Exhibit 10-g-4

NOTICE OF SHARE- AND CASH-BASED AWARDS

(Executive Officer)

 

To:   

 

  (“Grantee”) Date of Notice:   

 

 

Nordson Corporation, an Ohio corporation (the “Company”), grants to you, the
Grantee named above, in accordance with the terms of the Nordson Corporation
2012 Stock Incentive and Award Plan (the “Plan”) and this Notice of Share- and
Cash-Based Awards (“Notice”), the following awards:

 

Award Type

  

Date of

Grant

   # of Options /
Shares /
Target
Opportunity    Exercise Price    Vesting Date Non-qualified Stock Option    [•]
   [•]    $[•] per Share    Equal annual
installments on each
of the first four
anniversaries of the
Date of Grant Restricted Shares    [•]    [•]    N/A    Equal annual
installments on each
of the first three
anniversaries of the
Date of Grant Performance Share Units1 (FY[•]-[•] Performance Share Program)   
[•]    [•] units (Target) 2    N/A    [•]

Cash-Based Award

(FY[•] Annual Cash Incentive)

   [•]    $[•] (Target) 2    N/A    [•]

 

1  Fractional Shares or Units will be subject to rounding conventions adopted by
the Company from time to time; provided that in no event will the total Shares
or Units issued exceed the total Shares or Units granted under the award.

2  Actual payout amount to be determined at the conclusion of the performance
period.

 

  I. Terms of Grant. See Appendix A to this Notice.

 

  II. Impact of Termination of Employment. See Appendix B to this Notice

 

  III. Performance Objectives: Unless you are a “Covered Employee” (as defined
in Appendix C to this Notice), the performance objectives related to your
Performance Share Units and Cash-Based Award are set out below. Performance
Objectives for Covered Employees are set out on Appendix C to this Notice.

 

- Notice -

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NOTICE OF SHARE- AND CASH-BASED AWARDS

(Executive Officer)

 

To:   

 

  (“Grantee”) Date of Notice:   

 

 

 

  A. Performance Share Unit Award (FY [•]-[•]Performance Share Program). Your
right to receive any unrestricted Nordson Common Shares under your Performance
Share Unit Award is contingent upon the Company’s achievement of specified
levels of [•] and [•] over the performance period (FY [•] through FY [•]) as set
out in the matrix below, with one-half of your target number of Performance
Share Units allocated to each of those two performance objectives. Further, the
Compensation Committee, in its sole discretion, may modify the performance
objectives applicable to the Award, or the related threshold, target and maximum
achievement levels, or the actual payout levels, in whole or in part, as the
Committee deems appropriate and equitable to reflect a change in the business,
operations, corporate structure or capital structure of the Company or its
affiliates, the manner in which it conducts its business, or other events or
circumstances.

 

FY [•] -[•] Performance Share Program

[•]

  

[•]

Threshold

(50%

payout)

  

Target

(100%

payout)

  

Maximum

(200%

payout)

  

Threshold

(50%
payout)

  

Target

(100%

payout)

  

Maximum

(200%

payout)

[•]

   [•]    [•]    [•]    [•]    [•]

 

1  Proposed and subject to adjustment upon confirmation of FY [•] financial
results.

* Straight line interpolation applies for performance between designated levels.

 

  B. Cash-Based Award (FY [•] Annual Cash Incentive). Payment of all or any
portion of your Cash-Based Award is contingent upon the Company’s achievement of
specified levels of [•] and [•] for FY [•] as set out in the matrix below, with
one-half of your Award opportunity allocated to each of those two performance
objectives provided that payout of your Annual Incentive is subject to a
reduction or increase based upon the Compensation Committee’s discretionary
assessment of your individual performance. The Compensation Committee, in its
sole discretion, may modify the performance objectives applicable to the Award,
or the related threshold, target and maximum achievement levels, or the actual
payout levels, in whole or in part, as the Committee deems appropriate and
equitable to reflect a change in the business, operations, corporate structure
or capital structure of the Company or its affiliates, the manner in which it
conducts its business, or other events or circumstances.

 

- Notice -

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NOTICE OF SHARE- AND CASH-BASED AWARDS

(Executive Officer)

 

To:   

 

  (“Grantee”) Date of Notice:   

 

 

 

FY [•] Annual Cash Incentive

[•]

  

[•]

Threshold

(50%

payout)

  

Target

(100%

payout)

  

Maximum

(200%

payout)

  

Threshold

(50%

payout)

  

Target

(100%

payout)

  

Maximum

(200%

payout)

[•]

   [•]    [•]    [•]    [•]    [•]

 

1  Proposed and subject to adjustment upon confirmation of FY 2013 financial
results.

* Straight line interpolation applies for performance between designated levels.

 

  IV. Miscellaneous Provisions:

 

  A. Forfeiture. All Awards are subject to the Company’s Clawback Policy (see
Appendix D to this Notice).

 

  B. No Employment Contract. Nothing contained in this Notice shall confer upon
you any right with respect to continuance of employment by the Company and its
Subsidiaries, nor limit or affect in any manner the right of the Company and its
Subsidiaries to terminate your employment or adjust your compensation.

 

  C. Relation to Other Benefits. Any economic or other benefit to you under this
Notice or the Plan shall not be taken into account in determining any benefits
to which you may be entitled under any profit-sharing, retirement, life
insurance or other benefit or compensation plan maintained by the Company or a
Subsidiary unless expressly provided for in the respective plans.

 

  D. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal and state securities laws and listing requirements
with respect to the awards; provided that, notwithstanding any other provision
of this Notice, and only to the extent permitted under Section 409A of the Code,
the Company shall not be obligated to deliver any Shares pursuant to this Notice
if the delivery thereof would result in a violation of any such law or listing
requirement.

 

  E.

Amendments. Subject to the terms of the Plan, the Committee may modify this
Notice upon written notice to you. Any amendment to the Plan shall be deemed to
be an amendment to this Notice to the extent that the amendment is applicable
hereto. Notwithstanding the foregoing, no amendment of the

 

- Notice -

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NOTICE OF SHARE- AND CASH-BASED AWARDS

(Executive Officer)

 

To:   

 

  (“Grantee”) Date of Notice:   

 

 

 

  Plan or this Notice shall adversely affect your rights under this Notice
without your consent unless the Committee determines, in good faith, that such
amendment is required for the Notice to either be exempt from the application
of, or comply with, the requirements of Section 409A of the Code, or as
otherwise may be provided in the Plan.

 

  F. Severability. In the event that one or more of the provisions of this
Notice shall be invalidated for any reason by a court of competent jurisdiction,
any provision so invalidated shall be deemed to be separable from the other
provisions hereof, and the remaining provisions hereof shall continue to be
valid and fully enforceable.

 

  G. Relation to Plan. This Notice (along with Appendices A, B, C and D) is
subject to the terms and conditions of the Plan and, together with the Plan,
contain the entire understanding of the parties with respect to the subject
matter contained in this Notice, and supersede all prior written or oral
communications, representations and negotiations in respect thereto. In the
event of any inconsistency between the provisions of this Notice and the Plan,
the Plan shall govern. Capitalized terms used herein (and the related Appendices
A, B, C and D) without definition shall have the meanings assigned to them in
the Plan. See Appendices E and F to this Notice for the Plan Document and Plan
Summary, respectively.

 

  H. Successors and Assigns. The provisions of this Notice shall inure to the
benefit of, and be binding upon your successors, administrators, heirs, legal
representatives and assigns, and the successors and assigns of the Company.

 

  I. Governing Law. The interpretation, performance, and enforcement of this
Notice shall be governed by the laws of the State of Ohio, without giving effect
to the principles of conflict of laws thereof.

 

  J. Electronic Delivery. You hereby consent and agree to electronic delivery of
any documents that the Company may elect to deliver (including, but not limited
to, grant or award notifications, account statements, annual and quarterly
reports, and all other forms of communications) in connection with this and any
other award made or offered under the Plan. You have the right at any time to
request that the Company deliver written copies of any and all materials
referred to above at no charge. You also hereby consent to any and all
procedures the Company has established or may establish for an electronic
signature system for delivery and acceptance of any such documents that the
Company may elect to deliver, and agrees that your electronic response or
signature is the same as, and shall have the same force and effect as your
manual signature.

 

- Notice -

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NOTICE OF SHARE- AND CASH-BASED AWARDS

(Executive Officer)

 

To:   

 

  (“Grantee”) Date of Notice:   

 

 

 

  K. Tax Withholding. To the extent the Company or any Subsidiary is required to
withhold any federal, state, local, foreign or other taxes in connection with a
Stock Option exercise, the vesting of Restricted Shares or the settlement of
Performance Share Units, then the Company or Subsidiary (as applicable) shall
retain a number of Shares otherwise deliverable or vested with a value equal to
the required withholding (based on the Fair Market Value of the Shares on the
applicable date); provided that in no event shall the value of the Shares
retained exceed the minimum amount of taxes required to be withheld or such
other amount that will not result in a negative accounting impact.
Notwithstanding the foregoing, you may elect, in accordance with procedures
adopted by the Company from time to time, to either (i) pay or provide for
payment of the required tax withholding, or (ii) have the required tax
withholding deducted from any amount of salary, bonus, incentive compensation or
other amounts otherwise payable in cash to you (other than deferred compensation
subject to Section 409A of the Code); provided that the Company may require the
use of one or both of these methods in the event that the Company or any
Subsidiary is required to withhold taxes at any time other than upon delivery or
vesting of the Shares (for example, if you defer the Shares under a Company
deferred compensation plan. Any payment of a Cash-Based Award shall be subject
to withholding of applicable federal, state, local, foreign or other taxes.

Acceptance:

You must accept the Awards set forth in this Notice no later than [•] or this
Notice may be cancelled by the Company, in its sole discretion. You may accept
the Awards by e-mailing [•] with a copy to [•] and inserting the following
legend in the body of the e-mail:

I have reviewed this Notice of Share- and Cash-Based Awards dated [•] and
confirm my acceptance of the Awards in accordance with the terms of the Nordson
Corporation 2012 Stock Incentive and Award Plan and this Notice of Share- and
Cash-Based Awards.

 

- Notice -

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APPENDIX A:

TERMS OF GRANT

(EXECUTIVE OFFICER)

STOCK OPTION AWARDS

Each Stock Option Award granted pursuant to the Compensation Committee’s [•]
Resolution (“Resolution”), shall have, in addition to any terms and conditions
set forth in the Notice and the Plan, the following terms and conditions:

 

     FY [•] Executive Officer Stock Option Award Form of Grant    Non-qualified
Stock Options Grant Period    Fiscal Year [•] Date of Grant    [•] Vesting Date
   Four equal annual installments on each of the first four anniversaries of the
Date of Grant. Term    Each Stock Option shall expire on midnight of the tenth
anniversary of the Date of Grant. Exercise   

To the extent that the Stock Option becomes vested and exercisable, it may be
exercised in whole or in part from time to time by written notice to the Company
or its designee stating the number of Shares for which the Stock Option is being
exercised, the intended manner of payment to cover the exercise price, taxes or
any brokerage fees or commissions, and such other provisions as may be required
by the Company or its designee. The vested Stock Option may be exercised prior
to its expiration date, during the lifetime of the Grantee, only by the Grantee,
or in the event of his legal incapacity, by his guardian or legal representative
acting on behalf of the Grantee in a fiduciary capacity under state law and
court supervision. If the Grantee dies before the expiration of the Stock
Option, all or part of this Stock Option may be exercised (prior to expiration)
by the personal representative of the Grantee or by any person who has acquired
this Stock Option directly from the Grantee by will, bequest or inheritance but
only to the extent that the Stock Option was vested and exercisable upon the
Grantee’s death.

 

The exercise price and taxes due as a consequence of the exercise are payable
(i) in cash or by certified or cashier’s check or other cash equivalent
acceptable to the Company payable to the order of the Company, (ii) by surrender
of vested Shares (including by attestation) owned by the Grantee having an
aggregate Fair Market Value at the time of exercise equal to the total exercise
price and taxes, (iii) by a reduction in the number of Common Shares to be
received upon exercise of the Stock Option (in which case shares may be reduced
only to satisfy the minimum withholding tax required by federal, state and local
authorities, unless otherwise determined by the Committee, or (iv) by a
combination of the foregoing methods.

Delivery of Shares    Subject to the terms and conditions contained herein,
Shares shall be delivered to the Grantee as soon as administratively practicable
following the date the Grantee (i) exercises the Stock Option in accordance with
the procedures outlined above, (ii) makes full payment to the Company or its
designee of the exercise price and (iii) makes arrangements satisfactorily to
the Company (or any Subsidiary, if applicable) for the payment of any required
withholding taxes or brokerage fees/commissions related to the exercise of the
Stock Option. The Grantee shall not possess any incidents of ownership
(including, without limitation, dividend and voting rights) in the Shares until
such Shares have been delivered to the Grantee.

 

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APPENDIX A:

TERMS OF GRANT

(EXECUTIVE OFFICER)

 

     FY [•] Executive Officer Stock Option Award Transferability   

All Non-Qualified Stock Options shall be transferable and such options may be
exercised by the transferee; provided, however, that (i) Non-Qualified Stock
Options shall only be transferable to Family Members, trusts with third party
trustees and for the sole benefit of Family Member beneficiaries, partnerships
whose only partners are Family Members, and organizations exempt from income tax
under §501(c)(3) of the Internal Revenue Code (provided, in this latter case,
that all transferred Non-Qualified Stock Options must be vested); (ii) any such
transfer must be without consideration (except when required by court order);
(iii) once transferred, Non-Qualified Stock Options may not be further
transferred by the transferee, except (a) by will or the laws of descent and
distribution or (b) for a transfer by a trust or a partnership to a trust
beneficiary or a partner, respectively; and (iv) the Company receives a copy of
the document deemed necessary by the Committee establishing the validity of the
transfer and requiring the transferee to accept and comply with the terms and
conditions of the Non-Qualified Stock Option, the applicable Plan and any
related Committee rules.

 

“Family Members” shall include children, stepchildren, grandchildren, parents,
stepparents, grandparents, spouses, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law, nieces or
nephews, including adoptive relationships.

 

In the event a Stock Option has been transferred, a Participant will be
obligated to pay, on the date of exercise, all taxes associated with the
exercise of the Stock Option. If the Participant fails to so pay all taxes
associated with the exercise, such taxes will be paid by reducing the number of
Common Shares to be received upon exercise.

 

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APPENDIX A:

TERMS OF GRANT

(EXECUTIVE OFFICER)

 

RESTRICTED SHARE AWARDS

Each Restricted Share Award granted pursuant to the Resolution shall have, in
addition to any terms and conditions set forth in the Notice and the Plan, the
following terms and conditions:

 

     FY [•] Executive Officer Restricted Share Award Form of Grant    Restricted
Shares Grant Period    Fiscal Year [•] Date of Grant    [•] Vesting Date   
Three equal annual installments on each of the first three anniversaries of the
Date of Grant. Transferability    The Restricted Shares may not be sold,
exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of
by the Grantee, except to the Company, by will or the laws of descent and
distribution, or as may otherwise be permitted by the Plan, until the Restricted
Shares have vested. Any purported transfer or encumbrance in violation of this
provision shall be void, and the other party to any such purported transaction
shall not obtain any rights to or interest in such Restricted Shares. Any
permitted transferee (other than the Company) shall remain subject to all the
terms and conditions applicable to the Restricted Shares prior to such transfer.
Dividend, Voting and Other Rights    Except as otherwise provided herein, from
and after the Date of Grant, the Grantee shall have all of the rights of a
shareholder with respect to the Restricted Shares, including the right to vote
the Restricted Shares and receive any cash dividends that may be paid thereon
(which such cash dividends shall be paid to the Grantee at the same time they
are paid to other shareholders); provided, however, that any additional Shares
of the Company or other securities that the Grantee may become entitled to
receive pursuant to a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, separation or reorganization or any
other change in the capital structure of the Company shall be considered
Restricted Shares and shall be subject to the same restrictions as the
Restricted Shares covered by the Notice. Custody of Shares    Until the
Restricted Shares have vested, the Restricted Shares shall be issued in
book-entry form only and shall not be represented by a certificate. The
restrictions applicable to the Restricted Shares shall be reflected on the stock
transfer records maintained by or on behalf of the Company. The Grantee agrees
that, in order to ensure compliance with the restrictions imposed on the
Restricted Shares under the Notice, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any. Effective until the
Restricted Shares have become vested, the Grantee hereby irrevocably constitutes
and appoints each of the Chief Financial Officer, General Counsel and the Vice
President of Human Resources of the Company as attorney-in-fact to transfer the
Restricted Shares on the stock transfer records of the Company with full power
of substitution.

 

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APPENDIX A:

TERMS OF GRANT

(EXECUTIVE OFFICER)

 

PERFORMANCE SHARE UNIT AWARDS

Each Performance Share Unit Award granted pursuant to the Resolution, shall
have, in addition to any terms and conditions set forth in any Notice and the
Plan, the following terms and conditions:

 

     FY [•] -[•] Executive Officer Performance Share Units Award Form of Grant
   Performance Share Units Performance Period    Fiscal Year [•] – Fiscal Year
[•] Date of Grant    [•] Payment:   

Payment of any Performance Share Units that become earned will be made in the
form of Shares no later than 90 days after the end of the Performance Period.

 

Notwithstanding the foregoing, payment of any Performance Share Units that
become earned pursuant to Section 20 of the Plan (relating to a Change in
Control and Potential Change in Control) shall be paid within 60 days after they
become earned; provided that if the Performance Share Units are considered a
“deferral of compensation” within the meaning of Section 409A of the Code, then
Performance Share Units earned pursuant to Section 20 of the Plan shall be paid
within 60 days following the earlier of (i) the occurrence of a “change in the
ownership,” a “change in the effective control” or a “change in the ownership of
a substantial portion of the assets” of the Company within the meaning of
Section 409A of the Code; (ii) the Grantee’s “separation from service” within
the meaning of Section 409A of the Code; or (iii) the end of the Performance
Period; provided that payment to a “specified employee” within the meaning of
Section 409A of the Code shall be made, to the extent required by Section 409A
of the Code, at least six months after the Grantee’s separation from service.

 

See Appendix B to the Notice relating to treatment of the Performance Share
Units in the event of a Grantee’s termination of employment (other than in
connection with a Potential Change in Control as provided in Section 20 of the
Plan).

Transferability    The Performance Share Units subject to the Notice are
personal to the Grantee and may not be sold, exchanged, assigned, transferred,
pledged, encumbered or otherwise disposed of by the Grantee until they become
earned and settled; provided, however, that the Grantee’s rights with respect to
such Performance Share Units may be transferred by will or pursuant to the laws
of descent and distribution. Any purported transfer or encumbrance in violation
of this provision shall be void, and the other party to any such purported
transaction shall not obtain any rights to or interest in such Performance Share
Units. Dividend, Voting and Other Rights    The Grantee shall have no rights of
ownership in the Performance Share Units or in the Shares related thereto and
shall have no right to dividends or dividend equivalents and no right to vote
Performance Share Units or the Shares related thereto until the date on which
the Shares underlying the Performance Share Units are delivered to the Grantee.

 

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APPENDIX A:

TERMS OF GRANT

(EXECUTIVE OFFICER)

 

CASH-BASED AWARDS (ANNUAL CASH INCENTIVE)

Each Cash-Based Award (Annual Cash Incentive) granted pursuant to the
Resolution, shall have, in addition to any terms and conditions set forth in any
Notice and the Plan, the following terms and conditions:

 

     FY [•] Executive Officer Cash-based Award Form of Grant    Cash
Performance Period    Fiscal Year [•] Date of Grant    [•] Payment   

Payment of any Award that becomes earned will be made in cash after the end of
fiscal year [•] but no later than [•].

 

Notwithstanding the foregoing, payment of any Award that becomes earned pursuant
to Section 20 of the Plan (relating to a Change in Control and Potential Change
in Control) shall be paid within 60 days after it becomes earned.

 

See Appendix B to the Notice relating to disposition (payout) of the Award in
the event of a Grantee’s termination of employment (other than in connection
with a Potential Change in Control as provided in Section 20 of the Plan).

 

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APPENDIX B

IMPACT OF TERMINATION OF EMPLOYMENT ON AWARDS

(EXECUTIVE OFFICER)

The following tables reflect the impact various termination of employment
scenarios have on the Awards granted to Executive Officers, other than
termination of employment in connection with a Potential Change in Control as
provided in Section 20 of the Plan. See Appendix A to the Notice relating to
treatment of Awards in connection with a Change in Control or Potential Change
in Control.

 

Reason for Termination

  

Impact of Termination of Employment

DEATH & DISABILITY1

  

Stock Options

  

Restricted Shares

  

Performance Share Units2

  

Cash-based Award (Annual
Cash Incentive)4

Vesting    Full vesting of all unvested stock options awarded (e.g., accelerated
vesting)    The restriction period will terminate and all restricted shares will
become vested and transferable    Grantee shall earn a pro-rated number of
Performance Share Units (rounded to the nearest whole number) equal to (i) the
number of Performance Share Units to which the Grantee would have been entitled
based on the performance of the Company during the full performance period and,
for Covered Employees3 the Compensation Committee’s exercise of negative
discretion in accordance with the FY 2014-FY 2016 Performance Share Program,
multiplied by (ii) a fraction, the numerator of which is the number of days that
the Grantee was employed during the performance period and the denominator of
which is the number of days in the performance period.    Grantee is not
eligible for a payout, except that the Committee may, in its discretion, provide
that the Grantee shall earn a pro-rated payout equal to (i) the payout to which
the Grantee would have been entitled based on the performance of the Company
during the full fiscal year and, for Covered Employees, the Compensation
Committee’s exercise of negative discretion in accordance with the FY 2014
Annual Cash Incentive Program, multiplied by (ii) a fraction, the numerator of
which is the number of days that the Grantee was employed during the fiscal year
and the denominator of which is 365. Option Expiration Date    Midnight of the
10th anniversary of the grant date    N/A    N/A    N/A

 

 

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APPENDIX B

IMPACT OF TERMINATION OF EMPLOYMENT ON AWARDS

(EXECUTIVE OFFICER)

 

Reason for Termination

  

Impact of Termination of Employment

RETIREMENT AT

AGE 655

  

Stock Options

  

Restricted Shares

  

Performance Share Units2

  

Cash-based Award
(Annual Cash Incentive)4

Vesting   

Grants made less than 12 months prior to termination date are forfeited;

 

Vesting continues for all other unvested stock options granted

  

Grants made less than 12 months prior to termination date are forfeited;

 

For all other unvested restricted shares at the time of retirement, the
restriction period will terminate and all restricted shares will become vested
and transferable.

   Grantee shall earn a pro-rated number of Performance Share Units (rounded to
the nearest whole number) equal to (i) the number of Performance Share Units to
which the Grantee would have been entitled based on the performance of the
Company during the full performance period and, for Covered Employees, the
Compensation Committee’s exercise of negative discretion in accordance with the
FY 2014-FY 2016 Performance Share Program, multiplied by (ii) a fraction, the
numerator of which is the number of days that the Grantee was employed during
the performance period and the denominator of which is the number of days in the
performance period.    Grantee is not eligible for a payout, except that the
Committee may, in its discretion, provide that the Grantee shall earn a
pro-rated payout equal to (i) the payout to which the Grantee would have been
entitled based on the performance of the Company during the full fiscal year
and, for Covered Employees, the Compensation Committee’s exercise of negative
discretion in accordance with the FY 2014 Annual Cash Incentive Program,
multiplied by (ii) a fraction, the numerator of which is the number of days that
the Grantee was employed during the fiscal year and the denominator of which is
365. Option Expiration Date    Midnight of the 10th anniversary of the grant
date.    N/A    N/A    N/A

 

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APPENDIX B

IMPACT OF TERMINATION OF EMPLOYMENT ON AWARDS

(EXECUTIVE OFFICER)

 

Reason for Termination

  

Impact of Termination of Employment

EARLY RETIREMENT6

  

Stock Options

  

Restricted Shares

  

Performance Share Units2

  

Cash-based Award
(Annual Cash Incentive)4

Vesting   

Grants made less than 12 months prior to termination date are forfeited;

 

Vesting continues for all other unvested stock options granted

  

Grants made less than 12 months prior to termination date are forfeited;

 

For all other unvested Restricted Shares at the time of retirement, the
restriction period will terminate with respect to that number of shares of
Restricted Shares (rounded to the nearest whole number) equal to the product of
(i) the total number of shares of Restricted Shares multiplied by (ii) a
fraction the numerator of which is the number of full months that have elapsed
since the date of grant and the denominator of which is the number of full
months of the full restriction period, and that number of shares of Restricted
Shares will become vested and transferable.

 

The Committee may, in its discretion, waive the forfeiture of any or all such
remaining shares.

   Grantee shall earn a pro-rated number of Performance Share Units (rounded to
the nearest whole number) equal to (i) the number of Performance Share Units to
which the Grantee would have been entitled based on the performance of the
Company during the full performance period and, for Covered Employees, the
Compensation Committee’s exercise of negative discretion in accordance with the
FY 2014-FY 2016 Performance Share Program, multiplied by (ii) a fraction, the
numerator of which is the number of days that the Grantee was employed during
the performance period and the denominator of which is the number of days in the
performance period.    Grantee is not eligible for a payout, except that the
Committee may, in its discretion, provide that the Grantee shall earn a
pro-rated payout equal to (i) the payout to which the Grantee would have been
entitled based on the performance of the Company during the full fiscal year
and, for Covered Employees, the Compensation Committee’s exercise of negative
discretion in accordance with the FY 2014 Annual Cash Incentive Program,
multiplied by (ii) a fraction, the numerator of which is the number of days that
the Grantee was employed during the fiscal year and the denominator of which is
365. Option Expiration Date    Earlier of (i) the 5th anniversary of the date of
termination or (ii) midnight of the 10th anniversary of the grant date.    N/A
   N/A    N/A

 

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APPENDIX B

IMPACT OF TERMINATION OF EMPLOYMENT ON AWARDS

(EXECUTIVE OFFICER)

 

Reason for Termination

  

Impact of Termination of Employment

INVOLUNTARY
TERMINATION

(other than a violation of

the Company’s

Code of Ethics and

Business Conduct)

  

Stock Options

  

Restricted Shares

  

Performance Share Units2

  

Cash-based Award
(Annual Cash Incentive)4

Vesting    All unvested options are forfeited as of the termination date    All
unvested shares of restricted stock will be forfeited as of the date of
termination; except that the Committee may, in its discretion, waive the
automatic forfeiture of, and the restrictions on, any or all such shares.    All
unvested performance share units are forfeited; except that the Committee may,
in its discretion, provide that the Grantee shall earn a pro-rated number of
Performance Share Units (rounded to the nearest whole number) equal to (i) the
number of Performance Share Units to which the Grantee would have been entitled
based on the performance of the Company during the full performance period and,
for Covered Employees, the Compensation Committee’s exercise of negative
discretion in accordance with the FY 2014-FY 2016 Performance Share Program,
multiplied by (ii) a fraction, the numerator of which is the number of days that
the Grantee was employed during the performance period and the denominator of
which is the number of days in the performance period.    Grantee is not
eligible for a payout, except that the Committee may, in its discretion, provide
that the Grantee shall earn a pro-rated payout equal to (i) the payout to which
the Grantee would have been entitled based on the performance of the Company
during the full fiscal year and, for Covered Employees, the Compensation
Committee’s exercise of negative discretion in accordance with the FY 2014
Annual Cash Incentive Program, multiplied by (ii) a fraction, the numerator of
which is the number of days that the Grantee was employed during the fiscal year
and the denominator of which is 365. Option Expiration Date    Earlier of (i) 90
days after the date of termination and (ii) midnight of the 10th anniversary of
the grant date.    N/A    N/A    N/A

 

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APPENDIX B

IMPACT OF TERMINATION OF EMPLOYMENT ON AWARDS

(EXECUTIVE OFFICER)

 

Reason for Termination

  

Impact of Termination of Employment

VOLUNTARY
TERMINATION or
TERMINATION DUE TO A
VIOLATION

OF THE COMPANY’S

CODE OF ETHICS

AND BUSINESS CONDUCT

  

Stock Options

  

Restricted Shares

  

Performance Share Units2

  

Cash-based Award
(Annual Cash Incentive)4

Vesting    All vested and unvested options are forfeited as of the termination
date.    All unvested shares of restricted shares will be forfeited as of the
date of termination.    All unvested performance share units are forfeited.   
Grantee is not eligible for a payout. Option Expiration Date    On the
termination date.    N/A    N/A    N/A

 

1. Death and Disability: defined as a physical or mental impairment, due to
accident or illness that renders a Grantee incapable of performing the duties of
his normal occupation, as determined by the Committee. The Committee may, in its
discretion, require that the existence of the Disability be verified by a
physician approved by the Committee.

2. Achievement of performance objectives and amounts payable will be certified
by the Compensation Committee and payouts, if any, will be remitted following
the conclusion of a performance period.

3. Covered Employees” shall be those Grantees serving as President and Chief
Executive Officer (“CEO”), the first highest paid named executive officer other
than the CEO or the Chief Financial Officer (“CFO”), the second highest paid
named executive officer other than the CEO and CFO, and the third highest paid
named executive officer other than the CEO and CFO as of the last day of the
applicable performance period.

4. Achievement of performance objectives and amounts payable will be certified
by the Compensation Committee and payouts, if any, will be remitted following
the conclusion of a performance period (fiscal year).

5. Under the terms of the Nordson Corporation Salaried Employees Pension Plan.

6. Retirement no earlier than age 55 but before age 65, with no less than 5
years of service as defined under the Nordson Corporation Salaried Employees
Pension Plan.

 

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APPENDIX C:

PERFORMANCE OBJECTIVE FOR AWARDS TO COVERED EMPLOYEE

 

This Appendix C sets out Performance Objectives for Performance Share Unit
Awards and Cash-Based Awards to Covered Employees. Covered Employees are those
individuals serving on the last day of the applicable performance period (i.e.,
the last day of FY [•] in the case of Cash-Based Awards and the last day of FY
[•] in the case of Performance Share Unit Awards) as the Company’s President and
Chief Executive Officer (“CEO”), the first highest paid Named Executive Officer
other than the CEO or Chief Financial Officer (“CFO”), the second highest paid
Named Executive Officer other than the CEO and CFO, and the third highest paid
Named Executive Officer other than the CEO and CFO. Awards to Covered Employees
subject to this Appendix C are intended to qualify as “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the Code and shall
be administered and interpreted in a manner consistent with that intent.

The Performance Objectives for Awards to Grantees who are not Covered Employees
are set out in the Notice.

Performance Share Unit Awards (FY [•] -[•] Performance Share Program)

No Performance Share Units shall be payable to any Covered Employee unless a
share pool is funded based on the Company’s achievement of positive cumulative
cash flow from operating activities (“Cash Flow”), as disclosed in the Company’s
Form 10-K Report, if any, for the Performance Period as described below. The
aggregate share pool, if any, will equal the number of Shares determined by
dividing (a) 1.75% of the Company’s Cash Flow, if any, for the performance
period, by (b) the Fair Market Value per Share on the last day of the
performance period. If funded, 60% of the share pool will be allocated to the
CEO and 13.3% of the share pool will be allocated to each of the other Covered
Employees; provided, however, that in no event may the portion of the share pool
allocated to any Covered Employee exceed 750,000 Shares.

If the Company does not achieve positive cumulative operating cash flow for the
performance period, then no Performance Share Units shall be payable to any
Covered Employee for the performance period.

If the share pool is funded as described above, the Compensation Committee, in
its sole discretion, may decrease the payout of each Covered Employee’s
Performance Share Unit Award (without increasing any other Covered Employee’s
payout) based on its assessment of the Company’s performance, the Covered
Employee’s individual performance, or any other factors it considers relevant,
including, without limitation, the Company’s achievement of specified levels of
[•] and [•] over the performance period (FY [•] through FY [•]) as set out in
the matrix below, with one-half of each Covered Employee’s target number of
Performance Share Units allocated to each of those two performance objectives.
Further, the Compensation Committee, in its sole discretion, may modify the
performance objectives set out in the matrix below, or the related threshold,
target and maximum achievement levels, or the actual payout levels, in whole or
in part, as the Committee deems appropriate and equitable to reflect a change in
the business, operations, corporate structure or capital structure of the
Company or its affiliates, the manner in which it conducts its business, or
other events or circumstances.

 

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APPENDIX C:

PERFORMANCE OBJECTIVE FOR AWARDS TO COVERED EMPLOYEE

 

FY [•] -[•] Performance Share Program

[•]

  

[•]

Threshold

(50%

payout)

  

Target

(100%

payout)

  

Maximum

(200%
payout)

  

Threshold
(50%
payout)

(millions)

  

Target

(100%

payout)

(millions)

  

Maximum

(200%

payout)

(millions)

[•]

   [•]    [•]    [•]    [•]    [•]

 

1  Proposed and subject to adjustment upon confirmation of FY [•] financial
results.

* Straight line interpolation applies for performance between designated levels.

Cash-Based Awards (FY [•] Annual Cash Incentive)

No Cash-Based Award shall be payable to any Covered Employee for FY [•] unless a
bonus pool is funded based on the Company’s achievement of positive cash flow
from operating activities (“Cash Flow”), as disclosed in the Company’s Form 10-K
Report, if any for FY [•], as described below. The aggregate bonus pool, if any,
will equal 1.5% of the Company’s Cash Flow, if any, for FY [•]. If funded, 55%
of the bonus pool will be allocated to the CEO and 15% of the bonus pool will be
allocated to each of the other Covered Employees; provided, however, that in no
event may the portion of the bonus pool allocated to any Covered Employee exceed
$5,000,000. The lesser of $5,000,000 or the portion of the bonus pool allocated
to a Covered Employee shall be the Covered Employee’s “Maximum Bonus.” If the
Company does not achieve positive Cash Flow for FY [•], then no Cash-Based Award
shall be payable to any Covered Employee for FY [•].

If the bonus pool is funded as described above, the Compensation Committee, in
its sole discretion, may decrease the payout of each Covered Employee’s Award
(without increasing any other Covered Employee’s payout) based on its assessment
of the Company’s performance, the Covered Employee’s individual performance, or
any other factors it considers relevant, including, without limitation, the
Company’s achievement of specified levels of [•] and [•] as set out in the
matrix below, with one-half of each Covered Employee’s target Award opportunity
allocated to each of those two performance objectives; provided that payout of a
Covered Employee’s Cash-Based Award is subject to a reduction or increase of the
amount determined in accordance with the matrix below, based upon the
Compensation Committee’s discretionary assessment of each Covered Employee’s
individual performance. The Compensation

 

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APPENDIX C:

PERFORMANCE OBJECTIVE FOR AWARDS TO COVERED EMPLOYEE

 

Committee, in its sole discretion, may modify the performance objectives set out
in the matrix below, or the related threshold, target and maximum achievement
levels, or the actual payout levels, in whole or in part, as the Committee deems
appropriate and equitable to reflect a change in the business, operations,
corporate structure or capital structure of the Company or its affiliates, the
manner in which it conducts its business, or other events or circumstances.

 

FY [•] Annual Cash Incentive

[•]

  

[•]

Threshold

(50%

payout)

  

Target

(100%

payout)

  

Maximum

(200%

payout)

  

Threshold

(50%
payout)

  

Target

(100%

payout)

  

Maximum

(200%

payout)

[•]

   [•]    [•]    [•]    [•]    [•]

 

1  Proposed and subject to adjustment upon confirmation of FY [•] financial
results.

* Straight line interpolation applies for performance between designated levels.

 

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APPENDIX D:

NORDSON CORPORATION CLAWBACK POLICY

This Clawback Policy is applicable to Nordson Corporation (the “Company”)
executive officers who are subject to Section 16 of the Securities Exchange Act
of 1934 (“Executive Officers”). The Company’s Board of Directors, upon the
Compensation Committee’s recommendation, may, to the extent permitted by law and
to the extent it determines that it is in the Company’s best interests to do so,
take action in accordance with the following:

 

  A. Material Restatement:

In the event of a material restatement of the consolidated financial statements
of the Company, other than any restatement required pursuant to a change in
applicable accounting rules, the Company may recover from culpable and
non-culpable Executive Officers any compensation (whether in cash or property)
paid to, or realized by, an Executive Officer that would not have been paid or
realized had the consolidated financial statements that are the subject of such
restatement been correctly stated. Determination of culpability and materiality
will be at the discretion of the Compensation Committee. Recovery hereunder is
limited to amounts paid or realized by an Executive Officer during the
three-year period preceding the date that the Company is required to prepare a
restatement.

 

  B. Other Conduct:

In the event the Compensation Committee determines that an Executive Officer has
engaged in (i) conduct that violates the Company’s Code of Ethics and Business
Conduct, or (ii) willful misconduct or fraud that causes harm to the Company,
the Company’s Board of Directors, upon the Compensation Committee’s
recommendation, may, to the extent permitted by law and to the extent it
determines that it is in the Company’s best interests to do so, require
reimbursement or payment by the Executive Officer to the Company of an amount
determined by the Board of Directors to be attributable to such conduct
described in (i) and (ii) above.

Collectively, conduct described in A and B above shall be considered
“Detrimental Conduct.” Compensation subject to this Policy includes equity-based
compensation and performance-based compensation.

In determining whether to recover compensation paid or realized, the Board in
its discretion may take into account such considerations as it deems
appropriate, including whether the assertion of a claim may violate applicable
law or prejudice the interest of the Company in any related proceeding or
investigation and whether penalties or punishments have been imposed by third
parties, such as law enforcement agencies, regulators or other authorities.

The Board may take action only after recommendation to do so by the Compensation
Committee. However, the Board has sole and absolute discretion not to take
action and its determination not to take action in any particular instance shall
not in any way limit the Company’s ability to terminate participation of an
Executive Officer in a compensation plan or program, or terminate an Executive
Officer’s employment.

 

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APPENDIX D:

NORDSON CORPORATION CLAWBACK POLICY

 

If any provision of this Clawback Policy is determined to be unenforceable or
invalid under any applicable law, such provision will be applied to the maximum
extent permitted by applicable law, and shall automatically be deemed amended in
a manner consistent with its objectives to the extent necessary to conform to
any limitations required under applicable law.

Any action taken by the Company under this Clawback Policy is without prejudice
to any other action the Company may choose to take upon determination that an
Executive Officer has engaged in Detrimental Conduct or to all other remedies
available to the Company.

The Company reserves the right to amend this policy in the future at any time
including after final clawback rules are adopted by the Securities and Exchange
Commission pursuant to the Dodd-Frank Act.

 

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APPENDIX E:

NORDSON CORPORATION

2012 STOCK INCENTIVE AND AWARD PLAN

1. Establishment, Purpose, Duration.

a. Establishment. Nordson Corporation (the “Company”), hereby establishes an
equity compensation plan to be known as the Nordson Corporation 2012 Stock
Incentive and Award Plan (the “Plan”). The Plan is effective as of December 28,
2012 (the “Effective Date”), subject to the approval of the Plan by the
shareholders of the Company (the date of such shareholder approval being the
“Approval Date”). Definitions of capitalized terms used in the Plan are
contained in Section 0 of the Plan.

b. Purpose. The purpose of the Plan is to attract and retain Directors, officers
and other key employees of the Company and its Subsidiaries and to provide to
such persons incentives and rewards for superior performance.

c. Duration. No Award may be granted under the Plan after the day immediately
preceding the tenth (10th) anniversary of the Effective Date, or such earlier
date as the Board shall determine. The Plan will remain in effect with respect
to outstanding Awards until no Awards remain outstanding.

d. Prior Plan. If the Company’s shareholders approve the Plan, the Nordson
Corporation Amended and Restated 2004 Long-Term Performance Plan (the “Prior
Plan”) will terminate in its entirety effective on the Approval Date; provided
that all outstanding awards under the Prior Plan as of the Approval Date shall
remain outstanding and shall be administered and settled in accordance with the
provisions of the Prior Plan.

 

  2. Definitions. As used in the Plan, the following definitions shall apply.

“Applicable Laws” means the applicable requirements relating to the
administration of equity-based compensation plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, the rules of any stock
exchange or quotation system on which the Shares are listed or quoted and the
applicable laws of any other country or jurisdiction where Awards are granted
under the Plan.

“Approval Date” has the meaning given such term in Section 0(a).

“Award” means a Nonqualified Stock Option, Incentive Stock Option, Stock
Appreciation Right, Restricted Shares Award, Restricted Share Unit, Other
Share-Based Award or Cash-Based Award granted pursuant to the terms and
conditions of the Plan.

“Award Agreement” means either: (a) an agreement, either in written or
electronic format, entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award granted under the Plan; or (b) a
statement, either in written or electronic format, issued by the Company to a
Participant describing the terms and provisions of such Award, which need not be
signed by the Participant.

“Board” means the Board of Directors of the Company.

“Cash-Based Award” shall mean a cash Award granted pursuant to Section 11 of the
Plan.

“Cause” as a reason for a Participant’s termination of employment shall have the
meaning assigned such term in the employment agreement (or, if operative, the
Change-in-Control Retention Agreement), if any, between the Participant and the
Company or Subsidiary. If the Participant is not a party to an employment
agreement (or Change-in-Control Retention Agreement) with the Company or a
Subsidiary in which such term is defined, then unless otherwise defined in the
applicable Award Agreement, “Cause” shall mean (i) the commission of an act of
fraud, embezzlement, theft, or other similar criminal act constituting a felony
and involving the business of the Company or its Subsidiaries, or (ii) the
continued failure of the Participant to perform substantially the Participant’s
duties with the Company or any of its Subsidiaries (other than any such failure
resulting from any medically determined physical or mental impairment) that is
not cured by the Participant within 30 days after a written demand for
substantial performance is delivered to the Participant by the Company which
specifically identifies the manner in which the Company believes that the
Participant has not substantially performed the Participant’s duties.

“Change in Control” means the occurrence of one of the following events: (a) a
report is filed with the SEC on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form, or report), each as promulgated pursuant to the Exchange Act,
disclosing that any “person” (as the term “person” is used in

 

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APPENDIX E:

NORDSON CORPORATION

2012 STOCK INCENTIVE AND AWARD PLAN

 

Section 13(d) or Section 14(d)(2) of the Exchange Act) is or has become a
beneficial owner, directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Company’s then
outstanding securities; (b) the Company is merged or consolidated with another
corporation and, as a result thereof, securities representing less than 50% of
the combined voting power of the surviving or resulting corporation’s securities
(or of the securities of a parent corporation in case of a merger in which the
surviving or resulting corporation becomes a wholly-owned subsidiary of the
parent corporation) are owned in the aggregate by holders of the Company’s
securities immediately before such merger or consolidation; (c) all or
substantially all of the assets of the Company are sold in a single transaction
or a series of related transactions to a single purchaser or a group of
affiliated purchasers; or (d) during any period of 24 consecutive months,
individuals who were Directors at the beginning of the period cease to
constitute at least a majority of the Board unless the election, or nomination
for election by the Company’s shareholders, of more than one half of any new
Directors was approved by a vote of at least two-thirds of the Directors then
still in office who were Directors at the beginning of the 24 month period.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board or such other
committee or subcommittee of the Board as may be duly appointed to administer
the Plan and having such powers in each instance as shall be specified by the
Board. To the extent required by Applicable Laws, the Committee shall consist of
two or more members of the Board, each of whom is a “non-employee director”
within the meaning of Rule 16b-3 promulgated under the Exchange Act, an “outside
director” within the meaning of regulations promulgated under Section 162(m) of
the Code, and an “independent director” within the meaning of applicable rules
of any securities exchange upon which Shares are listed.

“Company” has the meaning given such term in Section 1(a) and any successor
thereto.

“Date of Grant” means the date as of which an Award is determined to be
effective and designated in a resolution by the Committee and is granted
pursuant to the Plan. The Date of Grant shall not be earlier than the date of
the resolution and action therein by the Committee. In no event shall the Date
of Grant be earlier than the Effective Date.

“Director” means any individual who is a member of the Board who is not an
Employee.

“Effective Date” has the meaning given such term in Section 0(a).

“Employee” means any employee of the Company or a Subsidiary; provided, however,
that for purposes of determining whether any person may be a Participant for
purposes of any grant of Incentive Stock Options, the term “Employee” has the
meaning given to such term in Section 3401(c) of the Code, as interpreted by the
regulations thereunder and Applicable Law.

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and
regulations thereunder, as such law, rules and regulations may be amended from
time to time.

“Fair Market Value” means the value of one Share on any relevant date,
determined under the following rules: (a) the closing sale price per Share on
that date as reported on the principal exchange on which Shares are then
trading, if any, or if applicable the NASDAQ Global Select Market, or if there
are no sales on that date, on the next preceding trading day during which a sale
occurred; (b) if the Shares are not reported on a principal exchange or national
market system, the average of the closing bid and asked prices last quoted on
that date by an established quotation service for over-the-counter securities;
or (c) if neither (a) nor (b) applies, (i) with respect to Stock Options, Stock
Appreciation Rights and any Award of stock rights that is subject to
Section 409A of the Code, the value as determined by the Committee through the
reasonable application of a reasonable valuation method, taking into account all
information material to the value of the Company, within the meaning of
Section 409A of the Code, and (ii) with respect to all other Awards, the fair
market value as determined by the Committee in good faith.

“Full Value Award” means an Award that is settled by the issuance of Shares,
other than a Stock Option or a Stock Appreciation Right.

“Good Reason” as a reason for a Participant’s termination of employment shall
have the meaning assigned such term in the Change-in-Control Retention
Agreement, if any, between the Participant and the Company or Subsidiary.

 

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APPENDIX E:

NORDSON CORPORATION

2012 STOCK INCENTIVE AND AWARD PLAN

 

“Incentive Stock Option” or “ISO” means a Stock Option that is designated as an
Incentive Stock Option and that is intended to meet the requirements of
Section 422 of the Code.

“Nonqualified Stock Option” means a Stock Option that is not intended to meet
the requirements of Section 422 of the Code or otherwise does not meet such
requirements.

“Other Share-Based Award” means an equity-based or equity-related Award not
otherwise described by the terms of the Plan, granted in accordance with the
terms and conditions set forth in Section 10.

“Participant” means any eligible individual as set forth in Section 5 who holds
one or more outstanding Awards.

“Performance-Based Exception” means the performance-based exception from the tax
deductibility limitations of Section 162(m) of the Code.

“Performance Objectives” means the performance objective or objectives
established by the Committee pursuant to the Plan. Any Performance Objectives
may relate to the performance of the Company or one or more of its Subsidiaries,
divisions, departments, units, functions, partnerships, joint ventures or
minority investments, product lines or products, or the performance of the
individual Participant, and may include, without limitation, the Performance
Objectives set forth in Section 13(b). The Performance Objectives may be made
relative to the performance of a group of comparable companies, or published or
special index that the Committee, in its sole discretion, deems appropriate, or
the Company may select Performance Objectives as compared to various stock
market indices. Performance Objectives may be stated as a combination of the
listed factors.

“Plan” means this Nordson Corporation 2012 Stock and Incentive Award Plan, as
amended from time to time.

“Potential Change in Control” means a report is filed with the SEC on Schedule
13D or Schedule 14D-1 (or any successor schedule, form, or report), each as
promulgated pursuant to the Exchange Act, disclosing that any “person” (as the
term “person” is used in Section 13(d) or Section 14(d)(2) of the Exchange Act)
is or has become a beneficial owner, directly or indirectly, of securities of
the Company representing at least 25% but less than 35% of the combined voting
power of the Company’s then outstanding securities.

“Potential Change in Control Protection Period” means the period commencing on a
Potential Change in Control and ending on the earlier of (i) a Change in
Control, or (ii) the second anniversary of the Potential Change in Control.

“Prior Plan” has the meaning given such term in Section 0(d).

“Qualified Termination” means any termination of a Participant’s employment
during the Potential Change in Control Protection Period: (i) by the Company,
any of its Subsidiaries or the resulting entity without Cause, or (ii) solely
with respect to a Participant who is a party to a Change-in-Control Retention
Agreement with the Company or a Subsidiary immediately prior to a Potential
Change in Control, by the Participant for Good Reason.

“Restricted Shares” means Shares granted or sold pursuant to Section 0 as to
which neither the substantial risk of forfeiture nor the prohibition on
transfers referred to in such Section 0 has expired.

“Restricted Share Unit” means a grant or sale of the right to receive Shares or
cash at the end of a specified restricted period made pursuant to Section 0.

“SEC” means the United States Securities and Exchange Commission.

“Share” means a share of common stock of the Company, without par value, or any
security into which such Share may be changed by reason of any transaction or
event of the type referred to in Section 15.

“Stock Appreciation Right” means a right granted pursuant to Section 0.

“Stock Option” means a right to purchase a Share granted to a Participant under
the Plan in accordance with the terms and conditions set forth in Section 0.
Stock Options may be either Incentive Stock Options or Nonqualified Stock
Options.

 

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APPENDIX E:

NORDSON CORPORATION

2012 STOCK INCENTIVE AND AWARD PLAN

 

“Subsidiary” means: (a) with respect to an Incentive Stock Option, a “subsidiary
corporation” as defined under Section 424(f) of the Code; and (b) for all other
purposes under the Plan, any corporation or other entity in which the Company
owns, directly or indirectly, a proprietary interest of more than fifty (50%) by
reason of stock ownership or otherwise.

“Ten Percent Shareholder” shall mean any Participant who owns more than 10% of
the combined voting power of all classes of stock of the Company, within the
meaning of Section 422 of the Code.

3. Shares Available Under the Plan.

a. Shares Available for Awards. The maximum number of Shares that may be issued
or delivered pursuant to Awards under the Plan shall be 2,900,000, including the
number of Shares that, on the Approval Date, are available to be granted under
the Prior Plan but which are not then subject to outstanding awards under the
Prior Plan, all of which may be granted with respect to Incentive Stock Options.
Shares issued or delivered pursuant to an Award may be authorized but unissued
Shares, treasury Shares, including Shares purchased in the open market, or a
combination of the foregoing. The aggregate number of Shares available for
issuance or delivery under the Plan shall be subject to adjustment as provided
in Section 15.

b. Share Counting. The following Shares shall not count against the Share limit
in Section 3(a): (i) Shares covered by an Award that expires or is forfeited,
canceled, surrendered, or otherwise terminated without the issuance of such
Shares; (ii) Shares covered by an Award that is settled only in cash;
(iii) Shares tendered in payment of the exercise price of a Stock Option;
(iv) Shares withheld by the Company or any Subsidiary to satisfy a tax
withholding obligation; and (v) Shares granted through the assumption of, or in
substitution for, outstanding awards granted by a company to individuals who
become Employees or Directors as the result of a merger, consolidation,
acquisition or other corporate transaction involving such company and the
Company or any of its Affiliates (except as may be required by reason of the
rules and regulations of any stock exchange or other trading market on which the
Shares are listed). With respect to any Stock Appreciation Right that is settled
in Shares, only the Shares used to settle the Stock Appreciation Right upon
exercise shall count against the number of Shares available for Awards under the
Plan. In addition, Shares subject to outstanding awards under the Prior Plan as
of the Approval Date that on or after the Approval Date are forfeited, canceled,
surrendered or otherwise terminated without the issuance of such Shares shall be
available for issuance or delivery under this Plan. Notwithstanding anything
contained herein to the contrary, Shares that are repurchased by the Company
with Stock Option proceeds shall not be added back to the number of Shares
reserved in Section 3(a). This Section 3(b) shall apply to the number of Shares
reserved and available for Incentive Stock Options only to the extent consistent
with applicable Treasury regulations relating to Incentive Stock Options under
the Code.

c. Per Participant Share Limits. Subject to adjustment as provided in Section 15
of the Plan, the following limits shall apply with respect to Awards that are
intended to qualify for the Performance-Based Exception: (i) the maximum
aggregate number of Shares that may be subject to Stock Options or Stock
Appreciation Rights granted in any calendar year to any one Participant shall be
750,000 Shares; (ii) the maximum aggregate number of Restricted Shares granted
in any calendar year to any one Participant shall be 250,000 Shares; (iii) the
maximum aggregate number of shares that may be issued or delivered pursuant to
Restricted Share Units or Other Share-Based Awards granted in any calendar year
to any one Participant shall be 250,000 Shares, provided that if the Restricted
Share Units or Other Share-Based Awards are subject to a performance period of
more than one year, the maximum shall equal the product of 250,000 Shares and
the full number of years in the performance period; and (iv) the maximum
aggregate compensation that may be paid under a Cash-Based Award granted in any
calendar year to any one Participant shall be $5,000,000 or a number of Shares
having an aggregate Fair Market Value not in excess of such amount, provided
that if the Cash-Based Award is subject to a performance period of more than one
year, the maximum shall equal the product of $5,000,000 and the full number of
years in the performance period.

 

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4. Administration of the Plan.

a. In General. The Plan shall be administered by the Committee. Except as
otherwise provided by the Board, the Committee shall have full and final
authority in its discretion to take all actions determined by the Committee to
be necessary in the administration of the Plan, including, without limitation,
discretion to: select Award recipients; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; grant waivers of terms, conditions, restrictions and limitations
applicable to any Award, or accelerate the vesting or exercisability of any
Award, in a manner consistent with the Plan; construe and interpret the Plan and
any Award Agreement or other agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations for the Plan’s
administration; and take such other action, not inconsistent with the terms of
the Plan, as the Committee deems appropriate. To the extent permitted by
Applicable Laws, the Committee may, in its discretion, delegate to one or more
Directors or Employees any of the Committee’s authority under the Plan. The acts
of any such delegates shall be treated hereunder as acts of the Committee with
respect to any matters so delegated.

b. Determinations. The Committee shall have no obligation to treat Participants
or eligible Participants uniformly, and the Committee may make determinations
under the Plan selectively among Participants who receive, or Employees or
Directors who are eligible to receive, Awards (whether or not such Participants
or eligible Employees or Directors are similarly situated). All determinations
and decisions made by the Committee pursuant to the provisions of the Plan and
all related orders and resolutions of the Committee shall be final, conclusive
and binding on all persons, including the Company, its Subsidiaries, its
shareholders, Directors, Employees, Participants and their estates and
beneficiaries.

c. Authority of the Board. The Board may reserve to itself any or all of the
authority or responsibility of the Committee under the Plan or may act as the
administrator of the Plan for any and all purposes. To the extent the Board has
reserved any such authority or responsibility or during any time that the Board
is acting as administrator of the Plan, it shall have all the powers of the
Committee hereunder, and any reference herein to the Committee (other than in
this Section 4(c)) shall include the Board. To the extent that any action of the
Board under the Plan conflicts with any action taken by the Committee, the
action of the Board shall control.

5. Eligibility and Participation. Each Employee and Director is eligible to
participate in the Plan. Subject to the provisions of the Plan, the Committee
may, from time to time, select from all eligible Employees and Directors those
to whom Awards shall be granted and shall determine, in its sole discretion, the
nature of any and all terms permissible by Applicable Law and the amount of each
Award.

6. Stock Options. Subject to the terms and conditions of the Plan, Stock Options
may be granted to Participants in such number, and upon such terms and
conditions, as shall be determined by the Committee in its sole discretion.

a. Award Agreement. Each Stock Option shall be evidenced by an Award Agreement
that shall specify the exercise price, the term of the Stock Option, the number
of Shares covered by the Stock Option, the conditions upon which the Stock
Option shall become vested and exercisable and such other terms and conditions
as the Committee shall determine and which are not inconsistent with the terms
and conditions of the Plan. The Award Agreement also shall specify whether the
Stock Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option.

b. Exercise Price. The exercise price per Share of a Stock Option shall be
determined by the Committee at the time the Stock Option is granted and shall be
specified in the related Award Agreement; provided, however, that in no event
shall the exercise price per Share of any Stock Option be less than one hundred
percent (100%) of the Fair Market Value of a Share on the Date of Grant.

c. Term. The term of a Stock Option shall be determined by the Committee and set
forth in the related Award Agreement; provided, however, that in no event shall
the term of any Stock Option exceed ten (10) years from its Date of Grant.

d. Exercisability. Stock Options shall become vested and exercisable at such
times and upon such terms and conditions as shall be determined by the Committee
and set forth in the related Award Agreement. Such terms and conditions may
include, without limitation, the satisfaction of (a) performance goals based on
one or more Performance Objectives, and/or (b) time-based vesting requirements.

 

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e. Exercise of Stock Options. Except as otherwise provided in the Plan or in a
related Award Agreement, a Stock Option may be exercised for all or any portion
of the Shares for which it is then exercisable. A Stock Option shall be
exercised by the delivery of a notice of exercise to the Company or its designee
in a form specified by the Company which sets forth the number of Shares with
respect to which the Stock Option is to be exercised and full payment of the
exercise price for such Shares. The exercise price of a Stock Option may be
paid, in the discretion of the Committee and as set forth in the applicable
Award Agreement: (i) in cash or its equivalent; (ii) by tendering (either by
actual delivery or attestation) previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the aggregate exercise price;
(iii) by a cashless exercise (including by withholding Shares deliverable upon
exercise and through a broker-assisted arrangement to the extent permitted by
Applicable Laws); (iv) by a combination of the methods described in clauses (i),
(ii) and/or (iii); or (v) through any other method approved by the Committee in
its sole discretion. As soon as practicable after receipt of the notification of
exercise and full payment of the exercise price, the Company shall cause the
appropriate number of Shares to be issued to the Participant.

f. Special Rules Applicable to Incentive Stock Options. Notwithstanding any
other provision in the Plan to the contrary:

(i) Incentive Stock Options may be granted only to Employees of the Company and
its Subsidiaries. The terms and conditions of Incentive Stock Options shall be
subject to and comply with the requirements of Section 422 of the Code.

(ii) To the extent that the aggregate Fair Market Value of the Shares
(determined as of the Date of Grant) with respect to which an Incentive Stock
Option is exercisable for the first time by any Participant during any calendar
year (under all plans of the Company and its Subsidiaries) is greater than
$100,000 (or such other amount specified in Section 422 of the Code), as
calculated under Section 422 of the Code, then the Stock Option shall be treated
as a Nonqualified Stock Option.

(iii) No Incentive Stock Option shall be granted to any Participant who, on the
Date of Grant, is a Ten Percent Shareholder, unless (x) the exercise price per
Share of such Incentive Stock Option is at least one hundred and ten percent
(110%) of the Fair Market Value of a Share on the Date of Grant, and (y) the
term of such Incentive Stock Option shall not exceed five (5) years from the
Date of Grant.

7. Stock Appreciation Rights. Subject to the terms and conditions of the Plan,
Stock Appreciation Rights may be granted to Participants in such number, and
upon such terms and conditions, as shall be determined by the Committee in its
sole discretion.

a. Award Agreement. Each Stock Appreciation Right shall be evidenced by an Award
Agreement that shall specify the exercise price, the term of the Stock
Appreciation Right, the number of Shares covered by the Stock Appreciation
Right, the conditions upon which the Stock Appreciation Right shall become
vested and exercisable and such other terms and conditions as the Committee
shall determine and which are not inconsistent with the terms and conditions of
the Plan.

b. Exercise Price. The exercise price per Share of a Stock Appreciation Right
shall be determined by the Committee at the time the Stock Appreciation Right is
granted and shall be specified in the related Award Agreement; provided,
however, that in no event shall the exercise price per Share of any Stock
Appreciation Right be less than one hundred percent (100%) of the Fair Market
Value of a Share on the Date of Grant.

c. Term. The term of a Stock Appreciation Right shall be determined by the
Committee and set forth in the related Award Agreement; provided, however, that
in no event shall the term of any Stock Appreciation Right exceed ten (10) years
from its Date of Grant.

d. Exercisability of Stock Appreciation Rights. A Stock Appreciation Right shall
become vested and exercisable at such times and upon such terms and conditions
as may be determined by the Committee and set forth in the related Award
Agreement. Such terms and conditions may include, without limitation, the
satisfaction of (i) performance goals based on one or more Performance
Objectives, and/or (ii) time-based vesting requirements.

 

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e. Exercise of Stock Appreciation Rights. Except as otherwise provided in the
Plan or in a related Award Agreement, a Stock Appreciation Right may be
exercised for all or any portion of the Shares for which it is then exercisable.
A Stock Appreciation Right shall be exercised by the delivery of a notice of
exercise to the Company or its designee in a form specified by the Company which
sets forth the number of Shares with respect to which the Stock Appreciation
Right is to be exercised. Upon exercise, a Stock Appreciation Right shall
entitle a Participant to an amount equal to (a) the excess of (i) the Fair
Market Value of a Share on the exercise date over (ii) the exercise price per
Share, multiplied by (b) the number of Shares with respect to which the Stock
Appreciation Right is exercised. A Stock Appreciation Right may be settled in
whole Shares, cash or a combination thereof, as specified by the Committee in
the related Award Agreement.

8. Restricted Shares. Subject to the terms and conditions of the Plan,
Restricted Shares may be granted or sold to Participants in such number, and
upon such terms and conditions, as shall be determined by the Committee in its
sole discretion.

a. Award Agreement. Each Restricted Shares Award shall be evidenced by an Award
Agreement that shall specify the number of Restricted Shares, the restricted
period(s) applicable to the Restricted Shares, the conditions upon which the
restrictions on the Restricted Shares will lapse and such other terms and
conditions as the Committee shall determine and which are not inconsistent with
the terms and conditions of the Plan.

b. Terms, Conditions and Restrictions. The Committee shall impose such other
terms, conditions and/or restrictions on any Restricted Shares as it may deem
advisable, including, without limitation, a requirement that the Participant pay
a purchase price for each Restricted Share, restrictions based on the
achievement of specific Performance Objectives, time-based restrictions or
holding requirements or sale restrictions placed on the Shares by the Company
upon vesting of such Restricted Shares. Unless otherwise provided in the related
Award Agreement or required by applicable law, the restrictions imposed on
Restricted Shares shall lapse upon the expiration or termination of the
applicable restricted period and the satisfaction of any other applicable terms
and conditions. Subject to Sections 18 and 20 of the Plan, or as otherwise
provided in the related Award Agreement in connection with a Change in Control
or a Participant’s death, disability, retirement, involuntary termination of
employment or service without Cause or termination of employment or service for
good reason, (i) no condition on vesting of Restricted Shares that is based upon
the achievement of Performance Objectives shall be based on performance over a
period of less than one year, and (ii) no condition on vesting of Restricted
Shares that is based solely upon continued employment or service shall provide
for vesting in full of the Restricted Shares more quickly than three (3) years
from the Date of Grant of the Award (which vesting period may lapse on a
pro-rated, graded, or cliff basis as specified in the Award Agreement);
provided, however, that up to five percent (5%) of the Shares available for
grant as Restricted Shares (together with all other Shares available for grant
as Full Value Awards) may be granted with a vesting period of at least one
(1) year, regardless of whether vesting is conditioned upon the achievement of
Performance Objectives; provided further that these minimum vesting provisions
shall not apply to any grant of Restricted Shares to Directors.

c. Custody of Certificates. To the extent deemed appropriate by the Committee,
the Company may retain the certificates, if any, representing Restricted Shares
in the Company’s possession until such time as all terms, conditions and/or
restrictions applicable to such Shares have been satisfied or lapse.

d. Rights Associated with Restricted Shares during Restricted Period. During any
restricted period applicable to Restricted Shares: (i) the Restricted Shares may
not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated; (ii) unless otherwise provided in the related Award Agreement, the
Participant shall be entitled to exercise full voting rights associated with
such Restricted Shares; and (iii) the Participant shall be entitled to all
dividends and other distributions paid with respect to such Restricted Shares
during the restricted period. The Award Agreement may require that receipt of
any dividends or other distributions with respect to the Restricted Shares shall
be subject to the same terms and conditions as the Restricted Shares with
respect to which they are paid. Notwithstanding the preceding sentence,
dividends or other distributions with respect to Restricted Shares that vest
based on the achievement of Performance Objectives shall be accumulated until
such Award is earned, and the dividends or other distributions shall not be paid
if the Performance Objectives are not satisfied.

 

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9. Restricted Share Units. Subject to the terms and conditions of the Plan,
Restricted Share Units may be granted or sold to Participants in such number,
and upon such terms and conditions, as shall be determined by the Committee in
its sole discretion.

a. Award Agreement. Each Restricted Share Unit Award shall be evidenced by an
Award Agreement that shall specify the number of units, the restricted period(s)
applicable to the Restricted Share Units, the conditions upon which the
restrictions on the Restricted Share Units will lapse, the time and method of
payment of the Restricted Share Units, and such other terms and conditions as
the Committee shall determine and which are not inconsistent with the terms and
conditions of the Plan.

b. Terms, Conditions and Restrictions. The Committee shall impose such other
terms, conditions and/or restrictions on any Restricted Share Units as it may
deem advisable, including, without limitation, a requirement that the
Participant pay a purchase price for each Restricted Share Unit, restrictions
based on the achievement of specific Performance Objectives and/or time-based
restrictions or holding requirements. Subject to Sections 18 and 20 of the Plan,
or as otherwise provided in the related Award Agreement in connection with a
Change in Control or a Participant’s death, disability, retirement, involuntary
termination of employment or service without Cause or termination of employment
or service for good reason, (i) no condition on vesting of Restricted Share
Units that is based upon the achievement of Performance Objectives shall be
based on performance over a period of less than one year, and (ii) no condition
on vesting of Restricted Share Units that is based solely upon continued
employment or service shall provide for vesting in full of the Restricted Share
Units more quickly than three (3) years from the Date of Grant of the Award
(which vesting period may lapse on a pro-rated, graded, or cliff basis as
specified in the Award Agreement); provided, however, that up to five percent
(5%) of the Shares available for grant as Restricted Share Units (together with
all other Shares available for grant as Full Value Awards) may be granted with a
vesting period of at least one (1) year, regardless of whether vesting is
conditioned upon the achievement of Performance Objectives; provided further
that these minimum vesting provisions shall not apply to any grant of Restricted
Share Units to Directors.

c. Form of Settlement. Restricted Share Units may be settled in whole Shares,
cash or a combination thereof, as specified by the Committee in the related
Award Agreement.

d. Dividend Equivalents. Restricted Share Units may provide the Participant with
dividend equivalents, on either a current or deferred or contingent basis, and
either in cash or in additional Shares, as determined by the Committee in its
sole discretion and set forth in the related Award Agreement; provided that
dividend equivalents with respect to Restricted Share Units that vest based on
the achievement of Performance Objectives shall be accumulated until such Award
is earned, and the dividend equivalents shall not be paid if the Performance
Objectives are not satisfied.

10. Other Share-Based Awards. Subject to the terms and conditions of the Plan,
Other Share-Based Awards may be granted to Participants in such number, and upon
such terms and conditions, as shall be determined by the Committee in its sole
discretion. Other Share-Based Awards are Awards that are valued in whole or in
part by reference to, or otherwise based on the Fair Market Value of, Shares,
and shall be in such form as the Committee shall determine, including without
limitation, time-based or performance-based units that are settled in Shares
and/or cash and stock equivalent units.

a. Award Agreement. Each Other Share-Based Award shall be evidenced by an Award
Agreement that shall specify the terms and conditions upon which the Other
Share-Based Award shall become vested, if applicable, the time and method of
settlement, the form of settlement and such other terms and conditions as the
Committee shall determine and which are not inconsistent with the terms and
conditions of the Plan. Subject to Sections 18 and 20 of the Plan, or as
otherwise provided in the related Award Agreement in connection with a Change in
Control or a Participant’s death, disability, retirement, involuntary
termination of employment or service without Cause or termination of employment
or service for good reason, (i) no condition on vesting of an Other Share-Based
Award that is based solely upon the achievement of Performance Objectives shall
be based on performance over a period of less than one year, and (ii) no
condition on vesting of an Other Share-Based Award that is based upon continued
employment or service shall provide for vesting in full of the Other Share-Based
Award more quickly than three (3) years from the Date of Grant of the Award
(which vesting period may lapse on a pro-rated, graded, or cliff basis as
specified in the Award Agreement); provided, however, that up to five percent

 

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(5%) of the Shares available for grant as Other Share-Based Awards (together
with all other Shares available for grant as Full Value Awards) may be granted
with a vesting period of at least one (1) year, regardless of whether vesting is
conditioned upon the achievement of Performance Objectives; provided further
that these minimum vesting provisions shall not apply to any grant of Other
Share-Based Awards to Directors.

b. Form of Settlement. An Other Share-Based Award may be settled in whole
Shares, cash or a combination thereof, as specified by the Committee in the
related Award Agreement.

c. Dividend Equivalents. Other Share-Based Awards may provide the Participant
with dividend equivalents, on either a current or deferred or contingent basis,
and either in cash or in additional Shares, as determined by the Committee in
its sole discretion and set forth in the related Award Agreement; provided that
dividend equivalents with respect to Other Share-Based Awards that vest based on
the achievement of Performance Objectives shall be accumulated until such Award
is earned, and the dividend equivalents shall not be paid if the Performance
Objectives are not satisfied.

11. Cash-Based Awards. Subject to the terms and conditions of the Plan,
Cash-Based Awards may be granted to Participants in such amounts and upon such
other terms and conditions as shall be determined by the Committee in its sole
discretion. Each Cash-Based Award shall be evidenced by an Award Agreement that
shall specify the payment amount or payment range, the time and method of
settlement and the other terms and conditions, as applicable, of such Award
which may include, without limitation, restrictions based on the achievement of
specific Performance Objectives.

12. Compliance with Section 409A. Awards granted under the 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 Award 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 Award Agreement (unless the Award Agreement
provides otherwise with specific reference to this Section): (i) an Award shall
not be granted, deferred, accelerated, extended, paid out, settled, substituted
or modified under the Plan in a manner that would result in the imposition of an
additional tax under Section 409A of the Code upon a Participant; and (ii) if an
Award is subject to Section 409A of the Code, and if the Participant holding the
award is a “specified employee” (as defined in Section 409A of the Code, with
such classification to be determined in accordance with the methodology
established by the Company), then, to the extent required to avoid the
imposition of an additional tax under Section 409A of the Code upon a
Participant, no distribution or payment of any amount shall be made before the
date that is six (6) months following the date of such Participant’s “separation
from service” (as defined in Section 409A of the Code) or, if earlier, the date
of the Participant’s death. 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. The
Company shall not be liable to any 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.

13. Compliance with Section 162(m).

a. In General. Notwithstanding anything in the Plan to the contrary, Awards may
be granted in a manner that is intended to qualify for the Performance-Based
Exception. As determined by the Committee in its sole discretion, the grant,
vesting, exercisability and/or settlement of any Restricted Shares, Restricted
Share Units Other Share-Based Awards and Cash-Based Awards intended to qualify
for the Performance-Based Exception shall be conditioned on the attainment of
one or more Performance Objectives during a performance period established by
the Committee and must satisfy the requirements of this Section 13.

b. Performance Objectives. If an Award is intended to qualify for the
Performance-Based Exception, then the Performance Objectives shall be based on
specified levels of or growth in one or more of the following criteria: return
on net assets, return on capital employed, economic value added, sales, revenue,
earnings per share, operating income, net income, earnings before interest and
taxes,

 

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return on equity, total shareholder return, market valuation, cash flow,
completion of acquisitions, product and market development, inventory
management, working capital management and customer satisfaction. The foregoing
business criteria may be clarified by reasonable definitions adopted from time
to time by the Committee, which may include or exclude any items as the
Committee may specify, including but not limited to: extraordinary, unusual or
non-recurring items; effects of accounting changes; effects of currency
fluctuations; effects of financing activities; effects relating to the
impairment of goodwill or other intangible assets; expenses for restructuring or
productivity initiatives; non-operating items; acquisition expenses; and effects
of acquisitions, divestitures or reorganizations.

c. Establishment of Performance Goals. With respect to Awards intended to
qualify for the Performance-Based Exception, the Committee shall establish:
(i) the applicable Performance Objectives and performance period, and (ii) the
formula for computing the payout. Such terms and conditions shall be established
in writing while the outcome of the applicable performance period is
substantially uncertain, but in no event later than the earlier of: (x) ninety
days after the beginning of the applicable performance period; or (y) the
expiration of twenty-five percent (25%) of the applicable performance period.

d. Certification of Performance. With respect to any Award intended to qualify
for the Performance-Based Exception, the Committee shall certify in writing
whether the applicable Performance Objectives and other material terms imposed
on such Award have been satisfied, and, if they have, ascertain the amount of
the payout or vesting of the Award. Notwithstanding any other provision of the
Plan, payment or vesting of any such Award shall not be made until the Committee
certifies in writing that the applicable Performance Objectives and any other
material terms of such Award were in fact satisfied in a manner conforming to
applicable regulations under Section 162(m) of the Code.

e. Negative Discretion. With respect to any Award intended to qualify for the
Performance-Based Exception, after the date that the Performance Objectives are
required to be established in writing pursuant to Section 13(c), the Committee
shall not have discretion to increase the amount of compensation that is payable
upon achievement of the designated Performance Objectives. However, the
Committee may, in its sole discretion, reduce the amount of compensation that is
payable upon achievement of the designated Performance Objectives.

14. Transferability. Except as otherwise determined by the Committee, no Award
or dividend equivalents paid with respect to any Award shall be transferable by
the Participant except by will or the laws of descent and distribution;
provided, that if so determined by the Committee, each Participant may, in a
manner established by the Board or the Committee, designate a beneficiary to
exercise the rights of the Participant with respect to any Award upon the death
of the Participant and to receive Shares or other property issued or delivered
under such Award. Except as otherwise determined by the Committee, Stock Options
and Stock Appreciation Rights will be exercisable during a Participant’s
lifetime only by the Participant or, in the event of the Participant’s legal
incapacity to do so, by the Participant’s guardian or legal representative
acting on behalf of the Participant in a fiduciary capacity under state law
and/or court supervision.

15. Adjustments. In the event of any equity restructuring (within the meaning of
Financial Accounting Standards Board Accounting Standards Codification Topic
718, Compensation – Stock Compensation), such as a stock dividend, stock split,
reverse stock split, spinoff, rights offering, or recapitalization through a
large, nonrecurring cash dividend, the Committee shall cause there to be an
equitable adjustment in the numbers of Shares specified in Section 3 of the Plan
and, with respect to outstanding Awards, in the number and kind of Shares
subject to outstanding Awards and the exercise price or other price of Shares
subject to outstanding Awards, in each case to prevent dilution or enlargement
of the rights of Participants. In the event of any other change in corporate
capitalization, or in the event of a merger, consolidation, liquidation, or
similar transaction, the Committee may, in its sole discretion, cause there to
be an equitable adjustment as described in the foregoing sentence, to prevent
dilution or enlargement of rights; provided, however, that, unless otherwise
determined by the Committee, the number of Shares subject to any Award shall
always be rounded down to a whole number. Notwithstanding the foregoing, the
Committee shall not make any adjustment pursuant to this Section 15 that would
(i) cause any Stock Option intended to qualify as an ISO to fail to so qualify,
(ii) cause an Award that is otherwise exempt from Section 409A of the Code to
become subject to Section 409A, or (iii) cause an Award that is subject

 

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to Section 409A of the Code to fail to satisfy the requirements of Section 409A.
The determination of the Committee as to the foregoing adjustments, if any,
shall be conclusive and binding on all Participants and any other persons
claiming under or through any Participant.

16. Fractional Shares. The Company shall not be required to issue or deliver any
fractional Shares pursuant to the Plan and, unless otherwise provided by the
Committee, fractional shares shall be settled in cash.

17. Withholding Taxes. To the extent required by Applicable Law, a Participant
shall be required to satisfy, in a manner satisfactory to the Company or
Subsidiary, as applicable, any withholding tax obligations that arise by reason
of a Stock Option or Stock Appreciation Right exercise, the vesting of or
settlement of Shares under an Award, an election pursuant to Section 83(b) of
the Code or otherwise with respect to an Award. The Company and its Subsidiaries
shall not be required to issue or deliver Shares, make any payment or to
recognize the transfer or disposition of Shares until such obligations are
satisfied. The Committee may permit or require these obligations to be satisfied
by having the Company withhold a portion of the Shares that otherwise would be
issued or delivered to a Participant upon exercise of a Stock Option or Stock
Appreciation Right or upon the vesting or settlement of an Award, or by
tendering Shares previously acquired, in each case having a Fair Market Value
equal to the minimum amount required to be withheld or paid. Any such elections
are subject to such conditions or procedures as may be established by the
Committee and may be subject to disapproval by the Committee.

18. Foreign Employees. Without amending the Plan, the Committee may grant Awards
to Participants who are foreign nationals, or who are subject to Applicable Laws
of one or more non-United States jurisdictions, on such terms and conditions
different from those specified in the Plan as may in the judgment of the
Committee be necessary or desirable to foster and promote achievement of the
purposes of the Plan, and, in furtherance of such purposes, the Committee may
make such modifications, amendments, procedures, and the like as may be
necessary or advisable to comply with provisions of Applicable Laws of other
countries in which the Company or its Subsidiaries operate or have employees.

19. Termination for Cause; Forfeiture of Awards. If a Participant’s employment
or service is terminated by the Company or a Subsidiary for Cause, as determined
by the Committee in its sole discretion, then the Participant shall forfeit all
Awards granted under the Plan to the extent then held by the Participant. In
addition, any Award granted to a Participant shall be subject to forfeiture or
repayment pursuant to the terms of any applicable compensation recovery policy
adopted by the Company, including any such policy that may be adopted to comply
with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any rules
or regulations issued by the Securities and Exchange Commission or applicable
securities exchange.

20. Change in Control and Potential Change in Control.

a. Change in Control. In the event of a Change in Control: (x) all outstanding
Awards held by the Participant that may be exercised shall become fully
exercisable and shall remain exercisable for the full duration of their term
effective immediately prior to the Change in Control, (y) all restrictions with
respect to outstanding Awards shall lapse effective immediately prior to the
Change in Control, with any specified Performance Objectives with respect to
outstanding Awards deemed to be satisfied at the “target” level, and (z) all
outstanding Awards shall become fully vested effective immediately prior to the
Change in Control.

b. Potential Change in Control. In the event of a Potential Change in Control,
all Awards shall continue to vest during the applicable vesting period, if any.
Notwithstanding the preceding sentence, if a Participant incurs a Qualified
Termination during the Potential Change in Control Protection Period, then upon
such termination: (x) all outstanding Awards held by the Participant that may be
exercised shall become fully exercisable and shall remain exercisable for the
full duration of their term, (y) all restrictions with respect to outstanding
Awards shall lapse, with any specified Performance Objectives with respect to
outstanding Awards deemed to be satisfied at the “target” level, and (z) all
outstanding Awards shall become fully vested.

c. Cancellation Right. The Committee may, in its sole discretion and without the
consent of Participants, either by the terms of the Award Agreement applicable
to any Award or by resolution adopted prior to the occurrence of a Change in
Control or Potential Change in Control, provide that any

 

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outstanding Award (or a portion thereof) shall, upon the occurrence of such
Change in Control or Potential Change in Control, be cancelled in exchange for a
payment in cash or other property (including shares of the resulting entity in
connection with a Change in Control) in an amount equal to the excess, if any,
of the Fair Market Value of the Shares subject to the Award, over any exercise
price related to the Award, which amount may be zero if the Fair Market Value of
a Share on the date of the Change in Control or Potential Change in Control does
not exceed the exercise price per Share of the applicable Awards.

21. Amendment, Modification and Termination.

a. In General. The Board may at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part; provided, however, that no
alteration or amendment that requires shareholder approval in order for the Plan
to comply with any rule promulgated by the SEC or any securities exchange on
which Shares are listed or any other Applicable Laws shall be effective unless
such amendment shall be approved by the requisite vote of shareholders of the
Company entitled to vote thereon within the time period required under such
applicable listing standard or rule.

b. Adjustments to Outstanding Awards. The Committee may in its sole discretion
at any time (i) provide that all or a portion of a Participant’s Stock Options,
Stock Appreciation Rights and other Awards in the nature of rights that may be
exercised shall become fully or partially exercisable; (ii) provide that all or
a part of the time-based vesting restrictions on all or a portion of the
outstanding Awards shall lapse, and/or that any Performance Objectives or other
performance-based criteria with respect to any Awards shall be deemed to be
wholly or partially satisfied; or (iii) waive any other limitation or
requirement under any such Award, in each case, as of such date as the Committee
may, in its sole discretion, declare. Unless otherwise determined by the
Committee, any such adjustment that is made with respect to an Award that is
intended to qualify for the Performance-Based Exception shall be made at such
times and in such manner as will not cause such Awards to fail to qualify under
the Performance-Based Exception. Additionally, the Committee shall not make any
adjustment pursuant to this Section 21(b) that would cause an Award that is
otherwise exempt from Section 409A of the Code to become subject to
Section 409A, or that would cause an Award that is subject to Section 409A of
the Code to fail to satisfy the requirements of Section 409A.

c. Prohibition on Repricing. Except for adjustments made pursuant to Sections 15
or 20, the Board 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. No Stock Option
or Stock Appreciation Right will be cancelled and replaced with an Award having
a lower exercise price, or for another Award, or for cash without further
approval of the shareholders of the Company, except as provided in Sections 15
or 20. Furthermore, no Stock Option or Stock Appreciation Right will provide for
the payment, at the time of exercise, of a cash bonus or grant or sale of
another Award without further approval of the shareholders of the Company. This
Section 21(c) is intended to prohibit the repricing of “underwater” Stock
Options or Stock Appreciation Rights without shareholder approval and will not
be construed to prohibit the adjustments provided for in Sections 15 or 20.

d. Effect on Outstanding Awards. Notwithstanding any other provision of the Plan
to the contrary (other than Sections 15, 20, 21(b) and 23(d)), no termination,
amendment, suspension, or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously granted under the
Plan, without the written consent of the Participant holding such Award;
provided that the Committee may modify an ISO held by a Participant to
disqualify such Stock Option from treatment as an “incentive stock option” under
Section 422 of the Code without the Participant’s consent.

22. Applicable Laws. The obligations of the Company with respect to Awards under
the Plan shall be subject to all Applicable Laws and such approvals by any
governmental agencies as the Committee determines may be required. The Plan and
each Award Agreement shall be governed by the laws of the State of Ohio,
excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan to the substantive law of
another jurisdiction.

 

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23. Miscellaneous.

a. Deferral of Awards. Except with respect to Stock Options, Stock Appreciation
Rights and Restricted Shares, the Committee may permit Participants to elect to
defer the issuance or delivery of Shares or the settlement of Awards in cash
under the Plan pursuant to such rules, procedures or programs as it may
establish for purposes of the Plan. The Committee also may provide that deferred
issuances and settlements include the payment or crediting of dividend
equivalents or interest on the deferral amounts. All elections and deferrals
permitted under this provision shall comply with Section 409A of the Code,
including setting forth the time and manner of the election (including a
compliant time and form of payment), the date on which the election is
irrevocable, and whether the election can be changed until the date it is
irrevocable.

b. No Right of Continued Employment. The Plan shall not confer upon any
Participant any right with respect to continuance of employment or other service
with the Company or any Subsidiary, nor shall it interfere in any way with any
right the Company or any Subsidiary would otherwise have to terminate such
Participant’s employment or other service at any time. No Employee or Director
shall have the right to be selected to receive an Award under the Plan, or,
having been so selected, to be selected to receive future Awards.

c. Unfunded, Unsecured Plan. Neither a Participant nor any other person shall,
by reason of participation in the Plan, acquire any right or title to any
assets, funds or property of the Company or any Subsidiary, including without
limitation, any specific funds, assets or other property which the Company or
any Subsidiary may set aside in anticipation of any liability under the Plan. A
Participant shall have only a contractual right to an Award or the amounts, if
any, payable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.

d. Severability. If any provision of the Plan is or becomes invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended or limited in scope to conform to Applicable Laws
or, in the discretion of the Committee, it shall be stricken and the remainder
of the Plan shall remain in full force and effect.

e. Acceptance of Plan. By accepting any benefit under the Plan, each Participant
and each person claiming under or through any such Participant shall be
conclusively deemed to have indicated their acceptance and ratification of, and
consent to, all of the terms and conditions of the Plan and any action taken
under the Plan by the Committee, the Board or the Company, in any case in
accordance with the terms and conditions of the Plan.

f. Successors. All obligations of the Company under the Plan and with respect to
Awards shall be binding on any successor to the Company, whether the existence
of such successor is the result of a direct or indirect purchase, merger,
consolidation, or other event, or a sale or disposition of all or substantially
all of the business and/or assets of the Company and references to the “Company”
herein and in any Award agreements shall be deemed to refer to such successors.

[END OF DOCUMENT]

 

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APPENDIX F:

2012 STOCK INCENTIVE AND AWARD PLAN SUMMARY

The 2012 Stock Incentive and Award Plan (“2012 Plan”) authorizes the Company to
grant equity-based and cash-based incentive compensation in the form of stock
options, stock appreciation rights (or “SARs”), restricted shares, restricted
share units, other share-based awards and cash-based awards. The principal
features of the 2012 Plan are summarized below.

General Provisions of the 2012 Plan

Plan Limits. The 2012 Plan authorizes the issuance of up to a total of 2,900,000
common shares, inclusive of shares available to be granted under the prior plan
immediately prior to shareholder approval of the 2012 Plan. As of October 31,
1,606,000 common shares were available for awards under the prior plan. Upon
adoption of the 2012 Plan, no further awards will be made under the prior plan.
All of the shares authorized under the 2012 Plan may be granted with respect to
incentive stock options.

The following shares will not count against the number of shares available for
awards under the 2012 Plan: (i) shares covered by awards under the 2012 Plan and
the prior plan that expire or are forfeited, canceled, surrendered or otherwise
terminated without the issuance of shares; (ii) shares covered by awards settled
only in cash; (iii) shares tendered in payment of the exercise price of stock
options; (iv) shares withheld to satisfy a tax withholding obligation; and
(v) shares granted in assumption of, or substitution for, awards granted to
individuals who become employees or directors as a result of a merger or similar
transaction. With respect to SARs that are settled in shares, only the shares
used to settle the SAR upon exercise will be counted against the number of
shares available for awards under the 2012 Plan. Notwithstanding the foregoing,
shares that are repurchased by the Company with stock option proceeds will not
be added back to the number of shares available for awards under the 2012 Plan.

The 2012 Plan also imposes various sub-limits on the number of common shares
that may be issued to any individual during any calendar year under awards that
are intended to qualify for the performance-based compensation exception to
Section 162(m) of the Internal Revenue Code. In particular, for any calendar
year, the following limits shall apply with respect to awards intended to
qualify as performance-based compensation:

 

  •   The maximum number of shares subject to stock options or SARs granted in
any calendar year to any one participant shall be 750,000 shares.

 

  •   The maximum number of restricted shares granted in any calendar year to
any one participant shall be 250,000 shares.

 

  •   The maximum number of shares that may be issued pursuant to restricted
share units or other share-based awards granted in any calendar year to any one
participant shall be 250,000 shares (or, if the applicable performance period is
more than one year, 250,000 times the full number of years in the performance
period).

 

  •   The maximum amount of compensation that may be paid under a cash-based
award granted in any calendar year to any one participant shall be $5,000,000,
or a number of shares having a fair market value not exceeding that amount (or,
if the applicable performance period is more than one year, $5,000,000 times the
full number of years in the performance period).

Administration of the 2012 Plan. The 2012 Plan will be administered by the
Compensation Committee of the Board of Directors of the Company (or such other
committee as may be appointed by the Board of Directors in accordance with
applicable laws). The Board of Directors may reserve to itself any or all of the
authority of the Compensation Committee, and the Board of Directors or the
Compensation Committee may delegate any or all of its authority to one or more
directors or employees to the extent permitted by applicable laws.

Eligibility for Awards. The 2012 Plan authorizes the Compensation Committee to
make awards to any of our employees or non-employee directors. The selection of
participants and the nature and size of awards are within the discretion of the
Compensation Committee.

Term and Amendment. The 2012 Plan became effective on February 26, 2013 and will
remain in effect until February 25, 2022.

 

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The Board of Directors may amend or terminate the 2012 Plan at any time,
provided that the 2012 Plan may not be amended without shareholder approval
where required by applicable laws. Generally, the amendment or termination of
the 2012 Plan or of any award agreement may not adversely affect in a material
way any outstanding award without the consent of the participant holding the
award.

Awards Under the 2012 Plan

General. When an award is granted under the 2012 Plan, the Compensation
Committee will establish the terms and conditions of that award. These terms and
conditions will be contained in an award agreement and may, for example, require
that the participant continue to provide services to the Company or a related
entity for a certain period of time or that the participant meet certain
performance objectives during a specified period of time. By accepting an award,
a participant will agree to be bound by the terms of the 2012 Plan and the
associated award agreement. If there is a conflict between the terms of the 2012
Plan and the terms of an award agreement, the terms of the 2012 Plan will
control. The types of awards that may be granted under the 2012 Plan are
described below.

Stock Options. A stock option gives a participant the right to purchase a
specified number of common shares and may be an incentive stock option or
nonqualified stock option. The price at which a common share may be purchased
upon exercise of a stock option, called the “exercise price,” will be determined
by the Compensation Committee, but may not be less than the fair market value of
a common share on the date the stock option is granted. Generally, “fair market
value” will be the closing price of the Company’s common shares on the date in
question. An option’s exercise price may be paid in any way determined by the
Compensation Committee, including payment in cash (or a cash equivalent), a
cashless exercise, tendering common shares the participant already owns or a
combination thereof. In no event may an option be exercised more than 10 years
after the date of grant. A participant who has been granted a stock option will
not have any dividend or voting rights in connection with the shares underlying
the stock option.

Special provisions apply to any incentive stock options granted under the 2012
Plan. All of the shares available for issuance under the 2012 Plan may be issued
pursuant to incentive stock options. Incentive stock options may be granted only
to employees. Incentive stock options that become exercisable for the first time
in any year cannot relate to common shares having a fair market value
(determined on the date of grant) of more than $100,000 per participant. The
exercise price of an incentive stock option granted to an employee who owns
shares possessing more than 10 percent of the Company’s voting power (a “10%
shareholder”) may not be less than 110 percent of the fair market value of a
common share on the date of grant, and an incentive stock option granted to a
10% shareholder will expire no later than 5 years after the date of grant.

Stock Appreciation Rights. A stock appreciation right gives a participant the
right to receive the difference between the SAR’s exercise price and the fair
market value of a common share on the date the SAR is exercised. SARs will be
settled in (i) cash, (ii) common shares with a value on the settlement date
equal to the difference between the fair market value of the common shares and
the exercise price, or (iii) a combination of cash and common shares, as
determined by the Compensation Committee at the time of grant. The exercise
price of a stock appreciation right will be determined by the Compensation
Committee, but may not be less than the fair market value of a common share on
the date the SAR is granted. A stock appreciation right will be forfeited if the
applicable terms and conditions are not met or if it is not exercised before it
expires (which may never be later than 10 years after the date of grant). A
participant who has been granted a stock appreciation right will not have any
dividend or voting rights in connection with the shares underlying the SAR.

Restricted Shares. Restricted shares consist of common shares that are granted
to a participant, but which are subject to certain restrictions on
transferability and a risk of forfeiture if certain terms and conditions
specified by the Compensation Committee are not met by the end of the
restriction period. The restrictions may include time-based and/or
performance-based restrictions. Generally, time-based restricted shares will
have a vesting period of at least three years (and may vest on a pro-rated,
graded or cliff basis), and performance-based restricted shares will have a
performance period of at least one year. However, up to five percent of the
shares available for grant under the 2012 Plan as restricted shares and

 

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2012 STOCK INCENTIVE AND AWARD PLAN SUMMARY

 

other “full value awards” (awards settled in shares other than stock options and
stock appreciation rights) may be granted with a vesting period of at least one
year, regardless of whether vesting is based on the achievement of performance
objectives. Unless otherwise determined by the Compensation Committee, a
participant who has been granted restricted shares will have the right to
receive dividends on the restricted shares and may vote those shares during the
restriction period. However, dividends with respect to performance-based
restricted shares will be accumulated until the restricted shares are earned and
will not be paid unless applicable performance objectives are satisfied.

Restricted Share Units. Restricted share units constitute an agreement to
deliver common shares to a participant if certain conditions specified by the
Compensation Committee are met by the end of the restriction period. The
conditions may include time-based and/or performance-based restrictions.
Generally, time-based restricted share units will have a vesting period of at
least three years (and may vest on a pro-rated, graded or cliff basis), and
performance-based restricted share units will have a performance period of at
least one year. However, up to five percent of the shares available for grant
under the 2012 Plan as restricted share units and other “full value awards” may
be granted with a vesting period of at least one year, regardless of whether
vesting is based on the achievement of performance objectives. A participant who
has been granted restricted share units will not have any dividend or voting
rights in connection with the notional shares underlying the restricted share
units, but the Compensation Committee may authorize the payment of dividend
equivalents. However, dividend equivalents with respect to performance-based
restricted share units will be accumulated until the restricted share units are
earned and will not be paid unless applicable performance objectives are
satisfied. At the end of the restriction period, the restricted share units
either will be forfeited or settled, depending on whether or not the applicable
terms and conditions have been satisfied. Restricted share units may be settled
by (i) issuing one common share for each restricted share unit, (ii) paying the
participant cash equal to the fair market value of a common share for each
restricted share unit, or (iii) a combination of common shares and cash, as
determined by the Compensation Committee at the time of grant.

Other Share-Based Awards. The Compensation Committee may grant other awards that
are valued in whole or in part by reference to, or otherwise based on the fair
market value of, common shares. Such other share-based awards shall be subject
to terms and conditions specified by the Compensation Committee, which may
include time-based and/or performance-based restrictions. Generally, other
share-based awards subject to time-based vesting conditions will have a vesting
period of at least three years (and may vest on a pro-rated, graded or cliff
basis), and other share-based awards subject to performance-based vesting
restrictions will have a performance period of at least one year. However, up to
five percent of the shares available for grant under the 2012 Plan as other
share-based awards and other “full value awards” may be granted with a vesting
period of at least one year, regardless of whether vesting is based on the
achievement of performance objectives. The Compensation Committee may authorize
the payment of dividend equivalents with respect to other share-based awards.
However, such dividend equivalents subject to performance-based restrictions
will be accumulated until the other share-based awards are earned and will not
be paid unless applicable performance objectives are satisfied.

Cash-Based Awards. A cash-based award gives a participant the right to receive a
specified amount of cash, subject to terms and conditions as determined by the
Compensation Committee, which may include time-based and/or performance-based
restrictions.

Performance Objectives. The 2012 Plan provides that performance objectives may
be established by the Compensation Committee in connection with any award.
Performance objectives may relate to performance of the Company or one or more
of its subsidiaries, divisions, departments, units, functions, partnerships,
joint ventures or minority investments, product lines or products, or the
performance of an individual participant, and performance objectives may be made
relative to the performance of a group or companies or a special index of
companies.

The Compensation Committee may, in its discretion, grant awards under the 2012
Plan that are intended to qualify for the “performance-based compensation”
exemption from Section 162(m) of the Internal Revenue Code. In the case of an
award intended to qualify for that exemption, any applicable performance
objectives shall be based on the attainment of specified levels of one or more
of the following measures: return on net assets, return on capital employed,
economic value added, sales,

 

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2012 STOCK INCENTIVE AND AWARD PLAN SUMMARY

 

revenue, earnings per share, operating income, net income, earnings before
interest and taxes, return on equity, total shareholder return, market
valuation, cash flow, completion of acquisitions, product and market
development, inventory management, working capital management and customer
satisfaction. Those measures may be clarified by reasonable definitions adopted
from time to time by the Compensation Committee, which may include or exclude
any items as the Compensation Committee may specify, including but not limited
to: extraordinary, unusual or non-recurring items; effects of accounting
changes; effects of currency fluctuations; effects of financing activities;
effects relating to the impairment of goodwill or other intangible assets;
expenses for restructuring or productivity initiatives; non-operating items;
acquisition expenses; and effects of acquisitions, divestitures or
reorganizations. Performance objectives related to an award intended to qualify
as performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code will be established by the Compensation Committee within the time
period prescribed by, and subject to the other requirements of, Section 162(m)
of the Internal Revenue Code.

Forfeiture of Awards. If the Company terminates a participant’s employment or
service for cause, then the participant shall forfeit all outstanding awards
granted under the 2012 Plan. For this purpose, “cause” will have the meaning
provided in any applicable employment agreement or Change-in-Control Retention
Agreement with the participant, or if there is no such applicable definition,
“cause” shall mean (i) the commission of an act of fraud, embezzlement, theft,
or other similar criminal act constituting a felony and involving the business
of the Company or its subsidiaries, or (ii) the participant’s continued failure
to perform substantially the participant’s duties (other than a failure
resulting from a medically determined physical or mental impairment) that is not
cured by the participant within 30 days after a written demand from the Company
which specifically identifies the manner in which the Company believes that the
participant has not substantially performed the participant’s duties. Awards
granted under the 2012 Plan may also be subject to forfeiture or repayment to
the Company pursuant to any compensation recovery (or “clawback”) policy that
may be adopted by the Company, including a policy that may be adopted to comply
with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or
any rules or regulations issued by the SEC or NASDAQ.

Adjustments to Authorized Shares and Outstanding Awards. In the event of any
equity restructuring, such as a stock dividend, stock split, reverse stock
split, spinoff, rights offering or recapitalization through a large,
nonrecurring cash dividend, the Compensation Committee will adjust the number
and kind of shares that may be delivered under the 2012 Plan, the individual
award limits, and, with respect to outstanding awards, the number and kind of
shares subject to outstanding awards, the exercise price, and the grant price or
other price of shares subject to outstanding awards, to prevent dilution or
enlargement of rights. In the event of any other change in corporate
capitalization, such as a merger, consolidation or liquidation, the Compensation
Committee may, in its discretion, cause there to be such equitable adjustment as
described in the foregoing sentence, to prevent dilution or enlargement of
rights. However, unless otherwise determined by the Compensation Committee, the
Company will always round down to a whole number of shares subject to any award.
Any such adjustment will be made by the Compensation Committee, whose
determination will be conclusive.

Prohibition on Repricing. Except in connection with certain corporate
transactions or events or with the approval of shareholders, the 2012 Plan
prohibits the amendment of outstanding stock options or SARs to reduce the
exercise price of the award, and no stock option or SAR will be cancelled and
replaced with another award (including an award having a lower exercise price)
or for cash. These provisions of the 2012 Plan are intended to prohibit the
repricing of “underwater” stock options or SARs without approval of the
Company’s shareholders.

Effect of a Potential Change in Control or Change in Control. In the event of a
“potential change in control” of the Company, all unvested awards shall continue
to vest during the applicable vesting period. However, if, within two years
after a potential change in control, a participant’s employment is involuntarily
terminated without cause or, if the participant is a party to a
Change-in-Control Retention Agreement, the participant terminates his or her
employment for “good reason” (as defined in the applicable Change-in-Control
Retention Agreement), then upon such termination of employment: (i) all of the
participant’s outstanding stock options and SARs shall become fully exercisable
and shall remain exercisable for the full duration of their term, (ii) all
restrictions with respect to outstanding awards shall lapse, with any

 

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specified performance objectives deemed to be satisfied at the “target” level,
and (iii) all outstanding awards shall become fully vested. For purposes of the
2012 Plan, a potential change of control generally means the acquisition of at
least 25% but less than 35% of the voting power of the Company’s outstanding
voting securities.

In the event of a “change in control” of the Company: (i) all outstanding stock
options and SARs shall become fully exercisable and shall remain exercisable for
the full duration of their term effective immediately prior to the change in
control, (ii) all restrictions with respect to outstanding awards shall lapse
effective immediately prior to the change in control, with any specified
performance objectives deemed to be satisfied at the “target” level, and
(iii) all outstanding awards shall become fully vested effective immediately
prior to the change in control. For purposes of the 2012 Plan, a change in
control generally means (i) the acquisition of 35% or more of the voting power
of the Company’s outstanding voting securities; (ii) the replacement of a
majority of the members of the incumbent Board of Directors during a 24-month
period with new directors who were not approved by at least two-thirds of the
directors then in office; (iii) consummation of a merger or consolidation
resulting in less than 50% of the combined voting power of the surviving or
resulting corporation’s securities being owned by persons who were shareholders
of the Company immediately before such transaction; or (iv) the sale of all or
substantially all of the assets of the Company in a single transaction or series
of related transactions to a single purchaser or group of affiliated purchasers.

The Compensation Committee also has discretion to cancel any award in exchange
for a cash payment upon the occurrence of a change in control, or cancel a stock
option or SAR without payment if the fair market value of a share on the date of
the change in control does not exceed the exercise price per share of the stock
option or SAR.

U.S. Federal Income Tax Consequences

The following is a brief summary of the general U.S. federal income tax
consequences relating to the 2012 Plan. This summary is based on U.S. federal
tax laws and regulations in effect on the date of this proxy statement and does
not purport to be a complete description of the U.S. federal income tax laws.

Incentive Stock Options. Incentive stock options are intended to qualify for
special treatment available under Section 422 of the Internal Revenue Code. A
participant who is granted an incentive stock option will not recognize ordinary
income at the time of grant, and the Company will not be entitled to a deduction
at that time. A participant will not recognize ordinary income upon the exercise
of an incentive stock option provided that the participant was, without a break
in service, an employee of the Company or a subsidiary during the period
beginning on the date of grant of the option and ending on the date three months
prior to the date of exercise (one year prior to the date of exercise if the
participant’s employment is terminated due to permanent and total disability).

If the participant does not sell or otherwise dispose of the common shares
acquired upon the exercise of an incentive stock option within two years from
the date of grant of the incentive stock option or within one year after he or
she receives the common shares, then, upon disposition of such common shares,
any amount recognized in excess of the exercise price will be taxed to the
participant as a capital gain, and the Company will not be entitled to a
corresponding deduction. The participant will generally recognize a capital loss
to the extent that the amount recognized is less than the exercise price.

If the foregoing holding period requirements are not met, the participant will
generally recognize ordinary income at the time of the disposition of the common
shares in an amount equal to the lesser of (i) the excess of the fair market
value of the common shares on the date of exercise over the exercise price, or
(ii) the excess, if any, of the amount recognized upon disposition of the common
shares over the exercise price, and the Company will be entitled to a
corresponding deduction. Any amount recognized in excess of the value of the
common shares on the date of exercise will be capital gain. If the amount
recognized is less than the exercise price, the participant generally will
recognize a capital loss equal to the excess of the exercise price over the
amount recognized upon the disposition of the common shares.

The rules described above that generally apply to incentive stock options do not
apply when calculating any alternative minimum tax liability. The rules
affecting the application of the alternative minimum tax are complex, and their
effect depends on individual circumstances, including whether a participant has
items of adjustment other than those derived from incentive stock options.

 

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2012 STOCK INCENTIVE AND AWARD PLAN SUMMARY

 

Nonqualified Stock Options. A participant will not recognize ordinary income
when a nonqualified stock option is granted, and the Company will not receive a
deduction at that time. When a nonqualified stock option is exercised, a
participant will recognize ordinary income in an amount equal to the excess, if
any, of the fair market value of the common shares that the participant
purchased over the exercise price he or she paid, and the Company generally will
be entitled to a corresponding deduction.

Stock Appreciation Rights. A participant will not recognize ordinary income when
a stock appreciation right is granted, and the Company will not receive a
deduction at that time. When a stock appreciation right is exercised, the
participant will recognize ordinary income equal to the cash and/or the fair
market value of common shares the participant receives, and the Company
generally will be entitled to a corresponding deduction.

Restricted Shares. A participant who has been granted restricted shares will not
recognize ordinary income at the time of grant, and the Company will not be
entitled to a deduction at that time, assuming that the underlying common shares
are not transferable and that the restrictions create a “substantial risk of
forfeiture” for federal income tax purposes and that the participant does not
make an election under Section 83(b) of the Internal Revenue Code. Generally,
upon the vesting of restricted shares, the participant will recognize ordinary
income in an amount equal to the then fair market value of the common shares,
less any consideration paid for such common shares, and the Company will be
entitled to a corresponding deduction. Any gains or losses recognized by the
participant upon disposition of the common shares will be treated as capital
gains or losses. However, a participant may elect pursuant to Section 83(b) of
the Internal Revenue Code to have income recognized at the date of grant of a
restricted share award equal to the fair market value of the common shares on
the date of grant (less any amount paid for the restricted shares) and to have
the applicable capital gain holding period commence as of that date. If a
participant makes this election, the Company generally will be entitled to a
corresponding deduction in the year of grant.

Restricted Share Units. A participant generally will not recognize ordinary
income when restricted share units are granted, and the Company generally will
not receive a deduction at that time. Instead, a participant will recognize
ordinary income when the restricted share units are settled in an amount equal
to the fair market value of the common shares and the cash he or she receives,
less any consideration paid, and the Company generally will be entitled to a
corresponding deduction.

Other Share-Based Awards. Generally, participants will recognize ordinary income
equal to the fair market value of the common shares subject to other share-based
awards when they receive the common shares, and the Company generally will be
entitled to a corresponding deduction at that time.

Cash-Based Awards. Generally, a participant will recognize ordinary income when
a cash-based award is settled in an amount equal to the cash he or she receives,
and the Company generally will be entitled to a corresponding deduction at that
time.

Miscellaneous. When a participant sells common shares that he or she has
received under an award, the participant will generally recognize long-term
capital gain or loss if, at the time of the sale, the participant has held the
common shares for more than one year (or, in the case of a restricted share
award, more than one year from the date the restricted shares vested unless the
participant made an election pursuant to Section 83(b) of the Internal Revenue
Code, described above). If the participant has held the common shares for one
year or less, the gain or loss will be a short-term capital gain or loss.

Section 162(m) of the Tax Code. Section 162(m) of the Internal Revenue Code
disallows the deduction of certain compensation in excess of $1 million per year
payable to certain covered employees of a public company (generally, the chief
executive officer and the next three most highly compensated named executive
officers, other than the chief financial officer). Compensation paid to such an
officer during a year in excess of $1 million that is not performance-based (or
does not comply with other exceptions) generally would not be deductible on the
Company’s federal income tax return for that year. It is intended that
compensation attributable to any stock options or SARs granted under the 2012
Plan will qualify as performance-based compensation exempt from Section 162(m)
of the Internal Revenue Code. The Compensation Committee may, in its discretion,
decide to structure other awards granted under the 2012 Plan to qualify for
deductibility under Section 162(m).

 

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APPENDIX F:

2012 STOCK INCENTIVE AND AWARD PLAN SUMMARY

 

Section 409A of the Tax Code. In 2004, the Internal Revenue Code was amended to
add Section 409A, which created new rules for amounts deferred under
nonqualified deferred compensation plans. Section 409A includes a broad
definition of nonqualified deferred compensation plans which may extend to
various types of awards granted under the 2012 Plan. If an award is subject to,
but fails to comply with, Section 409A, the participant would generally be
subject to accelerated income taxation, plus a 20% penalty tax and an interest
charge. The Company intends that awards granted under the 2012 Plan will either
be exempt from, or will comply with, Section 409A.

Benefits Proposed to be Awarded Under the 2012 Plan. No benefits or amounts have
been granted, awarded or received under the 2012 Plan. The issuance of any
awards under the 2012 Plan will be at the discretion of the Compensation
Committee. Therefore, it is not possible to determine the amount or form of any
award that will be granted to any individual in the future as there are many
variables the Committee considers in granting equity awards, including
compensation of our executive officers compared to peer group compensation,
share price at the time the Committee sets executive compensation, and, for
payouts under the Long-Term Incentive Plan, performance against predetermined
metrics at the time of settlement.

 

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