Document:

EX-10.12

 

Exhibit 10.12

Scripps Networks
 Interactive, Inc.
 Executive Change in
 Control Plan

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE 1.
	 	INTRODUCTION	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE 2.
	 	DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE 3.
	 	PLAN PARTICIPATION	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE 4.
	 	ACCELERATION OF VESTING OF EQUITY AWARDS UPON CHANGE IN CONTROL	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE 5.
	 	TERMINATION PAYMENT AND OTHER BENEFITS UPON CERTAIN TERMINATIONS OF EMPLOYMENT AFTER CHANGE IN CONTROL	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE 6.
	 	NON-DUPLICATION OF PAYMENTS AND BENEFITS	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 7.
	 	SOURCE OF PAYMENTS	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 8.
	 	PLAN ADMINISTRATION AND CLAIMS PROCEDURE	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 9.
	 	ARBITRATION OF DISPUTES	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE 10.
	 	MISCELLANEOUS PROVISIONS	 	 	11	 

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ARTICLE 1. INTRODUCTION

Scripps Networks Interactive, Inc., an Ohio corporation (“Company”), adopted the Scripps Networks
Interactive, Inc. Executive Change in Control Plan (“Plan”), effective immediately prior to the Distribution
Date as defined in the Employee Matters Agreement by and between The E. W. Scripps Company and the
Company (the “Effective Date”).

The Plan generally provides for (i) accelerated vesting of outstanding equity awards for covered
executives if the Company experiences a change in control and (ii) certain potential termination
payments and other benefits for covered executives if their employment terminates under prescribed
circumstances after a change in control, all as specifically described in the following provisions
of the Plan. The Company believes that it will derive substantial benefits by adopting the Plan
because its existence will:

	 	•	 	Allow covered executives to focus on the Company’s business and objectively
evaluate any future proposals during potential change in control transactions,
	 
	 	•	 	Assist the Company in attracting and retaining selected executives,
	 
	 	•	 	Provide for greater consistency of protection for selected executives, and
	 
	 	•	 	Avoid problems associated with adopting change in control agreements during any
future potential change in control transaction.

ARTICLE 2. DEFINITIONS

	2.1	 	“Board” means the board of directors of the Company.
	 
	2.2	 	“Cause” means:

	 	(a)	 	Commission of a felony or an act or series of acts that results in material
injury to the business or reputation of the Company or any subsidiary;
	 
	 	(b)	 	Willful failure to perform duties of employment, if such failure has not been
cured in all material respects within twenty (20) days after the Company or any
subsidiary, as applicable, gives notice thereof; or
	 
	 	(c)	 	Breach of any material term, provision or condition of employment, which breach
has not been cured in all material respects within twenty (20) days after the Company
or any subsidiary, as applicable, gives notice thereof.

	2.3	 	“Change in Control” means the occurrence,
after the Distribution Date, of any of the following with respect to the Company:

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	 	(a)	 	Any Person becomes a Beneficial Owner of a majority of the outstanding Common
Voting Shares, $.01 par value, of the Company (or shares of capital stock of the
Company with comparable or unlimited voting rights), excluding, however, The Edward W.
Scripps Trust (the “Trust”) and the trustees thereof, and any Person that is or becomes
a party to the Scripps Family Agreement, dated October 15, 1992, as amended currently
and as it may be amended from time to time in the future (the “Family Agreement”); or
	 
	 	(b)	 	Assets of the Company accounting for 90% or more of the Company’s revenues are
disposed of pursuant to a merger, consolidation, sale, or plan of liquidation and
dissolution (unless the Trust or the parties to the Family Agreement have Beneficial
Ownership of, directly or indirectly, a controlling interest (defined as owning a
majority of the voting power) in the entity surviving such merger or consolidation or
acquiring such assets upon such sale or in connection with such plan of liquidation and
dissolution).

	 
	 	 	 	For purposes of this Section 2.3, “Person” has the meaning provided in section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (“Exchange Act”), and as used in sections
13(d) and 14(d) of the Exchange Act, including a “group” within the meaning of section 13(d)
of the Exchange Act; and “Beneficial Ownership” and “Beneficial Owner” have the meanings
provided in Rule 13d-3 promulgated under the Exchange Act.

	2.4	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	2.5	 	“Committee” means the Board’s Compensation Committee.
	 
	2.6	 	“Company” means Scripps Networks Interactive, Inc., an Ohio corporation, and any successor.
	 
	2.7	 	“Covered Executive” means an employee of the Company who is employed as an executive and who
is listed in Appendix A at the time of a Change in Control.
	 
	2.8	 	“Disability” means a Covered Executive’s termination or suspension of employment accompanied
by his/her actual receipt of a Disability Retirement Benefit under the Pension Plan or a
Disability Benefit under the Long Term Disability Income Plan. A Covered Executive will be
deemed to be in actual receipt of the aforementioned benefits during any waiting period, of up
to six (6) months duration, that is a prerequisite for the commencement of benefit payments.
	 
	2.9	 	“Good Reason” means any of the following actions on or after a Change in Control, without the
Covered Executive’s consent:

	 	(a)	 	A material diminution in a Covered Executive’s annual salary or target annual
incentive opportunity below the amount of annual salary or target

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	 	 	 	annual incentive opportunity in effect immediately prior to such Change in Control;

	 	(b)	 	A material diminution in a Covered Executive’s authority, duties, or
responsibilities as compared to his or her authority, duties, or responsibilities
immediately prior to such Change in Control;
	 
	 	(c)	 	A material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Covered Executive is required to report, including a requirement
that the Covered Executive report to a corporate officer or employee instead of
reporting directly to the Board;
	 
	 	(d)	 	A material diminution in the budget over which a Covered Executive retains
authority as compared to the budget over which he or she had authority immediately
prior to such Change in Control;
	 
	 	(e)	 	A material change in geographic location at which a Covered Executive is
principally employed as compared to the geographic location immediately prior to such
Change in Control; or
	 
	 	(f)	 	The Company’s (or successor’s) material breach of this Plan or of any material
term, provision or condition of employment of a Covered Executive, unless the Covered
Executive’s employment is terminated for Cause within the applicable cure period set
forth below.

	 
	 	 	 	A termination of a Covered Executive’s employment by a Covered Executive shall not be deemed
to be for Good Reason unless (1) the Covered Executive gives notice to the Company of the
existence of the event or condition constituting Good Reason within thirty (30) days after
such event or condition initially occurs or exists, (2) the Company fails to cure such event
or condition within thirty (30) days after receiving such notice, and (3) Executive’s
“separation from service” within the meaning of Section 409A of the Code occurs not later
than ninety (90) days after such event or condition initially occurs or exists (or, if
earlier, the last day of the 24-month period following a Change in Control).

	2.10	 	“Retirement” means a Covered Executive’s termination of employment accompanied by his/her
actual receipt of a Normal Retirement Benefit or Early Retirement Benefit under the Pension
Plan.
	 
	2.11	 	“Long Term Disability Income Plan” means the employee benefit plan of that name sponsored by
the Company, including any amended, restated or successor version of that plan.
	 
	2.12	 	“Pension Plan” means the tax-qualified employee pension plan of that name sponsored by the
Company (or in which the Company is a participating company), including any amended, restated
or successor version of that plan. “Supplemental Executive Retirement Plan” means the
non-tax-qualified excess retirement plan sponsored by the Company (or in which the Company is

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	 	 	a participating company), including any amended, restated or successor version of that plan.

	2.13	 	“Termination Payment” is the payment described in Section 5.2 to which a Covered Executive
may become entitled following termination of his/her employment under the circumstances
described in Section 5.1.
	 
	2.14	 	In addition to the foregoing, certain other terms of more limited usage are defined in other
Articles of the Plan. All terms defined in the Plan are designated with initial capital
letters.
	 
	2.15	 	Whenever appropriate, words used herein in the singular may be read as the plural and the
plural may be read as the singular. Unless otherwise clear from the context, words used
herein in the masculine shall also be deemed to include the feminine.

ARTICLE 3. PLAN PARTICIPATION

An individual must be a Covered Executive in order to participate in the Plan. The names of all
Covered Executives are listed in Appendix A. Subject to approval or ratification by the Board, the
Committee may revise Appendix A at any time(s) by adding or deleting names (or changing Termination
Pay Multiples, as described in Section 5.2(c)), provided that the deletion of any name (or
reduction of any Termination Pay Multiple) shall require sixty (60) days’ advance written notice to
each affected Covered Executive. Only those employees listed in Appendix A at the time of a Change
in Control are eligible to receive any rights, termination payment or other benefits under the
Plan.

ARTICLE 4. ACCELERATION OF VESTING OF EQUITY AWARDS UPON CHANGE IN CONTROL

Upon a Change in Control, all outstanding equity awards of a Covered Executive, including but not
limited to any incentive or nonqualified stock options, stock appreciation rights in tandem with or
independent of options (“SARs”), restricted or nonrestricted share awards, restricted stock units
and performance units, shall immediately vest and not be subject to forfeiture, with all vested
stock options and SARs (including those vesting pursuant to this Article 5) remaining exercisable
for the remainder of their original terms.

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	ARTICLE 5.	TERMINATION PAYMENT AND OTHER BENEFITS UPON CERTAIN TERMINATIONS OF EMPLOYMENT AFTER
CHANGE IN CONTROL

	5.1	 	Eligibility for Termination Payment. A Covered Executive will be entitled to receive
a Termination Payment (described in Section 5.2) if, within twenty-four (24) months after a
Change in Control, his/her employment with the Company is terminated either (i) by the Company
without Cause, or (ii) by the Covered Executive for Good Reason. Notwithstanding the
foregoing, a Covered Executive will not be entitled to any Termination Payment if his/her
termination of employment is (i) of his/her own initiative for any reason other than Good
Reason, or (ii) on account of his/her Retirement, Disability or death. A Termination Payment
is in lieu of any further salary, bonus, annual incentive or other payments to a Covered
Executive for periods subsequent to the date of his/her termination of employment; but the
Covered Executive still will retain any and all of his/her vested rights under the Company’s
employee pension and benefit plans and arrangements, including, without limitation, the
Pension Plan and the Supplemental Executive Retirement Plan.
	 
	5.2	 	Amount of Termination Payment. A Covered Executive’s Termination Payment is a cash
lump sum equal to the amount computed by multiplying (i) the sum of his/her Base Salary plus
Annual Incentive, by (ii) his/her Termination Pay Multiple. A Covered Executive’s Termination
Payment will be paid by the Company within thirty (30) days following his/her termination of
employment.

	 	 	 	As used herein, the following terms have the following meanings:

	 
	 	(a)	 	“Base Salary” means a Covered Executive’s highest annualized rate of basic
salary in effect at any time during the then current partial calendar year, if
applicable, and three (3) full prior calendar years preceding his/her termination of
employment;
	 
	 	(b)	 	“Annual Incentive” means the higher of (i) a Covered Executive’s target annual
incentive in the then partial calendar year, if applicable, of his/her termination of
employment, or (ii) his/her highest actual annual incentive earned in the three (3)
full prior calendar years preceding his/her termination of employment under an annual
incentive plan sponsored by the Company or any comparable plans of The E. W. Scripps
Company (and annualized in the case of any pro rata annual incentive earned for a
partial calendar year); and
	 
	 	(c)	 	“Termination Pay Multiple” is the number set forth beside a Covered Executive’s
name in Appendix A under the column so named Termination Pay Multiple.

	5.3	 	Other Benefit Coverage. If a Covered Executive qualifies for a Termination Payment
under Section 5.1, his/her Benefit Coverage shall be continued for the

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	 	 	Maximum Benefit Period or, if less, until the Covered Executive obtains full-time employment
providing benefits substantially similar to his/her Benefit Coverage. To receive such
Benefit Coverage, the Covered Executive must continue to pay the same percentage of the
total benefit premiums or contributions required from similarly situated executive employees
at the time of the Covered Executive’s termination of employment (or, if materially less, at
the time of the prior Change in Control).

	 	 	 	As used herein, the following terms have the following meanings:

	 
	 	(a)	 	“Benefit Coverage” means the medical, dental, disability, life and accidental
death insurance benefits which the Covered Executive and his/her eligible dependents,
if any, were receiving at the time of his/her termination of employment (or, if
materially greater, at the time of the prior Change in Control); and
	 
	 	(b)	 	“Maximum Benefit Period” is the number of months following the Covered
Executive’s termination of employment equal to twelve (12) times his/her Termination
Pay Multiple. The Maximum Benefit Period automatically shall end if a Covered Executive
dies, but only with respect to his/her own coverage, with coverage of any eligible
dependent(s) continuing as though the Covered Executive had not died so long as all
required employee premiums or contributions continue to be paid by the eligible
dependent(s).

	5.4	 	Pension Enhancement. If a Covered Executive qualifies for a Termination Payment under
Section 5.1, he/she will receive a cash lump sum equal to the actuarially determined value of
a Pension Enhancement. The Pension Enhancement will be paid by the Company at the same time
as the Termination Payment.
	 
	 	 	“Pension Enhancement” is the difference in the present value of the following:

	 	(a)	 	The actual pension the Covered Executive is entitled to receive under the
Pension Plan and the Supplemental Executive Retirement Plan based upon his/her actual
age and years of credited service at the time of his/her termination of employment; and
	 
	 	(b)	 	The assumed pension the Covered Executive would be entitled to receive under
the Pension Plan and the Supplemental Executive Retirement Plan if his/her age and
years of credited service at the time of his/her termination of employment were
increased by a number equal to his/her Termination Pay Multiple.

	 
	 	 	 	In calculating the Pension Enhancement, the same actuarial assumptions and factors shall be
used as are prescribed under the Pension Plan for computing lump sum benefit payments.

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	5.5	 	Gross-Up Payment. If a Covered Executive qualifies for a Termination Payment under
Section 5.1, he/she also shall be entitled to a Gross-Up Payment, if applicable. “Gross-Up
Payment” is the lump sum benefit payment hereinafter described in this Section 5.5.
	 
	 	 	If it is determined (as hereinafter provided) that any payment, benefit or distribution to
or for such Covered Executive’s benefit, whether paid or payable or distributed or
distributable pursuant to the terms of the Plan or otherwise pursuant to or by reason of any
other agreement, policy, plan, program, arrangement or similar right (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (or any
successor provision thereto), or any interest or penalties with respect to such excise tax
(such tax, together with any such interest and penalties, hereafter collectively referred to
as the “Excise Tax”), then the Covered Executive shall be entitled to receive a cash lump
sum Gross-Up Payment(s) in an amount such that, after payment by the Covered Executive of
all taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment(s), the Covered Executive
retains an amount of the Gross-Up Payment(s) equal to the Excise Tax imposed upon the
Payments. The Gross-Up Payment, if any, shall be paid in full to the Covered Executive at
the same time as any Payment (or first installment thereof) subject to the Excise Tax is
paid or provided to the Covered Executive; provided that the Company, in its sole
discretion, may withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of the Covered Executive, all or any portion of
any Gross-Up Payment, and the Covered Executive consents to such withholding.
	 
	 	 	All determinations required to be made under this Section 5.5, including whether an Excise
Tax is payable by the Covered Executive, the amount of such Excise Tax, whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment, shall be made by a
nationally-recognized legal or accounting firm (the “Firm”) (which may be the Company’s
independent auditor) selected by the Company in its sole discretion. The Firm shall submit
its determination and detailed supporting calculations to the Covered Executive and the
Company as promptly as practicable. If the Firm determines that any Excise Tax is payable
by the Covered Executive and that a Gross-Up Payment is required, the Company shall pay the
Covered Executive the required Gross-Up Payment as provided herein. If the Firm determines
that no Excise Tax is payable by the Covered Executive, it shall, at the same time it makes
such determination, furnish the Covered Executive with an opinion stating that he/she has
substantial authority not to report any Excise Tax on his/her federal income tax return.
Any determination by the Firm as to the amount of the Gross-Up Payment shall be binding upon
the Covered Executive and the Company. As a result of the uncertainty in the application of
Section 4999 of the Internal Revenue Code (or any successor provision thereto) at the time
of the initial determination by the Firm hereunder, it is possible that the Company may fail
to pay a Gross-Up Payment which should have been paid (an “Underpayment”). If the Covered

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	 	 	Executive thereafter is required to make a payment of any Excise Tax, the Firm shall
determine the amount of the Underpayment, if any, that has occurred and submit its
determination and detailed supporting calculations to the Covered Executive and the Company
as promptly as possible. Any such Underpayment shall be promptly paid by the Company to the
Covered Executive, or for his/her benefit, within thirty (30) days of receipt of such
determination and calculations.
	 
	 	 	The Covered Executive and the Company shall each provide the Firm access to and copies of
any books, records or documents in the possession of the Company or the Covered Executive,
as the case may be, reasonably requested by the Firm, and shall each otherwise cooperate
with the Firm in connection with the preparation and issuance of the determinations
contemplated by this Section 5.5. The fees and expenses of the Firm that are incurred at
any time from the date of this Plan through 10th anniversary of the date of the Change in
Control for services in connection with the determinations and calculations contemplated by
this Section 5.5 shall be paid by the Company. The Company shall pay such fees and expenses
not later than the end of the calendar year following the calendar year in which the related
work is performed or the expenses are incurred by the Firm. The amount of such fees and
expenses that the Company is obligated to pay in any given calendar year shall not affect
the fees and expenses that the Company is obligated to pay in any other calendar year, and
the Covered Executive’s right to have the Company pay such fees and expenses may not be
liquidated or exchanged for any other benefit.
	 
	 	 	Notwithstanding any other provision of this Section 5.5 to the contrary, and in order to
comply with Section 409A of the Code, the Company and the Covered Executive shall take all
steps reasonably necessary to ensure that any Gross-Up Payment, Underpayment or other
payment or reimbursement made to the Covered Executive pursuant to this Section 5.5 will be
paid or reimbursed on the earlier of (i) the date specified for payment under this Section
5.5, or (ii) December 31st of the year following the year in which the applicable taxes are
remitted or, in the case of reimbursement of expenses incurred due to a tax audit or
litigation to which there is no remittance of taxes, the end of the calendar year following
the year in which the audit is completed or there is a final and nonappealable settlement or
other resolution of the litigation in accordance with Treasury Regulation Section
1.409A-3(i)(1)(v).

ARTICLE 6. NON-DUPLICATION OF PAYMENTS AND BENEFITS

Notwithstanding any contrary provision of the Plan, there shall be no duplication of rights,
payments and benefits under the Plan with rights, payments and benefits granted to a Covered
Employee, in the event of a Change in Control or upon termination of his/her employment after a
Change in Control, under any other agreement, plan or arrangement (“Alternate Plan”). In order to
prevent such duplication, if the Covered Executive is entitled to payments or benefits under
Article 5 upon termination of employment, the Covered Executive shall not be entitled to any
severance pay or benefits under any Alternate Plan unless otherwise specifically provided therein
in a

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specific reference to this Plan. Notwithstanding the foregoing, any payments due under the
Executive Annual Incentive Plan upon a Covered Executive’s termination of employment shall be in
addition to (and shall not be considered duplicative of) any payments or benefits provided under
this Plan.

ARTICLE 7. SOURCE OF PAYMENTS

All payments required under the terms of the Plan shall be paid in cash from the general assets of
the Company. A Covered Executive shall have the status of a general creditor of the Company with
respect to any and all claims for payments under the Plan.

ARTICLE 8. PLAN ADMINISTRATION AND CLAIMS PROCEDURE

	8.1	 	Plan Administration. The Plan shall be administered by the Committee and/or its
designee(s). The Committee shall have rights, powers and duties with respect to the Plan that
are comparable to those granted to the designated pension board under the Pension Plan.
Without limiting the generality of the foregoing, the Committee has full authority to (i)
interpret Plan, (ii) determine all questions relating to the rights and status of Covered
Executives and their Termination Payments, Benefit Coverage, Pension Enhancements and Gross-Up
Payments, and (iii) make such rules and regulations for the administration of the Plan as are
not inconsistent with its express terms and provisions. This provision is included in the
Plan for the express purpose of giving and granting to the Committee the maximum discretionary
authority possible under Firestone Tire and Rubber Company v. Bruch, 489 U.S. 101
(1989). Decisions by the Committee shall be made by majority vote of all members of the
Committee.
	 
	8.2	 	Claims Procedure. If any Covered Executive’s claim for payments or benefits under
the Plan is denied, the Committee shall cause a written notice to be sent to the Covered
Executive setting forth the specific reasons for the denial, specific reference to the
provisions of the Plan on which the denial is based, a description of any material or
information necessary to perfect the denied claim (together with an explanation of why such
material or information is necessary), and an explanation of the review procedure described
below. Within sixty (60) days after receipt of such notice of denial from the Committee, the
Covered Executive, or his/her duly authorized representative, may request a review of the
denied claim by written application to the Committee. In connection with such request for
review, the Covered Executive, or his/her duly authorized representative, shall be entitled to
review any and all documents pertinent to the claim or its denial and also shall be entitled
to submit issues and comments in writing. The decision of the Committee upon such review
shall be made not later than sixty (60) days after the receipt of such request for review,
unless special circumstances shall require an extension of time for processing, in which case
a decision shall be rendered as soon as possible, but not later than one hundred twenty (120)
days after the Committee’s receipt of the request for review. The decision of the

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	 	 	Committee upon review of the denied application shall be in writing and shall include
specific reasons for the decision and specific references to the pertinent Plan provisions
on which the decision is based. All written communications from the Committee under this
Section 8.2 shall be written in a manner calculated to be understood by the recipient.

ARTICLE 9. ARBITRATION OF DISPUTES

Any controversy or claim arising out of or relating to the Plan that cannot be resolved pursuant to
Section 9.2 shall be settled by binding arbitration in the City of Cincinnati, Ohio, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association then pertaining in
such city; and judgment upon the award rendered by the arbitrator or arbitrators may be entered in
any court in Hamilton County, Ohio having jurisdiction thereof. The arbitrator or arbitrators
shall have powers to issue mandatory orders and restraining orders in connection with such
arbitration. Neither the Company nor a Covered Executive shall be liable for punitive or exemplary
damages. Each party shall be responsible for its/his/her own costs and expenses (including
attorneys’ fees). The federal and state courts in Hamilton County, Ohio shall have exclusive
jurisdiction with respect to the entry of judgment upon any arbitration award hereunder or the
granting of any order; and such courts shall have exclusive jurisdiction with respect to any other
controversy or claim arising out of or relating to the Plan that may properly be brought therein if
the provisions herein mandating arbitration are held to be unenforceable.

ARTICLE 10. MISCELLANEOUS PROVISIONS

	10.1	 	ERISA and Governing Law. The Plan is an unfunded deferred
compensation plan for a select group of management or highly
compensated employees, as defined in Section 201(2) and
401(a)(1) of the Employee Retirement Security Act of 1974, as
amended (“ERISA”). As such, the Plan is expressly excluded
from all, or substantially all, of the provisions of ERISA,
including but not limited to Parts 2 and 3 of Title I
thereof. None of the statutory rights and protections
conferred on participants by ERISA are conferred under the
terms of this Plan, except as expressly noted or required by
operation of law. To the extent not superseded by federal
law, the laws of the State of Ohio shall control in any and
all matters relating to the Plan.
	 
	10.2	 	Benefits Are Nonassignable. No right, payment or benefit
under the Plan may be
pledged, assigned,
anticipated or alienated in
any way by any Covered
Executive. The Company will
require any successor
(whether direct or indirect,
by purchase, merger,
consolidation or otherwise)
to all or substantially all
of the business and/or
assets of the Company to
assume expressly and agree
to perform this Plan in the
same manner and to the same
extent that the Company
would be required to perform
it if no such succession had
taken place. “Company”
means the Company as
hereinbefore defined and any
successor to

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	 	 	its business and/or assets as aforesaid that assumes and agrees to perform this Plan by
operation of law or otherwise.
	 
	10.3	 	Amendment, Suspension or Termination of Plan. The Company hereby reserves the right
and power to amend, suspend or terminate the Plan, in whole or in part, at any time and from
time to time; provided, however, that any action taken after a Change in Control or within
sixty (60) days prior to a Change in Control cannot materially adversely affect the rights,
payments or benefits of any employee who then is a Covered Executive without his/her express
written consent. All actions pursuant to this Section 10.3 shall be set forth in a written
instrument adopted by the Committee and approved or ratified by the Board.
	 
	10.4	 	No Guarantee Of Employment. Nothing contained in the Plan shall be construed as a
contract of employment between the Company or any Covered Executive, or as a right of any
Covered Executive to continue in the employment of the Company, or as a limitation of the
right of the Company to discharge any Covered Executive, with or without cause, at any time.
	 
	10.5	 	Severability. If any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining provisions hereof;
instead, each provision shall be fully severable and the Plan shall be construed and enforced
as if the illegal or invalid provision had never been included herein.
	 
	10.6	 	Section 409A of the Code.

	 	(a)	 	Section 409A of the Code (“Section 409A”) imposes payment restrictions on
“separation pay” (i.e., payments owed to a Covered Executive upon termination of
employment). Failure to comply with these restrictions could result in negative tax
consequences to the Covered Executive, including immediate taxation, interest and a 20%
penalty tax. It is the Company’s intent that this Plan be exempt from the application
of, or otherwise comply with, the requirements of Section 409A. Specifically, any
taxable benefits or payments provided under this Plan are intended to be separate
payments that qualify for the “short-term deferral” exception to Section 409A to the
maximum extent possible, and to the extent they do not so qualify, are intended to
qualify for the involuntary separation pay exceptions to Section 409A of the Code, to
the maximum extent possible. If neither of these exceptions applies, then
notwithstanding any provision in this Plan to the contrary:

	 	(i)	 	All amounts that would otherwise be paid or provided during the
first six months following the date of termination shall instead be accumulated
through and paid or provided (together with interest on any delayed payment at
the applicable federal rate under the Code), on the first business day
following the six-month anniversary of the Covered Executive’s termination of
employment.

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	 	(ii)	 	Any expense eligible for reimbursement must be incurred, or any
entitlement to a benefit must be used, during the applicable expense
reimbursement or benefit continuation period provided in this Plan. The amount
of the reimbursable expense or benefit to which a Covered Executive is entitled
during a calendar year will not affect the amount to be provided in any other
calendar year, and a Covered Executive’s right to receive the reimbursement or
benefit is not subject to liquidation or exchange for another benefit.
Provided the requisite documentation is submitted, the Company will reimburse
the eligible expenses on or before the last day of the calendar year following
the calendar year in which the expenses were incurred.

	 	(b)	 	For purposes of this Plan, “termination of employment” or words or phrases to
that effect shall mean a “separation from service” within the meaning of Section 409A.

13

 

APPENDIX A

14EX-10.20

 

Exhibit 10.20

Scripps Networks Interactive, Inc.

Employee Stock Purchase Plan

Section 1 — Purpose; Effective Date

          The Scripps Networks Interactive, Inc. Employee Stock Purchase Plan is (a) adopted by the
Board of Directors of Scripps Networks Interactive, Inc. (the “Company”) effective immediately
prior to the Distribution Date, as defined in the Employee Matters Agreement by and between The E.
W. Scripps Company and Scripps Networks Interactive, Inc. (the “Effective Date”), and (b) approved
effective as of the Effective Date by The E. W. Scripps Company, as sole shareholder of the
Company. The Plan is established for the general benefit of the Employees of the Company and of
certain of its Subsidiaries. The purpose of the Plan is to facilitate the purchase of Shares by
Eligible Employees through payroll deductions and is intended as an employment incentive and to
encourage ownership of Shares.

          The Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the
Code. The provisions of the Plan shall be construed so as to extend and limit participation in a
manner consistent with the requirements of Section 423 of the Code.

Section 2 — Definitions

a.   “Act” shall mean the Securities Act of 1933.

b.   “Administrator” shall mean the Senior Vice President, Human Resources of the Company, subject to
the general control of, and superseding action by, the Board.

c.   “Agent” shall mean the bank, brokerage firm, financial institution, or other entity or person(s)
engaged, retained or appointed to act as the agent of the Employer and of the Participants under
the Plan.

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

e.   “Closing Value” shall mean, as of a particular date, the value of a Share determined by the
closing sales price for such Share (or the closing bid, if no sales were reported) as quoted on The
New York Stock Exchange for the last market trading day prior to the date of determination, as
reported in The Wall Street Journal or such other source as the Administrator deems
reliable.

f.   “Code” shall mean the Internal Revenue Code of 1986, as amended and currently in effect, or any
successor body of federal tax law.

 

 

g.   “Company” shall mean Scripps Networks Interactive, Inc., including any successor thereto.

h.   “Compensation” shall mean regular base salary or wages, shift differential, commissions (as
paid) and draw actually received as of a particular pay date, including any amounts not paid to an
Employee pursuant to an election under Code Sections 125 and 401(k). Compensation shall not
include any deferred compensation, bonuses, overtime, severance or dismissal pay, cost-of-living
allowances, or any extraordinary pay, or any compensation after an Employee’s last day of work
except for purposes of Section 8 b. hereof.

i.   “Designated Subsidiaries” shall mean each Subsidiary, unless specifically excluded from
participation in the Plan by the Board.

j.   “Effective Date” has the meaning given that term in Section 1.

k.   “Eligible Employee” means any Employee who (1) is regularly scheduled to work at least twenty
(20) hours per week, and (2) is customarily employed for at least five (5) months each calendar
year.

l.   “Employee” means any person who performs services as a common law employee of an Employer, and
does not include “leased employees,” as that term is defined under Code Section 414(n), or other
individuals providing services to an Employer in a capacity as an independent contractor.

m.   “Employer” means, individually and collectively, the Company and the Designated Subsidiaries.

n.   “Enrollment Period” shall mean the one (1) month period ending on the 15th day of the
calendar month preceding an Offering Period during which Eligible Employees may elect to
participate in the Plan with respect to such Offering Period, i.e., for the first quarter of a
year, the Enrollment Period would be November 15 through December 15.

o.   “Offering Period” shall mean the one (1) calendar quarter period during which Participants in
the Plan authorize payroll deductions to fund the purchase of Shares on their behalf under the
Plan. The first Offering Period shall commence on the date specified by the Company in its sole
discretion (but in any event after the separation of the Company from The E. W. Scripps Company).

p.   “Participant” means any Eligible Employee who has elected to participate in the Plan for an
Offering Period by authorizing payroll deductions and entering into a
written subscription agreement with an Employer or the Administrator during the Enrollment Period
for such Offering Period.

2

 

q.   “Plan” shall mean the Scripps Networks Interactive, Inc. Employee Stock Purchase Plan.

r.   “Plan Account” shall mean the individual account established by the Agent for each Participant
for purposes of accounting for and/or holding each Participant’s Shares, dividends and
distributions.

s.   “Plan Year” shall mean the calendar year.

t.   “Purchase Price” shall mean, for each Share purchased in accordance with Section 4 hereof, an
amount equal to the lesser of (1) ninety percent (90%) of the Closing Value of a Share on the first
Trading Day of each Offering Period, or the earliest date thereafter as is administratively
feasible (which for Plan purposes shall be deemed to be the date the right to purchase such Shares
was granted to each Eligible Employee who is, or elects to become, a Participant); or (2) ninety
percent (90%) of the Closing Value of such Share on the last Trading Day of the Offering Period, or
the earliest date thereafter as is administratively feasible (which for Plan purposes shall be
deemed to be the date each such right to purchase such Shares was exercised).

u.   “Shares” means the Class A common shares of the Company.

v.   “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than fifty percent
(50%) of the voting shares are held by the Company or a Subsidiary, whether or not such corporation
now exists or is hereafter organized or acquired by the Company or a Subsidiary (or as otherwise
may be defined in Code Section 424).

w.   “Trading Day” shall mean a day on which national stock exchanges and The New York Stock Exchange
are open for trading.

Section 3 — Eligible Employees

          a.   In General.  Participation in the Plan is voluntary. All Eligible Employees of an
Employer are eligible to participate in the Plan. Each Eligible Employee who is a Participant
shall have the same rights and privileges as every other Eligible Employee who is a Participant,
and only Eligible Employees of an Employer satisfying the applicable requirements of the Plan will
be entitled to be a Participant.

          b.   Limitations on Rights.  An Employee who otherwise is an Eligible Employee shall not
be entitled to purchase Shares under the Plan if (1) such purchase would cause such Eligible
Employee to own Shares (including any
Shares which would be owned if such Eligible Employee purchased all of the Shares made available
for purchase by such Eligible Employee under all purchase rights then held by such Eligible
Employee, whether or not then exercisable) representing five percent (5%) or more of the total
combined voting power or value of each class of stock of the Company or any Subsidiary; or (2) such
purchase would cause such Eligible Employee to have rights to purchase more than $25,000 of Shares
under the Plan (and under all employee stock purchase plans of

3

 

the Company and its Subsidiary
corporations which qualify for treatment under Section 423 of the Code) for any calendar year in
which such rights are outstanding (based on the Closing Value of such Shares, determined as of the
date such rights are granted and can first be exercised hereunder). For purposes of clause (1) of
this paragraph b., the attribution rules set forth in Section 424(d) of the Code and related
regulations shall apply. For purposes of applying the $25,000 limitation, the number of Shares
covered by one right may not be carried over to any other right.

Section 4 — Enrollment and Offering Periods

          a.   Enrolling in the Plan.  To participate in the Plan, an Eligible Employee must
enroll in the Plan. Enrollment for a given Offering Period will take place during the Enrollment
Period for such Offering Period.

          b.   The Three-Month Offering Period.  Any Employee who is an Eligible Employee and who
desires to purchase Shares hereunder must file with the Administrator or Employer an authorization
for payroll deduction and a subscription agreement during an Enrollment Period. Such authorization
shall be effective for the Offering Period immediately following such Enrollment Period. Each
Offering Period shall last for three (3) calendar months, commencing on the first day (or the First
Trading Day) of the calendar quarter and ending on the last day (or the last Trading Day) of the
calendar quarter. There shall be four (4) Offering Periods each Plan Year during the term of this
Plan. On the first day (or the First Trading Day) of each Offering Period each Participant shall
be granted the right to purchase Shares under the Plan and such right shall last only for three (3)
months, i.e., it shall expire at the end of the Offering Period for which it was granted.

          c.   Changing Enrollment.  The offering of Shares pursuant to the Plan shall occur only
during an Offering Period and shall be made only to Participants. Once an Eligible Employee is
enrolled in the Plan, the Administrator or Employer will inform the Agent of such fact. Once
enrolled, a Participant shall continue to participate in the Plan for each succeeding Offering
Period until he or she terminates his or her participation by revoking his or her payroll deduction
authorization or ceases to be an Eligible Employee. Once a Participant has elected to participate
under the Plan, that Participant’s payroll deduction authorization and subscription agreement shall
apply to all subsequent Offering Periods unless and until the Participant ceases to be an Eligible
Employee, modifies or terminates said authorization and/or agreement or withdraws from the Plan.
If a Participant desires
to change his or her rate of contribution, he or she may do so effective for the next Offering
Period by filing a new authorization for payroll deduction and/or subscription agreement with the
Administrator or Employer during the Enrollment Period immediately preceding such Offering Period,
in accordance with rules and procedures established by the Administrator.

Section 5 — Term of Plan

          Unless sooner terminated by the Board or as otherwise provided herein, the Plan shall
terminate upon the tenth anniversary of the Effective Date.

4

 

Section 6 — Number of Shares to Be Made Available

          The total number of Shares made available for purchase by Participants under the Plan is
600,000, which may be authorized but unissued shares, treasury shares, or shares purchased by the
Plan in the open market. The provisions of Section 9 b. shall control in the event the number of
Shares to be purchased by Participants during any Offering Period exceeds the number of Shares
available for sale under the Plan. If all of the Shares authorized for sale under the Plan have
been sold, the Plan shall either be continued through additional authorizations of Shares (such
authorizations must, however, comply with Section 17 hereof), or shall be terminated in accordance
with Section 17 hereof.

Section 7 — Use of Funds

          All payroll deductions received or held by an Employer under the Plan may be used by the
Employer for any corporate purpose, and the Employer shall not be obligated to segregate such
payroll deductions. Any amounts held by an Employer or other party holding amounts in connection
with or as a result of payroll withholding made pursuant to the Plan and pending the purchase of
Shares hereunder shall be considered a non-interest-bearing, unsecured indebtedness extended to the
Employer or other party by the Participants.

Section 8 — Amount of Contribution; Method of Payment

          a.   Payroll Withholding.  Except as otherwise specifically provided herein, the
Purchase Price will be payable by each Participant by means of payroll withholding. The
withholding shall be in increments of one percent (1%). The minimum withholding permitted shall be
an amount equal to one percent (1%) of a Participant’s Compensation and the maximum withholding
shall be an amount equal to ten percent (10%) of a Participant’s Compensation. In any event, the
total withholding permitted to be made by any Participant for a Plan Year shall be limited to the
sum of $22,500. The actual percentage of Compensation to be deducted
shall be specified by a Participant in his or her authorization for payroll withholding.
Participants may not deposit any separate cash payments into their Plan Accounts.

          b.   Application of Withholding Rules.  Payroll withholding will commence with the first
paycheck issued during the Offering Period and will continue with each paycheck throughout the
entire Offering Period, except for pay periods for which such Participant receives no compensation
(e.g., uncompensated personal leave, leave of absence, etc.). A pay period which overlaps Offering
Periods will be credited in its entirety to the Offering Period in which it is paid. Payroll
withholding shall be retained by the Employer or other party responsible for making such payment to
the Participant, until applied to the purchase of Shares as described in Section 9 and the
satisfaction of any

5

 

related federal, state or local withholding obligations (including any employment tax
obligations), or until returned to such Participant in connection with a withdrawal from the Plan
or a revocation of authorization described in Section 13.

          At the time the Shares are purchased, or at the time some or all of the Shares issued under
the Plan are disposed of, Participants must make adequate provision for the Employer’s federal,
state, local or other tax withholding obligations (including employment taxes), if any, which arise
upon the purchase or disposition of the Shares. At any time, the Employer may, but shall not be
obligated to, withhold from each Participant’s Compensation the amount necessary for the Employer
to meet applicable withholding obligations, including any withholding required to make available to
the Employer any tax deductions or benefits attributable to the sale or early disposition of Shares
by the Participant. Each Participant, as a condition of participating under the Plan, shall agree
to bear responsibility for all federal, state, and local income taxes required to be withheld from
his or her Compensation as well as the Participant’s portion of FICA (both the OASDI and Medicare
components) with respect to any Compensation arising on account of the purchase or disposition of
Shares. The Employer may increase income and/or employment tax withholding on a Participant’s
Compensation after the purchase or disposition of Shares in order to comply with federal, state and
local tax laws, and each Participant shall agree to sign any and all appropriate documents to
facilitate such withholding.

Section 9 — Purchasing, Transferring Shares

          a.     Maintenance of Plan Account.  Upon enrollment in the Plan by a Participant and upon
receipt by the Agent of such data as it requires, the Agent shall establish a Plan Account in the
name of such Participant. At the close of each Offering Period, the aggregate amount deducted
during such Offering Period by the Employer from a Participant’s Compensation (and credited to a
non-interest-bearing account maintained by the Employer or other party for bookkeeping purposes)
will be communicated by the Employer to the Agent and shall thereupon be credited by the Agent to
such Participant’s Account (unless the Participant has given written notice to the Administrator of
his or her withdrawal or revocation of authorization, prior to the date such communication is
made), except that the amount credited to the account of each Eligible Employee of this Plan as of
the Effective Date who was a participant in The E.W. Scripps Company Employee Stock Purchase Plan
immediately prior to the Effective Date shall be transferred to the Scripps Networks, Inc. Employee
Stock Purchase Plan and credited to Plan Account established on his or her behalf under this Plan
as of the Effective Date. As of the last day of each Offering Period, or as soon thereafter as is
administratively feasible, the Agent will automatically purchase Shares on behalf of each
Participant with respect to those amounts reported to the Agent by the Administrator or Employer as
creditable to that Participant’s Plan Account. On the date of purchase of such Shares, the amount
then credited to the Participant’s Plan Account for the purpose of purchasing Shares hereunder will
be divided by the Purchase Price and there shall be transferred to the Participant’s Plan Account by the Agent the
number of full and fractional Shares which results.

6

 

          b.     Insufficient Number of Available Shares.  In the event the number of Shares to be
purchased by Participants during any Offering Period exceeds the number of Shares available for
sale under the Plan, the number of Shares actually available for sale hereunder shall be limited to
the remaining number of Shares authorized for sale under the Plan and shall be allocated in
accordance with the Company’s instructions by the Agent among the Participants in proportion to
each Participant’s Compensation during the Offering Period over the total Compensation of all
Participants during the Offering Period. Any excess amounts withheld and credited to Participants’
Accounts then shall be returned to the Participants as soon as is administratively feasible.

          c.     Handling Excess Shares.  In the event that the number of Shares which would be
credited to any Participant’s Plan Account in any Offering Period exceeds the limit specified in
Section 3 b. hereof, such Participant’s Account shall be credited with the maximum number of Shares
permissible, and the remaining amounts will be refunded in cash as soon as administratively
practicable.

          d.     Status Reports.  Statements of each Participant’s Plan Account shall be given to
participating Employees at least quarterly. The statements shall set forth the Purchase Price and
the number of Shares purchased. The Agent shall hold in its name, or in the name of its nominee,
all Shares so purchased and allocated. No certificate will be issued to a Participant for Shares
held in his or her Plan Account unless he or she so requests in writing or unless such
Participant’s active participation in the Plan is terminated due to death, disability, separation
from service or retirement.

          e.     In-Service Share Distributions.  A Participant may request that a certificate for
all or part of the full Shares held in his or her Plan Account be sent to him or her after the
relevant Shares have been purchased and allocated. All such requests must be submitted to the
Agent. No certificate for a fractional Share will be issued; the fair value of fractional Shares,
as determined pursuant to the Plan on the date of withdrawal of all Shares credited to a
Participant’s Plan Account, shall be paid in cash to such Participant. The Plan may impose a
reasonable charge, to be paid by the Participant, for each stock certificate so issued prior to the
date active participation in the Plan ceases; such charge shall be paid by the Participant to the
Administrator or Employer prior to the date any distribution of a certificate evidencing ownership
of such Shares occurs.

Section 10 — Dividends and Other Distributions

          a.     Reinvestment of Dividends.  Cash dividends and other cash distributions received by
the Agent on Shares held in its custody hereunder will be credited to the Plan Accounts of
individual Participants in accordance with their
interests in the Shares with respect to which such dividends or distributions are paid or made, and
will be applied, as soon as practical after the receipt thereof by the Agent, to the purchase in
the open market or otherwise at prevailing market prices of the number of whole and fractional
Shares capable of being purchased with such funds (after deduction of any bank service fees,
brokerage charges, transfer taxes, and any other transaction fee, expense or cost

7

 

payable in connection with the purchase of such shares and not otherwise paid by the Employer).

          b.     Shares to Be Held in Agent’s Name.  All purchases of Shares made pursuant to this
Section will be made in the name of the Agent or its nominee, shall be held as provided in Section
9 hereof, and shall be transferred and credited (to the nearest one one-thousandth of a share) to
the Plan Account(s) of the individual Participant(s) to which such dividends or other distributions
were credited. Dividends paid in the form of Shares will be allocated by the Agent, as and when
received, with respect to Shares held in its custody hereunder to the Plan Accounts of individual
Participants (to the nearest one one-thousandth of a share) in accordance with such Participants’
interests in such Shares with respect to which such dividends were paid. Property, other than
Shares or cash, received by the Agent as a distribution on Shares held in its custody hereunder,
shall be sold by the Agent for the accounts of the Participants, and the Agent shall treat the
proceeds of such sale in the same manner as cash dividends received by the Agent on Shares held in
its custody hereunder.

          c.     Tax Responsibilities.  The automatic reinvestment of dividends under the Plan will
not relieve a Participant (or Eligible Employee with a Plan Account) of any income or other tax
which may be due on or with respect to such dividends. The Agent shall report to each Participant
(or Eligible Employee with a Plan Account) the amount of dividends credited to his or her Plan
Account.

Section 11 — Voting of Shares

          A Participant shall have no interest or voting right in any Shares until such Shares have been
actually purchased by the Agent in the Participant’s behalf. Shares held for a Participant (or
Eligible Employee with a Plan Account) in his or her Plan Account will be voted in accordance with
the Participant’s (or Eligible Employee’s) express written directions. In the absence of any such
directions, such Shares will not be voted.

Section 12 — Sale of Shares

          Subject to the provisions of Section 19, a Participant may at any time, and without
withdrawing from the Plan, by giving notice to the Agent, direct the Agent to sell all or part of
the Shares held on behalf of the Participant. Upon receipt of such a notice on which the
Participant’s signature is guaranteed by a bank or trust company, the Agent shall, as soon as
practicable after receipt of such notice,
sell such Shares in the marketplace at the prevailing market price and transmit the net proceeds of
such sale (less any bank service fees, brokerage charges, transfer taxes, and any other transaction
fee, expense or cost) to the Participant.

Section 13 — Withdrawals from the Plan and Revocations

          a.     General Rule.  A Participant may at any time, by giving written notice to the
Administrator or Employer, withdraw from the Plan or, without withdrawing from the

8

 

Plan but by
giving written notice to the Administrator or Employer, revoke his or her authorization for payroll
deduction for the Offering Period in which such revocation is made.

          b.     Refund of Amounts Not Used to Purchase Shares.  At the time of any withdrawal or
revocation under this Section, any amount deducted from payroll which has not previously been used
to purchase Shares will be used to purchase Shares in accordance with Section 9a.

          c.     Withdrawal of Shares.  Upon any withdrawal from the Plan as a result of separation
from employment, as provided in Section 14 of the Plan, a Participant (or his or her executor or
personal administrator), shall elect to either transfer Shares to his or her own personal brokerage
account or receive cash for the full number of Shares then being held in his or her Plan Account.
If the Participant elects cash, the Agent shall sell such Shares in the marketplace at the
prevailing market price and send the net proceeds (less any bank service fees, brokerage charges,
transfer taxes, and any other transaction fee, expense or cost) to the Participant. If no election
is made, Participant’s Shares will be sold as stated herein and net proceeds shall be sent to
Participant. In every case of withdrawal from the Plan, fractional Shares allocated to a
Participant’s Plan Account will be paid in cash at the Closing Value of such Shares on the date
such withdrawal becomes effective (or as soon thereafter as is administratively feasible). Upon
any other withdrawal, the Participant may elect to retain his or her Shares under the Plan until
separation from employment for any reason, at which time this Section 13(c) shall apply.

Section 14 — Separation from Employment

          Separation from employment for any reason, including death, disability, termination or
retirement, shall be treated as a withdrawal from the Plan, as described in Section 13. A service
fee will not be charged for any withdrawal attributable to a separation from employment.

Section 15 — Assignment

          Neither payroll deductions credited to a Participant’s account nor any rights or Shares held
under the Plan may be assigned, alienated, transferred, pledged, or otherwise disposed of in any
way by a Participant other than by will or
the laws of descent and distribution. Any such assignment, alienation, transfer, pledge, or other
disposition shall be without effect, except that the Administrator may treat such act as an
election to withdraw from the Plan as described in Section 13. A Participant’s right to purchase
Shares under this Plan may be exercisable during the Participant’s lifetime only by the
Participant.

Section 16 — Adjustment of and Changes in Shares

          If at any time after the effective date of the Plan the Company shall subdivide or reclassify
the Shares which have been sold or may be offered and sold under

9

 

the Plan, or shall declare thereon
any dividend payable in Shares, then the number and class of Shares which may thereafter be offered
and sold (in the aggregate and to any Participant) shall be adjusted accordingly and in the case of
each subscription outstanding at the time of any such action, the number and class of Shares which
may thereafter be purchased pursuant to such subscription and the Purchase Price shall be adjusted
to such extent as may be determined by the Company or Administrator, following consultation with
the Company’s independent certified public accountants and legal counsel, to be necessary to
preserve the rights of such subscribers.

Section 17 — Amendment or Termination of the Plan

          The Board shall have the right, at any time, to amend, modify or terminate the Plan without
notice; however, no Participant’s outstanding subscriptions shall be adversely affected by any such
amendment, modification or termination. In no event may the Board effect any of the following
amendments or revisions to the Plan without the approval of the Company’s shareholders: (i)
increase the number of Shares authorized for sale under the Plan, except for permissible
adjustments pursuant to Section 16 in the event of certain changes in the Company’s capitalization,
(ii) alter the purchase price formula so as to reduce the purchase price payable for the Shares
purchasable under the Plan or (iii) modify the eligibility requirements for participation in the
Plan.

Section 18 — Administration

          a.     Administration.  The Plan shall be administered by the Administrator. The
Administrator shall be responsible for the administration of all matters under the Plan which have
not been delegated to the Agent. The Administrator shall have full and exclusive discretionary
authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Any rule or regulation adopted by the
Administrator shall remain in full force and effect unless and until altered, amended or repealed
by the Administrator.

          b.     Specific Responsibilities.  The Administrator’s responsibilities shall include, but
shall not be limited to:

                    (1)   interpreting the Plan (including issues relating to the definition and application of
“Compensation”);

                    (2)   identifying and compiling a list of persons who are Eligible Employees for an Offering
Period;

                    (3)   identifying those Eligible Employees not entitled to subscribe for Shares during any
Offering Period on account of the limitations described in Section 3 b. hereof; and

                    (4)   providing prompt notice to the Agent of the enrollment of Eligible Employees, the Shares
to be credited to Participants’ Plan Accounts, and any

10

 

written notices of withdrawal or revocation
of authorization filed with the Administrator by individual Participants.

The Administrator may from time to time adopt rules and regulations for carrying out the terms of
the Plan. Interpretation or construction of any provision of the Plan by the Administrator shall
be final and conclusive on all persons, absent specific and contrary action taken by the Board.
Any interpretation or construction of any provision of the Plan by the Board shall be final and
conclusive.

          c.     Electronic or other Media.  Notwithstanding any other provision of the Plan to the
contrary, including any provision that requires the use of a written instrument, the Administrator
may establish procedures for the use of electronic or other media in communications and
transactions between the Plan or the Agent and Participants. Electronic or other media may
include, but are not limited to, e-mail, the Internet, intranet systems and automated telephonic
response systems.

Section 19 — Securities Law Restrictions

          Notwithstanding any provision of the Plan to the contrary, no payroll deductions shall take
place and no Shares may be purchased under the Plan until a registration statement has been filed
and become effective with respect to the issuance of the Shares covered by the Plan under the Act.

Section 20 — No Independent Employee’s Rights

          Nothing in the Plan shall be construed to be a contract of employment between an Employer or
Subsidiary and any Employee, or any group or category of Employees (whether for a definite or
specific duration or otherwise), or to prevent the Employer, its parent or any Subsidiary from
terminating any Employee’s employment at any time, without notice or recompense. No Employee shall
have any rights as a shareholder with respect to any Shares until such Shares have actually been
purchased in his or her behalf by the Agent.

Section 21 — Agent’s Powers and Duties

          a.     Acceptance.  The Agent accepts the agency created under this Plan and agrees to
perform the obligations imposed hereunder.

          b.     Receipt of Shares and Dividends.  The Agent shall be accountable to each
Participant for Shares held in the Participant’s Plan Account and dividends received with respect
thereto.

          c.     Records and Statements.  The records of the Agent pertaining to the Plan shall be
open to inspection by the Company at all reasonable times and may be audited from time to time by
any person or parties specified by the Company in writing. The Agent shall furnish the Company
with whatever information relating to the Plan

11

 

Accounts the Company considers necessary, including,
without limitation, any information required to be furnished, if any, to Participants each January
31 pursuant to Section 6039(a)(2) of the Code and related regulations.

          d.     Fees and Expenses.   The Agent shall receive from the Company reasonable annual
compensation as may be agreed upon from time to time between the Company and the Agent. In the
event the Agent resigns or is removed before the end of the year for which compensation was paid,
the compensation paid to the Agent for the year will be prorated (i.e., number of months of
services rendered/12) and the Agent will return any compensation in excess of the prorated fee
which was paid in advance.

          e.     Resignation.  The Agent may resign at any time as Agent of the Employer and
Participants by giving sixty (60) days’ written notice in advance to the Company, or if the Plan is
amended or modified by the Board and the Agent is unable to comply with such amendment or
modification, the Agent may resign immediately.

          f.     Removal.  The Company, by giving sixty (60) days’ written notice in advance to the
Agent, may remove the Agent. In the event of the resignation or removal of the Agent, the Company
shall promptly appoint a successor Agent if it intends to continue the Plan.

          g.     Interim Duties and Successor Agent.  Each successor Agent shall succeed to the
title of the Agent vested in its predecessor by accepting in writing its appointment as successor
Agent and filing the acceptance with the former Agent and the Company without the signing or filing
of any further statement. The resigning or removed Agent, upon receipt of acceptance in writing of
the agency by the successor Agent, shall execute all documents and do all acts necessary to vest
the title in any successor Agent. Each successor Agent shall have and enjoy all of the powers
conferred under this Plan upon its predecessor.
No successor Agent shall be personably liable for any act or failure to act of any predecessor
Agent. With the approval of the Company, a successor Agent may accept the account rendered and the
property delivered to it by a predecessor Agent without incurring any liability or responsibility
for so doing.

          h.     Limitation of Liability to Participants.  The Agent shall not be liable hereunder
for any act or failure to act including, without limitation, any claim of liability arising out of
a failure to terminate a Participant’s Plan Account upon such Participant’s death or adjudication
of incompetency prior to the receipt by the Agent of notice in writing of such death or
incompetency.

Section 22 — Applicable Law

          The Plan shall be construed, administered and governed in all respects under the laws of the
State of Ohio to the extent such laws are not preempted or controlled by federal law.

12

 

Section 23 — Death

          In the event of Participant’s death, the Administrator or Agent shall deliver his or her
Shares and/or cash under the Plan to the executor or administrator of Participant’s estate.

Section 24 — Merger or Consolidation

          If the Company shall at any time merge into or consolidate with another corporation or
business entity, each Participant will thereafter be entitled to receive at the end of the Offering
Period (during which such merger or consolidation occurs) the securities or property which a holder
of Shares was entitled to upon and at the time of such merger or consolidation. The Board shall
determine the kind and amount of such securities or property which each Participant shall be
entitled to receive. A sale of all or substantially all of the assets of the Company shall be
deemed a merger or consolidation for the foregoing purposes.

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