursuant to such determination shall constitute a full release and discharge of any and all liability of the Administrative Committee and the Company and each Participating Affiliate under the Plan.

6.4Inability to Locate Payee.  In the event that the Administrative Committee is unable to locate a Participant or Beneficiary within two (2) years following the scheduled Payment Date, the amount allocated to the Participant’s Account shall be forfeited.  If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without interest or earnings.

ARTICLE 7
Administration/Claims Procedures

7.1Administration.  The Plan shall be administered by the Administrative Committee which shall be the Compensation Committee of the Board of Directors of the Company or such other person or persons as may be appointed by the Board of Directors to administer the Plan.  The Administrative Committee shall have the exclusive right and full discretion (i) to appoint agents or other delegates to act on its behalf in the day to day administration of the Plan, (ii) to interpret the Plan, (iii) to decide any and all matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or omissions), (iv) to make, amend and rescind such rules as it deems necessary for the proper administration of the Plan and (v) to make all other determinations and resolve all questions of fact necessary or advisable for the administration of 

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the Plan, including determinations regarding eligibility for benefits payable under the Plan.  All interpretations by the Administrative Committee and its agents or other delegates with respect to any matter hereunder shall be final, conclusive and binding on all persons affected thereby and shall be given the maximum possible deference permitted by law.  No member of the Administrative Committee or agent or other delegate thereof shall be liable for any determination, decision, or action made in good faith with respect to the Plan.  Each of the Employers shall indemnify and hold harmless the members of the Administrative Committee and its agents or other delegates from and against any and all liabilities, costs, and expenses incurred by such persons as a result of any act or omission, in connection with the performance of such persons’ duties, responsibilities, and obligations under the Plan, other than such liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or criminal acts of such persons.  Each decision of a majority of the members of the Administrative Committee then in office shall constitute the final and binding act of the Administrative Committee.  The Administrative Committee may act with or without a meeting being called or held and shall keep minutes of all meetings held and a record of all actions taken.  Except as otherwise specifically or generally directed by the Administrative Committee, any action of the Administrative Committee may be evidenced by a writing signed by any member thereof.

7.2Claims Procedures.  Any Participant, former Participant or Beneficiary may file a written claim with the Administrative Committee setting forth the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement to such benefit.  The Administrative Committee shall determine the validity of the claim and communicate a decision to the claimant promptly and, in any event, not later than ninety (90) days after the date of the claim.  The claim may be deemed by the claimant to have been denied for purposes of further review described below in the event a decision is not furnished to the claimant within such ninety (90) day period.  If additional information is necessary to make a determination on a claim, the claimant shall be advised of the need for such additional information within forty-five (45) days after the date of the claim.  The claimant shall have up to one hundred and eighty (180) days to supplement the claim information, and the claimant shall be advised of the decision on the claim within forty-five (45) days after the earlier of the date the supplemental information is supplied or the end of the one hundred and eighty (180) day period.  Every claim for benefits which is denied shall be denied by written notice setting forth in a manner calculated to be understood by the claimant (i) the specific reason or reasons for the denial, (ii) specific reference to any provisions of the Plan (including any internal rules, guidelines, protocols, criteria, etc.) on which the denial is based, (iii) description of any additional material or information that is necessary to process the claim, and (iv) an explanation of the procedure for further reviewing the denial of the claim and shall include an explanation of the claimant’s right to bring a civil action under ERISA Section 502(a) in the event of an adverse determination on review.

7.3Review Procedures.  Within sixty (60) days after the receipt of a denial on a claim, a claimant or his/her authorized representative may file a written request for review of such denial.  Such review shall be undertaken by the Administrative Committee and shall be a full and fair review. The claimant shall have the right to review all pertinent documents.  The Administrative Committee shall issue a decision not later than sixty (60) days after receipt of a request for review from a claimant unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision shall be rendered as soon as possible but not later than one hundred and twenty (120) days after receipt of the claimant’s request for review.  The decision 

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on review shall be in writing and shall include specific reasons for the decision written in a manner calculated to be understood by the claimant with specific reference to any provisions of the Plan on which the decision is based and shall include an explanation of the claimant’s right to bring a civil action under ERISA Section 502(a) in the event of an adverse determination on review.

ARTICLE 8
Conditions Related to Benefits

8.1Nonassignability.  The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by any person, at any time, or to any person whatsoever.  Those benefits shall be exempt from the claims of creditors or other claimants of the Participant or Beneficiary and from all orders, decrees, levies, garnishments or executions to the fullest extent allowed by law.  Notwithstanding the foregoing, the Administrative Committee may establish procedures whereby some or all of one or more of a Participant’s Account balances may be accelerated and/or paid to an alternative payee pursuant to a domestic relations order which complies with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ii).

8.2No Right to Company or Employer Assets.  The benefits paid under the Plan shall be paid from the general funds of the Employer or the Company, and the Participant and any Beneficiary shall be no more than unsecured general creditors of the Employer or the Company with no special or prior right to any assets of the Employer or the Company for payment of any obligations hereunder.

8.3Protective Provisions.  The Participant shall cooperate with the Administrative Committee by furnishing any and all information requested by the Administrative Committee, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrative Committee may deem necessary, consenting to insurance coverage and taking such other actions as may be requested by the Administrative Committee.  If the Participant refuses to so cooperate, the Employer and the Company shall have no further obligation to the Participant under the Plan.  

8.4Compliance with Securities Laws.  All payments scheduled to be made under the Plan shall comply with all applicable securities laws and may be delayed if the Administrative Committee reasonably believes that making the payment will violate any federal or state securities laws, subject to compliance with all applicable laws.  Any such delayed payment will be made at the earliest date at which the Administrative Committee reasonably anticipates that the making of the payment will not cause such violation.  For this purpose, the making of a payment under the Plan that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code will not be treated as a violation of applicable law.

8.5Payments Subject to Code Section 162(m).  Any payment scheduled to be made under the Plan may be delayed, in the complete and sole discretion of the Administrative Committee, to the extent that the Company reasonably anticipates that if the payment were made as scheduled, the Employer’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m) and the delay of such payment may increase the likelihood that the Company would be able to deduct such amount.  Any such delayed payment shall be made at the earliest date the Administrate Committee reasonably anticipates that the 

17

Schnitzer Steel Industries Deferred Compensation Plan

Employer’s deduction of such payment will not be barred by the application of Code Section 162(m), subject to compliance with all requirements of Code Section 409A.

8.6Recoupment Policy.  The Participant acknowledges and agrees that the participant’s Account balances and benefits payments under the Plan shall be subject, as determined in the discretion of the Administrative Committee, to the Company’s Executive Officer Incentive Compensation Recovery Policy, as the same may be amended from time to time or any replacement policy thereto, or as may be required by any applicable law (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder).

8.7Withholding.  The Participant shall make appropriate arrangements with the Administrative Committee for satisfaction of any federal, state or local income tax withholding requirements, Social Security and other employee tax or other requirements applicable to the deferral, crediting, vesting or payment of benefits under the Plan.  The Company intends to deduct from each payment made under the Plan or any other compensation (including Company Contributions) payable to the Participant (or Beneficiary) all applicable taxes required to be withheld in respect of such payment or this Plan.  The Employer shall have the right to reduce any payment (or other compensation) by the amount of cash sufficient to provide the amount of said taxes.

8.8Receipt or Release.  Any payment made in good faith to a Participant or the Participant’s Beneficiary shall, to the extent thereof, be in full satisfaction of all claims against the Administrative Committee, the Company and each Participating Affiliate.  The Administrative Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. 

8.9Trust.  The Company ultimately shall be responsible for the payment of all benefits under the Plan.  At its discretion, the Company may establish one or more grantor trusts for the purpose of providing for the payment of benefits under the Plan.  Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the creditors of the Company (or Employer).  Neither such trust or trusts, nor the assets thereof, however, shall be located outside of the United States.  Benefits paid to the Participant (or his or her Beneficiary) from any such trust or trusts shall be considered paid by the Company (or Employer) for purposes of meeting the obligations of the Company (or Employer) under the Plan.

ARTICLE 9
Miscellaneous

9.1Amendment or Termination of Plan.  The Administrative Committee or its authorized delegate may, at any time amend or terminate the Plan, except that no such amendment or termination may reduce a Participant’s Account balances, reduce or delay the vesting of a Participant’s Accounts or change the timing of payments except to the extent specifically permitted under Code Section 409A.  If the Plan is terminated, no further amounts shall be deferred hereunder, and amounts previously deferred or contributed to the Plan shall be fully vested and shall be paid in accordance with the provisions of the Plan as scheduled prior to the Plan termination.  Notwithstanding the foregoing, the Company may, in its complete and sole 

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Schnitzer Steel Industries Deferred Compensation Plan

discretion, accelerate distributions under the Plan, whether upon termination of the Plan or otherwise, under any circumstances specifically authorized under Code Section 409A not resulting in the imposition of additional Code Section 409A taxes or penalties.

9.2Errors in Account Statements, Deferrals or Distributions.  In the event an error is made in an Account statement, such error shall be corrected on the next statement following the date such error is discovered.  In the event of an error in deferral amount, the error shall be corrected as soon as administratively practicable after discovery; (i) in the case of an excess deferral, by distribution of the excess amount to the Participant, or, (ii) in the case of an under deferral, by reduction of other compensation payable to the Participant in compliance with all requirements of Code Section 409A.  In the event of an error in a distribution, the over or under payment shall be corrected by payment to or collection from the Participant consistent with the requirements of, or correction procedures established under, Code Section 409A, as soon as administratively practicable after the discovery of such error. In the event of an overpayment, the Administrative Committee may, at its discretion, offset other amounts payable to the Participant from the Employer (including but not limited to salary, bonuses, expense reimbursements, severance benefits or other employee compensation benefit arrangements, as allowed by law and subject to compliance with Code Section 409A) to recoup the amount of such overpayment(s).

9.3Employment Not Guaranteed.  Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or for services, or as giving any Participant any right to continue the provision of services in any capacity whatsoever to the Company or any Participating Affiliate.

9.4Successors of the Employer.  The rights and obligations of each Employer under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the applicable Employer.

9.5Notice.  Any notice or filing required or permitted to be given to the Company or the Participant under the Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail to, in the case of the Company, the principal office of the Company, directed to the attention of the Administrative Committee, and in the case of the Participant, to the last known address of the Participant indicated on the employment records 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.  Notices to the Company may be permitted by electronic communication according to specifications established by the Administrative Committee.

9.6Headings.  Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

9.7Gender, Singular and Plural.  All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require.  As the context may require, the singular may be read as the plural and the plural as the singular.

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Schnitzer Steel Industries Deferred Compensation Plan

9.8Validity.  In the event any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.

9.9Waiver of Breach.  The waiver by the Company or Employer of any breach of any provision of the Plan shall not operate or be construed as a waiver of any subsequent breach by that Participant or any other Participant. 

9.10Governing Law.  The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.  In the event any provision of, or legal issue relating to, this Plan is not fully preempted by federal law, such issue or provision shall be governed by the laws of the State of Oregon (other than its conflict of laws provisions).   

 

SCHNITZER STEEL INDUSTRIES, INC.

By____________________________

Title____________________________

Date____________________________

 

 

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Schnitzer Steel Industries Deferred Compensation Plan

FORM DOL LETTER

The following letter must be filed with the Department of Labor for all ERISA Nonqualified Deferred Compensation Plans (or notice may be filed electronically) within 120 days of the effective date of the plan.  Please retain a copy of this letter (or evidence of electronic filing) with your plan documents for your records.

[LETTERHEAD OF COMPANY]

[DATE]

Top Hat Plan Exemption 

Employee Benefits Security Administration 

Room N-1513 

U.S. Department of Labor 

200 Constitution Avenue NW 

Washington, DC 20210

Dear Sir or Madam:

[Company] hereby supplies the following information pursuant to Labor Department Regulations Section 2520.104-23:

1.Name and Address of Employer:

____________________________

____________________________

____________________________

2.Employer Identification Number:

____________________________

3. [Company] maintains the following plan primarily for the purpose of providing deferred compensation for a select group of highly compensated or management employees:

Number of Plans:1
Name of Plan:[Name of Plan]
Number of Employees in Plan:_______

[Company], a __________corporation

 

By____________________________

Title____________________________

 

 

21

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