Document:

EX-10.25

 

EXHIBIT 10.25

MILACRON INC.

1997 Long-Term Incentive Plan

As Amended November 2, 2006

Section 1. GENERAL PROVISIONS

1.1 Purposes

The purposes of the 1997 Long-Term Incentive Plan (the “Plan”) of Milacron Inc. (the “Company”) are
to promote the interests of the Company and its shareowners by (i) helping to attract and retain
individuals of outstanding ability; (ii) strengthening the Company’s capability to develop,
maintain and direct a competent management team; (iii) motivating key employees by means of
performance-related incentives; (iv) providing incentive compensation opportunities which are
competitive with those of other major corporations; and (v) enabling such individuals to
participate in the long-term growth and financial success of the Company.

1.2 Definitions

“Affiliate”— means any corporation or other entity which is not a Subsidiary but as to which the
Company possesses a direct or indirect ownership interest and has power to exercise management
control.

“Award”— means a Stock Option grant, a Restricted Stock grant and/or a Performance Share Grant
under the Plan.

“Board of Directors”— means the board of directors of the Company.

“Code”— means the Internal Revenue Code of 1986, as it may be amended from time to time.

“Committee”— means those members of the Personnel and Compensation Committee of the Board of
Directors who qualify as “Non-Employee Directors” pursuant to Rule 16b-3(b)(3) issued under the
Exchange Act and who qualify as outside directors pursuant to Code Section 162(m) and any
regulations issued thereunder.

“Common Stock”— means the common shares of the Company.

“Corporation”— means the Company, its divisions, Subsidiaries and Affiliates.

“Director”— means a member of the Board of Directors of the Company.

 

 

“Disability Date”— means the date on which a Participant is deemed disabled under the employee
benefit plans of the Corporation applicable to the Participant.

“Earnings Per Share”— shall mean earnings from continuing operations before extraordinary items and
cumulative effect of changes in methods of accounting, but including or excluding any income or
expense items which, in the opinion of the Committee, are properly includable or excludable in the
determination of earnings within the intent of the Plan, reduced by the preferred dividend
requirement, divided by the number of common share used to calculate “basic earnings per share” as
that term is defined in Statement of Financial Accounting Standards No. 128. In the event that
generally accepted accounting principles for the calculation of Earnings Per Share change during
the term of a Performance Period, the number of common shares used to calculate Earnings Per Share
at the beginning and end of the Performance Period shall be determined by a method, to be chosen at
the Committee’s discretion, which shall be applied consistently throughout the Performance Period.

“Employee” — means any salaried employee of the Corporation.

“Exchange Act” — means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” — means, as of any particular date, (i) the closing sale price per share of
Common Stock as reported on the principal exchange on which Common Stock of the Company is then
trading, if any, or if there are no sales on such day, on the next preceding trading day during
which a sale occurred, or (ii) if clause (i) does not apply, the fair market value of a share of
Common Stock as determined by the Committee.

“Incentive Stock Options”— means Stock Options which constitute “incentive stock options” under
Section 422 (or any successor section) of the Code.

“Initial Performance Period”— shall mean the Performance Period beginning December 29, 1996.

“Non-Employee Director”— means a Director who is not an Employee.

“Non-Qualified Stock Options” means Stock Options which do not constitute Incentive Stock Options.

“Participant”— means an Employee who is selected by the Committee to receive an Award under the
Plan.

“Performance Cycle”— means a fiscal year of the Company in which this Plan is in effect.

 

 

“Performance Period”— shall mean the three year period following the beginning of the fiscal year
in which the Performance Share Grant is awarded.

“Performance Share Grant”— shall mean a number of shares of Restricted Stock granted to the
Participant at the beginning of a Performance Period that ranges from 20% to 100%, as determined
by the Committee, of the Participant’s base earnings, not to exceed $1,000,000 for purposes of
this Plan, during the year of award divided by the average of the closing prices per share of
Common Stock during the month immediately preceding the Performance Period.

“Performance Share Multiple”— shall mean a percentage of 0%, 100%, 150% or 200% which, when
multiplied by the Performance Share Grant, results in the final number of Performance Shares
Earned by the Participant for a specific Performance Period.

“Performance Shares Earned”— shall mean the product of the Performance Share Multiple multiplied
by the Performance Share Grant.

“Restricted Period”— means the period of up to three (3) years selected by the Committee during
which a grant of Restricted Stock may be forfeited to the Company.

“Restricted Stock”— means shares of Common Stock contingently granted to a Participant under
Sections 3, 4 or 5 of the Plan.

“Retirement Date” —  means the actual date of retirement from the Company (i) for those
Participants who have attained age 55 and have at least ten Years of Credited Service (as that
term is defined in the Cincinnati Milacron Retirement Plan); or, (ii) as may be determined under a
temporary early retirement program.

“Stock Options” —  means an Incentive Stock Option and/or a Non-Qualified Stock Option granted
under Section 2 of the Plan.

“Subsidiary”— means any corporation in which the Company possesses directly or indirectly fifty
percent (50%) or more of the total combined voting power of all classes of its stock.

“Total Growth Rate”— shall mean the percentage increase in Earnings Per Share for threshold,
target and maximum levels of attainment in the third year of the Performance Period divided by the
Earnings Per Share in the year immediately prior to that Performance Period, and will be the
result of the annual compound growth rate over the three year Performance Period.

1.3 Administration

The Plan shall be administered by the Committee, which shall at all times consist of three or more
members. The Committee shall have sole and complete authority to adopt, alter and repeal such

 

 

administrative rules, guidelines and practices governing the operation of the Plan as it shall
from time to time deem advisable, and to interpret the terms and provisions of the Plan. The
Committee’s decisions are binding upon all parties.

1.4 Eligibility

All Employees who have demonstrated significant management potential or who have contributed in a
substantial measure to the successful performance of the Corporation, as determined by the
Committee, are eligible to be Participants in the Plan. Also, in instances where another
corporation or other business entity is being acquired by the Company, and the Company has assumed
outstanding employee option grants and/or the obligation to make future or potential grants under
a prior existing plan of the acquired entity, adjustments are permitted at the discretion of the
Committee subject to Section 1.5(a) below. Awards to Employees are made at the discretion of the
Committee. Non-Employee Directors shall also participate pursuant to Section 5 herein.

1.5 Shares Reserved

(a) There shall be reserved for grant pursuant to the Plan a total of 4,400,000 shares of Common
Stock. In the event that (i) a Stock Option expires or is terminated unexercised as to any shares
covered thereby, or (ii) Restricted Stock grants, are forfeited or unearned for any reason under
the Plan, such shares shall thereafter be again available for grant pursuant to the Plan.

(b) In the event of any change in the outstanding shares of Common Stock by reason of any stock
dividend or split, recapitalization, merger, consolidation, spin-off, combination or exchange of
shares or other corporate change, or any distributions to common shareholders other than cash
dividends, the Committee shall make such substitution or adjustment, if any, as it deems to be
equitable, as to the number or kind of shares of Common Stock or other securities granted or
reserved for grant pursuant to the Plan, the number of outstanding Stock Options and the option
price thereof, and the number of payable Performance Share Grants and shares of Restricted Stock.

1.6 Change of Control

“Change of Control” shall mean —

	•	 	a Person or Group other than a trustee or other fiduciary of securities held under an
employee benefit plan of the Company
or any of its subsidiaries, is or becomes a Beneficial Owner, directly or indirectly, of stock
of the Company representing 20% or more of the total voting power of the Company’s then
outstanding stock and securities; provided, however, that for 

 

 

	 	 	purposes of this
subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clause (i) of section (c) of this section;

	•	 	individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”), cease for any reason to constitute a majority
thereof; provided, however, that any individual becoming a
director whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least 60% of
the directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person or Group other
than the Board;
	 
	•	 	there is consummated a merger, consolidation or other corporate
transaction, other than (i) a merger, consolidation or transaction
that would result in the voting securities of the Company
outstanding immediately prior to such merger, consolidation or
transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least 66-2/3% of the
combined voting power of the stock and securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger, consolidation or transaction, or
(ii) a merger, consolidation or transaction effected to implement
a recapitalization of the Company (or similar transaction) in
which no Person or Group is or becomes the Beneficial Owner,
directly or indirectly, of stock and securities of the Company
representing more than 20% of the combined voting power of the
Company’s then outstanding stock and securities;
	 
	•	 	the sale or disposition by the Company of all or substantially all
of the Company’s assets other than a sale or disposition by the
Company of all or substantially all of the assets to an entity at
least 66-2/3% of the combined voting power of the stock and
securities of which is owned by Persons in substantially the same
proportions as their ownership of the Company’s voting stock
immediately prior to such sale; or
	 
	•	 	the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.

 

 

“Person” shall mean any person (as defined in Section 3(a)(9) of the Securities Exchange Act (the
“Exchange Act”), as such term is modified in Section 13(d) and 14(d) of the Exchange Act) other
than (i) any employee plan established by the Company, (ii) any affiliate (as defined in Rule
12b-2 promulgated under the Exchange Act) of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same proportions as their
ownership of the Company. “Group” shall mean any group as defined in Section 14(d)(2) of the
Exchange Act. “Beneficial Owner” shall mean beneficial owner as defined in Rule 13d-3 under the
Exchange Act. ”

In the event of a Change of Control of the Company (i) all time periods relating to the exercise
or realization of Awards shall be accelerated so that such Awards may be exercised or realized in
full beginning immediately following the Change of Control and extending for the remaining normal
exercise period, and (ii) Performance Share Grants shall be paid and shares related thereto
distributed as set forth in Sections 4 (d) and (h).

Notwithstanding any other provision of this Plan to the contrary, and only with respect to Awards
granted on or after February 10, 2004, a “Change of Control” shall not occur solely as a result of
a financial restructuring or recapitalization of the Company that may occur during 2004 (the “2004
Restructuring”) and, accordingly, the occurrence of the 2004 Restructuring shall not result in,
among other things, (a) the accelerated vesting, exercisability, release, realization or payment of
any such Awards and (b) the deemed satisfaction of any performance criteria related to any such
Awards; provided, however, that in the event that the 2004 Restructuring would
otherwise constitute a Change of Control but for this paragraph, any Performance Share Grants
hereunder that are outstanding as of the date of the 2004 Restructuring shall, upon a Qualifying
Termination (as defined in Section 4(h) hereof) of the recipient of such Performance Share Grant
within 24 months of the 2004 Restructuring, be paid in a lump sum cash payment (calculated assuming
attainment of the applicable maximum Total Growth Rate as provided in Section 4(h) hereunder).

1.7 Withholding

The Corporation shall have the right to deduct from all amounts paid in cash any taxes required by
law to be withheld therefrom. In the case of payments of Awards in the form of Common Stock, the
amount of any taxes required to be withheld with respect to such Common Stock from the Participant
may, at the Committee’s
discretion, be paid in cash, by tender by the Employee of the number of shares of Common Stock
whose Fair Market Value equals the amount required to be withheld or, except for Non-Employee

 

 

Directors receiving Awards of Common Stock pursuant to Section 5 herein, use of the Company’s Key
Employee Withholding Tax Loan Program.

1.8 Nontransferability

No Award shall be assignable or transferable except by will or the laws of descent and
distribution, and no right or interest of any Participant shall be subject to any lien, obligation
or liability of the Participant.

1.9 No Right to Employment

No person shall have any claim or right to be granted an Award, and the grant of an Award shall
not be construed as giving a Participant the right to be retained in the employ of the
Corporation. Further, the Corporation expressly reserves the right at any time to dismiss a
Participant free from any liability, or any claim under the Plan, except as provided herein or in
a Stock Option or Restricted Stock agreement.

1.10 Construction of the Plan

The validity, construction, interpretation, administration and effect of the Plan and of its rules
and regulations, and rights relating to the Plan, shall be determined solely in accordance with
the laws of Ohio.

1.11 Amendment

(a) The Board of Directors may amend, suspend or terminate the Plan or any portion thereof at any
time, provided that no amendment shall be made without stockholder approval which shall (i)
increase (except as provided in Section 1.5(b) hereof) the total number of shares reserved for
grant pursuant to the Plan, (ii) change the class of Employees eligible to be Participants, (iii)
decrease the minimum option prices stated in Section 2.1 hereof (other than to change the manner
of determining Fair Market Value to conform to any then applicable provision of the Code or
regulations thereunder) (iv) extend the maximum period during which Non-Qualified Stock Options or
Incentive Stock Options may be exercised, or (v) reduce the restriction period for Restricted
Stock Awards (except as provided in Section 1.6 hereof).

(b) With the consent of the Participant adversely affected thereby, the Committee may amend or
modify any outstanding Award in any manner not inconsistent with the terms of the Plan, including
without limitation, to change the form of payment or the date or dates as of which (i) a Stock
Option becomes exercisable, (ii) the restrictions on shares of Restricted Stock are removed, or (iii) a
Performance Share Grant is payable.

 

 

(c) In no event shall any outstanding Award be modified in such a manner as to re-price any Stock
Option by (i) decreasing the purchase price thereof, or (ii) cancellation of any Stock Option
prior to its established terms of expiration for the purpose of replacement by a lower-priced
Stock Option, nor shall an outstanding Award of Restricted Stock be modified in a manner which
will reduce the restriction period related to the Restricted Stock.

1.12 Authority of Committee

Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to
determine the Employees to receive Awards, and:

(a) Stock Options. The number of shares to be covered by each Stock Option and the conditions and
limitations, if any, in addition to those set forth in Section 2.2 hereof, applicable to the
exercise of the Stock Option shall be determined by the Committee. The Committee shall have the
authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of Stock Options. In the case of Incentive Stock Options, the maximum aggregate Fair
Market Value (at the date of grant) of the shares, under this Plan or any other plan of the
Company or a corporation which (at the date of grant) is a parent of the Company or a Subsidiary,
which are exercisable by an Employee for the first time during any calendar year shall not exceed
$100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422
of the Code, or any successor provision.

(b) Restricted Stock. The number of shares of Restricted Stock to be granted to each Participant,
the duration of the Restricted Period during which and the conditions under which the Restricted
Stock may be forfeited to the Company, and the terms and conditions of the Award in addition to
those contained in Section 3.1 shall be determined by the Committee. Such determinations shall be
made by the Committee at the time of the grant.

1.13 Effective Dates

The Plan shall be effective on December 29, 1996, and shall expire on the earlier of (i) a date
determined by the Board of Directors, or (ii) the full use of the shares reserved for grant
pursuant to the Plan, provided however, that the Plan shall be null and void unless approved at
the 1997 annual meeting of the shareholders of the Company.

1.14 Government and Other Regulations

The obligation of the Company with respect to Awards shall be subject to all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be required,

 

 

including, without limitation, the effectiveness of any registration statement required under the
Securities Act of 1933, and the rules and regulations of any securities exchange on which the
Common Stock may be listed. For so long as the Common Stock is registered under the Exchange Act,
the Company shall use its reasonable efforts to comply with any legal requirements (a) to maintain
a registration statement in effect under the Securities Act of 1933 with respect to all shares of
Common Stock that may be issued to Holders under the Plan, and (b) to file in a timely manner all
reports required to be filed by it under the Exchange Act.

1.15 Non-Exclusivity

Neither the adoption of the Plan by the Board of Directors nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board of Directors to adopt such other incentive arrangements as it may deem
desirable including, without limitation, the granting of stock options and the awarding of stock
and cash otherwise than under the Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.

1.16 Forfeiture Provision

If the Employee has (i) used for profit or disclosed confidential information or trade secrets of
the Company to unauthorized persons, or (ii) breached any contract with or violated any legal
obligations to the Company, or (iii) failed to make himself or herself available to consult with,
supply information to, or otherwise cooperate with the Company at reasonable times and upon a
reasonable basis, or (iv) engaged in any other activity which would constitute grounds for his or
her discharge for cause by the Company or a Subsidiary, the Employee will forfeit all undelivered
portions of an Award.

Section 2: STOCK OPTIONS

2.1 Option Price

The Committee shall establish the option price at the time each Stock Option is granted, which
price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of
grant. The option price shall be subject to adjustment in accordance with the provisions of
Section 1.5(b) hereof.

2.2 Exercise of Options

(a) Except as stated in Section 2.2(c), each Stock Option by its terms shall require the
Participant to remain in the continuous employ, or service to the Board of Directors if the
individual is a Non-Employee Director and awarded Stock Options under Section 5 herein, of the
Corporation for at least one year from

 

 

the date of grant of the Stock Option before any part of
the Stock Option shall be exercisable. Non-Qualified Stock Options and Incentive Stock Options may
not be exercisable later than ten years after their date of grant.

(b) Stock Options shall become exercisable in installments with twenty-five percent (25%) of the
total Stock Option becoming exercisable upon the first anniversary of the date of grant of the
Stock Option and additional increments of twenty-five percent (25%) of the total Stock Option
grant shall become exercisable on each anniversary thereafter until the entire Stock Option is
exercisable.

(c) In the event a Participant ceases to be an Employee or a Non-Employee Director as a result of
his death, all time periods related to the exercise of any outstanding Stock Options shall be
accelerated and the Stock Options shall become exercisable immediately following the Participant’s
death and extending for the remaining normal exercise period. In the event a Participant ceases to
be an Employee or a Non-Employee Director upon the occurrence of his Retirement Date, Disability
Date, or otherwise with the consent of the Committee, his Stock Options shall be exercisable as
described in 2.2(b) above as if the individual had remained as an Employee or Non-Employee
Director and extending for the normal exercise period. The Committee may at any time and with
regard to all Participants or any individual Participant accelerate time periods related to the
exercise of any outstanding Stock Options, and the Stock Option shall become exercisable
immediately thereafter and extending for the remaining normal exercise period. In all other
circumstances when a Participant ceases to be an Employee or a Non-Employee Director, his rights
under all Stock Options shall terminate immediately.

(d) Each Stock Option shall be confirmed by a Stock Option agreement executed by the Company and
by the Participant which agreement shall designate the Stock Options granted as Incentive Stock
Options or Non-Qualified Stock Options. The option price of each share as to which an Option is
exercised shall be paid in full five (5) days from the date of such exercise, but in no event
shall the shares issued pursuant to said option exercise be delivered to the Participant until
said payment has been received by the Company. Such payment shall be made in cash, by tender of
shares of Common Stock owned by the Participant valued at Fair Market Value as of the date of
exercise, subject to such limitations on the tender of Common Stock as the Committee may impose,
pursuant to the provisions of the Company’s Key Employee Stock Option Loan Program, if applicable,
(or any other loan
program or arrangement which may be established by the Company under this Plan, or otherwise) or
by a combination of the foregoing.

2.3 Maximum Number of Shares

 

 

The maximum number of shares that may be granted to any Participant under all Stock Option Awards
under this Plan during any one year shall not exceed 100,000 shares.

Section 3: RESTRICTED STOCK GRANTS

3.1 The terms and conditions regarding Restricted Stock grants are as follows:

(a) Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as herein provided, during the Restricted Period. Certificates issued in
respect of shares of Restricted Stock shall be registered in the name of the Participant and
deposited by him, together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates to the
Participant or his legal representative, except that the Participant may defer receipt of his
Restricted Stock under terms established by the Committee by extending the Restricted Period.

(b) Except as provided in subsection (a) hereof, the Participant shall have all the rights of a
holder of Common Stock, including but not limited to the rights to receive dividends and to vote
during the Restricted Period.

(c) In the event a Participant ceases to be an Employee or a Non-Employee Director during the
Restricted Period as a result of his death, the restrictions imposed hereunder shall immediately
lapse with respect to such shares of Restricted Stock. In the event a Participant ceases to be an
Employee or a Non-Employee Director during the Restricted period and upon the occurrence of his
Retirement Date, Disability Date, or with the consent of the Committee, the restrictions imposed
hereunder shall continue as if the individual had remained as an Employee or Non-Employee
Director. The Committee may at any time and with regard to all Participants or any individual
Participant lapse any restrictions imposed hereunder with respect to shares of Restricted Stock.
In all other circumstances in which a Participant ceases to be an Employee or Non-Employee
Director, all shares of Restricted Stock shall thereupon be forfeited to the Company and the
certificate or certificates representing such Restricted Stock shall be immediately canceled.

(d) Each grant shall be confirmed by a Restricted Stock agreement executed by the Company and by
the Participant.

Section 4: PERFORMANCE SHARE GRANTS

(a) Not later than May 1 of each calendar year in which this Plan is in effect, the Committee may
make a Performance Share Grant, effective as of the beginning of the year, to any Participant
selected by the Committee. The Committee may make a Performance Share Grant to a Participant in
any given year which

 

 

relates to a Performance Period already in progress. In such event, (i) the
Performance Share Grant determined under Section 4(b) shall be prorated based on the remaining
whole years of the relevant Performance Period as of the date of grant compared to the entire
length of the relevant Performance Period, (ii) the Participant shall receive Restricted Shares
immediately upon the date of grant, and, (iii) the Total Growth Rate and level of attainment
factors determined by the Committee at the beginning of the relevant Performance Period shall be
used to determine the Participant’s ultimate payout under Section 4(d) herein. If awarded not
later than May 1, the Performance Share Grant shall relate back to the beginning of the year in
which made for purposes of proration.

(b) The Committee shall, at the beginning of each Performance Period or not later than 90 days
thereafter, determine the Performance Share Grant to be made to each Participant in Restricted
Stock and establish the threshold, target and maximum levels of attainment for Total Growth Rate
during the Performance Period.

(c) If Earnings Per Share during the third year of a Performance Period are equal to or exceed the
threshold for a Total Growth Rate set by the Committee at the beginning of a Performance Period, a
Performance Share Multiple of 100%, 150% or 200% will be applied to the Performance Share Grant.
If Earnings Per Share are below the threshold level of attainment, the Performance Share Multiple
will be 0%. Below is the Total Growth Rate and the threshold, target and maximum levels of
attainment for the Initial Performance Period.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Performance
	Earnings Per Share	 	 	 	Level of	 	Share
	Compounded Annually	 	Total Growth Rate	 	Attainment	 	Multiple
	 
	 
	 	 	 	 	 	 	 	 
	Less than 12%

	 	Less than 40.5%
	 	 	 	 	0	%
	 
	 	 	 	 	 	 	 	 
	At least 12%, but less than 15%

	 	At least 40.5% but less than 52.1%
	 	Threshold
	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	At least 15%, but less than 18%

	 	At least 52.1% but less than 64.3%
	 	Target
	 	 	150	%
	 
	 	 	 	 	 	 	 	 
	Equal to or greater than 18%

	 	64.3% or greater
	 	Maximum
	 	 	200	%

 

 

(d) Payment for the value of Performance Shares Earned shall be made to a Participant not later
than three months following the end of a Performance Period. If the threshold Total Growth Rate
during the Performance Period is not attained in the third year the performance goals attached to
the Performance Share Grant will not have been met and the Participant shall forfeit his
Restricted Stock. Payment related to a Performance Share Multiple of 100% shall be the lapse of
restrictions for the Participant’s Performance Share Grant and he shall receive the certificate
for unrestricted ownership of such shares. Payment related to that portion, if any, of a
Performance Share Multiple of 150% or 200% shall be as follows: a) for the first 100%, payment
shall be the transfer of unrestricted share certificates as a result of the lapse of restrictions
on the Performance Share Grant and b) for the 50% or 100% premium, payment shall be an amount of
cash equal to the value of the Performance Shares Earned in excess of the 100% multiplied by the
average of the closing prices per share of the Common Stock for the last month in the Performance
Period. In the event of a Change of Control (as defined in Section 1.6), payment shall be made as
if the maximum targets for the three year performance period had been met and shall be paid within
thirty days following the Change of Control. Such payment shall be in a cash amount equal to the
Performance Share Grant multiplied by the higher of (i) the highest average of the high and low
prices per share of the Common Stock on any date within the period commencing 30 days prior to the
Change in Control or (ii) if the Change in Control occurs as a result of a tender or exchange
offer or consummation of a corporate transaction, the highest price paid per share of Common Stock
pursuant thereto.

(e) The Committee may make adjustments from time to time in the Performance Share Multiple, in the
Total Growth Rate or in Earnings Per Share in such reasonable manner as the Committee may
determine to reflect (i) any increase or decrease in the number of issued shares of Common Stock
of the Company resulting from a subdivision or consolidation of shares or any other capital
adjustment, the payment of stock dividends or other increases or decreases in such shares effected
without receipt of consideration by the Company, (ii) material changes in the Company’s accounting
practices or principles, the effect of which would be to cause inconsistency in reporting earnings
per share, (iii) material acquisitions or dispositions, the effect of which would be to cause
fluctuations in reported earnings per share which are not within the intent of the Plan, or (iv)
extraordinary, unusual and nonrecurring items (such as
restructuring charges or a disposal of a business) which are disclosed in the published, audited
financial statements; provided, however, that no such adjustments shall be made to the extent that
the Committee determines that the adjustment would cause payment in respect of Performance Share
Grant to fail to be fully deductible by the Company on account of Section 162(m) of the Code.

 

 

(f) With respect to a Performance Share Grant, the Participant shall have the rights of a holder
of Common Stock, including but not limited to the rights to receive dividends and to vote during
the Restricted Period until such Participant ceases to be an Employee of the Corporation for any
reason other than death or termination of Employment on a Disability Date or Retirement Date.

(g) In the event a Participant ceases to be an Employee upon the occurrence of his death,
Retirement Date or Disability Date prior to the end of a Period, payment for the value of
Performance Shares Earned shall be prorated for the amount of time the Participant remained an
Employee compared to the length of the Performance Period, provided the Participant has completed
at least the first full year of the Performance Period. In such event, any prorated payment for
Performance Shares Earned shall be distributed in unrestricted share certificates or paid in cash
(depending on whether the threshold, target or maximum Total Growth Rate is attained) in
accordance with Paragraphs (c) and (d) above. In all other circumstances in which a Participant
ceases to be an Employee, Performance Share Grant shall terminate and no amounts shall be payable
at any time.

(h) If there is an event constituting a Change of Control (as defined in Section 1.6), any
outstanding Performance Share Grant shall immediately vest in the Participant to whom such
Performance Share Grant has been awarded as of the date such Change of Control occurs. If the
Participant’s employment is terminated in a Qualifying Termination within 24 months following the
Change of Control, then the Participant shall receive a lump sum cash payment equal to all cash
payments possible related to outstanding Performance Share Grants made to the Participant, as if
there has been attainment of the applicable maximum Total Growth Rate. For purposes hereof, a
“Qualifying Termination” shall mean (i) a termination of the Participant’s employment for any
reason other than for cause or disability or due to the Participant’s death, or (ii) the
Participant’s termination of employment for Good Reason. “Good Reason” shall exist in the event of
the occurrence of any of the following without the Participant’s express prior written consent:

(i) any diminution of, or the assignment to the Participant of duties inconsistent with,
the Participant’s position,
duties, responsibilities and status with the Corporation immediately prior to a Change in
Control, an adverse change in the Participant’s titles or offices as in effect immediately
prior to a Change in Control, or any removal of the Participant from, or any failure to
reelect the Participant to, any of such positions, except in connection with the
Participant’s termination of employment for disability or cause or as a result of the
Participant’s death or by the Participant other than for Good Reason;

 

 

(ii) a reduction by the Corporation in the Participant’s base salary as in effect on the
date of a Change in Control or as the same may be increased from time to time during the 24
months following a Change of Control;

(iii) the Corporation’s failure to continue any benefit plan or arrangement (including,
without limitation, the Corporation’s life insurance, post-retirement benefits, and
comprehensive medical plan coverage) in which the Participant participated at the time of a
Change in Control (or any other plans providing the Participant with substantially similar
benefits) (hereinafter referred to as “Benefit Plans”), or any action by the Corporation
that would adversely affect the Participant’s participation in or materially reduce the
Participant’s benefits under any such benefit plan or deprive the Participant of any
material fringe benefit enjoyed by the Participant at the time of a Change in Control;

(iv) the Corporation’s failure to continue in effect, or continue payments under, any
incentive plan or arrangement (including, without limitation, any equity-based plan or
arrangement) in which the Participant participated at the time of a Change in Control
(hereinafter referred to as “Incentive Plans”) or any action by the Company that would
adversely affect the Participant’s participation in any such Incentive Plans or reduce the
Participant’s benefits under any such Incentive Plans;

(v) a relocation of the Corporation’s principal executive offices to a location outside the
Cincinnati, Ohio metropolitan area or relocation of the Participant’s primary workplace to
any place other than the location at which the Participant performed the Participant’s
duties immediately prior to a Change in Control;

(vi) the Corporation’s failure to provide the Participant with the number of paid vacation
days to which the Participant was entitled at the time of a Change in Control;

(vii) the Corporation’s material breach of any Agreement entered into with the Participant;
or

(viii) the Company’s failure to 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, by agreement in form and substance satisfactory to the
Participant, to expressly assume 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.

 

 

Section 5: NON-EMPLOYEE DIRECTORS

(a) Each individual then serving as a Non-Employee Director shall receive a Non-Qualified Stock
Option of 2,000 shares at or about the effective date of the Plan and at the beginning of each of
the Company’s fiscal years thereafter so long as the Plan is in effect. As a portion of their
compensation, the Committee may also award to Non-Employee Directors shares of Restricted Stock,
as it may determine, not to exceed 2,000 shares per individual every three years.

(b) Notwithstanding anything contained in Section 5(a) to the contrary, effective as of July 29,
2004, Non-Employee Directors shall no longer be entitled to receive any Award under this Plan.EX-10.26

 

EXHIBIT 10.26

MILACRON INC.

2004 LONG-TERM INCENTIVE PLAN

As Amended November 2, 2006

     1. Purpose of the Plan. The purpose of this Plan is to attract, retain and motivate officers
and other key employees of Milacron Inc. (the “Company”) and its Subsidiaries, to retain qualified
individuals to serve as non-employee members of the Board, and to provide such persons with
appropriate incentives and rewards for superior performance and contribution. The Plan is
effective as of April 1, 2004 (the “Effective Date”), subject to the approval of the Company’s
stockholders.

     2. Definitions. Capitalized terms used herein shall have the meanings assigned to such terms
in this Section 2.

          “Applicable Laws” means the requirements relating to the administration of equity-based
compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any other country or jurisdiction where awards are granted under the Plan.

          “Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and shall
include both Tandem Appreciation Rights and Free-Standing Appreciation Rights.

          “Base Price” means the price to be used as the basis for determining the Spread upon the
exercise of a Free-Standing Appreciation Right and a Tandem Appreciation Right.

          “Beneficial Owner” means a beneficial owner as defined in Rule 13d-3 under the Exchange Act.

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

          “Change in Control” shall mean any of the following events:

     (i) A Person or Group other than a trustee or other fiduciary of securities held under
an employee benefit plan of the company or any of its Subsidiaries, is or becomes a
Beneficial Owner, directly or indirectly, of stock of the Company representing 20% or more
of the total voting power of the Company’s then outstanding stock and securities;
provided, however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control: (a) any acquisition directly from
the Company, (b) any acquisition by the Company, (c) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any corporation controlled
by the Company, or (d) any acquisition by any corporation pursuant to a transaction which
complies with clause (a) of section (iii) of this section;

     (ii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”), cease for any reason to constitute a majority thereof; provided, however, that any
individual becoming a Director whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least 60% of the Directors then comprising the
Incumbent Board shall be considered as though such individual was a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the
election or removal of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person or Group other than the Board;

     (iii) There is consummated a merger, consolidation or other corporate transaction,
other than (a) a merger, consolidation or transaction that would result in the voting
securities of the Company outstanding immediately prior to such merger, consolidation or
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least 66-2/3% of
the combined voting power of the stock and securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger, consolidation or

1

 

transaction, or (b) a merger, consolidation or transaction effected to implement a
recapitalization of the Company (or similar transaction) in which no Person or Group is or
becomes the Beneficial Owner, directly or indirectly, of stock and securities of the Company
representing more than 20% of the combined voting power of the Company’s then outstanding
stock and securities;

     (iv) The sale or disposition by the Company of all or substantially all of the
Company’s assets other than a sale or disposition by the Company of all or substantially all
of the assets to an entity at least 66-2/3% of the combined voting power of the stock and
securities of which is owned by Persons in substantially the same proportions as their
ownership of the Company’s voting stock immediately prior to such sale; or

     (v) The stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.

Notwithstanding any other provision of this Plan to the contrary, a “Change in Control” shall not
occur solely as a result of any change in the combined voting power of the stock and securities of
the Company as a result of any securities issued or issuable pursuant to the transactions
contemplated by the Note Purchase Agreement, dated as of March 12, 2004, by and among Milacron
Inc., Glencore Finance AG and Mizuho International plc, including any securities issued or issuable
in exchange for, upon conversion or exercise of, or as a payment of dividends upon, such
securities.

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

          “Committee” means the Committee described in Section 16 of the Plan.

          “Common Stock” means the common stock of the Company or any security into which such Common
Stock may be changed by reason of any transaction or event of the type referred to in Section 12 of
this Plan.

          “Company” has the meaning given such term in Section 1 of the Plan.

          “Covered Employee” means an Employee who is, or is determined by the Committee to be likely to
become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor
provision).

          “Date of Grant” means the date specified by the Committee on which a grant of Option Rights,
Appreciation Rights, Performance Units or Performance Shares or a grant or sale of Restricted
Shares or Deferred Shares or any awards granted under Section 10 shall become effective.

          “Deferral Period” means the period of time during which Deferred Shares are subject to
deferral limitations under Section 8 of this Plan.

          “Deferred Shares” means an award made pursuant to Section 8 of this Plan of the right to
receive shares of Common Stock at the end of a specified Deferral Period.

          “Director” means a member of the Board of Directors of the Company.

          “Effective Date” has the meaning given such term in Section 1 of the Plan.

          “Employee” means a salaried employee of the Company or any Subsidiary who has demonstrated
significant management potential or who has contributed in a substantial measure to the successful
performance of the Company, as determined by the Committee.

          “Evidence of Award” means an agreement, certificate, resolution or other type or form of
writing or other evidence approved by the Committee which sets forth the terms and conditions of
the Option Rights, Appreciation Rights, Performance Units, Performance Shares, Restricted Shares or
Deferred Shares or any awards

2

 

granted under Section 10. An Evidence of Award may be in an electronic medium, may be limited
to a notation on the books and records of the Company and, with the approval of the Committee, need
not be signed by a representative of the Company or a Participant.

          “Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations
thereunder, as such law, rules and regulations may be amended from time to time.

          “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5
of this Plan that is not granted in tandem with an Option Right.

          “Group’ means any group as defined in Section 14(d)(2) of the Exchange Act.

          “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock
options” under Section 422 of the Code or any successor provision. For purposes of clarity,
Incentive Stock Options may only be granted to Employees.

          “Management Objectives” means the measurable performance objective or objectives established
pursuant to this Plan for Participants who have received grants of Performance Units or Performance
Shares or, when so determined by the Committee, Option Rights, Appreciation Rights and Restricted
Shares pursuant to this Plan. Management Objectives may be described in terms of Company-wide
objectives or objectives that are related to the performance of the individual Participant or of
the Subsidiary, division, department, region or function within the Company or Subsidiary in which
the Participant is employed. The Management Objectives may be made relative to the performance of
other corporations. The Management Objectives applicable to any award to a Covered Employee shall
be based on specified levels of or growth in one or more of the following criteria: revenues;
earnings from operations; earnings before or after interest and taxes; net income; cash flow;
earnings per share; working capital; economic value added; return on total capital; return on
invested capital; return on equity; return on assets; total return to stockholders; earnings before
or after interest, taxes, depreciation, amortization or extraordinary or special items; return on
investment; free cash flow; cash flow return on investment (discounted or otherwise); net cash
provided by operations; cash flow in excess of cost of capital; operating margin; profit margin;
stock price and/or strategic business criteria consisting of one or more objectives based on
meeting specified product development, strategic partnering, research and development, market
penetration, geographic business expansion goals, cost targets, customer satisfaction, employee
satisfaction, management of employment practices and employee benefits, supervision of litigation
or information technology, goals relating to acquisitions or divestitures of subsidiaries,
affiliates and joint ventures. Management Objectives may be stated as a combination of the listed
factors. If the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it conducts its business, or
other events or circumstances (including those events and circumstances described in Section 12 of
this Plan) render the Management Objectives unsuitable, the Committee may in its discretion modify
such Management Objectives or the related minimum acceptable level of achievement, in whole or in
part, as the Committee deems appropriate and equitable, except in the case of a Covered Employee to
the extent that such action would result in the loss of the otherwise available exemption of the
award under Section 162(m) of the Code.

          “Market Value per Share” means, as of any particular date, (i) the closing sale price per
share of Common Stock as reported on the principal exchange on which Common Stock of the Company is
then trading, if any, or if there are no sales on such day, on the next preceding trading day
during which a sale occurred, or (ii) if clause (i) does not apply, the fair market value of a
share of Common Stock as determined by the Committee.

          “Optionee” means the optionee named in an agreement evidencing an outstanding Option Right.

          “Option Price” means the purchase price payable on exercise of an Option Right.

          “Option Right” means the right to purchase shares of Common Stock from the Company upon the
exercise of an option granted pursuant to Section 4 of this Plan.

3

 

          “Participant” means an Employee or a Director who receives a grant of Option Rights,
Appreciation Rights, Performance Units or Performance Shares or a grant or sale of Restricted
Shares or Deferred Shares or any awards under Section 10.

          “Performance Period” means, in respect of a Performance Unit or Performance Share, a period of
time established pursuant to Section 6 of this Plan within which the Management Objectives relating
to such Performance Share or Performance Unit are to be achieved.

          “Performance Share” means a bookkeeping entry that records the equivalent of one share of
Common Stock awarded pursuant to Section 6 of this Plan.

          “Performance Unit” means a bookkeeping entry that records a unit equivalent to $1.00 awarded
pursuant to Section 6 of this Plan.

          “Person” means any person (as defined in Section 3(a)(9) of the Exchange Act, as such term is
modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) any employee plan
established by the Company, (ii) any affiliate (as defined in Rule 12b-2 promulgated under the
Exchange Act) of the Company, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or indirectly, by stockholders
of the Company in substantially the same proportions as their ownership of the Company.

          “Plan” means this Milacron Inc. 2004 Long-Term Incentive Plan, as amended from time to time.

          “Restricted Shares” means shares of Common Stock granted or sold pursuant to Section 7 of this
Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers
referred to in such Section 7 has expired.

          “Spread” means the excess of the Market Value per Share on the date when an Option Right or
Appreciation Right is exercised, over the per share Option Price or per share Base Price provided
for in the related Option Right or Appreciation Right, respectively.

          “Subsidiary” means a corporation, company or other entity which is designated by the Committee
and in which the Company has a direct or indirect ownership or other equity interest,
provided, however, that for purposes of determining whether any person may be a
Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” has the
meaning given to such term in Section 424 of the Code, as interpreted by the regulations thereunder
and applicable law.

          “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this
Plan that is granted in tandem with an Option Right.

     3. Shares Available Under the Plan.

          a. Subject to adjustment as provided in Section 3(b) and Section 12 of this Plan, the number
of shares of Common Stock that may be issued or transferred (i) upon the exercise of Option Rights
or Appreciation Rights, (ii) as Restricted Shares, (iii) as Deferred Shares, (iv) in payment of
Performance Units or Performance Shares that have been earned, (v) in payment of awards granted
under Section 10 of the Plan or (vi) in payment of dividend equivalents paid with respect to awards
made under the Plan shall not exceed in the aggregate 7,000,000 shares of Common Stock. Such
shares may be shares of original issuance, treasury shares, shares purchased by the Company on the
open market, or a combination of the foregoing.

          b. The Committee may adopt reasonable counting procedures to ensure appropriate counting,
avoid double counting (as, for example, in the case of tandem or substitute awards) and make
adjustments in the number of shares of Common Stock available in Section 3(a) above or otherwise
specified in the Plan or in any award granted hereunder if the number of shares of Common Stock
actually delivered differs from the number of shares of Common Stock previously counted in
connection with an award. Shares of Common Stock subject to

4

 

an award granted under the Plan that is canceled, expired, forfeited, settled in cash or is
otherwise terminated without a delivery of Common Stock to the Participant will again be available
for awards, and Common Stock withheld in payment of the exercise price or taxes relating to an
award granted under the Plan and shares of Common Stock equal to the number surrendered in payment
of any exercise price or taxes relating to an award under the Plan shall be deemed to constitute
Common Stock not delivered to the Participant and shall be deemed to again be available for awards
under the Plan. This Section 3(b) shall apply to the number of shares of Common Stock reserved and
available for Incentive Stock Options only to the extent consistent with applicable Treasury
regulations relating to Incentive Stock Options under the Code.

          c. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and
subject to adjustment as provided in Section 12 of this Plan, (i) the aggregate number of shares of
Common Stock actually issued or transferred by the Company upon the exercise of Incentive Stock
Options shall not exceed 7,000,000 shares of Common Stock; (ii) no Participant shall be granted
Option Rights and Appreciation Rights, in the aggregate, for more than 500,000 shares of Common
Stock during any calendar year; (iii) no Director who is not an Employee shall be granted Option
Rights, Appreciation Rights, Restricted Shares and Deferred Shares, in the aggregate, for more than
10,000 shares of Common Stock during any calendar year.

          d. Notwithstanding any other provision of this Plan to the contrary, in no event shall any
Participant in any calendar year receive awards of (i) Performance Shares, Restricted Shares
specifying Management Objectives or awards granted under Section 10 of the Plan specifying
Management Objectives, which awards, in the aggregate, cover a maximum of more than 500,000 shares
of Common Stock or (ii) Performance Units having an aggregate maximum value as of their respective
Dates of Grant in excess of $2,000,000.

     4. Option Rights. The Committee may, from time to time and upon such terms and conditions as
it may determine, authorize the granting to Employees of Option Rights. Each such grant may
utilize any or all of the authorizations, and shall be subject to all of the limitations, contained
in the following provisions:

          a. Each grant shall specify the number of shares of Common Stock to which it pertains, subject
to adjustments as provided in Section 12 of this Plan.

          b. Each grant shall specify an Option Price per share, which shall be equal to or greater than
the Market Value per Share on the Date of Grant.

          c. Each grant shall specify whether the Option Price shall be payable (i) in cash or by check
acceptable to the Company, (ii) by the actual or constructive transfer to the Company of shares of
Common Stock owned by the Optionee not less than 6 months having a value at the time of exercise
equal to the total Option Price, or (iii) by a combination of such methods of payment. To the
extent permitted by law, any grant may provide for deferred payment of the Option Price from the
proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of
the shares to which such exercise relates.

          d. Grants may be made to the same Employee whether or not any Option Rights previously granted
to such Employee remain unexercised.

          e. Each grant shall specify the period or periods of continuous service by the Optionee with
the Company or any Subsidiary that is necessary before the Option Rights or installments thereof
will become exercisable and may provide for the earlier exercise of such Option Rights in the event
of a Change in Control, retirement, death or disability of the Optionee or other similar
transaction or event as approved by the Committee.

          f. Any grant of Option Rights may specify Management Objectives that must be achieved as a
condition to the exercise of such rights.

          g. Option Rights granted under this Plan may be (i) options, including, without limitation,
Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii)
options that are not intended so to qualify, or (iii) combinations of the foregoing.

5

 

          h. The exercise of an Option Right shall result in the cancellation on a share-for-share basis
of any Tandem Appreciation Right authorized under Section 5 of this Plan.

          i. No Option Right shall be exercisable more than 10 years from the Date of Grant.

          j. Each grant of Option Rights shall be evidenced by an Evidence of Award which shall contain
such terms and provisions, consistent with this Plan and applicable sections of the Code, as the
Committee may approve.

     5. Appreciation Rights.

          a. The Committee may authorize the granting (i) to any Optionee who is also an Employee, of
Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Employee,
of Free-Standing Appreciation Rights. A Tandem Appreciation Right shall be a right of the
Optionee, exercisable by surrender of the related Option Right, to receive from the Company an
amount determined by the Committee, which shall be expressed as a percentage of the Spread (not
exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any
time prior to the exercise or termination of the related Option Rights; provided,
however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option
must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right
shall be a right of the Employee to receive from the Company an amount determined by the Committee,
which shall be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of
exercise.

          b. Each grant of Appreciation Rights may utilize any or all of the authorizations, and shall
be subject to all of the requirements, contained in the following provisions:

     (i) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in shares of Common Stock or
in any combination thereof and may either grant to the Employee or retain in the
Committee the right to elect among those alternatives.

     (ii) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at the Date
of Grant.

     (iii) Each grant shall specify the period or periods of continuous service by
the Employee with the Company or any Subsidiary that is necessary before the
Appreciation Right or installments thereof will become exercisable and may provide
for the earlier exercise of such Appreciation Rights in the event of a Change in
Control, retirement, death or disability of the Employee or other similar
transaction or event as approved by the Committee.

     (iv) Each grant of an Appreciation Right shall be evidenced by an Evidence of
Award, which shall describe such Appreciation Right, identify any related Option
Right, state that such Appreciation Right is subject to all the terms and conditions
of this Plan, and contain such other terms and provisions, consistent with this Plan
and applicable sections of the Code, as the Committee may approve.

     (v) Any grant may provide for the payment to the Employee of dividend
equivalents thereon in cash or shares of Common Stock on a current, deferred or
contingent basis.

          c. Any grant of Tandem Appreciation Rights shall provide that such Rights may be exercised
only at a time when the related Option Right is also exercisable and at a time when the Spread is
positive, and by surrender of the related Option Right for cancellation.

          d. Regarding Free-Standing Appreciation Rights only:

6

 

     (i) Each grant shall specify in respect of each Free-Standing Appreciation
Right a Base Price, which shall be equal to or greater than the Market Value per
Share on the Date of Grant;

     (ii) Grants may be made to the same Employee regardless of whether any
Free-Standing Appreciation Rights previously granted to the Employee remain
unexercised; and

     (iii) No Free-Standing Appreciation Right granted under this Plan may be
exercised more than 10 years from the Date of Grant.

          e. Any grant of Appreciation rights may specify Management Objectives that must be achieved as
a condition to exercise such rights.

     6. Performance Units and Performance Shares. The Committee may also authorize the granting to
Employees of Performance Units and Performance Shares that will become payable (or payable early)
to an Employee upon achievement of specified Management Objectives. Each such grant may utilize
any or all of the authorizations, and shall be subject to all of the limitations, contained in the
following provisions:

          a. Each grant shall specify the number of Performance Units or Performance Shares to which it
pertains, which number may be subject to adjustment to reflect changes in compensation or other
factors; provided, however, that no such adjustment shall be made in the case of a
Covered Employee where such action would result in the loss of the otherwise available exemption of
the award under Section 162(m) of the Code.

          b. The Performance Period with respect to each Performance Unit or Performance Share shall be
such period of time commencing with the Date of Grant as shall be determined by the Committee at
the time of grant.

          c. Any grant of Performance Units or Performance Shares shall specify Management Objectives
which, if achieved, will result in payment or early payment of the award, and each grant may
specify in respect of such specified Management Objectives a minimum acceptable level of
achievement and shall set forth a formula for determining the number of Performance Units or
Performance Shares that will be earned if performance is at or above the minimum level, but falls
short of full achievement of the specified Management Objectives. The grant of Performance Units
or Performance Shares shall specify that, before the Performance Shares or Performance Units shall
be earned and paid, the Committee must determine that the Management Objectives have been
satisfied.

          d. Each grant shall specify the time and manner of payment of Performance Units or Performance
Shares that have been earned. Any grant may specify that the amount payable with respect thereto
may be paid by the Company to the Employee in cash, in shares of Common Stock or in any combination
thereof, and may either grant to the Employee or retain in the Committee the right to elect among
those alternatives.

          e. Any grant of Performance Units may specify that the amount payable or the number of shares
of Common Stock issued with respect thereto may not exceed maximums specified by the Committee at
the Date of Grant. Any grant of Performance Shares may specify that the amount payable with
respect thereto may not exceed a maximum specified by the Committee at the Date of Grant.

          f. Each grant of Performance Units or Performance Shares shall be evidenced by an Evidence of
Award, which shall contain such terms and provisions, consistent with this Plan and applicable
sections of the Code, as the Committee may approve.

          g. The Committee may, at or after the Date of Grant of Performance Shares, provide for the
payment of dividend equivalents to the holder thereof on either a current or deferred or contingent
basis, either in cash or in additional shares of Common Stock.

7

 

     7. Restricted Shares. The Committee may also authorize the grant or sale of Restricted Shares
to Participants. Each such grant or sale may utilize any or all of the authorizations, and shall
be subject to all of the limitations, contained in the following provisions:

          a. Each such grant or sale shall constitute an immediate transfer of the ownership of Common
Stock to the Participant in consideration of the performance of services, entitling such
Participant to voting, dividend and other ownership rights, but subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.

          b. Each such grant or sale may be made without additional consideration or in consideration of
a payment by such Participant that is less than Market Value per Share at the Date of Grant.

          c. Each such grant or sale shall provide that the Restricted Shares covered by such grant or
sale shall be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the
Code for a period to be determined by the Committee at the Date of Grant and may provide for the
earlier lapse of such substantial risk of forfeiture in the event of a Change in Control,
retirement, or death or disability of the Employee or other similar transaction or event as
approved by the Committee.

          d. Each such grant or sale shall provide that during the period for which such substantial
risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited
or restricted in the manner and to the extent prescribed by the Committee at the Date of Grant
(which restrictions may include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Shares to a continuing substantial risk of
forfeiture in the hands of any transferee).

          e. Any grant of Restricted Shares may specify Management Objectives that, if achieved, will
result in termination or early termination of the restrictions applicable to such shares. Each
grant may specify in respect of such Management Objectives a minimum acceptable level of
achievement and may set forth a formula for determining the number of Restricted Shares on which
restrictions will terminate if performance is at or above the minimum level, but falls short of
full achievement of the specified Management Objectives.

          f. Any such grant or sale of Restricted Shares may require that any or all dividends or other
distributions paid thereon during the period of such restrictions be automatically deferred and
reinvested in additional Restricted Shares, which may be subject to the same restrictions as the
underlying award.

          g. Each grant or sale of Restricted Shares shall be evidenced by an Evidence of Award, which
shall contain such terms and provisions, consistent with this Plan and applicable sections of the
Code, as the Committee may approve. The Restricted Shares may be certificated or uncertificated,
as determined by the Committee. Unless otherwise directed by the Committee, all certificates
representing Restricted Shares shall be held in custody by the Company until all restrictions
thereon shall have lapsed, together with a stock power or powers executed by the Participant in
whose name such certificates are registered, endorsed in blank and covering such Shares.

     8. Deferred Shares. The Committee may also authorize the grant or sale of Deferred Shares to
Employees. Each such grant or sale may utilize any or all of the authorizations, and shall be
subject to all of the requirements contained in the following provisions:

          a. Each such grant or sale shall constitute the agreement by the Company to deliver Common
Stock to the Employee in the future in consideration of the performance of services, but subject to
the fulfillment of such conditions during the Deferral Period as the Committee may specify.

          b. Each such grant or sale may be made without additional consideration or in consideration of
a payment by such Employee that is less than the Market Value per Share at the Date of Grant.

          c. Each such grant or sale shall be subject to a Deferral Period as determined by the
Committee at the Date of Grant, and may provide for the earlier lapse or other modification of such
Deferral Period

8

 

in the event of a Change in Control, retirement, or death or disability of the Employee or
other similar transaction or event as approved by the Committee.

          d. During the Deferral Period, the Employee shall have no right to transfer any rights under
his or her award and shall have no rights of ownership in the Deferred Shares and shall have no
right to vote them, but the Committee may, at or after the Date of Grant, authorize the payment of
dividend equivalents on such shares on either a current or deferred or contingent basis, either in
cash or in additional shares of Common Stock.

          e. Each grant or sale of Deferred Shares shall be evidenced by an Evidence of Award, which
shall contain such terms and provisions, consistent with this Plan and applicable sections of the
Code, as the Committee may approve.

     9. Non-Employee Directors. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Directors who are not then Employees of
Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares, or any combination of the
foregoing. Each grant of Option Rights, Appreciation Rights, Restricted Shares and Deferred Shares
shall be upon terms and conditions consistent with Sections 4, 5, 7 and 8 of this Plan.

10. Other Awards.

          a. The Committee is authorized, subject to limitations under applicable law, to grant to any
Employee such other awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Common Stock or factors that may influence the
value of Common Stock, including, without limitation, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock,
awards with value and payment contingent upon performance of the Company or business units thereof
or any other factors designated by the Committee, and awards valued by reference to the book value
of Common Stock or the value of securities of, or the performance of specified Subsidiaries or
affiliates or other business units of, the Company. The Committee shall determine the terms and
conditions of such awards. Common Stock delivered pursuant to an award in the nature of a purchase
right granted under this Section 10 shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash, Common Stock, other
awards, notes or other property, as the Committee shall determine.

          b. Cash awards, as an element of or supplement to any other award granted under this Plan, may
also be granted pursuant to this Section 10 of the Plan.

          c. The Committee is authorized to grant Common Stock as a bonus, or to grant Common Stock or
other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements, subject to such terms as
shall be determined by the Committee.

     11. Transferability.

          a. Except as otherwise determined by the Committee, no Option Right, Appreciation Right or
other award granted under the Plan shall be transferable by a Participant other than by will or the
laws of descent and distribution. Except as otherwise determined by the Committee, Option Rights
and Appreciation Rights shall be exercisable during the Optionee’s lifetime only by him or her or
by his or her guardian or legal representative.

          b. The Committee may specify at the Date of Grant that part or all of the shares of Common
Stock that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or
Appreciation Rights, upon the termination of the Deferral Period applicable to Deferred Shares or
upon payment under any grant of Performance Units or Performance Shares or (ii) no longer subject
to the substantial risk of forfeiture and restrictions on transfer referred to in Section 7 of this
Plan, shall be subject to further restrictions on transfer.

9

 

     12. Adjustments. The Committee may make or provide for such adjustments in the numbers of
shares of Common Stock covered by outstanding Option Rights, Appreciation Rights, Performance
Shares, Deferred Shares and share-based awards described in Section 10 of the Plan granted
hereunder, in the Option Price and Base Price provided in outstanding Appreciation Rights, and in
the kind of shares covered thereby, as the Committee, in its sole discretion, exercised in good
faith, may determine is equitably required to prevent dilution or enlargement of the rights of
Participants or Optionees that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure of the Company, or
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or
complete liquidation or other distribution of assets (including, without limitation, a special or
large non-recurring dividend), issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the foregoing. Moreover,
in the event of any such transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative consideration (or
no consideration) as it, in good faith, may determine to be equitable in the circumstances and may
require in connection therewith the surrender of all awards so replaced. The Committee may also
make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan
as the Committee in its sole discretion, exercised in good faith, may determine is appropriate to
reflect any transaction or event described in this Section 12; provided, however,
that any such adjustment to the number specified in Section 3(c)(i) shall be made only if and to
the extent that such adjustment would not cause any Option intended to qualify as an Incentive
Stock Option to fail so to qualify.

     13. Fractional Shares. The Company shall not be required to issue any fractional Common Stock
pursuant to this Plan. The Committee may provide for the elimination of fractions or for the
settlement of fractions in cash.

     14. Withholding Taxes. The Company shall have the right to deduct from any payment under this
Plan an amount equal to the federal, state, local, foreign and other taxes which in the opinion of
the Company are required to be withheld by it with respect to such payment and to the extent that
the amounts available to the Company for such withholding are insufficient, it shall be a condition
to the receipt of such payment or the realization of such benefit that the Participant or such
other person make arrangements satisfactory to the Company for payment of the balance of such taxes
required to be withheld. At the discretion of the Committee, such arrangements may include
relinquishment of a portion of such benefit pursuant to procedures adopted by the Committee from
time to time.

     15. Foreign Employees. In order to facilitate the making of any grant or combination of
grants under this Plan, the Committee may provide for such special terms for awards to Participants
who are foreign nationals or who are employed by the Company or any Subsidiary outside of the
United States of America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may approve such
supplements to or amendments, restatements or alternative versions of this Plan as it may consider
necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in
effect for any other purpose, and the Corporate Secretary or other appropriate officer of the
Company may certify any such document as having been approved and adopted in the same manner as
this Plan. No such special terms, supplements, amendments or restatements, however, shall include
any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan
could have been amended to eliminate such inconsistency without further approval by the
stockholders of the Company.

     16. Administration of the Plan.

          a. This Plan shall be administered by the Company’s Personnel and Compensation Committee of
the Board. Notwithstanding the foregoing, the Board may perform any function of the Committee
hereunder, and the Board shall perform all functions of the Committee with respect to any award for
a Director who is not then an Employee, in which case the term “Committee” shall refer to the
Board.

          b. The interpretation and construction by the Committee of any provision of this Plan or of
any Evidence of Award, agreement, notification or document evidencing the grant of Option Rights,
Appreciation Rights, Restricted Shares, Deferred Shares, Performance Units, Performance Shares or
any awards granted under Section 10 of the Plan and any determination by the Committee pursuant to
any provision of this Plan or of any such

10

 

Evidence of Award, agreement, notification or document shall be final, binding and conclusive.
No member of the Committee shall be liable for any such action or determination made not in bad
faith.

     17. Amendments and Other Matters.

          a. The Board may at any time and from time to time amend the Plan in whole or in part;
provided, however, that any amendment which must be approved by the stockholders of
the Company in order to comply with applicable law or the rules of the New York Stock Exchange or,
if the Common Stock is not traded on the New York Stock Exchange, the principal national securities
exchange upon which the Common Stock is traded or quoted, shall not be effective unless and until
such approval has been obtained. Presentation of this Plan or any amendment thereof for
stockholder approval shall not be construed to limit the Company’s authority to offer similar or
dissimilar benefits under other plans or otherwise with or without stockholder approval. Without
limiting the generality of the foregoing, the Board of Directors may amend this Plan to eliminate
provisions which are no longer necessary as a result in changes in tax or securities laws or
regulations, or in the interpretation thereof.

          b. The Committee shall not, without the further approval of the stockholders of the Company,
authorize the amendment of any outstanding Option Right or Appreciation Right to reduce the Option
Price or Base Price. Furthermore, no Option Right or Appreciation Right shall be cancelled and
replaced with awards having a lower Option Price or Base Price, respectively, without further
approval of the stockholders of the Company. This Section 17(b) is intended solely to prohibit the
repricing of “underwater” Option Rights and Appreciation Rights and shall not be construed to
prohibit the adjustments provided for in Section 12 of this Plan.

          c. The Committee also may permit Participants to elect to defer the issuance of Common Stock
or the settlement of awards in cash under the Plan pursuant to such rules, procedures or programs
as it may establish for purposes of this Plan. The Committee also may provide that deferred
issuances and settlements include the payment or crediting of dividend equivalents or interest on
the deferral amounts.

          d. The Committee may condition the grant of any award or combination of awards authorized
under this Plan on the deferral by the Participant of his or her right to receive a cash bonus or
other compensation otherwise payable by the Company or a Subsidiary to the Participant.

          e. In case of a Change in Control of the Company, or in the case of a termination of
employment of a Participant by reason of death, disability or normal or early retirement, or in the
case of hardship of a Participant or other special circumstances, the Committee may, in its sole
discretion, accelerate the time at which any Option Right or Appreciation Right may be exercised or
the time when a Performance Unit or Performance Share shall be deemed to have been fully earned or
the time when a substantial risk of forfeiture or prohibition on transfer of Restricted Shares
shall lapse or the time when a Deferral Period shall end. In addition, the Committee may, in its
sole discretion, modify any Option Right or Appreciation Right to extend the period following
termination of a Participant’s employment to the Company or any Subsidiary during which such award
will remain outstanding and be exercisable, provided that no such extension shall result in any
award being exercisable more than ten years after the Date of Grant.

          f. This Plan shall not confer upon any Participant any right with respect to continuance of
employment with the Company or any Subsidiary, nor shall it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate such Participant’s employment at any
time.

          g. Subject to Section 19, this Plan shall continue in effect until the date on which all
Common Stock available for issuance or transfer under this Plan has been issued or transferred and
the Company has no further obligation hereunder.

          h. Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire
any right or title to any assets, funds or property of the Company or any Subsidiary,
including without limitation, any specific funds, assets or other property which the Company or any
Subsidiary may set aside in anticipation of any liability under the Plan. A Participant shall have
only a contractual right to an award or the amounts, if any, payable under the Plan, unsecured by
any assets of the Company or any Subsidiary, and nothing

11

 

contained in the Plan shall constitute a guarantee that the assets of the Company or any
Subsidiary shall be sufficient to pay any benefits to any person.

          i. This Plan and each Evidence of Award shall be governed by the laws of the State of
Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan to the substantive law of another jurisdiction.

          j. If any provision of the Plan is or becomes invalid, illegal or unenforceable in any
jurisdiction, or would disqualify the Plan or any award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended or limited in scope to conform to
applicable laws or, in the discretion of the Committee, it shall be stricken and the remainder of
the Plan shall remain in full force and effect.

     18. Applicable Laws. The obligations of the Company with respect to awards under the Plan
shall be subject to all Applicable Laws and such approvals by any governmental agencies as the
Committee determines may be required.

     19. Termination. No grant shall be made under this Plan more than 10 years after the Effective
Date, but all grants effective on or prior to such date shall continue in effect thereafter subject
to the terms thereof and of this Plan.

12

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