Document:

EX-10.1

 

EXHIBIT 10.1

Execution Copy

 

REGISTRATION RIGHTS AGREEMENT

REGISTERED EXCHANGE OFFER

 

 

 

POLYONE CORPORATION

8.875% Senior Notes due 2012

REGISTRATION RIGHTS AGREEMENT

New York, New York

April 10, 2008

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Dear Sirs:

          PolyOne Corporation, a corporation organized under the laws of the state of Ohio (the
“Company”), proposes to issue and sell to Morgan Stanley & Co. Incorporated (the
“Initial Purchaser”), upon the terms set forth in a purchase agreement dated April 7, 2008
(the “Purchase Agreement”), its 8.875% Senior Notes due 2012 (the “Securities”)
relating to the initial placement of the Securities (the “Initial Placement”). The
Securities are to be issued under an indenture dated as of April 23, 2002 between the Company and
The Bank of New York Trust Company N.A., as successor trustee (the “Trustee”), as
supplemented by the supplemental indenture dated as of April 10, 2008 (the “Indenture”).
To induce the Initial Purchaser to enter into the Purchase Agreement and to satisfy a condition of
your obligations thereunder, the Company agrees with you for your benefit and the benefit of the
holders from time to time of the Securities (including the Initial Purchaser) (each a
“Holder” and, together, the “Holders” for as long as such Person holds Securities),
as follows:

          1. Definitions. Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:

          “Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder.

          “Affiliate” of any specified Person shall mean any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, “control” of a Person shall mean the power, direct or
indirect, to direct or cause the direction of the management and policies of such Person whether by
contract or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative
to the foregoing.

          “Broker-Dealer” shall mean any broker or dealer registered as such under the Exchange
Act.

 

 

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          “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday
or a day on which banking institutions or trust companies are authorized or obligated by law to
close in New York City.

          “Commission” shall mean the Securities and Exchange Commission.

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

          “Exchange Offer Registration Period” shall mean the 180-day period following the
consummation of the Registered Exchange Offer, exclusive of any period during which any stop order
shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement.

          “Exchange Offer Registration Statement” shall mean a registration statement of the
Company on an appropriate form under the Act with respect to the Registered Exchange Offer, all
amendments and supplements to such registration statement, including post-effective amendments
thereto, in each case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

          “Exchanging Dealer” shall mean any Holder (which may include the Initial Purchaser)
that is a Broker-Dealer and elects to exchange for New Securities any Securities that it acquired
for its own account as a result of market-making activities or other trading activities (but not
directly from the Company or any Affiliate of the Company) for New Securities.

          “Final Memorandum” shall have the meaning set forth in the Purchase Agreement.

          “Holder” shall have the meaning set forth in the preamble hereto.

          “Indenture” shall have the meaning set forth in the preamble hereto.

          “Initial Placement” shall have the meaning set forth in the preamble hereto.

          “Initial Purchaser” shall have the meaning set forth in the preamble hereto.

          “Issue Date” shall mean the date of original issuance of the Securities.

          “Losses” shall have the meaning set forth in Section 7(d) hereof.

          “Majority Holders” shall mean the Holders of a majority of the aggregate principal
amount of Securities registered under a Registration Statement.

          “Managing Underwriters” shall mean the investment banker or investment bankers and
manager or managers that shall administer an underwritten offering.

 

 

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          “New Securities” shall mean debt securities of the Company identical in all material
respects to the Securities (except that the additional interest provisions and the transfer
restrictions and restrictive legends shall be eliminated, as appropriate) and to be issued under
the Indenture.

          “Person” shall mean an individual, partnership, corporation, trust or unincorporated
organization, or a government agency or a political subdivision thereof.

          “Prospectus” shall mean the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon Rule 430A under
the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities covered by such Registration
Statement, and all amendments and supplements thereto and all material incorporated by reference
therein.

          “Purchase Agreement” shall have the meaning set forth in the preamble hereto.

          “Registered Exchange Offer” shall mean the proposed offer of the Company to issue and
deliver to the Holders of the Securities that are not prohibited by any law or policy of the
Commission from participating in such offer, in exchange for the Securities, a like aggregate
principal amount of the New Securities.

          “Registration Statement” shall mean any Exchange Offer Registration Statement or Shelf
Registration Statement that covers any of the Securities or the New Securities pursuant to the
provisions of this Agreement, any amendments and supplements to such registration statement,
including post-effective amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.

          “Securities” shall have the meaning set forth in the preamble hereto.

          “Shelf Registration” shall mean a registration effected pursuant to Section 3 hereof.

          “Shelf Registration Period” shall have the meaning set forth in Section 3(c) hereof.

          “Shelf Registration Statement” shall mean a “shelf” registration statement of the
Company pursuant to the provisions of Section 3 hereof which covers some or all of the Securities
or New Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any
similar rule that may be adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference therein.

          “Trustee” shall have the meaning set forth in the preamble hereto.

 

 

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          “underwriter” shall mean any underwriter of Securities in connection with an offering
thereof under a Shelf Registration Statement.

          2. Registered Exchange Offer. (a) The Company shall prepare and, not later than
90 days following the Issue Date (or if such 90th day is not a Business Day, the next succeeding
Business Day), shall use its reasonable best efforts to file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The Company shall use its
reasonable best efforts to cause the Exchange Offer Registration Statement to become effective
under the Act within 180 days of the Issue Date (or if such 180th day is not a Business Day, the
next succeeding Business Day).

          (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall
promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange
Offer to enable each Holder electing to exchange Securities for New Securities (assuming that such
Holder is not an Affiliate of the Company, acquires the New Securities in the ordinary course of
such Holder’s business, is not engaged in and does not intend to engage in and has no arrangements
or understandings with any Person to participate in the distribution of the New Securities, is not
a broker-dealer tendering Securities acquired directly from the Company for its own account and is
not prohibited by any law or policy of the Commission from participating in the Registered Exchange
Offer) to trade such New Securities from and after their receipt without any limitations or
restrictions under the Act and under state securities or blue sky laws.

          (c) In connection with the Registered Exchange Offer, the Company shall:

     (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal and related
documents;

     (ii) keep the Registered Exchange Offer open for not less than 20 Business Days after
the date notice thereof is mailed to the Holders (or, in each case, longer if required by
applicable law);

     (iii) if the Company receives notice from an Exchanging Dealer on the letter of
transmittal that such Exchanging Dealer holds Securities acquired for the account of such
Exchanging Dealer as a result of market making or other trading activities, use its
reasonable best efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required under the Act to ensure that it is available
for sales of New Securities by Exchanging Dealers during the Exchange Offer Registration
Period;

     (iv) utilize the services of a depositary for the Registered Exchange Offer with an
address in the Borough of Manhattan in New York City, which may be the Trustee;

     (v) permit Holders to withdraw tendered Securities at any time prior to the close of
business, New York time, on the last Business Day on which the Registered Exchange Offer is
open by sending to the entity specified in the Prospectus, a facsimile or

 

 

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letter setting
forth the name of such Holder, the principal amount of Securities delivered for exchange and
a statement that such Holder is withdrawing such Holder’s election to have such Securities
exchanged;

     (vi) prior to effectiveness of the Exchange Offer Registration Statement, provide a
supplemental letter to the Commission (A) stating that the Company is conducting the
Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital
Holdings Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc.
(pub. avail. June 5, 1991); and (B) including a representation that the Company has not
entered into any arrangement or understanding with any Person to distribute the New
Securities to be received in the Registered Exchange Offer and that, to the best of the
Company’s information and belief, each Holder participating in the Registered Exchange Offer
is acquiring the New Securities in the ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the New Securities; and

     (vii) comply in all respects with all applicable laws relating to the Registered
Exchange Offer.

          (d) As soon as reasonably practicable after the close of the Registered Exchange Offer, the
Company shall:

     (i) accept for exchange all Securities duly tendered and not validly withdrawn pursuant
to the Registered Exchange Offer in accordance with the Exchange Offer Registration
Statement and letter of transmittal which shall be an exhibit thereto;

     (ii) deliver to the Trustee for cancellation in accordance with Section 4(s) all
Securities so accepted for exchange; and

     (iii) cause the Trustee promptly to authenticate and deliver to each Holder of
Securities a principal amount of New Securities equal to the principal amount of the
Securities of such Holder so accepted for exchange.

          (e) Accordingly, each Holder participating in the Registered Exchange Offer shall be required
to represent to the Company that, at the time of the consummation of the Registered Exchange Offer:

     (i) any New Securities received by such Holder will be acquired in the ordinary course
of business;

     (ii) such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Securities or the New Securities within the meaning
of the Act; and

     (iii) such Holder is not an Affiliate of the Company.

 

 

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          (f) If the Initial Purchaser determines that it is not eligible to participate in the
Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an
unsold allotment, at the request of the Initial Purchaser, the Company shall issue and deliver to
the Initial Purchaser or the Person purchasing New Securities registered under a Shelf Registration
Statement as contemplated by Section 3 hereof from the Initial Purchaser, in exchange for such
Securities, a like principal amount of New Securities. If required, the Company shall use its
reasonable best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such
New Securities as for New Securities issued pursuant to the Registered Exchange Offer.

          3. Shelf Registration. (a) If (i) due to any change in law or applicable
interpretations thereof by the Commission’s staff, the Company determines upon advice of its
outside counsel that it is not permitted to effect the Registered Exchange Offer as contemplated by
Section 2 hereof; (ii) for any other reason the Registered Exchange Offer is not consummated within
225 days of the Issue Date (the “Consummation Deadline”); (iii) the Initial Purchaser so
requests with respect to Securities that are not eligible to be exchanged for New Securities in the
Registered Exchange Offer and that are held by it following consummation of the Registered Exchange
Offer; (iv) any Holder (other than the Initial Purchaser) is not eligible to participate in the
Registered Exchange Offer; or (v) if the Initial Purchaser participates in the Registered Exchange
Offer or acquires New Securities pursuant to Section 2(f) hereof, and the Initial Purchaser does
not receive freely tradeable New Securities in exchange for Securities constituting any portion of
an unsold allotment (it being understood that (x) the requirement that the Initial Purchaser
deliver a Prospectus containing the information required by Item 507 and 508 of Regulation S-K
under the Act in connection with sales of New Securities acquired in exchange for such Securities
shall result in such New Securities being not “freely tradeable”; and (y) the requirement that an
Exchanging Dealer deliver a Prospectus in connection with sales of New Securities acquired in the
Registered Exchange Offer in exchange for Securities acquired as a result of market-making
activities or other trading activities shall not result in such New Securities being not “freely
tradeable”), the Company shall effect a Shelf Registration Statement in accordance with subsection
(b) below; provided, however, that the Company shall not be obligated to effect a Shelf
Registration Statement under this Section 3 if the Company would no longer be required to keep such
Shelf Registration Statement effective pursuant to Section 4(c) if such Shelf Registration
Statement had been filed.

          (b) The Company shall as promptly as reasonably practicable (but in no event more than 60 days
after so required or requested pursuant to this Section 3 (the “Shelf Filing Deadline”),
file with the Commission and thereafter shall use its reasonable best efforts to cause to be
declared effective under the Act a Shelf Registration Statement within 120 days from the Shelf
Filing Deadline (the “Shelf Effectiveness Deadline”) relating to the offer and sale of the
Securities or the New Securities, as applicable, by the Holders thereof from time to time in
accordance with the methods of distribution elected by a majority of such Holders and set forth in
such Shelf Registration Statement; provided, however, that nothing in this Section
3(b) shall require the filing of a Shelf Registration Statement prior to the Filing Deadline (as defined
below); provided, further, that no Holder (other than the Initial Purchaser) shall
be entitled to have the Securities held by it covered by such Shelf Registration Statement unless
such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to
such

 

 

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Holder; and provided, further, that, with respect to New Securities received
by the Initial Purchaser in exchange for Securities constituting any portion of an unsold
allotment, the Company may, if permitted by current interpretations by the Commission’s staff, file
a post-effective amendment to the Exchange Offer Registration Statement containing the information
required by Item 507 and 508 of Regulation S-K, as applicable, in satisfaction of its obligations
under this subsection with respect thereto, and any such Exchange Offer Registration Statement, as
so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a
Shelf Registration Statement.

          (c) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective, supplemented and amended as required by the Act, in order to permit the
Prospectus forming part thereof to be usable by Holders for a period that will terminate when all
the Securities or New Securities, as applicable, covered by the Shelf Registration Statement (i)
have been sold pursuant to the Shelf Registration Statement, (ii) have been sold to the public
pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Act,
(iii) have become freely transferable by persons who are not Affiliates of the Company (and have
not been Affiliates of the Company for the preceding three months) without registration under the
1933 Act pursuant to Rule 144 without regard to the availability of public information regarding
the Company; or (iv) cease to be outstanding (such period being the “Shelf Registration
Period”). The Company shall be deemed not to have used its reasonable best efforts to keep the
Shelf Registration Statement effective during the Shelf Registration Period if it voluntarily takes
any action that would result in Holders of Securities or New Securities covered thereby not being
able to offer and sell such Securities or New Securities during that period, unless (A) such action
is required by applicable law; or (B) such action is taken by the Company in good faith and for
valid business reasons (not including avoidance of the Company’s obligations hereunder), including
the acquisition or divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 5(k) hereof, if applicable.

          4. If (i) within 90 days after the Issue Date (the “Filing Deadline”), the Exchange
Offer Registration Statement has not been filed with the Commission; (ii) within 180 days after the
Issue Date (the “Effectiveness Deadline”), the Exchange Offer Registration Statement has
not been declared effective within the Effectiveness Deadline; (iii) the Exchange Offer has not
been consummated prior to the Consummation Deadline; (iv) the Shelf Registration Statement has not
been filed with the Commission prior to the Shelf Filing Deadline, if applicable; (v) the Shelf
Registration Statement has not been declared effective prior to the Shelf Effectiveness Deadline,
if applicable; or (vi) after either the Exchange Offer Registration Statement or the Shelf
Registration Statement has been declared effective, such Registration Statement thereafter ceases
to be effective or usable (other than as permitted by Section 5(k)) in connection with resales of
Securities or New Securities in accordance with and during the periods specified in Sections 2 and
3 of this Agreement (each such event referred to in clauses (i) through (vi), a “Registration
Default”), additional interest (“Additional Interest”) will
accrue on the Securities and the New Securities from and including the date on which any such
Registration Default shall occur but excluding the date on which all Registration Defaults have
been cured. Additional Interest will accrue at a rate equal to 0.25% per annum of the aggregate
principal amount of the Securities and New Securities during the 90-day period immediately

 

 

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following the occurrence of any Registration Default and shall increase by 0.25% per annum for each
subsequent 90-day period during which such Registration Default continues, provided that in no
event shall such Additional Interest exceed 0.50% per annum; provided further that, with respect to
clauses (i), (ii) and (iii), if the Company is not permitted to effect the Registered Exchange
Offer as provided by Section 3(a)(i), Additional Interest shall cease to accrue pursuant to clause
(i) on the date the Shelf Registration Statement is filed and pursuant to clauses (ii) and (iii) on
the date the Shelf Registration Statement is declared effective; provided further that Additional
Interest shall cease to accrue upon the date on which the Securities and New Securities are
eligible to be resold without restriction pursuant to Rule 144 without regard to the availability
of public information regarding the Company. The Company shall notify the Trustee within five
Business Days after each and every Registration Default. Any amounts of Additional Interest due
pursuant to this Section 4 will be payable in cash semiannually on each May 1 and November 1 (to
the Holders of record on the April 15 and October 15 immediately preceding such dates), commencing
with the first such date occurring after any such Additional Interest commences to accrue.

          5. Additional Registration Procedures. . In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following
provisions shall apply:

          (a) The Company shall:

     (i) furnish to you, not less than five Business Days prior to the filing
thereof with the Commission, a copy of the Exchange Offer Registration Statement or
the Shelf Registration Statement, as the case may be, and each amendment thereto and
each amendment or supplement, if any, to the Prospectus included therein (and, upon
written request, all documents incorporated by reference therein after the initial
filing) and shall use its reasonable best efforts to reflect in each such document,
when so filed with the Commission, such comments as you reasonably propose,
provided, however, that such comments are furnished to the Company
within three Business Days after receipt of the copy of the Exchange Offer
Registration Statement;

     (ii) include the information in substantially the form set forth in Annex A
hereto on the facing page of the Exchange Offer Registration Statement, in
substantially the form in Annex B hereto in the forepart of the Exchange Offer
Registration Statement in a section setting forth details of the Exchange Offer, in
substantially the form in Annex C hereto in the underwriting or plan of distribution
section of the Prospectus contained in the Exchange Offer Registration Statement,
and in substantially the form in Annex D hereto in the letter of transmittal
delivered pursuant to the Registered Exchange Offer; and

     (iii) in the case of the Shelf Registration Statement, include the names of the
Holders that propose to sell Securities or New Securities pursuant to the Shelf
Registration Statement as selling security holders and the applicable information
required by Item 507 of Regulation S-K as provided by the Holders.

 

 

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          (b) The Company shall ensure that:

     (i) any Registration Statement, any amendment thereto, any Prospectus forming
part thereof and any amendment or supplement thereto complies in all material
respects with the Act and the rules and regulations thereunder; and

     (ii) any Registration Statement and related Prospectus and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that with respect to a Shelf Registration Statement, the Company
makes no representation or warranty as to the information contained in or omitted
from such Shelf Registration Statement or Prospectus, or any amendment thereto, in
reliance upon and in conformity with information furnished in writing to the Company
by or on behalf of the Holders whose Securities are registered thereunder
specifically for inclusion therein.

     (c) The Company shall advise you, the Holders of Securities or New Securities covered
by any Shelf Registration Statement and any Exchanging Dealer under any Exchange Offer
Registration Statement that has provided in writing to the Company a telephone or facsimile
number and address for notices, and, if requested by you or any such Holder or Exchanging
Dealer, shall confirm such advice in writing (which notice pursuant to clauses (ii)-(v)
hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the
Company shall have remedied the basis for such suspension):

     (i) when a Registration Statement or any amendment thereto has been filed with
the Commission and when the Registration Statement or any post-effective amendment
thereto has become effective;

     (ii) of any request by the Commission for any amendment or supplement to the
Registration Statement or the Prospectus or for additional information;

     (iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings for
that purpose;

     (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the securities included therein for sale in any
jurisdiction or the initiation of any proceeding for such purpose; and

     (v) of the happening of any event that requires any change in the Registration
Statement or the Prospectus so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the

 

 

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Prospectus, in the
light of the circumstances under which they were made) not misleading;
provided that such notice need not identify the reasons for such event that
requires such change in the Registration Statement.

     (d) The Company shall use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement or the qualification of the
securities therein for sale in any jurisdiction at the earliest possible time.

     (e) The Company shall furnish to each Holder of Securities or New Securities covered by
any Shelf Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto, including, upon written
request, all material incorporated therein by reference, and, if the Holder so requests in
writing, all exhibits thereto.

     (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of
Securities or New Securities covered by any Shelf Registration Statement, without charge, as
many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder may reasonably
request. The Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of securities in connection with the offering and
sale of the securities covered by the Prospectus, or any amendment or supplement thereto,
included in the Shelf Registration Statement.

     (g) The Company shall furnish to each Exchanging Dealer which so requests, without
charge, at least one copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including, upon written request, all material incorporated
by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits
thereto.

     (h) The Company shall promptly deliver to the Initial Purchaser, each Exchanging Dealer
and each other Person required to deliver a Prospectus during the Exchange Offer
Registration Period, without charge, as many copies of the Prospectus included in such
Exchange Offer Registration Statement and any amendment or supplement thereto as any such
Person may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Initial Purchaser, any Exchanging Dealer and any such
other Person that may be required to deliver a Prospectus following the Registered Exchange
Offer in connection with the offering and sale of the New Securities covered by the
Prospectus, or any amendment or supplement thereto, included in the Exchange Offer
Registration Statement.

     (i) Prior to the Registered Exchange Offer or any other offering of Securities or New
Securities pursuant to any Registration Statement, the Company shall arrange, if necessary,
for the qualification of the Securities or the New Securities for sale under the laws of
such jurisdictions as any Holder shall reasonably request and will maintain such

 

 

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qualification in effect so long as required; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to taxation or service of process in
suits, other than those arising out of the Initial Placement, the Registered Exchange Offer
or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where
it is not then so subject.

     (j) The Company shall cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing New Securities or Securities to be issued or sold
pursuant to any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request.

     (k) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v)
above, the Company shall promptly prepare a post-effective amendment to the applicable
Registration Statement or an amendment or supplement to the related Prospectus or file any
other required document so that, as thereafter delivered, the Prospectus will not include an
untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; provided, however that the Company may suspend preparing, filing
and distributing any such amendment or supplement for a reasonable period of time if the
Company determines reasonably and in good faith that such amendment or supplement would
require the disclosure of non-public material information that, in the reasonable judgment
of the Company, would be detrimental to the Company if so disclosed or would otherwise
materially adversely affect a financing, acquisition, disposition, merger or other material
transaction provided, further, that there shall be no more than one such
suspension in any 365 day period and no such suspension shall extend for a period of more
than 45 days. In such circumstances, the period of effectiveness of the Exchange Offer
Registration Statement provided for in Section 2 shall be extended by the number of days
from and including the date of the giving of a notice of suspension pursuant to Section 5(c)
to and including the date when the Initial Purchaser, the Holders and any known Exchanging
Dealer shall have received such amended or supplemented Prospectus pursuant to this Section
5. As soon as practicable following receipt of notice from the Company in accordance with
Section 5(c), each Holder and Exchange Dealer agrees to suspend use of the Prospectus until
such Holder and Exchange Dealer receive copies of the amended or supplemented Prospectus or
until it receives written notice from the Company that use of the applicable Prospectus may
be resumed.

     (l) Not later than the effective date of any Registration Statement, the Company shall
provide a CUSIP number for the Securities or the New Securities, as the case may be,
registered under such Registration Statement and provide the Trustee with
printed certificates for such Securities or New Securities, in a form eligible for
deposit with The Depository Trust Company.

     (m) The Company shall comply with all applicable rules and regulations of the
Commission and shall make generally available to its security holders as soon as

 

 

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practicable
after the effective date of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Act and Rule 158 thereunder.

     (n) The Company shall cause the Indenture to be qualified under the Trust Indenture Act
in a timely manner.

     (o) The Company may require each Holder of securities to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information regarding the Holder and
the distribution of such securities as the Company may from time to time reasonably require
for inclusion in such Registration Statement. The Company may exclude from such Shelf
Registration Statement the Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.

     (p) In the case of any Shelf Registration Statement, the Company shall enter into such
and take all other appropriate actions (including if requested by Holders representing 20%
of the principal amount of Securities covered by such Shelf Registration Statement an
underwriting agreement in customary form) in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain indemnification provisions
and procedures no less favorable than those set forth in Section 7 (or such other provisions
and procedures acceptable to the Majority Holders and the Managing Underwriters, if any,
with respect to all parties to be indemnified pursuant to Section 7).

     (q) In the case of any Shelf Registration Statement, if requested by the Holders or any
underwriters, the Company shall:

     (i) make reasonably available for inspection by the Holders of Securities to be
registered thereunder, any underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and any attorney, accountant or other agent
retained by the Holders or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries during normal business hours at the offices where such information is
typically kept;

     (ii) cause the Company’s officers, directors and employees to supply all
relevant information reasonably requested by the Holders or any such underwriter,
attorney, accountant or agent in connection with any such Shelf Registration
Statement as is customary for similar due diligence examinations during normal
business hours at the offices where such information is typically
kept; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by the Holders or any such
underwriter, attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such information becomes
available to the

 

 

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public generally or through a third party without an accompanying
obligation of confidentiality, provided, further, that prior notice
shall be provided as practicable to the Company of the potential disclosure of any
information in connection with a court proceeding or required by law to permit the
Company to obtain a protective order or take such other action to prevent disclosure
of such information;

     (iii) make such representations and warranties to the Holders of Securities
registered thereunder and the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in primary underwritten offerings
and covering matters including, but not limited to, those set forth in the Purchase
Agreement as may reasonably be requested;

     (iv) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably satisfactory
to the Managing Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;

     (v) obtain “cold comfort” letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary or equity affiliate of
the Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each selling Holder of Securities registered
thereunder and the underwriters, if any, in customary form and covering matters of
the type customarily covered in “cold comfort” letters in connection with primary
underwritten offerings; and

     (vi) deliver such documents and certificates as may be reasonably requested by
the Majority Holders and the Managing Underwriters, if any, including those to
evidence compliance with Section 5(k) and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company.

The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 5(q) shall be
performed at (A) the effectiveness of such Registration Statement and each post-effective
amendment thereto; and (B) each closing under any underwriting or similar agreement as and
to the extent required thereunder.

     (r) [Intentionally Omitted.]

     (s) If a Registered Exchange Offer is to be consummated, upon delivery of the
Securities by Holders to the Company (or to such other Person as directed by the Company) in
exchange for the New Securities, the Company shall mark, or caused to be

 

 

 -14-

marked, on the
Securities so exchanged that such Securities are being canceled in exchange for the New
Securities. In no event shall the Securities be marked as paid or otherwise satisfied.

     (t) The Company will use its reasonable best efforts (i) if the Securities have been
rated prior to the initial sale of such Securities, to confirm such ratings will apply to
the Securities or the New Securities, as the case may be, covered by a Registration
Statement; or (ii) if the Securities were not previously rated, to cause the Securities
covered by a Registration Statement to be rated with at least one nationally recognized
statistical rating agency, if so requested by Majority Holders with respect to the related
Registration Statement or by any Managing Underwriters.

     (u) In the event that any Broker-Dealer shall underwrite any Securities or participate
as a member of an underwriting syndicate or selling group or “assist in the distribution”
(within the meaning of the Rules and the By-Laws of the Financial Industry Regulatory
Authority) thereof, whether as a Holder of such Securities or as an underwriter, a placement
or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will
assist such Broker-Dealer in complying with the requirements of such Rules and By-Laws,
including, without limitation, by:

     (i) if such Rules or By-Laws shall so require, engaging a “qualified
independent underwriter” (as defined in such Rules) to participate in the
preparation of the Registration Statement, to exercise usual standards of due
diligence with respect thereto and, if any portion of the offering contemplated by
such Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities;

     (ii) indemnifying any such qualified independent underwriter to the extent of
the indemnification of underwriters provided in Section 7 hereof; and

     (iii) providing such information to such Broker-Dealer as may be required in
order for such Broker-Dealer to comply with the requirements of such Rules.

     (v) The Company shall use its reasonable best efforts to take all other steps necessary
to effect the registration of the Securities or the New Securities, as the case may be,
covered by a Registration Statement.

          6. Registration Expenses. The Company shall bear all expenses incurred in connection with
the performance of its obligations under Sections 2, 3 and 5 hereof (other than any underwriting
discounts or
commissions in the event of an underwritten offering) and, in the event of any Shelf Registration
Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in connection
therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the
Initial Purchaser for the reasonable fees and disbursements of counsel acting in connection
therewith.

 

 

 -15-

          7. Indemnification and Contribution. (a) The Company agrees to indemnify and hold
harmless each Holder of Securities or New Securities, as the case may be, covered by any
Registration Statement (including the Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 5(h) hereof, each Exchanging Dealer), the directors, officers,
employees and agents of each such Holder and each Person who controls any such Holder within the
meaning of either the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement as originally filed or in any amendment thereof, or in any preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any case to the
extent that any such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the Company by or on behalf
of any such Holder specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.

          The Company also agrees to indemnify or contribute as provided in Section 7(d) to Losses of
each any underwriter of Securities or New Securities, as the case may be, registered under a Shelf
Registration Statement, their directors, officers, employees or agents and each Person who controls
such underwriter on substantially the same basis as that of the indemnification of the Initial
Purchaser and the selling Holders provided in this Section 7(a) and shall, if requested by any
Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 5(p)
hereof.

          (b) Each Holder of securities covered by a Registration Statement (including the Initial
Purchaser and, with respect to any Prospectus delivery as contemplated in Section 5(h) hereof, each
Exchanging Dealer) severally and not jointly agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who signs such Registration Statement and each Person
who controls the Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each such
Holder, but only with reference to written information relating to such Holder furnished to
the Company by or on behalf of such Holder specifically for inclusion in the documents referred to
in the foregoing indemnity. This indemnity agreement will be in addition to any liability which
any such Holder may otherwise have.

          (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 7, notify the indemnifying party in writing
of the commencement thereof; but the failure so to notify the

 

 

 -16-

indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party
in any action for which indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel retained by the
indemnified party or parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel to represent the indemnified party in an action,
the indemnified party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party; (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It is understood, however, that the indemnifying party shall, in
connection with any one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general circumstances, be liable for the fees and
expenses of only one firm of attorneys (in addition to local counsel) at any time for all such
indemnified parties. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding.

          (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, then each
applicable indemnifying party shall have a joint and several obligation to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) (collectively “Losses”) to
which such indemnified party may be subject in such proportion as is appropriate to reflect the
relative benefits received by such indemnifying party, on the one hand, and such indemnified party,
on the other hand, from the Initial Placement and the Registration Statement which resulted in such
Losses; provided, however, that in no case shall the Initial Purchaser be
responsible, in the aggregate, for any amount in excess of the purchase discount or commission
applicable to such Security, or in the case of a New Security, applicable to the Security that was
exchangeable into such New Security, nor shall any Holder of any Security or New Security be

 

 

 -17-

responsible, in the aggregate, for any amount in excess of the amount by which the total price at
which such Security, or in the case of a New Security, applicable to the Security that was
exchangeable into such New Security, as set forth on the cover page of the Final Memorandum,
exceeds the amount of any damages that the Initial Purchaser or Holder has otherwise been required
to pay in connection with the statements or omissions which resulted in such Losses, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount or commission
applicable to the securities purchased by such underwriter under the Registration Statement which
resulted in such Losses. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand,
in connection with the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before deducting expenses) as set
forth on the cover page of the Final Memorandum and (y) the total amount of Additional Interest
which the Company was not required to pay as a result of registering the securities covered by the
Registration Statement which resulted in such Losses. Benefits received by the Initial Purchaser
shall be deemed to be equal to the total purchase discounts and commissions as set forth on the
cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Securities or New Securities, as applicable, registered under
the Act. Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a
part of the Registration Statement which resulted in such Losses. Relative fault shall be
determined by reference to, among other things, whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand, or by the indemnified
party, on the other hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or omission. The parties
agree that it would not be just and equitable if contribution were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or any other method of
allocation which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each Person who controls a Holder within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder,
and each Person who controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration Statement and each director
of the Company shall have the same rights to contribution as the Company, subject in each case to
the applicable terms and conditions of this paragraph (d).

          (e) The provisions of this Section 7 will remain in full force and effect, regardless of any
investigation made by or on behalf of any Holder or the Company or any of the officers, directors
or controlling Persons referred to in this Section 7, and will survive the sale by a Holder of
securities covered by a Registration Statement.

 

 

 -18-

          8. Underwritten Registrations. (a) If any of the Securities or New Securities, as the
case may be, covered by any Shelf Registration Statement are to be sold in an underwritten
offering, the Managing Underwriters shall be selected by the Majority Holders and, in the case of a
Managing Underwriter that is not the Initial Purchaser, with the consent of the Company (not to be
unreasonably withheld).

          (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration
Statement, unless such Person (i) agrees to sell such Person’s Securities or New Securities, as the
case may be, on the basis reasonably provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements; and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.

          9. No Inconsistent Agreements. The Company has not, as of the date hereof, entered into,
nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.

          10. Amendments and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders (or, after the consummation of any Registered Exchange Offer in
accordance with Section 2 hereof, of New Securities); provided that, with respect to any
matter that directly or indirectly affects the rights of the Initial Purchaser hereunder, the
Company shall obtain the written consent of the Initial Purchaser against which such amendment,
qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose Securities or New
Securities, as the case may be, are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of Securities or New Securities, as the case may be, being sold rather than
registered under such Registration Statement.

          11. Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier
guaranteeing overnight delivery:

     (a) if to a Holder, at the most current address given by such holder to the Company in
accordance with the provisions of this Section 11, which address initially is, with respect
to each Holder, the address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to the Initial Purchaser;

     (b) if to you, initially at the address set forth in the Purchase Agreement; and

 

 

 -19-

     (c) if to the Company, initially at its address set forth in the Purchase Agreement.

          All such notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; two Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.

          The Initial Purchaser or the Company by notice to the other parties may designate additional
or different addresses for subsequent notices or communications.

          12. Successors. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties, including, without the need for an express
assignment or any consent by the Company thereto, subsequent Holders of Securities and the New
Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and the New Securities, and any such Holder may specifically enforce the provisions of
this Agreement as if an original party hereto.

          13. Counterparts . This Agreement may be in signed counterparts, each of which shall
constitute an original and all of which together shall constitute one and the same agreement.

          14. Headings . The headings used herein are for convenience only and shall not affect
the construction hereof.

          15. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York applicable to contracts made and to be performed in the State of New York.

          16. Severability . In the event that any one of more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.

          17. Securities Held by the Company, etc . Whenever the consent or approval of Holders
of a specified percentage of principal amount of Securities or New Securities is required
hereunder, Securities or New Securities, as applicable, held by the Company or its Affiliates
(other than subsequent Holders of Securities or New Securities if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such Securities or New Securities)
shall not be counted in determining whether such consent or approval was given by the Holders of
such required percentage.

 

 

          If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall
represent a binding agreement among the Company and the Initial Purchaser.

	 	 	 	 	 
	 	Very truly yours,	 
	 
	 	 
	 	POLYONE CORPORATION
 	 
	 
	 	 
	 	By:  	 /s/
W. David Wilson	 
	 	 	Name: 	W. David Wilson	 
	 	 	Title: 	Senior Vice President and Chief Financial Officer	 
	 

 

 

The
foregoing Agreement is hereby confirmed and accepted as of the date first above written.

	 	 	 	 	 
	MORGAN STANLEY & CO. INCORPORATED
	 
	 	 	 	 
	By:
	 	 /s/ Kevin D. Emerson	 	 
	 

	 	 

Name: Kevin D. Emerson

Title: Executive Director
	 	 

 

 

ANNEX A

          Each Broker-Dealer that receives New Securities for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New
Securities. The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Broker-Dealer will not be deemed to admit that it is an “underwriter” within the
meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a Broker-Dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired by such Broker-Dealer as a result of
market-making activities or other trading activities. The Company has agreed that, starting on the
Expiration Date (as defined herein) and ending on the close of business 180 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented, available to any
Broker-Dealer for use in connection with any such resale. See “Plan of Distribution.”

 

 

ANNEX B

          Each Broker-Dealer that receives New Securities for its own account in exchange for
Securities, where such Securities were acquired by such Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. See “Plan of Distribution.”

 

 

ANNEX C

PLAN OF DISTRIBUTION

          Each Broker-Dealer that receives New Securities for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New
Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of New Securities received in exchange for Securities
where such Securities were acquired as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and ending on the close
of business 180 days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Broker-Dealer for use in connection with any such resale. In
addition, until                     , 200___, all dealers effecting transactions in the New Securities may be
required to deliver a prospectus.

          The Company will not receive any proceeds from any sale of New Securities by Brokers-Dealers.
New Securities received by Broker-Dealers for their own account pursuant to the Exchange Offer may
be sold from time to time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a combination of such methods
of resale, at market prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of commissions or concessions
from any such Broker-Dealer and/or the purchasers of any such New Securities. Any Broker-Dealer
that resells New Securities that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such New Securities may be
deemed to be an “underwriter” within the meaning of the Securities Act and any profit of any such
resale of New Securities and any commissions or concessions received by any such Persons may be
deemed to be underwriting compensation under the Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a Broker-Dealer will not be
deemed to admit that it is an “underwriter” within the meaning of the Act.

          For a period of 180 days after the Expiration Date, the Company will promptly send additional
copies of this Prospectus and any amendment or supplement to this Prospectus to any Broker-Dealer
that requests such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of
the Securities) other than commissions or concessions of any brokers or dealers and will indemnify
the holders of the Securities (including any Broker-Dealers) against certain liabilities, including
liabilities under the Act.

          [If applicable, add information required by Regulation S-K Items 507 and/or 508.]

 

 

ANNEX D

CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Address:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 

If the undersigned is not a Broker-Dealer, the undersigned represents that it acquired the New
Securities in the ordinary course of its business, it is not engaged in, and does not intend to
engage in, a distribution of New Securities and it has not arrangements or understandings with any
Person to participate in a distribution of the New Securities. If the undersigned is a
Broker-Dealer that will receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchanged for New Securities were acquired by it as a result
of market-making activities or other trading activities and acknowledges that it will deliver a
prospectus in connection with any resale of such New Securities; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter”
within the meaning of the Act.EX-10.1

 

Exhibit 10.1

 

    2008 Performance
    Plan

    of

    The Goodyear Tire &
    Rubber Company

 

		
	
    1.  
	
    PURPOSE.

 

    The purposes of the 2008 Performance Plan of The Goodyear
    Tire & Rubber Company (the “Plan”) are to
    advance the interests of the Company and its shareholders by
    strengthening the ability of the Company to attract, retain and
    reward highly qualified officers and other employees, to
    motivate officers and other selected employees to achieve
    business objectives established to promote the long term growth,
    profitability and success of the Company, and to encourage
    ownership of the Common Stock of the Company by participating
    officers, other selected employees and directors. The Plan
    authorizes performance based stock and cash incentive
    compensation in the form of stock options, stock appreciation
    rights, restricted stock, restricted stock units, performance
    grants and awards, and other stock-based grants and awards.

 

		
	
    2.  
	
    DEFINITIONS.

 

    For the purposes of the Plan, the following terms shall have the
    following meanings:

 

    (a) “AWARD” means any Stock Option, Stock
    Appreciation Right, Restricted Stock Grant, Performance Grant,
    Stock-Based Grant, or any other right, interest or option
    relating to shares of Common Stock or other property (including
    cash) granted pursuant to the Plan.

 

    (b) “BOARD OF DIRECTORS” means the Board
    of Directors of the Company.

 

    (c) “CHANGE IN CONTROL” has the meaning
    set forth in Section 13(b) hereof.

 

    (d) “CODE” means the Internal Revenue Code
    of 1986, as amended and in effect from time to time, or any
    successor statute thereto, together with the published rulings,
    regulations and interpretations duly promulgated thereunder.

 

    (e) “COMMITTEE” means the committee of the
    Board of Directors established and constituted as provided in
    Section 5 of the Plan.

 

    (f) “COMMON STOCK” means the common stock,
    without par value, of the Company, or any security issued by the
    Company in substitution or exchange therefor or in lieu thereof.

 

    (g) “COMMON STOCK EQUIVALENT” means a Unit
    (or fraction thereof, if authorized by the Committee)
    substantially equivalent to a hypothetical share of Common
    Stock, credited to a Participant and having a value at any time
    equal to the Fair Market Value of a share of Common Stock (or
    such fraction thereof) at such time.

 

    (h) “COMPANY” means The Goodyear
    Tire & Rubber Company, an Ohio corporation, or any
    successor corporation.

 

    (i) “DATE OF GRANT” means the date as of
    which an Award is determined to be effective as designated in a
    resolution by the Committee and is granted pursuant to the Plan.
    The Date of Grant shall not be earlier than the date of the
    resolution and action therein by the Committee.

 

    (j) “DIRECTOR” means any individual who is
    a member of the Board of Directors and who is not an Employee at
    the relevant time.

 

    (k) “DIVIDEND EQUIVALENT” means, in
    respect of a Common Stock Equivalent or a Restricted Stock Unit
    and with respect to each dividend payment date for the Common
    Stock, an amount equal to the cash dividend on one share of
    Common Stock payable on such dividend payment date.

 

    (l) “EMPLOYEE” means any individual,
    including any officer of the Company, who is on the active
    payroll of the Company or a Subsidiary at the relevant time.

 

    (m) “EXCHANGE ACT” means the Securities
    Exchange Act of 1934, as amended and in effect from time to
    time, including all rules and regulations promulgated thereunder.

 

    (n) “FAIR MARKET VALUE” means, in respect
    of any date on or as of which a determination thereof is being
    or to be made, the closing market price of the Common Stock
    reported on the New York Stock Exchange Composite Transactions
    tape on such date, or, if the Common Stock was not traded on
    such date, on the next

    

    A-1

 

    preceding day on which sales of shares of the Common Stock were
    reported on the New York Stock Exchange Composite Transactions
    tape.

 

    (o) “INCENTIVE STOCK OPTION” means any
    option to purchase shares of Common Stock granted pursuant to
    the provisions of Section 6 of the Plan that is intended to
    be and is specifically designated as an “incentive stock
    option” within the meaning of Section 422(b) of the
    Code.

 

    (p) “NON-QUALIFIED STOCK OPTION” means any
    option to purchase shares of Common Stock granted pursuant to
    the provisions of Section 6 of the Plan that is not an
    Incentive Stock Option.

 

    (q) “PARTICIPANT” means any Employee or
    Director who receives a grant or Award under the Plan.

 

    (r) “PERFORMANCE AWARD” has the meaning
    set forth in Section 9(a) hereof.

 

    (s) “PERFORMANCE GOALS” mean, with respect
    to any applicable grant made pursuant to the Plan, the one or
    more targets, goals or levels of attainment required to be
    achieved in terms of the specified Performance Measure during
    the specified Performance Period, all as set forth in the
    related grant agreement.

 

    (t) “PERFORMANCE GRANT” means a grant made
    pursuant to Section 9 of the Plan, the Award of which is
    contingent on the achievement of specific Performance Goals
    during a Performance Period, determined using a specific
    Performance Measure, all as specified in the grant agreement
    relating thereto.

 

    (u) “PERFORMANCE MEASURE” means, with
    respect to any applicable grant made pursuant to the Plan, one
    or more of the criteria selected by the Committee pursuant to
    Section 9(c) of the Plan for the purpose of establishing,
    and measuring attainment of, Performance Goals for a Performance
    Period in respect of such grant, as provided in the related
    grant agreement.

 

    (v) “PERFORMANCE PERIOD” means, with
    respect to any applicable grant made pursuant to the Plan, the
    one or more periods of time, which may be of varying and
    overlapping durations, as the Committee may select during which
    the attainment of one or more Performance Goals will be measured
    to determine whether, and the extent to which, a Participant is
    entitled to receive payment of an Award pursuant to such grant.

 

    (w) “PLAN” means this 2008 Performance
    Plan of the Company, as set forth herein and as hereafter
    amended from time to time in accordance with the terms hereof.

 

    (x) “PRIOR AWARD” means any award or grant
    made pursuant to a Prior Plan that is outstanding and
    unexercised on the date of adoption of the Plan.

 

    (y) “PRIOR PLAN” means the Company’s
    1997 Performance Incentive Plan, 2002 Performance Plan or 2005
    Performance Plan, as amended from time to time in accordance
    with the terms thereof.

 

    (z) “QUALIFIED PERFORMANCE-BASED AWARD”
    means any Award or portion of an Award that is intended to
    satisfy the requirements for “qualified performance-based
    compensation” under Section 162(m) of the Code.

 

    (aa) “RESTRICTED STOCK” means shares of
    Common Stock issued pursuant to a Restricted Stock Grant under
    Section 8 of the Plan so long as such shares remain subject
    to the restrictions and conditions specified in the grant
    agreement pursuant to which such Restricted Stock Grant is made.

 

    (bb) “RESTRICTED STOCK GRANT” means a
    grant made pursuant to the provisions of Section 8 of the
    Plan.

 

    (cc) “RESTRICTED STOCK UNIT” means a Unit
    issued pursuant to a Restricted Stock Grant under Section 8
    of the Plan so long as such Unit remains subject to the
    restrictions and conditions specified in the grant agreement
    pursuant to which such Restricted Stock Grant is made.

 

    (dd) “STOCK APPRECIATION RIGHT” means a
    grant in the form of a right to benefit from the appreciation of
    the Common Stock made pursuant to Section 7 of the Plan.

 

    (ee) “STOCK-BASED GRANT” has the meaning
    set forth in Section 10(a) hereof.

 

    (ff) “STOCK OPTION” means and includes any
    Non-Qualified Stock Option and any Incentive Stock Option
    granted pursuant to Section 6 of the Plan.

 

    (gg) “SUBSIDIARY” means any corporation or
    entity in which the Company directly or indirectly owns or
    controls securities having a majority of the voting power of
    such corporation or entity; provided, however, that (i) for
    purposes of determining whether any Employee may be a
    Participant with respect to any grant of Incentive

    

    A-2

 

    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;
    and (ii) for purposes of determining whether any individual
    may be a Participant with respect to any grant of Stock Options
    or Stock Appreciation Rights that are intended to be exempt from
    Section 409A of the Code, the term “Subsidiary”
    means any corporation or other entity as to which the Company is
    an “eligible issuer of service recipient stock”
    (within the meaning of Section 409A of the Code).

 

    (hh) “SUBSTITUTE AWARDS” means Awards that
    are granted in assumption of, or in substitution or exchange
    for, outstanding awards previously granted by an entity acquired
    directly or indirectly by the Company or with which the Company
    directly or indirectly combines.

 

    (ii) “UNIT” means a bookkeeping entry used
    by the Company to record and account for the grant, settlement
    or, if applicable, deferral of an Award until such time as such
    Award is paid, canceled, forfeited or terminated, as the case
    may be, which, except as otherwise specified by the Committee,
    shall be equal to one Common Stock Equivalent.

 

		
	
    3.  
	
    EFFECTIVE DATE;
    TERM.

 

    (a) EFFECTIVE DATE.  The Plan shall be
    effective on April 8, 2008, upon approval by the
    shareholders of the Company at the 2008 annual meeting of
    shareholders or any adjournments thereof and the Board of
    Directors.

 

    (b) TERM.  The Plan shall remain in effect
    until April 8, 2018, unless sooner terminated by the Board
    of Directors. Termination of the Plan shall not affect grants
    and Awards then outstanding.

 

		
	
    4.  
	
    SHARES OF
    COMMON STOCK SUBJECT TO PLAN.

 

    (a) MAXIMUM NUMBER OF SHARES AVAILABLE FOR ISSUANCE
    UNDER THE PLAN.  The maximum aggregate number of
    shares of Common Stock which may be granted pursuant to Awards
    under the Plan, subject to Sections 4(b) and 4(c) of the
    Plan, shall be eight million (8,000,000). Any shares of Common
    Stock that are subject to Awards of Stock Options or Stock
    Appreciation Rights shall be counted against this limit as one
    (1) share of Common Stock for every one (1) share of
    Common Stock granted. Any shares of Common Stock that are
    subject to Awards other than Stock Options or Stock Appreciation
    Rights shall be counted against this limit as 1.61 shares
    of Common Stock for every one (1) share of Common Stock
    granted. The shares of Common Stock which may be issued under
    the Plan may be authorized and unissued shares or issued shares
    reacquired by the Company. No fractional share of Common Stock
    shall be issued under the Plan. Awards of fractional shares of
    Common Stock, if any, shall be settled in cash. Notwithstanding
    the limitations imposed upon the vesting of Awards elsewhere in
    the Plan, those vesting limitations shall not be applicable to
    up to a maximum aggregate number of shares of Common Stock
    granted pursuant to Awards under the Plan of 400,000 shares.

 

    (b) CHARGING OF SHARES.  Shares of Common
    Stock subject to an Award or a Prior Award that expires
    according to its terms or is forfeited, terminated, canceled or
    surrendered, in each case, without having been exercised or is
    settled, or can be paid only, in cash, with respect to Awards
    under the Plan, will be available again for grant under the
    Plan, without reducing the number of shares of Common Stock that
    may be subject to Awards or that are available for the grant of
    Awards under the Plan and, with respect to Prior Awards under a
    Prior Plan, will become available for grant under the Plan,
    thereby increasing the number of shares of Common Stock that may
    be subject to Awards or that are available for the grant of
    Awards under the Plan. In no event shall (i) any shares of
    Common Stock subject to a stock option that is canceled upon the
    exercise of a tandem stock appreciation right, (ii) any
    shares of Common Stock subject to an Award or a Prior Award that
    is surrendered in payment of the exercise price of a stock
    option or in payment of taxes associated with an Award or a
    Prior Award, or (iii) any shares of Common Stock subject to
    a stock appreciation right that are not issued in connection
    with the stock settlement of the stock appreciation right upon
    the exercise thereof become available for grant under the Plan
    pursuant to this paragraph. Any shares of Common Stock that
    become available for grant pursuant to this paragraph shall be
    added back as (i) one (1) share of Common Stock if
    such shares were subject to Stock Options or Stock Appreciation
    Rights granted under the Plan or were subject to stock options
    or stock appreciation rights granted under a Prior Plan, and
    (ii) as 1.61 shares of Common Stock if such shares
    were subject to Awards other than Stock Options or Stock
    Appreciation Rights granted under the Plan or were subject to
    Prior Awards other than stock options or stock appreciation
    rights granted under a Prior Plan.

 

    Any Substitute Awards granted by the Company will not reduce the
    number of shares of Common Stock available for Awards under the
    Plan and will not count against the limits specified in
    Section 4(a) above.

    

    A-3

 

    Units that represent deferred compensation, and shares of Common
    Stock issued in payment of deferred compensation, will not
    reduce the number of shares of Common Stock that may be subject
    to Awards or that are available for the grant of Awards under
    the Plan, except to the extent of matching or other related
    grants by the Company or any discount in the price used to
    convert the deferred compensation into Units or shares of Common
    Stock.

 

    (c) ADJUSTMENTS UPON CHANGES IN CAPITAL
    STRUCTURE.  In the event of a merger,
    consolidation, acquisition of property or shares, stock rights
    offering, liquidation, disaffiliation, or similar event
    affecting the Company or any of its Subsidiaries (each, a
    “Corporate Transaction”), the Committee or the Board
    of Directors may in its discretion make such substitutions or
    adjustments as it deems appropriate and equitable to prevent
    dilution or enlargement of the rights of Participants to
    (A) the aggregate number and kind of shares of Common Stock
    reserved for issuance and delivery under the Plan, (B) the
    various maximum share limitations applicable to certain types of
    Awards and upon the grants to individuals of certain types of
    Awards, (C) the number and kind of shares of Common Stock
    subject to outstanding Awards; and (D) the exercise price
    of outstanding Stock Options and Stock Appreciation Rights. In
    the event of a stock dividend, stock split, reverse stock split,
    separation, spinoff, reorganization, extraordinary dividend of
    cash or other property, share combination, recapitalization or
    similar event affecting the capital structure of the Company
    (each, a “Share Change”), the Committee or the Board
    of Directors shall make such equitable substitutions or
    adjustments to prevent dilution or enlargement of the rights of
    Participants to (A) the aggregate number and kind of shares
    of Common Stock reserved for issuance and delivery under the
    Plan, (B) the various maximum share limitations applicable
    to certain types of Awards and upon the grants to individuals of
    certain types of Awards, (C) the number and kind of shares
    of Common Stock subject to outstanding Awards; and (D) the
    exercise price of outstanding Stock Options and Stock
    Appreciation Rights. In the case of Corporate Transactions, such
    adjustments may include, without limitation, the cancellation of
    outstanding Awards in exchange for payments of cash, property or
    a combination thereof having an aggregate value equal to the
    value of such Awards, as determined by the Committee or the
    Board of Directors in its sole discretion. In no event shall any
    adjustment be required under this Section 4(c) if the
    Committee determines that such action could cause an Award to
    fail to satisfy the conditions of an applicable exception from
    the requirements of Section 409A of the Code or otherwise
    could subject a Participant to the additional tax imposed under
    Section 409A in respect of an outstanding Award. Moreover,
    any adjustment to the number of shares of Common Stock specified
    in Section 6(b)(i) will be made only if and to the extent
    that such adjustment would not cause any Stock Option intended
    to qualify as an Incentive Stock Option to fail so to qualify.

 

    (d) AWARDS TO DIRECTORS.  On the first
    business day of each calendar quarter, commencing
    October 1, 2008, the Company shall make Restricted Stock
    Grants, of the types and with the terms and conditions as are
    permitted by the Plan and determined by the Committee, with a
    value of $23,750 to each Director who is then a member of the
    Board of Directors.

 

		
	
    5.  
	
    ADMINISTRATION.

 

    (a) THE COMMITTEE.  The Plan shall be
    administered by the Committee to be appointed from time to time
    by the Board of Directors and comprised of not less than three
    of the then members of the Board of Directors who qualify as
    “non-employee directors” within the meaning of
    Rule 16b-3
    promulgated under the Exchange Act, as “outside
    directors” within the meaning of Section 162(m) of the
    Code, and as “independent directors” for purposes of
    the rules and regulations of the New York Stock Exchange.
    Members of the Committee shall serve at the pleasure of the
    Board of Directors. The Board of Directors may from time to time
    remove members from, or add members to, the Committee. A
    majority of the members of the Committee shall constitute a
    quorum for the transaction of business and the acts of a
    majority of the members present at any meeting at which a quorum
    is present shall be the acts of the Committee. Any one or more
    members of the Committee may participate in a meeting by
    conference telephone or similar means where all persons
    participating in the meeting can hear and speak to each other,
    which participation shall constitute presence in person at such
    meeting. Action approved in writing by a majority of the members
    of the Committee then serving shall be fully as effective as if
    the action had been taken by a vote at a meeting duly called and
    held. The Company shall make grants and effect Awards under the
    Plan in accordance with the terms and conditions specified by
    the Committee, which terms and conditions shall be set forth in
    grant agreements
    and/or other
    instruments in such forms as the Committee shall approve.

 

    (b) COMMITTEE POWERS.  The Committee shall
    have full power and authority to operate and administer the Plan
    in accordance with its terms. The powers of the Committee
    include, but are not limited to, the power to: (i) select
    Participants from among the Employees and Directors;
    (ii) establish the types of, and the terms and conditions
    of, all grants and Awards made under the Plan, subject to any
    applicable limitations set forth in, and consistent with the
    express terms of, the Plan; (iii) make grants of and pay or
    otherwise effect Awards subject to,

    

    A-4

 

    and consistent with, the express provisions of the Plan;
    (iv) establish Performance Goals, Performance Measures and
    Performance Periods, subject to, and consistent with, the
    express provisions of the Plan; (v) reduce the amount of
    any grant or Award; (vi) prescribe the form or forms of
    grant agreements and other instruments evidencing grants and
    Awards under the Plan; (vii) pay and to defer payment of
    Awards on such terms and conditions, not inconsistent with the
    express terms of the Plan, as the Committee shall determine;
    (viii) direct the Company to make conversions, accruals and
    payments pursuant to the Plan; (ix) construe and interpret
    the Plan and make any determination of fact incident to the
    operation of the Plan; (x) promulgate, amend and rescind
    rules and regulations relating to the implementation, operation
    and administration of the Plan; (xi) adopt such
    modifications, procedures and subplans as may be necessary or
    appropriate to comply with the laws of other countries with
    respect to Participants or prospective Participants employed in
    such other countries; (xii) delegate to other persons the
    responsibility for performing administrative or ministerial acts
    in furtherance of the Plan; (xiii) delegate to one or more
    officers (as that term is defined in
    Rule 16a-1(f)
    under the Exchange Act) of the Company the ability to make
    Awards under the Plan, provided that no such Awards may be made
    to officers or Directors; (xiv) engage the services of
    persons and firms, including banks, consultants and insurance
    companies, in furtherance of the Plan’s activities; and
    (xv) make all other determinations and take all other
    actions as the Committee may deem necessary or advisable for the
    administration and operation of the Plan.

 

    (c) COMMITTEE’S DECISIONS FINAL.  Any
    determination, decision or action of the Committee in connection
    with the construction, interpretation, administration or
    application of the Plan, and of any grant agreement, shall be
    final, conclusive and binding upon all Participants, and all
    persons claiming through Participants, affected thereby.

 

    (d) ADMINISTRATIVE ACCOUNTS.  For the
    purpose of accounting for Awards deferred as to payment, the
    Company shall establish bookkeeping accounts expressed in Units
    bearing the name of each Participant receiving such Awards. Each
    account shall be unfunded, unless otherwise determined by the
    Committee in accordance with Section 15(d) of the Plan.

 

    (e) CERTIFICATIONS.  In respect of each
    grant under the Plan of a Qualified Performance-Based Award, the
    provisions of the Plan and the related grant agreement shall be
    construed to confirm such intent, and to conform to the
    requirements of Section 162(m) of the Code, and the
    Committee shall certify in writing (which writing may include
    approved minutes of a meeting of the Committee) that the
    applicable Performance Goal(s), determined using the Performance
    Measure specified in the related grant agreement, was attained
    during the relevant Performance Period at a level that equaled
    or exceeded the level required for the payment of such Award in
    the amount proposed to be paid and that such Award does not
    exceed any applicable Plan limitation.

 

		
	
    6.  
	
    STOCK
    OPTIONS.

 

    (a) IN GENERAL.  Options to purchase
    shares of Common Stock may be granted under the Plan and may be
    Incentive Stock Options or Non-Qualified Stock Options. All
    Stock Options shall be subject to the terms and conditions of
    this Section 6 and shall contain such additional terms and
    conditions, not inconsistent with the express provisions of the
    Plan, as the Committee shall determine. Stock Options may be
    granted in addition to, or in tandem with or independent of,
    Stock Appreciation Rights or other grants and Awards under the
    Plan.

 

    (b) ELIGIBILITY AND LIMITATIONS.  Any
    Employee or Director may be granted Stock Options. The Committee
    shall determine, in its discretion, the Employees and Directors
    to whom Stock Options will be granted, the timing of such
    grants, and the number of shares of Common Stock subject to each
    Stock Option granted; provided, that (i) the maximum
    aggregate number of shares of Common Stock which may be issued
    and delivered upon the exercise of Incentive Stock Options shall
    be eight million (8,000,000), (ii) the maximum number of
    shares of Common Stock in respect of which Stock Options may be
    granted to any single Participant during any calendar year shall
    be 500,000, (iii) Incentive Stock Options may only be
    granted to Employees, and (iv) in respect of Incentive
    Stock Options, the aggregate Fair Market Value (determined as of
    the date the Incentive Stock Option is granted) of the shares of
    Common Stock with respect to which an Incentive Stock Option
    becomes exercisable for the first time by an Employee during any
    calendar year shall not exceed $100,000, or such other limit as
    may be required by the Code, except that, if authorized by the
    Committee and provided for in the related grant agreement, any
    portion of any Incentive Stock Option that cannot be exercised
    as such because of this limitation will be converted into and
    exercised as a Non-Qualified Stock Option. In no event, without
    the approval of the Company’s shareholders, shall any Stock
    Option (i) be granted to a Participant in exchange for the
    Participant’s agreement to the cancellation of one or more
    Stock Options then held by such Participant if the exercise
    price of the new grant is lower than the exercise price of the
    grant to be cancelled, (ii) be amended to reduce the
    exercise price, or (iii) be cancelled in exchange for
    another Award or a cash payment. The immediately preceding
    sentence is intended to

    

    A-5

 

    prohibit the repricing of “underwater” Stock Options
    without shareholder approval and will not be construed to
    prohibit the adjustments provided for in Section 4(c) of
    the Plan.

 

    (c) OPTION EXERCISE PRICE.  The per share
    exercise price of each Stock Option granted under the Plan shall
    be determined by the Committee prior to or at the time of grant,
    but in no event shall the per share exercise price of any Stock
    Option be less than 100% of the Fair Market Value of the Common
    Stock on the Date of Grant of such Stock Option, except for
    Substitute Awards provided for in Section 15(b) of the Plan.

 

    (d) OPTION TERM.  The term of each Stock
    Option shall be fixed by the Committee; except that in no event
    shall the term of any Stock Option exceed ten years from the
    Date of Grant.

 

    (e) EXERCISABILITY.  A Stock Option shall
    be exercisable at such time or times and subject to such terms
    and conditions as shall be determined by the Committee at the
    Date of Grant; provided, however, that no Stock Option shall be
    exercisable during the first six months after the Date of Grant.
    No Stock Option may be exercised unless the holder thereof is at
    the time of such exercise an Employee or Director and has been
    continuously an Employee or Director since the Date of Grant,
    except that the Committee may permit the exercise of any Stock
    Option for any period following the Participant’s
    termination of employment not in excess of the original term of
    the Stock Option on such terms and conditions as it shall deem
    appropriate and specify in the related grant agreement.

 

    (f) METHOD OF EXERCISE.  A Stock Option
    may be exercised, in whole or in part, by giving written notice
    of exercise to the Company specifying the number of shares of
    Common Stock to be purchased. Such notice shall be accompanied
    by payment in full of the exercise price in cash or, if
    permitted by the terms of the related grant agreement or
    otherwise approved in advance by the Committee, in shares of
    Common Stock to be delivered upon exercise or already owned by
    the Participant, valued at the Fair Market Value of the Common
    Stock on the date of exercise.

 

		
	
    7.  
	
    STOCK
    APPRECIATION RIGHTS.

 

    (a) IN GENERAL.  Stock Appreciation Rights
    in respect of shares of Common Stock may be granted under the
    Plan alone, in tandem with, in addition to or independent of a
    Stock Option or other grant or Award under the Plan. A Stock
    Appreciation Right entitles a Participant to receive an amount
    equal to the excess of the Fair Market Value of a share of
    Common Stock on the date of exercise over the Fair Market Value
    of a share of Common Stock on the Date of Grant of the Stock
    Appreciation Right, or such other higher price as may be set by
    the Committee, multiplied by the number of shares of Common
    Stock with respect to which the Stock Appreciation Right shall
    have been exercised.

 

    (b) ELIGIBILITY AND LIMITATIONS.  Any
    Employee or Director may be granted Stock Appreciation Rights.
    The Committee shall determine, in its discretion, the Employees
    and Directors to whom Stock Appreciation Rights will be granted,
    the timing of such grants and the number of shares of Common
    Stock in respect of which each Stock Appreciation Right is
    granted; provided that the maximum number of shares of Common
    Stock in respect of which Stock Appreciation Rights may be
    granted to any single Participant during any calendar year shall
    be 500,000. In no event, without the approval of the
    Company’s shareholders, shall any Stock Appreciation Right
    (i) be granted to a Participant in exchange for the
    Participant’s agreement to the cancellation of one or more
    Stock Appreciation Rights then held by such Participant if the
    exercise price of the new grant is lower than the exercise price
    of the grant to be cancelled, (ii) be amended to reduce the
    exercise price, or (iii) be cancelled in exchange for
    another Award or a cash payment. The immediately preceding
    sentence is intended to prohibit the repricing of
    “underwater” Stock Appreciation Rights without
    shareholder approval and will not be construed to prohibit the
    adjustments provided for in Section 4(c) of the Plan.

 

    (c) EXERCISABILITY; EXERCISE; FORM OF
    PAYMENT.  A Stock Appreciation Right may be
    exercised by a Participant at such time or times and in such
    manner as shall be authorized by the Committee and set forth in
    the related grant agreement, except that in no event shall a
    Stock Appreciation Right be exercisable within the first six
    months after the Date of Grant or shall the term of any Stock
    Appreciation Right exceed ten years from the Date of Grant. The
    Committee may provide that a Stock Appreciation Right shall be
    automatically exercised on one or more specified dates. No Stock
    Appreciation Right may be exercised unless the holder thereof is
    at the time of exercise an Employee or Director and has been
    continuously an Employee or Director since the Date of Grant,
    except that the Committee may permit the exercise of any Stock
    Appreciation Right for any period following the
    Participant’s termination of employment not in excess of
    the original term of the Stock Appreciation Right on such terms
    and conditions as it shall deem appropriate and specify in the
    related grant agreement. A Stock Appreciation Right may be
    exercised, in whole or in part, by giving the Company a written
    notice specifying the number of shares of Common Stock in
    respect of which the Stock Appreciation Right is to be
    exercised. Stock Appreciation Rights may

    

    A-6

 

    be paid upon exercise in cash, in shares of Common Stock, or in
    any combination of cash and shares of Common Stock as determined
    by the Committee. With respect to any Stock Appreciation Rights
    granted in tandem with a Stock Option, the tandem Stock
    Appreciation Rights may be exercised only at a time when the
    related Stock Option is also exercisable and at a time when the
    “spread” is positive, and by surrender of the related
    Stock Option for cancellation.

 

		
	
    8.  
	
    RESTRICTED STOCK
    GRANTS.

 

    (a) IN GENERAL.  A Restricted Stock Grant
    is the issue of shares of Common Stock or Units in the name of
    an Employee or Director, which issuance is subject to such terms
    and conditions as the Committee shall deem appropriate,
    including, without limitation, restrictions on the sale,
    assignment, transfer or other disposition of such shares or
    Units and the requirement that the Employee or Director forfeit
    such shares or Units back to the Company (i) upon
    termination of employment for specified reasons within a
    specified period of time, (ii) if any specified Performance
    Goals are not achieved during a specified Performance Period, or
    (iii) if such other conditions as the Committee may specify
    are not satisfied.

 

    (b) ELIGIBILITY AND LIMITATIONS.  Any
    Employee or Director may receive a Restricted Stock Grant. The
    Committee, in its sole discretion, shall determine whether a
    Restricted Stock Grant shall be made, the Employee or Director
    to receive the Restricted Stock Grant, whether the Restricted
    Stock Grant will consist of Restricted Stock or Restricted Stock
    Units, or both, and the conditions and restrictions imposed on
    the Restricted Stock Grant. The maximum aggregate number of
    shares of Common Stock which may be issued to any single
    Participant as Restricted Stock or Restricted Stock Units that
    are subject to the attainment of Performance Goals during any
    calendar year shall not exceed 100,000.

 

    (c) RESTRICTION PERIOD.  Restricted Stock
    Grants shall provide that in order for a Participant to receive
    shares of Common Stock or Units free of restrictions, the
    Participant must remain an Employee or Director of the Company
    or its Subsidiaries for a period of time specified by the
    Committee (the “Restriction Period”). The Committee
    may also establish one or more Performance Goals that are
    required to be achieved during one or more Performance Periods
    within the Restriction Period as a condition to the lapse of the
    restrictions. Except for Substitute Awards, upon a Change in
    Control, and in certain limited situations (including the death,
    disability or retirement of the Participant), Restricted Stock
    Grants subject solely to the continued service of the
    Participant shall have a Restriction Period of not less than
    three (3) years from the Date of Grant. The Committee, in
    its sole discretion, may provide for the pro rata lapse of
    restrictions in installments during the Restriction Period.
    Restricted Stock Grants subject to the achievement of one or
    more Performance Goals shall have a minimum Restriction Period
    of one year.

 

    (d) RESTRICTIONS.  The following
    restrictions and conditions shall apply to each Restricted Stock
    Grant during the Restriction Period: (i) the Participant
    may not sell, assign, transfer, pledge, hypothecate, encumber or
    otherwise dispose of or realize on the shares of Common Stock or
    Units subject to the Restricted Stock Grant; and (ii) the
    shares of the Common Stock issued as Restricted Stock or the
    Restricted Stock Units shall be forfeited to the Company if the
    Participant for any reason ceases to be an Employee or Director
    prior to the end of the Restriction Period, except due to
    circumstances specified in the related grant agreement or
    otherwise approved by the Committee. Unless otherwise directed
    by the Committee, (i) all certificates representing shares
    of Restricted Stock will be held in custody by the Company until
    all restrictions thereon 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 of Common Stock, or (ii) all uncertificated shares
    of Restricted Stock will be held at the Company’s transfer
    agent in book entry form with appropriate restrictions relating
    to the transfer of such shares of Restricted Stock. The
    Committee may, in its sole discretion, include such other
    restrictions and conditions as it may deem appropriate.

 

    (e) PAYMENT.  Upon expiration of the
    Restriction Period and if all conditions have been satisfied and
    any applicable Performance Goals attained, the shares of the
    Restricted Stock will be made available to the Participant or
    the Restricted Stock Units will be vested in the account of the
    Participant, free of all restrictions; provided, that the
    Committee may, in its discretion, require (i) the further
    deferral of any Restricted Stock Grant beyond the initially
    specified Restriction Period, (ii) that the Restricted
    Stock or Restricted Stock Units be retained by the Company, and
    (iii) that the Participant receive a cash payment in lieu
    of unrestricted shares of Common Stock or Units.

 

    (f) RIGHTS AS A SHAREHOLDER.  A
    Participant shall have, with respect to shares of Restricted
    Stock, all of the rights of a shareholder of the Company,
    including the right to vote the shares and, unless otherwise
    determined by the Committee, receive any cash dividends paid
    thereon. A Participant shall not have, with respect to
    Restricted Stock Units, any voting or other rights of a
    shareholder of the Company, but unless otherwise determined by
    the

    

    A-7

 

    Committee shall have the right to receive Dividend Equivalents.
    Stock dividends distributed with respect to shares of Restricted
    Stock or Restricted Stock Units shall be treated as additional
    shares or Units, as the case may be, under the Restricted Stock
    Grant and shall be subject to the restrictions and other terms
    and conditions set forth therein.

 

		
	
    9.  
	
    PERFORMANCE
    GRANTS AND AWARDS.

 

    (a) ELIGIBILITY AND TERMS.  The Committee
    may grant to Employees the prospective contingent right,
    expressed in Units, to receive payments of shares of Common
    Stock, cash or any combination thereof, with each Unit
    equivalent in value to one share of Common Stock, or equivalent
    to such other value or monetary amount as may be designated or
    established by the Committee (“Performance Grants”),
    based upon Company performance over a specified Performance
    Period. The Committee shall, in its sole discretion, determine
    the Employees eligible to receive Performance Grants. At the
    time each Performance Grant is made, the Committee shall
    establish the Performance Period, the Performance Measures and
    the Performance Goals in respect of such Performance Grant. The
    number of shares of Common Stock
    and/or the
    amount of cash earned and payable in settlement of a Performance
    Grant shall be determined at the end of the Performance Period
    (a “Performance Award”).

 

    (b) LIMITATIONS ON GRANTS AND
    AWARDS.  With respect to share-based Performance
    Grants, the maximum number of shares which may be the subject of
    Performance Grants made to any single Participant during any
    calendar year shall be 200,000. With respect to cash-based
    Performance Grants, the maximum amount any single Participant
    may receive during any calendar year as Performance Awards
    pursuant to Performance Grants shall not exceed $15 million
    ($15,000,000), determined using the maximum amount of cash that
    may be earned and payable as of the last day of the applicable
    Performance Period or Periods or as of the date or dates of
    payment thereof, whichever is higher.

 

    (c) PERFORMANCE GOALS, PERFORMANCE MEASURES AND
    PERFORMANCE PERIODS.  Each Performance Grant shall
    provide that, in order for a Participant to receive an Award of
    all or a portion of the Units subject to such Performance Grant,
    the Company must achieve certain Performance Goals over a
    designated Performance Period having a minimum duration of one
    year, with attainment of one or more Performance Goals
    determined using one or more specific Performance Measures. The
    Performance Goals and Performance Period shall be established by
    the Committee in its sole discretion. The Committee shall
    establish one or more Performance Measures for each Performance
    Period for determining the portion of the Performance Grant
    which will be earned or forfeited based on the extent to which
    the Performance Goals are achieved or exceeded. The term
    Performance Measures includes one or more of the criteria
    established pursuant to the Plan for Participants who have
    received Performance Grants or, when so determined by the
    Committee, Restricted Stock, Restricted Stock Units, or other
    Stock-Based Grants. The Performance Measures applicable to any
    Qualified Performance-Based Award will be based on specified
    levels of or growth in one or more of the following criteria:
    (i) cumulative net income per share; (ii) cumulative net
    income; (iii) return on sales; (iv) total shareholder
    return; (v) return on assets; (vi) economic value
    added; (vii) cash flow; (viii) return on equity;
    (ix) cumulative operating income (which shall equal
    consolidated sales minus cost of goods sold and selling,
    administrative and general expense); (x) operating income;
    and (xi) return on invested capital. The Performance
    Measures may be calculated before or after taxes, interest,
    depreciation, amortization, discontinued operations, effect of
    accounting changes, acquisition expenses, restructuring
    expenses, extraordinary items, non-operating items or unusual
    charges, as determined by the Committee at the time the
    Performance Measures are established. Performance Goals may be
    established on a corporate-wide basis, with respect to one or
    more business units, divisions, subsidiaries or business
    segments and in either absolute terms or relative to the
    performance of one or more comparable companies or an index
    covering multiple companies. Performance Goals may include
    minimum, maximum and target levels of performance, with the size
    of Performance Award based on the level attained. Once
    established by the Committee and specified in the grant
    agreement, and if and to the extent provided in or required by
    the grant agreement, the Performance Goals and the Performance
    Measure in respect of any Qualified Performance-Based Award
    (including any Performance Grant, Restricted Stock Grant or
    Stock-Based Grant that requires the attainment of Performance
    Goals as a condition to the Award) shall not be changed. The
    Committee may, in its discretion, eliminate or reduce (but not
    increase) the amount of any Qualified Performance-Based Award
    that otherwise would be payable to a Participant upon attainment
    of the Performance Goals.

 

    (d) FORM OF GRANTS.  Performance
    Grants may be made on such terms and conditions not inconsistent
    with the Plan, and in such form or forms, as the Committee may
    from time to time approve. Performance Grants may be made alone,
    in addition to, in tandem with, or independent of other grants
    and Awards under the Plan. Subject to the terms of the Plan, the
    Committee shall, in its discretion, determine the number of
    Units subject to each Performance Grant made to a Participant
    and the Committee may impose different terms and conditions on

    

    A-8

 

    any particular Performance Grant made to any Participant. The
    Performance Goals, the Performance Period or Periods, and the
    Performance Measures applicable to a Performance Grant shall be
    set forth in the relevant grant agreement.

 

    (e) PAYMENT OF AWARDS.  Each Participant
    shall be entitled to receive payment in an amount equal to the
    aggregate Fair Market Value (if the Unit is equivalent to a
    share of Common Stock), or such other value as the Committee
    shall specify, of the Units earned in respect of such
    Performance Award. Payment in settlement of a Performance Award
    may be made in shares of Common Stock, in cash, or in any
    combination of Common Stock and cash, and at such time or times,
    as the Committee, in its discretion, shall determine.

 

		
	
    10.  
	
    OTHER STOCK-BASED
    GRANTS AND AWARDS.

 

    (a) IN GENERAL.  The Committee may make
    other grants and Awards pursuant to which Common Stock is, or in
    the future may be, acquired by Participants, and other grants
    and Awards to Participants denominated in Common Stock
    Equivalents or other Units (“Stock-Based Grants”).
    Such Stock-Based Grants may be made alone, in addition to, in
    tandem with, or independent of other grants and Awards under the
    Plan.

 

    (b) ELIGIBILITY AND TERMS.  The Committee
    may make Stock-Based Grants to Employees or Directors. Subject
    to the provisions of the Plan, the Committee shall have
    authority to determine the Employees and Directors to whom, and
    the time or times at which, Stock-Based Grants will be made, the
    number of shares of Common Stock, if any, to be subject to or
    covered by each Stock-Based Grant, and any and all other terms
    and conditions of each Stock-Based Grant.

 

    (c) LIMITATIONS.  No single Participant
    shall receive more than 50,000 shares of Common Stock in
    settlement of Stock-Based Awards that are subject to the
    attainment of Performance Goals during any calendar year.

 

    (d) FORM OF GRANTS; PAYMENT OF
    AWARDS.  Stock-Based Grants may be made in such
    form or forms and on such terms and conditions, including the
    attainment of specific Performance Goals, as the Committee, in
    its discretion, shall approve. Payment of Stock-Based Awards may
    be made in cash, in shares of Common Stock, or in any
    combination of cash and shares of Common Stock, and at such time
    or times, as the Committee, in its discretion, shall determine.

 

		
	
    11.  
	
    DEFERRALS.

 

    To the extent permitted by Section 409A of the Code, the
    Committee may, whether at the time of grant or at anytime
    thereafter prior to payment or settlement, require a Participant
    to defer, or permit (subject to such conditions as the Committee
    may from time to time establish) a Participant to elect to
    defer, receipt of all or any portion of any payment of cash or
    shares of Common Stock that would otherwise be due to such
    Participant in payment or settlement of any Award under the
    Plan. If any such deferral is required by the Committee (or is
    elected by the Participant with the permission of the
    Committee), the Committee shall establish rules and procedures
    for such payment deferrals. The Committee may provide for the
    payment or crediting of interest, at such rate or rates as it
    shall in its discretion deem appropriate, on such deferred
    amounts credited in cash and the payment or crediting of
    Dividend Equivalents in respect of deferred amounts credited in
    Common Stock Equivalents or Restricted Stock Units. Deferred
    amounts may be paid in a lump sum or in installments in the
    manner and to the extent permitted, and in accordance with rules
    and procedures established, by the Committee. This
    Section 11 shall not apply to any grant of Stock Options or
    Stock Appreciation Rights that are intended to be exempt from
    Section 409A of the Code.

 

		
	
    12.  
	
    NON-TRANSFERABILITY
    OF GRANTS AND AWARDS.

 

    No grant or Award under the Plan, and no right or interest
    therein, shall be (i) assignable, alienable or transferable
    by a Participant, except by will or the laws of descent and
    distribution, or (ii) subject to any obligation, or the
    lien or claims of any creditor, of any Participant, or
    (iii) subject to any lien, encumbrance or claim of any
    party made in respect of or through any Participant, however
    arising. During the lifetime of a Participant, Stock Options and
    Stock Appreciation Rights are exercisable only by, and shares of
    Common Stock issued upon the exercise of Stock Options and Stock
    Appreciation Rights or in settlement of other Awards will be
    issued only to, and other payments in settlement of any Award
    will be payable only to, the Participant or his or her legal
    representative. The Committee may, in its sole discretion,
    authorize written designations of beneficiaries and authorize
    Participants to designate beneficiaries with the authority to
    exercise Stock Options and Stock Appreciation Rights granted to
    a Participant in the event of his or her death. Notwithstanding
    the foregoing, the Committee may, in its sole discretion and on
    and subject to such terms and conditions as it shall deem
    appropriate, which terms and conditions shall be

    

    A-9

 

    set forth in the related grant agreement: (i) authorize a
    Participant to transfer all or a portion of any Non-Qualified
    Stock Option or Stock Appreciation Right, as the case may be,
    granted to such Participant; provided, that in no event shall
    any transfer be made to any person or persons other than such
    Participant’s spouse, children or grandchildren, or a trust
    or partnership for the exclusive benefit of one or more such
    persons, which transfer must be made as a gift and without any
    consideration; and (ii) provide for the transferability of
    a particular grant or Award pursuant to a qualified domestic
    relations order. All other transfers and any retransfer by any
    permitted transferee are prohibited and any such purported
    transfer shall be null and void. Each Non-Qualified Stock Option
    or Stock Appreciation Right which becomes the subject of a
    permitted transfer (and the Participant to whom it was granted
    by the Company) shall continue to be subject to the same terms
    and conditions as were in effect immediately prior to such
    permitted transfer. The Participant shall remain responsible to
    the Company for the payment of all withholding taxes incurred as
    a result of any exercise of such Stock Option or Stock
    Appreciation Right. In no event shall any permitted transfer of
    a Stock Option, Stock Appreciation Right or other grant or Award
    create any right in any party in respect of any Stock Option,
    Stock Appreciation Right or other grant or Award, other than the
    rights of the qualified transferee in respect of such Stock
    Option, Stock Appreciation Right or other grant or Award
    specified in the related grant agreement.

 

		
	
    13.  
	
    CHANGE IN
    CONTROL.

 

    (a) EFFECT ON GRANTS.  In the event of a
    Severance (as defined below) of a Participant, and
    notwithstanding any other provision of the Plan or a grant
    agreement to the contrary: (i) all Stock Options and Stock
    Appreciation Rights then outstanding shall become fully
    exercisable as of the date of the Severance, whether or not then
    exercisable; (ii) all restrictions and conditions in
    respect of all Restricted Stock Grants then outstanding shall be
    deemed satisfied as of the date of the Severance; and
    (iii) all Performance Grants and Stock-Based Grants shall
    be deemed to have been fully earned, at the target amount of the
    award opportunity specified in the grant agreement, as of the
    date of the Severance.

 

    (b) DEFINITIONS.  As used in the Plan, the
    following terms shall have the following meanings (unless
    otherwise prescribed by the Committee in a grant agreement):

 

			
	 	    (1) 
	
    “Affiliate” shall have the meaning set forth in
    Rule 12b-2
    under Section 12 of the Exchange Act.

	 
	 	    (2) 
	
    “Beneficial Owner” shall have the meaning set
    forth in
    Rule 13d-3
    under the Exchange Act.

	 
	 	    (3) 
	
    “Cause” means (1) the continued failure by
    the Participant to substantially perform the Participant’s
    duties with the Company or a Subsidiary (other than any such
    failure resulting from the Participant’s incapacity due to
    physical or mental illness), (2) the engaging by the
    Participant in conduct which is demonstrably injurious to the
    Company, monetarily or otherwise, (3) the Participant
    committing any felony or any crime involving fraud, breach of
    trust or misappropriation or (4) any breach or violation of
    any agreement relating to the Participant’s employment with
    the Company or a Subsidiary where the Company or a Subsidiary,
    in its discretion, determines that such breach or violation
    materially and adversely affects the Company.

	 
	 	    (4) 
	
    A “Change in Control” shall be deemed to have
    occurred if the event set forth in any one of the following
    paragraphs shall have occurred:

 

			
	 	    (i) 
	
    any Person is or becomes the Beneficial Owner, directly or
    indirectly, of securities of the Company (not including in the
    securities beneficially owned by such Person any securities
    acquired directly from the Company other than securities
    acquired by virtue of the exercise of a conversion or similar
    privilege or right unless the security being so converted or
    pursuant to which such right was exercised was itself acquired
    directly from the Company) representing 20% or more of
    (A) the then outstanding shares of Common Stock of the
    Company or (B) the combined voting power of the
    Company’s then outstanding voting securities entitled to
    vote generally in the election of directors; or

	 
	 	    (ii) 
	
    the following individuals cease for any reason to constitute a
    majority of the number of directors then serving on the Board of
    Directors (the “Incumbent Board”): individuals who, on
    the Effective Date, constitute the Board of Directors and any
    new director (other than a director whose initial assumption of
    office is in connection with an actual or threatened election
    contest, including, without limitation, a consent solicitation,
    relating to the election of directors of the Company) whose
    appointment or election by the Board of Directors or nomination
    for election by the Company’s stockholders was approved or
    recommended by a vote of at least two-thirds of the directors
    then still in office who either were directors on the Effective
    Date or whose appointment, election or nomination for election
    was previously so approved or recommended; or

    

    A-10

 

 

			
	 	    (iii) 
	
    there is consummated a merger or consolidation of the Company or
    any direct or indirect Subsidiary of the Company with any other
    corporation, other than a merger or consolidation pursuant to
    which (A) the voting securities of the Company outstanding
    immediately prior to such merger or consolidation will continue
    to represent (either by remaining outstanding or by being
    converted into voting securities of the surviving entity or any
    parent thereof) more than 50% of the outstanding shares of
    common stock, and the combined voting power of the then
    outstanding voting securities entitled to vote generally in the
    election of directors, as the case may be, of the Company or
    such surviving entity or any parent thereof outstanding
    immediately after such merger or consolidation, (B) no
    Person will become the Beneficial Owner, directly or indirectly,
    of securities of the Company or such surviving entity or any
    parent thereof representing 20% or more of the outstanding
    shares of common stock or the combined voting power of the
    outstanding voting securities entitled to vote generally in the
    election of directors (except to the extent that such ownership
    existed prior to such merger or consolidation) and
    (C) individuals who were members of the Incumbent Board
    will constitute at least a majority of the members of the board
    of directors of the corporation (or any parent thereof)
    resulting from such merger or consolidation; or

	 
	 	    (iv) 
	
    the stockholders of the Company approve a plan of complete
    liquidation or dissolution of the Company or there is
    consummated an agreement for 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 Company’s assets to an entity,
    (A) more than 50% of the outstanding shares of common
    stock, and the combined voting power of the then outstanding
    voting securities entitled to vote generally in the election of
    directors, as the case may be, of which (or of any parent of
    such entity) is owned by stockholders of the Company in
    substantially the same proportions as their ownership of the
    Company immediately prior to such sale, (B) in which (or in
    any parent of such entity) no Person is or becomes the
    Beneficial Owner, directly or indirectly, of securities of the
    Company representing 20% or more of the outstanding shares of
    common stock resulting from such sale or disposition or the
    combined voting power of the outstanding voting securities
    entitled to vote generally in the election of directors (except
    to the extent that such ownership existed prior to such sale or
    disposition) and (C) in which (or in any parent of such
    entity) individuals who were members of the Incumbent Board will
    constitute at least a majority of the members of the board of
    directors.

 

			
	 	    (5) 
	
    “Effective Date” means the date set forth in
    Section 3(a) hereof.

	 
	 	    (6) 
	
    “Good Reason” means the occurrence without the
    affected Participant’s written consent, of any of the
    following:

 

			
	 	    (i) 
	
    the assignment to the Participant of duties that are materially
    inconsistent with the Participant’s position (including,
    without limitation, offices or titles), authority, duties or
    responsibilities immediately prior to a Change in Control (other
    than pursuant to a transfer or promotion to a position of equal
    or enhanced responsibility or authority) or any other action by
    the Company or a Subsidiary which results in a diminution in
    such position, authority, duties or responsibilities, excluding
    for this purpose an isolated, insubstantial and inadvertent
    action not taken in bad faith and which is remedied by the
    Company or a Subsidiary promptly after receipt of notice thereof
    given by the Participant, provided, however, that any such
    assignment or diminution that is primarily a result of the
    Company or a Subsidiary no longer being a publicly traded entity
    or becoming a subsidiary or division of another entity shall not
    be deemed “Good Reason” for purposes of the Plan,
    except that a Participant shall have Good Reason if the Company
    is no longer a publicly traded entity and, immediately before
    the Change in Control that caused the Company no longer to be a
    publicly traded entity, substantially all of the
    Participant’s duties and responsibilities related to public
    investors or government agencies that regulate publicly traded
    entities;

	 
	 	    (ii) 
	
    change in the location of such Participant’s principal
    place of business by more than 50 miles when compared to
    the Participant’s principal place of business immediately
    before a Change in Control;

	 
	 	    (iii) 
	
    a reduction in the Participant’s annual base salary or
    annual incentive opportunity from that in effect immediately
    before a Change in Control;

	 
	 	    (iv) 
	
    a material increase in the amount of business travel required of
    the Participant when compared to the amount of business travel
    required immediately before a Change in Control; and

	 
	 	    (v) 
	
    the failure by 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 expressly

    

    A-11

 

			
	 	
	
    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 succession had taken place, or to otherwise convert or
    replace the Awards under the Plan.

 

			
	 	    (7) 
	
    “Person” shall have the meaning given in
    Section 3(a)(9) of the Exchange Act, as modified and used
    in Sections 13(D) and 14(D) thereof, except that such term
    shall not include (1) the Company or any of its Affiliates,
    (2) a trustee or other fiduciary holding securities under
    an employee benefit plan of the Company or any of its
    Subsidiaries, (3) an underwriter temporarily holding
    securities pursuant to an offering of such securities or
    (4) a corporation owned, directly or indirectly, by the
    stockholders of the Company in substantially the same
    proportions as their ownership of stock of the Company.

	 
	 	    (8) 
	
    “Severance” means from the date of a Change in
    Control until the second anniversary of the Change in Control,
    the termination of a Participant’s employment with the
    Company or a Subsidiary (A) by the Company or a Subsidiary,
    other than for Cause or pursuant to mandatory retirement
    policies of the Company or a Subsidiary that existed prior to
    the Change in Control or (B) by the Participant for Good
    Reason.

 

    A Participant will not be considered to have incurred a
    Severance if his or her employment is discontinued by reason of
    the Participant’s death or a physical or mental condition
    causing such Participant’s inability to substantially
    perform his or her duties with the Company or a Subsidiary,
    including, without limitation, such condition entitling him or
    her to benefits under any sick pay or disability income policy
    or program of the Company or a Subsidiary.

 

    A Participant who seeks to terminate employment for Good Reason
    must provide the Company or a Subsidiary with thirty days
    advanced written notice of his or her intention to terminate
    employment for Good Reason and shall only be entitled to
    terminate employment for Good Reason if the Company or a
    Subsidiary fails to cure the alleged Good Reason to the
    reasonable satisfaction of the Participant during such
    thirty-day
    period.

 

		
	
    14.  
	
    AMENDMENT AND
    TERMINATION.

 

    The Board of Directors may terminate the Plan at any time,
    except with respect to grants then outstanding. The Board of
    Directors may amend the Plan at any time and from time to time
    in such respects as the Board of Directors may deem necessary or
    appropriate without approval of the shareholders, unless such
    approval is necessary in order to comply with applicable laws,
    including the Exchange Act and the Code, or the rules and
    regulations of any securities exchange on which the Common Stock
    is listed. In no event may the Board of Directors amend the Plan
    without the approval of the shareholders to (i) increase
    the maximum number of shares of Common Stock which may be issued
    pursuant to the Plan, (ii) increase any limitation set
    forth in the Plan on the number of shares of Common Stock which
    may be issued, or the aggregate value of Awards which may be
    made, in respect of any type of grant to any single Participant
    during any specified period, (iii) reduce the minimum
    exercise price for Stock Options and Stock Appreciation Rights,
    (iv) change the restrictions on the repricing of Stock
    Options or Stock Appreciation Rights contained in the
    penultimate sentence of Sections 6(b) or 7(b) of the Plan,
    or (v) change the Performance Measure criteria applicable
    to any Qualified Performance-Based Award identified in
    Section 9(c) of the Plan.

 

    Subject to Sections 6(b) and 7(b) hereof, the Committee may
    amend the terms of any Award granted under the Plan
    prospectively or retroactively, except in the case of a
    Qualified Performance-Based Award where such action would result
    in the loss of the otherwise available exemption of such Award
    under Section 162(m) of the Code. Subject to
    Section 4(c) above, no amendment shall materially impair
    the rights of any Participant without his or her consent.

 

		
	
    15.  
	
    MISCELLANEOUS.

 

    (a) WITHHOLDING TAXES.  All Awards under
    the Plan will be made subject to any applicable withholding for
    taxes of any kind. The Company shall have the right to deduct
    from any amount payable under the Plan, including delivery of
    shares of Common Stock to be made under the Plan, all federal,
    state, city, local or foreign taxes of any kind required by law
    to be withheld with respect to such payment and to take such
    other actions as may be necessary in the opinion of the Company
    to satisfy all obligations for the payment of such taxes. If
    shares of Common Stock are used to satisfy withholding taxes,
    such shares shall be valued based on the Fair Market Value
    thereof on the date when the withholding for taxes is required
    to be made and shall be withheld only up to the minimum required
    tax withholding rates or such other rate that will not trigger a
    negative accounting impact on the

    

    A-12

 

    Company. The Company shall have the right to require a
    Participant to pay cash to satisfy withholding taxes as a
    condition to the payment of any amount (whether in cash or
    shares of Common Stock) under the Plan.

 

    (b) SUBSTITUTE AWARDS FOR AWARDS GRANTED BY OTHER
    ENTITIES.  Substitute Awards may be granted under
    the Plan for grants or awards held by employees of a company or
    entity who become Employees as a result of the acquisition,
    merger or consolidation of the employer company by or with the
    Company or a Subsidiary. Except as otherwise provided by
    applicable law and notwithstanding anything in the Plan to the
    contrary, the terms, provisions and benefits of the Substitute
    Awards so granted may vary from those set forth in or required
    or authorized by this Plan to such extent as the Committee at
    the time of the grant may deem appropriate to conform, in whole
    or part, to the terms, provisions and benefits of the grants or
    awards in substitution for which they are granted.

 

    (c) NO RIGHT TO EMPLOYMENT.  Neither the
    adoption of the Plan nor the making of any grant or Award shall
    confer upon any Employee any right to continued employment with
    the Company or any Subsidiary, nor shall it interfere in any way
    with the right of the Company or any Subsidiary to terminate the
    employment of any Employee at any time, with or without cause.

 

    (d) UNFUNDED PLAN.  The Plan shall be
    unfunded and the Company shall not be required to segregate any
    assets that may at any time be represented by Awards under the
    Plan. Any liability of the Company to any person with respect to
    any Award under the Plan shall be based solely upon any
    contractual obligations that may be effected pursuant to the
    Plan. No such obligation of the Company shall be deemed to be
    secured by any pledge of, or other encumbrance on, any property
    of the Company.

 

    (e) PAYMENTS TO TRUST.  The Committee is
    authorized to cause to be established a trust agreement or
    several trust agreements whereunder the Committee may make
    payments of amounts due or to become due to Participants in the
    Plan.

 

    (f) ENGAGING IN COMPETITION WITH
    COMPANY.  In the event a Participant terminates
    his or her employment with the Company or a Subsidiary for any
    reason whatsoever, and within eighteen (18) months after
    the date thereof accepts employment with any competitor of, or
    otherwise engages in competition with, the Company, the
    Committee, in its sole discretion, may require such Participant
    to return, or (if not received) to forfeit, to the Company the
    economic value of any Award which is realized or obtained
    (measured at the date of exercise, vesting or payment) by such
    Participant (i) at any time after the date which is six
    months prior to the date of such Participant’s termination
    of employment with the Company or (ii) during such other
    period as the Committee may determine. The provisions of this
    Section 15(f) shall cease to have any force or effect
    whatsoever immediately upon the occurrence of any Change in
    Control described at Section 13 hereof.

 

    (g) OTHER COMPANY BENEFIT AND COMPENSATION
    PROGRAMS.  Payments and other benefits received by
    a Participant under an Award made pursuant to the Plan shall not
    be deemed a part of a Participant’s regular, recurring
    compensation for purposes of any termination indemnity or
    severance pay law of any country and shall not be included in,
    nor have any effect on, the determination of benefits under any
    pension or other employee benefit plan or similar arrangement
    provided by the Company or any Subsidiary, unless
    (i) expressly so provided by such other plan or arrangement
    or (ii) the Committee expressly determines that an Award or
    a portion thereof should be included as recurring compensation.
    Nothing contained in the Plan shall prohibit the Company or any
    Subsidiary from establishing other special awards, incentive
    compensation plans, compensation programs and other similar
    arrangements providing for the payment of performance, incentive
    or other compensation to Employees or Directors. Payments and
    benefits provided to any Employee or Director under any other
    plan, including, without limitation, any stock option, stock
    award, restricted stock, deferred compensation, savings,
    retirement or other benefit plan or arrangement, shall be
    governed solely by the terms of such other plan.

 

    (h) SECURITIES LAW RESTRICTIONS.  In no
    event shall the Company be obligated to issue or deliver any
    shares of Common Stock if such issuance or delivery shall
    constitute a violation of any provisions of any law or
    regulation of any governmental authority or securities exchange
    on which the Common Stock is listed. No shares of Common Stock
    shall be issued under the Plan unless counsel for the Company
    shall be satisfied that such issuance will be in compliance with
    all applicable federal and state securities laws and regulations
    and all requirements of any securities exchange on which the
    Common Stock is listed.

 

    (i) GRANT AGREEMENTS.  Each grant of an
    Award under the Plan shall be evidenced by a grant agreement, in
    a form specified by the Committee, which shall set forth the
    terms and conditions of the grant and such related matters as
    the Committee shall, in its sole discretion, determine
    consistent with this Plan. A grant agreement may be in an
    electronic medium, may be limited to a notation on the books and
    records of the Company and, unless determined otherwise by the
    Committee, need not be signed by a representative of the Company
    or a Participant.

    

    A-13

 

    (j) SEVERABILITY.  In the event any
    provision of the Plan shall be held to be invalid or
    unenforceable for any reason, such invalidity or
    unenforceability shall not affect the remaining provisions of
    the Plan.

 

    (k) GOVERNING LAW.  The Plan shall be
    governed by and construed in accordance with the laws of the
    State of Ohio.

 

    (l) COMPLIANCE WITH SECTION 409A OF THE
    CODE.  Awards granted under the Plan shall be
    designed and administered in such a manner that they are either
    exempt from the application of, or comply with, the requirements
    of Section 409A of the Code. To the extent that the
    Committee determines that any Award granted under the Plan is
    subject to Section 409A of the Code, the grant agreement
    shall incorporate the terms and conditions necessary to avoid
    the imposition of an additional tax under Section 409A of
    the Code upon a Participant. Notwithstanding any other provision
    of the Plan or any grant agreement (unless the grant agreement
    provides otherwise with specific reference to this Section), an
    Award shall not be granted, deferred, accelerated, extended,
    paid out, settled, substituted or modified under this Plan in a
    manner that would result in the imposition of an additional tax
    under Section 409A of the Code upon a Participant. Although
    the Company intends to administer the Plan so that Awards will
    be exempt from, or will comply with, the requirements of
    Section 409A of the Code, the Company does not warrant that
    any Award under the Plan will qualify for favorable tax
    treatment under Section 409A of the Code or any other
    provision of federal, state, local, or
    non-United
    States law. Neither the Company, its Subsidiaries, nor their
    respective directors, officers, employees or advisers shall be
    liable to any Participant (or any other individual claiming a
    benefit through the Participant) for any tax, interest, or
    penalties the Participant might owe as a result of the grant,
    holding, vesting, exercise or payment of any Award under the
    Plan.

    

    A-14

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