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Exhibit 10.1
 
DSW INC.
 
2005 EQUITY INCENTIVE PLAN
 
1.00           PURPOSE AND EFFECTIVE DATE
 
1.01        Purpose.  This Plan is intended to foster and promote the long-term
financial success of the Company and Related Entities and to materially increase
shareholder value by [1] providing Consultants, Employees and Eligible Directors
an opportunity to acquire an ownership interest in the Company and [2] enabling
the Company and Related Entities to attract and retain the services of
outstanding Consultants, Employees and Eligible Directors upon whose judgment,
interest and special efforts the successful conduct of the Group’s business is
largely dependent.
 
1.02        Effective Date.  The Plan will be effective upon its adoption by the
Board and approval by the affirmative vote of the Company’s shareholders under
applicable rules and procedures described in Code §§162(m) and 422.  Any Award
granted before shareholder approval will be null and void if the shareholders do
not approve the Plan within the period just described.  Subject to Section
14.00, the Plan will continue until the tenth anniversary of the date it is
adopted by the Board or approved by the Company’s shareholders, whichever is
earliest.
 
2.00           DEFINITIONS
 
When used in this Plan, the following terms have the meanings given to them in
this section unless another meaning is expressly provided elsewhere in this
document or clearly required by the context.  When applying these definitions
and any other word, term or phrase used in this Plan, the form of any word, term
or phrase will include any and all of its other forms.
 
Act.  The Securities Exchange Act of 1934, as amended, or any successor statute
of similar effect even if the Company is not subject to the Act.
 
Affiliated SAR.  An SAR that is granted in conjunction with an Option and which
is always deemed to have been exercised at the same time that the related Option
is exercised.  The deemed exercise of an Affiliated SAR will not reduce the
number of shares of Stock subject to the related Option, except to the extent of
the exercise of the related Option.
 
Annual Meeting.  The annual meeting of the Company’s shareholders.
 
Annual Retainer.  The annual retainer and any other fees paid to each Eligible
Director for service as a member of the Board and as a member of any Board
committee.
 
Annual Retainer Deferral Form.  The form each Eligible Director must complete to
defer all or a portion of his or her Annual Retainer.
 
Award.  Any Incentive Stock Option, Nonstatutory Stock Option, Performance
Share, Performance Unit, Restricted Stock, Restricted Stock Unit, Stock
Appreciation Right and Stock Unit granted under the Plan.
 
Award Agreement.  The written or electronic agreement between the Company and
each Participant that describes the terms and conditions of each Award and the
manner in which it will be settled if earned.  If there is a conflict between
the terms of this Plan and the terms of the Award Agreement, the terms of this
Plan will govern.
 
Beneficiary.  The person a Participant designates to receive (or to exercise)
any Plan benefits (or rights) that are unpaid (or unexercised) when he or she
dies.  A Beneficiary may be designated only by following the procedures
described in Section 15.02; neither the Company nor the Committee is required to
infer a Beneficiary from any other source.
 
Board.  The Company’s board of directors.
 
Cause.  Unless the Committee specifies otherwise in the Award Agreement, with
respect to any Participant and subject to any cure provision included in any
written agreement between the Participant and the Company:
 
[1]           A material failure to substantially perform his or her position or
duties;
 
[2]           Engaging in illegal or grossly negligent conduct that is
materially injurious to the Company or any Related Entity;
 
 
 

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[3]           A material violation of any law or regulation governing the
Company or any Related Entity;
 
[4]           Commission of a material act of fraud or dishonesty which has had
or is likely to have a material adverse effect upon the Company’s (or any
Related Entity’s) operations or financial conditions;
 
[5]           A material breach of the terms of any other agreement (including
any employment agreement) with the Company or any Related Entity; or
 
[6]           A breach of any term of this Plan or Award Agreement.
 
If a Participant Terminates (or is Terminated) for any reason other than Cause
and the Company subsequently discovers an act, failure or event that, if known
before the Participant’s Termination would have justified a Termination for
Cause and that act, event or failure was actively concealed by the Participant
and could not have been discovered through reasonable diligence before the
Participant Terminated, that Participant will be retroactively treated as having
been Terminated for Cause.
 
Change in Control.  The earliest of any of the following events to occur after
completion of the initial public offering of the Company’s stock which is the
subject of the Registration Statement:
 
[1]           During any period consisting of 12 consecutive calendar months
beginning after completion of the initial public offering of the Company’s stock
which is the subject of the Registration Statement, the members of the Board
specified in the Registration Statement (“Incumbent Directors”) cease for any
reason other than death to constitute at least a majority of the members of the
Board, provided [a] that any director whose election, or nomination for election
by the Company’s shareholders, was approved by a vote of at least a majority of
the then Incumbent Directors also will be treated as an Incumbent Director
unless that person was nominated for election to the Board (or otherwise became
a member of the Board) in connection with an actual or threatened election
contest relating to the election or removal of Board members or other threatened
or actual solicitation of proxies of consent by or in behalf of any “person,”
including a “group” [as those terms are used in Act §§13(d) and 14(d)(2)], [b]
this element of this definition will not apply if the Company reorganizes into
an entity that does not have a board of directors or analogous governing body
and that reorganization is not a Change in Control under another element of this
definition and [c] if the Company becomes a subsidiary of another entity (i.e.,
another entity owns, directly or indirectly, more than 50 percent of the total
combined voting power of all classes of Stock) in a transaction that is not a
Change in Control under another element of this definition, subpart [1] of this
definition will be applied by reference to changes to the board of directors of
the parent entity (or of the ultimate parent entity).
 
[2]           Any “person,” including a “group” [as these terms are used in Act
§§13(d) and 14(d)(2)], becomes the “beneficial owner” (as defined in Rule 13d-3
under the Act), directly or indirectly, of 30 percent or more of the combined
voting power of the Company and of securities of the Company sufficient to elect
a majority of the members of the Board but disregarding the effect of [a] any
acquisition by a person who on the Effective Date is the beneficial owner of 30
percent or more of the combined voting power of the Company, [b] any acquisition
directly from the Company, including a public offering of securities, [c] any
acquisition by the Company or any Related Entity, [d] any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Related Entity, [e] any acquisition through a transaction described in
subpart [3], [4] or [5] of this definition, [f] any acquisition by Retail
Ventures, Inc. or any corporation, partnership or other form of unincorporated
entity of which Retail Ventures, Inc. owns, directly or indirectly, 50 percent
or more of the total combined voting power of all classes of stock, if the
entity is a corporation, or of the capital or profits interest, if the entity is
a partnership or another form of unincorporated entity, [g] any acquisition by
Schottenstein Stores Corporation (the persons identified in subparts [a], [c],
[f] and [g] of this subpart being sometimes referred to as “Permitted
Acquirers”), [h] any acquisition by any one or more of the trusts established
for the benefit of any of Jay L. Schottenstein, Susan S. Diamond, Ann Deshe,
Lori Schottenstein, Geraldine Schottenstein or any of their respective spouses,
children or lineal descendants or any person controlled by any such trust or
trusts, [i] any acquisition by an entity that files SEC Form 13-G in connection
with its ownership of Stock unless and until that entity files SEC Form 13-D in
connection with its ownership of Stock or [j] any acquisition by Cerberus
Partners, Ltd. unless, at the time of the acquisition, the Permitted Acquirers,
as defined in subpart [2][g] of this definition and the trusts described in
subpart [2][h] of this definition, directly or indirectly, own less than 10
percent of the voting power of the Company’s stock.
 
[3]           The completion of a transaction or a series of related
transactions effecting [a] the merger or other business combination of the
Company with or into another entity other than a Permitted Acquirer in which the
shareholders of the Company immediately before the effective date of such merger
or other business combination own less than 50 percent of the voting power in
such entity; or [b] the sale or other disposition of all or substantially all of
the assets of the Company except a sale or other disposition to [i] an entity in
which the shareholders of the Company immediately before the sale or disposition
own more than 50 percent of the voting power of such entity after that
transaction or [ii] a Permitted Acquirer.
 
 
 

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[4]           Liquidation or dissolution of the Company other than a liquidation
or dissolution into an entity [a] in which the shareholders of the Company
before the effective date of the liquidation or dissolution own more than 50
percent of the voting power of such entity after the liquidation or dissolution
or [b] which is a Permitted Acquirer.
 
[5]           Any other transaction or event that the Board, in its sole
discretion, decides will have as material an effect on the Company as any
transaction or event described in subparts [1] through [4] of this definition
but which is not otherwise described in this section.
 
Provided, in the case of an award (or portion thereof) subject to Code §409A,
such event also constitutes a change in the ownership or effective control of
the Company, or in the ownership of a substantial portion of the Company’s
assets, within the meaning of Code §409A.  However, and regardless of any other
provision of this Plan or element of this definition, a Change in Control will
not occur solely as a result of the initial public offering of the Company’s
stock which is the subject of the Registration Statement or of any event
directly related to that initial public offering.

Change in Control Price.  The highest price per share of Stock offered in
conjunction with any transaction resulting in a Change in Control (as determined
in good faith by the Committee if any part of the offered price is payable other
than in cash) or, in the case of a Change in Control occurring solely by reason
of events not related to a transfer of Stock, the highest Fair Market Value of a
share of Stock on any of the 30 consecutive trading days ending on the last
trading day before the Change in Control occurs.
 
Code.  The Internal Revenue Code of 1986, as amended or superseded after the
Effective Date and any applicable rulings or regulations issued under the Code.
 
Committee.
 
[1]           In the case of any Award to Eligible Directors, the entire Board;
 
[2]           In the case of any Award granted to Participants other than
Eligible Directors before the Company becomes a “publicly held corporation,” as
defined in Code §162(m)(2), the entire Board; or
 
[2]           In the case of Awards made to Participants other than Eligible
Directors after the Company becomes a “publicly held corporation,” as defined in
Code §162(m)(2), the Board’s Compensation Committee which also constitutes a
“compensation committee” within the meaning of Treas.
Reg.  §1.162-27(c)(4).  The Committee will be comprised of at least three
persons [a] each of whom is [i] an outside director, as defined in Treas. Reg.
§1.162-27(e)(3)(i) and [ii] a “non-employee” director within the meaning of Rule
16b-3 under the Act and [b] none of whom may receive remuneration from the
Company or any Related Entity in any capacity other than as a director, except
as permitted under Treas. Reg. §1.162-27(e)(3)(ii).
 
Company.  DSW Inc., an Ohio corporation, and any and all successors to it.
 
Consultant.  Any person, other than an Employee or an Eligible Director, who
provides significant services to the Company or any Related Entity.
 
Covered Officer.  Those Employees whose compensation is subject to limited
deductibility under Code §162(m) as of the last day of any calendar year ending
with or within any Performance Period.
 
Disability.  Unless the Committee specifies otherwise in the Award Agreement:
 
[1]           With respect to an Incentive Stock Option, as defined in Code
§22(e)(3).
 
[2]           With respect to any Award subject to Code §409A, the Participant
is [a] unable to engage in any substantial gainful activity by reason of  any
medically determinable physical or mental impairment arising before Termination
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 continuous months beginning before
Termination; or [b] by reason of any readily determinable physical or mental
impairment arising before Termination which can be expected to result in death
or can be expected to last for a continuous period of not less than 12 months
beginning before Termination, receiving income replacement benefits for a period
of not less than three months beginning before Termination under an accident and
health plan covering employees of the Participant’s employer; or
 
 
 

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[3]           With respect to any Award not described in subpart [1] or [2] of
this definition, the Participant’s inability, with a reasonable accommodation,
to perform his or her duties on a full-time basis for a period of more than six
consecutive calendar months due to a physical or mental infirmity arising before
Termination.
 
Dividend Equivalent Right.  A right to receive the amount of any dividend paid
on a share of Stock underlying a Stock Unit, as provided in Section 7.01.
 
Eligible Director.  A person who, on an applicable Grant Date [1] is an elected
member of the Board or of a Related Board (or has been appointed to the Board or
to a Related Board to fill an unexpired term and will continue to serve at the
expiration of that term only if elected by shareholders) and [2] is not an
Employee.  For purposes of applying this definition, an Eligible Director’s
status will be determined as of the Grant Date applicable to each affected
Award.
 
Employee.  Any person who, on any applicable date, is a common law employee of
the Company or any Related Entity.  A worker who is classified as other than a
common law employee but who is subsequently reclassified as a common law
employee of the Company for any reason and on any basis will be treated as a
common law employee only from the date that reclassification occurs and will not
retroactively be reclassified as an Employee for any purpose of this Plan.
 
Exercise Price.  The price at which a Participant may exercise an Award.
 
Fair Market Value.  The value of one share of Stock on any relevant date,
determined under the following rules:
 
[1]           If the Stock is traded on an exchange, the reported “closing
price” on the relevant date, if it is a trading day, otherwise on the next
trading day;
 
[2]           If the Stock is traded over-the-counter with no reported closing
price, the mean between the lowest bid and the highest asked prices on that
quotation system on the relevant date if it is a trading day, otherwise on the
next trading day; or
 
[3]           If neither subparts [1] nor [2] of this definition apply, the fair
market value as determined by the Committee in good faith and, with respect to
Incentive Stock Options, consistent with rules prescribed under Code §422.
 
Freestanding SAR.  An SAR that is not associated with an Option and is granted
under Section 10.00.
 
Grant Date.  The later of [1] the date the Committee establishes the terms of an
Award or [2] the date specified in the Award Agreement.
 
Group.  The Company and all Related Entities.  The composition of the Group will
be determined as of any relevant date.
 
Incentive Stock Option.  Any Option granted under Section 6.00 that, on the
Grant Date, meets the conditions imposed under Code §422 and is not subsequently
modified in a manner inconsistent with Code §422.
 
Nonstatutory Stock Option.  Any Option granted under Section 6.00 that is not an
Incentive Stock Option.
 
Option.  The right granted to a Participant to purchase a share of Stock at a
stated price for a specified period of time.  Subject to Section 6.00, an Option
may be either [1] an Incentive Stock Option or [2] a Nonstatutory Stock Option.
 
Participant.  Any Consultant, Employee or Eligible Director to whom an Award has
been granted and is still outstanding.
 
Performance-Based Award.  An Award granted subject to Section 11.00.
 
Performance Criteria.  The criteria described in Section 11.02.
 
Performance Period.  The period over which the Committee will determine if
applicable Performance Criteria have been met.
 
Performance Share.  An Award granted under Section 9.00.
 
Performance Unit.  An Award granted under Section 9.00.
 
Plan.  The DSW Inc. 2005 Equity Incentive Plan.
 
 
 

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Plan Year.  The Company’s fiscal year.
 
Registration Statement.  The Form S-1 Registration Statement filed with the
Securities and Exchange Commission on March 14, 2005 (Registration #333-123289),
as amended at the time it is declared effective by the Securities and Exchange
Commission.
 
Related Board.  The board of directors of any incorporated Related Entity or the
governing body of any unincorporated Related Entity.
 
Related Entity.  Any corporation, partnership or other form of unincorporated
entity [1] of which the Company owns, directly or indirectly, 50 percent or more
of the total combined voting power of all classes of stock, if the entity is a
corporation, or of the capital or profits interest, if the entity is a
partnership or another form of unincorporated entity or [2] except when
identifying Related Boards, which owns 50 percent or more of the total combined
voting power of all classes of the Stock.
 
Restricted Stock.  An Award granted under Section 8.01.
 
Restricted Stock Unit.  An Award granted under Section 8.02.
 
Restriction Period.  The period over which the Committee will determine if a
Participant has met conditions placed on Restricted Stock or Restricted Stock
Units.
 
Retirement.  Unless the Committee specifies otherwise in the Award Agreement,
the date:
 
[1]           An Employee Terminates on or after reaching age 65 and completing
at least five years of service; or
 
[2]           An Eligible Director Terminates as a Board or a Related Board
member after completing one full term as a member of the Board or the board of
directors of a Related Entity after reaching age 65.
 
[3]           For purposes of applying this definition:
 
[a]           No Consultant will be deemed to have “Retired” regardless of the
circumstances surrounding his or her Termination;
 
[b]           A Participant’s status as an Employee or an Eligible Director will
be determined as of the Grant Date applicable to each affected Award; and
 
[c]           An Eligible Director serving on the Board and/or one or more
Related Boards may Retire from one board while continuing to serve as a member
of other Group boards (or governing bodies).  In this case, the Eligible
Director’s Retirement will affect only Awards granted with respect to his or her
service on the board (or other governing body) from which he or she is Retiring.
 
Stock.  The Class A common shares, without par value, issued by the Company or
any security issued by the Company in substitution, exchange or in place of
these shares.
 
Stock Appreciation Right (or “SAR”).  An Award granted under Section 10.00 that
is a Tandem SAR, an Affiliated SAR or a Freestanding SAR.
 
Stock Unit.  A right to receive payment of the Fair Market Value of a share of
Stock as provided in Section 7.00.
 
Tandem SAR.  An SAR that is associated with an Option and which expires when
that Option expires or is exercised, as described in Section 10.00.
 
Terminate.
 
[1]           Unless the Committee specifies otherwise in the Award Agreement:
 
[a]           Cessation of the employee-employer relationship between an
Employee and the Company and all Related Entities for any reason;
 
[b]           A Participant who is an Employee of a Related Entity at a Grant
Date [i] will not be treated as having Terminated solely because his or her
employer ceases to be a Related Entity and that individual continues to be
employed by the former Related Entity (in which case the former employee will be
treated as having Terminated or not Terminated under this definition as if the
former Related Entity had remained a Related Entity) but [ii] will be treated as
having Terminated if (and to the extent that) his or her Award is replaced by
the former Related Entity following procedures and principles described in Code
§424 within 90 days after the disaffiliation;
 
 
 

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[c]           With respect to a Participant who is a Consultant, a cessation of
the service relationship between the Consultant and the Company and all Related
Entities, unless there is a simultaneous reengagement of the Consultant by the
Company or a Related Entity;
 
[d]           With respect to a Participant who is an Eligible Director,
cessation of his or her service on the Board or a Related Board for any reason.
 
[2]           For purposes of  this definition:
 
[a]           An Eligible Director serving on the Board and/or one or more
Related Boards may Terminate from one board while continuing to serve as a
member of other Related Boards.  In this case, the Eligible Director’s
Termination will affect only Awards granted with respect to his or her
Terminating board membership.
 
[b]           With respect to any Award (including an Incentive Stock Option
granted to an Employee) a Termination will not have occurred while the Employee
is absent from active employment for a period of not more than three months (or,
if longer, the period during which reemployment rights are protected by law,
contract or written agreement, including the Award Agreement, between the
Participant and the Company) due to illness, military service or other leave of
absence approved by the Committee.
 
[c]           Subject to other rules described in the Plan and the Award
Agreement, an Employee whose status changes from an Employee to a Consultant
will not be treated as having Terminated.  In these circumstances, the former
Employee will be treated as having Terminated under rules applicable to
Consultants.
 
3.00           PARTICIPATION
 
3.01        Participation.
 
[1]           Consistent with the terms of the Plan and subject to Section 3.02,
the Committee will [a] decide which Consultants, Employees and Eligible
Directors will be granted Awards; and [b] specify the type of Award to be
granted and the terms upon which an Award will be granted and may be earned.
 
[2]           The Committee may establish different terms and conditions [a] for
each type of Award, [b] for each Participant receiving the same type of Award;
and [c] for the same Participant for each Award the Participant receives,
whether or not those Awards are granted at different times.
 
[3]           The Committee (or the Board, as appropriate) also may amend the
Plan and the Award Agreements without any additional consideration to affected
Participants to the extent necessary to avoid penalties arising under Code
§409A, even if those amendments reduce, restrict or eliminate rights granted
under the Plan or Award Agreement (or both) before those amendments.
 
[4]           Unless permitted by Code §409A, no Award subject to Code §409A
will be granted under this Plan to any person who is performing services only
for an entity that is not an affiliate of the Company within the meaning of Code
§§414(b) and (c).
 
3.02        Conditions of Participation.  By accepting an Award, each
Participant agrees:
 
[1]           To be bound by the terms of the Award Agreement and the Plan and
to comply with other conditions imposed by the Committee; and
 
[2]           That the Committee (or the Board, as appropriate) may amend the
Plan and the Award Agreements without any additional consideration to the extent
necessary to avoid penalties arising under Code §409A, even if those amendments
reduce, restrict or eliminate rights granted under the Plan or Award Agreement
(or both) before those amendments.
 
 
 

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4.00           ADMINISTRATION
 
4.01        Committee Duties.  The Committee is responsible for administering
the Plan and has all powers appropriate and necessary to that
purpose.  Consistent with the Plan’s objectives, the Committee may adopt, amend
and rescind rules and regulations relating to the Plan, to the extent
appropriate to protect the Company’s and the Group’s interests, and has complete
discretion to make all other decisions (including whether a Participant has
incurred a Disability) necessary or advisable for the administration and
interpretation of the Plan.  Any action by the Committee will be final, binding
and conclusive for all purposes and upon all persons.
 
4.02        Delegation of Duties.  In its sole discretion, the Board or the
Committee may delegate to any person (including Employees) any duties otherwise
reserved under the Plan to the Committee, exclusive of duties that the Committee
is required to discharge under Code §162(m).
 
4.03        Award Agreement.  At the time an Award is made, the Committee will
prepare and deliver an Award Agreement to each affected Participant.  The Award
Agreement:
 
[1]           Will describe [a] the type of Award and when and how it may be
exercised  or earned and [b] any Exercise Price associated with each Award.
 
[2]           To the extent different from the terms of the Plan, will describe
[a] any conditions that must be met before the Award may be exercised or earned,
[b] any objective restrictions placed on Awards and any performance-related
conditions and Performance Criteria that must be met before those restrictions
will be released and [c] any other applicable terms and conditions affecting the
Award.
 
4.04        Restriction on Repricing.  Regardless of any other provision of this
Plan, neither the Company nor the Committee may “reprice” (as defined under
rules issued by the exchange on which the Stock is then traded) any Award
without the prior approval of the shareholders.
 
5.00           STOCK SUBJECT TO PLAN
 
5.01        Number of Shares of Stock.  Subject to Section 5.03, the number of
shares of Stock issued under the Plan may not be larger than 7,600,000, of which
up to 7,600,000 may be issued through Incentive Stock Options.  The shares of
Stock to be delivered under the Plan may consist, in whole or in part, of
treasury Stock or authorized but unissued Stock not reserved for any other
purpose.
 
5.02        Unfulfilled Awards.  Any Stock subject to an Award that, for any
reason, is forfeited, cancelled, terminated, relinquished, exchanged or
otherwise settled without the issuance of Stock or without payment of cash equal
to the difference between the Award’s Fair Market Value and its Exercise Price
(if any) may again be granted under the Plan and, in the discretion of the
Committee and subject to the limits described in Section 5.01, may be subject to
a subsequent Award.  Any decision by the Committee under this section will be
final and binding on all Participants.
 
5.03        Adjustment in Capitalization.  If, after the Effective Date, there
is a Stock dividend or Stock split, recapitalization (including payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to shareholders, exchange of shares, or other similar
corporate change affecting Stock, the Committee will appropriately adjust [1]
the number of Awards that may or will be granted  to Participants during a Plan
Year, [2] the aggregate number of shares of Stock available for Awards under
Section 5.01 or subject to outstanding Awards (as well as any share-based limits
imposed under this Plan), [3] the respective Exercise Price, number of shares
and other limitations applicable to outstanding or subsequently granted Awards
and [4] any other factors, limits or terms affecting any outstanding or
subsequently granted Awards.
 
5.04        Limits on Awards to Covered Officers.  During any Plan Year, no
Covered Officer may receive [1] Options and Stock Appreciation Rights covering
more than 500,000 shares (adjusted as provided in Section 5.03), including
Awards that are cancelled [or deemed to have been cancelled under Treas. Reg.
§1.162-27(e)(2)(vi)(B)] during each Plan Year granted, or [2] other Awards
covering more than 100,000 shares (adjusted as provided in Section 5.03),
including Awards that are cancelled [or deemed to have been cancelled under
Treas. Reg. §1.162-27(e)(2)(vi)(B)] during each Plan Year granted.
 
6.00           OPTIONS
 
6.01        Grant of Options.  At any time during the term of this Plan, the
Committee may grant [1] Incentive Stock Options or Nonstatutory Stock Options to
Employees and [2] Nonstatutory Stock Options to Consultants and Eligible
Directors.
 
6.02        Exercise Price.  Except as required to implement Section 6.06, each
Option will bear an Exercise Price at least equal to Fair Market Value on the
Grant Date.  However, the Exercise Price associated with an Incentive Stock
Option will be at least 110 percent of the Fair Market Value of a share of Stock
on the Grant Date with respect to any Incentive Stock Options issued to an
Employee who, on the Grant Date, owns [as defined in Code §424(d)] Stock
possessing more than 10 percent of the total combined voting power of all
classes of Stock (or the combined voting power of any Related Entity),
determined under rules issued under Code §422.
 
 
 

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6.03        Exercise of Options.  Subject to any terms, restrictions and
conditions specified in the Plan and unless specified otherwise in the Award
Agreement:
 
[1]           Options granted to Employees and Consultants will be exercisable
according to the following schedule:
 
Number of Full Years Beginning After Grant Date
Cumulative Percentage Vested
1 but fewer than 2
20 percent
2 but fewer than 3
40 percent
3 but fewer than 4
60 percent
4 but fewer than 5
80 percent
5 or more
100 percent

 
Regardless of the vesting schedule just described but subject to Section 12.00
and the terms of the Award Agreement, Options that are not exercisable at
Termination will be fully and immediately exercisable [a] in the case of an
Employee, if the Employee Terminates because of death, Retirement or Disability
or [b] in the case of a Consultant, the Consultant Terminates because of death
or Disability.  In all other cases (but subject to Section 12.00), Options
issued to an Employee or Consultant that are not exercisable when the Employee
or Consultant Terminates for any other reason will be forfeited.
 
[2]           Options granted to Eligible Directors will be exercisable:
 
[a]           12 complete consecutive calendar months beginning after the Grant
Date, if the Eligible Director has not then Terminated; and
 
[b]           Will be fully and immediately exercisable if the Eligible Director
Terminates because of death, Retirement or Disability but will be forfeited if
the Eligible Director Terminates for any other reason.
 
[3]           However:
 
[a]           Any Option to purchase a fraction of a share of Stock will
automatically be converted to an Option to purchase an additional whole share.
 
[b]           Unless the Committee specifies otherwise in the Award Agreement,
no Participant may exercise Options for fewer than the smaller of [i] 100 shares
of Stock or [ii] the full number of shares of Stock for which Options are then
exercisable.
 
[c]           No Option may be exercised more than ten years after it is granted
(five years in the case of an Incentive Stock Option granted to an Employee who
owns [as defined in Code §424(d)] on the Grant Date Stock possessing more than
10 percent of the total combined voting power of all classes of Stock or the
combined voting power of any Related Entity, determined under rules issued under
Code §422).
 
6.04        Incentive Stock Options.  Notwithstanding anything in the Plan to
the contrary:
 
[1]           No provision of this Plan relating to Incentive Stock Options will
be interpreted, amended or altered, nor will any discretion or authority granted
under the Plan be exercised, in a manner that is inconsistent with Code §422 or,
without the consent of any affected Participant, to cause any Incentive Stock
Option to fail to qualify for the federal income tax treatment afforded under
Code §421.
 
[2]           The aggregate Fair Market Value of the Stock (determined as of the
Grant Date) with respect to which Incentive Stock Options are exercisable for
the first time by any Participant during any calendar year (under all option
plans of the Company and all Related Entities of the Company) will not exceed
$100,000 [or other amount specified in Code §422(d)], determined under rules
issued under Code §422.
 
 
 

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[3]           No Incentive Stock Option will be granted to any person who is not
an Employee on the Grant Date.
 
[4]           An Incentive Stock Option granted to an Employee who, without
Terminating, [a] becomes a Consultant after the Grant Date or [b] is no longer
an Employee because he or she is employed by an entity that no longer is a
Related Entity, [c] will be treated as a Nonstatutory Stock Option beginning at
the end of the third month after the former Employee becomes a Consultant or the
date the former Employee’s employer no longer is a Related Entity, whichever is
applicable.
 
6.05        Exercise of and Payment for Options.  Unless the Committee specifies
otherwise in the Award Agreement, the Exercise Price associated with each Option
must be paid in cash.  However, the Committee may, in its discretion, develop
and extend to some or all Participants, other procedures through which
Participants may pay the Exercise Price, including a cashless exercise and
allowing a Participant to tender Stock he or she already has owned for at least
six months before the exercise date, either by actual delivery of the previously
owned Stock or by attestation, valued at its Fair Market Value on the exercise
date, as partial or full payment of the Exercise Price.  A Participant may
exercise an Option only by sending to the Committee a completed exercise notice
(in the form prescribed by the Committee) along with payment of the Exercise
Price.  As soon as administratively feasible after those steps are taken, the
Committee will issue to the Participant the appropriate share certificates.
 
6.06        Substitution of Options.  In the Committee’s discretion, persons who
become Employees as a result of a transaction described in Code §424(a) or
Employees holding options issued by a former Related Entity at the occurrence of
a transaction described in Code §424(a) may receive Options in exchange for
options granted by their former employer or the former Related Entity subject to
the rules and procedures prescribed under Code §424.
 
6.07        Transferability of Stock.  Unless the Committee specifies otherwise
in the Award Agreement or as otherwise specifically provided in the Plan, Stock
acquired through an Option will be transferable, subject to applicable federal
securities laws, the requirements of any national securities exchange or system
on which shares of Stock are then listed or traded or any blue sky or state
securities laws.
 
7.00           STOCK UNITS
 
7.01        Granting Stock Units
 
[1]           Subject to the terms of this Plan, the Committee may grant Stock
Units to Employees, Eligible Directors, and Consultants at any time during the
term of this Plan under the terms and conditions that the Committee specifies in
the Award Agreement.
 
[2]           On the last day of the fiscal quarter during which the Company
completes the initial public offering of the Company’s stock which is the
subject of the Registration Statement, each Eligible Director will automatically
receive 3,100 Stock Units.
 
[3]           Each Eligible Director may elect to have any Annual Retainer
payable in cash (including any amount paid for service as the chair of a Board
committee) automatically converted to Stock Units by returning to the Committee
an Annual Retainer Deferral Form.  The Committee may, in its sole discretion,
reject any election made on an Annual Retainer Deferral Form.  Any election
under this subsection must be made in a manner acceptable to the Committee and
be consistent with rules described in Section 7.03.  If this election is made,
the electing Eligible Director will receive a number of Stock Units determined
by dividing the portion of the Annual Retainer subject to this election by the
Fair Market Value of a share of Stock on the Grant Date, which will coincide
with the date that the affected portion of the Annual Retainer otherwise would
have been paid in cash.
 
[4]           If provided in the Award Agreement, a Dividend Equivalent Right
also may be granted in connection with any Stock Unit.  If granted, the right to
receive any Dividend Equivalent Right will be forfeited or paid in cash or in
the form of additional Stock Units (as provided in the Award Agreement) when the
associated Stock Unit is forfeited or settled.
 
7.02        Settling Stock Units.
 
[1]           Stock Units always will be settled in shares of Stock unless the
Award Agreement specifies another form of settlement.
 
 
 

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[2]           Subject to Committee approval and the terms of the Award
Agreement, all Stock Units will be settled as of [a] the date specified in the
Award Agreement, in the case of Stock Units issued to Employees and Consultants
or [b] in the case of Stock Units issued to Eligible Directors under Section
7.01[2] and [3], the date the Eligible Director Terminates.
 
[3]           If Stock Units are to be settled in cash, the amount distributed
will be calculated by multiplying the number of Stock Units to be settled in
cash by their Fair Market Value.
 
[4]           If Stock Units are to be settled in shares of Stock, the number of
shares of Stock distributed will equal the whole number of Stock Units to be
settled in Stock, with the Fair Market Value of any fractional share of Stock
distributed in cash.
 
[5]           If a Participant dies or becomes Disabled before all of his or her
Stock Units have been settled, the value of any unpaid Stock Units will be paid
in a lump sum in shares of Stock to his or her Beneficiary.
 
7.03        Election Procedures.  To be effective, an election under Section
7.01[3] may be made only by returning a completed Annual Retainer Deferral Form
to the Committee no later than:
 
[1]           The last day preceding the calendar year for which the Annual
Retainer is earned and otherwise would have been paid in cash; or
 
[2]           Not later than 30 days after the Eligible Director first becomes
eligible to make an election under this section, although an election under this
subpart will apply only to the portion of the Annual Retainer attributable to
services performed after the date of that election.
 
Once filed, elections made on an Annual Retainer Deferral Form may be revoked or
changed by filing a subsequent Annual Retainer Deferral Form with the Committee
and subject to approval by the Committee.  However, that revocation or change
will be effective only with respect to any Annual Retainer to be earned for any
calendar year beginning after the effective date of the revocation or change.
 
8.00           RESTRICTED STOCK/RESTRICTED STOCK UNITS
 
8.01        Restricted Stock.  Subject to the terms of this Plan, the Committee
may grant Restricted Stock to Participants at any time during the term of this
Plan under terms and conditions that the Committee specifies in the Award
Agreement.
 
[1]           Restricted Stock may not be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated until the end of the applicable
Restriction Period.  At the Committee’s sole discretion, all shares of
Restricted Stock will:
 
[a]           Be held by the Company as escrow agent during the Restriction
Period; or
 
[b]           Be issued to the Participant in the form of certificates bearing a
legend describing the restrictions imposed on the shares.
 
[2]           Restricted Stock will be:
 
[a]           Forfeited (or if shares were issued to the Participant for a cash
payment, those shares will be resold to the Company for the amount paid), if all
restrictions have not been met at the end of the Restriction Period, and again
become available under the Plan; or
 
[b]           Released from escrow and distributed (or any restrictions
described in the certificate removed) as soon as practicable after the last day
of the Restriction Period, if all restrictions have then been met.
 
[3]           During the Restriction Period, and unless the Award Agreement
provides otherwise, each Participant to whom Restricted Stock has been issued as
described in Section 8.01[1][b]:
 
[a]           May exercise full voting rights associated with that Restricted
Stock; and
 
[b]           Will be entitled to receive all dividends and other distributions
paid with respect to that Restricted Stock; provided, however, that if any
dividends or other distributions are paid in shares of Stock, those shares will
be subject to the same restrictions on transferability and forfeitability as the
shares of Restricted Stock with respect to which they were issued.
 
 
 

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8.02        Restricted Stock Units.   Subject to the terms of this Plan, the
Committee may grant Restricted Stock Units to Participants at any time during
the term of this Plan under terms and conditions that the Committee specifies in
the Award Agreement and to the terms of the Plan.
 
[1]           Restricted Stock Units may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated.
 
[2]           Restricted Stock Units will be:
 
[a]           Forfeited, if all restrictions have not been met at the end of the
Restriction Period, and again become available under the Plan; or
 
[b]           Settled in shares of Stock unless the Award Agreement specifies
another form of settlement.
 
[3]           If Restricted Stock Units are settled [a] in shares of Stock, the
number of shares of Stock distributed will be equal to the number of Restricted
Stock Units to be settled, [b] in cash, the amount distributed will be equal to
the number of Restricted Stock Units to be settled multiplied by the Fair Market
Value of a share of Stock on the settlement date or [c] in a combination of
shares of Stock or cash, the number of shares of Stock distributed and the
amount of cash distributed will be computed under subpart 8.02[3][a] and [b].
 
[4]           During the Restriction Period, Participants may not exercise any
voting rights associated with the shares of Stock underlying his or her
Restricted Stock Units or to receive any dividends or other distributions
otherwise payable with respect to the shares of Stock underlying his or her
Restricted Stock Units.
 
8.03        Vesting.  Subject to any terms, restrictions and conditions
specified in the Plan or the Award Agreement and unless specified otherwise in
the Award Agreement, time-based restrictions imposed on Restricted Stock or
Restricted Stock Units will lapse under the following schedule:
 
Number of Full Years Beginning After Grant Date
Cumulative Percentage Vested
Fewer than 4
0 percent
4 or more
100 percent

 
Also, and unless the Committee specifies otherwise in the Award Agreement,
restrictions that have not lapsed at Termination will fully lapse [a] in the
case of an Employee or Eligible Director, if the Employee or Eligible Director
Terminates because of death, Retirement or Disability or [b] in the case of a
Consultant, the Consultant Terminates because of death or Disability.  However,
Restricted Stock and Restricted Stock Units subject to restrictions when the
Participant Terminates for any other reason will be forfeited.
 
9.00.           PERFORMANCE SHARES AND PERFORMANCE UNITS
 
9.01        Generally.  Any Award may be granted [1] to Covered Officers in a
manner that qualifies as “performance-based compensation” under Code §162(m) or
[2] to Employees who are not Covered Officers or to Consultants in a manner
determined by the Committee.  Subject to any terms, restrictions and conditions
specified in the Plan and the Award Agreement, the granting or vesting of
Performance Shares and Performance Units will, in the Committee’s sole
discretion, be based on achieving performance objectives derived from one or
more of the Performance Criteria.
 
9.02        Earning Performance Shares and Performance Units.  Except as
otherwise provided  in the Plan or the Award Agreement, as of the end of each
Performance Period, the Committee will certify to the Board the extent to which
each Participant has or has not met his or her Performance Criteria and
Performance Shares or Performance Units will be:
 
[1]           Forfeited, to the extent that Performance Criteria have not been
met at the end of the Performance Period, and again become available to be
granted under the Plan; or
 
 
 

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[2]           Valued and distributed, in a single lump sum, to Participants, in
the form of cash, Stock or a combination of both (as specified by the Committee
in the Award Agreement) as soon as practicable after the last day of the
Performance Period to the extent that related Performance Criteria have been
met.
 
9.03        Rights Associated with Performance Shares and Performance
Units.  During the Performance Period, and unless the Award Agreement provides
otherwise:
 
[1]           Participants may not exercise voting rights associated with their
Performance Shares or Performance Units; and
 
[2]           All dividends and other distributions paid with respect to any
Performance Shares or Performance Units will be held by the Company as escrow
agent during the Performance Period.  At the end of the Performance Period,
these dividends (and other distributions) will be distributed to the Participant
or forfeited as provided in Section 9.02.  No interest or other accretion will
be credited with respect to any dividends (and other distributions) held in this
escrow account.  If any dividends or other distributions are paid in shares of
Stock, those shares will be subject to the same restrictions on transferability
and forfeitability as the shares of Stock with respect to which they were
issued.
 
10.00           STOCK APPRECIATION RIGHTS
 
10.01      SAR Grants.  Subject to the terms of the Plan, the Committee may
grant Affiliated SARs, Freestanding SARs and Tandem SARs (or a combination of
each) to Employees or Consultants at any time during the term of this Plan.
 
10.02      Exercise Price.  Unless the Committee specifies otherwise in the
Award Agreement, the Exercise Price specified in the Award Agreement will:
 
[1]           In the case of an Affiliated SAR, not be less than 100 percent of
the Fair Market Value of a share of Stock on the Grant Date;
 
[2]           In the case of a Freestanding SAR, not be less than 100 percent of
the Fair Market Value of a share of Stock on the Grant Date; and
 
[3]           In the case of a Tandem SAR, not be less than the Exercise Price
of the related Option.
 
10.03      Exercise of Affiliated SARs.  Affiliated SARs will be deemed to be
exercised on the date the related Option is exercised.  However:
 
[1]           An Affiliated SAR will expire no later than the date the related
Option expires;
 
[2]           The value of the payout with respect to the Affiliated SAR will
not be more than the Exercise Price of the related Option; and
 
[3]           An Affiliated SAR may be exercised only if the Fair Market Value
of the shares of Stock subject to the related Option is larger than the Exercise
Price of the related Option.
 
10.04      Exercise of Freestanding SARs.  Freestanding SARs will be exercisable
subject to the terms specified in the Award Agreement.
 
10.05      Exercise of Tandem SARs.  Tandem SARs may be exercised with respect
to all or part of the shares of Stock subject to the related Option by
surrendering the right to exercise the equivalent portion of the related
Option.  A Tandem SAR may be exercised only with respect to the shares of Stock
for which its related Option is then exercisable.  However:
 
[1]           A Tandem SAR will expire no later than the date the related Option
expires or is exercised;
 
[2]           The value of the payout with respect to the Tandem SAR will not be
more than 100 percent of the difference between the Exercise Price of the
related Option and the Fair Market Value of a share of Stock subject to the
related Option at the time the Tandem SAR is exercised; and
 
[3]           A Tandem SAR may be exercised only if the Fair Market Value of a
share of Stock subject to the Option is larger than the Exercise Price of the
related Option.
 
 
 

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10.06      Settling SARs.
 
[1]           A Participant exercising a Tandem SAR or a Freestanding SAR will
receive an amount equal to:
 
[a]           The difference between the Fair Market Value of a share of Stock
on the exercise date and the Exercise Price multiplied by
 
[b]           The number of shares of Stock with respect to which the Tandem SAR
or Freestanding SAR is exercised.
 
[2]           Tandem SARs and Freestanding SARs always will be settled in shares
of Stock unless the Award Agreement specifies another form of settlement.
 
[3]           A Participant will not receive any cash or other amount when
exercising an Affiliated SAR.  Instead, the value of the Affiliated SAR being
exercised will be applied to reduce (but not below zero) the Exercise Price of
the related Option.
 
At the discretion of the Committee, the value of any Tandem SAR or Freestanding
SAR being exercised will be settled in cash, shares of Stock or any combination
of both.
 
11.00           PERFORMANCE-BASED AWARD
 
11.01      Generally.  Any Award granted under the Plan to [1] Covered Officers
may be granted in a manner that qualifies as “performance-based compensation”
under Code §162(m) or [2] Employees who are not Covered Officers or who are
Consultants, may be granted in a manner determined by the Committee.  As
determined by the Committee in its sole discretion, either the granting or
vesting of Performance-Based Awards will be based on achieving performance
objectives derived from one or more of the Performance Criteria over the
Performance Period established by the Committee.
 
11.02      Performance Criteria.
 
[1]           The payment or vesting of an Award to a Covered Officer that is
intended to qualify as “performance-based compensation” under Code §162(m) will
be based on one or more (or a combination) of the following Performance Criteria
and may be applied solely with reference to the Company (and/or any Related
Entity) or relatively between the Company (and/or any Related Entity) and one or
more unrelated entities:
 
[a]           Net earnings or net income (before or after taxes);
 
[b]           Earnings per share;
 
[c]           Net sales or revenue growth;
 
[d]           Net operating profit;
 
[e]           Return measures (including, but not limited to, return on assets,
capital, invested capital, equity, sales or revenue);
 
[f]            Cash flow (including, but not limited to, operating cash flow,
free cash flow, cash flow return on equity and cash flow return on  investment);
 
[g]           Earnings before or after taxes, interest, depreciation and/or
amortization;
 
[h]           Gross or operating margins;
 
[i]           Productivity ratios;
 
[j]           Share price (including, but not limited to, growth measures and
total shareholder return);
 
[k]          Expense targets;
 
[l]            Margins;
 
[m]          Operating efficiency;
 
 
 

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[n]           Market share;
 
[o]           Customer satisfaction;
 
[p]           Working capital targets; and
 
[q]           Economic value added (net operating profit after tax minus the sum
of capital multiplied by the cost of capital).
 
[2]           The payment or vesting of an Award to Participants who are not
Covered Officers may be based on one or more (or a combination) of the
Performance Criteria listed in Section 11.02[1] or on other factors the
Committee believes are relevant and appropriate.
 
[3]           Different Performance Criteria may be applied to individual
Participants or to groups of Participants and, as specified by the Committee,
may be based on the results achieved [a] separately by the Company or any
Related Entity, [b] any combination of the Company and Related Entities, or [c]
any combination of segments, products or divisions of the Company and Related
Entities.
 
[4]           The Committee:
 
[a]           Will make appropriate adjustments to Performance Criteria to
reflect the effect on any Performance Criteria of any stock dividend or stock
split affecting Stock, recapitalization (including, without limitation, the
payment of an extraordinary dividend), merger, consolidation, combination,
spin-off, distribution of assets to shareholders, exchange of shares or similar
corporate change.  Also, the Committee will make a similar adjustment to any
portion of a Performance Criteria that is not based on Stock but which is
affected by an event having an effect similar to those just described.
 
[b]           May make appropriate adjustments to Performance Criteria to
reflect a substantive change in a Participant’s job description or assigned
duties and responsibilities.
 
[5]           Performance Criteria will be established in an Award Agreement [a]
as soon as administratively practicable after established but [b] in the case of
Covered Officers, no later than the earlier of [i] 90 days after the beginning
of the applicable Performance Period or [ii] the expiration of 25 percent of the
applicable Performance Period.
 
11.03      Earning Awards.  Subject to any terms, restrictions and conditions
specified in the Plan or the Award Agreement, as of the end of each Performance
Period, the Committee will certify to the Board the extent to which each
Participant has or has not met his or her Performance
Criteria.  Performance-Based Awards will be:
 
[1]           Forfeited, if Performance Criteria have not been met at the end of
the Performance Period; or
 
[2]           Subject to Section 5.04, valued and distributed as soon as
practicable after the last day of the Performance Period to the extent that
related Performance Criteria have been met.
 
12.00           TERMINATION/BUY OUT
 
12.01      Retirement.  Unless otherwise specified in the Award Agreement or
this Plan, all Awards that are exercisable when a Participant Retires may be
exercised at any time before the earlier of [1] the expiration date specified in
the Award Agreement or [2] one year (three months in the case of Incentive Stock
Options) after the Retirement date (or any shorter period specified in the Award
Agreement).
 
12.02      Death or Disability.  Unless otherwise specified in the Award
Agreement or this Plan, all Awards that are exercisable when a Participant
Terminates because of death or Disability may be exercised by the Participant or
the Participant’s Beneficiary at any time before the earlier of [1] the
expiration date specified in the Award Agreement or [2] one year after the date
of death or Termination  because of Disability (or any shorter period specified
in the Award Agreement).
 
12.03      Termination for Cause.  Unless otherwise specified in the Award
Agreement or this Plan, all Awards that are outstanding (whether or not then
exercisable) will be forfeited if a Participant Terminates (or is deemed to have
been Terminated) for Cause.
 
 
 

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12.04      Termination for any Other Reason.  Unless otherwise specified in the
Award Agreement or this Plan or subsequently, any Awards that are outstanding
when a Participant Terminates for any reason not described in Sections 12.01
through 12.03 and which are then exercisable, or which the Committee has, in its
sole discretion, decided to make exercisable, may be exercised at any time
before the earlier of [1] the expiration date specified in the Award Agreement
or [2] 90 days after the Termination date (or any shorter period specified in
the Award Agreement) and all Awards that are not then exercisable will terminate
on the Termination date.
 
12.05      Expiration of Options in Connection with Termination Associated with
Merger, Etc.  Unless otherwise provided in an Award Agreement or this Plan),
Options held by a Participant who Terminates in connection with a transaction
described in Code §424 will expire immediately upon the date of Termination but
only if and to the extent that another party to that transaction will grant
substitute options in exchange for the Options to be cancelled and otherwise
comply with the rules and procedures prescribed under the provisions of Code
§424 governing that substitution.  In all other cases, Options held by a
Participant who Terminates in connection with a transaction described in Code
§424, will expire as otherwise provided in this Plan and the Award Agreement.
 
12.06      Buy Out of Awards.
 
[1]           At any time before a Change in Control or the commencement of
activity that may reasonably be expected to result in a Change in Control, the
Committee, in its sole discretion and without the consent of the affected
Participant, may cancel any or all outstanding Awards (other than an Award
subject to Code §409A) held by that Participant, whether or not exercisable, by
providing to that Participant written notice (“Buy Out Notice”) of its intention
to exercise the rights reserved in this section.  If a Buy Out Notice is given,
in the case of an Option, the Company also will pay to each affected Participant
the difference between [a] the Fair Market Value of the Stock underlying each
exercisable Option (or portion of an Option) to be cancelled and [b] the
Exercise Price associated with each exercisable Option to be cancelled.  With
respect to any Award other than an Option, the Company will pay to each affected
Participant the Fair Market Value of the Stock subject to the Award.  However,
unless otherwise specified in the Award Agreement, no payment will be made with
respect to any Awards that are not exercisable or are subject to a restriction
when cancelled under this section.  The Company will complete any buy out made
under this section as soon as administratively possible after the date of the
Buy Out Notice.  At the Committee’s option, payment of the buy out amount may be
made in cash, in whole shares of Stock or partly in cash and partly in shares of
Stock.  The number of whole shares of Stock, if any, included in the buy out
amount will be determined by dividing the amount of the payment to be made in
shares of Stock by the Fair Market Value as of the date of the Buy Out Notice.
 
[2]           At any time before a Change in Control or the commencement of
activity that may reasonably be expected to result in a Change in Control, the
Committee, in its sole discretion, may offer to buy for cash or by substitution
of another Award any or all outstanding Awards (other than an Award subject to
Code §409A) held by any Participant, whether or not exercisable, by providing to
that Participant written notice (“Buy Out Offer”) of its intention to exercise
the rights reserved in this section and other information, if any, required to
be included under applicable security laws.  If a Buy Out Offer is given, the
Company also will transfer to each Participant accepting the offer the value
(determined under procedures adopted by the Committee) of the Award to be
purchased or exchanged.  The Company will complete any buy out made under this
section as soon as administratively possible after the date of the Buy Out Offer
and the shares of Stock subject to the Awards purchased will be recredited as
provided in Section 5.02.
 
13.00           CHANGE IN CONTROL
 
13.01      Accelerated Vesting and Settlement.  Subject to Section 13.02, on the
date of any Change in Control:
 
[1]           [a] Each Option outstanding on the date of a Change in Control
(whether or not exercisable) will be cancelled in exchange [i] for cash equal to
the excess of the Change in Control Price over the Exercise Price associated
with the cancelled Option or, [ii] at the Committee’s discretion, for whole
shares of Stock with a Fair Market Value equal to the excess of the Change in
Control Price over the Exercise Price associated with the cancelled Option and
the Fair Market Value of any fractional share of Stock will be distributed in
cash, and [b] all related Affiliated and Tandem SARs will be cancelled;
 
[2]           All Performance Criteria associated with Performance Shares or
Performance Units will be deemed to have been met on the date of the Change in
Control, all Performance Periods will be accelerated to the date of the Change
in Control and all outstanding Performance Shares and Performance Units
(including those subject to the acceleration described in this subpart) will be
distributed in a single lump sum cash payment;
 
 
 

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[3]           All Freestanding SARs will be deemed to be exercisable and will be
liquidated in a single lump sum cash payment;
 
[4]           All Stock Units will be distributed immediately in the form
provided in the Annual Retainer Deferral Form; and
 
[5]           All restrictions then imposed on Restricted Stock or Restricted
Stock Units will lapse.
 
13.02      Effect of Code §280G.  Unless otherwise specified in the Award
Agreement or in another written agreement between the Participant and the
Company or a Related Entity executed simultaneously with or before any Change in
Control, if the sum (or value) of the payments described in Section 13.01
constitute an “excess parachute payment” as defined in Code §280G(b)(1) when
combined with all other parachute payments attributable to the same Change in
Control, the Company or other entity making the payment (“Payor”) will reduce
the Participant’s benefits under this Plan so that the Participant’s total
“parachute payment” as defined in Code §280G(b)(2)(A) under this Plan, an Award
Agreement and all other agreements will be $1.00 less than the amount that
otherwise would generate an excise tax under Code §4999.  If the reduction
described in the preceding sentence applies, within 10 business days of the
effective date of the event generating the payments (or, if later, the date of
the Change in Control), the Payor will apprise the Participant of the amount of
the reduction (“Notice of Reduction”).  Within 10 business days of receiving
that information, the Participant may specify how and against which benefit or
payment source, (including benefits and payment sources other than this Plan)
the reduction is to be applied (“Notice of Allocation”).  The Payor will be
required to implement these directions within 10 business days of receiving the
Notice of Allocation.  If the Payor has not received a Notice of Allocation from
the Participant within 10 business days of the date of the Notice of Reduction
or if the allocation provided in the Notice of Allocation is not sufficient to
fully implement the reduction described in this section, the Payor will apply
the reduction described in this section proportionately based on the amounts
otherwise payable under Section 13.01 or, if a Notice of Allocation has been
returned that does not sufficiently implement the reduction described in this
section, on the basis of the reductions specified in the Notice of Allocation.
 
14.00           AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
 
The Board or the Committee may terminate, suspend or amend the Plan at any time
without shareholder approval except to the extent that shareholder approval is
required to satisfy applicable requirements imposed by [1] Rule 16b-3 under the
Act, or any successor rule or regulation, [2] applicable requirements of the
Code or [3] any securities exchange, market or other quotation system on or
through which the Company’s securities are listed or traded.  Also, no Plan
amendment may [4] result in the loss of a Committee member’s status as a
“non-employee director” as defined in Rule 16b-3 under the Act, or any successor
rule or regulation, with respect to any employee benefit plan of the Company,
[5] cause the Plan to fail to meet requirements imposed by Rule 16b-3 or [6]
without the consent of the affected Participant (and except as specifically
provided otherwise in this Plan or the Award Agreement), adversely affect any
Award granted before the amendment, modification or termination.  However,
nothing in this section will restrict the Committee’s right to exercise the
discretion retained in Section 12.06 or the right to amend the Plan and any
Award Agreements without any additional consideration to affected Participants
to the extent necessary to avoid penalties arising under Code §409A, even if
those amendments reduce, restrict or eliminate rights granted under the Plan or
Award Agreement (or both) before those amendments.
 
15.00           MISCELLANEOUS
 
15.01      Assignability.  Except as described in this section, an Award may not
be transferred except by will or the laws of descent and distribution and,
during the Participant’s lifetime, may be exercised only by the Participant or
the Participant’s guardian or legal representative.  However, with the
permission of the Committee, a Participant or a specified group of Participants
may transfer Awards (other than Incentive Stock Options) to a revocable inter
vivos trust, of which the Participant is the settlor, or may transfer Awards
(other than Incentive Stock Options) to any member of the Participant’s
immediate family, any trust, whether revocable or irrevocable, established
solely for the benefit of the Participant’s immediate family, any partnership or
limited liability company whose only partners or members are members of the
Participant’s immediate family or an organization described in Code §501(c)(3)
(“Permissible Transferees”).  Any Award transferred to a Permissible Transferee
will continue to be subject to all of the terms and conditions that applied to
the Award before the transfer and to any other rules prescribed by the
Committee.  A Permissible Transferee [other than an organization described in
Code §501(c)(3)] may not retransfer an Award except by will or the laws of
descent and distribution and then only to another Permissible Transferee.
 
15.02      Beneficiary Designation.  Each Participant may name a Beneficiary or
Beneficiaries (who may be named contingently or successively) to receive or to
exercise any vested Award that is unpaid or unexercised at the Participant’s
death.  Each designation made will revoke all prior designations made by the
same Participant, must be made on a form prescribed by the Committee and will be
effective only when filed in writing with the Committee.  If a Participant has
not made an effective Beneficiary designation, the deceased Participant’s
Beneficiary will be his or her surviving spouse or, if none, the deceased
Participant’s estate.  The identity of a Participant’s designated Beneficiary
will be based only on the information included in the latest beneficiary
designation form completed by the Participant and will not be inferred from any
other evidence.
 
 
 

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15.03      No Guarantee of Continuing Services.  Nothing in the Plan may be
construed as:
 
[1]           Interfering with or limiting the right of the Company or any
Related Entity to Terminate any Employee’s employment at any time;
 
[2]           Conferring on any Participant any right to continue as an Employee
or director of the Company or any Related Entity;
 
[3]           Guaranteeing that any Employee will be selected to be a
Participant; or
 
[4]           Guaranteeing that any Participant will receive any future Awards.
 
15.04      Tax Withholding.
 
[1]           The Company will withhold from other amounts owed to the
Participant, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local withholding tax requirements on
any Award, exercise or cancellation of an Award or purchase of Stock.  If these
amounts are not to be withheld from other payments due to the Participant (or if
there are no other payments due to the Participant), the Company will defer
payment of cash or issuance of shares of Stock until the earlier of:
 
[a]           Thirty days after the settlement date; or
 
[b]           The date the Participant remits the required amount.
 
[2]           If the Participant has not remitted the required amount within 30
days after the settlement date, the Company will permanently withhold from the
value of the Awards to be distributed the minimum amount required to be withheld
to comply with applicable federal, state and local income, wage and employment
taxes and distribute the balance to the Participant.
 
[3]           In its sole discretion, which may be withheld for any reason or
for no reason, the Committee may permit a Participant to elect, subject to
conditions the Committee establishes, to reimburse the Company for this tax
withholding obligation through one or more of the following methods:
 
[a]           By having shares of Stock otherwise issuable under the Plan
withheld by the Company (but only to the extent of the minimum amount that must
be withheld to comply with applicable state, federal and local income,
employment and wage tax laws);
 
[b]           By delivering to the Company previously acquired shares of Stock
that the Participant has owned for at least six months;
 
[c]           By remitting cash to the Company; or
 
[d]           By remitting a personal check immediately payable to the Company.
 
15.05      Indemnification.  Each individual who is or was a member of the
Committee or of the Board will be indemnified and held harmless by the Company
against and from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or not taken under
the Plan as a Committee or Board member and against and from any and all amounts
paid, with the Company’s approval, by him or her in settlement of any matter
related to or arising from the Plan as a Committee or Board member or paid by
him or her in satisfaction of any judgment in any action, suit or proceeding
relating to or arising from the Plan against him or her as a Committee or Board
member, but only if he or she gives the Company an opportunity, at its own
expense, to handle and defend the matter before he or she undertakes to handle
and defend it in his or her own behalf.  The right of indemnification described
in this section is not exclusive and is independent of any other rights of
indemnification to which the individual may be entitled under the Company’s
organizational documents, by contract, as a matter of law or otherwise.
 
 
 

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15.06      No Limitation on Compensation.  Nothing in the Plan is to be
construed to limit the right of the Company to establish other plans or to pay
compensation to its employees or directors, in cash or property, in a manner not
expressly authorized under the Plan.
 
15.07      Requirements of Law.  The grant of Awards and the issuance of shares
of Stock will be subject to all applicable laws, rules and regulations and to
all required approvals of any governmental agencies or national securities
exchange, market or other quotation system.  Also, no shares of Stock will be
issued under the Plan unless the Company is satisfied that the issuance of those
shares of Stock will comply with applicable federal and state securities
laws.  Certificates for shares of Stock delivered under the Plan may be subject
to any stock transfer orders and other restrictions that the Committee believes
to be advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange or other recognized
market or quotation system upon which the Stock is then listed or traded, or any
other applicable federal or state securities law.  The Committee may cause a
legend or legends to be placed on any certificates issued under the Plan to make
appropriate reference to restrictions within the scope of this section.
 
15.08      Governing Law.  The Plan, and all agreements hereunder, will be
construed in accordance with and governed by the laws (other than laws governing
conflicts of laws) of the State of Ohio.
 
15.09      No Impact on Benefits.  Plan Awards are incentives designed to
promote the objectives described in Section 1.00.  Also, Awards are not
compensation for purposes of calculating a Participant’s rights under any
employee benefit plan that does not specifically require the inclusion of Awards
in calculating benefits.
 
 

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