Document:

OND 11 10-Q Exhibit 10-3

Exhibit (10-3)

The Procter & Gamble 2009 Stock and Incentive Compensation Plan

The Procter & Gamble Company
Executive Offices
1 Procter & Gamble Plaza
Cincinnati, OH  45202-3315
www.pg.com

October 11, 2011

To:    Participants in The Procter & Gamble 2009 Stock and Incentive Compensation Plan

This document provides a copy of The Procter & Gamble 2009 Stock and Incentive Compensation Plan followed by important Additional Information.  Please save this with your stock option materials.

Corporate Secretary 
The Procter & Gamble Company

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

  R e w a r d s   o f   L e a d e r s h i p

The Procter & Gamble 2009 Stock and Incentive Compensation Plan

ARTICLE A -- Purpose.

The purposes of The Procter & Gamble 2009 Stock and Incentive Compensation Plan (the "Plan") are to strengthen the alignment of interests between those employees of The Procter & Gamble Company (the "Company") and its subsidiaries who are largely responsible for the success of the business  (the “Participants”) and the Company's shareholders through ownership behavior and the increased ownership of shares of the Company's common stock (the “Common Stock”), and to encourage the Participants to remain in the employ of the Company and its subsidiaries.  This will be accomplished through the granting of options to purchase shares of Common Stock, the granting of performance related awards, the payment of a portion of the Participants' remuneration in shares of Common Stock, the granting of deferred awards related to the increase in the price of Common Stock, and the granting of restricted stock units (“RSUs”) or other awards that are related to the price of Common Stock.

ARTICLE B -- Administration.

1.    The Plan shall be administered by the Compensation & Leadership Development Committee (the "Committee") of the Board of Directors of the Company (the "Board"), or such other committee as may be designated by the Board.  The Committee shall consist of not fewer than three (3) members of the Board who are "Non-Employee Directors" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "1934 Act") to be appointed by the Board from time to time and to serve at the discretion of the Board.  They shall also have been deemed independent by the Board under the Company’s independence guidelines and the applicable national securities exchange which serves as the principal trading market for the Common Stock. The Committee may establish such regulations, provisions, and procedures within the terms of the Plan as, in its opinion, may be advisable for the administration and operation of the Plan, and may designate the Secretary of the Company or other employees of the Company to assist the Committee in the administration and operation of the Plan and may grant authority to such persons to execute documents on behalf of the Committee.  The Committee shall report on the administration of the Plan as requested by the Board.

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

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

(b)    waive the provisions of Article G, Paragraph 9(a) and 9(b);and

(c)    impose conditions in lieu of those set forth in Article G, Paragraphs 7, 8, 9 and 11 for nonstatutory stock options, incentive stock options and stock appreciation rights which do not increase or extend the rights of the Participant.

ARTICLE C -- Participation.

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

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

1.    Unless otherwise authorized by the shareholders, or as provided in this Article D or Article K of the Plan, the maximum aggregate number of shares available for award under the Plan shall be the sum of:
		
	(a)
	160,000,000 new shares; and

(b)the shares previously authorized but not awarded under The Procter & Gamble 2001 Stock and Incentive Compensation Plan and The Gillette Company 2004 Long-Term Incentive Plan, in each case,  as of the date on which the Plan is approved by shareholders (e.g., approximately 181,113,260 shares in total).

2.    In addition to the shares authorized for award by Paragraph 1 of this Article D, any shares awarded under the Plan, or any of the following plans, that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares, are settled in cash in lieu of shares, or are exchanged with the Committee’s permission prior to the issuance of shares, for awards not involving shares, shall be available for award under the Plan:        
    
(a)    The Procter & Gamble 1992 Stock Plan;
(b)    The Procter & Gamble 1992 Stock Plan (Belgian Version);
(c)    The Procter & Gamble Future Shares Plan;
(d)    The Procter & Gamble 2001 Stock and Incentive Compensation Plan;
(e)    The Gillette Company 1971 Stock Option Plan; and
(f)    The Gillette Company 2004 Long-Term Incentive Plan.
    
Any shares that become available for award under this Article D, Paragraph 2 shall be added back to the aggregate shares available using the ratio set forth in Article D, Paragraphs 3(a) and 3(b) below (e.g., one for one for stock options and stock appreciation rights and 2.88 shares for each share awarded for all other awards).

3.    Solely for purposes of calculating the number of shares remaining available for grant under this Article D:

(a)all stock options and stock appreciation rights awards shall be counted on a one for one basis;
(b)all full value awards under the Plan to be settled in shares shall be counted as 2.88  shares for each share awarded;
(c)except as otherwise noted in this Article D, Paragraph 4 below, only shares issued by the 

Company shall be counted against the number of shares available; and
(d) “shares issued” shall include all shares delivered pursuant to the Plan, all shares tendered, exchanged or withheld to cover option costs and/or taxes, and all shares underlying an award of stock appreciation rights once such stock appreciation rights are exercised.

4.    Shares that were subject to a stock option or stock-settled stock appreciation right and were not issued upon the net settlement or net exercise of such stock option or stock appreciation right may not again be made available for issuance under the Plan.

5.    Notwithstanding anything to the contrary contained herein, shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options shall not be added to the shares available for award under Article D, Paragraph 1 above.

6.    Subject to the provisions of Article K and Article L, and notwithstanding anything else herein to the contrary, without affecting the number of shares reserved or available hereunder the Committee may authorize the issuance or assumption of benefits under the Plan in connection with any merger, consolidation acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with the rules under Sections 162(m), 409A, 422 and 424 of the Internal Revenue Code (“Code”) as and where applicable.

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

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

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

ARTICLE F -- Restrictions & Covenants.                    

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

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

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

Company or one of its subsidiaries, to be in development):

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

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

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

(c)    To better protect the Company’s investment in its employees and to ensure the long-term success of the business, the Participant, without prior written consent of the Company, will not attempt directly or indirectly to induce any employee of the Company or its affiliates or subsidiaries to be employed or perform services elsewhere or attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier or partner of the Company or its affiliates or subsidiaries.

(d)    Because a main purpose of the Plan is to strengthen the alignment of interests between employees of the Company (including all affiliates and subsidiaries) and its shareholders to ensure the continued success of the Company, the Participant will not take any action that is significantly contrary to the best interests of the Company or its affiliates or subsidiaries.  For purposes of this paragraph, an action taken “significantly contrary to the best interests of the Company or its affiliates or subsidiaries” includes without limitation any action taken or threatened by the Participant that the Committee determines has, or is reasonably likely to have, a significant adverse impact on the reputation, goodwill, stability, operation, personnel retention and management, or business of the Company or any affiliate or subsidiary.  

(e)    The provisions of this Article F are not in lieu of, but are in addition to the continuing obligation of the Participant (which Participant acknowledges by accepting any award under the Plan) to not use or disclose the Company's or its subsidiaries' trade secrets and confidential information known to the Participant until any particular trade secret or confidential information becomes generally known (through no fault of the Participant), whereupon the restriction on use and disclosure shall cease as to that item.  Information regarding products in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its subsidiaries is considering for broader use, shall not be deemed generally known until such broader use is actually commercially implemented.  As used in this Article F, "generally known" means known throughout the domestic U. S. industry or, in the case of Participants who have job responsibilities outside of the United States, the appropriate foreign country or countries' industry. 

(f)    By acceptance of any award granted under the terms of the Plan, the Participant acknowledges that if the Participant were, without authority, to use or disclose the Company's or any of its affiliates’ or subsidiaries' trade secrets or confidential information or threaten to do so, the Company or one of its subsidiaries would be entitled to injunctive and other appropriate relief to prevent the Participant from doing so.  The Participant acknowledges that the harm caused to the Company by the breach or anticipated breach of this Article F is by its nature irreparable because, among other things, it is not readily susceptible of proof as to the monetary harm that would ensue.  The Participant consents that any interim or final equitable relief entered by a court of competent jurisdiction shall, at the request of the Company or one of its subsidiaries, be entered on consent and enforced by any court having jurisdiction 

over the Participant, without prejudice to any rights either party may have to appeal from the proceedings which resulted in any grant of such relief.

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

2.    The Committee may cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid or deferred awards at any time if the Participant is not in compliance with all terms and conditions set forth in the Plan. By acceptance of any award granted under the terms of the Plan,  Participant acknowledges that the remedies outlined in this Paragraph 2 and in Paragraph 3 below are in addition to any remedy the Company or any affiliate or subsidiary may have at law or in equity, including without limitation injunctive and other appropriate relief.

3.    Upon exercise, payment or delivery of an award, the Participant shall certify in a manner acceptable to the Company that he or she has complied with the terms and conditions of the Plan. In the event a Participant fails to comply with any provision in this Article F, the Participant shall repay to the Company the net proceeds of any exercises, payments or deliveries of awards which occur at any time after the earlier of the following two dates: (a) the date three years immediately preceding any such violation; or (b) the date 6 months prior to the Participant’s termination of employment with the Company.  The Participant shall repay to the Company the net proceeds in such manner and on such terms and conditions as may be required by the Company, and the Company shall be entitled to set-off against the amount of any such net proceeds any amount owed to the Participant by the Company, to the extent that such set-off is not inconsistent with Section 409A of the Code. For purposes of this paragraph, net proceeds shall mean (1)  for each stock option or stock appreciation right exercise, the difference between the exercise price and the greater of (i) the price of Common Stock on the date of exercise or (ii) the amount realized upon the disposition of the underlying shares, less any applicable taxes withheld by the Company; (2) for RSUs, the greater of (i) the number of net shares delivered to Participant  multiplied by the closing price of Common Stock on the date of delivery or (ii) the amount realized upon the disposition of the number of net shares delivered, less any applicable taxes withheld by the Company; and (3) for restricted stock, the greater of (i) the number of net shares retained by, or delivered to, Participant after any restrictions lapse multiplied by the closing price of Common Stock on the date the restrictions lapse or (ii) the amount realized upon the disposition of the number of net shares delivered, less any applicable taxes withheld by the Company.

4.The fact that a Participant has been granted an award under the Plan shall not limit the right of the employer to terminate the Participant's employment at any time.  

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

6.    The Committee may require any Participant to accept any award under the Plan and/or to exercise any stock options or stock appreciation rights by means of electronic signature.

                        

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

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

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

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

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

6.     The maximum number of shares that may be issued as incentive stock options under the Plan shall be the aggregate number of shares available for award under Article D.  The aggregate fair market value (determined at the time when the incentive stock option is exercisable for the first time by a Participant during any calendar year) of the shares for which any Participant may be granted incentive stock options under the Plan and all other stock option plans of the Company and its subsidiaries in any calendar year shall not exceed $100,000 (or such other amount as reflected in the limits imposed by Section 422(d) of the Code, as it may be amended from time to time). 

7.    Unless a transfer has been duly authorized by the Committee pursuant to Article G, Paragraph 8 below, during the lifetime of the Participant, stock options and stock appreciation rights may be exercised only by the Participant personally, or, in the event of the legal incompetence of the Participant, by the Participant's duly appointed legal guardian and are not transferable other than by will or by the laws of descent and distribution.  For the purpose of exercising stock options or stock appreciation rights after the death of the Participant:
        
(a) the persons to whom the stock options or stock appreciation rights have been transferred by will or the laws of descent and distribution shall have the privilege of exercising remaining stock options, stock appreciation rights or parts thereof, whether or not exercisable on the date of death of such Participant, at any time prior to the expiration date of the stock options or stock appreciation rights; and

(b)    the duly appointed executors and administrators of the estate of the deceased Participant shall have the same rights and obligations with respect to the stock options and stock appreciation rights as legatees or distributees would have after distribution to them from the Participant's estate.  

8.    The Committee may authorize the transfer of stock options and stock appreciation rights upon such terms and conditions as the Committee may require; provided, however, that no stock option or stock appreciation right may be sold by a Participant without shareholder approval.  Such transfer shall become effective only upon the Committee’s complete satisfaction that the proposed transferee has 

strictly complied with such terms and conditions, and both the original Participant and the transferee shall be subject to the same terms and conditions hereunder as the original Participant.

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

(a)    Any unexercisable portions thereof are then void, except in the case of: (1) death of the Participant; (2) Retirement or Special Separation where the participant is employed through June 30th following the date the options were granted; or (3) any option as to which the Committee has waived, at the time of grant, the provisions of this Article G, Paragraph 9(a).

(b)    Any exercisable portions thereof are then void, except in the case of:  (1) death of the Participant; (2) Retirement or Special Separation; or (3) any option as to which the Committee has waived, at the time of grant, the provisions of this Article G, Paragraph 9(b).

The definitions of “Special Separation” and “Retirement” are set forth in Article L, Paragraphs 5 and 6 of the Plan, respectively.

10.    For purposes of this Article G, Paragraph 10 of the Plan, an employee on a leave of absence shall not be deemed to have “ceased to be an employee of the Company or any of its subsidiaries” during that time.  Leave of absence means any period of time away from work granted to any employee by his or her employer because of illness, injury, or other reasons satisfactory to the employer.

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

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

13.    Except as permitted by Article K or as otherwise authorized by shareholders, no stock option or stock appreciation right shall be amended to reduce the exercise price or cancelled in exchange for cash, other awards or stock options or stock appreciation rights having a lower exercise price without the prior approval of the shareholders of the Company.  This Article G, Paragraph 13 is intended to prohibit the re-pricing of “underwater” stock options and stock appreciation rights and shall not be construed to prohibit the adjustments permitted under Article K of the Plan.

14.    No dividends or dividend equivalents shall be awarded under the Plan for any stock options or stock appreciation rights. 

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

Upon the exercise of a stock option, payment in full of the exercise price shall be made by the Participant.  As determined by the Committee, the stock option exercise price may be paid by the Participant either in cash, shares of Common Stock valued at their fair market value on the date of 

exercise, a combination thereof, or such other method as determined by the Committee.  In addition to payment of the exercise price, the Committee may authorize the Company to charge a reasonable administrative fee for the exercise of any stock option.  Furthermore, to the extent the Company is required to withhold federal, state, local or foreign taxes in connection with any Participant’s stock option or stock appreciation right exercise or the lapse of restrictions on, or delivery of shares pursuant to, any Participant’s award of shares of Common Stock or RSUs, the Committee may require the Participant to make such arrangements as the Company may deem necessary for the payment of such taxes required to be withheld (including, without limitation, relinquishment of a portion of such stock options,  the proceeds received by the Participant in a simultaneous exercise and sale of stock during a “cashless” exercise, or the RSUs or shares of Common Stock subject to such restrictions).  Notwithstanding any action taken by the Company with respect to any income tax, social insurance, payroll tax, or other tax, the  acceptance of an award under the Plan represents the Participant’s acknowledgement that the ultimate liability for any such tax owed by the Participant is and remains the Participant’s responsibility, and that the Company makes no representations about the tax treatment of any award, and does not commit to structure any aspect of the award to reduce or eliminate a Participant’s tax liability. In no event, however, shall the Committee be permitted to require payment from a Participant in excess of the maximum required tax withholding rates.

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

The Committee may grant Common Stock or RSUs to Participants under the Plan subject to such conditions or restrictions, if any, as the Committee may determine.  Unless the grant materials for an award made under this Article I, including any statements of terms and conditions accompanying such award, state specifically to the contrary, the restrictions and covenants set forth in Article F shall apply to all such awards. 

ARTICLE J -- Performance Related Awards.

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

2.    Notwithstanding the foregoing, any Performance Awards granted under this Article to any Participant subject to the restrictions set forth in Section 162(m) of the Code, other than stock options and stock appreciation rights that would otherwise qualify as performance-based compensation under Section 162(m) without the restrictions of this Article J, Paragraph 2, shall comply with all of the following requirements:

(a)    Each award shall specify the specific performance objectives (the “Performance Objectives”) which, if achieved, will result in payment of the Performance Award.  The Performance Objectives may be described in terms of Company-wide objectives that are related to the individual Participant or objectives that are related to a subsidiary, division, department, region, function or business unit of the Company in which the Participant is employed, and may consist of one or more or any combination of the following criteria:  stock price, market share, sales revenue, organic sales growth, cash flow, cash flow efficiency, earnings per share, return on equity, total shareholder return, gross margin, 

stock price growth measures, operating total shareholder return, net earnings or net income (before or after taxes), return on assets or capital, earnings (before or after interest, taxes, depreciation and/or amortization), operating income, operating margin, acquisition integration metrics, economic value added, and/or costs.  The Performance Objectives may be made relative to the performance of other corporations.  While the Committee may, in its discretion, change or modify the performance criteria used to calculate a Performance Award, all criteria used must be drawn from the above list and otherwise be valid performance criteria for purposes of Section 162(m) of the Code.  The Committee may not change the criteria or Performance Objectives for any Performance Period that has already been approved by the Committee.  The Committee may cancel a Performance Period or replace a Performance Period with a new Performance Period, provided that any such cancellation or replacement shall not cause the Performance Award to fail to meet the requirements of Section 162(m) of the Code.

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

(c)    The maximum Performance Award that may be granted to any Participant for any one-year Performance Period shall not exceed $20,000,000 or 400,000 shares of Common Stock (the “Annual Maximum”).  The maximum Performance Award that may be granted to any Participant for a Performance Period greater than one year shall not exceed the Annual Maximum multiplied by the number of full years in the Performance Period. 

(d)    In the event an award intended to comply with Section 162(m) of the Code, all terms of the award and any accompanying Committee action shall be interpreted in a manner that results in the award complying with that section, and, to the extent a Plan term or Committee action is inconsistent with Section 162(m), the Plan term or Committee action shall be deemed modified (or, if necessary, treated as void) in a manner that results in compliance with Section 162(m).

ARTICLE K -- Adjustments.

In the event of any future reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, share exchange, reclassification, distribution, spin-off, split-off or other change affecting the corporate structure, capitalization or Common Stock of the Company occurring after the date of approval of the Plan by the Company's shareholders, (i) the amount of shares authorized to be issued under the Plan; (ii) the number of shares and/or the exercise prices covered by outstanding stock options, stock appreciation rights or RSUs; and (iii) the maximum award limits set forth in Article D, Article G, Paragraph 4 and Article J, Paragraph 2(c) shall be adjusted appropriately and equitably to prevent dilution or enlargement of rights under the Plan.  Following any such change, the term "Common Stock" shall be deemed to refer to such class of shares or other securities as may be applicable.

ARTICLE L -- Additional Provisions and Definitions.

1.    The Plan may not be amended without the express authority of the Committee or the Board. 

The Board may, at any time, repeal the Plan or may amend it except that no such amendment may amend this paragraph, increase the total aggregate number of shares subject to the Plan or the share counting ratios set forth in Article D, Paragraph 3, reduce the price at which stock options, stock appreciation rights, RSUs or shares of Common Stock may be granted or exercised, or alter the class of employees eligible to receive awards under the Plan.  Participants and the Company shall be bound by any such amendments as of their effective dates, but if any outstanding stock options, stock appreciation rights, RSUs or shares of Common Stock are materially affected adversely, notice thereof shall be given to the Participants holding such stock options and stock appreciation rights and such amendments shall not be applicable without such Participant’s written consent.  If the Plan is repealed in its entirety, all theretofore granted unexercised stock options or stock appreciation rights shall continue to be exercisable in accordance with their terms and RSUs, Performance Awards and shares  of Common Stock subject to conditions or restrictions granted pursuant to the Plan shall continue to be subject to such conditions or restrictions.

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

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

4.    Notwithstanding anything to the contrary in the Plan, the following provisions shall apply in connection with a “Change in Control” (as defined in Paragraph (c) below).  

(a)    Awards Assumed by Successor  

(i)    Upon the occurrence of a Change in Control, any awards made under the Plan that are Assumed (as defined in Paragraph (v) below) by the entity effecting the Change in Control shall vest and be exercisable in accordance with the terms of the original grant unless, during the three (3) year period commencing on the date of the Change in Control (“Post-CIC period”):

		
	(A)
	Participant is involuntarily terminated for reasons other than for Cause (as defined in Paragraph (iii) below); or

		
	(B)
	Participant terminates his or her employment for Good Reason (as defined in Paragraph (iv) below).

(ii)    Any Participant whose employment is terminated as described in Paragraphs 4(a)(i)(A) or 4(a)(i)(B) above shall be deemed a Special Separation, and any outstanding stock options and stock 

appreciation rights shall become fully vested and exercisable and any restrictions that apply to awards made pursuant to the Plan shall lapse on the date of termination and provided that any Participant who terminates his or her employment for Good Reason must:

(A)    provide the Company with a written notice of his her or her intent to terminate employment for Good Reason within sixty (60) days of Participant becoming aware of the circumstances giving rise to Good Reason; and
(B)    allow the Company thirty (30) days to remedy such circumstances to the extent curable.

(iii)     Solely for purposes of this Article L, Paragraph 4 (and not for Article L, Paragraph 5), “Cause” shall mean:

(A)    Participant’s conviction of or plea of guilty or nolo contendere, or no contest to, a felony; 
(B)    Participant’s violation of a material Company policy, which violation continues after written notice from the Company; or 
(C)    Participant’s bad faith and/or willful failure or refusal to perform services.

(iv)     Solely for purposes of this Article L, Paragraph 4, “Good Reason” shall mean the occurrence, during the Post-CIC Period, of any of the following without Participant’s written consent, in each case, when compared to the arrangements in effect immediately prior to the Change in Control:

(A)    a material reduction in Participant’s total compensation; 
(B)    a material reduction in Participant’s annual or long-term incentive opportunities (including a material adverse change in the method of calculating Participant’s annual or long-term incentives);
(C)    a material diminution in Participant’s duties, responsibilities or authority; or 
(D)    a relocation of more than 50 miles from Participant’s office location.

     (v)     For purposes of this Article L, Paragraph 4, an award shall be considered assumed (“Assumed”) if each of the following conditions are met:  

		
	(A) 
	stock options and stock appreciation rights are converted into a replacement award in a manner that complies with Section 409A of the Code;      

		
	(B) 
	RSUs and restricted stock awards are converted into a replacement award covering a number of shares of the entity effecting the Change in Control (or a successor or parent corporation), as determined in a manner substantially similar to the treatment of an equal number of shares of the Company common stock covered by the award; provided that to the extent that any portion of the consideration received by holders of the Company common stock in the Change Control transaction is not in the form of the common stock of such entity (or a successor or parent corporation), the number of shares covered by the replacement award shall be based on the average of the high and low selling prices of the common stock of such entity (or a successor or parent corporation) on the established stock exchange on the trading day immediately preceding the date of the Change in Control;  

		
	(C) 
	the replacement award contains provisions for scheduled vesting and treatment on termination of employment (including the definition of Cause and Good Reason) that are no less favorable to Participant than the underlying award being replaced, and all other terms of the replacement award (other than the security and number of shares represented by the replacement award) are substantially similar to the 

underlying award; and
		
	(D) 
	the security represented by the replacement award is of a class that is publicly held and widely traded on an established stock exchange.  

(b)    Awards Not Assumed by Successor  

(i) Upon the occurrence of a Change in Control, awards under the Plan which are not Assumed by the person(s) or entity(s) effecting the Change in Control shall become fully vested and exercisable on the date of the Change in Control and any restrictions that apply to such awards shall lapse.  

(ii) Stock Options and Stock Appreciation Rights. For each stock option and stock appreciation right, Participant shall receive a payment equal to the difference between the consideration (consisting of cash or other property (including securities of a successor or parent corporation)) received by holders of Common Stock in the Change in Control transaction and the exercise price of the applicable stock option or stock appreciation right, if such difference is positive. Such payment shall be made in the same form as the consideration received by holders of Common Stock.  Any stock options or stock appreciation rights with an exercise price that is higher than the per share consideration received by holders of Common Stock in connection with the Change in Control shall be cancelled for no additional consideration. 

(iii) Restricted Stock and RSUs. The Participant shall receive the consideration (consisting of cash or other property (including securities of a successor or parent corporation)) which such Participant would have received in the Change in Control transaction had he or she been, immediately prior to such transaction, a holder of the number of shares of the Common Stock equal to the number of RSUs and/or shares of restricted stock covered by the award.  

(iv)  The payments contemplated by clauses (ii) and (iii) of this Paragraph 4(b) shall be made at the same time as consideration is paid to the holders of the Common Stock in connection with the Change in Control.

(c)    For purposes of the Plan, a “Change in Control” shall mean the occurrence of any of the following:

(i)    An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the 1934 Act), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent (20%) or more of the then outstanding shares or the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred pursuant to this Paragraph 4(c),  shares or Voting Securities which are acquired in a "Non-Control Acquisition"  shall not constitute an acquisition which would cause a Change in Control.  A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a "Related Entity"), (ii) the Company or any Related Entity, or (iii) any Person in connection with a "Non-Control Transaction" (as defined in Paragraph 4(c)(iii)(A)(1) below);
(ii)  The individuals who, as of October 14, 2009 are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least half of the members of the Board; or, following a Merger (as hereinafter defined) which results in a Parent Corporation (as defined in Paragraph 4(c)(iii)(A)(1) below), the board of directors of the ultimate Parent Corporation; provided, however, that if the 

election, or nomination for election by the Company's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or 
(iii)  The consummation of:
		
	(A)
	A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued (a “Merger”), unless such Merger is a "Non-Control Transaction."  A "Non-Control Transaction" shall mean a Merger where:

		
	(1)
	the stockholders of the Company, immediately before such Merger own directly or indirectly immediately following such Merger at least fifty percent (50%) of the combined voting power of the outstanding voting securities of (x) the corporation resulting from such Merger (the "Surviving Corporation") in substantially the same proportion as their ownership immediately prior to such merger if fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly by another Person (a "Parent Corporation"), or (y) if there is one or more Parent Corporations, the ultimate Parent Corporation; 

		
	(2)
	the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger constitute at least half of the members of the board of directors of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if there is one or more Parent Corporations, the ultimate Parent Corporation; and

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

(B)    Shareholder approval of a complete liquidation or dissolution of the Company; or
		
	(C)
	Shareholder approval of the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Related Entity or under conditions that would constitute a Non-Control Transaction with the disposition of assets being regarded as a Merger for this purpose or the distribution 

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

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

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

ARTICLE M -- Consent.

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

ARTICLE N -- Purchase of Shares or Stock Options.

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

The Plan will terminate on October 13, 2019 unless a different termination date is fixed by the shareholders or by action of the Board of Directors, but no such termination shall affect the prior rights 

under the Plan of the Company (or any subsidiary) or of anyone to whom stock options or stock appreciation rights were granted prior thereto or to whom shares or RSUs have been granted prior to such termination.

ARTICLE P – Compliance with Section 409A of the Internal Revenue Code.

To the extent applicable, it is intended that the Plan and any awards made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion and/or 20% additional tax provisions of Section 409A(a)(1) of the Code do not apply to the Participants.  The Plan and any awards made hereunder shall be administered in a manner consistent with this intent.  Any reference in the Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. 

Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under the Plan and awards hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under the Plan and awards hereunder may not be reduced by, or set-off against, any amount owing by a Participant to the Company or any of its Affiliates. 

If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest, as soon as practicable after the end of such six-month period. 

Notwithstanding any provision of the Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to the Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, a Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with the Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.
 
ADDITIONAL INFORMATION 

		
	1.
	Shares Awarded as a Portion of Remuneration

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

2.    U.S. Tax Effects

The following explanation of the U.S. tax effects of awards under the Plan is provided for general informational purposes and is not intended as individual tax guidance for the recipients of awards.  It is each recipient's responsibility to check with his or her personal tax adviser as to the tax effects and proper handling of stock options, stock appreciation rights, restricted stock, restricted stock units and Common Stock acquired.  The discussion below relates specifically to the U.S. tax consequences of equity awards.  In addition to U.S. tax consequences, the awards may be subject to tax by the recipient’s country of residence or citizenship at the same time or at a different time than the awards would be subject to tax by the U.S.  Recipients who may be subject to tax in a non-U.S. jurisdiction should consult their personal tax advisers regarding the taxation of awards under the Plan.

Nonstatutory Stock Options

Nonstatutory stock options are not taxable to the optionee upon grant, but will result in taxable ordinary income to the optionee at the date of exercise of the option. The taxable amount will be equal to the difference between the market price of the optioned shares on the date of exercise and the option price.  This amount is treated as a tax deductible expense to the Company at the time of the exercise of the option.  Any appreciation in the value of the stock after the date of exercise is considered a long-term or short-term capital gain to the optionee depending on whether or not the stock was held for the appropriate holding period prior to sale.

Incentive Stock Options

Incentive Stock options are generally not taxable to the optionee upon grant or exercise if the optionee has continuously been an employee from the time the option has been granted until at least three months before it is exercised.  However, the spread at exercise is an "adjustment" item for alternative minimum tax purposes.

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

Stock Appreciation Rights

Like nonstatuory options, stock appreciation rights are not taxable to the recipient upon grant, but result in taxable ordinary income as of the date of exercise equal to the amount paid to the recipient, i.e., the difference between the grant price and the value of the shares on the date of exercise.  This amount is treated as a tax deductible expense to the Company at the time of the exercise of the stock appreciation right.

Restricted and Unrestricted Stock

Restricted stock is generally taxable as ordinary income in the first taxable year in which the recipient's rights to the stock are transferable or are not subject to a substantial risk of forfeiture, whichever is applicable. Recipients may also elect to include the income in their tax returns for the taxable year in which they receive the shares by filing an election to do so with the appropriate office of the Internal Revenue Service within 30 days of the date the shares are transferred to them.

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

Unrestricted stock is taxable as ordinary income when it is granted to the recipient.  Dividends paid on restricted stock during the restricted period are taxable as ordinary income as paid.  The Company is entitled to a deduction for restricted or unrestricted stock in the year the recipient is subject to ordinary income tax with respect to the stock.

Restricted Stock Units
    
Restricted stock units are generally taxable to the recipient as ordinary income when stock or cash is payable with respect to the restricted stock units, even if the restricted stock units become vested at an earlier date.  The Company is generally entitled to a deduction at the time the recipient is subject to tax with respect to the grant.  Dividend equivalents with respect to restricted stock units are generally accumulated and paid to the recipient when the stock or cash payable under the restricted stock units become payable, and the dividend equivalents are taxable at the time of such payment. 
    

Section 162(m)

Under Section 162(m) of the Code, compensation paid to certain executives in excess of $1 million for any taxable year is not deductible unless an exception to such rule is applicable.  Accordingly, in some circumstances the Company’s deduction with respect to awards under the Plan may be limited by Section 162(m).

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

3.    Employee Retirement Income Security Act of 1974

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

4.    Incorporation of Certain Documents by Reference

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

		
	1.
	The Company's Annual Report on Form 10-K for the most recent fiscal year ended June 30;

		
	2.
	The Company's Quarterly Report on Form 10-Q for the most recent quarter(s); and

		
	3.
	All other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 

1934 Act after the date of this Prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold.

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

5.    Additional Information

Additional information about the Plan and its administrators may be obtained from Mr. E.J. Wunsch, Assistant Secretary, The Procter & Gamble Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202, (513) 983-4370.KLAC 10Q 12/31/11 EX10.44

KLA-TENCOR 
 
EXECUTIVE DEFERRED SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 2, 2011    

	
			
	ARTICLE I
	DEFINITIONS
	1

	1.1
	“Account”
	1

	1.2
	“Affiliated Company”
	2

	1.3
	“Beneficiary”
	2

	1.4
	“Board of Directors”
	2

	1.5
	“Bonus”
	2

	1.6
	“Code”
	2

	1.7
	“Committee”
	2

	1.8
	“Company”
	2

	1.9
	“Company Contribution”
	2

	1.10
	“Credited Investment Return (Loss)”
	2

	1.11
	“Deferral Amount”
	2

	1.12
	“Deferral Election”
	2

	1.13
	“Early Termination”
	2

	1.14
	“Effective Date”
	2

	1.15
	“Eligible Employee”
	3

	1.16
	“Employee”
	3

	1.17
	“Employer Group”
	3

	1.18
	“Extended Deferral Election”
	3

	1.19
	“Hardship”
	3

	1.20
	“KLA”
	3

	1.21
	“Normal Termination”
	3

	1.22
	“Outside Director”
	3

	1.23
	“Participant”
	3

	1.24
	“Participating Employer”
	4

	1.25
	“Performance Period”
	4

	1.26
	“Plan”
	4

	1.27
	“Plan Year”
	4

	1.28
	“Prior Plans”
	4

	1.29
	“Prior Plan Company Contribution”
	4

	1.30
	“Separation from Service”
	4

	1.31
	“Specified Employee”
	4

	1.32
	“Supplemental Executive Benefits”
	5

	1.33
	“Tencor”
	5

	1.34
	“Trust”
	5

	1.35
	“Trust Agreement”
	5

	1.36
	“Trustee”
	5

	1.37
	“Year of Service”
	5

	 
	 
	 

	ARTICLE II

	ELIGIBILITY
	5

	2.1
	Eligible Persons
	5

	2.2
	Continuation of Participation
	6

	2.3
	Resumption of Participation Following Separation from Service
	6

	2.4
	Cessation or Resumption of Participation Following a Change in Status
	6

i

	
			
	ARTICLE III
	SALARY, COMMISSION AND BONUS REDUCTION CONTRIBUTIONS; COMPANY CONTRIBUTIONS
	6

	3.1
	Salary and Commission Deferrals
	6

	3.2
	Bonus Deferrals
	7

	3.3
	Requirements for Deferral Elections
	9

	3.4
	Limitations on Deferrals
	10

	3.5
	Deferral Election Subaccounts
	10

	3.6
	Subsequent Distribution
	10

	3.7
	Company Contributions
	10

	 
	 
	 

	ARTICLE IV
	CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS
	10

	4.1
	Accounts
	10

	4.2
	Credited Investment Return (Loss)
	11

	4.3
	Deemed Investment Options
	11

	 
	 
	 

	ARTICLE V
	DISTRIBUTION OF PRE-2005 DEFERRED ACCOUNT
	11

	5.1
	Distribution of Benefits upon Normal Termination
	11

	5.2
	Distribution of Benefits upon Early Termination
	12

	5.3
	Election of Form of Benefit Payment
	12

	5.4
	Payment to Beneficiary
	12

	5.5
	Early Withdrawals
	13

	5.6
	Automatic Lump-Sum Distribution for Accounts below $25,000
	13

	5.7
	Valuation
	14

	5.8
	Tax Withholding
	14

	5.9
	Outside Directors
	14

	 
	 
	 

	ARTICLE VI
	DISTRIBUTION OF 2005-2007 DEFERRED ACCOUNT
	14

	6.1
	Special Distribution Election
	14

	6.2
	Commencement Date
	14

	6.3
	Method of Distribution
	15

	6.4
	Continuing Elections
	15

	6.5
	Tax Withholding
	15

	 
	 
	 

	ARTICLE VII
	DISTRIBUTION OF POST-2007 DEFERRAL ELECTION SUBACCOUNTS
	15

	7.1
	Normal Distribution
	15

	7.2
	Tax Withholding
	16

	7.3
	Special Distribution Election
	16

	 
	 
	 

	ARTICLE VIII
	PROVISIONS APPLICABLE TO 2005-2007 DEFERRED ACCOUNTS AND POST-2007 DEFERRAL ELECTION SUBACCOUNTS
	16

	8.1
	Extended Deferral Election
	16

	8.2
	Distribution Commencement Date
	17

	8.3
	Hardship Withdrawal
	17

	8.4
	Death Before Full Distribution
	17

	8.5
	Valuation
	17

ii

	
			
	8.6
	Small Account Balances
	17

	8.7
	Mandatory Deferral of Distribution
	18

	 
	 
	 

	ARTICLE IX
	BENEFICIARIES
	18

	9.1
	Designation of Beneficiary
	18

	9.2
	No Designated Beneficiary
	18

	 
	 
	 

	ARTICLE X
	OBLIGATION TO PAY SUPPLEMENTAL EXECUTIVE BENEFITS
	18

	10.1
	Benefits Paid From Trust
	18

	10.2
	Trustee Investment Discretion
	18

	10.3
	No Secured Interest
	18

	 
	 
	 

	ARTICLE XI
	ADMINISTRATION
	18

	11.1
	Administration of the Plan
	18

	11.2
	Indemnification
	19

	 
	 
	 

	ARTICLE XII
	MISCELLANEOUS
	19

	12.1
	No Employment Right
	19

	12.2
	Amendment/Termination
	19

	12.3
	Applicable Law
	20

	12.4
	Satisfaction of Claims
	20

	12.5
	Alienation of Benefits
	20

	12.6
	Expenses
	21

	12.7
	Successors and Assigns
	21

	12.8
	Reimbursement of Costs
	21

	12.9
	Arbitration
	21

	12.10
	Entire Agreement
	21

	 
	 
	 

	ARTICLE XIII
	BENEFIT CLAIMS
	21

	13.1
	Claims Procedure
	21

	13.2
	Denial of Benefits
	21

	13.3
	Review
	22

	13.4
	Denial of Appeal
	22

	 
	 
	 

	APPENDIX I
	 
	23

	 
	 
	 

	SCHEDULE I
	 
	24

iii

KLA-TENCOR EXECUTIVE DEFERRED SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 2, 2011
This KLA-Tencor Executive Deferred Savings Plan was originally adopted effective October 1, 1997 to amend, restate and consolidate in their entirety the KLA Instruments Corporation Supplemental Executive Benefit Plan and the Tencor Instruments Amended and Restated Deferral Plan. The Plan was previously amended and restated, effective January 1, 2009, to conform the provisions of the Plan to the applicable requirements of Section 409A of the Internal Revenue Code and the Treasury Regulations issued thereunder and thereby bring the Plan into documentary compliance with those requirements. The Plan as so amended and restated has continued (and shall continue) to function solely as a so-called “top hat” plan of deferred compensation subject to the provisions of the Employee Retirement Income Security Act of 1974 (as amended from time to time) applicable to such a plan.  The Plan is hereby amended and restated, effective November 2, 2011, to make certain typographical corrections and to update certain references to plans and compensation structures that are no longer applicable.
ARTICLE I
DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following definitions shall govern the Plan:
1.1    “Account” shall mean the following accounts maintained for each Participant on the books and records of the Participating Employer to which there shall be credited the items of compensation deferred by such Participant under the Plan:
(a)    The Pre-2005 Deferred Account to which there shall be credited the following items of compensation which were deferred and vested under the Plan as of December 31, 2004: the Participant’s Deferral Amounts pursuant to Article III, any Company Contributions and any Prior Plan Company Contributions.  Such account shall be subject to adjustment from time to time to reflect the Credited Investment Return (Loss) determined under Article IV, any distributions made to Participant and any charges which may be imposed on such account pursuant to the terms of the Plan.
(b)    The 2005-2007 Deferred Account to which there shall be credited the following items of compensation which were deferred under the Plan after December 31, 2004 but prior to January 1, 2008 or which were deferred under the Plan prior to January 1, 2005 but were not vested as of December 31, 2004: the Participant’s Deferral Amounts pursuant to Article III and any Company Contributions.  Such account shall be subject to adjustment from time to time to reflect the Credited Investment Return (Loss) determined under Article IV, any distributions made to Participant and any charges which may be imposed on such account pursuant to the terms of the Plan.
(c)    The Post-2007 Plan Year Account which will be divided into a series of Deferral Election subaccounts (each, a “Subaccount”), one for each post-2007 Plan Year in which the Participant defers one or more of the following items of compensation earned for services rendered the Participating Employers after December 31, 2007: the Participant’s Salary and Commission Deferral Amounts pursuant to Article III, any Bonuses attributable to Performance Periods commencing after December 31, 2007 and any Company Contributions.  
Each Account or Subaccount shall be subject to adjustment from time to time to reflect the Credited Investment Return (Loss) determined for that Account or Subaccount pursuant to Article IV, any 

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distributions made to the Participant from that Account or Subaccount and any charges which may be imposed on such Account or Subaccount pursuant to the terms of the Plan.
1.2    “Affiliated Company” shall mean (i) the Company and (ii) each member of the group of commonly controlled corporations or other businesses that include the Company, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder. 
1.3    “Beneficiary” means any of the persons, trusts or other entities which a Participant shall, in his or her most recent written form of beneficiary designation filed with the Company, have designated as a beneficiary to receive benefits which may become payable hereunder following Participant’s death, as provided under Articles V and VIII.
1.4    “Board of Directors” or “Board” means the Company’s Board of Directors.
1.5    “Bonus” means the annual, semi-annual or quarterly bonus which the Participant may earn based on the attainment of performance objectives established for a designated Performance Period. 
1.6    “Code” means the Internal Revenue Code of 1986, as amended from time to time.
1.7    “Committee” means an independent committee of two or more individuals appointed by the Board to administer this Plan, including the selection of Participants, the administration of the Deferral Election process and the designation of the available investment funds, and to take such other actions as may be specified herein.
1.8    “Company” means KLA-Tencor Corporation, a Delaware corporation, and any successor or assignee corporation, whether by way of merger, acquisition or other reorganization.
1.9    “Company Contribution” means a contribution made on behalf of a Participant by the Company pursuant to Section 3.7 hereof.
1.10    “Credited Investment Return (Loss)” means the notional investment return credited to the Participant’s Accounts or Deferral Election Subaccounts pursuant to Article IV.
1.11    “Deferral Amount” means the Salary and/or Commission Deferral Amount and the Bonus Deferral Amount which the Participant elects to contribute for Supplemental Executive Benefits pursuant to the Plan.  For Participants who are non-employee Board members, the Deferral Amount means the retainer and meeting fees earned for service as a Board member or a member of one or more Board committees which the Participant elects to contribute for Supplemental Executive Benefits pursuant to the Plan.
1.12    “Deferral Election” means the irrevocable election filed by the Participant under Article III pursuant to which a portion of his or her salary, commissions and Bonus for each Plan Year is to be deferred under the Plan. 
1.13    “Early Termination” means, with respect to any Pre-2005 Deferred Account, the Participant’s termination of Employee status other than pursuant to a Normal Termination. 
1.14    “Effective Date” means, for this Amendment and Restatement, November 2, 2011.

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1.15    “Eligible Employee” means any Employee who is either a highly compensated employee of his or her Participating Employer or part of its management personnel, as determined pursuant to guidelines established from time to time by the Committee.  In no event shall any of the following individuals be deemed to be Eligible Employees:
(i)    an Employee who is not on the United States payroll of a Participating Employer, 

(ii)    any individual classified as an independent contractor or consultant or as a temporary employee, or 

(iii)    any individual who has ceased Employee status or otherwise incurred a Separation from Service. 

1.16    “Employee” means any person in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. An individual shall be deemed to continue in Employee status for so long as he or she continues in the employee of at least one member of the Employer Group.
1.17    “Employer Group” means (i) the Company and (ii) each of the other members of the controlled group that includes the Company, as determined in accordance with Sections 414(b) and (c) of the Code, except that (A) in applying Sections 1563(1), (2) and (3) of the Code for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and (B) in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.4.14(c)-2 of the Treasury Regulations.
1.18    “Extended Deferral Election” shall mean a Participant’s election, made in accordance with the terms and conditions of Section 8.1 of the Plan, to defer the distribution of any of his or her Post-2004 Accounts or Deferral Election Subaccounts for an additional period of at least five (5) years measured from the date or event on which that particular Account or Subaccount would otherwise first become due and payable under the Plan in the absence of such election.
1.19    “Hardship” means an “unforeseeable emergency,” as defined in Section 1.409A-3(i)(3)(i) of the Treasury Regulations (as it may be amended from time to time), the text of which (as of the Effective Date) is set forth in Appendix I attached hereto.
1.20    “KLA” means KLA Instruments Corporation or any of its subsidiaries.
1.21    “Normal Termination” means, with respect to any Pre-2005 Deferred Account, the Participant’s termination of Employee status on or after (i) the attainment of age fifty-five (55) and the completion of at least five (5) Years of Service or (ii) the completion of at least fifteen (15) Years of Service and means, with respect to any other Account or Subaccount, the Participant’s Separation from Service on or after the attainment of age fifty-five (55) and the completion of at least five (5) Years of Service.
1.22    “Outside Director” means any member of the Board of Directors who is not an Employee.
1.23    “Participant” means (i) an Eligible Employee selected for participation in the Plan in accordance with the provisions of Section 2.1 or (ii) any Outside Director electing to participate in the Plan.

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1.24    “Participating Employer” means, with respect to each Participant, the Affiliated Company employing that individual which has adopted the Plan as a deferred compensation program for one or more of its Employees. The Participating Employers for the 2007 Plan Year and as of the Effective Date are set forth in attached Schedule I. Any additional Affiliated Companies which may from time to time become Participating Employers shall be listed in revised Schedule I.
1.25    “Performance Period” means, with respect to any annual, semi-annual or quarterly Bonus that is tied to the attainment of performance objectives, the period over which those performance objectives are to be measured for purposes of determining the amount of such Bonus (if any) to be earned by the Participant for service during that period. Accordingly, the Performance Period may be coincident with the Company’s fiscal year or with one or more semi-annual or quarterly periods within such fiscal year.
1.26    “Plan” means this KLA-Tencor Executive Deferred Savings Plan, as it may be amended from time to time.
1.27    “Plan Year” means, effective January 1, 2005, the 12-month period coincidental with each calendar year.  
1.28    “Prior Plans” means the KLA Instruments Corporation Supplemental Executive Benefit Plan and the Tencor Instruments Amended and Restated Deferral Plan.
1.29    “Prior Plan Company Contribution” means the amount, if any, which the Company contributed on behalf of Participants for Supplemental Executive Benefits under the Prior Plans. Any Prior Plan Company Contributions that were credited to Participant Accounts as of October 1, 1997 and had not already been forfeited as of such date became 100% vested on that date.
1.30    “Separation from Service” means the Participant’s cessation of Employee status by reason of his or her death, retirement or termination of employment.  The Participant shall be deemed to have terminated employment for such purpose at such time as the level of his or her bona fide services to be performed as an Employee (or non-employee consultant) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter period for which he or she may have rendered such service). Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Code Section 409A. In addition to the foregoing, a Separation from Service will not be deemed to have occurred while an Employee is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six (6) months or any longer period for which such Employee’s right to reemployment with one or more members of the Employer Group is provided either by statute or contract; provided, however, that in the event of an Employee’s leave of absence due to any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than six (6) months and that causes such individual to be unable to perform his or her duties as an Employee, no Separation from Service shall be deemed to occur during the first twenty-nine (29) months of such leave.  If the period of leave exceeds six (6) months (or twenty-nine (29) months in the event of disability as indicated above) and the Employee’s right to reemployment is not provided either by statute or contract, then such Employee will be deemed to have a Separation from Service on the first day immediately following the expiration of such six (6)-month or twenty-nine (29)-month period.
1.31    “Specified Employee” means any individual who is, at any time during the twelve (12)-month period ending with the identification date specified below, a “key employee” (within the meaning of that term under Code Section 416(i)), as determined by the Committee in accordance with the applicable 

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standards of Code Section 409A and the Treasury Regulations thereunder and applied on a consistent basis for all non-qualified deferred compensation plans of the Employer Group subject to Code Section 409A.  The Specified Employees shall be identified by the Committee as of December 31 of each Plan Year and shall have that status for the twelve (12)-month period beginning on the April 1 subsequent to such determination by the Committee. 
1.32     “Supplemental Executive Benefits” means the benefits payable to the Participant and/or his or her Beneficiary under this Plan.
1.33    “Tencor” means Tencor Instruments or any of its subsidiaries.  
1.34    “Trust” means the legal entity created by the Trust Agreement.
1.35    “Trust Agreement” means that trust agreement entered into between the Company and Wells Fargo Bank.
1.36    “Trustee” means the original Trustee(s) named in the Trust Agreement and any duly appointed successor or successors thereto.
1.37    “Year of Service” means each twelve (12) consecutive month period of Employee service measured from the date on which the Participant initially became a Company, KLA or Tencor employee, and successive anniversaries thereof, during which the Participant continues in Employee status, including leaves of absence approved by the Company or other member of the Employer Group.  Should the Participant cease Employee status and then return to such status, the following break in service provisions shall be in effect:
(i)    The period of Employee service following such break shall be measured from the date of the Participant’s return and shall be aggregated with the period of Employee service he or she rendered prior to the break to determine his or her total Years of Service.  
(ii)    The Participant shall not receive any Year of Service credit for the period of the break in service if the break is of a duration of twelve (12) months or more. 
ARTICLE II
ELIGIBILITY
2.1    Eligible Persons.  The Committee shall have absolute discretion in selecting the Eligible Employees who are to participate in the Plan for each Plan Year.  An Eligible Employee selected for participation for any Plan Year must, in order to participate in the Plan for that year, file his or her Deferral Election on or before the last day of the immediately preceding Plan Year. However, an Eligible Employee who is first selected for participation in the Plan after the start of a Plan Year and who has not otherwise been eligible for participation in any other non-qualified elective account balance plan subject to Code Section 409A and maintained by one or more Affiliated Companies will have until the thirtieth (30th) day following the date he or she is so selected in which to file his or her Deferral Election for that Plan Year. Individuals who are selected for participation in the Plan shall be promptly notified by the Company of their eligibility to participate in the Plan.  Outside Directors shall automatically be eligible to participate in the Plan and must make their Deferral Elections in accordance with the same requirements set forth above for Employee Participants. Notwithstanding the foregoing, Participants receiving benefits pursuant to the Executive Severance Plan, the 2010 Executive Severance Plan, the Employee Level E08 and Below Severance Benefits Plan, or the Employee Director Level and Above Severance Benefits Plan are not eligible 

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to participate in the Plan and are deemed to have ceased Employee status for Plan purposes.
2.2    Continuation of Participation. Every Eligible Employee who becomes a Participant may continue to file Deferral Elections under the Plan for one or more subsequent Plan Years until the earliest of (i) his or her exclusion from the Plan upon written notice from the Committee, (ii) his or her cessation of Eligible Employee status or (iii) the termination of the Plan.  The Committee shall have complete discretion to exclude one or more Eligible Employees from Participant status for one or more Plan Years as the Committee deems appropriate. However, no such exclusion authorized by the Committee shall become effective until the first day of the first Plan Year coincident with or next following the date of the Committee’s  determination to exclude the individual from such participation.  If any Eligible Employee is excluded from Participant status for one or more Plan Years, then such individual shall not be entitled to defer any part of his or her salary, Bonus or commissions for those Plan Years. 
2.3    Resumption of Participation Following Separation from Service.  If a Participant ceases to be an Eligible Employee or an Outside Director due to a Separation from Service and thereafter returns to service with the Company or any other Participating Employer, such individual will again become a Participant as of the first day the first Plan Year coincident with or next following the date on which he or she resumes Eligible Employee or Outside  Director status, provided such individual files a timely a Deferral Election under Article III with respect to that Plan Year.  However, a Participant who returns to Eligible Employee or Outside Director status after a Separation from Service of more than twenty-four (24) months during which he or she was not eligible to defer any compensation under this Plan or any other non-qualified elective account balance plan subject to Code Section 409A and maintained by one or more Affiliated Companies shall, upon resumption of such service, be permitted to make a Deferral Election under Article III in accordance with the requirements applicable to a newly-selected Participant.  Notwithstanding the foregoing provisions of this Section 2.3, no returning Eligible Employee shall be eligible to participate in the Plan if the Committee determines to exclude such individual from participation on or before his or her resumption of service.
2.4    Cessation or Resumption of Participation Following a Change in Status.  If any Participant continues in the service of the Employer Group but ceases to be an Eligible Employee or Outside Director, the individual will continue to be a Participant until the entire amount of his or her Accounts distributed.  However, the individual will not be entitled to make any Deferral Elections with respect to compensation earned for the period that he or she is not an Eligible Employee or Outside Director. In the event that the individual subsequently resumes Eligible Employee or Outside Director status, he or she will again become a Participant as of the first day the first Plan Year coincident with or next following the date of his or her resumption of Eligible Employee or Outside Director status, provided such individual timely files a Deferral Election under Article III with respect to that Plan Year.  However, an Eligible Employee shall not be eligible to participate in the Plan upon his or her resumption of Eligible Employee status if the Committee determines to exclude such individual from participation on or before such resumption of Eligible Employee status. 
ARTICLE III
SALARY, COMMISSION AND BONUS REDUCTION 
CONTRIBUTIONS; COMPANY CONTRIBUTIONS
3.1    Salary and Commission Deferrals.
(a)    Each Employee Participant shall have the right to file a Deferral Election to defer a portion of the salary and/or commissions earned by such Participant for service as an Employee during the 

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Plan Year for which the Deferral Election is made. Each Deferral Election must be made by a written or electronic notice filed with the Committee or its designate in which the Participant shall indicate the percentage (up to one hundred percent (100%)) of the salary and/or commissions to be deferred. The notice must be filed on or before the last day of the calendar year immediately preceding the start of the Plan Year for which the salary and/or commissions subject to that election are to be earned.  However, an Eligible Employee who is first selected for participation in the Plan after the start of a Plan Year and who has not otherwise been eligible for participation in any other non-qualified elective account balance plan subject to Code Section 409A and maintained by one or more Affiliated Companies must file his or her initial Deferral Election no later than thirty (30) days after the date he or she is so selected.  Such Deferral Election shall only be effective for salary and/or commissions attributable to Employee service for the period commencing with the first day of the first calendar month next following the filing of such Deferral Election and ending with the close of such Plan Year.  
(b)    For purposes of determining the compensation which may be deferred pursuant to a Deferral Election under Section 3.1(a), the following provisions shall be in effect:
(i)    The term “salary” shall mean the Participant’s base salary, and the term “commissions” shall mean the Participant’s sales commissions. 
(ii)    For any Deferral Election made with respect to commissions, the commissions will be deemed to be earned as a result of the Participant’s service in the Plan Year in which the customer payments relating to the sales generating those particular commissions are made to the Participating Employer.  Accordingly, such commissions shall only be deferred under the Plan to the extent the Participant has a Deferral Election covering commissions for that Plan Year. 
(iii)    For purposes of any Deferral Election made by an Outside Director, salary shall mean the compensation payable to the Outside Director for service as a member of the Board and any Board committee and/or for attendance at meetings of the Board or any Board committee on which such Outside Director serves. 
(c)    The salary and commissions deferred for each Plan Year shall be designated the “Salary and Commission Deferral Amount” for that Plan Year.  The Salary and Commission Deferral Amount shall not be paid to the Participant, but shall be withheld from the Participant’s salary and/or commissions, and an amount equal to the Salary and Commission Deferral Amount shall be credited to the Participant’s Deferral Election Subaccount for the Plan Year within ten (10) business days following the date on which such deferred amount would otherwise have been paid to the Participant in the absence of the Deferral Election.  The same procedure shall be utilized for crediting any fees which an Outside Director elects to defer under the Plan, except that the deferred fees shall be credited to his or her Deferral Election Subaccount within thirty (30) business days following the date on which those deferred fees would otherwise have been paid to the Outside Director in the absence of the Deferral Election.
(d)    The Deferral Election for a particular Plan Year shall become irrevocable as of the first day of that Plan Year (or any later day the Deferral Election for such Plan Year may be filed under Section 3.1(a) by a newly-eligible Participant), and no subsequent changes may be made to that Deferral Election once it becomes irrevocable. 
3.2    Bonus Deferrals.
(a)    The Committee shall determine the Bonuses eligible for deferral under the Plan.  Each Employee Participant shall have the right to file a separate Deferral Election to defer a portion of each 

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eligible Bonus earned by such Participant for any Performance Period commencing in the Plan Year for which the Deferral Election is made. Each Deferral Election must be made by a written or electronic notice filed with the Committee or its designate in which the Participant shall indicate the percentage (up to one hundred percent (100%)) of the Bonus to be deferred. The notice must be filed on or before the last day of the Plan Year immediately preceding the Plan Year in which the Performance Period for the Bonus subject to that election is to commence.  However, the following special rules shall be in effect for any Deferral Elections with respect to such Bonuses:
(i)    The Committee may allow a Deferral Election with respect to a Bonus which is based on a Performance Period of twelve (12) months or more and which qualifies as performance-based compensation in accordance with the standards and requirements set forth in Section 1.409A-1(e) of the Treasury Regulations to be made by a Participant after the start of the Performance Period to which that Bonus pertains but not later than by a designated date that is at least six (6) months prior to the end of that Performance Period; provided, however, that such Participant otherwise satisfies the applicable service requirements of Section 1.409A-2(a)(8) of the Treasury Regulations. Accordingly, for a Performance Period coincidental with the Company’s July 1 to June 30 fiscal year, the Committee may, in accordance with the foregoing, allow a Deferral Election with respect to any performance-based Bonus earned over that period to be made not later than December 31 of the calendar year immediately preceding the calendar year in which that Performance Period will end. 
(ii)    An Eligible Employee who is first selected for participation in the Plan after the start of a Plan Year and who has not otherwise been eligible for participation in any other non-qualified elective account balance plan subject to Code Section 409A and maintained by one or more Affiliated Companies must, with respect to any Bonus to be covered by his or her initial Deferral Election, file that election no later than thirty (30) days after the date he or she is so selected.  Such Deferral Election shall only be effective for the portion of such Bonus determined by multiplying the dollar amount of such Bonus by a fraction, the numerator of which is the number of days remaining in the Performance Period applicable to that Bonus following the close of the calendar month in which the Participant’s Deferral Election as to such Bonus is filed and the denominator of which is the total number of days in that Performance Period; provided, however, that in the event any such Bonus qualifies as performance-based compensation, then the provisions of subparagraph (i) shall also be applicable in determining the amount of such Bonus that may be deferred.  
(b)    The amount of the Bonus or Bonuses deferred for each Plan Year shall be designated the “Bonus Deferral Amount” for that Plan Year.  The Bonus Deferral Amount shall not be paid to the Participant, but shall be withheld from the Participant’s Bonus or Bonuses subject to the Deferral Election, and an amount equal to the Bonus Deferral Amount shall be credited to the Participant’s Deferral Election Subaccount within ten (10) business days following the date on which such deferred amount would otherwise have been paid to the Participant in the absence of the Deferral Election.
(c)    The Deferral Election shall become irrevocable as of the first day of the Plan Year to which that election relates (or any later day the Deferral Election for such Bonus may be filed pursuant to the special provisions of Section 3.2(a)), and no subsequent changes may be made to that Deferral Election once it becomes irrevocable. 

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3.3    Requirements for Deferral Elections.  The following requirements shall be in effect for each Deferral Election filed by a Participant for a Plan Year beginning after December 31, 2007 or a Fiscal Year beginning after June 30, 2007:
(a)    The percentage of compensation which a Participant may elect to defer each Plan Year or Fiscal Year pursuant to his or her Deferral Election must comply with the following guidelines:
(i)    To the extent the Participant’s salary or commissions are the subject of the Deferral Election, the amount to be deferred pursuant to such election may be any multiple of one percent (1%) of the portion of such salary and commissions eligible for deferral for such Plan Year, but not less than five percent (5%) of such compensation. 
(ii)    To the extent the Participant’s Bonus is the subject of the Deferral Election, the amount to be deferred pursuant to such election must be a multiple of five percent (5%), up to one hundred percent (100%) of the portion of such bonus eligible for deferral for such Plan Year or Fiscal Year. 

(b)    The Participant must also specify in the Deferral Election the date or event for the commencement of the distribution of the Deferral Election Subaccount attributable to that election.  The following commencement dates or events shall be permissible:
-   a date within the first sixty (60) days of any calendar year which is at least two (2) calendar years after the calendar year to which such Deferral Election relates, 
-   the Participant’s Separation from Service, or
-   the earlier of (i) a date within the first sixty (60) days of any calendar year which is at least two (2) calendar years after the calendar year to which the Deferral Election relates or (ii) the Participant’s Separation from Service.  
(c)    The Participant shall also specify in the Deferral Election the manner in which the Deferral Election Subaccount attributable to that election shall be distributed.  The following methods of distribution shall be permissible for a distribution tied to a specified date: 
-    lump sum payment, or
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a five (5)-year term. 
The following methods of distribution shall be permissible for a distribution tied to a Separation from Service: 
-    lump sum payment,
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a five (5)-year term, or
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a ten (10)-year term, provided, however, that any election of such a ten (10)-year payment stream shall only be effective if the Participant’s Separation from Service 

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is due to a Normal Termination; otherwise, such election shall automatically revert to a five (5)-year term. 
For purposes of Section 8.1, an installment distribution shall be treated as a single aggregate payment, and not as a series of individual installment payments. 
3.4    Limitations on Deferrals.  In applying the Participant’s Deferral Election to the salary, commissions or bonuses subject to that election, the percentage of such compensation to be deferred shall be determined based upon the Participant’s gross compensation.  Any payroll deductions to be made from the Participant’s compensation for purposes of the Company’s Employee Stock Purchase Plan (“ESPP”) shall be calculated on the basis of the Executive’s gross compensation prior to reduction for his or her Deferral Elections under the Plan. However, prior to the start of the Plan Year for which the Deferral Election is to be in effect, the amount of the Participant’s compensation available for deferral hereunder shall be calculated by reducing the Participant’s gross compensation by (a) the amount necessary to satisfy all federal, state and local income, employment and other payroll taxes (including FICA taxes) required to be withheld with respect to such items of compensation, (b) amounts deducted with respect to the Participant’s elections regarding employee health and welfare benefits and (c) the amount of payroll deductions elected by the Participant in connection with the Company’s ESPP (such reduced amount, the “Available Deferral Amount”). If those reductions would result in gross compensation less than the dollar amount of compensation requested to be deferred pursuant to Participant’s Deferral Election for that Plan Year, then the actual dollar amount of compensation to be deferred pursuant to such Participant’s Deferral Election shall be reduced, effective with the start of that Plan Year, to be equal to the Available Deferral Amount.  In no event, however, may the Participant change the rate of payroll deduction in effect for him or her under the ESPP for a particular Plan Year at any time after the start of that Plan Year, if such change would otherwise affect the amount of compensation to be deferred under this Plan pursuant to his or her Deferral Election in effect for that Plan Year. Any changes to the Participant’s elections regarding health and welfare benefits to be made after the start of the Plan Year for which his or her  Deferral Election is in effect shall be effected in accordance with the requirements of Sections 1.409A-2(a)(10) and 1.409A-3(j)(6) of the Treasury Regulations. Any salary deferral elections made by the Participant under the Company’s 401(k) Plan shall be calculated on the basis of the Executive’s compensation after reduction for his or her Deferral Elections under the Plan.
3.5    Deferral Election Subaccounts.  A separate Deferral Election Subaccount shall be established for each Plan Year for which the Participant defers a portion of his or her eligible compensation under the Plan.  The Participant shall at all times be fully vested in the balance credited to each of his or her Deferral Election Subaccounts.
3.6    Subsequent Distribution.  Each of the Participant’s Deferral Election Subaccounts shall be distributed in accordance with the provisions of Articles VII and VIII of the Plan. 
3.7    Company Contributions.  The Company may, in its sole discretion, make a Company Contribution to an Account or Subaccount on behalf of a Participant, subject to such vesting and distribution conditions and limitations as the Company, in its sole discretion, shall impose at the time such contribution is made.
ARTICLE IV
CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS 
4.1    Accounts. One or more Accounts and Subaccounts shall be established and maintained for each Participant in accordance with the provisions of Section 1.1.  Each Account or Subaccount shall be charged with any distributions made therefrom pursuant to the Plan and any charges imposed thereon pursuant 

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to the terms of the Plan.  In addition, any Pre-2005 Deferred Account established for a Participant was credited, as of October 1, 1997, with the ending balance (if any) accrued by that Participant under the Prior Plans.
4.2    Credited Investment Return (Loss).
(a)    Each of the Participant’s Accounts and Subaccounts shall be credited at least monthly with the Credited Investment Return (Loss) attributable to the balance credited to that   Account or Subaccount. The Credited Investment Return (Loss) is the amount which the balance credited to the Account or Subaccount would have earned if that balance had in fact been invested in the Deemed Investment Options in accordance with the Participant’s Investment Elections.
(b)    The Committee shall, from time to time, designate the investment options available to Participants for the deemed investment of their Accounts or Subaccounts under the Plan (the “Deemed Investment Options”).  The Committee shall specify the particular funds which shall constitute the Deemed Investment Options and may, in its sole discretion, change or add to the Deemed Investment Options; provided, however, that the Committee shall notify the Participants of any such change prior to the effective date thereof.
4.3    Deemed Investment Options.  Each Participant may select among the Deemed Investment Options and specify the manner in which his or her Accounts and Subaccounts shall be deemed to be invested (the “Investment Election”) for purposes of determining the Credited Investment Return (Loss) on those Accounts and Subaccounts. The Committee shall establish and communicate the rules, procedures and deadlines for making and changing such Investment Elections.  Each Participant may continue to make such Investment Election for so long as he or she has an outstanding balance credited to an Account or Subaccount, whether or not such Participant is in Employee status or active Participant status at the time.
ARTICLE V
DISTRIBUTION OF PRE-2005 DEFERRED ACCOUNT
The provisions of this Article V shall apply solely to the Participant’s Pre-2005 Deferred Account for so long as that account remains exempt from the requirements of Code Section 409A by reason of the applicable effective date of those requirements.
5.1    Distribution of Benefits upon Normal Termination.  The following provisions shall govern the distribution  to be made with respect to a Participant who ceases Employee status through a Normal Termination:
(a)    Unless the Participant otherwise elects pursuant to Section 5.1(b), the amount credited to his or her Pre-2005 Deferred Account shall be paid in sixty (60) substantially equal quarterly installments (subject to ongoing Credited Investment Returns (Losses)), with the first installment to be paid as soon as practicable following the first day of first calendar quarter following such Normal Termination.  
(b)    If the Participant has filed an appropriate distribution election with the Committee at least one (1) year prior to his or her Normal Termination, then the amount of his or her Pre-2005 Deferred Account shall be distributed in one of the following methods as the Participant may specify in that election:

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(i)    a single lump sum payment;
(ii)    twenty (20) substantially equal (subject to ongoing Credited Investment Returns (Losses)) quarterly installments; or
(iii)    forty (40) substantially equal (subject to ongoing Credited Investment Returns (Losses)) quarterly installments.
The applicable distribution shall commence as soon as practicable following the first day of the first calendar quarter following such Normal Termination.
5.2    Distribution of Benefits upon Early Termination.  The following provisions shall govern the distribution to be made with respect to a Participant who ceases Employee status through an Early Termination:
(a)    Unless the Participant otherwise elects a different form of distribution in accordance the requirements and limitations of Section 5.2(b) or 5.2(c), the amount credited to his or her Pre-2005 Deferred Account shall be distributed to the Participant in a single lump sum payment within a reasonable amount of time after such Early Termination event.
(b)    If the Participant with an Early Termination has more than five (5) Years of Service, then he or she may file a distribution election at least one (1) year prior to the date of such Early Termination to have the amount credited to his or her Pre-2005 Deferred Account, to the extent vested, distributed in twenty (20) substantially equal quarterly installments (subject to ongoing Credited Investment Returns (Losses)). The elected distribution shall commence as soon as reasonably practicable following the Early Termination event. Such election, however, shall not be effective if the date of the Participant’s Early Termination occurs within one (1) year after the filing date of that election.
(c)    If the Participant with an Early Termination has at least ten (10) Years of Service, then he or she may file a distribution election at least one (1) year prior to the date of such Early Termination to have the amount credited to his or her Pre-2005 Deferred Account, to the extent vested, distributed in either twenty (20) or forty (40) substantially equal quarterly installments (subject to ongoing Credited Investment Returns (Losses)).  The elected distribution shall commence as soon as reasonably practicable following the Early Termination event.  Such election, however, shall not be effective if the date of the Participant’s Early Termination occurs within one (1) year after the filing date of that election.
5.3    Election of Form of Benefit Payment.  The Participant may file a distribution election permitted under Section 5.1 or 5.2 above with the Committee or its designate at any time which is more than one (1) year prior to the applicable Normal Termination or Early Termination date and may revoke or change such election at any time or times which is more than one (1) year prior to the then applicable Normal Termination or Early Termination date.  Any distribution election which is filed within one (1) year of the applicable Normal Termination or Early Termination date shall be void and without effect, and the most recently effective distribution election shall control instead.
5.4    Payment to Beneficiary.  In the event the Participant dies after installment payments have begun but before all of the installments are paid, the undistributed installments shall be paid to his or her Beneficiary as they become due.

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5.5    Early Withdrawals.
(a)    Notwithstanding any other provision of this Plan, the Participant may, upon thirty (30) days prior written notice, withdraw up to ninety-two percent (92%) of the balance credited to his or her Pre-2005 Deferred Account determined at the time of such withdrawal.  Upon such withdrawal, eight percent (8%) of the amount requested from the Participant’s Pre-2005 Deferred Account shall be forfeited, and the Participant shall have no further right thereto.  The Participant shall be prohibited from making any compensation deferrals pursuant to this Plan for the Plan Year immediately following the Plan Year in which such withdrawal occurs and for a subsequent period of months equal to the number of months (rounded to the next whole month) that elapse between the date on which such withdrawal is effected and the last day of the Plan Year in which that withdrawal occurs.  The Participant may only make a maximum of two (2) early withdrawals pursuant to this Section 5.5(a).
(b)    Notwithstanding any other provision of this Plan, the Participant may request to withdraw any or all of the balance credited to his or her Pre-2005 Deferred Account in the event of a Hardship.  The Committee shall, in its sole discretion, determine whether or not to approve such a withdrawal request. The Participant shall be required to demonstrate to the Committee’s satisfaction that the financial burden imposed by the Hardship cannot reasonably be satisfied out of his or her other financial resources.  Withdrawals pursuant to a Hardship request shall only be permitted, if at all, to the extent reasonably required to satisfy the Participant’s need.
(c)    Notwithstanding any other provision of this Plan, a Participant may schedule an in-service distribution of any portion of the balance credited to his or her Pre-2005 Deferred Account by submitting a distribution election form (or by scheduling an in-service distribution in his or her initial enrollment election) to the Committee at least two (2) years prior to the desired distribution date.  Such distribution shall be paid in a lump-sum; provided, however, that if (i) the Participant elects such form of distribution on the distribution election or initial enrollment form and (ii) the distribution commences after five (5) or more Years of Service with the Company, the distribution shall be made in twenty (20) equal quarterly installments, payable on the first day of each calendar quarter.  Any Credited Investment Return (Loss) with respect to the portion of the Participant’s Pre-2005 Deferred Account scheduled for an in-service installment distribution that is to be credited on and after the date of the initial in-service distribution shall be credited to the remaining portion of the Participant’s Pre-2005 Deferred Account. The Participant may postpone a scheduled in-service distribution date by submitting a new distribution election form to the Committee at least one (1) year prior to the otherwise scheduled in-service distribution date.  Any in-service distribution election form which is filed within one (1) year of the scheduled in-service distribution date shall be void and without effect. Once an in-service installment distribution commences, such distribution shall continue over the applicable installment period, whether or not the Participant continues in Employee status.  However, if the Participant has an Early Termination or a Normal Termination prior to the first scheduled in-service distribution, then his or her in-service distribution election shall become void and without effect, and the distribution provisions relating to such Participant’s Early Termination or Normal Termination, as applicable, shall control the distribution of the Participant’s Pre-2005 Deferred Account.
5.6    Automatic Lump-Sum Distribution for Accounts below $25,000.  Notwithstanding any other provisions of this Plan or the provisions of a Participant’s distribution election with respect to his or her Pre-2005 Deferred Account, in the event such Participant has less than twenty-five thousand dollars ($25,000) credited to his or her Pre-2005 Deferred Account as of the date of his or her cessation of Employee status, then 100% of that Account shall be distributed to him or her in a single lump-sum payment within a reasonable amount of time following the date of such cessation of Employee status. 

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5.7    Valuation.  The amount to be distributed from the Participant’s Pre-2005 Deferred Account shall be determined on the basis of the balance credited to that Account as of the most recent practicable valuation date (as determined by the Committee or its designate) preceding the date of the actual distribution. For a Participant who has elected an installment distribution from his or her Pre-2005 Deferred Account (or any portion thereof), such distribution shall be effected through a series of substantially equal payments (as adjusted for Credited Investment Returns (Losses)), and the amount of each such installment shall accordingly be determined by dividing the balance credited to that Account (or applicable portion) as of the most recent practicable valuation date (as determined by the Committee) preceding the date of the actual distribution of that installment by the number of installments (including the current installment) remaining in the applicable distribution period.
5.8    Tax Withholding.  Each payment made from the Participant’s Pre-2005 Deferred Account shall be subject to the Participating Employer’s collection of all applicable federal, state and local income and employment/payroll taxes, and each payment shall be net of such applicable withholding taxes.
5.9    Outside Directors.  As applied to an Outside Director, for all purposes under the Plan, the terms “service,” “employed” and “employment” shall mean the time during which the Outside Director serves on the Board of Directors, and the terms “retirement” and “termination” shall mean the time at which the Outside Director ceases to serve on the Board of Directors.
ARTICLE VI
DISTRIBUTION OF 2005-2007 DEFERRED ACCOUNT
The provisions of this Article VI shall apply solely to the Participant’s 2005-2007 Deferred Account. 
6.1    Special Distribution Election. Each Participant may, prior to December 31, 2007, make a new payment election under this Article VI with respect to the commencement date and form of payment to be in effect for his or her 2005-2007 Deferred Account (the “Special Distribution Election”).  Any such Special Distribution Election made by the Participant shall constitute a new payment election under Q&A 19(c) of Notice 2005-1, as modified by the Preamble to the proposed Treasury Regulations under Code Section 409A and Notice 2006-79. However, any Special Distribution Election submitted during the 2007 calendar year can only apply to amounts not otherwise payable in that calendar year, and the election may not cause any amount to be paid in the 2007 calendar year that would not otherwise be payable in that year.
6.2    Commencement Date.  In the Special Distribution Election, the Participant must specify the date or event for the commencement of the distribution of his or her 2005-2007 Deferred Account.  The following commencement dates or events shall be permissible:
-   a  date within the first sixty (60) days of any calendar year after the 2008 calendar year, 
-   the Participant’s Separation from Service, or
-   the earlier of (i) a date within the first sixty (60) days of any  post-2008 calendar year or (ii) the Participant’s Separation from Service.  

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6.3    Method of Distribution.  The Participant must specify in the Special Distribution Election the method by which his or her 2005-2007 Deferred Account shall be distributed.  The following methods of distribution shall be permissible for a distribution tied to a specified date: 
-    lump sum payment, or
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a five (5)-year term. 
The following methods of distribution shall be permissible for a distribution tied to a Separation from Service: 
-    lump sum payment,
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a five (5)-year term, 
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a ten (10)-year term, or
-    substantially equal quarterly installments (subject to periodic adjustment for Credited Investment Returns (Losses)) over a fifteen (15)-year term; provided, however, that any election of such a fifteen (15)-year payment stream shall only be effective if the Participant’s Separation from Service due to a  Normal Termination; otherwise, such election shall automatically revert to a ten (10)-year term. 
For purposes of Section 8.1, an installment distribution shall be treated as a single aggregate payment, and not as a series of individual installment payments. 
6.4    Continuing Elections.  Should the Participant not file a Special Distribution Election on a timely basis in accordance with Section 6.1, then each of the separate distribution elections he or she initially made with respect to the compensation deferred under the Plan for each of the 2005, 2006 and 2007 Plan Years shall continue in full force and effect and may not be subsequently changed except in accordance with the requirements of Section 7.3 or 8.1. 
6.5    Tax Withholding.  Each payment made from the Participant’s 2005-2007 Deferred Account shall be subject to the Participating Employer’s collection of all applicable federal, state and local income and employment/payroll taxes, and each payment shall be net of such applicable withholding taxes.
ARTICLE VII
DISTRIBUTION OF POST-2007 DEFERRAL ELECTION SUBACCOUNTS
The provisions of this Article VII shall apply to each of the Participant’s Deferral Election Subaccounts attributable to a Plan Year beginning after December 31, 2007 or a Company fiscal year (a “Fiscal Year”) beginning after June 30, 2007. 
7.1    Normal Distribution.  The Participant’s Deferral Election Subaccount for a particular Plan Year or Fiscal Year shall become due and payable in accordance with the commencement date and method of distribution designated by the Participant in his or her Deferral Election for that Plan Year or Fiscal Year.  Such distribution shall begin on the designated commencement date or event as soon as administratively practicable thereafter, but in no event later than the later of (i) the close of the calendar year in which the 

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designated commencement date or event occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the occurrence of such commencement date or event.  
7.2     Tax Withholding.  Each payment made from a Deferral Election Subaccount shall be subject to the Participating Employer’s collection of all applicable federal, state and local income and employment/payroll taxes, and each payment shall be net of such applicable withholding taxes.
7.3    Special Distribution Election. Notwithstanding the provisions of Sections 3.3, 6.1 and 7.1 of the Plan, each Participant may, prior to December 31, 2008, make a new payment election under this Article VII with respect to the commencement date and form of payment to be in effect for his or her 2005-2007 Deferred Account and/or his or her Deferral Election Subaccount for the 2008 Plan Year (the “2008 Special Distribution Election”).  Any such 2008 Special Distribution Election made by the Participant shall constitute a new payment election under Q&A 19(c) of Notice 2005-1, as modified by the Preamble to the proposed Treasury Regulations under Code Section 409A and Notice 2006-79, and shall not be treated as an Extended Deferral Election for purposes of Section 8.1 of the Plan. However, the 2008 Special Distribution Election can only apply to amounts not otherwise payable in that calendar year, and the election may not cause any amount to be paid in the 2008 calendar year that would not otherwise be payable in that year.  The 2008 Special Distribution Election must be made on or before December 31, 2008 in order to be effective.
ARTICLE VIII
PROVISIONS APPLICABLE TO 2005-2007 DEFERRED ACCOUNTS AND POST-2007 DEFERRAL ELECTION SUBACCOUNTS
The provisions of this Article VIII shall apply to the Participant’s 2005-2007 Deferred Account and each of his or her Deferral Election Subaccounts attributable to a Plan Year beginning after December 31, 2007.  Each such Account or Subaccount shall, for purposes of this Article VIII, be designated a “Post-2004 Account.” 
8.1    Extended Deferral Election.  A Participant may make an Extended Deferral Election with respect to any Post 2004 Account maintained for him or her under the Plan, provided the  Participant remains at the time of such election a highly compensated Employee or member of the management group of a Participating Employer (as determined pursuant to guidelines established by the Committee).  The Extended Deferral Election must be made by filing an appropriate election form with the Committee at least twelve (12) months prior to the date the Post-2004 Account subject to such election is scheduled to become payable pursuant to the applicable provisions of Article VI or Article VII, and the Extended Deferral Election for that Account shall in no event become effective or otherwise have any force or applicability until the expiration of the twelve (12)-month period measured from the date such election is filed with the Committee. The Extended Deferral Election must specify a commencement date in a Plan Year which is at least five (5) Plan Years later than the Plan Year in which the distribution of that Post-2004 Account would have otherwise been made or commenced in the absence of the Extended Deferral Election.  As part of the Extended Deferral Election, the Participant may also elect a different method of distribution, provided the selected method complies with one of the forms of distribution permissible for that Account in accordance with the provisions of the Plan.   Once the Extended Deferral Election becomes effective in accordance with the foregoing provisions of this Section 8.1, such election shall remain in effect, whether or not the Participant continues in Employee status; provided, however, that in the event of the Participant’s death, the provisions of Section 8.4 shall apply. Notwithstanding anything to the contrary in the foregoing provisions of this Section 8.1, neither the Special Distribution Election under Section 6.1 nor the 2008 Special Distribution Election under Section 7.3 shall be deemed to be an Extended Deferral Election or otherwise be subject to the requirements 

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of this Section 8.1
8.2    Distribution Commencement Date.  The distribution of any Post-2004 Account shall be made or commence on the distribution date or event applicable to that Account or as soon thereafter as administratively practicable, but in no event later than the later of (i) the end of the calendar year in which that distribution date or event occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following such distribution date or event. 
8.3    Hardship Withdrawal.  If a Participant incurs a Hardship and does not have any other resources available, whether through reimbursement or compensation (by insurance or otherwise), liquidation of existing assets (to the extent such liquidation would not itself result in financial hardship) or cancellation of his or her existing Deferral Election(s) under the Plan, to satisfy such financial emergency, then the Participant may apply to the Committee  for an immediate distribution from one or more of his or her Post-2004 Accounts in an amount necessary to satisfy such Hardship and the tax liability attributable to such distribution.  The Committee shall have complete discretion to accept or reject the request and shall in no event authorize a distribution in an amount in excess of that reasonably required to meet such Hardship and the tax liability attributable to that distribution. 
8.4    Death Before Full Distribution. If the Participant dies before the entire aggregate balance of his or her Post-2004 Accounts is distributed, then the unpaid balance shall be paid in a lump sum to his or her designated Beneficiary under the Plan.  Such payment shall be made as soon as administratively practical following the Participant’s death, but in no event later than the later of (i) the end of the calendar year in which the Participant’s death occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the date of the Participant’s death.  Should the Participant die without a valid Beneficiary designation in effect or after the death of his or her designated Beneficiary, then any amounts due him or her from his or her Post-2004 Accounts shall be paid to his or her estate.
8.5    Valuation.  The amount to be distributed from any Post-2004 Account shall be determined on the basis of the balance credited to that Account as of the most recent practicable valuation date (as determined by the Committee or its designate) preceding the date of the actual distribution. For a Participant who has elected an installment distribution for any Post-2004 Account, such distribution shall be effected through a series of substantially equal payments (as adjusted for Credited Investment Returns (Losses)), and the amount of each such installment shall accordingly be determined by dividing the balance credited to that Account as of the most recent practicable valuation date (as determined by the Committee) preceding the date of the actual distribution of that installment by the number of installments (including the current installment) remaining in the applicable distribution period.
8.6    Small Account Balances.  If the aggregate balance of the Participant’s Post-2004 Accounts is not greater than the applicable dollar amount in effect under Code Section 402(g)(1)(B) at the time of the Participant’s Separation from Service (note: as of the Effective Date, such amount is $16,500 and is scheduled to increase to $17,000 effective January 1, 2012) and the Participant is not otherwise at that time participating in any other non-qualified elective account balance plan subject to Code Section 409A and maintained by one or more Affiliated Companies, then that balance shall be distributed to the Participant in a lump sum distribution as soon as administratively practical following such Separation from Service, whether or not the Participant elected that form of distribution or distribution event, but in no event later than the later of (i) the end of the calendar year in which such Separation from Service occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the date of such Separation from Service.

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8.7    Mandatory Deferral of Distribution.  Notwithstanding any provision to the contrary in this Article VIII or any other article in the Plan, no distribution which becomes due and payable from any of the Participant’s Post-2004 Accounts by reason of his or her Separation from Service shall be made to such Participant prior to the earlier of (i) the first day of the seventh (7th) month following the date of such Separation from Service or (ii) the date of his or her death, if the Participant is deemed at the time of such Separation from Service to be a Specified Employee and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of such deferral period, all payments deferred pursuant to this Section 8.7 (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid in a lump sum to the Participant, and any remaining payments due under the Plan shall be paid in accordance with the normal payment dates specified for them herein.  During such deferral period, the Participant’s Account shall continue to be subject to the investment return provisions of Article IV. 
ARTICLE IX
BENEFICIARIES
9.1    Designation of Beneficiary.  Executive shall have the right to designate on such form as may be prescribed by the Committee a Beneficiary to receive any Supplemental Executive Benefits due to the Participant’s deferrals of compensation under the Plan which remain unpaid at the time of his or her death.  The Participant shall have the right at any time to revoke such designation and to substitute another such Beneficiary.
9.2    No Designated Beneficiary.  If, upon the Participant’s death, there is no valid designation of Beneficiary, the Beneficiary shall be the Participant’s estate.
ARTICLE X
OBLIGATION TO PAY SUPPLEMENTAL EXECUTIVE BENEFITS
10.1    Benefits Paid From Trust.  All benefits payable to the Participant hereunder shall be paid by the Trustee, to the extent of the assets held in the Trust by the Trustee, and by the Company to the extent the assets in the Trust are insufficient to pay the Participant the Supplemental Executive Benefits to which he or she is entitled under this Plan.
10.2    Trustee Investment Discretion.  The Deemed Investment Options shall be for the sole purpose of determining the Credited Investment Return (Loss), and neither the Trustee nor the Company shall have any obligation to invest the Participant’s Deferral Amounts in the Deemed Investment Options or in any other investment.
10.3    No Secured Interest.  Except as otherwise provided by the Trust Agreement, the assets of the Trust shall be subject to the claims of creditors of the Company, and no Participant or Beneficiary shall have any legal or equitable interest in such assets or policies or any other asset of the Company.  The Participant shall be a general unsecured creditor of the Company with respect to the promises of the Company made herein, except as otherwise expressly provided by the Trust Agreement.
ARTICLE XI
ADMINISTRATION
11.1    Administration of the Plan.  The Plan shall be administered by the Committee.  The Committee shall have full power and discretionary authority to administer, construe and interpret the Plan, to establish procedures for administering the Plan, to prescribe forms, and take any and all necessary or 

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desirable actions in connection with the Plan.  The Committee’s interpretation and construction of the Plan shall be conclusive and binding on all persons having an interest in the Plan, including (without limitation) all decisions relating to an individual’s eligibility for participation in the Plan, his or her entitlement to benefits hereunder and the amount of any such benefit entitlement.  The Committee may appoint a committee or any other agent and delegate to them such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe.
11.2    Indemnification.  The Committee and each of its members shall be indemnified by the Company against any and all liabilities incurred by reason of any action taken in good faith pursuant to the provisions of the Plan.
ARTICLE XII
MISCELLANEOUS
12.1    No Employment Right.  Neither the action of the Company or the Participating Employer in establishing or maintaining the Plan, nor any action taken under the Plan by the Committee, nor any provision of the Plan itself shall be construed so as to grant any person the right to remain in the employ of the Participating Employer or any other Affiliated Company for any period of specific duration, and the Participant may be discharged at any time, with or without cause.
12.2    Amendment/Termination.
(a)    The Committee may at any time amend the provisions of the Plan to any extent and in any manner the Committee may deem advisable, and such amendment shall become effective at the time of such Committee action. Without limiting the generality of the foregoing, the Committee may amend the Plan to impose such restrictions upon (i) the timing, filing and effectiveness of Deferral Elections or Extended Deferral Elections and (ii) the distribution provisions of the Plan which the Committee deems appropriate or advisable in order to avoid the current income taxation of amounts deferred under the Plan which might otherwise occur as a result of changes to the tax laws and regulations governing deferred compensation arrangements such as the Plan. The Committee may also at any time terminate the Plan in whole or in part.  Except for (i) such modifications, limitations or restrictions as may otherwise be required to avoid current income taxation or other adverse tax consequences to Participants as a result of changes to the tax laws and regulations applicable to the Plan or (ii) as otherwise provided in Sections 12.2(b), (c) and (d) below with respect to the distribution of Participant Accounts, no such plan amendment or plan termination authorized by the Committee shall adversely affect the benefits of Participants accrued to date under the Plan or otherwise reduce the then outstanding balances credited to their Accounts or Deferral Election Subaccounts or otherwise adversely affect the distribution provisions in effect for those Accounts or Subaccounts, and all amounts deferred prior to the date of any such plan amendment or termination shall, subject to the foregoing exception, continue to become due and payable in accordance with the distribution provisions of the Plan as in effect immediately prior to such amendment or termination. 
(b)    Except as otherwise provided in Sections 12.2(c) and (d) below, in the event of a termination of the Plan, the Participant Accounts may, in the Company’s discretion, be distributed within the period beginning twelve (12) months after the date the Plan is terminated and ending twenty-four (24) months after the date of such plan termination, or pursuant to Articles VI, VII and VIII of the Plan, if earlier.  If the Plan is terminated and Accounts are distributed, the Company and the other Participating Employers shall also terminate and liquidate all other non-qualified elective account balance deferred compensation plans maintained by them and shall not adopt a new non-qualified elective account balance deferred compensation plan for at least three (3)  years after the date the Plan is terminated.  

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(c)    The Company and the other Participating Employers may terminate the Plan thirty (30) days prior to or within  twelve (12) months following a Change of Control and distribute, within the twelve (12)-month period following the termination of the Plan, the Accounts of the Participants affected by such Change in Control   If the Plan is terminated and Accounts are distributed, the Company and the other Participating Employers shall also terminate all other non-qualified elective account balance deferred compensation plans sponsored by them in which such Participants participate, and all of the benefits accrued under those terminated plans by such Participants shall be distributed to them within twelve (12) months following the termination of such  plans.
(d)    The Company may terminate the Plan upon a corporate dissolution of the Company that is taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), provided that the Participant Accounts are distributed and included in the gross income of the Participants by the later of (i) the Plan Year in which the Plan terminates or (ii) the first Plan Year in which payment of the Accounts is administratively practicable.
(e)     Notwithstanding the foregoing provisions of this Section 12.2 or any other provision in this Plan to the contrary, should the Plan be terminated, then all benefits attributable to the Participant’s Pre-2005 Deferred Account shall be paid pursuant to the provisions of Section 5.2 as if such Participant had voluntarily ceased Employee status on the date of such Plan termination.  
(f)    All amounts remaining in the Trust after all benefits have been paid in connection with the termination of the Plan shall revert to the Company.
12.3    Applicable Law.  The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management and other highly compensated persons, and all rights hereunder shall be construed, administered and governed in all respects in accordance with the provisions of the Employee Retirement Income Security Act of 1974 (as amended from time to time) applicable to such an arrangement and, to the extent not pre-empted thereby, by the laws of the State of California without resort to its conflict-of-laws provisions.  If any provision of this Plan shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions of the Plan shall continue in full force and effect.
12.4    Satisfaction of Claims.  Any payment made to a Participant or his or her legal representative or beneficiary in accordance with the terms of this Plan shall to the extent thereof be in full satisfaction of all claims with respect to that payment which such person may have against the Plan, the Committee (or its designate), the Company, the Participating Employer and all other Affiliated Companies, any of whom may require the Participant or his or her legal representative or Beneficiary, as a condition precedent to such payment, to execute a receipt and release in such form as shall be determined by the Committee.
12.5    Alienation of Benefits.  No person entitled to any benefits under the Plan shall have the right to alienate, pledge, hypothecate or otherwise encumber his or her interest in such benefits, and those benefits shall not, to the maximum extent permissible by law, be subject to claim of his or her creditors or liable to attachment, execution or other process of law. Notwithstanding the foregoing, any benefits otherwise due and payable to the Participant shall instead be distributed to one or more third parties (including, without limitation, the Participant’s former spouse) to the extent such distribution is required by a domestic relations order or other order or directive of a court with jurisdiction over the Participant and his or her benefits hereunder, and the Participant shall cease to have any right, interest or entitlement to any benefits to be distributed pursuant to such order or directive.

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12.6    Expenses.  The Accounts and Subaccounts of each  Participant shall be charged with its allocable share of all other costs and expenses incurred in the operation and administration of the Plan, except to the extent one or more Participating Employers elect in their sole discretion to pay all or a portion of those costs and expenses. 
12.7    Successors and Assigns.  The obligation of each Participating Employer to make the payments required hereunder shall be binding upon the successors and assigns of that Participating Employer, whether by merger, consolidation, acquisition or other reorganization. Except for such modifications, limitations or restrictions as may otherwise be required to avoid current income taxation or other adverse tax consequences to Participants as a result of changes to the tax laws and regulations applicable to the Plan, no amendment or termination of the Plan by any such successor or assign shall adversely affect or otherwise impair the rights of Participants to receive benefit payments hereunder, to the extent attributable to amounts deferred prior to the date of such amendment or termination, in accordance with the applicable distribution provisions of the Plan as in effect immediately prior to such amendment or termination.
12.8    Reimbursement of Costs.  If the Company, the Participant, any Beneficiary or a successor in interest to any of the foregoing brings legal action to enforce any of the provisions of this Plan, the prevailing party in such legal action shall be entitled to reimbursed by the other party for the prevailing party’s costs of such legal action, including (without limitation) reasonable fees of attorneys, accountants and similar advisors and expert witnesses.
12.9    Arbitration.  Any dispute or claim relating to or arising from the Plan that cannot be resolved within thirty (30) days of the dispute or controversy through good-faith negotiation or non-binding mediation between the Participant and the Company shall be subject to binding arbitration in Santa Clara, California before the American Arbitration Association under its National Rules for the Resolution of Employment Disputes, supplemented by the California Rules of Civil Procedure.  The Company and the Participant shall each bear their own respective costs and  attorneys’ fees incurred in connection with the arbitration; and the Company shall pay the arbitrator’s fees, unless law applicable at the time of the arbitration hearing requires otherwise.  The arbitrator shall issue a written decision that sets forth the essential findings of fact and conclusions of law on which the award is based.  The arbitrator’s decision shall be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof. 
12.10    Entire Agreement.  This Plan and any applicable deferral election and beneficiary forms constitute the entire understanding and agreement with respect to the Plan, and there are no agreements, understandings, restrictions, representations or warranties among the Participant, the Company and the Participating Employers other than those as set forth or provided for therein.
ARTICLE XIII
BENEFIT CLAIMS
13.1    Claims Procedure.  No application is required for the payment of benefits under the Plan.  However, if any Participant (or beneficiary) believes he or she is entitled to a benefit from the Plan which differs from the benefit determined by the Committee, then such individual may file a written claim for benefits with the Committee.  Each claim shall be acted upon and approved or disapproved within ninety (90) days following receipt by the Committee.
13.2    Denial of Benefits.  In the event any claim for benefits is denied, in whole or in part, the Committee shall notify the claimant in writing of such denial and of his or her right to a review by the Committee and shall set forth, in a manner calculated to be understood by the claimant, specific reasons for such denial, specific references to pertinent provisions of the Plan on which the denial is based, a description 

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of any additional material or information necessary to perfect the claim, an explanation of why such material or information is necessary, and an explanation of the review procedure.
13.3    Review.
(a)    Any person whose claim for benefits is denied in whole or in part may appeal to the Committee for a full and fair review of the decision by submitting to the Committee, within ninety (90) days after receiving written notice from the Committee of such denial, a written statement:
(i)    requesting a review by the Committee of his or her claim for benefits;
(ii)    setting forth all of the grounds upon which the request for review is based and any facts in support thereof; and
(iii)    setting forth any issues or comments which the claimant deems pertinent to his or her claim.
(b)    The Committee shall act upon each such appeal within sixty (60) days after receipt of the claimant’s request for review by the Committee, unless special circumstances require an extension of time for processing.  If such an extension is required, written notice of the extension shall be furnished to the claimant within the initial sixty (60)-day period, and a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the initial request for review.  The Committee shall make a full and fair review of each such appeal and any written materials submitted by the claimant or the Participating Employer in connection therewith and may require the Participating Employer or the claimant to submit such additional facts, documents or other evidence as the Committee may, in its sole discretion, deem necessary or advisable in making such a review.  On the basis of its review, the Committee shall make an independent determination of the claimant’s eligibility for benefits under the Plan.  The decision of the Committee on any benefit claim shall be final and conclusive upon all persons.
13.4    Denial of Appeal.  Should the Committee deny an appeal in whole or in part, the Committee shall give written notice of such decision to the claimant, setting forth in a manner calculated to be understood by the claimant the specific reasons for such denial and specific reference to the pertinent Plan provisions on which the decision was based.  
IN WITNESS WHEREOF, the Company has caused this amended and restated Plan to be executed by a duly authorized officer effective as of the Effective Date.

	
	
	KLA-TENCOR CORPORATION

	 

	 

	By:    /s/ Brian M. Martin

	Name:      Brian M. Martin

	Title:        Executive Vice President and General Counsel

	 

	Dated:      November 3, 2011

22

APPENDIX I
TEXT OF SECTION 1.409A-3(i)(3)(i) OF THE TREASURY REGULATIONS 
(AS OF THE EFFECTIVE DATE)

(3) Unforeseeable emergency —(i) Definition. For purposes of §§1.409A–1 and 1.409A–2, this section, and §§1.409A–4 through 1.409A–6, an unforeseeable emergency is a severe financial hardship to the service provider resulting from an illness or accident of the service provider, the service provider's spouse, the service provider's beneficiary, or the service provider's dependent (as defined in section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)); loss of the service provider's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the service provider. For example, the imminent foreclosure of or eviction from the service provider's primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse, a beneficiary, or a dependent (as defined in section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)) may also constitute an unforeseeable emergency. Except as otherwise provided in this paragraph (i)(3)(i), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a service provider is faced with an unforeseeable emergency permitting a distribution under this paragraph (i)(3)(i) is to be determined based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the service provider's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the plan. A plan may provide for a payment upon a specific type or types of unforeseeable emergency, without providing for payment upon all unforeseeable emergencies, provided that any event upon which a payment may be made qualifies as an unforeseeable emergency.

SCHEDULE I
LIST OF PARTICIPATING EMPLOYERS AS OF THE EFFECTIVE DATE

KLA-Tencor Corporation
VLSI Standards, Inc.

LIST OF PARTICIPATING EMPLOYERS AS OF OCTOBER 1, 2008

KLA-Tencor Corporation
KLA-Tencor Technologies Corporation
VLSI Standards, Inc.
ADE Technologies, Inc.

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