Document:

EX-10.1

 

EXHIBIT 10.1

THE
J. M. SMUCKER COMPANY

NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN

(EFFECTIVE JANUARY 1, 2007)

ARTICLE I

INTRODUCTION

     1.1. Purpose of the Plan. The purpose of The J. M. Smucker Company Nonemployee Director
Deferred Compensation Plan is to provide the nonemployee Directors of The J. M. Smucker Company
(the “Company”) with the opportunity to defer receipt of all or a portion of compensation received
for services as a Director and to continue to align the common interest of Directors and
shareholders in enhancing the value of the Company’s Common Shares.

ARTICLE II

DEFINITIONS

     As used herein, the terms set forth below shall have the following meanings:

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

     2.2. “Change in Control” has the meaning assigned thereto in the Company’s 2006 Equity
Compensation Plan.

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

     2.4. “Committee” means the Executive Compensation Committee of the Board.

     2.5. “Common Shares” means the Common Shares, without par value, of the Company.

     2.6. “Company” means The J. M. Smucker Company.

     2.7. “Deferred Compensation Account” has the meaning assigned thereto in Section 3.1 hereof.

     2.8. “Deferred Stock Units” has the meaning assigned thereto in Section 4.1 hereof.

     2.9. “Director” means any nonemployee director of the Company.

     2.10. “Market Value per Share” means, as of any particular date, the average of the high and
low sales prices of the Common Shares as reported on the New York Stock Exchange Composite Tape or,
if not listed on such exchange, on any other national securities exchange on which the Common
Shares are listed, or if there are no sales on such day, on the immediately

 

 

preceding trading day
during which a sale occurred. If there is no regular trading market for such Common Shares, the
Market Value per Share shall be determined by the Board.

     2.11. “Plan” means The J. M. Smucker Company Nonemployee Director Deferred Compensation Plan,
as amended from time to time.

ARTICLE III

ELECTIONS BY DIRECTORS

     3.1. Compensation Reduction for 2007 and Later Years. Not later than December 31 of any
calendar year, beginning with December 31, 2006 for the calendar year 2007, a Director may, by
delivering an annual written election to the Corporate Secretary of the Company, direct the Company
(a) to reduce the cash compensation payable to him or her (determined without regard to the
provisions of this Section) for services as a Director during the next calendar year (including
annual retainer and committee and meeting fees) in such amount as elected by the Director and (b)
to credit the cash amount identified in subsection 3.1(a) above to an account established in the
name of the Director (a “Deferred Compensation Account”).

     3.2. Partial Years. If a Director first becomes a Director after January 1st of any calendar
year, the Director may, by delivering a written election to the Corporate Secretary of the Company,
direct the Company (a) to reduce the cash compensation payable to him or her for future services as
a Director during the year in such amount as elected by the Director and (b) to credit the amount
of such reduction to the Director’s Deferred Compensation Account. Any such election shall be made
within 30 calendar days after an individual becomes a Director, and shall apply only to cash
compensation for services as a Director performed after the date of such election.

     3.3. Elections. All elections described in this Article shall be made on an election form
specified by the Committee and delivered to Corporate Secretary of the Company. The elections
described in this Article will remain in effect for future calendar years unless a new written
deferral election form is submitted. Any subsequent election or written termination of election
shall become effective as of the first day of the calendar year following the calendar year in
which the notice is given and is effective only for cash compensation earned in such following
calendar year and thereafter. If a Director does not have an election form on file with the
Corporate Secretary, he or she will receive his or her Director compensation for the year (that
would otherwise be paid in cash) in cash on a current basis.

ARTICLE IV

DEFERRED COMPENSATION ACCOUNTS

     4.1. Deferred Compensation Accounts. Upon reduction of a Director’s cash compensation in a
particular year, the Director’s Deferred Compensation Account will be credited with a number of
deferred stock units equal to the cash amount that would have been paid to the Director divided by
the Market Value per Share of one Common Share on the date on which such cash amount would have
been paid (the “Deferred Stock Units”). The Deferred Stock Units credited to a Director’s Deferred
Compensation Account (plus any shares credited

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pursuant to Section 4.3 below) will represent the
number of Common Shares that the Company will issue to the Director at the times provided in
Article V.

     4.2. Nonforfeitable Right. Each Director who has elected to have his or her cash compensation
reduced under this Plan shall have a nonforfeitable right to the balance from time to time of his
or her Deferred Compensation Account and all Deferred Stock Units credited to Deferred Compensation
Accounts under this Plan will be 100% vested on the date such Deferred Stock Units are credited to
the Director’s Deferred Compensation Account. Each Director’s Deferred Compensation Account shall
be subdivided into separate subaccounts for each year of participation.

     4.3. Dividend Equivalents. Dividend equivalents shall be earned on Deferred Stock Units
provided under this Plan. Such dividend equivalents shall be converted into equivalent amounts of
Deferred Stock Units and credited to each Director. Such dividend equivalents will be 100% vested
at all times and will be paid as provided in Section 5.1(b) below.

ARTICLE V

PAYMENT OF ACCOUNTS

     5.1. Time of Payment.

          (a) Distribution of each subaccount included in a Director’s Deferred Compensation Account
shall commence or be made in the manner described in Section 5.2 hereof as soon as is reasonably
practicable, but not later than 60 calendar days, after a Director’s “separation from service” (as
defined under Section 409A of the Code). Notwithstanding anything to the contrary contained in
this Plan (or in any election relating to this Plan) (i) if the aggregate amount credited to any
Director’s Deferred Compensation Account is less than $50,000 on the date of the Director’s
separation from service or (ii) if a Change in Control of the Company occurs (but only to the
extent the event constitutes a “change in the ownership or effective control” of the Company, or
“in the ownership of a substantial portion of the assets” of the Company (as determined under
Section 409A of the Code)), the distribution of the Director’s entire Deferred Compensation Account
shall be made in a lump sum upon separation from service or the date of the Change in Control, as
the case may be.

          (b) Notwithstanding anything to the contrary contained in this Plan (or in any election
relating to this Plan), dividend equivalents credited to a Director pursuant to Section 4.3 above
shall be paid to the Director in a single lump sum as soon as is reasonably practicable, but not
later than 60 calendar days, after a Director’s “separation from service” (as defined under Section
409A of the Code). Thereafter, any dividend equivalents earned on Deferred Stock Units that are
paid to the Director in installments following the Director’s separation from service, as described
in Section 5.2 below, shall be paid to the Director on a current basis.

     5.2. Method of Distribution. Prior to December 31 of each year, beginning with December 31,
2006, a Director shall deliver an annual election to the Corporate Secretary of the Company to
specify whether Deferred Stock Units credited to his or her Deferred Compensation Account (other
than additional Deferred Stock Units credited pursuant to Section 4.3) for the following year shall
be distributed to him or her (or his or her beneficiary): (a) in a single lump

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sum payment, (b) in
up to ten annual installments or (c) a combination of (a) and (b). The Director shall designate
the percentage payable under each option. The Deferred Stock Units credited to the Director’s
Deferred Compensation Account for such year shall be distributed or commence to be distributed to
the Director or the Director’s beneficiary at the time described in Section 5.1 and, except for
additional Deferred Stock Units credited pursuant to Section 4.3, in the manner so specified. The
amount of each installment payment shall be calculated by dividing the number of Deferred Stock
Units that are to be paid in installments and credited to the applicable subaccount in the
Director’s Deferred Compensation Account at the time of each such payment by the number of
remaining installments (including the current installment). If a Director does not file an
election under this Section 5.2, the payment of the Deferred Stock Units will be made in a single
lump sum distribution.

     5.3. Form of Payment. The Deferred Stock Units shall be distributed in Common Shares on a
one-for-one basis. Fractional shares shall be rounded down to the nearest whole Common Share, and
such fractional amount shall be paid in cash.

     5.4. Designation of Beneficiary. Each Director participating in this Plan shall designate a
beneficiary or beneficiaries to whom distribution shall be made in the event of the death of the
Director before his or her entire Deferred Compensation Account is distributed and, in such case,
the balance of the Director’s Deferred Compensation Account shall be distributed to the beneficiary
or beneficiaries in a single lump sum distribution, even if the Director elected distribution in
installments. If there is no designated beneficiary, or no designated beneficiary surviving at a
Director’s death the Director’s beneficiary shall be his or her estate. Beneficiary designations
shall be made in writing. A Director may designate a new beneficiary or beneficiaries at any time
by delivering a new election to the Corporate Secretary of the Company.

     5.5. Taxes. In the event any taxes are required by law to be withheld or paid from any
distributions made pursuant to the Plan, the Company (or any trustee, if applicable) shall deduct
such amounts from such distributions and shall transmit the withheld amounts to the appropriate
taxing authority.

ARTICLE VI

FUNDING; CREDITORS AND INSOLVENCY

     6.1. Funding Mechanism for Deferred Stock Units. The Company shall be entitled, but not
obligated, to establish a grantor trust or similar funding mechanism to fund the Company’s
obligations under this Plan; provided, however, that any funds contained therein
shall remain subject to the claims of the Company’s general creditors. The funding mechanism shall
constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan
maintained for the purpose of providing compensation for a select group of management for purposes
of Title I of the Employee Retirement Income Securities Act of 1974.

     6.2. Claims of the Company’s Creditors. The Company’s obligation under the Plan shall be
merely that of an unfunded and unsecured promise of the Company to pay benefits in the future. All
Deferred Stock Units (and any corresponding assets held in a trust established for the Plan), and
any payment to be made pursuant to the Plan, shall be subject to the claims of the

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general
creditors of the Company, including judgment creditors and bankruptcy creditors. Neither any
Director, nor his or her beneficiaries, nor his or her heirs, successors or assigns, shall have any
secured interest in or, claim on any property or assets of the Company (or of any trust). The
rights of a Director or his or her beneficiaries to his or her Deferred Compensation Account and to
the Deferred Stock Units (and to any assets held in trust) shall be no greater than the rights of
an unsecured creditor of the Company.

ARTICLE VII

ADMINISTRATION

     7.1. Powers of the Committee. The Committee shall administer the Plan and resolve all
questions of interpretation arising under the Plan. The Committee shall have no discretion with
respect to Plan contributions or distributions, but shall act in an administrative capacity only.

     7.2. Indemnity of Committee. The Company shall indemnify the members of the Committee against
all claims, losses, damages, expenses and liabilities arising from any action or failure to act
with respect to the Plan to the extent provided in the Code of Regulations of the Company and any
applicable indemnification agreement between the Company and such member.

ARTICLE VIII

MISCELLANEOUS

     8.1. Term of Plan. The Company reserves the right to amend the Plan or terminate the Plan at
any time; provided, however, that no amendment or termination shall affect the
rights of Directors to amounts previously credited to their Deferred Compensation Accounts or to
additional credits of Deferred Stock Units pursuant to Section 4.3 hereof; and provided
further, that no amendment or termination shall apply to the then current plan year, except
as permitted under Section 409A of the Code. The Plan shall remain in effect until such time as
all Deferred Stock Units are distributed pursuant to Article V hereof.

     8.2. Adjustments. In the event that, after the effective date of the Plan (as provided in
Section 8.9 below), the number of outstanding Common Shares is increased or decreased or such
shares are exchanged for a different number or kind of shares or other securities by reason of a
recapitalization, reclassification, stock split-up or combination of shares, adjustments will be
made by the Board in the number and kind of shares or other securities that are underlying Deferred
Stock Units and/or credited to Deferred Compensation Accounts hereunder and that shall be issued
under this Plan.

     8.3. Assignment. No right or interest of any Director or his or her beneficiary (or any
person claiming through or under such Director or his or her beneficiary) in any benefit or payment
herefrom shall be assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or
subject to the debts or liabilities of such Director.

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     8.4. Tax Effect. This Plan is intended to be treated as an unfunded deferred compensation
plan under the Code. It is the intention of the Company that the amounts by which Directors elect
to have their compensation reduced pursuant to this Plan shall not be included in the gross income
of the Directors or their beneficiaries until such time as the Deferred Stock Units and amounts
credited to Directors’ Deferred Compensation Accounts hereunder are distributed from the Plan. If,
at any time, it is determined by the Company that the Deferred Stock Units, or amounts attributable
to Directors’ compensation reduction elections or Deferred Compensation Accounts are includible in
the gross income of the Directors or their beneficiaries before distribution pursuant to Article V
hereof due to a failure to comply with Section 409A of the Code, such amounts to the extent
required to be included in income shall be immediately distributed to the respective Directors or,
in the case of deceased Directors, their beneficiaries.

     8.5. Governing Law. This Plan shall be governed by and construed in accordance with the
internal substantive laws of the State of Ohio.

     8.6. Successors. The provisions of this Plan shall bind and inure to the benefit of the
Company and its successors and assigns. The term “successors” as used herein shall include any
corporate or other business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of the Company and
successors of any such corporation or other business entity.

     8.7. No Right to Continued Service. Nothing contained herein shall be construed to confer
upon any Director the right to continue to serve as a Director of the Company or in any other
capacity.

     8.8. Section 409A of the Code. It is intended that the Plan (including any amendments
thereto) comply with the provisions of Section 409A of the Code so as to prevent the inclusion in
gross income of any Deferred Stock Units or any amount credited to a Director’s Deferred
Compensation Account hereunder in a taxable year that is prior to the taxable year or years in
which such amounts would otherwise be actually distributed or made available to the Director. The
Plan shall be administered in a manner that will comply with Section 409A of the Code, including
proposed, temporary or final regulations or any other guidance issued by the Secretary of the
Treasury and the Internal Revenue Service with respect thereto. Any Plan provision that would
cause the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until
amended to comply with Code Section 409A (which amendment may be retroactive to the extent
permitted by Section 409A of the Code).

     8.9. Effective Date. The effective date of the Plan is January 1, 2007.

6EX-10.A

 

Exhibit 10(a)

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

1997 LONG-TERM PERFORMANCE PLAN

1. Objectives

     The Applied Industrial Technologies, Inc. 1997 Long-Term Performance Plan (the “Plan”) is
designed to foster and promote the long-term growth and performance of the Company by: (a)
strengthening the Company’s ability to develop and retain an outstanding management team, (b)
motivating superior performance by means of long-term performance related incentives and (c)
enabling key management employees and outside directors to participate in the long-term growth and
financial success of the Company. These objectives will be promoted by awarding to such persons
performance-based stock awards, restricted stock, stock options, stock appreciation rights and/or
other performance or stock-based awards.

2. Definitions

     (a) “Award” — The grant of stock or any form of stock option, stock appreciation right,
performance share, restricted stock, other stock-based award or cash whether granted singly, in
combination or in tandem, to a Plan Participant pursuant to such terms, conditions and limitations
as the Committee may establish in order to fulfill the objectives of the Plan.

     (b) “Award Agreement” — An agreement between the Company and a Participant that sets forth the
terms, conditions and limitations applicable to an Award.

     (c) “Board” — The Board of Directors of the Company.

     (d) “Common Shares” or “shares” — Authorized and issued or unissued shares of common stock
without par value of the Company.

     (e) “Code” — The Internal Revenue Code of 1986, as amended from time to time.

     (f) “Committee” — The Executive Organization and Compensation Committee of the Company’s
Board, or such other committee of the Board that is designated by the Board to administer the Plan.
The Committee shall be constituted so as to satisfy any applicable legal requirements including
the requirements of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the “Exchange
Act”) or any similar rule which may subsequently be in effect (“Rule 16b-3”). The members shall be
appointed by, and serve at the pleasure of, the Board and any vacancy on the Committee shall be
filled by the Board.

     (g) “Company” — Applied Industrial Technologies, Inc., an Ohio corporation, and its direct and
indirect subsidiaries.

 

 

     (h) “Fair Market Value” — The average of the high and low prices of Common Shares as reported
on the composite tape for securities listed on the New York Stock Exchange for the date in
question, provided that if no sales of Common Shares were made on said exchange on that date, the
average of the high and low prices of Common Shares as reported on said composite tape for the
preceding day on which sales of Common Shares were made on said Exchange.

     (i) “Participant” — Any employee of the Company, or other person whose selection the Committee
determines to be in the best interests of the Company, to whom an Award has been made under the
Plan.

     (j) “Section 162(m) Employee” — Any employee with respect to which compensation paid is
subject to the restrictions imposed by Section 162(m) of the Code, or any similar or successor
restrictions.

3. Eligibility

     Persons eligible to be selected as Participants shall include employees of the Company who
hold responsible managerial or professional positions and outside directors whose performance, in
the judgment of the Committee, can contribute to the continued growth and success of the Company.
The selection of Participants shall be within the sole discretion of the Committee. Grants may be
made to the same Participant on more than one occasion.

4. Common Shares Available for Awards

     The aggregate number of Common Shares which may be awarded under the Plan in each fiscal year
of the Company, subject to adjustment as provided in Section 15 hereof, shall be two percent (2%)
of the total outstanding Common Shares as of the first day of such year for which the Plan is in
effect; provided that such number shall be increased in any year by the number of Common Shares
available for grant hereunder in previous years but not the subject of Awards granted hereunder in
such year; and provided further, that no more than four hundred fifty thousand (450,000) Common
Shares shall be cumulatively available for the grant of incentive stock options under the Plan and
that no more than six hundred seventy-five thousand (675,000) Common Shares will be available for
the grant of Stock Options, Stock Appreciation Rights, and Stock Awards to any individual
Participant in any one calendar year. In addition, any Common Shares issued by the Company
through the assumption or substitution of outstanding grants from an acquired corporation or entity
shall not reduce the Common Shares available for grants under the Plan. Such Shares may consist,
in whole or in part, of authorized and unissued shares or treasury shares.

     From time to time, the Board and appropriate officers of the Company shall take whatever
actions are necessary to file required documents with governmental authorities and stock exchanges
to make Common Shares available for issuance pursuant to Awards. Any Common Shares subject to an
Option which for any reason is canceled (excluding shares subject to an Option canceled upon the
exercise of a related stock appreciation right (“SAR”) to the extent shares are issued upon
exercise of such SAR) or terminated without having been exercised, or any shares of Restricted

 

 

Stock or Performance Shares which are forfeited, shall again be available for Awards under the
Plan. No fractional shares shall be issued, and the Committee shall determine the manner in which
fractional share value shall be treated.

5. Administration

     The Plan shall be administered by the Committee which shall have full and exclusive power and
authority to interpret the Plan, to grant waivers of Plan restrictions and to adopt such rules,
regulations and guidelines for carrying out the Plan as it may deem necessary or proper, all of
which powers shall be executed in the best interests of the Company and in keeping with the
objectives of the Plan. In particular, the Committee shall have the authority to: (i) select
eligible Participants as recipients of Awards; (ii) determine the number and type of Awards to be
granted; (iii) determine the terms and conditions, not inconsistent with the terms hereof, of any
Award granted; (iv) adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable; (v) interpret the terms and
provisions of the Plan and any Award granted; (vi) prescribe the form of any agreement or
instrument executed in connection with any Award; and (vii) otherwise supervise the administration
of the Plan. In addition, the Board shall have authority, without amending the Plan, to grant
Awards hereunder to Participants who are foreign nationals or employed outside the United States or
both, on terms and conditions different from those specified herein as may in the sole judgment and
discretion of the Board, be necessary or desirable to further the purpose of the Plan. All
decisions made by the Committee pursuant to the provisions hereof shall be made in the Committee’s
sole discretion and shall be final and binding on all persons.

6. Delegation of Authority

     The Committee may to the extent that any such action will not prevent the Plan from complying
with Rule 16b-3, delegate any of its authority hereunder to such persons as it deems appropriate.

7. Awards

     The Committee shall determine the type or types of Award(s) to be made to each Participant and
shall set forth in the related Award Agreement the terms, conditions and limitations applicable to
each Award. Awards may include but are not limited to those listed in this Section 7. Awards may
be granted singly, in combination or in tandem or in exchange for a previously granted Award;
provided that the exercise price for stock options shall not be less than the Fair Market Value on
the date of grant of the new Award. Awards may also be made in combination or in tandem with, in
replacement of, or as alternatives to, grants or rights under any other employee plan of the
Company, including the plan of any acquired entity.

     (a) Stock Option — A grant of a right to purchase a specified number of Common Shares during a
specified period and at a specified price not less than the Fair Market Value on the date of grant,
as determined by the Committee. A stock option may be in the form of an incentive stock option
(“ISO”) which, in addition to being subject to applicable terms, conditions and

 

 

limitations established by the Committee, complies with Section 422 of the Code which, among other
limitations, currently provides that the aggregate Fair Market Value (determined at the time the
option is granted) of Common Shares exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000 (or such other limit as may be required by the Code); that
the exercise price shall be not less than 100% of Fair Market Value on the date of the grant; that
such options shall be exercisable for a period of not more than ten years and may be granted no
later than ten years after the effective date of this Plan.

     (b) Stock Appreciation Right or SAR — A right to receive a payment, in cash and/or Common
Shares, equal to the excess of the Fair Market Value or other specified valuation of a specified
number of Common Shares on the date the SAR is exercised over the Fair Market Value or other
specified valuation on the date of grant of the SAR as set forth in the applicable Award Agreement,
except that where the SAR is granted in tandem with a stock option, the grant and exercise
valuations must be no less than Fair Market Value.

     (c) Stock Award — An Award made in Common Shares and other Awards that are valued in whole or
in part by reference to, or are otherwise based on, Common Shares. All or part of any stock award
may be subject to conditions established by the Committee, and set forth in the Award Agreement.

     (d) Cash Award — An Award denominated in cash with the eventual payment amount subject to
future service and such other restrictions and conditions as may be established by the Committee,
and as set forth in the Award Agreement. The maximum amount of any Cash Award payable to any
Participant in any one calendar year shall be two million dollars ($2,000,000).

     (e)(1) With respect to grants of Awards to any Section 162(m) Employee, the Stock Awards and
Cash Awards made pursuant to paragraphs (c) and (d) shall be based on the satisfaction of
performance goals established by the Committee at the time an Award is granted, which goals shall
include one or more of the following: sales, costs and expenses, cash flow, pre-tax income, net
income, operating profit and margin, earnings per share, retained earnings, return on equity,
return on assets, return on investment, asset turnover, liquidity, capitalization, value created,
stock price, total shareholder return, price measures, market share, sales to targeted customers,
customer satisfaction, employee satisfaction, safety measures, quality measures, productivity,
process improvement, educational and technical skills of employees, changes in one or more of the
preceding, development of criteria for and programs related to hiring and promotion, creation and
acquisition of new business units, development and implementation of business plans and programs
relating to product lines or business units, integration of acquired businesses, development and
implementation of employee training and development programs, implementation of tax and accounting
elections, and development and implementation of communications and investor relations programs;
provided however, that all performance goals shall be objective performance goals satisfying the
requirements for “performance-based compensation” within the meaning of section 162(m)(4) of the
Code. Such performance goals may also be based on the attainment of levels of performance of the
Company and/or any of its affiliates under one or more of the measures described above relative to
the performance of other businesses.

 

 

          (2) With respect to grants of Awards to any Participant who is not a Section 162(m) Employee,
the Awards may be based on any of the goals described in paragraph (1) and on such other conditions
as may be established by the Committee.

8. Payment of Awards

     Payment of Awards may be made in the form of cash, Common Shares or combinations thereof and
may include such restrictions as the Committee shall determine, including in the case of Common
Shares, restrictions on transfer and forfeiture provisions. When transfer of shares is so
restricted or subject to forfeiture provisions, such shares are referred to as “Restricted Stock.”
Further, with Committee approval, payments may be deferred, either in the form of installments or a
future lump sum payment. The Committee may permit selected Participants to elect to defer payments
of some or all types of Awards in accordance with procedures established by the Committee to assure
that such deferrals comply with applicable requirements of the Code including, at the choice of
Participants, the capability to make further deferrals for payment after retirement. Any deferred
payment, whether elected by the Participant or specified by the Award Agreement or by the
Committee, may require the payment to be forfeited in accordance with the provisions of Section 13
of the Plan. Dividends or dividend equivalent rights may be extended to and made part of any Award
denominated in shares or units of Shares, subject to such terms, conditions and restrictions as the
Committee may establish. The Committee may also establish rules and procedures for the crediting
of interest on deferred cash payments and dividend equivalents for deferred payments denominated in
shares or units of shares. At the discretion of the Committee, a Participant may be offered an
election to substitute an Award for another Award or Awards of the same or different type; provided
that Awards may not be made to substitute for previously granted stock options having higher
exercise prices.

9. Stock Option Exercise

     The price at which shares may be purchased under a stock option shall be paid in full at the
time of the exercise in cash or, if permitted by the Committee, by means of tendering Common Shares
or surrendering another Award, including Restricted Stock, valued at Fair Market Value on the date
of exercise, or by any other means which the Committee determines to be consistent with the Plan’s
objectives and applicable law and regulations. The Committee shall determine acceptable methods
for tendering Common Shares or other Awards and may impose such conditions on the use of Common
Shares or other Awards to exercise a stock option as it deems appropriate. In the event shares of
Restricted Stock are tendered as consideration for the exercise of a stock option, a number of the
shares issued upon the exercise of the stock option, equal to the number of shares of Restricted
Stock used as consideration therefor, shall be subject to the same restrictions as the Restricted
Stock so submitted plus any additional restrictions that may be imposed by the Committee.

 

 

10. Tax Withholding

     The Corporation shall have the authority to withhold, or to require a Participant to remit to
the Corporation, prior to issuance or delivery of any shares or cash hereunder, an amount
sufficient to satisfy federal, state and local tax withholding requirements associated with any
Award. In addition, the Corporation may, in its sole discretion, permit a Participant to satisfy
any tax withholding requirements, in whole or in part, by (i) delivering to the Corporation shares
of common stock held by such Participant having a Fair Market Value equal to the amount of the tax
or (ii) directing the Corporation to retain Common Shares otherwise issuable to the Participant
under the Plan. If Common Shares are used to satisfy tax withholding, such shares shall be valued
based on the Fair Market Value when the tax withholding is required to be made.

11. Amendment, Modification, Suspension or Discontinuance of this Plan

     The Board may amend, modify, suspend or terminate the Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted by law. Subject to
changes in law or other legal requirements which would permit otherwise, the Plan may not be
amended without consent of the holders of the majority of the Common Shares then outstanding, to
(i) increase the aggregate number of Common Shares that may be issued under the Plan (except for
adjustments pursuant to the Plan), (ii) materially modify the requirements as to eligibility for
participation in the Plan, or (iii) withdraw administration of the Plan from the Committee.

     The Board may amend the terms of any Award theretofore granted, prospectively or
retroactively, but no such amendment shall impair the rights of any Participant without his consent
and no such amendment shall have the effect, with respect to any Section 162(m) Employee, of
increasing the amount of any Award from the amount that would otherwise be payable pursuant to the
formula and/or goals previously established for such Participant. The Board may also make Awards
hereunder in replacement of, or as alternatives to, Awards previously granted to Participants,
except for previously granted options having higher exercise prices, but including without
limitation grants or rights under any other plan of the Company or of any acquired entity.

12. Termination of Employment

     If the employment of a Participant terminates for any reason, all unexercised, deferred and
unpaid Awards shall be exercisable or paid in accordance with the applicable Award Agreement, which
may provide that the Committee may authorize, as it deems appropriate, the acceleration and/or
continuation of all or any part of Awards granted prior to such termination.

13. Cancellation and Rescission of Awards

     Unless the Award Agreement specifies otherwise, the Committee may cancel any unexpired,
unpaid, or deferred Awards at any time if the Participant is not in compliance with all other
applicable provisions of the Award Agreement, the Plan and with the following conditions:

 

 

     (a) A Participant shall not render services for any organization or engage directly or
indirectly in any business which, in the judgment of the Chief Executive Officer of the
Company or other senior officer designated by the Committee, is or becomes competitive with
the Company, or which organization or business, or the rendering of services to such
organization or business, is or becomes otherwise prejudicial to or in conflict with the
interests of the Company. For Participants whose employment has terminated, the judgment of
the Chief Executive Officer shall be based on the Participant’s position and
responsibilities while employed by the Company, the Participant’s post-employment
responsibilities and position with the other organization or business, the extent of past,
current and potential competition or conflict between the Company and the other organization
or business, the effect on the Company’s customers, suppliers and competitors of the
Participant’s assuming the post-employment position, and such other considerations as are
deemed relevant given the applicable facts and circumstances. A Participant who has retired
shall be free, however, to purchase as an investment or otherwise, stock or other securities
of such organization or business so long as they are listed upon a recognized securities
exchange or traded over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than one percent (1%) equity interest in the
organization or business.

     (b) A Participant shall not, without prior written authorization from the Company,
disclose to anyone outside the Company, or use in other than the Company’s business, any
confidential information or material relating to the business of the Company, acquired by
the Participant either during or after employment with the Company.

     (c) Upon exercise, payment or delivery pursuant to an Award, the Participant shall
certify on a form acceptable to the Committee that he or she is in compliance with the terms
and conditions of the Plan. Failure to comply with the provisions of paragraph (a), (b) or
(c) of this Section 13 prior to, or during the six months after, any exercise, payment or
delivery pursuant to an Award (except in the event of an intervening Change in Control as
defined below) shall cause such exercise, payment or delivery to be rescinded. The Company
shall notify the Participant in writing of any such rescission within two years after such
exercise, payment or delivery. Within ten days after receiving such a notice from the
Company, the Participant shall pay to the Company the amount of any gain realized or payment
received as a result of the rescinded exercise, payment or delivery pursuant to an Award.
Such payment shall be made either in cash or by returning to the Company the number of
Common Shares that the Participant received in connection with the rescinded exercise,
payment or delivery.

14. Nonassignability

     Except as may be otherwise provided in the relevant Award Agreement, no Award or any benefit
under the Plan shall be assignable or transferable, or payable to or exercisable by, anyone other
than the Participant to whom it was granted.

 

 

15. Adjustments; Waiver of Restrictions

     (a) In the event of any change in capitalization of the Company by reason of a stock split,
stock dividend, combination, reclassification of shares, recapitalization, merger, consolidation,
exchange of shares, spin-off, spin-out or other distribution of assets to shareholders, or similar
event, the Committee may adjust proportionally (i) the Common Shares (1) reserved under the Plan,
(2) available for ISOs and (3) covered by outstanding Awards denominated in stock or units of
stock; (ii) the stock prices related to outstanding Awards; and (iii) the appropriate Fair Market
Value and other price determinations for such Awards. In the event of any other change affecting
the Common Shares or any distribution (other than normal cash dividends) to holders of capital
stock, such adjustments as may be deemed equitable by the Committee, shall be made to give proper
effect to such event. In the event of a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation, the Committee shall be authorized to issue or
assume stock options, whether or not in a transaction to which Section 424 of the Code applies, by
means of substitution of new options for previously issued options or an assumption of previously
issued options.

     (b) The Board may, in its sole discretion, based on such factors as the Board may deem
appropriate, waive in whole or in part, any remaining restrictions or vesting requirements in
connection with any Award hereunder.

16. Change in Control

     (a) In the event of a Change in Control (as defined below) of the Company, and except as the
Board may expressly provide otherwise, (i) all Stock Options or Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date of the Change in Control, whether or not
then exercisable, (ii) all restrictions and conditions of all Stock Awards then outstanding shall
be deemed satisfied as of the date of the Change in Control, and (iii) all Cash Awards shall be
deemed to have been fully earned as of the date of the Change in Control.

     (b) A “Change in Control” of the Company shall have occurred when any of the following events
shall occur:

(i) The Company is merged, consolidated or reorganized into or with another corporation or
other legal person, and immediately after such merger, consolidation or reorganization less
than a majority of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the aggregate by the
holders of Voting Stock (as that term is hereafter defined) of the Company immediately prior
to such transaction;

(ii) The Company sells all or substantially all of its assets to any other corporation or
other legal person, less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such sale are
held in the aggregate by the holders of Voting Stock of the Company immediately prior to
such sale;

 

 

(iii) There is a report filed or required to be filed on Schedule 13D on Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), disclosing that any person (as the
term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term “beneficial owner, is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of securities
representing 20% or more of the combined voting power of the then-outstanding securities
entitled to vote generally in the election of directors of the Company (“Voting Stock”);

(iv) The Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) that a change in control of the
Company has or may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or

(v) If during any period of two consecutive years, individuals who at the beginning of any
such period constitute the Directors of the Company cease for any reason to constitute at
least a majority thereof, provided, however, that for purposes of this clause (v), each
Director who is first elected, or first nominated for election by the Company’s stockholders
by a vote of at least two-thirds of the Directors of the Company (or a committee thereof)
then still in office who were Directors of the Company at the beginning of any such period
will be deemed to have been a Director of the Company at the beginning of such period.

     Notwithstanding the foregoing provisions of Section 16(b)(iii) or (iv) hereof, unless
otherwise determined in a specific case by majority vote of the Board, a “Change in Control” shall
not be deemed to have occurred for purposes of the Plan solely because (i) the Company, (ii) an
entity in which the Company directly or indirectly beneficially owns 50% or more of the voting
securities or interest, or (iii) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 20% or otherwise, or because the
Company reports that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership.

17. Notice

     Any written notice to the Company required by any of the provisions of the Plan shall be
addressed to the Chief Financial Officer or to the Chief Executive Officer of the Company, and
shall become effective when it is received by the office of the Chief Financial Officer or the
Chief Executive Officer.

 

 

18. Unfunded Plan

     Insofar as it provides for Awards of cash and Common Shares, the Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to Participants who are entitled to
cash, Common Shares or rights thereto under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any assets that may at any
time be represented by cash, Common Shares or rights thereto, nor shall the Plan be construed as
providing for such segregation, nor shall the Company nor the Board nor the Committee be deemed to
be a trustee of any cash, Common Shares or rights thereto to be granted under the Plan. Any
liability of the Company to any Participant with respect to a grant of cash, Common Shares or
rights thereto under the Plan shall be based solely upon any contractual obligations that may be
created by the Plan and any Award Agreement; no such obligation of the Company shall be deemed to
be secured by any pledge or other encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any security or bond for the performance
of any obligation that may be created by the Plan.

19. Governing Law

     The Plan and all determinations made and actions taken pursuant hereto, to the extent not
otherwise governed by the Code or the securities laws of the United States, shall be governed by
the law of the State of Ohio and construed accordingly.

20. Rights of Employees

     Nothing in the Plan shall interfere with or limit in any way the right of the Company or any
subsidiary to terminate any Participant’s employment at any time, nor confer upon any Participant
any right to continued employment with the Company or any subsidiary.

21. Status of Awards

     Awards hereunder shall not be deemed compensation for purposes of computing benefits under any
retirement plan of the Company and shall not affect any benefits under any other benefit plan now
or hereafter in effect under which the availability or amount of benefits is related to the level
of compensation.

22. Effective and Termination Dates

     The Plan shall become effective on the date it is first approved by the holders of a majority
of the Common Shares then outstanding. Unless subsequently approved by the holders of a majority
of the Common Shares then outstanding, the Plan shall continue in effect until October 22, 2012 or
until earlier terminated by the Board pursuant to Section 11. Notwithstanding the foregoing, any
Awards granted under the Plan prior to its termination shall remain outstanding in accordance with
the terms of such Awards.

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