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SYNALLOY CORPORATION

 
2011 Long-Term Incentive Stock Option Plan

1.
Purpose.  This 2011 Long-Term Incentive Stock Option Plan (the “2011 Plan”) is
intended to provide key executive employees of Synalloy Corporation (the
“Company,” which term shall include Synalloy Corporation and any of its
affiliates or subsidiaries) with the opportunity to participate in the Company’s
future prosperity and growth by purchasing stock of the Company.  The purpose of
the 2011 Plan is to provide long-term incentive for gain through outstanding
service to the Company and its shareholders and to assist in attracting and
retaining executives of ability and initiative.

2.
Administration.  The 2011 Plan shall be administered by the Compensation & Long
Term Incentive Committee (the “Committee”) which shall consist of three members
of the Company’s Board of Directors who are Non-Employee Directors.  Members of
the Committee are not eligible to participate in the 2011 Plan (or any other
option or incentive plan of the Company) while serving on the Committee, nor
shall they have been so eligible for the twelve (12) months immediately
preceding such appointment.  A Non-Employee Director shall mean a director who
(1) is not currently an officer of the Company (as defined in 17 CFR §
240.16a-1(f)) or a parent or subsidiary of the Company, or otherwise currently
employed by the Company or a parent or subsidiary of the Company; (2) does not
receive compensation, either directly or indirectly, from the Company or a
parent or subsidiary of the Company, for services rendered as a consultant or in
any capacity other than as a director, except for an amount that does not exceed
the dollar amount for which disclosure would be required pursuant to 17 CFR
§ 229.404(a); (3) does not possess an interest in any other transaction for
which disclosure would be required pursuant to 17 CFR § 229.404(a); and (4) is
not engaged in a business relationship for which disclosure would be required
pursuant to 17 CFR § 229.404(b).

The Committee shall have complete authority and discretion to interpret all
provisions of this Plan consistent with law, to prescribe the form of
instruments evidencing the stock options granted under the 2011 Plan, to adopt,
amend, and rescind general and special rules and regulations for its
administration, and to make all other determinations necessary or advisable for
the administration of the 2011 Plan.  No member of the Committee shall be liable
for any action or determination in respect thereto, if made in good faith, and
shall be entitled to indemnification by the Company with respect to all matters
arising from his service on the Committee to the fullest extent allowable under
applicable law.
 

3.
Eligibility.  Any salaried employee of the Company who in the judgment of the
Committee occupies a management position in which his efforts contribute to the
profit and growth of the Company may be granted one or more options under the
2011 Plan.  The Committee will designate employees to whom options are to be
granted; will designate options granted under the 2011 Plan as Incentive Stock
Options (“ISOs”) as defined in Section 422(b) of the Internal Revenue Code of
1986, as amended (the “Code”); and will specify the number of shares subject to
each option.  Options not designated as ISOs shall be Non-Qualified Options
(“NQOs”).  The Committee shall have the discretion to determine to what extent,
if any, persons employed on a part-time or consulting basis will be eligible to
participate in the 2011 Plan; provided however, that an employee who,
immediately before an option is granted, owns more than 10% of the combined
voting power of the Company, shall not be eligible for the grant of an ISO
unless such grant complies with the requirements of Section 422(c)(5) of the
Code.

4.
Stock.  There shall be reserved for the granting of awards pursuant to the 2011
Plan, and for issuance and sale pursuant to such awards, 350,000 shares of the
Company’s common stock of the par value of $1.00 per share (the “common
stock”).  The maximum number of shares of common stock that may be issued in
connection with options intended to be ISOs shall be 350,000 shares.  The
limitations set forth in this paragraph are subject to adjustment to reflect any
change in the capitalization of the Company, as more fully provided in Section
10 hereof.  The Committee will maintain records showing the cumulative total of
all shares subject to options outstanding under this Plan.

If for any reason shares of common stock as to which an award has been made are
forfeited or otherwise cease to be subject to purchase hereunder, then such
shares of common stock again shall be available for issuance in connection with
awards made pursuant to the 2011 Plan.
 
 
5.
Grant of Options.  The Committee, at any time, during the duration of the 2011
Plan, may authorize the granting of options to employees of the Company eligible
under Section 3 hereof, subject to the limitations provided herein.  Any such
grant shall be made pursuant to the terms of a grant award agreement.  The date
on which an option shall be granted shall be the date the Committee authorizes
such grant or such later date as may be determined by the Committee at the time
such grant is authorized.  Any employee may hold more than one option.

 
 
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6.
Option Price.  The price per share for shares purchased upon the exercise of any
option granted under the 2011 Plan will be one hundred percent (100%) of the
fair market value per share of such shares on the date of grant of the
option.  Payment shall be made to the Company either (i) in cash or, (ii), at
the discretion of the Committee, (a) by delivery to the Company of shares of
common stock owned by the option holder and having a fair market value on the
date of exercise equal to the fair market value of the shares covered by the
option on the date of the grant of the option, or (b) a combination of cash and
the value of such shares mentioned in (a) above.  As used in this Plan, “fair
market value” per share of the common stock shall mean the average of the
highest and lowest selling prices of the common stock on the day before the date
of the grant as reported on NASDAQ Global Market (or such other exchange or
market on which such value is being determined) or, if the exchange shall be
closed on that date, then on the last preceding date on which the exchange was
open for trading, or, if there were no sales reported on said date, then the
mean between the bid and ask prices on said date.  In determining fair market
value, the Committee may rely upon sales information reported on the
consolidated tape or other consolidated reporting system and, in the absence of
any sale or sales on the dates referred to in the preceding sentence, or a
recognized market for the Company’s common stock, the Committee may determine
fair market value by whatever recognized method it deems appropriate.

7.
Exercise of Options.  Options granted under the 2011 Plan shall be exercisable
only in the following manner; provided, however, that in no event shall an
option be exercisable more than ten years after the date of grant as set forth
in paragraph 5 above.

A.  
By an Employee During Continuous Employment.  The aggregate fair market value of
the shares of the Company’s common stock, as determined at the time of grant, as
to which ISOs are exercisable for the first time by an employee during any
calendar year shall not exceed the maximum amount permitted by Section 422(d) of
the Code, which is $100,000.00 as of the effective date of this Plan.  Options
may be granted in excess of this threshold, but such options shall be NQOs and
shall not qualify as ISOs under Section 422(b) of the Code.  Subject to this
limitation, an employee may exercise any option during the applicable Exercise
Periods in accordance with the following schedule:

B.  
 

 
 
 
Time from Grant Date
(Exercise Period)
Percentages of Options
Granted Which may be
Exercisable in that Exercise
Period (including those
previously exercised)
Up to One Year
0%
One to Two Years
20%
Two to Three Years
40%
Three to Four Years
60%
Four to Five Years
80%
Five to Ten Years
100%

An employee may not exercise any part of an option granted under this Plan
unless, at the time of such exercise, he has been in the continuous employment
of the Company since the date the option was granted.  The Committee may decide
in each case to what extent leaves of absence for government or military
service, illness, temporary disability, or other reasons shall not for this
purpose be deemed interruptions of continuous employment.
 

C.  
By a Former Employee.  No person may exercise an option after he ceases to be an
employee of the Company unless he ceases to be an employee of the Company as a
result of normal retirement, early retirement, or disability retirement, either
physical or mental, or on account of physical or mental disability.  In these
instances, the option may be exercised by him, his attorney-in-fact, or his
guardian, as appropriate within three months after cessation of employment (or
12 months in the case of “disability” as defined in Section 22(e)(3) of the
Code), but not later than the end of the fixed term of the option.

D.  
In Case of Death.  If any employee or former employee who was granted an option
dies, and at the time of death was entitled to exercise any option granted under
this Plan, pursuant to subsections A and B above, the option may be exercised
within six (6) months after the death of the employee or former employee (but no
later than the end of the fixed term of the option) by his estate, or by a
person who acquired the right to exercise the option by bequest or inheritance.

 
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E.  
Sale or Merger.  Notwithstanding the limitation on the Exercise Period set forth
in Section 7.A. above (except as pertains to the $100,000 per year limitation
regarding ISOs), an employee may exercise all options then exercisable by him as
provided for in Section 7.A. above plus one-hundred percent (100%) of the
options granted to him but which are not then exercisable because the requisite
time from the date of grant has not lapsed in the event that either (i) all or
substantially all of the assets or common stock of the Company (or a subsidiary
or division of the Company in which he is employed) is sold to an entity not
affiliated with the Company, (ii) a merger or share exchange with an
unaffiliated party occurs in which the Company is not the surviving entity or
(iii) a similar sale or exchange transaction occurs which in the Committee’s
sole discretion justifies such exercise right.

8.
Method of Exercise.  Each option granted under the 2011 Plan shall be deemed
exercised when the holder shall so notify the Company in writing, addressed to
the Company’s secretary, together with payment in full for the shares for which
the option is exercised, and tender of any related agreements or instruments, as
required by the Committee, and shall comply with such other reasonable
requirements as the Committee may establish pursuant to Section 2 of the 2011
Plan.  However, this provision shall not preclude exercise of, or payment for,
an option by any other proper method specifically approved by the Committee.  No
person, estate, or other entity shall have or exercise any of the rights of a
shareholder with reference to shares subject to an option until a certificate or
certificates for the shares has been duly issued and delivered.

An option granted under this Plan may be exercised for any lesser number of
shares than the full amount for which it could be exercised.  Such a partial
exercise of an option shall not affect the right to exercise the option from
time to time in accordance with the 2011 Plan for the remaining shares subject
to the option.

9.
Assignability.  Options granted under the 2011 Plan to an employee shall not be
transferable by him except by will or the laws of descent and distribution.  In
the case of the exercise of an option by a person or estate acquiring the right
to exercise the option by bequest or inheritance, the Committee may require
reasonable evidence as to the ownership of the option and may require consents
and releases of taxing authorities that it may deem advisable.

10.
Adjustment upon Change of Shares.  In the event of a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering or other event affecting
shares of the Company, the number and class of shares for which options may
thereafter be granted, the number and class of shares then subject to options
previously granted and the price per share payable upon exercise of such options
shall be equitably adjusted by the Committee to reflect the change.

11.
Compliance with Law and Approval of Regulatory Bodies.  No option shall be
exercisable and no shares shall be delivered under the 2011 Plan except in
compliance with all applicable Federal and state laws and regulations including,
without limitation, compliance with applicable withholding tax requirements and
with the rules of all domestic stock exchanges on which the Company’s shares may
be listed.  Any share certificate issued to evidence shares may be listed on any
domestic stock exchange authorized by the Company.  Any share certificate issued
to evidence shares for which an option is exercised may bear legends and
statements, and be subject to such restrictions, as the Company shall deem
advisable to assure compliance with Federal and state laws and regulations.  No
options shall be exercisable, and no shares will be delivered under the 2011
Plan, until the Company has obtained such consents or approvals from regulatory
bodies, Federal or state, having jurisdiction over such matters as the Company
may deem advisable.

12.
General Provisions.  Neither the adoption of the 2011 Plan nor its operation,
nor any document describing or referring to the 2011 Plan, or any part thereof,
shall confer upon any employee any right to continue in the employ of the
Company or any subsidiary, or shall in any way affect the right and power of the
Company to terminate the employment of any employee at any time with or without
assigning a reason therefor to the same extent as the Company might have done if
the 2011 Plan had not been adopted.

13.
Effective Date of the 2011 Plan.  This Plan was adopted by the Board of
Directors of the Company effective January 24, 2011 which will be the effective
date of the 2011 Plan if and when approved by shareholders holding a majority of
the Company’s outstanding shares of common stock entitled to vote on the 2011
Plan at the Annual Meeting of Shareholders in 2011.

 
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14.
Amendment to the 2011 Plan.  The Board of Directors of the Company may alter,
amend, or terminate the 2011 Plan from time to time.  Such action by the Board
of Directors, however, will not be effective to change or modify the 2011 Plan,
unless approved by shareholders holding a majority of the Company’s outstanding
shares of common stock, if such changes or modifications in the 2011 Plan would:

 
A.  
Increase the total number of shares of stock that may be issued pursuant to the
2011 Plan, except as contemplated in Section 10;

 
B.  
Change the manner of determining the option price;

 
C.  
Assign the administration of the 2011 Plan otherwise than to a committee of the
Board of Directors;

 
D.  
Change the eligibility requirements for participation in the 2011 Plan, or

 
E.  
Extend the term of this Plan.

 

15.
Duration of the 2011 Plan.  Unless previously terminated by the Board of
Directors, the 2011 Plan shall be effective for a period of ten years from the
effective date of the 2011 Plan, and no option shall be granted after such
date.  Options granted before that date shall remain valid thereafter in
accordance with their terms.

 
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