Exhibit 10.23
___________________________________________________________________________
STEEL OF WEST VIRGINIA, INC.
1995 EMPLOYEE STOCK OPTION PLAN
___________________________________________________________________________
April 1, 1995
Table of Contents
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Page
I. Purposes of the Plan . . . . . . . . . . . . . . . . . . . . . . . 1
II. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 4
IV. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Duties of the Committee . . . . . . . . . . . . . . . . . . . 4
B. Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . 4
C. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 5
D. Meetings of the Committee . . . . . . . . . . . . . . . . . . 5
E. Determinations . . . . . . . . . . . . . . . . . . . . . . . 5
X. Xxxxxx; Adjustment Upon Certain Events . . . . . . . . . . . . . . 5
A. Shares to be Delivered; Fractional Shares . . . . . . . . . . 5
B. Number of Shares . . . . . . . . . . . . . . . . . . . . . . 6
C. Adjustments; Recapitalization, etc. . . . . . . . . . . . . . 6
VI. Awards and Terms of Options . . . . . . . . . . . . . . . . . . . 7
X. Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
B. Exercise Price . . . . . . . . . . . . . . . . . . . . . . . 7
C. Number of Shares . . . . . . . . . . . . . . . . . . . . . . 7
D. Exercisability . . . . . . . . . . . . . . . . . . . . . . . 7
E. Acceleration of Exercisability . . . . . . . . . . . . . . . 8
F. Exercise of Options. . . . . . . . . . . . . . . . . . . . . 9
G. Incentive Stock Option Limitations. . . . . . . . . . . . . . 10
VII. Effect of Termination of Employment . . . . . . . . . . . . . . . 10
A. Death, Disability, Retirement, etc. . . . . . . . . . . . . . 10
B. Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
C. Cancellation of Options . . . . . . . . . . . . . . . . . . . 11
VIII. Nontransferability of Options . . . . . . . . . . . . . . . . 11
IX. Rights as a Stockholder . . . . . . . . . . . . . . . . . . . . . 11
X. Termination, Amendment and Modification . . . . . . . . . . . . . 12
General Amendments and Termination . . . . . . . . . . . . . . . . 12
XI. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 13
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Page
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XII. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . 13
A. Right to Terminate Employment . . . . . . . . . . . . . . . . 13
B. Purchase for Investment . . . . . . . . . . . . . . . . . . . 13
C. Trusts, etc. . . . . . . . . . . . . . . . . . . . . . . . . 13
D. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
E. Severability of Provisions . . . . . . . . . . . . . . . . . 14
F. Payment to Minors, Etc. . . . . . . . . . . . . . . . . . . . 14
G. Headings and Captions . . . . . . . . . . . . . . . . . . . . 14
H. Controlling Law . . . . . . . . . . . . . . . . . . . . . . . 14
I. Other Benefits . . . . . . . . . . . . . . . . . . . . . . . 14
J. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
K. Section 162(m) Deduction Limitation . . . . . . . . . . . . . 15
L. Section 16(b) of the Act . . . . . . . . . . . . . . . . . . 15
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses . . . . . . . . . . . . . . . . . . . 15
A. Stock Certificates . . . . . . . . . . . . . . . . . . . . . 15
B. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
C. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . 15
XIV. Listing of Shares and Related Matters . . . . . . . . . . . . . . 15
XV. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . 16
Form of Option Agreement . . . . . . . . . . . . . . . . . . . . Exhibit A
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Steel of West Virginia, Inc.
1995 Employee Stock Option Plan
I. Purposes of the Plan
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The purposes of this 1995 Employee Stock Option Plan (the "Plan")
are to enable Steel of West Virginia, Inc. (the "Company") and Designated
Subsidiaries (as defined herein) to attract, retain and motivate certain
employees who are important to the success and growth of the business of
the Company and Designated Subsidiaries and to create a long-term mutuality
of interest between such employees and the stockholders of the Company by
granting the options to purchase Common Stock (as defined herein).
II. Definitions
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In addition to the terms defined elsewhere herein, for purposes
of this Plan, the following terms will have the following meanings when
used herein with initial capital letters:
A. "Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.
B. "Board" means the Board of Directors of the Company.
C. "Cause" means that the Committee shall have determined that
any of the following events has occurred: (1) an act of fraud,
embezzlement, misappropriation of business or theft committed by a
Participant in the course of his or her employment or any intentional or
grossly negligent misconduct of a Participant which injures the business or
reputation of the Company or Designated Subsidiaries; (2) intentional or
grossly negligent damage committed by a Participant to the property of the
Company or Designated Subsidiaries; (3) a Participant's willful failure or
refusal to perform the customary duties and responsibilities of his or her
position with the Company or Designated Subsidiaries; (4) a Participant's
material breach of any covenant, condition or obligation required to be
performed by him or her pursuant to this Plan, the Option Agreement or any
other agreement between him or her and the Company or Designated
Subsidiaries or a Participant's intentional or grossly negligent violation
of any material written policy of the Company or Designated Subsidiaries;
or (5) commission by a Participant of a felony or a crime or act involving
moral turpitude that brings the Company or Designated Subsidiaries into
public disrepute. Cause shall be deemed to exist as of the date any of the
above events occur even if the Committee's determination
is later and whether or not such determination is made before or after
Termination of Employment.
D. "Code" means the Internal Revenue Code of 1986, as amended.
E. "Committee" means such committee, if any, appointed by the
Board to administer the Plan, consisting of two or more directors as may be
appointed from time to time by the Board each of whom, unless otherwise
determined by the Board, shall be disinterested persons as defined in Rule
16b-3 promulgated under Section 16(b) of the Act and outside directors as
defined in Section 162(m) of the Code. If the Board does not appoint a
committee for this purpose, "Committee" means the Board.
F. "Common Stock" means the common stock of the Company, par
value $.01 per share, any Common Stock into which the Common Stock may be
converted and any Common Stock resulting from any reclassification of the
Common Stock.
G. "Company" means Steel of West Virginia, Inc., a Delaware
corporation.
H. "Designated Subsidiary" means any corporation that is
defined as a subsidiary corporation in Section 424(f) of the Code. An
entity shall be deemed a Designated Subsidiary only for such periods as the
requisite ownership relationship is maintained.
I. "Disability" means a permanent and total disability,
rendering a Participant unable to perform the duties performed by the
Participant for the Company or Designated Subsidiaries by reason of
physical or mental disability for a period of four consecutive months, or
for a period of more than an aggregate of six months in any twelve month
period. A Disability shall only be deemed to occur at the time of the
determination by the Committee of the Disability.
J. "Fair Market Value" shall mean, for purposes of this Plan,
unless otherwise required by any applicable provision of the Code or any
regulations issued thereunder, as of any date, the last sales prices
reported for the Common Stock on the applicable date, (i) as reported by
the principal national securities exchange in the United States on which it
is then traded, or (ii) if not traded on any such national securities
exchange, as quoted on an automated quotation system sponsored by the
National Association of Securities Dealers, or if the sale of the Common
Stock shall not have been reported or quoted on such date, on the first day
prior thereto on which the Common Stock was reported or quoted. If the
Common Stock is not readily tradeable on a national securities exchange or
any system sponsored by the National Association of Securities Dealers, its
Fair Market Value shall be set by the Committee based upon its assessment
of the cash price that would be paid between a fully informed buyer and
seller under no compulsion to buy or sell (without giving effect to any
discount for a minority interest or any restrictions on transferability or
any lack of liquidity of the stock).
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K. "Incentive Stock Option" shall mean any Option awarded under
this Plan intended to be and designated as an "Incentive Stock Option"
within the meaning of Section 422 of the Code.
L. "Key Employee" means any person who is an officer or other
valuable employee of the Company or a Designated Subsidiary, as determined
by the Committee in its sole discretion. A Key Employee may, but need not,
be an officer of the Company or a Designated Subsidiary.
M. "Non-Qualified Stock Option" shall mean any Option awarded
under this Plan that is not an Incentive Stock Option.
N. "Option" means the right to purchase one Share at a
prescribed purchase price on the terms specified in the Plan.
O. "Participant" means a Key Employee who is granted Options
under the Plan which Options have not expired.
P. "Person" means any individual or entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of
such Person as the context may require.
Q. "Retirement" means a Termination of Employment at or after
age 65 (or, with the consent of the Committee, any age between age 55 and
65).
R. "Securities Act" means the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
S. "Share" means a share of Common Stock.
T. "Ten Percent Shareholder" shall mean a person owning Common
Stock of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company as defined in
Section 422 of the Code.
U. "Termination of Employment" with respect to an individual
means that individual is no longer actively employed by the Company or a
Designated Subsidiary on a full-time basis, irrespective of whether or not
such employee is receiving salary continuance pay, is continuing to
participate in other employee benefit programs or is otherwise receiving
severance type payments. In the event an entity shall cease to be a
Designated Subsidiary, there shall be deemed a Termination of Employment of
any individual who is not otherwise an employee of the Company or another
Designated Subsidiary at the time the entity ceases to be a Designated
Subsidiary. A Termination of Employment shall not include a leave of
absence approved for purposes of the Plan by the Committee.
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III. Effective Date
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The Plan shall become effective on April 1, 1995 (the "Effective
Date"), subject to its approval by the stockholders of the Company in
accordance with Rule 16b-3 promulgated under the Act within one year after
the Plan is adopted by the Board of Directors of the Company. Grants of
Options by the Committee under the Plan may be made on or after the
Effective Date of the Plan, including retroactively, provided that, if the
Plan is not approved by the stockholders of the Company as provided in the
preceding sentence, all Options which have been granted by the Committee
shall be null and void. No Options may be exercised prior to the approval
of the Plan by the stockholders of the Company as aforesaid.
IV. Administration
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A. Duties of the Committee. The Plan shall be administered and
-----------------------
interpreted by the Committee. The Committee shall have full authority to
interpret the Plan and to decide any questions and settle all controversies
and disputes that may arise in connection with the Plan; to establish,
amend and rescind rules for carrying out the Plan; to administer the Plan,
subject to its provisions; to select Participants in, and grant Options
under, the Plan; to determine the terms, exercise price and form of
exercise payment for each Option granted under the Plan; to determine the
consideration to be received by the Company in exchange for the grant of
the Options; to determine whether and to what extent Incentive Stock
Options and Non-Qualified Stock Options, or any combination thereof, are to
be granted hereunder to one or more Key Employees to prescribe the form or
forms of instruments evidencing Options and any other instruments required
under the Plan (which need not be uniform) and to change such forms from
time to time; and to make all other determinations and to take all such
steps in connection with the Plan and the Options as the Committee, in its
sole discretion, deems necessary or desirable. The Committee shall not be
bound to any standards of uniformity or similarity of action,
interpretation or conduct in the discharge of its duties hereunder,
regardless of the apparent similarity of the matters coming before it. Any
determination, action or conclusion of the Committee shall be final,
conclusive and binding on all parties. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be so exercised, so as to disqualify
the Plan under Section 422 of the Code, or, without the consent of the
Participants affected, to disqualify any Incentive Stock Option under such
Section 422.
B. Advisors. The Committee may employ such legal counsel,
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consultants and agents as it may deem desirable for the administration of
the Plan, and may rely upon any advice or opinion received from any such
counsel or consultant and any computation received from any such consultant
or agent. Expenses incurred by the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company.
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C. Indemnification. To the maximum extent permitted by
---------------
applicable law, no officer of the Company or member or former member of the
Committee or of the Board shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted under it.
To the maximum extent permitted by applicable law or the Certificate of
Incorporation or By-Laws of the Company and to the extent not covered by
insurance, each officer and member or former member of the Committee or of
the Board shall be indemnified and held harmless by the Company against any
cost or expense (including reasonable fees of counsel reasonably acceptable
to the Company) or liability (including any sum paid in settlement of a
claim with the approval of the Company), and advanced amounts necessary to
pay the foregoing at the earliest time and to the fullest extent permitted,
arising out of any act or omission to act in connection with the Plan,
except to the extent arising out of such officer's, member's or former
member's own fraud or bad faith. Such indemnification shall be in addition
to any rights of indemnification the officers, members or former members
may have as directors under applicable law or under the Certificate of
Incorporation or By-Laws of the Company or Designated Subsidiary.
Notwithstanding anything else herein, this indemnification will not apply
to the actions or determinations made by an individual with regard to
Options granted to him or her under this Plan.
D. Meetings of the Committee. The Committee shall adopt such
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rules and regulations as it shall deem appropriate concerning the holding
of its meetings and the transaction of its business. Any member of the
Committee may be removed from the Committee at any time either with or
without cause by resolution adopted by the Board, and any vacancy on the
Committee may at any time be filled by resolution adopted by the Board.
All determinations by the Committee shall be made by the affirmative vote
of a majority of its members. Any such determination may be made at a
meeting duly called and held at which a majority of the members of the
Committee are in attendance in person or through telephonic communication.
Any determination set forth in writing and signed by all the members of the
Committee shall be as fully effective as if it had been made by a majority
vote of the members at a meeting duly called and held.
E. Determinations. Each determination, interpretation or other
--------------
action made or taken pursuant to the provisions of this Plan by the
Committee shall be final, conclusive and binding for all purposes and upon
all persons, including, without limitation, the Participants, the Company
and Designated Subsidiaries, directors, officers and other employees of the
Company and Designated Subsidiaries, and the respective heirs, executors,
administrators, personal representatives and other successors in interest
of each of the foregoing.
V. Shares; Adjustment Upon Certain Events
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A. Shares to be Delivered; Fractional Shares. Shares to be
-----------------------------------------
issued under the Plan shall be made available, at the sole discretion of
the Board, either from authorized but unissued Shares or from issued Shares
reacquired by the Company and
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held in treasury. No fractional Shares will be issued or transferred upon
the exercise of any Option. In lieu thereof, the Company shall pay a cash
adjustment equal to the same fraction of the Fair Market Value of one Share
on the date of exercise.
B. Number of Shares. Subject to adjustment as provided in this
----------------
Article V, the maximum aggregate number of Shares that may be issued under
the Plan shall be 430,000. If Options are for any reason canceled, or
expire or terminate unexercised, the Shares covered by such Options shall
again be available for the grant of Options, subject to the foregoing
limit.
C. Adjustments; Recapitalization, etc. The existence of the
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Plan and the Options granted hereunder shall not affect in any way the
right or power of the Board or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change
in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting Common Stock, the dissolution
or liquidation of the Company or Designated Subsidiaries, any sale or
transfer of all or part of its assets or business or any other corporate
act or proceeding. The Committee may make or provide for such adjustments
in the maximum number of Shares specified in Article V(B), in the number of
Shares covered by outstanding Options granted hereunder, and/or in the
Purchase Price (as hereinafter defined) applicable to such Options or such
other adjustments in the number and kind of securities received upon the
exercise of Options, as the Committee in its sole discretion may determine
is equitably required to prevent dilution or enlargement of the rights of
Participants or to otherwise recognize the effect that otherwise would
result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any
other corporate transaction or event having an effect similar to any of the
foregoing. In the event of a merger or consolidation in which the Company
is not the surviving entity or in the event of any transaction that results
in the acquisition of substantially all of the Company's outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or in the event of the sale or transfer of all of the
Company's assets (the foregoing being referred to as "Acquisition Events"),
then the Committee may in its sole discretion terminate all outstanding
Options effective as of the consummation of the Acquisition Event by
delivering notice of termination to each Participant at least 20 days prior
to the date of consummation of the Acquisition Event; provided that, during
the period from the date on which such notice of termination is delivered
to the consummation of the Acquisition Event, each Participant shall have
the right to exercise in full all the Options that are then outstanding
(without regard to limitations on exercise otherwise contained in the
Options) but contingent on occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a
specified period after giving such notice for any reason whatsoever, the
notice and exercise shall be null and void. Except as hereinbefore
expressly provided, the issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of
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any class, for cash, property, labor or services, upon direct sale, upon
the exercise of rights or warrants to subscribe therefor or upon conversion
of shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number and class of shares and/or other securities or
property subject to Options theretofore granted or the Purchase Price (as
hereinafter defined).
VI. Awards and Terms of Options
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X. Xxxxx. The Committee may grant Non-Qualified Stock Options
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or Incentive Stock Options, or any combination thereof to Key Employees.
To the extent that the maximum number of authorized Shares with respect to
which Options may be granted are not granted in a particular calendar year
to a Participant (beginning with the year in which the Participant receives
his or her first grant of Options hereunder), such ungranted Options for
any year shall increase the maximum number of Shares with respect to which
Options may be granted to such Participant in subsequent calendar years
during the term of the Plan until used. To the extent that any Option does
not qualify as an Incentive Stock Option (whether because of its provisions
or the time or manner of its exercise or otherwise), such Option or the
portion thereof which does not qualify, shall constitute a separate Non-
Qualified Stock Option. Each Option shall be evidenced by an Option
agreement (the "Option Agreement") in such form as the Committee shall
approve from time to time.
B. Exercise Price. The purchase price per Share (the "Purchase
--------------
Price") deliverable upon the exercise of a Non-Qualified Stock Option shall
be determined by the Committee and set forth in a Participant's Option
Agreement, provided that the Purchase Price shall not be less than the par
value of a Share. The Purchase Price deliverable upon the exercise of an
Incentive Stock Option shall be determined by the Committee and set forth
in a Participant's Option Agreement but shall be not less than 100% of the
Fair Market Value of a Share at the time of grant; provided, however, if an
Incentive Stock Option is granted to a Ten Percent Shareholder, the
Purchase Price shall be no less than 110% of the Fair Market Value of a
Share.
C. Number of Shares. The Option Agreement shall specify the
----------------
number of Options granted to the Participant, as determined by the
Committee in its sole discretion.
D. Exercisability. Except as otherwise provided herein or in
--------------
the Option Agreement, each Option granted under this Plan shall be
exercisable on and after the first anniversary of the date as of which such
Option is granted, and at the time of grant the Committee shall specify on
what terms the Options granted shall be exercisable, provided that the
Committee may at any time accelerate the time at which all or any part of
the Options may be exercised and may waive any other conditions to
exercise. No Option shall be exercisable after the expiration of ten years
from the date of grant; provided,
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however, the term of an Incentive Stock Option granted to a Ten Percent
Shareholder may not exceed five years. Each Option shall be subject to
earlier termination as provided in Article VII below.
E. Acceleration of Exercisability.
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All Options granted and not previously exercisable shall
become fully exercisable immediately upon the later of a Change of
Control (as defined herein). For this purpose, a "Change of Control"
shall be deemed to have occurred upon:
(a) an acquisition after the Effective Date by any
individual, entity or group (within the meaning of Section 13d-3
or 14d-1 of the Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Act) of more than 30% of the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors, including, but not limited to, by merger,
consolidation or similar corporate transaction or by purchase;
excluding, however, the following: (x) any such acquisition by
the Company or Designated Subsidiaries or (y) any such
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or Designated
Subsidiaries; or
(b) the approval of the stockholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii)
the sale or other disposition of more than 80% of the assets of
the Company and Designated Subsidiaries on a consolidated basis
(determined under generally accepted accounting principles as
determined in good faith by the Committee); excluding, however,
such a sale or other disposition to a corporation with respect to
which, following such sale or other disposition, (x) more than
70% of the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors will be then beneficially owned, directly
or indirectly, by the individuals and entities who were the
beneficial owners of the outstanding Shares immediately prior to
such sale or other disposition, (y) no Person (other than the
Company, Designated Subsidiaries, and any employee benefit plan
(or related trust) of the Company or Designated Subsidiaries or
such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly,
70% or more of the outstanding Shares) will beneficially own,
directly or indirectly, 70% or more of the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (z)
individuals who were members of the board prior to such sale or
other disposition will constitute at least a majority of the
members of the board of directors of such corporation.
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(c) within any 24 month period beginning on or after
the Effective Date, the persons who were directors of the Company
immediately before the beginning of such period ("Incumbent
Directors") shall cease (for any reason other than death) to
constitute at least a majority of the Board or the board of
directors of any successor to the Company, provided that, any
director who was not a director as of the date hereof shall be
deemed to be an Incumbent Director if such director was elected
to the Board by, or on the recommendation of or with approval of,
at least two-thirds of the directors who qualified as Incumbent
Directors either actually or by prior operation of this
subsection, unless such election, recommendation or approval was
a result of an actual or threatened election contest of the type
contemplated by Regulation 14a-11 promulgated under the Exchange
Act or any successor provision.
F. Exercise of Options.
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1. A Participant may elect to exercise one or more Options
by giving written notice to the Committee of such election and of the
number of Options such Participant has elected to exercise,
accompanied by payment in full of the aggregate Purchase Price for the
number of Shares for which the Options are being exercised.
2. Xxxxxx purchased pursuant to the exercise of Options
shall be paid for at the time of exercise as follows:
(a) in cash or by check, bank draft or money order
payable to the order of Company;
(b) if the Shares are traded on a national securities
exchange, through the delivery of irrevocable instructions to a
broker to deliver promptly to the Company an amount equal to the
aggregate Purchase Price; or
(c) on such other terms and conditions as may be
acceptable to the Committee (which may include payment in full or
in part by the transfer of Shares which have been owned by the
Participant for at least six months or the surrender of Options
owned by the Participant) and in accordance with applicable law.
3. Upon receipt of payment, the Company shall deliver to
the Participant as soon as practicable a certificate or certificates
for the Shares then purchased.
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G. Incentive Stock Option Limitations. To the extent that the
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aggregate Fair Market Value (determined as of the time of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by the Participant during any calendar year under the
Plan and/or any other stock option plan of the Company or any subsidiary or
parent corporation (within the meaning of Section 424 of the Code) exceeds
$100,000, such Options shall be treated as Options which are not Incentive
Stock Options.
To the extent permitted under Section 422 of the Code, or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement, if (i) a Participant's employment with the Company
or Designated Subsidiary is terminated by reason of death, Disability,
Retirement or termination without Cause, and (ii) the portion of any
Incentive Stock Option that would be exercisable during the post-
termination period specified under Article VII but for the $100,000
limitation currently contained in Section 422(d) of the Code, is greater
than the portion of such Stock Option that is immediately exercisable as an
`incentive stock option' during such post-termination period under Section
422, such excess shall be treated as a Non-Qualified Stock Option. If the
exercise of an Incentive Stock Option is accelerated for any reason, any
portion of such Option that is not exercisable as an Incentive Stock Option
by reason of the $100,000 limitation contained in Section 422(d) of the
Code shall be treated as a Non-Qualified Stock Option.
Should any of the foregoing provisions not be necessary in order
for the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the
shareholders of the Company, except as otherwise required by law.
VII. Effect of Termination of Employment
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A. Death, Disability, Retirement, etc. Except as otherwise
-----------------------------------
provided in the Participant's Option Agreement, upon Termination of
Employment other than for Cause, all outstanding Options then exercisable
and not exercised by the Participant prior to such Termination of
Employment (and any Options not previously exercisable but made exercisable
by the Committee at or after the Termination of Employment) shall remain
exercisable by the Participant (or in the case of death, by the
Participant's estate or by the person given authority to exercise such
Options by the Participant's will or by operation of law) until the
expiration of the Option in accordance with the terms of the Plan and
grant.
B. Cause. Upon the Termination of Employment of a Participant
-----
for Cause, or if the Company or a Designated Subsidiary obtains or
discovers information after Termination of Employment that such Participant
had engaged in conduct that would have justified a Termination of
Employment for Cause during employment, all
10
outstanding Options of such Participant shall immediately terminate and
shall be null and void.
C. Cancellation of Options. Except as otherwise provided in
-----------------------
Article VI(E), no Options that were not exercisable during the period of
employment shall thereafter become exercisable upon a Termination of
Employment for any reason or no reason whatsoever, and such options shall
terminate and become null and void upon a Termination of Employment, unless
the Committee determines in its sole discretion that such Options shall be
exercisable.
VIII. Nontransferability of Options
-----------------------------
No Option shall be transferable by the Participant otherwise than
by will or under applicable laws of descent and distribution, and during
the lifetime of the Participant may be exercised only by the Participant or
his or her guardian or legal representative. An option shall also be
transferable under a domestic relations order that is a "qualified domestic
relations order", as defined in Section 414(p) of the Code, but may
thereafter not be further transferred except as provided in the prior
sentence (with the alternate payee under such order being substituted for
"Participant"). In addition, except as provided above, no Option shall be
assigned, negotiated, pledged or hypothecated in any way (whether by
operation of law or otherwise), and no Option shall be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, negotiate, pledge or hypothecate any Option, or in the event of any
levy upon any Option by reason of any execution, attachment or similar
process contrary to the provisions hereof, such Option shall immediately
terminate and become null and void. Notwithstanding the "qualified
domestic relations order" exception above, an Incentive Stock Option shall
not be transferable except as permitted under Code Section 422(b)(5) and a
Nonqualified Stock Option shall not be transferable unless (i) such
transfer is not considered a disposition within the meaning of Code Section
83 or (ii) such Option is not immediately exercisable in full on the date
of grant.
IX. Rights as a Stockholder
-----------------------
A Participant (or a permitted transferee of an Option) shall have
no rights as a stockholder with respect to any Shares covered by such
Participant's Option until such Participant (or permitted transferee) shall
have become the holder of record of such Shares, and no adjustments shall
be made for dividends in cash or other property or distributions or other
rights in respect to any such Shares, except as otherwise specifically
provided in this Plan.
11
X. Termination, Amendment and Modification
---------------------------------------
General Amendments and Termination. The Plan shall terminate at
----------------------------------
the close of business on the fifth anniversary of the Effective Date (the
"Termination Date"), unless terminated sooner as hereinafter provided, and
no Option shall be granted under the Plan on or after that date. The
termination of the Plan shall not terminate any outstanding Options that by
their terms continue beyond the Termination Date. At any time prior to the
Termination Date, the Committee may amend or terminate the Plan or suspend
the Plan in whole or in part.
The Committee may at any time, and from time to time, amend, in
whole or in part, any or all of the provisions of the Plan (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirements referred to in Article XII), or suspend or
terminate it entirely, retroactively or otherwise; provided, however, that,
-------- -------
unless otherwise required by law or specifically provided herein, the
rights of a Participant with respect to Options granted prior to such
amendment, suspension or termination, may not, be materially impaired
without the consent of such Participant and, provided further, without the
approval of the stockholders of the Company entitled to vote, no amendment
may be made which would (i) materially increase the aggregate number of
shares of Common Stock that may be issued under this Plan (except by
operation of Article V); (ii) decrease the minimum Purchase Price of any
Option or (iii) extend the maximum option period.
The Committee may amend the terms of any Option granted,
prospectively or retroactively, but, subject to Article VI above or as
otherwise provided herein, no such amendment or other action by the
Committee shall materially impair the rights of any Participant without the
Participant's consent. No modification of an Option shall adversely affect
the status of an Incentive Stock Option as an incentive stock option under
Section 422 of the Code. Notwithstanding the foregoing, however, no such
amendment may, without the approval of the stockholders of the Company,
effect any change that would require stockholder approval under applicable
law.
This Plan and any Options granted hereunder shall terminate and
be void if this Plan does not receive the approval of the stockholders of
the Company that may be required under Rule 16b-3 promulgated under the Act
within one year after the Plan is adopted by the Board of Directors of the
Company. Except as otherwise required by law, or as provided in this Plan,
no termination, amendment or modification of this Plan may, without the
consent of the Participant or the permitted transferee of his or her
Option, alter or impair the rights and obligations arising under any then
outstanding Option.
12
XI. Use of Proceeds
---------------
The proceeds of the sale of Shares subject to Options under the
Plan are to be added to the general funds of Company and used for its
general corporate purposes as the Board shall determine.
XII. General Provisions
------------------
A. Right to Terminate Employment. Neither the adoption of the
-----------------------------
Plan nor the grant of Options shall impose any obligation on the Company or
Designated Subsidiaries to continue the employment of any Participant, nor
shall it impose any obligation on the part of any Participant to remain in
the employ of the Company or Designated Subsidiaries.
B. Purchase for Investment. If the Board or the Committee
-----------------------
determines that the law so requires, the holder of an Option granted
hereunder shall, upon any exercise or conversion thereof, execute and
deliver to the Company a written statement, in form satisfactory to the
Company, representing and warranting that such Participant is purchasing or
accepting the Shares then acquired for such Participant's own account and
not with a view to the resale or distribution thereof, that any subsequent
offer for sale or sale of any such Shares shall be made either pursuant to
(i) a Registration Statement on an appropriate form under the Securities
Act, which Registration Statement shall have become effective and shall be
current with respect to the Shares being offered and sold, or (ii) a
specific exemption from the registration requirements of the Securities
Act, and that in claiming such exemption the holder will, prior to any
offer for sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to the Company, from counsel acceptable
to the Company as to the availability of such exception.
C. Trusts, etc. Nothing contained in the Plan and no action
------------
taken pursuant to the Plan (including, without limitation, the grant of any
Option thereunder) shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between the Company and any Participant
or the executor, administrator or other personal representative or
designated beneficiary of such Participant, or any other persons. Any
reserves that may be established by the Company in connection with the Plan
shall continue to be part of the general funds of the Company, and no
individual or entity other than the Company shall have any interest in such
funds until paid to a Participant. If and to the extent that any
Participant or such Participant's executor, administrator or other personal
representative, as the case may be, acquires a right to receive any payment
from the Company pursuant to the Plan, such right shall be no greater than
the right of an unsecured general creditor of the Company.
13
D. Notices Any notice to the Company required by or in respect
-------
of this Plan will be addressed to the Company at 17th Street and 2nd
Avenue, Huntington, West Virginia 25703, Attention: Chief Financial
Officer, or such other place of business as shall become the Company's
principal executive offices from time to time. Each Participant shall be
responsible for furnishing the Committee with the current and proper
address for the mailing to such Participant of notices and the delivery to
such Participant of agreements, Shares and payments. Any such notice to
the Participant will, if the Company has received notice that the
Participant is then deceased, be given to the Participant's personal
representative if such representative has previously informed the Company
of his status and address (and has provided such reasonable substantiating
information as the Company may request) by written notice under this
Section. Any notice required by or in respect of this Plan will be deemed
to have been duly given when delivered in person or when dispatched by
telegram or one business day after having been dispatched by a nationally
recognized overnight courier service or three business days after having
been mailed by United States registered or certified mail, return receipt
requested, postage prepaid. The Company assumes no responsibility or
obligation to deliver any item mailed to such address that is returned as
undeliverable to the addressee and any further mailings will be suspended
until the Participant furnishes the proper address.
E. Severability of Provisions. If any provisions of the Plan
--------------------------
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions of the Plan, and the Plan shall be
construed and enforced as if such provisions had not been included.
F. Payment to Minors, Etc. Any benefit payable to or for the
-----------------------
benefit of a minor, an incompetent person or other person incapable of
receipt thereof shall be deemed paid when paid to such person's guardian or
to the party providing or reasonably appearing to provide for the care of
such person, and such payment shall fully discharge the Committee, the
Company and their employees, agents and representatives with respect
thereto.
G. Headings and Captions. The headings and captions herein are
---------------------
provided for reference and convenience only. They shall not be considered
part of the Plan and shall not be employed in the construction of the Plan.
H. Controlling Law. The Plan shall be construed and enforced
---------------
according to the laws of the State of Delaware.
I. Other Benefits. No payment under this Plan shall be
--------------
considered compensation for purposes of computing benefits under any
retirement plan of the Company or a Designated Subsidiary nor affect any
benefits under any other benefit plan now or subsequently in effect under
which the availability of benefits is related to the level of compensation.
14
J. Costs. The Company shall bear all expenses included in
-----
administering this Plan, including expenses of issuing Common Stock
pursuant to any Options hereunder.
K. Section 162(m) Deduction Limitation. The Committee at any
-----------------------------------
time may in its sole discretion limit the number of Options that can be
exercised in any taxable year of the Company, to the extent necessary to
prevent the application of Section 162(m) of the Code (or any similar or
successor provision), provided that the Committee may not postpone the
earliest date on which Options can be exercised beyond the last day of the
stated term of such Options.
L. Section 16(b) of the Act. All elections and transactions
------------------------
under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with all exemptive
conditions under Rule 16b-3 promulgated under the Act. The Committee may
establish and adopt written administrative guidelines, designed to
facilitate compliance with Section 16(b) of the Act, as it may deem
necessary or proper for the administration and operation of the Plan and
the transaction of business thereunder.
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses
----------------------------
A. Stock Certificates. Upon any exercise of an Option and
------------------
payment of the exercise price as provided in such Option, a certificate or
certificates for the Shares as to which such Option has been exercised
shall be issued by the Company in the name of the person or persons
exercising such Option and shall be delivered to or upon the order of such
person or persons.
B. Legends. Certificates for Shares issued upon exercise of an
-------
Option shall bear such legend or legends as the Committee, in its sole
discretion, determines to be necessary or appropriate to prevent a
violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or to implement the provisions of any
agreements between Company and the Participant with respect to such Shares.
C. Payment of Expenses. The Company shall pay all issue or
-------------------
transfer taxes with respect to the issuance or transfer of Shares, as well
as all fees and expenses necessarily incurred by the Company in connection
with such issuance or transfer and with the administration of the Plan.
XIV. Listing of Shares and Related Matters
-------------------------------------
If at any time the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the grant of Options or
15
the award or sale of Shares under the Plan, no Option grant shall be
effective and no Shares will be delivered, as the case may be, unless and
until such listing, registration, qualification, consent or approval shall
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board.
XV. Withholding Taxes
-----------------
The Company shall have the right to require prior to the issuance
or delivery of any shares of Common Stock payment by the Participant of any
Federal, state or local taxes required by law to be withheld.
The Committee may permit any such withholding obligation to be
satisfied by reducing the number of shares of Common Stock otherwise
deliverable. A person required to file reports under Section 16(a) of the
Exchange Act with respect to securities of the Company may elect to have a
sufficient number of shares of Common Stock withheld to fulfill such tax
obligations (hereinafter a "Withholding Election") only if the election
complies with such conditions as are necessary to prevent the withholding
of such shares from being subject to Section 16(b) of the Exchange Act. To
the extent necessary under then current law, such conditions shall include
the following: (x) the Withholding Election shall be subject to the
approval of the Committee and (y) the Withholding Election is made (i)
during the period beginning on the third business day following the date of
release for publication of the quarterly or annual summary statements of
sales and earnings of the Company and ending on the twelfth business day
following such date or is made in advance but takes effect during such
period, (ii) six (6) months before the stock award becomes taxable, or
(iii) during any other period in which a Withholding Election may be made
under the provisions of Rule 16b-3 promulgated under the Act. Any fraction
of a share of Common Stock required to satisfy such tax obligations shall
be disregarded and the amount due shall be paid instead in cash by the
Participant.
16
Exhibit A
---------
STEEL OF WEST VIRGINIA, INC.
OPTION AGREEMENT
PURSUANT TO THE
1995 EMPLOYEE STOCK OPTION PLAN
-------------------------------------
AGREEMENT, dated ____________, 1995 by and between Steel of West Virginia,
Inc. (the "Company") and ___________________ (the "Participant").
Preliminary Statement
---------------------
The Committee of the Board of Directors of the Company (the "Committee"),
pursuant to the Company's 1995 Employee Stock Option Plan, annexed hereto
as Exhibit A (the "Plan"), has authorized the granting to the Participant,
as a Key Employee (as defined in the Plan), of a [nonqualified stock
option] [incentive stock option] (the "Option") to purchase the number of
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), set forth below. The parties hereto desire to enter into this
Agreement in order to set forth the terms of the Option.
Accordingly, the parties hereto agree as follows:
1. Tax Matters. [No part of the Option granted hereby is
-----------
intended to qualify as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").] [The Option
granted hereby is intended to qualify as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").]
2. Grant of Option. Subject in all respects to the Plan and
---------------
the terms and conditions set forth herein and therein, the Participant is
hereby granted the Option to purchase from the Company up to _______ Shares
(as defined in the Plan), at a price per Share of $_________ (the "Option
Price").
3. Vesting. The Option may be exercised by the Participant, in
-------
whole or in part, at any time or from time to time on and after the first
anniversary of the date of grant and prior to the expiration of the Option
as provided herein and in the Plan.
Upon the occurrence of a Change of Control (as defined in the
Plan), the Option shall immediately become exercisable with respect to all
Shares subject thereto, regardless of whether the Option has vested with
respect to such Shares.
4. Termination. Unless terminated as provided in the Plan, the
-----------
Option shall expire on the tenth anniversary of this grant.
5. Restriction on Transfer of Option. Except as provided in
---------------------------------
the Plan with regard to a "qualified domestic relations order" as defined
in Section 414(p) of the Internal Revenue Code, the Option granted hereby
is not transferable otherwise than by will or under the applicable laws of
descent and distribution and during the lifetime of the Participant may be
exercised only by the Participant or the Participant's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or
otherwise), and the Option shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge
or hypothecate the Option, or in the event of any levy upon the Option by
reason of any execution, attachment or similar process contrary to the
provisions hereof, the Option shall immediately become null and void.
6. Rights as a Stockholder. The Participant shall have no
-----------------------
rights as a stockholder with respect to any Shares covered by the Option
until the Participant shall have become the holder of record of the Shares,
and no adjustments shall be made for dividends in cash or other property,
distributions or other rights in respect of any such Shares, except as
otherwise specifically provided for in the Plan.
7. Provisions of Plan Control. This Agreement is subject to
--------------------------
all the terms, conditions and provisions of the Plan, including, without
limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan as may be adopted by
the Committee and as may be in effect from time to time. Any capitalized
term used but not defined herein shall have the meaning ascribed to such
term in the Plan. The annexed copy of the Plan is incorporated herein by
reference. If and to the extent that this Agreement conflicts or is
inconsistent with the terms, conditions and provisions of the Plan, the
Plan shall control, and this Agreement shall be deemed to be modified
accordingly.
8. Notices. Any notice or communication given hereunder shall
-------
be in writing and shall be deemed to have been duly given when delivered in
person, when dispatched by Telegram or one business day after having been
dispatched by a nationally recognized courier service or three business
days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, to the appropriate party
at the address set forth below (or such other address as the party shall
from time to time specify in accordance with Article XII(D) of the Plan.):
If to the Company, to:
Steel of West Virginia, Inc.
17th Street and 2nd Avenue
Huntington, West Virginia 25703
Attention: Chief Financial Officer
2
If to the Participant, to:
the address indicated on the signature page at the end of
this Agreement.
9. No Obligation to Continue Employment. This Agreement does
------------------------------------
not guarantee that the Company or any Designated Subsidiary will employ the
Participant for any specific time period, nor does it modify in any respect
the Company's or any Designated Subsidiary's right to terminate or modify
the Participant's employment or compensation.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
STEEL OF WEST VIRGINIA, INC.
By:
---------------------------------
Authorized Officer
------------------------------------
[PARTICIPANT]
Address:
3
