Document:

exv4w5

 

EXHIBIT 4.5

THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

     This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is
made and entered into as of May 18, 2007 (the “Effective Date”), by and among METAL
MANAGEMENT, INC., a Delaware corporation, CIM TRUCKING, INC., an Illinois corporation, METAL
MANAGEMENT AEROSPACE, INC., a Delaware corporation, METAL MANAGEMENT ALABAMA, INC., a Delaware
corporation, METAL MANAGEMENT ARIZONA, L.L.C., an Arizona limited liability company, METAL
MANAGEMENT CONNECTICUT, INC., a Delaware corporation, METAL MANAGEMENT INDIANA, INC., an Illinois
corporation, METAL MANAGEMENT MEMPHIS, L.L.C., a Tennessee limited liability company, METAL
MANAGEMENT MIDWEST, INC., an Illinois corporation, METAL MANAGEMENT MISSISSIPPI, INC., a Delaware
corporation, METAL MANAGEMENT NEW HAVEN, INC., a Delaware corporation, METAL MANAGEMENT NORTHEAST,
INC., a New Jersey corporation, METAL MANAGEMENT OHIO, INC., an Ohio corporation, METAL MANAGEMENT
PITTSBURGH, INC., a Delaware corporation, METAL MANAGEMENT PROLER SOUTHWEST, INC., a Delaware
corporation, METAL MANAGEMENT S&A HOLDINGS, INC., a Delaware corporation, METAL MANAGEMENT WEST,
INC., a Colorado corporation, METAL MANAGEMENT WEST COAST HOLDINGS, INC., a Delaware corporation,
NAPORANO IRON & METAL, INC., a Delaware corporation, NEW YORK RECYCLING VENTURES, INC., a Delaware
corporation, PROLER SOUTHWEST GP, INC., a Delaware corporation, PROLER SOUTHWEST LP, a Texas
limited partnership, and RESERVE IRON & METAL LIMITED PARTNERSHIP, a Delaware limited partnership
(collectively, the “Borrowers”); METAL MANAGEMENT, INC., a Delaware corporation, acting in
its capacity as borrowing agent and funds administrator for the Borrowers (in such capacity, the
“Funds Administrator”); the financial institutions identified on the signature pages hereto
as lenders (the “Lenders”); and LASALLE BANK NATIONAL ASSOCIATION, a national banking
association acting in its capacity as agent for the Lenders (in such capacity, “Agent”).

     WHEREAS, the Borrowers, the Funds Administrator, the Lenders and the Agent are party to a
certain Amended and Restated Credit Agreement dated as of May 9, 2006, as amended by a certain
First Amendment to Amended and Restated Credit Agreement dated as of October 13, 2006 and a certain
Second Amendment to Amended and Restated Credit Agreement dated as of January 12, 2007 (such
agreement, as it may be from time to time amended, restated, modified, or supplemented, the
“Credit Agreement”);

     WHEREAS, MTLM has requested that the Agent and the Lenders amend certain of the terms of the
Credit Agreement; and

     WHEREAS, the defined terms used, but not defined, herein shall have the meanings ascribed to
such terms in the Credit Agreement.

     NOW, THEREFORE, for valuable consideration received to their mutual satisfaction, the
parties hereby agree as follows:

 

 

     1. Amendment of Credit Agreement. Subject to the terms of this Amendment, the Credit
Agreement is hereby amended as follows:

     (a) Capital Expenditures. Section 8.2 of the Credit Agreement is hereby deleted and
the following inserted in its stead:

“8.2 Capital Expenditures. The Borrowers shall not permit Capital
Expenditures for the Consolidated Entity to exceed $90,000,000 for the twelve month
period ending March 31, 2007, or to exceed $85,000,000 for the twelve month period
ending March 31, 2008, or to exceed $65,000,000 during any fiscal year of the
Consolidated Entity thereafter.”

     2. General Terms of Amendment. Except as specifically amended herein, directly or by
reference, all of the terms and conditions set forth in the Credit Agreement and the other Credit
Documents are confirmed and ratified, and shall remain as originally written. This Amendment shall
be governed by and construed in accordance with the internal laws and decisions of the State of
Illinois. Nothing herein shall affect or impair any rights and powers which the Borrowers, the
Funds Administrator, any Lender or the Agent may have under the Credit Agreement or any of the
other Credit Documents.

     3. Release. In consideration of this Amendment, the Borrowers and the Funds
Administrator hereby release and discharge the Lenders and Agent and each of their respective
shareholders, directors, officers, employees, attorneys, affiliates and subsidiaries from any and
all claims, demands, liability and causes of action whatsoever, now known or unknown, arising prior
to the date hereof out of or in any way related to the extension or administration of the
Obligations, the Credit Agreement, the other Credit Documents or any security interest related
thereto.

     4. Liens not Impaired. The parties hereto further agree that this Amendment shall in
no manner affect or impair the liens and security interests evidenced by the Credit Agreement
and/or any other Credit Documents or instruments evidencing, securing or related to the
Obligations. The Borrowers hereby acknowledge that all liens and security interests securing the
Obligations are valid and subsisting.

     5. No Counterclaims or Defenses. The Borrowers and the Funds Administrator hereby
declare that neither the Borrowers nor the Funds Administrator have any set offs, counterclaims,
defenses or other causes of action against the Lenders or the Agent arising out of the Credit
Agreement, the other Credit Documents or the transactions contemplated thereby, and to the extent
any such set offs, counterclaims, defenses or other causes of action might exist, such items are
hereby waived by the Borrowers.

     6. Representations and Undertakings of Borrowers and Funds Administrator. Each of the
Borrowers and the Funds Administrator hereby represents and warrants to the Lenders and the Agent
that: (a) each Credit Party a party hereto has the legal power and authority to execute and deliver
this Amendment; (b) the officers or representatives executing this Amendment have been duly
authorized to execute and deliver the same and bind such Credit Parties with respect to the
provisions hereof; (c) the execution and delivery hereof by such Credit Parties and the

2

 

performance and observance by such Credit Parties of the provisions hereof do not violate or
conflict with the organizational documents or agreements of such Credit Parties or any law
applicable to such Credit Parties or result in a breach of any provisions of or constitute a
default under any other agreement, document, certificate or instrument binding upon or enforceable
against such Credit Parties; (d) this Amendment constitutes a valid and binding obligation upon
such Credit Parties in every respect, and (e) the recitals to this Amendment are true and correct.
The Borrowers and the Funds Administrator hereby further represent and warrant to the Lenders and
the Agent that no Default or Event of Default has occurred under the Credit Agreement or the other
Credit Documents and that each of the representations and warranties of the Borrowers and the Funds
Administrator set forth in the Credit Agreement and the other Credit Documents are true and correct
in all material respects as of the Effective Date. On the Effective Date, the Borrowers and the
Funds Administrator shall deliver to the Agent (for the benefit of the Agent and the Lenders)
certification from each of the Credit Parties that there have been no amendments to the respective
bylaws, certificates of incorporation or equivalent constituent documents of the Credit Parties
since the date of the original Credit Agreement (or if there have been such amendments, certified
copies of such amended documents) and that the resolutions authorizing amendments to the Credit
Agreement are in full force and effect, and an incumbency certificate evidencing the authority of
the officers of such Credit Parties executing this Amendment.

     7. Costs and Expenses. The Borrowers and the Funds Administrator jointly and
severally agree to pay, on demand, all costs and expenses of the Agent (including the reasonable
fees and expenses of outside counsel for the Agent) in connection with the preparation,
negotiation, execution, delivery, and administration of this Amendment and any other Credit
Documents and all other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith or related thereto. In addition, the Borrowers and
the Funds Administrator jointly and severally agree to pay, and save the Lenders and the Agent
harmless from all liability for, any stamp or other taxes which may be payable in connection with
the execution or delivery of this Amendment, the borrowings contemplated in this Amendment, and the
execution and delivery of any instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith or in connection with the Credit Agreement or the
other Credit Documents. All obligations in this Section shall survive any termination of the
Credit Agreement, as amended hereby, and the other Credit Documents. The Borrowers and the Funds
Administrator hereby authorize the Agent to charge the Borrowers’ account(s) with the Agent in
respect of any and all costs and expenses described hereunder.

     8. Section Titles. The Section titles and captions contained herein are and shall be
without substantive meaning and are not a part of the agreement between the parties hereto.

     9. Counterparts. This Amendment may be executed in counterparts and all such
counterparts shall constitute one agreement binding on all the parties, notwithstanding that the
parties are not signatories to the same counterpart.

[Signature Pages Follow]

3

 

     IN WITNESS WHEREOF, the respective parties hereto have caused this Third Amendment to Amended
and Restated Credit Agreement to be executed and delivered by their duly authorized officers as of
the date first set forth above.

	 	 	 	 	 	 	 
	 	 	METAL MANAGEMENT, INC.,	 	 
	 	 	as Funds Administrator and as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert C. Larry
 

	 	 
	 

	 	 	 	Name: Robert C. Larry	 	 
	 	 	 	 	Title:   Executive Vice President and Chief Financial
Officer
	 
	 	 	 	 	 	 
	 	 	ADDITIONAL BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 	 	CIM TRUCKING, INC.
	 	 	METAL MANAGEMENT AEROSPACE, INC.
	 	 	METAL MANAGEMENT ALABAMA, INC.
	 	 	METAL MANAGEMENT ARIZONA, L.L.C.
	 	 	METAL MANAGEMENT CONNECTICUT, INC.
	 	 	METAL MANAGEMENT INDIANA, INC.
	 	 	METAL MANAGEMENT MEMPHIS, L.L.C.
	 	 	METAL MANAGEMENT MIDWEST, INC.
	 	 	METAL MANAGEMENT MISSISSIPPI, INC.
	 	 	METAL MANAGEMENT NEW HAVEN, INC.
	 	 	METAL MANAGEMENT NORTHEAST, INC.
	 	 	METAL MANAGEMENT OHIO, INC.
	 	 	METAL MANAGEMENT PITTSBURGH, INC.
	 	 	METAL MANAGEMENT PROLER SOUTHWEST, INC.
	 	 	METAL MANAGEMENT S&A HOLDINGS, INC.
	 	 	METAL MANAGEMENT WEST, INC.
	 	 	METAL MANAGEMENT WEST COAST HOLDINGS, INC.
	 	 	NAPORANO IRON & METAL, INC.
	 	 	NEW YORK RECYCLING VENTURES, INC.
	 	 	PROLER SOUTHWEST GP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert C. Larry	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Robert C. Larry	 	 
	 

	 	 	 	Title:   Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RESERVE IRON & METAL LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	By: METAL MANAGEMENT OHIO, INC., its general partner
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert C. Larry
 

Name: Robert C. Larry
	 	 
	 

	 	 	 	Title:   Vice President	 	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 	 	 
	 	 	PROLER SOUTHWEST LP	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	PROLER SOUTHWEST GP, INC., its general partner
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert C. Larry
 

Name: Robert C. Larry
	 	 
	 

	 	 	 	Title:   Vice President	 	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 	 	 
	 

	 	AGENT:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION, as Agent
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael J. Vrchota
 

Name: Michael J. Vrchota
	 	 
	 

	 	 	 	Title:   Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael J. Vrchota
 

Name: Michael J. Vrchota
	 	 
	 

	 	 	 	Title:   Senior Vice President	 	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	CHARTER ONE BANK, N.A.

 	 
	 	By:  	/s/ Mark A. LoSchiavo
 	 
	 	 	Name:  	Mark A. LoSchiavo 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	SOVEREIGN BANK

 	 
	 	By:  	/s/ Christine Gerula
 	 
	 	 	Name:  	Christine Gerula 	 
	 	 	Title:  	Senior Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	PNC BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ John M. Cunningham
 	 
	 	 	Name:  	John M. Cunningham 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	NATIONAL CITY BANK

 	 
	 	By:  	/s/ James M. Kershner
 	 
	 	 	Name:  	James M. Kershner 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	U.S. BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Matthew J. Schultz
 	 
	 	 	Name:  	Matthew J. Schultz 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Suzannah Harris
 	 
	 	 	Name:  	Suzannah Harris 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	FIFTH THIRD BANK (CHICAGO)

 	 
	 	By:  	/s/ Neil G. Mesch
 	 
	 	 	Name:  	Neil G. Mesch 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	ASSOCIATED BANK, N.A.

 	 
	 	By:  	/s/ Daniel Holzhauer
 	 
	 	 	Name:  	Daniel Holzhauer 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	REGIONS BANK

 	 
	 	By:  	/s/ Berkin Istanbulluoglu
 	 
	 	 	Name:  	Berkin Istanbulluoglu 	 
	 	 	Title:  	Assistant Vice President 	 
	 

[Signature Page Continues]

 

 

[Signature Page to Third Amendment, Continued]

	 	 	 	 	 
	 	COMERICA BANK

 	 
	 	By:  	/s/ Tamara J. Miller
 	 
	 	 	Name:  	Tamara J. Miller 	 
	 	 	Title:  	Vice Presidentexv10w2

 

EXHIBIT 10.2

METAL MANAGEMENT, INC.

2002 INCENTIVE STOCK PLAN

Amended and Restated as of March 14, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	SECTION 1.
	 	BACKGROUND AND PURPOSE	 	 	1	 
	 
	 	 	 	 	 	 
	SECTION 2.
	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	2.1
	 	Affiliate	 	 	1	 
	2.2
	 	Award	 	 	1	 
	2.3
	 	Board	 	 	1	 
	2.4
	 	Cause	 	 	1	 
	2.5
	 	Change in Control	 	 	1	 
	2.6
	 	Code	 	 	2	 
	2.7
	 	Committee	 	 	2	 
	2.8
	 	Company	 	 	2	 
	2.9
	 	Director	 	 	2	 
	2.10
	 	Fair Market Value	 	 	2	 
	2.11
	 	ISO	 	 	2	 
	2.12
	 	Key Person	 	 	3	 
	2.13
	 	1933 Act	 	 	3	 
	2.14
	 	1934 Act	 	 	3	 
	2.15
	 	Non-ISO	 	 	3	 
	2.16
	 	Option	 	 	3	 
	2.17
	 	Option Certificate	 	 	3	 
	2.18
	 	Option Price	 	 	3	 
	2.19
	 	Parent	 	 	3	 
	2.20
	 	Plan	 	 	3	 
	2.21
	 	Rule 16b-3	 	 	3	 
	2.22
	 	Stock	 	 	3	 
	2.23
	 	Stock Appreciation Right	 	 	3	 
	2.24
	 	Stock Appreciation Right Certificate	 	 	3	 
	2.25
	 	SAR Value	 	 	3	 
	2.26
	 	Stock Grant	 	 	3	 
	2.27
	 	Stock Grant Certificate	 	 	3	 
	2.28
	 	Subsidiary	 	 	4	 
	2.29
	 	Ten Percent Shareholder	 	 	4	 
	 
	 	 	 	 	 	 
	SECTION 3.
	 	SHARES RESERVED UNDER PLAN	 	 	4	 
	 
	 	 	 	 	 	 
	SECTION 4.
	 	EFFECTIVE DATE	 	 	4	 
	 
	 	 	 	 	 	 
	SECTION 5.
	 	COMMITTEE	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 6.
	 	ELIGIBILITY AND ANNUAL GRANT CAPS	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 7.
	 	OPTIONS	 	 	5	 

i

 

	 	 	 	 	 	 	 
	7.1
	 	Committee Action	 	 	5	 
	7.2
	 	$100,000 Limit	 	 	6	 
	7.3
	 	Option Price	 	 	6	 
	7.4
	 	Payment of Option Price	 	 	6	 
	7.5
	 	Exercise Period	 	 	6	 
	7.6
	 	Reload Option Grants	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 8.
	 	GRANTS TO DIRECTORS	 	 	7	 
	 
	 	 	 	 	 	 
	8.1
	 	Automatic Grants	 	 	7	 
	8.2
	 	Exercise of Options	 	 	8	 
	8.3
	 	Payment of Option Price	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 9.
	 	STOCK APPRECIATION RIGHTS	 	 	8	 
	 
	 	 	 	 	 	 
	9.1
	 	Committee Action	 	 	8	 
	9.2
	 	Terms and Conditions	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 10.
	 	STOCK GRANTS	 	 	9	 
	 
	 	 	 	 	 	 
	10.1
	 	Committee Action	 	 	9	 
	10.2
	 	Conditions	 	 	10	 
	10.3
	 	Dividends and Voting Rights	 	 	10	 
	10.4
	 	Satisfaction of Forfeiture Conditions	 	 	10	 
	 
	 	 	 	 	 	 
	SECTION 11.
	 	NON-TRANSFERABILITY	 	 	11	 
	 
	 	 	 	 	 	 
	SECTION 12.
	 	SECURITIES REGISTRATION	 	 	11	 
	 
	 	 	 	 	 	 
	SECTION 13.
	 	LIFE OF PLAN	 	 	11	 
	 
	 	 	 	 	 	 
	SECTION 14.
	 	ADJUSTMENT	 	 	12	 
	 
	 	 	 	 	 	 
	14.1
	 	Capital Structure	 	 	12	 
	14.2
	 	Mergers	 	 	12	 
	14.3
	 	Fractional Shares	 	 	12	 
	 
	 	 	 	 	 	 
	SECTION 15.
	 	CHANGE IN CONTROL	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 16.
	 	AMENDMENT OR TERMINATION	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 17.
	 	MISCELLANEOUS	 	 	14	 
	 
	 	 	 	 	 	 
	17.1
	 	Performance Goals	 	 	14	 
	17.2
	 	Shareholder Rights	 	 	14	 
	17.3
	 	No Contract of Employment	 	 	14	 
	17.4
	 	Withholding	 	 	14	 
	17.5
	 	Construction	 	 	14	 
	17.6
	 	Other Conditions	 	 	15	 
	17.7
	 	Loans	 	 	15	 

ii

 

SECTION 1.

BACKGROUND AND PURPOSE

The purpose of this Plan is to provide for the grant of Options, Stock Appreciation Rights and
Stock to Key Persons and to provide for the grant of Options to Directors in order to (1) attract
and retain Key Persons and Directors, (2) provide an additional incentive to each Key Person or
Director to work to increase the value of Stock and promote the success of the business of the
Company, and (3) provide each Key Person or Director with a stake in the future of the Company that
corresponds to the stake of each of the Company’s stockholders.

SECTION 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 Award — means an Option, a Stock Appreciation Right or a Stock Grant or any
combination of Options, Stock Appreciation Rights and Stock Grants.

     2.3 Board — means the Board of Directors of the Company.

     2.4 Cause — means the definition of such term in the applicable employment or
consulting agreement, if any, or Option Certificate at the time a determination with respect to
“Cause” is made or, in the absence of such an applicable definition, “Cause” means (1) the Key
Person is convicted of, pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement that affects the Company or a Subsidiary or Affiliate, as
determined by the Committee; (2) the Key Person engages in a fraudulent act that damages or
prejudices the Company or any Subsidiary or Affiliate or engages in conduct or activities damaging
to the property, business or reputation of the Company or any Subsidiary or Affiliate, all as
determined by the Committee; (3) any act or omission by the Key Person involving malfeasance or
negligence in the performance of the Key Person’s duties and responsibilities as set forth in any
employment or consulting agreement between the Key Person and the Company or any Subsidiary or
Affiliate to the detriment of the Company or any Subsidiary or Affiliate, as determined by the
Committee; or (4) a failure by the Key Person to comply in any material respect with the terms of
any employment or consulting agreement between the Key Person and the Company or any Subsidiary or
Affiliate or any written policies
or directives of the Company or any Subsidiary or Affiliate which failure has not been corrected by
the Key Person within 15 days after written notice from the Committee of such failure.

     2.5 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 (1) any “person”

 

 

(as that
term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes after the effective date of
this Plan the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) directly or indirectly
of securities representing 45% 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, (2) 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 person who was not a director at the beginning of such
period was approved by vote of at least two-thirds of the directors then in office who were
directors at the beginning of such period or who were directors previously so approved, (3) there
is a dissolution or liquidation of the Company or any sale or disposition of 50% or more of the
assets or business of the Company, or (4) there is a reorganization, merger, consolidation or share
exchange (other than a reorganization, merger, consolidation, or share exchange with a wholly-owned
subsidiary of the Company) of the Company 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 50% 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 shares of the common stock of such successor or survivor corporation
beneficially owned by the persons described in Section 2.5(4)(A) immediately following the
consummation of such transaction are beneficially owned by each such person in substantially the
same proportion that each such person had beneficially owned shares of Company common stock
immediately before the consummation of such transaction.

     2.6 Code — means the Internal Revenue Code of 1986, as amended.

     2.7 Committee — means a committee of the Board appointed to administer this Plan that
shall have at least two 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.

     2.8 Company — means Metal Management, Inc. and any successor to Metal Management,
Inc.

     2.9 Director — means any member of the Board who is not an employee of the Company, a
Parent, a Subsidiary or an affiliate (as such term is defined in Rule 405 of the 1933 Act) of the
Company.

     2.10 Fair Market Value — means for any date (1) the last sales price on any business
day for a share of Stock as reported by The Wall Street Journal or such other reputable
reporting service selected by the Committee or, if no such price is so reported, (2) the price that
the Committee acting in good faith determines through any reasonable valuation method that a share
of Stock might change hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.

     2.11 ISO — means an option granted under Section 7 to purchase Stock that is
intended to satisfy the requirements of § 422 of the Code.

2

 

     2.12 Key Person — means an employee or consultant of the Company or any Parent,
Subsidiary or Affiliate designated by the Committee who, in the judgment of the Committee acting in
its absolute discretion, is key directly or indirectly to the success of the Company.

     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 Section 7 or Section 8 to purchase Stock
that (1) by its terms provides that it will not be treated as an incentive stock option under § 422
of the Code or (2) fails in operation or by its terms to satisfy the requirements of § 422 of the
Code.

     2.16 Option — means an ISO or a Non-ISO.

     2.17 Option Certificate — means the document that sets forth the terms and conditions
of an Option (and, if so provided, a Stock Appreciation Right granted in connection with an
Option).

     2.18 Option Price — means the price that shall be paid to purchase one share of Stock
upon the exercise of an Option.

     2.19 Parent — means any corporation that is a parent corporation (within the meaning
of § 424(e) of the Code) of the Company.

     2.20 Plan — means this Metal Management, Inc. 2002 Incentive Stock Plan as effective
as of the date adopted by the Board in 2002 and as amended from time to time thereafter.

     2.21 Rule 16b-3 — means the exemption under Rule 16b-3 to Section 16(b) of the 1934
Act or any successor to such rule.

     2.22 Stock — means the $.01 par value common stock of the Company.

     2.23 Stock Appreciation Right — means a right granted under Section 9 to receive the
appreciation in a share of Stock.

     2.24 Stock Appreciation Right Certificate — means the document that sets forth the
terms and conditions of a Stock Appreciation Right that is not granted as part of an Option.

     2.25 SAR Value — means the value assigned by the Committee to a share of Stock in
connection with the grant of a Stock Appreciation Right.

     2.26 Stock Grant — means Stock granted under Section 10.

     2.27 Stock Grant Certificate — means the document that sets forth the terms and

3

 

conditions of a Stock Grant.

     2.28 Subsidiary — means a corporation that is a subsidiary corporation (within the
meaning of § 424(f) of the Code) of the Company.

     2.29 Ten Percent Shareholder — means a person who owns (after taking into account the
attribution rules of § 424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of either the Company, a Subsidiary or Parent.

SECTION 3.

SHARES RESERVED UNDER PLAN

Subject to Section 14, there shall be 4,000,000 shares of Stock reserved for issuance under this
Plan. Such shares of Stock shall be reserved to the extent that the Company deems appropriate from
authorized but unissued shares of Stock and from shares of Stock that have been reacquired by the
Company. Any shares of Stock subject to an Option or Stock Grant that remain unissued after the
cancellation, expiration or exchange of such Option or Stock Grant or that are forfeited after
issuance thereafter shall again become available for issuance under this Plan. The shares of Stock
reserved for issuance under this Plan shall be reduced to the extent that shares are issued as
payment under Section 9.3 upon the exercise of a Stock Appreciation Right, but Stock Appreciation
Rights otherwise shall not reduce the number of shares available for issuance under this Plan. Any
shares of Stock that would be transferred pursuant to the Plan but that are used to satisfy a
withholding obligation shall be treated as transferred under this Plan and shall not again become
available for grants under this Plan.

SECTION 4.

EFFECTIVE DATE

The effective date of this Plan shall be the date of its adoption by the Board, provided the
shareholders of the Company (acting at a duly called meeting of such shareholders) approve such
adoption within twelve months of such effective date. Any ISO granted before such shareholder
approval automatically shall be granted subject to such approval.

4

 

SECTION 5.

COMMITTEE

This Plan shall be administered by the Committee. If there is no Committee (for example, because
the Board has not appointed a Committee or the members of the appointed committee do not satisfy
the requirements of § 2.7), the Board shall administer the Plan (and any reference in the Plan to
the Committee shall mean a reference to the Board). 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 § 15 and §
16 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 Key Person or Director and on each other person directly or indirectly
affected by such action. The Committee, in its discretion, may delegate to one or more of its
members or one or more officers of the Company the right to grant Awards to Key Persons who are not
officers of the Company. In addition, the Committee may authorize any of its members or any
officer of the Company to execute and deliver documents on behalf of the Committee.

SECTION 6.

ELIGIBILITY AND ANNUAL GRANT CAPS

Only Key Persons who are employed by the Company or a Subsidiary or Parent shall be eligible for
the grant of ISOs under this Plan. All Key Persons shall be eligible for the grant of Non-ISOs,
Stock Appreciation Rights and Stock Grants. No Key Person, however, shall be granted in any
calendar year Options, Stock Appreciation Rights, or Stock Grants that individually or in the
aggregate are based on more than 1,000,000 shares of Stock. Directors shall be eligible for the
grant of Non-ISOs in accordance with the provisions of Section 8.

SECTION 7.

OPTIONS

     7.1 Committee Action. The Committee acting in its absolute discretion shall have the
right to grant Options to Key Persons from time to time. The Committee shall have the right to
grant new Options in exchange for the cancellation of outstanding Options that have a higher or
lower Option Price than the new Options. Each grant of an Option 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 such other terms and conditions as the Committee acting in its absolute discretion deems
consistent with the terms of this Plan. If the Committee grants an ISO and a Non-ISO to a Key
Person on the same date, the right of the Key Person to exercise the ISO shall not be conditioned
on his or her failure to exercise the Non-ISO. The Committee, in its sole discretion, at any time
may accelerate the vesting of an Option or waive any conditions or restrictions relating to the
Option or the shares of Stock covered thereby.

5

 

     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 that would first become exercisable
in any calendar year exceeds $100,000. Any such excess instead automatically shall be treated as a
Non-ISO. The Committee shall interpret and administer the ISO limitation set forth in this Section
7.2 in accordance with § 422(d) of the Code, and the Committee shall treat this Section 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 an ISO shall be no less than the Fair Market
Value of a share of Stock on the date the Option is granted; provided, however, if an ISO is
granted to a Key Person who is a Ten Percent Shareholder, the Option Price of 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. The
Option Price for a Non-ISO may be equal to, greater than or less than the Fair Market Value of a
share of Stock on the date the Option is granted.

     7.4 Payment of Option Price. The Option Price shall be payable in full upon the
exercise of any Option or the Key Person shall have entered into an agreement with the Company and
a broker acceptable to the Committee to the effect that the Company will transfer the shares to the
brokerage account of the Key Person and the broker will transfer the Option Price to the Company on
that same date. At the discretion of the Committee, an Option Certificate may provide for the
payment of the Option Price either in cash, by check or in Stock that has been held by the optionee
for at least six months, or in any combination of cash, check and such Stock, or by such other
means as the Committee determines appropriate at the time of grant of the Option. Any payment made
in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the Key
Person causes such Stock to be transferred to the account of the Company.

     7.5 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 that is the fifth anniversary of the date the Option is
granted, if the Option is an ISO and the Key Person is a Ten Percent
Shareholder on the date the Option is granted, or

(2) the date that is the tenth anniversary of the date the Option is
granted, if the Option is (a) a Non-ISO or (b) an ISO that is
granted to a Key Person who is not a Ten Percent Shareholder on the
date the Option is granted.

An Option Certificate may provide for the exercise of an Option after the employment or service of
a Key Person has terminated for any reason whatsoever, and unless an Option Certificate provides
otherwise, an Option granted to a Key Person may be exercised by the Key Person (to the extent
exercisable) during the period that the Key Person remains an employee or consultant of the Company
or any Parent, Subsidiary or Affiliate and for a period of three months (one year for a Non-ISO in
the case of retirement on or after the age of 65) after the Key Person’s employment or service as a
consultant terminates other than as a result of death, total and

6

 

permanent disability (as
determined by the Committee), or Cause; provided that in no event shall the Option be exercisable
more than ten years (five years in the case of an ISO granted to a Ten Percent Shareholder) after
the grant date. Unless an Option Certificate provides otherwise, if the Key Person’s employment or
service as a consultant terminates as a result of death or total and permanent disability (as
determined by the Committee), the Option will vest immediately and may be exercised thereafter for
a period of one year if an ISO or two years if a Non-ISO after the Key Person’s employment or
service as a consultant terminates by the executor or administrator of the Key Person’s estate or
by the person or persons to whom the Key Person’s rights under the Option pass by the Key Person’s
will or the laws of descent and distribution; provided that in no event shall the Option be
exercisable more than ten years (five years in the case of an ISO granted to a Ten Percent
Shareholder) after the grant date. Unless an Option Certificate provides otherwise, if the Key
Person is terminated for Cause, the Option will expire immediately and automatically at the time of
such termination.

     7.6 Reload Option Grants. An Option Certificate may provide for the automatic grant
of additional Options as of each date that a Key Person exercises the original Option if the Key
Person in connection with such exercise uses (in accordance with Section 7.4) Stock to pay all or a
part of the Option Price or uses Stock to satisfy all or a part of any related tax withholding
requirement. As for each such additional Option,

(1) the number of shares of Stock subject to the additional Option
shall be no more than the number of shares of Stock used to pay the
related Option Price or to satisfy the related withholding
requirement,

(2) the Option Price shall be no less than the Fair Market Value of
a share of Stock on the date of the grant of the reload Option,

(3) the additional Option shall expire no later than the expiration
date for the original Option, and

(4) the additional Option shall be subject to such other terms and
conditions as the Committee deems appropriate under the
circumstances.

SECTION 8.

GRANTS TO DIRECTORS

     8.1 Automatic Grants. Each Director who is a member of the Board as of the first day
of each fiscal year of the Company, commencing with the fiscal year ending March 31, 2008,
automatically shall be granted (without any action on the part of the Committee) on such date a
non-ISO to purchase 30,000 shares of Stock at an Option Price equal to the Fair Market Value of a
share of Stock on the date of such grant. If a Director commences service on the Board after the
first business day of a fiscal year, the Director automatically shall be granted (without any
action on the part of the Committee) on the date the Director commences service on

7

 

the Board, a
Non-ISO to purchase a number of shares of Stock determined by multiplying 30,000 by a fraction the
numerator of which is the number of full and partial months remaining in such fiscal year and the
denominator of which is 12, at an Option Price equal to the Fair Market Value of a share of Stock
on the date of such grant. Each Option granted to a Director under this Section 8 shall be
evidenced by an Option Certificate that sets forth the terms and conditions set forth in this
Section 8.

     8.2 Exercise of Options. The shares of Stock subject to an Option granted to a
Director shall become exercisable on the last day of the fiscal year of the Company during which
such Option was granted, so long as the Director remains on the Board through that date. The right
to purchase shares of Stock subject to an Option that has become exercisable shall be cumulative
during the term of the Option. The Option may be exercised by the Director (to the extent
exercisable) during the period that the Director remains on the Board and for a period of three
months after the Director ceases to serve as a member of the Board other than as a result of death
or disability (as determined by the Board); provided that in no event shall the Option be
exercisable more than ten years after the grant date. If the Director ceases to serve as a member
of the Board as a result of death or disability (as determined by the Board), the Option may be
exercised thereafter (to the extent exercisable) for a period of twelve months after the Director
ceases to serve as a member of the Board by the executor or administrator of the Director’s estate
or by the person or persons to whom the Director’s rights under the Option pass by the Director’s
will or the laws of descent and distribution; provided that in no event shall the Option be
exercisable more than ten years after the grant date.

     8.3 Payment of Option Price. No shares of Stock shall be issued upon exercise of an
Option by a Director until the Company has received full payment of the Option Price or the
Director has entered into an agreement with the Company and a broker acceptable to the Committee to
the effect that the Company will transfer the shares to the brokerage account of the Director and
the broker will transfer the Option Price to the Company on that same date. The Option Price may
be paid either in cash, by check or in Stock that has been held by the Director for at least six
months, or in any combination of cash, check and such Stock. Any payment made in Stock shall be
treated as equal to the Fair Market Value of such Stock on the date the Director causes such Stock
to be transferred to the account of the Company.

SECTION 9.

STOCK APPRECIATION RIGHTS

     9.1 Committee Action. The Committee acting in its absolute discretion may grant Stock
Appreciation Rights to Key Persons 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.

     9.2 Terms and Conditions.

          (a) Stock Appreciation Right Certificate. Each Stock Appreciation Right

8

 

Certificate
shall set forth the number of shares of Stock on which the Key Person’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 that is the tenth anniversary of the date such Stock Appreciation
Right is granted.

          (b) Option Certificate. If a Stock Appreciation Right is evidenced by an Option
Certificate, the number of shares of Stock subject to the Stock Appreciation Right 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 Key Person’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 Key Person’s right to exercise his or her Stock Appreciation Right
with respect to such share. A Stock Appreciation Right that is granted as part of an Option shall
be exercisable only while the related Option is exercisable. The Option Certificate shall set
forth such other terms and conditions for the exercise of the Stock Appreciation Right as the
Committee deems appropriate under the circumstances.

          (c) 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. A Key Person upon the exercise of his or her Stock Appreciation Right shall
receive a payment from the Company in cash or in Stock, or in a combination of cash and Stock,
equal to the excess of the Fair Market Value of the shares of Stock to which the exercise relates
over the SAR Value for such shares. If payment is made in whole or in part in Stock, the number of
shares of Stock paid shall be based on the Fair Market Value of a share on the date the Stock
Appreciation Right is exercised. The Committee acting in its absolute discretion shall have the
right to determine the form of payment under this Section 9.3.

SECTION 10.

STOCK GRANTS

     10.1 Committee Action. The Committee acting in its absolute discretion may make Stock
Grants to Key Persons, including, but not limited to, restricted stock grants. Each Stock 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 and the conditions
under which the Key Person’s interest in any Stock that has been issued will become
non-forfeitable. The Committee, in its sole discretion, may at the time a Stock Grant is made or
at any time thereafter provide for the deemed satisfaction of the conditions to which the Stock
Grant is subject and the early vesting of the Stock Grant.

9

 

     10.2 Conditions.

          (a) Conditions to Issuance of Stock. The Committee acting in its absolute discretion
may make the issuance of Stock under a Stock Grant subject to the satisfaction of one, or more than
one, condition that the Committee deems appropriate under the circumstances for Key Persons
generally or for a Key Person in particular, and the related Stock Grant Certificate shall set
forth each such condition and the deadline for satisfying each such condition. Stock subject to a
Stock Grant shall be issued in the name of a Key Person only after each such condition, if any, has
been timely satisfied, and any Stock that is so issued shall be held by the Company pending the
satisfaction of the forfeiture conditions, if any, under Section 10.2(b) for the related Stock
Grant.

          (b) Forfeiture Conditions. The Committee acting in its absolute discretion may make
Stock issued in the name of a Key Person subject to one, or more than one, objective employment,
performance or other forfeiture condition (including a performance goal specified in Section 17.1)
that the Committee acting in its absolute discretion deems appropriate under the circumstances for
Key Persons generally or for a Key Person in particular, and the related Stock
Grant Certificate shall set forth each such forfeiture condition, if any, and the deadline, if any,
for satisfying each such forfeiture condition. A Key Person’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 be unavailable
under § 3 after such grant is effective unless such share thereafter is forfeited as a result of a
failure to timely satisfy a forfeiture condition, in which event such share of Stock shall again
become available under Section 3 as of the date of such forfeiture.

     10.3 Dividends and Voting Rights. Unless the Stock Grant Certificate provides
otherwise, if a cash dividend is paid on a share of Stock after such Stock has been issued under a
Stock Grant but before the first date that a Key Person’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 Key Person. If a Stock dividend is paid on such a share of Stock during such
period, such Stock dividend shall be treated as part of the related Stock Grant, and a Key Person’s
interest in such Stock dividend shall be forfeited or shall become non-forfeitable at the same time
as the Stock with respect to which the Stock dividend was paid is forfeited or becomes
non-forfeitable. The disposition of each other form of dividend that is declared on such a share
of Stock during such period shall be made in accordance with such rules as the Committee shall
adopt with respect to each such dividend. A Key Person also shall have the right to vote the Stock
issued under his or her Stock Grant during such period.

     10.4 Satisfaction of Forfeiture Conditions. A share of Stock shall cease to be
subject to a Stock Grant at such time as a Key Person’s interest in such Stock becomes
non-forfeitable under this Plan, and the certificate representing such share shall be transferred
to, or registered in the name of, the Key Person as soon as practicable thereafter.

10

 

SECTION 11.

NON-TRANSFERABILITY

No Award shall (absent the Committee’s consent) be transferable by a Key Person or a Director other
than by will or by the laws of descent and distribution, and any Award shall (absent the
Committee’s consent) be exercisable during a Key Person’s or Director’s lifetime only by the Key
Person or Director. Notwithstanding the foregoing, an Award (other than an ISO) may permit the
transfer of the Award by the Key Person or Director pursuant to a qualified domestic relations
order (as defined in Code Section 414(p)), provided the transfer of such Award would not adversely
affect the qualification of such Award or the underlying shares of Stock for registration on a
Registration Statement on Form S-8. The person or persons to whom an Award is transferred by will
or by the laws of descent and distribution or pursuant to a qualified domestic relations order (or
with the Committee’s consent) thereafter shall be treated as the Key Person or Director.

SECTION 12.

SECURITIES REGISTRATION

As a condition to the receipt of shares of Stock under this Plan, the Key Person 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 Key Person 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 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.

SECTION 13.

LIFE OF PLAN

No Award shall be granted under this Plan on or after the earlier of

     (1) the tenth anniversary of the effective date of this Plan
(as determined under Section 4), in which event this Plan

11

 

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 has been forfeited or has become non-forfeitable, or

     (2) the date on which all of the Stock reserved under Section 3
has (as a result of the exercise of Options or Stock Appreciation
Rights 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.

SECTION 14.

ADJUSTMENT

     14.1 Capital Structure. The number, kind or class (or any combination thereof) of
shares of Stock reserved under Section 3, the annual grant caps described in Section 6, the annual
Director grants described in Section 8, the number, kind or class (or any combination thereof) of
shares of Stock subject to an Award, and the Option Price or SAR Value of an Award shall be
adjusted by the Committee in an equitable manner to reflect any change in the capitalization of the
Company, including, but not limited to, such changes as stock dividends or stock splits, effected
without receipt of consideration by the Company.

     14.2 Mergers. The Committee as part of any corporate transaction described in §
424(a) of the Code shall have the right to adjust (in any manner that 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 reserved under Section 3, the annual grant caps described
in Section 6, and the annual Director grants described in Section 8. The Committee as part of any
corporate transaction described in § 424(a) of the Code also shall have the right to adjust (in any
manner that 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 an Award, the Option Price
or SAR Value of an Award, and any grant and forfeiture conditions of an Award. Furthermore, the
Committee shall have the right (in any manner that the Committee in its discretion deems consistent
with § 424(a) of the Code and without regard to the annual grant caps described in Section 6) to
make any Award to effect the assumption of, or the substitution for, stock grants and option and
stock appreciation right grants previously made by any other entity to the extent that such
corporate transaction calls for such substitution or assumption of such stock grants and stock
option and stock appreciation right grants.

     14.3 Fractional Shares. If any adjustment under this Section 14 would create a
fractional share of Stock or a right to acquire a fractional share of Stock, such fractional share
shall be disregarded and the number of shares of Stock reserved under this Plan and the number
subject to an Award shall be the next lower number of shares of Stock, rounding all fractions
downward. An adjustment made under this Section 14 by the Committee shall be conclusive and

12

 

binding on all affected persons.

SECTION 15.

CHANGE IN CONTROL

If there is a Change in Control, then any and all conditions to the exercise of all then
outstanding Options and Stock Appreciation Rights and any and all issuance and forfeiture
conditions on all then outstanding Stock Grants automatically shall be deemed satisfied in full,
and the Board shall have the right to cancel such Options, Stock Appreciation Rights and Stock
Grants if (1) the Company transfers to the Key Person or Director shares of Stock, the number of
which shall be determined by the Company by dividing the excess of (a) the fair market value of the
number of shares which remain subject to the exercise of such Option or SAR over the total Option
Price or SAR Value (as the case may be) for such shares by (b) the fair market value of a share of
Stock on such date, which number shall be rounded down to the nearest whole number, or (2) the
Company transfers to the Key Person or Director the same consideration which the Key Person or
Director otherwise would receive as a shareholder of the Company in connection with such Change in
Control if the Key Person or Director held the number of shares of Stock which would have been
transferable to him or to her under (1) above if such number had been determined immediately before
such Change in Control.

SECTION 16.

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, (1) no amendment (including an amendment to increase
the number of shares of Stock available for issuance of ISOs) shall be made absent the approval of
the shareholders of the Company to the extent such approval is required under applicable law and
(2) no amendment shall adversely affect any rights under an Award previously made unless the Key
Person or Director consents in writing. The Board also may suspend granting Awards at any time and
may terminate this Plan at any time; provided, however, the Board or the Committee shall not have
the right unilaterally to modify, amend or cancel any Award granted before such suspension or
termination unless (x) the modification or amendment does not adversely affect any rights under the
Award, (y) the Key Person or Director consents in writing to such modification, amendment or
cancellation, or (z) there is a transaction described in Section 14 or Section 15 (in which case
the Committee may act as provided in such Sections).

13

 

SECTION 17.

MISCELLANEOUS

     17.1 Performance Goals. As a condition to the grant of an Award, or the issuance of
shares subject to an Award, the Committee may prescribe corporate, divisional and/or individual
performance goals applicable to all or any portion of the shares subject to the Award. Performance
goals may be based on achieving a certain level of revenue, earnings, earnings per share, net
income, return on equity, return on capital, return on assets, total shareholder return, return on
sales or cash flow, or any combination thereof, of the Company or the Company and its Subsidiaries
and Affiliates, or any division thereof, or on the extent of changes in such criteria.

     17.2 Shareholder Rights. No Key Person 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 Award to such Key Person or Director.
Subject to Section 10.3, a Key Person’s rights as a shareholder in the shares of Stock underlying a
Stock Grant that is effective shall be set forth in the related Stock Grant Certificate.

     17.3 No Contract of Employment. The grant of an Option or a Stock Appreciation Right
or a Stock Grant to a Key Person under this Plan shall not constitute a contract of employment and
shall not confer on a Key Person any rights upon his or her termination of employment or service in
addition to those rights, if any, expressly set forth in the related Option Certificate, Stock
Appreciation Right Certificate or Stock Grant Certificate.

     17.4 Withholding. Each Award shall be made subject to the condition that the Key
Person or Director consents to whatever action the Committee directs to satisfy the minimum
statutory federal and state tax withholding requirements, if any, that the Committee in its
discretion deems applicable to the exercise of the Option, or, in the case of a Key Person, Stock
Appreciation Right, or the satisfaction of any forfeiture conditions with respect to Stock subject
to a Stock Grant issued in the name of a Key Person, including requiring the Key Person or Director
to remit to the Company in cash the required withholding amount. The Committee also shall have the
right to provide in an Option Certificate, Stock Appreciation Right Certificate or Stock Grant
Certificate that a Key Person or Director may elect to satisfy such minimum statutory federal and
state tax withholding requirements through a reduction in the cash or the number of shares of Stock
actually transferred to him or to her under this Plan. No withholding shall be effected under this
Plan that exceeds the minimum statutory federal and state withholding requirements. The Committee
acting in its absolute discretion shall have the power to authorize and direct the Company to pay a
cash bonus (or to provide in the terms of an Award for the Company to make such payment) to a Key
Person or Director to pay all, or any portion of, his or her federal, state and local income tax
liability that the Committee deems attributable to his or her Award and, further, to pay any
such tax liability attributable to such cash bonus.

     17.5 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.
Finally, each term set forth in Section 2 shall 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

14

 

and the plural shall include the singular.

     17.6 Other Conditions. Each Option Certificate, Stock Appreciation Right Certificate
or Stock Grant Certificate may require that a Key Person (as a condition to the exercise of an
Option or a Stock Appreciation Right or the issuance of Stock subject to a Stock Grant) or Director
(as a condition to the exercise of an Option) enter into any agreement or make such representations
prepared by the Company, including (without limitation) any agreement that 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.

     17.7 Loans. If approved by the Committee, the Company may lend money to, or guarantee
loans made by a third party to, any Key Person or Director to finance all or a part of the exercise
of any Option granted under this Plan, or, in the case of a Key Person, the purchase of any Stock
subject to a Stock Grant under this Plan, and the exercise of an Option or the purchase of any such
Stock with the proceeds of any such loan shall be treated as an exercise or purchase for cash under
this Plan.

15

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