Exhibit 10.1
THE TIMKEN COMPANY 2011 LONG-TERM INCENTIVE PLAN
     1. Purpose. The purpose of The Timken Company 2011 Long-Term Incentive Plan
(the “Plan”), is to enable The Timken Company, an Ohio corporation (the
“Corporation”), and its Subsidiaries, to attract, retain and motivate key
employees by providing such persons incentives and rewards for superior
performance and to promote equity participation by key employees and directors
of the Corporation, thereby reinforcing a mutuality of interest with other
shareholders, and permitting key employees and directors to share in the
Corporation’s growth.
     2. Definitions. As used in this Plan,
“Appreciation Right” means a right granted pursuant to Section 5 of this Plan,
including both a Free-Standing Appreciation Right and a Tandem Appreciation
Right.
“Base Price” means the price to be used as the basis for determining the Spread
upon the exercise of a Free-Standing Appreciation Right.
“Board” means the Board of Directors of the Corporation.
“Change in Control” means the occurrence of any of the following events:

  (i)   The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 30% or more of either: (A) the
then-outstanding Common Shares or (B) the combined voting power of the
then-outstanding voting securities of the Corporation entitled to vote generally
in the election of directors (“Voting Shares”); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change in Control: (1) any acquisition directly from the Corporation, (2) any
acquisition by the Corporation, (3) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Corporation or any Subsidiary,
or (4) any acquisition by any Person pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii); or     (ii)   Individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason (other than death or disability) to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Corporation’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Corporation in which
such person is named as a nominee for director, without objection to such
nomination) shall be considered as though such individual were a member of the
Incumbent Board, but excluding for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or

1

--------------------------------------------------------------------------------

 

  (iii)   Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Corporation
(a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Common Shares and Voting Shares
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 66-2/3% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the entity resulting from such Business Combination (including,
without limitation, an entity which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions relative to each other as their ownership, immediately prior to such
Business Combination, of the Common Shares and Voting Shares of the Corporation,
as the case may be, (B) no Person (excluding any entity resulting from such
Business Combination or any employee benefit plan (or related trust) sponsored
or maintained by the Corporation or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then-outstanding shares of common stock of the entity
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or     (iv)   Approval by the
shareholders of the Corporation of a complete liquidation or dissolution of the
Corporation.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means the committee described in Section 18(a) of this Plan.
“Common Shares” means (i) shares of the common stock of the Corporation and
(ii) any security into which Common Shares may be converted by reason of any
transaction or event of the type referred to in Section 12 of this Plan.
“Covered Employee” means a Participant who is, or is determined by the Committee
to be likely to become, a “covered employee” within the meaning of Section
162(m) of the Code (or any successor provision).
“Date of Grant” means the date specified by the Committee on which a grant of
Option Rights, Appreciation Rights, Performance Shares or Performance Units or a
grant or sale of Restricted Shares, Restricted Stock Units, Deferred Shares or
Common Shares shall become effective, which shall not be earlier than the date
on which the Committee takes

2

--------------------------------------------------------------------------------

 

action with respect thereto, including the date on which a grant of Common
Shares to a Nonemployee Director becomes effective pursuant to Section 10 of
this Plan.
“Deferral Period” means the period of time during which Deferred Shares are
subject to deferral limitations under Section 8 of this Plan.
“Deferred Shares” means an award pursuant to Section 8 of this Plan of the right
to receive Common Shares at the end of a specified Deferral Period.
“Detrimental Activity” means:

  (i)   Engaging in any activity, as an employee, principal, agent, or
consultant for another entity that competes with the Corporation in any actual,
researched, or prospective product, service, system, or business activity for
which the Participant has had any direct responsibility during the last two
years of his or her employment with the Corporation or a Subsidiary, in any
territory in which the Corporation or a Subsidiary manufactures, sells, markets,
services, or installs such product, service, or system, or engages in such
business activity;     (ii)   Soliciting any employee of the Corporation or a
Subsidiary to terminate his or her employment with the Corporation or a
Subsidiary;     (iii)   The disclosure to anyone outside the Corporation or a
Subsidiary, or the use in other than the Corporation or a Subsidiary’s business,
without prior written authorization from the Corporation, of any confidential,
proprietary or trade secret information or material relating to the business of
the Corporation and its Subsidiaries, acquired by the Participant during his or
her employment with the Corporation or its Subsidiaries or while acting as a
director of or consultant for the Corporation or its Subsidiaries thereafter;  
  (iv)   The failure or refusal to disclose promptly and to assign to the
Corporation upon request all right, title and interest in any invention or idea,
patentable or not, made or conceived by the Participant during employment by the
Corporation and any Subsidiary, relating in any manner to the actual or
anticipated business, research or development work of the Corporation or any
Subsidiary or the failure or refusal to do anything reasonably necessary to
enable the Corporation or any Subsidiary to secure a patent where appropriate in
the United States and in other countries;     (v)   Activity that results in
Termination for Cause. For the purposes of this Section, “Termination for Cause”
shall mean a termination:

  (A)   due to the Participant’s willful and continuous gross neglect of his or
her duties for which he or she is employed; or     (B)   due to an act of
dishonesty on the part of the Participant constituting a felony resulting or
intended to result, directly or indirectly, in his or her gain for personal
enrichment at the expense of the Corporation or a Subsidiary; or

3

--------------------------------------------------------------------------------

 

  (vi)   Any other conduct or act determined to be injurious, detrimental or
prejudicial to any significant interest of the Corporation or any Subsidiary
unless the Participant acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation.

“Effective Date” means the date that this Plan is approved by the shareholders
of the Corporation.
“Evidence of Award” means an agreement, certificate, resolution or other type or
form of writing or other evidence approved by the Committee which sets forth the
terms and conditions of one or more awards granted under this Plan. An Evidence
of Award may be in any electronic medium, may be limited to notation on the
books and records of the Corporation and, unless otherwise determined by the
Committee, need not be signed by a representative of the Corporation or a
Participant.
“Existing Plan” means The Timken Company Long-Term Incentive Plan, as Amended
and Restated as of February 5, 2008.
“Free-Standing Appreciation Right” means an Appreciation Right granted pursuant
to Section 5 of this Plan that is not granted in tandem with an Option Right or
similar right.
“Incentive Stock Options” means Option Rights that are intended to qualify as
“incentive stock options” under Section 422 of the Code or any successor
provision.
“Less-Than-80-Percent Subsidiary” means a Subsidiary with respect to which the
Corporation directly or indirectly owns or controls less than 80 percent of the
total combined voting or other decision-making power.
“Management Objectives” means the measurable performance objective or objectives
established pursuant to this Plan for Participants who have received grants of
Performance Shares or Performance Units or, when so determined by the Committee,
Option Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units,
Deferred Shares and dividend equivalents. Management Objectives may be described
in terms of Corporation-wide objectives or objectives that are related to the
performance of the individual Participant or of the Subsidiary, division,
department, region or function within the Corporation or Subsidiary in which the
Participant is employed. The Management Objectives may be made relative to the
performance of other companies or subsidiaries, divisions, departments, regions
or functions within such other companies, and may be made relative to an index
or one or more of the performance objectives themselves. The Compensation
Committee may grant awards subject to Management Objectives that are either
Qualified Performance-Based Awards or are not Qualified Performance-Based
Awards. The Management Objectives applicable to any Qualified Performance-Based
Award to a Covered Employee will be based on one or more, or a combination, of
the following criteria: cash flow, comparisons with various stock market
indices, cost of capital, customer service, debt reduction, earnings, earnings
before interest and taxes, earnings per share, economic profit, free cash flow,
gross profits, inventory management, net income, productivity improvement,
profit after tax, reduction

4

--------------------------------------------------------------------------------

 

of fixed costs, return on assets, return on equity, return on invested capital,
sales, shareholder return and/or working capital.
If the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Corporation, or the manner in which it
conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Committee may in its discretion modify such
Management Objectives or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Qualified Performance-Based Award (other than in connection with a
Change in Control) where such action would result in the loss of the otherwise
available exemption of the award under Section 162(m) of the Code. In such case,
the Compensation Committee will not make any modification of the Management
Objectives or minimum acceptable level of achievement with respect to such
Covered Employee.
“Market Value per Share” means as of any particular date the closing sale price
of the Common Shares as reported on The New York Stock Exchange or, if not
listed on such exchange, on any other national securities exchange on which the
Common Shares are listed. If the Common Shares are not traded as of any given
date, the Market Value per Share means the closing price for the Common Shares
on the principal exchange on which the Common Shares are traded for the
immediately preceding date on which the Common Shares were traded. If there is
no regular public trading market for the Common Shares, the Market Value per
Share of the Common Shares shall be the fair market value of the Common Shares
as determined in good faith by the Committee. The Committee is authorized to
adopt another fair market value pricing method, provided such method is stated
in the Evidence of Award, and is in compliance with the fair market value
pricing rules set forth in Section 409A of the Code.
“Nonemployee Director” means a member of the Board who is not an employee of the
Corporation or any Subsidiary.
“Optionee” means the person named in an Evidence of Award evidencing an
outstanding Option Right.
“Option Price” means the purchase price payable upon the exercise of an Option
Right.
“Option Right” means the right to purchase Common Shares upon exercise of an
option granted pursuant to Section 4 or Section 9 of this Plan.
“Participant” means a person who is selected by the Committee to receive
benefits under this Plan and who is at that time an officer, including without
limitation an officer who may also be a member of the Board, or other key
employee of the Corporation or any Subsidiary or who has agreed to commence
serving in any such capacity within 90 days of the Date of Grant, and shall also
include each Nonemployee Director who receives an award pursuant to this Plan.
The term “Participant” shall also include any person who provides services to
the Corporation or a Subsidiary that are equivalent to those typically provided
by an employee.

5

--------------------------------------------------------------------------------

 

“Performance Period” means, in respect of a Performance Share or Performance
Unit, a period of time established pursuant to Section 9 of this Plan within
which the Management Objectives relating thereto are to be achieved.
“Performance Share” means a bookkeeping entry that records the equivalent of one
Common Share awarded pursuant to Section 9 of this Plan.
“Performance Unit” means a bookkeeping entry that records a unit equivalent to
$100.00 or such other value as is determined by the Committee awarded pursuant
to Section 9 of this Plan.
“Qualified Performance-Based Award” means any award of Performance Shares,
Performance Units, Restricted Shares or Restricted Stock Units, or portion of
such award, to a Covered Employee that is intended to satisfy the requirements
for “qualified performance-based compensation” under Section 162(m) of the Code.
“Restricted Shares” means Common Shares granted or sold pursuant to Section 6 of
this Plan as to which neither the substantial risk of forfeiture nor the
restrictions on transfer referred to in Section 6 hereof has expired.
“Restricted Stock Unit” means an award made pursuant to Section 7 of this Plan
of the right to receive Common Shares or cash at the end of a specified period.
“Restriction Period” means the period of time during which Restricted Stock
Units are subject to restrictions, as provided in Section 7 of this Plan.
“Rule 16b-3” means Rule 16b-3 of the Securities and Exchange Commission
promulgated under the Securities Exchange Act of 1934 (or any successor rule to
the same effect), as in effect from time to time.
“Spread” means, in the case of a Free-Standing Appreciation Right, the amount by
which the Market Value per Share on the date when any such right is exercised
exceeds the Base Price specified for such right or, in the case of a Tandem
Appreciation Right, the amount by which the Market Value per Share on the date
when any such right is exercised exceeds the Option Price specified for the
related Option Right.
“Subsidiary” means a corporation, partnership, joint venture, unincorporated
association or other entity in which the Corporation has a direct or indirect
ownership or other equity interest; provided, however, for purposes of
determining whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, “Subsidiary” means any corporation in which the
Corporation owns or controls directly or indirectly more than 50 percent of the
total combined voting power represented by all classes of stock issued by such
corporation at the time of such grant.
“Tandem Appreciation Right” means an Appreciation Right granted pursuant to
Section 5 of this Plan that is granted in tandem with an Option Right or any
similar right granted under any other plan of the Corporation.

6

--------------------------------------------------------------------------------

 

     3. Maximum Shares Available Under the Plan; Life of Plan Limits; Individual
Participant Limits.

  (a)   Subject to adjustment as provided in Section 12 of this Plan, the
maximum number of Common Shares that may be issued or transferred (i) upon the
exercise of Option Rights or Appreciation Rights, (ii) as Restricted Shares and
released from all substantial risks of forfeiture, (iii) in payment of
Restricted Stock Units, (iv) as Deferred Shares, (v) in payment of Performance
Shares or Performance Units that have been earned, (vi) as Common Share awards
to Nonemployee Directors or (vii) in payment of dividend equivalents paid with
respect to awards made under this Plan, shall not in the aggregate exceed
7,000,000 Common Shares (the “Available Common Shares”), which Available Common
Shares may be Common Shares of original issuance or Common Shares held in
treasury or a combination thereof.     (b)   Each Common Share issued or
transferred (and, in the case of Restricted Shares, released from all
substantial risks of forfeiture) pursuant to any award (other than an Option
Right or Appreciation Right) granted under this Plan shall, for purposes of
Section 3(a) of this Plan, reduce the number of Available Common Shares by two
and twelve one hundredths (2.12) Common Shares for each such Common Share,
instead of one Common Share. Each Common Share issued or transferred pursuant to
any Option Right or Appreciation Right granted under this Plan shall, for
purposes of Section 3(a) of this Plan, reduce the number of Available Common
Shares by one Common Share.     (c)   Common Shares covered by an award granted
under this Plan shall not be counted as used unless and until they are actually
issued and delivered to a Participant and, therefore, the total number of
Available Common Shares under this Plan as of a given date shall not be reduced
by any Common Shares relating to prior awards that have expired or have been
forfeited and cancelled. Without limiting the generality of the foregoing, upon
payment in cash of the benefit provided by any award granted under this Plan,
any Common Shares that were covered by that award will be available for issue or
transfer hereunder. Notwithstanding anything to the contrary contained herein:
(i) if Common Shares are tendered or otherwise used in payment of the Option
Price of an Option Right, the total number of shares covered by the Option Right
being exercised shall count against the aggregate plan limit described above;
(ii) Common Shares withheld by the Corporation to satisfy tax withholding
obligations shall count against the aggregate plan limit described above;
(iii) Common Shares that are repurchased by the Corporation with Option Right
proceeds shall not be added to the aggregate plan limit described above; and
(iv) the gross number of Common Shares covered by an Appreciation Right, to the
extent that it is exercised and settled in Common Shares, and whether or not
Common Shares are actually issued to the Participant upon exercise of the
Appreciation Right, shall be considered issued or transferred pursuant to this
Plan.

7

--------------------------------------------------------------------------------

 

  (d)   Notwithstanding anything in this Plan to the contrary, and subject to
adjustment as provided in Section 12 of this Plan:

  (i)   The aggregate number of Common Shares actually issued or transferred by
the Corporation upon the exercise of Incentive Stock Options shall not exceed
7,000,000 Common Shares;     (ii)   No Participant shall be granted Option
Rights or Appreciation Rights, in the aggregate, for more than 500,000 Common
Shares during any calendar year;     (iii)   No Participant will be granted
Qualified Performance-Based Awards of Restricted Shares, Restricted Stock Units,
Performance Shares or Performance Units, in the aggregate, for more than 500,000
Common Shares during any calendar year;     (iv)   In no event will any
Participant in any calendar year receive a Qualified Performance-Based Award of
Performance Units having an aggregate maximum value as of their respective Dates
of Grant in excess of $3,000,000;     (v)   No Nonemployee Director will be
granted, in any period of one calendar year, awards in excess of 6,000
Restricted Shares, 7,500 Common Shares or 9,000 Option Rights.

  (e)   Notwithstanding anything in this Plan to the contrary, up to 5% of the
maximum number of Common Shares that may be issued or transferred under this
Plan as provided for in Section 3(a) of this Plan, as may be adjusted under
Section 12 of this Plan, may be used for awards granted under Sections 6 through
9 of this Plan that do not comply with the three-year or one-year vesting
requirements set forth in such Sections of this Plan plus awards granted under
Section 10 of this Plan.

     4. Option Rights. The Committee may, from time to time and upon such terms
and conditions as it may determine, authorize grants to Participants of options
to purchase Common Shares. Each such grant may utilize any or all of the
authorizations and shall be subject to all of the requirements contained in the
following provisions:

  (a)   Each grant shall specify the number of Common Shares to which it
pertains, subject to the limitations set forth in Section 3 of this Plan.    
(b)   Each grant shall specify an Option Price per Common Share, which shall be
equal to or greater than the Market Value per Share on the Date of Grant.    
(c)   Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Corporation, (ii) nonforfeitable,
unrestricted Common Shares, which are already owned by the Optionee and have a
value at the time of exercise

8

--------------------------------------------------------------------------------

 

      that is equal to the total Option Price, (iii) subject to any conditions
or limitations established by the Committee, the Corporation’s withholding
Common Shares otherwise issuable upon exercise of an Option Right pursuant to a
“net exercise” arrangement (it being understood that, solely for purposes of
determining the number of treasury shares held by the Corporation, the Common
Shares so withheld shall not be treated as issued and acquired by the
Corporation upon such exercise), (iv) any other legal consideration that the
Committee may deem appropriate, including without limitation any form of
consideration authorized under Section 4(d) below, on such basis as the
Committee may determine in accordance with this Plan and (v) any combination of
the foregoing.     (d)   To the extent permitted by law, any grant may provide
for deferred payment of the Option Price from the proceeds of sale through a
bank or broker on the date of exercise of some or all of the Common Shares to
which the exercise relates.     (e)   Successive grants may be made to the same
Participant regardless of whether any Option Rights previously granted to such
Participant remain unexercised.     (f)   Each grant shall specify the period or
periods of continuous service by the Optionee with the Corporation or any
Subsidiary that is necessary before the Option Rights or installments thereof
shall become exercisable, and any such grant may provide for the earlier
exercisability of such rights in the event of the retirement, death or
disability of the Participant or a Change in Control.     (g)   Any grant of
Option Rights may specify Management Objectives that must be achieved as a
condition to the exercise of such rights.     (h)   Option Rights granted under
this Plan may be (i) options that are intended to qualify under particular
provisions of the Code, including without limitation Incentive Stock Options,
(ii) options that are not intended to so qualify or (iii) combinations of the
foregoing. Incentive Stock Options may be granted only to Participants who meet
the definition of “employees” under Section 3401(c) of the Code.     (i)  
Option Rights granted under this Plan shall not provide for any dividends or
dividend equivalents thereon.     (j)   The exercise of an Option Right will
result in the cancellation on a Common Share-for-Common Share basis of any
Tandem Appreciation Right authorized under Section 5 of this Plan.     (k)   No
Option Right granted under this Plan may be exercised more than 10 years from
the Date of Grant.     (l)   Each grant shall be evidenced by an Evidence of
Award, which shall contain such terms and provisions as the Committee may
determine consistent with this Plan.

9

--------------------------------------------------------------------------------

 

  (m)   The Committee reserves the discretion after the Date of Grant to provide
for the right to tender in satisfaction of the Option Price nonforfeitable,
unrestricted Common Shares, which are already owned by the Optionee and have a
value at the time of exercise that is equal to the Option Price.

     5. Appreciation Rights. The Committee may, from time to time and upon such
terms and conditions as it may determine, authorize grants to Participants of
Appreciation Rights. A Tandem Appreciation Right will be a right of the
Optionee, exercisable by surrender of the related Option Right, to receive from
the Corporation an amount determined by the Committee, which will be expressed
as a percentage (not exceeding 100 percent) of the Spread at the time of
exercise. Tandem Appreciation Rights may be granted at any time prior to the
exercise or termination of the related Option Rights; provided, however, that a
Tandem Appreciation Right awarded in relation to an Incentive Stock Option must
be granted concurrently with such Incentive Stock Option. A Free-Standing
Appreciation Right will be a right of the Participant to receive from the
Corporation an amount determined by the Committee, which will be expressed as a
percentage (not exceeding 100 percent) of the Spread at the time of exercise.
Each such grant may utilize any or all of the authorizations and shall be
subject to all of the requirements contained in the following provisions:

  (a)   Any grant may specify that the amount payable upon the exercise of an
Appreciation Right may be paid by the Corporation in cash, Common Shares or any
combination thereof and may (i) either grant to the Participant or reserve to
the Committee the right to elect among those alternatives or (ii) preclude the
right of the Participant to receive and the Corporation to issue Common Shares
or other equity securities in lieu of cash; provided, however, that no form of
consideration or manner of payment that would cause Rule 16b-3 to cease to apply
to this Plan shall be permitted.     (b)   Any grant may specify that the amount
payable upon the exercise of an Appreciation Right shall not exceed a maximum
specified by the Committee on the Date of Grant.     (c)   Any grant may specify
(i) a waiting period or periods before Appreciation Rights shall become
exercisable and (ii) permissible dates or periods on or during which
Appreciation Rights shall be exercisable.     (d)   Any grant may specify that
an Appreciation Right may be exercised only in the event of, or earlier in the
event of, the retirement, death or disability of the Participant or a Change in
Control.     (e)   Appreciation Rights granted under this Plan shall not provide
for any dividends or dividend equivalents thereon.     (f)   Each grant shall be
evidenced by an Evidence of Award, which shall describe the subject Appreciation
Rights, identify any related Option Rights, state that the Appreciation Rights
are subject to all of the terms and conditions of this Plan and

10

--------------------------------------------------------------------------------

 

      contain such other terms and provisions as the Committee may determine
consistent with this Plan.     (g)   Any grant of Appreciation Rights may
specify Management Objectives that must be achieved as a condition of the
exercise of such rights.     (h)   Regarding Tandem Appreciation Rights only:
Each grant shall provide that a Tandem Appreciation Right may be exercised only
(i) at a time when the related Option Right (or any similar right granted under
any other plan of the Corporation) is also exercisable and the Spread is
positive and (ii) by surrender of the related Option Right (or such other right)
for cancellation.     (i)   Regarding Free-Standing Appreciation Rights only:

  (i)   Each grant shall specify in respect of each Free-Standing Appreciation
Right a Base Price per Common Share, which shall be equal to or greater than the
Market Value per Share on the Date of Grant;     (ii)   Successive grants may be
made to the same Participant regardless of whether any Free-Standing
Appreciation Rights previously granted to such Participant remain unexercised;  
  (iii)   Each grant shall specify the period or periods of continuous
employment of the Participant by the Corporation or any Subsidiary that are
necessary before the Free-Standing Appreciation Rights or installments thereof
shall become exercisable; and     (iv)   No Free-Standing Appreciation Right
granted under this Plan may be exercised more than 10 years from the Date of
Grant.

     6. Restricted Shares. The Committee may also authorize grants or sales to
Participants of Restricted Shares upon such terms and conditions as the
Committee may determine. Each such grant or sale may utilize any or all of the
authorizations and shall be subject to all of the requirements contained in the
following provisions:

  (a)   Each grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to dividend, voting and
other ownership rights, subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.     (b)   Each grant or sale
may be made without additional consideration from the Participant or in
consideration of a payment by the Participant that is less than the Market Value
per Share on the Date of Grant.     (c)   Each grant or sale shall provide that
the Restricted Shares covered thereby shall be subject to a “substantial risk of
forfeiture” within the meaning of Section 83 of the Code for a period to be
determined by the Committee on the Date of Grant or

11

--------------------------------------------------------------------------------

 

      until Management Objectives referred to in subparagraph (e) below are
achieved. If the elimination of restrictions is based only on the passage of
time rather than the achievement of Management Objectives, the period of time
will be no shorter than three years, except that the restrictions may be removed
ratably during the three-year period, on an annual basis, as determined by the
Committee on the Date of Grant.     (d)   Each grant or sale shall provide that,
during the period for which such substantial risk of forfeiture is to continue,
the transferability of the Restricted Shares shall be prohibited or restricted
in the manner and to the extent prescribed by the Committee on the Date of
Grant. Such restrictions may include without limitation rights of repurchase or
first refusal in the Corporation or provisions subjecting the Restricted Shares
to a continuing substantial risk of forfeiture in the hands of any transferee.  
  (e)   Any grant of Restricted Shares may specify Management Objectives which,
if achieved, will result in termination or early termination of the restrictions
applicable to such Restricted Shares; provided, however, that, notwithstanding
subparagraph (c) above, restrictions relating to Restricted Shares that vest
upon the achievement of Management Objectives may not terminate sooner than one
year from the Date of Grant. Each such grant may specify in respect of such
specified Management Objectives a minimum acceptable level of achievement and
may set forth a formula for determining the number of Restricted Shares on which
restrictions will terminate if performance is at or above the minimum level, but
falls short of full achievement of the specified Management Objectives.     (f)
  Notwithstanding anything to the contrary contained in this Plan, any grant or
sale of Restricted Shares may provide for the earlier termination of
restrictions on such Restricted Shares in the event of the retirement, death or
disability of the Participant or a Change of Control.     (g)   Any grant or
sale may require that any or all dividends or other distributions paid on the
Restricted Shares during the period of such restrictions be automatically
sequestered; provided, however, that dividends or other distributions on
Restricted Shares with restrictions that lapse as a result of the achievement of
Management Objectives shall be deferred until and paid contingent upon the
achievement of the applicable Management Objectives. Sequestered dividends or
other distribution may be reinvested on an immediate or deferred basis in
additional Common Shares, which may be subject to the same restrictions as the
underlying award or such other restrictions as the Committee may determine.    
(h)   Each grant or sale shall be evidenced by an Evidence of Award, which shall
contain such terms and provisions as the Committee may determine consistent with
this Plan. Unless otherwise directed by the Committee, (i) all certificates
representing Restricted Shares will be held in custody by the Corporation until
all restrictions thereon will have lapsed, together with a stock power or powers
executed by the Participant in whose name such certificates are registered,

12

--------------------------------------------------------------------------------

 

      endorsed in blank and covering such Restricted Shares, or (ii) all
Restricted Shares will be held at the Corporation’s transfer agent in book entry
form with appropriate restrictions relating to the transfer of such Restricted
Shares.

     7. Restricted Stock Units. The Committee may also authorize the granting or
sale of Restricted Stock Units to Participants upon such terms and conditions as
the Committee may determine. Each such grant or sale may utilize any or all of
the authorizations and shall be subject to all of the requirements contained in
the following provisions:

  (a)   Each grant or sale will constitute the agreement by the Corporation to
deliver Common Shares or cash to the Participant in the future in consideration
of the performance of services, but subject to the fulfillment of such
conditions (which may include the achievement of Management Objectives) during
the Restriction Period as the Committee may specify. If a grant of Restricted
Stock Units specifies that the Restriction Period will terminate only upon the
achievement of Management Objectives then, notwithstanding anything to the
contrary contained in subparagraph (c) below, such Restriction Period may not
terminate sooner than one year from the Date of Grant. Each grant may specify in
respect of such Management Objectives a minimum acceptable level of achievement
and may set forth a formula for determining the number of Restricted Stock Units
on which restrictions will terminate if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives.     (b)   Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than the Market Value per Share at the Date of Grant.     (c)   If the
Restriction Period lapses only by the passage of time rather than the
achievement of Management Objectives as provided in subparagraph (a) above, each
such grant or sale will be subject to a Restriction Period of not less than
three years, except that a grant or sale may provide that the Restriction Period
will expire ratably during the three-year period, on an annual basis, as
determined by the Committee on the Date of Grant.     (d)   Notwithstanding
anything to the contrary contained in this Plan, any grant or sale of Restricted
Stock Units may provide for the earlier lapse or modification of the Restriction
Period in the event of the retirement, death or disability of the Participant or
a Change in Control.     (e)   During the Restriction Period, the Participant
will have no rights of ownership in the Common Shares deliverable upon payment
of the Restricted Stock Units and shall have no right to vote them, but the
Committee may at the Date of Grant, authorize the payment of dividend
equivalents on such Restricted Stock Units on either a current, deferred or
contingent basis, either in cash or in additional Common Shares; provided,
however, that dividends or other distributions on Common Shares underlying
Restricted Stock Units with restrictions that lapse as

13

--------------------------------------------------------------------------------

 

      a result of the achievement of Management Objectives shall be deferred
until and paid contingent upon the achievement of the applicable Management
Objectives.     (f)   Each grant or sale of Restricted Stock Units will specify
the time and manner of payment of the Restricted Stock Units that have been
earned.     (g)   Each grant or sale of Restricted Stock Units will be evidenced
by an Evidence of Award and will contain such terms and provisions, consistent
with this Plan, as the Committee may approve.

     8. Deferred Shares. The Committee may also authorize grants or sales of
Deferred Shares to Participants upon such terms and conditions as the Committee
may determine. Each such grant may utilize any or all of the authorizations and
shall be subject to all of the requirements contained in the following
provisions:

  (a)   Each grant or sale shall constitute the agreement by the Corporation to
issue or transfer Common Shares to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during
the Deferral Period of such conditions as the Committee may specify.     (b)  
Each grant or sale may be made without additional consideration from the
Participant or in consideration of a payment by the Participant that is less
than the Market Value per Share on the Date of Grant.     (c)   Each grant or
sale shall provide that the Deferred Shares covered thereby shall be subject to
a Deferral Period to be determined by the Committee on the Date of Grant or
until Management Objectives referred to in subparagraph (e) below are achieved.
If the termination of the Deferral Period is based only on the passage of time
rather than the achievement of Management Objectives, the period of time will be
no shorter than three years, except that the Deferral Period may terminate
ratably during the three-year period, on an annual basis, as determined by the
Committee on the Date of Grant.     (d)   During the Deferral Period, the
Participant shall not have any right to transfer any rights under the subject
award, shall not have any rights of ownership in the Deferred Shares and shall
not have any right to vote such shares, but the Committee may on or after the
Date of Grant authorize the payment of dividend equivalents on such shares in
cash or additional Common Shares on a current, deferred or contingent basis;
provided, however, that dividend equivalents on Deferred Shares with
restrictions that lapse as a result of the achievement of Management Objectives
shall be deferred until and paid contingent upon the achievement of the
applicable Management Objectives.     (e)   Any grant of Deferred Shares may
specify Management Objectives which, if achieved, will result in termination or
early termination of the Deferral Period applicable to such Deferred Shares;
provided, however, that, notwithstanding subparagraph (c) above, the Deferral
Period relating to Deferred Shares that terminates upon the achievement of
Management Objectives may not terminate

14

--------------------------------------------------------------------------------

 

      sooner than one year from the Date of Grant. Each such grant may specify
in respect of such specified Management Objectives a minimum acceptable level of
achievement and may set forth a formula for determining the number of Deferred
Shares for which the Deferral Period will terminate if performance is at or
above the minimum level, but falls short of full achievement of the specified
Management Objectives.     (f)   Notwithstanding anything to the contrary
contained in this Plan, any grant or sale of Deferred Shares may provide for the
earlier termination of the Deferral Period relating to such Deferred Shares in
the event of the retirement, death or disability of the Participant or a Change
of Control.     (g)   Each grant or sale shall be evidenced by an Evidence of
Award, which shall contain such terms and provisions as the Committee may
determine consistent with this Plan.

     9. Performance Shares and Performance Units. The Committee may also
authorize grants to Participants of Performance Shares and Performance Units,
which shall become payable to the Participant upon the achievement of specified
Management Objectives, upon such terms and conditions as the Committee may
determine. Each such grant may utilize any or all of the authorizations and
shall be subject to all of the requirements contained in the following
provisions:

  (a)   Each grant shall specify the number of Performance Shares or Performance
Units to which it pertains, subject to the limitations in Section 3, which may
be subject to adjustment to reflect changes in compensation or other factors;
provided, however, that no such adjustment will be made in the case of a
Qualified Performance-Based Award (other than in connection with the death or
disability of the Participant or a Change in Control) where such action would
result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code.     (b)   The Performance Period with respect to
each Performance Share or Performance Unit will be such period of time (not less
than one year) commencing with the Date of Grant as shall be determined by the
Committee on the Date of Grant and may be subject to earlier termination in the
event of the retirement, death or disability of the Participant or a Change in
Control.     (c)   Each grant shall specify the Management Objectives which, if
achieved, will result in payment or early payment of the award, and each grant
may specify in respect of the specified Management Objectives a minimum
acceptable level of achievement below which no payment will be made and may set
forth a formula for determining the amount of any payment to be made if
performance is at or above the minimum acceptable level but falls short of full
achievement of the specified Management Objectives.

15

--------------------------------------------------------------------------------

 

  (d)   Each grant shall specify the time and manner of payment of Performance
Shares or Performance Units that shall have been earned, and any grant may
specify that any such amount may be paid by the Corporation in cash, Common
Shares or any combination thereof and may either grant to the Participant or
reserve to the Committee the right to elect among those alternatives.     (e)  
Any grant of Performance Shares may specify that the amount payable with respect
thereto may not exceed a maximum specified by the Committee on the Date of
Grant. Any grant of Performance Units may specify that the amount payable, or
the number of Common Shares issued, with respect thereto may not exceed maximums
specified by the Committee on the Date of Grant.     (f)   Any grant may provide
for the payment to the Participant of dividend equivalents thereon in cash or in
additional Common Shares, subject in all cases to deferral and payment on a
contingent basis based on the Participant’s earning of the Performance Shares or
Performance Units with respect to which such dividend equivalents are paid.    
(g)   Each grant of Performance Shares or Performance Units shall be evidenced
by an Evidence of Award, which shall contain such terms and provisions as the
Committee may determine consistent with this Plan.

     10. Common Share Awards to Nonemployee Directors. The Board may, from time
to time and upon such terms and conditions as it may determine, authorize the
granting to Nonemployee Directors of Common Shares. Awards of Common Shares to
Nonemployee Directors shall be subject only to a restriction on transfer for a
period of six months immediately following the Date of Grant thereof and shall
bear a legend to that effect.

  11.   Transferability.     (a)   No Option Right, Appreciation Right or other
derivative security (as that term is used in Rule 16b-3) awarded under this Plan
shall be transferable by a Participant other than by will or the laws of descent
and distribution. Option Rights and Appreciation Rights shall be exercisable
during a Participant’s lifetime only by the Participant or, in the event of the
Participant’s legal incapacity, by his guardian or legal representative acting
in a fiduciary capacity on behalf of the Participant under state law and/or
court supervision. Notwithstanding the foregoing, the Committee, in its sole
discretion, may provide for transferability of Option Rights or Appreciation
Rights under this Plan; provided, however, that no awards granted under this
Plan may be transferred in exchange for value or consideration.     (b)   Any
award made under this Plan may provide that all or any part of the Common Shares
that are (i) to be issued or transferred by the Corporation upon the exercise of
Option Rights or Appreciation Rights, or upon the termination of the Deferral
Period applicable to Deferred Shares, or upon the termination of the Restriction
Period applicable to Restricted Stock Units, or in payment of Performance Shares

16

--------------------------------------------------------------------------------

 

      or Performance Units or (ii) no longer subject to the substantial risk of
forfeiture and restrictions on transfer referred to in Section 6 of this Plan,
shall be subject to further restrictions upon transfer.

     12. Adjustments. The Committee shall make or provide for such adjustments
in the (a) number of Common Shares or number of Common Shares covered by
outstanding Option Rights, Appreciation Rights, Restricted Shares, Restricted
Stock Units, Deferred Shares and Performance Shares and Performance Units
granted hereunder, (b) prices per share applicable to such Option Rights and
Appreciation Rights, and (c) kind of shares (including shares of another issuer)
covered thereby, as the Committee in its sole discretion in good faith
determines to be equitably required in order to prevent dilution or enlargement
of the rights of Participants that otherwise would result from (x) any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Corporation, (y) any merger, consolidation,
spin-off, spin-out, split-off, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants to
purchase securities or (z) any other corporate transaction or event having an
effect similar to any of the foregoing. In the event of any such transaction or
event, or in the event of a Change in Control, the Committee may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration (including cash) as it may in good faith determine to be equitable
under the circumstances and may require in connection therewith the surrender of
all awards so replaced in a manner that complies with Section 409A of the Code.
Moreover, the Committee may on or after the Date of Grant provide in the
agreement evidencing any award under this Plan that the holder of the award may
elect to receive an equivalent award in respect of securities of the surviving
entity of any merger, consolidation or other transaction or event having a
similar effect, or the Committee may provide that the holder will automatically
be entitled to receive such an equivalent award. In addition, for each Option
Right or Appreciation Right with an Option Price or Base Price greater than the
consideration offered in connection with any such transaction or event or Change
in Control, the Committee may in its sole discretion elect to cancel such Option
Right or Appreciation Right without any payment to the person holding such
Option Right or Appreciation Right. The Committee shall also make or provide for
such adjustments in the numbers and kind of shares specified in Section 3 as the
Committee in its sole discretion may in good faith determine to be appropriate
in order to reflect any transaction or event described in this Section 12;
provided, however, that any such adjustment to the number specified in
Section 3(d)(i) will be made only if and to the extent that such adjustment
would not cause any option intended to qualify as an Incentive Stock Option to
fail to so qualify.
     13. Fractional Shares. The Corporation shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement thereof in cash.
     14. Withholding Taxes. To the extent that the Corporation is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization of
such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such taxes
required to be withheld. At the discretion of the Committee, such arrangements
may include the tender by the Participant

17

--------------------------------------------------------------------------------

 

or such other person or the withholding by the Corporation of Common Shares to
provide for such withholding taxes. Any Evidence of Award may provide for such
arrangements, subject to such conditions and limitations as the Committee may
approve. In no event shall the value of the Common Shares to be tendered or
withheld pursuant to this Section to satisfy applicable withholding taxes in
connection with the benefit exceed the minimum amount of taxes required to be
withheld.
     15. Participation by Employees of a Less-Than-80-Percent Subsidiary. As a
condition to the effectiveness of any grant or award to be made hereunder to a
Participant who is an employee of a Less-Than-80-Percent Subsidiary, regardless
whether such Participant is also employed by the Corporation or another
Subsidiary, the Committee may require the Less-Than-80-Percent Subsidiary to
agree to transfer to the Participant (as, if and when provided for under this
Plan and any applicable agreement entered into between the Participant and the
Less-Than-80-Percent Subsidiary pursuant to this Plan) the Common Shares that
would otherwise be delivered by the Corporation upon receipt by the
Less-Than-80-Percent Subsidiary of any consideration then otherwise payable by
the Participant to the Corporation. Any such award may be evidenced by an
agreement between the Participant and the Less-Than-80-Percent Subsidiary, in
lieu of the Corporation, on terms consistent with this Plan and approved by the
Committee and the Less-Than-80-Percent Subsidiary. All Common Shares so
delivered by or to a Less-Than-80-Percent Subsidiary will be treated as if they
had been delivered by or to the Corporation for purposes of Section 3 of this
Plan, and all references to the Corporation in this Plan shall be deemed to
refer to the Less-Than-80-Percent Subsidiary except with respect to the
definitions of the Board and the Committee and in other cases where the context
otherwise requires.
     16. Certain Terminations of Employment. If permitted by Section 409A of the
Code and Section 162(m), but subject to the paragraph that follows, in case of
termination of employment by reason of death, disability or normal retirement or
early retirement with the consent of the Corporation of a Participant who holds
an Option Right or Appreciation Right not immediately exercisable in full, or
any Restricted Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or any Deferred Shares as
to which the Deferral Period is not complete, or any Restricted Stock Units as
to which the Restriction Period has not been completed, or any Performance
Shares or Performance Units which have not been fully earned, or who holds
Common Shares subject to any transfer restriction imposed pursuant to Section
11(b) of this Plan, the Committee may, in its sole discretion, take any action
that it deems to be equitable under the circumstances or in the best interests
of the Corporation, including, without limitation, accelerate the time at which
such Option Right, Appreciation Right or other award may be exercised or the
time at which such substantial risk of forfeiture or prohibition or restriction
on transfer will lapse or the time when such Restriction Period will end or the
time at which such Performance Shares or Performance Units will be deemed to
have been fully earned or the time when such transfer restriction will terminate
or may waive any other limitation or requirement under any such award.
Subject to Section 19(b) hereof, the Committee may amend the terms of any award
theretofore granted under this Plan prospectively or retroactively, except in
the case of a Qualified Performance-Based Award (other than in connection with
the Participant’s death or disability, or a Change in Control) where such action
would result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code. In such case, the Committee will not

18

--------------------------------------------------------------------------------

 

make any modification of the Management Objectives or the level or levels of
achievement with respect to such Qualified Performance-Based Award. Subject to
Section 12 above, no such amendment shall impair the rights of any Participant
without his or her consent. The Committee may, in its discretion, terminate this
Plan at any time. Termination of this Plan will not affect the rights of
Participants or their successors under any awards outstanding hereunder and not
exercised in full on the date of termination.
     17. Foreign Employees. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals, who are
employed by the Corporation or any Subsidiary outside of the United States of
America or who provide services to the Corporation under an agreement with a
foreign nation or agency, as the Committee may consider necessary or appropriate
to accommodate differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements or
alternative versions of, this Plan (including without limitation sub-plans) as
it may consider necessary or appropriate for such purposes without thereby
affecting the terms of this Plan as in effect for any other purpose, and the
Secretary or other appropriate officer of the Corporation may certify any such
document as having been approved and adopted in the same manner as this Plan. No
such special terms, supplements, amendments or restatements shall include any
provisions that are inconsistent with the terms of this Plan as then in effect
unless this Plan could have been amended to eliminate such inconsistency without
further approval by the shareholders of the Corporation.

  18.   Administration of the Plan.     (a)   This Plan shall be administered by
the Compensation Committee of the Board, as constituted from time to time. The
Committee shall be composed of not less than three members of the Board, each of
whom shall (i) meet all applicable independence requirements of the New York
Stock Exchange, or if the Common Stock is not traded on the New York Stock
Exchange, the principal national securities exchange on which the Common Stock
is traded, (ii) be a “non-employee director” within the meaning of Rule 16b-3
and (iii) be an “outside director” within the meaning of Section 162(m) of the
Code. The Committee may from time to time delegate all or any part of its
authority under this Plan to any subcommittee thereof. To the extent of any such
delegation, references in this Plan to the Committee will be deemed to be
references to such subcommittee. A majority of the Committee shall constitute a
quorum, and the acts of the members of the Committee who are present at any
meeting thereof at which a quorum is present, or acts unanimously approved by
the members of the Committee in writing, shall be the acts of the Committee.    
(b)   The interpretation and construction by the Committee of any provision of
this Plan or of any agreement, notification or document evidencing the grant of
Option Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units,
Deferred Shares, Performance Shares and Performance Units and any determination
by the Committee pursuant to any provision of this Plan or any such agreement,
notification or document shall be final and conclusive. No member of the

19

--------------------------------------------------------------------------------

 

      Committee shall be liable for any such action taken or determination made
in good faith.     (c)   The Committee, to the full extent permitted by law, may
delegate to one or more of its members or to one or more other directors or any
officer or officers of the Corporation, or to one or more agents or advisors,
such administrative duties or powers as it may deem advisable, and any person to
whom duties or powers have been delegated as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. Without limiting the generality of the
foregoing, the Committee may, by resolution, authorize one or more officers of
the Corporation to do one or both of the following on the same basis as the
Committee: (i) designate employees to be recipients of awards under this Plan
and (ii) determine the size and type of any such awards; provided, however, that
(x) the Committee shall not delegate such responsibilities to any such officer
for awards granted to an employee who is an officer, director or more than 10%
beneficial owner of any class of the Corporation’s equity securities that is
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
determined by the Committee in accordance with Section 16 of the Securities
Exchange Act of 1934, or any person subject to Section 162(m) of the Code,
(y) the resolution providing for such authorization sets forth the total number
of Common Shares such officer(s) may grant and the terms of any award that such
officer(s) may grant, and (z) the officer(s) shall report periodically to the
Committee regarding the nature and scope of the awards granted pursuant to the
authority delegated.     19.   Amendments and Other Matters.     (a)   This Plan
may be amended from time to time by the Committee; provided, however, that if an
amendment to the Plan (i) would materially increase the benefits accruing to
Participants under the Plan, (ii) would materially increase the number of
securities which may be issued under the Plan, (iii) would materially modify the
requirements for participation in the Plan or (iv) must otherwise be approved by
the shareholders of the Corporation in order to comply with applicable law or
the rules of the New York Stock Exchange or, if the Common Shares are not traded
on the New York Stock Exchange, the principal national securities exchange upon
which the Common Shares are traded or quoted, then such amendment will be
subject to shareholder approval and will not be effective unless and until such
approval has been obtained. Without limiting the generality of the foregoing,
the Committee may amend this Plan to eliminate provisions which are no longer
necessary as a result of changes in tax or securities laws or regulations, or in
the interpretation thereof.     (b)   Except in connection with a corporate
transaction or event described in Section 12 of this Plan, the terms of
outstanding awards may not be amended to reduce the Option Price of outstanding
Option Rights or the Base Price of outstanding Appreciation Rights, or cancel
outstanding Option Rights or Appreciation Rights in exchange for cash, other
awards or Option Rights or Appreciation Rights with

20

--------------------------------------------------------------------------------

 

      an Option Price or Base Price, as applicable, that is less than the Option
Price of the original Option Rights or Base Price of the original Appreciation
Rights, as applicable, without shareholder approval. This Section 19(b) is
intended to prohibit the repricing of “underwater” Option Rights and
Appreciation Rights and will not be construed to prohibit the adjustments
provided for in Section 12 of the Plan. Notwithstanding any provision of the
Plan to the contrary, this Section 19(b) may not be amended without approval by
the Corporation’s shareholders.     (c)   Except with respect to Options Rights,
Appreciation Rights and Restricted Shares, the Committee also may permit
Participants to elect to defer the issuance of Common Shares or the settlement
of awards in cash under the Plan pursuant to such rules, procedures or programs
as it may establish for purposes of this Plan and which are intended to comply
with Section 409A of the Code. The Committee also may provide that deferred
settlements include the payment or crediting of interest on the deferral
amounts, or the payment or crediting of dividend equivalents where the deferral
amounts are denominated in Common Shares.     (d)   The Committee may condition
the grant of any award or combination of awards under the Plan on the surrender
or deferral by the Participant of his or her right to receive a cash bonus or
other compensation otherwise payable by the Corporation or any Subsidiary to the
Participant.     (e)   To the extent that any provision of this Plan would
prevent any Option Right that was intended to qualify under particular
provisions of the Code from so qualifying, such provision of this Plan shall be
null and void with respect to such Option Right; provided, however, that such
provision shall remain in effect with respect to other Option Rights, and there
shall be no further effect on any provision of this Plan.

     20. Detrimental Activity and Recapture Provisions. Any Evidence of Award
may provide for the cancellation or forfeiture of an award or the forfeiture and
repayment to the Corporation of any gain related to an award, or other
provisions intended to have a similar effect, upon such terms and conditions as
may be determined by the Committee from time to time, if a Participant, either
during employment by the Corporation or a Subsidiary or within a specified
period after termination of such employment, shall engage in any Detrimental
Activity. In addition, notwithstanding anything in the Plan to the contrary, any
Evidence of Award may also provide for the cancellation or forfeiture of an
award or the forfeiture and repayment to the Corporation of any gain related to
an award, or other provisions intended to have a similar effect, upon such terms
and conditions as may be required by the Committee or under Section 10D of the
Securities Exchange Act of 1934 and any applicable rules or regulations
promulgated by the Securities and Exchange Commission or any national securities
exchange or national securities association on which the Common Shares may be
traded.

  21.   Compliance with Section 409A of the Code.     (a)   To the extent
applicable, it is intended that this Plan and any grants made hereunder comply
with the provisions of Section 409A of the Code. This Plan and

21

--------------------------------------------------------------------------------

 

      any grants made hereunder shall be administrated in a manner consistent
with this intent, and any provision that would cause this Plan or any grant made
hereunder to fail to satisfy Section 409A of the Code shall have no force and
effect until amended to comply with Section 409A of the Code (which amendment
may be retroactive to the extent permitted by Section 409A of the Code and may
be made by the Corporation without the consent of Participants). Any reference
in this Plan to Section 409A of the Code will also include any proposed,
temporary or final regulations, or any other guidance, promulgated with respect
to such Section by the U.S. Department of the Treasury or the Internal Revenue
Service.     (b)   If, at the time of a Participant’s separation from service
(within the meaning of Section 409A of the Code), (i) such Participant is a
specified employee (within the meaning of Section 409A of the Code and using the
identification methodology selected by the Corporation from time to time) and
(ii) the Corporation makes a good faith determination that an amount payable
hereunder constitutes deferred compensation (within the meaning of Section 409A
of the Code) the payment of which is required to be delayed pursuant to the
six-month delay rule set forth in Section 409A of the Code in order to avoid
taxes or penalties under Section 409A of the Code, then the Corporation shall
not pay such amount on the otherwise scheduled payment date but shall instead
pay it, without interest, on the first business day of the seventh month after
the Participant’s separation from service.     (c)   Neither a Participant nor
any of a Participant’s creditors or beneficiaries shall have the right to
subject any deferred compensation (within the meaning of Section 409A of the
Code) payable under this Plan and grants hereunder to any anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment. Except as permitted under Section 409A of the Code, any deferred
compensation (within the meaning of Section 409A of the Code) payable to a
Participant or for a Participant’s benefit under this Plan and grants hereunder
may not be reduced by, or offset against, any amount owing by a Participant to
the Corporation or any of its affiliates.     22.   Effective Date/Termination.
This Plan shall be effective as of the Effective Date. No grants will be made on
or after the Effective Date under the Existing Plan, except that outstanding
awards granted under the Existing Plan will continue unaffected following the
Effective Date. No grant shall be made under this Plan more than ten years after
the Effective Date, but all grants made on or prior to such date shall continue
in effect thereafter subject to the terms thereof and of this Plan.

     23. No Right to Employment. This Plan shall not confer upon any Participant
any right with respect to continuance of employment or other service with the
Corporation or any Subsidiary and shall not interfere in any way with any right
that the Corporation or any Subsidiary would otherwise have to terminate any
Participant’s employment or other service at any time.

22

--------------------------------------------------------------------------------

 

     24. Governing Law. The Plan and all grants and awards and actions taken
thereunder shall be governed by and construed in accordance with the internal
substantive laws of the State of Ohio.

23