Exhibit 10-h
MERITOR, INC.
2020 LONG-TERM INCENTIVE PLAN

1.Plan Introduction
(a)Establishment of the Plan
The Company hereby establishes this Meritor, Inc. 2020 Long-Term Incentive Plan,
as set forth in this document and as may be amended from time to time (the
“Plan”). The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units and other cash and stock-based
Awards. Following the effective date of the Plan, no new awards will be granted
under the Meritor, Inc. 2010 Long-Term Incentive Plan, as amended (the “Prior
Plan”). For the avoidance of doubt, the Prior Plan and any applicable award
agreements issued thereunder will continue to govern any awards that remain
outstanding thereunder on and after the effective date of the Plan.
(b)Purpose of the Plan.
The purpose of this Plan is to enhance shareholder value by linking the
compensation of officers, directors, and key employees of the Company to
increases in the price of Meritor stock and the achievement of other performance
objectives, and to encourage ownership in the Company by key personnel whose
long-term employment is considered essential to the Company’s continued progress
and success. The Plan is also intended to assist the Company in the recruitment
of new employees and to motivate, retain and encourage such employees and
directors to act in the shareholders’ interest and share in the Company’s
success.
2.Definitions.
As used herein, the following definitions shall apply:
(a)“Administrator” means the Board, any Committee or such delegates as shall be
administering the Plan in accordance with Section 4 of the Plan.
(b)“Affiliate” means any Subsidiary or other entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator. The
Administrator shall, in its sole discretion, determine which entities are
classified as Affiliates and designated as eligible to participate in this Plan.
(c)“Applicable Law” means the requirements relating to the administration of
stock option plans under U.S. federal and state laws, any stock exchange or
quotation system on which the Company has listed or submitted for quotation the
Common Shares to the extent provided under the terms of the Company’s agreement
with such exchange or quotation system and, with respect to Awards subject to
the laws of any foreign
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jurisdiction where Awards are, or will be, granted under the Plan, the laws of
such jurisdiction.
(d)“Award” means a Cash Award, Stock Award, Option, Stock Appreciation Right or
Other Stock-Based Award granted in accordance with the terms of the Plan.
(e)“Awardee” means an Employee or Non-employee Director who has been granted an
Award under the Plan.
(f)“Award Agreement” means a Cash Award Agreement, Stock Award Agreement, Option
Agreement, Stock Appreciation Right Agreement and/or Other Stock-Based Award
Agreement, which may be in written or electronic format, in such form and with
such terms as may be specified by the Administrator, evidencing the terms and
conditions of an individual Award. Each Award Agreement is subject to the terms
and conditions of the Plan.
(g)“Board” means the Board of Directors of the Company.
(h)“Cash Award” means a bonus opportunity awarded under Section 13 of the Plan
pursuant to which a Participant may become entitled to receive an amount based
on the satisfaction of such performance criteria as are specified in the
agreement or, if no agreement is entered into with respect to the Cash Award,
other documents evidencing the Award (the “Cash Award Agreement”).
(i)“Change of Control” means one of the following shall have taken place after
the date of this Plan:
(i)the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of thirty-five percent (35%) or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of Directors (the “Outstanding Company Voting Securities”) or of such
other amount that, together with Common Shares already held by such Person,
constitutes more than fifty percent (50%) of either (x) the Outstanding Company
Voting Securities, or (y) the then outstanding Common Shares of the Company (the
“Outstanding Company Common Shares”). However, for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of Control: (A)
any acquisition directly from the Company or any corporation controlled by the
Company; (B) any acquisition by the Company or any corporation controlled by the
Company; (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; or (D) any acquisition by any corporation that is a Non-Control
Acquisition (as defined in subsection (iii) of this Section 2(i)); or
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(ii)individuals who, as of the effective date of this Plan, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board within a twelve (12) month period; provided, however, that any
individual becoming a Director subsequent to the effective date whose election,
or nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the Directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board; or
(iii)consummation of a reorganization, merger, consolidation, or sale or other
disposition of all or a substantial portion of the assets of the Company, or the
acquisition by the Company of assets or shares of another corporation (a
“Business Combination”), unless, such Business Combination is a Non-Control
Acquisition. For the purpose of this provision, “substantial portion of the
assets of the Company” is defined as assets having a gross fair market value,
determined without regard to any liabilities associated with such assets, of
forty percent (40%) or more of the total assets of the Company. A “Non-Control
Acquisition” shall mean a Business Combination where: (x) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Shares and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, at least fifty percent (50%) of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which, as a result of
such transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Shares and Outstanding Company
Voting Securities, as the case may be; or (y) a transfer of a substantial
portion of the assets of the Company is made to a Person beneficially owning,
directly or indirectly, fifty percent (50%) or more of, respectively, the
Outstanding Company Common Shares or Outstanding Company Voting Securities
(“Control Person”), as the case may be, or to another entity in which either
such Control Person or the Company beneficially owns fifty percent (50%) or more
of the total value or voting power of such entity’s outstanding voting
securities; or
(iv)approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, if any payment or distribution event applicable
to an Award is subject to the requirements of Section 409A(a)(2)(A) of the Code,
the determination of the occurrence of a Change of Control shall be governed by
applicable provisions of Section 409A(a)(2)(A) of the Code and regulations and
rulings issued
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thereunder for purposes of determining whether such payment or distribution may
then occur.
(j)“Code” means the United States Internal Revenue Code of 1986, as amended.
(k)“Committee” means one or more committees of Directors appointed by the Board
in accordance with Section 4 of the Plan or, in the absence of any such special
appointment, the Compensation and Management Development Committee of the Board.
(l)“Common Shares” means the common shares, par value $1 per share, of the
Company.
(m)“Company” means Meritor, Inc., an Indiana corporation, or, except as utilized
in the definition of Change of Control, its successor.
(n)“Conversion Award” has the meaning set forth in Section 4(b)(xii) of the
Plan.
(o)“Director” means a member of the Board who is an Employee or a Non-employee
Director.
(p)“Disability,” has the meaning specified in the Company’s long-term disability
plan applicable to the Participant at the time of the disability. If the
Participant is not covered by a long-term disability plan, then the definition
applicable under the plan covering salaried U.S. Employees shall apply.
(q)“Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a
Subsidiary or Affiliate for any reason (including, without limitation, as a
result of a public offering, or a spin-off or sale by the Company, of the stock
of the Subsidiary or Affiliate) or a sale of a division of the Company and its
Affiliates.
(r)“Employee” means a regular, active employee of the Company or any Affiliate,
including an Officer and/or Director who is also a regular, active employee of
the Company or any Affiliate. The Administrator shall determine whether the
Chairman of the Board qualifies as an “Employee.” For any and all purposes under
the Plan, the term “Employee” shall not include a person hired as an independent
contractor, leased employee, consultant or a person otherwise designated by the
Administrator, the Company or an Affiliate at the time of hire as not eligible
to participate in or receive benefits under the Plan or not on the payroll, even
if such ineligible person is subsequently determined to be a common law employee
of the Company or an Affiliate or otherwise an employee by any governmental or
judicial authority. Unless otherwise determined by the Administrator in its sole
discretion, for purposes of the Plan, an Employee shall be considered to have
terminated employment and to have ceased to be an Employee if his or her
employer ceases to be an Affiliate, even if he or she continues to be employed
by such employer.
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(s)“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.
(t)“Grant Date” means, with respect to each Award, the date upon which the Award
is granted to an Awardee pursuant to this Plan, which may be a designated future
date as of which such Award will be effective.
(u)“Incentive Stock Option” means an Option that is identified in the Option
Agreement as intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated thereunder, and that
actually does so qualify.
(v)“Fair Market Value” means the closing price for the Common Shares reported on
a consolidated basis on the New York Stock Exchange on the relevant date or, if
there were no sales on such date, the closing price on the nearest preceding
date on which sales occurred.
(w)“Non-employee Director” has the meaning set forth in Section 4(a)(iv) of the
Plan.
(x)“Nonqualified Stock Option” means an Option that is not an Incentive Stock
Option.
(y)“Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(z)“Option” means a right granted under Section 8 of the Plan to purchase a
number of Shares or Stock Units at such exercise price, at such times, and on
such other terms and conditions as are specified in the agreement or other
documents evidencing the Award (the “Option Agreement”). Both Incentive Stock
Options and Nonqualified Stock Options may be granted under the Plan.
(aa)“Other Stock-Based Award” means an Award granted pursuant to Section 12 of
the Plan on such terms and conditions as are specified in the agreement or other
documents evidencing the Award (the “Other Stock- Based Award Agreement”).
(ab)“Participant” means the Awardee or any person (including any estate) to whom
an Award has been assigned or transferred as permitted hereunder.
(ac)“Performance Criteria” shall have the meaning set forth in Section 14(b) of
the Plan.
(ad)“Plan” shall have the meaning set forth in Section 1(a) of the Plan.
(ae)“Prior Plan” shall have the meaning set forth in Section 1(a) of the Plan.
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(af) “Qualifying Termination” shall mean a Termination of Employment due to
death, Disability, Retirement, Termination Without Cause or Termination for Good
Reason or a termination of Board membership for a Non-employee Director for any
reason.
(ag)“Retirement” means, unless the Administrator determines otherwise, voluntary
Termination of Employment by a Participant from the Company and its Affiliates
after attaining age fifty-five (55) and having at least five (5) years of
service with the Company and its Affiliates, excluding service with an Affiliate
of the Company prior to the time that such Affiliate became an Affiliate of the
Company.
(ah)“Securities Act” means the United States Securities Act of 1933, as amended.
(ai)“Share” means a Common Share, as adjusted in accordance with Section 16 of
the Plan.
(aj)“Stock Appreciation Right” means a right granted under Section 10 of the
Plan on such terms and conditions as are specified in the agreement or other
documents evidencing the Award (the “Stock Appreciation Right Agreement”).
(ak)“Stock Award” means an award or issuance of Shares or Stock Units made under
Section 11 of the Plan, the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of time to such
conditions (including, without limitation, continued employment or performance
conditions) and terms as are expressed in the agreement or other documents
evidencing the Award (the “Stock Award Agreement”).
(al)“Stock Unit” means a bookkeeping entry representing an amount equivalent to
the Fair Market Value of one Share, payable in cash, property or Shares. Stock
Units represent an unfunded and unsecured obligation of the Company, except as
otherwise provided for by the Administrator.
(am)“Subsidiary” means any company (other than the Company) in an unbroken chain
of companies beginning with the Company, provided each company in the unbroken
chain (other than the Company) owns, at the time of determination, stock
possessing more than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other companies in such chain.
(an)“Termination for Cause” means, unless otherwise provided in an Award
Agreement, Termination of Employment on account of any act of fraud or
intentional misrepresentation or embezzlement, misappropriation or conversion of
assets of the Company or any Affiliate, or the intentional and repeated
violation of the written policies or procedures of the Company; provided,
however, that, for an Employee who is party to an individual severance or
employment agreement defining Cause, “Cause” shall have the meaning set forth in
such agreement except as may be otherwise provided in such
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agreement. For purposes of this Plan, a Participant’s Termination of Employment
shall be deemed to be a Termination for Cause if, after the Participant’s
employment has terminated, facts and circumstances are discovered that would
have justified, in the opinion of the Committee, a Termination for Cause.
(ao)“Termination for Good Reason” means for purposes of this Plan, unless
otherwise provided in an Award Agreement, the occurrence of any of the following
events without the Awardee’s written consent: (i) a material diminution in the
Awardee’s base salary; (ii) a relocation of the Awardee’s principal place of
employment by more than fifty (50) miles; (iii) any material breach by the
Company of any material provision of this Plan; or (iv) a material diminution in
the Awardee’s authority, duties or responsibilities. No Termination for Good
Reason shall be deemed to occur until the Awardee has furnished written notice
to the Company of the existence of the circumstances providing grounds for
termination for such good reason within ninety (90) days of the date of the
initial existence of such grounds and the Company has had at least thirty (30)
days from the date on which such notice is provided to cure such circumstances.
If the Awardee does not terminate his or her employment for such good reason
within two (2) years after the first occurrence of such grounds, then the
Awardee will be deemed to have waived his or her right to terminate for good
reason with respect to such grounds.
(ap)“Termination of Employment” means for purposes of this Plan, unless
otherwise determined by the Administrator, ceasing to be an Employee (as
determined in accordance with Section 3401(c) of the Code and the regulations
promulgated thereunder) of the Company or one of its Subsidiaries. In addition,
Termination of Employment shall mean a “separation from service” as defined in
regulations issued under Code Section 409A whenever necessary to ensure
compliance therewith for any payment or settlement of a benefit conferred under
this Plan that is subject to such Code section, and, for such purposes, shall be
determined based upon a reduction in the bona fide level of services performed
to a level equal to twenty percent (20%) or less of the average level of
services performed by the Employee during the immediately preceding thirty-six
(36)-month period.
(aq)“Termination Without Cause” means for purposes of this Plan, unless
otherwise provided in an Award Agreement, involuntary Termination of Employment
by the Company other than due to the Awardee’s death, Disability or Termination
for Cause.
3.Stock Subject to the Plan.
(a)Aggregate Limit. Subject to the provisions of Section 16(a) of the Plan, the
maximum aggregate number of Shares which may be subject to or delivered under
Awards granted under the Plan shall not exceed the sum of (i) [4,500,000] Shares
and (ii) any Shares under the Prior Plan subject to awards that, after the
effective date of the Plan, are forfeited, terminated or lapsed. Shares subject
to or delivered under Conversion Awards shall not reduce the aggregate number of
Shares which may be subject to or delivered under Awards granted under this
Plan. The Shares issued under the Plan may
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be either Shares reacquired by the Company, Shares purchased in the open market,
or authorized but unissued Shares.
(b)Code Section 422 Limits; Other Share Limitations. Subject to the provisions
of Section 16(a) of the Plan, the aggregate number of Shares subject to Awards
granted under this Plan during any fiscal year to any one Awardee shall not
exceed 1,500,000. Subject to the provisions of Section 16(a) of the Plan, the
aggregate number of Shares that may be subject to all Incentive Stock Options
granted under the Plan is 500,000 Shares.
(c)Share Counting Rules.
(i)Except as otherwise provided in Section 3(c)(ii) below, for purposes of this
Section 3 of the Plan, Shares subject to Awards that have been canceled,
expired, settled in cash, or not issued or forfeited for any reason shall not
reduce the aggregate number of Shares which may be subject to or delivered under
Awards granted under this Plan and shall be available for future Awards granted
under this Plan. In addition, except as otherwise provided in Section 3(c)(ii)
below, Shares subject to Awards that have been canceled, expired, settled in
cash, or not issued or forfeited for any reason shall not reduce any other
limitation on Shares to which such Shares were subject at the time of the Award,
and shall be available for future Awards of the type subject to such
limitations.
(ii)The following Shares shall not become available for Awards under this Plan:
(A) all Shares issued upon exercise of an Option, including Shares that have
been retained by the Company in payment or satisfaction of the purchase price of
an Award or the tax withholding obligation of an Awardee; (B) Shares repurchased
on the open market with proceeds received by the Company from Shares issued upon
exercise of an Option, as described in subclause (A) hereof; or (C) Shares
reserved for issuance upon a grant of Stock Appreciation Rights which are able
to be exercised and settled in Shares, including Shares that are not issued upon
the exercise of the Stock Appreciation Right.
4.Administration of the Plan.
(a)Procedure.
(i)Multiple Administrative Bodies. The Plan shall be administered by the Board,
a Committee designated by the Board to so administer this Plan and/or their
respective delegates.
(ii)Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”),
Awards to Officers and Directors shall be made by the entire Board or a
Committee composed solely of two or more “non-employee directors” within the
meaning of Rule 16b-3.
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(iii)Other Administration. Except to the extent prohibited by Applicable Law,
the Board or a Committee may delegate to a Committee of one or more Directors or
to authorized officers of the Company the power to approve Awards to persons
eligible to receive Awards under the Plan who are not (A) subject to Section 16
of the Exchange Act or (B) at the time of such approval, “covered employees”
under Section 162(m) of the Code.
(iv)Awards to Directors. The Board shall have the power and authority to grant
Awards to Directors who do not serve as employees of the Company (“Non-employee
Directors”), including the authority to determine the number and type of Awards
to be granted; determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award; and to take any other actions the Board
considers appropriate in connection with the administration of the Plan. The
aggregate number of Shares subject to Awards granted under this Plan during any
fiscal year to a Non-employee Director, that is part of regular annual grants of
Awards to eligible Non-employee Directors, shall not exceed 100,000.
(v)Delegation of Authority for the Day-to-Day Administration of the Plan. Except
to the extent prohibited by Applicable Law, the Administrator may delegate to
one or more individuals the day-to-day administration of the Plan and any of the
functions assigned to it in this Plan. Such delegation may be revoked at any
time.
(b)Powers of the Administrator. Subject to the provisions of the Plan and, in
the case of a Committee or delegates acting as the Administrator, subject to the
specific duties delegated to such Committee or delegates, the Administrator
shall have the authority, in its discretion:
(i)to select the Non-employee Directors and Employees of the Company or its
Affiliates to whom Awards are to be granted hereunder;
(ii)to determine Cash Award targets and the number of Common Shares to be
covered by each Award granted hereunder;
(iii)to determine the type of Award to be granted to the selected Employees and
Non-employee Directors;
(iv)to approve forms of Award Agreements;
(v)to determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Award granted hereunder. Such terms and conditions include, but are
not limited to, the exercise and/or purchase price, the time or times when an
Award may be exercised (which may or may not be based on performance criteria),
the vesting schedule, any vesting and/or exercisability provisions, terms
regarding acceleration of Awards or waiver of forfeiture restrictions, the
acceptable forms of consideration for payment for an Award, the term, and any
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restriction or limitation regarding any Award or the Shares relating thereto,
based in each case on such factors as the Administrator, in its sole discretion,
shall determine and may be established at the time an Award is granted or
thereafter;
(vi)to correct administrative errors;
(vii)to construe and interpret the terms of the Plan (including sub-plans and
Plan addenda) and Awards granted pursuant to the Plan;
(viii)to adopt rules and procedures relating to the operation and administration
of the Plan to accommodate the specific requirements of local laws and
procedures. Without limiting the generality of the foregoing, the Administrator
is specifically authorized (A) to adopt rules and procedures regarding the
conversion of local currency, the shift of tax liability from employer to
employee (where legally permitted) and withholding procedures and handling of
stock certificates which vary with local requirements, and (B) to adopt
sub-plans and Plan addenda as the Administrator deems desirable, to accommodate
foreign laws, regulations and practice;
(ix)to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans and Plan addenda;
(x)to modify or amend each Award, including, but not limited to, the
acceleration of vesting and/ or exercisability; provided, however, that any such
modification or amendment (A) is subject to the minimum vesting provisions set
forth in Sections 8(e), 11(a) and 12(a) of the Plan and the plan amendment
provisions set forth in Section 17 of the Plan, and (B) may not impair any
outstanding Award unless agreed to in writing by the Participant to whom such
Award was granted, except that such agreement shall not be required if the
Administrator determines in its sole discretion that such modification or
amendment either (Y) is required or advisable in order for the Company, the Plan
or the Award to satisfy any Applicable Law or to meet the requirements of any
accounting standard, or (Z) is not reasonably likely to significantly diminish
the benefits provided under such Award, or that adequate compensation has been
provided for any such diminishment, except following a Change of Control;
(xi)to allow or require Participants to satisfy withholding tax amounts by
electing to have the Company withhold from the Shares to be issued upon exercise
of a Nonqualified Stock Option or vesting of a Stock Award that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined in such manner and
on such date that the Administrator shall determine or, in the absence of
provision otherwise, on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may provide;
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(xii)to authorize conversion or substitution under the Plan of any or all stock
options, stock appreciation rights or other stock awards held by awardees of an
entity acquired by the Company (the “Conversion Awards”). Any conversion or
substitution shall be effective as of the close of the merger or acquisition.
The Conversion Awards may be Nonqualified Stock Options or Incentive Stock
Options, as determined by the Administrator, with respect to options granted by
the acquired entity;
(xiii)to authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by the
Administrator;
(xiv)to impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resale by a Participant or of
other subsequent transfers by the Participant of any Shares issued as a result
of or under an Award or upon the exercise of an Award, including without
limitation, (A) restrictions under an insider trading policy, (B) restrictions
as to the use of a specified brokerage firm for such resale or other transfers,
and (C) institution of “blackout” periods on exercises of Awards;
(xv)to provide, either at the time an Award is granted or by subsequent action,
that an Award shall contain as a term thereof, a right, either in tandem with
the other rights under the Award or as an alternative thereto, of the
Participant to receive, without payment to the Company, a number of Shares, cash
or a combination thereof, the amount of which is determined by reference to the
value of the Award; and
(xvi)to make all other determinations deemed necessary or advisable for
administering the Plan and any Award granted hereunder.
(c)Effect of Administrator’s Decision. All questions arising under the Plan or
under any Award shall be decided by the Administrator in its total and absolute
discretion. All decisions, determinations and interpretations by the
Administrator regarding the Plan, any rules and regulations under the Plan and
the terms and conditions of any Award granted hereunder, shall be final and
binding on all Participants. The Administrator shall consider such factors as it
deems relevant, in its sole and absolute discretion, to making such decisions,
determinations and interpretations, including, without limitation, the
recommendations or advice of any officer or other employee of the Company and
such attorneys, consultants and accountants as it may select.
5.Eligibility.
Awards may be granted only to Directors and Employees of the Company or any of
its Affiliates.
6.Term of Plan.
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The Plan was adopted by the Board on November 6, 2019 and will become effective
upon its approval by shareholders of the Company on January 23, 2020. It shall
continue in effect for a term of ten (10) years from that date unless terminated
earlier under Section 17 of the Plan. No Awards may be granted under the Plan
subsequent to the tenth (10th) anniversary of the effective date of the Plan.
Awards granted under the Plan on or prior to the tenth (10th) anniversary of the
effective date of the Plan will remain outstanding beyond that date in
accordance with the terms and conditions of the Plan and the applicable Award
Agreements.
7.Term of Award.
Subject to the provisions of the Plan, the term of each Award shall be
determined by the Administrator and stated in the Award Agreement, and may
extend beyond the termination of the Plan. In the case of an Option or a Stock
Appreciation Right, the term shall be ten (10) years from the Grant Date or such
shorter term as may be provided in the Award Agreement.
8.Options.
The Administrator may grant an Option or provide for the grant of an Option,
either from time to time in the discretion of the Administrator or automatically
upon the occurrence of specified events, including, without limitation, the
achievement of performance goals or the satisfaction of an event or condition
within the control of the Awardee or within the control of others.
(a)Option Agreement. Each Option Agreement shall contain provisions regarding
(i) the number of Shares that may be issued upon exercise of the Option, (ii)
the type of Option, (iii) the exercise price of the Option and the means of
payment of such exercise price, (iv) the term of the Option, (v) such terms and
conditions regarding the vesting and/or exercisability of an Option as may be
determined from time to time by the Administrator, (vi) restrictions on the
transfer of the Option and forfeiture provisions, and (vii) such further terms
and conditions, in each case not inconsistent with this Plan, as may be
determined from time to time by the Administrator.
(b)Exercise Price. The per share exercise price for the Shares to be issued upon
exercise of an Option shall be determined by the Administrator, except that the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the Grant Date.
(c)No Option Repricings. Subject to Section 16(a) of the Plan, the exercise
price of an Option may not be reduced without shareholder approval, nor may
outstanding Options be cancelled in exchange for cash, other Awards or Options
with an exercise price that is less than the exercise price of the original
Option without shareholder approval.
(d)No Reload Grants. Options shall not be granted under the Plan in
consideration for and shall not be conditioned upon the delivery of Shares to
the
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Company in payment of the exercise price and/or tax withholding obligation under
any other employee stock option.
(e)Vesting Period and Exercise Dates. Options granted under this Plan shall vest
and/or be exercisable at such time and in such installments during the period
prior to the expiration of the Option’s term as determined by the Administrator,
except that no Option granted to a Participant shall first become fully
exercisable before the three (3) year anniversary of its Grant Date (provided,
however, that an Option may become partially exercisable within the three (3)
year period immediately following its Grant Date; provided, further that no more
than 50% shall become exercisable in any one (1) year during such three (3) year
period), other than (i) upon a Qualifying Termination within the two (2) year
period immediately following a Change of Control as specified in Section 16(b)
of the Plan, or (ii) upon the death or Disability of the Awardee, in each case
as specified in the Option Agreement. The Administrator shall have the right to
make the timing of the ability to exercise any Option granted under this Plan
subject to continued active employment, the passage of time and/or such
performance requirements as deemed appropriate by the Administrator. At any time
after the grant of an Option, the Administrator may reduce or eliminate any
restrictions surrounding any Participant’s right to exercise all or part of the
Option, subject to the restrictions set forth above.
(f)Form of Consideration. The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of payment,
either through the terms of the Option Agreement or at the time of exercise of
an Option. Acceptable forms of consideration may include:
(i)cash;
(ii)check or wire transfer (denominated in U.S. Dollars);
(iii)subject to any conditions or limitations established by the Administrator,
other Shares which (A) in the case of Shares acquired from the Company (whether
upon the exercise of an Option or otherwise), have been owned by the Participant
for more than six (6) months on the date of surrender (unless this condition is
waived by the Administrator), and (B) have a Fair Market Value on the date of
surrender equal to or greater than the aggregate exercise price of the Shares as
to which said Option shall be exercised (it being agreed that the excess of the
Fair Market Value over the aggregate exercise price shall be refunded to the
Awardee in cash);
(iv)subject to any conditions or limitations established by the Administrator,
the Company withholding shares otherwise issuable upon exercise of an Option;
(v)consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Administrator and in compliance with
Applicable Law;
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(vi)such other consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Law; or
(vii)any combination of the foregoing methods of payment.
(g)Procedure for Exercise; Rights as a Shareholder.
(i)Any Option granted hereunder shall be exercisable according to the terms of
the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the applicable Option Agreement.
(ii)An Option shall be deemed exercised when (A) the Company receives (1)
written or electronic notice of exercise (in accordance with the Option
Agreement or procedures established by the Administrator) from the person
entitled to exercise the Option and (2) full payment for the Shares with respect
to which the related Option is exercised, and (B) with respect to Nonqualified
Stock Options, provisions acceptable to the Administrator have been made for
payment of all applicable withholding taxes.
(iii)Unless provided otherwise by the Administrator or pursuant to this Plan,
until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or any other rights as a shareholder shall exist with respect to the
Shares subject to an Option, notwithstanding the exercise of the Option.
(iv)The Company shall issue (or cause to be issued) such Shares as soon as
administratively practicable after the Option is exercised. An Option may not be
exercised for a fraction of a Share.
(h)Termination of Employment or Board Membership. The Administrator shall
determine as of the Grant Date (subject to modification subsequent to the Grant
Date) the effect a termination from membership on the Board by a Director for
any reason or a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for Cause)
shall have on any Option. Unless otherwise provided in an Award Agreement and
except as otherwise provided in Section 16(b) herein, (A) upon termination from
membership on the Board by a Director, any Option held by such Director that (1)
has not vested and is not exercisable as of the effective date of such
termination from membership on the Board shall be subject to immediate
cancellation and forfeiture or (2) is vested and exercisable as of the effective
date of such termination shall remain exercisable for five (5) years thereafter,
or the remaining term of the Option, if less; (B) a Termination of Employment
due to Disability or death or the termination of a Director due to death shall
result in immediate vesting of any Option, which shall remain exercisable for
three (3) years thereafter, or the remaining term of the Option, if less; (C)
provided that Retirement occurs at least one (1) year after the Grant Date, an
Option held by an Awardee at Retirement will remain outstanding for the lesser
of five (5) years or the remaining term of the Option and will continue to vest
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in accordance with the terms of the Option Agreement as though the Awardee were
still employed; and (D) any other Termination of Employment shall result in
immediate cancellation and forfeiture of all outstanding Options that have not
vested as of the effective date of such Termination of Employment, and any
vested and exercisable Options held at the time of such Termination of
Employment shall remain exercisable for ninety (90) days thereafter, or the
remaining term of the Option, if less.
9.Incentive Stock Option Limitations/Terms.
(a)Eligibility. Only employees (as determined in accordance with Section 3401(c)
of the Code and the regulations promulgated thereunder) of the Company or any of
its Subsidiaries may be granted Incentive Stock Options. No Incentive Stock
Option shall be granted to any such employee who as of the Grant Date owns stock
possessing more than ten percent (10%) of the total combined voting power of the
Company.
(b)$100,000 Limitation. Notwithstanding the designation “Incentive Stock Option”
in an Option Agreement, if and to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Awardee during any calendar year (under
all plans of the Company and any of its Subsidiaries) exceeds U.S. $100,000,
such Options shall be treated as Nonqualified Stock Options. For purposes of
this Section 9(b) of the Plan, Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares shall be determined as of the Grant Date.
(c)Transferability. The Option Agreement must provide that an Incentive Stock
Option is not transferable by the Awardee other than by will or the laws of
descent and distribution, and, during the lifetime of such Awardee, must not be
exercisable by any other person. If the terms of an Incentive Stock Option are
amended to permit transferability, the Option will be treated for tax purposes
as a Nonqualified Stock Option.
(d)Exercise Price. The per Share exercise price of an Incentive Stock Option
shall in no event be inconsistent with the requirements for qualification of the
Incentive Stock Option under Section 422 of the Code.
(e)Other Terms. Option Agreements evidencing Incentive Stock Options shall
contain such other terms and conditions as may be necessary to qualify, to the
extent determined desirable by the Administrator, with the applicable provisions
of Section 422 of the Code.
10.Stock Appreciation Rights.
A “Stock Appreciation Right” is a right that entitles the Awardee to receive, in
cash or Shares (as determined by the Administrator), value equal to or otherwise
based on the excess of (i) the Fair Market Value of a specified number of Shares
at the time of exercise over (ii) the aggregate exercise price of the right, as
established by the Administrator on the Grant Date.
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Stock Appreciation Rights may be granted to Awardees either alone
(“freestanding”) or in addition to or in tandem with other Awards granted under
the Plan and may, but need not, relate to a specific Option granted under
Section 8 of the Plan. Any Stock Appreciation Right granted in tandem with an
Option may be granted at the same time such Option is granted or at any time
thereafter before exercise or expiration of such Option. All Stock Appreciation
Rights under the Plan shall be granted subject to the same terms and conditions
applicable to Options as set forth in Section 8 of the Plan. Subject to the
provisions of Section 8 of the Plan, the Administrator may impose such other
conditions or restrictions on any Stock Appreciation Right as it shall deem
appropriate. Stock Appreciation Rights may be settled in Shares or cash as
determined by the Administrator.
11.Stock Awards.
(a)Stock Award Agreement. Each Stock Award Agreement shall contain provisions
regarding (i) the number of Shares subject to such Stock Award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the
means of payment for the Shares, (iii) the performance criteria, if any, and
level of achievement versus these criteria that shall determine the number of
Shares granted, issued, retainable and/or vested, (iv) such terms and conditions
on the grant, issuance, vesting and/or forfeiture of the Shares as may be
determined from time to time by the Administrator, (v) restrictions on the
transferability of the Stock Award, and (vi) such further terms and conditions,
in each case not inconsistent with this Plan, as may be determined from time to
time by the Administrator. No condition that is based upon performance criteria
and level of achievement versus such criteria shall be based on performance over
a period of less than one (1) year, and no condition that is based upon
continued employment or the passage of time shall provide for vesting in full of
a Stock Award in less than three (3) years from the date the Stock Award is
made, other than (A) with respect to such Stock Awards that are issued upon the
exercise or settlement of Options or Stock Appreciation Rights, (B) upon a
Change of Control as specified in Section 16(b) of the Plan, (C) upon the death,
Disability or Retirement of the Awardee, in each case as specified in the Stock
Award Agreement, or (D) as otherwise determined appropriate by the
Administrator. The Administrator shall be prohibited from waiving the minimum
vesting conditions set forth above except under the circumstances in clauses (A)
through (D) of the immediately preceding sentence subject to a maximum exemption
of up to five percent (5%) of the total Shares authorized to be issued under the
Plan.
(b)Restrictions and Performance Criteria. The grant, issuance, retention and/or
vesting of Stock Awards issued to Employees may be subject to such performance
criteria and level of achievement versus these criteria as the Administrator
shall determine, which criteria may be based on financial performance, personal
performance evaluations and/or completion of service by the Awardee.
(c)Termination of Employment or Board Membership. The Administrator shall
determine as of the Grant Date (subject to modification subsequent to the Grant
Date) the effect a termination from membership on the Board by a Director for
any
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reason or a Termination of Employment due to (i) Disability, (ii) Retirement,
(iii) death, or (iv) otherwise (including Termination for Cause) shall have on
any Stock Award. Unless otherwise provided in the Award Agreement and except as
otherwise provided in Section 16(b) herein, (A) a termination from membership on
the Board by a Director due to Disability or death shall result in immediate
vesting of a Stock Award; (B) a Termination of Employment due to Disability or
death shall result in vesting of a prorated portion of any Stock Award,
effective as of the end of the applicable performance or vesting period or other
period of restriction, based upon the full months of the applicable performance
period, vesting period or other period of restriction elapsed as of the end of
the month in which the Termination of Employment due to Disability or death
occurs over the total number of months in such period; (C) provided that
Retirement occurs at least one (1) year after the Grant Date, an Award held by
an Awardee at Retirement will remain outstanding for the lesser of five (5)
years or the remaining term of the Award and will continue to vest in accordance
with the terms of the Award Agreement as though the Awardee were still employed,
subject to the requirement that the amount of any Award shall not be determined
before the end of the applicable performance or vesting period or other period
of restriction; and (D) any other Termination of Employment or termination from
membership on the Board by a Director (including, but not limited to, Retirement
before the one (1) year anniversary of the Grant Date) shall result in immediate
cancellation and forfeiture of all outstanding, unvested Stock Awards unless as
otherwise provided for in the Award Agreement.
(d)Rights as a Shareholder. Unless otherwise provided for by the Administrator,
the Participant shall have the rights equivalent to those of a shareholder and
shall be a shareholder only after Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) to the Participant.
12.Other Stock-Based Awards.
(a)Other Stock-Based Awards. An “Other Stock-Based Award” means any other type
of equity-based or equity-related Award not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted Shares) in such
amount and subject to such terms and conditions as the Administrator shall
determine. Such Awards may involve the transfer of actual Shares to
Participants, or payment in cash or otherwise of amounts based on the value of
Shares. Each Other Stock-Based Award will be evidenced by an Award Agreement
containing such terms and conditions as may be determined by the Administrator.
No condition that is based upon performance criteria and level of achievement
versus such criteria shall be based on performance over a period of less than
one (1) year and no condition that is based upon continued employment or the
passage of time shall provide for vesting in full of an Other Stock-Based Award
in less than three (3) years from the date the Other Stock-Based Award is made,
other than (i) with respect to such Other Stock-Based Awards that are issued
upon the exercise or settlement of Options or Stock Appreciation Rights, (ii)
upon a Change of Control as specified in Section 16(b) of the Plan, (iii) upon
the death, Disability or Retirement of the
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Awardee, in each case as specified in the Other Stock-Based Award Agreement, or
(iv) as otherwise determined appropriate by the Administrator. The Administrator
shall be prohibited from waiving the minimum vesting conditions set forth above
except under the circumstances in clauses (i) through (iv) of the immediately
preceding sentence subject to a maximum exemption of up to five percent (5%) of
the total Shares authorized to be issued under the Plan.
(b)Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be
expressed in terms of Shares or units based on Shares, as determined by the
Administrator. The Administrator may establish performance goals in its
discretion. If the Administrator exercises its discretion to establish
performance goals, the number and/or value of Other Stock-Based Awards that will
be paid out to the Participant will depend on the extent to which the
performance goals are met.
(c)Payment of Other Stock-Based Awards. Payment, if any, with respect to Other
Stock-Based Awards shall be made in accordance with the terms of the Award, in
cash or Shares as the Administrator determines.
(d)Termination of Employment or Board Membership. The Administrator shall
determine as of the Grant Date (subject to modification subsequent to the Grant
Date) the effect a termination from membership on the Board by a Director for
any reason or a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for Cause)
shall have on any Other Stock-Based Award. Unless otherwise provided in the
Award Agreement and except as otherwise provided in Section 16(b) herein, (A)
the termination from membership on the Board of a Director for any reason shall
result in immediate vesting; (B) a Termination of Employment due to Disability
or death shall result in vesting of a prorated portion of any Other Stock-Based
Award, effective as of the end of the applicable performance or vesting period
or other period of restriction, based upon the full months of the applicable
performance period, vesting period or other period of restriction elapsed as of
the end of the month in which the Termination of Employment due to Disability or
death occurs over the total number of months in such period; (C) provided that
Retirement occurs at least one (1) year after the Grant Date, an Award held by
an Awardee at Retirement will remain outstanding for the lesser of five (5)
years or the remaining term of the Award and will continue to vest in accordance
with the terms of the Award Agreement as though the Awardee were still employed,
subject to the requirement that the amount of any Award shall not be determined
before the end of the applicable performance or vesting period or other period
of restriction; and (D) any other Termination of Employment (including but not
limited to Retirement before the one (1) year anniversary of the Grant Date)
shall result in immediate cancellation and forfeiture of all outstanding,
unvested Other Stock-Based Awards unless as otherwise provided for in the Award
Agreement.
13.Cash Awards.
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Each Cash Award will confer upon the Participant the opportunity to earn a
future payment tied to the level of achievement with respect to one or more
performance criteria established for a performance period.
(a)Cash Award. Each Cash Award may contain provisions regarding (i) the amounts
potentially payable to the Participant as a Cash Award, (ii) the performance
criteria and level of achievement versus these criteria which shall determine
the amount of such payment, (iii) the period as to which performance shall be
measured for establishing the amount of any payment, (iv) the timing of any
payment earned by virtue of performance, (v) restrictions on the alienation or
transfer of the Cash Award prior to actual payment, (vi) forfeiture provisions,
and (vii) such further terms and conditions, in each case not inconsistent with
the Plan, as may be determined from time to time by the Administrator. The
maximum amount payable as a Cash Award that is settled for cash may be a
multiple of the target amount payable, but the maximum amount payable pursuant
to portions of Cash Awards earned with respect to any fiscal year to any Awardee
shall not exceed U.S. $10,000,000.
(b)Performance Criteria. The Administrator shall establish the performance
criteria and level of achievement versus these criteria which shall determine
the amounts payable under a Cash Award, which criteria may be based on financial
performance and/or personal performance evaluations.
(c)Timing and Form of Payment. The Administrator shall determine the time of
payment of any Cash Award. The Administrator may provide for or, subject to such
terms and conditions as the Administrator may specify, may permit an Awardee to
elect for the payment of any Cash Award to be deferred to a specified date or
event. The Administrator may specify the form of payment of Cash Awards, which
may be cash or other property, including Shares, or may provide for an Awardee
to have the option for his or her Cash Award, or such portion thereof as the
Administrator may specify, to be paid in whole or in part in cash or other
property, including Shares. To the extent that a Cash Award is in the form of
cash, the Administrator may determine whether a payment is in U.S. dollars or
foreign currency.
(d)Termination of Employment or Board Membership. The Administrator shall
determine as of the Grant Date (subject to modification subsequent to the Grant
Date) the effect a termination from membership on the Board by a Director for
any reason or a Termination of Employment due to (i) Disability, (ii)
Retirement, (iii) death, or (iv) otherwise (including Termination for Cause)
shall have on any Cash Award. Unless otherwise provided in the Award Agreement
and except as otherwise provided in Section 16(b) herein, (A) termination from
membership on the Board by a Director due to Disability or death shall result in
immediate vesting of any Cash Award; (B) a Termination of Employment due to
Disability or death shall result in vesting of a prorated portion of any Cash
Award, effective as of the end of the applicable performance period, based upon
the full months of the applicable performance period elapsed as of the end of
the month in which the Termination of Employment due to Disability or death
occurs
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over the total number of months in such period; (C) provided that Retirement
occurs at least one (1) year after the first day of the performance period, an
Award held by an Awardee at Retirement will remain outstanding for the lesser of
five (5) years or the remaining term of the Award and will continue to vest in
accordance with the terms of the Award Agreement as though the Awardee were
still employed, subject to the requirement that the amount of any Award shall
not be determined before the end of the applicable performance period; and (D)
any other Termination of Employment or termination from Board membership
(including but not limited to Retirement before the one (1) year anniversary of
the first day of the performance period) shall result in immediate cancellation
and forfeiture of all outstanding, unvested Cash Awards; provided, however, that
an Awardee who incurs a Termination Without Cause at least one year after the
beginning of an applicable performance cycle for a performance based Award shall
receive a partial Award, subject to the requirement that the amount of such
performance-based Award shall not be determined before the end of the applicable
performance period, and shall be prorated based upon the full months of the
applicable performance period elapsed as of the end of the month in which such
Termination Without Cause occurs over the total number of months in the
performance period.
14.Other Provisions Applicable to Awards.
(a)Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by beneficiary designation,
will or by the laws of descent or distribution. The Administrator may make an
Award transferable to an Awardee’s family member or any other person or entity.
If the Administrator makes an Award transferable, either as of the Grant Date or
thereafter, such Award shall contain such additional terms and conditions as the
Administrator deems appropriate, and any transferee shall be deemed to be bound
by such terms upon acceptance of such transfer.
(b)Performance Criteria. For purposes of this Plan, the term “Performance
Criteria” shall mean any one or more of the following performance criteria,
either individually, alternatively or in any combination, applied to either the
Company as a whole or to a business unit, Affiliate or business segment, either
individually, alternatively or in any combination, and measured either annually
or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison
group, in each case as specified by the Committee in the Award: (i) sales, sales
growth or cash return on sales; (ii) cash flow or free cash flow, net cash from
operating activity or cash flow ratios or conversion metrics; (iii) earnings
(including gross margin, earnings before or after interest and taxes, earnings
before taxes, net earnings, earnings before interest, taxes, depreciation and
amortization (“EBITDA”) and EBITDA divided by sales); (iv) basic or diluted
earnings per share; (v) growth in earnings or earnings per share; (vi) stock
price; (vii) return on equity or average shareholders’ equity; (viii) total
shareholder return; (ix) return on capital; (x) return on assets or net assets;
(xi) return on investments; (xii) revenue or gross profits; (xiii) income before
or after interest, taxes, depreciation and amortization, or net income; (xiv)
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pretax income before allocation of corporate overhead and bonus; (xv) operating
income or net operating income; (xvi) operating profit or net operating profit
(whether before or after taxes); (xvii) operating margin; (xviii) return on
operating revenue; (xix) working capital or net working capital; (xx) debt and
debt ratios, (xxi) market share; (xxii) asset velocity index; (xxiii) contract
awards or backlog; (xxiv) overhead or other expense or cost reduction; (xxv)
growth in shareholder value relative to the moving average of the S&P 500 Index
or a peer group index; (xxvi) credit rating; (xxvii) strategic plan development
and implementation; (xxviii) improvement in workforce diversity; (xxix) customer
satisfaction; (xxx) employee satisfaction; (xxxi) management succession plan
development and implementation; (xxxii) employee retention; and (xxxiii) any
other performance criteria determined by the Committee and specified in an
Award. The Committee will establish in writing a definition or procedure for
calculating or measuring any Performance Criteria at the time any Performance
Criteria are established.
(c)Discretionary Adjustments. Notwithstanding satisfaction or completion of any
Performance Criteria, to the extent specified as of the Grant Date, the number
of Shares, Options or other benefits granted, issued, retainable and/or vested
under an Award on account of satisfaction of such Performance Criteria may be
increased or reduced by the Administrator on the basis of such further
considerations as the Administrator in its sole discretion shall determine.
(d)Other Forfeiture Events. The Administrator may, in its discretion, also
require repayment to the Company of all or any portion of an Award if the amount
of the Award was calculated based upon the achievement of certain financial
results that were subsequently the subject of a restatement of the Company’s
financial statements within a period of one (1) year after the payment or
settlement of the Award, the Participant engaged in misconduct or other culpable
conduct (as determined by the Committee in its sole discretion) that caused or
contributed to the need for the restatement of the financial statements, and the
amount of the Award would have been lower than the amount actually awarded to
the Participant had the financial results been properly reported. This provision
shall not be the Company’s exclusive remedy with respect to such matters.
15.Dividends and Dividend Equivalents.
Awards (other than Awards of Options and Stock Appreciation Rights and
performance-based Awards) may provide that any dividend or dividend equivalent
payments or other distributions paid with respect to the Shares subject to such
Award will be accumulated and held subject to the same restrictions as such
Shares; provided, however, that no such dividend or dividend equivalent payment
or other distribution will be paid to any Awardee prior to the vesting of the
applicable Award on which such payments or distributions have accrued. Such
payments or distributions may be made in cash, Shares or Stock Units or may be
credited as cash or Stock Units to an Awardee’s account and later settled in
cash or Shares or a combination thereof, as determined by the Administrator.
Such payments and credits may be subject to such conditions and contingencies as
the Administrator may establish.
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16.Adjustments upon Changes in Capitalization, Organic Change or Change of
Control.
(a)Adjustment Clause. In the event of (i) a stock dividend, stock split, reverse
stock split, share combination, or recapitalization or similar event affecting
the capital structure of the Company (each, a “Share Change”), or (ii) a merger,
consolidation, acquisition of property or shares, separation, spin-off,
reorganization, stock rights offering, liquidation, Disaffiliation, or similar
event affecting the Company or any of its Subsidiaries (each, an “Organic
Change”), the Administrator or the Board shall make such substitutions or
adjustments to outstanding Awards as it deems appropriate and equitable. In its
discretion, such adjustments may include, without limitation, such proportionate
adjustments that it deems appropriate to reflect such change with respect to (A)
the Share limitations set forth in Sections 3, 11(a) and 12(a) of the Plan, (B)
the number and kind of Shares covered by each outstanding Award, and (C) the
price per Share subject to each such outstanding Award. In the case of Organic
Changes, such adjustments may include, without limitation, (1) the cancellation
of outstanding Awards in exchange for payments of cash, property or a
combination thereof having an aggregate value equal to the value of such Awards,
as determined by the Administrator or the Board in its sole discretion (it being
understood that in the case of an Organic Change with respect to which
shareholders receive consideration other than publicly traded equity securities
of the ultimate surviving entity, any such determination by the Administrator
that the value of an Option or Stock Appreciation Right shall for this purpose
be deemed to equal the excess, if any, of the value of the consideration being
paid for each Share pursuant to such Organic Change over the exercise price of
such Option or Stock Appreciation Right shall conclusively be deemed valid); (2)
the substitution of other property (including, without limitation, cash or other
securities of the Company and securities of entities other than the Company) for
the Shares subject to outstanding Awards; and (3) in connection with any
Disaffiliation, arranging for the assumption of Awards, or replacement of Awards
with new awards based on other property or other securities (including, without
limitation, other securities of the Company and securities of entities other
than the Company), by the affected Subsidiary, Affiliate, or division or by the
entity that controls such Subsidiary, Affiliate, or division following such
Disaffiliation (as well as any corresponding adjustments to Awards that remain
based upon Company securities).
(b)Termination Following Change of Control. Except as may be provided in an
individual severance or employment agreement (or severance plan) to which an
Awardee is a party and unless otherwise determined by the Administrator as of
the Grant Date of a particular Award (or subsequent to the Grant Date), in the
event of a Qualifying Termination within the two (2) year period immediately
following a Change of Control, the following acceleration, exercisability and
valuation provisions shall apply:
(i)On the date that such Qualifying Termination occurs, any or all Options and
Stock Appreciation Rights awarded under this Plan not previously exercisable and
vested shall become fully exercisable and vested. In the event of a
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Qualifying Termination due to Termination Without Cause or Termination for Good
Reason or termination of Board membership for a Non-employee Director, each
Option and Stock Appreciation Right held by the Awardee (or a transferee) that
is vested following such Termination of Employment shall remain exercisable
until the earlier of the third (3rd) anniversary of such Termination of
Employment (or any later date until which it would remain exercisable under such
circumstances by its terms) or the expiration of its original term. In the event
of an Awardee’s Termination of Employment or termination of Board membership for
a Non-employee Director more than two (2) years after a Change of Control, or
any Termination of Employment other than a Termination of Employment Without
Cause or Termination for Good Reason or termination of Board membership for a
Non-employee Director within the two (2)-year period immediately following a
Change of Control, the provisions of Sections 8(h) and 10 of the Plan shall
govern (as applicable).
(ii)On the date that such Qualifying Termination occurs, the restrictions and
conditions applicable to any or all Stock Awards, Other Stock-Based Awards and
Cash Awards shall lapse and such Awards shall be fully vested.
(iii)On the date that such Qualifying Termination occurs, any performance based
Award shall be deemed fully earned at the target amount as of the date on which
the Change of Control occurs. All Stock Awards, Other Stock-Based Awards and
Cash Awards shall be settled or paid within thirty (30) days of vesting
hereunder.
(c)Section 409A. Notwithstanding the foregoing: (i) any adjustments made
pursuant to Section 16(a) of the Plan to Awards that are considered “deferred
compensation” within the meaning of Section 409A of the Code shall be made in
compliance with the requirements of Section 409A of the Code; (ii) any
adjustments made pursuant to Section 16(a) of the Plan to Awards that are not
considered “deferred compensation” subject to Section 409A of the Code shall be
made in such a manner as to ensure that after such adjustment, the Awards either
continue not to be subject to Section 409A of the Code or comply with the
requirements of Section 409A of the Code; (iii) the Administrator shall not have
the authority to make any adjustments pursuant to Section 16(a) of the Plan to
the extent that the existence of such authority would cause an Award that is not
intended to be subject to Section 409A of the Code to be subject thereto; and
(iv) if any Award is subject to Section 409A of the Code, Section 16(b) of the
Plan shall be applicable only to the extent specifically provided in the Award
Agreement and permitted pursuant to Section 25 of the Plan in order to ensure
that such Award complies with Code Section 409A.
17.Amendment and Termination of the Plan.
(a)Amendment and Termination. The Administrator may amend, alter or discontinue
the Plan or any Award Agreement, but any such amendment shall be subject to
approval of the shareholders of the Company in the manner and to the extent
required
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by Applicable Law. In addition, without limiting the foregoing, unless approved
by the shareholders of the Company and subject to Section 16(a), no such
amendment shall be made that would:
(i)increase the maximum aggregate number of Shares which may be subject to
Awards granted under the Plan;
(ii)reduce the minimum exercise price for Options or Stock Appreciation Rights
granted under the Plan;
(iii)reduce the exercise price of outstanding Options or Stock Appreciation
Rights; or
(iv)result in outstanding Options or Stock Appreciations Rights being cancelled
in exchange for cash, other Awards, or Options or Stock Appreciation Rights with
an exercise price that is less than the exercise price of the original Options
or Stock Appreciation Rights.
(b)Effect of Amendment or Termination. No amendment, suspension or termination
of the Plan shall impair the rights of any Participant with respect to an
outstanding Award, unless mutually agreed otherwise between the Participant and
the Administrator, which agreement must be in writing and signed by the
Participant and the Company, except that no such agreement shall be required if
the Administrator determines in its sole discretion that such amendment either
(i) is required or advisable in order for the Company, the Plan or the Award to
satisfy any Applicable Law (including any listing standard of any securities
exchange on which the Common Shares may be listed from time to time) or to meet
the requirements of any accounting standard, or (ii) is not reasonably likely to
significantly diminish the benefits provided under such Award, or that any such
diminishment has been adequately compensated, except following a Change of
Control. Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under
the Plan prior to the date of such termination.
(c)Effect of the Plan on Other Arrangements. Neither the adoption of the Plan by
the Board or a Committee nor the submission of the Plan to the shareholders of
the Company for approval shall be construed as creating any limitations on the
power of the Board or any Committee to adopt such other incentive arrangements
as it or they may deem desirable, including without limitation, the granting of
restricted shares or restricted share units or stock options otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
18.Designation of Beneficiary.
(a)An Awardee may file a written designation of a beneficiary who is to receive
the Awardee’s rights pursuant to Awardee’s Award or the Awardee may include his
or her Awards in an omnibus beneficiary designation for all benefits under the
Plan.
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To the extent that Awardee has completed a designation of beneficiary while
employed with the Company, such beneficiary designation shall remain in effect
with respect to any Award hereunder until changed by the Awardee to the extent
enforceable under Applicable Law.
(b)Such designation of beneficiary may be changed by the Awardee at any time by
written notice. In the event of the death of an Awardee and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Awardee’s death, the Company shall allow the legal representative of the
Awardee’s estate to exercise the Award.
19.No Right to Awards or to Employment.
No person shall have any claim or right to be granted an Award and the grant of
any Award shall not be construed as giving an Awardee the right to continue in
the employ of the Company or its Affiliates. Further, the Company and its
Affiliates expressly reserve the right, at any time, to dismiss any Employee or
Awardee at any time without liability or any claim under the Plan, except as
provided herein or in any Award Agreement entered into hereunder.
20.Legal Compliance.
Shares shall not be issued pursuant to an Option, Stock Appreciation Right,
Stock Award or Other Stock-Based Award unless such Option, Stock Appreciation
Right, Stock Award or Other Stock-Based Award and the issuance and delivery of
such Shares shall comply with Applicable Law and shall be further subject to the
approval of counsel for the Company with respect to such compliance. Unless the
Awards and Shares covered by this Plan have been registered under the Securities
Act or the Company has determined that such registration is unnecessary, each
person receiving an Award and/or Shares pursuant to any Award may be required by
the Company to give a representation in writing that such person is acquiring
such Shares for his or her own account for investment and not with a view to, or
for sale in connection with, the distribution of any part thereof.
21.Inability to Obtain Authority.
To the extent the Company is unable to or the Administrator deems it unfeasible
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be advisable or necessary to the
lawful issuance and sale of any Shares hereunder, the Company shall be relieved
of any liability with respect to the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
22.Reservation of Shares.
The Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
23.Notice.
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Any written notice to the Company required by any provisions of this Plan shall
be addressed to the Secretary of the Company and shall be effective when
received.
24.Governing Law; Interpretation of Plan and Awards.
(a)This Plan and all determinations made and actions taken pursuant hereto shall
be governed by the substantive laws, but not the choice of law rules, of the
state of Indiana, except as to matters governed by U.S. federal law.
(b)In the event that any provision of the Plan or any Award granted under the
Plan is declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to the
extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of the terms of the Plan and/or Award shall not be
affected except to the extent necessary to reform or delete such illegal,
invalid or unenforceable provision.
(c)The headings preceding the text of the sections hereof are inserted solely
for convenience of reference, and shall not constitute a part of the Plan, nor
shall they affect its meaning, construction or effect.
(d)The terms of the Plan and any Award shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted heirs,
beneficiaries, successors and assigns.
25.Section 409A.
It is the intention of the Company that no Award shall be “deferred
compensation” subject to Section 409A of the Code, unless and to the extent that
the Administrator specifically determines otherwise, and the Plan and the terms
and conditions of all Awards shall be interpreted accordingly. The terms and
conditions governing any Awards that the Administrator determines will be
subject to Section 409A of the Code, including any rules for elective or
mandatory deferral of the delivery of cash or Shares pursuant thereto and any
rules regarding treatment of such Awards in the event of a Change of Control,
shall be set forth in the applicable Award Agreement, deferral election forms
and procedures, and rules established by the Administrator, and shall comply in
all respects with Section 409A of the Code. The following rules will apply to
Awards intended to be subject to Section 409A of the Code (“409A Awards”):
(a)If a Participant is permitted to elect to defer an Award or any payment under
an Award, such election will be permitted only at times in compliance with Code
Section 409A, including applicable transition rules thereunder.
(b)The Company shall have no authority to accelerate distributions relating to
409A Awards in excess of the authority permitted under Section 409A.
(c)Any distribution of a 409A Award following a Termination of Employment that
would be subject to Code Section 409A(a)(2)(A)(i) as a distribution
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following a separation from service of a “specified employee” as defined under
Code Section 409A(a)(2)(B)(i), shall occur no earlier than the expiration of the
six-month period following such Termination of Employment.
(d)In the case of any distribution of a 409A Award, if the timing of such
distribution is not otherwise specified in the Plan or an Award Agreement or
other governing document, the distribution shall be made not later than the end
of the calendar year during which the settlement of the 409A Award is specified
to occur.
(e)In the case of an Award providing for distribution or settlement upon vesting
or the lapse of a risk of forfeiture, if the time of such distribution or
settlement is not otherwise specified in the Plan or an Award Agreement or other
governing document, the distribution or settlement shall be made not later than
March 15 of the year following the year in which the Award vested or the risk of
forfeiture lapsed.
26.Limitation on Liability.
The Company and any Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant, an Employee, an Awardee or any
other persons as to:
(a)The Non-Issuance of Shares. The non-issuance or sale of Shares as to which
the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b)Tax or Exchange Control Consequences. Any tax consequence expected, but not
realized, or any exchange control obligation owed, by any Participant, Employee,
Awardee or other person due to the receipt, exercise or settlement of any Option
or other Award granted hereunder.
27.Unfunded Plan.
Insofar as it provides for Awards, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Awardees who are granted
Stock Awards or Other Stock-Based Awards under this Plan, any such accounts will
be used merely as a bookkeeping convenience. The Company shall not be required
to segregate any assets which may at any time be represented by Awards, nor
shall this Plan be construed as providing for such segregation. Neither the
Company nor the Administrator shall be deemed to be a trustee of stock or cash
to be awarded under the Plan. Any liability of the Company to any Participant
with respect to an Award shall be based solely upon any contractual obligations
which may be created by the Plan; no such obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Administrator shall be required to give any
security or bond for the performance of any obligation which may be created by
this Plan.
28.Foreign Employees.
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Awards may be granted hereunder to Employees who are foreign nationals, who are
located outside the United States or who are not compensated from a payroll
maintained in the United States, or who are otherwise subject to (or could cause
the Company to be subject to) legal or regulatory provisions of countries or
jurisdictions outside the United States, on such terms and conditions different
from those specified in the Plan as may, in the judgment of the Administrator,
be necessary or desirable to foster and promote achievement of the purposes of
the Plan, and, in furtherance of such purposes, the Administrator may make such
modifications, amendments, procedures, or subplans as may be necessary or
advisable to comply with such legal or regulatory provisions.
29.Tax Withholding.
Each Participant shall pay to the Company, or make arrangements satisfactory to
the Company regarding the payment of, any federal, state, local or foreign taxes
of any kind required by law to be withheld with respect to any Award under the
Plan no later than the date as of which any amount under such Award first
becomes includible in the gross income of the Participant for any tax purposes
with respect to which the Company has a tax withholding obligation. Unless
otherwise determined by the Company, withholding obligations may be settled with
Shares, including Shares that are part of the Award that gives rise to the
withholding requirement; provided, however, that not more than the legally
required minimum withholding may be settled with Shares. The obligations of the
Company under the Plan shall be conditional on such payment or arrangements, and
the Company and its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any vested Shares or any other payment due
to the Participant at that time or at any future time. The Administrator may
establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Shares.
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