8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):      April 10, 2006

SCHNITZER STEEL INDUSTRIES, INC.

(Exact Name of Registrant as Specified in its Charter)

OREGON (State or other jurisdiction of incorporation) 0-22496 (Commission File Number) 93-0341923 (I.R.S. Employer Identification No.)

  3200 N.W. Yeon Ave. P.O. Box 10047 Portland, OR (Address of principal executive offices)       97296-0047 (Zip Code)

Registrant’s telephone number, including area code: (503) 224-9900

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On April 10, 2006, Schnitzer Steel Industries, Inc. (the “Company”) entered into an agreement with Tamara L. Adler (Lundgren) regarding her position as Executive Vice President, Strategy & Investments, and President - Shared Services of the Company (the “Employment Agreement”). On April 10, 2006 the Company also entered into a change in control severance agreement (the “Change in Control Agreement”) with Ms. Adler. The Employment Agreement and Change in Control Agreement were each approved by the Compensation Committee of the Company’s Board of Directors (the “Board”). The summaries herein of the Employment Agreement and the Change in Control Agreement are qualified in their entirety by the actual agreements which are attached hereto as exhibits 10.1 and 10.2 and incorporated herein by reference.

EMPLOYMENT AGREEMENT

The Employment Agreement is effective as of March 24, 2006 and governs the terms and conditions of Ms. Adler’s employment through August 31, 2009. The Employment Agreement replaces and supersedes an agreement dated August 4, 2005 entered into between the Company and Ms. Adler in connection with the commencement of her employment.

The Employment Agreement provides for an annual base salary of $550,000 beginning on January 1, 2006, subject to annual review in connection with the Company’s normal compensation review for executive officers, and may be increased from time to time in the sole discretion of the Company’s President & Chief Executive Officer. The Employment Agreement also provides for a cash bonus for the fiscal year ending August 31, 2006 to be determined by the Company’s President & Chief Executive Officer in his sole discretion, subject to review of the Compensation Committee, based on considerations including a variety of financial and organizational objectives and the overall performance of the Company, as well as the achievement of personal goals agreed with the Company’s President & Chief Executive Officer. Ms. Adler’s target bonus for the fiscal year ending August 31, 2006 is $550,000, but the actual amount may be higher or lower subject to the considerations discussed in the previous sentence. At the beginning of fiscal years 2007, 2008 and 2009 the Company’s President & Chief Executive Officer will establish bonus programs that provide for annual bonuses payable to Ms. Adler based on predetermined (i) objective Company financial performance criteria and (ii) clearly measurable management objectives for Ms. Adler. The target bonus for fiscal year 2007 is 1 times Ms. Adler’s base salary for 2007, but the actual amount may be higher or lower subject to the considerations in the previous sentence. The target bonuses for fiscal years 2008 and 2009 shall be the same as 2007, unless otherwise agreed to by the Company’s President and Chief Executive Officer and Ms. Adler.

Ms. Adler is eligible to participate in the Company’s long term incentive programs (“LTIP”), and awards under the LTIP will be made at the discretion of the Compensation Committee, as recommended by the Company’s President and Chief Executive Officer. In addition, the amount and terms of any stock option grants to Ms. Adler after March 24, 2006 shall be at the discretion of the Compensation Committee, as recommended by the Company’s President and Chief Executive Officer. The Employment Agreement also provides that Ms. Adler is eligible to participate in the Company’s employee benefit plans (other than the Company’s Economic Value

Added Bonus Plan), with participation under the Company’s retirement programs, including the Supplemental Executive Retirement Bonus Plan, to begin after June 1, 2006.

In the event that Ms. Adler’s employment is terminated by the Company without “cause” or by Ms. Adler for “good reason” (as such terms are defined in the Employment Agreement) before September 1, 2009 and not under circumstances that would give rise to severance payments to Ms. Adler under the Change in Control Agreement, Ms. Adler would be entitled to receive (i) her base salary and any other compensation or benefits which have been earned or become payable as of the date of termination but which have not yet been paid, (ii) all paid time off accrued but untaken through the effective date of such termination, (iii) reimbursement of expenses incurred through the effective date of such termination pursuant to the Company’s normal expense reimbursement policy, (iv) a severance payment in a lump sum in an amount equal to two times her annual base salary plus two times her target annual bonus, and (v) a pro rata portion of her target bonus for the fiscal year in which the termination occurs (based on the portion of the year worked). In addition, all options to purchase Company stock then held by Ms. Adler would become immediately vested and exercisable in full and all performance shares and restricted stock then held by Ms. Adler would become immediately vested and all related forfeiture provisions would lapse.

If any payments received by Ms. Adler in connection with the termination of her employment by the Company without “cause” or by Ms. Adler for “good reason” will be subject to any “excise tax” (as such terms are defined in the Employment Agreement), the Company will make an additional payment to Ms. Adler such that Ms. Adler will receive net benefits as if no such tax were payable.

Ms. Adler is an “at-will” employee of the Company and her employment can be terminated at any time, for any reason or no reason, upon notice by either the Company or Ms. Adler, subject to certain obligations of the Company and Ms. Adler contained in the Employment Agreement.

CHANGE IN CONTROL AGREEMENT

The Change in Control Agreement is effective as of March 24, 2006 and shall continue in effect until August 31, 2009 or earlier termination of Ms. Adler’s employment; provided that the Change in Control Agreement will continue in effect for a period of twenty-four (24) months beyond the term provided therein if a “change in control” (as such term in defined in the Change in Control Agreement) shall have occurred during such term.

In the event that Ms. Adler’s employment is terminated by the Company without “cause” or by Ms. Adler for “good reason” within twenty-four (24) months following a “change in control” of the Company (as such terms are defined in the Change in Control Agreement), Ms. Adler would be entitled to receive (i) her base salary and any other benefits or awards which pursuant to the terms of any “plans” (as defined in the Change in Control Agreement) have been earned or become payable but which have not yet been paid and (ii) severance pay in a single payment in an amount equal to three times her annual salary and target bonus. Ms. Adler would also continue to receive her life, accident and health insurance benefits for a period of up to thirty-six (36) months. In addition, all options to purchase Company stock then held by Ms. Adler would

become immediately vested and exercisable in full and all performance shares and restricted stock then held by Ms. Adler would become immediately vested and all related forfeiture provisions would lapse.

If any payments or benefits received by Ms. Adler in connection with a “change in control” will be subject to an excise tax on “excess parachute payments,” the Company will make an additional payment to Ms. Adler such that Ms. Adler will receive net benefits as if no such tax were payable. If such additional payments are required, the Company will not be able to deduct such additional payments for federal income tax purposes and also will be denied such a deduction for most of the other payments made pursuant to the Change in Control Agreement and its other plans and policies.

Ms. Adler is obligated under the Change in Control Agreement to remain in the employ of the Company for a period of 60 days following a “potential change in control” unless employment is terminated by Company without “cause” or by Ms. Adler for “good reason” (as such terms are defined in the Change in Control Agreement).

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)Exhibits

10.1 Employment Agreement with Tamara L. Adler (Lundgren).

10.2 Change in Control Severance Agreement with Tamara L. Adler (Lundgren).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SCHNITZER STEEL INDUSTRIES, INC.
	(Registrant)
Date:    April 11, 2006	By:	/s/ Richard C. Josephson
		Name: Richard C. Josephson
		Title:Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.1	Employment Agreement with Tamara L. Adler (Lundgren).
10.2	Change in Control Severance Agreement with Tamara L. Adler (Lundgren).

EX-10.1

EXHIBIT 10.1

SCHNITZER STEEL INDUSTRIES, INC.

EMPLOYMENT AGREEMENT

Tamara L. Adler (Lundgren)—Executive

Schnitzer Steel Industries, Inc.—Company

PO Box 10047

Portland, OR 97296-0047

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

1.Effective Date and Term. The effective date of this Agreement is March 24, 2006, and this Agreement governs the terms and conditions of Executive’s employment through August 31, 2009. This Agreement replaces and supersedes the Agreement of Initial Employment Terms dated August 4, 2005 between the Company and Executive. This Agreement has been approved by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”.

2.Employment At-Will. The Company employs Executive as Executive Vice President, Strategy & Investments, and President—Shared Services of the Company (EVPS&I—PSS) on the terms and conditions set forth in this Agreement. Executive serves as EVPS&I—PSS of the Company at the pleasure of the Company, and reports to the President & Chief Executive Officer. Executive’s employment is at will and may be terminated at any time, for any reason or no reason, upon notice by either the Company or Executive, subject to the obligations of the Company and Executive as provided in this Agreement. Termination of Executive as EVPS&I—PSS, for any reason, shall constitute the resignation by Executive, effective upon such termination as an officer of the Company. Upon request, Executive shall provide the Company with additional written evidence of any such resignation

3.Change in Control Severance Agreement. The Company and the Executive have entered into a Change in Control Severance Agreement dated March 24, 2006 (the “Change in Control Agreement”).

4.Annual Salary and Bonus.

(a)Base Salary. Beginning January 1, 2006, Executive’s base salary (the “Base Salary”) shall be at the annual rate of $550,000. Base Salary shall be payable in installments on regular Company paydays, subject to withholding for taxes and other proper deductions. Base Salary for any partial period of employment shall be prorated. Executive’s performance and the amount of the Base Salary shall be reviewed annually in connection with the Company’s normal compensation review and bonus cycle for executive officers, and the

Base Salary may be increased from time to time in the sole discretion of the President & Chief Executive Officer.

(b)Annual Performance Bonus for Fiscal Year Ended August 31, 2006. Executive’s target cash bonus for the fiscal year ending August 31, 2006 shall be $550,000. The actual amount of Executive’s bonus for this period shall be determined by the President & Chief Executive Officer in his sole discretion, subject to review by the Compensation Committee, based on his judgment regarding Executive’s performance during fiscal year 2006, and may be more or less than the target amount. There is no pre-determined minimum or maximum amount of the bonus. Bonus payment for performance during fiscal year 2006 will be on the basis of a review and discussion with the President & Chief Executive Officer, and will include consideration of a variety of financial and organizational objectives and the overall performance of the Company, as well as the achievement of personal goals agreed with the President & Chief Executive Officer. The bonus provided for in this Section 4(b) shall be payable to Executive on a date selected by the Company between September 1 and November 15, 2006, and is subject to withholding for taxes and other proper deductions.

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

5.Options and Other Benefits.

(a)Option Grants. The amount and terms of any stock option grants after the date of this Agreement shall be in the discretion of the Compensation Committee, as recommended to the Committee by the President & Chief Executive Officer.

(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

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most senior officers, except that Executive shall not be a participant in the Company’s Supplemental Executive Retirement Bonus Plan (“SERBP”) or the Company’s Economic Value Added Bonus Program. If Executive’s employment continues beyond June 1, 2006, Executive will also become eligible for retirement benefits, including the SERBP, subject to the Compensation Committee’s review and approval regarding the terms and conditions of such benefits.

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

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

(a)“Cause” shall mean (i) the willful and continued failure by Executive to perform substantially her assigned duties with the Company (other than any such failure resulting from her incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Executive by the President & Chief Executive Officer of the Company which specifically identifies the manner in which the President & Chief Executive Officer believes that Executive has not substantially performed her duties or (ii) the willful engaging by Executive in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this Section 6(a) (ii), no act, or failure to act, on Executive’s part shall be considered “willful” unless done, or omitted to be done, by Executive in knowing bad faith and without reasonable belief that her 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 direction from the President & Chief Executive Officer or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a copy of a letter from the President and Chief Executive Officer, finding (after reasonable notice to her and an opportunity for her, together with her counsel, to be heard) that in his good faith opinion she was guilty of the conduct set forth above in (i) or (ii) of this paragraph (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)a substantive change or diminution in Executive’s status, title, positions or responsibilities as EVPS&I—PSS or the assignment to Executive of any duties or responsibilities which are inconsistent with such status, title or positions, or any removal of

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Executive from or any failure to reappoint or reelect Executive to such positions, except in connection with the termination of Executive’s employment for Cause or Disability or as a result of Executive’s death or by Executive other than for Good Reason;

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

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

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

(v) the Company’s requiring Executive to relocate her residence, or change her base office locations from either of the current locations in New York and Portland (or other offices in reasonable proximity within those cities), 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 date of this Agreement;

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

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

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

7.Effect of Termination of Employment.

(a)Terminationby 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 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

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the Company normal expense reimbursement policy. The amounts described in clauses (i) through (iii) of the foregoing are referred to as the “Accrued Obligations.”

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

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

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

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

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

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

(d)Disability. If Executive’s employment is terminated as a result of Executive’s Disability, Executive shall be entitled to receive theAccrued 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 Section7 shall be made no later than the 30th day following the effective date of Executive’s termination.

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

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

(h)No Obligation of Executive to Mitigate. The amount of any payment provided for in this Section 7 shall not be reduced, offset or subject to recovery by the Company

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by reason of any compensation earned by Executive as the result of employment by another employer after the date of termination.

(i)280G Excise Tax Gross Up Provision. If any of the payments provided for in Section 7(b) will be subject to the tax imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar tax that may hereafter be imposed (the “Excise Tax”), the Company shall pay to Executive at the time any such payment is paid an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax on the payments and any federal, state and local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to the payment provided for in Section 7(b). For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive’s residence on the date of termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment directly and indirectly attributable to such reduction plus interest on the amount of such repayment at the rate provided for in section 1274(d) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable to the taxing authorities with respect to such excess) at the time that the amount of such excess is finally determined. The Company shall withhold the Excise Tax in accordance with section 4999(b) of the Code, and shall withhold federal, state and local income taxes from payments under Section 7(b) and Gross-Up Payments as required by law.

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

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

10.   Successors; Binding Agreement.

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

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(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.

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

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

13.    Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by Executive and the President & Chief Executive Officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon.

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

15.      Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Portland, Oregon by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award, which award shall be a final and binding determination of the dispute or controversy, in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of Executive’s right to be paid until the date of termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses of the arbitrators arising in connection with any arbitration proceeding pursuant to this Section 15.

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

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

Dated:     March 24, 2006

SCHNITZER STEEL INDUSTRIES, INC.
By   /s/ John D. Carter	/s/  Tamara L.Adler (Ludgren)
Name:  John D. Carter Title:    President & Chief Executive Officer	Tamara L. Adler (Lundgren)

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EX-10.2

EXHIBIT 10.2

March 24, 2006

Tamara L. Adler (Lundgren)

Executive Vice President, Strategy & Investments

President—Shared Services

Schnitzer Steel Industries, Inc.

3200 NW Yeon Avenue

Portland, Oregon 97210

Re:Change in Control Severance Agreement

Dear Tamara:

Schnitzer Steel Industries, Inc., an Oregon corporation (the “Company”), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company, its customers and its shareholders. Accordingly, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without distraction in circumstances arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Compensation Committee of the Board, sets forth severance benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated in connection with a Change in Control (as defined in Section 3 hereof) under the circumstances described below.

     1.Agreement to Provide Services; Right to Terminate.

  (i)Except as otherwise provided in paragraph (ii) below, the Company or you may terminate your employment at any time, subject to the Employment Agreement dated March 24, 2006, and subject to the Company’s providing the benefits hereinafter specified in accordance with the terms hereof.

  (ii)In the event of a Potential Change in Control (as defined in Section 3 hereof), you agree that you will not leave the employ of the Company (other than as a result of Disability, as such term is hereinafter defined) and will render the services contemplated in the recitals to this Agreement until the earlier of (a) a date which is 60 days from the occurrence of such Potential Change in Control, or (b) a termination of your employment pursuant to which you become entitled under this Agreement to receive the benefits provided in Section 5(iii) below.

2.Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until August 31, 2009 or earlier termination of your employment; provided that, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a Change in Control shall have occurred during such term.

3.Change in Control; Potential Change in Control; Shareholder Approval; Person.

 (i)     For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

 (A)The consummation of:

(1)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

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

(B)At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board (“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 (as hereinafter defined) 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

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meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing twenty percent (20%) or more of the combined voting power of the then outstanding Voting Securities.

Notwithstanding anything in the foregoing to the contrary, unless otherwise determined by the Board, no Change in Control shall be deemed to have occurred for purposes of this Agreement if (1) you acquire (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 otherwise described under subparagraph (A) above, or (2) you are 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 under subparagraph (C) above.

(ii)For purposes of this Agreement, a “Potential Change in Control” shall be deemed to have occurred if:

(A)the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(B)any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or

(C)the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(iii)For purposes of this Agreement, “Shareholder Approval” shall be deemed to have occurred if the shareholders of the Company approve an agreement entered into by the Company, the consummation of which would result in the occurrence of a Change in Control.

(iv)For purposes of this Agreement, the term “Person” shall mean and include any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than the Company or any employee benefit plan sponsored by the Company.

4.             Termination Following Shareholder Approval or Change in Control. If a Change in Control occurs, you shall be entitled to the benefits provided in Section 5(iii) hereof in the event that (x) a Date of Termination (as defined in Section 4(v) below) of your employment with the Company occurred or occurs after the earlier of Shareholder Approval, if applicable, or the Change in Control and no later than twenty-four (24) months after the Change in Control, or (y) your employment with the Company is terminated by you for Good Reason (as defined below) based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control and your Notice of Termination (as defined in Section 4(iv) below) in

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connection therewith shall have been given no later than twenty-four (24) months after the Change in Control; provided, however, that if any such termination is (a) because of your death, (b) by the Company for Cause (as defined below) or Disability, or (c) by you other than for Good Reason based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control, then you shall not be entitled to the benefits provided in Section 5(iii) hereof.

(i)Disability. Termination by the Company of your employment based on “Disability” shall mean termination because of your absence from your duties with the Company on a full-time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination is given to you following such absence you shall have returned to the full-time performance of your duties.

(ii)Cause. Termination by the Company of your employment for “Cause” shall mean termination upon (a) the willful and continued failure by you to perform substantially your assigned duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the President & Chief Executive Officer of the Company which specifically identifies the manner in which such executive believes that you have not substantially performed your duties or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph (ii), no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you in knowing bad faith and without reasonable belief that your 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 by the President & Chief Executive Officer or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a letter from the President and Chief Executive Officer, finding (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard) that in his good faith opinion you were guilty of the conduct set forth above in (a) or (b) of this paragraph (ii) and specifying the particulars thereof in detail.

(iii)Good Reason. Termination by you of your employment with the Company for “Good Reason” shall mean termination by you of your employment with the Company based on any of the following events provided you give Notice of Termination after the occurrence of any of the following events and no later than 30 days after the later of (1) notice to you of such event, or (2) the Change in Control:

(A)a change in your status, title, positions or responsibilities as EVP S&I--PSS or the assignment to you of any duties or responsibilities which are inconsistent with such status, title or positions, or any removal of you from or any failure to reappoint or reelect you to such positions, except in connection with the

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termination of your employment for Cause or Disability or as a result of your death or by you other than for Good Reason;

(B)a reduction by the Company in your base salary as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;

(C)the failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any of such Plans on at least as favorable a basis to you as is the case immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;

(D)the failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with the Company’s normal vacation policy as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;

(E)the Company’s requiring you to relocate your residence, or change your base office locations from the locations currently in New York and Portland (or other offices in reasonable proximity within those cities) immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company prior to the earlier of Shareholder Approval, if applicable, or the Change in Control;

(F)the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 7 hereof;

(G)any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (iv) below (and, if applicable, paragraph (ii) above); and for purposes of this Agreement, no such purported termination shall be effective; or

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(H)the failure by the Company to pay you any portion of your current compensation, to credit your Deferred Compensation Plan account in accordance with your previous election, or to pay you any portion of an installment of deferred compensation under any Plan in which you participated, within seven (7) days of the date such compensation is due.

For purposes of this Agreement, “Plan” shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, deferred compensation, medical, disability, accident, life insurance, or relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees.

(iv)Notice of Termination. Any purported termination by the Company or by you (other than termination due to your death, which shall terminate your employment automatically) following the earlier of Shareholder Approval, if applicable, or a Change in Control shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(A)   With respect to any Notice of Termination given by you for Good Reason, such Notice of Termination may indicate that such termination for Good Reason shall be conditioned upon, and postponed until, the date on which it is finally determined, either by mutual written agreement of the parties or by the arbitrators in a proceeding as provided in Section 13 hereof, that Good Reason exists for such termination. If a Notice of Termination given by you for Good Reason indicates that such termination shall be so conditioned and postponed, then, if the Company disputes the existence of Good Reason, the Company shall, within thirty (30) days after the Notice of Termination is given, notify you that a dispute exists concerning the termination, whereupon Section 13 hereof shall apply to such dispute. If no such notice is given by the Company within such 30-day period, then a final determination that Good Reason exists shall be deemed to have occurred on the date thirty (30) days after the Notice of Termination for Good Reason is given.

(B)   Notwithstanding anything to the contrary in this Agreement:

(1)if, at any time before the Date of Termination determined pursuant to this Agreement with respect to any purported termination by you of your employment with the Company, there exists a basis for the Company to terminate your employment for Cause, then the Company may, regardless of whether or not you have given Notice of Termination for Good Reason and regardless of whether or not Good Reason exists, terminate your employment for Cause, in which event you shall not be entitled to the benefits provided in Section 5(iii) hereof, and

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(2)if you die or your employment is terminated based on Disability after you have given Notice of Termination for Good Reason and before the Date of Termination determined under this Agreement with respect to that Notice of Termination, and it is subsequently finally determined that Good Reason existed at the time your employment terminated, then termination of your employment shall be deemed to have occurred for Good Reason (and not due to your death or Disability) and you shall be entitled to the benefits provided in Section 5(iii) hereof.

(v)Date of Termination. “Date of Termination” shall mean the date your employment with the Company is terminated following the earlier of Shareholder Approval, if applicable, or a Change in Control, which date shall be determined as follows:

(A)if your employment is to be terminated for Disability, thirty (30) days after Notice of Termination is given (provided that, if you shall have returned to the performance of your duties on a full-time basis during such thirty (30) day period, then the termination for Disability contemplated by the Notice of Termination shall not occur),

(B)if your employment is terminated due to your death, the date of your death,

(C)if your employment is to be terminated by the Company other than for Disability, or if your employment is to be terminated by you without a claim of Good Reason, the date specified in the Notice of Termination, and

(D)if your employment is to be terminated by you for Good Reason, the date ninety (90) days after the date on which a Notice of Termination is given, unless either:

(1)an earlier date has been agreed to by the Company either in advance of, or after, receiving such Notice of Termination (in which case such earlier date shall be the Date of Termination),

(2)pursuant to and in accordance with Section 4(iv) you have indicated in your Notice of Termination that you are conditioning your termination upon (and postponing such termination until) the date on which it is finally determined that Good Reason exists for such termination (in which case the later of such date as determined in accordance with Section 4(iv) above, or the date otherwise determined under this Section 4(v)(D), shall be the Date of Termination),

(3)the Company shall not have notified you within fifteen (15) days after a Notice of Termination for Good Reason is given that it intends

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to fully correct the circumstances giving rise to Good Reason (in which case the date fifteen (15) days after the Notice of Termination shall be the Date of Termination), or

(4)if the Company gives notice as provided in Section 4(v)(D)(3) and if the circumstances giving rise to Good Reason are fully corrected on or prior to the date that is ninety (90) days after such Notice of Termination was given, then the termination for Good Reason contemplated by such Notice of Termination shall not occur.

5.Compensation Upon Termination or During Disability.

(i)During any period following the earlier of Shareholder Approval, if applicable, or a Change in Control that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your full base salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(v) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.

(ii)If your employment shall be terminated for Cause or as a result of death following the earlier of Shareholder Approval, if applicable, or a Change in Control, the Company shall pay you your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you. Thereupon the Company shall have no further obligations to you under this Agreement.

(iii)If a Change in Control occurs and either (a) after the earlier of Shareholder Approval, if applicable, or the Change in Control and no later than twenty-four (24) months after the Change in Control, a Date of Termination of your employment with the Company occurred or occurs as a result of a termination by the Company other than for Cause or Disability, or (b) your employment with the Company is terminated by you for Good Reason based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control and your Notice of Termination in connection therewith shall have been given no later than twenty-four (24) months after the Change in Control, then, by no later than the fifth day following the later of the Date of Termination or the Change in Control (except as may otherwise be provided), you shall be entitled, without regard to any contrary provisions of any Plan, to a severance benefit as follows:

(A)the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you;

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provided, however, that with respect to a termination of your employment for Good Reason based on a reduction by the Company in your base salary as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to such reduction plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you;

(B)as severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, the Company shall pay to you in a single payment an amount in cash equal to three (3) times the sum of (1) the greater of (i) your annual rate of base salary in effect on the Date of Termination or (ii) your annual rate of base salary in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control and (2) your target bonus as most recently established by the Board;

(C)for a thirty-six (36) month period after the Date of Termination, the Company shall arrange to provide you, your spouse and your dependents with life, accident and health insurance benefits substantially similar to those which you were receiving immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control. Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to this subparagraph (C) to the extent that a similar benefit is actually received by you from a subsequent employer during such thirty-six (36) month period, and any such benefit actually received by you shall be reported to the Company; and

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

(iv)The amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. Your entitlements under Section (5)(iii) are in addition to, and not in lieu of, any rights, benefits or entitlements you may have under the terms or provisions of any Plan.

6.Tax Gross-Up Payments.

(i)Whether or not your employment is terminated, if any of the payments provided for in Section 5(iii) or any other payment or benefit received or to be received by you in connection with a Change in Control or the termination of your employment (collectively, the “Change in Control 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

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Company shall pay to you at the time any such Change in Control Payment is paid an additional amount (the “Gross-Up Payment”) such that the net amount retained by you, after deduction of any Excise Tax on the Change in Control Payments and any federal, state and local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to the Change in Control Payments. For purposes of determining the amount of the Gross-Up Payment, you 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 your 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, you 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 Change in Control Payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable to the taxing authorities with respect to such excess) at the time that the amount of such excess is finally determined.

(ii)The Company shall withhold the Excise Tax determined under paragraph (i) above in accordance with section 4999(b) of the Code, and shall withhold federal, state and local income taxes from Change in Control Payments and Gross-Up Payments as required by law.

7.Successors; Binding Agreement.

(i)Upon your written request, the Company will seek to have any Successor (as hereinafter defined), by agreement in form and substance satisfactory to you, 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.

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

8.Fees and Expenses. The Company shall pay to you all legal fees and related expenses incurred by you in good faith as a result of (i) your termination

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following the earlier of Shareholder Approval, if applicable, or a Change in Control (including all such fees and expenses, if any, incurred in contesting or disputing in good faith any such termination) or (ii) your seeking to obtain or enforce in good faith any right or benefit provided by this Agreement.

9.Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6, 7(ii), 8 and 13 of this Agreement shall survive termination of this Agreement, but only with respect to a Change in Control occurring during the term of this Agreement.

10.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 respective party set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the President & CEO of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

11.Amendment, Waiver; Applicable Law. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the President & CEO of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon.

12.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.

13.Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Portland, Oregon by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award, which award shall be a final and binding determination of the dispute or controversy, in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your 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 13.

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

15.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.

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

Sincerely, SCHNITZER STEEL INDUSTRIES, INC.
By:	/s/  John D. Carter
	John D. Carter President & CEO

Agreed to this 24^th day

of March, 2006.

/s/   Tamara L. Adler (Lundgren)

Tamara L. Adler (Lundgren)

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