Document:

EX-10(D)(4)

 

Exhibit 10(d)(4)

THE SCOTTS MIRACLE-GRO COMPANY

AMENDED AND RESTATED

1996 STOCK OPTION PLAN

(EFFECTIVE AS OF OCTOBER 30, 2007)

(Does Not Reflect Any Stock Splits or Stock Dividends)

 

 

THE SCOTTS MIRACLE-GRO COMPANY

AMENDED AND RESTATED

1996 STOCK OPTION PLAN

(EFFECTIVE AS OF OCTOBER 30, 2007)

(Does Not Reflect Any Stock Splits or Stock Dividends)

SECTION 1.

PURPOSE AND EFFECTIVE DATE

     1.1 Purpose. The purpose of the Plan is to foster and promote the long-term financial success
of the Company and materially increase shareholder value by (a) encouraging and providing for the
acquisition of an ownership interest in the Company by Employees and Eligible Directors, and (b)
enabling the Company to attract and retain the services of an outstanding management team upon
whose judgment, interest, and special effort the successful conduct of its operations is largely
dependent.

     1.2. Effective Date. The Plan was originally adopted by the Board on February 12, 1996 and is
hereby amended and restated effective as of October 30, 2007.

SECTION 2.

DEFINITIONS

     2.1 Definitions. Whenever used herein, the following terms shall have the respective meanings
set forth below:

     (a) “Act” means the Securities Exchange Act of 1934, as amended.

     (b) “Annual Meeting” means the annual meeting of the shareholders of the Company.

     (c) “Annual Retainer” means the annual retainer fee, established by the Board, paid to an
Eligible Director for services on the Board.

     (d) “Award” means any Option or Stock Unit.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Cause” means (i) the willful failure by a Participant to perform substantially the
Participant’s duties as an Employee of the Company (other than due to physical or mental illness)
after reasonable notice to the Participant of such failure, (ii) the Participant’s engaging in
serious misconduct that is injurious to the Company or any Subsidiary, (iii) the Participant’s
having been convicted of, or entered a plea of nolo contendere to, a crime that constitutes
a felony or (iv) the breach by the Participant of any written covenant or agreement with the
Company or any Subsidiary not to disclose any information pertaining to the Company or any
Subsidiary or not to compete or interfere with the Company or any Subsidiary.

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     (g) “Change in Control” means the occurrence of any of the following events:

     (i) the members of the Board (“Incumbent Directors”) cease for any reason other than
death to constitute at least a majority of the members of the Board, provided that any
director whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the then Incumbent Directors also will be
treated as an Incumbent Director; or

     (ii) any “person,” including a “group” [as such terms are used in Sections 13(d) and
14(d)(2) of the Act, but excluding the Company, any of its Subsidiaries, any employee
benefit plan of the Company or any of its Subsidiaries or Hagedorn Partnership, L.P. or any
party related to Hagedorn Partnership, L.P. as determined by the Committee] becomes the
“beneficial owner” [as defined in Rule 13d-3 under the Act], directly or indirectly, of
securities of the Company representing more than 30 percent of the combined voting power of
the Company’s then outstanding securities; or

     (iii) the adoption or authorization by the shareholders of the Company of a definitive
agreement or a series of related agreements (1) for the merger or other business combination
of the Company with or into another entity in which the shareholders of the Company
immediately before the effective date of such merger or other business combination own less
than 50 percent of the voting power in such entity or (2) for the sale or other disposition
of all or substantially all of the assets of the Company;

     (iv) the adoption by the shareholders of the Company of a plan relating to the
liquidation or dissolution of the Company; or

     (v) for any reason, Hagedorn Partnership, L.P. or any party related to Hagedorn
Partnership, L.P. as determined by the Committee, becomes the “beneficial owner” [as defined
in Rule 13d-3 under the Act], directly or indirectly, of securities of the Company
representing more than 49 percent of the combined voting power of the Company’s then
outstanding securities.

     (h) “Change in Control Price” means the price per share of Stock paid in conjunction with any
transaction resulting in a Change in Control (as determined in good faith by the Committee if any
part of the price offered is payable other than in cash) or, in the case of a Change in Control
occurring solely by reason of events not related to a transfer of Stock, the highest Fair Market
Value of a share of Stock on any of the 30 consecutive trading days ending on the last trading day
before the Change in Control occurs.

     (i) “Code” means the Internal Revenue Code of 1986, as amended.

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     (j) “Committee” means the Compensation and Organization Committee of the Board which shall
have the meaning ascribed to a “compensation committee” in Section 1.162-27(c)(4) of the final
regulations promulgated under Section 162(m) of the Code and which shall consist of three or more
members, each of whom shall be (i) a person from time to time permitted by the rules promulgated
under Section 16 of the Act in order for grants of Awards to be exempt transactions under said
Section 16 and (ii) receiving remuneration in no other capacity than as a director, except as
permitted under Section 1.162-27(e)(3) of the final regulations promulgated under Section 162(m) of
the Code and the rulings thereunder.

     (k) “Company” means The Scotts Miracle-Gro Company, an Ohio corporation, and any successor
thereto.

     (l) “Director Option” means a “nonstatutory stock option” (“NSO”) granted to each Eligible
Director pursuant to Section 6.6 without any action by the Board or the Committee.

     (m) “Disability” means the inability of the Participant to perform the Participant’s duties
for a period of at least six months due to a physical or medical infirmity. Notwithstanding the
foregoing, with respect to Incentive Stock Options, the term “Disability” shall be defined as such
term is defined in Section 22(e)(3) of the Code.

     (n) “Eligible Director” means, on any date, a person who is serving as a member of the Board
and who is not an Employee.

     (o) “Employee” means any officer or other key executive and management employee of the Company
or of any of its Subsidiaries.

     (p) “Fair Market Value” means, on any date, the closing price of the Stock as reported on the
New York Stock Exchange (or on such other recognized market or quotation system on which the
trading prices of the Stock are traded or quoted at the relevant time) on such date. In the event
that there are no Stock transactions reported on the New York Stock Exchange (or such other market
or system) on such date, Fair Market Value shall mean the closing price on the immediately
preceding date on which Stock transactions were so reported.

     (q) “Non-Grandfathered Option” means an NSO that was not earned and vested (within the meaning
of Treasury Regulation §1.409A-6) as of December 31, 2004.

     (r) “Option” means the right to purchase Stock at a stated price for a specified period of
time. For purposes of the Plan, an Option may be either (i) an “Incentive Stock Option” (ISO)
within the meaning of Section 422 of the Code or (ii) an NSO which does not qualify for treatment
as an “Incentive Stock Option.”

     (s) “Participant” means any Employee designated by the Committee to participate in the Plan.

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     (t) “Plan” means The Scotts Miracle-Gro Company Amended and Restated 1996 Stock Option Plan,
as in effect from time to time.

     (u) “Retirement” means, unless the Committee specifies otherwise, the date:

     (i) a Participant terminates employment on or after the earlier of (1) reaching age 62
or, (2) with the Committee’s approval, reaching age 55 and completing at least 10 years of
service as an Employee; or

     (ii) an Eligible Director terminates service as a Board member after having been a
Board member for at least one full term.

     (v) “Stock” means the Common Shares, without par value, of the Company.

     (w) “Stock Unit” means a right to receive payment, in accordance with the provisions hereof,
of the Fair Market Value of a share of Stock.

     (x) “Subsidiary” means any corporation or partnership in which the Company owns, directly or
indirectly, 50% or more of the total combined voting power of all classes of stock of such
corporation or of the capital interest or profits interest of such partnership.

     2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine
gender used in the Plan shall include the feminine gender, the singular shall include the plural,
and the plural shall include the singular.

SECTION 3.

ELIGIBILITY AND PARTICIPATION

     Except as otherwise provided in Sections 6.6 and 6.7, the only persons eligible to participate
in the Plan shall be those Employees selected by the Committee as Participants.

SECTION 4.

POWERS OF THE COMMITTEE

     4.1 Power to Grant. The Committee shall determine the Participants to whom Options shall be
granted, the type or types of Options to be granted and the terms and conditions of any and all
such Options. The Committee may establish different terms and conditions for different types of
Options, for different Participants receiving the same type of Option and for the same Participant
for each Option such Participant may receive, whether or not granted at different times.

     4.2 Administration. The Committee shall be responsible for the administration of the Plan.
The Committee, by majority action thereof, is authorized to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions deemed necessary or advisable to
protect the interests of the Company, and to make all other determinations (including, without
limitation, whether a Participant has incurred a Disability) necessary or

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advisable for the administration and interpretation of the Plan in order to carry out its
provisions and purposes. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final, binding, and conclusive for all
purposes and upon all persons.

SECTION 5.

STOCK SUBJECT TO PLAN

     5.1 Number. Subject to the provisions of Section 5.3, the number of shares of Stock subject
to Awards under the Plan may not exceed 5,500,000 shares of Stock. Subject to the provisions of
Section 5.3, no Participant shall receive Options for more than 150,000 shares of Stock over any
one-year period. For this purpose, to the extent that any Option is canceled (as described in
Section 1.162-27(e)(2)(vi)(B) of the final regulations promulgated under Section 162(m) of the
Code), such canceled Option shall continue to be counted against the maximum number of shares of
Stock for which Options may be granted to a Participant under the Plan. The shares of Stock to be
delivered under the Plan may consist, in whole or in part, of treasury Stock or authorized but
unissued Stock, not reserved for any other purpose.

     5.2 Canceled, Terminated, or Forfeited Awards. Except as provided in Section 5.1, any shares
of Stock subject to an Award which for any reason is canceled, terminated or otherwise settled
without the issuance of any Stock shall again be available for Awards under the Plan.

     5.3 Adjustment in Capitalization. In the event of any Stock dividend or Stock split,
recapitalization (including, without limitation, the payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares,
or other similar corporate change, the aggregate number of shares of Stock available for Awards
under Section 5.1 or subject to outstanding Awards and the respective prices and/or limitations
applicable to outstanding Awards shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. A corresponding adjustment shall be made to the number of
shares subject to outstanding Director Options and Stock Units, and a corresponding adjustment
shall also be made to the number of shares subject to each Director Option and each Stock Unit
thereafter granted pursuant to Section 6.6 or Section 6.7. Notwithstanding anything to the
contrary in this Section 5.3, an adjustment to a Non-Grandfathered Option shall be made only to the
extent such adjustment complies with the requirements of Section 409A of the Code.

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SECTION 6.

OPTIONS AND STOCK UNITS

     6.1 Grant of Options. Options may be granted to Participants at such time or times as shall
be determined by the Committee. Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) NSOs. The Committee shall have complete discretion in determining the
number of Options, if any, to be granted to a Participant. Without limiting the foregoing, the
Committee may grant Options containing provisions for the issuance to the Participant, upon
exercise of such Option and payment of the exercise price therefor with previously owned shares of
Stock, of an additional Option for the number of shares so delivered, having such other terms and
conditions not inconsistent with the Plan as the Committee shall determine. Each Option shall be
evidenced by an Option agreement that shall specify the type of Option granted, the exercise price,
the duration of the Option, the number of shares of Stock to which the Option pertains, and such
other terms and conditions not inconsistent with the Plan as the Committee shall determine.

     6.2 Option Price. NSOs and Incentive Stock Options granted pursuant to the Plan shall have an
exercise price which is not less than the Fair Market Value of the Stock on the date the Option is
granted. To the extent that an Incentive Stock Option is granted to a Participant who owns
(actually or constructively under the provisions of Section 424(d) of the Code) Stock possessing
more than 10% of the total combined voting power of all classes of Stock of the Company or of any
Subsidiary, such Incentive Stock Option shall have an exercise price which is not less than 110% of
the Fair Market Value on the date the Option is granted.

     6.3 Exercise of Options. Options granted to a Participant under the Plan shall be exercisable
at such times and shall be subject to such restrictions and conditions including the performance of
a minimum period of service, as the Committee may impose, either at or after the time of grant of
such Options; provided, however, that if the Committee does not specify another exercise schedule
at the time of grant, each Option shall become exercisable on the third anniversary of the date of
grant, subject to the Committee’s right to accelerate the exercisability of such Option in its
discretion. Notwithstanding the foregoing, no Option shall be exercisable for more than ten years
after the date on which it is granted; provided, however, in the case of an Incentive Stock Option
granted to a Participant who owns (actually or constructively under the provisions of Section
424(d) of the Code) Stock possessing more than 10% of total combined voting power of all classes of
Stock of the Company or any Subsidiary, such Incentive Stock Option shall not be exercisable for
more than five years after the date on which it is granted.

     6.4 Payment. The Committee shall establish procedures governing the exercise of Options,
which shall require that written notice of exercise be given and that the Option price be paid in
full in cash or equivalents, including by personal check, at the time of exercise or pursuant to
any arrangement that the Committee shall approve. The Committee may, in its discretion, permit a
Participant or an Eligible Director to tender Stock already owned by the Participant or the
Eligible Director, either by actual delivery of the shares of Stock or by attestation, valued at
its Fair Market Value on the date of exercise, as partial or full payment of the exercise price.
As soon as practicable after receipt of a written exercise notice and full

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payment of the exercise price, the Company shall deliver to the Participant or the Eligible
Director a certificate or certificates representing the acquired shares of Stock.

     6.5 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, no term of
this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall
any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of any Participant affected thereby, to
cause any Incentive Stock Option previously granted to fail to qualify for the Federal income tax
treatment afforded under Section 421 of the Code. Further, the aggregate Fair Market Value
(determined as of the time an Incentive Stock Option is granted) of the Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Participant during any calendar
year (under all option plans of the Company and all Subsidiaries of the Company) shall not exceed
$100,000.

     6.6 Director Options. Notwithstanding anything else contained herein to the contrary, prior
to January 29, 2002, on the first
business day following the date of each annual meeting of shareholders during the term of the Plan,
each Eligible Director shall receive a Director Option to purchase 5,000 shares of Stock at an
exercise price per share equal to the Fair Market Value of the Stock on the date of grant. An
Eligible Director who is a member of one or more Board committees, shall receive an additional
grant covering 500 shares of Stock for each committee of which the Eligible Director is a member.
An Eligible Director who chairs one or more Board committees shall receive (over and above that
additional grant covering 500 shares for each committee membership) an additional grant covering
1,000 shares of Stock for each committee the Eligible Director chairs. Each Director Option shall
be exercisable six months after the date of grant and shall remain exercisable until the earlier to
occur of (a) the tenth anniversary of the date of grant or (b) the first anniversary of the date
the Eligible Director ceases to be a member of the Board, except that (i) if the Eligible Director
ceases to be a member of the Board after having been convicted of, or pled guilty or nolo
contendere to, a felony, the Eligible Director’s Director Options shall be canceled on the date
the Eligible Director ceases to be a director, or (ii) if the Eligible Director ceases to be a
member of the Board due to Retirement, any Director Options granted to such Eligible Director which
are then outstanding (whether or not exercisable prior to the date of such Retirement), may be
exercised at any time prior to the expiration of the term of the Director Options or within five
years following the Retirement, whichever period is shorter. An Eligible Director may exercise a
Director Option in the manner described in Section 6.3.

     6.7 Stock Units. Effective beginning in the calendar year 2000 and ending in calendar year
2002, each
Eligible Director shall be provided with the opportunity to elect to receive all or a portion, in
25% increments, of the Eligible Director’s Annual Retainer: (a) in cash or (b) in Stock Units. An
Eligible Director’s first such election shall be made on a form provided by the Committee at least
two weeks in advance of the 2000 Annual Meeting. Such election shall be effective until the next
Annual Meeting. Elections for annual periods thereafter shall be made on an annual basis, at least
two weeks in advance of the applicable Annual Meeting. In the event no election is received from
an Eligible Director for an applicable period, the Eligible Director shall

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be deemed to have elected payment of the Eligible Director’s Annual Retainer in cash. Any
portion of an Eligible Director’s Annual Retainer which is elected to be paid in cash shall be paid
in accordance with the Company’s regular practice for such payments. To the extent that the
Eligible Director elects to receive Stock Units in lieu of all or a portion of the Eligible
Director’s Annual Retainer, the Eligible Director shall receive a number of Stock Units (including
fractional Stock Units) determined by dividing the dollar amount of Annual Retainer elected by the
Fair Market Value of a share of Stock on the next business day following the date of the Annual
Meeting; provided that for the calendar year 2000, the Fair Market Value as of March 31, 2000 shall
be the value used. All payments in respect of Stock Units shall be settled as soon as practicable
after the earlier of (a) the occurrence of a Change in Control or (b) the Eligible Director’s
cessation of service on the Board; provided, however, that if the Eligible Director has elected on
a form provided by the Committee at least one year prior to the commencement of payment of the
value of the Eligible Director’s Stock Units, payment thereof shall be made over a period of up to
ten years, as elected by the Eligible Director. All such payments to the Eligible Director shall
be made in cash or in Stock, as elected by the Eligible Director on the deferral form provided by
the Committee. If distributions are made in cash pursuant to such Eligible Director’s election,
distribution shall be made at Fair Market Value determined as of the date immediately preceding the
date of distribution. Upon the death of an Eligible Director, the value of any unpaid Stock Units
shall be paid in a lump sum in cash in accordance with the provisions of Section 10.2.

     6.8 Restriction on Repricing. Regardless of any other provision of this Plan, neither the
Company nor the Committee may “reprice” (as defined under rules issued by the exchange on which the
Stock then is traded) any Option without the prior approval of the shareholders.

SECTION 7.

TERMINATION OF EMPLOYMENT

     7.1 Termination of Employment Due to Retirement. Unless otherwise determined by the Committee
at the time of grant, in the event a Participant’s employment terminates by reason of Retirement,
any Options granted to such Participant which are then outstanding (whether or not exercisable
prior to the date of such termination) may be exercised at any time prior to the expiration of the
term of the Options or within five years (or such shorter period as the Committee shall determine
at the time of grant) following the Participant’s termination of employment, whichever period is
shorter. Notwithstanding any provision contained herein, with respect to any Incentive Stock
Option, a Participant who terminates the Participant’s employment by reason of Retirement may
exercise such Incentive Stock Option at any time prior to the expiration of the term of the Option
or within three months following the Participant’s termination of employment, whichever period is
shorter.

     7.2 Termination of Employment Due to Death or Disability. Unless otherwise determined by the
Committee at the time of grant, in the event a Participant’s employment terminates by reason of
death or Disability, any Options granted to such Participant which are

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then outstanding (whether or not exercisable prior to the date of such termination) may be
exercised by the Participant or the Participant’s designated beneficiary, and if none is named, in
accordance with Section 10.2, at any time prior to the expiration date of the term of the Options
or within five years (or such shorter period as the Committee shall determine at the time of grant)
following the Participant’s termination of employment, whichever period is shorter.
Notwithstanding any provision contained herein, with respect to any Incentive Stock Option, a
Participant whose employment terminates by reason of death or Disability may exercise (or the
Participant’s designated beneficiary may exercise, in the case of death) such Incentive Stock
Option at any time prior to the expiration of the term of the Option or within one year following
the Participant’s termination of employment, whichever period is shorter.

     7.3 Termination of Employment For Cause. Unless otherwise determined by the Committee at the
time of grant, in the event a Participant’s employment is terminated for Cause, any Options granted
to such Participant which are then outstanding (whether or not exercisable prior to the date of
such termination) shall be forfeited.

     7.4 Termination of Employment for Any Other Reason. Unless otherwise determined by the
Committee at or after the time of grant, in the event the employment of the Participant shall
terminate for any reason other than one described in Section 7.1, 7.2 or 7.3, any Options granted
to such Participant which are exercisable at the date of the Participant’s termination of
employment, or on such accelerated basis as the Committee may have determined in its discretion,
shall remain exercisable until the earlier to occur of (a) the expiration of the term of such
Options or (b) the ninetieth day following the Participant’s termination of employment, whichever
period is shorter.

     7.5 Limitations on Exercisability Following Termination of Employment. No Options shall be
exercisable after termination of employment unless the Participant shall have, during the time
period in which the Options are exercisable, (a) refrained from serving as an officer, director or
employee of any individual, partnership or corporation, or the owner of a business, or a member of
a partnership which conducts business in competition with the Company or renders any service
(including, without limitation, advertising agencies and business consultants) to competitors with
any portion of the business of the Company, (b) been available, if so requested by the Company, at
reasonable times and upon a reasonable basis, to consult with, supply information to, and otherwise
cooperate with, the Company, and (c) refrained from engaging in a deliberate action which has been
determined by the Committee to cause substantial harm to the interests of the Company. If any of
these conditions is not fulfilled, the Committee may require the Participant to forfeit all rights
to any Options which have not been exercised prior to the date of the breach of the condition.

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SECTION 8.

CHANGE IN CONTROL

     8.1 Accelerated Vesting and Payment. Subject to the provisions of Section 8.2 below, in the
event of a Change in Control, each Participant shall be permitted, in the Participant’s discretion,
to surrender any Option (excluding any Director Option) or portion thereof in exchange for (a) a
payment in cash of an amount equal to the excess of the Change in Control Price over the exercise
price of the Option or (b) at the Committee’s discretion, whole shares of Stock with a Fair Market
Value equal to the excess of the Change in Control Price over the exercise price of the Option and
the Fair Market Value of any fractional share of Stock will be distributed in cash. However, the
Committee, in its sole discretion, may offer the holders of the Options to be surrendered a
reasonable opportunity (not longer than 15 days beginning on the date of the Change in Control) to
exercise all their outstanding Options (whether or not otherwise then exercisable) by following the
exercise procedures described in Section 6. Such right to surrender an Option in exchange for a
payment in cash or, if appropriate, in shares of Stock (or to exercise an Option) as provided in
the two preceding sentences shall remain in effect only during the fifteen-day period commencing
with the day following the date of a Change in Control. Thereafter, the Option shall only be
exercisable in accordance with the terms and conditions of the Stock Option Agreement and the
provisions of the Plan.

     8.2 Alternative Awards. Notwithstanding Section 8.1, no cancellation or cash settlement or
other payment or exercise shall occur under the circumstances described in Section 8.1 with respect
to any Option or any class of Options if the Committee reasonably determines in good faith prior to
the occurrence of a Change in Control that such Option or Options shall be honored or assumed, or
new rights substituted therefor (such honored, assumed or substituted award hereinafter called an
“Alternative Award”), by a Participant’s employer (or the parent or a subsidiary of such employer)
immediately following the Change in Control, provided that any such Alternative Award must:

     (a) be based on stock which is traded on an established securities market, or which
will be so traded within 60 days of the Change in Control;

     (b) provide such Participant (or each Participant in a class of Participants) with
rights and entitlements substantially equivalent to or better than the rights, terms and
conditions applicable under such Option, including, but not limited to, an identical or
better exercise or vesting schedule and identical or better timing and methods of payment;

     (c) have substantially equivalent economic value to such Option (determined at the time
of the Change in Control); and

     (d) have terms and conditions which provide that in the event that the Participant’s
employment is involuntarily terminated or constructively terminated, any conditions on a
Participant’s rights under, or any restrictions on transfer or exercisability applicable to,
each such Alternative Award shall be waived or shall lapse, as the case may be.

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     For this purpose, a constructive termination shall mean a termination by a Participant
following a material reduction in the Participant’s compensation, a material reduction in the
Participant’s responsibilities or the relocation of the Participant’s principal place of employment
to another location, in each case without the Participant’s written consent.

     Notwithstanding anything herein to the contrary, no Alternative Award shall be made with
respect to an Option if it would cause the Option to become “deferred compensation” subject to
Section 409A of the Code or fail to comply with the requirements of Section 409A of the Code.

     8.3 Director Options and Stock Units. Upon a Change in Control, each Director Option granted
to an Eligible Director and all Stock Units credited to an Eligible Director shall be canceled in
exchange for (a) a payment in cash or, (b) in the case of Director Options and at the Committee’s
discretion, whole shares of Stock with a Fair Market Value equal to the excess of the Change in
Control Price over the exercise price associated with the cancelled Director Options and the Fair
Market Value of any fractional share of Stock will be distributed in cash. Alternatively, the
Committee, in its sole discretion, may offer the holders of the Director Options to be cancelled a
reasonable opportunity (not longer than 15 days beginning on the date of the Change in Control) to
exercise all their outstanding Director Options (whether or not otherwise then exercisable) by
following the exercise procedures described in Section 6. The amount of cash (or the Fair Market
Value of shares of Stock plus the cash distributed in lieu of a fractional share of Stock)
exchanged for each Director Option shall be the excess of the Change in Control Price over the
exercise price for such Director Option unless (a) the Stock remains traded on an established
securities market following the Change in Control and (b) such Eligible Director remains on the
Board following the Change in Control. The amount of cash exchanged for each Stock Unit shall be
the Change in Control Price.

     8.4 Options Granted Within Six Months of the Change in Control. If any Option (including a
Director Option) granted within six months of the date on which a Change in Control occurs (a) is
held by a person subject to the reporting requirements of Section 16(a) of the Act and (b) is to be
cashed out pursuant to Section 8.1 or 8.3, such cash out shall not occur unless and until, in the
opinion of the Company’s counsel, such cash out could occur without such reporting person being
potentially subject to liability under Section 16(b) of the Act by reason of such cash out.

SECTION 9.

AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

     The Board or the Committee may at any time terminate or suspend the Plan, and from time to
time may amend or modify the Plan. Any such amendment, termination or suspension may be made
without the approval of the shareholders of the Company except as such shareholder approval may be
required (a) to satisfy the requirements of Rule 16b-3 under the Act, or any successor rule or
regulation, (b) to satisfy applicable requirements of the Code or (c)

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to satisfy applicable requirements of any securities exchange on which are listed any of the
Company’s equity securities. No amendment of the Plan shall result in any loss of a Committee
member’s status as a “non-employee director” as defined in Rule 16b-3 under the Act, or any
successor rule or regulation, with respect to any employee benefit plan of the Company or result in
the Plan losing its status as a plan satisfying the requirements of said Rule 16b-3. No amendment,
modification, or termination of the Plan shall in any manner adversely affect any Award theretofore
made under the Plan, without the consent of the Participant.

SECTION 10.

MISCELLANEOUS PROVISIONS

     10.1. Assignability.

     (a) With the permission of the Committee, a Participant or a specified group of
Participants who has or have been granted an NSO under the Plan may transfer it to a
revocable inter vivos trust as to which the Participant is the settlor or may transfer it to
a “Permissible Transferee.” A Permissible Transferee shall be defined as any member of the
immediate family of the Participant; any trust, whether revocable or irrevocable, solely for
the benefit of members of the Participant’s immediate family; any partnership or limited
liability company whose only partners or members are members of the Participant’s immediate
family; or an organization described in Section 501(c)(3) of the Code. Any such transferee
shall remain subject to all of the terms and conditions applicable to such NSO and subject
to the rules and regulations prescribed by the Committee. A Permissible Transferee [other
than an organization described in Section 501(c)(3) of the Code] may not retransfer an NSO
except by will or the laws of descent and distribution and then only to another Permissible
Transferee. Other than as described above, an NSO granted under the Plan may not be
transferred except by will or the laws of descent and distribution and, during the lifetime
of the Participant to whom granted, may be exercised only by the Participant or the
Participant’s guardian or legal representative.

     (b) With the permission of the Committee, an Eligible Director who has been granted a
Director Option or has received a Stock Unit under the Plan may transfer such Director
Option or Stock Unit to a revocable inter vivos trust as to which the Eligible Director is
the settlor or may transfer such Director Option or Stock Unit to a “Permissible
Transferee.” A Permissible Transferee shall be defined as any member of the immediate
family of the Eligible Director; any trust, whether revocable or irrevocable, solely for the
benefit of members of the Eligible Director’s immediate family; any partnership or limited
liability company whose only partners or members are members of the Eligible Director’s
immediate family; or an organization described in Section 501(c)(3) of the Code. Any such
transferee shall remain subject to all of the terms and conditions applicable to such
Director Option or Stock Unit and subject to the rules and regulations prescribed by the
Committee. A Permissible Transferee [other than an organization described in Section
501(c)(3) of the Code] may not retransfer a Director Option or Stock Unit except by will or
the laws of descent and distribution and then only to another Permissible Transferee. Other
than as described above, a Director Option

13

 

granted or Stock Unit received under the Plan may not be transferred except by will or
the laws of descent and distribution and, during the lifetime of the Eligible Director to
whom granted or by whom received, may be exercised only by the Eligible Director or the
Eligible Director’s guardian or legal representative.

     10.2 Beneficiary Designation. Each Participant and each Eligible Director may from time to
time name a beneficiary or beneficiaries (who may be named contingently or successively) to whom
any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in
case of the Participant’s or Eligible Director’s death. Each designation shall revoke all prior
designations by the same Participant or Eligible Director, shall be in a form prescribed by the
Committee, and shall be effective only when filed in writing with the Committee. In the absence of
any such designation, benefits remaining unpaid at the Participant’s or Eligible Director’s death
shall be paid to the Participant or Eligible Director’s surviving spouse, if any, or otherwise to
the Participant’s or Eligible Director’s estate and Options outstanding at the Eligible Director’s
death shall be exercised by the Participant or Eligible Director’s surviving spouse, if any, or
otherwise by the Participant’s or Eligible Director’s estate.

     10.3 No Guarantee of Employment or Participation. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any Participant’s
employment at any time, nor confer upon any Participant any right to continue in the employ of the
Company or any Subsidiary. No Employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Awards. Nothing in the Plan shall confer upon an
Eligible Director a right to continue to serve on the Board or to be nominated for reelection to
the Board.

     10.4 Tax Withholding. The Company shall have the power to withhold, or require a Participant
or Eligible Director to remit to the Company, an amount sufficient to satisfy Federal, state, and
local withholding tax requirements on any Award under the Plan, and the Company may defer payment
of cash or issuance of Stock until such requirements are satisfied. The Committee may, in its
discretion, permit a Participant or an Eligible Director to elect, subject to such conditions as
the Committee shall impose, (a) to have shares of Stock otherwise issuable under the Plan withheld
by the Company or (b) to deliver to the Company previously acquired shares of Stock having a Fair
Market Value sufficient to satisfy all or part of the Participant’s or the Eligible Director’s
estimated total Federal, state, and local tax obligation associated with the transaction.

     10.5 Indemnification. Each person who is or shall have been a member of the Committee or of
the Board shall be indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by such person in connection
with or resulting from any claim, action, suit, or proceeding to which such person may be made a
party or in which such person may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by such person in settlement thereof, with
the Company’s approval, or paid by such person in

14

 

satisfaction of any judgment in any such action, suit, or proceeding against such person
provided such person shall give the Company an opportunity, at its own expense, to handle and
defend the same before such person undertakes to handle and defend it on such person’s own behalf.
The foregoing right of indemnification shall not be exclusive and shall be independent of any other
rights of indemnification to which such persons may be entitled under the Company’s articles of
incorporation or code of regulations, by contract, as a matter of law, or otherwise.

     10.6 No Limitation on Compensation. Nothing in the Plan shall be construed to limit the right
of the Company to establish other plans or to pay compensation to its Employees or directors, in
cash or property, in a manner which is not expressly authorized under the Plan.

     10.7 International Employees. It is the Company’s desire to provide the same motivation to
materially increase shareholder value and to enable the Company to attract and retain the services
of outstanding managers in the international locations where the Company maintains facilities and
employs people. To this end, the Company will adopt incentives in its foreign locations that
provide as closely as possible the same motivational effect as Options provide to domestic
Participants. The Committee may grant Options to employees who are subject to the tax laws of
nations other than the United States, which Options may have terms and conditions that differ from
other Options granted under the Plan for the purposes of complying with foreign tax laws.

     10.8 Requirements of Law. The making of Awards and the issuance of shares of Stock shall be
subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required. Notwithstanding the foregoing, no
Stock shall be issued under the Plan unless the Company is satisfied that such issuance will be in
compliance with applicable federal and state securities laws. Certificates for Stock delivered
under the Plan may be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is then listed or traded, The NASDAQ
Stock Market or any applicable federal or state securities law. The Committee may cause a legend
or legends to be placed on any such certificates to make appropriate reference to such
restrictions.

     10.9 Term of Plan. The Plan was effective upon its adoption by the Committee, subject to
approval by the Board and approval by the affirmative vote of the holders of a majority of the
shares of voting stock present in person or represented by proxy at the 1996 Annual Meeting. After
January 26, 2006, no Award is permitted to be granted under the Plan, but all Awards outstanding as
of such date may extend beyond such date in accordance with their respective terms.

     10.10 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Ohio.

     10.11 No Impact On Benefits. Plan Awards are not compensation for purposes of calculating an
Employee’s rights under any employee benefit plan.

15EX-10(J)(3)

 

Exhibit 10(j)(3)

THE SCOTTS MIRACLE-GRO COMPANY

AMENDED AND RESTATED

2003 STOCK OPTION AND INCENTIVE EQUITY PLAN

(EFFECTIVE AS OF OCTOBER 30, 2007)

(Does Not Reflect Any Stock Splits or Stock Dividends)

1.00 PURPOSE

This Plan is intended to foster and promote the long-term financial success of the Company and to
materially increase shareholder value by [1] providing Key Employees and Eligible Directors an
opportunity to acquire an ownership interest in the Company, and [2] enabling the Company to
attract and retain the services of outstanding Employees and Eligible Directors upon whose
judgment, interest and special efforts the successful conduct of the Company’s business is largely
dependent.

2.00 DEFINITIONS

When used in this Plan, the following terms have the meanings given to them in this section unless
another meaning is expressly provided elsewhere in this document or clearly required by the
context. When applying these definitions, the form of any term or word will include any of its
other forms.

2.01 Act. The Securities Exchange Act of 1934, as amended.

2.02 Annual Meeting. The annual meeting of the Company’s shareholders.

2.03 Annual Retainer. The annual cash retainer and any other fees paid to each Eligible Director
for service as a member of the Board and as a member of any Board committees.

2.04 Annual Retainer Deferral Form. The form each Eligible Director must complete to defer all or
a portion of his or her Annual Retainer.

2.05 Award. Any Incentive Stock Option, Nonstatutory Stock Option, Performance Share, Performance
Unit, Restricted Stock, Stock Appreciation Right and Stock Unit issued under the Plan. During any
single Plan Year, no Participant may be granted SARs affecting more than 150,000 shares of Stock
(adjusted as provided in Section 5.03) and Options affecting more than 150,000 shares of Stock
(adjusted as provided in Section 5.03), including Options and SARs that are cancelled [or deemed to
have been cancelled under Treas. Reg. §1.162-27(e)(2)(vi)(B)] during the Plan Year issued.

2.06 Award Agreement. The written agreement between the Company and each Participant that
describes the terms and conditions of each Award.

 

 

2.07 Beneficiary. The person a Member designates to receive (or exercise) any Plan benefits (or
rights) that are unpaid (or unexercised) when he or she dies. A Beneficiary may be designated only
by following the procedures described in Section 14.02; neither the Company nor the Committee is
required to infer a Beneficiary from any other source.

2.08 Board. The Company’s Board of Directors.

2.09 Cause. Unless the Committee specifies otherwise in the Award Agreement, with respect to any
Participant:

[1] Willful failure to substantially perform his or her duties as an Employee (for reasons
other than physical or mental illness) or director after reasonable notice to the
Participant of that failure;

[2] Misconduct that materially injures the Company or any Subsidiary;

[3] Conviction of, or entering into a plea of nolo contendere to, a felony; or

[4] Breach of any written covenant or agreement with the Company or any Subsidiary.

2.10 Change in Control.

The occurrence of any of the following events:

[1] The members of the Board on November 8, 2002 (“Incumbent Directors”) cease for any
reason other than death to constitute at least a majority of the members of the Board,
provided that any director whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the then Incumbent Directors
also will be treated as an Incumbent Director; or

[2] Any “person,” including a “group” [as such terms are used in Act §§13(d) and 14(d)(2),
but excluding the Company, any of its Subsidiaries, any employee benefit plan of the Company
or any of its Subsidiaries or Hagedorn Partnership, L.P. or any party related to Hagedorn
Partnership, L.P. as determined by the Committee] becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing more than 30 percent of the combined voting power of the Company’s then
outstanding securities; or

[3] The adoption or authorization by the shareholders of the Company of a definitive
agreement or a series of related agreements [a] for the merger or other business combination
of the Company with or into another entity in which the shareholders of the Company
immediately before the effective date of such merger or other business combination own less
than 50 percent of the voting power in such entity; or [b] for the sale or other disposition
of all or substantially all of the assets of the Company; or

[4] The adoption by the shareholders of the Company of a plan relating to the liquidation or
dissolution of the Company; or

-2-

 

[5] For any reason, Hagedorn Partnership, L. P. or any party related to Hagedorn
Partnership, L.P. as determined by the Committee becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing more than 49 percent of the combined voting power of the Company’s then
outstanding securities.

2.11 Change in Control Price. The price per share of Stock paid in conjunction with any
transaction resulting in a Change in Control (as determined in good faith by the Committee if any
part of the offered price is payable other than in cash) or, in the case of a Change in Control
occurring solely by reason of events not related to a transfer of Stock, the highest Fair Market
Value of a share of Stock on any of the 30 consecutive trading days ending on the last trading day
before the Change in Control occurs.

2.12 Code. The Internal Revenue Code of 1986, as amended, and any regulations issued under the
Code (sometimes referred to as “Treas. Reg.”) and any applicable rulings issued under the Code.

2.13 Committee. The Board’s Compensation and Organization Committee which also constitutes a
“compensation committee” within the meaning of Treas. Reg. §1.162-27(c)(4). The Committee will be
comprised of at least three persons [a] each of whom is [i] an outside director, as defined in
Treas. Reg. §1.162-27(e)(3)(i) and [ii] a “non-employee” director within the meaning of Rule 16b-3
under the Act and [b] none of whom may receive remuneration from the Company or any Subsidiary in
any capacity other than as a director, except as permitted under Treas. Reg. §1.162-27(e)(3)(ii).

2.14 Company. The Scotts Miracle-Gro Company, an Ohio corporation, and any and all successors to
it.

2.15 Director Option. A Nonstatutory Stock Option granted to an Eligible Director under Section
6.05.

2.16 Disability. Unless the Committee specifies otherwise in the Award Agreement:

[1] With respect to any Award other than an Incentive Stock Option, the Participant’s
inability to perform his or her normal duties for a period of at least six months due to a
physical or mental infirmity; or

[2] With respect to an Incentive Stock Option, as defined in Code §22(e)(3).

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2.17 Eligible Director. A person who, on an applicable Grant Date [1] is an elected member of the
Board (or has been appointed to the Board to fill an unexpired term and will continue to serve at
the expiration of that term only if elected by shareholders) and [2] is not an Employee. For
purposes of applying this definition, an Eligible Director’s status will be determined as of the
Grant Date applicable to each affected Award.

2.18 Employee. Any person who, on an applicable Grant Date, is a common law employee of the
Company or any Subsidiary. A worker who is classified as other than a common law employee but who
is subsequently reclassified as a common law employee of the Company for any reason and on any
basis will be treated as a common law employee only from the date of that determination and will
not retroactively be reclassified as an Employee for any purpose of this Plan.

2.19 Exercise Price. The price at which a Member may exercise an Award.

2.20 Fair Market Value. The value of one share of Stock on any relevant date, determined under the
following rules:

[1] If the Stock is traded on an exchange, the reported “closing price” on the relevant
date, if it is a trading day, otherwise on the next trading day;

[2] If the Stock is traded over-the-counter with no reported closing price, the mean between
the lowest bid and the highest asked prices on that quotation system on the relevant date if
it is a trading day, otherwise on the next trading day; or

[3] If neither Section 2.20[1] nor Section 2.20[2] applies, the value as determined by the
Committee through the reasonable application of a reasonable valuation method, taking into
account all information material to the value of the Company, within the meaning of
Code §409A and the Treasury Regulations promulgated thereunder.

2.21 Freestanding SAR. An SAR that is not associated with an Option and is granted under Section
10.00.

2.22 Grandfathered Stock Unit. A Stock Unit that was earned and vested (within the meaning of
Treas. Reg. §1.409A-6) as of December 31, 2004.

2.23 Grant Date. The date an Award is granted to a Participant.

2.24 Key Employee. Any Employee who, on any applicable Grant Date, is performing services the
Committee concludes are essential to the Company’s business success and to whom the Committee has
granted an Award.

2.25 Member. Each Participant and Terminated Participant to whom an Award has been granted and
which has not expired under the terms of the Award Agreement or as provided in Section 11.00.

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2.26 Non-Grandfathered NSO. A Nonstatutory Stock Option that (1) was not earned and vested (within
the meaning of Treas. Reg. §1.409A-6) as of December 31, 2004 or (2) was granted on or after
January 1, 2005.

2.27 Non-Grandfathered SAR. A Stock Appreciation Right that (1) was not earned and vested (within
the meaning of Treas. Reg. § 1.409A-6) as of December 31, 2004 or (2) was granted on or after
January 1, 2005.

2.28 Non-Grandfathered Stock Unit. A Stock Unit that is not a Grandfathered Stock Unit.

2.29 Nonstatutory Stock Option. Any Option granted under Section 6.00 that is not an Incentive
Stock Option.

2.30 Option. The right granted under the Plan to purchase a share of Stock at a stated price for a
specified period of time. An Option may be either [1] an Incentive Stock Option or [2] a
Nonstatutory Stock Option.

2.31 Participant. Any Key Employee or Eligible Director who has not Terminated.

2.32 Performance Goal. The conditions that must be met before a Key Employee will earn a
Performance Share or Performance Unit.

2.33 Performance Period. The period over which the Committee will determine if applicable
Performance Goals have been met.

2.34 Performance Share. An Award granted under Section 9.00.

2.35 Performance Unit. An Award granted under Section 9.00.

2.36 Plan. The Scotts Miracle-Gro Company Amended and Restated 2003 Stock Option and Incentive
Equity Plan.

2.37 Plan Year. The Company’s fiscal year.

2.38 Restricted Stock. An Award granted under Section 8.00.

2.39 Restriction Period. The period over which the Committee will determine if a Key Employee has
met conditions placed on Restricted Stock; provided such period will be at least three years.

2.40 Retirement. Unless, the Committee specifies otherwise in the Award Agreement, the date:

[1] A Key Employee Terminates on or after the earlier of [a] reaching age 62 or [b] with the
Committee’s approval, reaching age 55 and completing at least 10 years of service as an
Employee; or

[2] An Eligible Director Terminates as a Board member after having been a Board member for
at least one full term.

-5-

 

For purposes of applying this definition, a Participant’s status will be determined as of the Grant
Date applicable to each affected Award.

2.41 Stock. A common share, without par value, issued by the Company.

2.42 Stock Appreciation Right (or “SAR”). An Award granted under Section 10.00 that is a Tandem
SAR or a Freestanding SAR.

2.43 Stock Unit. A right to receive payment of the Fair Market Value of a share of Stock as
provided in Section 7.00.

2.44 Subsidiary. Any corporation, partnership or other form of unincorporated entity of which the
Company owns, directly or indirectly, 50 percent or more of the total combined voting power of all
classes of stock, if the entity is a corporation; or of the capital or profits interest, if the
entity is a partnership or another form of unincorporated entity.

2.45 Tandem SAR. An SAR that is associated with an Option and which expires when that Option
expires or is exercised, as described in Section 10.00.

2.46 Termination or Terminated. Unless the Committee specifies otherwise in the Award Agreement,
[1] cessation of the employee-employer relationship between a Key Employee and the Company and all
Subsidiaries for any reason or [2] cessation of an Eligible Director’s service on the Board for any
reason; provided, however, that, with respect to any Award subject to Code §409A, such cessation
also must constitute a “separation from service” as defined under Treas. Reg. §1.409A-1(h).

3.00 PARTICIPATION

3.01 Key Employees.

[1] Consistent with the terms of the Plan and subject to Section 3.02, the Committee will:

[a] Decide which Key Employees may become Participants;

[b] Decide which Key Employees will be granted Awards; and

[c] Specify the type of Award to be granted and the terms upon which an Award will
be granted.

[2] The Committee may establish different terms and conditions:

[a] For each type of Award;

-6-

 

[b] For each Key Employee receiving the same type of Award; and

[c] For the same Key Employees for each Award the Key Employee receives, whether or
not those Awards are granted at different times.

3.02 Eligible Directors. Each Eligible Director will [1] become a Participant on the date he or
she becomes an Eligible Director and [2] receive the Awards described in Sections 6.05 and 7.00
without any further action by the Committee. However, as of the date an Award is made, the
Committee will complete and deliver an Award Agreement to each affected Eligible Director
describing the terms of the Award.

3.03 Conditions of Participation. Each Participant receiving an Award agrees:

[1]
To sign an Award Agreement;

[2]
To be bound by the terms of the Award Agreement and the Plan; and

[3]
To comply with other conditions imposed by the Committee.

4.00 ADMINISTRATION

4.01 Committee Duties. The Committee is responsible for administering the Plan and has all powers
appropriate and necessary to that purpose. Consistent with the Plan’s objectives, the Committee
may adopt, amend and rescind rules and regulations relating to the Plan, to the extent appropriate
to protect the Company’s interests and has complete discretion to make all other decisions
(including whether a Participant has incurred a Disability) necessary or advisable for the
administration and interpretation of the Plan. Any action by the Committee will be final, binding
and conclusive for all purposes and upon all persons.

4.02 Delegation of Ministerial Duties. In its sole discretion, the Committee may delegate any
ministerial duties associated with the Plan to any person (including employees) that it deems
appropriate.

4.03 Award Agreement. At the time any Award is made, the Committee will prepare and deliver an
Award Agreement to each affected Participant. The Award Agreement:

[1] Will describe:

[a] The type of Award and when and how it may be exercised;

[b] The effect of exercising the Award; and

[c] Any Exercise Price associated with each Award.

[2] To the extent different from the terms of the Plan, will describe:

[a] Any conditions that must be met before the Award may be exercised;

-7-

 

[b] Any objective restrictions placed on Restricted Stock, Performance Shares and
Performance Units and any performance related conditions and Performance Goals that
must be met before those restrictions will be released;

[c] When and how an Award may be exercised; and

[d] Any other applicable terms and conditions affecting the Award.

4.04 Restriction on Repricing. Regardless of any other provision of this Plan, neither the Company
nor the Committee may “reprice” (as defined under rules issued by the exchange on which the Stock
then is traded) any Option without the prior approval of the shareholders.

5.00 STOCK SUBJECT TO PLAN

5.01 Number of Shares of Stock. Subject to Section 5.03, the number of shares of Stock subject to
Awards under the Plan may not be larger than 1,800,000 of which up to 300,000 may be issued as
Restricted Stock. The shares of Stock to be delivered under the Plan may consist, in whole or in
part, of treasury Stock or authorized but unissued Stock not reserved for any other purpose.

5.02 Cancelled, Terminated or Forfeited Awards. Any Stock subject to an Award that, for any
reason, is cancelled, terminated or otherwise settled without the issuance of any Stock or cash may
again be granted under the Plan. Any Performance Share or share of Restricted Stock that has been
issued to a Participant under the Plan and is subsequently forfeited pursuant to the terms of the
Plan or the applicable Award Agreement will be forfeited to and acquired by the Company as treasury
Stock and may again be granted under the terms of the Plan.

5.03 Adjustment in Capitalization. If there is a Stock dividend or Stock split, recapitalization
(including payment of an extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to shareholders, exchange of shares, or other similar corporate change
affecting Stock, the Committee will appropriately adjust [1] the number of Awards that may or will
be issued to Participants during a Plan Year, [2] the aggregate number of shares of Stock available
for Awards under Section 5.01 or subject to outstanding Awards (as well as any share-based limits
imposed under this Plan), [3] the respective Exercise Price, number of shares and other limitations
applicable to outstanding or subsequently issued Awards and [4] any other factors, limits or terms
affecting any outstanding or subsequently issued Awards. Notwithstanding anything to the contrary
in this Section 5.03, an adjustment to a Non-Grandfathered NSO, a Non-Grandfathered SAR or a
Non-Grandfathered Stock Unit shall be made only to the extent such adjustment complies with the
requirements of Code §409A.

-8-

 

6.00 OPTIONS

6.01 Grant of Options. The Committee may grant Options to Key Employees at any time during the
term of this Plan. Options may be either [1] Incentive Stock Options or [2] Nonstatutory Stock
Options.

6.02 Option Price. Each Option will bear the Exercise Price the Committee specifies in the Award
Agreement. However, [1] in the case of a Nonstatutory Stock Option, the Exercise Price will not be
less than the Fair Market Value of a share of Stock on the Grant Date and [2] in the case of an
Incentive Stock Option, the Exercise Price [a] will not be less than the Fair Market Value of a
share of Stock on the Grant Date and [b] will be at least 110 percent of the Fair Market Value of a
share of Stock on the Grant Date with respect to any Incentive Stock Options issued to a Key
Employee who, on the Grant Date, owns [as defined in Code §424(d)] Stock possessing more than
10 percent of the total combined voting power of all classes of Stock.

6.03 Exercise of Options. Subject to Section 11.00 and any other restrictions and conditions
specified in the Award Agreement and unless the Committee specifies otherwise in the Award
Agreement, Options will be exercisable according to the following schedule:

	 	 	 
	Number of Full Years Beginning 

After Grant Date
	 	Cumulative Percentage

Vested
	 
	 	 
	Less than 3

3 or more
	 	0 percent

100 percent

However:

[1] Any fractional share of Stock will be rounded down.

[2] Unless the Committee specifies otherwise in the Award Agreement, no Key Employee may
exercise Options for fewer than the smaller of:

[a] 100 shares of Stock; or

[b] The number of full shares of Stock for which Options are then exercisable.

-9-

 

[3] No Option may be exercised more than ten years after it is granted (five years in
respect of an Incentive Stock Option, if the Key Employee owns [as defined in Code §424(d)]
Stock possessing more than 10 percent of total combined voting power of all classes of Stock
on the Grant Date).

6.04 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary:

[1] No provision of this Plan relating to Incentive Stock Options will be interpreted,
amended or altered, nor will any discretion or authority granted under the Plan be
exercised, in a manner that is inconsistent with Code §422 or, without the consent of any
affected Member, to cause any Incentive Stock Option to fail to qualify for the federal
income tax treatment afforded under Code §421;

[2] The aggregate Fair Market Value of the Stock (determined as of the Grant Date) with
respect to which Incentive Stock Options are exercisable for the first time by any Member
during any calendar year (under all option plans of the Company and all Subsidiaries of the
Company) will not exceed $100,000 [or other amount specified in Code §422(d)]; and

[3] No Incentive Stock Option will be granted to any person who is not a Key Employee on the
Grant Date.

6.05 Director Options.

[1] Prior to the 2006 Annual Meeting, on the first business day after each Annual Meeting,
each Eligible Director was issued Director Options to purchase [a] 5,000 shares of Stock
plus [b] 500 shares of Stock, multiplied by the number of Board committees of which he or
she was then a member, plus [c] 1,000 shares of Stock, multiplied by the number of Board
committees of which he or she was then chairperson. The Director Options issued under this
section were reduced (but not below zero) by any options issued for the same purpose under
any other Company equity plan or program.

[2] Subject to Section 6.05[3], each Director Option may be exercised [a] no earlier than
six months after the Grant Date and [b] no later than the earlier of [i] ten years after the
Grant Date, or [ii] one year after the Eligible Director Terminates (five years if
Termination is because of Retirement).

[3] However:

[a] Any fractional share of Stock will be rounded down; and

[b] Unless the Committee specifies otherwise in the Award Agreement, no Eligible
Director may exercise Director Options for fewer than the smaller of:

	 	 	 	[i] 100 shares of Stock; or

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	 	 	 	[ii] The number of full shares of Stock for which
Director Options are then exercisable.

6.06 Payment for Options. Unless the Committee specifies otherwise in the Award Agreement, the
Exercise Price associated with each Option must be paid in cash. However, the Committee may, in
its discretion, develop, and extend to some or all Members, procedures through which Members may
pay an Option’s Exercise Price, including allowing a Member to tender Stock he or she already has
owned for at least six months before the exercise date, either by actual delivery of the previously
owned Stock or by attestation, valued at its Fair Market Value on the exercise date, as partial or
full payment of the Exercise Price.

6.07 Transferability of Stock. Unless the Committee specifies otherwise in the Award Agreement,
Stock acquired through an Option will be transferable, subject to applicable federal securities
laws, the requirements of any national securities exchange or system on which shares of Stock are
then listed or traded or any blue sky or state securities laws.

7.00 STOCK UNITS

7.01 Granting Stock Units. Each Eligible Director was permitted to elect, prior to January 1,
2005, to receive all or a portion of his or her Annual Retainer in cash or Stock Units under this
Plan by returning to the Committee an Annual Retainer Deferral Form specifying:

[1] The portion (stated in 25 percent increments) of the Annual Retainer to be converted to
Stock Units;

[2] The date Stock Units are to be settled;

[3] Whether Stock Units are to be settled in cash or Stock; and

[4] The period (which may not be longer than 10 years) over which the value of Stock Units
is to be distributed.

If a completed Annual Retainer Deferral Form was not timely received, the Eligible Director’s
Annual Retainer was paid in cash through the Company’s regular procedures for paying Annual
Retainers. Each Eligible Director that effectively elected to receive Stock Units in lieu of all
or a portion of his or her Annual Retainer received a number of Stock Units calculated by dividing
the dollar amount of Annual Retainer to be received in Stock Units by the Fair Market Value of a
share of Stock on the first trading day following the date of the Annual Meeting for which the
deferred value of the Annual Retainer otherwise would have been paid and rounded to the next
highest whole share of Stock.

7.02 Settling Stock Units.

[1] All Stock Units will be settled as of the earlier of:

[a] The date the Eligible Director Terminates; or

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[b] The date the Eligible Director specifies on an Annual Retainer Deferral Form.

[2] If Stock Units are to be settled in cash, the amount distributed will be calculated by
multiplying the number of Stock Units to be settled in cash by the Fair Market Value of a
share of Stock on the date the Stock Units are settled.

[3] If Stock Units are to be settled in shares of Stock, the number of shares distributed
will equal the whole number of Stock Units to be settled in Stock, with the Fair Market
Value of any fractional share of Stock on the date the Stock Units are settled distributed
in cash.

[4] If an Eligible Director dies before all of his or her Stock Units have been settled, the
value of any unpaid Stock Units will be paid in a lump sum in cash to his or her
Beneficiary.

7.03 Change to Election. 

[1] Grandfathered Stock Units. Once filed, elections made on an Annual Retainer Deferral
Form with respect to Grandfathered Stock Units will remain in effect until changed. Any
change to an earlier election relating to Grandfathered Stock Units must be made by
completing and returning another completed Annual Retainer Deferral Form to the Committee:

[a] If the change relates to the time Grandfathered Stock Units are to be settled,
no later than 12 months before the previously established settlement date relating
to the affected Grandfathered Stock Units; or

[b] If the change relates to the form in which Grandfathered Stock Units are to be
settled, no later than 12 months before the settlement date relating to the affected
Grandfathered Stock Units.

[2] Non-Grandfathered Stock Units.

[a] An Eligible Director may change the time and period over which the
Non-Grandfathered Stock Units are to be settled (based on the choices available
under Section 7.01[2] and [4]) by completing and returning a new Annual Retainer
Deferral Form to the Committee; provided that such change is irrevocable and

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meets the following requirements: [i] the change may not take effect until at least
12 months after the date on which such election is made; [ii] the settlement date of
the Non-Grandfathered Stock Units must be deferred (other than in respect of a
distribution upon death) for a period of not less than five years from the date the
Non-Grandfathered Stock Units were scheduled to be settled; and [iii] any change
affecting a distribution at a specified time (or pursuant to a fixed schedule) may
not be made less than 12 months before the date the Non-Grandfathered Stock Units
were scheduled to be settled.

[b] Once payments relating to Non-Grandfathered Stock Units begin, no changes to the
Eligible Director’s distribution election shall be permitted.

[c] For purposes of this Section 7.03[2], the right to a series of installment
payments shall be treated as the right to a series of separate payments.

8.00 RESTRICTED STOCK

8.01 Restricted Stock Grants. The Committee may grant Restricted Stock to Key Employees at any
time during the term of this Plan.

8.02 Transferability. Shares of Restricted Stock may not be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated until the end of the applicable Restriction Period.
Restricted Stock normally will be held by the Company as escrow agent during the Restriction Period
and will be distributed as described in Section 8.03. However, at any time during the Restriction
Period, the Committee may, in its sole discretion, issue the Restricted Stock to the Key Employee
in the form of certificates containing a legend describing restrictions imposed on the Restricted
Stock.

8.03 Removal of Restrictions. Shares of Restricted Stock will be:

[1] Forfeited, if all restrictions have not been met at the end of the Restriction Period,
and again become available to be granted under the Plan; or

[2] Released from escrow and distributed to the affected Key Employee (or any restrictions
imposed on the distributed certificate removed) as soon as practicable, but no later than 60
days, after the last day of the Restriction Period, if all restrictions have then been met.

8.04 Rights Associated with Restricted Stock. During the Restriction Period:

[1] Key Employees may exercise full voting rights associated with their Restricted Stock;
and

[2] All dividends and other distributions paid with respect to any Restricted Stock will be
held in escrow during the Restriction Period and subject to the same restrictions on
transferability and forfeitability as the shares of Restricted Stock with respect to which
they were paid. A reasonable rate of interest, as determined by the Committee in its sole
discretion, will be credited to the Key Employee and held in escrow during the

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Restriction Period with respect to any such cash dividends that were or are declared and
paid during the period beginning on December 20, 2006 and ending on the last day of the
Restriction Period. At the end of the Restriction Period, any such dividends and interest
thereon will be distributed to the Key Employee or forfeited as provided in Section 8.03.

9.00. PERFORMANCE SHARES AND PERFORMANCE UNITS

9.01 Performance Shares and Performance Unit Grants. The Committee may grant Performance Shares or
Performance Units to Key Employees at any time during the term of this Plan.

9.02 Performance Criteria.

[1] For each Performance Period, the Committee will establish the Performance Goal that will
be applied to determine the Performance Shares or Performance Units that will be distributed
at the end of the Performance Period.

[2] In establishing each Participant’s Performance Goal, the Committee will consider the
relevance of each Participant’s assigned duties and responsibilities to factors that
preserve and increase the Company’s value. These factors will include:

[a] Increasing sales;

[b] Developing new products and lines of revenue;

[c] Reducing operating expenses;

[d] Increasing customer satisfaction;

[e] Developing new markets and increasing the Company’s share of existing markets;

[f] Meeting completion schedules;

[g] Increasing standardized pricing;

[h] Developing and managing relationships with regulatory and other governmental
agencies;

[i]
Managing cash;

[j]
Managing claims against the Company, including litigation;

[k]
Identifying and completing strategic acquisitions; and

[l]
Increasing the Company’s book value.

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[3] The Committee will make appropriate adjustments to reflect:

[a] The effect on any Performance Goal of any Stock dividend or Stock split,
recapitalization (including, without limitation, the payment of an extraordinary
dividend), merger, consolidation, combination, spin-off, distribution of assets to
shareholders, exchange of shares or similar corporate change. This adjustment to
the Performance Goal will be made [i] to the extent the Performance Goal is based on
Stock, [ii] as of the effective date of the event and [iii] for the Performance
Period in which the event occurs. Also, the Committee will make a similar
adjustment to any portion of a Performance Goal that is not based on Stock but which
is affected by an event having an effect similar to those just described.

[b] A substantive change in a Participant’s job description or assigned duties and
responsibilities.

[4] Performance Goals will be established and communicated to each affected Participant in
an Award Agreement no later than the earlier of:

[a] 90 days after the beginning of the applicable Performance Period; or

[b] The expiration of 25 percent of the applicable Performance Period.

9.03 Earning Performance Shares and Performance Units. As of the end of each Performance Period,
the Committee will certify to the Board the extent to which each Participant has or has not met his
or her Performance Goal. Performance Shares or Performance Units will be:

[1] Forfeited, to the extent that Performance Goals have not been met at the end of the
Performance Period, and again become available to be granted under the Plan; or

[2] Valued and distributed, in a single lump sum, to Key Employees, in the form of cash,
Stock or a combination of both (as determined by the Committee) as soon as practicable, but
no later than 60 days, after the last day of the Performance Period, to the extent that
related Performance Goals have been met.

9.04 Rights Associated with Performance Shares and Performance Units. During the Performance
Period, and unless the Award Agreement provides otherwise:

[1] Key Employees may exercise full voting rights associated with their Performance Shares
or Performance Units; and

[2] All dividends and other distributions paid with respect to any Performance Shares or
Performance Units will be held in escrow during the Performance Period. At the end of the
Performance Period, these dividends will be distributed to the Key Employee or

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forfeited as provided in Section 9.03. No interest or other accretion will be credited with
respect to any dividends held in escrow. If any dividends or other distributions are paid
in shares of Stock, those shares will be subject to the same restrictions on transferability
and forfeitability as the shares of Restricted Stock with respect to which they were paid.

10.00 STOCK APPRECIATION RIGHTS

10.01 SAR Grants. Subject to the terms of the Plan, the Committee may grant Freestanding SARs and
Tandem SARs (or a combination of each) to Key Employees at any time during the term of this Plan.

10.02 Exercise Price. The Exercise Price of a SAR will not be less than 100 percent of the Fair
Market Value of a share of Stock on the Grant Date.

10.03 Exercise of Freestanding SARs. Freestanding SARs will be exercisable subject to the terms
specified in the Award Agreement.

10.04 Exercise of Tandem SARs. Tandem SARs may be exercised with respect to all or part of the
shares of Stock subject to the related Option by surrendering the right to exercise the equivalent
portion of the related Option. A Tandem SAR may be exercised only with respect to the shares of
Stock for which its related Option is then exercisable. However:

[1] A Tandem SAR will expire no later than the date the related Option expires;

[2] The value of the payout with respect to the Tandem SAR will not be more than 100 percent
of the difference between the Exercise Price of the SAR and the Fair Market Value of a share
of Stock on the date the Tandem SAR is exercised; and

[3] A Tandem SAR may be exercised only if the Fair Market Value of a share of Stock subject
to the Option is larger than the Exercise Price of the related Option.

10.05 Settling SARs. A Member exercising a Tandem SAR or a Freestanding SAR will receive an amount
equal to:

[1] The difference between the Fair Market Value of a share of Stock on the exercise date
and the Exercise Price; multiplied by

[2] The number of shares of Stock with respect to which the Tandem SAR or Freestanding SAR
is exercised.

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At the discretion of the Committee, the value of any Tandem SAR or Freestanding SAR being exercised
will be settled in cash, shares of Stock or any combination of both.

11.00 TERMINATION/BUY OUT

11.01 Retirement. Unless otherwise specified in the Award Agreement, all Awards that are
outstanding (whether or not then exercisable) when a Participant Retires may be exercised at any
time before the earlier of [1] the expiration date specified in the Award Agreement or [2] 60
months (three months in the case of Incentive Stock Options) beginning on the Retirement date (or
any shorter period specified in the Award Agreement).

11.02 Death or Disability. Unless otherwise specified in the Award Agreement, all Awards that are
outstanding (whether or not then exercisable) when a Participant Terminates because of death or
Disability may be exercised by the Participant or the Participant’s Beneficiary at any time before
the earlier of [1] the expiration date specified in the Award Agreement or [2] 60 months (12 months
in the case of an Incentive Stock Option) beginning on the date of death or Termination because of
Disability (or any shorter period specified in the Award Agreement).

11.03 Termination for Cause. Unless otherwise specified in the Award Agreement, all Awards that
are outstanding (whether or not then exercisable) if a Participant Terminates for Cause will be
forfeited.

11.04 Termination for any Other Reason. Unless otherwise specified in the Award Agreement or
subsequently, any Awards that are outstanding when an Employee Participant Terminates for any
reason not described in Sections 11.01 through 11.03 and which are then exercisable, or which the
Committee has, in its sole discretion, decided to make exercisable, may be exercised at any time
before the earlier of [1] the expiration date specified in the Award Agreement or [2] 90 days
beginning on the date the Employee Participant Terminates.

11.05 Limits on Exercisability/Forfeiture of Exercised Awards. Regardless of any other provision
of this section or the Plan and unless the Committee specifies otherwise in the Award Agreement, a
Member who fails to comply with Sections 11.05[3] through [9] will:

[1] Forfeit all outstanding Awards; and

[2] Forfeit all shares of Stock or cash (including dividends held in escrow under Sections
8.04[2] and 9.04[2]) acquired or received by the exercise of any Award, lapse of any
restrictions or attainment of any Performance Goals on the date of Termination or within 180
days before and 730 days after Terminating, including any amounts received under a “buy out”
as described in Section 11.06 but excluding amounts received as a consequence of a Change in
Control as described in Section 12.00.

The forfeiture described in Sections 11.05[1] and [2] will apply if the Member:

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[3] Without the Committee’s written consent, which may be withheld for any reason or for no
reason, serves (or agrees to serve) as an officer, director, consultant or employee of any
proprietorship, partnership or corporation or becomes the owner of a business or a member of
a partnership that competes with any portion of the Company’s (or a Subsidiary’s) business
with which the Member has been involved anytime within five years before Termination or
renders any service (including, without limitation, advertising or business consulting) to
entities that compete with any portion of the Company’s (or a Subsidiary’s) business with
which the Member has been involved anytime within five years before Termination;

[4] Refuses or fails to consult with, supply information to or otherwise cooperate with the
Company after having been requested to do so;

[5] Deliberately engages in any action that the Committee concludes has caused substantial
harm to the interests of the Company or any Subsidiary;

[6] Without the Committee’s written consent, which may be withheld for any reason or for no
reason, on his or her own behalf or on behalf of any other person, partnership, association,
corporation or other entity, solicits or in any manner attempts to influence or induce any
employee of the Company or a Subsidiary to leave the Company’s or Subsidiary’s employment or
uses or discloses to any person, partnership, association, corporation or other entity any
information obtained while an employee or director of the Company or any Subsidiary
concerning the names and addresses of the Company’s and any Subsidiaries’ employees;

[7] Without the Committee’s written consent, which may be withheld for any reason or for no
reason, discloses confidential and proprietary information relating to the Company’s and its
Subsidiaries’ business affairs (“Trade Secrets”), including technical information, product
information and formulae, processes, business and marketing plans, strategies, customer
information and other information concerning the Company’s and Subsidiaries’ products,
promotions, development, financing, expansion plans, business policies and practices,
salaries and benefits and other forms of information considered by the Company to be
proprietary and confidential and in the nature of Trade Secrets;

[8] Fails to return all property (other than personal property), including keys, notes,
memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks,
cards, surveys, maps, logs, machines, technical data, formulae or any other tangible
property or document and any and all copies, duplicates or reproductions that have been
produced by, received by or otherwise been submitted to the Member in the course of his or
her service with the Company or a Subsidiary; or

[9] Engaged in conduct that the Committee reasonably concludes would have given rise to a
Termination for Cause had it been discovered before the Participant Terminated.

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11.06 Buy Out of Awards. At any time before a Change in Control or the commencement of activity
that may reasonably be expected to result in a Change in Control, to the extent permitted by
applicable law, the Committee, in its sole discretion and without the consent of the affected
Member, may cancel any or all outstanding Awards, other than an Award that is subject to
Code §409A, held by that Member, whether or not exercisable, by providing to that Member written
notice (“Buy Out Notice”) of its intention to exercise the rights reserved in this section. If a
Buy Out Notice is given, in the case of an Option or a SAR (other than an Option or a SAR that is
subject to Code §409A), the Company also will pay to each affected Participant the difference
between [1] the Fair Market Value of the Stock underlying each exercisable Option (or portion
thereof) or SAR (or portion thereof) to be cancelled and [2] the Exercise Price associated with
each exercisable Option or SAR to be cancelled. With respect to any Award other than an Option, a
SAR or an Award that is subject to Code §409A, the Company will pay to each affected Participant
the Fair Market Value of the Stock subject to the Award. However, unless otherwise specified in
the Award Agreement, no payment will be made with respect to any Awards that are not exercisable
when cancelled under this section. The Company will complete any buy out made under this section
as soon as administratively possible after the date of the Buy Out Notice. At the Committee’s
option, payment of the buy out amount may be made in cash, in whole shares of Stock or partly in
cash and partly in shares of Stock. The number of whole shares of Stock, if any, included in the
buy out amount will be determined by dividing the amount of the payment to be made in shares of
Stock by the Fair Market Value as of the date of the Buy Out Notice.

12.00 CHANGE IN CONTROL

12.01 Accelerated Vesting and Settlement. Subject to Section 12.02, on the date of any Change in
Control:

[1] [a] Each Option (other than Directors’ Options) outstanding on the date of a Change in
Control (whether or not exercisable) will be cancelled in exchange [i] for cash equal to the
excess of the Change in Control Price over the Exercise Price associated with the cancelled
Option or, [ii] at the Committee’s discretion, for whole shares of Stock with a Fair Market
Value equal to the excess of the Change in Control Price over the Exercise Price associated
with the cancelled Option and the Fair Market Value of any fractional share of Stock will be
distributed in cash, and [b] all related Tandem SARs will be cancelled. However, the
Committee, in its sole discretion, may offer the holders of the Options to be cancelled a
reasonable opportunity (not longer than 15 days beginning on the date of the Change in
Control) to exercise all their outstanding Options (whether or not otherwise then
exercisable) by following the exercise procedures described in Section 6.00;

[2] All Performance Goals associated with Performance Shares or Performance Units will be
deemed to have been met on the date of the Change in Control, all Performance Periods
accelerated to the date of the Change in Control and all outstanding Performance Shares and
Performance Units (including those subject to the acceleration described in this

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subsection) will be distributed in a single lump sum cash payment within 30 days following
such Change in Control; and

[3] Each Freestanding SAR will be deemed to be exercisable and will be liquidated in a
single lump sum cash payment equal to [a] the difference between the Change in Control Price
and the Exercise Price; multiplied by [b] the number of shares of Stock with respect to
which the Freestanding SAR is deemed exercised.

12.02 Alternative Awards. Section 12.01 will not apply to the extent that the Committee reasonably
concludes in good faith before the Change in Control occurs that Awards will be honored or assumed
or new rights substituted for the Award (collectively “Alternative Awards”) by the Key Employee’s
employer (or the parent or a subsidiary of that employer) immediately after the Change in Control,
provided that any Alternative Award must:

[1] Be based on stock that is (or, within 60 days of the Change in Control, will be) traded
on an established securities market;

[2] Provide the Key Employee (or each Key Employee in a class of Key Employees) rights and
entitlements substantially equivalent to or better than the rights, terms and conditions of
each Award for which it is substituted, including an identical or better exercise or vesting
schedule and identical or, in the case of an Award that is not subject to Code §409A, better
timing and methods of payment;

[3] Have substantially equivalent economic value to the Award (determined at the time of the
Change in Control) for which it is substituted; and

[4] Provide that, if the Key Employee’s employment is involuntarily Terminated without Cause
or constructively Terminated by the Key Employee, any conditions on the Key Employee’s
rights under, or any restrictions on transfer or exercisability applicable to, each
Alternative Award will be waived or lapse.

For purposes of this section, a constructive Termination means a Termination by a Key Employee
following a material reduction in the Key Employee’s compensation or job responsibilities (when
compared to the Key Employee’s compensation and job responsibilities on the date of the Change in
Control) or the relocation of the Key Employee’s principal place of employment to a location at
least 50 miles from his or her principal place of employment on the date of the Change in Control
(or other location to which the Key Employee has been reassigned with his or her written consent),
in each case without the Key Employee’s written consent.

Notwithstanding anything herein to the contrary, no Alternative Award shall be made with respect to
an Option or SAR if it would cause the Option or SAR to become “deferred compensation” subject to
Code §409A or fail to comply with the requirements of Code §409A.

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12.03 Directors’ Options and Stock Units. Upon a Change in Control, outstanding:

[1] Director Options will be cancelled unless [a] the Stock continues to be traded on an
established securities market after the Change in Control or [b] the Eligible Director
continues to be a Board member after the Change in Control. In the situations just
described, the Director Option will be unaffected by a Change in Control. Any Director
Option to be cancelled under the first sentence of this Section 12.03[1] will be exchanged
[c] for cash equal to the excess of the Change in Control Price over the Exercise Price
associated with the cancelled Director Option or, [d] at the Committee’s discretion, for
whole shares of Stock with a Fair Market Value equal to the excess of the Change in Control
Price over the Exercise Price associated with the cancelled Director Option and the Fair
Market Value of any fractional share of Stock will be distributed in cash. However, the
Committee, in its sole discretion, may offer the holders of the Director Options to be
cancelled a reasonable opportunity (not longer than 15 days beginning on the date of the
Change in Control) to exercise all their outstanding Director Options (whether or not
otherwise then exercisable) by following the exercise procedures described in Section 6.00.

[2] Stock Units will be settled within 30 days following the Change in Control for a lump
sum cash payment equal to [a] the Change in Control Price, multiplied by [b] the number of
Stock Units to be settled. Notwithstanding the foregoing, Non-Grandfathered Stock Units
will not be settled under this Section 12.03[2] unless the Change in Control also
constitutes a “change in control event” under Code §409A and the Treasury Regulations
promulgated thereunder. If the Change in Control does not constitute a “change in control
event” under Code §409A, the Non-Grandfathered Stock Units will be settled as described in
Section 7.02.

13.00 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN

The Board or the Committee may terminate, suspend or amend the Plan at any time without shareholder
approval except to the extent that shareholder approval is required to satisfy applicable
requirements imposed by [1] Rule 16b-3 under the Act, or any successor rule or regulation,
[2] applicable requirements of the Code or [3] any securities exchange, market or other quotation
system on or through on which the Company’s securities are listed or traded. Also, no Plan
amendment may [4] result in the loss of a Committee member’s status as a “non-employee director” as
defined in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any
employee benefit plan of the Company, [5] cause the Plan to fail to meet requirements imposed by
Rule 16b-3 or [6] without the consent of the affected Member adversely affect any Award issued
before the amendment, modification or termination. However, nothing in this section will restrict
the Committee’s right to exercise the discretion retained in Section 11.06.

14.00 MISCELLANEOUS

14.01 Assignability. Except as described in this Section 14.01, an Award may not be transferred
except by will or the laws of descent and distribution and, during the Member’s lifetime, may be
exercised only by the Member, the Member’s guardian or legal representative. However, with the
permission of the Committee, a Member or a specified group of Members may transfer Awards

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(other than Incentive Stock Options) to a revocable inter vivos trust, of which the Member is the
settlor, or may transfer Awards (other than an Incentive Stock Option) to any member of the
Member’s immediate family, any trust, whether revocable or irrevocable, established solely for the
benefit of the Member’s immediate family, any partnership or limited liability company whose only
partners or members are members of the Member’s immediate family or an organization described in
Code §501(c)(3) (“Permissible Transferees”). Any Award transferred to a Permissible Transferee
will continue to be subject to all of the terms and conditions that applied to the Award before the
transfer and to any other rules prescribed by the Committee. A Permissible Transferee [other than
an organization described in Code §501(c)(3)] may not retransfer an Award except by will or the
laws of descent and distribution and then only to another Permissible Transferee.

14.02 Beneficiary Designation. Each Member may name a Beneficiary or Beneficiaries (who may be
named contingently or successively) to receive or to exercise any vested Award that is unpaid or
unexercised at the Member’s death. Each designation made will revoke all prior designations made
by the same Member, must be made on a form prescribed by the Committee and will be effective only
when filed in writing with the Committee. If a Member has not made an effective Beneficiary
designation, the deceased Member’s Beneficiary will be his or her surviving spouse or, if none, the
deceased Member’s estate. The identity of a Member’s designated Beneficiary will be based only on
the information included in the latest beneficiary designation form completed by the Member and
will not be inferred from any other evidence.

14.03 No Guarantee of Employment or Participation. Nothing in the Plan may be construed as:

[1] Interfering with or limiting the right of the Company or any Subsidiary to Terminate any
Key Employee’s employment at any time;

[2] Conferring on any Participant any right to continue as an Employee or director of the
Company or any Subsidiary;

[3]
Guaranteeing that any Employee will be selected to be a Key Employee; or

[4]
Guaranteeing that any Member will receive any future Awards.

14.04 Tax Withholding.

[1] The Company will withhold from other amounts owed to the Member, or require a Member to
remit to the Company, an amount sufficient to satisfy federal, state and local withholding
tax requirements on any Award, exercise or cancellation of an Award or purchase of Stock.
If these amounts are not to be withheld from other payments due to the Member (or if there
are no other payments due to the Member), the Company will defer payment of cash or issuance
of shares of Stock until the earlier of:

[a] Thirty days after the settlement date; or

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[b] The date the Member remits the required amount.

[2] If the Member has not remitted the required amount within 30 days after the settlement
date, the Company will permanently withhold from the value of the Awards to be distributed
the minimum amount required to be withheld to comply with applicable federal, state and
local income, wage and employment taxes and distribute the balance to the Member.

[3] In its sole discretion, which may be withheld for any reason or for no reason, the
Committee may permit a Member to elect, subject to conditions the Committee establishes, to
reimburse the Company for this tax withholding obligation through one or more of the
following methods:

[a] By having shares of Stock otherwise issuable under the Plan withheld by the
Company (but only to the extent of the minimum amount that must be withheld to
comply with applicable state, federal and local income, employment and wage tax
laws);

[b] By delivering to the Company previously acquired shares of Stock that the Member
has owned for at least six months;

[c] By remitting cash to the Company; or

[d] By remitting a personal check immediately payable to the Company.

14.05 Indemnification. Each individual who is or was a member of the Committee or of the Board
will be indemnified and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or failure to take action under the
Plan as a Committee member and against and from any and all amounts paid, with the Company’s
approval, by him or her in settlement of any matter related to or arising from the Plan as a
Committee member or paid by him or her in satisfaction of any judgment in any action, suit or
proceeding relating to or arising from the Plan against him or her as a Committee member, but only
if he or she gives the Company an opportunity, at its own expense, to handle and defend the matter
before he or she undertakes to handle and defend it in his or her own behalf. The right of
indemnification described in this section is not exclusive and is independent of any other rights
of indemnification to which the individual may be entitled under the Company’s organizational
documents, by contract, as a matter of law or otherwise. The foregoing right of indemnification is
not exclusive and is independent of any other rights of indemnification to which the person may be
entitled under the Company’s organizational documents, by contract, as a matter of law or
otherwise.

14.06 No Limitation on Compensation. Nothing in the Plan is to be construed to limit the right of
the Company to establish other plans or to pay compensation to its employees or directors, in cash
or property, in a manner not expressly authorized under the Plan.

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14.07 International Employees. To provide the same motivation to materially increase shareholder
value and to enable the Company to attract and retain the services of outstanding managers at its
international locations, the Company will adopt incentives for its foreign locations that provide,
as closely as possible, the same motivational effect as Awards provided to domestic Participants.
Also, the Committee may grant Awards to Employees who are subject to the tax laws of nations other
than the United States under terms and conditions that differ from other Awards granted under the
Plan but which are required to comply with applicable foreign tax laws.

14.08 Requirements of Law. The grant of Awards and the issuance of shares of Stock will be subject
to all applicable laws, rules and regulations and to all required approvals of any governmental
agencies or national securities exchange, market or other quotation system. Also, no shares of
Stock will be issued under the Plan unless the Company is satisfied that the issuance of those
shares of Stock will comply with applicable federal and state securities laws. Certificates for
shares of Stock delivered under the Plan may be subject to any stock transfer orders and other
restrictions that the Committee believes to be advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange or other recognized
market or quotation system upon which the Stock is then listed or traded, or any other applicable
federal or state securities law. The Committee may cause a legend or legends to be placed on any
certificates issued under the Plan to make appropriate reference to restrictions within the scope
of this section.

14.09 Term of Plan. The Plan was originally effective upon its adoption by the Board and approval
by the affirmation vote of the holders of a majority of the shares of voting stock present in
person or represented by proxy at the first Annual Meeting occurring after the Board approved the
Plan and is hereby amended and restated effective as of October 30, 2007. Subject to
Section 13.00, the Plan will continue until November 8, 2012. After January 26, 2006, no Award is
permitted to be granted under this Plan, but all Awards outstanding as of such date may extend
beyond such date in accordance with their respective terms.

14.10 Governing Law. The Plan, and all agreements hereunder, will be construed in accordance with
and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio.

14.11 No Impact on Benefits. Plan Awards are incentives designed to promote the objectives
described in Section 1.00. Also, Awards are not compensation for purposes of calculating a
Member’s rights under any employee benefit plan.

-24-

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