Document:

exv10w1

Exhibit 10.1

Visteon Corporation

One Village Center Drive

Van Buren Township, MI 48111

May 11, 2011

Mr. David Zales

Alden Global Distressed Opportunities Master Fund, L.P.

c/o Alden Global Capital

885 Third Avenue

New York, NY 10022

Dear Mr. Zales:

     This letter constitutes the agreement (the “Agreement”) among Alden Global Distressed
Opportunities Master Fund, L.P., a Cayman Islands limited partnership, on behalf of itself and its
affiliated funds, persons and entities, both current and future (collectively, “Alden”),
and Visteon Corporation, a Delaware corporation (the “Company”).

     WHEREAS, the Company and Alden have agreed that it is in their mutual interests to enter into
this Agreement, among other things, to set forth certain agreements concerning the composition of
the board of directors of the Company (the “Board”); and

     WHEREAS, Mr. William E. Redmond, Jr. has announced that he is resigning from the Board
effective May 20, 2011.

     NOW, THEREFORE, in consideration of the promises and the representations, warranties and
agreements contained herein, and other good and valuable consideration, the parties hereto mutually
agree as follows:

     1. Upon issuance of the press release referred to in Section 7, Alden shall withdraw its
notice of intent to nominate individuals for election to the Board at the Company’s 2011 annual
meeting of stockholders (the “2011 Annual Meeting”).

     2. As promptly as practicable following the 2011 Annual Meeting, but in any event no later
than August 1, 2011, the Board, pursuant to the powers granted to the Board under Article Eighth of
the Second Amended and Restated Certificate of Incorporation of the Company (the
“Charter”), shall increase the size of the Board by one (such that there will be ten total
seats on the Board and there will be two vacancies following Mr. Redmond’s resignation and the
increase in the size of the Board) and appoint two persons selected by the Board from a pool of
candidates recommended by Alden (such persons selected by the Board, the “Appointed
Directors”) to fill the two vacancies on the Board and to serve in such capacity from such date
of appointment through the date of the Company’s 2012 annual meeting of stockholders (the “2012
Annual Meeting”). Alden shall recommend candidates who possess the skills and qualifications
necessary (it being understood that a candidate’s age shall not be a basis which precludes such
candidate from being added to the pool by Alden) to serve on the board of directors of a large

 

 

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Page 2

public company, and the Board shall act reasonably and consistent with its fiduciary duties in
evaluating such candidates. Alden is initially proposing three candidates, which it has identified
to the Board, for consideration by the Board. The Board shall advise Alden no later than 5 business
days after the 2011 Annual Meeting whether it will appoint two of such candidates to the Board. If
the Board declines to appoint two of such candidates to the Board, Alden shall continue to
recommend new candidates as promptly as practicable until the Board has appointed two such
candidates as the Appointed Directors. The Board shall respond to Alden within 20 days of any such
recommendation as to its decision.

     3. Concurrently with the appointment of the Appointed Directors, the Board shall, consistent
with its fiduciary duties, consider in good faith each Appointed Director’s skills and
qualifications and appoint an Appointed Director to each of the following committees of the Board:
the Corporate Governance and Nominating Committee, the Finance Committee and the Organization and
Compensation Committee.

     4. Alden shall (a) in the case of all shares of the Company’s common stock (the “Common
Stock”) owned of record by it as of the record date for the 2011 Annual Meeting (the
“Record Date”), and (b) in the case of all shares of Common Stock beneficially owned by
Alden as of the Record Date (whether held in street name or by some other arrangement, but
excluding any shares it may be deemed to beneficially own by virtue of its owning cash-settled
total return equity and warrant swaps), instruct the record holder to: in each case at the 2011
Annual Meeting, (i) publicly support and vote for the election of each of the incumbent directors;
(ii) publicly support and vote for ratification of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm for fiscal year 2011; and (iii) vote to abstain or
against any shareholder nominations for director or shareholder proposals (whether made pursuant to
Rule 14a-8 or Rule 14a-4 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) which are not approved and recommended by the Board. The Company represents that it is
not aware of any shareholder nominations for directors or shareholder proposals to be voted on at
the 2011 Annual Meeting.

     5. Alden shall not, except as otherwise set forth in this Agreement, from the date of this
Agreement until the earlier of (i) (A) 90 days prior to the date of the 2012 Annual Meeting,
provided, that if a notice to the Secretary of the Company (the “ Secretary”) of nominations
of directors for election to the Board or the proposal of business at the 2012 Annual Meeting must
be received prior to such date to be considered timely, such date shall instead be 30 days prior to
the date on which such notice must be received by the Secretary to be considered timely, if by such
date either (x) the Corporate Governance and Nominating Committee of the Company has not notified
Alden and each of the Appointed Directors that it has resolved to recommend to the Board that the
Board nominate, and the Board has agreed to nominate, each of the Appointed Directors for election
to the Board at the 2012 Annual Meeting, or (y) the Corporate Governance and Nominating Committee
of the Company has so notified Alden and each of the Appointed Directors but (1) either of the
Appointed Directors has declined to stand for election as a Company nominee and has notified the
Company of same or (2) Alden has, within 5 business days of receiving such notification by the
Company, notified the Company that it requests that the Board not renominate the Appointed
Directors; or (B) the date immediately following the 2012 Annual Meeting if (x) the Board has
agreed to renominate each of the Appointed Directors

 

 

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Page 3

for election at the 2012 Annual Meeting, (y) both of the Appointed Directors has agreed to
stand for election as a Company nominee and has notified the Company of same, and (z) Alden has
explicitly agreed to the renomination of, or has not requested that the Company not renominate, the
Appointed Directors; or (ii) such date that the Company has materially breached any of its
commitments or obligations under this Agreement, except that if such material breach can be cured,
Alden shall provide written notice to the Company that the Company has materially breached its
commitments or obligations under this Agreement and the Company shall have an additional 10 days
after the date of such written notice within which to cure its material breach (the “Standstill
Period”):

          (a) make, or in any way participate, directly or indirectly, in any “solicitation” (as such
term is used in the proxy rules of the Securities and Exchange Commission (the “SEC”)) of
proxies or consents, conduct or suggest any binding or nonbinding referendum or resolution or seek
to advise, encourage or influence any individual, partnership, corporation, limited liability
company, group, association or entity (collectively, a “Person”) with respect to the voting
of any of the Common Stock;

          (b) initiate, propose or otherwise “solicit” (as such term is used in the proxy rules of the
SEC) shareholders of the Company for the approval of shareholder proposals, or cause or encourage
any Person to initiate any such shareholder proposal;

          (c) propose or nominate, or cause or encourage any Person to propose or nominate, any
candidates to stand for election to the Board, or seek the removal of any member of the Board;

          (d) form, join or otherwise participate in any “partnership, limited partnership, syndicate or
other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common
Stock, other than a group consisting of members of Alden, or deposit any shares of Common Stock in
a voting trust or similar arrangement, or subject any shares of Common Stock to any voting
agreement or pooling arrangement, or grant any proxy with respect to any shares of Common Stock
(other than to a designated representative of the Company pursuant to a proxy statement of the
Company);

          (e) seek to call, or to request the call of, or call a special meeting of the shareholders of
the Company, or make a request for a list of the Company’s shareholders or other Company records;

          (f) take any public action alone or in concert with others to control or seek to control, or
to influence or seek to influence, the management, the Board or the policies of the Company;
provided, however, that nothing herein shall prohibit Alden from complying with
legal or regulatory requirements, including, without limitation, the filing of any report or
schedule required to be filed with the SEC; or

          (g) otherwise take, or solicit, cause or encourage others to take, any action inconsistent
with any of the foregoing.

 

 

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Page 4

     For the avoidance of doubt, any actions of an Appointed Director taken in his or her capacity
as a member of the Board or any committee thereof shall not be deemed to violate the foregoing
clauses (a) through (g).

     6. The Company represents and warrants that, at all times since October 1, 2010, including the
date hereof, the Company has been in an Unrestricted Period (as defined in the Charter) and does
not reasonably expect that the Company will enter an Unrestricted Period prior to June 30, 2011.

     7. The Company shall issue a press release in the form attached hereto as Exhibit A (the
“Press Release”) as soon as practicable on or after the date hereof, but in no event later
than May 12, 2011, and the Company shall file with the SEC a corresponding Form 8-K that includes
both the Press Release and this Agreement.

     8. The Company and Alden each acknowledge and agree that (a) a breach or a threatened breach
by either party may give rise to irreparable injury inadequately compensable in damages and
accordingly each party shall be entitled to injunctive relief, without proof of actual damages, to
prevent a breach or threatened breach of the provisions hereof and to enforce specifically the
terms and provisions hereof in any state or federal court having jurisdiction, (b) neither party
shall plead in defense for any such relief that there would be an adequate remedy at law, (c) any
applicable right or requirement that a bond be posted by either party is waived and (d) such
remedies shall not be the exclusive remedies for a breach of this Agreement, but will be in
addition to all other remedies available at law or in equity.

     9. All notices and other communications under this Agreement shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in person or by
facsimile, or by Federal Express or registered or certified mail, postage pre-paid, return receipt
requested, as follows:

	 	 	 	If to the Company:

	 	 	 	Visteon Corporation

One Village Center Drive

Van Buren Township, MI 48111

Attn: General Counsel

	 	 	 	with a copy (which shall not constitute notice) to:

	 	 	 	Kirkland & Ellis LLP

300 North LaSalle

Chicago, IL 60654

Attn: Gerald Nowak

 

 

May 11, 2011

Page 5

	 	 	 	If to Alden:

	 	 	 	Alden Global Distressed Opportunities Master Fund, L.P.

c/o Alden Global Capital

885 Third Avenue

New York, NY 10022

Attn: David Zales

	 	 	 	with a copy (which shall not constitute notice) to:

	 	 	 	Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

	 	Attn: 	Marc Weingarten

David Rosewater

     10. This Agreement may be executed by the signatories hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.

     11. This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware, without regard to its conflict of laws principles. The parties hereto consent to
personal jurisdiction and venue in any action to enforce this Agreement in any court of competent
jurisdiction located in New York, New York.

     12. This Agreement constitutes the only agreement between Alden and the Company with respect
to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written. This Agreement shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement may not be assigned by
any party without the express written consent of the other party or parties. No amendment,
modification, supplement or waiver of any provision of this Agreement may in any event be effective
unless in writing and signed by the party or parties affected thereby. Alden acknowledges that the
U.S. securities laws prohibit any person who has access to material nonpublic information from
trading while in possession of such information or providing that information to others in certain
circumstances.

     13. The Company represents and warrants that (a) the Company has the power and authority to
execute, deliver and carry out the terms and provisions of this Agreement and to consummate the
transactions contemplated hereby, and (b) this Agreement has been duly and validly authorized,
executed and delivered by the Company, constitutes a valid and binding obligation and agreement of
the Company and is enforceable against the Company in accordance with its terms.

     14. Alden represents and warrants that (a) it has the power and authority to execute, deliver
and carry out the terms and provisions of this Agreement and to consummate the transactions
contemplated hereby, and (b) this Agreement has been duly and validly authorized,

 

 

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executed and delivered by Alden, constitutes a valid and binding obligation and
agreement of Alden and is enforceable against Alden in accordance with its terms.

     15. Alden, for the benefit of the Company and each of the Company’s controlling persons,
officers, directors, stockholders, agents, affiliates, employees, attorneys and assigns, past and
present, in their capacity as such (the Company and each such person being a “Company Released
Person”), hereby forever waives and releases, and covenants not to sue, any of the Company
Released Persons for any and all claims, causes of action, actions, judgments, liens, debts,
contracts, indebtedness, damages, losses, liabilities, rights, interests and demands of whatsoever
kind or character (other than fraud) (collectively, “Claims”) based on any event, fact,
act, omission, or failure to act by the Company Released Persons, whether known or unknown,
occurring or existing prior to the date hereof; provided, however, this waiver and
release and covenant not to sue shall not include any Claims (i) arising out of or related to any
obligations under, or breach of, this Agreement, or (ii) any acts which are criminal;
provided, further, that this waiver and release shall not prohibit Alden’s
receipt of proceeds in any class action lawsuit initiated by a Person unaffiliated with Alden on
the same basis as the Company’s other non-initiating stockholders within such class. The Company,
for the benefit of Alden and each of its controlling persons, officers, directors, stockholders,
agents, affiliates, employees, attorneys and assigns, past and present, in their capacity as such
(each such person being an “Alden Released Person”), hereby forever waives and releases and
covenants not to sue, for any Claim based on any event, fact, act, omission or failure to act by
such Alden Released Person, whether known or unknown, occurring or existing prior to the date
hereof; provided, however, this waiver and release and covenant not to sue shall
not include any Claims arising out of or related to any obligations under, or breach of, this
Agreement and does not extend to acts which are criminal.

     16. During the Standstill Period, Alden shall not solicit, cause or encourage others to, make
any comments or statements regarding the Company or its current or former officers, directors or
employees, which are derogatory or detrimental to, or which disparage, any of the Company or its
current or former officers, directors or employees, provided, however, that nothing
in this Agreement to the contrary shall prohibit Alden from (i) making public statements (including
statements contemplated by Rule 14a-1(1)(2)(iv) under the Exchange Act), (ii) engaging in
discussions with other stockholders or (iii) soliciting, or encouraging or participating in the
solicitation of, proxies or consents with respect to voting securities of the Company (so long as
such discussions are in compliance with subsection 5(d) hereof) in each case with respect to any
transaction that has been publicly announced by the Company involving (1) the recapitalization of
the Company, (2) an acquisition, disposition or sale of assets or a business by the Company where
the consideration to be received or paid in such transaction has a value of $800 million or more or
(3) a change of control of the Company. During the Standstill Period, neither the Company nor any
of its officers or directors shall, nor shall any of them solicit, cause or encourage others to,
make any comments or statements regarding Alden or any of its respective partners, officers,
directors or employees, which are derogatory or detrimental to, or which disparage, any of them.
The foregoing shall not apply to compelled testimony, either by legal process, subpoena or
otherwise, or to communications that are required by an applicable fiduciary or legal obligation
including, without limitation, (i) those communications that are

 

 

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Page 7

that are subject to contractual provisions providing for confidential disclosure
and (ii) the filing of any report or schedule that is required by law to be
filed with the SEC.

[signature page follows]

 

 

	 	 	 	 	 
	 	Very truly yours,

VISTEON CORPORATION

 	 
	 	By:  	/s/ Donald J. Stebbins
 	 
	 	 	Name:  	Donald J. Stebbins 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 
	 

Accepted and agreed to:

ALDEN GLOBAL DISTRESSED 

OPPORTUNITIES MASTER FUND, L.P., on 

behalf of itself and its affiliates

By: Alden Global Capital Limited, its investment
manager

By: Alden Global Capital, a division of Smith Management, LLC, as service provider to Alden Global
Capital Limited

	 	 	 	 	 
	 	 	 
	By:  	/s/ David B. Gales
 	 	 
	 	Name:  	David B. Gales 	 	 
	 	Title:  	General Counselexv10w1

Exhibit 10.1

THE TIMKEN COMPANY 2011 LONG-TERM INCENTIVE PLAN

     1. Purpose. The purpose of The Timken Company 2011 Long-Term Incentive Plan (the “Plan”), is
to enable The Timken Company, an Ohio corporation (the “Corporation”), and its Subsidiaries, to
attract, retain and motivate key employees by providing such persons incentives and rewards for
superior performance and to promote equity participation by key employees and directors of the
Corporation, thereby reinforcing a mutuality of interest with other shareholders, and permitting
key employees and directors to share in the Corporation’s growth.

     2. Definitions. As used in this Plan,

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

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

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

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

	 	(i)	 	The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934) of 30% or more of either: (A) the then-outstanding Common Shares
or (B) the combined voting power of the then-outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (“Voting Shares”);
provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control: (1) any acquisition
directly from the Corporation, (2) any acquisition by the Corporation, (3) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by
the Corporation or any Subsidiary, or (4) any acquisition by any Person pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (iii); or
	 
	 	(ii)	 	Individuals who, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason (other than death or disability) to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the Effective Date whose election, or nomination for election
by the Corporation’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (either by a specific vote or by approval
of the proxy statement of the Corporation in which such person is named as a nominee
for director, without objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or

1

 

	 	(iii)	 	Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Corporation (a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Common Shares and Voting Shares immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 66-2/3% of,
respectively, the then-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 entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such transaction owns
the Corporation or all or substantially all of the Corporation’s assets either directly
or through one or more subsidiaries) in substantially the same proportions relative to
each other as their ownership, immediately prior to such Business Combination, of the
Common Shares and Voting Shares of the Corporation, as the case may be, (B) no Person
(excluding any entity resulting from such Business Combination or any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or such entity
resulting from such Business Combination) beneficially owns, directly or indirectly,
30% or more of, respectively, the then-outstanding shares of common stock of the entity
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such Business
Combination; or
	 
	 	(iv)	 	Approval by the shareholders of the Corporation of a complete liquidation or
dissolution of the Corporation.

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

“Committee” means the committee described in Section 18(a) of this Plan.

“Common Shares” means (i) shares of the common stock of the Corporation and (ii) any
security into which Common Shares may be converted by reason of any transaction or event of
the type referred to in Section 12 of this Plan.

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

“Date of Grant” means the date specified by the Committee on which a grant of Option Rights,
Appreciation Rights, Performance Shares or Performance Units or a grant or sale of
Restricted Shares, Restricted Stock Units, Deferred Shares or Common Shares shall become
effective, which shall not be earlier than the date on which the Committee takes

2

 

action with respect thereto, including the date on which a grant of Common Shares to a
Nonemployee Director becomes effective pursuant to Section 10 of this Plan.

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

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

“Detrimental Activity” means:

	 	(i)	 	Engaging in any activity, as an employee, principal, agent, or consultant for
another entity that competes with the Corporation in any actual, researched, or
prospective product, service, system, or business activity for which the Participant
has had any direct responsibility during the last two years of his or her employment
with the Corporation or a Subsidiary, in any territory in which the Corporation or a
Subsidiary manufactures, sells, markets, services, or installs such product, service,
or system, or engages in such business activity;
	 
	 	(ii)	 	Soliciting any employee of the Corporation or a Subsidiary to terminate his or
her employment with the Corporation or a Subsidiary;
	 
	 	(iii)	 	The disclosure to anyone outside the Corporation or a Subsidiary, or the use
in other than the Corporation or a Subsidiary’s business, without prior written
authorization from the Corporation, of any confidential, proprietary or trade secret
information or material relating to the business of the Corporation and its
Subsidiaries, acquired by the Participant during his or her employment with the
Corporation or its Subsidiaries or while acting as a director of or consultant for the
Corporation or its Subsidiaries thereafter;
	 
	 	(iv)	 	The failure or refusal to disclose promptly and to assign to the Corporation
upon request all right, title and interest in any invention or idea, patentable or not,
made or conceived by the Participant during employment by the Corporation and any
Subsidiary, relating in any manner to the actual or anticipated business, research or
development work of the Corporation or any Subsidiary or the failure or refusal to do
anything reasonably necessary to enable the Corporation or any Subsidiary to secure a
patent where appropriate in the United States and in other countries;
	 
	 	(v)	 	Activity that results in Termination for Cause. For the purposes of this
Section, “Termination for Cause” shall mean a termination:

	 	(A)	 	due to the Participant’s willful and continuous gross neglect
of his or her duties for which he or she is employed; or
	 
	 	(B)	 	due to an act of dishonesty on the part of the Participant
constituting a felony resulting or intended to result, directly or indirectly,
in his or her gain for personal enrichment at the expense of the Corporation or
a Subsidiary; or

3

 

	 	(vi)	 	Any other conduct or act determined to be injurious, detrimental or prejudicial
to any significant interest of the Corporation or any Subsidiary unless the Participant
acted in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation.

“Effective Date” means the date that this Plan is approved by the shareholders of the
Corporation.

“Evidence of Award” means an agreement, certificate, resolution or other type or form of
writing or other evidence approved by the Committee which sets forth the terms and
conditions of one or more awards granted under this Plan. An Evidence of Award may be in
any electronic medium, may be limited to notation on the books and records of the
Corporation and, unless otherwise determined by the Committee, need not be signed by a
representative of the Corporation or a Participant.

“Existing Plan” means The Timken Company Long-Term Incentive Plan, as Amended and Restated
as of February 5, 2008.

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

“Incentive Stock Options” means Option Rights that are intended to qualify as “incentive
stock options” under Section 422 of the Code or any successor provision.

“Less-Than-80-Percent Subsidiary” means a Subsidiary with respect to which the Corporation
directly or indirectly owns or controls less than 80 percent of the total combined voting or
other decision-making power.

“Management Objectives” means the measurable performance objective or objectives established
pursuant to this Plan for Participants who have received grants of Performance Shares or
Performance Units or, when so determined by the Committee, Option Rights, Appreciation
Rights, Restricted Shares, Restricted Stock Units, Deferred Shares and dividend equivalents.
Management Objectives may be described in terms of Corporation-wide objectives or
objectives that are related to the performance of the individual Participant or of the
Subsidiary, division, department, region or function within the Corporation or Subsidiary in
which the Participant is employed. The Management Objectives may be made relative to the
performance of other companies or subsidiaries, divisions, departments, regions or functions
within such other companies, and may be made relative to an index or one or more of the
performance objectives themselves. The Compensation Committee may grant awards subject to
Management Objectives that are either Qualified Performance-Based Awards or are not
Qualified Performance-Based Awards. The Management Objectives applicable to any Qualified
Performance-Based Award to a Covered Employee will be based on one or more, or a
combination, of the following criteria: cash flow, comparisons with various stock market
indices, cost of capital, customer service, debt reduction, earnings, earnings before
interest and taxes, earnings per share, economic profit, free cash flow, gross profits,
inventory management, net income, productivity improvement, profit after tax, reduction

4

 

of fixed costs, return on assets, return on equity, return on invested capital, sales,
shareholder return and/or working capital.

If the Committee determines that a change in the business, operations, corporate structure
or capital structure of the Corporation, or the manner in which it conducts its business, or
other events or circumstances render the Management Objectives unsuitable, the Committee may
in its discretion modify such Management Objectives or the related minimum acceptable level
of achievement, in whole or in part, as the Committee deems appropriate and equitable,
except in the case of a Qualified Performance-Based Award (other than in connection with a
Change in Control) where such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code. In such case, the Compensation
Committee will not make any modification of the Management Objectives or minimum acceptable
level of achievement with respect to such Covered Employee.

“Market Value per Share” means as of any particular date the closing sale price of the
Common Shares as reported on The New York Stock Exchange or, if not listed on such exchange,
on any other national securities exchange on which the Common Shares are listed. If the
Common Shares are not traded as of any given date, the Market Value per Share means the
closing price for the Common Shares on the principal exchange on which the Common Shares are
traded for the immediately preceding date on which the Common Shares were traded. If there
is no regular public trading market for the Common Shares, the Market Value per Share of the
Common Shares shall be the fair market value of the Common Shares as determined in good
faith by the Committee. The Committee is authorized to adopt another fair market value
pricing method, provided such method is stated in the Evidence of Award, and is in
compliance with the fair market value pricing rules set forth in Section 409A of the Code.

“Nonemployee Director” means a member of the Board who is not an employee of the Corporation
or any Subsidiary.

“Optionee” means the person named in an Evidence of Award evidencing an outstanding Option
Right.

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

“Option Right” means the right to purchase Common Shares upon exercise of an option granted
pursuant to Section 4 or Section 9 of this Plan.

“Participant” means a person who is selected by the Committee to receive benefits under this
Plan and who is at that time an officer, including without limitation an officer who may
also be a member of the Board, or other key employee of the Corporation or any Subsidiary or
who has agreed to commence serving in any such capacity within 90 days of the Date of Grant,
and shall also include each Nonemployee Director who receives an award pursuant to this
Plan. The term “Participant” shall also include any person who provides services to the
Corporation or a Subsidiary that are equivalent to those typically provided by an employee.

5

 

“Performance Period” means, in respect of a Performance Share or Performance Unit, a period
of time established pursuant to Section 9 of this Plan within which the Management
Objectives relating thereto are to be achieved.

“Performance Share” means a bookkeeping entry that records the equivalent of one Common
Share awarded pursuant to Section 9 of this Plan.

“Performance Unit” means a bookkeeping entry that records a unit equivalent to $100.00 or
such other value as is determined by the Committee awarded pursuant to Section 9 of this
Plan.

“Qualified Performance-Based Award” means any award of Performance Shares, Performance
Units, Restricted Shares or Restricted Stock Units, or portion of such award, to a Covered
Employee that is intended to satisfy the requirements for “qualified performance-based
compensation” under Section 162(m) of the Code.

“Restricted Shares” means Common Shares granted or sold pursuant to Section 6 of this Plan
as to which neither the substantial risk of forfeiture nor the restrictions on transfer
referred to in Section 6 hereof has expired.

“Restricted Stock Unit” means an award made pursuant to Section 7 of this Plan of the right
to receive Common Shares or cash at the end of a specified period.

“Restriction Period” means the period of time during which Restricted Stock Units are
subject to restrictions, as provided in Section 7 of this Plan.

“Rule 16b-3” means Rule 16b-3 of the Securities and Exchange Commission promulgated under
the Securities Exchange Act of 1934 (or any successor rule to the same effect), as in effect
from time to time.

“Spread” means, in the case of a Free-Standing Appreciation Right, the amount by which the
Market Value per Share on the date when any such right is exercised exceeds the Base Price
specified for such right or, in the case of a Tandem Appreciation Right, the amount by which
the Market Value per Share on the date when any such right is exercised exceeds the Option
Price specified for the related Option Right.

“Subsidiary” means a corporation, partnership, joint venture, unincorporated association or
other entity in which the Corporation has a direct or indirect ownership or other equity
interest; provided, however, for purposes of determining whether any person
may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary”
means any corporation in which the Corporation owns or controls directly or indirectly more
than 50 percent of the total combined voting power represented by all classes of stock
issued by such corporation at the time of such grant.

“Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of
this Plan that is granted in tandem with an Option Right or any similar right granted under
any other plan of the Corporation.

6

 

     3. Maximum Shares Available Under the Plan; Life of Plan Limits; Individual Participant
Limits.

	 	(a)	 	Subject to adjustment as provided in Section 12 of this Plan, the maximum
number of Common Shares that may be issued or transferred (i) upon the exercise of
Option Rights or Appreciation Rights, (ii) as Restricted Shares and released from all
substantial risks of forfeiture, (iii) in payment of Restricted Stock Units, (iv) as
Deferred Shares, (v) in payment of Performance Shares or Performance Units that have
been earned, (vi) as Common Share awards to Nonemployee Directors or (vii) in payment
of dividend equivalents paid with respect to awards made under this Plan, shall not in
the aggregate exceed 7,000,000 Common Shares (the “Available Common Shares”), which
Available Common Shares may be Common Shares of original issuance or Common Shares held
in treasury or a combination thereof.
	 
	 	(b)	 	Each Common Share issued or transferred (and, in the case of Restricted Shares,
released from all substantial risks of forfeiture) pursuant to any award (other than an
Option Right or Appreciation Right) granted under this Plan shall, for purposes of
Section 3(a) of this Plan, reduce the number of Available Common Shares by two and
twelve one hundredths (2.12) Common Shares for each such Common Share, instead of one
Common Share. Each Common Share issued or transferred pursuant to any Option Right or
Appreciation Right granted under this Plan shall, for purposes of Section 3(a) of this
Plan, reduce the number of Available Common Shares by one Common Share.
	 
	 	(c)	 	Common Shares covered by an award granted under this Plan shall not be counted
as used unless and until they are actually issued and delivered to a Participant and,
therefore, the total number of Available Common Shares under this Plan as of a given
date shall not be reduced by any Common Shares relating to prior awards that have
expired or have been forfeited and cancelled. Without limiting the generality of the
foregoing, upon payment in cash of the benefit provided by any award granted under this
Plan, any Common Shares that were covered by that award will be available for issue or
transfer hereunder. Notwithstanding anything to the contrary contained herein: (i) if
Common Shares are tendered or otherwise used in payment of the Option Price of an
Option Right, the total number of shares covered by the Option Right being exercised
shall count against the aggregate plan limit described above; (ii) Common Shares
withheld by the Corporation to satisfy tax withholding obligations shall count against
the aggregate plan limit described above; (iii) Common Shares that are repurchased by
the Corporation with Option Right proceeds shall not be added to the aggregate plan
limit described above; and (iv) the gross number of Common Shares covered by an
Appreciation Right, to the extent that it is exercised and settled in Common Shares,
and whether or not Common Shares are actually issued to the Participant upon exercise
of the Appreciation Right, shall be considered issued or transferred pursuant to this
Plan.

7

 

	 	(d)	 	Notwithstanding anything in this Plan to the contrary, and subject to
adjustment as provided in Section 12 of this Plan:

	 	(i)	 	The aggregate number of Common Shares actually issued or
transferred by the Corporation upon the exercise of Incentive Stock Options
shall not exceed 7,000,000 Common Shares;
	 
	 	(ii)	 	No Participant shall be granted Option Rights or Appreciation
Rights, in the aggregate, for more than 500,000 Common Shares during any
calendar year;
	 
	 	(iii)	 	No Participant will be granted Qualified Performance-Based
Awards of Restricted Shares, Restricted Stock Units, Performance Shares or
Performance Units, in the aggregate, for more than 500,000 Common Shares during
any calendar year;
	 
	 	(iv)	 	In no event will any Participant in any calendar year receive a
Qualified Performance-Based Award of Performance Units having an aggregate
maximum value as of their respective Dates of Grant in excess of $3,000,000;
	 
	 	(v)	 	No Nonemployee Director will be granted, in any period of one
calendar year, awards in excess of 6,000 Restricted Shares, 7,500 Common Shares
or 9,000 Option Rights.

	 	(e)	 	Notwithstanding anything in this Plan to the contrary, up to 5% of the maximum
number of Common Shares that may be issued or transferred under this Plan as provided
for in Section 3(a) of this Plan, as may be adjusted under Section 12 of this Plan, may
be used for awards granted under Sections 6 through 9 of this Plan that do not comply
with the three-year or one-year vesting requirements set forth in such Sections of this
Plan plus awards granted under Section 10 of this Plan.

     4. Option Rights. The Committee may, from time to time and upon such terms and conditions as
it may determine, authorize grants to Participants of options to purchase Common Shares. Each such
grant may utilize any or all of the authorizations and shall be subject to all of the requirements
contained in the following provisions:

	 	(a)	 	Each grant shall specify the number of Common Shares to which it pertains,
subject to the limitations set forth in Section 3 of this Plan.
	 
	 	(b)	 	Each grant shall specify an Option Price per Common Share, which shall be equal
to or greater than the Market Value per Share on the Date of Grant.
	 
	 	(c)	 	Each grant shall specify the form of consideration to be paid in satisfaction
of the Option Price and the manner of payment of such consideration, which may include
(i) cash in the form of currency or check or other cash equivalent acceptable to the
Corporation, (ii) nonforfeitable, unrestricted Common Shares, which are already owned
by the Optionee and have a value at the time of exercise

8

 

	 	 	 	that is equal to the total Option Price, (iii) subject to any conditions or
limitations established by the Committee, the Corporation’s withholding Common
Shares otherwise issuable upon exercise of an Option Right pursuant to a “net
exercise” arrangement (it being understood that, solely for purposes of determining
the number of treasury shares held by the Corporation, the Common Shares so withheld
shall not be treated as issued and acquired by the Corporation upon such exercise),
(iv) any other legal consideration that the Committee may deem appropriate,
including without limitation any form of consideration authorized under Section 4(d)
below, on such basis as the Committee may determine in accordance with this Plan and
(v) any combination of the foregoing.
	 
	 	(d)	 	To the extent permitted by law, any grant may provide for deferred payment of
the Option Price from the proceeds of sale through a bank or broker on the date of
exercise of some or all of the Common Shares to which the exercise relates.
	 
	 	(e)	 	Successive grants may be made to the same Participant regardless of whether any
Option Rights previously granted to such Participant remain unexercised.
	 
	 	(f)	 	Each grant shall specify the period or periods of continuous service by the
Optionee with the Corporation or any Subsidiary that is necessary before the Option
Rights or installments thereof shall become exercisable, and any such grant may provide
for the earlier exercisability of such rights in the event of the retirement, death or
disability of the Participant or a Change in Control.
	 
	 	(g)	 	Any grant of Option Rights may specify Management Objectives that must be
achieved as a condition to the exercise of such rights.
	 
	 	(h)	 	Option Rights granted under this Plan may be (i) options that are intended to
qualify under particular provisions of the Code, including without limitation Incentive
Stock Options, (ii) options that are not intended to so qualify or (iii) combinations
of the foregoing. Incentive Stock Options may be granted only to Participants who meet
the definition of “employees” under Section 3401(c) of the Code.
	 
	 	(i)	 	Option Rights granted under this Plan shall not provide for any dividends or
dividend equivalents thereon.
	 
	 	(j)	 	The exercise of an Option Right will result in the cancellation on a Common
Share-for-Common Share basis of any Tandem Appreciation Right authorized under Section
5 of this Plan.
	 
	 	(k)	 	No Option Right granted under this Plan may be exercised more than 10 years
from the Date of Grant.
	 
	 	(l)	 	Each grant shall be evidenced by an Evidence of Award, which shall contain such
terms and provisions as the Committee may determine consistent with this Plan.

9

 

	 	(m)	 	The Committee reserves the discretion after the Date of Grant to provide for
the right to tender in satisfaction of the Option Price nonforfeitable, unrestricted
Common Shares, which are already owned by the Optionee and have a value at the time of
exercise that is equal to the Option Price.

     5. Appreciation Rights. The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize grants to Participants of Appreciation Rights. A Tandem
Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option
Right, to receive from the Corporation an amount determined by the Committee, which will be
expressed as a percentage (not exceeding 100 percent) of the Spread at the time of exercise.
Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the
related Option Rights; provided, however, that a Tandem Appreciation Right awarded
in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock
Option. A Free-Standing Appreciation Right will be a right of the Participant to receive from the
Corporation an amount determined by the Committee, which will be expressed as a percentage (not
exceeding 100 percent) of the Spread at the time of exercise. Each such grant may utilize any or
all of the authorizations and shall be subject to all of the requirements contained in the
following provisions:

	 	(a)	 	Any grant may specify that the amount payable upon the exercise of an
Appreciation Right may be paid by the Corporation in cash, Common Shares or any
combination thereof and may (i) either grant to the Participant or reserve to the
Committee the right to elect among those alternatives or (ii) preclude the right of the
Participant to receive and the Corporation to issue Common Shares or other equity
securities in lieu of cash; provided, however, that no form of
consideration or manner of payment that would cause Rule 16b-3 to cease to apply to
this Plan shall be permitted.
	 
	 	(b)	 	Any grant may specify that the amount payable upon the exercise of an
Appreciation Right shall not exceed a maximum specified by the Committee on the Date of
Grant.
	 
	 	(c)	 	Any grant may specify (i) a waiting period or periods before Appreciation
Rights shall become exercisable and (ii) permissible dates or periods on or during
which Appreciation Rights shall be exercisable.
	 
	 	(d)	 	Any grant may specify that an Appreciation Right may be exercised only in the
event of, or earlier in the event of, the retirement, death or disability of the
Participant or a Change in Control.
	 
	 	(e)	 	Appreciation Rights granted under this Plan shall not provide for any dividends
or dividend equivalents thereon.
	 
	 	(f)	 	Each grant shall be evidenced by an Evidence of Award, which shall describe the
subject Appreciation Rights, identify any related Option Rights, state that the
Appreciation Rights are subject to all of the terms and conditions of this Plan and

10

 

	 	 	 	contain such other terms and provisions as the Committee may determine consistent
with this Plan.
	 
	 	(g)	 	Any grant of Appreciation Rights may specify Management Objectives that must be
achieved as a condition of the exercise of such rights.
	 
	 	(h)	 	Regarding Tandem Appreciation Rights only: Each grant shall provide that a
Tandem Appreciation Right may be exercised only (i) at a time when the related Option
Right (or any similar right granted under any other plan of the Corporation) is also
exercisable and the Spread is positive and (ii) by surrender of the related Option
Right (or such other right) for cancellation.
	 
	 	(i)	 	Regarding Free-Standing Appreciation Rights only:

	 	(i)	 	Each grant shall specify in respect of each Free-Standing
Appreciation Right a Base Price per Common Share, which shall be equal to or
greater than the Market Value per Share on the Date of Grant;
	 
	 	(ii)	 	Successive grants may be made to the same Participant
regardless of whether any Free-Standing Appreciation Rights previously granted
to such Participant remain unexercised;
	 
	 	(iii)	 	Each grant shall specify the period or periods of continuous
employment of the Participant by the Corporation or any Subsidiary that are
necessary before the Free-Standing Appreciation Rights or installments thereof
shall become exercisable; and
	 
	 	(iv)	 	No Free-Standing Appreciation Right granted under this Plan may
be exercised more than 10 years from the Date of Grant.

     6. Restricted Shares. The Committee may also authorize grants or sales to Participants of
Restricted Shares upon such terms and conditions as the Committee may determine. Each such grant or
sale may utilize any or all of the authorizations and shall be subject to all of the requirements
contained in the following provisions:

	 	(a)	 	Each grant or sale shall constitute an immediate transfer of the ownership of
Common Shares to the Participant in consideration of the performance of services,
entitling such Participant to dividend, voting and other ownership rights, subject to
the substantial risk of forfeiture and restrictions on transfer hereinafter referred
to.
	 
	 	(b)	 	Each grant or sale may be made without additional consideration from the
Participant or in consideration of a payment by the Participant that is less than the
Market Value per Share on the Date of Grant.
	 
	 	(c)	 	Each grant or sale shall provide that the Restricted Shares covered thereby
shall be subject to a “substantial risk of forfeiture” within the meaning of Section 83
of the Code for a period to be determined by the Committee on the Date of Grant or

11

 

	 	 	 	until Management Objectives referred to in subparagraph (e) below are achieved. If
the elimination of restrictions is based only on the passage of time rather than the
achievement of Management Objectives, the period of time will be no shorter than
three years, except that the restrictions may be removed ratably during the
three-year period, on an annual basis, as determined by the Committee on the Date of
Grant.
	 
	 	(d)	 	Each grant or sale shall provide that, during the period for which such
substantial risk of forfeiture is to continue, the transferability of the Restricted
Shares shall be prohibited or restricted in the manner and to the extent prescribed by
the Committee on the Date of Grant. Such restrictions may include without limitation
rights of repurchase or first refusal in the Corporation or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture in the hands of any
transferee.
	 
	 	(e)	 	Any grant of Restricted Shares may specify Management Objectives which, if
achieved, will result in termination or early termination of the restrictions
applicable to such Restricted Shares; provided, however, that,
notwithstanding subparagraph (c) above, restrictions relating to Restricted Shares that
vest upon the achievement of Management Objectives may not terminate sooner than one
year from the Date of Grant. Each such grant may specify in respect of such specified
Management Objectives a minimum acceptable level of achievement and may set forth a
formula for determining the number of Restricted Shares on which restrictions will
terminate if performance is at or above the minimum level, but falls short of full
achievement of the specified Management Objectives.
	 
	 	(f)	 	Notwithstanding anything to the contrary contained in this Plan, any grant or
sale of Restricted Shares may provide for the earlier termination of restrictions on
such Restricted Shares in the event of the retirement, death or disability of the
Participant or a Change of Control.
	 
	 	(g)	 	Any grant or sale may require that any or all dividends or other distributions
paid on the Restricted Shares during the period of such restrictions be automatically
sequestered; provided, however, that dividends or other distributions
on Restricted Shares with restrictions that lapse as a result of the achievement of
Management Objectives shall be deferred until and paid contingent upon the achievement
of the applicable Management Objectives. Sequestered dividends or other distribution
may be reinvested on an immediate or deferred basis in additional Common Shares, which
may be subject to the same restrictions as the underlying award or such other
restrictions as the Committee may determine.
	 
	 	(h)	 	Each grant or sale shall be evidenced by an Evidence of Award, which shall
contain such terms and provisions as the Committee may determine consistent with this
Plan. Unless otherwise directed by the Committee, (i) all certificates representing
Restricted Shares will be held in custody by the Corporation until all restrictions
thereon will have lapsed, together with a stock power or powers executed by the
Participant in whose name such certificates are registered,

12

 

	 	 	 	endorsed in blank and covering such Restricted Shares, or (ii) all Restricted Shares
will be held at the Corporation’s transfer agent in book entry form with appropriate
restrictions relating to the transfer of such Restricted Shares.

     7. Restricted Stock Units. The Committee may also authorize the granting or sale of
Restricted Stock Units to Participants upon such terms and conditions as the Committee may
determine. Each such grant or sale may utilize any or all of the authorizations and shall be
subject to all of the requirements contained in the following provisions:

	 	(a)	 	Each grant or sale will constitute the agreement by the Corporation to deliver
Common Shares or cash to the Participant in the future in consideration of the
performance of services, but subject to the fulfillment of such conditions (which may
include the achievement of Management Objectives) during the Restriction Period as the
Committee may specify. If a grant of Restricted Stock Units specifies that the
Restriction Period will terminate only upon the achievement of Management Objectives
then, notwithstanding anything to the contrary contained in subparagraph (c) below,
such Restriction Period may not terminate sooner than one year from the Date of Grant.
Each grant may specify in respect of such Management Objectives a minimum acceptable
level of achievement and may set forth a formula for determining the number of
Restricted Stock Units on which restrictions will terminate if performance is at or
above the minimum level, but falls short of full achievement of the specified
Management Objectives.
	 
	 	(b)	 	Each such grant or sale may be made without additional consideration or in
consideration of a payment by such Participant that is less than the Market Value per
Share at the Date of Grant.
	 
	 	(c)	 	If the Restriction Period lapses only by the passage of time rather than the
achievement of Management Objectives as provided in subparagraph (a) above, each such
grant or sale will be subject to a Restriction Period of not less than three years,
except that a grant or sale may provide that the Restriction Period will expire ratably
during the three-year period, on an annual basis, as determined by the Committee on the
Date of Grant.
	 
	 	(d)	 	Notwithstanding anything to the contrary contained in this Plan, any grant or
sale of Restricted Stock Units may provide for the earlier lapse or modification of the
Restriction Period in the event of the retirement, death or disability of the
Participant or a Change in Control.
	 
	 	(e)	 	During the Restriction Period, the Participant will have no rights of ownership
in the Common Shares deliverable upon payment of the Restricted Stock Units and shall
have no right to vote them, but the Committee may at the Date of Grant, authorize the
payment of dividend equivalents on such Restricted Stock Units on either a current,
deferred or contingent basis, either in cash or in additional Common Shares;
provided, however, that dividends or other distributions on Common
Shares underlying Restricted Stock Units with restrictions that lapse as

13

 

	 	 	 	a result of the achievement of Management Objectives shall be deferred until and
paid contingent upon the achievement of the applicable Management Objectives.
	 
	 	(f)	 	Each grant or sale of Restricted Stock Units will specify the time and manner
of payment of the Restricted Stock Units that have been earned.
	 
	 	(g)	 	Each grant or sale of Restricted Stock Units will be evidenced by an Evidence
of Award and will contain such terms and provisions, consistent with this Plan, as the
Committee may approve.

     8. Deferred Shares. The Committee may also authorize grants or sales of Deferred Shares to
Participants upon such terms and conditions as the Committee may determine. Each such grant may
utilize any or all of the authorizations and shall be subject to all of the requirements contained
in the following provisions:

	 	(a)	 	Each grant or sale shall constitute the agreement by the Corporation to issue
or transfer Common Shares to the Participant in the future in consideration of the
performance of services, subject to the fulfillment during the Deferral Period of such
conditions as the Committee may specify.
	 
	 	(b)	 	Each grant or sale may be made without additional consideration from the
Participant or in consideration of a payment by the Participant that is less than the
Market Value per Share on the Date of Grant.
	 
	 	(c)	 	Each grant or sale shall provide that the Deferred Shares covered thereby shall
be subject to a Deferral Period to be determined by the Committee on the Date of Grant
or until Management Objectives referred to in subparagraph (e) below are achieved. If
the termination of the Deferral Period is based only on the passage of time rather than
the achievement of Management Objectives, the period of time will be no shorter than
three years, except that the Deferral Period may terminate ratably during the
three-year period, on an annual basis, as determined by the Committee on the Date of
Grant.
	 
	 	(d)	 	During the Deferral Period, the Participant shall not have any right to
transfer any rights under the subject award, shall not have any rights of ownership in
the Deferred Shares and shall not have any right to vote such shares, but the Committee
may on or after the Date of Grant authorize the payment of dividend equivalents on such
shares in cash or additional Common Shares on a current, deferred or contingent basis;
provided, however, that dividend equivalents on Deferred Shares with
restrictions that lapse as a result of the achievement of Management Objectives shall
be deferred until and paid contingent upon the achievement of the applicable Management
Objectives.
	 
	 	(e)	 	Any grant of Deferred Shares may specify Management Objectives which, if
achieved, will result in termination or early termination of the Deferral Period
applicable to such Deferred Shares; provided, however, that,
notwithstanding subparagraph (c) above, the Deferral Period relating to Deferred Shares
that terminates upon the achievement of Management Objectives may not terminate

14

 

	 	 	 	sooner than one year from the Date of Grant. Each such grant may specify in respect
of such specified Management Objectives a minimum acceptable level of achievement
and may set forth a formula for determining the number of Deferred Shares for which
the Deferral Period will terminate if performance is at or above the minimum level,
but falls short of full achievement of the specified Management Objectives.
	 
	 	(f)	 	Notwithstanding anything to the contrary contained in this Plan, any grant or
sale of Deferred Shares may provide for the earlier termination of the Deferral Period
relating to such Deferred Shares in the event of the retirement, death or disability of
the Participant or a Change of Control.
	 
	 	(g)	 	Each grant or sale shall be evidenced by an Evidence of Award, which shall
contain such terms and provisions as the Committee may determine consistent with this
Plan.

     9. Performance Shares and Performance Units. The Committee may also authorize grants to
Participants of Performance Shares and Performance Units, which shall become payable to the
Participant upon the achievement of specified Management Objectives, upon such terms and conditions
as the Committee may determine. Each such grant may utilize any or all of the authorizations and
shall be subject to all of the requirements contained in the following provisions:

	 	(a)	 	Each grant shall specify the number of Performance Shares or Performance Units
to which it pertains, subject to the limitations in Section 3, which may be subject to
adjustment to reflect changes in compensation or other factors; provided,
however, that no such adjustment will be made in the case of a Qualified
Performance-Based Award (other than in connection with the death or disability of the
Participant or a Change in Control) where such action would result in the loss of the
otherwise available exemption of the award under Section 162(m) of the Code.
	 
	 	(b)	 	The Performance Period with respect to each Performance Share or Performance
Unit will be such period of time (not less than one year) commencing with the Date of
Grant as shall be determined by the Committee on the Date of Grant and may be subject
to earlier termination in the event of the retirement, death or disability of the
Participant or a Change in Control.
	 
	 	(c)	 	Each grant shall specify the Management Objectives which, if achieved, will
result in payment or early payment of the award, and each grant may specify in respect
of the specified Management Objectives a minimum acceptable level of achievement below
which no payment will be made and may set forth a formula for determining the amount of
any payment to be made if performance is at or above the minimum acceptable level but
falls short of full achievement of the specified Management Objectives.

15

 

	 	(d)	 	Each grant shall specify the time and manner of payment of Performance
Shares or Performance Units that shall have been earned, and any grant may specify
that any such amount may be paid by the Corporation in cash, Common Shares or any
combination thereof and may either grant to the Participant or reserve to the
Committee the right to elect among those alternatives.
	 
	 	(e)	 	Any grant of Performance Shares may specify that the amount payable with
respect thereto may not exceed a maximum specified by the Committee on the Date of
Grant. Any grant of Performance Units may specify that the amount payable, or the
number of Common Shares issued, with respect thereto may not exceed maximums specified
by the Committee on the Date of Grant.
	 
	 	(f)	 	Any grant may provide for the payment to the Participant of dividend
equivalents thereon in cash or in additional Common Shares, subject in all cases to
deferral and payment on a contingent basis based on the Participant’s earning of the
Performance Shares or Performance Units with respect to which such dividend equivalents
are paid.
	 
	 	(g)	 	Each grant of Performance Shares or Performance Units shall be evidenced by an
Evidence of Award, which shall contain such terms and provisions as the Committee may
determine consistent with this Plan.

     10. Common Share Awards to Nonemployee Directors. The Board may, from time to time and upon
such terms and conditions as it may determine, authorize the granting to Nonemployee Directors of
Common Shares. Awards of Common Shares to Nonemployee Directors shall be subject only to a
restriction on transfer for a period of six months immediately following the Date of Grant thereof
and shall bear a legend to that effect.

	 	11.	 	Transferability.
	 
	 	(a)	 	No Option Right, Appreciation Right or other derivative security (as that term
is used in Rule 16b-3) awarded under this Plan shall be transferable by a Participant
other than by will or the laws of descent and distribution. Option Rights and
Appreciation Rights shall be exercisable during a Participant’s lifetime only by the
Participant or, in the event of the Participant’s legal incapacity, by his guardian or
legal representative acting in a fiduciary capacity on behalf of the Participant under
state law and/or court supervision. Notwithstanding the foregoing, the Committee, in
its sole discretion, may provide for transferability of Option Rights or Appreciation
Rights under this Plan; provided, however, that no awards granted under
this Plan may be transferred in exchange for value or consideration.
	 
	 	(b)	 	Any award made under this Plan may provide that all or any part of the Common
Shares that are (i) to be issued or transferred by the Corporation upon the exercise of
Option Rights or Appreciation Rights, or upon the termination of the Deferral Period
applicable to Deferred Shares, or upon the termination of the Restriction Period
applicable to Restricted Stock Units, or in payment of Performance Shares

16

 

	 	 	 	or Performance Units or (ii) no longer subject to the substantial risk of forfeiture
and restrictions on transfer referred to in Section 6 of this Plan, shall be subject
to further restrictions upon transfer.

     12. Adjustments. The Committee shall make or provide for such adjustments in the (a) number
of Common Shares or number of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Restricted Shares, Restricted Stock Units, Deferred Shares and Performance Shares and
Performance Units granted hereunder, (b) prices per share applicable to such Option Rights and
Appreciation Rights, and (c) kind of shares (including shares of another issuer) covered thereby,
as the Committee in its sole discretion in good faith determines to be equitably required in order
to prevent dilution or enlargement of the rights of Participants that otherwise would result from
(x) any stock dividend, stock split, combination of shares, recapitalization or other change in the
capital structure of the Corporation, (y) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance
of rights or warrants to purchase securities or (z) any other corporate transaction or event having
an effect similar to any of the foregoing. In the event of any such transaction or event, or in
the event of a Change in Control, the Committee may provide in substitution for any or all
outstanding awards under this Plan such alternative consideration (including cash) as it may in
good faith determine to be equitable under the circumstances and may require in connection
therewith the surrender of all awards so replaced in a manner that complies with Section 409A of
the Code. Moreover, the Committee may on or after the Date of Grant provide in the agreement
evidencing any award under this Plan that the holder of the award may elect to receive an
equivalent award in respect of securities of the surviving entity of any merger, consolidation or
other transaction or event having a similar effect, or the Committee may provide that the holder
will automatically be entitled to receive such an equivalent award. In addition, for each Option
Right or Appreciation Right with an Option Price or Base Price greater than the consideration
offered in connection with any such transaction or event or Change in Control, the Committee may in
its sole discretion elect to cancel such Option Right or Appreciation Right without any payment to
the person holding such Option Right or Appreciation Right. The Committee shall also make or
provide for such adjustments in the numbers and kind of shares specified in Section 3 as the
Committee in its sole discretion may in good faith determine to be appropriate in order to reflect
any transaction or event described in this Section 12; provided, however, that any
such adjustment to the number specified in Section 3(d)(i) will be made only if and to the extent
that such adjustment would not cause any option intended to qualify as an Incentive Stock Option to
fail to so qualify.

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

     14. Withholding Taxes. To the extent that the Corporation is required to withhold federal,
state, local or foreign taxes in connection with any payment made or benefit realized by a
Participant or other person under this Plan, and the amounts available to the Corporation for such
withholding are insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such taxes required to be withheld.
At the discretion of the Committee, such arrangements may include the tender by the Participant

17

 

or such other person or the withholding by the Corporation of Common Shares to provide for such
withholding taxes. Any Evidence of Award may provide for such arrangements, subject to such
conditions and limitations as the Committee may approve. In no event shall the value of the Common
Shares to be tendered or withheld pursuant to this Section to satisfy applicable withholding taxes
in connection with the benefit exceed the minimum amount of taxes required to be withheld.

     15. Participation by Employees of a Less-Than-80-Percent Subsidiary. As a condition to the
effectiveness of any grant or award to be made hereunder to a Participant who is an employee of a
Less-Than-80-Percent Subsidiary, regardless whether such Participant is also employed by the
Corporation or another Subsidiary, the Committee may require the Less-Than-80-Percent Subsidiary to
agree to transfer to the Participant (as, if and when provided for under this Plan and any
applicable agreement entered into between the Participant and the Less-Than-80-Percent Subsidiary
pursuant to this Plan) the Common Shares that would otherwise be delivered by the Corporation upon
receipt by the Less-Than-80-Percent Subsidiary of any consideration then otherwise payable by the
Participant to the Corporation. Any such award may be evidenced by an agreement between the
Participant and the Less-Than-80-Percent Subsidiary, in lieu of the Corporation, on terms
consistent with this Plan and approved by the Committee and the Less-Than-80-Percent Subsidiary.
All Common Shares so delivered by or to a Less-Than-80-Percent Subsidiary will be treated as if
they had been delivered by or to the Corporation for purposes of Section 3 of this Plan, and all
references to the Corporation in this Plan shall be deemed to refer to the Less-Than-80-Percent
Subsidiary except with respect to the definitions of the Board and the Committee and in other cases
where the context otherwise requires.

     16. Certain Terminations of Employment. If permitted by Section 409A of the Code and Section
162(m), but subject to the paragraph that follows, in case of termination of employment by reason
of death, disability or normal retirement or early retirement with the consent of the Corporation
of a Participant who holds an Option Right or Appreciation Right not immediately exercisable in
full, or any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, or any Deferred Shares as to which the Deferral Period is
not complete, or any Restricted Stock Units as to which the Restriction Period has not been
completed, or any Performance Shares or Performance Units which have not been fully earned, or who
holds Common Shares subject to any transfer restriction imposed pursuant to Section 11(b) of this
Plan, the Committee may, in its sole discretion, take any action that it deems to be equitable
under the circumstances or in the best interests of the Corporation, including, without limitation,
accelerate the time at which such Option Right, Appreciation Right or other award may be exercised
or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer
will lapse or the time when such Restriction Period will end or the time at which such Performance
Shares or Performance Units will be deemed to have been fully earned or the time when such transfer
restriction will terminate or may waive any other limitation or requirement under any such award.

Subject to Section 19(b) hereof, the Committee may amend the terms of any award theretofore granted
under this Plan prospectively or retroactively, except in the case of a Qualified Performance-Based
Award (other than in connection with the Participant’s death or disability, or a Change in Control)
where such action would result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code. In such case, the Committee will not

18

 

make any modification of the Management Objectives or the level or levels of achievement with
respect to such Qualified Performance-Based Award. Subject to Section 12 above, no such amendment
shall impair the rights of any Participant without his or her consent. The Committee may, in its
discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights
of Participants or their successors under any awards outstanding hereunder and not exercised in
full on the date of termination.

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

	 	18.	 	Administration of the Plan.
	 
	 	(a)	 	This Plan shall be administered by the Compensation Committee of the Board, as
constituted from time to time. The Committee shall be composed of not less than three
members of the Board, each of whom shall (i) meet all applicable independence
requirements of the New York Stock Exchange, or if the Common Stock is not traded on
the New York Stock Exchange, the principal national securities exchange on which the
Common Stock is traded, (ii) be a “non-employee director” within the meaning of Rule
16b-3 and (iii) be an “outside director” within the meaning of Section 162(m) of the
Code. The Committee may from time to time delegate all or any part of its authority
under this Plan to any subcommittee thereof. To the extent of any such delegation,
references in this Plan to the Committee will be deemed to be references to such
subcommittee. A majority of the Committee shall constitute a quorum, and the acts of
the members of the Committee who are present at any meeting thereof at which a quorum
is present, or acts unanimously approved by the members of the Committee in writing,
shall be the acts of the Committee.
	 
	 	(b)	 	The interpretation and construction by the Committee of any provision of this
Plan or of any agreement, notification or document evidencing the grant of Option
Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units, Deferred
Shares, Performance Shares and Performance Units and any determination by the Committee
pursuant to any provision of this Plan or any such agreement, notification or document
shall be final and conclusive. No member of the

19

 

	 	 	 	Committee shall be liable for any such action taken or determination made in good
faith.
	 
	 	(c)	 	The Committee, to the full extent permitted by law, may delegate to one or more
of its members or to one or more other directors or any officer or officers of the
Corporation, or to one or more agents or advisors, such administrative duties or
powers as it may deem advisable, and any person to whom duties or powers have been
delegated as aforesaid may employ one or more persons to render advice with respect to
any responsibility the Committee or such person may have under the Plan. Without
limiting the generality of the foregoing, the Committee may, by resolution, authorize
one or more officers of the Corporation to do one or both of the following on the same
basis as the Committee: (i) designate employees to be recipients of awards under this
Plan and (ii) determine the size and type of any such awards; provided,
however, that (x) the Committee shall not delegate such responsibilities to any
such officer for awards granted to an employee who is an officer, director or more than
10% beneficial owner of any class of the Corporation’s equity securities that is
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as determined
by the Committee in accordance with Section 16 of the Securities Exchange Act of 1934,
or any person subject to Section 162(m) of the Code, (y) the resolution providing for
such authorization sets forth the total number of Common Shares such officer(s) may
grant and the terms of any award that such officer(s) may grant, and (z) the officer(s)
shall report periodically to the Committee regarding the nature and scope of the awards
granted pursuant to the authority delegated.
	 
	 	19.	 	Amendments and Other Matters.
	 
	 	(a)	 	This Plan may be amended from time to time by the Committee; provided,
however, that if an amendment to the Plan (i) would materially increase the
benefits accruing to Participants under the Plan, (ii) would materially increase the
number of securities which may be issued under the Plan, (iii) would materially modify
the requirements for participation in the Plan or (iv) must otherwise be approved by
the shareholders of the Corporation in order to comply with applicable law or the rules
of the New York Stock Exchange or, if the Common Shares are not traded on the New York
Stock Exchange, the principal national securities exchange upon which the Common Shares
are traded or quoted, then such amendment will be subject to shareholder approval and
will not be effective unless and until such approval has been obtained. Without
limiting the generality of the foregoing, the Committee may amend this Plan to
eliminate provisions which are no longer necessary as a result of changes in tax or
securities laws or regulations, or in the interpretation thereof.
	 
	 	(b)	 	Except in connection with a corporate transaction or event described in Section
12 of this Plan, the terms of outstanding awards may not be amended to reduce the
Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation
Rights, or cancel outstanding Option Rights or Appreciation Rights in exchange for
cash, other awards or Option Rights or Appreciation Rights with

20

 

	 	 	 	an Option Price or Base Price, as applicable, that is less than the Option Price of
the original Option Rights or Base Price of the original Appreciation Rights, as
applicable, without shareholder approval. This Section 19(b) is intended to
prohibit the repricing of “underwater” Option Rights and Appreciation Rights and
will not be construed to prohibit the adjustments provided for in Section 12 of the
Plan. Notwithstanding any provision of the Plan to the contrary, this Section 19(b)
may not be amended without approval by the Corporation’s shareholders.
	 
	 	(c)	 	Except with respect to Options Rights, Appreciation Rights and Restricted
Shares, the Committee also may permit Participants to elect to defer the issuance of
Common Shares or the settlement of awards in cash under the Plan pursuant to such
rules, procedures or programs as it may establish for purposes of this Plan and which
are intended to comply with Section 409A of the Code. The Committee also may provide
that deferred settlements include the payment or crediting of interest on the deferral
amounts, or the payment or crediting of dividend equivalents where the deferral amounts
are denominated in Common Shares.
	 
	 	(d)	 	The Committee may condition the grant of any award or combination of awards
under the Plan on the surrender or deferral by the Participant of his or her right to
receive a cash bonus or other compensation otherwise payable by the Corporation or any
Subsidiary to the Participant.
	 
	 	(e)	 	To the extent that any provision of this Plan would prevent any Option Right
that was intended to qualify under particular provisions of the Code from so
qualifying, such provision of this Plan shall be null and void with respect to such
Option Right; provided, however, that such provision shall remain in effect with
respect to other Option Rights, and there shall be no further effect on any provision
of this Plan.

     20. Detrimental Activity and Recapture Provisions. Any Evidence of Award may provide for the
cancellation or forfeiture of an award or the forfeiture and repayment to the Corporation of any
gain related to an award, or other provisions intended to have a similar effect, upon such terms
and conditions as may be determined by the Committee from time to time, if a Participant, either
during employment by the Corporation or a Subsidiary or within a specified period after termination
of such employment, shall engage in any Detrimental Activity. In addition, notwithstanding
anything in the Plan to the contrary, any Evidence of Award may also provide for the cancellation
or forfeiture of an award or the forfeiture and repayment to the Corporation of any gain related to
an award, or other provisions intended to have a similar effect, upon such terms and conditions as
may be required by the Committee or under Section 10D of the Securities Exchange Act of 1934 and
any applicable rules or regulations promulgated by the Securities and Exchange Commission or any
national securities exchange or national securities association on which the Common Shares may be
traded.

	 	21.	 	Compliance with Section 409A of the Code.
	 
	 	(a)	 	To the extent applicable, it is intended that this Plan and any grants made
hereunder comply with the provisions of Section 409A of the Code. This Plan and

21

 

	 	 	 	any grants made hereunder shall be administrated in a manner consistent with this
intent, and any provision that would cause this Plan or any grant made hereunder to
fail to satisfy Section 409A of the Code shall have no force and effect until
amended to comply with Section 409A of the Code (which amendment may be retroactive
to the extent permitted by Section 409A of the Code and may be made by the
Corporation without the consent of Participants). Any reference in this Plan to
Section 409A of the Code will also include any proposed, temporary or final
regulations, or any other guidance, promulgated with respect to such Section by the
U.S. Department of the Treasury or the Internal Revenue Service.
	 
	 	(b)	 	If, at the time of a Participant’s separation from service (within the meaning
of Section 409A of the Code), (i) such Participant is a specified employee (within the
meaning of Section 409A of the Code and using the identification methodology selected
by the Corporation from time to time) and (ii) the Corporation makes a good faith
determination that an amount payable hereunder constitutes deferred compensation
(within the meaning of Section 409A of the Code) the payment of which is required to be
delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in
order to avoid taxes or penalties under Section 409A of the Code, then the Corporation
shall not pay such amount on the otherwise scheduled payment date but shall instead pay
it, without interest, on the first business day of the seventh month after the
Participant’s separation from service.
	 
	 	(c)	 	Neither a Participant nor any of a Participant’s creditors or beneficiaries
shall have the right to subject any deferred compensation (within the meaning of
Section 409A of the Code) payable under this Plan and grants hereunder to any
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment
or garnishment. Except as permitted under Section 409A of the Code, any deferred
compensation (within the meaning of Section 409A of the Code) payable to a Participant
or for a Participant’s benefit under this Plan and grants hereunder may not be reduced
by, or offset against, any amount owing by a Participant to the Corporation or any of
its affiliates.
	 
	 	22.	 	Effective Date/Termination. This Plan shall be effective as of the Effective Date. No
grants will be made on or after the Effective Date under the Existing Plan, except that outstanding
awards granted under the Existing Plan will continue unaffected following the Effective Date. No
grant shall be made under this Plan more than ten years after the Effective Date, but all grants
made on or prior to such date shall continue in effect thereafter subject to the terms thereof and
of this Plan.

     23. No Right to Employment. This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Corporation or any Subsidiary and
shall not interfere in any way with any right that the Corporation or any Subsidiary would
otherwise have to terminate any Participant’s employment or other service at any time.

22

 

     24. Governing Law. The Plan and all grants and awards and actions taken thereunder shall be
governed by and construed in accordance with the internal substantive laws of the State of Ohio.

23

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