FARMERS NATIONAL BANC CORP.

2012 EQUITY INCENTIVE PLAN

The purpose of the Plan is to promote the Company’s long-term financial success
and increase shareholder value by motivating performance through incentive
compensation. The Plan also is intended to encourage Participants to acquire
ownership interests in the Company, attract and retain talented employees and
directors and enable Participants to participate in the Company’s long-term
growth and financial success.

ARTICLE I

DEFINITIONS

When used in the Plan, the following capitalized words, terms and phrases shall
have the meanings set forth in this Article I. For purposes of the Plan, the
form of any word, term or phrase shall include any and all of its other forms.

1.1 “Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time, or any successor thereto.

1.2 “Affiliate” shall mean any entity with whom the Company would be considered
a single employer under Section 414(b) or (c) of the Code, but modified as
permitted under Treasury Regulations promulgated under any Code section relevant
to the purpose for which the definition is applied.

1.3 “Award” shall mean any Restricted Stock, Stock Unit, Performance Based Award
or Share Award granted pursuant to the Plan.

1.4 “Award Agreement” shall mean any written or electronic agreement between the
Company and a Participant that describes the terms and conditions of an Award.
If there is a conflict between the terms of the Plan and the terms of an Award
Agreement, the terms of the Plan shall govern.

1.5 “Board” shall mean the Board of Directors of the Company.

1.6 “Cause” shall mean, unless otherwise provided in the related Award Agreement
or in any employment agreement between the Participant and the Company or any
Affiliate or in any other agreement between the Participant and the Company or
any Affiliate (but only within the context of the events contemplated by the
employment agreement or other agreement, as applicable), a Participant’s:
(a) commission of any intentional, reckless, or grossly negligent act which may
result in material injury to the good will, business or business reputation of
the Company or any Affiliate; (b) participation in any fraud, dishonesty, theft,
conviction of a crime, or unethical business conduct; (c) violation of any
written policy, rule, regulation or covenant with respect to non-competition,
non-solicitation, non-disparagement, cooperation or otherwise with respect to
the Company or any Affiliate; or (d) failure to adequately perform the
Participant’s job duties or to follow lawful and ethical directions provided to
the Participant, which failure, if amenable to cure, has not been cured in all
material respects within 20 days after receiving notice of such failure from the
Company.

1.7 “Change in Control” shall mean, unless otherwise provided in any employment
agreement between the Participant and the Company or any Affiliate or in any
other agreement between the Participant and the Company or any Affiliate (but
only within the context of events contemplated by the employment agreement or
other agreement, as applicable), the occurrence of any of the following:

(a) any person (as defined in Act) becomes a direct or indirect beneficial owner
of securities of the Company representing 20% or more of the combined voting
power of the Company’s then outstanding securities; or

(ii) the merger or consolidation of the Company with another entity, and as a
result of such merger or consolidation, less than 75% of the outstanding voting
securities of the surviving or resulting entity shall be owned in the aggregate
by the former shareholders of the Company; or

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(c) during any two consecutive years, individuals who at the beginning of such
period constitute the Board, cease for any reason to constitute at least a
majority thereof, unless the election of each director who is not a director at
the beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors at the beginning of the
period.

A “change in control” will only be deemed to have occurred if one of the three
above-listed scenarios occurs and, as a result thereof, the Participant is not
offered a position that is substantially similar to the Participant’s position
immediately prior to the transaction, in terms of duties, responsibilities, pay
and benefits.

Notwithstanding the foregoing, with respect to the payment, exercise or
settlement of any Award that is subject to Section 409A of the Code (and for
which no exception applies), a Change in Control shall be deemed not to have
occurred unless the events or circumstances constituting a Change in Control
also constitute a “change in control event” within the meaning of Section 409A
of the Code and the Treasury Regulations promulgated thereunder.

1.8 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.

1.9 “Committee” shall mean the Compensation Committee of the Board, which will
be comprised of at least two (2) directors, each of whom is a “non-employee”
director within the meaning of Rule 16b-3 under the Act.

1.10 “Company” shall mean Farmers National Banc Corp., an Ohio corporation, and
any successor thereto.

1.11 “Director” shall mean a person who is a member of the Board, excluding any
member who is an Employee.

1.12 “Disability” shall mean:

(a) with respect to an Incentive Stock Option, “disability” as defined in
Section 22(e)(3) of the Code;

(b) with respect to the payment or settlement of any Award that is (or becomes)
subject to Section 409A of the Code (and for which no exception applies),
(i) the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, (ii) the Participant is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months, receiving income replacement benefits for a period of
not less than three (3) months under an accident and health plan covering
Employees of the Participant’s employer, or (iii) the Participant is determined
to be totally disabled by the Social Security Administration or Railroad
Retirement Board; and

(c) with respect to the payment or settlement of any Award not described in
subsection (a) or (b) of this definition, a Participant’s inability (established
by an independent physician selected by the Committee and reasonably acceptable
to the Participant or to the Participant’s legal representative) due to illness,
accident or otherwise to perform his or her duties, which is expected to be
permanent or for an indefinite duration longer than twelve (12) months.

1.13 “Employee” shall mean any person who is a common law employee of the
Company or any Affiliate. A person who is classified as other than a common-law
employee but who is subsequently reclassified as a common law employee of the
Company or any Affiliate for any reason and on any basis shall be treated as a
common law employee only from the date that reclassification occurs and shall
not retroactively be reclassified as an Employee for any purpose under the Plan.

1.14 “Fair Market Value” shall mean the value of one Share on any relevant date,
determined under the following rules:

(a) If the Shares are traded on an exchange, the reported “closing price” on the
relevant date if it is a trading day, otherwise on the next trading day;

 

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(b) If the Shares are traded over-the-counter with no reported closing price,
the mean between the lowest bid and the highest asked prices on that quotation
system on the relevant date if it is a trading day, otherwise on the next
trading day; or

(c) If neither (a) nor (b) applies, (i) with respect to Options, Stock
Appreciation Rights and any Award 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 the
Treasury Regulations promulgated thereunder, and (ii) with respect to all other
Awards, the fair market value as determined by the Committee in good faith.

1.15 “Good Reason” shall mean, unless otherwise specified in the Award Agreement
or another agreement between the Participant and the Company or any Affiliate,
or in any other agreement between the Participant and the Company or any
Affiliate (but only within the context of events contemplated by the employment
agreement or other agreement, as applicable), the occurrence of any of the
following without the Participant’s consent (provided the Company or Affiliate
does not fully cure the effect of such event within 30 days following its
receipt of written notice of such event from the Participant: (a) a material
diminution in the Participant’s Base Salary; or (b) a material reduction in, or
the permanent assignment to, the Participant of duties that are materially
inconsistent with the Participant’s position (including, without limitation, the
Participant’s status, office and title), authority, duties or responsibilities;
or (c) a material change in the geographic location in which the Participant
must perform services under this Agreement. Notwithstanding the foregoing, Good
Reason shall cease to exist for an event on the 90th day following the later of
its occurrence or the Participant’s knowledge thereof, unless the Participant
has given the Employer written notice of such event prior to such date.

1.16 “Participant” shall mean an Employee or Director who is granted an Award
under the Plan.

1.17 “Performance-Based Award” shall mean an Award described in Article VIII of
the Plan.

1.18 “Performance Criteria” shall mean any of the following: (a) revenue;
(b) net earnings or net income (before or after taxes); (c) earnings per share;
(d) deposit or asset growth; (e) net operating income; (f) return measures
(including return on assets and equity); (g) fee income; (h) earnings before or
after taxes, interest, depreciation and/or amortization; (i) interest spread;
(j) productivity ratios; (k) share price (including, but not limited to, growth
measures and total shareholder return); (l) expense targets; (m) credit quality;
(n) efficiency ratio; (o) market share; (p) customer satisfaction; (q) asset
quality measures (e.g., Texas Ratio, ALLL etc.); (r) net income after cost of
capital (NIACC); (s) strategic objectives (including, branding, mergers and
acquisitions, succession management, dynamic market response, new product build
out, expense reduction initiatives, risk management and regulatory compliance);
or (t) such other measures as the Committee may select from time to time.

1.19 “Plan” shall mean the Farmers National Banc Corp. 2012 Equity Incentive
Plan, as set forth herein and as may be amended from time to time.

1.20 “Restricted Stock” shall mean an Award granted pursuant to Article V of the
Plan under which a Participant is issued a right to receive a specified number
of Shares or a cash payment equal to a specified number of Shares, the
settlement of which is subject to specified restrictions on vesting and
transferability.

1.21 “Retirement” shall mean, with respect to an Employee, termination after the
attainment of age 65, unless another definition is provided in the related Award
Agreement.

1.22 “Shares” shall mean the common shares, par value $1.00 per share, of the
Company or any security of the Company issued in satisfaction, exchange or in
place of these shares.

1.23 “Share Award” shall mean an Award granted pursuant to Section VII of the
Plan consisting on an award of unrestricted Shares.

 

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1.24 “Stock Unit” shall mean an Award granted pursuant to Section VI of the Plan
through which a Participant is granted the right to receive Shares in the
future.

ARTICLE II

SHARES SUBJECT TO THE PLAN

2.1 Number of Shares Available for Awards. Subject to this Article II, the
aggregate number of Shares with respect to which Awards may be granted under the
Plan shall be 500,000. The Shares may consist, in whole or in part, of treasury
Shares, authorized but unissued Shares not reserved for any other purpose or
Shares purchased by the Company or an independent agent in either a private
transaction or in the open market. Subject to this Article II, the number of
Shares available for issuance under the Plan shall be reduced by one Share for
each Share subject to a grant of an Award and any Shares underlying such an
Award that become available for future grant under the Plan pursuant to
Section 2.2 shall be added back to the Plan in an amount equal to the number of
Shares subject to such an Award that become available for future grant under the
Plan pursuant to Section 2.2.

2.2 Share Usage. In addition to the number of Shares provided for in
Section 2.1, the following Shares shall be available for Awards under the Plan:
(a) Shares covered by an Award that expires or is forfeited, canceled,
surrendered or otherwise terminated without the issuance of such Shares;
(b) Shares covered by an Award that, by its terms, may be settled only in cash;
(c) 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; and (d) any Shares from awards exercised for or settled in vested
and nonforfeitable Shares that are later returned to the Company pursuant to any
compensation recoupment policy, provision or agreement. Notwithstanding the
foregoing, no Shares covered by an Award that are withheld to satisfy any
applicable taxes shall again be available for issuance as Awards under this
Plan.”

2.3 Adjustments. In the event of any Share dividend, Share split,
recapitalization (including payment of an extraordinary dividend), merger,
reorganization, consolidation, combination, spin-off, distribution of assets to
stockholders, exchange of Shares or any other change affecting the Shares, the
Committee shall make such substitutions and adjustments, if any, as it deems
equitable and appropriate to: (a) the aggregate number of Shares that may be
issued under the Plan; and (b) the number of Shares and other terms or
limitations applicable to outstanding Awards. Notwithstanding the foregoing, an
adjustment pursuant to this Section 2.3 shall be made only to the extent such
adjustment complies, to the extent applicable, with Section 409A of the Code.

ARTICLE III

ADMINISTRATION

3.1 In General. The Plan shall be administered by the Committee. The Committee
shall have full power and authority to: (a) interpret the Plan and any Award
Agreement; (b) establish, amend and rescind any rules and regulations relating
to the Plan; (c) select Participants; (d) establish the terms and conditions of
any Award consistent with the terms and conditions of the Plan; and (e) make any
other determinations that it deems necessary or desirable for the administration
of the Plan. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any Award Agreement in the manner
and to the extent the Committee deems necessary or desirable. Any decision of
the Committee in the interpretation and administration of the Plan shall be made
in the Committee’s sole and absolute discretion and shall be final, conclusive
and binding on all persons.

3.2 Delegation of Duties. In its sole discretion, the Committee may delegate any
ministerial duties associated with the Plan to any person (including Employees)
it deems appropriate; provided, however, that the Committee may not delegate
(a) any duties that it is required to discharge to comply with applicable law;
(b) its authority to grant Awards to any Participant who is subject to
Section 16 of the Act; and (c) its authority under the Company’s equity award
granting policy that may be in effect from time to time.

 

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ARTICLE IV

ELIGIBILITY

Any Employee or Director selected by the Committee shall be eligible to be a
Participant in the Plan.

ARTICLE V

RESTRICTED STOCK

5.1 Grant of Restricted Stock. Subject to the terms and conditions of the Plan,
Shares of Restricted Stock 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.

5.2 Award Agreement. Each Award of Restricted Stock shall be evidenced by an
Award Agreement that shall specify the number of Shares of Restricted Stock, the
restricted period(s) applicable to the Shares of Restricted Stock, the
conditions upon which the restrictions on the Shares of Restricted Stock 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.

5.3 Terms, Conditions and Restrictions.

(a) The Committee shall impose such other terms, conditions and/or restrictions
on any Shares of Restricted Stock as it may deem advisable, including, without
limitation, restrictions based on the achievement of specific performance goals
(which may be based on one or more of the Performance Criteria), time-based
restrictions or holding requirements or sale restrictions placed on the Shares
by the Company upon vesting of such Restricted Stock.

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

(c) Unless otherwise provided in the related Award Agreement or required by
applicable law, the restrictions imposed on Shares of Restricted Stock shall
lapse upon the expiration or termination of the applicable restricted period and
the satisfaction of any other applicable terms and conditions.

5.4 Rights Associated with Restricted Stock during Restricted Period. During any
restricted period applicable to Shares of Restricted Stock:

(a) Such Shares of Restricted Stock may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated.

(b) Unless otherwise provided in the related Award Agreement, (i) the
Participant shall be entitled to exercise full voting rights associated with
such Shares of Restricted Stock and (ii) the Participant shall be entitled to
all dividends and other distributions paid with respect to such Shares of
Restricted Stock during the restricted period; provided, however, that receipt
of any such dividends or other distributions will be subject to the same terms
and conditions as the Shares of Restricted Stock with respect to which they are
paid.

ARTICLE VI

STOCK UNITS

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

6.2 Award Agreement. Each Award of Stock Units shall be evidenced by an Award
Agreement that shall specify the number of Shares underlying the Award, the
restricted period(s), the conditions upon which the restrictions on the Stock
Units will lapse, the time at and form in which the Stock Units will be settled,
and such other terms and conditions as the Committee shall determine and which
are not inconsistent with the terms and conditions of the Plan.

 

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6.3 Terms, Conditions and Restrictions. The Committee shall impose such other
terms, conditions and/or restrictions on any Award of Stock Units as it may deem
advisable, including, without limitation, conditions and/or restrictions based
on the achievement of specific performance goals (which may be based on one or
more of the Performance Criteria), time-based conditions and/or restrictions or
holding requirements or sale conditions and/or restrictions placed on the Shares
by the Company upon vesting of such Stock Units.

6.4 Form of Settlement. An Award of Stock Units may be settled in full Shares,
cash or a combination thereof, as specified by the Committee in the related
Award Agreement.

6.5 Dividend Equivalents. Awards of Stock Units may provide the Participant with
dividend equivalents, as determined by the Committee in its sole discretion and
set forth in the related Award Agreement. In no event will a Participant have
any voting rights with respect to the Shares underlying the Stock Units.

ARTICLE VII

SHARE AWARDS

Subject to the terms and conditions of the Plan, Share Awards consisting of
unrestricted Shares 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.

ARTICLE VIII

PERFORMANCE-BASED AWARDS

8.1 In General. Notwithstanding anything in the Plan to the contrary, any Award
may be granted as a Performance-Based Award. As determined by the Committee in
its sole discretion, the grant, vesting and/or settlement of any
Performance-Based Award shall be conditioned on the attainment of performance
goals based upon one or more Performance Criteria during a performance period
established by the Committee. Any such Performance-Based Award must meet the
requirements of this Article VIII. Performance Criteria may relate to the
individual Participant, the Company, the Company and one or more Affiliate or
one or more of their respective divisions or business units, or any combination
of the foregoing, and may be applied on an absolute basis and/or be relative to
one or more peer group companies or indices, or any combination thereof, in each
case, as determined by the Committee in its sole discretion.

8.2 Modifying Performance-Based Awards. Performance goals relating to
Performance-Based Awards may be calculated without regard to extraordinary items
or adjusted, as the Committee deems equitable, in recognition of unusual or
non-recurring events affecting the Company and/or its Affiliates or changes in
applicable tax laws or accounting principles.

8.3 Negative Discretion. In the Committee’s sole discretion, the amount of a
Performance-Based Award actually paid to a Participant may be less than the
amount otherwise payable based on the satisfaction of the performance goals and
other materials terms of the Performance-Based Award.

ARTICLE IX

TERMINATION OF EMPLOYMENT OR SERVICE

9.1 Death; Disability; Retirement. Unless otherwise specified in the Award
Agreement, or as subsequently determined by the Committee (but only to the
extent permitted under Section 409A of the Code), a Participant shall vest in
all Awards in full (and, if the Award was granted subject to the attainment of
Performance Objectives, as though the Performance Objectives were achieved at
the “target” level of performance) in the event of a Participant’s death,
Disability or Retirement.

 

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9.2 Termination for Cause. A Participant shall forfeit all Awards whether or not
vested in the event that the Participant is terminated for Cause.

9.3 Other Terminations. The Committee shall determine the extent to which an
Award shall vest and the extent to which the Participant shall have the right to
receive settlement of the Award on or following the Participant’s termination of
employment or services with the Company and/or any of its Affiliates for any
reason other than set forth in Sections 9.1 or 9.2. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
related Award Agreement, need not be uniform among all Awards granted under the
Plan and may reflect distinctions based on the reasons for termination.

ARTICLE X

CHANGE IN CONTROL

10.1 Rights in the Event of a Change in Control. The Committee, in its sole
discretion, may take such actions, if any, as it deems necessary or desirable
with respect to any Award that is outstanding as of the date of the consummation
of a Change in Control. Such actions may include, without limitation: (a) the
acceleration of the vesting and/or settlement of an Award; (b) the payment of a
cash amount in exchange for the cancellation of an Award equal to the value of
the consideration to be paid in the Change in Control to holders of the same
number of Shares as the number of Shares underlying the Award being cancelled
(or, if no consideration is paid in the Change in Control, the Fair Market Value
of the Shares underlying the Award being canceled); and/or (c) the issuance of
substitute Awards that substantially preserve the value, rights and benefits of
any affected Awards. Any action relating to an Award that is subject to
Section 409A of the Code shall be consistent with the requirements thereof.

10.2 Effect of Change in Control. Except as otherwise provided in the related
Award Agreement, in the event of a Change in Control, a Participant shall vest
in all unvested Awards in full (and, if the Award was granted subject to the
attainment of Performance Objectives, as though the Performance Objectives were
achieved at the “target” level of performance) if either: (a) the Participant is
terminated by the Company without Cause or voluntarily terminates for Good
Reason within 12 months following a Change in Control; or (b) the Awards are
canceled and the Participant is not granted substitute Awards that substantially
preserve the value, rights and benefits of any affected Awards.

10.3 Golden Parachute Limitations. Except as otherwise provided in any other
written agreement between the Company or any Affiliate and a Participant,
including any Award Agreement, if the sum of the amounts payable under the Plan
and those provided under all other plans, programs or agreements between the
Participant and the Company or any Affiliate constitutes a “parachute payment”
as defined in Section 280G of the Code, the Company will reduce any payments to
the minimum extent necessary to avoid the imposition of an excise tax under
Section 4999 of the Code or a loss of deduction under Section 280G of the Code.
Any reduction pursuant to this Section 10.3 shall be made in compliance with
Section 409A of the Code.

ARTICLE XI

AMENDMENT OR TERMINATION OF THE PLAN

The Board or the Committee may amend or terminate the Plan at any time;
provided, however, that no amendment or termination shall be made without the
approval of the Company’s stockholders to the extent that (a) the amendment
materially increases the benefits accruing to Participants under the Plan,
(b) the amendment materially increases the aggregate number of Shares authorized
for grant under the Plan (excluding an increase in the number of Shares that may
be issued under the Plan as a result of Section 2.3, (c) the amendment
materially modifies the requirements as to eligibility for participation in the
Plan, or (d) such approval is required by any law, regulation or stock exchange
rule.

ARTICLE XII

TRANSFERABILITY

12.1 Awards Not Transferable. Except as described in Section 12.2 or as provided
in a related Award Agreement, an Award may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, except by will or the laws of
descent and distribution Notwithstanding any provision contained in this Article
XII, no Award may be transferred by a Participant for value or consideration.

 

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12.2 Beneficiary Designation. Unless otherwise specifically designated by the
Participant in writing, a Participant’s beneficiary under the Plan shall be the
Participant’s spouse or, if no spouse survives the Participant, the
Participant’s estate.

ARTICLE XIII

MISCELLANEOUS

13.1 No Right to Continue Services or to Awards. The granting of an Award under
the Plan shall impose no obligation on the Company or any Affiliate to continue
the employment or services of a Participant or interfere with or limit the right
of the Company or any Affiliate to terminate the services of any Employee or
Director at any time. In addition, no Employee or Director shall have any right
to be granted any Award, and there is no obligation for uniformity of treatment
of Participants. The terms and conditions of Awards and the Committee’s
interpretations and determinations with respect thereto need not be the same
with respect to each Participant.

13.2 Tax Withholding.

(a) The Company or an Affiliate, as applicable, shall have the power and the
right to deduct, withhold or collect any amount required by law or regulation to
be withheld with respect to any taxable event arising with respect to an Award
granted under the Plan. This amount may, as determined by the Committee in its
sole discretion, be (i) withheld from other amounts due to the Participant,
(ii) withheld from the value of any Award being settled or any Shares being
transferred in connection with the settlement of an Award or (iii) withheld from
the vested portion of any Award (including the Shares transferable thereunder),
whether or not being settled at the time the taxable event arises, or
(iv) collected directly from the Participant.

(b) Subject to the approval of the Committee, a Participant may elect to satisfy
the withholding requirement, in whole or in part, by having the Company or an
Affiliate, as applicable, withhold Shares having a Fair Market Value on the date
the tax is to be determined equal to the minimum statutory total tax that could
be imposed on the transaction; provided that such Shares would otherwise be
distributable to the Participant at the time of the withholding and if such
Shares are not otherwise distributable at the time of the withholding, provided
that the Participant has a vested right to distribution of such Shares at such
time. All such elections shall be irrevocable and made in writing and shall be
subject to any terms and conditions that the Committee, in its sole discretion,
deems appropriate.

13.3 Requirements of Law. The grant of Awards and the issuance of Shares shall
be subject to all applicable laws, rules and regulations (including applicable
federal and state securities laws) and to all required approvals of any
governmental agencies or national securities exchange, market or other quotation
system. Without limiting the foregoing, the Company shall have no obligation to
issue Shares under the Plan prior to (a) receipt of any approvals from any
governmental agencies or national securities exchange, market or quotation
system that the Committee deems necessary and (b) completion of registration or
other qualification of the Shares under any applicable federal or state law or
ruling of any governmental agency that the Committee deems necessary.

13.4 Legends. Certificates for Shares delivered under the Plan may be subject to
such stock transfer orders and other restrictions that the Committee deems
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange or other recognized market or
quotation system upon which the Shares are then listed or traded, or any other
applicable federal or state securities law. The Committee may cause a legend or
legends to be placed on any certificates issued under the Plan to make
appropriate reference to restrictions within the scope of this Section 14.4.

13.5 Uncertificated Shares. To the extent that the Plan provides for the
issuance of certificates to reflect the transfer of Shares, the transfer of
Shares may be effected on a noncertificated basis, to the extent not prohibited
by applicable law or the applicable rules of any stock exchange.

13.6 Governing Law. The Plan and all Award Agreements shall be governed by and
construed in accordance with the laws of (other than laws governing conflicts of
laws) the State of Ohio, except to the extent that the laws of the state in
which the Company is incorporated are mandatorily applicable.

 

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13.7 No Impact on Benefits. Awards are not compensation for purposes of
calculating a Participant’s rights under any employee benefit plan that does not
specifically require the inclusion of Awards in calculating benefits.

13.8 Rights as a Shareholder. Except as otherwise provided in the Plan or in a
related Award Agreement, a Participant shall have none of the rights of a
shareholder with respect to Shares covered by an Award unless and until the
Participant becomes the record holder of such Shares.

13.9 Successors and Assigns. The Plan shall be binding on all successors and
assigns of the Company and each Participant, including without limitation, the
estate of such Participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of the
Participant’s creditors.

13.10 Section 409A of the Code.

(a) Awards granted pursuant to the Plan that are subject to Section 409A of the
Code, or that are subject to Section 409A but for which an exception from
Section 409A of the Code applies, are intended to comply with or be exempt from
Section 409A of the Code and the Treasury Regulations promulgated thereunder,
and the Plan shall be interpreted, administered and operated accordingly.

(b) If a Participant is determined to be a “specified employee” (within the
meaning of Section 409A of the Code and as determined under the Company’s policy
for determining specified employees), the Participant shall not be entitled to
payment or to distribution of any portion of an Award that is subject to
Section 409A of the Code (and for which no exception applies) and is payable or
distributable on account of the Participant’s “separation from service” (within
the meaning of Section 409A of the Code) until the expiration of six (6) months
from the date of such separation from service (or, if earlier, the Participant’s
death). Such Award, or portion thereof, shall be paid or distributed on the
first business day of the seventh month following such separation from service.

(c) Nothing in the Plan shall be construed as an entitlement to or guarantee of
any particular tax treatment to a Participant, and none of the Company, its
Affiliates, the Board or the Committee shall have any liability with respect to
any failure to comply with the requirements of Section 409A of the Code.

13.11 Savings Clause. In the event that any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

ARTICLE XIV

EFFECTIVE DATE AND TERM OF THE PLAN

This Plan shall become effective upon its approval by the Company’s
shareholders. No Awards may be granted under the Plan after the tenth
anniversary of the date the Plan was approved by the Board. Notwithstanding the
foregoing, the termination of the Plan shall not preclude the Company from
complying with the terms of Awards outstanding on the date the Plan terminates.

 

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