Document:

exhibit10_1.htm

     

    EXHIBIT
10.1

     

    

      Confidential
Treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality
request.  Omissions are designated as “***”. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.

       

      AMENDMENT
NO. 2 TO THE COLLABORATION AND LICENSE AGREEMENT

       

      This
Amendment No. 2 to the Collaboration and License Agreement (this “Amendment No.
2”) is made effective as of October 1, 2008 (the “Amendment No. 2 Effective
Date”) by and between POZEN INC., a Delaware corporation having offices at 1414
Raleigh Road, Suite 400, Chapel Hill, North Carolina (“POZEN”), and ASTRAZENECA
AB, a Swedish corporation having an office at SE-431 83, Mölndal, Sweden
(“AstraZeneca”).  POZEN and AstraZeneca may be referred to herein
individually as a “Party,” or collectively as the “Parties.”

       

      RECITALS

       

      
        	
                A.  

              	
                POZEN
      and AstraZeneca entered into that certain Collaboration and License
      Agreement, dated as of August 1, 2006, and effective as of September 7,
      2006 (as amended hereby, the
“Agreement”).

              

      

       

      
        	
                B.  

              	
                POZEN
      and Astra Zeneca entered into an Amendment No. 1 to the Agreement
      effective as of September 6, 2007;

              

      

       

      
        	
                C.  

              	
                POZEN
      and AstraZeneca desire to amend the
Agreement.

              

      

       

      NOW,
THEREFORE, in consideration of the mutual promises and covenants hereinafter set
forth, the parties hereto agree to amend the Agreement as follows:

       

      Capitalized
terms used herein have the respective meanings assigned to them as defined in
this Amendment No. 2.  Other capitalized terms not otherwise defined
herein have the meaning ascribed thereto in the Agreement.

       

      ARTICLE
1 - AMENDMENTS

       

      1.1 Amendment
to Section 3.3.3.  Section 3.3.3 of the Agreement is hereby
amended and restated to read in its entirety as follows:

       

      “AstraZeneca
will pay POZEN within *** (***) days following the receipt *** of  the
invoice sent as hard copy and also in the form of a pdf file via e-mail for
Direct costs and FTE Costs that do not exceed the then current ADA Budget by
more than *** percent (***%); provided, that the GPT will approve variances
above ***% if and to the extent the variances are (a) reasonable in light of
prevalent market conditions for similar work and consistent with POZEN’s
expenditures on Core Development Activities to the extent the activities are
comparable, or (b) beyond POZEN’s reasonable control.”

       

      The
parties agree that the amendment to section 3.3.3 set forth above will apply to
all invoices outstanding as of the Amendment No. 2 Effective Date.

       

      
        
          
            ***
Portion for which confidential treatment requested.

          

           

        

        
          - 1
-

          
            

          

        

        
           

        

      

      1.2 Amendment
to Exhibit F (TPP Profile and TPP Studies).  Exhibit F of the
Agreement as revised and attached to Amendment No. 1 is hereby amended and
restated to read in its entirety as set forth in Exhibit F attached
hereto:

       

      ARTICLE
2 – REFERENCE TO AND EFFECT ON THE AGREEMENT

       

      2.1 Reference
to Agreement.  Upon and after the effectiveness of this
Amendment No. 2, each reference in the Agreement to “this Agreement,”
“hereunder,” “hereof” or words of like import referring to the Agreement shall
mean and be a reference to the Agreement as modified and amended by Amendment
No. 1 and this Amendment No. 2.

       

      2.2 Effectiveness
of Agreement.  The Amendment No. 2 set forth above shall not be
effective until execution and delivery of this Amendment No. 2 by both
parties.  Except as specifically amended above, the Agreement, as
amended, is and shall continue to be  in full force and effect and is
hereby in all respects ratified and confirmed and shall constitute the legal,
valid, binding and enforceable obligations of the parties.

       

      2.3 No
Waiver.  The execution, delivery and effectiveness of this
Amendment No. 2 shall not operate as a waiver of any right, power or remedy of
either Party under the Agreement, no constitute a waiver of any provision of the
Agreement.

       

      ARTICLE
3 - MISCELLANEOUS

       

      3.1 Governing
Law; Dispute Resolution.  Section 15.4 of the Agreement governs
any dispute arising out of or related to this Amendment No. 2.

       

      3.2 Notices.  All
notices or other communications that are required or permitted hereunder will be
made according to Section 15.5 of the Agreement.

       

      3.3 Headings.  The
headings for each Article and Section in this Amendment No. have been inserted
for convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular Article of
Section.

       

      3.4 Counterparts.  This
Amendment No. 2 may be executed in two (2) or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

       

      3.5 No Strict
Construction.  This Amendment No. 2 has been submitted to the
scrutiny of, and has been negotiated by, both Parties and their counsel, and
will be given a fair and reasonable interpretation in accordance with its terms,
without consideration or weight being given to any such terms having been
drafted by any Party or its counsel.  No Rule of strict construction
will be applied against either Party.

       

      
        
          
            ***
Portion for which confidential treatment requested.

          

           

        

        
          - 2
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      IN WITNESS WHEREOF, the
Parties have executed this Amendment No. 2 in duplicate originals by their duly
authorized representatives as of the Amendment No. 2 Effective
Date.

       

      
        	
                POZEN
      INC.

              	 
      	
                ASTRAZENECA
      AB

              
	 
      	 
      	 
      	 
      	 
      
	
                By:

              	
                /s/
      John R. Plachetka

              	 
      	
                By:

              	
                /s/
      Olof Ljungstrand

              
	
                Print
      Name:

              	
                John
      R. Plachetka

              	 
      	
                Print
      Name:

              	
                Olof
      Ljungstrand

              
	
                Title:

              	
                Chairman,
      President & CEO

              	 
      	
                Title:

              	
                Authorized
      Signatory

              

      

      

       

      
        
          
            ***
Portion for which confidential treatment requested.

          

           

        

        
          - 3
-

          
            

          

        

        
           

        

      

      EXHIBIT
F

      TPP
STUDIES

      

       

      
        	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***†

              
	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      
	
                ***

              
	 
      

      

      

      
 

       

      _____________________________  
        †
***

      

      
        
           

        

        
          - 4
-WWW.EXFILE.COM, INC. -- 888-775-4789 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.1 TO FORM 8-K

     

    EXHIBIT 10.1

    
 

    SCHNITZER
STEEL INDUSTRIES, INC.

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

     

    Tamara L.
Lundgren —Executive

     

    Schnitzer
Steel Industries, Inc. —Company

    3200 NW
Yeon Avenue

    Portland,
Oregon 97210

     

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

     

    1.    Effective Date and
Term.  The effective date of this Amended and Restated
Employment Agreement (the “Agreement”) is
December 1, 2008 (the “Effective Date”), and
this Agreement governs the terms and conditions of Executive’s employment
through December 1, 2011 (the “Term”); provided, that
commencing with the first anniversary of the Effective Date and on each
anniversary thereafter (each, an “Extension Date”), the
Term shall be automatically extended for an additional one-year period, unless
the Company or Executive provides the other party hereto at least 90 days’ prior
written notice before the next Extension Date that the Term shall not be so
extended.  This Agreement amends and restates the Employment
Agreement, dated as of March 24, 2006, between the Company and Executive (the
“Prior
Agreement”).  This Agreement has been approved by the
Compensation Committee (the “Committee”) of the
Company’s Board of Directors (the “Board”).

     

    2.    Employment At
Will.  During the Term, the Company will employ Executive as
President and Chief Executive Officer of the Company on the terms and conditions
set forth in this Agreement.  Executive will serve in such position at
the pleasure of the Board.  Executive shall also serve as a member of
the Board.  Executive’s employment is at will and may be terminated at
any time, for any reason or no reason, upon notice by either the Company or
Executive, subject to the obligations of the Company and Executive as provided
in this Agreement and any other agreement between Executive and the Company then
in effect. Unless otherwise terminated in accordance with the terms and
conditions set forth in this Agreement, Executive’s employment with the Company
shall terminate upon the expiration of the Term.  Termination of
Executive as President and Chief Executive Officer, for any reason, shall
constitute the resignation by Executive, effective upon such termination as a
director and officer of the Company. Upon request, Executive shall provide the
Company with additional written evidence of any such resignation

     

    3.    Change In Control Severance
Agreement. In connection with the execution of this Agreement, the
Company and the Executive also entered into an Amended and Restated Change in
Control Severance Agreement dated October 29, 2008 (the “Change in Control
Agreement”).

     

    4.    Annual Salary and
Bonus.

     

    (a)    Base
Salary.  Beginning on the Effective Date, Executive’s base
salary (the “Base
Salary”) shall be at the annual rate of $800,000.  Base Salary
shall be payable in 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    installments
on regular Company paydays, subject to withholding for taxes and other proper
deductions. Base Salary for any partial period of employment shall be prorated.
Executive’s performance and the amount of the Base Salary shall be reviewed
annually in connection with the Company’s normal compensation review and bonus
cycle for executive officers, and the Base Salary may be increased (but not
decreased) from time to time in the sole discretion of the
Committee.

     

    (b)    Sign-On Bonus.  On
the Effective Date, the Company shall pay to Executive a special one-time signing bonus in an
amount equal to $900,000 (the “Sign-On Bonus”);
provided, that
if Executive’s employment is terminated by Executive without Good Reason (as
defined in Section 6(c) below) during the three-year period commencing on the
Effective Date, then Executive shall, within 90 days of such termination, repay
the Company the Sign-On Bonus; provided, further, that the
amount of the Sign-On Bonus that Executive must repay to the Company shall be
reduced by an amount equal to 1/36 of the Sign-On Bonus on each monthly
anniversary that Executive is employed with the Company following the Effective
Date.

     

    (c)    Annual Performance
Bonus.

     

    (i)    For each
fiscal year during the Term, the Committee will establish a bonus program at the
beginning of such fiscal year (and in any event no later than 90 days into the
fiscal year) that will have two components: a component based on objective
Company financial measures and a component based on management objectives
(“MBO”).  The
first component will set forth objective Company financial performance criteria
that will determine the amount of Executive’s bonus. The plan will specify bonus
amounts higher and lower than the target for Company performance based on the
predetermined objectives. The second component will be based on MBO performance
criteria. At the beginning of each fiscal year the Committee, in consultation
with Executive, will establish MBO performance criteria for Executive which will
be clearly understood and measurable. The plan will specify bonus amounts higher
or lower than the target for performance based on the objectives. At the end of
each applicable fiscal year, the Committee will review Executive’s performance,
and determine the extent to which the objectives have been met and the
applicable bonus amount.

     

    (ii)    For each
applicable fiscal year, (A) the target annual bonus under the combined bonus
plan will be 100% of the Base Salary at the rate in effect on the last day of
such fiscal year (the “Target Bonus”), (B)
the Company financial performance component will apply to 50% of the Target
Bonus and the MBO component will apply to 50% of the Target Bonus, (C) with
respect to any fiscal year, the minimum bonus payable to Executive shall be $0
and the maximum bonus payable to Executive shall be seven times the amount of
the Target Bonus allocated to the Company financial performance component and
three times the amount of Target Bonus allocated to the MBO component, and (D)
with respect to both the Company financial performance component and the MBO
component, the amount of bonus payable to Executive if the level of performance
achieved falls between (x) the level required to receive a payout of the minimum
amount for such component and the level required to receive a payout of the
target amount for such component or (y) the level required to receive a payout
of the target amount for such component and the level required to receive a
payout of the maximum amount for such component, shall be determined by linear
interpolation between the applicable points.  

     

    
      
        
        

      

      
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    The bonus
earned for a fiscal year shall be payable to Executive on a date selected by the
Company prior to the expiration of the period beginning on the first day after
the end of the applicable fiscal year and ending on the date which is two and
one-half months after the end of the applicable fiscal year, and shall be
subject to withholding for taxes and other proper deductions.

     

    5.    Equity Grants and Other
Benefits.

     

    (a)    Option and Equity Grants. On
the Effective Date, the Company shall grant Executive restricted stock units
having an aggregate grant date fair market value of $45,000 which restricted
stock units shall vest 20% on June 1, 2009 (the “Initial Vesting
Date”) and at a rate of 20% per year on each of the first four
anniversaries of the Initial Vesting Date and such restricted stock units shall
have such other terms and conditions as are set forth in the restricted stock
unit agreement attached hereto as Exhibit
A.  The amount and terms of any stock option grants and any
other equity-based awards after the Effective Date shall be in the discretion of
the Committee.

     

    (b)    Benefits. Executive shall be
entitled to participate in the Company’s employee benefit plans, insurance,
executive medical coverage, sick leave, holidays, auto allowance and such other
benefits as the Company from time to time may generally provide to its most
senior officers, including, without limitation, the Company’s Supplemental
Executive Retirement Bonus Plan (“SERBP”).

     

    (c)    Long Term Incentive Plan.
Executive is eligible to participate in the Company’s long term incentive
programs (“LTIP”), and awards to
Executive under the LTIP will be made at the discretion of the Committee in
accordance with the LTIP now in effect, or as later modified by the Company;
provided, that
Executive’s performance share award under the LTIP for the Fiscal Year 2009-2011
performance cycle shall have an aggregate grant date fair market value of
$1,200,000.

     

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

     

    (a)    “Cause” shall mean (i)
the willful and continued failure by Executive to perform substantially
Executive’s assigned duties with the Company (other than any such failure
resulting from Executive’s incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to Executive by the Board which
specifically identifies the manner in which the Board believes that Executive
has not substantially performed Executive’s duties or (ii) the willful engaging
by Executive in illegal conduct which is materially and demonstrably injurious
to the Company.  For purposes of Section 6(a)(ii), no act, or failure
to act, on Executive’s part shall be considered “willful” unless done, or
omitted to be done, by Executive in knowing bad faith and without reasonable
belief that his action or omission was in, or not opposed to, the best interests
of the Company.  Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best interests of the
Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall 

     

    
      
        
        

      

      
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    have been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the Board
(excluding Executive) at a meeting of the Board called and held for the purpose
(after reasonable notice to Executive and an opportunity for Executive, together
with Executive’s counsel, to be heard before the Board), finding that in its
good faith opinion Executive was guilty of the conduct set forth above in (i) or
(ii) of this Section 6(a)) and specifying the particulars thereof in
detail.

     

    (b)    “Disability” shall
mean Executive’s absence from her duties with the Company on a full-time basis
for one hundred eighty (180) consecutive days as a result of her incapacity due
to physical or mental illness, unless within thirty (30) days after notice of
termination is given to Executive following such absence she shall have returned
to the full-time performance of her duties.

     

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

     

    (i)    an
adverse change or diminution in Executive’s status, title, positions or
responsibilities as President and Chief Executive Officer or the assignment to
Executive of any duties, reporting requirements or responsibilities which are
inconsistent with such status, title or positions (including, without
limitation, any requirement that Executive report to any person other than the
Board or any failure of Executive to be the senior most officer of the Company),
or any removal of Executive from or any failure to reappoint or reelect
Executive to such positions (including, without limitation, a failure to appoint
Executive as a member of the Board by December 1, 2008 and any subsequent
failure of Executive to be reappointed or reelected to the Board), in each case
except in connection with the termination of Executive’s employment for Cause or
Disability or as a result of Executive’s death or by Executive other than for
Good Reason;

     

    (ii)    a
reduction by the Company in the Base Salary;

     

    (iii)    a failure
by the Company to provide to Executive the compensation and benefits as provided
in Section 4 or Section 5 of this Agreement;

     

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

     

    (v)    the
Company’s requiring Executive to relocate her personal residence, or to change
her base office locations from either of the current locations in New York City,
New York and Portland, Oregon, absent agreement with the Executive, except for
required travel on the Company’s business to an extent substantially consistent
with the business travel obligations which Executive undertook as of the
Effective Date;

     

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

     

    (vii)    a failure
by the Company to pay Executive any portion of Executive’s current compensation,
to credit any deferred compensation plan account of 

     

    
      
        
        

      

      
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    Executive
in accordance with Executive’s previous election, or to pay Executive any
portion of an installment of deferred compensation under any plan in which
Executive participated, within seven days of the date such compensation is
due.

     

    Notwithstanding
any provision in this Agreement to the contrary, Executive may terminate her
employment for Good Reason only if (1) within 90 days after the first
occurrence of  the circumstances giving rise to Good Reason, Executive
gives written notice to the Company of Executive’s belief that Good Reason
exists and of her intention to terminate her employment for Good Reason, (2)
within 30 days of such notice from Executive the circumstances giving rise to
Good Reason are not fully corrected, and (3) such termination occurs no later
than 180 days following the first occurrence of the circumstances giving rise to
Good Reason.

     

    7.    Effect of Termination of
Employment.

     

    (a)    Termination by the Company for Cause
or by Executive without Good Reason. If the Company terminates
Executive’s employment for Cause or Executive terminates her employment without
Good Reason, Executive shall be entitled to receive only (i) the Base Salary,
any earned but unpaid bonus for the prior fiscal year, and any other
compensation or benefits which have been earned or become payable as of the date
of termination but which have not yet been paid to Executive, (ii) all paid time
off accrued but untaken through the effective date of such termination, and
(iii) reimbursement of expenses incurred through the effective date of such
termination pursuant to the Company’s normal expense reimbursement policy, which
reimbursement shall be paid promptly and in any event within 30 days after
submission in accordance with Company policy; provided that
Executive shall submit all outstanding unreimbursed business expenses no later
than 15 days following the date of termination. The amounts described in clauses
(i) through (iii) of the foregoing are referred to as the “Accrued
Obligations.”

     

    (b)    Termination by the Company Without
Cause or by Executive for Good Reason. If the Company terminates
Executive’s employment without Cause (which, for the avoidance of doubt, shall
include any termination of Executive’s employment upon the expiration of the
Term as a result of the Company’s election not to extend the Term in accordance
with Section 1 of this Agreement) or Executive terminates her employment for
Good Reason at any time during the Term and such termination does not occur
under circumstances that would give rise to severance payments to Executive
under the Change in Control Agreement:

     

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

     

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

     

    (iii)    Executive
shall be paid an amount equal to the product of the annual incentive bonus
Executive would have received had Executive remained employed on the last day of
such fiscal year multiplied by the percentage of days during the fiscal year
prior to the 

     

    
      
        
        

      

      
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    Termination
Date during which Executive was employed, such amount to be paid at the same
time as the annual incentive bonus would have been paid to Executive if she had
remained employed on the applicable payment date for such annual incentive
bonus;

     

    (iv)    for a
24-month period after the date of termination, the Company shall arrange to
provide Executive, her spouse and dependents with life, accident and health
insurance benefits substantially similar to those which Executive was receiving
immediately prior to such termination; provided, that the
Company shall not provide any benefit otherwise receivable by Executive pursuant
to this Section 7(b)(iv) to the extent that a similar benefit is actually
received by Executive from a subsequent employer during such 24-month period,
and any such benefit actually received by Executive shall be reported to the
Company; and

     

    (v)    all
options to purchase Company common stock then held by Executive shall become
immediately vested and exercisable in full, all restricted stock units and
restricted stock then held by Executive shall become immediately vested and all
related forfeiture provisions shall lapse, and all performance shares then held
by Executive shall vest to the extent provided in the applicable plan and award
agreement pursuant to which such performance shares were granted.

     

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

     

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

     

    (e)    Date of Payment. Except as
otherwise provided in this Agreement, all cash payments and lump-sum awards
required to be made pursuant to the provisions of this Section 7 shall be paid
(i) in the case of the Accrued Obligations, no later than the 30th day
following such termination of employment, (ii) in the case of the pro rata
bonus, as provided in Section 7(b)(iii), and (iii) in the case of the payments
described in Sections 7(b)(ii), within 45 days of the date of termination; provided that
Executive has delivered an executed copy of a release of claims in the form
attached hereto as Exhibit B (and not
revoked such release) prior to the expiration of such 45-day
period.

     

    (f)    Options, Performance Shares and
Restricted Stock. The options, performance shares, restricted stock units
and restricted stock awarded to Executive by the Company shall, in the event of
a termination of Executive’s employment, be governed by the provisions of the
applicable plan and award agreement; provided that the
accelerated vesting provisions of Section 7(b)(v) shall, if triggered, control
in the event of any inconsistency with any such agreement.

     

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

     

    (h)    280G Excise Tax Gross Up
Provision. If any of the payments or benefits provided for in Section 7
of this Agreement, under any other agreement between Executive and 

     

    
      
        
        

      

      
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    the
Company or otherwise (collectively, the “Payments”) will be
subject to the tax imposed by section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”), or any
similar tax that may hereafter be imposed (the “Excise Tax”), the
Company shall pay to Executive at the time any such Payment is paid an
additional amount (the “Gross-Up Payment”)
such that the net amount retained by Executive, after deduction of any Excise
Tax on the Payments and any federal, state and local income tax and Excise Tax
upon the Gross-Up Payment, shall be equal to the Payments. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive’s personal residence on the date of termination, net of
the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder,
Executive shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment directly and indirectly attributable to such reduction plus interest on
the amount of such repayment at the rate provided for in section 1274(d) of the
Code.  In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest and penalties payable to the taxing authorities
with respect to such excess) at the time that the amount of such excess is
finally determined. The Company shall withhold the Excise Tax in accordance with
section 4999(b) of the Code, and shall withhold federal, state and local income
taxes from the Payments and Gross-Up Payments as required by law.

     

    (i)    Compliance with Code Section
409A.  Notwithstanding anything herein to the contrary, (i) if
at the time of Executive’s termination of employment with the Company Executive
is a “specified employee” as defined in Section 409A of the Code and the
deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such termination of employment is necessary in order to
prevent any accelerated or additional tax under Section 409A of the Code, then
the Company will defer the commencement of the payment of any such payments or
benefits hereunder (without any reduction in such payments or benefits
ultimately paid or provided to Executive) until the date that is six months
following Executive’s termination of employment with the Company (or the
earliest date as is permitted under Section 409A of the Code) and (ii) if any
other payments of money or other benefits due to Executive hereunder could cause
the application of an accelerated or additional tax under Section 409A of the
Code, such payments or other benefits shall be deferred if deferral will make
such payment or other benefits compliant under Section 409A of the Code, or
otherwise such payment or other benefits shall be restructured, to the extent
possible, in a manner, determined by the Board, that does not cause such an
accelerated or additional tax.  In the event that payments under this
Agreement are deferred pursuant to this Section 7(i) in order to prevent any
accelerated tax or additional tax under Section 409A of the Code, then such
payments shall be paid at the time specified under this Section 7(i) (together
with interest for any additional deferral period resulting from this Section
7(i) at the applicable federal rate under Section 7872(f)(2)(A) of the Code in
effect on the date of termination).  The Company shall consult with
Executive in good faith regarding the implementation of this Section
7(i).  For purposes of Section 409A of the Code, the right to a series
of installment payments under this Agreement 

     

    
      
        
        

      

      
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    shall be
treated as a right to a series of separate payments. Notwithstanding
anything to the contrary herein, a termination of employment shall not be deemed
to have occurred for purposes of any provision of this Agreement providing for
the payment of amounts or benefits upon or following a termination of employment
unless such termination is also a “Separation from Service” within the meaning
of Section 409A of the Code and, for purposes of any such provision of this
Agreement, references to a “resignation,” “termination,” “termination of
employment” or like terms shall mean Separation from Service.

     

    8.    Restrictive
Covenants.

     

    (a)    Noncompetition.  In
consideration of the payments, benefits and other obligations of the Company to
Executive pursuant to this Agreement, including, without limitation, the
Company’s obligation to provide Executive with Confidential Information pursuant
to Section 8(c), and in order to protect the such Confidential Information and
preserve the goodwill of the Company and its subsidiaries (collectively, the
“Company
Group”), Executive hereby covenants and agrees that, during the “Restricted Period”
(as defined below), Executive shall not, anywhere in the world where any member
of the Company Group conducts business, directly or indirectly, own any interest
in, manage, control, participate in (whether as an officer, director, manager,
employee, partner, equity holder, member, agent, representative or otherwise),
consult with, render services for, or in any other manner engage in any business
in which a member of the Company Group is materially engaged at the time of such
termination (collectively, a “Competing Business”);
provided that
nothing herein shall prohibit Executive from (i) investing in stocks, bonds, or
other securities in any business if such stocks, bonds, or other securities are
listed on any United States securities exchange or are publicly traded in an
over the counter market, and such investment does not exceed, in the case of any
capital stock of any one issuer two percent (2%) of the issued and outstanding
capital stock or in the case of bonds or other securities, two percent (2%) of
the aggregate principal amount thereof issued and outstanding or (ii) working
for a subsidiary, affiliate or division of a Competing Business if such
subsidiary, affiliate or division is not itself engaged in a Competing Business
and Executive does not provide services to such Competing
Business.  For purposes of this Section 8(a), the “Restricted Period”
shall mean all times during which Executive is employed by the Company and the
period commencing on the date of the termination of Executive’s employment with
the Company for any reason and ending on the first anniversary of the date of
such termination.

     

    (b)    Nonsolicitation.  In
further consideration of the payments by the Company to Executive pursuant to
this Agreement, Executive hereby covenants and agrees that, during Executive’s
employment with the Company and for the two-year period following the date of
Executive’s termination for any reason, Executive shall not attempt to
influence, persuade or induce, or assist any other person in so influencing,
persuading or inducing, (i) any customer of the Company Group to give up, or to
not commence, a business relationship with the Company Group and shall not
otherwise directly or indirectly solicit any such customer except on behalf of
the Company Group, and (ii) any employee of the Company Group to cease such
employee’s employment with the Company Group and shall not otherwise directly or
indirectly solicit for employment any such employee.

     

    (c)    Confidential
Information.  Executive acknowledges that the Company Group has
a legitimate and continuing proprietary interest in the protection of its
confidential 

     

    
      
        
        

      

      
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    information
and that it has invested substantial sums and will continue to invest
substantial sums to develop, maintain and protect such confidential
information.  During the Term and at all times thereafter, Executive
shall not, except with the written consent of the Company or in connection with
carrying out Executive’s duties or responsibilities hereunder, furnish or make
accessible to anyone or use for Executive’s own benefit any trade secrets,
confidential or proprietary information of the Company Group (all such
information, “Confidential
Information”), including its business plans, marketing plans, strategies,
systems, programs, methods, employee lists, computer programs, insurance
profiles and client lists; provided, that
Confidential Information shall not include information known to the public or
otherwise in the public domain without violation by Executive of this
Section 8(c).  Notwithstanding the foregoing, Executive may
disclose Confidential Information when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company Group or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order Executive to divulge,
disclose or make accessible such information; provided, further, that in the
event that Executive is ordered by a court or other government agency to
disclose any Confidential Information, Executive shall (i) promptly notify
the Company of such order, (ii) at the written request of the Company,
diligently contest such order at the sole expense of the Company as expenses
occur, and (iii) at the written request of the Company, seek to obtain, at
the sole expense of the Company, such confidential treatment as may be available
under applicable laws for any information disclosed under such
order.

     

    (d)    Enforcement.  Executive
acknowledges and agrees that the Company’s remedies at law for a breach or
threatened breach of any of the provisions of Sections 8(a), (b) or (c)
herein would be inadequate and, in recognition of this fact, Executive agrees
that, in the event of such a breach or threatened breach, in addition to any
remedies at law, the Company shall be entitled to obtain equitable relief in the
form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be
available.  It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in
Sections 8(a) and 8(b) to be reasonable, if a judicial determination is
made by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is an unenforceable restriction
against Executive, the provisions of this Agreement shall not be rendered void
but shall be deemed amended to apply as to such maximum time and territory and
to such maximum extent as such court may judicially determine or indicate to be
enforceable.  Alternatively, if any court of competent jurisdiction
finds that any restriction contained in this Agreement is unenforceable, and
such restriction cannot be amended so as to make it enforceable, such finding
shall not affect the enforceability of any of the other restrictions contained
herein.

     

    9.    Withholding. Payment of all
compensation under this Agreement, including but not limited to the Base Salary
and annual performance bonus, shall be subject to all applicable federal, state
and local tax withholding.

     

    10.    Attorneys’ Fees. The Company
shall pay to Executive all reasonable legal fees and related expenses incurred
by Executive in good faith as a result of Executive seeking to obtain or enforce
in good faith any right or benefit provided by this Agreement.

     

    
      
        
        

      

      
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    11.    Successors; Binding
Agreement.

     

    (a)    Upon
Executive’s written request, the Company will seek to have any Successor (as
hereinafter defined), by agreement in form and substance satisfactory to
Executive, assent to the fulfillment by the Company of its obligations under
this Agreement.  For purposes of this Agreement, “Successor” shall mean
any Person that succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company’s business directly, by
merger, consolidation or purchase of assets, or indirectly, by purchase of the
Company’s voting securities or otherwise.

     

    (b)    This
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any amount
would still be payable to Executive hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee or
other designee or, if there be no such designee, to Executive’s
estate.

     

    12.    Survival. The respective
obligations of, and benefits afforded to, the Company and Executive as provided
in Sections 7-13 and 16 of this Agreement shall survive termination of
Executive’s employment and this Agreement.

     

    13.    Notice. For the purposes of
this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid and addressed to the address of the Company as set forth on the
first page of this Agreement or to Executive as set forth in the Company’s
records, provided that all notices to the Company shall be directed to the
attention of the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon
receipt.

     

    14.    Miscellaneous. No provision of
this Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in a writing signed by Executive and a duly
authorized officer of the Company (other than Executive). No waiver by either
party hereto at any time of any breach by the other party hereto of, or of
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party that are not expressly set
forth in this Agreement or the Change in Control Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal laws of the State of Oregon, without regard to conflicts of law
principles.

     

    15.    Validity. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

     

    
      
        
        

      

      
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    16.    Arbitration. Any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Portland, Oregon by three arbitrators in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrators’ award, which award shall be
a final and binding determination of the dispute or controversy, in any court
having jurisdiction; provided, that
Executive shall be entitled to seek specific performance of Executive’s right to
be paid until the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The Company
shall bear all costs and expenses of the arbitrators arising in connection with
any arbitration proceeding pursuant to this Section 16.

     

    17.    Related Agreements. To the
extent that any provision of any other agreement between the Company or any of
its subsidiaries and Executive, other than the Change in Control Agreement,
shall limit, qualify or be inconsistent with any provision of this Agreement,
then for purposes of this Agreement, while the same shall remain in force, the
provision of this Agreement shall control and such provision of such other
agreement shall be deemed to have been superseded, and to be of no force or
effect, as if such other agreement had been formally amended to the extent
necessary to accomplish such purpose.

     

    18.    Counterparts. This Agreement
may be executed in several counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the same
instrument.

     

    Dated:
October 29, 2008

     

    
      	
              SCHNITZER
      STEEL INDUSTRIES, INC.

               

               

              By:  
      /s/ Judith Johansen

                
      

              Name:
      Judith Johansen

              Title:  Acting
      Chair, Compensation Committee of the Board of Directors

            	
               

               

               

              /s/
      Tamara
      L. Lundgren

              
                
      

              Tamara
      L. Lundgren

            

    

    

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
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