Document:

Employment Agreement btwn the Company and and Sharon McCollam

 Exhibit 10.42 
  
 AGREEMENT 
  
 THIS AGREEMENT made as of December 28, 2002, by and between Williams-Sonoma, Inc., a California corporation, having its principal place of business at
3250 Van Ness Ave., San Francisco, California, 94109 (the “Company1), and Sharon L. McCollam (the
“Executive”). 
  
 WITNESSETH: 
  
 WHEREAS, the Company presently employs the Executive as Senior Vice President
and Chief Financial Officer; 
  
 WHEREAS, the Company and the
Executive desire to set form certain terms and conditions of such employment in a formal agreement, with the understanding that, except as specifically set forth herein. Executive’s employment continues to be on the same terms and conditions as
prior to the execution of this Agreement. 
  
 NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and agreements herein contained, the Company and the Executive agree as follows: 
  
 1. Employment. The Company hereby agrees to continue to employ the Executive as Senior Vice President and Chief Financial Officer and the Executive
hereby agrees to continue such employment on the same terms and conditions as are currently in effect except as to the terms and conditions herein contained. The Executive shall devote substantially all of her working time, attention, skill, and
efforts to tire performance of her duties to the Company; provided, however, that the Executive may serve on the boards of directors of not more than one (1) other for-profit corporations, if such service does not conflict with her duties hereunder
or her fiduciary duty to the Company, The term of this Agreement (the “Employment Period”) shall be for an initial period of three years from the date hereof with additional terms thereafter of one year, until the Executive terminates her
employment or her employment is terminated by the Company. 
  
 2.
Termination. The Executive’s employment shall terminate upon the earliest of the following: 
  

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 (a) The Executive’s death: 
  
 (b) The Executive’s disability in accordance with Section 4: 
  
 (c) The Executive’s termination for cause in accordance with Section 5;

  
 (d) The termination of the Executive by the Company without
cause; or 
  
 (e) The termination by the Executive in accordance
with Section 7. 
  
 3. Death. The death of the Executive
shall serve to terminate the Executive’s employment, in which event, unless the Executive dies in the course of performing her duties as an officer of the Company (in which case the Company shall have the additional obligations specified in
Section 7(a)), the Company shall have no liability or further obligation except as follows: 
  
 (a) The Company shall pay the Executive’s estate (or, if properly designated under an applicable plan or arrangement, her beneficiary) when otherwise due any unpaid base salary through the date of her death at
the rate at which she was compensated prior to such termination, any declared but unpaid bonuses, any declared but unpaid amounts due under any incentive plan, any accrued vacation pay, any accrued car allowance amounts and any other unpaid amounts
due the Executive under employee benefit, fringe benefit or incentive plans (“Entitlements”). 
  
 (b) The Executive’s estate or her designated beneficiary shall have such rights under any employee benefit, fringe benefit or incentive plan,
including any stock option plan, as provided in such plans (“Rights”). 
  
 (c) The Executive’s estate or her designated beneficiary shall be entitled to receive those benefits afforded by the Company under its then existing policies in effect for employees who die while employed by the
Company. 
  
 4. Disability. If the Company reasonably shall
determine that the Executive has become physically or mentally incapable of performing her duties (“disabled”) and the Company reasonably determines that such incapacity is likely to last for a period of at least 180 days from 

 

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 the onset of such disability, the Company may, at its election at any time after the date of such onset while the
Executive remains disabled, terminate the Executive’s employment hereunder effective immediately by giving the Executive written notice of such termination. In such event, the Company shall continue the Executive as an employee on payroll (but
not as an officer hereunder) under its short term disability policy at the base salary then paid to her for thirteen (13) weeks and shall continue such payments thereafter in accordance with the Company’s long term disability policy, provided
that she qualifies for coverage. Unless the Executive becomes disabled in the course of performing her duties as an officer of the Company (in which case the Company shall have the additional obligations specified in Section 7(a) the Company shall
have no other obligation to the Executive or her dependents other than Entitlement, Rights, accrued vacation pay and amounts due under the Company’s long term disability plan, and any benefits offered by the Company under its then policy to
employees who become disabled while employed by the Company. 
  
 5. Cause. 
  
 (a) If the Company’s
Chief Executive Officer, with concurrence from the Chairman of the Board and Audit Committee of the Board of Directors, shall reasonably determine that there arc grounds for terminating Executive’s employment and discharging the Executive for
“cause” (as hereinafter defined), the Company may, at its election at any time within three months after the Company shall obtain knowledge of the grounds for termination, give the Executive notice of its intention to terminate the
Executive for cause, stating the grounds for termination and specifying a reasonable date on which the Executive shall be given an opportunity if she desires to discuss such grounds for termination at a meeting with the Chief Executive Officer.

  
 (b) If the grounds for termination are those specified in
clause (ii)(X), (iv) or or (v) of paragraph (d) hereof the Executive shall have a period of ten days from giving of the notice to cure the neglect, refusal, or breach, as the case may be, provided that if similar grounds arise again within one year
of such, cure, no new notice need be given and the Company, at its option, may immediately terminate the Executive for cause. The Chief Executive officer shall determine whether the Executive has effected a cure within the ten-day period.

  

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 (c) If the grounds for termination are those specified in clauses (i), (ii)(Y), (ii)(Z) or (iii) of
paragraph (d) hereof, it is understood and agreed that no satisfactory cure is available and such termination shall be effective immediately upon notice by the Company. 
  
 (d) For purposes of this Section 5 and Section 7 hereof, the term “cause” shall mean: 
  
 (i) the conviction (or plea of guilty or nolo contendere) of
the Executive of any felony, or of any crime involving fraud, dishonesty or misappropriation, or moral turpitude or, if any of the foregoing involves the Company or any subsidiary or affiliate companies (collectively the “Control Group”),
the commission of any of the foregoing (other than good faith disputes involving expense account items or de minimus issues); 
  
 (ii) the Executive’s (X) continued willful neglect of her duties and responsibilities as Senior Vice President and Chief Financial Officer, (Y)
grossly negligent conduct in connection with her duties and responsibilities as Senior Vice President and Chief Financial Officer; or (Z) gross negligence in connection with her handling of the assets of the Control Group; 
  
 (iii) the Executive’s willful misconduct with regard to the Control
Group; 
  
 (iv) the Executive’s willful failure to comply
with the covenants in Section 8 hereof; or 
  
 (v) material
breach of any of the provisions of this Agreement by the Executive. 
  
 (e) If the Company shall terminate the Executive’s employment pursuant to this Section 5, it shall have no liability or obligation to her except as follows: 
  
 (i) The Company shall promptly pay the Executive her then current base salary through the effective date of such termination
plus any accrued vacation pay; 
  

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 (ii) The Executive shall receive the benefits, if any, and have the rights afforded by the Company under
its then existing policies for “at will” employees whose employment is terminated for cause. 
  
 6. Good Reason. In the event that the Company shall (i) fail to continue the appointment of the Executive as Senior Vice President and Chief
Financial Officer, or (ii) reduce the Executive’s annual salary below her current base salary, or (iii) locate the Executive other than at the Company’s principal executive offices, or (iv) relocate the Company’s principal executive
offices outside the San Francisco metropolitan area, (v) substantially change the responsibilities assigned to the Executive’s position, or (vi) breach any material provision of this Agreement (each of the foregoing hereinafter referred to as a
“Triggering Event”), then the Executive may give notice to the Company of her election to terminate her employment with the Company pursuant to this Section 6, effective thirty (30) days from the date of such notice, unless the Company
shall have cured within such thirty (30) day period the default giving rise to her notice of election to terminate. Such notice from the Executive shall state the Triggering Event which provides the grounds for her termination, and such notice must
be given, if at all, within 90 days of the date the Executive obtains knowledge of the Triggering Event referred to as providing such grounds for termination. Within the 30 day period specified in the Executive’s notice to the Company, the
Company shall have the opportunity to cure the default involved in the Triggering Event specified by the Executive. If the Executive’s employment is terminated pursuant to this Section 6, the Company shall have no liability or further
obligation hereunder except as provided in Section 7 hereof. If the Executive does not give notice to the Company of her election to terminate within 90 days following the occurrence of a Triggering Event, then the Executive shall be deemed to have
waived her right to terminate her employment based on such Triggering Event, but such waiver shall not prejudice her right to terminate pursuant to this Section 6 based on the occurrence of another Triggering Event occurring subsequent in time,
whether of the same or a different type. 
  
 7. Termination for
Good Reason or Without Cause. In the event of a termination of the Executive’s employment pursuant to Section 6 hereof, or in the event the Company shall terminate the Executive’s employment without cause, or, in the event the
Executive dies or 
  

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 becomes disabled during the course of performance of her duties as an officer of the Company, then the Company shall have
no obligation to Executive except as follows: 
  
 (a) The
Executive shall receive her Entitlements and have her Rights. In addition, from the date of such termination until the earliest of (i) the Severance Period Termination Date, as hereinafter defined, or (ii) the Executive’s material violation of
the post employment requirements of Section 8 hereof, following the date of such termination (hereinafter referred as the “Severance Period”), the Company shall make payments to the Executive, either bi-weekly or monthly as the Company
shall elect, calculated at the annual rate of base salary which the Executive was receiving immediately prior to such termination, plus for the first fiscal year of the Company ending during such Severance Period, the Company shall pay the
Executive, in a lump sum amount, the target bonus amount she would have received on account of Company performance during such fiscal year. As used herein the “Severance Period Termination Date” shall mean that date which is the later of
the date which is three years from the date of this Agreement or the first anniversary of the date of termination of Executive’s employment with the Company. 
  
 (b) During the Severance Period the Executive shall not be an employee and shall not be entitled to receive any fringes,
perquisites or benefits from the Company, except the Company shall pay the premiums for her and her dependents’ health coverage under COBRA until the earliest of (i) such time as she commences other employment or (ii) such time as she or a
dependent, as the case may be, is no longer entitled to COBRA coverage. 
  
 (c) The Company shall provide the Executive, at no cost to the Executive, with out-placement services at a level commensurate with the Executive’s position. 
  
 (d) The Executive shall not be required to mitigate the amount of any
payment provided for in the second sentence of paragraph (a) or in paragraph, (b) by seeking other employment nor shall any amounts to be received by the Executive hereunder be reduced by any other compensation earned. 
  

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 (e) The Company shall be entitled to withhold from any payments made to the Executive under this Section
7 any amounts required to be withheld by applicable federal, state or local tax law. 
  
 8. Confidentiality; Nondisparagement; Nonsolicitation; Intellectual Property; Other Company Policies. 
  
 (a) In consideration of the covenants by the Company contained herein, the Executive undertakes and agrees that during the Employment Period and
thereafter during the Severance Period she shall hold in a fiduciary capacity for the benefit of the Control Group all secret or confidential information, knowledge, or data relating to the Control Group or its business (which shall be defined as
all such information, knowledge, and data coming to the Executive’s attention by virtue of her employment at the Company except that which is otherwise public knowledge or generally known within the Company’s industry). During the
Employment Period and thereafter throughout the Severance Period, the Executive shall not, without prior written consent of the Company, unless compelled pursuant to the order of a court or other body having jurisdiction over such matter or unless
required by lawful process or subpoena, communicate or divulge any such information, knowledge or data to anyone other than the Control Group and those designated by it, or use any such information, knowledge or data, other than for the benefit of
the Control Group. The foregoing shall not limit the disclosure by the Executive of such information in the course of the performance of her duties as Senior Vice President and Chief Financial Officer so long as such disclosure is in good faith.

  
 (b) During the Employment Period and thereafter throughout
the Severance Period while the Executive is receiving any amounts pursuant to Section 7(a) hereof, the Executive shall not make any statements or comments (i) to any form of media or likely to come to the attention of any form of media of a negative
nature that reasonably could be considered to have an adverse impact on the business or reputation of the Control Group, the Company’s Board of Directors (the “Board”) or any senior officer of the Control Group, or (ii) to any
employee of the Control Group or to any supplier or customer of the Control Group of a negative nature that reasonably could be considered to have an adverse impact on the business or reputation of the Control Group or the Board or any senior
officer of the Control Group, 

  

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provided that in no event shall the foregoing limitation apply to (i) compliance with legal process or subpoena, (ii) statements in response to inquiry from
a court or regulatory body, (iii) in direct rebuttal of media stories with regard to the Executive, (iv) directly or indirectly (e.g., through an employment agency) to a possible future employer in connection with employment discussions, or (v) in
response to inquiry from the Board. 
  
 (c) During the Employment
Period and thereafter throughout the Severance Period while the Executive is receiving any amounts pursuant to Section 7(a) hereof, the Executive will not directly or indirectly recruit, solicit or induce, or attempt to induce, any employee,
consultant or vendor of the Control Group to terminate employment or any other relationship with the Control Group. The Executive acknowledges that the restrictions contained in this paragraph are necessary for the protection of the business and
goodwill of the Control Group and are considered by the Executive to be reasonable for such purpose. 
  
 (d) The Executive acknowledges and agrees that all intellectual property created, made or conceived by the Executive (solely or jointly), at any time
while she was employed by the Company (either before or during the Employment Period), shall be owned exclusively by the Company. In addition, the Executive agrees that this Agreement shall constitute an assignment to the Company of the
Executive’s residual intellectual property rights, if any, in all such work, and agrees to assist the Company with securing patents, registering copyrights and trademarks, and obtaining any other forms of intellectual property protection in the
United States and in other countries. For purposes of this Agreement, ‘“intellectual property” includes business ideas and methods, confidential information, inventions, product designs, artwork, graphic designs (including, for
example, catalog designs, in-store signage and posters), web page designs, audio/visual works, package designs, store interior and exterior designs, trademarks, and any other works of authorship, any of which relates to the actual or anticipated
business of the Control Group or results from or is suggested by any work performed by employees for or on behalf of the Control Group. 
  
 (e) During the Employment Period, me Executive will comply with all Company policies that apply to associates generally and to executives specifically.
The Executive further acknowledges and agrees that notwithstanding any lesser requirements 

  

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contained in the Company’s insider trading policy, the Executive will not conduct any transaction in the Company’s stock during the Employment
Period without first receiving written approval from the Company’s General Counsel. 
  
 (f) Notwithstanding any other provision of this Agreement, in the event of a breach or threatened breach by the Executive of any provision of this Section, the Executive and the Company agree that the Company shall be
entitled to injunctive and declaratory relief from a court of competent jurisdiction to restrain the Executive from committing such breach of this Agreement. 
  

(g) The provisions of this Section shall survive the termination of the Executive’s employment by the Company for any reason; provided, however,
that the provisions shall cease to apply if the Company ever fails to fulfill its obligations to the Executive under this Agreement. 
  
 9. Accelerated Vesting of Stock Options in the event of a Change in Control or Certain Other Termination Events. 
  
 (a) Existing Stock Options. Schedule A attached to this Agreement
lists the Stock option agreements (by date) entered into by and between the Company and the Executive (the “Option Agreements”) on or before the date of this Agreement, the character of the options granted pursuant to the Option Agreements
(the “Options”) (ISO or NQS), the number of unvested Options as of the date of this Agreement, the exercise price per share of common stock of the Company optioned under the Agreement (each, an “Option Share”), and the vesting
schedule for the Options. 
  
 (b) Accelerated Vesting of
Options. 
  
 (i) If; within one year after
the occurrence of a Change In Control (as defined below), the Executive’s status as an employee is terminated pursuant to paragraph (d) or (e) of Section 2, the Options, to the extent not theretofore vested, shall vest and become exercisable in
full during the time period specified in the relevant Option Agreement(s). 
  

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 (ii) If, prior to the third anniversary date of this Agreement, the Executive’s
employment is terminated pursuant to paragraph (a), (b), (d) or (e) of Section 2, then the Options, to the extent not theretofore at least 100% vested, shall vest 60% and become exercisable during the time period specified in the relevant Option
Agreement(s). Solely by way of example, if, on such date, 10,000 of the Options are 40% vested (i.e. 6,000 options are unvested) and 20,000 of the Options are 80% vested (i.e. 4,000 options are unvested), then the aggregate 10,000 unvested Options
shall become 60% vested and exercisable (i.e., 6,000 options shall become vested and exercisable, in each case during the time period specified in the relevant Option Agreement(s). 
  
 (iii) Notwithstanding the provisions of subparagraph (b)(i) and (b)(ii) above, the vesting of the Options
shall not accelerate to the extent that such acceleration of vesting would subject the Executive to liability for the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended. 
  
 (c) Definition of Change in Control. For purposes of this Agreement,
a “Change in Control” means the occurrence of any of the following: 
  
 (i) Any “Person” or “Group”, as such terms are defined in Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder,
is or becomes the “Beneficial Owner” (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company, or of any entity resulting from a merger or consolidation involving the Company,
representing more than fifty percent (50%) of the combined voting power of the then outstanding securities of the Company or such entity. 
  
 (ii) The individuals who, as of the time immediately following the election of directors at the Company’s 2002 Annual Meeting of
Shareholders, are members of the Board (the “Existing Directors”), cease, for any reason, to constitute more than fifty percent (50%) of the number of authorized directors of the Company as determined in the manner prescribed in the
Company’s 

  

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Certificate of Incorporation and Restated Bylaws. However, if the election, or nomination for election, by the Company’s shareholders of any new
director was approved by a vote of at least fifty percent (50%) of the Existing Directors, such new director shall be considered an Existing Director. Furthermore, no individual shall be considered an Existing Director if such individual initially
assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies by or on behalf of anyone other than the
Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest. 
  
 (iii) The consummation of (x) a merger, consolidation or reorganization to which the Company is a party, whether or not the Company is the
Person surviving or resulting therefrom, or (y) a sale, assignment, lease, conveyance or other disposition of all or substantially all of the assets of the Company, in one transaction or a series of related transactions, to any Person other than the
Company, where any such transaction or series of related transactions as is referred to in clause (x) or clause (y) above in this subparagraph (iii) (singly or collectively, a “Transaction”) does not otherwise result in a “Change in
Control” pursuant to subparagraph (i) of this definition of “Change in Control”. However, no such Transaction shall constitute a “Change in Control” under this subparagraph (iii) if the Persons who were the shareholders of
the Company immediately before the consummation of such Transaction are the Beneficial Owners, immediately following (the consummation of such Transaction, of fifty percent (50%) or more of the combined voting power of the then outstanding voting
securities of the Person surviving or resulting from any merger, consolidation or reorganization referred to in clause (x) above in this subparagraph (iii) or the Person to whom the assets of the Company are sold, assigned, leased, conveyed or
disposed of in any transaction or series of related transactions referred in clause (y) above in this subparagraph (iii), in substantially the same proportions in which such Beneficial Owners held voting stock in the Company immediately before such
Transaction. 
  

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 (d) Miscellaneous. Other than as expressly provided in this Section 9, the Option Agreements and
the Options remain unchanged and in full force and effect. The provisions of this Section shall survive a Change in Control and shall survive the termination of the Executive’s employment by the Company for any reason. 
  
 10. Indemnification. 
  
 (a) Proceedings. In the event that the Executive is made a party to
or is threatened to be made a party to or is involuntarily involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “Proceeding”), by reason of the fact that she is or was an
officer of the Company or is or was serving (during such person’s tenure as officer) at the request of the Company, any other corporation, partnership, joint venture, trust or other enterprise in any capacity, whether the basis of a Proceeding
is an alleged action in an official capacity as an officer or in any other capacity while serving as an officer, shall be indemnified and held harmless by the Company to the fullest extent authorized by California Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment), against all
expenses, liability and loss (including attorneys’ fees, judgments, fines, or penalties and amounts to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by the Company the expenses incurred in defending a Proceeding in advance of its final disposition; provided, however, that, if California Law requires, the payment of
such expenses in advance of the final disposition of a Proceeding shall be made only upon receipt by the corporation of an undertaking by or on behalf of the Executive to repay all amounts so advanced if it shall ultimately be determined that she is
not entitled to be indemnified under this Section or otherwise. No amendment to or repeal of this Section shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to
such amendment or repeal. 
  
 (b) Right of Executive to Bring
Suit. If a claim for indemnity under paragraph (a) of this Section is not paid in full by the Company within 90 days after a written 

  

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claim has been received by the Company, the Executive may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim
and, if successful in whole or in part, the Executive shall also be entitled to be paid the expense of prosecuting such claim including reasonable attorneys’ fees incurred in connection therewith. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the Executive has not met
the standards of conduct which make it permissible under California Law for the Company to indemnify the Executive for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including
the Board, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the Executive is proper in the circumstances because he or she has met the applicable standard
of conduct set forth in California Law, nor an actual determination by the Company (including the Board, independent legal counsel, or its shareholders) that the Executive has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Executive has not met the applicable standard of conduct. 
  
 (c) Non-Exclusivity of Rights. The rights conferred in this Section shall not be exclusive of any other rights which the Executive may have or
hereafter acquire under any statute, provision of the Articles of Incorporation, bylaw, agreement, vote of shareholders or disinterested directors or otherwise, to the extent the additional rights to indemnification are authorized in the Articles of
Incorporation of the corporation. 
  
 11. Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs (in the case of the Executive) and permitted assigns. This Agreement is personal to the Executive and neither this Agreement nor
any rights hereunder may be assigned by the Executive. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a
merger or consolidation in which the Company is not the continuing entity, or pursuant to a sale of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities, 

  

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obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company further agrees that, in the
event of a sale as described in the preceding sentence, it shall use its best efforts to cause such assignee or transferee to expressly assume the liabilities, obligations, and duties of the Company hereunder. 
  
 12. Arbitration. Any claim or controversy between the parties which
the parties are unable to resolve themselves, including any claim arising out of Executive’s employment or the termination of that employment, and including any claim arising out of, connected with, or related to the formation, interpretation,
performance or breach of this Agreement, and any claim or dispute as to whether a claim is subject to arbitration, shall be submitted to and resolved exclusively by expedited arbitration by a single arbitrator in accordance with the following
procedures: 
  
 (a) In the event of a claim or controversy
subject to this arbitration provision, the complaining party shall promptly send written notice to the other party identifying the matter in dispute and the proposed remedy. Following the giving of such notice, the parties shall meet and attempt in
good faith to resolve the matter. In the event the parties are unable to resolve the matter within 21 calendar days, the parties shall submit the controversy to a mutually-selected mediator and attempt in good faith to resolve the matter through
mediation. If the controversy is not resolved through mediation, the parties shall meet and attempt in good faith to select a single arbitrator acceptable to both parties. If a single arbitrator is not selected by mutual consent within 10 business
days following the failure to resolve the controversy by mediation, an arbitrator shall be selected from a list of nine persons each of whom shall be an attorney who is either engaged in the active practice of law or a recognized arbitrator and who,
in either event, is experienced in serving as an arbitrator in disputes between employers and executives, which list shall be provided by the main San Francisco office of the American Arbitration Association (“AAA”). If, within three
business days of the parties’ receipt of such list, the parties are unable to agree upon an arbitrator from the list, then the parties shall each strike names alternatively from the list, with the first to strike being determined by the flip of
a coin. After each party has had four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected. 
  

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 (b) Unless the parties agree otherwise, within 120 calendar days of the selection of the arbitrator, a
hearing shall be conducted before such arbitrator at a time and a place in the city of San Francisco agreed upon by (the parties. In the event the parties are unable to agree upon the time or place of the arbitration, the time and place within the
city of San Francisco shall be designated by the arbitrator after consultation with the parties. Within 30 calendar days of the conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining
the basis for the arbitrator’s award. 
  
 (c) In any
arbitration hereunder, the Company shall pay all administrative fees of the arbitration and all fees of the arbitrator, except that Executive may, if she wishes, pay up to one-half of those amounts. Each party shall pay its own attorneys’ fees,
costs, and expenses, unless the arbitrator orders otherwise. The prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees. The arbitrator shall have no authority to add to or to modify this
Agreement, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall, upon an appropriate motion, dismiss any claim without an
evidentiary hearing if the party bringing the motion establishes that it would be entitled to summary judgment if the matter had been pursued in court litigation. The parties shall be entitled to reasonable discovery subject to the discretion of the
arbitrator. 
  
 (d) The decision of the arbitrator shall be
final, binding, and non-appealable, except as otherwise permitted by law, and may be enforced as a final judgment in any court of competent jurisdiction. 
  
 (e) This agreement to resolve any disputes by arbitration shall extend to claims against any parent, subsidiary, or affiliate of the Company, and, when
acting within such capacity, any officer, director, shareholder, employee or agent of the Company, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising
under the common law or under this Agreement. This 

  

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Agreement, however, shall not apply to claims for workers’ compensation or unemployment compensation benefits. 
  
 (f) Notwithstanding the foregoing, and unless otherwise agreed between the
parties, either party may, in an appropriate matter, apply to a court for provisional relief, including a temporary restraining order or preliminary injunction, on the ground that the arbitration award to which the applicant may be entitled may be
rendered ineffectual without provisional relief. 
  
 (g) Any
arbitration hereunder shall be conducted in accordance with the employment rules and procedures of the AAA then in effect; provided, however, that, in the event of any inconsistency between the rules and procedures of the AAA and the terms of this
Agreement, the terms of this Agreement shall prevail. 
  
 (h) If
any of the provisions of this Section 12 is determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Section 12, and this Section 12 shall be reformed to the
extent necessary to carry out its provisions to the greatest extent possible and to ensure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration.
If a court should find that the provisions of this Section 12 are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of
fact, and treated as determinative to the maximum extent permitted by law. 
  
 13. Notice. Any notice to either party hereunder shall be in writing, and shall be deemed to be sufficiently given to or served on such party, for all purposes, if the same shall be personally delivered to such
party, or sent to such party by registered mail, postage prepaid, at, in the case of the Company, the address first given above and, in the case of the Executive, her principal residence address as shown in the records of the Company. Notices to the
Company shall be addressed to the General Counsel. Either party hereto may change the address to which notices are to be sent to such party hereunder by written notice of such new address given to the other party hereto. Notices shall be deemed
given when received if delivered personally or three days after mailing if mailed as aforesaid. 
  

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 14. Applicable Law. This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of California applicable to contacts to be performed therein 
  
 15. Miscellaneous. 
  
 (a)
This Agreement represents the entire understanding of the parties hereto with respect to the matters set forth herein, supersedes any prior understandings or agreements between the parties with respect thereto, and the terms and provisions of this
Agreement may not be modified or amended except in a writing signed by both parties. 
  
 (b) No waiver by either party of any breach by the other party of any condition or provision contained in this Agreement to be fulfilled or performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time. Except to the extent otherwise specifically provided herein, any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the
case may be, 
  
 (c) Nothing in this Agreement shall be construed
as prohibiting the Company from, pursuing any other, remedy or remedies not specified herein, including, without limitation, the recovery of damages, 
  
 16. Beneficiary. The Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefits payable under this Agreement following her death by giving the Company written notice thereof in accordance with applicable Company policies. In the event of the Executive’s death or a
judicial determination of her incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to her beneficiary, estate or other legal representative. 
  
 IN WITNESS WHEREOF, the parties agree that the contract shall be deemed
executed as of December 28, 2002. 
  

 17 

			
	Williams-Sonoma, Inc.
		
	By:	 	/s/ Dale Hilpert
		
	 	 	/s/ Sharon L. McCollam             12/28/02
	 	 	Sharon L. McCollam

  

 18 

 SCHEDULE A 
  
 Option Agreements 
  

									
	# Granted	 	Date Granted	 	Type	 	# Unvested	 	Grant Price
	  60,000	 	03/06/00	 	NQ	 	36,000	 	$  9.4688
	150,000	 	10/09/00	 	NQ	 	90,000	 	$  9.5000
	  30,000	 	03/27/01	 	NQ	 	24,000	 	$13.6600The Kroger Co. Deferred Compensation Plan for Independent Directors

 EXHIBIT 10.3 
  
 THE KROGER CO. 
 DEFERRED COMPENSATION PLAN FOR INDEPENDENT DIRECTORS 
  
 The Kroger Co.
hereby amends and restates, effective as of June 1, 2003, its Deferred Compensation Plan for Independent Directors established for the purpose of providing to members of the Board of Directors who are eligible to participate in the Plan the option
of deferring a portion of future compensation that may become due from the Company. 
  
 ARTICLE I 
 DEFINITIONS 
  
 For purposes hereof, the following words and phrases have the meanings indicated: 
  

	1.	The “Plan” means The Kroger Co. Deferred Compensation Plan for Independent Directors, as set forth herein, together with all amendments hereto. 

 

	2.	“Cash Credit(s)” of a Participant at any time means the sum of all amounts of Deferred Compensation, including interest, credited to a Participant and recorded on his/her
Deferred Compensation Account as Cash Credits. 

  

	3.	The “Committee” means the Retirement Management Committee. 

  

	4.	The “Compensation Committee” means the Compensation Committee of the Board of Directors of the Company. 

  

	5.	The “Company” means The Kroger Co., an Ohio corporation, its Independent successors, and the surviving corporation, resulting from any merger of the Company with any other
corporation or corporations. 

  

	6.	A “Independent Director” means any member of the Board of Directors of the Company who is not an employee of the Company. 

  

	7.	“Compensation” means the retainer and any fee payable to a Independent Director with respect to a fiscal year of the Company. 

  

	8.	A “Deferral Year” means the calendar year during which, but for an election to defer under the Plan, the Independent Director would actually receive Compensation from the
Company. 

  

	9.	A “Deferral Election Agreement” means an agreement, in the form attached hereto as Exhibit A, executed by a Participant in order to defer Compensation in accordance with
the provisions of the Plan, and to designate whether such Deferred Compensation shall be allocated to the Participant’s Deferred Compensation Account as Cash Credits or as Stock Price Credits. 

  

	10.	“Deferred Compensation” means the amount of Compensation deferred in accordance with the Plan. 

  

	11.	“Deferred Compensation Account” means the bookkeeping account for each Deferral Year on which the amount of Deferred Compensation of a Participant is recorded as a
“Cash Credit” or “Stock Price Credit” for each Deferral Year in accordance with the Plan. 

  

	12.	“Designated Beneficiary” means the person(s) designated by a Participant on the Participant’s Deferral Election Agreement, in accordance with the Plan, to receive
payment of the remaining balance of the Deferred Compensation Account in the event of the death of the Participant prior to Participant’s receipt of the entire amount of the Deferred Compensation Account. 

  

	13.	“Fair Market Value” of the Stock Price Credits allocated to a Participant’s Deferred Compensation Account as of any date means the average of the high and low trading
price on the New York Stock Exchange of common stock of the Company on the last day of the calendar quarter immediately preceding such date, multiplied by the “Stock Price Credits” in his/her Deferred Compensation Account.

  

	14.	A “Participant” means an Independent Director who has been elected to defer payment of all or a portion of the Participant’s Compensation in accordance with the Plan.

  

	15.	“Stock Price Credit(s)” means the credits allocated to the Participant’s Deferred Compensation Account in the manner described in Section 5 of Article II.

  
 ARTICLE II 
 DEFERRAL OF COMPENSATION 
  

	1.	Deferral Elections. For each Deferral Year, each Independent Director is entitled to defer the receipt of payment of up to 100% (or any stated dollar amount not to exceed the
amount of Compensation) of the Compensation payable during the Deferral Year, and such Deferred Compensation shall be recorded in the Deferred Compensation Account of the Participant as a “Cash Credit” or a “Stock Price Credit”.

  
 The Independent Director must make all deferral
elections on a Deferral Election Agreement. The Committee will establish procedures to make deferral elections that will include the times during which the deferral elections can be made and that will comply with applicable Internal Revenue Service
requirements. 
  

	2.	Period of Deferral. The Independent Director must, in the Deferral Election Agreement, designate the time and manner in which Deferred Compensation is to be later paid, all
in accordance with the distribution option prescribed in Article III. 

  
 Upon making a deferral election pursuant to the foregoing provisions, an Independent Director will become a Participant of the Plan and will continue to be a Participant until all amounts of Deferred Compensation have
been paid from the Plan. 
  

	3.	Deferred Compensation Account. The amount of Compensation deferred by a Participant for any Deferral Year will be credited to a separate Deferred Compensation Account for
that Deferral Year in the name of the Participant, effective as of the day on which the Compensation otherwise would have been paid to the Participant. The Participant’s Deferred Compensation Account for the year will be either credited with
interest pursuant to Section 4 of this Article or credited with Stock Price Credits pursuant to Section 5 of this Article. 

  

	4.	Crediting of Interest. The Participant’s Cash Credit in his/her Deferred Compensation Account for the Deferral Year will be credited with interest based upon the
interest rate established for the Deferral Year by the Board of Directors of the Company, or by the Compensation Committee of the Board of Directors, before the beginning of the Deferral Year. Subject to future change by the Board of Directors or
the Compensation Committee, that interest rate will apply to all subsequent years until the Deferred Compensation is paid out to the Participant or the Participant’s Beneficiary. For the Deferral Year and each subsequent year, the
Participant’s Cash Credit in his/her Deferred Compensation Account will be credited with interest on a quarterly basis pursuant to the following provisions: 

  

	 	(A)	The interest for a calendar quarter will be credited effective as of the last day of the calendar quarter. 

  

	 	(B)	The interest credited for a calendar quarter will be in an amount equal to (i) ___ of the applicable interest rate for the Deferral Year, multiplied by (ii) the average of the
beginning and ending balances of the Participant’s Cash Credit in his/her Deferred Compensation Account for the calendar quarter. 

  

	5.	Crediting of Stock Price Credits. For each calendar quarter, a Participant shall have allocated to his/her Deferred Compensation Account a number of Stock Price Credits equal to the
amount of Deferred Compensation which the Participant has elected to allocate to the Participant’s Deferred Compensation Account for the quarter, divided by the average of the closing prices of the Company’s common stock on the New York
Stock Exchange on the first and last days of the quarter. Such Stock Price Credits will be recorded in the Participant’s Deferred Compensation Account for the Deferral Year and for each subsequent year until the Deferred Compensation is paid
out to the Participant or the Participant’s Beneficiary. 

  
 If, prior to payment of the Fair Market Value of a Participant’s Stock Price Credits pursuant to paragraph 1 of Article III, the Company pays a dividend on its common stock or makes any distribution with respect
thereto, the Participant’s Deferred Compensation Account will be credited with a number of additional Stock Price Credits determined by dividing the amount of the dividend or other distribution allocable to the Stock Price Credits already
credited to the Participant’s Deferred Compensation Account as of the record date for the dividend or distribution, by the average of the high and low trading prices on the New York Stock Exchange of Company common stock on the payment date for
the dividend or distribution. 
  
 If, prior to the payment of the
Fair Market Value of a Participant’s Stock Price Credits pursuant to paragraph 1 of Article III, the number of outstanding shares of Company common stock is changed by reason of a stock split, stock dividend, combination of shares or
recapitalization, or is converted or exchanged for other shares as a result of a merger, consolidation, sale, reorganization or recapitalization, the number of Stock Price Credits will be appropriately adjusted to reflect the change, based on the
best estimate of the Committee as to relative values. 
  

	6.	Designated Beneficiary. The Participant must, in the Participant’s Deferral Election Agreement, name a Designated Beneficiary with respect to the Participant’s
Deferred Compensation. The Participant is entitled to provide for multiple or contingent persons as Designated Beneficiary. The Participant may change or revoke the Participant’s designation of a Designated Beneficiary by written notice to the
Committee. 

  

	7.	Continued Right to Defer. A Independent Director’s right to defer the Participant’s Compensation ceases when he/she retires, dies or otherwise terminates the
Participant’s services to the Company. 

  

 ARTICLE III 
 PAYMENT OF DEFERRED COMPENSATION 
  

	1.	Payment Upon Participant’s Termination of Services. The Participant, in the Participant’s Deferral Election Agreement, must specify the time and manner that
Deferred Compensation is to be paid to the Participant upon the Participant’s termination of services to the Company (for any reason other than death) from among the following choices, as irrevocably elected by the Participant.

  
 For Cash Credits the choices of payment are:

  

	 	(A)	Immediate (Next Quarter) Lump Sum. The Participant’s Deferred Compensation Account will be paid to the Participant in a single cash lump sum payment as soon as
administratively possible after the first day of the calendar quarter following the date of the Participant’s termination of services as an Independent Director. The amount of the lump sum payment will be equal to the balance of the
Participant’s Deferred Compensation Account as of the last day of the calendar quarter preceding the date of payment to the Participant. 

  

	 	(B)	Deferred (Next Year) Lump Sum. The Participant’s Deferred Compensation Account will be paid to the Participant in a single cash lump sum payment as soon as
administratively possible after the first day of the calendar year following the date of the Participant’s termination of services as an Independent Director. The amount of the lump sum payment will be equal to the balance of the
Participant’s Deferred Compensation Account as of the last day of the calendar year preceding the date of payment to the Participant. 

  
 In the event that the Participant dies before the date of actual payment of the lump sum payment, the Participant’s Designated Beneficiary will
receive the Participant’s lump sum payment at the same time and manner prescribed by subsections (A) and (B). 
  

	 	(C)	Immediate (Next Quarter) Quarterly Installments. The Participant’s Deferred Compensation Account will be paid to the Participant in quarterly installment payments as
designated on the Deferral Election Agreement (not less than 4 nor more than 40) commencing as soon as administratively possible after the first day of the calendar quarter following the date of the Participant’s termination of services as a
Independent Director. The amount of each quarterly installment will be determined by dividing (i) the balance of the Participant’s Deferred Compensation Account as of the last day of the calendar quarter preceding the quarterly installment
payment to the Participant, by (ii) the number of the remaining quarterly installment payments to be made to the Participant plus the payment currently being made. 

  

	 	(D)	Deferred (Retirement Age) Quarterly Installments. The Participant’s Deferred Compensation Account will be paid to the Participant in quarterly installment payments as
designated on the Deferral Election Agreement (not less than 4 nor more than 40) commencing as soon as administratively possible after the first day of the calendar quarter following the date of the Participant’s retirement age specified in the
Participant’s Deferral Election Agreement. The amount of each quarterly installment will be determined by dividing (i) the balance of the Participant’s Deferred Compensation Account as of the last day of the calendar quarter preceding the
quarterly installment payment to the Participant, by (ii) the number of the remaining quarterly installment payments to be made to the Participant plus the payment currently being made. 

  
 In the event that the Participant dies before commencement of the
Participant’s quarterly installment payments, or the Participant dies after commencement of the Participant’s quarterly installment payments, the Participant’s Designated Beneficiary will receive the Participant’s quarterly
installment 

  

 
payments, at the election of the Participant in Deferral Election Agreement, either (i) at the same time and manner prescribed by subsections (C) and (D) as
if the quarterly installment payments were being made to the Participant or (ii) in a single lump sum payment as soon as administratively possible after the first day of the calendar quarter following the date of the Participant’s death in an
amount equal to the balance of the Participant’s Deferred Compensation Account as of the last day of the calendar year preceding the date of payment to the Designated Beneficiary. 
  
 For Stock Price Credits the choices of payment are: 
  
 The Fair Market Value of a Participant’s Stock Price Credits in his/her Deferred Compensation Account will be paid in
the form of a single lump sum cash payment on the first day of the quarter following either the first, second, third, fourth or fifth anniversary of the Participant’s termination of services as an Independent Director. 
  

	2.	Payment Upon Participant’s Death. The Participant, in the Participant’s Deferral Election Agreement, must specify the time and manner that the Deferred Compensation
is to be paid to the Participant’s Designated Beneficiary upon the Participant’s death during the Participant’s tenure as Independent Director among the following choices, as irrevocably elected by the Participant:

  

	 	(A)	Immediate (Next Quarter) Lump Sum. All Cash Credits or the Fair Market Value of any Stock Price Credits in the Participant’s Deferred Compensation Account will be paid
to his/her Designated Beneficiary in a single cash lump sum payment as soon as administratively possible after the first day of the calendar quarter following the date of the Participant’s death. The amount of the lump sum payment will be equal
to the balance of the Participant’s Deferred Compensation Account as of the last day of the calendar quarter preceding the date of payment to the Designated Beneficiary. 

  

	 	(B)	Deferred (Next Year) Lump Sum. All Cash Credits and the Fair Market Value of any Stock Price Credits in the Participant’s Deferred Compensation Account will be paid to
his/her Designated Beneficiary in a single cash lump sum payment as soon as administratively possible after the first day of the calendar year following the date of the Participant’s death. The amount of the lump sum payment will be equal to
the balance of the Participant’s Deferred Compensation Account as of the last day of the calendar year preceding the date of payment to the Designated Beneficiary. 

  

	 	(C)	Immediate (Next Quarter) Quarterly Installments Available for Cash Credits Only. Cash Credits in the Participant’s Deferred Compensation Account will be paid to his/her
Designated Beneficiary in quarterly installment payments as designated on the Deferral Election Agreement (not less than 4 nor more than 40) commencing as soon as administratively possible after the first day of the calendar quarter following the
date of the Participant’s death. The amount of each quarterly installment will be determined by dividing (i) the balance of the Participant’s Deferred Compensation Account as of the last day of the calendar quarter preceding the quarterly
installment payment to the Designated Beneficiary, by (ii) the number of the remaining quarterly installment payments to be made to the Designated Beneficiary plus the payment currently being made. 

  

	3.	Special Death Distribution Provisions. In the event of the death of a Participant, the Committee must receive written notice and verification of the death of the Participant
and reserves the right to delay distribution of a Participant’s Deferred Compensation Account to the Participant’s Designated Beneficiary until the Committee’s receipt and acceptance of that notice and verification of death.

  
 The distribution options elected by the
Participant in Sections 1 and 2 of this Article, where applicable, are binding on any subsequent Designated Beneficiary, including any subsequent Designated Beneficiary arising by a change by the Participant or by operation of any contingency
provisions of the Participant’s beneficiary designation. 
  

 The Participant’s written designation of the Participant’s Designated Beneficiary and
Participant’s contingency provisions (if any) will govern the determination of the proper person entitled to benefits under the Plan following the death of the Participant and the Participant’s Designated Beneficiary. However, in the
absence of a specific contingency provision therefore, the following default provisions will apply: 
  

	 	(A)	In the event that the Participant dies without any Designated Beneficiary, the Participant’s Designated Beneficiary will be deemed the Participant’s estate.

  

	 	(B)	In the event that the Participant’s Designated Beneficiary dies after the Participant and with outstanding benefits under the Plan, the Designated Beneficiary’s own
beneficiary designated in writing to the Committee (or, if none, the Participant’s estate) will thereafter be considered the Participant’s Designated Beneficiary. 

  

	 	(C)	In the event that the Participant and the Designated Beneficiary die simultaneously or under circumstances such that the order of death cannot be determined, the Participant, for
purposes of the Plan, will be deemed to have survived the Designated Beneficiary. 

  
 In the event the Participant has elected the installment distribution option available for Cash Credits and the Participant’s Designated Beneficiary
is the Participant’s estate (or, if applicable, the estate of a Designated Beneficiary), the Participant’s Deferred Compensation Account will continue to be made in installment payments consistent with the installment distribution option
to the proper beneficiary under the estate of the Participant (or, if applicable, the estate of the Designated Beneficiary). 
  

	4.	Hardship. In instances of unforeseeable emergency arising from causes beyond the Participant’s control and resulting in severe financial hardship to the Participant if
early withdrawal were not permitted, the Participant may apply in writing to the Committee for an emergency payment under this Section 4. The Company will pay to the Participant that portion of the Participant’s Deferred Compensation Account(s)
under the Plan as necessary to meet the emergency. For purposes of this Section 4 an emergency payment will be made only in instances of hardship arising from those causes and only in those amounts that the Committee determines is necessary to meet
the hardship. Upon application, the Participant will furnish to the Committee all information as the Participant deems appropriate and as the Company and counsel for the Company deem necessary and appropriate to make a determination on the hardship
application. 

  

	5.	Committee Discretion to Modify Distribution. The Committee reserves the right, in its sole and absolute discretion, to modify the time and manner of payment of a
Participant’s Deferred Compensation Account, without regard to the Participant’s Deferral Election Agreement or any provision of the Plan. 

  

 ARTICLE IV 
 BENEFIT RELATED PROVISIONS 
  

	1.	Plan Tax Status. The Plan is intended to constitute an unfunded, non-qualified deferred compensation arrangement with respect to section 451(a) of the Internal Revenue Code.

  

	2.	Plan Binding. As a condition to participating in and receiving benefits under this Plan, a Participant will be bound by the provisions of this Plan. 

 

	3.	Unsecured Obligation. The obligation of the Company to make payments under the Plan merely constitutes a general, unsecured promise of the Company to make payments from its
general assets. No Participant or Designated Beneficiary will have any interest in, or a lien or prior claim upon, any property of the Company. The right of a Participant or a Designated Beneficiary to receive benefits under the Plan will be an
unsecured claim against the general assets of the Company and the Participant and the Participant’s Beneficiary will have no greater rights to the general assets of the Company than any other general creditor of the Company.

  

	4.	Nonalienation of Benefits. The Participant’s benefits under this Plan, or the current right of a Participant or Designated Beneficiary to receive benefits under the
Plan, will not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, garnished or subjected to any charge or legal process, by the Participant, Designated Beneficiary or any other person (such as their creditors), and any
attempt to do so will be null and void and of no force and effect. 

  

	5.	Tax Withholding. The Participant and Designated Beneficiary will be responsible for all taxes on amounts paid under the Plan, except to the extent taxes are withheld as
required by law. 

  

	6.	Benefit Payments in the Event of Incapacity. If the Committee finds that any Participant or Designated Beneficiary is unable to care for the Participant’s affairs
because of illness or injury, or is a minor, then any payment due under the Plan will be made, in the discretion of the Committee, to the spouse, child, brother, sister or parent of the respective Participant or Designated Beneficiary, for the
Participant’s benefit, unless a prior claim has been made by a duly appointed guardian or other legal representative. 

  
 ARTICLE V 
 ADMINISTRATION 
  

	1.	Committee Authority. The Committee is responsible for the general administration of the Plan and for carrying out the provisions hereof. The Committee has all powers
necessary to carry out the provisions of the Plan, including the discretionary authority to interpret and construe all provisions of the Plan and make all benefit determinations under the Plan, including but not limited to eligibility for and the
amount in the Deferred Compensation Account, crediting and calculation of interest, and all questions pertaining to claims for benefits and procedures for claim review. The Committee is empowered to take all action deemed advisable in the
administration of the Plan. The actions taken and the decisions made hereunder will be final and binding on all interested parties. 

  

	2.	Claims Procedure. The Company will provide a procedure for handling claims of Participants or their Designated Beneficiaries under the Plan. The procedure will provide
adequate written notice within a reasonable period of time with respect to the Committee’s denial of any claim, as well as a reasonable opportunity for a full and fair review of any denial. The decision after any review will be conclusive and
binding on Participants, Designated Beneficiaries and the Company. 

  

	3.	Account Statements. As soon as administratively possible after the end of each calendar year, the Company will prepare and furnish to each Participant a statement of the
status of each of the Participant’s Cash Credits and Stock Price Credits in his/her Deferred Compensation Account of the Plan effective as of the last day of the calendar year. The statement will show the contributions and earnings credited to
the Account during the year and the payments made from the Account during the year, and any other information as the Committee may prescribe. 

  

	4.	Indemnification. The Company will indemnify, through insurance or otherwise, each member of the Committee against any claims, losses, expenses, damages or liabilities arising
out of the performance (or failure of performance) of their responsibilities under the Plan. 

  

 ARTICLE VI 
 AMENDMENT AND TERMINATION 
  
 The Company reserves
the right to amend or modify the Plan at any time by action of its Board of Directors or the Compensation Committee. The Board of Directors may terminate this Plan at any time. No action will adversely affect any Participant or Designated
Beneficiary who has a Deferred Compensation Account. The Board may, however, direct that all Deferred Compensation be paid out in a lump sum or in a series of payments upon, and commencing with, termination of the Plan. The Board will not be bound
by any elections therefore made by Participants to receive extended payout. 
  
 ARTICLE VII 
 MISCELLANEOUS 
  

	1.	Claims of Other Persons. The Plan will not be construed as giving any person, firm or corporation any legal or equitable right against the Company, its officers, employees,
or directors, except any rights specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan. 

  

	2.	Severability. The invalidity or unenforceability of any particular provision of the Plan will not affect any other provisions hereof, and the Plan will be construed in all
respects as if all invalid or unenforceable provisions were omitted herefrom. 

  

	3.	Governing Law. The provisions of the Plan will be governed and construed in accordance with the laws of the State of Ohio. Nothing contained herein will be construed to
create any duty, right or obligation under the Employee Retirement Income Security Act of 1974, as amended (ERISA).

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