Document:

Ex-10.3

 

Exhibit 10.3

NONSTATUTORY STOCK OPTION

_________, Optionee:

     PSYCHIATRIC SOLUTIONS, INC. (the “Company”), pursuant to its Amended and Restated Equity
Incentive Plan (the “Plan”), has granted to you, the optionee named above, an option to purchase
shares of the common stock of the Company (“Common Stock”). This option is not intended to
qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

     The grant hereunder is in connection with and in furtherance of the Company’s compensatory
benefit plan for participation of the Company’s employees (including officers), directors or
consultants. Defined terms not explicitly defined in this agreement but defined in the Plan shall
have the same definitions as in the Plan.

     The details of your option are as follows:

     1. Number Of Shares Subject To This Option And Exercise Price. The total number of
shares of Common Stock subject to this option is ___. The exercise price of this option is
$  _________ per share.

     2. Vesting. Subject to the limitations contained herein, 25% of the shares will vest
(become exercisable) on each anniversary of the date of grant, beginning on ___, 200_, until
either (i) you cease to provide services to the Company for any reason, or (ii) this option becomes
fully vested.

     3. Method Of Payment.

          (a) Method of Payment. Payment of the exercise price per share is due in full upon exercise of
all or any part of this option. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following alternatives:

               i. Payment of the exercise price per share in cash (including check) at the time of exercise;

               ii. With the prior approval of the Committee, payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board and in accordance with the rules and
regulations of the Securities and Exchange Commission which, prior to the issuance of Common Stock,
results in either the receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales proceeds;

               iii. Provided that at the time of exercise the Company’s Common Stock is publicly traded and
quoted regularly in the Wall Street Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the

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Company’s reported earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market value on the date of
exercise; or

               iv. Payment by a combination of the methods of payment permitted by subparagraph 3(b)(i)
through 3(b)(iii) above.

     4. Whole Shares. This option may only be exercised for whole shares.

     5. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, this option may not be exercised unless the shares issuable upon exercise of this option
are then registered under the Securities Act or, if such shares are not then so registered, the
Company has determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act.

     6. Term. The term of this option commences on ___, 200_, the date of grant, and
expires on ___, 201_ (the “Expiration Date”), which date shall be no more than ten (10) years
from date this option is granted, unless this option expires sooner as set forth below or in the
Plan. In no event may this option be exercised on or after the Expiration Date. This option shall
terminate prior to the Expiration Date as follows: three (3) months after the termination of your
provision of services as an employee, director or consultant with the Company or an Affiliate of
the Company unless one of the following circumstances exists:

          (a) Your termination of provision of services as an employee, director or consultant is due to
your disability. This option will then expire on the earlier of the Expiration Date set forth above
or twelve (12) months following such termination of provision of services as an employee, director
or consultant.

          (b) Your termination of provision of services as an employee, director or consultant is due to
your death. This option will then expire on the earlier of the Expiration Date set forth above or
twelve (12) months after your death.

          (c) If during any part of such three-month period you may not exercise your option solely
because of the condition set forth in paragraph 5 above, then your option will not expire until the
earlier of the Expiration Date set forth above or until this option shall have been exercisable for
an aggregate period of three (3) months after your termination of provision of services as an
employee, director or consultant.

          (d) If your exercise of the option within three (3) months after termination of your provision
of services as an employee, director or consultant with the Company or with an Affiliate of the
Company would result in liability under Section 16(b) of the Securities Exchange Act of 1934, then
your option will expire on the earlier of (i) the Expiration Date set forth above, (ii) the tenth
(10th) day after the last date upon which exercise would result in such liability or (iii) six (6)
months and ten (10) days after the termination of your provision of services as an employee,
director or consultant with the Company or an Affiliate of the Company.

     This option may be exercised following your termination of provision of services as an
employee, director or consultant only as to that number of shares as to which it was exercisable

2

 

on the date of your termination of provision of services as an employee, director or
consultant under the provisions of paragraph 2 of this option.

     7. Exercise.

          (a) This option may be exercised, to the extent specified above, by delivering a notice of
exercise (in a form designated by the Company) together with the exercise price to the Secretary of
the Company, or to such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant to the Plan.

          (b) By exercising this option you agree that, as a precondition to the completion of any
exercise, the Company may require you to enter an arrangement providing for the payment by you to
the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise
of this option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject
at the time of exercise; or (3) the disposition of shares acquired upon such exercise. You also
agree that the exercise of this option has not been completed and that the Company is under no
obligation to issue any shares of Common Stock to you until such an arrangement is established or
the Company’s tax withholding obligations are satisfied, as determined by the Company.

     8. Transferability. This option is not transferable, except by will or by the laws
of descent and distribution, and is exercisable during your life only by you. Notwithstanding the
foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you
may designate a third party who, in the event of your death, shall thereafter be entitled to
exercise this option.

     9. Option Not A Service Contract. This option is not an employment contract and
nothing in this option shall be deemed to create in any way whatsoever any obligation on your part
to continue in the employ of the Company, or of the Company to continue your employment with the
Company. In addition, nothing in this option shall obligate the Company or any Affiliate of the
Company, or their respective shareholders, Board of Directors, officers or employees to continue
any relationship which you might have as a Director or Consultant for the Company or Affiliate of
the Company.

     10. Notices. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the address specified below or at such other address as you hereafter designate
by written notice to the Company.

     11. Governing Plan Document. This option is subject to all the provisions of the
Plan, a copy of which is attached hereto and its provisions are hereby made a part of this option
and is further subject to all interpretations, amendments, rules and regulations which may from
time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between
the provisions of this option and those of the Plan, the provisions of the Plan shall control.

3

 

     Dated
the ___ day of ___, 200____.

	 	 	 	 	 
	 	Very truly yours,

PSYCHIATRIC SOLUTIONS, INC.

 	 
	 	By:  	 	 
	 	 	Duly authorized on behalf 	 
	 	 	of the Board of Directors 	 
	 

ATTACHMENTS:

     Equity Incentive Plan

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The undersigned:

     (a) Acknowledges receipt of the foregoing option and the attachments referenced therein and
understands that all rights and liabilities with respect to this option are set forth in the option
and the Plan; and

     (b) Acknowledges that as of the date of grant of this option, it sets forth the entire
understanding between the undersigned optionee and the Company and its Affiliates regarding the
acquisition of stock in the Company and supersedes all prior oral and written agreements on that
subject with the exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:

	 	 	 	 	 	 	 
		 	
None
	 	 	 	
	 	 	
	 	 

 
	 	 
	 	 	
	 	(Initial)	 	 
	 	 	
Other	 	 	 	 
	 	 	
	 	 

 
	 	 
	 	 	
	 	 

 
	 	 
	 	 	
	 	 

 
	 	 
	 	 	 	 	 	 	 

	 	 	 
		 	
 

 

Optionee
	 	 	
 

 

Address
	 	 	
 

 

	 	 	
 

 

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NOTICE OF EXERCISE

Psychiatric Solutions, Inc.

6640 Carothers Parkway

Suite 500

Franklin, TN 37067

Date of Exercise: __________

Ladies and Gentlemen:

     This constitutes notice under my stock option that I elect to purchase the number of shares
for the price set forth below.

	 	 	 
	Type of option:

	 	Nonstatutory
	 
	 	 
	Stock option dated:

	 	______
	 
	 	 
	Number of shares as to which option is exercised:

	 	______
	 
	 	 
	Certificates to be issued in name of:

	 	______
	 
	 	 
	Total exercise price:

	 	$______
	 
	 	 
	Cash payment delivered herewith:

	 	$______
	 
	 	 
	Value of shares of common stock delivered herewith1:

	 	$______

     By this exercise, I agree (i) to provide such additional documents as you may require pursuant
to the terms of the Company’s Amended and Restated Equity Incentive Plan and (ii) to provide for
the payment by me to you (in the manner designated by you) of your withholding obligation, if any,
relating to the exercise of this option.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	  	 	 
	 	 	 	 
	 	 	 	 
	 

 

			
	1	 	Shares must meet the public trading
requirements set forth in the option. Shares must be valued in accordance with
the terms of the option being exercised, must have been owned for the minimum
period required in the option, and must be owned free and clear of any liens,
claims, encumbrances or security interests. Certificates must be endorsed or
accompanied by an executed assignment separate from certificate.

6EX-10.21

 

EXHIBIT 10.21

OLYMPIC STEEL, INC.

2007 OMNIBUS INCENTIVE PLAN

ARTICLE 1

General Purpose of Plan; Definitions

     1.1 Name and Purposes. The name of this Plan is the Olympic Steel, Inc. 2007 Omnibus
Incentive Plan. The purpose of this Plan is to enable Olympic Steel, Inc. and its Affiliates to (i)
attract and retain skilled and qualified officers, other employees, directors and consultants who
are expected to contribute to the Company’s success by providing long-term incentive compensation
opportunities competitive with those made available by other companies, (ii) motivate Plan
participants to achieve the long-term success and growth of the Company, (iii) facilitate ownership
of shares of the Company and (iv) align the interests of the Plan participants with those of the
Company’s public Shareholders.

     1.2 Certain Definitions. Unless the context otherwise indicates, the following words used
herein shall have the following meanings whenever used in this instrument:

     (a) The word “Affiliate” means any corporation, partnership, joint venture or other
entity, directly or indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with the Company as determined by the Board of Directors in its
discretion.

     (b) The word “Award” means any grant under this Plan of a Stock Option, Stock
Appreciation Right, Restricted Shares, Restricted Share Units, Performance Shares,
Cash-Based Awards or Other Stock-Based Awards to any Plan participant.

     (c) The words “Board of Directors” mean the Board of Directors of the Company, as
constituted from time to time.

     (d) The words “Cash-Based Award” mean an Award, denominated in cash, granted to a
Participant as described in Article 10.

     (e) The word “Code” means the Internal Revenue Code of 1986, as amended, and any lawful
regulations or pronouncements promulgated thereunder. Whenever reference is made to a
specific Code section, such reference shall be deemed to be a reference to any successor
Code section or sections with the same or similar purpose.

     (f) The word “Committee” means the entity administering this Plan as provided in
Section 2.1 hereof or, if none has been appointed, then the Board of Directors as a whole.

     (g) The words “Common Shares” mean the Common Stock, without par value, of the Company.

 

 

     (h) The word “Company” means Olympic Steel, Inc., a corporation organized under the
laws of the State of Ohio and any successor corporation or business organization which shall
assume the duties and obligations of Olympic Steel, Inc. under this Plan.

     (i) The words “Date of Grant” mean the date on which the Committee grants an Award or a
future date that the Committee designates at the time of the Award.

     (j) The word “Director” means a member of the Board of Directors.

     (k) The word “Disability” means a medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period
of not less than 12 months and which results in the Participant: (i) being unable to engage
in any substantial gainful activity; or (ii) receiving income replacement benefits for a
period of not less than three (3) months under an accident or health plan covering employees
of the Company.

     (l) The words “Early Retirement” mean a participant’s retirement from active employment
with the Company or an Affiliate on and after the attainment of age 55.

     (m) The words “Eligible Director” mean a Director of the Company who is entitled to
participate in the Plan pursuant to Section 4.1.

     (n) The acronym “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended and any lawful regulations or pronouncements promulgated thereunder. Whenever
reference is made to a specific ERISA Section, such reference shall be deemed to be a
reference to any successor, ERISA Section or Sections with the same or similar purpose.

     (o) The words “Exchange Act” mean the Securities Exchange Act of 1934, as amended, and
any lawful regulations or pronouncements promulgated thereunder.

     (p) The words “Exercise Price” mean the purchase price of a Share covered by a Stock
Option.

     (q) The words “Fair Market Value” mean the last closing price of a Share as reported on
The Nasdaq Stock Market, or, if applicable, on another national securities exchange on which
the Common Shares are principally traded, on the date for which the determination of fair
market value is made, or, if there are no sales of Common Shares on such date, then on the
most recent immediately preceding date on which there were any sales of Common Shares on
such principal trading exchange. If the Common Shares are not or cease to be traded on The
Nasdaq Stock Market or another national securities exchange, the “Fair Market Value” of
Common Shares shall be determined in the manner prescribed by the Committee.
Notwithstanding the foregoing, as of any date, the “Fair Market Value” of Common Shares
shall be determined in a manner consistent with Code Section 409A and the guidance then
existing thereunder.

     (r) The words “Incentive Stock Option” and the acronym “ISO” mean a Stock Option that
is clearly identified as such and which meets the requirements of Section 422 of the Code,
or any successor provision, and therefore qualifies for favorable tax treatment.

 

 

     (s) The words “Non-Qualified Stock Option” and the acronym “NQSO” mean a Stock Option
that: (i) is governed by Section 83 of the Code; and (ii) does not meet the requirements of
Section 422 of the Code.

     (t) The words “Normal Retirement” mean retirement from active employment with the
Company or an Affiliate on or after the age of 65.

     (u) The words “Other Stock-Based Award” mean an equity-based or equity-related Award
not otherwise described in this Plan, granted pursuant to Article 10.

     (v) The words “Outside Director” mean a Director who meets the definitions of the terms
“outside director” set forth in Section 162(m) of the Code, “independent director” set forth
in The Nasdaq Stock Market, Inc. rules, and “non-employee director” set forth in Rule 16b-3
under the Exchange Act, or any successor definitions adopted by the Internal Revenue
Service, The Nasdaq Stock Market, Inc. and Securities and Exchange Commission, respectively,
and similar requirements under any other applicable laws and regulations.

     (w) The word “Parent” means any corporation which qualifies as a “parent corporation”
of the Company under Section 424(e) of the Code.

     (x) The words “Performance Shares” are defined in Article 9.

     (y) The word “Plan” means this Olympic Steel, Inc. 2007 Omnibus Incentive Plan, as
amended from time to time.

     (z) The acronym “QDRO” means a qualified domestic relations order as defined by the
Code.

     (aa) The word “Retirement” means Normal Retirement or Early Retirement.

     (bb) The words “Restricted Shares” are defined in Article 8.

     (cc) The words “Restricted Share Units” are defined in Article 8.

     (dd) The word “Share” or “Shares” means one or more of the Common Shares.

     (ee) The word “Shareholder” means an individual or entity that owns one or more Shares.

     (ff) The words “Stock Appreciation Rights” and the acronym “SAR” mean any right
pursuant to an Award granted under Article 7.

     (gg) The words “Stock Option” mean any right to purchase a specified number of Shares
at a specified price which is granted pursuant to Article 5 herein and may be an Incentive
Stock Option, a Non-Qualified Stock Option.

     (hh) The words “Stock Power” mean a power of attorney executed by a participant and
delivered to the Company which authorizes the Company to transfer

 

 

ownership of Restricted
Shares, Performance Shares or Shares from the participant to the Company or a third party.

     (ii) The word “Subsidiary” means any corporation which qualifies as a “subsidiary
corporation” of the Company under Section 424(f) of the Code.

     (jj) The word “Vested” means that the time has been reached, with respect to Stock
Options, when the option to purchase Shares first becomes exercisable; with respect to Stock
Appreciation Rights, when the Stock Appreciation Right first becomes exercisable for
payment; with respect to Restricted Shares, when the Shares are no longer subject to
forfeiture and restrictions on transferability, with respect to Restricted Share Units,
Performance Shares, and Other Stock-Based Awards, when the units are no longer subject to
forfeiture and are convertible to Shares; and with respect to Cash-Based Awards when the
payment of a cash amount is non-forfeitable. The words “Vest” and “Vesting” have meanings
correlative to the foregoing.

ARTICLE 2

Administration

     2.1 Authority and Duties of the Committee.

     (a) The Plan shall be administered by a Committee of not less than three Directors who
are appointed by the Board of Directors and serve at its pleasure. Unless otherwise
determined by the Board of Directors, the Compensation Committee shall serve as the
Committee, and all of the members of the Committee shall be Outside Directors.
Notwithstanding the requirement that the Committee consist exclusively of Outside Directors,
no action or determination by the Committee or an individual considered to be an Outside
Director shall be deemed void because a member of the Committee or such individual fails to
satisfy the requirements for being an Outside Director, except to the extent required by
applicable law.

     (b) The Committee has the power and authority to grant Awards pursuant to the terms of
this Plan to officers, other employees, Eligible Directors and consultants.

     (c) In particular, the Committee has the authority, subject to any limitations
specifically set forth in this Plan, to:

     (i) select the officers, employees, Eligible Directors and consultants to whom
Awards are granted;

     (ii) determine the types of Awards granted and the timing of such Awards;

     (iii) determine the number of Shares to be covered by each Award granted
hereunder;

 

 

     (iv) determine whether an Award is, or is intended to be, “performance-based
compensation” within the meaning of Section 162(m) of the Code;

     (v) determine the other terms and conditions, not inconsistent with the terms
of this Plan and any operative employment or other agreement, of any Award granted
hereunder; such terms and conditions include, but are not limited to, the exercise
price, the time or times when Options or Stock Appreciation Rights may be exercised
(which may be based on performance objectives), any vesting, acceleration or waiver
of forfeiture restrictions, any performance criteria (including any performance
criteria as described in Section 162(m)(4)(C) of the Code) applicable to an Award,
and any restriction or limitation regarding any Option or Stock Appreciation Right or
the Common Shares relating thereto, based in each case on such factors as the
Committee, in its sole discretion, shall determine;

     (vi) determine whether any conditions or objectives related to Awards have been
met, including any such determination required for compliance with Section 162(m) of
the Code;

     (vii) subsequently modify or waive any terms and conditions of Awards, not
inconsistent with the terms of this Plan and any operative employment or other
agreement;

     (viii) determine whether, to what extent and under what circumstances, Shares
and other amounts payable with respect to any Award are deferred either automatically
or at the election of the participant;

     (ix) adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan as it deems advisable from time to time;

     (x) promulgate such administrative forms as they from time to time deem
necessary or appropriate for administration of the Plan;

     (xi) construe, interpret and implement the terms and provisions of this Plan,
any Award and any related agreements;

     (xii) correct any defect, supply any omission and reconcile any inconsistency
in or between the Plan, any Award and any related agreements; and

     (xiii) otherwise supervise the administration of this Plan.

     (d) All decisions made by the Committee pursuant to the provisions of this Plan are
final and binding on all persons, including the Company, its Shareholders and Plan
participants, but may be made by their terms subject to ratification or approval by the
Board of Directors, another committee of the Board of Directors or Shareholders.

     2.2 Delegation of Authority. The Committee may delegate its powers and duties under this
Plan to the Chief Executive Officer of the Company, subject to applicable law and such terms,
conditions and limitations as the Committee may establish in its sole discretion; provided,

 

 

however, that the Committee may not delegate its powers and duties under this Plan with regard to
Awards to the Company’s executive officers or any participant who is a “covered employee” as
defined in Section 162(m) of the Code or a Director. The Company shall furnish the Committee with
such clerical and other assistance as is necessary for the performance of the Committee’s duties
under the Plan. In addition, the Committee may delegate ministerial duties to any other person or
persons, and it may employ attorneys, consultants, accountants or other professional advisers.

ARTICLE 3

Stock Subject to Plan

     3.1 Total Shares Limitation. Subject to the provisions of this Article 3, the maximum number
of Shares that may be issued pursuant to Awards granted under this Plan is 500,000 Shares, which
may be newly-issued Shares or Shares that have been reacquired in the open market or in private
transactions.

     3.2 Other Limitations.

     (a) ISO Limitations. The maximum number of Shares available with respect to all Stock
Options granted under this Plan that may be Incentive Stock Options is 500,000 Shares.

     (b) Participant Limitation. The aggregate number of Shares underlying Awards granted
under this Plan to any one participant in any fiscal year, regardless of whether such Awards
are thereafter canceled, forfeited or terminated, shall not exceed 50,000 Shares. The
maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one
Participant in any fiscal year may not exceed $3,000,000.00. The foregoing annual
limitations are intended to include the grant of all Awards, including but not limited to,
Awards representing “performance-based compensation” as described in Section 162(m)(4)(C) of
the Code.

     3.3 Awards Not Exercised. In the event any outstanding Award, or portion thereof, expires,
or is terminated, canceled or forfeited, the Shares that would otherwise be issuable with respect
to the unexercised portion of such expired, terminated, canceled or forfeited Award shall be
available for subsequent Awards under this Plan.

     3.4 Dilution and Other Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other securities or other
property), recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under this Plan, then the Committee may, in such manner as it deems equitable, adjust any
or all of (i) the number and type of Shares (or other securities or other property) which
thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other
securities or other property) subject to outstanding Awards,

 

 

(iii) the limitations set forth above
and (iv) the purchase or exercise price or any performance objective with respect to any Award;
provided, however, that the number of Shares or other securities covered by any Award or to which
such Award relates is always a whole number. Notwithstanding the foregoing, the foregoing
adjustments shall be made in compliance with: (i) Sections 422 and 424 of the Code with respect to
ISOs; (ii) Section 162(m) of the Code with respect to Performance Share Awards unless specifically
determined otherwise by the Committee; (iii) Section 409A of the Code, to the extent the Committee
determines it is necessary to avoid its application or avoid adverse tax consequences thereunder.

ARTICLE 4

Participants

     4.1 Eligibility. Officers, all other regular active employees of the Company or any of its
Affiliates, Eligible Directors and consultants to the Company or any of its Affiliates are eligible
to participate in this Plan. The Plan participants shall be selected from time to time by the
Committee in its sole discretion, or, with respect to employees other than executive officers or
participants who are “covered employees” as defined in Section 162(m) of the Code, by the Chief
Executive Officer in his sole discretion with proper delegation from the Committee.

ARTICLE 5

Stock Option Awards

     5.1 Option Grant. Each Stock Option granted under this Plan (or delegation of authority to
the Chief Executive Officer to grant Stock Options) will be evidenced by minutes of a meeting, or
by a unanimous written consent without a meeting, of the Committee and by a written agreement dated
as of the Date of Grant and executed by the Company and by the Plan participant.

     5.2 Terms and Conditions of Grants. Stock Options granted under this Plan are subject to the
following terms and conditions and may contain such additional terms, conditions, restrictions and
contingencies with respect to exercisability and/or with respect to the Shares acquired upon
exercise, not inconsistent with the terms of this Plan and any operative employment or other
agreement, as the Committee deems desirable:

     (a) Exercise Price. The Exercise Price fixed at the time of grant will not be less
than 100% of the Fair Market Value of the Shares as of the Date of Grant. If a variable
Exercise Price is specified at the time of grant, the Exercise Price may vary pursuant to a
formula or other method established by the Committee which provides a floor not less than
Fair Market Value as of the Date of Grant. Except as
otherwise provided in Section 3.4 hereof, no subsequent amendment of an outstanding Stock
Option may reduce the Exercise Price to less than 100% of the Fair Market Value of the
Shares as of the Date of Grant.

     (b) Option Term. Any unexercised portion of a Stock Option granted hereunder shall
expire at the end of the stated term of the Stock Option. The Committee shall determine the
term of each Stock Option at the time of grant, which term shall not exceed ten years from
the Date of Grant. The Committee may extend the term of a Stock Option,

 

 

in its discretion,
but not beyond the date immediately prior to the tenth anniversary of the original Date of
Grant. If a definite term is not specified by the Committee at the time of grant, then the
term is deemed to be ten years.

     (c) Vesting. Stock Options, or portions thereof, are exercisable at such time or
times as determined by the Committee in its discretion at or after grant. If the Committee
provides that any Stock Option becomes Vested over a period of time, in full or in
installments, the Committee may waive or accelerate such Vesting provisions at any time.

     (d) Method of Exercise. Vested portions of any Stock Option may be exercised in whole
or in part at any time during the option term by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. The notice must be given by or on
behalf of a person entitled to exercise the Stock Option, accompanied by payment in full of
the Exercise Price, along with any required tax withholding pursuant to Section 16.3 hereof.
The Exercise Price may be paid:

     (i) in cash;

     (ii) by tendering (by either actual delivery of Shares or by attestation)
previously-owned Shares having an aggregate Fair Market Value on the date of exercise
equal to the Exercise Price applicable to such Stock Option exercise, and, with
respect to the exercise of NQSOs, including Restricted Shares;

     (iii) by a combination of cash and Shares;

     (iv) by authorizing a broker to sell, on behalf of the participant, the
appropriate number of Shares otherwise issuable to the participant upon the exercise
of a Stock Option with the proceeds of sale applied to pay the Exercise Price and tax
withholding; or

     (v) by another method permitted by law which assures full and immediate payment
of the Exercise Price.

     The Committee may prohibit any method of payment for any reason, in its sole
discretion, including but not limited to concerns that the proposed method of payment
will result in adverse financial accounting treatment or adverse tax treatment for
the Company.

     If the Exercise Price of a NQSO is paid by tendering Restricted Shares, then the
Shares received upon the exercise will contain identical restrictions as the
Restricted Shares so tendered. Except as otherwise provided by law and in the
Committee’s sole discretion, required tax withholding may be paid only by cash,
through a same day sale transaction or by withholding Shares.

     (e) Issuance of Shares. The Company will issue or cause to be issued such Shares
promptly upon exercise of the Option. No Shares will be issued until full payment has been
made. Until the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificate

 

 

evidencing
such Shares, no right to vote or receive dividends or any other rights as a Shareholder will
exist with respect to the Shares, notwithstanding the exercise of the Option.

     (f) Form. Unless the grant of a Stock Option is designated at the time of grant as an
ISO, it is deemed to be an NQSO. ISOs are also subject to the terms and conditions stated in
Article 6 hereof.

     (g) Special Limitations on Stock Option Awards. Unless an Award agreement approved by
the Committee provides otherwise, Stock Options awarded under this Plan are intended to meet
the requirements for exclusion from coverage under Code Section 409A and all Stock Option
Awards shall be construed and administered accordingly.

     5.3 Termination of Grants Prior to Expiration. Unless otherwise provided in an employment or
other agreement entered into between the optionee and the Company and approved by the Committee,
either before or after the Date of Grant, or otherwise specified at or after the time of grant, and
subject to Article 6 hereof with respect to ISOs, the following early termination provisions apply
to all Stock Options:

     (a) Termination by Death. If an optionee’s employment or directorship with the
Company or its Affiliates terminates by reason of his or her death, all Stock Options held
by such optionee will immediately become Vested, but thereafter may only be exercised (by
the legal representative of the optionee’s estate, or by the legatee or heir of the optionee
pursuant to a will or the laws of descent and distribution) for a period of one year (or
such other period as the Committee may specify at or after the time of grant) from the date
of such death, or until the expiration of the original term of the Stock Option, whichever
period is the shorter.

     (b) Termination by Reason of Disability. If an optionee’s employment or directorship
with the Company or its Affiliates terminates by reason of his or her Disability, all Stock
Options held by such optionee will immediately become Vested, but thereafter may only be
exercised for a period of one year (or such other period as the Committee may specify at or
after the time of grant) from the date of such termination of employment (or of
directorship, if applicable), or until the expiration of the original term of the Stock
Option, whichever period is the shorter. If the optionee dies within such one-year period
(or such other period as applicable), any unexercised Stock Option held by such optionee
will thereafter be
exercisable by the legal representative of the optionee’s estate, or by the legatee or heir
of the optionee pursuant to a will or the laws of descent and distribution, for the greater
of the remainder of the one-year period (or other period as applicable) or for a period of
twelve months from the date of such death, but in no event shall any portion of the Stock
Option be exercisable after its original stated expiration date.

     (c) Termination by Reason of Retirement. If an optionee’s employment or directorship
with the Company or its Affiliates terminates by reason of his or her Retirement, all Stock
Options held by such optionee immediately become Vested but thereafter may only be exercised
for a period of two years (or such other period as the Committee may specify at or after the
time of grant) from the date of such Retirement, or until the expiration of the original
term of the Stock Option, whichever period is the

 

 

shorter. If the optionee dies within such
two-year period (or such other period as applicable), any unexercised Stock Option held by
such optionee will thereafter be exercisable by the legal representative of the optionee’s
estate, or by the legatee or heir of the optionee pursuant to a will or the laws of descent
and distribution, for the greater of the remainder of the two-year period (or such other
period as applicable) or for a period of twelve months from the date of such death, but in
no event shall any portion of the Stock Option be exercisable after its original stated
expiration date.

     (d) Other Termination. If an optionee’s employment or directorship with the Company
or its Affiliates terminates, voluntarily or involuntarily, for any reason other than death,
Disability, Retirement or for Cause, any Vested portions of Stock Options held by such
optionee at the time of termination may be exercised by the optionee for a period of three
months (or such other period as the Committee may specify at or after the time of grant)
from the date of such termination or until the expiration of the original term of the Stock
Option, whichever period is the shorter. No portion of any Stock Option which is not Vested
at the time of such termination will thereafter become Vested.

ARTICLE 6

Special Rules Applicable to Incentive Stock Options

     6.1 Eligibility. Notwithstanding any other provision of this Plan to the contrary, an ISO
may only be granted to full or part-time employees (including officers and Directors who are also
employees) of the Company or of an Affiliate, provided that the Affiliate is a Parent or
Subsidiary.

     6.2 Special ISO Rules.

     (a) Exercise Price. The Exercise Price fixed at the time of grant will not be less
than 100% of the Fair Market Value of the Shares as of the Date of Grant. If a variable
Exercise Price is specified at the time of grant, the Exercise Price may vary pursuant to a
formula or other method established by the Committee which provides a floor not less than
Fair Market Value as of the Date of Grant. Except as
otherwise provided in Section 3.4 hereof, no subsequent amendment of an outstanding Stock
Option may reduce the Exercise Price to less than 100% of the Fair Market Value of the
Shares as of the Date of Grant.

     (b) Term. No ISO may be exercisable on or after the tenth anniversary of the Date of
Grant, and no ISO may be granted under this Plan on or after the tenth anniversary of the
effective date of this Plan. (See Section 17.1 hereof.)

     (c) Ten Percent Shareholder. No grantee may receive an ISO under this Plan if such
grantee, at the time the Award is granted, owns (after application of the rules contained in
Section 424(d) of the Code) equity securities possessing more than 10% of the total combined
voting power of all classes of equity securities of the Company, its Parent or any
Subsidiary, unless (i) the option price for such ISO is at least 110% of the Fair Market
Value of the Shares as of the Date of Grant and (ii) such ISO is not exercisable on or after
the fifth anniversary of the Date of Grant.

 

 

     (d) Limitation on Grants. The aggregate Fair Market Value (determined with respect to
each ISO at the time such ISO is granted) of the Shares with respect to which ISOs are
exercisable for the first time by a grantee during any calendar year (under this Plan or any
other plan adopted by the Company or its Parent or its Subsidiary) shall not exceed
$100,000. If such aggregate fair market value shall exceed $100,000, such number of ISOs as
shall have an aggregate fair market value equal to the amount in excess of $100,000 shall be
treated as NQSOs.

     (e) Non-Transferability. Notwithstanding any other provision herein to the contrary,
no ISO granted hereunder (and, if applicable, related Stock Appreciation Right) may be
transferred except by will or by the laws of descent and distribution, nor may such ISO (or
related Stock Appreciation Right) be exercisable during a grantee’s lifetime other than by
him (or his guardian or legal representative to the extent permitted by applicable law).

     (f) Termination of Employment. No ISO may be exercised more than three months
following termination of employment for any reason (including retirement) other than death
or disability, nor more than one year following termination of employment for the reason of
death or disability (as defined in Section 422 of the Code), or such option will no longer
qualify as an ISO and shall thereafter be, and receive the tax treatment applicable to, an
NQSO. For this purpose, a termination of employment is cessation of employment with the
Company, a Parent or a Subsidiary.

     (g) Fair Market Value. For purposes of any ISO granted hereunder (or, if applicable,
related Stock Appreciation Right), the Fair Market Value of Shares shall be determined in
the manner required by Section 422 of the Code.

     6.3 Subject to Code Amendments. The foregoing limitations are designed to comply with the
requirements of Section 422 of the Code
and shall be automatically amended or modified to comply with amendments or modifications to
Section 422 or any successor provisions. Any ISO which fails to comply with Section 422 of the Code
is automatically treated as a NQSO appropriately granted under this Plan provided it otherwise
meets the Plan’s requirements for NQSOs.

ARTICLE 7

Stock Appreciation Rights

     7.1 SAR Grant and Agreement. Stock Appreciation Rights may be granted under this Plan,
either independently or in conjunction with the grant of a Stock Option. Each SAR granted under
this Plan (or delegation of authority to the Chief Executive Officer to grant SARs) will be
evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the
Committee and by a written agreement dated as of the Date of Grant and executed by the Company and
by the Plan participant.

     7.2 SARs Granted in Conjunction with Option. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under this Plan, either at the same time
or after the grant of the Stock Option, and will be subject to the following terms and conditions:

 

 

     (a) Term. Each Stock Appreciation Right, or applicable portion thereof, granted with
respect to a given Stock Option or portion thereof terminates and is no longer exercisable
upon the termination or exercise of the related Stock Option, or applicable portion thereof.

     (b) Exercisability. A Stock Appreciation Right is exercisable only at such time or
times and to the extent that the Stock Option to which it relates is Vested and exercisable
in accordance with the provisions of Article 5 hereof or otherwise as the Committee may
determine at or after the time of grant.

     (c) Method of Exercise. A Stock Appreciation Right may be exercised by the surrender
of the applicable portion of the related Stock Option. Stock Options which have been so
surrendered, in whole or in part, are no longer exercisable to the extent the related Stock
Appreciation Rights have been exercised and are deemed to have been exercised for the
purpose of the limitation set forth in Article 3 hereof on the number of Shares to be issued
under this Plan, but only to the extent of the number of Shares actually issued under the
Stock Appreciation Right at the time of exercise. Upon the exercise of a Stock Appreciation
Right, subject to satisfaction of tax withholding requirements pursuant to Section 16.3, the
holder of the Stock Appreciation Right is entitled to receive up to, but not more than, an
amount in cash or Shares equal in value to the excess of the Fair Market Value of one Share
over the Exercise Price per Share specified in the related Stock Option, multiplied by the
number of Shares in respect of which the Stock Appreciation Right is exercised, with the
Committee having the right in its discretion to determine the form of payment. At any time
the Exercise Price per Share of the related Stock Option does not exceed the Fair Market
Value of one Share, the holder of the Stock Appreciation Right shall not be permitted to
exercise such right.

     7.3 Independent SARs. Stock Appreciation Rights may be granted without related Stock
Options, and independent Stock Appreciation Rights will be subject to the following terms and
conditions:

     (a) Term. Any unexercised portion of an independent Stock Appreciation Right granted
hereunder shall expire at the end of the stated term of the Stock Appreciation Right. The
Committee shall determine the term of each Stock Appreciation Right at the time of grant,
which term shall not exceed ten years from the Date of Grant. The Committee may extend the
term of a Stock Appreciation Right, in its discretion, but not beyond the date immediately
prior to the tenth anniversary of the original Date of Grant. If a definite term is not
specified by the Committee at the time of grant, then the term is deemed to be ten years.

     (b) Exercisability. A Stock Appreciation Right is exercisable, in whole or in part,
at such time or times as determined by the Committee at or after the time of grant.

     (c) Method of Exercise. A Stock Appreciation Right may be exercised in whole or in
part during the term by giving written notice of exercise to the Company specifying the
number of Shares in respect of which the Stock Appreciation Right is being exercised. The
notice must be given by or on behalf of a person entitled to exercise the Stock Appreciation

 

 

Right. Upon the exercise of a Stock Appreciation Right, subject to satisfaction of tax
withholding requirements pursuant to Section 16.3, the holder of the Stock Appreciation
Right is entitled to receive an amount in cash or Shares equal in value to the excess of the
Fair Market Value of a Share on the exercise date over the Fair Market Value of a Share on
the Date of Grant multiplied by the number of Stock Appreciation Rights being exercised,
with the Committee having the right in its discretion to determine the form of payment. At
any time the Fair Market Value of a Share on a proposed exercise date does not exceed the
Fair Market Value of a Share on the Date of Grant, the holder of the Stock Appreciation
Right shall not be permitted to exercise such right.

     (d) Early Termination Prior to Expiration. Unless otherwise provided in an employment
or other agreement entered into between the holder of the Stock Appreciation Right and the
Company and approved by the Committee, either before or after the Date of Grant, or
otherwise specified at or after the Date of Grant, the early termination provisions set
forth in Section 5.3 as applied to Non-Qualified Stock Options will apply to independent
Stock Appreciation Rights.

     7.4 Other Terms and Conditions of SAR Grants. Stock Appreciation Rights are subject to such
other terms and conditions, not inconsistent with the provisions of this Plan and any operative
employment or other agreement, as are determined from time to time by the Committee.

     7.5 Special Limitations on SAR Awards. Unless an Award agreement approved by the Committee
provides otherwise, Stock Appreciation Rights awarded under this Plan are intended to meet the
requirements for exclusion
from coverage under Code Section 409A and all Stock Appreciation Rights Awards shall be construed
and administered accordingly.

ARTICLE 8

Restricted Share and Restricted Share Unit Awards

     8.1 Restricted Share Grants and Agreements. Restricted Share Awards consist of Shares which
are issued by the Company to a participant at no cost or at a purchase price determined by the
Committee which may be below their Fair Market Value but which are subject to forfeiture and
restrictions on their sale or other transfer by the participant. Each Restricted Share Award
granted under this Plan (or delegation of authority to the Chief Executive Officer to make
Restricted Share Awards) will be evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by a written agreement dated as of the Date of
Grant and executed by the Company and by the Plan participant. The timing of Restricted Share
Awards and the number of Shares to be issued (subject to Section 3.2 hereof) are to be determined
by the Committee in its discretion. By accepting a grant of Restricted Shares, the participant
agrees to remit to the Company when due any required tax withholding as provided in Section 16.3
hereof.

     8.2 Terms and Conditions of Restricted Share Grants. Restricted Shares granted under this
Plan are subject to the following terms and conditions, which, except as otherwise provided herein,
need not be the same for each participant, and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms of this Plan and any operative
employment or other agreement, as the Committee deems desirable:

 

 

     (a) Purchase Price. The Committee shall determine the prices, if any, at which
Restricted Shares are to be issued to a participant, which may vary from time to time and
among participants and which may be below the Fair Market Value of such Shares at the Date
of Grant.

     (b) Restrictions. All Restricted Shares issued under this Plan will be subject to
such restrictions as the Committee may determine, which may include, without limitation, the
following:

     (i) a prohibition against the sale, transfer, pledge or other encumbrance of
the Restricted Shares, such prohibition to lapse at such time or times as the
Committee determines (whether in installments, at the time of the death, Disability
or Retirement of the holder of such shares, or otherwise, but subject to the Change
in Control provisions in Article 12);

     (ii) a requirement that the participant forfeit such Restricted Shares in the
event of termination of the participant’s employment or directorship with the Company
or its Affiliates prior to Vesting;

     (iii) a prohibition against employment or retention of the participant by any
competitor of the Company or its Affiliates, or against dissemination by the
participant of any secret or confidential information belonging to the Company or an
Affiliate; and

     (iv) any applicable requirements arising under the Securities Act of 1933, as
amended, other securities laws, the rules and regulations of The Nasdaq Stock Market
or any other stock exchange or transaction reporting system upon which such
Restricted Shares are then listed or quoted and any state laws, rules and
regulations, including “blue sky” laws.

     (v) such additional restrictions as are required to avoid adverse tax
consequences under Code Section 409A.

The Committee may at any time waive such restrictions or accelerate the date or dates
on which the restrictions will lapse. However, if the Committee determines that restrictions
lapse upon the attainment of specified performance objectives, then the provisions of
Sections 9.2 and 9.3 will apply (including, but not limited to, the enumerated performance
objectives). If the written agreement governing an award provides that such Award is
intended to be “performance-based compensation,” the provisions of Section 9.4(d) will also
apply.

     (c) Delivery of Shares. Restricted Shares will be registered in the name of the
participant and deposited, together with a Stock Power, with the Company. Each such
certificate will bear a legend in substantially the following form:

     “The transferability of this certificate and the Common Shares represented by it are
subject to the terms and conditions (including conditions of forfeiture) contained in the
Olympic Steel, Inc. 2007 Omnibus Incentive Plan of the Company, and an agreement

 

 

entered
into between the registered owner and the Company. A copy of this Plan and agreement are on
file in the office of the Secretary of the Company.”

At the end of any time period during which the Restricted Shares are subject to forfeiture
and restrictions on transfer, such Shares will be delivered free of all restrictions (except
for any pursuant to Section 15.2 hereof) to the participant and with the foregoing legend
removed.

     (d) Forfeiture of Shares. If a participant who holds Restricted Shares fails to
satisfy the restrictions, Vesting requirements and other conditions relating to the
Restricted Shares prior to the lapse, satisfaction or waiver of such restrictions and
conditions, except as may otherwise be determined by the Committee, the participant shall
forfeit the Shares and transfer them back to the Company in exchange for a refund of any
consideration paid by the participant or such other amount which may be specifically set
forth in the Award agreement. A participant shall execute and deliver to the Company one or
more Stock Powers with respect to Restricted Shares granted to such participant.

     (e) Voting and Other Rights. Except to the extent prohibited by Section 162(m) of the
Code and the terms of the applicable Restricted Share Agreement, during any period in which
Restricted Shares are subject to forfeiture and restrictions on transfer, the participant
holding such Restricted Shares shall have all the rights of a Shareholder with respect to
such Shares, including, without limitation, the right to vote such Shares and the right to
receive any dividends paid with respect to such Shares.

     8.3 Restricted Share Unit Awards and Agreements. Restricted Share Unit Awards consist of
Shares that will be issued to a participant at a future time or times at no cost or at a purchase
price determined by the Committee which may be below their Fair Market Value if continued
employment, continued directorship and/or other terms and conditions specified by the Committee are
satisfied. Each Restricted Share Unit Award granted under this Plan (or delegation of authority to
the Chief Executive Officer to make Restricted Share Unit Awards) will be evidenced by minutes of a
meeting, or by a unanimous written consent without a meeting, of the Committee and by a written
agreement dated as of the Date of Grant and executed by the Company and the Plan participant. The
timing of Restricted Share Unit Awards and the number of Restricted Share Units to be awarded
(subject to Section 3.2 hereof) are to be determined by the Committee in its sole discretion. By
accepting a Restricted Share Unit Award, the participant agrees to remit to the Company when due
any required tax withholding as provided in Section 16.3 hereof.

     8.4 Terms and Conditions of Restricted Share Unit Awards. Restricted Share Unit Awards are
subject to the following terms and conditions, which, except as otherwise provided herein, need not
be the same for each participant, and may contain such additional terms, conditions, restrictions
and contingencies not inconsistent with the terms of this Plan and any operative employment or
other agreement, as the Committee deems desirable:

     (a) Purchase Price. The Committee shall determine the prices, if any, at which Shares
are to be issued to a participant after Vesting of Restricted Stock Units, which may vary
from time to time and among participants and which may be below the Fair Market Value of
Shares at the Date of Grant.

 

 

     (b) Restrictions. All Restricted Share Units awarded under this Plan will be subject
to such restrictions as the Committee may determine, which may include, without limitation,
the following:

     (i) a prohibition against the sale, transfer, pledge or other encumbrance of
the Restricted Share Unit;

     (ii) a requirement that the participant forfeit such Restricted Share Unit in
the event of termination of the participant’s employment or directorship with the
Company or its Affiliates prior to Vesting;

     (iii) a prohibition against employment of the participant by, or provision of
services by the participant to, any competitor of the Company or its Affiliates, or
against dissemination by the participant of any secret or confidential information
belonging to the Company or an Affiliate; and

     (iv) any applicable requirements arising under the Securities Act of 1933, as
amended, other securities laws, the rules and regulations of The Nasdaq Stock Market
or any other stock exchange or transaction reporting system upon which the Common
Shares are then listed or quoted and any state laws, rules and interpretations,
including “blue sky” laws.

     (v) such additional restrictions as are required in order to avoid adverse tax
consequences under Code Section 409A.

The Committee may at any time waive such restrictions or accelerate the date or dates on
which the restrictions will lapse.

     (c) Performance-Based Restrictions. The Committee may, in its sole discretion,
provide restrictions that lapse upon the attainment of specified performance objectives. In
such case, the provisions of Sections 9.2 and 9.3 will apply (including, but not limited to,
the enumerated performance objectives). If the written agreement governing an Award
provides that such Award is intended to be “performance-based compensation,” the provisions
of Section 9.4(d) will also apply.

     (d) Voting and Other Rights. A participant holding Restricted Share Units shall not
be deemed to be a Shareholder solely because of such units. Such participant shall have no
rights of a Shareholder with respect to such units; provided that Restricted Share Units may
provide for the payment of dividends or dividend equivalents if so provided in the written
agreement governing such units.

     (e) Lapse of Restrictions. If a participant who holds Restricted Share Units
satisfies the restrictions and other conditions relating to the Restricted Share Units prior
to the lapse or waiver of such restrictions and conditions, the Restricted Share Units shall
be converted to, or replaced with, Shares which are free of all restrictions except for any
restrictions required pursuant to Section 15.2 hereof. Notwithstanding the foregoing, the
Committee may, in lieu of the conversion and distribution of the Restricted Share Units,
establish procedures to permit deferral of Restricted Stock Units of one or more
participants who are

 

 

highly compensated employees or members of a select group of management
in accordance with the terms of a deferred compensation plan sponsored by the Company.

     (f) Forfeiture of Restricted Share Units. If a participant who holds Restricted Share
Units fails to satisfy the restrictions, Vesting requirements and other conditions relating
to the Restricted Share Units prior to the lapse, satisfaction or waiver of such
restrictions and conditions, except as may otherwise be determined by the Committee, the
participant shall forfeit the Restricted Share Units.

     (g) Termination. A Restricted Stock Unit Award or unearned portion thereof will
terminate without the issuance of Shares on the termination date specified on the Date of
Grant or upon the termination of employment or directorship of the participant during the
time period or periods specified by the Committee during which any performance objectives
must be met (the “Performance Period”). If a participant’s employment or directorship with
the Company or its Affiliates terminates by reason of his or her death, Disability or
Retirement, the Committee in its discretion at or after the Date of Grant may determine that
the participant (or the heir, legatee or legal representative of the participant’s estate)
will receive a distribution of Shares in an amount which is not more than the number of
Shares which would have been earned by the participant if 100% of the performance objectives
for the current Performance Period had been achieved prorated based on the ratio of the
number of months of active employment in the Performance Period to the total number of
months in the Performance Period. However, with respect to Awards intended to be
performance-based compensation (as described in Section 9.4(d)), distribution of the Shares
shall not be made prior to attainment of the relevant performance objectives.

     8.5 Time Vesting of Restricted Share and Restricted Share Unit Awards. Restricted Shares or
Restricted Share Units, or portions thereof, are exercisable at such time or times as determined by
the Committee in its discretion at or after grant, subject to the restrictions on time Vesting set
forth in this Section. If the Committee provides that any Restricted Shares or Restricted Share
Unit Awards become Vested over time (with or without a performance component), the Committee may
waive or accelerate such Vesting provisions at any time, subject to the restrictions on time
Vesting set forth in this Section.

ARTICLE 9

Performance Share Awards

     9.1 Performance Share Awards and Agreements. A Performance Share Award is a right to receive
Shares in the future conditioned upon the attainment of specified performance objectives and such
other conditions, restrictions and contingencies as the Committee may determine. Each Performance
Share Award granted under this Plan (or delegation of authority to the Chief Executive Officer to
make Performance Share Awards) will be evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by a written agreement dated as of the Date of
Grant and executed by the Company and by the Plan participant. The timing of Performance Share
Awards and the number of Shares covered by each Award (subject to Section 3.2 hereof) are to be

 

 

determined by the Committee in its discretion. By accepting a grant of Performance Shares, the
participant agrees to remit to the Company when due any required tax withholding or payment of cash
as provided in Section 16.3 hereof.

     9.2 Performance Objectives. At the time of grant of a Performance Share Award, the Committee
will specify the performance objectives which, depending on the extent to which they are met, will
determine the number of Shares that will be distributed to the participant. The Committee also will
specify the time period or periods (the “Performance Period”) during which the performance
objectives must be met. The
performance objectives and periods need not be the same for each participant nor for each Award.
The Committee may use performance objectives based on one or more of the following targets: stock
price, market share, sales, earnings per share, return on equity, return on invested capital,
costs, earnings, capital adjusted pre-tax earnings (economic profit), earnings before income taxes,
depreciation, and amortization, net income, operating income, performance profit (operating income
minus an allocated charge approximating the Company’s cost of capital, before or after tax), gross
margin, revenue, working capital, total assets, net assets, stockholders’ equity and cash flow.
The Committee may designate a single goal criterion or multiple goal criteria for performance
measurement purposes, with the measurement based on absolute Company or business unit performance
and/or on performance as compared with that of other publicly-traded companies. The foregoing
criteria may have any reasonable definitions that the Committee may specify, which may include or
exclude any or all of the following items, as the Committee may specify: extraordinary, unusual, or
non-recurring items; effects of accounting changes; effects of currency fluctuations; effects of
financing activities (e.g., effect on earnings per share of issuing convertible debt securities);
effects of price escalators; expenses for restructuring or productivity initiatives; non-operating
items; acquisition expenses; and effects of divestitures. Any such performance criterion or
combination of such criteria may apply to a participant’s Award opportunity in its entirety or to
any designated portion or portions of the Award opportunity, as the Committee may specify.

     9.3 Adjustment of Performance Objectives. The Committee may modify, amend or otherwise
adjust the performance objectives specified for outstanding Performance Share Awards if it
determines that an adjustment would be consistent with the objectives of this Plan and taking into
account the interests of the participants. Any such adjustments must comply with the requirements
of Section 162(m) of the Code to the extent applicable unless the Committee indicates a contrary
intention. The types of events which could cause an adjustment in the performance objectives
include, without limitation, accounting changes which substantially affect the determination of
performance objectives, changes in applicable laws or regulations which affect the performance
objectives, and divisive corporate reorganizations, including spin-offs and other distributions of
property or stock.

     9.4 Other Terms and Conditions. Performance Share Awards granted under this Plan are subject
to the following terms and conditions and may contain such additional terms, conditions,
restrictions and contingencies not inconsistent with the terms of this Plan and any operative
employment or other agreement as the Committee deems desirable:

     (a) Delivery of Award. As soon as practicable after the applicable Performance Period
has ended, the participant will receive a distribution of the number of Shares earned during
the Performance Period, depending upon the extent to which the applicable performance
objectives were achieved. Such Shares will be registered in the name of the

 

 

participant and
will be free of all restrictions except for any pursuant to Section 15.2 hereof.

     (b) Termination. A Performance Share Award or portion thereof that has not been
earned will terminate and be forfeited without the issuance of Shares on the termination
date specified at the time of grant or upon the termination of employment or directorship of
the participant during the Performance
Period. If a participant’s employment or directorship with the Company or its Affiliates
terminates by reason of his or her death, Disability or Retirement (except with respect to
Awards that are designated pursuant to paragraph (d) below as subject to Section
162(m)(4)(c) of the Code), the Committee in its discretion at or after the time of grant may
determine, notwithstanding any Vesting requirements under Section 9.4(a), that the
participant (or the heir, legatee or legal representative of the participant’s estate) will
receive a distribution of a portion of the participant’s then-outstanding Performance Share
Awards in an amount which is not more than the number of shares which would have been earned
by the participant if 100% of the performance objectives for the current Performance Period
had been achieved prorated based on the ratio of the number of months of active employment
in the Performance Period to the total number of months in the Performance Period. However,
with respect to Awards intended to be “performance-based compensation” (as described in
Section 9.4(e)), distribution of the Shares shall not be made prior to attainment of the
relevant performance objective.

     (c) Voting and Other Rights. Awards of Performance Shares do not provide the
participant with voting rights or rights to dividends prior to the participant becoming the
holder of record of Shares issued pursuant to an Award. Prior to the issuance of Shares,
Performance Share Awards may not be sold, transferred, pledged, assigned or otherwise
encumbered.

     (d) Performance-Based Compensation. The Committee may designate Performance Share
Awards as being “remuneration payable solely on account of the attainment of one or more
performance goals” as described in Section 162(m)(4)(C) of the Code. Such Awards shall be
automatically amended or modified to comply with amendments to Section 162 of the Code to
the extent applicable, unless the Committee indicates a contrary intention.

     9.5 Time Vesting of Performance Share Awards. Performance Share Awards, or portions
thereof, are exercisable at such time or times as determined by the Committee in its discretion at
or after grant, subject to the restrictions on time Vesting set forth in this Section. If the
Committee provides that any Performance Shares become Vested over time (accelerated by a
performance component), the Committee may waive or accelerate such Vesting provisions at any time,
subject to the restrictions on time Vesting set forth in this Section.

     9.6 Special Limitations on Performance Share Awards. Unless an Award agreement approved by
the Committee provides otherwise, Performance Shares awarded under this Plan are intended to meet
the requirements for exclusion from coverage under Code Section 409A and all Performance Share
Awards shall be construed and administered accordingly.

 

 

ARTICLE 10

Cash-Based Awards and Other Stock-Based Awards 

     10.1 Grant of Cash-Based Awards. Subject to the terms of the Plan, the Committee may, at any
time and from time to time, grant Cash-Based Awards to Participants in such amounts and upon such
terms as the Committee may determine. The Committee may designate Cash-Based Awards to a
participant as being “performance-based compensation” subject to Section 9.4(d).

     10.2 Other Stock-Based Awards. The Committee may grant other types of equity-based or
equity-related Awards not otherwise described in this Plan (including the grant or offer for sale
of unrestricted Shares) in such amounts and subject to such terms and conditions as the Committee
shall determine. Such Awards may involve the transfer of actual Shares to participants, or payment
in cash or otherwise of amounts based on the value of Shares. The Committee may designate Other
Stock-Based Awards to a participant as being “performance-based compensation” subject to Section
9.4(d).

     10.3 Value of Cash-Based Awards and Other Stock-Based Awards.. Each Cash-Based Award shall
specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based
Award shall be expressed in terms of Shares or units based on Shares, as determined by the
Committee. The Committee may establish performance objectives in its sole discretion. If the
Committee exercises its discretion to establish performance objectives, then Sections 9.2 and 9.3
will apply

     10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Any payment with respect to a
Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the
Award, in cash or Shares, as the Committee determines.

     10.5 Termination of Employment. The Committee shall determine the extent to which a
participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following
termination of the participant’s employment with, or provision of services to, the Company and
Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of
the Committee, such provisions may be included in an agreement entered into with each participant,
but need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued
pursuant to the Plan and may reflect distinctions based on the reasons for termination.

ARTICLE 11

Transfers and Leaves of Absence

     11.1 Transfer of Participant. For purposes of this Plan, except as provided in Section
6.2(f) with respect to Incentive Stock Options, the transfer of a participant among the Company and
its Affiliates is deemed not to be a termination of employment.

     11.2 Effect of Leaves of Absence. For purposes of this Plan, the following leaves of absence
are deemed not to be a termination of employment:

 

 

     (a) a leave of absence, approved in writing by the Company, for military service,
sickness or any other purpose approved by the Company, if the period of such leave does not
exceed 90 days;

     (b) a leave of absence in excess of 90 days, approved in writing by the Company, but
only if the employee’s right to reemployment is guaranteed either by a statute or by
contract, and provided that, in the case of any such leave of absence, the employee returns
to work within 30 days after the end of such leave; and

     (c) any other absence determined by the Committee in its discretion not to constitute
a break in service.

ARTICLE 12

Effect of Change of Control

     12.1 Change of Control Defined. Change of Control. The words “Change of Control”
shall mean, but not be limited to:

     (a) the first purchase of shares pursuant to a tender offer or exchange (other than a
tender offer or exchange by the Company and/or any affiliate thereof) for all or part of the
Company’s Common Shares of any class or any securities convertible into such Common Shares
and the Participant has elected not to tender or exchange his Common Shares;

     (b) the receipt by the Company of a Schedule 13D or other advice indicating that a
person is the “beneficial owner” (as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of twenty percent (20%) or more of the Company’s Common Shares
calculated as provided in paragraph (d) of said Rule 13d-3;

     (c) the date of approval by shareholders of the Company of an agreement providing for
any consolidation or merger of the Company in which the Company will not be the continuing
or surviving corporation or pursuant to which shares of capital stock, of any class or any
securities convertible into such capital stock, of the Company would be converted into cash,
securities, or other property, other than a merger of the Company in which the holders of
common stock of all classes of the Company immediately prior to the merger would have the
same proportion of ownership of common stock of the surviving corporation immediately after
the merger;

     (d) the date of approval by shareholders of the Company of any sale, lease, exchange,
or other transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company;

     (e) the adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company; or

     (f) the date (the “Measurement Date”) on which the individuals who at the beginning of
a two consecutive year period ending on the Measurement Date, cease,
for any reason, to constitute at least a majority of the Board of Directors of the Company,

 

 

unless the
election, or the nomination for election by the Company’s shareholders, of each new Director
during such two-year period was approved by an affirmative vote of the Directors (including
any Participant) then still in office who were Directors at the beginning of said two-year
period.

     Notwithstanding the foregoing, (i) if any person’s ownership interest in the Company increases
to 20% or more, solely as a result of the Company’s repurchase of its shares, or (ii) Michael D.
Siegal increases his ownership interest to 20% or more, such ownership shall not be considered a
Change of Control for purposes of subparagraph (b) above.

     12.2 Acceleration of Award. Except as otherwise provided in this Plan or an Award agreement,
immediately upon the occurrence of a Change of Control:

     (a) all outstanding Stock Options automatically become fully exercisable;

     (b) all Restricted Share Awards automatically become fully Vested;

     (c) all Restricted Share Unit Awards automatically become fully Vested (or, if such
Restricted Share Unit Awards are subject to performance-based restrictions, shall become
Vested on a prorated basis as described in Section 12.2(d)) and, to the extent Vested,
convertible to Shares at the election of the holder;

     (d) all participants holding Performance Share Awards become entitled to receive a
partial payout in an amount which is the number of Shares which would have been earned by
the participant if 100% of the performance objectives for the current Performance Period had
been achieved prorated based on the ratio of the number of months of active employment in
the Performance Period to the total number of months in the Performance Period; and

     (e) Stock Appreciation Rights automatically become fully Vested and fully exercisable.

     (f) all participants holding Cash-Based Awards become entitled to a payout of such
amounts.

     (g) Other Stock-Based Awards automatically become fully Vested.

ARTICLE 13

Transferability of Awards

     13.1 Awards Are Non-Transferable. Except as provided in Sections 13.2 and 13.3, Awards are
non-transferable and any attempts to assign, pledge, hypothecate or otherwise alienate or encumber
(whether by operation of law or otherwise) any Award shall be null and void.

     13.2 Inter-Vivos Exercise of Awards. During a participant’s lifetime, Awards are exercisable
only by the participant or, as permitted by applicable law and notwithstanding Section 13.1 to the
contrary, the participant’s guardian or other legal representative.

 

 

     13.3 Limited Transferability of Certain Awards. The Committee, in its discretion, may allow
at or after the time of grant the transferability of Awards which are Vested, provided that the
permitted transfer is made (a) pursuant to a QDRO or other applicable domestic relations order to
the extent permitted by law; (b) if the Award is an Incentive Stock Option, the transfer is
consistent with Section 422 of the Code; (c) to the Company (for example in the case of forfeiture
of Restricted Shares), an Affiliate or a person acting as the agent of the foregoing or which is
otherwise determined by the Committee to be in the interests of the Company; or (d) by the
participant for no consideration to Immediate Family Members or to a bona fide trust, partnership
or other entity controlled by and for the benefit of one or more Immediate Family Members.
“Immediate Family Members” means the participant’s spouse, children, stepchildren, parents,
stepparents, siblings (including half brothers and sisters), in-laws and other individuals who have
a relationship to the participant arising because of a legal adoption. No transfer may be made to
the extent that transferability would cause Form S-8 or any successor form thereto not to be
available to register Shares related to an Award. The Committee in its discretion may impose
additional terms and conditions upon transferability.

ARTICLE 14

Amendment and Discontinuation

     14.1 Amendment or Discontinuation of this Plan. The Board of Directors or the Committee may
amend, alter, or discontinue this Plan at any time, provided that no amendment, alteration, or
discontinuance may be made which would materially and adversely affect the rights of a participant
under any Award granted prior to the date such action is adopted by the Board of Directors or the
Committee without the participant’s written consent thereto.

     14.2 Amendment of Grants. The Committee may amend, prospectively or retroactively, the terms
of any outstanding Award, provided that no such amendment may be inconsistent with the terms of
this Plan (specifically including the prohibition on granting Stock Options with an Exercise Price
less than 100% of the Fair Market Value of the Common Shares on the Date of Grant) or would
materially and adversely affect the rights of any holder without his or her written consent.

     14.3 Effect of Non-Approval of this Plan. This Plan shall cease to be operative if it is not
approved by a majority of the outstanding Shares present (in person, telephonically,
electronically, by proxy or its equivalent or as otherwise permitted by the Company’s governing
documents) and entitled to vote on the approval of this Plan at a meeting of Shareholders of the
Company. In the event of such a cessation, any Awards under the Plan shall be revoked and this
Plan shall be deemed null and void ab initio. In the event of such a cessation, the Company, the
Board of Directors and the Committee shall not be liable for any such Awards under this Plan.

ARTICLE 15

Share Certificates

     15.1 Delivery of Share Certificates. The Company is not required to issue or deliver any
certificates for Shares issuable with respect to Awards under this Plan prior to the fulfillment of
all of the following conditions:

 

 

     (a) payment in full for the Shares and for any required tax withholding (See Section
16.3 hereof);

     (b) completion of any registration or other qualification of such Shares under any
Federal or state laws or under the rulings or regulations of the Securities and Exchange
Commission or any other regulating body which the Committee in its discretion deems
necessary or advisable;

     (c) admission of such Shares to listing on The Nasdaq Stock Market or any stock
exchange on which the Shares are listed;

     (d) in the event the Shares are not registered under the Securities Act of 1933,
qualification as a private placement under said Act;

     (e) obtaining of any approval or other clearance from any Federal or state
governmental agency which the Committee in its discretion determines to be necessary or
advisable; and

     (f) the Committee is fully satisfied that the issuance and delivery of Shares under
this Plan is in compliance with applicable Federal, state or local law, rule, regulation or
ordinance or any rule or regulation of any other regulating body, for which the Committee
may seek approval of counsel for the Company.

     15.2 Applicable Restrictions on Shares. Shares issued with respect to Awards may be subject
to such stock transfer orders and other restrictions as the Committee may determine necessary or
advisable under any applicable Federal or state securities law rules, regulations and other
requirements, the rules, regulations and other requirements of The Nasdaq Stock Market or any stock
exchange upon which the Shares are then-listed, and any other applicable Federal or state law and
will include any restrictive legends the Committee may deem appropriate to include.

     15.3 Book Entry. In lieu of the issuance of stock certificates evidencing Shares, the
Company may use a “book entry” system in which a computerized or manual entry is made in the
records of the Company to evidence the issuance of such Shares. Such Company records are, absent
manifest error, binding on all parties.

ARTICLE 16

General Provisions

     16.1 No Implied Rights to Awards, Employment or Directorship. No potential participant has
any claim or right to be granted an Award under this Plan, and there is no obligation of uniformity
of treatment of participants under this Plan. Neither this Plan nor any Award thereunder shall be
construed as giving any individual any right to continued employment or continued directorship with
the Company or any Affiliate. The Plan does not constitute a contract
of employment, and the Company and each Affiliate expressly reserve the right at any time to 

 

 

terminate employees free from
liability, or any claim, under this Plan, except as may be specifically provided in this Plan or in
an Award agreement.

     16.2 Other Compensation Plans. Nothing contained in this Plan prevents the Board of
Directors from adopting other or additional compensation arrangements, subject to Shareholder
approval if such approval is required, and such arrangements may be either generally applicable or
applicable only in specific cases.

     16.3 Withholding. Each participant must, no later than the date as of which the value of an
Award first becomes includible in the gross income of the participant for income tax purposes, pay,
in cash, to the Company, or make arrangements satisfactory to the Company regarding payment of, any
Federal, state or local taxes of any kind required by law or other amounts to be withheld with
respect to the Award. Participants may elect, subject to the approval of the Committee, to satisfy
the withholding requirement, in whole or in part, by having the Company withhold Shares or sell
Shares on the open market having a Fair Market Value on the date the withholding amount is to be
determined in an amount not to exceed the total tax that could be imposed on the transaction. All
such elections shall be irrevocable, made in writing, and signed by the participant, and shall be
subject to any restrictions or limitations that the Committee, in its sole discretion, deems
appropriate. The obligations of the Company under this Plan are conditioned on such payment, and
the Company, to the extent permitted by law, has the right to deduct any such taxes or other
amounts from any payment of any kind otherwise due to a participant, with or without such
participant’s consent.

     16.4 Rule 16b-3 Compliance. The Plan is intended to comply with all applicable conditions of
Rule 16b-3 of the Exchange Act, as such rule may be amended from time to time. All transactions
involving any participant subject to Section 16(a) shall be subject to the conditions set forth in
Rule 16b-3, regardless of whether such conditions are expressly set forth in this Plan. Any
provision of this Plan that is contrary to Rule 16b-3 does not apply to such participants.

     16.5 Code Section 162(m) Compliance. The Plan is intended to comply with all applicable
requirements of Section 162(m) of the Code with respect to “performance-based compensation.” Unless
the Committee shall otherwise determine, all transactions involving any participant the
deductibility of whose compensation is subject to Section 162(m) of the Code shall be subject to
such requirements, regardless of whether such requirements are expressly set forth in this Plan.
Unless the Committee shall otherwise determine, any provision of this Plan that is contrary to such
requirements does not apply to such participants.

     16.6 Successors. All obligations of the Company with respect to Awards granted under this
Plan are binding on any successor to the Company, whether as a result of a direct or indirect
purchase, merger, consolidation or otherwise of all or substantially all of the business and/or
assets of the Company.

     16.7 Severability. In the event any provision of this Plan, or the application thereof to
any person or circumstances, is held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of this Plan, or other applications, and this Plan
is to be construed and enforced as if the illegal or invalid provision had not been included.

 

 

     16.8 Governing Law. To the extent not preempted by Federal law, this Plan and all Award
agreements pursuant thereto are construed in accordance with and governed by the laws of the State
of Ohio. This Plan is not intended to be governed by ERISA and shall be so construed and
administered.

ARTICLE 17

Effective Dates 

     17.1 Effective Date. Subject to the approval of the Shareholders of the Company at the
Annual Meeting of Shareholders held in 2007, the effective date of this Olympic Steel, Inc. 2007
Omnibus Incentive Plan is the date of its adoption by the Board of Directors on February 10, 2007.

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