Exhibit 10.23



 






Exhibit 10.23




DSW INC.




2005 EQUITY INCENTIVE PLAN




1.00 PURPOSE AND EFFECTIVE DATE



1.01 Purpose. This Plan is intended to foster and promote the long-term financial success of the
Company and Related Entities and to materially increase shareholder value by [1] providing
Consultants, Employees and Eligible Directors an opportunity to acquire an ownership interest in
the Company and [2] enabling the Company and Related Entities to attract and retain the services of
outstanding Consultants, Employees and Eligible Directors upon whose judgment, interest and special
efforts the successful conduct of the Group’s business is largely dependent.



1.02 Effective Date. This Plan is effective on the date it is approved by the Board subject to
approval by the Company’s shareholders. Any Award granted before shareholder approval will be null
and void if the shareholders do not approve the Plan within the period just described.




2.00 DEFINITIONS



When used in this Plan, the following terms have the meanings given to them in this section unless
another meaning is expressly provided elsewhere in this document or clearly required by the
context. When applying these definitions and any other word, term or phrase used in this Plan, the
form of any word, term or phrase will include any and all of its other forms.



Act. The Securities Exchange Act of 1934, as amended, or any successor statute of similar effect
even if the Company is not subject to the Act.



Affiliated SAR. An SAR that is granted in conjunction with an Option and which is always deemed to
have been exercised at the same time that the related Option is exercised. The deemed exercise of
an Affiliated SAR will not reduce the number of shares of Stock subject to the related Option,
except to the extent of the exercise of the related Option.



Annual Meeting. The annual meeting of the Company’s shareholders.



Annual Retainer. The annual cash retainer and any other fees paid to each Eligible Director for
service as a member of the Board and as a member of any Board committee.



Annual Retainer Deferral Form. The form each Eligible Director must complete to defer all or a
portion of his or her Annual Retainer.



Award. Any Incentive Stock Option, Nonstatutory Stock Option, Performance Share, Performance Unit,
Restricted Stock, Restricted Stock Unit, Stock Appreciation Right and Stock Unit granted under the
Plan.



Award Agreement. The written or electronic agreement between the Company and each Participant that
describes the terms and conditions of each Award and the manner in which it will


 









 






be settled if earned. If there is a conflict between the terms of this Plan and the terms of the
Award Agreement, the terms of this Plan will govern.



Beneficiary. The person a Participant designates to receive (or to exercise) any Plan benefits (or
rights) that are unpaid (or unexercised) when he or she dies. A Beneficiary may be designated only
by following the procedures described in Section 15.02; neither the Company nor the Committee is
required to infer a Beneficiary from any other source.



Board. The Company’s board of directors.



Cause. Unless the Committee specifies otherwise in the Award Agreement, with respect to any
Participant and subject to any cure provision included in any written agreement between the
Participant and the Company:





[1] A material failure to substantially perform his or her position or duties;




[2] Engaging in illegal or grossly negligent conduct that is materially injurious to the
Company or any Related Entity;




[3] A material violation of any law or regulation governing the Company or any Related
Entity;




[4] Commission of a material act of fraud or dishonesty which has had or is likely to have a
material adverse effect upon the Company’s (or any Related Entity’s) operations or financial
conditions;




[5] A material breach of the terms of any other agreement (including any employment
agreement) with the Company or any Related Entity.; or




[6]
A breach of any term of this Plan or Award Agreement.


If a Participant Terminates (or is Terminated) for any reason other than Cause and the Company
subsequently discovers an act, failure or event that, if known before the Participant’s Termination
would have justified a Termination for Cause and that act, event or failure was actively concealed
by the Participant and could not have been discovered through reasonable diligence before the
Participant Terminated, that Participant will be retroactively treated as having been Terminated
for Cause.



Change in Control. The earliest of any of the following events to occur after completion of the
initial public offering of the Company’s stock which is the subject of the Registration
Statement:



[1]
During any period consisting of 12 consecutive calendar months beginning after completion
of the initial public offering of the Company’s stock which is the subject of the
Registration Statement, the members of the Board specified in the Registration Statement
(“Incumbent Directors”) cease for any reason other than death to constitute at least a
majority of the members of the Board, provided [a] that any director whose election, or nomination for election by the Company’s shareholders, was approved by a






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vote of at least a majority of the then Incumbent Directors also will be treated as an Incumbent
Director unless that person was nominated for election to the Board (or otherwise became a
member of the Board) in connection with an actual or threatened election contest relating to
the election or removal of Board members or other threatened or actual solicitation of
proxies of consent by or in behalf of any “person,” including a “group” [as those terms are
used in Act §§13(d) and 14(d)(2)], [b] this element of this definition will not apply if the
Company reorganizes into an entity that does not have a board of directors or analogous
governing body and that reorganization is not a Change in Control under another element of
this definition and [c] if the Company becomes a subsidiary of another entity (i.e., another
entity owns, directly or indirectly, more than 50 percent of the total combined voting power
of all classes of Stock) in a transaction that is not a Change in Control under another
element of this definition, subpart [1] of this definition will be applied by reference to
changes to the board of directors of the parent entity (or of the ultimate parent entity).




[2] Any “person, ” including a “group” [as these terms are used in Act §§13(d) and 14(d)(2)]
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or
indirectly, of 30 percent or more of the combined voting power of the Company and of
securities of the Company sufficient to elect a majority of the members of the Board but
disregarding the effect of [a] any acquisition by a person who on the Effective Date is the
beneficial owner of 30 percent or more of the combined voting power of the Company, [b] any
acquisition directly from the Company, including a public offering of securities, [c] any
acquisition by the Company or any Related Entity, [d] any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any Related Entity
or [e] any acquisition through a transaction described in subpart [3], [4] or [5] of this
definition, [f] any acquisition by Retail Ventures, Inc. or any corporation, partnership or
other form of unincorporated entity of which Retail Ventures, Inc. owns, directly or
indirectly, 50 percent or more of the total combined voting power of all classes of stock,
if the entity is a corporation, or of the capital or profits interest, if the entity is a
partnership or another form of unincorporated entity, [g] any acquisition by Schottenstein
Stores Corporation (the persons identified in subparts [a], [c], [f] and [g] of this subpart
being sometimes referred to as “Permitted Acquirers”), [h] any acquisition by any one or
more of the trusts established for the benefit of any of Jay L. Schottenstein, Susan S.
Diamond, Ann Desche, Lori Schottenstein, Geraldine Schottenstein or any of their respective
spouses, children or lineal descendants or any person controlled by any such trust or
trusts, [i] any acquisition by an entity that files SEC Form 13-G in connection with its
ownership of Stock unless and until that entity files SEC Form 13-D in connection with its
ownership of Stock or [j] any acquisition by Cerberus Partners, Ltd. unless, at the time of
the acquisition, the Permitted Acquirers, as defined in subpart [2][g] of this definition
and the trusts described in subpart [2][h] of this definition, directly or indirectly, own
less than 10 percent of the voting power of the Company’ stock.




[3] The completion of a transaction or a series of related transactions effecting [a] the
merger or other business combination of the Company with or into another entity other than a
Permitted Acquirer in which the shareholders of the Company immediately before the effective date of such merger or other business combination own less than 50 percent



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of the voting power in such entity; or [b] the sale or other disposition of all or
substantially all of the assets of the Company except a sale or other disposition to [i] an
entity in which the shareholders of the Company immediately before the sale or disposition
own more than 50 percent of the voting power of such entity after that transaction or [ii] a
Permitted Acquirer.




[4] Liquidation or dissolution of the Company other than a liquidation or dissolution into
an entity [a] in which the shareholders of the Company before the effective date of the
liquidation or dissolution own more than 50 percent of the voting power of such entity after
the liquidation or dissolution or [b] which is a Permitted Acquirer.




[5] Any other transaction or event that the Board, in its sole discretion, decides will have
as material an effect on the Company as any transaction or event described in subparts [1]
through [4] of this definition but which is not otherwise described in this section.


However, and regardless of any other provision of this Plan or element of this definition, a Change
in Control will not occur solely as a result of the initial public offering of the Company’s stock
which is the subject of the Registration Statement or of any event directly related to that initial
public offering.



Change in Control Price. The highest price per share of Stock offered in conjunction with any
transaction resulting in a Change in Control (as determined in good faith by the Committee if any
part of the offered price is payable other than in cash) or, in the case of a Change in Control
occurring solely by reason of events not related to a transfer of Stock, the highest Fair Market
Value of a share of Stock on any of the 30 consecutive trading days ending on the last trading day
before the Change in Control occurs.



Code. The Internal Revenue Code of 1986, as amended or superseded after the Effective Date and any
applicable rulings or regulations issued under the Code.




Committee.





[1] In the case of any Award to Eligible Directors, the entire Board;




[2] In the case of Award granted to Participants other than Eligible Directors before the
Company becomes a “publicly held corporation” as defined in Code §162(m)(2), the entire
Board; or




[2] In the case of Awards made to Participants other than Eligible Directors after the
Company becomes a “publicly held corporation” as defined in Code §162(m)(2), the Board’s
Compensation Committee which also constitutes a “compensation committee” within the meaning
of Treas. Reg. §1.162-27(c)(4). The Committee will be comprised of at least two persons
[a] each of whom is [i] an outside director, as defined in Treas. Reg. §1.162-27(e)(3)(i)
and [ii] a “non-employee” director within the meaning of Rule 16b-3 under the Act and [b]
none of whom may receive remuneration from the Company or any Related Entity in any capacity other than as a director, except as permitted
under Treas. Reg. §1.162-27(e)(3)(ii).



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Company. DSW Inc., an Ohio corporation, and any and all successors to it.



Consultant. Any person, other than an Employee or an Eligible Director, who provides significant
services to the Company or any Related Entity.



Covered Officer. Those Employees whose compensation is subject to limited deductibility under Code
§162(m) as of the last day of any calendar year ending with or within any Performance Period.



Disability. Unless the Committee specifies otherwise in the Award Agreement:





[1] With respect to an Incentive Stock Option, as defined in Code §22(e)(3).




[2] With respect to any Award subject to Code §409A, the Participant is [a] unable to engage
in any substantial gainful activity by reason of any medically determinable physical or
mental impairment arising before Termination which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 continuous months beginning
before Termination; or [b] by reason of any readily determinable physical or mental
impairment arising before Termination which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months beginning before
Termination, receiving income replacement benefits for a period of not less than 3 months
beginning before Termination under an accident and health plan covering employees of the
Participant’s employer; or




[3] With respect to any Award not described in subpart [1] or [2] of this definition, the
Participant’s inability, with a reasonable accommodation, to perform his or her duties on a
full-time basis for a period of more than six-consecutive calendar months due to a physical
or mental infirmity arising before Termination.


Eligible Director. A person who, on an applicable Grant Date [1] is an elected member of the Board
or of a Related Board (or has been appointed to the Board or to a Related Board to fill an
unexpired term and will continue to serve at the expiration of that term only if elected by
shareholders) and [2] is not an Employee. For purposes of applying this definition, an Eligible
Director’s status will be determined as of the Grant Date applicable to each affected Award.



Employee. Any person who, on any applicable date, is a common law employee of the Company or any
Related Entity. A worker who is classified as other than a common law employee but who is
subsequently reclassified as a common law employee of the Company for any reason and on any basis
will be treated as a common law employee only from the date that reclassification occurs and will
not retroactively be reclassified as an Employee for any purpose of this Plan.



Exercise Price. The price at which a Participant may exercise an Award.



Fair Market Value. The value of one share of Stock on any relevant date, determined under the
following rules:




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[1] If the Stock is traded on an exchange, the reported “closing price” on the relevant
date, if it is a trading day, otherwise on the next trading day;




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




[3] If neither subparts [1] nor [2] of this definition apply, the fair market value as
determined by the Committee in good faith and, with respect to Incentive Stock Options,
consistent with rules prescribed under Code §422.


Freestanding SAR. An SAR that is not associated with an Option and is granted under Section 10.00.



Grant Date. The later of [1] the date the Committee establishes the terms of an Award or [2] the
date specified in the Award Agreement.



Group. The Company and all Related Entities. The composition of the Group will be determined as
of any relevant date.



Incentive Stock Option. Any Option granted under Section 6.00 that, on the Grant Date, meets the
conditions imposed under Code §422 and is not subsequently modified in a manner inconsistent with
Code §422.



Nonstatutory Stock Option. Any Option granted under Section 6.00 that is not an Incentive Stock
Option.



Option. The right granted to a Participant to purchase a share of Stock at a stated price for a
specified period of time. Subject to Section 6.00, an Option may be either [1] an Incentive Stock
Option or [2] a Nonstatutory Stock Option.



Participant. Any Consultant, Employee or Eligible Director to whom an outstanding Award has been
granted.



Performance-Based Award. An Award granted subject to Section 11.00.



Performance Criteria. The criteria described in Section 11.02.



Performance Period. The period over which the Committee will determine if applicable Performance
Criteria have been met.



Performance Share. An Award granted under Section 9.00.



Performance Unit. An Award granted under Section 9.00.



Plan. The DSW Inc. 2005 Equity Incentive Plan.



Plan Year. The Company’s fiscal year.




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Registration Statement. The Form S-1 Registration Statement filed with the Securities and Exchange
Commission on March 14, 2005 (Registration #333-123289), as amended at the time it is declared
effective by the Securities and Exchange Commission.



Related Board. The board of directors of any incorporated Related Entity or the governing body of
any unincorporated Related Entity.



Related Entity. Any corporation, partnership or other form of unincorporated entity [1] of which
the Company owns, directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock, if the entity is a corporation, or of the capital or profits interest, if the
entity is a partnership or another form of unincorporated entity or [2] which owns 50 percent or
more of the total combined voting power of all classes of the Stock.



Restricted Stock. An Award granted under Section 8.01.



Restricted Stock Unit. An Award granted under Section 8.02.



Restriction Period. The period over which the Committee will determine if a Participant has met
conditions placed on Restricted Stock or Restricted Stock Units.



Retirement. Unless the Committee specifies otherwise in the Award Agreement, the date:





[1] An Employee Terminates on or after reaching age 65 and completing at least five years of
service; or




[2] An Eligible Director Terminates as a Board or a Related Board member after completing
one full term as a member of the Board or the board of directors of a Related Entity after
reaching age 65.




[3] For purposes of applying this definition:




[a] No consultant will be deemed to have “Retired” regardless of the circumstances
surrounding his or her Termination;




[b] A Participant’s status as an Employee or an Eligible Director will be determined
as of the Grant Date applicable to each affected Award; and




[c] An Eligible Director serving on the Board and/or one or more Related Boards may
Retire from one board while continuing to serve as a member of other Group boards
(or governing bodies). In this case, the Eligible Director’s Retirement will affect
only Awards granted with respect to his or her service on the board (or other
governing body) from which he or she is Retiring.


Stock. The Class A common stock, without par value, issued by the Company or any security issued
by the Company in substitution, exchange or in place of these shares.



Stock Appreciation Right (or “SAR”). An Award granted under Section 10.00 that is a Tandem SAR, an
Affiliated SAR or a Freestanding SAR.




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Stock Unit. A right to receive payment of the Fair Market Value of a share of Stock as provided in
Section 7.00.



Tandem SAR. An SAR that is associated with an Option and which expires when that Option expires or
is exercised, as described in Section 10.00.



Termination or Terminated.





[1] Unless the Committee specifies otherwise in the Award Agreement:




[a] Cessation of the employee-employer relationship between an Employee and the
Company and all Related Entities for any reason;




[b] A Participant who is an Employee of a Related Entity at a Grant Date [i] will
not be treated as having Terminated solely because his or her employer ceases to be
a Related Entity and that individual continues to be employed by the former Related
Entity (in which case the former employee will be treated as having Terminated or
not Terminated under this definition as if the former Related Entity had remained a
Related Entity) but [ii] will be treated as having Terminated if (and to the extent
that) his or her Award is replaced by the former Related Entity following procedures
and principles described in Code §424 within 90 days after the disaffiliation;




[c] With respect to a Participant who is a Consultant, a cessation of the service
relationship between the Consultant and the Company and all Related Entities, unless
there is a simultaneous reengagement of the Consultant by the Company or a Related
Entity;




[d] With respect to a Participant who is an Eligible Director, cessation of his or
her service on the Board or a Related Board for any reason.




[2] For purposes of this definition:




[a] An Eligible Director serving on the Board and/or one or more Related Boards may
Terminate from one board while continuing to serve as a member of other Related
Boards. In this case, the Eligible Director’s Termination will affect only Awards
granted with respect to his or her Terminating board membership.




[b] With respect to any Award (including an Incentive Stock Option granted to an
Employee) a Termination will not have occurred while the Employee is absent from
active employment for a period of not more than three months (or, if longer, the
period during which reemployment rights are protected by law, contract or written
agreement, including the Award Agreement, between the Participant and the Company)
due to illness, military service or other leave of absence approved by the
Committee.




[c] Subject to other rules described in the Plan and the Award Agreement, an
Employee whose status changes from an Employee to a Consultant will not be



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treated as having Terminated. In these circumstances, the former Employee will be treated
as having Terminated under rules applicable to Consultants.



3.00 PARTICIPATION




3.01 Participation.





[1] Consistent with the terms of the Plan and subject to Section 3.02, the Committee will
[a] decide which Consultants, Employees and Eligible Directors will be granted Awards; and
[b] specify the type of Award to be granted and the terms upon which an Award will be
granted and may be earned.




[2] The Committee may establish different terms and conditions [a] for each type of Award,
[b] for each Participant receiving the same type of Award; and [c] for the same Participants
for each Award the Participant receives, whether or not those Awards are granted at
different times.




[3] The Committee (or the Board, as appropriate) also may amend the Plan and the Award
Agreements without any additional consideration to affected Participants to the extent
necessary to avoid penalties arising under Code §409A, even if those amendments reduce,
restrict or eliminate rights granted under the Plan or Award Agreement (or both) before
those amendments.




[4] Unless permitted by Code 409A, no Award subject to Code §409A will be granted under this
Plan to any person who is performing services only for an entity that is not an affiliate of
the Company within the meaning of Code §414(b) and (c).



3.02 Conditions of Participation. By accepting an Award, each Participant agrees:





[1] To be bound by the terms of the Award Agreement and the Plan and to comply with other
conditions imposed by the Committee; and




[2] That the Committee (or the Board, as appropriate) may amend the Plan and the Award
Agreements without any additional consideration to the extent necessary to avoid penalties
arising under Code §409A, even if those amendments reduce, restrict or eliminate rights
granted under the Plan or Award Agreement (or both) before those amendments.



4.00 ADMINISTRATION



4.01 Committee Duties. The Committee is responsible for administering the Plan and has all powers
appropriate and necessary to that purpose. Consistent with the Plan’s objectives, the Committee
may adopt, amend and rescind rules and regulations relating to the Plan, to the extent appropriate
to protect the Company’s and the Group’s interests and has complete discretion to make all other
decisions (including whether a Participant has incurred a Disability) necessary or advisable for the administration and interpretation of the Plan. Any action by the Committee will
be final, binding and conclusive for all purposes and upon all persons.




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4.02 Delegation of Ministerial Duties. In its sole discretion, the Committee may delegate any
ministerial duties associated with the Plan to any person (including Employees) that it deems
appropriate. However, the Committee may not delegate any duties it is required to discharge under
Code §162(m).



4.03 Award Agreement. At the time an Award is made, the Committee will prepare and deliver an Award
Agreement to each affected Participant. The Award Agreement:





[1] Will describe [a] the type of Award and when and how it may be exercised or earned and
[b] any Exercise Price associated with each Award.




[2] To the extent different from the terms of the Plan, will describe [a] any conditions
that must be met before the Award may be exercised or earned, [b] any objective restrictions
placed on Awards and any performance related conditions and Performance Criteria that must
be met before those restrictions will be released and [c] any other applicable terms and
conditions affecting the Award.


4.04 Restriction on Repricing. Regardless of any other provision of this Plan, neither the Company
nor the Committee may “reprice” (as defined under rules issued by the exchange on which the Stock
then is traded) any Award without the prior approval of the shareholders.




5.00 STOCK SUBJECT TO PLAN



5.01 Number of Shares of Stock. Subject to Section 5.03, the number of shares of Stock issued
under the Plan may not be larger than 4,600,000 of which up to 4,600,000 may be issued through
Incentive Stock Options. The shares of Stock to be delivered under the Plan may consist, in whole
or in part, of treasury Stock or authorized but unissued Stock not reserved for any other purpose.



5.02 Unfulfilled Awards. Any Stock subject to an Award that, for any reason, is forfeited,
cancelled, terminated, relinquished, exchanged or otherwise settled without the issuance of Stock
or without payment of cash equal to the difference between the Award’s Fair Market Value and its
Exercise Price (if any) may again be granted under the Plan and, in the discretion of the Committee
and subject to the limits described in Section 5.01, may be subject to a subsequent Award. Any
decision by the Committee under this section will be final and binding on all Participants.



5.03 Adjustment in Capitalization. If, after the Effective Date, there is a Stock dividend or
Stock split, recapitalization (including payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares,
or other similar corporate change affecting Stock, the Committee will appropriately adjust [1] the
number of Awards that may or will be granted to Participants during a Plan Year, [2] the aggregate
number of shares of Stock available for Awards under Section 5.01 or subject to outstanding Awards
(as well as any share-based limits imposed under this Plan), [3] the respective Exercise Price,
number of shares and other limitations applicable to outstanding or subsequently granted Awards and [4] any other factors, limits or terms affecting any outstanding or
subsequently granted Awards.




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5.04 Limits on Awards to Covered Officers. During any Plan Year, no Covered Officer may receive
[1] Options and Stock Appreciation Rights covering more than 500,000 shares (adjusted as provided
in Section 5.03), including Awards that are cancelled [or deemed to have been cancelled under
Treas. Reg. §1.162-27(e)(2)(vi)(B)] during each Plan Year granted, [2] other Awards covering more
than 100,000 share (adjusted as provided in Section 5.03), including Awards that are cancelled [or
deemed to have been cancelled under Treas. Reg. §1.162-27(e)(2)(vi)(B)] during each Plan Year
granted or [3] receive more than $3,000,000 in cash settlement of Awards.




6.00 OPTIONS



6.01 Grant of Options. At any time during the term of this Plan, the Committee may grant [1]
Incentive Stock Options or Nonstatutory Stock Options to Employees and [2] Nonstatutory Stock
Options to Consultants and Eligible Directors.



6.02 Exercise Price. Except as required to implement Section 6.06, each Option will bear an
Exercise Price at least equal to Fair Market Value on the Grant Date. However, the Exercise Price
associated with an Incentive Stock Option will be at least 110 percent of the Fair Market Value of
a share of Stock on the Grant Date with respect to any Incentive Stock Options issued to an
Employee who, on the Grant Date, owns [as defined in Code §424(d)] Stock possessing more than 10
percent of the total combined voting power of all classes of Stock (or the combined voting power of
any Related Entity), determined under rules issued under Code §422.



6.03 Exercise of Options. Subject to any terms, restrictions and conditions specified in the Plan,
the Award Agreement and unless specified otherwise in the Award Agreement:





[1] Options granted to Employees and Consultants will be exercisable according to the
following schedule:



	 	 	 
	Number of Full Years Beginning After	 	Cumulative Percentage
	Grant Date	 	Vested
	1 but fewer than 2
	 	20 percent
	2 but fewer than 3
	 	40 percent
	3 but fewer than 4
	 	60 percent
	4 but fewer than 5
	 	80 percent
	5 or more
	 	100 percent





Regardless of the vesting schedule just described but subject to Section 12.00 and the terms of the
Award Agreement, Options that are not exercisable at Termination will be fully and immediately
exercisable if the Employee Terminates because of death, Retirement or Disability or the Consultant
Terminates because of death or Disability but will be forfeited if the Employee or Consultant
Terminates for any other reason.





[2] Options granted to Eligible Directors will be exercisable:



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[a] 12 complete consecutive calendar months beginning after the Grant Date, if the
Eligible Director has not then Terminated; and




[b] Will be fully and immediately exercisable if the Eligible Director Terminates
because of death, Retirement or Disability but will be forfeited if the Eligible
Director Terminates for any other reason.




[3] However:




[a] Any Option to purchase a fraction of a share of Stock will automatically be
converted to an Option to purchase an additional whole share.




[b] Unless the Committee specifies otherwise in the Award Agreement, no Participant
may exercise Options for fewer than the smaller of [i] 100 shares of Stock or [ii]
the full number of shares of Stock for which Options are then exercisable.




[c] No Option may be exercised more than ten years after it is granted (five years
in the case of an Incentive Stock Option granted to an Employee who owns [as
defined in Code §424(d)] on the Grant Date Stock possessing more than 10 percent of
total combined voting power of all classes of Stock or the combined voting power of
any Related Entity, determined under rules issued under Code §422).



6.04 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary:





[1] No provision of this Plan relating to Incentive Stock Options will be interpreted,
amended or altered, nor will any discretion or authority granted under the Plan be
exercised, in a manner that is inconsistent with Code §422 or, without the consent of any
affected Participant, to cause any Incentive Stock Option to fail to qualify for the federal
income tax treatment afforded under Code §421.




[2] The aggregate Fair Market Value of the Stock (determined as of the Grant Date) with
respect to which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all option plans of the Company and all Related
Entities of the Company) will not exceed $100,000 [or other amount specified in Code
§422(d)], determined under rules issued under Code §422.




[3] No Incentive Stock Option will be granted to any person who is not an Employee on the
Grant Date.




[4] An Incentive Stock Option granted to an Employee who, without Terminating, [a] becomes a
Consultant after the Grant Date or [b] is no longer an Employee because he or she is
employed by an entity that no longer is a Related Entity, [c] will be treated as a
Nonstatutory Stock Option beginning at the end of the third month after the former Employee becomes a Consultant or the date the former Employee’s employer no longer is a
Related Entity, whichever is applicable.



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6.05 Exercise of and Payment for Options. Unless the Committee specifies otherwise in the Award
Agreement, the Exercise Price associated with each Option must be paid in cash. However, the
Committee may, in its discretion, develop and extend to some or all Participants, other procedures
through which Participants may pay the Exercise Price, including a cashless exercise and allowing a
Participant to tender Stock he or she already has owned for at least six months before the exercise
date, either by actual delivery of the previously owned Stock or by attestation, valued at its Fair
Market Value on the exercise date, as partial or full payment of the Exercise Price. A Participant
may exercise an Option only by sending to the Committee a completed exercise notice (in the form
prescribed by the Committee) along with payment of the Exercise Price. As soon as administratively
feasible after those steps are taken, the Committee will issue to the Participant the appropriate
shares certificates.



6.06 Substitution of Options. In the Committee’s discretion, persons who become Employees as a
result of a transaction described in Code §424(a) or Employees holding options issued by a former
Related Entity at the occurrence of a transaction described in Code §424(a) may receive Options in
exchange for options granted by their former employer or the former Related Entity subject to the
rules and procedures prescribed under Code §424.



6.07 Transferability of Stock. Unless the Committee specifies otherwise in the Award Agreement or
as otherwise specifically provided in the Plan, Stock acquired through an Option will be
transferable, subject to applicable federal securities laws, the requirements of any national
securities exchange or system on which shares of Stock are then listed or traded or any blue sky or
state securities laws.




7.00 STOCK UNITS




7.01 Granting Stock Units.





[1] Each Eligible Director may elect to receive all or a portion of his or her Annual
Retainer in cash or Stock Units by returning to the Committee an Annual Retainer Deferral
Form specifying [a] the portion (stated in 25 percent increments) of the Annual Retainer to
be converted to Stock Units, [b] the date Stock Units are to be settled and [c] the period
(which may not be longer than 10 years) over which the value of Stock Units is to be
distributed.




[2] Each Eligible Director that has followed the procedure described in Section 7.03 to
receive Stock Units in lieu of all or a portion of his or her Annual Retainer will receive a
number of Stock Units calculated by dividing the dollar amount of Annual Retainer to be
received in Stock Units by the Fair Market Value of a share of Stock on the first trading
day following the date of the Annual Meeting for which the deferred value of the Annual
Retainer otherwise would have been paid, rounded to the next highest whole share of Stock.



7.02 Settling Stock Units.





[1] Stock Units always will be settled in shares of Stock unless the Award Agreement
specifies another form of settlement.



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[2] All Stock Units will be settled as of [a] the date the Eligible Director ceases to be a
member of the Board or [b] the date the Eligible Director specifies on an Annual Retainer
Deferral Form.




[3] If Stock Units are to be settled in cash, the amount distributed will be calculated by
multiplying the number of Stock Units to be settled in cash by Fair Market Value.




[4] If Stock Units are to be settled in shares of Stock, the number of shares of Stock
distributed will equal the whole number of Stock Units to be settled in Stock, with the Fair
Market Value of any fractional share of Stock distributed in cash.




[5] If an Eligible Director dies before all of his or her Stock Units have been settled, the
value of any unpaid Stock Units will be paid in a lump sum in cash to his or her
Beneficiary.


7.03 Election Procedures. To be effective, a completed Annual Retainer Deferral Form must be
delivered to the Committee not later than:





[1] The first day of the calendar year for which the Annual Retainer is earned and otherwise
would have been paid in cash; or




[2] Not later than 30 days after the Eligible Director first becomes eligible to make an
election under this section, although an election under this subpart will apply only to the
portion of the Annual Retainer attributable to services performed after the date of that
election.


Once filed, elections made on an Annual Retainer Deferral Form may be revoked or changed by filing
a subsequent Annual Retainer Deferral Form with the Committee. However, that revocation or change
will be effective only with respect to any Annual Retainer to be earned for any calendar year
beginning after the effective date of the revocation or change. Also, the Committee will adopt
rules relating to changes in the time and manner in which Stock Units may be settled.




8.00 RESTRICTED STOCK/RESTRICTED STOCK UNITS



8.01 Restricted Stock. Subject to the terms of this Plan, the Committee may grant Restricted Stock
to Participants at any time during the term of this Plan under terms and conditions that the
Committee specifies in the Award Agreement and the terms of the Plan.





[1] Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated until the end of the applicable Restriction Period. At the Committee’s sole
discretion, all shares of Restricted Stock will:




[a] Be held by the Company as escrow agent during the Restriction Period; or




[b] Be issued to the Participant in the form of certificates bearing a legend
describing the restrictions imposed on the shares.



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[2] Restricted Stock will be:




[a] Forfeited (or if shares were issued to the Participant for a cash payment, those shares will be resold to the Company for the amount paid), if all restrictions have
not been met at the end of the Restriction Period, and again become available under
the Plan; or




[b] Released from escrow and distributed (or any restrictions described in the
certificate removed) as soon as practicable after the last day of the Restriction
Period, if all restrictions have then been met.




[3] During the Restriction Period, and unless the Award Agreement provides otherwise, each
Participant to whom Restricted Stock has been issued as described in Section 8.01[1][b]:




[a] May exercise full voting rights associated with that Restricted Stock; and




[b] Will be entitled to receive all dividends and other distributions paid with
respect to that Restricted Stock; provided, however, that if any dividends or other
distributions are paid in shares of Stock, those shares will be subject to the same
restrictions on transferability and forfeitability as the shares of Restricted Stock
with respect to which they were issued.


8.02 Restricted Stock Units. Subject to the terms of this Plan, the Committee may grant
Restricted Stock Units to Participants at any time during the term of this Plan under terms and
conditions that the Committee specifies in the Award Agreement and to the terms of the Plan.





[1] Restricted Stock Units may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated.




[2] Restricted Stock Units will be:




[a] Forfeited, if all restrictions have not been met at the end of the Restriction
Period, and again become available under the Plan; or




[b] Settled in shares of Stock unless the Award Agreement specifies another form of
settlement.




[3] If Restricted Stock Units are settled, [a] in shares of Stock, the number of shares of
Stock distributed will be equal to the number of Restricted Stock Units to be settled, [b]
in cash, the amount distributed will be equal to the number of Restricted Stock Units to be
settled multiplied by the Fair Market Value of a share of Stock on the settlement date or
[c] in a combination of shares of Stock or cash, the number of shares of Stock distributed
and the amount of cash distributed will be computed under subpart 8.02[3][b] and [c].




[4] During the Restriction Period, Participants may not exercise any voting rights
associated with the shares of Stock underlying his or her Restricted Stock Units or to



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receive any dividends or other distributions otherwise payable with respect to the shares of
Stock underlying his or her Restricted Stock Units.


8.03 Vesting. Subject to any terms, restrictions and conditions specified in the Plan or the Award
Agreement and unless specified otherwise in the Award Agreement, time-based restrictions imposed on
Restricted Stock or Restricted Stock Units will lapse under the following schedule:




	 	 	 
	Number of Full Years Beginning	 	Cumulative Percentage
	After Grant Date	 	Vested
	Fewer than 4
	 	0 percent
	4 or more
	 	100 percent





Also, and unless the Committee specifies otherwise in the Award Agreement, restrictions that have
not lapsed at Termination will fully and immediately lapse if the Participant Terminates because of
death, Retirement or Disability but will be forfeited if the Participant Terminates for any other
reason.




9.00. PERFORMANCE SHARES AND PERFORMANCE UNITS



9.01 Generally. Any Award may be granted [1] to Covered Officers in a manner that qualifies as
“performance-based compensation” under Code §162(m) or [2] to Employees who are not Covered
Employees or to Consultants in a manner determined by the Committee. Subject to any terms,
restrictions and conditions specified in the Plan and the Award Agreement, the granting or vesting
of Performance-Based Awards will, in the Committee’s sole discretion, be based on achieving
performance objectives derived from one or more of the Performance Criteria.



9.02 Earning Performance Shares and Performance Units. Except as otherwise provided in the Plan
or the Award Agreement, as of the end of each Performance Period, the Committee will certify to the
Board the extent to which each Participant has or has not met his or her Performance Criteria and
Performance Shares or Performance Units will be:





[1] Forfeited, to the extent that Performance Criteria have not been met at the end of the
Performance Period, and again become available to be granted under the Plan; or




[2] Valued and distributed, in a single lump sum, to Participants, in the form of cash,
Stock or a combination of both (as specified by the Committee in the Award Agreement) as
soon as practicable after the last day of the Performance Period to the extent that related
Performance Criteria have been met.


9.03 Rights Associated with Performance Shares and Performance Units. During the Performance
Period, and unless the Award Agreement provides otherwise:





[1] Participants may not exercise voting rights associated with their Performance Shares or
Performance Units; and



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[2] All dividends and other distributions paid with respect to any Performance Shares or
Performance Units will be held by the Company as escrow agent during the Performance Period.
At the end of the Performance Period, these dividends will be distributed to the
Participant or forfeited as provided in Section 9.02. No interest or other accretion will
be credited with respect to any dividends held in this escrow account. If any dividends or
other distributions are paid in shares of Stock, those shares will be subject to the same
restrictions on transferability and forfeitability as the shares of Stock with respect to
which they were issued.



10.00 STOCK APPRECIATION RIGHTS



10.01 SAR Grants. Subject to the terms of the Plan, the Committee may grant Affiliated SARs,
Freestanding SARs and Tandem SARs (or a combination of each) to Employees or Consultants at any
time during the term of this Plan.



10.02 Exercise Price. Unless the Committee specifies otherwise in the Award Agreement, the
Exercise Price specified in the Award Agreement will:





[1] In the case of an Affiliated SAR, not be less than 100 percent of the Fair Market Value
of a share of Stock on the Grant Date;




[2] In the case of a Freestanding SAR, not be less than 100 percent of the Fair Market Value
of a share of Stock on the Grant Date; and




[3] In the case of a Tandem SAR, not be less than the Exercise Price of the related Option.


10.03 Exercise of Affiliated SARs. Affiliated SARs will be deemed to be exercised on the date the
related Option is exercised. However:





[1] An Affiliated SAR will expire no later than the date the related Option expires;




[2] The value of the payout with respect to the Affiliated SAR will not be more than the
Exercise Price of the related Option; and




[3] An Affiliated SAR may be exercised only if the Fair Market Value of the shares of Stock
subject to the related Option is larger than the Exercise Price of the related Option.


10.04 Exercise of Freestanding SARs. Freestanding SARs will be exercisable subject to the terms
specified in the Award Agreement.



10.05 Exercise of Tandem SARs. Tandem SARs may be exercised with respect to all or part of the
shares of Stock subject to the related Option by surrendering the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the
shares of Stock for which its related Option is then exercisable. However:




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[1] A Tandem SAR will expire no later than the date the related Option expires or is
exercised;




[2] The value of the payout with respect to the Tandem SAR will not be more than 100 percent
of the difference between the Exercise Price of the related Option and the Fair Market Value
of a share of Stock subject to the related Option at the time the Tandem SAR is exercised;
and




[3] A Tandem SAR may be exercised only if the Fair Market Value of a share of Stock subject
to the Option is larger than the Exercise Price of the related Option.



10.06 Settling SARs.





[1] A Participant exercising a Tandem SAR or a Freestanding SAR will receive an amount equal
to:




[a] The difference between the Fair Market Value of a share of Stock on the exercise
date and the Exercise Price multiplied by




[b] The number of shares of Stock with respect to which the Tandem SAR or
Freestanding SAR is exercised.




[2] Tandem SARs and Freestanding SARs always will be settled in shares of Stock unless the
Award Agreement specifies another form of settlement.




[3] A Participant will not receive any cash or other amount when exercising an Affiliated
SAR. Instead, the value of the Affiliated SAR being exercised will be applied to reduce
(but not below zero) the Exercise Price of the related Option.


At the discretion of the Committee, the value of any Tandem SAR or Freestanding SAR being exercised
will be settled in cash, shares of Stock or any combination of both.




11.00 PERFORMANCE-BASED AWARD



11.01 Generally. Any Restricted Stock, Restricted Stock Units or Stock Units granted under the
Plan to [1] Covered Officers may be granted in a manner that qualifies as “performance-based
compensation” under Code §162(m) or [2] Employees who are not Covered Officers or who are
Consultants, in a manner determined by the Committee. As determined by the Committee in its sole
discretion, either the granting or vesting of Performance-Based Awards will be based on achieving
performance objectives derived from one or more of the Business Criteria over the Performance
Period established by the Committee.




11.02 Performance Criteria.






[1] The Performance Criteria upon which the payment or vesting of an Award to a Covered
Officer that is intended to qualify as “performance-based compensation” under Code §162(m)
will be based on one or more (or a combination of) the following Performance Criteria and
may be applied solely with reference to the Company (and/or




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any Related Entity) or
relatively between the Company (and/or any Related Entity) and one or more unrelated
entities:





[a] Net earnings or net income (before or after taxes);




[b] Earnings per share;




[c] Net sales or revenue growth;




[d] Net operating profit;




[e] Return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or revenue);




[f] Cash flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on investment);




[g] Earnings before or after taxes, interest, depreciation, and/or amortization;




[h] Gross or operating margins;




[i] Productivity ratios;




[j] Share price (including, but not limited to, growth measures and total
shareholder return);




[k] Expense targets;




[l] Margins;




[m] Operating efficiency;




[n] Market share;




[o] Customer satisfaction;




[p] Working capital targets; and




[q] Economic value added (net operating profit after tax minus the sum of capital
multiplied by the cost of capital).




[2] Performance Criteria upon which the payment or vesting of an Award to Participants who
are not Covered Officers may be based on one or more (or a combination of) the Performance
Criteria listed in Section 11.02[1] or on other factors the Committee believes are relevant
and appropriate.




[3] Different Performance Criteria may be applied to individual Participants or to groups of
Participants and, as specified by the Committee, may be based on the results achieved [a]
separately by the Company or any Related Entity, [b] any combination of



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the Company and
Related Entities, or [c] any combination of segments, products or divisions of the Company
and Related Entities.




[4] The Committee:




[a] Will make appropriate adjustments to Performance Criteria to reflect the effect
on any Performance Criteria of any stock dividend or stock split affecting Stock,
recapitalization (including, without limitation, the payment of an extraordinary
dividend), merger, consolidation, combination, spin-off, distribution of assets to
shareholders, exchange of shares or similar corporate change. Also, the Committee
will make a similar adjustment to any portion of a Performance Criteria that is not
based on Stock but which is affected by an event having an effect similar to those
just described.




[b] May make appropriate adjustments to Performance Criteria to reflect a
substantive change in a Participant’s job description or assigned duties and
responsibilities.




[5] Performance Criteria will be established in an Award Agreement [a] as soon as
administratively practicable after established but [b] in the case of Covered Officers, no
later than the earlier of [i] 90 days after the beginning of the applicable Performance
Period; or [ii] the expiration of 25 percent of the applicable Performance Period.


11.03 Earning Awards. Subject to any terms, restrictions and conditions specified in the Plan or
the Award Agreement, as of the end of each Performance Period, the Committee will certify to the
Board the extent to which each Participant has or has not met his or her Performance Criteria.
Performance-Based Awards will be:





[1] Forfeited, if Performance Criteria have not been met at the end of the Performance
Period; or




[2] Subject to Section 5.04, valued and distributed as soon as practicable after the last
day of the Performance Period to the extent that related Performance Criteria have been met.



12.00 TERMINATION/BUY OUT



12.01 Retirement. Unless otherwise specified in the Award Agreement or this Plan, all Awards that
are exercisable when a Participant Retires may be exercised at any time before the earlier of [1]
the expiration date specified in the Award Agreement or [2] one year (three months in the case of
Incentive Stock Options) beginning on the Retirement date (or any shorter period specified in the
Award Agreement).



12.02 Death or Disability. Unless otherwise specified in the Award Agreement or this Plan, all
Awards that are exercisable when a Participant Terminates because of death or Disability may be exercised by the Participant or the Participant’s Beneficiary at any time before the earlier of
[1] the expiration date specified in the Award Agreement or [2] one year beginning on the date


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of death or Termination because of Disability (or any shorter period specified in the Award
Agreement).



12.03 Termination for Cause. Unless otherwise specified in the Award Agreement or this Plan, all
Awards that are outstanding (whether or not then exercisable) if a Participant Terminates (or is
deemed to have been Terminated for Cause) will be forfeited.



12.04 Termination for any Other Reason. Unless otherwise specified in the Award Agreement or this
Plan or subsequently, any Awards that are outstanding when a Participant Terminates for any reason
not described in Sections 12.01 through 12.03 and which are then exercisable, or which the
Committee has, in its sole discretion, decided to make exercisable, may be exercised at any time
before the earlier of [1] the expiration date specified in the Award Agreement or [2] 90 days
beginning on the Termination date (or any shorter period specified in the Award Agreement) and all
Awards that are not then exercisable will terminate on the Termination date.



12.05 Expiration of Options in Connection with Termination Associated with Merger, Etc. Regardless
of any other provision of this Plan (and unless otherwise provided in an Award Agreement or this
Plan), Options held by a Participant who Terminates in connection with a transaction described in
Code §424 will expire immediately upon the date of Termination but only if and to the extent that
another party to that transaction will grant substitute options in exchange for the Options to be
cancelled and otherwise comply with the rules and procedures prescribed under the provisions of
Code §424 governing that substitution. In all other cases, Options held by a Participant who
Terminates in connection with a transaction described in Code §424, will expire as otherwise
provided in this Plan and the Award Agreement.



12.06 Buy Out of Awards.





[1] At any time before a Change in Control or the commencement of activity that may
reasonably be expected to result in a Change in Control, the Committee, in its sole
discretion and without the consent of the affected Participant, may cancel any or all
outstanding Awards held by that Participant, whether or not exercisable, by providing to
that Participant written notice (“Buy Out Notice”) of its intention to exercise the rights
reserved in this section. If a Buy Out Notice is given, in the case of an Option, the
Company also will pay to each affected Participant the difference between [a] the Fair
Market Value of the Stock underlying each exercisable Option (or portion of an Option) to be
cancelled and [ b] the Exercise Price associated with each exercisable Option to be
cancelled. With respect to any Award other than an Option, the Company will pay to each
affected Participant the Fair Market Value of the Stock subject to the Award. However,
unless otherwise specified in the Award Agreement, no payment will be made with respect to
any Awards that are not exercisable or are subject to a restriction when cancelled under
this section. The Company will complete any buy out made under this section as soon as
administratively possible after the date of the Buy Out Notice. At the Committee’s option,
payment of the buy out amount may be made in cash, in whole shares of Stock or partly in
cash and partly in shares of Stock. The number of whole shares of Stock, if any, included in the buy out amount will be determined by dividing the



-21-









 






amount of the payment to be made in shares of Stock by the Fair Market Value as of the date
of the Buy Out Notice.




[2] At any time before a Change in Control or the commencement of activity that may
reasonably be expected to result in a Change in Control, the Committee, in its sole
discretion, may offer to buy for cash or by substitution of another Award any or all
outstanding Awards held by any Participant, whether or not exercisable, by providing to that
Participant written notice (“Buy Out Offer”) of its intention to exercise the rights
reserved in this section and other information, if any, required to be included under
applicable security laws. If a Buy Out Offer is given, the Company also will transfer to
each Participant accepting the offer the value (determined under procedures adopted by the
Committee) of the Award to be purchased or exchanged. The Company will complete any buy out
made under this section as soon as administratively possible after the date of the Buy Out
Offer and the shares of Stock subject to the Awards purchased will be recredited as provided
in Section 5.02.



13.00 CHANGE IN CONTROL



13.01 Accelerated Vesting and Settlement. Subject to Section 13.02 on the date of any Change in
Control:





[1] [a] Each Option outstanding on the date of a Change in Control (whether or not
exercisable) will be cancelled in exchange [i] for cash equal to the excess of the Change in
Control Price over the Exercise Price associated with the cancelled Option or, [ii] at the
Committee’s discretion, for whole shares of Stock with a Fair Market Value equal to the
excess of the Change in Control Price over the Exercise Price associated with the cancelled
Option and the Fair Market Value of any fractional share of Stock will be distributed in
cash, and [b] all related Affiliated and Tandem SARs will be cancelled.




[2] All Performance Criteria associated with Performance Shares or Performance Units will be
deemed to have been met on the date of the Change in Control, all Performance Periods
accelerated to the date of the Change in Control and all outstanding Performance Shares and
Performance Units (including those subject to the acceleration described in this subpart)
will be distributed in a single lump sum cash payment;




[3] All Freestanding SARs will be deemed to be exercisable and will be liquidated in a
single lump sum cash payment;




[4] All Stock Units will be distributed immediately in the form provided in the Annual
Retainer Deferral Form; and




[5] All restrictions then imposed Restricted Stock or Restricted Stock Units will lapse.


13.02 Effect of Code §280G. Unless otherwise specified in the Award Agreement or in another
written agreement between the Participant and the Company or a Related Entity executed
simultaneously with or before any Change in Control, if the sum (or value) of the payments described in Section 13.01 constitute an “excess parachute payments” as defined in


-22-









 






Code §280G(b)(1) when combined with all other parachute payments attributable to the same Change in
Control, the Company or other entity making the payment (“Payor”) will reduce the Participant’s
benefits under this Plan so that the Participant’s total “parachute payment” as defined in Code
§280G(b)(2)(A) under this and all other agreements will be $1.00 less than the amount that
otherwise would generate an excise tax under Code §4999. If the reduction described in the
preceding sentence applies, within 10 business days of the effective date of the event generating
the payments (or, if later, the date of the Change in Control), the Payor will apprise the
Participant of the amount of the reduction (“Notice of Reduction”). Within 10 business days of
receiving that information, the Participant may specify how and against which benefit or payment
source, (including benefits and payment sources other than this Plan) the reduction is to be
applied (“Notice of Allocation”). The Payor will be required to implement these directions within
10 business days of receiving the Notice of Allocation. If the Payor has not received a Notice of
Allocation from the Participant within 10 business days of the date of the Notice of Reduction or
if the allocation provided in the Notice of Allocation is not sufficient to fully implement the
reduction described in this section, the Payor will apply the reduction described in this section
proportionately based on the amounts otherwise payable under Section 13.01 or, if a Notice of
Allocation has been returned that does not sufficiently implement the reduction described in this
section, on the basis of the reductions specified in the Notice of Allocation.




14.00 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN



The Board or the Committee may terminate, suspend or amend the Plan at any time without shareholder
approval except to the extent that shareholder approval is required to satisfy applicable
requirements imposed by [1] Rule 16b-3 under the Act, or any successor rule or regulation, [2]
applicable requirements of the Code or [3] any securities exchange, market or other quotation
system on or through which the Company’s securities are listed or traded. Also, no Plan amendment
may [4] result in the loss of a Committee member’s status as a “non-employee director” as defined
in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any employee
benefit plan of the Company, [5] cause the Plan to fail to meet requirements imposed by Rule 16b-3
or [6] without the consent of the affected Participant (and except as specifically provided
otherwise in this Plan or the Award Agreement) adversely affect any Award granted before the
amendment, modification or termination. However, nothing in this section will restrict the
Committee’s right to exercise the discretion retained in Section 12.06 or the right to amend the
Plan and any Award Agreements without any additional consideration to affected Participants to the
extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce,
restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those
amendments.




15.00 MISCELLANEOUS



15.01 Assignability. Except as described in this section, an Award may not be transferred except
by will or the laws of descent and distribution and, during the Participant’s lifetime, may be
exercised only by the Participant, the Participant’s guardian or legal representative. However,
with the permission of the Committee, a Participant or a specified group of Participants may
transfer Awards (other than Incentive Stock Options) to a revocable inter vivos trust, of which the Participant is the settlor, or may transfer Awards (other than an Incentive Stock Option) to


-23-









 






any member of the Participant’s immediate family, any trust, whether revocable or irrevocable,
established solely for the benefit of the Participant’s immediate family, any partnership or
limited liability company whose only partners or members are members of the Participant’s immediate
family or an organization described in Code §501(c)(3) (“Permissible Transferees”). Any Award
transferred to a Permissible Transferee will continue to be subject to all of the terms and
conditions that applied to the Award before the transfer and to any other rules prescribed by the
Committee. A Permissible Transferee [other than an organization described in Code §501(c)(3)] may
not retransfer an Award except by will or the laws of descent and distribution and then only to
another Permissible Transferee.



15.02 Beneficiary Designation. Each Participant may name a Beneficiary or Beneficiaries (who may
be named contingently or successively) to receive or to exercise any vested Award that is unpaid or
unexercised at the Participant’s death. Each designation made will revoke all prior designations
made by the same Participant, must be made on a form prescribed by the Committee and will be
effective only when filed in writing with the Committee. If a Participant has not made an
effective Beneficiary designation, the deceased Participant’s Beneficiary will be his or her
surviving spouse or, if none, the deceased Participant’s estate. The identity of a Participant’s
designated Beneficiary will be based only on the information included in the latest beneficiary
designation form completed by the Participant and will not be inferred from any other evidence.



15.03 No Guarantee of Continuing Services. Nothing in the Plan may be construed as:





[1] Interfering with or limiting the right of the Company or any Related Entity to Terminate
any Employee’s employment at any time;




[2] Conferring on any Participant any right to continue as an Employee or director of the
Company or any Related Entity;




[3]Guaranteeing that any Employee will be selected to be a Participant; or




[4]Guaranteeing that any Participant will receive any future Awards.



15.04 Tax Withholding.





[1] The Company will withhold from other amounts owed to the Participant, or require a
Participant to remit to the Company, an amount sufficient to satisfy federal, state and
local withholding tax requirements on any Award, exercise or cancellation of an Award or
purchase of Stock. If these amounts are not to be withheld from other payments due to the
Participant (or if there are no other payments due to the Participant), the Company will
defer payment of cash or issuance of shares of Stock until the earlier of:




[a] Thirty days after the settlement date; or




[b] The date the Participant remits the required amount.



-24-









 






[2] If the Participant has not remitted the required amount within 30 days after the
settlement date, the Company will permanently withhold from the value of the Awards to be
distributed the minimum amount required to be withheld to comply with applicable federal,
state and local income, wage and employment taxes and distribute the balance to the
Participant.




[3] In its sole discretion, which may be withheld for any reason or for no reason, the
Committee may permit a Participant to elect, subject to conditions the Committee
establishes, to reimburse the Company for this tax withholding obligation through one or
more of the following methods:




[a] By having shares of Stock otherwise issuable under the Plan withheld by the
Company (but only to the extent of the minimum amount that must be withheld to
comply with applicable state, federal and local income, employment and wage tax
laws);




[b] By delivering to the Company previously acquired shares of Stock that the
Participant has owned for at least six months;




[c] By remitting cash to the Company; or




[d] By remitting a personal check immediately payable to the Company.


15.05 Indemnification. Each individual who is or was a member of the Committee or of the Board
will be indemnified and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or not taken under the Plan as a
Committee or Board member and against and from any and all amounts paid, with the Company’s
approval, by him or her in settlement of any matter related to or arising from the Plan as a
Committee or Board member or paid by him or her in satisfaction of any judgment in any action, suit
or proceeding relating to or arising from the Plan against him or her as a Committee or Board
member, but only if he or she gives the Company an opportunity, at its own expense, to handle and
defend the matter before he or she undertakes to handle and defend it in his or her own behalf.
The right of indemnification described in this section is not exclusive and is independent of any
other rights of indemnification to which the individual may be entitled under the Company’s
organizational documents, by contract, as a matter of law or otherwise. The foregoing right of
indemnification is not exclusive and is independent of any other rights of indemnification to which
the person may be entitled under the Company’s organizational documents, by contract, as a matter
of law or otherwise.



15.06 No Limitation on Compensation. Nothing in the Plan is to be construed to limit the right of
the Company to establish other plans or to pay compensation to its employees or directors, in cash
or property, in a manner not expressly authorized under the Plan.



15.07 Requirements of Law. The grant of Awards and the issuance of shares of Stock will be subject
to all applicable laws, rules and regulations and to all required approvals of any governmental
agencies or national securities exchange, market or other quotation system. Also,


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no shares of Stock will be issued under the Plan unless the Company is satisfied that the issuance
of those shares of Stock will comply with applicable federal and state securities laws.
Certificates for shares of Stock delivered under the Plan may be subject to any stock transfer
orders and other restrictions that the Committee believes to be advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, any stock exchange or
other recognized market or quotation system upon which the Stock is then listed or traded, or any
other applicable federal or state securities law. The Committee may cause a legend or legends to
be placed on any certificates issued under the Plan to make appropriate reference to restrictions
within the scope of this section.



15.08 Term of Plan. The Plan will be effective upon its adoption by the Board and approval by the
affirmative vote of the Company’s shareholders under applicable rules and procedures described in
Code §§162(m) and 422. Subject to Section 14.00, the Plan will continue until the tenth
anniversary of the date it is adopted by the Board or approved by the Company’s shareholders,
whichever is earliest.



15.09 Governing Law. The Plan, and all agreements hereunder, will be construed in accordance with
and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio.



15.10 No Impact on Benefits. Plan Awards are incentives designed to promote the objectives
described in Section 1.00. Also, Awards are not compensation for purposes of calculating a
Participant’s rights under any employee benefit plan that does not specifically require the
inclusion of Awards in calculating benefits.





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