Document:

exv10w3

 

Exhibit 10.3

JUDGMENT SHARING AGREEMENT

BY AND AMONG

HILLENBRAND INDUSTRIES, INC.

BATESVILLE HOLDINGS, INC.

AND

BATESVILLE CASKET COMPANY, INC.

Dated as of March ___, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I. DEFINITIONS	 	 	1	 
	 
	 	1.01	 	General	 	 	1	 
	 
	 	1.02	 	References to Time	 	 	5	 
	ARTICLE II. BSI LITIGATION FUNDING OBLIGATIONS	 	 	5	 
	 
	 	2.01	 	Funding Methodology	 	 	5	 
	 
	 	2.02	 	Rights of Contribution	 	 	7	 
	 
	 	2.03	 	Termination of Agreement	 	 	7	 
	 
	 	2.04	 	Settlement	 	 	7	 
	 
	 	2.05	 	Exclusive Remedy	 	 	7	 
	 
	 	2.06	 	Further Assurances	 	 	7	 
	ARTICLE III. ARBITRATION; DISPUTE RESOLUTION	 	 	8	 
	 
	 	3.01	 	Agreement to Arbitrate	 	 	8	 
	 
	 	3.02	 	Escalation	 	 	8	 
	 
	 	3.03	 	Demand for Arbitration	 	 	9	 
	 
	 	3.04	 	Arbitrators	 	 	9	 
	 
	 	3.05	 	Hearings	 	 	10	 
	 
	 	3.06	 	Discovery and Certain Other Matters	 	 	10	 
	 
	 	3.07	 	Certain Additional Matters	 	 	11	 
	 
	 	3.08	 	Law Governing Arbitration Procedures	 	 	12	 
	ARTICLE IV. MISCELLANEOUS	 	 	12	 
	 
	 	4.01	 	Complete Agreement	 	 	12	 
	 
	 	4.02	 	Governing Law	 	 	12	 
	 
	 	4.03	 	Notices	 	 	12	 
	 
	 	4.04	 	Amendment and Modification	 	 	13	 
	 
	 	4.05	 	Successors and Assigns: No Third Party Beneficiaries	 	 	13	 
	 
	 	4.06	 	Counterparts	 	 	13	 
	 
	 	4.07	 	Interpretation	 	 	13	 
	 
	 	4.08	 	Legal Enforceability	 	 	13	 
	 
	 	4.09	 	Performance Standard	 	 	14	 
	 
	 	4.10	 	Authority	 	 	14	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	4.11	 	No Admission of Liability	 	 	14	 
	 
	 	4.12	 	Limitation on Damages	 	 	14	 
	 
	 	4.13	 	Joint Authorship	 	 	14	 
	 
	 	4.14	 	References; Construction	 	 	15	 

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JUDGMENT SHARING AGREEMENT

     THIS JUDGMENT SHARING AGREEMENT, dated as of March ___, 2008 (this “Agreement”),
is entered into by and among Hillenbrand Industries, Inc., an Indiana corporation (“HI”),
Batesville Holdings, Inc., an Indiana corporation (“BSI Parent”), and Batesville Casket Company,
Inc., an Indiana corporation (“BSI”). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in Article I.

WITNESSETH:

     WHEREAS, HI currently owns all the issued and outstanding capital stock of BSI Parent, and BSI
is an indirect wholly owned subsidiary of BSI Parent;

     WHEREAS, the Board of Directors of HI is currently considering (a) the spin-off of its entire
ownership interest in BSI Parent through a distribution of all the outstanding shares of capital
stock of BSI Parent to the shareholders of HI (the “Distribution”) and (b) the change of
the names of HI and BSI Parent to Hill-Rom Holdings, Inc. and Hillenbrand, Inc., respectively, on or
prior to the record date for the Distribution; and

     WHEREAS, HI and BSI are each named as codefendants in the BSI Litigation Matters and as such,
may become jointly and severally liable for the payment of damages assessed in that litigation;

     NOW, THEREFORE, in consideration of the mutual promises, covenants and obligations herein
contained and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

     1.01 General. As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural forms of the terms
defined):

     AAA: as defined in Section 3.04(a).

     Action: any claim, suit, action, mediation, arbitration, inquiry, investigation or
other proceeding of any nature (whether criminal, civil, legislative, administrative, regulatory,
prosecutorial or otherwise) by or before any mediator, arbitrator or Governmental Authority.

     affiliate: with respect to any specified Person, a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such specified Person; provided, however, that for purposes of this Agreement, no
member of either Group and no officer or director of any member of either Group shall be deemed to
be an affiliate of any member of the other Group.

     Agreement: as defined in the preamble to this Agreement.

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     Applicable Deadline: as defined in Section 3.03(b).

     Applicable Rate: the rate of interest applicable from time to time to the
indebtedness outstanding under a Person’s senior bank credit facility or, if no such indebtedness
is outstanding, the Base Rate.

     Arbitration Act: the United States Arbitration Act, 9 U.S.C. ss.ss 1-16, as the same
may be amended from time to time.

     Arbitration Demand Date: as defined in Section 3.03(a).

     Arbitration Demand Notice: as defined in Section 3.03(a).

     Base Rate: the rate which Citibank, N.A. (or any successor thereto or other major
money center commercial bank agreed to by the parties hereto) announces from time to time as its
base lending rate, as in effect from time to time.

     best efforts: a Person’s good faith best efforts to achieve a goal as expeditiously
as possible, which may require the incurrence of expense or hardship in order to achieve the
reasonable expectations of another party as agreed hereunder.

     BSI: as defined in the preamble of this Agreement, including its successors and
permitted assigns.

     BSI Funding Component: with respect to each BSI Litigation Matter, the sum of the
Initial BSI Funding Tranche and the Second BSI Funding Tranche, if any.

     BSI Group: BSI Parent and the BSI Subsidiaries.

     BSI Litigation Funding Obligation: with respect to each BSI Litigation Matter, the
aggregate amount that HI and/or BSI are required to pay or post in cash (a) to satisfy in whole a
claim (including, if any, interest, penalties, attorneys fees and court costs) arising from such
BSI Litigation Matter if and only upon such claim being Finally Determined, or (b) to post a
supersedeas bond (including the cost of the bond, cash collateral or letter of credit that must be
provided or posted, fees and other costs), in the event HI or BSI elects to do so, to defer the
execution of any judgment which may be entered in connection with such BSI Litigation Matter
pending its Final Determination.

     BSI
Litigation Matter: To the extent not covered by collectible
insurance: (a) each Action listed on Schedule 2.01; (b) each additional Action hereafter asserted prior to the
consummation of the Distribution against both a member of the HI Group and a member of the BSI
Group seeking damages for alleged violations of state and federal antitrust laws based upon the BSI
Group’s method of distributing caskets exclusively through licensed funeral directors; and (c) any
other Action consolidated for purposes of trial with any Action referred to in clause (a) or (b)
above.

     BSI Parent: as defined in the preamble of this Agreement, including its successors
and permitted assigns.

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     BSI Subsidiaries: all of the corporations, limited liability companies or other
entities listed on Exhibit A as members of the BSI Group, and any other Subsidiaries of BSI Parent,
in each case including their successors and permitted assigns.

     Business Day: any day other than a Saturday, a Sunday or a day on which banking
institutions located in the State of Indiana are authorized or obligated by law or executive order
to close.

     Deposit Date: as defined in Section 2.01(b).

     Distribution: as defined in the second “Whereas” clause of this Agreement.

     Escalation Notice: as defined in Section 3.02(a).

     Final Determination or Finally Determined: with respect to any Action, threatened
Action or other matter, that the outcome or resolution of that Action, threatened Action or matter
has either (a) been decided by an arbitrator or Governmental Authority of competent jurisdiction by
judgment, order, award or other ruling or (b) has been settled or voluntarily dismissed and, in the
case of each of clauses (a) and (b), the claimants’ rights to maintain that Action, threatened
Action or other matter have been finally adjudicated, waived, discharged, settled, or extinguished
as to all members of the HI Group and the BSI Group, and that judgment, order, ruling, award,
settlement or dismissal (whether mandatory or voluntary, but if voluntary that dismissal must be
final, binding and with prejudice as to all claims specifically pleaded in that Action) is subject
to no further appeal, vacatur proceeding or discretionary review.

     Funding Bank Account: a demand deposit account with a financial institution located
in the continental United States designated mutually by HI and BSI for the deposit of their
respective Funding Components and from which account the parties may withdraw funds based only upon
their joint instructions.

     Funding Components: the BSI Funding Component and the HI Funding Component applicable
to any BSI Litigation Matter.

     Governmental Authority: any federal, state, local, foreign or international court,
government, department, commission, board, bureau or agency, authority (including, but not limited
to, any central bank or taxing authority) or instrumentality (including, but not limited to, any
court, tribunal or grand jury) exercising executive, prosecutorial, legislative, judicial,
regulatory or administrative functions of or pertaining to government or any other regulatory,
administrative or governmental authority.

     Group: the HI Group or the BSI Group, as the context requires.

     HI: as defined in the preamble to this Agreement, including its successors and
permitted assigns.

     HI Funding Component: with respect to each BSI Litigation Matter, the HI Funding
Tranche.

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     HI Funding Tranche: as defined in Section 2.01(c).

     HI Group: HI and the HI Subsidiaries.

     HI Subsidiaries: all of the corporations, limited liability companies or other
entities listed on Exhibit A as members of the HI Group, and any other Subsidiaries of HI, in each
case including their successors and permitted assigns.

     Initial BSI Funding Tranche: as defined in Section 2.01(c).

     Maximum Funding Obligation: with respect to each BSI Litigation Matter, the aggregate
maximum amount that either HI or BSI is obligated to contribute to the satisfaction of a BSI
Litigation Funding Obligation determined in accordance with the provisions of Section 2.01(c).

     Maximum Funding Proceeds: the maximum amount of cash and cash proceeds that a Person
and its Subsidiaries have on hand and/or have raised, using their best efforts (without any
requirement to sell assets other than cash equivalents), to satisfy a BSI Litigation Funding
Obligation, including all cash on hand, all cash equivalents that can be converted to cash, all
available internally generated funds, the drawing of all undrawn capacity under existing credit
facilities, the creation of and drawdown under new secured and unsecured credit facilities and term
loans to the maximum extent practicable under the circumstances and the aggregate net proceeds from
the issuance and sale of additional equity, debt and hybrid securities; provided, however, that (a)
for a Person and its Subsidiaries this definition of Maximum Funding Proceeds shall exclude a
Normal Operating Cash Balance and (b) for purposes of calculating the amount of Maximum Funding
Proceeds, a Person and its Subsidiaries shall not be required to issue and sell more equity
securities than can be underwritten on a firm commitment basis by one or more Qualified Investment
Bankers at normal discount rates. For this purpose, such Person and its Subsidiaries shall be
required to use their best efforts to raise the maximum amount of cash and net proceeds from such
transactions, borrowings and debt securities sales as expeditiously as possible. In negotiating
the terms of such transactions, borrowings and debt securities sales, the maximization of cash and
net proceeds shall be given priority over the minimization of the costs of raising such proceeds,
the minimization of restrictive covenants, the avoidance of the creation of liens on assets or the
preservation of a debt rating.

     Normal Operating Cash Balance: the amount of operating cash required to sustain the
business of a Person and its Subsidiaries after the date of the Distribution, including amounts
required to service all indebtedness incurred by such Person and its Subsidiaries after that date,
currently estimated to be $40 million in the case of the HI Group and $30 million in the case of
the BSI Group, in each case as determined by a Qualified Solvency Expert with reference to the
levels of operating cash required by each Group from and after the date of this Agreement.

     Person: an individual, a limited or general partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated organization, or a
Governmental Authority.

     Qualified Investment Banker: Citigroup Global Markets Inc. or Goldman, Sachs & Co.,
including in each case its successors and assigns, or any other investment banking firm of national
stature in the United States mutually approved by HI and BSI.

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     Qualified Solvency Expert: Duff & Phelps, Inc. or its successor or any other firm of
solvency experts of national reputation in the United States mutually approved by HI and BSI.

     Rules: as defined in Section 3.05.

     representative: with respect to any Person, any of such Person’s directors, officers,
employees, agents, consultants, advisors, accountants, attorneys and representatives.

     Required Funding Obligation: the lesser of the aggregate amount of a Person’s Maximum
Funding Proceeds or such smaller amount that such Person is required to contribute to the
satisfaction of a BSI Litigation Funding Obligation pursuant to Section 2.01.

     Second BSI Funding Tranche: as defined in Section 2.01(c).

     Settlement Agreement: as defined in Section 2.04.

     Solvency Threshold: one dollar short of the level at which an additional liability or
obligation of a Person incurred for less than equivalent value would become subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable provision of applicable
state law, all as determined by a Qualified Solvency Expert.

     Subsidiary: with respect to any specified Person, any corporation or other legal
entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly,
more than 50% of the stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body, in each case including its successors or
permitted assigns; provided, however, that for purposes of this Agreement, no member of the BSI
Group shall be deemed to be a Subsidiary of any member of the HI Group.

     1.02 References to Time. All references in this Agreement to times of the day shall
be to Batesville, Indiana time, except as otherwise specifically provided herein.

ARTICLE II.

BSI LITIGATION FUNDING OBLIGATIONS

     2.01 Funding Methodology.

          (a) Expenses. BSI and the BSI Subsidiaries shall bear, at their sole expense, all
joint attorneys’, accountants’, consultants’, expert witnesses’ and other professionals’ fees and
expenses and all other out-of-pocket costs incurred on behalf of themselves and HI and the HI
Subsidiaries in the investigation, defense and/or evaluation of each BSI Litigation Matter.

          (b) Deposit of Funds. At least fifteen days prior to the date that funds representing
a BSI Funding Component and an HI Funding Component are required to be available to pay a claim or
post a supersedeas bond in connection with a BSI Litigation Matter (a “Deposit Date”), BSI
and HI shall specify in writing (i) their good faith best estimates of the amounts of the Initial
BSI Funding Tranche, the HI Funding Tranche and the Second BSI Funding Tranche, if any, and the key
assumptions used in calculating each such estimate, in each

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case as determined as of such date, (ii) the clause of the definition of BSI Litigation
Funding Obligation to which the foregoing Funding Components relate and (iii) the relevant Deposit
Date. Both the HI Group and the BSI Group are committed to generate additional Maximum Funding
Proceeds pursuant to Section 2.01(d) between the date of such specification and the relevant
Deposit Date. Therefore, on the Business Day prior to each Deposit Date, if the amount of Maximum
Funding Proceeds generated by either the HI Group or the BSI Group has increased since the date of
the foregoing specification, HI and BSI shall further specify in writing the different amounts, if
any, of the two components of the BSI Funding Component and the HI Funding Component and the
reasons for each increase therein, and such different amounts shall, for all purposes, be the two
components of the BSI Funding Component and the HI Funding Component with respect to such BSI
Litigation Matter. On each Deposit Date, BSI and HI shall deposit immediately available funds in
the Funding Bank Account in the amounts of the BSI Funding Component and the HI Funding Component,
as the case may be, applicable to the BSI Litigation Matter to which such Deposit Date relates.
Notwithstanding any other provision in this Agreement, (x) in the event that the Maximum Funding
Proceeds that could be generated by the HI Group and the BSI Group would not be adequate in the
aggregate to satisfy a BSI Litigation Funding Obligation, no party to this Agreement shall be
obligated to engage in activities to generate Maximum Funding Proceeds, (y) if the Maximum Funding
Proceeds that have been generated by BSI and HI in connection with a BSI Litigation Matter are not
adequate to satisfy in full a BSI Litigation Funding Obligation, no party to this Agreement shall
be obligated to deposit funds so generated in the Funding Bank Account on the related Deposit Date
and (z) neither HI nor BSI shall be obligated to raise more funds than are required to satisfy in
full its Required Funding Obligation with respect to any BSI Litigation Matter.

          (c) Sources of Funding for BSI Litigation Funding Obligation. Notwithstanding any
other provision of this Agreement to the contrary, HI and BSI agree that between themselves the
following allocation principles shall be used in determining the sources of the funding of each BSI
Litigation Funding Obligation, if any, depending on the amount of that obligation: (i) first, the
BSI Group shall contribute an amount equal to its Maximum Funding Proceeds minus the difference
between $50 million and the Normal Operating Cash Balance of the BSI Group to the extent that the
BSI Group’s Normal Operating Cash Balance is less than $50 million (the “Initial BSI Funding
Tranche”); (ii) second, the HI Group shall contribute an amount equal to its Maximum Funding
Proceeds (the “HI Funding Tranche”); and (iii) third, the BSI Group shall contribute the
balance of its Maximum Funding Proceeds (the “Second BSI Funding Tranche”); provided,
however, that HI and BSI agree between themselves that (x) the respective funding obligations of
each member of each Group under this Section 2.01(c) shall never exceed its respective Solvency
Threshold, (y) neither Group shall be required to apply any portion of its Normal Operating Cash
Balance to the satisfaction of a BSI Litigation Funding Obligation and (z) neither Group shall be
required to issue and sell a percentage of its total outstanding equity securities that is greater
than the percentage of outstanding total equity securities that the other Group is obligated to
issue and sell under the definition of Maximum Funding Proceeds.

          (d) Obligations to Maximize Funding Proceeds. Between the date on which a judgment is
entered with respect to any BSI Litigation Matter and the related Deposit Date, each member of the
HI Group and the BSI Group shall use its best efforts to raise the Maximum Funding Proceeds. Prior
to using any funds deposited by HI to satisfy a BSI Litigation Funding

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Obligation, BSI shall first use all of the Maximum Funding Proceeds from the Initial BSI
Funding Tranche for such purpose. Prior to using any funds deposited by BSI with respect to the
Second BSI Funding Tranche, HI shall use all funds deposited by HI with respect to the HI Funding
Tranche.

          (e) Repayment of Excess Funds. As soon as it can be determined, HI and BSI shall
promptly ascertain the portions, if any, of the amounts deposited by HI and BSI in satisfaction of
a Finally Determined BSI Litigation Funding Obligation that exceed their respective Funding
Components. Any portion of the amount deposited by either HI or BSI that exceeds its respective
Funding Component shall be remitted promptly to HI or BSI, as the case may be.

     2.02 Rights of Contribution. In the event that any provisions of Section 2.01 are
held to be unenforceable in accordance with their terms by a Governmental Authority, HI and BSI
agree between themselves to contribute to the satisfaction of any BSI Litigation Funding Obligation
based upon principles of general common law contribution determined with reference to their
respective fault, if any, as reflected in the trial record of the BSI Litigation Matter, or failing
to reach such an agreement, pursuant to an arbitration initiated and conducted in accordance with
Article III.

     2.03 Termination of Agreement. If either HI or BSI shall be dismissed as a defendant
in any BSI Litigation Matter (except where a party is dismissed or otherwise released, whether by
release, covenant not to sue or otherwise, as a result of its entry into a Settlement Agreement) or
shall be found upon conclusion of trial not to be responsible for the payment of any damages to the
plaintiffs in such lawsuit, all obligations under this Article II of the party so dismissed or
found not to be responsible for the payment of any damages with respect to such BSI Litigation
Matter shall terminate once such dismissal or finding of no liability for the payment of damages
has been Finally Determined.

     2.04 Settlement. Either HI or BSI may settle alone, the claims against it in any BSI
Litigation Matter or enter into a judgment sharing or similar agreement with one or more
codefendants in any BSI Litigation Matter (collectively a “Settlement Agreement”), but no
such Settlement Agreement shall release the signatory thereto from its obligations under this
Article II to the other party to this Agreement unless such Settlement Agreement results in a Final
Determination.

     2.05 Exclusive Remedy. The terms of this Article II are in lieu of any other rights
of contribution, indemnity, reimbursement or sharing, or any other claims, suits or causes of
action by or on behalf of the parties to this Agreement relating to all BSI Litigation Matters.

     2.06 Further Assurances. Unless otherwise expressly provided in this Agreement, each
of the parties hereto shall use its commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws, regulations and agreements to consummate and make effective the transactions
contemplated by this Agreement.

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ARTICLE III.

ARBITRATION; DISPUTE RESOLUTION

     3.01 Agreement to Arbitrate. The procedures for discussion, negotiation and
arbitration set forth in this Article III shall be the final, binding and exclusive means to
resolve, and shall apply to all disputes, controversies or claims (whether in contract, tort or
otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement.
Each party agrees on behalf of itself and each member of its respective Group that the procedures
set forth in this Article III shall be the final, binding and exclusive remedy in connection with
any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives
any right to commence any Action in or before any Governmental Authority, except to the extent
provided under the Arbitration Act in the case of judicial review of arbitration results or awards.
Each party on behalf of itself and each member of its respective Group irrevocably waives any right
to any trial by jury with respect to any dispute, controversy or claim covered by this
Section 3.01.

     3.02 Escalation.

          (a) Expeditious Resolution.  It is the intent of the two Groups to use their
respective commercially reasonable efforts to resolve expeditiously any dispute, controversy or
claim between them with respect to the matters covered by this Agreement that may arise from time
to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, any party
involved in a dispute, controversy or claim may deliver a notice (an “Escalation Notice”)
demanding an in-person meeting involving representatives of the two Groups at a senior level of
management (or if the parties agree, of the appropriate business function or division within such
entity). A copy of any such Escalation Notice shall be delivered addressed to the General Counsel,
or like chief legal officer or official, of each party involved in the dispute, controversy or
claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any
agenda, location or procedure for such discussions or negotiations between the parties may be
established by agreement of the parties from time to time; provided, however, that the parties
shall use their reasonable best efforts to meet within three days of the Escalation Notice.

          (b) Good Faith Negotiations. Following delivery of an Escalation Notice, the parties
shall undertake good faith, diligent efforts to negotiate a commercially reasonable resolution of
the dispute, controversy or claim. The parties may, by mutual consent, retain a mediator to aid the
parties in their discussions and negotiations. Any opinion expressed by the mediator shall be
strictly advisory and shall not be binding on the parties, nor shall any opinion expressed by the
mediator be admissible in any arbitration proceedings. The mediator may be chosen from a list of
mediators selected by the parties or by other agreement of the parties. All third-party costs of
the mediation shall be borne equally by the parties involved in the matter, and each party shall be
responsible for its own expenses. Mediation is not a prerequisite to an Arbitration Demand Notice
under Section 3.03.

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     3.03 Demand for Arbitration.  

          (a) Initiation of Process. At any time following three days after the date of an
Escalation Notice (the “Arbitration Demand Date”), any party involved in the dispute,
controversy or claim (regardless of whether such party delivered the Escalation Notice) may deliver
a notice demanding arbitration of such dispute, controversy or claim (an “Arbitration Demand
Notice”). Delivery of an Escalation Notice by a party shall be a prerequisite to delivery of
an Arbitration Demand Notice by that party or the other party, provided, however, that in the event
that any party shall deliver an Arbitration Demand Notice to another party, such other party may
itself deliver an Arbitration Demand Notice to such first party with respect to any related
dispute, controversy or claim with respect to which the Applicable Deadline has not passed without
the requirement of delivering an Escalation Notice. No party may assert that the failure to resolve
any matter during any prior discussions or negotiations, the course of conduct during such prior
discussions or negotiations, or the failure to agree on a mutually acceptable time, agenda,
location or procedure for a meeting is a prerequisite to an Arbitration Demand Notice under
Section 3.03. In the event that any party delivers an Arbitration Demand Notice with respect to any
dispute, controversy or claim that is the subject of any then pending arbitration proceeding or of
a previously delivered Arbitration Demand Notice, all such disputes, controversies and claims shall
be resolved in the arbitration proceeding for which an Arbitration Demand Notice was first
delivered unless the arbitrators in their sole discretion determine that it is impracticable or
otherwise inadvisable to do so.

          (b) Limitation Periods. Any Arbitration Demand Notice may be given until the date
that is two years after the later of the occurrence of the act or event giving rise to the
underlying claim or the date on which such act or event was, or should have been, in the exercise
of reasonable due diligence, discovered by the party asserting the claim (as applicable and as it
may in a particular case be specifically extended by the parties in writing, the “Applicable
Deadline”). Any discussions, negotiations or mediations between the parties pursuant to this
Agreement or otherwise will not toll the Applicable Deadline unless expressly agreed in writing by
the parties. Each of the parties agrees on behalf of itself and each member of its Group that if an
Arbitration Demand Notice with respect to a dispute, controversy or claim is not given prior to the
occurrence of the Applicable Deadline, as between or among the parties and the members of their
Groups, such dispute, controversy or claim will be barred. Subject to Section 3.08, upon delivery
of an Arbitration Demand Notice pursuant to Section 3.03(a) prior to the Applicable Deadline, the
dispute, controversy or claim, and all substantive and procedural issues related thereto, shall be
decided by a three member panel of arbitrators in accordance with this Article III.

     3.04 Arbitrators.

          (a) Selection.  The party delivering the Arbitration Demand Notice shall notify the
American Arbitration Association (“AAA”) and the other parties in writing describing in
reasonable detail the nature of the dispute. Within five days of the date of the Arbitration
Demand Notice, the members of each Group shall select one arbitrator from the members of a panel of
arbitrators of the AAA. The selected arbitrators shall then jointly select a third arbitrator from
the members of a panel of arbitrators of the AAA, and such third arbitrator shall be disinterested
with respect to each of the parties and shall be experienced in complex commercial arbitration. In
the event that the parties’ selected arbitrators are unable to agree on the selection of the third
arbitrator, the AAA shall select the third arbitrator, within ten days of the date of the

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Arbitration Demand Notice. In the event that any arbitrator is unable to serve, his
replacement will be selected in the same manner as the arbitrator to be replaced. The vote of two
of the three arbitrators shall be required for any decision under this Article III.

          (b) Time. The arbitrators will set a time for the hearing of the matter which will
commence no later than ten days after the date of appointment of the third arbitrator and which
hearing will be no longer than three days (unless in the judgment of the arbitrators the matter is
unusually complex and sophisticated and thereby requires a longer time, in which event such hearing
shall be no longer than five days). The final decision of such arbitrators will be rendered in
writing to the parties not later than five days after the last day of the hearing, unless otherwise
agreed by the parties in writing.

          (c) Place. The place of any arbitration hereunder will be Indianapolis, Indiana, and
the language of any arbitration hereunder will be English. Unless otherwise agreed by the parties,
the arbitration hearing shall be conducted on consecutive days.

     3.05 Hearings. Within the time period specified in Section 3.04(b), the matter shall
be presented to the arbitrators at a hearing by means of written submissions of memoranda and
verified witness statements, filed simultaneously, and responses, if necessary in the judgment of
the arbitrators or both of the Groups. If the arbitrators deem it to be essential to a fair
resolution of the dispute, live cross-examination or direct examination may be permitted, but is
not generally contemplated to be necessary. The arbitrators shall actively manage the arbitration
with a view to achieving a just, speedy and cost-effective resolution of the dispute, claim or
controversy. The arbitrators may, in their discretion, set time and other limits on the
presentation of each Group’s case, its memoranda or other submissions, and may refuse to receive
any proffered evidence, which the arbitrators, in their discretion, find to be cumulative,
unnecessary, irrelevant or of low probative nature. Any arbitration hereunder shall be conducted in
accordance with the Commercial Arbitration Rules of the AAA (“Rules”) in effect on the date
the Arbitration Demand Notice is served. The decision of the arbitrators will be final and binding
on the parties, and judgment thereon may be had and will be enforceable in any court having
jurisdiction over the parties. Arbitration awards will bear interest at the Applicable Rate plus 2%
per annum, subject to any maximum amount permitted by applicable law. To the extent that the
provisions of this Agreement and the prevailing Rules conflict, the provisions of this Agreement
shall govern.

     3.06 Discovery and Certain Other Matters.

          (a)  Production of Documents. Any party involved in a dispute, controversy or claim
subject to this Article III may request document production from the other party or parties of
specific and expressly relevant documents, with the reasonable expenses of the producing party
incurred in such production paid by the requesting party. Any such discovery shall be conducted in
accordance with the Rules, subject to the discretion of the arbitrators. Any such discovery shall
be conducted expeditiously and shall not cause the hearing to be adjourned except upon consent of
all parties involved in the applicable dispute or upon an extraordinary showing of cause
demonstrating that such adjournment is necessary to permit discovery essential to a party to the
proceeding. Disputes concerning the scope of document production and enforcement of the document
production requests will be determined by written agreement of the

-10-

 

parties involved in the applicable dispute or, failing such agreement, will be referred to the
arbitrators for resolution. Subject to the terms of this Agreement, all discovery requests will be
subject to the parties’ rights to claim any applicable privilege, and no joint privilege may be
waived without the prior written consent of all parties to this Agreement. The arbitrators will
adopt procedures to protect the proprietary rights of the parties and to maintain the confidential
treatment of the arbitration proceedings (except as may be required by law). Subject to the
foregoing, the arbitrators shall have the power to issue subpoenas to compel the production of
documents relevant to the dispute, controversy or claim.

          (b) Authority of Arbitrators. The arbitrators shall have full power and authority to
determine issues of arbitrability but shall otherwise be limited to interpreting or construing the
applicable provisions of this Agreement, and will have no authority or power to limit, expand,
alter, amend, modify, revoke or suspend any condition or provision of this Agreement; it being
understood, however, that the arbitrators will have full authority to implement the provisions of
this Agreement, and to fashion appropriate remedies for breaches of this Agreement (including
interim or permanent injunctive relief); provided that the arbitrators shall not have (i) any
authority in excess of the authority a court having jurisdiction over the parties and the
controversy or dispute would have absent these arbitration provisions or (ii) any right or power to
award punitive damages. It is the intention of the parties that in rendering a decision the
arbitrators give effect to the applicable provisions of this Agreement and follow applicable law
(it being understood and agreed that this sentence shall not give rise to a right of judicial
review of the arbitrators’ award). In resolving any arbitration initiated pursuant to Section
2.02, the arbitrators shall resolve the matter solely with reference to the respective fault, if
any, of HI and BSI as reflected in the trial record of the BSI Litigation Matter to which such
arbitration relates.

          (c) Effect of Failure to Participate. If a party fails or refuses to appear at and
participate in an arbitration hearing after due notice, the arbitrators may hear and determine the
controversy upon evidence produced by the appearing party.

          (d) Costs. Arbitration costs will be borne equally by each party involved in the
matter, and each party will be responsible for its own attorneys’ fees and other costs and
expenses, including the costs of any expert witnesses selected by such party.

     3.07 Certain Additional Matters.

          (a) Nature of Award. Any arbitration award shall be a bare award limited to a holding
for or against a party and shall be without findings as to facts, issues or conclusions of law and
shall be without a statement of the reasoning on which the award rests, but must be in adequate
form so that a judgment of a court may be entered thereupon. Judgment upon any arbitration award
hereunder may be entered in any court having jurisdiction thereof.

          (b) Confidentiality of Proceedings. Except as required by law, the parties shall
hold, and shall cause their respective officers, directors, employees, agents and other
representatives to hold, the existence, content and result of mediation or arbitration in
confidence in accordance with the provisions of this Section 3.07(b) and except as may be required
in order

-11-

 

to enforce any award. Each of the parties shall request that any mediator or arbitrator comply
with such confidentiality requirement.

     3.08 Law Governing Arbitration Procedures. The interpretation of the provisions of
this Article III, only insofar as they relate to the agreement to arbitrate and any procedures
pursuant thereto, shall be governed by the Arbitration Act, as amended, and other applicable
federal law. In all other respects, the interpretation of this Agreement shall be governed as set
forth in Section 4.02.

ARTICLE IV.

MISCELLANEOUS

     4.01 Complete Agreement. This Agreement, the Exhibit and the Schedule hereto shall
constitute the entire agreement among the parties hereto with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with respect to such
subject matter.

     4.02 Governing Law. The validity and enforceability of the judgment sharing
provisions of this Agreement shall be governed by and construed in accordance with federal law
relating to judgment sharing agreements in antitrust matters, such as In re Brand Name
Prescriptions Drugs Antitrust Litig., Nos. 94 C 897, MDL 997, 1995 WL 221853, (N.D. Ill. April 11,
1995); Cimarron Pipeline Const., Inc. v. National Council on Compensation Ins., No. Civ-89-822-T,
1992 WL 350612 (W.D. Okl. April 10, 1992); and California v. Infineon Technologies AG, No C 06-4333
PJH, (N.D. Cal. November 29, 2007) (Slip Copy, Docket No. 296). This Agreement shall otherwise be
governed by and construed in accordance with the laws of the State of Indiana (other than the laws
regarding choice of laws and conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies; provided, however, that the Arbitration Act shall
govern the matters described in Article III.

     4.03 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person (including a nationally recognized delivery service) by facsimile,
electronic mail or other standard form of telecommunications (provided confirmation is delivered to
the recipient the next Business Day in the case of facsimile, electronic mail or other standard
form of telecommunications) or by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:

	 	 	 
	If to HI:

	 	Hillenbrand Industries, Inc.
	 

	 	1069 State Route 46 East
	 

	 	Batesville, IN 47006-8835
	 

	 	c/o Corporate Secretary
	 
	 	 
	If to BSI:

	 	Batesville Casket Company, Inc.
	 

	 	One Batesville Boulevard
	 

	 	Batesville, IN 47006-8835
	 

	 	c/o General Counsel

-12-

 

	 	 	 
	If to BSI Parent:

	 	Batesville Holdings, Inc.
	 

	 	One Batesville Boulevard
	 

	 	Batesville, IN 47006-8835
	 

	 	c/o General Counsel

or to such other address as any party hereto may have furnished to the other parties by a notice in
writing in accordance with this Section 4.03.

     4.04 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by a written agreement signed by each of the parties hereto.

     4.05 Successors and Assigns: No Third Party Beneficiaries. This Agreement is made and
shall be binding on and inure solely to the benefit of HI, BSI and BSI Parent and their respective
successors or permitted assigns and does not otherwise confer any rights or defenses upon any other
Person including any other codefendants in the BSI Litigation. Neither HI nor BSI nor BSI Parent
may assign any of its rights or obligations under this Agreement to another Person without the
consent of the other parties to this Agreement, which consents may be withheld for any reason or no
reason. Subject to the foregoing: (a) this Agreement and all the terms and provisions hereof shall
be binding upon and inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns; and (b) each party to this Agreement shall require any Person or
Persons that, as a result of any merger, purchase of assets, reorganization or other transaction,
acquires or succeeds to all or substantially all of its business or assets to assume its
obligations under this Agreement pursuant to a written assumption agreement in form and substance
reasonably satisfactory to the other parties.

     4.06 Counterparts. This Agreement may be executed in three or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     4.07 Interpretation. The Article and Section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the parties hereto and shall
not in any way affect the meaning or interpretation of this Agreement.

     4.08 Legal Enforceability. Each party agrees that it shall not, directly or
indirectly, challenge the enforceability of this Agreement on any grounds or under any
circumstances. Without limiting the effect of the immediately preceding sentence, if any provision
of this Agreement is determined by a Governmental Authority or the arbitrators selected under
Section 3.04 to be prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Each party acknowledges that money damages would be an inadequate remedy for any breach of the
provisions of this Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.

-13-

 

     4.09 Performance Standard. Each of HI, BSI Parent and BSI agrees to at all times
exercise good faith and fair dealing in the performance of its rights and obligations under this
Agreement and to cause the members of its respective Group to do likewise.

     4.10 Authority. Each of the parties hereto represents to the others that: (a) it has
the corporate or other requisite power and authority to execute, deliver and perform this
Agreement; (b) the execution, delivery and performance of this Agreement by it have been, duly
authorized by all necessary corporate or other actions; (c) it has duly and validly executed and
delivered this Agreement; and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights generally and general
equity principles.

     4.11 No Admission of Liability. Nothing contained in this Agreement is intended to
be, nor shall it be deemed to be, an admission of liability to anyone or an admission of the
existence of facts upon which liability could be based other than to HI, BSI and BSI Parent
pursuant to the terms of this Agreement.

     4.12 Limitation on Damages. Neither the BSI Group nor the HI Group (or any member
thereof) shall be obligated to pay damages (when aggregated with all damages paid by each other
member of such Group, and all amounts paid which reduce a BSI Litigation Funding Obligation) to the
other for any breach of this Agreement in an amount that exceeds its aggregate Funding Component
hereunder (plus applicable costs and accrued interest) with respect to all BSI Litigation Matters.
In addition, no party shall be liable to any other party to this Agreement for the payment of
punitive, indirect, incidental or consequential damages, including (without limitation) lost
profits or lost opportunity damages with respect to any breach of this Agreement.

     4.13 Joint Authorship. This Agreement shall be treated as though it were jointly
drafted by HI, on the one hand, and BSI and BSI Parent, on the other hand, and any ambiguities
shall not be construed for or against any party hereto on the basis of attributed authorship.

[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK.]

-14-

 

     4.14 References; Construction. Any reference to an “Article,” “Exhibit,” “Schedule”
or “Section,” without more, is to an Article, Exhibit, Schedule and Section to or of this
Agreement. Unless otherwise expressly stated, clauses beginning with the term “including” set forth
examples only and in no way limit the generality of the matters thus exemplified. References to
“and” and “or” in this Agreement shall in each instance include both the conjunctive and the
disjunctive.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 	 	 
	 	 	HILLENBRAND INDUSTRIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Peter H. Soderberg	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BATESVILLE HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kenneth A. Camp	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BATESVILLE CASKET COMPANY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kenneth A. Camp	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 

-15-

 

EXHIBIT A

BSI Subsidiaries

[To Come]

HI Subsidiaries

[To Come]

A-1-

 

SCHEDULE 2.01

Actions Comprising BSI Litigation Matters

[To Come]

S-1-exv10w8

 

Exhibit 10.8

HILLENBRAND, INC.

STOCK INCENTIVE PLAN

R
E C I T A L S

     WHEREAS, in accordance with that certain Distribution Agreement (as defined below),
Hillenbrand Industries, Inc. (re-named Hill-Rom Holdings, Inc. and hereinafter referred to in these
recitals as “Hill-Rom Holdings, Inc.) distributed its entire ownership interest in Batesville
Holdings, Inc. (re-named Hillenbrand, Inc. and hereinafter referred to in these recitals as
“Hillenbrand, Inc.”) through a pro-rata distribution of all of the outstanding shares of
Hillenbrand, Inc. common stock then owned by Hill-Rom Holdings, Inc. to the holders of Hill-Rom
Holdings, Inc. common stock (“Distribution”); and

     WHEREAS, Hill-Rom Holdings, Inc. and Hillenbrand, Inc. have entered into that certain Employee
Matters Agreement (as defined below) for the purpose of continuing benefits for the
pre-Distribution directors, employees and consultants of Hill-Rom Holdings, Inc. and its
subsidiaries; and

     WHEREAS, in accordance with Section 2.5 of the Employee Matters Agreement, Hillenbrand, Inc.
is to adopt and implement a Stock Incentive Plan with features that are comparable to the
Hillenbrand Industries, Inc. Stock Incentive Plan, Amended and Restated Effective January 1, 2005,
to be effective as of the date of the consummation of the transactions contemplated by the
Distribution Agreement.

SECTION 1. Purpose and Types of Awards

          1.1 The purposes of the Hillenbrand, Inc. Stock Incentive Plan (the “Plan”) are to enable
Hillenbrand, Inc. (the “Company”) to attract, retain and reward its employees, officers and
directors, and strengthen the mutuality of interests between such persons and the Company’s
shareholders by offering such persons an equity interest in the Company and thereby enabling them
to participate in the long-term success and growth of the Company.

          1.2 Awards under the Plan may be in the form of (i) Stock Options; (ii) Stock Appreciation
Rights; (iii) Restricted Stock; (iv) Deferred Stock; and/or (v) Bonus Stock. Awards may be
free-standing or granted in tandem. If two awards are granted in tandem, the award holder may
exercise (or otherwise receive the benefit of) one award only to the extent he or she relinquishes
the tandem award.

SECTION 2. Definitions

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

          “Bonus Stock” shall mean an award described in Section 10 of the Plan.

 

 

          “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          “Committee” shall mean the committee of the Board designated by the Board to administer the
Plan, or if no committee is designated, and in any case with respect to awards to non-employee
directors, the entire Board.

          “Common Stock” shall mean the common stock of the Company, without par value.

          “Company” shall mean Hillenbrand, Inc. and its successors.

          “Deferred Stock” shall mean an award described in Section 9 of the Plan and also known as
Restricted Stock Units.

          “Distribution” shall have the meaning set forth in the recitals.

          “Distribution Agreement” shall mean the Distribution Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc. dated as of March ___, 2008.

          “Employee” shall mean an employee of the Company or of any Subsidiary of the Company.

          “Employee Matters Agreement” shall mean the Employee Matters Agreement by and between
Hillenbrand Industries, Inc. and Batesville Holdings, Inc. dated as of ___, 2008.

          “Fair Market Value” of the Common Stock on any date shall mean the value determined in good
faith by the Committee, by formula or otherwise; provided, however, that unless the Committee
determines to use a different measure, the fair market value of the Common Stock shall be the
average of the high and the low sales prices of the Common Stock (on such exchange or market as is
determined by the Board to be the primary market for the Common Stock) on the date in question (or
if shares of Common Stock were not traded on such date, then on the next preceding trading day on
which a sale of Common Stock occurred).

          “Hill-Rom Common Stock” shall have the meaning set forth in Section 5.3.

          “Hill-Rom Options” shall have the meaning set forth in Section 5.3.

          “Hill-Rom Deferred Stock” shall have the meaning set forth in Section 5.3.

          “Incentive Option” shall mean a Stock Option granted under the Plan which both is designated
as an Incentive Option and qualifies as an incentive stock option within the meaning of Section 422
of the Code.

          “Non-Employee Director” shall mean a director of the Company who is not employed by the
Company or any of its Subsidiaries.

-2-

 

          “Non-Qualified Option” shall mean a Stock Option granted under the Plan, which either is
designated as a Non-Qualified Option or does not qualify as an incentive stock option within the
meaning of Section 422 of the Code.

          “Optionee” shall mean any person who has been granted a Stock Option under the Plan or who is
otherwise entitled to exercise a Stock Option.

          “Option Period” shall mean, with respect to any portion of a Stock Option, the period after
such portion has become exercisable and before it has expired or terminated.

          “Plan” shall mean the Hillenbrand, Inc. Stock Incentive Plan.

          “Relationship” shall mean the status of employee, officer, or director of the Company or any
Subsidiary of the Company.

          “Restricted Stock” shall mean an award described in Section 8 of the Plan.

          “Spinoff Awards” shall have the meaning set forth in Section 5.3.

          “Spinoff Deferred Stock” shall have the meaning set forth in Section 5.3.

          “Spinoff Options” shall have the meaning set forth in Section 5.3.

          “Stock Appreciation Right” shall mean an award described in Section 7 of the Plan.

          “Stock Option” shall mean an Incentive Option or a Non-Qualified Option, and, unless the
context requires otherwise, shall include Director Options.

          “Subsidiary” shall mean any corporation, partnership, joint venture or other entity in which
the Company owns, directly or indirectly, more than 50% of the ownership interests.

SECTION 3. Administration

          3.1 The Plan shall be administered by the Committee. Notwithstanding anything to the contrary
contained herein, only the Board shall have authority to grant awards to Non-Employee Directors and
to amend and interpret such awards.

          3.2 The Committee shall have the following authority and discretion with respect to awards
under the Plan: to grant and amend (provided however that no amendment shall impair the rights of
the award holder without his or her written consent) awards to eligible persons under the Plan; to
adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as
it shall deem advisable; to interpret the terms and provisions of the Plan and any award granted
under the Plan; and to make all factual and other determinations necessary or advisable for the
administration of the Plan. In particular, and without limiting its authority and powers, the
Committee shall have the authority and discretion:

-3-

 

          (a) to select the persons to whom awards will be granted from among those eligible;

          (b) to determine the number of shares of Common Stock to be covered by each award
granted hereunder subject to the limitations contained herein;

          (c) to determine the terms and conditions of any award granted hereunder, including,
but not limited to, any vesting or other restrictions based on such continued employment,
performance objectives and such other factors as the Committee may establish, and to
determine whether the terms and conditions of the award have been satisfied;

          (d) to determine the treatment of awards upon an Employee’s retirement, disability,
death, termination for cause or other termination of employment, or during a leave of
absence or upon a Non-Employee Director’s termination of Relationship as allowed by law;

          (e) to determine that the award holder has no rights with respect to any dividends
declared with respect to any shares covered by an award or that amounts equal to the amount
of any dividends declared with respect to the number of shares covered by an award (i) will
be paid to the award holder currently or (ii) will be deferred and deemed to be reinvested
or (iii) will otherwise be credited to the award holder;

          (f) to determine whether, to what extent, and under what circumstances Common Stock and
other amounts payable with respect to an award will be deferred either automatically or at
the election of an award holder, including providing for and determining the amount (if any)
of deemed earnings on any deferred amount during any deferral period;

          (g) to amend the terms of any award, prospectively or retroactively; provided, however,
that no amendment shall impair the rights of the award holder without his or her written
consent;

          (h) after considering any accounting impact to the Company, to substitute new Stock
Options for previously granted Stock Options, or for options granted under other plans or
agreements, in each case including previously granted options having higher option prices;

          (i) to determine, pursuant to a formula or otherwise, the Fair Market Value of the
Common Stock on a given date;

          (j) after considering any accounting impact to the Company, to provide that the shares
of Common Stock received as a result of an award shall be subject to a right of repurchase
by the Company and/or a right of first refusal, in each case subject to such terms and
conditions as the Committee may specify;

          (k) to adopt one or more sub-plans, consistent with the Plan, containing such
provisions as may be necessary or desirable to enable awards under the

-4-

 

Plan to comply with the laws of other jurisdictions and/or qualify for preferred tax
treatment under such laws; and

          (l) to delegate such administrative duties as it may deem advisable to one or more of
its members or to one or more Employees or agents.

          3.3 The Committee shall have the right to designate awards as “Performance Awards.” The grant
or vesting of a Performance Award shall be subject to the achievement of performance objectives
established by the Committee based on one or more of the following criteria, in each case applied
to the Company on a consolidated basis and/or to a business unit and which the Committee may use as
an absolute measure, as a measure of improvement relative to prior performance, or as a measure of
comparable performance relative to a peer group of companies: sales, operating profits, operating
profits before taxes, operating profits before interest expense and taxes, net earnings, earnings
per share, return on equity, return on assets, return on invested capital, total shareholder
return, cash flow, debt to equity ratio, market share, stock price, economic value added, and
market value added.

          3.4 All determinations and interpretations made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and award holders.
Determinations by the Committee under the Plan relating to the form, amount, and terms and
conditions of awards need not be uniform, and may be made selectively among persons who receive or
are eligible to receive awards under the Plan, whether or not such persons are similarly situated.

          3.5 The Committee shall act by a majority of its members at a meeting (present in person or by
conference telephone) or by majority written consent.

          3.6 No member of the Board or the Committee, nor any officer or Employee of the Company or its
Subsidiaries acting on behalf of the Board or the Committee, shall be personally liable for any
action, determination or interpretation taken or made with respect to the Plan or any award
hereunder. The Company shall indemnify all members of the Board and the Committee and all such
officers and Employees acting on their behalf, to the extent permitted by law, from and against any
and all liabilities, costs and expenses incurred by such persons as a result of any act, or
omission to act, in connection with the performance of such persons’ duties, responsibilities and
obligations under the Plan.

SECTION 4. Stock Subject to Plan

          4.1 The total number of shares of Common Stock which may be issued under the Plan shall be
4,635,436, any or all of which may be issued pursuant to Incentive Options, subject to adjustment
as provided in Section 4.4. Such shares may consist of authorized but unissued shares or shares
that have been issued and reacquired by the Company. The exercise of a Stock Appreciation Right
for cash or the payment of any award in cash shall not count against this share limit.

          4.2 To the extent a Stock Option is surrendered for cash or terminates without having been
exercised, or an award terminates without the holder having received payment of the award, or
shares awarded are forfeited, the shares subject to such award shall again be available

-5-

 

for distribution in connection with future awards under the Plan. Shares of Common Stock
equal in number to the shares surrendered in payment of the option price, and shares of Common
Stock which are withheld in order to satisfy federal, state or local tax liability shall count
against the share limit set forth in Section 4.1.

          4.3 No Employee shall be granted Stock Options and/or Stock Appreciation Rights with respect
to more than 200,000 shares of Common Stock in any fiscal year, and no Employee shall be granted
Restricted Stock, Deferred Stock and/or Bonus Stock awards with respect to more than 100,000 shares
of Common Stock in any fiscal year, subject to adjustment as provided in Section 4.4.
Notwithstanding the foregoing, any Spinoff Awards (as defined in Section 5.3) shall not count
against the foregoing fiscal year award limits.

          4.4 In the event of any merger, reorganization, consolidation, sale of substantially all
assets, recapitalization, stock dividend, stock split, spin-off, split-up, split-off, distribution
of assets or other change in corporate structure affecting the Common Stock such that an adjustment
is determined by the Board in its discretion to be appropriate, after considering any accounting
impact to the Company, in order to prevent dilution or enlargement of benefits under the Plan, then
the Board shall, in such a manner as it may in its discretion deem equitable, adjust any or all of
(i) the aggregate number and kind of shares reserved for issuance under the Plan, and (ii) the
number and kind of shares as to which awards may be granted to any individual in any fiscal year.
In the event of any merger, reorganization, consolidation, sale of substantially all assets,
recapitalization, stock dividend, stock split, spin-off, split-up, split-off, distribution of
assets or other change in corporate structure affecting the Common Stock subject to an outstanding
award, the number and kind of shares of Common Stock or other securities which are subject to this
Plan or subject to any awards theretofore granted, and the exercise prices, shall be appropriately
and equitably adjusted by the Board so as to maintain the proportionate number of shares or other
securities without changing the aggregate exercise price, if any.

          In addition, upon the dissolution or liquidation of the Company or upon any reorganization,
merger, or consolidation as a result of which the Company is not the surviving corporation (or
survives as a wholly-owned subsidiary of another corporation), or upon a sale of substantially all
the assets of the Company, the Board may, after considering any accounting impact to the Company,
take such action as it in its discretion deems appropriate to (i) accelerate the time when awards
vest and/or may be exercised and/or may be paid, (ii) cash out outstanding Stock Options and/or
other awards at or immediately prior to the date of such event, (iii) provide for the assumption of
outstanding Stock Options or other awards by surviving, successor or transferee corporations,
(iv) provide that in lieu of shares of Common Stock of Company, the award recipient shall be
entitled to receive the consideration he would have received in such transaction in exchange for
such shares of Common Stock (or the Fair Market Value thereof in cash), and/or (v) provide that
Stock Options shall be exercisable for a period of at least 10 business days from the date of
receipt of a notice from the Company of such proposed event, following the expiration of which
period any unexercised Stock Options shall terminate.

          The Board’s determination as to which adjustments shall be made under this Section 4.4 and the
extent thereof shall be final, binding and conclusive.

-6-

 

          4.5 No fractional shares shall be issued or delivered under the Plan. The Committee shall
determine whether the value of fractional shares shall be paid in cash or other property, or
whether such fractional shares and any rights thereto shall be cancelled without payment.

SECTION 5. Eligibility

          5.1 The persons who are eligible for awards under Sections 6, 7, 8, 9, and 10 of the Plan are
Employees, officers and directors of the Company or of any Subsidiary of the Company. In addition,
awards under such Sections may be granted to prospective Employees, officers, or directors but such
awards shall not become effective until the recipient’s commencement of employment or service with
the Company or a Subsidiary. Incentive Options may be granted only to Employees and prospective
Employees. Award recipients under the Plan shall be selected from time to time by the Committee,
in its sole discretion, from among those eligible.

          5.2 Non-Employee Directors shall be granted awards under Section 12 in addition to any awards
which may be granted to them under other Sections of the Plan.

          5.3 In connection with the Distribution, options to purchase Common Stock (“Spinoff Options”)
may be granted to holders of options (“Hill-Rom Options”) to purchase shares of common stock, no
par value, of Hill-Rom Holdings, Inc. (“Hill-Rom Common Stock”) as of the date of the Distribution
in accordance with the terms of the Employee Matters Agreement. The Spinoff Options may be granted
to such holders on substantially similar terms to the corresponding options to purchase Hill-Rom
Common Stock held by such holders, including the rate at which the options vest and the expiration
date of such options, provided that the number of shares of Common Stock under the Spinoff Options
and the exercise prices of the Spinoff Options compared to their Hill-Rom Option counterparts will
reflect the Distribution in the manner set forth in the Employee Matters Agreement. In addition,
Deferred Stock awards (“Spinoff Deferred Stock”) may be granted to holders of deferred stock
relating to Hill-Rom Common Stock (“Hill-Rom Deferred Stock”) as of the date of the Distribution in
accordance with the terms of the Employee Matters Agreement. The Spinoff Deferred Stock awards may
be granted to such holders on substantially similar terms to the corresponding deferred stock
relating to Hill-Rom Common Stock held by such holders, including the rate at which the awards
vest, provided that the number of shares of Common Stock under the Spinoff Deferred Stock awards
compared to their Hill-Rom Deferred Stock counterparts will reflect the Distribution in the manner
set forth in the Employee Matters Agreement. It is intended that all grants of Spinoff Options and
Spinoff Deferred Stock described in this paragraph satisfy the requirements of Section 424 of the
Code, to the extent applicable, and avoid treatment as nonqualified deferred compensation subject
to Section 409A of the Code. Spinoff Options and Spinoff Deferred Stock shall be referred to
collectively herein as “Spinoff Awards.”

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SECTION 6. Stock Options

          6.1 The Stock Options awarded to eligible persons under the Plan may be of two types:
(i) Incentive Options and (ii) Non-Qualified Options. To the extent that any Stock Option granted
to an Employee does not qualify as an Incentive Option, it shall constitute a Non-Qualified Option.
All Stock Options awarded to persons who are not Employees shall be Non-Qualified Options.

          6.2 Subject to the following provisions, Stock Options awarded under Section 6 of the Plan
shall be in such form and shall have such terms and conditions as the Committee may determine.

          (a) Option Price. The option price per share of Common Stock purchasable under
a Stock Option (other than a Spinoff Option) shall be determined by the Committee and may
not be less than the Fair Market Value of the Common Stock on the date of the award of the
Stock Option (or, with respect to awards to prospective Employees, on the first date of
employment).

          (b) Option Term. The term of each Stock Option shall be fixed by the
Committee.

          (c) Exercisability. Stock Options shall be exercisable and shall vest at such
time or times and subject to such terms and conditions as shall be determined by the
Committee. The Committee may impose different schedules for exercisability and vesting.
After considering any accounting impact to the Company, the Committee may waive any exercise
or vesting provisions or accelerate the exercisability or vesting of the Stock Option at any
time in whole or in part.

          (d) Method of Exercise. Stock Options may be exercised in whole or in part at
any time during the Option Period by giving the Company notice of exercise in the form
approved by the Committee (which may be written or electronic) specifying the number of
whole shares to be purchased, accompanied by payment of the aggregate option price for such
shares. Payment of the option price shall be made in such manner as the Committee may
provide in the award, which may include (i) cash (including cash equivalents), (ii) delivery
(either by actual delivery of the shares or by providing an affidavit affirming ownership of
the shares) of shares of Common Stock already owned by the Optionee for at least six months,
(iii) broker-assisted “cashless exercise” in which the Optionee delivers a notice of
exercise together with irrevocable instructions to a broker acceptable to the Company to
sell shares of Common Stock (or a sufficient portion of such shares) acquired upon exercise
of the Stock Option and remit to the Company a sufficient portion of the sale proceeds to
pay the total option price and any withholding tax obligation resulting from such exercise,
(iv) any other manner permitted by law, or (v) any combination of the foregoing.

          (e) No Shareholder Rights. An Optionee shall have no rights to dividends or
other rights of a shareholder with respect to shares subject to a Stock Option until the
Optionee has duly exercised the Stock Option and a certificate for such shares

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has been duly issued (or the Optionee has otherwise been duly recorded as the owner of
the shares on the books of the Company).

          (f) Termination of Employment or Relationship. Following the termination of an
Optionee’s employment or other Relationship with the Company or its Subsidiaries, the Stock
Option shall be exercisable to the extent determined by the Committee. The Committee may
provide different post-termination exercise provisions which may vary based on the nature of
and reason for the termination. The Committee may provide that, notwithstanding the option
term fixed pursuant to Section 6.2(b), a Non-Qualified Option which is outstanding on the
date of an Optionee’s death shall remain outstanding for an additional period after the date
of such death. The Committee shall have absolute discretion to determine the date and
circumstances of any termination of employment or other Relationship.

          (g) Non-transferability. Unless otherwise provided by the Committee, (i) Stock
Options shall not be transferable by the Optionee other than by will or by the laws of
descent and distribution, and (ii) during the Optionee’s lifetime, all Stock Options shall
be exercisable only by such Optionee. The Committee, in its sole discretion, may permit
Stock Options to be transferred to such other transferees and on such terms and conditions
as may be determined by the Committee.

          (h) Surrender Rights. The Committee may, after considering any accounting
impact to the Company, provide that Stock Options may be surrendered for cash upon any terms
and conditions set by the Committee.

          6.3 Notwithstanding the provisions of Section 6.2, Incentive Options shall be subject to the
following additional restrictions:

          (a) Option Term. No Incentive Option shall be exercisable more than ten years
after the date such Incentive Stock Option is awarded.

          (b) Additional Limitations for 10% Shareholders. No Incentive Option granted
to an Employee who owns more than 10% of the total combined voting power of all classes of
stock of the Company or any of its parent or subsidiary corporations, as defined in Section
424 of the Code, shall (i) have an option price which is less than 110% of the Fair Market
Value of the Common Stock on the date of award of the Incentive Option or (ii) be
exercisable more than five years after the date such Incentive Option is awarded.

          (c) Exercisability. The aggregate Fair Market Value (determined as of the time
the Incentive Option is granted) of the shares with respect to which Incentive Options
(granted under the Plan and any other plans of the Company, its parent corporation or
subsidiary corporations, as defined in Section 424 of the Code) are exercisable for the
first time by an Optionee in any calendar year shall not exceed $100,000.

          (d) Notice of Disqualifying Disposition. An Optionee’s right to exercise an
Incentive Option shall be subject to the Optionee’s agreement to notify the

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Company of any “disqualifying disposition” (for purposes of Section 422 of the Code) of
the shares acquired upon such exercise.

          (e) Non-transferability. Incentive Options shall not be transferable by the
Optionee, other than by will or by the laws of descent and distribution. During the
Optionee’s lifetime, all Incentive Options shall be exercisable only by such Optionee.

          (f) Last Grant Date. No Incentive Option shall be granted more than ten years
after the earlier of the date of adoption of the Plan by the Board or approval of the Plan
by the Company’s shareholders.

The Committee may, with the consent of the Optionee, amend an Incentive Option in a manner that
would cause loss of Incentive Option status, provided the Stock Option as so amended satisfies the
requirements of Section 6.2.

          6.4 Substitute Options. In connection with a merger or consolidation of an entity
with the Company or the acquisition by the Company of property or stock of an entity, the Committee
may grant Stock Options in substitution for any options or other stock awards or stock-based awards
granted by such entity or an affiliate thereof. Such substitute Stock Options may be granted on
such terms as the Committee deems appropriate in the circumstances, notwithstanding any limitations
on Stock Options contained in other provisions of this Section 6.

SECTION 7. Stock Appreciation Rights

          7.1 A Stock Appreciation Right shall entitle the holder thereof to receive, for each share as
to which the award is granted, payment of an amount, in cash, shares of Common Stock, or a
combination thereof, as determined by the Committee, equal in value to the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the Fair Market Value of a
share of Common Stock on the day such Stock Appreciation Right was granted. Any such award shall
be in such form and shall have such terms and conditions as the Committee may determine. The grant
shall specify the number of shares of Common Stock as to which the Stock Appreciation Right is
granted.

          7.2 The Committee may provide that a Stock Appreciation Right may be exercised only within the
60-day period following occurrence of a Change in Control (as defined in Section 14.2) (such Stock
Appreciation Right being referred to herein as a “Limited Stock Appreciation Right”). The
Committee may also provide that in the event of a Change in Control the amount to be paid upon
exercise of a Stock Appreciation Right shall be based on the Change in Control Price (as defined in
Section 14.3).

SECTION 8. Restricted Stock

          Subject to the following provisions, all awards of Restricted Stock shall be in such form and
shall have such terms and conditions as the Committee may determine:

          (a) The Restricted Stock award shall specify the number of shares of Restricted Stock
to be awarded, the price, if any, to be paid by the recipient of the Restricted Stock and
the date or dates on which, or the conditions upon the satisfaction of

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which, the Restricted Stock will vest. The grant and/or the vesting of Restricted
Stock may be conditioned upon the completion of a specified period of service with the
Company and/or its Subsidiaries, upon the attainment of specified performance objectives, or
upon such other criteria as the Committee may determine.

          (b) Stock certificates representing the Restricted Stock awarded under the Plan shall
be registered in the award holder’s name, but the Committee may direct that such
certificates be held by the Company on behalf of the award holder. Except as may be
permitted by the Committee, no share of Restricted Stock may be sold, transferred, assigned,
pledged or otherwise encumbered by the award holder until such share has vested in
accordance with the terms of the Restricted Stock award. At the time Restricted Stock
vests, a certificate for such vested shares shall be delivered to the award holder (or his
or her designated beneficiary in the event of death), free of all restrictions.

          (c) The Committee may provide that the award holder shall have the right to vote and/or
receive dividends on Restricted Stock. Unless the Committee provides otherwise, Common
Stock received as a dividend on, or in connection with a stock split of, Restricted Stock
shall be subject to the same restrictions as the Restricted Stock.

          (d) Except as may be provided by the Committee, in the event of an award holder’s
termination of employment or other Relationship before all of his or her Restricted Stock
has vested, or in the event any conditions to the vesting of Restricted Stock have not been
satisfied prior to any deadline for the satisfaction of such conditions set forth in the
award, the shares of Restricted Stock which have not vested shall be forfeited, and the
Committee may provide that (i) any purchase price paid by the award holder shall be returned
to the award holder or (ii) a cash payment equal to the Restricted Stock’s Fair Market Value
on the date of forfeiture, if lower, shall be paid to the award holder.

          (e) The Committee may waive, in whole or in part, any or all of the conditions to
receipt of, or restrictions with respect to, any or all of the award holder’s Restricted
Stock (except that the Committee may not waive conditions or restrictions with respect to
awards intended to qualify under Section 162(m) of the Code unless such waiver would not
cause the award to fail to qualify as “performance-based compensation” within the meaning of
Section 162(m) of the Code).

SECTION 9. Deferred Stock Awards (also known as Restricted Stock Units)

          Subject to the following provisions, all awards of Deferred Stock shall be in such form and
shall have such terms and conditions as the Committee may determine:

          (a) The Deferred Stock award shall specify the number of shares of Deferred Stock to be
awarded and the duration of the period (the “Deferral Period”) during which, and the
conditions under which, receipt of the Common Stock will be deferred. The Committee may
condition the grant or vesting of Deferred Stock, or receipt of Common Stock or cash at the
end of the Deferral Period, upon the completion

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of a specified period of service with the Company and/or its Subsidiaries, upon the
attainment of specified performance objectives, or upon such other criteria as the Committee
may determine.

          (b) Except as may be provided by the Committee, Deferred Stock awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during the Deferral Period.

          (c) At the expiration of the Deferral Period, the award holder (or his or her
designated beneficiary in the event of death) shall receive (i) certificates for the number
of shares of Common Stock equal to the number of shares covered by the Deferred Stock award,
(ii) cash equal to the Fair Market Value of such Common Stock, or (iii) a combination of
shares and cash, as the Committee may determine.

          (d) Except as may be provided by the Committee, in the event of an award holder’s
termination of employment or other Relationship before the Deferred Stock has vested, his or
her Deferred Stock award shall be forfeited.

          (e) The Committee may waive, in whole or in part, any or all of the conditions to
receipt of, or restrictions with respect to, Common Stock or cash under a Deferred Stock
award (except that the Committee may not waive conditions or restrictions with respect to
awards intended to qualify under Section 162(m) of the Code unless such waiver would not
cause the award to fail to qualify as “performance-based compensation” within the meaning of
Section 162(m) of the Code).

SECTION 10. Bonus Stock Awards

          The Committee may award Bonus Stock to any eligible award recipient subject to such terms and
conditions as the Committee shall determine. The grant of Bonus Stock may, but need not, be
conditioned upon the attainment of specified performance objectives or upon such other criteria as
the Committee may determine. The Committee may waive such conditions in whole or in part (except
that the Committee may not waive conditions or restrictions with respect to awards intended to
qualify under Section 162(m) of the Code unless such waiver would not cause the award to fail to
qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code).
Unless otherwise specified by the Committee, no money shall be paid by the recipient for the Bonus
Stock. Alternatively, the Committee may, after considering any accounting impact to the Company,
offer eligible employees the opportunity to purchase Bonus Stock at a discount from its Fair Market
Value. The Bonus Stock award shall be satisfied by the delivery of the designated number of shares
of Common Stock which are not subject to restriction.

SECTION 11. Election to Defer Deferred Stock Awards or Bonus Stock Awards

          The Committee may permit an award recipient to elect to defer payment of an award for a
specified period or until a specified event, upon such terms as are determined by the Committee.
An award holder may elect to defer the distribution date of a Deferred Stock Award or Bonus Stock
Award provided that such election is made and delivered to the Company in compliance with Section
409A of the Code, when applicable.

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SECTION 12. Non-Employee Director Awards

               The Board shall have the discretion to determine the number and types of awards to be granted
to Non-Employee Directors and the terms of such awards, including but not limited to the
exercisability and the effect of a director’s termination of service.

SECTION 13. Tax Withholding

          13.1 Each award holder shall, no later than the date as of which an amount with respect to an
award first becomes includible in such person’s gross income for applicable tax purposes, pay to
the Company, or make arrangements satisfactory to the Committee regarding payment of, any federal,
state, local or other taxes of any kind required by law to be withheld with respect to the award.
The obligations of the Company under the Plan shall be conditional on such payment or arrangements.
The Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have
the right to deduct the minimum amount of any required tax withholdings from any such taxes from
any payment of any kind otherwise due to the award holder.

          13.2 To the extent permitted by the Committee, and subject to such terms and conditions as the
Committee may provide, an Employee may elect to have the minimum amount of any required tax
withholdings with respect to any awards hereunder, satisfied by (i) having the Company withhold
shares of Common Stock otherwise deliverable to such person with respect to the award or
(ii) delivering to the Company shares of unrestricted Common Stock already owned by the Employee
for at least six months. Alternatively, the Committee may require that a portion of the shares of
Common Stock otherwise deliverable be applied to satisfy the withholding tax obligations with
respect to the award.

SECTION 14. Change in Control

          14.1 In the event of a Change in Control, unless otherwise determined by the Committee at the
time of grant or by amendment (with the award holder’s consent) of such grant:

          (a) all outstanding Stock Options (including Director Options) and all outstanding
Stock Appreciation Rights (including Limited Stock Appreciation Rights) awarded under the
Plan shall become fully exercisable and vested;

          (b) the restrictions and vesting conditions applicable to any outstanding Restricted
Stock and Deferred Stock awards under the Plan shall lapse and such shares and awards shall
be deemed fully vested;

          (c) the Committee may, in its sole discretion, accelerate the payment date of all
Restricted Stock and Deferred Stock awards; and

          (d) to the extent the cash payment of any award is based on the Fair Market Value of
Common Stock, such Fair Market Value shall be the Change in Control Price.

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          14.2 A “Change in Control” shall be deemed to occur on:

               (i) the date that any person, corporation, partnership, syndicate, trust, estate or other
group acting with a view to the acquisition, holding or disposition of securities of the Company,
becomes, directly or. indirectly, the beneficial owner, as defined in Rule 13d-3 under the
Securities Exchange Act of 1934 (“Beneficial Owner”), of securities of the Company representing 35%
or more of the voting power of all securities of the Company having the right under ordinary
circumstances to vote at an election of the Board (“Voting Securities”), other than by reason of
(x) the acquisition of securities of the Company by the Company or any of its Subsidiaries or any
employee benefit plan of the Company or any of its Subsidiaries, (y) the acquisition of securities
of the Company directly from the Company, or (z) the acquisition of securities of the Company by
one or more members of the Hillenbrand Family (which term shall mean descendants of John A.
Hillenbrand and their spouses, trusts primarily for their benefit or entities controlled by them);

          (ii) the consummation of a merger or consolidation of the Company with another corporation
unless

               (A) the shareholders of the Company, immediately prior to the merger or consolidation,
beneficially own, immediately after the merger or consolidation, shares entitling such shareholders
to 50% or more of the voting power of all securities of the corporation surviving the merger or
consolidation having the right under ordinary circumstances to vote at an election of directors in
substantially the same proportions as their ownership, immediately prior to such merger or
consolidation, of Voting Securities of the Company;

               (B) no person, corporation, partnership, syndicate, trust, estate or other group beneficially
owns, directly or indirectly, 35% or more of the voting power of the outstanding voting securities
of the corporation resulting from such merger or consolidation except to the extent that such
ownership existed prior to such merger or consolidation; and

               (C) the members of the Company’s Board, immediately prior to the merger or consolidation,
constitute, immediately after the merger or consolidation, a majority of the board of directors of
the corporation issuing cash or securities in the merger;

          (iii) the date on which a majority of the members of the Board consist of persons other than
Current Directors (which term shall mean any member of the Board on the date hereof and any member
whose nomination or election has been approved by a majority of Current Directors then on the
Board);

          (iv) the consummation of a sale or other disposition of all or substantially all of the assets
of the Company; or

          (v) the date of approval of the shareholders of the Company of a plan of complete liquidation
of the Company.

          14.3 “Change in Control Price” means the highest price per share of Common Stock paid in any
transaction reported on any national market or securities exchange where the Common Stock is
traded, or paid or offered in any transaction related to a Change in Control at

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any time during the 90-day period ending with the Change in Control. Notwithstanding the
foregoing sentence, in the case of Stock Appreciation Rights granted in tandem with Incentive
Options, the Change in Control Price shall be the highest price paid on the date on which the Stock
Appreciation Right is exercised.

SECTION 15. General Provisions

          15.1 Each award under the Plan shall be subject to the requirement that, if at any time the
Committee shall determine that (i) the listing, registration or qualification of the Common Stock
subject or related thereto upon any securities exchange or market or under any state or federal
law, or (ii) the consent or approval of any government regulatory body or (iii) an agreement by the
recipient of an award with respect to the disposition of Common Stock, is necessary or desirable in
order to satisfy any legal requirements, or (iv) the issuance, sale or delivery of any shares of
Common Stock is or may in the circumstances be unlawful under the laws or regulations of any
applicable jurisdiction, the right to exercise such Stock Option shall be suspended, such award
shall not be granted and such shares will not be issued, sold or delivered, in whole or in part,
unless such listing, registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee, and the Committee
determines that the issuance, sale or delivery of the shares is lawful. The application of this
Section shall not extend the term of any Stock Option or other award. The Company shall have no
obligation to effect any registration or qualification of the Common Stock under federal or state
laws or to compensate the award holder for any loss caused by the implementation of this Section
15.1.

          15.2 The Committee may provide, at the time of grant or by amendment with the award holder’s
consent, that an award and/or Common Stock acquired under the Plan shall be forfeited, including
after exercise or vesting, if within a specified period of time the award holder engages in any of
the conduct described below (“Disqualifying Conduct”). Disqualifying Conduct shall mean (i) the
award holder’s performance of service for a competitor of the Company and/or its Subsidiaries,
including service as an employee, director, or consultant, or the establishing by the award holder
of a business which competes with the Company and/or its Subsidiaries, (ii) the award holder’s
solicitation of employees or customers of the Company and/or its Subsidiaries (iii) the award
holder’s improper use or disclosure of confidential information of the Company and/or its
Subsidiaries or (iv) material misconduct by the award holder in the performance of such award
holder’s duties for the Company and/or its Subsidiaries, as determined by the Committee.

          15.3 Nothing set forth in this Plan shall prevent the Board from adopting other or additional
compensation arrangements.

          15.4 Nothing in the Plan nor in any award hereunder shall confer upon any award holder any
right to continuation of his or her employment by or other Relationship with the Company or its
Subsidiaries, or interfere in any way with the rights of any such company to terminate such
employment or other Relationship.

          15.5 Neither the Plan nor any award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company or Subsidiary

-15-

 

and an award recipient, and no award recipient will, by participation in the Plan, acquire any
right in any specific Company property, including any property the Company may set aside in
connection with the Plan. To the extent that any award recipient acquires a right to receive
payments from the Company or any Subsidiary pursuant to an award, such right shall not be greater
than the right of an unsecured general creditor of the Company or its Subsidiaries.

          15.6 The Plan and all awards hereunder shall be governed by the laws of the State of Indiana
without giving effect to conflict of laws principles.

SECTION 16. Amendments and Termination

          16.1 The Plan shall be of unlimited duration. The Board may discontinue the Plan at any time
and may amend it from time to time. No amendment or discontinuation of the Plan shall adversely
affect any award previously granted without the award holder’s written consent. Amendments may be
made without shareholder approval except as required to satisfy applicable laws or regulations or
the requirements of any stock exchange or market on which the Common Stock is listed or traded.

          16.2 The Committee may amend the terms of any award prospectively or retroactively; provided,
however, that no amendment shall impair the rights of the award holder without his or her written
consent.

SECTION 17. Effective Date of Plan

          17.1 The Plan is effective as of the date of the consummation of the transactions contemplated
by the Distribution Agreement.

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