-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IB6MjNaQryPLKTis2SbtudR6bDnBaAk4uSpI4INyms56mRATiy1kLyCEJMsWQJY1 fg7QzoJpgg7MjCf0vRKHsQ== 0001072613-05-000743.txt : 20050318 0001072613-05-000743.hdr.sgml : 20050318 20050318150253 ACCESSION NUMBER: 0001072613-05-000743 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050216 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050318 DATE AS OF CHANGE: 20050318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH AMERICAN GALVANIZING & COATINGS INC CENTRAL INDEX KEY: 0000055805 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 710268502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03920 FILM NUMBER: 05691462 BUSINESS ADDRESS: STREET 1: 2250 EAST 73RD STREET STREET 2: SUITE 300 CITY: TULSA STATE: OK ZIP: 74136-6832 BUSINESS PHONE: (918)494-0964 MAIL ADDRESS: STREET 1: 2250 EAST 73RD STREET STREET 2: SUITE 300 CITY: TULSA STATE: OK ZIP: 74136-6832 FORMER COMPANY: FORMER CONFORMED NAME: KINARK CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL CO DATE OF NAME CHANGE: 19690601 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL & GAS CO DATE OF NAME CHANGE: 19680906 8-K 1 form8-k_13363.txt FORM 8-K (FEBRUARY 16, 2005) ================================================================================ 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): February 16, 2005 ----------------- North American Galvanizing & Coatings, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-3920 71-0268502 --------------- ----------- ------------- (State or other (Commission (IRS Employer jurisdiction File Number) Identification Number) of incorporation) 2250 East 73rd Street Tulsa, Oklahoma 74136-6832 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (918) 494-0964 -------------- Not applicable ------------------------------------------------------------- (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): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] 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. At North American Galvanizing & Coatings, Inc.'s (the "Company") 2004 Annual Meeting of Stockholders, the stockholders of the Company approved the Company's 2004 Incentive Stock Plan (the "Plan") and the Director Stock Unit Program (the "Program"). The Plan and the Program are attached hereto as Exhibits 10.1 and 10.2, respectively. The Plan and the Program are administered by a committee of the Board of Directors (the "Committee") comprised solely of non-management directors. THE PLAN The Plan provides for the grant of stock options ("Options"), stock grants ("Stock Grants"), stock units ("Stock Units"), and stock appreciation rights ("SARs") to certain eligible employees and to outside directors. An eligible employee is any of the Company's employees or any employee of the Company's affiliates who has been designated by the Committee to receive a grant under the Plan. No eligible employee or outside director in any calendar year may be granted an Option to purchase more than 100,000 shares of the Company's Common Stock ("Common Stock") or an SAR based on the appreciation with respect to more than 100,000 shares of Common Stock or may be granted Stock Grants or Stock Units where the fair market value of shares of Common Stock subject to such grant exceeds $100,000 in shares of Common Stock. This $100,000 limitation does not apply to a Stock Unit Grant made pursuant to the Program, which is discussed below. If there is a change in control, then any conditions to the exercise of all outstanding Options and SARs and all issuance or forfeiture conditions on all outstanding Stock Grants and Stock Unit grants will be deemed satisfied. There are 1,250,000 shares of Common Stock available for issuance under the Plan, which includes 489,677 authorized but unissued shares under the North American Galvanizing & Coatings, Inc. 1996 Stock Option Plan which are not covered by outstanding options. In addition, shares that were subject to outstanding grants under this plan and the North American Galvanizing & Coatings, Inc. 1988 Stock Option Plan which are forfeited or lapse shall become available for issuance under the Plan. The number of such shares will depend upon which, if any, grants under such plans are forfeited or lapse and therefore is not known at this time. Any shares of Common Stock which remain unissued after the cancellation, expiration or exchange of an Option, SAR or Stock Grant or which are forfeited after issuance shall again be available for grants under the Plan. Any Options issued pursuant to the Plan will be represented by an option certificate and any SARs issued pursuant to the Plan will be represented by a SAR certificate, provided that should Options and SARs be issued together, then only an option certificate will be required. The form of option certificate is included in Exhibit 10.1. THE PROGRAM Under the Program, each outside director is required to defer at least 50% of his or her director fees each calendar year, and each outside director is given the opportunity to defer 75% or 100% of his or her director fees for each calendar year. Amounts deferred under the Program will be converted into a Stock Unit Grant under the 2004 Incentive Stock Plan at the average of the closing prices for a share of the Company's Common Stock for the 10 trading days before the date the director fees for outside directors otherwise would have been payable in cash. To encourage deferral of fees by outside directors, matching units will be granted to each outside director based on the percentage of his or her director fees such outside director defers. Under the Program, for each inside director the Company automatically defers from such director's salary or other compensation a dollar amount equal to 50% of the director fees for outside directors. Each inside director may defer an amount equal to 50% or 75% of the director fees for outside directors from his or her compensation. Deferrals for inside directors shall be matched at the same rate as deferrals for outside directors. The deferrals for each inside director shall coincide with deferrals for outside directors and shall be converted into a Stock Unit Grant under the 2004 Incentive Stock Plan at the same time and in accordance with the same procedures followed for outside directors. All deferrals made in any calendar year automatically will be deferred for five calendar years following the calendar year for which the deferral is made. If a director makes an election at least one full year before the end of such a five-year deferral period, his or her deferrals under the Program shall be deferred for an additional five years. Importantly, however, all deferrals under the Program will be paid as of the later of the date a director's service as a director ends or the date his or her employment with us ends. When deferrals become payable under the Program, payment shall be made, subject to applicable withholdings, in a lump sum in cash or, at the Committee's discretion, in whole shares of Common Stock (and cash in lieu of a fractional share) based on the average of the closing prices for a share of Common Stock for the 10 trading days before the date as of which payment is made. Any payment in shares of Common Stock will be made subject to the limits in our 2004 Incentive Stock Plan. GRANTS On September 21, 2004, the Committee granted options under the Plan to acquire 5,000 shares of Common Stock to each of John H. Sununu, Joseph J. Morrow, Patrick J. Lynch, Gilbert L. Kleman, II and Linwood J. Bundy, the Company's non-management directors. The exercise price for each of these grants is $1.98 per share and the options vest March 21, 2005. On February 16, 2005, the Committee granted options under the Plan to acquire 50,000 shares of Common Stock to Ronald J. Evans, the Company's President and Chief Executive Officer. The exercise price for this grant is $2.50 per share and the options vest ratably over a four year period. ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits -------- 10.1 2004 Incentive Stock Plan 10.2 Form of Stock Option Agreement 10.3 Schedule A to Stock Option Agreement 10.4 Director Stock Unit Program SIGNATURES ---------- 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. NORTH AMERICAN GALVANIZING & COATINGS, INC. Date: March 18, 2005 By: /s/ Paul R. Chastain ------------------------------------- Name: Paul R. Chastain Title: Vice President and Chief Financial Officer EXHIBIT INDEX ------------- 10.1 2004 Incentive Stock Plan 10.2 Form of Stock Option Agreement 10.3 Schedule A to Stock Option Agreement 10.4 Director Stock Unit Program EX-10.1 2 exhibit10-1_13363.txt 2004 INCENTIVE STOCK PLAN EXHIBIT 10.1 ------------ NORTH AMERICAN GALVANIZING & COATINGS, INC. 2004 INCENTIVE STOCK PLAN TABLE OF CONTENTS Page ---- ss. 1. BACKGROUND AND PURPOSE.................................................1 ss. 2 DEFINITIONS.............................................................1 2.1 Affiliate...................................................1 2.2 Board.......................................................1 2.3 Change Effective Date.......................................1 2.4 Change in Control...........................................2 2.5 Code........................................................4 2.6 Committee...................................................4 2.7 Company.....................................................4 2.8 Director....................................................4 2.9 Director Stock Unit Program.................................4 2.10 Eligible Employee...........................................4 2.11 Fair Market Value...........................................5 2.12 ISO.........................................................5 2.13 1933 Act....................................................5 2.14 1934 Act....................................................5 2.15 Non-ISO.....................................................5 2.16 Option......................................................5 2.17 Option Certificate..........................................5 2.18 Option Price................................................6 2.19 Parent......................................................6 2.20 Plan........................................................6 2.21 Preexisting Plan............................................6 2.22 Rule 16b-3..................................................6 2.23 SAR Value...................................................6 2.24 Stock.......................................................6 2.25 Stock Appreciation Right....................................6 2.26 Stock Appreciation Right Certificate........................6 2.27 Stock Grant.................................................7 2.28 Stock Grant Certificate.....................................7 2.29 Stock Unit Grant............................................7 2.30 Subsidiary..................................................7 2.31 Ten Percent Shareholder.....................................7 ss. 3 SHARES AND GRANT LIMITS................................................8 3.1 Shares Reserved.............................................8 3.2 Source of Shares............................................8 3.3 Use of Proceeds.............................................9 3.4 Grant Limits................................................9 3.5 Preexisting Plan...........................................10 ss. 4 EFFECTIVE DATE........................................................10 ss. 5 COMMITTEE..............................................................10 ss. 6 ELIGIBILITY AND ANNUAL GRANT CAPS......................................11 ss. 7 OPTIONS................................................................11 7.1 Committee Action...........................................11 7.2 $100,000 Limit.............................................12 7.3 Option Price...............................................12 7.4 Payment....................................................12 7.5 Exercise...................................................13 ss. 8 STOCK APPRECIATION RIGHTS..............................................14 8.1 Committee Action...........................................14 8.2 Terms and Conditions.......................................14 8.3 Exercise...................................................16 ss. 9. STOCK GRANTS..........................................................17 9.1 Committee Action...........................................17 9.2 Conditions.................................................17 9.3 Dividends, Voting Rights and Creditor Status...............19 9.4 Satisfaction of Forfeiture Conditions......................21 9.5 Income Tax Deduction.......................................21 9.6 Director Stock Unit Program................................23 ss. 10 NON-TRANSFERABILITY...................................................24 ss. 11 SECURITIES REGISTRATION...............................................24 ss. 12 LIFE OF PLAN..........................................................25 ss. 13 ADJUSTMENT............................................................26 13.1 Capital Structure..........................................26 13.2 Transactions Described in ss. 424..........................26 13.3 Fractional Shares..........................................27 ss. 14 CHANGE IN CONTROL.....................................................28 ss. 15 AMENDMENT OR TERMINATION..............................................29 ii ss. 16 MISCELLANEOUS.........................................................29 16.1 Shareholder Rights.........................................29 16.2 No Contract of Employment..................................30 16.3 Withholding................................................30 16.4 Construction...............................................31 16.5 Other Conditions...........................................31 16.6 Rule 16b-3.................................................31 iii ss. 1. BACKGROUND AND PURPOSE ---------------------- The purpose of this Plan is to promote the interest of the Company by authorizing the Committee to grant Options and Stock Appreciation Rights and to make Stock Grants and Stock Unit Grants to Eligible Employees and Directors in order (1) to attract and retain Eligible Employees and Directors, (2) to provide an additional incentive to each Eligible Employee or Director to work to increase the value of Stock and (3) to provide each Eligible Employee or Director with a stake in the future of the Company which corresponds to the stake of each of the Company's shareholders. ss. 2 DEFINITIONS ----------- 2.1 Affiliate -- means any organization (other than a Subsidiary) that would be treated as under common control with the Company under ss. 414(c) of the Code if "50 percent" were substituted for "80 percent" in the income tax regulations under ss. 414(c) of the Code. 2.2 Board -- means the Board of Directors of the Company. 2.3 Change Effective Date -- means either the date which includes the "closing" of the transaction which makes a Change in Control effective if the Change in Control is made effective through a transaction which has a "closing" or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change in Control is made effective other than through a transaction which has a "closing". 2.4 Change in Control -- means a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the 1934 Act as in effect at the time of such "change in control", provided that such a change in control shall be deemed to have occurred at such time as (a) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of the 1934 Act), is or becomes the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) directly or indirectly, of securities representing 30% or more of the combined voting power for election of directors of the then outstanding securities of the Company or any successor to the Company; (b) during any period of two consecutive years or less, individuals who at the beginning of such period constitute the Board cease, for any reason, to constitute at least a majority of the Board, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (c) the shareholders of the Company approve any reorganization, merger, consolidation or share exchange as a result of which the common stock of the Company shall be changed, converted or exchanged into or for securities of another corporation (other than a merger with a wholly-owned subsidiary of the Company) or any 2 dissolution or liquidation of the Company or any sale or the disposition of 50% or more of the assets or business of the Company; or (d) shareholders of the Company approve any reorganization, merger, consolidation or share exchange unless (A) the persons who were the beneficial owners of the outstanding shares of the common stock of the Company immediately before the consummation of such transaction beneficially own more than 60% of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such transaction and (B) the number of shares of the common stock of such successor or survivor corporation beneficially owned by the persons described in ss. 2.4(d)(A) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of the Company common stock immediately before the consummation of such transaction, provided (C) the percentage described in ss. 2.4(d)(A) of the beneficially owned shares of the successor or survivor corporation and the number described in ss. 2.4 (d)(B) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the 3 successor or survivor corporation which result from the beneficial ownership of shares of common stock of the Company by the persons described in ss. 2.4(d)(A) immediately before the consummation of such transaction. 2.5 Code -- means the Internal Revenue Code of 1986, as amended. 2.6 Committee -- means a committee of the Board which shall have at least 2 members, each of whom shall be appointed by and shall serve at the pleasure of the Board and shall come within the definition of a "non-employee director" under Rule 16b-3 and an "outside director" under ss. 162(m) of the Code. 2.7 Company -- means North American Galvanizing & Coatings, Inc. and any successor to North American Galvanizing & Coatings, Inc. 2.8 Director -- means any member of the Board who is not an employee of the Company or a Parent or Subsidiary or affiliate (as such term is defined in Rule 405 of the 1933 Act) of the Company. 2.9 Director Stock Unit Program -- means the North American Galvanizing & Coatings, Inc. Director Stock Unit Program as effective as of the date approved by the shareholders of the Company and as amended from time to time thereafter. 2.10 Eligible Employee -- means an employee of the Company or any Subsidiary or Parent or Affiliate to whom the Committee decides for reasons sufficient to the Committee to make a grant under this Plan. 4 2.11 Fair Market Value -- means either (a) the closing price on any date for a share of Stock as reported by The Wall Street Journal or, if The Wall Street Journal no longer reports such closing price, such closing price as reported by a newspaper or trade journal selected by the Committee or, if no such closing price is available on such date, (b) such closing price as so reported in accordance with ss. 2.10(a) for the immediately preceding business day, or, if no newspaper or trade journal reports such closing price or if no such price quotation is available, (c) the price which the Committee acting in good faith determines through any reasonable valuation method that a share of Stock might change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. 2.12 ISO -- means an option granted under this Plan to purchase Stock which is intended to satisfy the requirements of ss. 422 of the Code. 2.13 1933 Act -- means the Securities Act of 1933, as amended. 2.14 1934 Act -- means the Securities Exchange Act of 1934, as amended. 2.15 Non-ISO -- means an option granted under this Plan to purchase Stock which is intended to fail to satisfy the requirements of ss. 422 of the Code. 2.16 Option -- means an ISO or a Non-ISO which is granted under ss. 7. 2.17 Option Certificate -- means the certificate (whether in electronic or written form) which sets forth the terms and conditions of an Option granted under this Plan. 5 2.18 Option Price -- means the price which shall be paid to purchase one share of Stock upon the exercise of an Option granted under this Plan. 2.19 Parent -- means any corporation which is a parent corporation (within the meaning of ss. 424(e) of the Code) of the Company. 2.20 Plan -- means this North American Galvanizing & Coatings, Inc. 2004 Incentive Stock Plan as effective as of the date approved by the shareholders of the Company and as amended from time to time thereafter. 2.21 Preexisting Plan -- means each of the following plans, as each such plan has been amended from time to time up to the date this Plan is effective: (1) the North American Galvanizing & Coatings, Inc. 1996 Stock Option Plan and (2) the North American Galvanizing & Coatings, Inc. 1988 Stock Option Plan. 2.22 Rule 16b-3 -- means the exemption under Rule 16b-3 to Section 16(b) of the 1934 Act or any successor to such rule. 2.23 SAR Value -- means the value assigned by the Committee to a share of Stock in connection with the grant of a Stock Appreciation Right under ss. 8. 2.24 Stock -- means the $0.10 par value common stock of the Company. 2.25 Stock Appreciation Right -- means a right which is granted under ss. 8 to receive the appreciation in a share of Stock. 2.26 Stock Appreciation Right Certificate -- means the certificate (whether in electronic or written form) which sets forth the terms and conditions of a Stock Appreciation Right which is not granted as part of an Option. 6 2.27 Stock Grant -- means a grant under ss. 9 which is designed to result in the issuance of the number of shares of Stock described in such grant rather than a payment in cash based on the Fair Market Value of such shares of Stock. 2.28 Stock Grant Certificate -- means the certificate (whether in electronic or written form) which sets forth the terms and conditions of a Stock Grant or a Stock Unit Grant. 2.29 Stock Unit Grant -- means a grant under ss. 9 which shall be designed to result in the payment of cash based on the Fair Market Value or average Fair Market Value of the number of shares of Stock described in such grant rather than in the issuance of the number of shares of Stock described in such grant but which may at the discretion of the Committee result in the issuance of shares of Stock (and cash in lieu of any fractional share) with respect to Stock Unit Grants made pursuant to the Director Stock Unit Program. 2.30 Subsidiary -- means a corporation which is a subsidiary corporation (within the meaning of ss. 424(f) of the Code) of the Company. 2.31 Ten Percent Shareholder -- means a person who owns (after taking into account the attribution rules of ss. 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of either the Company, a Subsidiary or Parent. 7 ss. 3 SHARES AND GRANT LIMITS ----------------------- 3.1 Shares Reserved. There shall (subject to ss. 13) be reserved for issuance under this Plan (a) 1,250,000 shares of Stock, 489,667 of which were authorized for issuance under the North American Galvanizing & Coatings, Inc. 1996 Stock Option Plan and would have remained authorized and available for issuance under such plan if shares were issued under such plan on the effective date of this Plan sufficient to satisfy all then outstanding grants under such plan plus (b) the number of shares of Stock subject to grants under each Preexisting Plan which are outstanding on the effective date of this Plan and which are forfeited or expire on or after such effective date in accordance with the terms of such grants; provided, however, only the shares of Stock described in ss. 3.1(a) shall be issued in connection with the exercise of ISOs and nothing in this Plan shall affect any grants under a Preexisting Plan which are outstanding on the effective date of this Plan until such time, if any, that any shares of Stock subject to such grants are forfeited or grants respecting any shares of Stock expire on or after such effective date in accordance with the terms of such grants. 3.2 Source of Shares. The shares of Stock described in ss. 3.1 shall be reserved to the extent that the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company. All shares of Stock described in ss. 3.1 shall remain available for issuance under this Plan until issued pursuant to the exercise of an Option or a Stock Appreciation Right or issued pursuant to a Stock Grant, and any such shares of stock 8 which are issued pursuant to an Option, a Stock Appreciation Right or a Stock Grant which are forfeited thereafter shall again become available for issuance under this Plan. Finally, if the Option Price under an Option is paid in whole or in part in shares of Stock or if shares of Stock are tendered to the Company in satisfaction of any condition to a Stock Grant, such shares thereafter shall become available for issuance under this Plan and shall be treated the same as any other shares available for issuance under this Plan. 3.3 Use of Proceeds. The proceeds which the Company receives from the sale of any shares of Stock under this Plan shall be used for general corporate purposes and shall be added to the general funds of the Company. 3.4 Grant Limits. No Eligible Employee or Director in any calendar year shall be granted an Option to purchase (subject to ss. 13) more than 100,000 shares of Stock or a Stock Appreciation Right based on the appreciation with respect to (subject to ss. 13) more than 100,000 shares of Stock, and no Stock Grant or Stock Unit Grant shall be made to any Eligible Employee or Director in any calendar year where the Fair Market Value of the Stock subject to such grant on the date of the grant exceeds $100,000; provided, however, that this limit shall not apply to a Stock Unit Grant made pursuant to the Director Stock Unit Program. No more than 100,000 non-forfeitable shares of Stock shall (subject to ss. 13) be issued pursuant to Stock Grants or Stock Unit Grants under ss. 9; provided, however, that no non-forfeitable shares of Stock issued pursuant to Stock Unit Grants under the Director Stock Unit Program shall be counted in determining whether this 100,000 share limitation has been reached. 9 3.5 Preexisting Plan. No grants shall be made under any Preexisting Plan on or after the date this Plan becomes effective. ss. 4 EFFECTIVE DATE -------------- The effective date of this Plan shall be the date the shareholders of the Company (acting at a duly called meeting of such shareholders) approve the adoption of this Plan. ss. 5 COMMITTEE --------- This Plan shall be administered by the Committee. The Committee acting in its absolute discretion shall exercise such powers and take such action as expressly called for under this Plan and, further, the Committee shall have the power to interpret this Plan and (subject to ss. 14 and ss. 15 and Rule 16b-3) to take such other action in the administration and operation of this Plan as the Committee deems equitable under the circumstances, which action shall be binding on the Company, on each affected Eligible Employee or Director and on each other person directly or indirectly affected by such action. Furthermore, the Committee as a condition to making any grant under this Plan to any Eligible Employee or Director shall have the right to require him or her to execute an agreement which makes the Eligible Employee or Director subject to non-competition provisions and other restrictive covenants which run in favor of the Company. 10 ss. 6 ELIGIBILITY AND ANNUAL GRANT CAPS --------------------------------- Only Eligible Employees who are employed by the Company or a Subsidiary or Parent shall be eligible for the grant of ISOs under this Plan. All Eligible Employees and Directors shall be eligible for the grant of Non-ISOs and Stock Appreciation Rights and for Stock Grants and Stock Unit Grants under this Plan. ss. 7 OPTIONS ------- 7.1 Committee Action. The Committee acting in its absolute discretion shall have the right to grant Options to Eligible Employees and to Directors under this Plan from time to time to purchase shares of Stock, but the Committee shall not, absent the approval of the Company's shareholders, take any action, whether through amendment, cancellation, replacement grants, or any other means, to reduce the Option Price of any outstanding Options. Each grant of an Option to a Eligible Employee or Director shall be evidenced by an Option Certificate, and each Option Certificate shall set forth whether the Option is an ISO or a Non-ISO and shall set forth such other terms and conditions of such grant as the Committee acting in its absolute discretion deems consistent with the terms of this Plan; however, (a) if the Committee grants an ISO and a Non-ISO to a Eligible Employee on the same date, the right of the Eligible Employee to exercise the ISO shall not be conditioned on his or her failure to exercise the Non-ISO and (b) if the only condition to exercise of the Option is the completion of a period of service, such period of service shall be no less than the one 11 (1) year period which starts on the date as of which the Option is granted, unless the Committee determines that a shorter period of service (or no period of service) better serves the Company's interest. 7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent that the aggregate Fair Market Value of the Stock subject to the Option which would first become exercisable in any calendar year exceeds $100,000. Any such excess shall instead automatically be treated as a Non-ISO. The Committee shall interpret and administer the ISO limitation set forth in this ss. 7.2 in accordance with ss. 422(d) of the Code, and the Committee shall treat this ss. 7.2 as in effect only for those periods for which ss. 422(d) of the Code is in effect. 7.3 Option Price. The Option Price for each share of Stock subject to an Option shall be no less than the Fair Market Value of a share of Stock on the date the Option is granted; provided, however, if the Option is an ISO granted to an Eligible Employee who is a Ten Percent Shareholder, the Option Price for each share of Stock subject to such ISO shall be no less than 110% of the Fair Market Value of a share of Stock on the date such ISO is granted. 7.4 Payment. The Option Price shall be payable in full upon the exercise of any Option and, at the discretion of the Committee, an Option Certificate can provide for the payment of the Option Price either in cash, by check or in Stock which has been held for at least 6 months and which is acceptable to the Committee, or through any cashless exercise procedure which is effected by an unrelated broker through a sale of Stock in the open market and which is acceptable to the Committee, 12 or in any combination of such forms of payment. Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the certificate for such Stock (or proper evidence of such certificate) is presented to the Committee or its delegate in such form as acceptable to the Committee. 7.5 Exercise. (a) Exercise Period. Each Option granted under this Plan shall be exercisable in whole or in part at such time or times as set forth in the related Option Certificate, but no Option Certificate shall make an Option exercisable on or after the earlier of (1) the date which is the fifth anniversary of the date the Option is granted, if the Option is an ISO and the Eligible Employee is a Ten Percent Shareholder on the date the Option is granted, or (2) the date which is the tenth anniversary of the date the Option is granted, if the Option is (a) a Non-ISO or (b) an ISO which is granted to an Eligible Employee who is not a Ten Percent Shareholder on the date the Option is granted. (b) Termination of Status as Eligible Employee or Director. Subject to ss. 7.5(a), an Option Certificate may provide for the 13 exercise of an Option after an Eligible Employee's or a Director's status as such has terminated for any reason whatsoever, including death or disability. ss. 8 STOCK APPRECIATION RIGHTS ------------------------- 8.1 Committee Action. The Committee acting in its absolute discretion shall have the right to grant Stock Appreciation Rights to Eligible Employees and to Directors under this Plan from time to time, and each Stock Appreciation Right grant shall be evidenced by a Stock Appreciation Right Certificate or, if such Stock Appreciation Right is granted as part of an Option, shall be evidenced by the Option Certificate for the related Option. 8.2 Terms and Conditions. (a) Stock Appreciation Right Certificate. If a Stock Appreciation Right is granted independent of an Option, such Stock Appreciation Right shall be evidenced by a Stock Appreciation Right Certificate, and such certificate shall set forth the number of shares of Stock on which the Eligible Employee's or Director's right to appreciation shall be based and the SAR Value of each share of Stock. Such SAR Value shall be no less than the Fair Market Value of a share of Stock on the date that the Stock Appreciation Right is granted. The Stock Appreciation Right Certificate shall set forth such other terms and conditions for the exercise of the Stock Appreciation Right as 14 the Committee deems appropriate under the circumstances, but no Stock Appreciation Right Certificate shall make a Stock Appreciation Right exercisable on or after the date which is the tenth anniversary of the date such Stock Appreciation Right is granted. (b) Option Certificate. If a Stock Appreciation Right is granted together with an Option, such Stock Appreciation Right shall be evidenced by an Option Certificate, the number of shares of Stock on which the Eligible Employee's or Director's right to appreciation shall be based shall be the same as the number of shares of Stock subject to the related Option, and the SAR Value for each such share of Stock shall be no less than the Option Price under the related Option. Each such Option Certificate shall provide that the exercise of the Stock Appreciation Right with respect to any share of Stock shall cancel the Eligible Employee's or Director's right to exercise his or her Option with respect to such share and, conversely, that the exercise of the Option with respect to any share of Stock shall cancel the Eligible Employee's or Director's right to exercise his or her Stock Appreciation Right with respect to such share. A Stock Appreciation Right which is granted as part of an Option shall be exercisable only while the related Option is exercisable. The Option Certificate shall set forth such other terms and conditions for 16 the exercise of the Stock Appreciation Right as the Committee deems appropriate under the circumstances. (c) Minimum Period of Service. If the only condition to exercise of a Stock Appreciation Right is the completion of a period of service, such period of service shall be no less than the one (1) year period which starts on the date as of which the Stock Appreciation Right is granted, unless the Committee determines that a shorter period of service (or no period of service) better serves the Company's interest. 8.3 Exercise. A Stock Appreciation Right shall be exercisable only when the Fair Market Value of a share of Stock on which the right to appreciation is based exceeds the SAR Value for such share, and the payment due on exercise shall be based on such excess with respect to the number of shares of Stock to which the exercise relates. An Eligible Employee or Director upon the exercise of his or her Stock Appreciation Right shall receive a payment from the Company in cash or in Stock issued under this Plan, or in a combination of cash and Stock, and the number of shares of Stock issued shall be based on the Fair Market Value of a share of Stock on the date the Stock Appreciation Right is exercised. The Committee acting in its absolute discretion shall have the right to determine the form and time of any payment under this ss. 8.3. 16 ss. 9. STOCK GRANTS ------------ 9.1 Committee Action. The Committee acting in its absolute discretion shall have the right to make Stock Grants and Stock Unit Grants to Eligible Employees and to Directors. Each Stock Grant and each Stock Unit Grant shall be evidenced by a Stock Grant Certificate, and each Stock Grant Certificate shall set forth the conditions, if any, under which Stock will be issued under the Stock Grant or cash will be paid under the Stock Unit Grant and the conditions under which the Eligible Employee's or Director's interest in any Stock which has been issued will become non-forfeitable. 9.2 Conditions. (a) Conditions to Issuance of Stock. The Committee acting in its absolute discretion may make the issuance of Stock under a Stock Grant subject to the satisfaction of one, or more than one, condition which the Committee deems appropriate under the circumstances for Eligible Employees or Directors generally or for an Eligible Employee or a Director in particular, and the related Stock Grant Certificate shall set forth each such condition and the deadline for satisfying each such condition. Stock subject to a Stock Grant shall be issued in the name of an Eligible Employee or Director only after each such condition, if any, has been timely satisfied, and any Stock which is so issued shall be held by the 17 Company pending the satisfaction of the forfeiture conditions, if any, under ss. 9.2(b) for the related Stock Grant. (b) Conditions on Forfeiture of Stock or Cash Payment. The Committee acting in its absolute discretion may make any cash payment due under a Stock Unit Grant or Stock issued in the name of an Eligible Employee or Director under a Stock Grant non-forfeitable subject to the satisfaction of one, or more than one, objective employment, performance or other condition that the Committee acting in its absolute discretion deems appropriate under the circumstances for Eligible Employees or Directors generally or for an Eligible Employee or a Director in particular, and the related Stock Grant Certificate shall set forth each such condition, if any, and the deadline, if any, for satisfying each such condition. An Eligible Employee's or a Director's non-forfeitable interest in the shares of Stock underlying a Stock Grant or the cash payable under a Stock Unit Grant shall depend on the extent to which he or she timely satisfies each such condition. Each share of Stock underlying a Stock Grant shall not be available under ss. 3 after such grant is effective until such time, if any, as such share thereafter is forfeited as a result of a failure to timely satisfy a forfeiture condition, in which event such share of Stock shall again become available under ss. 3 as of the date of such 18 forfeiture. Finally, the Company shall have the right to require an Eligible Employee or Director to sign an irrevocable stock power in favor of the Company with respect to forfeitable shares of Stock issued under this ss. 9.2(b) in order for the Company to effect a forfeiture in accordance with this ss. 9.2(b). (c) Minimum Period of Service. If the only condition to the forfeiture of a Stock Grant or a Stock Unit Grant is the completion of a period of service, such period of service shall be no less than the three (3) year period which starts on the date as of which the Stock Grant or Stock Unit Grant is made, unless the Committee determines that a shorter period of service (or no period of service) better serves the Company's interest. 9.3 Dividends, Voting Rights and Creditor Status. (a) Cash Dividends. Except as otherwise set forth in a Stock Grant, if a dividend is paid in cash on a share of Stock after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee's or a Director's interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the Company shall pay such cash dividend directly to such Eligible Employee or Director. (b) Stock Dividends. If a dividend is paid on a share of Stock in Stock after such Stock has been issued under a Stock Grant but before 19 the first date that an Eligible Employee's or a Director's interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the Company shall hold such dividend Stock subject to the same conditions under ss. 9.2(b) as the related Stock Grant. (c) Other. If a dividend (other than a dividend described in ss. 9.3(a) or ss. 9.3(b)) is paid with respect to a share of Stock after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee's or a Director's interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the Company shall distribute or hold such dividend in accordance with such rules as the Committee shall adopt with respect to each such dividend. (d) Voting. Except as otherwise set forth in a Stock Grant, an Eligible Employee or a Director shall have the right to vote the Stock issued under his or her Stock Grant during the period which comes after such Stock has been issued under a Stock Grant but before the first date that an Eligible Employee's or Director's interest in such Stock (1) is forfeited completely or (2) becomes completely non-forfeitable. (e) General Creditor Status. An Eligible Employee and a Director to whom a Stock Unit grant is made shall be no more than a general 20 and unsecured creditor of the Company with respect to any cash payable under such Stock Unit Grant. 9.4 Satisfaction of Forfeiture Conditions. A share of Stock shall cease to be subject to a Stock Grant at such time as an Eligible Employee's or a Director's interest in such Stock becomes non-forfeitable under this Plan, and the certificate or other evidence of ownership representing such share shall be transferred to the Eligible Employee or Director as soon as practicable thereafter. 9.5 Income Tax Deduction. (a) General. The Committee shall (where the Committee under the circumstances deems in the Company's best interest) make Stock Grants and Stock Unit Grants to Eligible Employees either (1) subject to at least one condition related to one, or more than one, performance goal based on the performance goals described in ss. 9.5(b) which seems likely to result in the Stock Grant or Stock Unit Grant qualifying as "performance-based compensation" under ss. 162(m) of the Code or (2) under such other circumstances as the Committee deems likely to result in an income tax deduction for the Company with respect such Stock Grant or Stock Unit Grant. A performance goal may be set in any manner determined by the Committee, including looking to achievement on an absolute or relative basis in relation to peer groups or indexes. 21 (b) Performance Goals. A performance goal is described in this ss. 9.5(b) if such goal relates to (1) the Company's return over capital costs or increases in return over capital costs, (2) the Company's total earnings or the growth in such earnings, (3) the Company's consolidated earnings or the growth in such earnings, (4) the Company's earnings per share or the growth in such earnings, (5) the Company's net earnings or the growth in such earnings, (6) the Company's earnings before interest expense, taxes, depreciation, amortization and other non-cash items or the growth in such earnings, (7) the Company's earnings before interest and taxes or the growth in such earnings, (8) the Company's consolidated net income or the growth in such income, (9) the value of the Company's common stock or the growth in such value, (10) the Company's stock price or the growth in such price, (11) the Company's return on assets or the growth on such return, (12) the Company's cash flow or the growth in such cash flow, (13) the Company's total shareholder return or the growth in such return, (14) the Company's expenses or the reduction of such expenses, (15) the Company's sales growth, (16) the Company's overhead ratios or changes in such ratios, (17) the Company's expense-to-sales ratios or the changes in such ratios, or (18) the Company's economic value added or changes in such value added. 22 (c) Adjustments. When the Committee determines whether a performance goal has been satisfied for any period, the Committee may exclude any or all "extraordinary items" as determined under U.S. generally accepted accounting principles and any other unusual or non-recurring items, including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, and the cumulative effects of accounting changes. The Committee may also adjust any performance goal for a period as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine (including, without limitation, any adjustments that would result in the Company's paying non-deductible compensation to an Eligible Employee). 9.6 Director Stock Unit Program. The Company at the direction of the Committee may establish a revocable "rabbi trust" which is a part of this Plan and the Director Stock Unit Program and transfer a number of shares of Stock to the trustee of such trust which matches the number of Stock Unit Grants made pursuant to the Director Stock Unit Program if a determination is made that such transfers will minimize or eliminate the adverse financial accounting 23 consequences, if any, to the Company as a result of Stock Unit Grants made pursuant to the Director Stock Unit Program. ss. 10 NON-TRANSFERABILITY ------------------- No Option, Stock Grant, Stock Unit Grant or Stock Appreciation Right shall (absent the Committee's consent) be transferable by an Eligible Employee or a Director other than by will or by the laws of descent and distribution, and any Option or Stock Appreciation Right shall (absent the Committee's consent) be exercisable during a Eligible Employee's or Director's lifetime only by the Eligible Employee or Director. The person or persons to whom an Option or Stock Grant or Stock Unit Grant or Stock Appreciation Right is transferred by will or by the laws of descent and distribution (or with the Committee's consent) thereafter shall be treated as the Eligible Employee or Director. ss. 11 SECURITIES REGISTRATION As a condition to the receipt of shares of Stock under this Plan, the Eligible Employee or Director shall, if so requested by the Company, agree to hold such shares of Stock for investment and not with a view of resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement satisfactory to the Company to that effect. Furthermore, if so requested by the Company, the Eligible Employee or Director shall make a written representation to the Company that he or she will not sell or offer for sale any of such Stock unless a 24 registration statement shall be in effect with respect to such Stock under the 1933 Act and any applicable state securities law or he or she shall have furnished to the Company an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required. Certificates or other evidence of ownership representing the Stock transferred upon the exercise of an Option or Stock Appreciation Right or upon the lapse of the forfeiture conditions, if any, on any Stock Grant may at the discretion of the Company bear a legend to the effect that such Stock has not been registered under the 1933 Act or any applicable state securities law and that such Stock cannot be sold or offered for sale in the absence of an effective registration statement as to such Stock under the 1933 Act and any applicable state securities law or an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required. ss. 12 LIFE OF PLAN ------------ No Option or Stock Appreciation Right shall be granted or Stock Grant or Stock Unit Grant made under this Plan on or after the earlier of: (1) the tenth anniversary of the effective date of this Plan (as determined under ss. 4), in which event this Plan otherwise thereafter shall continue in effect until all outstanding Options and Stock Appreciation Rights have been exercised in full or no longer are exercisable and all Stock issued 25 under any Stock Grants under this Plan have been forfeited or have become non-forfeitable, or (2) the date on which all of the Stock reserved under ss. 3 has (as a result of the exercise of Options or Stock Appreciation Rights granted under this Plan or the satisfaction of the forfeiture conditions, if any, on Stock Grants) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date. ss. 13 ADJUSTMENT 13.1 Capital Structure. The number, kind or class (or any combination thereof) of shares of Stock reserved under ss. 3, the grant caps described in ss. 3, the number, kind or class (or any combination thereof) of shares of Stock subject to Options or Stock Appreciation Rights granted under this Plan and the Option Price of such Options and the SAR Value of such Stock Appreciation Rights as well as the number, kind or class (or any combination thereof) of shares of Stock subject to Stock Grants or Stock Unit Grants made under this Plan shall be adjusted by the Committee in an equitable manner to reflect any equity restructuring or change in the capitalization of the Company, including, but not limited to, spin offs, stock dividends, large non-reoccurring dividends, rights offerings or stock splits. 13.2 Transactions Described in ss. 424. The Committee as part of any corporate transaction described in ss. 424(a) of the Code shall have the right to adjust (in 26 any manner which the Committee in its discretion deems consistent with ss. 424(a) of the Code) the number, kind or class (or any combination thereof) of shares of Stock reserved under ss. 3 and the annual grant caps described in ss. 3. Furthermore, the Committee as part of any corporate transaction described in ss. 424(a) of the Code shall have the right to adjust (in any manner which the Committee in its discretion deems consistent with ss. 424(a) of the Code) the number, kind or class (or any combination thereof) of shares of Stock subject to any outstanding Stock Grants or Stock Unit Grants under this Plan and any related grant conditions and forfeiture conditions, and the number, kind or class (or any combination thereof) of shares subject to Option and Stock Appreciation Right grants previously made under this Plan and the related Option Price and SAR Value for each such Option and Stock Appreciation Right, and, further, shall have the right (in any manner which the Committee in its discretion deems consistent with ss. 424(a) of the Code and without regard to the annual grant caps described in ss. 3 of this Plan) to make any Stock Grants and Option and Stock Appreciation Right grants to effect the assumption of, or the substitution for, stock grants, stock unit grants and option and stock appreciation right grants previously made by any other corporation to the extent that such corporate transaction calls for such substitution or assumption of such stock grants, stock unit grants and stock option and stock appreciation right grants. 13.3 Fractional Shares. If any adjustment under this ss. 13 would create a fractional share of Stock or a right to acquire a fractional share of Stock under any Option, Stock Appreciation Right or Stock Grant, such fractional share shall be 27 disregarded and the number of shares of Stock reserved under this Plan and the number subject to any Options or Stock Appreciation Right grants and Stock Grants shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment made under this ss. 13 by the Committee shall be conclusive and binding on all affected persons. ss. 14 CHANGE IN CONTROL ----------------- If there is a Change in Control of the Company, then as of the Change Effective Date for such Change in Control any and all conditions to the exercise of all outstanding Options and Stock Appreciation Rights on such date and any and all outstanding issuance and forfeiture conditions on any Stock Grants and Stock Unit Grants on such date automatically shall be deemed 100% satisfied as of such Change Effective Date, and the Board shall have the right (to the extent expressly required as part of such transaction) to cancel such Options, Stock Appreciation Rights, Stock Grants and Stock Unit Grants after providing each Eligible Employee and Director a reasonable period to exercise his or her Options and Stock Appreciation Rights and to take such other action as necessary or appropriate to receive the Stock subject to any Stock Grants and the cash payable under any Stock Unit Grants; provided, if any issuance or forfeiture condition described in this ss. 14 relates to satisfying any performance goal and there is a target for such goal, such issuance or forfeiture condition shall be deemed satisfied under this ss. 14 only to the extent of such target unless such target has been exceeded before the Change Effective Date, in which 28 event such issuance or forfeiture condition shall be deemed satisfied to the extent such target had been so exceeded. ss. 15 AMENDMENT OR TERMINATION ------------------------ This Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however, (a) no amendment shall be made absent the approval of the shareholders of the Company to the extent such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are listed and (b) no amendment shall be made to ss. 14 on or after the date of any Change in Control which might adversely affect any rights which otherwise would vest on the related Change Effective Date. The Board also may suspend granting Options or Stock Appreciation Rights or making Stock Grants or Stock Unit Grants under this Plan at any time and may terminate this Plan at any time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel any Option or Stock Appreciation Right granted or Stock Grant made before such suspension or termination unless (1) the Eligible Employee or Director consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in ss. 13.2 or ss. 14. ss. 16 MISCELLANEOUS ------------- 16.1 Shareholder Rights. No Eligible Employee or Director shall have any rights as a shareholder of the Company as a result of the grant of an Option or a 29 Stock Appreciation Right pending the actual delivery of the Stock subject to such Option or Stock Appreciation Right to such Eligible Employee or Director. Subject to ss. 9.3, an Eligible Employee's or a Director's rights as a shareholder in the shares of Stock underlying a Stock Grant which is effective shall be set forth in the related Stock Grant Certificate. 16.2 No Contract of Employment. The grant of an Option or a Stock Appreciation Right or a Stock Grant or Stock Unit Grant to an Eligible Employee or Director under this Plan shall not constitute a contract of employment or a right to continue to serve on the Board and shall not confer on an Eligible Employee or Director any rights upon his or her termination of employment or service in addition to those rights, if any, expressly set forth in this Plan or the related Option Certificate, Stock Appreciation Right Certificate, or Stock Grant Certificate. 16.3 Withholding. Each Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant shall be made subject to the condition that the Eligible Employee or Director consents to whatever action the Committee directs to satisfy the minimum statutory federal and state tax withholding requirements, if any, which the Company determines are applicable to the exercise of such Option or Stock Appreciation Right or to the satisfaction of any forfeiture conditions with respect to Stock subject to a Stock Grant or Stock Unit Grant issued in the name of the Eligible Employee or Director. No withholding shall be effected under this Plan which exceeds the minimum statutory federal and state withholding requirements. 30 16.4 Construction. All references to sections (ss.) are to sections (ss.) of this Plan unless otherwise indicated. This Plan shall be construed under the laws of the State of Delaware. Each term set forth in ss. 2 shall, unless otherwise stated, have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular. Finally, if there is any conflict between the terms of this Plan and the terms of any Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate, the terms of this Plan shall control. 16.5 Other Conditions. Each Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate may require that an Eligible Employee or a Director (as a condition to the exercise of an Option or a Stock Appreciation Right or the issuance of Stock subject to a Stock Grant) enter into any agreement or make such representations prepared by the Company, including (without limitation) any agreement which restricts the transfer of Stock acquired pursuant to the exercise of an Option or a Stock Appreciation Right or a Stock Grant or provides for the repurchase of such Stock by the Company. 16.6 Rule 16b-3. The Committee shall have the right to amend any Option, Stock Grant or Stock Appreciation Right to withhold or otherwise restrict the transfer of any Stock or cash under this Plan to an Eligible Employee or Director as the Committee deems appropriate in order to satisfy any condition or requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be applicable to such grant or transfer. 31 IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan to evidence its adoption of this Plan. NORTH AMERICAN GALVANIZING & COATINGS, INC. By: /s/ Paul R. Chastain Date: July 21, 2004 32 EX-10.2 3 exhibit10-2_13363.txt FORM OF STOCK OPTION AGREEMENT EXHIBIT 10.2 ------------ SCHEDULE A TO STOCK OPTION AGREEMENT BETWEEN NORTH AMERICAN GALVANIZING & COATINGS, INC. AND l. Number of shares of stock subject to Option: shares of common stock. 2. This Option (Check One) ( ) Is ( ) Is Not an Incentive Stock Option. 3. Option Exercise Price: per share. 4. Date of Grant: 5. Option Vesting Schedule: Check One: ( ) Options are exercisable with respect to all shares on or after the date hereof. (X) Options are exercisable with respect to the number of shares indicated below on or after the date indicated next to the number of shares: Number of Shares Vesting Date ---------------- ------------ 6. Option Exercise Period: All options expire and are void unless exercised on or before . 7. Effect of Termination of Employment of Optionee (if different from that set forth in Section 8 of the Stock Option Agreement): . EX-10.3 4 exhibit10-3_13363.txt SCHEDULE A TO STOCK OPTION AGREEMENT EXHIBIT 10.3 ------------ FORM OF STOCK OPTION AGREEMENT NORTH AMERICAN GALVANIZING & COATINGS, INC. 2004 INCENTIVE STOCK PLAN THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of the __________day of___________,20__, by and between North American Galvanizing & Coatings, Inc., a Delaware corporation (the "Company"), and ________________, (the "Optionee"): WITNESSETH: WHEREAS, on February 27, 2004, the Board of Directors of the Company adopted a stock option plan known as the "North American Galvanizing & Coating, Inc. 2004 Stock Option Plan" (the "Plan"), and recommended that the Plan be approved by the Company's shareholders; and WHEREAS, on July 21, 2004, the shareholders of the Company approved the Plan; and WHEREAS, the Committee has granted the Optionee a stock option to purchase the number of shares of the Company's common stock as set forth below, and in consideration of the granting of that stock option the Optionee intends to remain in the employ of the Company; and WHEREAS, the Company and the Optionee desire to enter into this Stock Option Agreement in accordance with the Plan; and NOW, THEREFORE, as an employment incentive to encourage stock ownership, and also in consideration of the mutual covenants contained herein, the parties agree hereto as follows: l. Incorporation of Plan. This option is granted pursuant to the provisions of the Plan and the terms and definitions of the Plan are incorporated herein by reference and made a part hereof. Capitalized terms not defined herein shall have the meaning ascribed to them in the Plan. A copy of the Plan has been delivered to, and receipt is hereby acknowledged by, the Optionee. Notwithstanding anything in this agreement to the contrary, to the extent the terms of this Agreement conflict with otherwise attempt to exceed the authority set forth under the terms of the Plan, the Plan shall govern and control all aspects. 2. Grant of Option. Subject to the terms, restrictions, limitations and conditions stated herein and under the Plan, the Company hereby evidences its grant to the Optionee, not in lieu of salary of other compensation, of the right and option (the "Option") to purchase all or any part of the number of shares of the Company's Common Stock, par value $.10 per share (the "Stock"), set forth on Schedule A attached hereto and incorporated herein by reference. The Option shall be exercisable in the amounts and at the times specified on Schedule A. The Option shall expire and shall not be excisable on the date specified on Schedule A or on such earlier date as determined pursuant to Section 8 hereof. Schedule A states whether the Option is intended to be an Incentive Stock Option. Neither the Company nor any Subsidiary or any Director or Officer of the Company or any subsidiary warrants or otherwise represents that (i) any Option granted under this Plan shall be considered an Incentive Stock Option for applicable tax purposes, or (ii) favorable or desirable tax treatment or characterization will be applicable in respect of any Option. 3. Purchase Price. The price per share to be paid by the Optionee for the shares subject to this Option (the "Exercise Price") shall be specified on Schedule A, which price shall be an amount not less than the Fair Market Value of a share of Stock as of the Date of Grant (as defined in Section 9 below) if the Option is an Incentive Stock Option. 4. Exercise Terms. The Optionee must exercise the Option for at least the lesser of 100 shares or the number of shares of vested Stock as to which the Option remains unexercised. In the event this Option is not exercised with respect to all or any part of the shares subject to this Option prior to its expiration, the shares with respect to which this Option was not exercised shall no longer be subject to this Option. 5. Restrictions on Transferability. No option shall be transferable by an Optionee other than by will or the laws of descent and distribution; provided, however non-Incentive Stock Options may also be transferred, pursuant to a Qualified Domestic Relations Order. During the lifetime of an Optionee, Options shall be exercisable only by such Optionee (or by such Optionee's guardian or legal representative, should one be appointed). 6. Notice of Exercise of Option. This option may be exercised by the Optionee, or by the Optionee's administrators, executors or personal representatives, by a written notice (in substantially the form of the Notice of Exercise attached hereto as Schedule B) signed by the Optionee, or by such administrators, executors or personal representatives, and delivered or mailed to the Company as specified in Section 12(C) hereof to the attention of the President or such other officer as the Company may designate. Any such notice shall (a) specify the number of shares of Stock which the Optionee or the Optionee's administrators, executors or personal representatives, as the case may be, then elects to purchase hereunder, (b) contain such information as may be reasonable required pursuant to Section 10 hereof, and (c) maybe accompanied by (i) a certified or cashier's check payable to the Company in payment of the total Exercise Price applicable to such shares as provided herein, (ii) shares of Stock owned by the Optionee and duly endorsed or accompanied by stock transfer pwers having a Fair Market Value equal to the total Exercise Price applicable to such shares purchased hereunder, or (iii) a certified or cashier's check accompanied by the number of shares of Stock whose Fair Market Value when added to the amount of the check equals the total Exercise Price applicable to such shares of Stock purchased hereunder. Upon receipt of any such notice and accompanying payment, and subject to the terms hereof, the Company agrees to issue the Optionee or the Optionee's administrators, executors or personal representatives, as the case may be, stock certificates for the number of shares specified in such notice registered in the name of the person exercising this Option. 7. Adjustment in Option. The number of shares of Stock subject to this Option, the Exercise Price and other matters are subject to adjustment during the term of this Option in accordance with the Plan. 8. Termination. (a) Except as otherwise specified in Schedule A, in the event of the termination of the Optionee's employment with the Company or any of its Subsidiaries, other than a termination that is either (i) For Cause, (ii) voluntary on the part of the Optionee and without written consent of the Company, or (iii) for reasons of death or Disability or retirement, the Optionee (or his or her personal representative) may exercise this Option at any time within thirty (30) days after such termination to the extent of the number of shares which were Purchasable hereunder at the date of such termination. (b) Except as otherwise specified in Schedule A, in the event of a termination of the Optionee's employment that is either (i) For Cause or (ii) voluntary on the part of the Optionee and without the written consent of the Company, this Option, to the extent not previously exercised, shall terminate immediately and shall not thereafter be or become exercisable. (c) Except as otherwise specified in Schedule A, in the event of the retirement of the Optionee at the normal retirement date as prescribed from time to time by the Company or any Subsidiary, the Optionee shall continue to have the right to exercise any Options for shares which were Vested at the date of the Optionee's retirement. This Option does not confer upon the Optionee any right with respect to continued employment by the Company or by any of its subsidiaries. This Option shall not be affected by any change of employment so long as the Optionee continues to be an employee of the Company or one of its Subsidiaries. (d) Except as otherwise specified in Schedule A, in the event of termination of employment because the Optionee's becoming a Disabled Optionee, the Optionee (or his or her personal representative) may exercise this Option, within a period ending on the earlier of (a) the last day of the one (1) year period following the beginning of Optionee's Disability or (b) the expiration date of this Option, to the extent of the number of shares which were Purchasable hereunder at the date of such termination. (e) Except as otherwise set forth in Schedule A with respect to the rights of the Optionee upon termination of employment under Section 8(a) above, in the event of the Optionee's death while employed by the Company or any of its Subsidiaries or within three (3) months after a termination of such employment (if such termination was neither (i) For Cause nor (ii) voluntary on the part of the Optionee and without the written consent of the Company), the appropriate persons described in Section 6 hereof or persons to whom all or a portion of this Option is transferred in accordance with Section 5 hereof may exercise this Option at any time within a period ending on the earlier of (a) the last day of the one (1) year period following the Optionee's death or (b) the expiration date of this Option. If the Optionee was an employee of the Company at the time of death, this Option may be so exercised to the extent of the number of shares that were Vested hereunder at the date of death. If the Optionee's employment terminated prior to his or her death, this Option may be exercised only to the extent of the number of shares covered by this Option which were Vested hereunder at the date of such termination. 9. Date of Grant. This Option was granted by the Board of Directors of the Company on the date set forth in Schedule A (the "Date of Grant"). 10. Compliance with Regulatory Matters. The Optionee acknowledges that the issuance of capital stock of the Company is subject to limitations imposed by federal and state law and the Optionee hereby agrees that the Company shall not be obligated to issue any shares of Stock upon exercise of the Option that would cause the Company to violate any laws or any rule, regulation, order or consent decree of any regulatory authority (including without limitation the Securities and Exchange Commission) having jurisdiction over the affairs of the Company. The Optionee agrees that he or she will provide the Company with such information as is reasonable requested by the Company or its counsel to determine whether the issuance of Stock complies with the provisions described by this Section 10. 11. Restriction on Disposition of Shares. The shares purchased pursuant to the exercise of an Incentive Stock Option shall not be transferred by the Optionee except pursuant to the Optionee's will, or the laws of descent and distribution, until such date which is the later of two (2) years after the grant of such Incentive Stock Option or one (1) year after the transfer of the shares to the Optionee pursuant to the exercise of such Incentive Stock Option. 12. Miscellaneous. (a) This agreement shall be binding upon the parties hereto and their representatives, successors and assigns. (b) This agreement is executed and delivered in, and shall be governed by the laws of, the State of Delaware, without regard to conflicts of laws principles. (c) Any notice, request, document or other communication required or permitted to be given hereunder shall be deemed given, and any elections or exercises to be made or accomplished shall be deemed made or accomplished, upon actual delivery thereof to the designated recipient, or three (3) days after deposit thereof in the United States mail, registered, return receipt requested and postage prepaid, addressed, if to the Optionee, at the address set forth below his or her signature and, if to the Company, to its executive offices at 2250 E. 73rd Street, Suite 300, Tulsa, Ok. 74136. (d) This agreement may not be modified except in writing executed by each of the parties hereto. (e) This agreement, together with the Plan, contains the entire understanding with the parties hereto and supersedes any prior understanding and/or written or oral agreement between them respecting the subject matter hereof. (f) The parties hereto agree that the provisions of this Agreement are severable and the invalidity or unenforceability of any provision in whole or in part shall not effect the validity or enforceability of any enforceable part of such provision or any other provision hereof. (g) The section headings herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. (h) No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. (j) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf and the Optionee has executed this Agreement, all as of the day and year first above written. NORTH AMERICAN GALVANIZING & COATINGS, INC. By: -------------------------------- Attest: ___________________ Title: Chief Executive Officer Secretary ----------------------------- OPTIONEE Name: ------------------------------ Individual's Name Typed Address: ---------------------------- EX-10.4 5 exhibit10-4_13363.txt DIRECTOR STOCK UNIT PROGRAM EXHIBIT 10.4 ------------ NORTH AMERICAN GALVANIZING & COATINGS, INC. DIRECTOR STOCK UNIT PROGRAM ss. 1 PURPOSE AND EFFECTIVE DATE -------------------------- The purpose of this Program is to tie a percentage of each Director's compensation to the long-term value of Stock. This Program has been adopted in connection with the adoption of the 2004 Incentive Stock Plan and has been adopted subject to the approval of this Program and the 2004 Incentive Stock Plan. This Program shall be effective on the date NAGALV's shareholders approve the adoption of this Program. ss. 2 DEFINITIONS ----------- 2.1. Account for purposes of this Program shall mean the bookkeeping account maintained by the Committee to show for each Director as of any date all Stock Unit Grant credits made for such Director under this Program, the adjustments to such credits and any distributions to such Director. 2.2. Automatic Deferral Period for purposes of this Program shall mean the period described in ss. 3.5(b). 2.3. Beneficiary for purposes of this Program shall mean for each Director the person designated as such by the Director on the form provided for this purpose or, if no such person is so designated or if no such person survives the Director, the Director's estate. 2.4. Board for purposes of this Program shall mean the Board of Directors of NAGALV. 2.5. Committee for purposes of this Program shall mean the Committee under the 2004 Incentive Stock Plan. 2.6. Deferral Period for purposes of this Program shall mean the period described in ss. 3.5(b) and the period described in ss. 3.5(c) . 2.7. Director for purposes of this Program shall mean a member of the Board. 2.8. Elective Deferral Period for purposes of this Program shall mean the period described in ss. 3.5(c). 2.9. Inside Director for purposes of this Program shall mean a member of the Board who is an employee of NAGALV. 2.10. NAGALV for purposes of this Program shall mean North American Galvanizing & Coatings, Inc. and any successor to such corporation. 2.11. Outside Director for purposes of this Program shall mean a member of NAGALV's Board of Directors who is not an employee of NAGALV. 2.12. Program for purposes of this Program shall mean this North American Galvanizing & Coatings, Inc. Director Stock Unit Program, as amended from time to time. 2.13. Stock for purposes of this Program shall mean Stock under the 2004 Incentive Stock Plan. 2.14. Stock Unit Grant for purposes of this Program shall mean a Stock Unit Grant under the 2004 Incentive Stock Plan. 2.15. 2004 Stock Incentive Plan for purposes of this Program shall mean the North American Galvanizing & Coatings, Inc. 2004 Stock Incentive Plan, as amended from time to time. ss. 3 STOCK UNIT GRANT ---------------- 3.1. Outside Directors. Each Outside Director shall be required to defer at least 50% of his or her director fees each calendar year and shall have the right under ss. 3.3 to elect to defer 75% or 100% of such fees each calendar year. The deferrals for each Outside Director will be deducted (if he or she elects less than a 100% deferral) on a pro-rata basis from his or her director fees when such fees are otherwise payable in cash, and the deferrals shall be converted into a Stock Unit Grant at the average of the closing prices for a share of Stock for the 10 trading days before the date the director fees for Outside Directors otherwise would have been payable in cash. 3.2. Inside Directors. NAGALV automatically shall defer for each Inside Director a dollar amount equal to 50% of the director fees for Outside Directors. Inside Directors shall have the right to elect additional deferrals which will correspond to an Outside Director's right to elect to defer 75% or 100% of such fees each calendar year. Any such additional deferrals by Inside Directors shall be matched by the Committee at the same rate at which additional deferrals by Outside Directors are matched under -2- ss. 3.3, and Inside Directors wishing to elect any additional deferral shall do so in accordance with the deferral election procedures described in ss. 3.3(d). The deferrals for each Inside Director shall be effected to coincide with the deferrals for Outside Directors, and the deferrals for Inside Directors shall be converted into a Stock Unit Grant at the same time and in accordance with the same procedure followed for Outside Directors. 3.3. Matching Units and Deferral Elections. (a) Fifty Percent. If an Outside Director does not elect to defer more than the required deferral under ss. 3.1, the Committee shall match 25% of his or her deferral in an additional Stock Unit Grant (b) Seventy Five Percent. If an Outside Director elects in accordance with ss. 3.3(d) to defer 75% of his or her director fees, the Committee shall match 50% of his or her deferral in an additional Stock Unit Grant. (c) One Hundred Percent. If an Outside Director elects in accordance with ss. 3.3(d) to defer 100% of his or her director fees, the Committee shall match 75% of his or her deferral in an additional Stock Unit Grant. The Committee shall match 75% of each Inside Director's automatic deferrals under ss. 3.2 in an additional Stock Unit Grant. (d) Deferral Election Rules for Outside Directors. (1) General Rule. A deferral election under ss. 3.3(b) or ss. 3.3(c) shall be effective for fees paid in any calendar year only if delivered to NAGALV before the beginning of such calendar year, and an election shall be effective only if made on the form provided for this purpose. (2) Special Rules. (A) Each Outside Director may make an election under ss. 3.3(b) or ss. 3.3(c) after NAGALV's annual shareholder meeting in 2004 if such shareholders approve this Program at such meeting and such election is delivered to NAGALV before the end of the 30 day period which starts on the date of such meeting. An election under this ss. 3.3(d)(2)(A) shall be effective for director fees otherwise payable in 2004 after such election is delivered to NAGALV. -3- (B) Each Outside Director may make an election under ss. 3.3(b) or ss. 3.3(c) with respect to director fees payable in the calendar year in which he or she is first elected an Outside Director if such election is delivered to NAGALV before the end of the 30 day period which starts on the date he or she is first elected an Outside Director. An election under this ss. 3.3(d)(2)(B) shall be effective for directors' fees otherwise payable in such calendar year after such election is delivered to NAGALV. (3) Irrevocable. An election under this ss. 3.3(d) shall be irrevocable for the calendar year for which the election is made when the election is delivered to NAGALV. (e) Conversion to a Stock Unit Grant. A Director's match under this ss. 3.3 will be converted into a Stock Unit Grant at the same time and under the same procedure as his or her deferrals are converted into a Stock Unit Grant. 3.5. Deferral Periods. (a) General. All deferrals under this Program shall be paid in the calendar year immediately following the end of an Automatic Deferral Period or, if a Director so elects in accordance with this ss. 3.5, the end of an additional Elective Deferral Period. (b) Automatic Deferral Period. The Automatic Deferral Period for a Director for deferrals effected in any calendar year shall be the five calendar year period starting on the immediately following January 1. There will be separate Automatic Deferral Period for deferrals effected in each calendar year. (c) Elective Deferral Period. If a Director delivers an election on the form provided for this purpose to NAGALV at least one full year before the end of any Automatic Deferral Period, the payment of the deferrals subject to such Automatic Deferral Period shall be deferred for an additional five calendar years. Any such election shall be irrevocable when delivered to NAGALV. (d) Special Rules. (1) Termination. All deferrals (whether subject to an Automatic Deferral Period or an Elective Deferral Period) shall be payable as of the date a Director's service as such ends or the date his or her employment with NAGALV ends, whichever comes last. -4- (2) Hardship. If a Director can demonstrate to a majority of the other members of the Board that he or she has an extreme financial hardship as a result of a reasonably unforeseeable event and that access to his or her deferrals under this Program is more appropriate under the circumstances than using any of his or her other assets to cure such hardship, the Board (acting by a majority vote with the affected Director not voting) may authorize the payment of all or a portion of his or her deferrals to cure such hardship. 3.6. Payment. When any deferrals become payable at the end of a Deferral Period or become payable under ss. 3.5(d), payment shall be made (subject to applicable withholdings) in a lump sum in cash or, at the Committee's discretion, in whole shares of Stock (and cash in lieu of a fractional share) based on the average of the closing prices for a share of Stock for the 10 trading days before the date as of which payment is made. NAGALV shall make a payment as soon as practicable after a deferral becomes payable; provided, however, NAGALV may defer any payment to a future date if making a payment before such future date could result in the violation of any securities or other laws. 3.7. Non-Forfeitable Account and Account Adjustments. A Director's interest in his or her Account shall be non-forfeitable. The number of shares described in a Stock Unit Grant credited to a Director's Account shall be adjusted at the same time and in the same manner as other Stock Unit Grant made under the 2004 Incentive Stock Plan and such number shall be reduced to reflect any cash payments made or shares of Stock issued to a Director. ss. 4 ADMINISTRATION -------------- 4.1. Powers. This Program shall be administered by the Committee, and the Committee shall have the absolute and complete authority, duty and power to interpret and construe the provisions of this Program as the Committee deems appropriate, including the final authority to determine a Director's benefits under this Program, and to take any other action in connection with the operation or administration of this Program which the Committee deems fair and appropriate under the circumstances. All interpretations, determinations, regulations and calculations shall be final and binding on all affected persons. 4.2. Statements. NAGALV shall furnish individual statements of Account balances to each Director in such form and as of such dates as determined by the Committee. -5- ss. 5 AMENDMENT AND TERMINATION ------------------------- NAGALV reserves the right to amend or terminate this Program at any time by action of the Board. NAGALV upon the termination of this Program shall have the right in its sole discretion to accelerate the timing of distributions of Accounts. No amendment or termination shall directly or indirectly reduce the balance of any Account as of the effective date of such amendment or termination. ss. 6 MISCELLANEOUS ------------- 6.1. General Assets. All cash distributions to, or on behalf of, a Director under this Program shall be made from NAGALV's general assets and all shares of Common Stock issued shall be issued under the 2004 Stock Incentive Plan, and any claim by a Director or by his or her Beneficiary against NAGALV for any cash distribution or stock issuance under this Program shall be treated the same as a claim of any general and unsecured creditor of NAGALV. 6.2. No Liability. No Director and no Beneficiary shall have the right to look to, or have any claim whatsoever against, any officer, director, employee or agent of NAGALV in his or her individual capacity for the distribution of any Account. 6.3. No Assignment; Binding Effect. No Director or Beneficiary shall have the right to alienate, assign, commute or otherwise encumber an Account for any purpose whatsoever, whether through a domestic relations order or otherwise, and any attempt to do so shall be disregarded as completely null and void. The provisions of this Program shall be binding on each Director and Beneficiary and on NAGALV. 6.4. Construction. This Program shall be construed in accordance with the laws of the State of Delaware except to the extent such laws are preempted by federal law. Headings and subheadings have been added only for convenience of reference and shall have no substantive effect whatsoever. All references to sections (ss.) shall be to sections (ss.) to this Program. All references to the singular shall include the plural and all references to the plural shall include the singular. All definitions in this Program shall apply exclusively to this Program. 6.5. No Contract of Employment. A Director's participation in this Program shall not constitute a contract of employment by NAGALV or a right to be nominated to serve on, or serve on, the Board. 6.6. 2004 Incentive Stock Plan. The terms of the 2004 Incentive Stock Plan are incorporated by this ss. 6.6 in the Program, and the Program is subject to the -6- terms of such plan. This Program shall not confer on any Director any rights with respect to a Stock Unit Grant which are superior to his or her rights under the 2004 Incentive Stock Plan with respect to such Stock Unit Grant. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Program to evidence its adoption of this Program. NORTH AMERICAN GALVANIZING & COATINGS, INC. By:________________________ Date:______________________ -7- -----END PRIVACY-ENHANCED MESSAGE-----