EXHIBIT  10.5
 
 
 
 
 
 
 
 
 
NORTH AMERICAN GALVANIZING & COATINGS, INC.
 
2004 INCENTIVE STOCK PLAN

(amended and Restated As of October 1, 2006)
 
 
 
 
 
 
 
 
 

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TABLE OF CONTENTS
1
BACKGROUND AND PURPOSE
1
2
DEFINITIONS
1
2.1
Affiliate
1
2.2
Board
2
2.3
Change Effective Date
2
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
5
2.10
Eligible Employee
5
2.11
Fair Market Value
5
2.12
ISO
5
2.13
1933 Act
5
2.14
1934 Act
6
2.15
Non-ISO
6
2.16
Option
6
2.17
Option Certificate
6
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
7
2.24
Stock
7
2.25
Stock Appreciation Right
7
2.26
Stock Appreciation Right Certificate
7
2.27
Stock Grant
7
2.28
Stock Grant Certificate
8
2.29
Stock Unit Grant
8
2.30
Subsidiary
8
 
 
 

 
 

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TABLE OF CONTENTS
 
 
 
2.31
Ten Percent Shareholder
8
3
SHARES AND GRANT LIMITS
8
3.1
Shares Reserved
8
3.2
Source of Shares
9
3.3
Use of Proceeds
9
3.4
Grant Limits
10
3.5
Preexisting Plan
10
4
EFFECTIVE DATE
10
5
COMMITTEE
10
6
ELIGIBILITY AND ANNUAL GRANT CAPS
11
7
OPTIONS
11
7.1
Committee Action
11
7.2
$100,000 Limit
12
7.3
Option Price
12
7.4
Payment
13
7.5
Exercise
13
7.6
Compliance With Section 409A of the Code
14
8
STOCK APPRECIATION RIGHTS
15
8.1
Committee Action
15
8.2
Terms and Conditions
15
8.3
Exercise
17
8.4
Compliance With Section 409A of the Code
17
§ 9
STOCK GRANTS
18
9.1
Committee Action
18
9.2
Conditions
18
9.3
Dividends, Voting Rights and Creditor Status
20
9.4
Satisfaction of Forfeiture Conditions
22
9.5
Income Tax Deduction
22
9.6
Director Stock Unit Program
24

 
 
 

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TABLE OF CONTENTS
 
9.7
Compliance With Section 409A of the Code
24
10
NON-TRANSFERABILITY
26
11
SECURITIES REGISTRATION
26
12
LIFE OF PLAN
27
13
ADJUSTMENT
28
13.1
Capital Structure
28
13.2
Transactions Described in § 424
28
13.3
Fractional Shares
29
13.4
Compliance With Section 409A of the Code
29
14
CHANGE IN CONTROL
30
15
AMENDMENT OR TERMINATION
30
16
MISCELLANEOUS
31
16.1
Shareholder Rights
31
16.2
No Contract of Employment
31
16.3
Withholding
32
16.4
Construction
32
16.5
Other Conditions
32
16.6
Rule 16b-3
33

 
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.  This document is an amendment and
complete restatement of the Plan effective as of October 1, 2006.   
Any grant of an Option or Stock Appreciation Right under this Plan is intended
to meet the requirements under Section 409A of the Code for a non-statutory
stock option, an incentive stock option or a stock appreciation right that does
not provide for a deferral of compensation.  Any Stock Grant or Stock Unit Grant
under this Plan is intended to meet the requirements of Section 409A of the Code
for a short-term deferral that does not provide for a deferral of compensation. 
The provisions of

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the Plan shall be construed to be consistent with the intent that the Plan not
be treated as a plan providing for the deferral of compensation within the
meaning of Section 409A.  The amendments with respect to Section 409A are to be
considered effective as of January 1, 2005.
2
DEFINITIONS
2.1                Affiliate.  – means any organization (other than a
Subsidiary) that would be treated as under common control with the Company under
§ 414(c) of the Code if “50 percent” were substituted for “80 percent” in the
income tax regulations under § 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 ““losing” 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;

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(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 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
§ 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 § 2.4(d)(A) of the

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beneficially owned shares of the successor or survivor corporation and the
number described in § 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 successor or survivor corporation which result from the
beneficial ownership of shares of common stock of the Company by the persons
described in § 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 § 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.

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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 § 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.  Such valuations shall always be determined in
a manner consistent with the requirements of Section 409A of the Code.
2.12              ISO.  – means an option granted under this Plan to purchase
Stock which is intended to satisfy the requirements of § 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 § 422 of
the Code.
2.16              Option.  – means an ISO or a Non-ISO which is granted under §
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.

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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 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
§ 8.
2.24              Stock.  – means the $0.10 par value common stock of the
Company that is readily tradable on an established securities market, or if
none, that class of common stock having the greatest aggregate value of common
stock issued and outstanding.  Under no circumstances shall Stock include stock
that is subject to a mandatory repurchase obligation or a put or call right that
is not a lapse restriction as defined in the regulations under Section 83 of the
Code and that is based on a measure other the Fair Market Value of the equity
interest in the corporation represented by the stock. 

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2.25              Stock Appreciation Right.  – means a right which is granted
under § 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.
2.27              Stock Grant.  – means a grant under Section 9 which is
designed to result in the issuance of the number of shares of Stock described in
the grant (and cash in lieu of any fractional share) after conditions stated in
the Stock Grant Certificate are satisfied. The stock described in the grant may,
in the discretion of the Committee, be issued to the Eligible Employee or
Director before the stock grant becomes non-forfeitable under the terms of the
grant.
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 Section 9 which is
designed to result in the payment of shares of Stock described in the grant (and
cash in lieu of any fractional share) after any conditions stated in the Stock
Grant Certificate are satisfied.
2.30              Subsidiary.  – means a corporation which is a subsidiary
corporation (within the meaning of § 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 § 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.

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3
SHARES AND GRANT LIMITS
3.1                Shares Reserved.  There shall (subject to § 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 § 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 § 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 § 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 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

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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 § 13) more than
100,000 shares of Stock or a Stock Appreciation Right based on the appreciation
with respect to (subject to § 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 § 13) be issued pursuant to Stock Grants or Stock Unit Grants under
§ 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.
3.5                Preexisting Plan.  No grants shall be made under any
Preexisting Plan on or after the date this Plan becomes effective.
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.

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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 § 14 and § 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.
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.
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

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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 (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 § 7.2 in
accordance with § 422(d) of the Code, and the Committee shall treat this § 7.2
as in effect only for those periods for which § 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,

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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 § 7.5(a), an Option Certificate may provide for the 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.
7.6                Compliance With Section 409A of the Code.  The Options
granted under this Plan are intended to be non-statutory stock options or
incentive stock options that do not provide for a deferral of compensation
within the meaning of Section 409A of the Code, and all the provisions of

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this Plan shall be construed accordingly.  As provided in Section 7.3, the
Option Price shall never be less than the Fair Market Value of a share of Stock
on the date the Option is granted.  The transfer or exercise of non-statutory
options will be subject to taxation under Section 83 of the Code.  The Option
will not include any feature for the deferral of compensation beyond the date
the Option is exercised or disposed of or the date the Stock acquired pursuant
to the exercise of the Option first becomes substantially vested within the
meaning of Section 83 of the Code.  Upon exercising the Option, the Option
holder will receive the Stock subject to the Option or payment for the stock as
soon as practicable but in any event on or before the end of the taxable year in
which the Option is exercised or on or before the 15th day of the third month
following the date of  exercise, if later.  No modification of the Option shall
be allowed if the resulting Option would provide for a deferral of compensation
within the meaning of Section 409A of the Code.  No Option holder will be
entitled to receive dividends on the Stock subject to an Option unless the right
to dividends is explicitly set forth in a separate agreement.
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

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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 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

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set forth such other terms and conditions for 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 § 8.3.
8.4                Compliance With Section 409A of the Code.  The Stock
Appreciation Rights granted under this Plan are intended to be stock
appreciation rights that do not provide for a deferral of compensation within
the meaning of Section 409A of the Code, and all the provisions of this Plan
shall be construed accordingly. Compensation payable under the Stock
Appreciation Right cannot, therefore, be greater than the difference between the
Fair Market Value of the Stock on the date of grant and the Fair Market Value of
the Stock on the date the Stock Appreciation Right  is exercised with respect to
a number of shares of Stock fixed on or before the date the Stock Appreciation
right is

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granted.  As provided in Section 8.2, the SAR Value of each share of Stock
subject to a Stock Appreciation Right shall never be less than the Fair Market
Value of a share of Stock on the date the Stock Appreciation Right is granted. 
The Stock Appreciation Right will not include any feature for the deferral of
compensation beyond the date the Stock Appreciation Right is exercised.  Upon
exercising the Stock Appreciation Right, the holder will receive payment
pursuant to the right as soon as practicable but in any event on or before the
end of the taxable year in which the Stock Appreciation Right is exercised or on
or before the 15th day of the third month following the date of exercise, if
later.  No modification of the Stock Appreciation Right shall be allowed if the
resulting Stock Appreciation Right would provide for a deferral of compensation
within the meaning of Section 409A of the Code.  No Stock Appreciation Right
holder will be entitled to receive dividends on the Stock subject to a Stock
Appreciation Right unless the right to dividends is explicitly set forth in a
separate arrangement.
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 the Stock Unit Grant and the conditions under
which the Eligible Employee’s or Director’s interest in any Stock which has been
or may be issued under a Stock Grant will become non-forfeitable.
9.2                Conditions.

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(a)                 Conditions to Issuance of Stock.  The Committee acting in
its absolute discretion may make the issuance of Stock under a Stock Grant or
Stock Unit 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 or Stock Unit 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 issued under a Stock Grant shall be held by
the Company pending the satisfaction of the forfeiture conditions, if any, under
§ 9.2(b) for the related Stock Grant.
(b)                 Conditions on Forfeiture of Stock.  The Committee acting in
its absolute discretion may make any 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 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 § 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

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such share of Stock shall again become available under § 3 as of the date of
such 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 § 9.2(b)
in order for the Company to effect a forfeiture in accordance with this §
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 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 §
9.2(b) as the related Stock Grant.

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(c)                 Other.  If a dividend (other than a dividend described in §
9.3(a) or § 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 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

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than one, performance goal based on the performance goals described in § 9.5(b)
which seems likely to result in the Stock Grant or Stock Unit Grant qualifying
as “performance-based compensation” under § 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.
(b)                 Performance Goals.  A performance goal is described in this
§ 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

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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.
(c)                 Adjustments.  In setting performance goals, the Committee
may exclude from consideration before the performance period begins 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. 
Payment of a Stock Grant or a Stock Unit Grant shall not be conditioned upon the
attainment of a performance goal unless the failure to obtain the goal presents
a substantial risk of forfeiture within the meaning of the regulations under
Section 409A of the Code.
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
consequences, if any, to the Company as a result of Stock Unit Grants made
pursuant to the Director Stock Unit Program.
9.7                Compliance with Section 409A of the Code.  It is intended
that the Stock Grants and Stock Units Grants under this Plan shall not provide
for a deferral of compensation within the meaning of Section 409A of the Code,
and all the provisions of this Plan shall be construed accordingly.  If the
Stock Grant or Stock Unit Grant is not subject to a substantial risk of
forfeiture, as that term is defined in the regulations under Section 409A, the
Stock or cash shall be paid as soon as practicable after the grant is made but
in any event on or before March 15th of the year following the

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year in which the grant is made.  If the Stock Grant or Stock Unit Grant is
subject to a substantial risk of forfeiture, as that term is defined in the
regulations under section 409A, the Stock or cash shall be paid as soon as
practicable after the forfeiture conditions are satisfied but in any event on or
before March 15 of the following year.   Notwithstanding the foregoing, a
payment of Stock or cash will be delayed if the Company reasonably anticipates
that the Company’s income tax deductions with respect to the payment will be
limited by Section 162(m) of the Code.  Any payment so delayed will be made at
the earliest date at which the Company reasonably anticipates the deduction of
the payment will not be limited or the calendar year in which the Eligible
Employee or Director separates from service.  In addition, a payment of Stock or
cash will be delayed if the Company reasonably anticipates that the making of
the payment will violate a term of a loan agreement to which the Company is a
party, or other similar contract to which the Company is a party if such
violation will cause material harm to the Company.  Any payment so delayed will
be made at the earliest date at which the Company reasonably anticipates that
the payment will not cause such violation or that the violation will not cause
material harm to the Company.  In addition, a payment of Stock or cash will be
delayed if the Company reasonably anticipates that the payment will violate
Federal securities laws or other applicable law.  Any payment so delayed will be
paid at the earliest date at which the Company reasonably anticipates that the
payment will not cause such a violation.  Finally, the Company may delay a
payment upon such other events and conditions as the Internal Revenue Service
may prescribe in generally applicable guidance.  No modification of the Stock
Grant or Stock Unit Grant shall be allowed if the resulting Stock Grant or Stock
Unit Grant would provide for a deferral of compensation within the meaning of
Section 409A of the Code. 

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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.
 
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 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.
 
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:

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(1)                 the tenth anniversary of the effective date of this Plan (as
determined under § 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
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 § 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.
13

ADJUSTMENTS
13.1              Capital Structure.  The number, kind or class (or any
combination thereof) of shares of Stock reserved under § 3, the grant caps
described in § 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 § 424.  The Committee as part of any
corporate transaction described in § 424(a) of the Code shall adjust (in any
manner which the Committee in its discretion

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deems consistent with § 424(a) of the Code) the number, kind or class (or any
combination thereof) of shares of Stock reserved under § 3 and the annual grant
caps described in § 3.  Furthermore, the Committee as part of any corporate
transaction described in § 424(a) of the Code shall adjust (in any manner which
the Committee in its discretion deems consistent with § 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 (in any manner which the Committee in its discretion deems
consistent with § 424(a) of the Code and without regard to the annual grant caps
described in § 3 of this Plan) 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 § 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 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 § 13 by the Committee shall
be conclusive and binding on all affected persons.

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13.4              Compliance With Section 409A of the Code.  Notwithstanding any
other provision in this Section 13, no adjustments shall be made in the
provisions of any award under this plan if the adjustment would cause the award
to be subject to the compensation deferral rules of Section 409A.
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 § 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 § 14 only to the extent of such target unless such
target has been exceeded before the Change Effective Date, in which event such
issuance or forfeiture condition shall be deemed satisfied to the extent such
target had been so exceeded.
 
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 § 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 § 13.2 or § 14.

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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 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 § 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.

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16.4              Construction.  All references to sections (§) are to sections
(§) of this Plan unless otherwise indicated.  This Plan shall be construed under
the laws of the State of Delaware.  Each term set forth in § 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.

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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/ Beth B. Hood, Secretary
Date: September  29, 2006

 

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