Exhibit 10.1
JO-ANN STORES, INC.
2008 INCENTIVE COMPENSATION PLAN
Effective June 11, 2008
Amended by Board as of April 7, 2010;
Ratified by Shareholders June 10, 2010
1. Purpose
The purpose of this Plan is to enable the Company to attract and retain
qualified employees and non-employee Directors, to provide incentives, and to
reward performance. To achieve this purpose, this Plan provides the authority to
grant Awards payable in Shares, in cash, or in a combination of Shares and cash.
This Plan was adopted by the Board of Directors of the Company on April 2, 2008,
subject to shareholder approval, which occurred on June 11, 2008. This Plan was
amended and restated by the Board of Directors of the Company, without
shareholder approval being required, on April 7, 2010.
2. Definitions
(a) “Affiliate and Associate” — These terms have the meanings given to them in
Rule 12b-2 under the Exchange Act.
(b) “Award” — A grant of Stock Appreciation Rights, Stock Awards, Stock Options,
Incentive Compensation Awards, or other incentives under this Plan.
(c) “Board of Directors” — The Board of Directors of the Company.
(d) “Cause” — The occurrence of any one or more of the following (unless
otherwise prescribed by the Committee in a grant agreement): (i) the willful and
continued failure by the Participant to substantially perform his normal duties
(other than any such failure resulting from Participant’s disability), after a
written demand for substantial performance is delivered to the Participant that
specifically identifies the manner in which the Committee believes that the
Participant has not substantially performed his duties, and the Participant has
failed to remedy the situation within thirty (30) business days of receiving
such notice; (ii) the Participant’s conviction for committing an act of fraud,
embezzlement, theft, or other criminal act constituting a felony; or (iii) the
willful engaging by the Participant in gross negligence materially and
demonstrably injurious to the Company. However, no act or failure to act on the
Participant’s part shall be considered “willful” unless done, or omitted to be
done, by the Participant not in good faith and without reasonable belief that
his action or omission was in or not opposed to the best interest of the
Company.

 

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(e) “Change in Control” — A “Change in Control” will be deemed to occur, with
respect to any Award granted prior to April 7, 2010, if at any time after the
date of the adoption of this Plan (unless otherwise prescribed by the Committee
in a grant agreement):
(i) Any person (other than the Company, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of the Company, or any person
organized, appointed, or established by the Company for or pursuant to the terms
of any such plan), alone or together with any of its affiliates, becomes the
beneficial owner of fifteen percent (15%) or more (but less than fifty percent
(50%)) of the Voting Shares then outstanding;
(ii) Any person (other than the Company, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of the Company, or any person
organized, appointed, or established by the Company for or pursuant to the terms
of any such plan), alone or together with any of its affiliates, becomes the
beneficial owner of fifty percent (50%) or more of the Voting Shares then
outstanding;
(iii) Any person commences or publicly announces an intention to commence a
tender offer or exchange offer the consummation of which would result in the
person becoming the beneficial owner of fifteen percent (15%) or more of the
Voting Shares then outstanding;
(iv) At any time during any period of twenty-four (24) consecutive months,
individuals who were Directors at the beginning of the 24-month period no longer
constitute a majority of the members of the Board of Directors, unless the
election, or the nomination for election by the Company’s shareholders, of each
Director who was not a Director at the beginning of the period is approved by at
least a majority of the Directors who (x) are in office at the time of the
election or nomination, and (y) were Directors at the beginning of the period;
(v) A record date is established for determining shareholders entitled to vote
upon (x) a merger or consolidation of the Company with another corporation in
which those persons who are shareholders of the Company immediately before the
merger or consolidation are to receive or retain less than sixty percent (60%)
of the stock of the surviving or continuing corporation, (y) a sale or other
disposition of all or substantially all of the assets of the Company, or (z) the
dissolution of the Company; or
(vi) (x) the Company is merged or consolidated with another corporation and
those persons who were shareholders of the Company immediately before the merger
or consolidation receive or retain less than sixty percent (60%) of the stock of
the surviving or continuing corporation, (y) there occurs a sale or other
disposition of all or substantially all of the assets of the Company, or (z) the
Company is dissolved.

 

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Notwithstanding anything herein to the contrary, if an event described in clause
(ii), clause (iv), or clause (vi) above occurs, the occurrence of that event
will constitute an irrevocable Change in Control. Furthermore, notwithstanding
anything herein to the contrary, if an event described in clause (iii) occurs,
and the Board of Directors either approves such offer or takes no action with
respect to such offer, then the occurrence of that event will constitute an
irrevocable Change in Control. On the other hand, notwithstanding anything
herein to the contrary, if an event described in clause (i) or clause (v) above
occurs, or if an event described in clause (iii) occurs and the Board of
Directors does not either approve such offer or take no action with respect to
such offer as described in the preceding sentence, and a majority of those
members of the Board of Directors who were Directors prior to such event
determine, within the 90-day period beginning on the date such event occurs,
that the event should not be treated as a Change in Control, then, from and
after the date that determination is made, that event will be treated as not
having occurred. If no such determination is made, a Change in Control resulting
from any of the events described in the immediately preceding sentence will
constitute an irrevocable Change in Control on the 91st day after the occurrence
of the event.
A “Change in Control” will be deemed to occur, with respect to any Award granted
on or after April 7, 2010, if at any time on or after such date (unless
otherwise prescribed by the Committee in a grant agreement):
(i) Any person (other than the Company, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of the Company, or any person
organized, appointed, or established by the Company for or pursuant to the terms
of any such plan), alone or together with any of its affiliates, becomes the
beneficial owner of thirty percent (30%) or more (but less than fifty percent
(50%)) of the Voting Shares then outstanding;
(ii) Any person (other than the Company, any of its Subsidiaries, any employee
benefit plan or employee stock ownership plan of the Company, or any person
organized, appointed, or established by the Company for or pursuant to the terms
of any such plan), alone or together with any of its affiliates, becomes the
beneficial owner of fifty percent (50%) or more of the Voting Shares then
outstanding;
(iii) At any time during any period of twenty-four (24) consecutive months,
individuals who were Directors at the beginning of the 24-month period no longer
constitute a majority of the members of the Board of Directors, unless the
election, or the nomination for election by the Company’s shareholders, of each
Director who was not a Director at the beginning of the period is approved by at
least a majority of the Directors who (x) are in office at the time of the
election or nomination, and (y) were Directors at the beginning of the period;
or

 

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(iv) (x) the Company is merged or consolidated with another corporation and
those persons who were shareholders of the Company immediately before the merger
or consolidation receive or retain less than sixty percent (60%) of the stock of
the surviving or continuing corporation, (y) there occurs a sale or other
disposition of all or substantially all of the assets of the Company, or (z) the
Company is dissolved.
Notwithstanding anything herein to the contrary, if an event described in clause
(ii), clause (iii), or clause (iv) above occurs, the occurrence of that event
will constitute an irrevocable Change in Control. Notwithstanding anything
herein to the contrary, if an event described in clause (i) above occurs, and a
majority of those members of the Board of Directors who were Directors prior to
such event determine, within the 90-day period beginning on the date such event
occurs, that the event should not be treated as a Change in Control, then, from
and after the date that determination is made, that event will be treated as not
constituting a Change in Control. If no such determination is made, a Change in
Control resulting from an event described in clause (i) above will constitute an
irrevocable Change in Control on the 91st day after the occurrence of the event.
(f) “Code” — The Internal Revenue Code of 1986, or any law that supersedes or
replaces it, as amended from time to time.
(g) “Committee” — The Compensation Committee of the Board of Directors, or any
other committee of the Board of Directors that the Board of Directors authorizes
to administer this Plan.
(h) “Company” — Jo-Ann Stores, Inc., an Ohio corporation, and its successors.
(i) “Date of Grant” — The date as of which an Award is determined to be
effective and is granted pursuant to the Plan, either as specified in rules
adopted by the Committee with respect to this Plan or as designated in a
resolution of the Committee. The Date of Grant shall not be earlier than the
date of the resolution and action therein by the Committee or the date specified
in the Committee’s rules.
(j) “Director” — A director of the Company.
(k) “Equity Restructuring” — A non-reciprocal transaction between the Company
and its shareholders, such as a stock dividend, stock split, spin-off, rights
offering or recapitalization through a large, nonrecurring cash dividend, that
causes the per-Share value of the Shares underlying outstanding Awards to
change.
(l) “Exchange Act” — Securities Exchange Act of 1934, and any law that
supersedes or replaces it, as amended from time to time.

 

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(m) “Fair Market Value” of Shares — As of any particular date the closing sale
price of the Shares as reported on the New York Stock Exchange Composite Tape
or, if not listed on such exchange, on any other national securities exchange on
which the Shares are listed. If the Shares are not traded as of any given date,
the Fair Market Value means the closing price of the Shares on the principal
exchange or market on which the Shares are traded or quoted for the immediately
preceding date on which the Shares were traded or quoted. If there is no regular
public trading market for such Shares, the Fair Market Value shall be the fair
market value 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 grant agreement, and is in compliance with the fair
market value pricing rules set forth in Section 409A of the Code.
(n) “Good Reason” — Means, without the Participant’s express written consent,
the occurrence of any one or more of the following (unless otherwise prescribed
by the Committee in a grant agreement): (i) any material reduction in the
Participant’s base compensation and incentive compensation opportunities (to the
extent such incentive compensation opportunities are a regular and substantial
part of the Participant’s base compensation) below the amount in effect
immediately before the Change in Control or, if higher, the amount in effect
before any reduction in the Participant’s base compensation and incentive
compensation opportunities made in contemplation of the Change in Control;
(ii) any material reduction in the Participant’s duties, responsibilities, or
position with respect to the Company from the duties, responsibilities, or
position as in effect immediately before the Change in Control or as in effect
immediately before any reduction in any such item made in contemplation of the
Change in Control; or (iii) any shift of the Participant’s principal place of
employment with the Company to a location that is more than fifty (50) miles (by
straight line measurement) from the site of the Company’s headquarters in
Hudson, Ohio at the relevant time. The Participant shall have a voluntary
termination for Good Reason only if: (i) the Participant provides written notice
to the Company within ninety (90) days after the initial occurrence of an above
event describing in detail the event and stating that the Participant’s
employment will terminate upon a specified date in such notice (the “Good Reason
Termination Date”), which date is not earlier than thirty (30) days after the
date such notice is provided to the Company (the “Notice Delivery Date”) and not
later than ninety (90) days after the Notice Delivery Date, and (ii) the Company
does not remedy the event prior to the Good Reason Termination Date.
(o) “Incentive Compensation Award” — This term has the meaning given to it in
Section 6(a)(iv).
(p) “Incentive Compensation Award Payout Level” — The greater of (i) the
Participant’s average Incentive Compensation Award earned over the three
(3) full performance periods ended before the Qualifying Termination or, if the
Participant was eligible to earn such a bonus for less than the last three full
performance periods, for the performance periods during which the Participant
was eligible to earn such Incentive Compensation Award immediately prior to the
Qualifying Termination, or (ii) the Participant’s target Incentive Compensation
Award established for the year in which the Qualifying Termination occurs. If
the Participant was not eligible to earn such an Incentive Compensation Award
for any performance period ending on or before the Qualifying Termination, then
the Incentive Compensation Payout Level shall be deemed to equal the
Participant’s target Incentive Compensation Award established for the year in
which the Qualifying Termination occurs.

 

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(q) “Participant” — Any person to whom an Award has been granted under this
Plan.
(r) “Performance Criteria” — This term has the meaning given to it in
Section 7(b).
(s) “Performance Goal” — This term has the meaning given to it in Section 7(a).
(t) “Prior Award” — Any award or grant made pursuant to the Jo-Ann Stores, Inc.
1998 Incentive Compensation Plan, as amended, that is outstanding and
unexercised on the date of adoption of the Plan.
(u) “Qualified Performance-Based Award” — An Award or portion of an Award that
is intended to satisfy the requirements for “qualified performance-based
compensation” under Section 162(m) of the Code.
(v) “Qualifying Termination” — Means either the Company or its Subsidiaries
terminates the Participant’s employment or service without Cause, or the
Participant terminates his employment or service with the Company and its
Subsidiaries for Good Reason.
(w) “Restricted Stock” — An Award of Shares that are subject to restrictions or
risk of forfeiture.
(x) “Rule 16b-3” — Rule 16b-3 under the Exchange Act, or any rule that
supersedes or replaces it, as amended from time to time.
(y) “Shares” — Company common shares.
(z) “Stock Appreciation Right” — This term has the meaning given to it in
Section 6(a)(i).
(aa) “Stock Award” — This term has the meaning given to it in Section 6(a)(ii).
(bb) “Stock Equivalent Unit” — An Award that is valued by reference to the Fair
Market Value of Shares.
(cc) “Stock Option” — This term has the meaning given to it in
Section 6(a)(iii).
(dd) “Subsidiary” — A corporation, limited liability company, business trust,
partnership, joint venture, or other organization of which securities having a
majority of the voting power are owned, directly or indirectly, by the Company;
provided, however, that for purposes of determining whether any individual may
be a Participant with respect to any grant of Stock Options or Stock
Appreciation Rights that are intended to be exempt from Section 409A of the
Code, the term “Subsidiary” means any corporation or other entity as to which
the Company is an “eligible issuer of service recipient stock” (within the
meaning of Section 409A of the Code).

 

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(ee) “Substitute Awards” — Awards that are granted in assumption of, or in
substitution or exchange for, outstanding awards previously granted by an entity
acquired directly or indirectly by the Company or with which the Company
directly or indirectly combines.
3. Eligibility
All non-employee Directors and employees of the Company or any of its
Subsidiaries will be eligible to receive Awards.
4. Administration
(a) Committee. Subject to Sections 4(b) and 4(c), this Plan will be administered
by the Committee. The Committee will, subject to the terms of this Plan, have
the authority to: (i) select the eligible Directors and employees who will
receive Awards; (ii) determine the number and types of Awards to be granted;
(iii) determine the terms, conditions, vesting periods, and restrictions
applicable to the Awards; (iv) establish Performance Goals for performance-based
Awards; (v) prescribe the forms of any notices, agreements, or other instruments
relating to the Awards; (vi) grant the Awards; (vii) adopt, alter, and repeal
rules governing this Plan; (viii) interpret the terms and provisions of this
Plan and any Awards granted under this Plan; and (ix) otherwise supervise the
administration of this Plan. All decisions by the Committee will be made with
the approval of not less than a majority of its members.
(b) Awards Subject to Section 16(b) of the Exchange Act. Notwithstanding the
provisions of Section 4(a), if any member of the Committee does not qualify as a
“Non-Employee Director” within the meaning of Rule 16b-3, the “Committee” will,
for purposes of making any Award that (i) constitutes a “purchase” of securities
within the meaning of Section 16(b) of the Exchange Act by an individual who is
subject to potential liability under Section 16(b) of the Exchange Act and
(ii) does not otherwise qualify for an exemption under Rule 16b-3, be deemed to
consist only of those members of the Committee who qualify as such Non-Employee
Directors.
(c) Awards Subject to Section 162(m) of the Code. Notwithstanding the provisions
of Section 4(a), if any member of the Committee does not qualify as an “outside
director” within the meaning of Section 162(m) of the Code, the “Committee”
will, for purposes of making any Qualified Performance-Based Awards, be deemed
to consist only of those members who qualify as such outside directors.
(d) Delegation. The Committee may delegate any of its authority to any other
person or persons that it deems appropriate, provided the delegation does not
(i) cause this Plan, or any Awards granted under this Plan, to fail to qualify
for the exemption provided by Rule 16b-3, (ii) result in a reduction in the
amount of compensation associated with any Qualified Performance-Based Award
that is deductible for federal income tax purposes under Section 162(m) of the
Code, or (iii) apply to an Award granted to a non-employee Director.

 

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(e) Decisions Final. All decisions by the Committee, and by any other person or
persons to whom the Committee has delegated authority, will be final and binding
on all persons.
5. Shares Available under Plan; Limitations on Incentive
(a) Maximum Aggregate Number of Shares. Subject to Sections 5(c) and 5(d), the
maximum aggregate number of Shares that may be issued or delivered under the
Plan is 3,125,000 Shares. Any Shares that are subject to Awards of Stock Options
or Stock Appreciation Rights shall be counted against this limit as one
(1) Share for every one (1) Share delivered under the Award. Any Shares that are
subject to Awards other than Stock Options or Stock Appreciation Rights shall be
counted against this limit as 1.57 Shares for every one (1) Share delivered
under those Awards. Shares issued or delivered under this Plan may consist of
authorized and unissued shares, treasury shares, or shares to be purchased by
the Company, as determined by the Committee.
(b) Maximum Number of Shares and Amount of Incentive Compensation Award for Each
Participant. Subject to Sections 5(c) and 5(d), the number of Shares subject to
Awards granted to any Participant, and the amount of any Incentive Compensation
Award payable in cash to any Participant, may not exceed:
(i) With respect to Stock Options, 500,000 Shares in any fiscal year of the
Company.
(ii) With respect to Stock Appreciation Rights, 500,000 Shares in any fiscal
year of the Company.
(iii) With respect to Restricted Stock awards that are Qualified
Performance-Based Awards, 200,000 Shares in any fiscal year of the Company.
(iv) With respect to Stock Awards other than Stock Options and Restricted Stock
that are Qualified Performance-Based Awards, 400,000 Shares in the aggregate in
any fiscal year of the Company.
(v) With respect to Incentive Compensation Awards payable in cash that are
Qualified Performance-Based Awards, the lesser of $2,000,000 or 200% of annual
base salary effective at the time the Performance Goals are established in
respect to any fiscal year of the Company.
(c) Charging of Shares. In addition to the Shares authorized in Section 5(a), if
any Award or Prior Award terminates, expires, is cancelled or is forfeited
without having been exercised, or any Award or Prior Award is settled (or can be
paid only) in cash, then the underlying Shares, to the extent of any such
forfeiture, cancellation, termination or cash

 

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settlement, again shall be available for grant under this Plan and credited
toward the Plan limit as set forth in Section 5(a). Any Shares that again become
available for grant pursuant to this paragraph shall be added back as (i) one
(1) Share if such Shares were subject to an Award or Prior Award of Stock
Options or Stock Appreciation Rights, and (ii) as 1.57 Shares if such Shares
were subject to Awards or Prior Awards other than Stock Options or Stock
Appreciation Rights. Shares that are tendered, whether by physical delivery or
by attestation, to the Company by a Participant or withheld from the Award or
Prior Award by the Company as full or partial payment of the exercise or
purchase price of any Award or Prior Award or in payment of any applicable
withholding for Federal, state, city, local or foreign taxes incurred in
connection with the exercise, vesting or earning of any Award or Prior Award
will not become available for future grants under the Plan. With respect to a
Stock Appreciation Right, when such Stock Appreciation Right is exercised and
settled in Shares, the Shares subject to such Stock Appreciation Right shall be
counted against the Shares available for issuance under the Plan as one Share
for every one Share subject thereto, regardless of the number of Shares used to
settle the Stock Appreciation Right upon exercise. Any Substitute Awards granted
by the Company shall not reduce the Shares available for Awards under the Plan
and will not count against the limits specified in Section 5(a) above.
(d) Adjustment.
(i) In the event that any dividend or other distribution, reorganization,
merger, consolidation, combination, repurchase, or exchange of Shares or other
securities of the Company, or other change in the corporate structure of the
Company affecting the Shares (other than an Equity Restructuring) occurs such
that an adjustment is determined by the Committee (in its sole discretion) to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust the number and
kind of Shares that may be delivered under the Plan, the exercise price or
purchase price per Share and the number of Shares covered by each outstanding
Award, and the Share limits of Sections 5(a) and (b).
(ii) In connection with the occurrence of any Equity Restructuring, and
notwithstanding anything to the contrary in Section 5(d)(i): (A) the number and
type of securities subject to each outstanding Award and the exercise price or
purchase price thereof, if applicable, will be proportionately adjusted, which
such adjustments shall be nondiscretionary and shall be final and binding on the
affected Participant and the Company; and (B) the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such Equity Restructuring with respect to the aggregate
number and kind of shares that may be issued under the Plan (including, but not
limited to, adjustments of the limitations in Section 5(a) and (b)).
(iii) In no event shall any adjustment be required under this Section 5(d) if
the Committee determines that such action could cause an Award to fail to
satisfy the conditions of an applicable exception from the requirements of
Section 409A of the Code or otherwise could subject a Participant to the
additional tax imposed under Section 409A of the Code in respect of an
outstanding Award.

 

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6. Awards
(a) Types of Awards. Awards may include, but are not limited to, the following:
(i) Stock Appreciation Right — A right to receive a payment, in cash or Shares,
equal to the excess of (A) the Fair Market Value of a specified number of Shares
on the date the right is exercised over (B) the Fair Market Value of the Shares
on the date the right is granted, all as determined by the Committee. The grant
price of any Stock Appreciation Rights granted to Participants may not be less
than the Fair Market Value of the Shares subject to the Stock Appreciation Right
on the Date of Grant. The right may be conditioned upon the occurrence of
certain events, such as a Change in Control of the Company, or may be
unconditional, as determined by the Committee. No Stock Appreciation Right may
be exercisable more than seven (7) years after the Date of Grant.
(ii) Stock Award — An Award that is made in Shares, Restricted Stock, or Stock
Equivalent Units. Except as provided in the next sentence, each grant or sale of
Restricted Stock to a Participant (other than a non-employee Director) shall
provide that the Shares covered by such grant or sale shall be subject to a
“substantial risk of forfeiture” within the meaning of Section 83 of the Code
for a period of not less than three (3) years to be determined by the Committee
at the Date of Grant, although the Committee, in its sole discretion, may
provide for the pro rata lapse of restrictions in installments during the
restriction period. Each grant or sale of Stock Awards (including Restricted
Stock) that are subject to achievement of one or more Performance Goals shall
have a minimum performance period of at least one (1) year to be determined by
the Committee at the Date of Grant. Stock Equivalent Units may be payable in
cash or in Shares.
(iii) Stock Option — A right to purchase a specified number of Shares, during a
specified period, and at a specified exercise price, all as determined by the
Committee. The exercise price of any Stock Options granted to Participants may
not be less than the Fair Market Value of the Shares subject to the Stock Option
on the Date of Grant. No Stock Option may be exercisable more than seven
(7) years after the Date of Grant. Each grant of Stock Options to a Participant
(other than a non-employee Director) shall specify the period or periods of
continuous service by the Participant that is necessary for the Stock Options to
become exercisable; provided that Stock Options may not become exercisable
sooner than one-third per year over three (3) years.
(iv) Incentive Compensation Award — An Award that, in the discretion of the
Committee, is payable either in Shares or in cash and is contingent upon the
achievement of Performance Goals established by the Committee. Each grant shall
have a minimum performance period of at least one (1) year to be determined by
the Committee at the Date of Grant.

 

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(b) Grant of Awards. More than one Award may be granted to the same Participant.
Awards may be granted singly or in combination or tandem with other Awards.
(c) Substitute Awards. Substitute Awards may be granted under this Plan for
grants or awards held by employees of a company or entity who become employees
of the Company or a Subsidiary as a result of the acquisition, merger or
consolidation of the employer company by or with the Company or a Subsidiary.
Except as otherwise provided by applicable law and notwithstanding anything in
the Plan to the contrary, the terms, provisions and benefits of the Substitute
Awards so granted may vary from those set forth in or required or authorized by
this Plan to such extent as the Committee at the time of the grant may deem
appropriate to conform, in whole or part, to the terms, provisions and benefits
of grants or awards in substitution for which they are granted.
(d) Grant Agreements. Each grant of an Award under the Plan shall be evidenced
by a grant agreement, in a form specified by the Committee, which shall set
forth the terms and conditions of the grant and such related matters as the
Committee shall, in its sole discretion, determine, consistent with this Plan. A
grant agreement may be in an electronic medium, may be limited to notation on
the books and records of the Company and, unless determined otherwise by the
Committee, need not be signed by a representative of the Company or a
Participant.
7. Performance-Based Awards under Section 162(m) of the Code
(a) Selection of Participants and Establishment of Performance Goals. The
Committee will determine the period of time during which any Award that is
performance-based may be earned (which performance period may not be less than
one (1) year). The Committee will also establish, not later than 90 days after
the commencement of the award period (or such earlier or later date as may be
the applicable deadline for the Award to be performance-based for purposes of
Section 162(m) of the Code), one or more performance objectives (“Performance
Goals”) to be met as a condition to the payment of the Award. Performance Goals
may be described in terms of Company-wide objectives or objectives that are
related to the performance of a joint venture, Subsidiary, business unit,
division, department, business segment, region or function and/or that are
related to the performance of the individual Participant. The Performance Goals
may be made relative to the performance of other companies or an index covering
multiple companies. The Performance Goals may, in the discretion of the
Committee, include a range of performance objectives (such as minimum, middle,
and maximum objectives) the achievement of which will entitle Participants to
receive different amounts of compensation.

 

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(b) Performance Criteria. The Performance Goals applicable to any Qualified
Performance-Based Award will be based on specified levels of or growth in one or
more of the following criteria (“Performance Criteria”): sales, same store
sales, earnings, earnings per Share, return on equity, market price per Share,
revenue, operating income, earnings before or after interest and taxes,
operating income before or after interest and taxes, net income, cash flow, debt
to capital ratio, economic value added, return on total capital, return on
invested capital, return on assets, total return to shareholders, earnings
before or after interest, taxes, depreciation, amortization or extraordinary or
special items, operating income before or after interest, taxes, depreciation,
amortization or extraordinary or special items, return on investment, free cash
flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations, cash flow in excess of cost of capital, operating
margin, profit margin, contribution margin, and/or strategic business criteria
consisting of one or more objectives based on meeting specified product
development, strategic partnering, research and development, market penetration,
geographic business expansion goals, cost targets, customer satisfaction,
employee satisfaction, management of employment practices and employee benefits,
supervision of litigation and information technology, and goals relating to
acquisitions or divestitures of subsidiaries, affiliates and joint ventures.
These Performance Criteria may be measured before or after taxes, interest,
depreciation, amortization, discontinued operations, affect of accounting
changes, acquisition expenses, restructuring expenses, non-operating items, or
unusual charges, as determined by the Committee at the time the Performance
Goals are established.
8. Deferral of Payment
To the extent permitted by Section 409A of the Code, the Committee may, in its
discretion, permit Participants to defer the payment of some or all of the
Shares or cash subject to their Awards, as well as other compensation or fees,
in accordance with procedures established by the Committee to assure that the
recognition of taxable income is deferred under the Code. Deferred amounts may,
to the extent permitted by the Committee, be credited as cash or Stock
Equivalent Units and paid in cash or in Shares. The Committee may also, in its
discretion, establish rules and procedures for the crediting of interest on
deferred cash and dividend equivalents on Stock Equivalent Units. The Committee
may also, in its discretion, provide for matching or other grants in connection
with such deferrals. This Section 8 shall not apply to any grant of Stock
Options or Stock Appreciation Rights that are intended to be exempt from
Section 409A of the Code.
9. Payment of Exercise Price
The exercise price of a Stock Option and any other Stock Award for which the
Committee has established an exercise price may be paid in cash, by the transfer
of Shares, by the surrender of all or part of an Award (including the Award
being exercised), or by a combination of these methods, as and to the extent
permitted by the Committee. The Committee may prescribe any other method of
paying the exercise price that it determines to be consistent with applicable
law and the purpose of this Plan.

 

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10. Taxes Associated with Award
Prior to the payment of an Award, the Company may withhold, or require a
Participant to remit to the Company, an amount sufficient to pay any federal,
state, and local taxes associated with the Award. The Committee may, in its
discretion and subject to such rules as the Committee may adopt, permit a
Participant to pay any or all taxes associated with the Award in cash, by the
transfer of Shares, by the surrender of all or part of an Award (including the
Award being exercised), or by a combination of these methods. In no event shall
the Fair Market Value of the Shares to be surrendered pursuant to this Section
to satisfy applicable withholding taxes exceed the minimum amount of taxes
required to be withheld or such other amount that will not result in a negative
accounting impact.
11. Termination of Employment
If the employment of a Participant terminates for any reason, all unexercised,
deferred, and unpaid Awards may be exercisable or paid only in accordance with
rules established by the Committee.
12. Termination of Awards under Certain Conditions
The Committee may cancel any unexpired, unpaid, or deferred Award at any time if
the Participant is not in compliance with all applicable provisions of this Plan
or with the terms or conditions of the Award or if the Participant, without the
prior written consent of the Company, engages in any of the following
activities:
(i) Renders services to an organization, or engages in a business, that is, in
the judgment of the Committee, in competition with the Company.
(ii) Discloses to anyone outside of the Company, or uses for any purpose other
than the Company’s business, any confidential information or material relating
to the Company, whether acquired by the Participant during or after employment
with the Company.
(iii) Engages in any other conduct or act determined to be injurious,
detrimental or prejudicial to any business, strategy, personnel, reputation or
other significant interest of the Company or any Subsidiary.
The Committee may, in its discretion and as a condition to the exercise of an
Award, require a Participant to acknowledge in writing that he or she is in
compliance with all applicable provisions of this Plan and with the terms and
conditions of the Award and has not engaged in any activities referred to in
clauses (i) and (ii) above.

 

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13. Change in Control; Acquisition of the Company
(a) Change in Control. In the event that there is a Change in Control of the
Company, and a Participant incurs a Qualifying Termination during the two
(2) year period commencing on the Change in Control, then unless otherwise
determined by the Committee, (i) all Stock Appreciation Rights and Stock Options
then held by the Participant will become fully exercisable and will, to the
extent not otherwise provided in the applicable grant agreements, remain
exercisable in accordance with their terms but in no event for a period less
than the lesser of (x) one (1) year following the Qualifying Termination or
(y) the remaining term of such Stock Option or Stock Appreciation Right (which
remaining term shall be determined without regard to such termination of
employment), (ii) all restrictions and conditions applicable to Restricted Stock
and other Stock Awards held by the Participant will be deemed to have been
satisfied, and (iii) all Incentive Compensation Awards held by the Participant
will be deemed to have been fully earned at the Incentive Compensation Award
Payout Level.
(b) Acquisition of the Company. With respect to Stock Options and any other
Awards that entitle Participants to receive Shares, in the event of an
acquisition of the Company in which the holders of Shares receive other
securities or cash in exchange for their Shares, the Committee may, in its
discretion, arrange for (1) the grant by the acquiror of substitute Stock
Options or Awards that entitle Participants to receive, in lieu of the Shares
they otherwise would be entitled to receive, the securities or cash for which
the Shares would have been exchanged in the acquisition or (2) the cancellation
of the Stock Options and other Awards in consideration of the securities or cash
for which the Shares would have been exchanged in the acquisition, net of any
exercise price.
14. Amendment or Suspension of this Plan; Amendment of Outstanding Awards
(a) Amendment or Suspension of this Plan. The Board of Directors may at any time
and from time to time, to the extent permitted by Section 409A of the Code,
amend, suspend or terminate this Plan in whole or in part; provided, however,
that if an amendment to this Plan (i) would materially increase the benefits
accruing to Participants under this Plan, (ii) would materially increase the
number of securities which may be issued under this Plan, (iii) would materially
modify the requirements for participation in this Plan, or (iv) must otherwise
be approved by the shareholders of the Company in order to comply with
applicable law (including applicable tax laws) or the rules of the New York
Stock Exchange or, if the Shares are not traded on the New York Stock Exchange,
the principal national securities exchange or other principal exchange or market
upon which the 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.
(b) Amendment of Outstanding Awards. Subject to Section 14(c), the Committee
may, in its discretion, amend the terms of any Award, prospectively or
retroactively, but no such amendment may, except as provided in Section 13(b),
impair the rights of any Participant without his or her consent. If permitted by
Section 409A of the Code, and except in the case of a Qualified
Performance-Based Award where such action would result in the loss of the
otherwise available exemption of the Award under Section 162(m) of the Code, the
Committee may, in whole or in part, waive any restrictions or conditions
applicable to, or accelerate the vesting of, any Award (i) in case of
termination of employment by reason of death, disability or normal or early
retirement, or a Change in Control, or (ii) for any other reason in the case of
Awards covering, in the aggregate, up to 10% of the number of Shares set forth
in Section 5(a).

 

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(c) No Re-Pricing. The Board of Directors or the Committee will not, without the
further approval of the shareholders of the Company, authorize the amendment of
any outstanding Stock Option or Stock Appreciation Right to reduce the exercise
price or grant price. No Stock Option or Stock Appreciation Right will be
cancelled and replaced with awards having a lower exercise price or grant price,
or for another award, or for cash without further approval of the shareholders
of the Company, except as provided in Sections 5(d) or 13(b). This Section 14(c)
is intended to prohibit the re-pricing of “underwater” Stock Options or Stock
Appreciation Rights without shareholder approval and will not be construed to
prohibit the adjustments provided for in Section 5(d) or 13(b) of the Plan.
15. Nonassignability
Unless otherwise determined by the Committee, (i) no Award granted under this
Plan may be transferred or assigned by the Participant to whom it is granted
other than by will, pursuant to the laws of descent and distribution, or
pursuant to a qualified domestic relations order and (ii) an Award granted under
this Plan may be exercised, during the Participant’s lifetime, only by the
Participant or by the Participant’s guardian or legal representative.
16. Governing Law
The interpretation, validity, and enforcement of this Plan will, to the extent
not otherwise governed by the Code or the securities laws of the United States,
be governed by the laws of the State of Ohio.
17. Rights of Employees
Nothing in this Plan will confer upon any Participant the right to continued
employment by the Company or limit in any way the Company’s right to terminate
any Participant’s employment at will.
18. Effective and Termination Dates
(a) Effective Date. This Plan became effective on the date it was approved by
the holders of a majority of the Shares then outstanding, which occurred on
June 11, 2008.
(b) Termination Date. This Plan will continue in effect until June 11, 2018.

 

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19. Compliance with Section 409A of the Code
Awards granted under this Plan shall be designed and administered in such a
manner that they are either exempt from the application of, or comply with, the
requirements of Section 409A of the Code. To the extent that the Committee
determines that any Award granted under the Plan is subject to Section 409A of
the Code, the grant agreement shall incorporate the terms and conditions
necessary to avoid the imposition of an additional tax under Section 409A of the
Code upon a Participant. Notwithstanding any other provision of the Plan or any
grant agreement (unless the grant agreement provides otherwise with specific
reference to this Section), an Award shall not be granted, deferred,
accelerated, extended, paid out, settled, substituted or modified under this
Plan in a manner that would result in the imposition of an additional tax under
Section 409A of the Code upon a Participant. Although the Company intends to
administer the Plan so that Awards will be exempt from, or will comply with, the
requirements of Section 409A of the Code, the Company does not warrant that any
Award under the Plan will qualify for favorable tax treatment under Section 409A
of the Code or any other provision of federal, state, local, or non-United
States law. Neither the Company, its Subsidiaries, nor their respective
directors, officers, employees or advisers shall be liable to any Participant
(or any other individual claiming a benefit through the Participant) for any
tax, interest, or penalties the Participant might owe as a result of the grant,
holding, vesting, exercise, or payment of any Award under the Plan.

 

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