FIRST AMENDMENT TO RIGHTS AGREEMENT

FIRST AMENDMENT TO RIGHTS AGREEMENT

FIRST AMENDMENT (this “Amendment”) dated as of November 20, 2006, to the RIGHTS AGREEMENT, dated as of December 23, 1999 (the “Rights Agreement”), between OREGON STEEL MILLS, INC., a Delaware corporation (the “Company”), and MELLON INVESTOR SERVICES LLC (f/k/a CHASEMELLON SHAREHOLDER SERVICES, LLC), a New Jersey limited liability company (the “Rights Agent”).

RECITALS

WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights Agreement (capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Rights Agreement);

WHEREAS, pursuant to Section 27 of the Rights Agreement, for as long as the Rights are redeemable, the Company may in its sole and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of the Rights Agreement without the approval of any holders of the Rights;

WHEREAS, the Company desires to amend the Rights Agreement to render the Rights inapplicable to the Offer and the Merger (each as defined in the Merger Agreement (as defined below)) and the other transactions contemplated by the Merger Agreement; and

WHEREAS, the Board of Directors has determined that it is in the best interests of the Company and its stockholders to amend the Rights Agreement as set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby amend the Rights Agreement as follows:

(a)           Amendment to Section 1(a). The following text is added at the end of the definition of “Acquiring Person” in Section 1(a) of the Rights Agreement:

“Notwithstanding anything in this Agreement to the contrary, none of Parent or Purchaser shall be deemed to be an Acquiring Person, either individually or collectively, by virtue of (i) the approval, execution or delivery of the Merger Agreement, (ii) the announcement of the Merger, (iii) the consummation of the Offer, the Merger or the other transactions contemplated by the Merger Agreement or (iv) the acquisition of Common Stock pursuant to the Offer, the Merger or the Merger Agreement.”

(b)           The following definitions are added to Section 1 of the Rights Agreement in the appropriate alphabetical order:

“Effective Time” shall have the meaning assigned to such term in the Merger Agreement.

“Merger Agreement” shall mean the Agreement and Plan of Merger dated as of November 20, 2006, among Parent, Purchaser and the Company, as the same may be amended from time to time.

“Merger” shall have the meaning assigned to such term in the Merger Agreement.

“Purchaser” shall mean Oscar Acquisition Merger Sub, Inc., a Delaware corporation, and a wholly owned subsidiary of Parent.