Document:

Exhibit

Exhibit 10.8

EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by and between ZEBRA TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company"), and Hugh Gagnier (the "Employee") as of June 1, 2018 (the “Effective Date”).
RECITALS
A.The Company and Employee are parties to an employment agreement dated December 12, 2007, as amended (the “Prior Agreement”).
B.The Company and Employee wish to terminate the Prior Agreement as of the Effective Date (as defined below) and enter into this Agreement, which provides for the continued employment of the Employee upon the terms and conditions set forth in this Agreement.
C.The Employee desires to continue the Employee’s employment with the Company upon the terms and condition set forth in this Agreement.
NOW, THEREFORE, in consideration of the above premises and the following mutual covenants and conditions, the parties agree as follows:
1.Continued Employment and Term.  Beginning as of the Effective Date and continuing through the close of business, Pacific time, on December 31, 2018 (the “Transition Period”), the Employee shall continue the Employee’s employment as Senior Vice President, Global Supply Chain at his current annual base salary of $437,750 and incentive compensation pay rates and benefits, including medical, dental and vision benefits.  Beginning as of the close of business on December 31, 2018 and continuing through the close of business, Pacific time, on June 30, 2021 (the “Executive Consultancy Period”), the Employee shall cease serving as Senior Vice President, Global Supply Chain at his current compensation and benefits and the Company shall employ the Employee as a Vice President of the Company at the compensation and benefits terms set forth in Section 4 below.  The Employee understands and agrees that the Employee is an at-will employee, and the Employee and the Company can, and shall have the right to, terminate the employment relationship, including in either the Transition Period or Executive Consultancy Period, at any time for any or no reason, with or without notice, and with or without cause, subject to the provisions contained in Paragraph 7 of this Agreement.  Nothing contained in this Agreement or any other agreement shall alter the at-will relationship.  
2.Duties.  During the Transition Period, the Employee shall continue to perform his current job duties as Senior Vice President, Global Supply Chain and shall solely report to, and follow the direction of, the Chief Executive Officer of the Company (the “CEO”) and assist the Company with smooth transition of those duties.  During the Executive Consultancy Period, the Employee shall solely report to, and follow the direction of, the CEO.  During the Executive Consultancy Period, the Employee will not be required to maintain regular work hours but shall make himself available to work on a part-time basis as reasonably requested by the CEO.  The Employee shall diligently, competently, and faithfully perform all duties assigned to Employee and will use the Employee’s best efforts to promote the interests of the Company.  It shall not be considered a violation of the foregoing for the Employee to serve on business, industry, civic, religious or charitable boards or committees.  Furthermore, it shall not be considered a violation of the foregoing for the Employee to engage in other employment during the Executive Consultancy Period provided that such employment does not conflict with or violate the other provisions of this Agreement, including but not limited to the Non-Solicitation and Non-Competition provisions of Paragraph 8(B); provided further that should Employee become eligible for health insurance coverage under another group health plan that does not impose preexisting condition limitations, the Company shall be relieved of any obligation under this Agreement to provide or subsidize health insurance coverage and any payment or portion of any payment to be provided by the Company under this Agreement attributable to providing or subsidizing health insurance shall cease.   For the avoidance of doubt, Employee shall consult with the Company prior to accepting any outside employment during the Executive Consultancy Period to ensure that such employment will not create an actual or perceived conflict with any of Employee’s obligations under this Agreement.
3.Loyalty.  The Employee expressly agrees that during the term of the Employee’s employment, the Employee shall not engage, directly or indirectly, as a partner, officer, director, member, manager, stockholder, supplier, advisor, agent, employee, or in any other form or capacity, in any other business similar to that of the Company. The foregoing notwithstanding, and except as otherwise set forth in Paragraph 8, nothing herein contained shall be deemed to prevent the Employee from (1) managing the Employee’s personal investments and financial affairs or (2) investing the Employee’s money in the capital stock or other securities of any corporation whose stock or securities are publicly traded on any securities exchange, so long as the Employee does not beneficially own more than one percent (1%) of the outstanding capital stock of any such corporation.
4.Executive Consultancy Period Compensation & Benefits.
A.    Base Salary.   Commencing January 1, 2019, the Employee’s Base Salary shall be reduced to an annual rate of $15,000, payable in substantially equal installments in accordance with the Company's payroll policy from time to time in effect.  The Base Salary shall be subject to any payroll or other deductions as may be required to be made pursuant to law, government order, or by agreement with, or consent of, the Employee.  The Base Salary during the Executive Consultancy Period may be reviewed by the CEO and may be increased (but not decreased) as shall be determined by the CEO.  If and when increased, the annual rate of salary shall thereafter be treated for all purposes of this Agreement as the Employee’s Base Salary.  
B.    Incentive Pay.  The Employee shall be eligible to earn a cash performance incentive under the Zebra Technologies Corporation 2018 Incentive Plan (the “2018 ZIP”).  The performance goals and targets under the 2018 ZIP shall be the same goals and targets as those set for executive officers of the Company, other than any personal performance goals and targets of an executive officer.  The Employee’s 2018 ZIP incentive shall be targeted at eighty percent (80%) of the Base Salary (the “Target Incentive”), with the actual incentive (“Incentive”) earned to be calculated on that portion of the Base Salary actually earned during 2018 and in accordance with the 2018 ZIP as established by the Board. The Incentive, if any, for 2018 may be below, at or above the Target Incentive and shall be paid in March 2019.  Except as otherwise set forth in Paragraph 7B, the Employee must be employed by the Company and in good standing as of the date that the 2018 Incentive is paid.  The Employee shall not participate in any cash incentive plan of the Company for any plan year after 2018.
C.    Equity.  The Employee shall not be eligible to be granted any equity award under any equity incentive plan of the Company during 2018 or throughout the remainder of the Employee’s employment with the Company.  This Agreement shall not affect the terms and conditions of any equity awards granted by the Company to Employee prior to the Effective Date, which awards shall continue in accordance with their terms.      
D.    Employee Benefits.  During the Executive Consultancy Period, the Company shall include the Employee in any benefit plans or programs maintained by the Company for the benefit of its employees and as to which the Employee is eligible to participate; provided, it is understood that during the Executive Consultancy Period, the Employee shall not be eligible to participate in the Company’s paid time off program, which shall cease accruing as of the close of business on December 31, 2018; provided, further, that beginning on January 1, 2019, the Employee shall not be eligible to participate in (1) any Company excess benefit or supplemental executive retirement plans provided or that may be provided to executive officers of the Company, (2) any Company disability insurance plans or programs, or (3) any Company medical, dental or vision insurance, except as set forth in this Agreement or as may be provided through continuation coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  Subject to Paragraph 7, in the period commencing January 1, 2019 through the end of the Employee’s employment, the Employee shall be entitled to medical, dental and vision coverage of the Employee and the Employee’s dependents in medical, dental and vision insurance plans sponsored by the Company for U.S. employees (or equivalent or substantially equivalent plans to those sponsored by the Company for U.S. employees) and the Company shall pay for such coverage except to the extent that the Employee shall be required to pay or contribute at the same rate that the Company’s U.S. employees pay for equivalent or substantially equivalent medical, dental and vision insurance coverage under the Company’s group health plan for active U.S. employees through the earlier of (a) June 30, 2021 and (b) the date the Employee becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations.  Nothing in this Agreement shall be construed to limit, condition, or otherwise encumber the rights of the Company, in its sole discretion, to amend, discontinue, substitute or maintain any benefit plan, program, or perquisite. 
5.    Expenses.  While employed by the Company, the Employee shall be entitled to receive prompt reimbursement for all reasonable and necessary business expenses incurred by the Employee, in accordance with the practices and policies of the Company, including travel expenses incurred in connection with the performance of the Employee’s duties.  To receive reimbursement, the Employee shall submit to the Company such vouchers or expense statements that reasonably evidence expenses incurred in accordance with the Company’s travel and expense reimbursement policy.
6.    Termination.  The Employee's employment shall terminate on the earlier of: (1) the close of business, Pacific time, on June 30, 2021, or (2) the first to occur of the following events:
A.Death or Disability.  Upon the Employee's date of death or the date the Employee is given written notice that the Employee has been determined by the Company to be disabled.  For purposes of this Agreement, the Employee shall be deemed to be disabled if the Employee, as a result of illness or incapacity, shall be unable to perform substantially the Employee’s required duties for a period of one hundred eighty (180) consecutive days with or without accommodation; provided, however, that if the Employee, after being unable to perform substantially the Employee’s required duties for a period of less than one hundred eighty (180) consecutive days as a result of illness or incapacity, returns to active duty for less than thirty (30) days, the period of such active duty will be disregarded in determining whether the 180 consecutive day threshold has been accumulated (although it will not be accumulated as part of the 180-day period).  A termination of the Employee's employment by the Company for disability shall be communicated to the Employee by written notice and shall be effective on the tenth (10th) business day after receipt of such notice by the Employee, unless the Employee returns to full-time performance of the Employee’s duties before such tenth (10th) business day.
B.Termination for Cause.  On or as of the date the Company provides the Employee with written notice that the Employee is being terminated for Cause.  For purposes of this Agreement, and as determined by the CEO in the CEO’s sole discretion, the Employee shall be deemed terminated for “Cause” if the CEO terminates the Employee after the Employee:
(1)    shall have committed, been indicted of, or been convicted of, or admitted, plea bargained, entered a plea of no contest or nolo contendere to, any felony of any kind or a misdemeanor, or violated any laws, involving fraud, dishonesty or an act of moral turpitude;
(2)    shall have materially breached this Agreement or any other agreement to which the Employee and the Company are parties;
(3)    shall have materially violated any written Company policy, regardless of whether within or outside the scope of the Employee’s authority;
(4)    shall have committed willful or intentional misconduct, gross negligence, or dishonest, fraudulent or unethical behavior, or other conduct involving serious moral turpitude in the performance of the Employee’s duties hereunder; 
(5)    shall have failed or refused to materially comply (to the best of the Employee’s ability) with a specific direction of the Company, unless the Employee reasonably and in good faith believes such specific direction to be unlawful (in which case the Company’s termination of the Employee’s employment shall not be for Cause under this provision); or
(6)    engages in any conduct which breaches the Employee’s fiduciary duty to the Company, which materially injures the integrity, character or reputation of the Company or which impugns Employee's own integrity, character or reputation so as to cause Employee to be unfit to act in the capacity of an officer of the Company. 
A termination of employment by the Company for Cause under subparagraphs 6B(2), (3), (4), (5) or (6) shall be effectuated by the CEO or the CEO’s designee giving the Employee written notice of the termination within thirty (30) days of the event constituting Cause or the CEO having actual knowledge of the event constituting Cause, or such longer period as the parties may agree, setting forth in reasonable detail the specific conduct of the Employee that constitutes Cause, the specific provisions of this Agreement on which the Company relies and, to the extent such Cause is susceptible to cure, providing the Employee with a thirty (30) day cure period.  If such Cause is susceptible to cure and the Employee fails to remedy the condition within such thirty (30) day cure period, the Company may terminate the Employee’s employment within thirty (30) days after the expiration of the cure period, and if the Company fails to so terminate the Employee’s employment, any subsequent termination based upon the same underlying facts shall not constitute a termination for Cause under this subparagraph 6B.
C.Termination by the Company.  On the date the Company terminates the Employee's employment for any reason, other than a reason otherwise set forth in this Paragraph 6.
D.Good Reason Termination.  On the date the Employee terminates the Employee’s employment for Good Reason.  The term “Good Reason” means the occurrence of a material breach by the Company of any material provision of this Agreement, the Indemnification Agreement dated as of February 15, 2017 between the Company and Employee (the “Indemnification Agreement”) or any equity award agreement between the Employee and the Company.   
A termination of employment by the Employee for Good Reason under this subparagraph 6D shall be effectuated by giving the Company written notice of the termination within thirty (30) days of the event constituting Good Reason, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provisions of this Agreement or the Indemnification Agreement on which Employee relies and providing the Company with a thirty (30) day period during which it may remedy the condition constituting Good Reason.  If the Company fails to remedy the condition within such thirty (30) day period, the Employee must terminate the Employee’s employment within thirty (30) days after the expiration of the cure period, and if the Employee fails to so terminate the Employee’s employment, any subsequent termination based upon the same underlying facts shall not constitute a termination for Good Reason under this subparagraph 6D.
E.Resignation.  On the date the Employee terminates the Employee’s employment for any reason (other than Good Reason), provided that the Employee shall give the CEO thirty (30) days written notice prior to such date of the Employee’s intention to terminate such employment.  The CEO may, in the CEO’s sole discretion, waive such thirty (30) day notice requirement.
7.    Compensation Upon Termination.
A.Final Payments and Benefits.  
(1)    Payments.  If the Employee's employment is terminated on or prior to June 30, 2021 pursuant to Paragraph 6, the Employee shall be entitled to the Employee’s salary through the Employee’s final date of active employment plus any accrued but unused paid time off.

(2)    Benefits Upon Termination During Transition Period. If the Employee’s employment is terminated during the Transition Period pursuant to Paragraph 6, the Employee (and the Employee’s dependents) shall be entitled to any benefits mandated under COBRA, and the Employee shall pay for any medical, dental or vision coverage through the earlier of (a) the last day of the period mandated by COBRA and (b) the date the Employee becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations; provided, that if the Employee’s employment is terminated during the Transition Period pursuant to Paragraph 6A, 6C or 6D, the Employee (and the Employee’s dependents) shall be entitled to medical, dental and vision coverage of the Employee and the Employee’s dependents in medical, dental and vision insurance plans sponsored by the Company for U.S. employees (or equivalent or substantially equivalent plans to those sponsored by the Company for U.S. employees) and the Company shall pay for such coverage except to the extent that the Employee (dependents) shall be required to pay or contribute at the same rate that the Company’s U.S. employees pay or contribute for equivalent or substantially equivalent medical, dental and vision insurance coverage under the Company’s group health plan for active U.S. employees through the earlier of (a) June 30, 2021 and (b) the date the Employee (or dependent) becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations; provided, further, that nothing herein shall be construed to extend the period of time over which such COBRA continuation coverage may be provided to the Employee and the Employee’s dependents beyond that mandated by law. 

(3)    Benefits Upon Termination During the Executive Consultancy Period.  If the Employee’s employment is terminated during the Executive Consultancy Period pursuant to Paragraph 6, the Employee (and the Employee’s dependents) shall be entitled, to medical, dental and vision coverage of the Employee and the Employee’s dependents in medical, dental and vision insurance plans sponsored by the Company for U.S. employees (or equivalent or substantially equivalent plans to those sponsored by the Company for U.S. employees) and the Employee shall pay for such coverage through the earlier of (a) June 30, 2021 and (b) the date the Employee becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations; provided, that if the Employee’s employment is terminated during the Executive Consultancy Period pursuant to Paragraph 6A, 6C or 6D, the Company shall pay for such coverage except to the extent that the Employee shall be required to pay or contribute at the same rate that the Company’s U.S. employees pay or contribute for equivalent or substantially equivalent medical, dental and vision insurance coverage under the Company’s group health plan for active U.S. employees through the earlier of (a) June 30, 2021 and (b) the date the Employee (or dependent) becomes eligible for coverage under another group health plan that does not impose preexisting condition limitations.

(4)    Other Benefits.  If the Employee’s employment is terminated pursuant to Paragraph 6 prior to June 30, 2021, the Employee shall be entitled to any benefits pursuant to the terms of any death, disability, life insurance, or retirement plan, program, or agreement provided by the Company and to which the Employee is a party or in which the Employee is a participant.
B.Severance Benefits.
(1)    Cash Payments Upon Termination During Transition Period.   In addition to the salary and benefits described in Paragraph 7A, and in lieu of any severance benefits whether under any Company severance plan or otherwise, if the Employee's employment is terminated during the Transition Period pursuant to Paragraph 6C or 6D, the Employee shall be entitled to the following: (i) the continuation of the Employee’s Base Salary of $437,750 for a period ending on the one-year anniversary of the effective date of the Employee’s termination of employment (the “Severance Period”), payable commencing on the first regularly scheduled payroll date after the date the Employee’s employment is terminated and continuing thereafter on each subsequent payroll date throughout the Severance Period in accordance with the Company’s payroll policy from time to time in effect and subject to the limitations imposed under subparagraph 7B(3); (ii) a pro rata portion of the Incentive under the 2018 ZIP based on the number of days employed in 2018, if such Incentive would have been earned had the Employee been employed and in good standing as of the date the Incentive otherwise is paid to U.S. employees of the Company, and payable at the time the Incentive is paid to U.S. employees of the Company; (iii) a payment equal to $350,200, to be paid not later than March 15, 2019; and (iv) equity compensation, if any, subject to the terms of the Employee’s respective award agreements; provided, that if the Employee’s employment is terminated during the Transition Period pursuant to Paragraph 6C or 6D and a "Change in Control" is completed on or prior to April 30, 2019, the Employee shall be entitled to a cash payment, in lieu of any payments otherwise set forth in Paragraph 7B(1)(i), and payable within sixty (60) days following the later of the Change in Control or the termination, subject, however, to the limitations imposed under subparagraph 7B(3) and (4), equal to $1,575,400.

(2)    Cash Payments Upon Termination During the Executive Consultancy Period.   In addition to the salary and benefits described in Paragraph 7A, and in lieu of any severance benefits whether under any Company severance plan or otherwise, if the Employee's employment is terminated during the Executive Consultancy Period pursuant to Paragraph 6C or 6D, the Employee shall be entitled to the following: (i) the continuation until June 30, 2021 of the Employee’s Base Salary at the annual salary rate then in effect, payable commencing on the first regularly scheduled payroll date after the date the Employee’s employment is terminated and continuing thereafter on each subsequent payroll date through June 30, 2021 in accordance with the Company’s payroll policy from time to time in effect and subject to the limitations imposed under subparagraph 7B(3); (ii) any unpaid portion of the Incentive under the 2018 ZIP, if such Incentive would have been earned had the Employee been employed and in good standing as of the date the Incentive otherwise is paid to U.S. employees of the Company, and payable at the time the Incentive is paid to U.S. employees of the Company; and (iii) equity compensation, if any, subject to the terms of the Employee’s respective award agreements.    

(3)    Notwithstanding the foregoing, if the Employee is a “specified employee” as such term is defined under Section 409A of the Code and the regulations and guidance promulgated thereunder, any payments described in this Paragraph 7B to the extent applicable shall be delayed for a period of six (6) months following the Employee’s separation of employment to the extent and up to an amount necessary to ensure such payments are not subject to the penalties and interest under Section 409A of the Code.  The payments to be made under this Paragraph 7B shall be further conditioned upon the Employee’s execution of an agreement acceptable to the Company that (i) waives any rights the Employee may otherwise have against the Company, and (ii) releases the Company from actions, suits, claims, proceedings and demands related to the period of employment and/or the termination of employment.  Such agreement shall be provided to the Employee prior to or promptly following the Employee’s termination of employment, and must be executed by the Employee and returned to the Company within the time prescribed in such agreement (but in no event later than the sixtieth (60th) day following termination of employment).   No payments shall be made pursuant to Paragraph 7B unless and until the Company shall have received such agreement and any period during which the Employee may revoke such agreement shall have expired without revocation.  In the event such period spans two (2) calendar years, payment will not commence until the second calendar year and after the severance agreement and general release of claims has become effective.  Any payments which the Employee would have otherwise received prior to the end of such revocation period shall be paid, in a single lump sum without interest, as soon as practical after the revocation period expires, but in no event later than March 15 of the year following the year in which the termination of employment occurs.  For purposes of this Paragraph 7B, "Change in Control" shall be as defined under the 2015 Long-Term Incentive Plan,  as in effect on the date hereof, which definition is incorporated herein by reference; provided, however, the definition of Change in Control as set forth herein is not intended to be broader than the definition of a “change in control event” as defined by reference to the regulations under Section 409A of the Code, and the payments described in Paragraph 7B(2) shall not be payable unless the applicable Change in Control constitutes a change in control event in accordance with Section 409A of the Code and the regulations and guidance promulgated thereunder. 

(4)    Each installment of Base Salary and Incentive paid under Section 7B is designated as a separate payment for purposes of the short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F) and the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii).  As a result, the following payments are intended to be exempt from Section 409A of the Code: (1) payments that are made on or before the 15th day of the third month of the calendar year following the calendar year in which the Employee terminates employment, and (2) subsequent payments made on or before the last day of the second calendar year following the year of the Employee’s termination that do not exceed the lesser of two times the Employee’s annual rate of pay in the year prior to the Employee’s termination or two times the limit under Section 401(a)(17) of the Internal Revenue Code then in effect.  In the event that any provision of this Agreement is deemed to be subject to Section 409A of the Code, the Company shall administer this Agreement in accordance with the requirements set forth in Section 409A of the Code and any rules and regulations issued thereunder.  If any provision of this Agreement does not comply with the requirements of Section 409A of the Code, the Company, in exercise of its sole discretion and without consent of the Employee, may amend or modify this Agreement in any manner to the extent necessary to meet the requirements of Section 409A of the Code; provided, that any such amendment or modification shall not reduce or diminish the amount or value of any payment to be made to Employee under this Agreement.  
8.    Restrictive Covenants.
A.Confidentiality.
(1)    Confidential Information.  The Employee understands that the Company possesses Confidential Information which is important to its business, the Company devotes significant financial, human and other resources to the development of its products, its customer base and the general goodwill associated with its business and the Company diligently maintains the secrecy and confidentiality of its Confidential Information.  For purposes of this Agreement, Confidential Information is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company, which has commercial value in the Company’s business.  “Confidential Information” means any and all financial, technical, commercial or other information concerning the business and affairs of the Company that is confidential and proprietary to the Company, including without limitation, (i) information relating to the Company’s past and existing customers and vendors and development of prospective customers and vendors, including specific customer product requirements, pricing arrangements, payment terms, customer lists and other similar information; (ii) inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company; (iii) the Company’s proprietary programs, processes or software, consisting of but not limited to, computer programs in source or object code and all related documentation and training materials, including all upgrades, updates, improvements, derivatives and modifications thereof and including programs and documentation in incomplete stages of design or research and development; (iv) the subject matter of the Company’s patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property, including such information in incomplete stages of design or research and development; and (v) other confidential and proprietary information or documents relating to the Company’s products, business and marketing plans and techniques, sales and distribution networks and any other information or documents which the Company reasonably regards as being confidential.
(2)    Company Materials.  Employee understands that the Company possesses or will possess Company Materials which are important to its business. For purposes of this Agreement, “Company Materials” are documents or other media or tangible items that contain or embody Confidential Information or any other information concerning the business, operations or future/strategic plans of the Company, whether such documents have been prepared by the Employee or by others.
(3)    Treatment of Confidential Information and Company Property.  In consideration of the Employee’s employment by the Company, the compensation received by the Employee from the Company, and the Company’s agreement to give Employee access to certain Confidential Information, the Employee agrees as follows:
(a)    All Confidential Information and trade secret rights, and other intellectual property and rights (collectively “Rights”) in connection therewith will be the sole property of the Company.  At all times, both during the Employee’s employment by the Company and after its termination for any reason, Employee will keep in confidence and trust and will not use or disclose any Confidential Information or anything relating to it without the prior written consent of the CEO, except as may be necessary and appropriate in the ordinary course of performing the Employee’s duties to the Company.
(a)    All Company Materials will be the sole property of the Company.  The Employee agrees that during the Employee’s employment by the Company, the Employee will not remove any Company Materials from the business premises of the Company or deliver any Company Materials to any person or entity outside the Company, except in connection with performing the duties of the Employee’s employment.  The Employee further agrees that, immediately upon the termination of the Employee’s employment by the Employee or by the Company for any reason, or during the Employee’s employment if so requested by the Company, the Employee will return all Company Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only the Employee’s copy of this Agreement.
(1)    No Limitation on Reporting of Violations or Protected Disclosures.  Notwithstanding any of the foregoing or any other provisions in this Agreement, nothing in this Agreement prohibits the Employee from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of Zebra or its CEO, Legal Department or anyone else to make any such reports or disclosures and I am not required to notify Zebra that I have made such reports or disclosures.
B.    Non-Solicitation and Non-Competition.  In consideration for the compensation and benefits granted by the Company to Employee under this Agreement, and in further consideration of Employee’s continued employment by the Company, the Employee hereby agrees that during the Employee’s employment by the Company, the Employee will not directly or indirectly:
(1)    Contact, solicit, interfere with or divert any of the Company’s or its subsidiaries’ customers or channel partners by disclosing, divulging, using or relying on Confidential Information, proprietary information or trade secrets acquired during the Employee’s employment with the Company; 

(2)    Accept employment or engage in a competing business, or engage in any activity that may result in the disclosure, divulging or otherwise use of Confidential Information acquired during the Employee’s employment with the Company; and

(3)    Solicit any person who is employed by the Company or any subsidiary of the Company for the purpose of encouraging that employee to cease employment with the Company or join Employee as a partner, agent, employee or otherwise in any business activity which is competitive with the Company or any subsidiary of the Company.  
C.    Nondisparagement.  While employed by the Company and for a one year period thereafter, the Employee shall refrain from (1) making any false statement about the Company, and (2) all conduct, verbal or otherwise, that disparages or damages or could disparage or damage the reputation, goodwill, or standing in the community of the Company or any of its subsidiaries or affiliates, or any of their officers, directors, employees and stockholders,  or that could have a deleterious effect upon the Company’s or any of its subsidiaries’ or affiliates’ business; provided, however, that nothing contained in this Paragraph 8C or any other paragraph of this Agreement shall preclude the Employee from making any statement in good faith that is required or protected by law or order of any court or regulatory commission.
D.    Forfeitures.  In the event that the Employee breaches any of the restrictions in this Paragraph 8, the Employee shall forfeit all of the applicable payments and benefits under this Agreement, including but not limited to such payments and benefits pursuant to Paragraph 7 (except those contained in Paragraph 7A or as otherwise prohibited by law), and the Company shall have the right to recapture and seek repayment of any such applicable payments and benefits under this Agreement.  The Company and the Employee acknowledge that the remedy set forth hereunder is not to be considered a form of liquidated damages and the forfeiture, recapture or repayment shall not be the exclusive remedy hereunder.
E.    Intellectual Property.  The Company has adopted a policy on Inventions intended to encourage research and inventions by its employees, to appraise and determine relative rights and equities of all parties concerned, to facilitate patent applications, licensing, and the generation of royalties, if any, and to provide a uniform procedure in patent matters when the Company has a right or equity.  “Inventions” includes all improvements, inventions, designs, formulas, works of authorship, trade secrets, technology, computer programs, compositions, ideas, processes, techniques, know-how and data, whether or not patentable, made or conceived or reduced to practice or developed by the Employee, either alone or jointly with others, during the term of the Employee’s employment, including during any period prior to the date of this Agreement.
(1)    Ownership and Assignment.  Except as defined in this Agreement, all Inventions which the Employee makes, conceives, reduces to practice or develops (in whole or in part, either alone or jointly with others) during the Employee’s employment will be the sole property of the Company to the maximum extent permitted by law.  The Employee agrees to assign such Inventions and all Rights in them to the Company.  Exemptions from this Agreement to assign may be authorized in those circumstances where the mission of the Company is better served by such action, provided that overriding obligations to other parties are met and such exemptions are not inconsistent with other Company policies.  Further, the Employee may petition the Company for license to make, market or sell a particular Invention.  The Company may release patent rights to the inventor in those circumstances when:
(a)    the Company provides the Employee with notification in writing that it elects not to file a patent application and the inventor is prepared to do so at the Employee’s expense, or
(b)    at the Company’s discretion, the equity of the situation indicates that such release should be given, provided in either case that no further research or development to develop that invention will be conducted involving Company support or facilities, and provided further that a shop right is granted to the Company and, at the Company’s discretion, the Company shall have a royalty-free, assignable license to the Invention and any intellectual property rights related to it.
The provisions of Paragraph 8E(1) do not apply to an Invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on the Employee’s own time, unless (a) the Invention relates (1) to the business of the Company, or (2) to the Company’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by the Employee for the Company.
(2)    Disclosure to the Company.  The Employee promptly will disclose in writing to the CEO, with a copy to the General Counsel of the Company, all Inventions.  The Employee also will disclose to the General Counsel of the Company all things that would be Inventions if made during the term of the Employee’s employment, conceived, reduced to practice, or developed by the Employee within six months after the termination of the Employee’s employment with the Company, unless the Employee can demonstrate that the Invention has been conceived and first reduced to practice by the Employee following the termination of the Employee’s employment with the Company.  Such disclosures will be received by the Company in confidence (to the extent they are not assigned in this Paragraph and do not extend the assignment made in this Paragraph.)  The Employee will not disclose Inventions to any person outside the Company unless requested to do so by the CEO or the General Counsel of the Company.
(3)    Assistance with Rights.  The Employee agrees to perform, during and after employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing Rights with respect to such Inventions and improvements in any and all countries.  Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings.  The Employee agrees to execute such declarations, assignments, or other documents as may be necessary in the course of Invention evaluation, patent prosecution, or protection of patent or analogous property rights, to assure that title in such Inventions will be held by the Company or by such other parties designated by the Company as may be appropriate under the circumstances.  The Employee irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Employee’s agents and attorneys-in-fact to act for and on the Employee’s behalf and instead of the Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by the Employee.
(4)    Moral Rights.  Any assignment of copyright pursuant to this Agreement includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” (collectively “Moral Rights”).  To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the laws in the various countries where Moral Rights exist, Employee hereby waives such Moral Rights and consents to any action of the Company that would violate such Moral Rights in the absence of such consent.  The Employee will confirm any such waivers and consents from time to time as requested by the Company.
F.    No Conflicts.  The execution and delivery of this Agreement by the Employee does not conflict with, or result in a breach of or constitute a default under, any agreement or contract, whether oral or written, to which the Employee is a party or by which the Employee may be bound.  In addition, the Employee has informed the Company of, and provided the Company with copies of, any non-competition, confidentiality, work-for-hire or similar agreements to which the Employee is subject or may be bound.  
G.    Disclosure.  The Employee acknowledges and agrees that the scope described above is necessary and reasonable in order to protect the Company in the conduct of its business and that, if the Employee becomes employed by another employer, the Employee shall be required to disclose the existence of this Paragraph 8 to such employer and the Employee hereby consents to and the Company is hereby given permission to disclose the existence of this Paragraph 8 to such Company.
H.    Market Information.  The Employee acknowledges that the Employee may become aware of "material" nonpublic information relating to the Company’s vendors, suppliers, alliance and/or joint venture partners, customers, channel partners or competitors (each, a “Business Partner”) whose stocks are publicly traded.  The Employee acknowledges that the Employee is prohibited by law as well as by Company policy from trading in the shares of such Business Partners while in possession of such information or directly or indirectly disclosing such information to any other persons so that they may trade in these shares. For purposes of this Paragraph H, "material" information may include any information, positive or negative, which might be of significance to an investor in determining whether to purchase, sell or hold the stock of publicly traded customers.  Information may be significant for this purpose even if it would not alone determine the investor's decision.  Examples include a potential business acquisition, internal financial information that departs in any way from what the market would expect, the acquisition or loss of a major contract, or an important financing transaction.
I.    Unauthorized Material.  The Company does not wish to incorporate any unlicensed or unauthorized material into its products or services or those of its subsidiaries.  Therefore, the Employee agrees that the Employee will not knowingly disclose to the Company, use in the Company's business, or cause the Company to use, any information or material which is confidential or proprietary to any third party including, but not limited to, any former employer, competitor or client, unless the Company has a right to receive and use such information.  The Employee will not incorporate into the Employee’s work any material which is subject to the copyrights of any third party unless the Company has a written agreement with such third party or otherwise has the right to receive and use such information.
J.    Injunctive Relief.  It is agreed that any breach or anticipated or threatened breach of any of the Employee's covenants contained in this Paragraph 8 will result in irreparable harm and continuing damages to the Company and its business and that the Company's remedy at law for any such breach or anticipated or threatened breach will be inadequate and, accordingly, in addition to any and all other remedies that may be available to the Company at law or in equity in such event, any court of competent jurisdiction may issue a decree of specific performance or issue a temporary and permanent injunction, without the necessity of the Company posting bond or furnishing other security and without proving special damages or irreparable injury, enjoining and restricting the breach, or threatened breach, of any such covenant, including, but not limited to, any injunction restraining the Employee from disclosing, in whole or part, any Confidential Information.  The Employee further agrees to pay all of the Company's costs and expenses, including reasonable attorneys' and accountants' fees, incurred in successfully enforcing such covenants.
9.    Notices.  Any and all notices required in connection with this Agreement shall be deemed adequately given only if in writing and (a) personally delivered, or sent by first class, registered or certified mail, postage prepaid, return receipt requested, or by recognized overnight courier, (b) sent by electronic mail, provided a hard copy is mailed on that date to the party for whom such notices are intended, or (c) sent by other means at least as fast and reliable as first class mail.  A written notice shall be deemed to have been given to the recipient party on the earlier of (a) the date it shall be delivered to the address required by this Agreement; (b) the date delivery shall have been refused at the address required by this Agreement; (c) with respect to notices sent by mail or overnight courier, the date as of which the Postal Service or overnight courier, as the case may be, shall have indicated such notice to be undeliverable at the address required by this Agreement; or (d) with respect to electronic mail, the date on which the electronic mail is sent and receipt of which is confirmed.  Any and all notices referred to in this Agreement, or which either party desires to give to the other, shall be addressed to the Employee’s residence in the case of the Employee, or, if to the Company, to:
General Counsel 
Zebra Technologies Corporation
3 Overlook Point
Lincolnshire, IL 60069
Either party may from time to time designate a new address by notice given in accordance with this Paragraph 9.
10.    Waiver of Breach.  A waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver or estoppel of any subsequent breach by such other party.  No waiver shall be valid unless in writing and signed by an authorized officer of the Company or by the Employee, as the case may be.
11.    Assignment.  The Employee acknowledges that the services to be rendered by the Employee are unique and personal.  Accordingly, the Employee may not assign any of the Employee’s duties or obligations under this Agreement.  This Agreement shall be binding upon and inure to the benefit of the Employee, the Employee’s estate and beneficiaries.  The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.
12.    Entire Agreement.  Except as set forth in this Section, this Agreement, together with any agreements referred to herein, sets forth the entire and final agreement and understanding of the parties and contains all of the agreements made between the parties with respect to the subject matter hereof.  This Agreement supersedes the Prior Agreement and any and all other agreements, either oral or in writing, between the parties hereto, with respect to the subject matter hereof; provided, however, that (1) the Indemnification Agreement, (2) the stock appreciation rights awards granted on May 5, 2011, April 30, 2012, May 3, 2013, and May 8, 2014, and the related agreements, and (3) the stock appreciation rights awards, time-vested restricted stock awards and performance-vested restricted stock awards granted to Employee on each of May 15, 2015, May 12, 2016, May 11, 2017, and the related agreements, shall not be affected by this Agreement.  No change or modification of this Agreement shall be valid unless in writing and signed by the Company and the Employee.  
13.    Severability.  If any provision of this Agreement shall be found invalid or unenforceable for any reason, in whole or in part, then such provision shall be deemed modified, restricted, or reformulated to the extent and in the manner necessary to render the same valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified, restricted, or reformulated or as if such provision had not been originally incorporated herein, as the case may be.  The parties further agree to seek a lawful substitute for any provision found to be unlawful; provided, that, if the parties are unable to agree upon a lawful substitute, the parties desire and request that a court or other authority called upon to decide the enforceability of this Agreement modify those restrictions in this Agreement that, once modified, will result in an agreement that is enforceable to the maximum extent permitted by the law in existence at the time of the requested enforcement.
14.    Headings.  The headings in this Agreement are inserted for convenience only and are not to be considered a construction of the provisions hereof.
15.    Execution of Agreement.  This Agreement may be executed in several counterparts, each of which shall be considered an original, but which when taken together, shall constitute one agreement.
16.    Recitals.  The recitals to this Agreement are incorporated herein as an integral part hereof and shall be considered as substantive and not precatory language.
17.    Governing Law; Choice of Forum.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, without reference to its conflict of law provisions.  of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Lake or Cook County, Illinois.  In addition, the Employee waives any right Further, the Employee waives any right the Employee may otherwise have to a trial by jury in any action to enforce the terms of this Agreement.
18.    Indemnification.  The Company shall obtain and maintain for the Employee directors’ and officers’ liability insurance coverage and shall indemnify the Employee to the extent permitted under the Company’s By-Laws and/or Certificate of Incorporation and/or the Indemnification Agreement.
19.    No Mitigation.      The Employee shall have no obligation or duty to seek subsequent employment or engagement as an employee (including self-employment) or as a consultant or otherwise mitigate the Company’s obligation under this Agreement.  Payments and benefits due under Paragraph 7 of this Agreement shall not be reduced by any compensation earned by the Employee as an employee or consultant from any employment or consulting arrangement after the Employee’s termination of employment.

IN WITNESS WHEREOF, the parties have set their signatures on the date set forth below.
ZEBRA TECHNOLOGIES CORPORATION:    EMPLOYEE:

By: /s/ Anders Gustafsson        By: /s/ Hugh Gagnier
      Anders Gustafsson, CEO             Hugh Gagnier 

Date signed: May 17, 2018        Date signed:  May 17, 2018

1Exhibit

EXHIBIT (10-1)

The Procter & Gamble Stock & Incentive Plan 
(as amended on August 14, 2007)

The Procter & Gamble Company
Executive Offices
1 Procter & Gamble Plaza, Cincinnati, Ohio 45202-3315

August 14, 2007

To:    Participants in The Procter & Gamble 2001 Stock and Incentive Compensation Plan

This document provides a copy of The Procter & Gamble 2001 Stock and Incentive Compensation Plan followed by important Additional Information. Please save this with your stock option materials.

Very truly yours,

James J. Johnson
Secretary

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

THE PROCTER & GAMBLE 2001 STOCK AND INCENTIVE COMPENSATION PLAN
(as adjusted for stock split on May 21, 2004 and amended on August 14, 2007)

ARTICLE A -- Purpose.

The purposes of The Procter & Gamble 2001 Stock and Incentive Compensation Plan (the "Plan") are to strengthen the alignment of interests between those employees of The Procter & Gamble Company (the "Company") and its subsidiaries who are largely responsible for the success of the business (the “Participants”) and the Company's shareholders through ownership behavior and the increased ownership of shares of the Company's common stock (the “Common Stock”), and to encourage the Participants to remain in the employ of the Company and its subsidiaries. This will be accomplished through the granting of options to purchase shares of Common Stock, the granting of performance related awards, the payment of a portion of the Participants' remuneration in shares of Common Stock, the granting of deferred awards related to the increase in the price of Common Stock, and the granting of restricted stock units (“RSUs”) or other awards that are related to the price of Common Stock.

ARTICLE B -- Administration.

1.    The Plan shall be administered by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board"), or such other committee as may be designated by the Board. The Committee shall consist of not fewer than three (3) members of the Board who are "Non-Employee Directors" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or any successor rule or definition adopted by the Securities and Exchange Commission, to be appointed by the Board from time to time and to serve at the discretion of the Board. The Committee may establish such regulations, provisions, and procedures within the terms of the Plan as, in its opinion, may be advisable for the administration and operation of the Plan, and may designate the Secretary of the Company or other employees of the Company to assist the Committee in the administration and operation of the Plan and may grant authority to such persons to execute documents on behalf of the Committee. The Committee shall report to the Board on the administration of the Plan not less than once each year.

2.    Subject to the express provisions of the Plan, the Committee shall have authority: to grant nonstatutory and incentive stock options; to grant stock appreciation rights either freestanding or in tandem with simultaneously granted stock options; to grant Performance Awards (as defined in Article J); to award a portion of a Participant's remuneration in shares of Common Stock subject to such conditions or restrictions, if any, as the Committee may determine; to award RSUs or other awards that are related to the price of Common Stock; to determine all the terms and provisions of the respective stock option, stock appreciation right, stock award, RSU, or other award agreements including setting the dates when each stock option or stock appreciation right or part thereof may be exercised and determining the conditions and restrictions, if any, of any shares of Common Stock acquired through the exercise of any stock option; to provide for special terms for any stock options, stock appreciation rights, stock awards, RSUs or other awards granted to Participants who are foreign nationals or who are employed by the Company or any of its subsidiaries outside of the United States of America in order to fairly accommodate for differences in local law, tax policy or custom and to approve such supplements to or amendments, restatements or alternative versions of the Plan as the Committee may consider necessary or appropriate for such purposes (without affecting the terms of the Plan for any other purpose); and to make all other determinations it deems necessary or advisable for administering the Plan. In addition, at the time of grant the Committee shall have the further authority to:

(a)    waive the provisions of Article F, Paragraph 1(a);

(b)    waive the provisions of Article F, Paragraph 1(b);

(c)    waive the provisions of Article G, Paragraph 4(a), 4(b) and 4(c); and

(d)    impose conditions in lieu of those set forth in Article G, Paragraphs 4 through 7, for nonstatutory stock options, stock appreciation rights, stock awards, RSUs, or Performance Awards which do not increase or extend the rights of the Participant.

ARTICLE C -- Participation.

The Committee shall select as Participants those employees of the Company and its subsidiaries who, in the opinion of the Committee, have demonstrated a capacity for contributing in a substantial manner to the success of such companies.

ARTICLE D -- Limitation on Number of Shares Available Under the Plan.

1.    Unless otherwise authorized by the shareholders and subject to Paragraph 2 of this Article D, the maximum aggregate number of shares available for award under the Plan shall be one hundred ninety million (190,000,000) shares. Any of the authorized shares may be used for any of the types of awards described in the Plan, except that no more than fifteen percent (15%) of the authorized shares may be awarded as restricted or unrestricted stock.

2.    In addition to the shares authorized for award by Paragraph 1 of this Article, the following shares may be awarded under the Plan:

(a)    shares that were authorized to be awarded under The Procter & Gamble 1992 Stock Plan (the “1992 Plan”), but that were not awarded under the 1992 Plan;

(b)    shares awarded under the Plan or the 1992 Plan that are subsequently forfeited in accordance with the Plan or the 1992 Plan, respectively;

(c)    shares tendered by a Participant in payment of all or part of the exercise price of a stock option awarded under the Plan or the 1992 Plan;

(d)    shares tendered by or withheld from a Participant in satisfaction of withholding tax obligations with respect to a stock option awarded under the Plan or the 1992 Plan.

ARTICLE E -- Shares Subject to Use Under the Plan.

1.    The shares to be delivered by the Company upon exercise of stock options or stock appreciation rights shall be determined by the Board and may consist, in whole or in part, of authorized but unissued shares or treasury shares. In the case of redemption of stock appreciation rights by one of the Company's subsidiaries, such shares shall be shares acquired by that subsidiary.

2.    For purposes of the Plan, restricted or unrestricted stock awarded or issued following redemption of RSUs under the terms of the Plan shall be authorized but unissued shares, treasury shares, or shares acquired in the open market by the Company or a subsidiary, as determined by the Board.

ARTICLE F -- Stock Options and Stock Appreciation Rights.

1.    In addition to such other conditions as may be established by the Committee, in consideration of the granting of stock options or stock appreciation rights under the terms of the Plan, each Participant agrees as follows:

(a)    The right to exercise any stock option or stock appreciation right shall be conditional upon certification by the Participant at time of exercise that the Participant intends to remain in the employ of the Company or one of its subsidiaries for at least one (1) year following the date of the exercise of the stock option or stock appreciation right (provided that termination of employment due to Retirement or Special Separation shall not constitute a breach of such certification), and,

(b)    In order to better protect the goodwill of the Company and its subsidiaries and to prevent the disclosure of the Company's or its subsidiaries' trade secrets and confidential information and thereby help insure the long-term success of the business, the Participant, without prior written consent of the Company, will not engage in any activity or provide any services, whether as a director, manager, supervisor, employee, adviser, consultant or otherwise, for a period of three (3) years following the date of the Participant's termination of employment with the Company, in connection with the manufacture, development, advertising, promotion, or sale of any product which is the same as or similar to or competitive with any products of the Company or its subsidiaries (including both existing products as well as products known to the Participant, as a consequence of the Participant's employment with the Company or one of its subsidiaries, to be in development):

		
	(1)
	with respect to which the Participant's work has been directly concerned at any time during the two (2) years preceding termination of employment with the Company or one of its subsidiaries or

		
	(2)
	with respect to which during that period of time the Participant, as a consequence of the Participant's job performance and duties, acquired knowledge of trade secrets or other confidential information of the Company or its subsidiaries.

For purposes of this paragraph, it shall be conclusively presumed that Participants have knowledge of information they were directly exposed to through actual receipt or review of memos or documents containing such information, or through actual attendance at meetings at which such information was discussed or disclosed.

(c)    The provisions of this Article are not in lieu of, but are in addition to the continuing obligation of the Participant (which Participant hereby acknowledges) to not use or disclose the Company's or its subsidiaries' trade secrets and confidential information known to the Participant until any particular trade secret or confidential information become generally known (through no fault of the Participant), whereupon the restriction on use and disclosure shall cease as to that item. Information regarding products in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its subsidiaries is considering for broader use, shall not be deemed generally known until such broader use is actually commercially implemented. As used in this Article, "generally known" means known throughout the domestic U. S. industry or, in the case of Participants who have job responsibilities outside of the United States, the appropriate foreign country or countries' industry. As used in this Article, "trade secrets and other confidential information" also includes personnel knowledge about a manager, or managers, of the Company or its subsidiaries gained in the course of Participant's employment with the Company or its subsidiaries (including personnel ratings or rankings, manager or peer evaluations, performance records, special skills or abilities, compensation, work and development plans, training, nature of specific project and work assignments, or specialties developed as a result of such assignments) which directly or indirectly affords the Participant a confidential basis to solicit, encourage, or participate in soliciting any manager, or managers, of the Company or any subsidiary to terminate his or her relationship with the Company or that subsidiary.

(d)    By acceptance of any offered stock option or stock appreciation rights granted under the terms of the Plan, the Participant acknowledges that if the Participant were, without authority, to use or disclose the Company's or any of its subsidiaries' trade secrets or confidential information or threaten to do so, the Company or one of its subsidiaries would be entitled to injunctive and other appropriate relief to prevent the Participant from doing so. The Participant acknowledges that the harm caused to the Company by the breach or anticipated breach of this Article is by its nature irreparable because, among other things, it is not readily susceptible of proof as to the monetary harm that would ensue. The Participant consents that any interim or final equitable relief entered by a court of competent jurisdiction shall, at the request of the Company or one of its subsidiaries, be entered on consent and enforced by any court having jurisdiction over the Participant, without prejudice to any rights either party may have to appeal from the proceedings which resulted in any grant of such relief.

(e)    If any of the provisions contained in this Article F shall for any reason, whether by application of existing law or law which may develop after the Participant's acceptance of an offer of the granting of stock appreciation rights or stock options, be determined by a court of competent jurisdiction to be overly broad as to scope of activity, duration, or territory, the Participant agrees to join the Company or any of its subsidiaries in requesting such court to construe such provision by limiting or reducing it so as to be enforceable to the extent compatible with then applicable law. If any one or more of the terms, provisions, covenants, or restrictions of this Article shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, then the remainder of the terms, provisions, covenants, and restrictions of this Article shall remain in full force and effect and shall in no way be affected, impaired, or invalidated.

2.    The fact that a Participant has been granted a stock option or a stock appreciation right under the Plan shall not limit the right of the employer to terminate the Participant's employment at any time.

Because a main purpose of the Plan is to strengthen the alignment of interests between employees of the Company (including all subsidiaries) and its shareholders to ensure the continued success of the Company, the Committee is authorized to suspend or terminate any outstanding stock option or stock appreciation right of a Participant if the Committee determines the Participant has acted significantly contrary to the best interests of the Company or its subsidiaries. For purposes of this paragraph, an action taken “significantly contrary to the best interests of the Company or its subsidiaries” includes without limitation any action taken or threatened by the Participant that the Committee determines has, or is reasonably likely to have, a significant adverse impact on the reputation, goodwill, stability, operation, personnel retention and management, or business of the Company or any subsidiary. This paragraph is in addition to any remedy the Company or a subsidiary may have at law or in equity, including without limitation injunctive and other appropriate relief.

3.    The maximum number of shares with respect to which stock options or stock appreciation rights may be granted to any Participant in any calendar year shall not exceed 2,000,000 shares.

4.    The aggregate fair market value (determined at the time when the incentive stock option is exercisable for the first time by a Participant during any calendar year) of the shares for which any Participant may be granted incentive stock options under the Plan and all other stock option plans of the Company and its subsidiaries in any calendar year shall not exceed $100,000 

(or such other amount as reflected in the limits imposed by Section 422(d) of the Internal Revenue Code of 1986, as it may be amended from time to time).

5.    If the Committee grants incentive stock options, all such stock options shall contain such provisions as permit them to qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as may be amended from time to time.

6.    With respect to stock options granted in tandem with stock appreciation rights, the exercise of either such stock options or such stock appreciation rights will result in the simultaneous cancellation of the same number of tandem stock appreciation rights or stock options, as the case may be.

7.    The exercise price for all stock options and stock appreciation rights shall be established by the Committee at the time of their grant and shall be not less than one hundred percent (100%) of the fair market value of the Common Stock on the date of grant.

8.    Unless otherwise authorized by the shareholders of the Company, neither the Board nor the Committee shall authorize the amendment of any outstanding stock option or stock appreciation right to reduce the exercise price.

9.    No stock option or stock appreciation right shall be cancelled and replaced with awards having a lower exercise price without the prior approval of the shareholders of the Company. This Article F, Paragraph 9 is intended to prohibit the repricing of “underwater” stock options and stock appreciation rights and shall not be construed to prohibit the adjustments permitted under Article K of the Plan.

10.    The Committee may require any Participant to accept any stock options or stock appreciation rights by means of electronic signature.

ARTICLE G -- Exercise of Stock Options and Stock Appreciation Rights.

1.    All stock options and stock appreciation rights granted hereunder shall have a maximum life of no more than ten (10) years from the date of grant.

2.    No stock options or stock appreciation rights shall be exercisable within one (1) year from their date of grant, except in the case of the death of the Participant.

3.    Unless a transfer has been duly authorized by the Committee pursuant to Article G, Paragraph 6 of the Plan, during the lifetime of the Participant, stock options and stock appreciation rights may be exercised only by the Participant personally, or, in the event of the legal incompetence of the Participant, by the Participant's duly appointed legal guardian.

4.    In the event that a Participant ceases to be an employee of the Company or any of its subsidiaries while holding an unexercised stock option or stock appreciation right:

		
	(a)    
	Any unexercisable portions thereof are then void, except in the case of: (1) death of the Participant; (2) Retirement or Special Separation that occurs more than six months from the date the options were granted; or (3) any option as to which the Committee has waived, at the time of grant, the provisions of this Article G, Paragraph 4(a).

		
	(b)
	Any exercisable portions thereof are then void, except in the case of: (1) death of the Participant; (2) Retirement or Special Separation; or (3) any option as to which the Committee has waived, at the time of grant, the provisions of this Article G, Paragraph 4(b).

		
	(c)
	In the case of a Special Separation which occurs prior to October 2, 2007, any stock option or stock appreciation right must be exercised within the time specified in the original grant or five (5) years from the date of Special Separation, whichever is shorter. For a Special Separation which occurs on or after October 2, 2007, any stock option or stock appreciation right must be exercised within the time specified in the original grant.

5.    In the case of the death of a Participant, the persons to whom the stock options or stock appreciation rights have been transferred by will or the laws of descent and distribution shall have the privilege of exercising remaining stock options, stock appreciation rights or parts thereof, whether or not exercisable on the date of death of such Participant, at any time prior to the expiration date of the stock options or stock appreciation rights.
 

6.    Stock options and stock appreciation rights are not transferable other than by will or by the laws of descent and distribution. For the purpose of exercising stock options or stock appreciation rights after the death of the Participant, the duly appointed executors and administrators of the estate of the deceased Participant shall have the same rights with respect to the stock options and stock appreciation rights as legatees or distributees would have after distribution to them from the Participant's estate. Notwithstanding the foregoing, the Committee may authorize the transfer of stock options and stock appreciation rights upon such terms and conditions as the Committee may require. Such transfer shall become effective only upon the Committee's complete satisfaction that the proposed transferee has strictly complied with such terms and conditions, and both the original Participant and the transferee shall be subject to the same terms and conditions hereunder as the original Participant.

7.    Upon the exercise of stock appreciation rights, the Participant shall be entitled to receive a redemption differential for each such stock appreciation right which shall be the difference between the then fair market value of one share of Common Stock and the exercise price of one stock appreciation right then being exercised. In the case of the redemption of stock appreciation rights by a subsidiary of the Company not located in the United States, the redemption differential shall be calculated in United States dollars and converted to the appropriate local currency on the exercise date. As determined by the Committee, the redemption differential may be paid in cash, Common Stock to be valued at its fair market value on the date of exercise, any other mode of payment deemed appropriate by the Committee or any combination thereof.

8.    Time spent on leave of absence shall be considered as employment for the purposes of the Plan. Leave of absence means any period of time away from work granted to any employee by his or her employer because of illness, injury, or other reasons satisfactory to the employer.

9.    The Company reserves the right from time to time to suspend the exercise of any stock option or stock appreciation right where such suspension is deemed by the Company as necessary or appropriate for corporate purposes. No such suspension shall extend the life of the stock option or stock appreciation right beyond its expiration date, and in no event will there be a suspension in the five (5) calendar days immediately preceding the expiration date.

10.    The Committee may require any Participant to exercise any stock options or stock appreciation rights by means of electronic signature.

ARTICLE H -- Payment for Stock Options and Tax Withholding.

Upon the exercise of a stock option, payment in full of the exercise price shall be made by the Participant. As determined by the Committee, the stock option exercise price may be paid by the Participant either in cash, shares of Common Stock valued at their fair market value on the date of exercise, a combination thereof, or such other method as determined by the Committee. In addition to payment of the exercise price, the Committee may authorize the Company to charge a reasonable administrative fee for the exercise of any stock option. Furthermore, to the extent the Company is required to withhold federal, state, local or foreign taxes in connection with any Participant's stock option exercise, the Committee may require the Participant to make such arrangements as the Company may deem necessary for the payment of such taxes required to be withheld (including, without limitation, relinquishment of a portion of such stock options or relinquishment of a portion of the proceeds received by the Participant in a simultaneous exercise and sale of stock during a “cashless” exercise). In no event, however, shall the Committee be permitted to require payment from a Participant in excess of the maximum required tax withholding rates.

ARTICLE I -- Grant of Unrestricted Stock, Restricted Stock or RSUs.

The Committee may grant Common Stock or RSUs to Participants under the Plan subject to such conditions or restrictions, if any, as the Committee may determine. To the extent the Company is required to withhold federal, state, local or foreign taxes in connection with the lapse of restrictions on any Participant's shares of Common Stock, the Committee may require the Participant to make such arrangements as the Company may deem necessary for the payment of such taxes required to be withheld (including, without limitation, relinquishment of a portion of such shares of Common Stock). In no event, however, shall the Committee be permitted to require payment from a Participant in excess of the maximum required tax withholding rates.

ARTICLE J -- Performance Related Awards.

1.    The Committee, in its discretion, may establish performance goals for selected Participants and authorize the granting of cash, stock options, stock appreciation rights, Common Stock, RSUs or other awards that are related to the price of Common Stock, other property, or any combination thereof (“Performance Awards”) to such Participants upon achievement of such established performance goals during a specified time period (the “Performance Period”). The Committee, in its discretion, shall determine the Participants eligible for Performance Awards, the performance goals to be achieved during each Performance Period, 

the amount of any Performance Awards to be paid, and the method of payment for any Performance Awards. Performance Awards may be granted either alone or in addition to other grants made under the Plan.

2.    Notwithstanding the foregoing, any Performance Awards granted under Article J, Paragraph 1 to any Participant subject to the restrictions set forth in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) shall comply with all of the following requirements:

(a)    Each grant shall specify the specific performance objectives (the “Performance Objectives”) which, if achieved, will result in payment or early payment of the Performance Award. The Performance Objectives may be described in terms of Company-wide objectives that are related to the individual Participant or objectives that are related to a subsidiary, division, department, region, function or business unit of the Company in which the Participant is employed, and may consist of one or more or any combination of the following criteria: stock price, market share, sales revenue, cash flow, earnings per share, return on equity, total shareholder return, gross margin, stock price growth measures, operating total shareholder return, net earnings or net income (before or after taxes), return on assets or capital, earnings (before or after interest, taxes, depreciation and/or amortization), operating margin, acquisition integration metrics, economic value added, and/or costs. The Performance Objectives may be made relative to the performance of other corporations. The Committee, in its discretion, may change or modify these criteria, however, at all times the criterion must be valid performance criterion for purposes of Section 162(m) of the Code. The Committee may not change the criteria or Performance Objectives for any Performance Period that has already been approved by the Committee. The Committee may cancel a Performance Period or replace a Performance Period with a new Performance Period, provided that any such cancellation or replacement shall not cause the Performance Award to fail to meet the requirements of Section 162(m) of the Code.

(b)    Each grant shall specify the minimum level of achievement required by the Participant relative to the Performance Objectives to qualify for a Performance Award. In doing so, the grant shall establish a formula for determining the percentage of the Performance Award to be awarded if performance is at or above the minimum level, but falls short of full achievement of the specified Performance Objectives. Each grant may also establish a formula for determining an additional award above and beyond the Performance Award to be granted to the Participant if performance is at or above the specified Performance Objectives. Such additional award shall also be established as a percentage of the Performance Award. The Committee may decrease a Performance Award as determined by the Performance Objectives, but in no case may the Committee increase any Performance Award as determined by the Performance Objectives.

(c)    The maximum Performance Award that may be granted to any Participant for any one-year Performance Period shall not exceed $20,000,000 or 800,000 shares of Common Stock (the “Annual Maximum”). The maximum Performance Award that may be granted to any Participant for a Performance Period greater than one year shall not exceed the Annual Maximum multiplied by the number of full years in the Performance Period.

ARTICLE K -- Adjustments.

In the event of any future reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, share exchange, reclassification, distribution, spin-off or other change affecting the corporate structure, capitalization or Common Stock of the Company occuring after the date of approval of the Plan by the Company's shareholders, (i) the amount of shares authorized to be issued under the Plan and (ii) the number of shares and/or the exercise prices covered by outstanding stock options, stock appreciation rights or RSUs shall be adjusted appropriately and equitably to prevent dilution or enlargement of rights under the Plan. Following any such change, the term "Common Stock" shall be deemed to refer to such class of shares or other securities as may be applicable.

ARTICLE L -- Additional Provisions and Definitions.

1.    The Board may, at any time, repeal the Plan or may amend it except that no such amendment may amend this paragraph, increase the total aggregate number of shares subject to the Plan, reduce the price at which stock options or stock appreciation rights may be granted or exercised, alter the class of employees eligible to receive stock options, or increase the percentage of shares authorized to be transferred as restricted or unrestricted stock. Participants and the Company shall be bound by any such amendments as of their effective dates, but if any outstanding stock options or stock appreciation rights are materially affected adversely, notice thereof shall be given to the Participants holding such stock options and stock appreciation rights and such amendments shall not be applicable without such Participant's written consent. If the Plan is repealed in its entirety, all theretofore granted unexercised stock options or stock appreciation rights shall continue to be exercisable in accordance with their terms and shares subject to conditions or restrictions granted pursuant to the Plan shall continue to be subject to such conditions or restrictions.

2.    In the case of a Participant who is an employee of a subsidiary of the Company, performance under the Plan, including the granting of shares of the Company, may be by the subsidiary. Nothing in the Plan shall affect the right of the Company or any subsidiary to terminate the employment of any employee with or without cause. None of the Participants, either individually or as a group, and no beneficiary, transferee or other person claiming under or through any Participant, shall have any right, title, or interest in any shares of the Company purchased or reserved for the purpose of the Plan except as to such shares, if any, as shall have been granted or transferred to him or her. Nothing in the Plan shall preclude the awarding or granting of shares of the Company to employees under any other plan or arrangement now or hereafter in effect.

3.    "Subsidiary" means any company in which more than fifty percent (50%) of the total combined voting power of all classes of stock is owned, directly or indirectly, by the Company or, if the company does not issue stock, more than fifty percent (50%) of the total combined ownership interest is owned, directly or indirectly, by the Company. In addition, the Board may designate for participation in the Plan as a "subsidiary," except for the granting of incentive stock options, those additional companies affiliated with the Company in which the Company's direct or indirect stock ownership is fifty percent (50%) or less of the total combined voting power of all classes of such company's stock, or, if the company does not issue stock, the Company's direct or indirect ownership is fifty percent (50%) or less of the company's total combined ownership interest.

4.    Notwithstanding anything to the contrary in the Plan, stock options and stock appreciation rights granted hereunder shall vest immediately and any conditions or restrictions on Common Stock shall lapse upon a “Change in Control.” A “Change in Control” shall mean the occurrence of any of the following:

		
	(a)
	An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the then outstanding shares or the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred pursuant to this Paragraph 4(a), shares or Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a "Related Entity"), (ii) the Company or any Related Entity, or (iii) any Person in connection with a "Non-Control Transaction" (as hereinafter defined);

		
	(b)
	The individuals who, as of July 10, 2001 are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least half of the members of the Board; or, following a Merger (as hereinafter defined) which results in a Parent Corporation (as hereinafter defined), the board of directors of the ultimate Parent Corporation; provided, however, that if the election, or nomination for election by the Company's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board 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 or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

		
	(c)
	The consummation of:

		
	(i)
	A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued (a “Merger”), unless such Merger is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a Merger where:

		
	(A)
	the stockholders of the Company, immediately before such Merger own directly or indirectly immediately following such Merger at least fifty percent (50%) of the combined voting power of the outstanding voting securities of (x) the corporation resulting from such Merger (the "Surviving Corporation") if fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly by another Person (a "Parent Corporation"), or (y) if there is one or more Parent Corporations, the ultimate Parent Corporation;

		
	(B)
	the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger constitute at least half of the members of the board of directors of (x) the Surviving 

Corporation, if there is no Parent Corporation, or (y) if there is one or more Parent Corporations, the ultimate Parent Corporation; and

		
	(C)
	no Person other than (1) the Company, (2) any Related Entity, (3) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to such Merger was maintained by the Company or any Related Entity, or (4) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of twenty percent (20%) or more of the then outstanding Voting Securities or shares, has Beneficial Ownership of twenty percent (20%) or more of the combined voting power of the outstanding voting securities or common stock of (x) the Surviving Corporation if there is no Parent Corporation, or (y) if there is one or more Parent Corporations, the ultimate Parent Corporation;

		
	(ii)
	A complete liquidation or dissolution of the Company; or

		
	(iii)
	The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Related Entity or under conditions that would constitute a Non-Control Transaction with the disposition of assets being regarded as a Merger for this purpose or the distribution to the Company's stockholders of the stock of a Related Entity or any other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding shares or Voting Securities as a result of the acquisition of shares or Voting Securities by the Company which, by reducing the number of shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of shares or Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional shares or Voting Securities which increases the percentage of the then outstanding shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

5.    The term “Special Separation” shall mean any termination of employment that occurs prior to the time a Participant is eligible to retire, except a termination for cause or a voluntary resignation that is not initiated or encouraged by the Company.

6.    The term “Retirement” shall mean: (a) retirement in accordance with the provisions of any appropriate retirement plan of the Company or any of its subsidiaries; or (b) termination of employment under the permanent disability provision of any retirement plan of the Company or any of its subsidiaries.

ARTICLE M -- Consent.

Every Participant who receives a stock option, stock appreciation right, RSU, or grant of shares pursuant to the Plan shall be bound by the terms and provisions of the Plan and of the stock option, stock appreciation right, RSU, or grant of shares agreement referable thereto, and the acceptance of any stock option, stock appreciation right, RSU, or grant of shares pursuant to the Plan shall constitute a binding agreement between the Participant and the Company and its subsidiaries and any successors in interest to any of them. Every Person who receives a stock option, stock appreciation right, RSU, or grant of shares from a Participant pursuant to the Plan shall, in addition to such terms and conditions as the Committee may require upon such grant, be bound by the terms and provisions of the Plan and of the stock option, stock appreciation right, RSU, or grant of shares agreement referable thereto, and the acceptance of any stock option, stock appreciation right, RSU, or grant of shares by such Person shall constitute a binding agreement between such Person and the Company and its subsidiaries and any successors in interest to any of them. The Plan shall be governed by and construed in accordance with the laws of the State of Ohio, United States of America.

ARTICLE N - Purchase of Shares or Stock Options.

The Committee may authorize any Participant to convert cash compensation otherwise payable to such Participant into stock options or shares of Common Stock under the Plan upon such terms and conditions as the Committee, in its discretion, shall determine. Notwithstanding the foregoing, in any such conversion the shares of Common Stock shall be valued at no less than one hundred percent (100%) of their fair market value.
 
ARTICLE O -- Duration of Plan.

The Plan will terminate on July 10, 2011 unless a different termination date is fixed by the shareholders or by action of the Board of Directors, but no such termination shall affect the prior rights under the Plan of the Company (or any subsidiary) or 

of anyone to whom stock options or stock appreciation rights were granted prior thereto or to whom shares or RSUs have been transferred prior to such termination.

ADDITIONAL INFORMATION

1.    Shares Awarded as a Portion of Remuneration
    
Any shares of Common Stock of the Company awarded as a portion of a participant's remuneration shall be valued at not less than one hundred percent (100%) of the fair market value of the Company's Common Stock on the date of the award. These shares may be subject to such conditions or restrictions as the Committee may determine, including a requirement that the participant remain in the employ of the Company or one of its subsidiaries for a set period of time, or until retirement. Failure to abide by any applicable restriction will result in forfeiture of the shares.

2.    U.S. Tax Effects

Incentive Stock Options

With regard to tax effects which may accrue to the optionee, counsel advises that if the optionee has continuously been an employee from the time an option has been granted until at least three months before it is exercised, under existing law no taxable income results to the optionee from the exercise of an incentive stock option at the time of exercise. However, the spread at exercise is an "adjustment" item for alternative minimum tax purposes.

Any gain realized on the sale or other disposition of stock acquired on exercise of an incentive stock option is considered as long-term capital gain for tax purposes if the stock has been held more than two years after the date the option was granted and more than one year after the date of exercise of the option. If the stock is disposed of within one year after exercise, the lesser of any gain on such disposition or the spread at exercise (i.e., the excess of the fair market value of the stock on the date of exercise over the option price) is treated as ordinary income, and any appreciation after the date of exercise is considered long-term or short-term capital gain to the optionee depending on the holding period prior to sale. However, the spread at exercise (even if greater than the gain on the disposition) is treated as ordinary income if the disposition is one on which a loss, if sustained, is not recognized--e.g., a gift, a "wash" sale or a sale to a related party. The amount of ordinary income recognized by the optionee is treated as a tax deductible expense to the Company. No other amount relative to an incentive stock option is a tax deductible expense to the Company.

Nonstatutory Stock Options

With regard to tax effects which may accrue to the optionee, counsel advises that under existing tax law gain taxable as ordinary income to the optionee is deemed to be realized at the date of exercise of the option, the gain on each share being the difference between the market price on the date of exercise and the option price. This amount is treated as a tax deductible expense to the Company at the time of the exercise of the option. Any appreciation in the value of the stock after the date of exercise is considered a long-term or short-term capital gain to the optionee depending on whether or not the stock was held for the appropriate holding period prior to sale.

Stock Appreciation Rights

With regard to tax effects which may accrue to the recipient, counsel advises that "United States persons," as defined in the Internal Revenue Code of 1986 (the "I.R.C."), must recognize ordinary income as of the date of exercise equal to the amount paid to the recipient, i.e., the difference between the grant price and the value of the shares on the date of exercise.

Shares Awarded as a Portion of Remuneration

With regard to tax effects which may accrue to the recipient, counsel advises that "United States persons" as defined in the Internal Revenue Code of 1986 (the "I.R.C."), must recognize ordinary income in the first taxable year in which the recipient's rights to the stock are transferable or are not subject to a substantial risk of forfeiture, whichever is applicable. Recipients who are "United States persons" may also elect to include the income in their tax returns for the taxable year in which they receive the shares by filing an election to do so with the appropriate office of the Internal Revenue Service within 30 days of the date the shares are transferred to them.

The amount includable in income is the fair market value of the shares as of the day the shares are transferable or not subject to a substantial risk of forfeiture, whichever is applicable; if the recipient has elected to include the income in the year in which the shares are received, the amount of income includable is the fair market value of the shares at the time of transfer.

For non-United States persons, the time when income is realized, its measurement and its taxation, will depend on the laws of the particular countries in which the recipients are residents and/or citizens at the time of transfer or when the shares are first transferable and not subject to a substantial risk of forfeiture, as the case may be. "United States persons" who receive shares awarded as a portion of remuneration may also have tax consequences with respect to the receipt of shares or the expiration of restrictions or substantial risk of forfeiture on such shares under the laws of the particular country other than the United States of which such person is a resident or citizen.

Notwithstanding the above advice received by the Company, it is each individual recipient's responsibility to check with his or her personal tax adviser as to the tax effects and proper handling of stock options, stock appreciation rights, restricted stock units and Common Stock acquired. The above advice relates specifically to the U.S. consequences of stock options, stock appreciation rights and Common Stock acquired, including the U.S. consequences to "United States persons" whether or not resident in the U.S. In addition to U.S. tax consequences, for all persons who are not U.S. residents, the time when income, if any, is realized, the measurement of such income and its taxation will also depend on the laws of the particular country other than the U.S. of which such persons are resident and/or citizens at the time of grant or the time of exercise, as the case may be.

The Plan is not subject to the qualification requirements of Section 401(a) of the I.R.C.

3.    Employee Retirement Income Security Act of 1974

The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.

4.    Incorporation of Certain Documents by Reference

The following documents filed by the Company with the Securities and Exchange Commission (File No. 1-434) pursuant to the 1934 Act are incorporated into this document by reference:

1.    The Company's Annual Report on Form 10-K for the most recent fiscal year ended June 30;
2.    The Company's Quarterly Report on Form 10-Q for the most recent quarter(s); and
3.    All other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date
of this Prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold.

The Company will provide without charge to each participant in the Plan, upon oral or written request, a copy of any or all of these documents other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents. In addition, the Company will provide without charge to such participants a copy of the Company's most recent annual report to shareholders, proxy statement, and other communications distributed generally to security holders of the Company. Requests for such copies should be directed to Mr. Jay A. Ernst, Manager, Shareholder Services, The Procter & Gamble Company, P.O. Box 5572, Cincinnati, Ohio 45201, (513) 983-3413.

5.    Additional Information

Additional information about the Plan and its administrators may be obtained from Mr. E.J. Wunsch, Assistant Secretary, The Procter & Gamble Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202, (513) 983-4370.

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