2006 EQUITY COMPENSATION PLAN

 
 
                              AMENDED AND RESTATED
                       1997 STOCK-BASED INCENTIVE PLAN OF
                            THE J. M. SMUCKER COMPANY
 
            The purpose of the Amended and Restated 1997 Stock-Based Incentive
Plan of The J. M. Smucker Company is to enable The J. M. Smucker Company, an
Ohio corporation ("Smucker") and its subsidiaries to attract and retain officers
and key employees capable of assuring the future success of Smucker and to
provide opportunities for stock ownership by such officers and employees that
will increase their proprietary interest in Smucker and, consequently, their
identification with the interests of the stockholders of Smucker. The 1997
Stock-Based Incentive Plan of The J. M. Smucker Company shall be referred to
herein as the "Plan".
 
            The Plan was initially adopted by the stockholders of International
Multifoods Corporation ("Multifoods"), a Delaware corporation and the
predecessor-in-interest to the Company, in 1997. On June 18, 2004, Multifoods
merged with and into a subsidiary of the Company (the "Merger"), and the Company
assumed the Plan. From and after the initial effective date of the Plan, no
awards of any kind were to be made under Part I of the Amended and Restated 1989
Stock-Based Incentive Plan of The J. M. Smucker Company, but all outstanding
awards previously granted under Part I of such plan were to remain outstanding
in accordance with the terms thereof. The Plan (but not Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units and Performance
Awards theretofore granted under the Plan) shall terminate on, and no Awards
shall be granted after, June 20, 2007.
 
SECTION 1. DEFINITIONS
 
            For purposes of the Plan, the following terms shall have the
meanings set forth below:
 
      "Award" shall mean an award granted to a Participant in accordance with
      the provisions of the Plan in the form of Options, Stock Appreciation
      Rights, Restricted Stock or Restricted Stock Units, or any combination
      thereof.
 
      "Award Agreement" shall mean the written agreement evidencing each Award
      granted to a Participant under the Plan.
 
      "Board" shall mean the Board of Directors of Smucker.
 
      "Code" shall mean the Internal Revenue Code of 1986, as amended from time
      to time.
 
      "Committee" shall mean the Compensation Committee of the Board or such
      other committee of Directors as may be designated by the Board to
      administer the Plan. The Committee shall be comprised of not less than
      such number of Directors as shall be required to permit the Plan to
      satisfy the requirements of Rule 16b-3, and each member of the Committee
      shall be a "Non-Employee Director" within the meaning of Rule 16b-3 and an
      "outside director" within the meaning of Section 162(m).
 
      "Date of Grant" shall mean the date on which the Committee grants the
      Award or such other date as the Committee may designate.
 
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      "Designated Event" shall mean any of the following:
 
                  (a) the acquisition by any individual, entity or group (within
            the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
            "Person") of beneficial ownership (within the meaning of Rule 13d-3
            promulgated under the Exchange Act) of 20% or more of either (i) the
            then outstanding shares of Stock (the "Outstanding Stock") or (ii)
            the combined voting power of the then outstanding voting securities
            of Smucker entitled to vote generally in the election of Directors
            (the "Outstanding Voting Securities"); provided, however, that for
            purposes of this provision (a), the following acquisitions shall not
            constitute a Designated Event: (i) any acquisition directly from
            Smucker, (ii) any acquisition by Smucker, (iii) any acquisition by
            any employee benefit plan (or related trust) sponsored or maintained
            by Smucker or any corporation controlled by Smucker or (iv) any
            acquisition by any corporation pursuant to a transaction which
            complies with clauses (i), (ii) and (iii) of provision (c) of this
            definition; or
 
                  (b) individuals, who, as of the date hereof, constitute the
            Board (the "Incumbent Board"), cease for any reason to constitute at
            least a majority of the Board; provided, however, that any
            individual becoming a Director subsequent to the date hereof whose
            election, or nomination for election by Smucker's stockholders, was
            approved by a vote of at least a majority of the Directors then
            comprising the Incumbent Board 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
 
                  (c) the consummation of a reorganization, merger or
            consolidation or sale or other disposition of all or substantially
            all of the assets of Smucker (a "Business Combination"), in each
            case, unless, following such Business Combination, (i) all or
            substantially all of the individuals and entities who were the
            beneficial owners, respectively, of the Outstanding Stock and
            Outstanding Voting Securities immediately prior to such Business
            Combination beneficially own, directly or indirectly, more than 60%
            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 corporation resulting from such Business Combination
            (including, without limitation, a corporation which as a result of
            such transaction owns Smucker or all or substantially all of
            Smucker's assets either directly or through one or more
            subsidiaries) in substantially the same proportions as their
            ownership, immediately prior to such Business Combination of the
            Outstanding Stock and Outstanding Voting Securities, as the case may
            be, (ii) no Person (excluding any employee benefit plan (or related
            trust) of Smucker or such corporation resulting from such Business
            Combination) beneficially owns, directly or indirectly, 20% or more
            of, respectively, the then outstanding shares of common stock of the
            corporation resulting from such Business Combination or the combined
            voting
 
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            power of the then outstanding voting securities of such corporation
            except to the extent that such ownership existed prior to the
            Business Combination and (iii) 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
 
                  (d) the approval by the stockholders of Smucker of a complete
            liquidation or dissolution of Smucker.
 
      "Director" or "Directors" shall mean a member, or more than one member, of
      the Board of Directors of Smucker.
 
      "Eligible Employee" shall mean, prior to the Merger, any officer or key
      employee of Multifoods or any subsidiary of Multifoods designated by the
      Committee to receive an Award. Following the Merger, only officers or key
      employees of Smucker or any Subsidiary who were, prior to the Merger,
      employees of Multifoods or any of its subsidiaries or affiliates will be
      eligible to receive an Award under the Plan.
 
      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
      from time to time.
 
      "Fair Market Value" shall mean, as of any date, the mean of the high and
      low sale prices of a share of Stock on The New York Stock Exchange, Inc.,
      or its successor on such date (or, if no sale took place on such exchange
      on such date, the mean between the high and low sale prices on such
      exchange on the most recent preceding date on which a sale took place).
 
      "Incentive Stock Option" shall mean an Option which is designated as such
      by the Committee and which meets the requirements of Section 422 of the
      Code on the Date of Grant.
 
      "Multifoods" shall mean International Multifoods Corporation, a Delaware
      corporation.
 
      "Non-Qualified Stock Option" shall mean an Option other than an Incentive
      Stock Option.
 
      "Option" shall mean a stock option awarded pursuant to the Plan to
      purchase Stock.
 
      "Participant" shall mean an Eligible Employee who receives an Award that
      has not been terminated, expired or been fully exercised.
 
      "Plan" shall mean this Amended and Restated 1997 Stock-Based Incentive
      Plan of The J. M. Smucker Company.
 
      "Restricted Stock" shall mean the award of Stock pursuant to the Plan.
 
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      "Restricted Stock Unit" shall mean a unit awarded pursuant to the Plan
      having a value equal to the Fair Market Value of one share of Stock (plus,
      if so determined by the Committee, the value of any dividends or other
      rights or property received by holders of Stock after the Date of Grant of
      such Restricted Stock Unit).
 
      "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
      Exchange Commission under the Exchange Act or any successor rule or
      regulation.
 
      "Section 162(m)" shall mean Section 162(m) of the Code.
 
      "Smucker" shall mean The J. M. Smucker Company, an Ohio corporation.
 
      "Stock" shall mean common stock (no par value per share) of Smucker.
 
      "Stock Appreciation Right" shall mean a stock appreciation right awarded
      pursuant to the Plan, which need not be granted in tandem with an Option.
 
      "Subsidiary" shall mean any subsidiary or affiliate of Smucker.
 
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
 
            Subject to adjustment as provided in Section 10 hereof, an aggregate
of 1,282,314 shares of Stock shall be available to Participants under the Plan.
Of such shares of Stock, a maximum of 128,231 shares shall be available for
issuance pursuant to Awards of Restricted Stock and Restricted Stock Units. The
shares of Stock deliverable upon the exercise of any Award may be made available
from authorized but unissued shares or shares reacquired by Smucker, including
shares of Stock purchased in the open market or in private transactions. For
purposes of this Section 2, if an Award entitles the holder thereof to receive
or purchase shares of Stock, the number of shares subject to such Award shall
reduce as of the Date of Grant the aggregate number of shares available for
granting Awards under the Plan by the number of shares subject to such Award. If
Stock Appreciation Rights are granted in tandem with an option under Section 4
hereof and the exercise of the Option would cancel the Stock Appreciation Rights
and vice versa, then the grant of such Stock Appreciation Rights shall not
reduce the number of shares of Stock available for granting Awards under the
Plan. Any shares of Stock that are used by a Participant as full or partial
payment to Smucker of the purchase price relating to an Award, or in connection
with the satisfaction of tax obligations relating to an Award, shall again be
available for granting Awards (other than Incentive Stock Options) to Eligible
Employees. If any Award granted under the Plan shall terminate, the shares of
Stock subject to, but not delivered under, such Award shall be available for
other Awards.
 
SECTION 3. GRANTS OF AWARDS; EXPIRATION OF AND LIMITATIONS ON AWARDS
 
      (a)         Eligible Employees shall be eligible to be selected by the
            Committee to participate in the Plan. The Committee may require any
            Participant to remain in the employ of Smucker or a Subsidiary for a
            stated period or periods of time before an Award may be exercised;
            provided that nothing in the Plan or in any Award Agreement shall
            confer upon any Participant any right to remain in the employ of
            Smucker or any of its Subsidiaries, and nothing herein shall be
 
<PAGE>
 
            construed in any manner to interfere in any way with the right of
            Smucker or any Subsidiary to terminate such Participant's employment
            at any time.
 
      (b)         Subject to the provisions of the Plan, the Committee shall:
 
            (i)         determine and designate from time to time those Eligible
                  Employees to whom Awards are to be granted;
 
            (ii)        determine the form or forms of Award to be granted;
 
            (iii)       determine the amount or number of shares of Stock
                  subject to each Award; and
 
            (iv)        determine the terms and conditions of each Award,
                  provided that no Award shall have a term that extends beyond
                  10 years from the Date of Grant.
 
      (c)         Each Award granted under the Plan shall be evidenced by a
            written Award Agreement. Each Award Agreement shall be subject to
            the applicable terms and conditions of the Plan and any other terms
            and conditions (not inconsistent with the Plan) determined by the
            Committee.
 
      (d)         In case of termination of employment, the following provisions
            shall apply:
 
            (i)         if a Participant who has been granted an Option or Stock
                  Appreciation Rights shall die before such Option or Stock
                  Appreciation Rights have expired, his or her Option or Stock
                  Appreciation Rights may be exercised, to the extent
                  exercisable at the date of death, by the personal
                  representatives or administrators of the Participant or by any
                  person or persons to whom the Participant's rights under the
                  Option or Stock Appreciation Rights pass by will or the
                  applicable laws of descent and distribution, as follows:
 
                  (A)         in the case of an Incentive Stock Option and Stock
                        Appreciation Rights granted in tandem with such
                        Incentive Stock Option, at any time, or from time to
                        time, within 12 months after the date of the
                        Participant's death or such shorter period as the
                        Committee may specify as set forth in the Award
                        Agreement; and
 
                  (B)         in the case of a Non-Qualified Stock Option, Stock
                        Appreciation Rights granted in tandem with a
                        Non-Qualified Stock Option and Stock Appreciation Rights
                        not granted in tandem with an Option, at any time, or
                        from time to time, within such period as the Committee
                        may specify as set forth in the Award Agreement;
 
                        but, in either event, not later than the expiration of
                        the applicable exercise period.
 
<PAGE>
 
            (ii)        if a Participant's employment terminates because of any
                  reason other than his or her death, such Participant may
                  exercise his or her Options or Stock Appreciation Rights, to
                  the extent exercisable at the date of termination of
                  employment as follows:
 
                  (A)         in the case of an Incentive Stock Option and Stock
                        Appreciation Rights granted in tandem with such
                        Incentive Stock Option, at any time, or from time to
                        time, within three months after the date of termination
                        of employment or such shorter period as the Committee
                        may specify as set forth in the Award Agreement; and
 
                  (B)         in the case of a Non-Qualified Stock Option, Stock
                        Appreciation Rights granted in tandem with a
                        Non-Qualified Stock Option and Stock Appreciation Rights
                        not granted in tandem with an Option, at any time, or
                        from time to time, within such period as the Committee
                        may specify as set forth in the Award Agreement;
 
                        but, in either event, not later than the expiration of
                        the applicable exercise period.
 
      (e)         No Eligible Employee may be granted any Award or Awards under
            the Plan, the value of which Award or Awards is based solely on an
            increase in the value of the Stock after the Date of Grant thereof,
            for more than 102,585 shares of Stock in the aggregate in any
            calendar year. The foregoing annual limitation specifically includes
            the grant of any Award or Awards representing
            "qualified-performance-based compensation" within the meaning of
            Section 162(m).
 
      (f)         No Award granted under the Plan shall be transferable other
            than by will or by the laws of descent and distribution. During the
            lifetime of a Participant, an Option or Stock Appreciation Right
            shall be exercisable only by the Participant to whom the Option or
            Stock Appreciation Right is granted.
 
SECTION 4. OPTIONS
 
      (a)         Subject to the provisions of paragraph (d) of this Section 4,
            any Option granted by the Committee may be either an Incentive Stock
            Option or a Non-Qualified Stock Option, as the Committee shall
            determine.
 
      (b)         The option price of the shares of Stock covered by each Option
            shall not be less than 100% of the Fair Market Value of such shares
            on the Date of Grant.
 
      (c)         Subject to the other provisions of the Plan, any Option may be
            exercised in whole or in part at such time or times, and the
            Participant may make payment of the option price in such form or
            forms, including without limitation payment by delivery of Stock
            having a Fair Market Value on the exercise date equal to the total
            option price, or by a combination of Stock and other consideration,
            as the Committee may specify in the applicable Award Agreement.
 
<PAGE>
 
      (d)         To the extent that the aggregate Fair Market Value (determined
            as of the Date of Grant) of the Stock with respect to which all
            Incentive Stock Options are exercisable for the first time by a
            Participant during any calendar year (under all plans described in
            Section 422(d) of the Code of Smucker and its Subsidiaries) exceeds
            $100,000, such Option shall be treated as an Option which does not
            qualify as an Incentive Stock Option.
 
      (e)         Notwithstanding anything else contained herein, any Option may
            be exercised in full at any time following the occurrence of a
            Designated Event.
 
SECTION 5. STOCK APPRECIATION RIGHTS
 
      (a)         Stock Appreciation Rights granted under the Plan may, but need
            not, relate to a specific option granted under Section 4 hereof. Any
            Stock Appreciation Right related to a Non-Qualified Stock Option may
            be granted at the same time the Option is granted or at any time
            thereafter before exercise or expiration of the Option. Any Stock
            Appreciation Right related to an Incentive Stock Option must be
            granted at the same time the Option is granted. Any Stock
            Appreciation Right related to any Option shall be exercisable only
            to the extent the related Option is exercisable. The Committee may
            impose such conditions or restrictions on the exercise of Stock
            Appreciation Rights as it shall deem appropriate.
 
      (b)         Upon the exercise of each Stock Appreciation Right, Smucker
            shall pay to the Participant the excess of (i) the Fair Market Value
            of one share of Stock on the date of exercise over (ii) the Fair
            Market Value of one share of Stock on the Date of Grant (the "Base
            Value"). Any such payment by Smucker may be made in cash, in shares
            of Stock (valued at the Fair Market Value on the date of exercise)
            or in a combination thereof, as the Committee shall determine.
 
      (c)         Notwithstanding anything else contained herein, any Stock
            Appreciation Right may be exercised in full at any time following
            the occurrence of a Designated Event.
 
SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
 
            The Committee may grant Awards of Restricted Stock and Restricted
Stock Units to Participants with the following terms and conditions and with
such additional terms and conditions not inconsistent with the provisions of the
Plan as the Committee shall determine:
 
      (a)         Shares of Restricted Stock and Restricted Stock Units shall be
            subject to such restrictions as the Committee may impose (including,
            without limitation, any limitation on the right to vote a share of
            Restricted Stock or the right to receive any dividend or other right
            or property with respect thereto), which restrictions may lapse
            separately or in combination at such time or times, in such
            installments or otherwise as the Committee may deem appropriate.
 
<PAGE>
 
      (b)         Any Restricted Stock granted under the Plan shall be evidenced
            by issuance of a stock certificate or certificates, which
            certificate or certificates shall be held by Smucker. Such
            certificate or certificates shall be registered in the name of the
            Participant and shall bear an appropriate legend referring to the
            restrictions applicable to such Restricted Stock. In the case of
            Restricted Stock Units, no shares of Stock shall be issued at the
            time such Awards are granted.
 
      (c)         Except as otherwise determined by the Committee, upon
            termination of employment (as determined under criteria established
            by the Committee) during the applicable restriction period, all
            shares of Restricted Stock and all Restricted Stock Units at such
            time subject to restriction shall be forfeited and reacquired by
            Smucker; provided, however, that the Committee may, when it finds
            that a waiver would be in the best interest of Smucker, waive in
            whole or in part any or all remaining restrictions with respect to
            shares of Restricted Stock or Restricted Stock Units. Shares
            representing Restricted Stock that is no longer subject to
            restrictions shall be delivered to the holder thereof promptly after
            the applicable restrictions lapse or are waived. Upon the lapse or
            waiver of restrictions and the restricted period relating to
            Restricted Stock Units evidencing the right to receive shares of
            Stock, such shares shall be issued and delivered to the holders of
            the Restricted Stock Units.
 
      (d)         Without limiting the generality of the foregoing, the
            Committee may specify in an Award Agreement granting an Award of
            Restricted Stock or Restricted Stock Units, or subsequently
            determine in its discretion, that, upon the occurrence of a
            Designated Event, the restrictions applicable to such Award shall
            lapse with respect to, and the Participant shall be unconditionally
            vested in, all or any part of the Award.
 
SECTION 7. ADMINISTRATION OF THE PLAN
 
            The Committee shall have the full power and authority to interpret
and administer the Plan. The Committee may adopt such rules, regulations and
procedures with respect to the administration of the Plan as it deems
appropriate. Any decisions, determinations or actions made or taken by the
Committee pursuant to the Plan shall be final, conclusive and binding on all
persons for all purposes. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable to carry the Plan into effect.
 
SECTION 8. DELIVERY OF SHARES: SECURITIES LAW COMPLIANCE
 
      (a)         No shares of Stock shall be issued or delivered pursuant to
            any exercise of an Award hereunder until the requirements of such
            laws and regulations as may be deemed by the Committee to be
            applicable thereto are satisfied.
 
      (b)         Without limiting the generality of the foregoing, all
            certificates for shares of Stock delivered under the Plan pursuant
            to any Award or the exercise thereof shall be subject to such
            restrictions as the Committee may deem advisable under
 
<PAGE>
 
            the Plan or the rules, regulations and other requirements of the
            Securities and Exchange Commission and any applicable federal or
            state securities laws.
 
SECTION 9. WITHHOLDING
 
            Upon exercise or receipt of (or the lapse of restrictions relating
to) any Award, the delivery of shares of Stock subject to such Award shall be
subject to payment of any required withholding taxes. A Participant receiving
shares of Stock subject to withholding taxes may, as a condition precedent to
receiving the shares of Stock, be required to pay Smucker a cash amount equal to
the amount of required withholdings. In lieu of all or any part of such a cash
payment, the Committee may permit the Participant to elect to cover all or any
part of the required withholdings, and to cover any additional withholdings up
to the amount needed to cover the Participant's full Federal Insurance
Contributions Act and federal, state and local income taxes with respect to
income arising from exercise of Options or receipt of Restricted Stock or shares
of Stock in payment of Performance Awards, through a reduction of the number of
shares of Stock delivered to the Participant and/or through the return to
Smucker of shares of Stock delivered to the Participant in connection with the
Award or shares otherwise held by such Participant.
 
SECTION 10. ADJUSTMENT OF AND CHANGES IN STOCK
 
            In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, distribution of
assets, or any other changes in the corporate structure or stock of Smucker, the
Committee shall make such adjustments as it deems appropriate in the number and
kind of shares of Stock authorized by the Plan, in the number and kind of shares
of Stock covered by the Awards granted and in the exercise price of outstanding
Options or the Base Value of outstanding Stock Appreciation Rights.
 
SECTION 11. NO RIGHTS OF STOCKHOLDERS
 
            Except with respect to Restricted Stock, neither a Participant nor
the Participant's legal representative shall be, or have any of the rights and
privileges of, a stockholder of Smucker in respect of any shares of Stock
receivable upon the exercise of any Award, in whole or in part, unless and until
certificates for such shares of Stock shall have been issued.
 
SECTION 12. AMENDMENTS
 
      (a)         The Board may, at any time, amend or terminate the Plan,
            subject to the following:
 
                        (i)   No such amendment may adversely affect the rights
                              of any Participant under an Award which has not
                              terminated, expired or been fully exercised
                              without the consent of such Participant or
                              beneficiary thereof.
 
                        (ii)  It is intended that the Plan qualify as an
                              incentive stock option plan meeting the
                              requirements of Section 422 of the Code or any
                              successor thereto, and that certain Awards
 
<PAGE>
 
                              constitute "qualified performance-based
                              compensation" within the meaning of Section
                              162(m). Unless otherwise determined by the Board,
                              amendments to the Plan shall be subject to
                              approval of the stockholders of Smucker to the
                              extent necessary to satisfy such requirements and
                              meet such qualifications as in effect from time to
                              time.
 
                        (iii) Unless otherwise determined by the Board,
                              amendments to the Plan shall be subject to
                              approval of the stockholders of Smucker to the
                              extent necessary to satisfy the requirements of
                              the listing rules of The New York Stock Exchange,
                              Inc.
 
      (b)         The Committee may not amend, alter, suspend, discontinue or
            terminate any outstanding Award if such action would adversely
            affect the rights of the holder of such Award, without the consent
            of the Participant or beneficiary thereof.
 
      (c)         Any re-pricing, replacement, re-granting through cancellation,
            or modification of any Option awarded under this Plan is subject to
            the approval of the stockholders of Smucker (except in connection
            with the adjustments of and changes in Stock described in Section 10
            of the Plan), if the effect of such re-pricing, replacement,
            re-granting or modification would be to reduce the exercise price
            for the Stock covered by the Option.
 
SECTION 13. GOVERNING LAW.
 
            The validity, construction and effect of the Plan and any Award
shall be determined in accordance with the laws of the State of Delaware.
 
SECTION 14. SEVERABILITY.
 
            If any provision of the Plan or any Award is or becomes or is deemed
to be invalid, illegal or unenforceable or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan or the Award, such
provision shall be stricken, and the remainder of the Plan or any such Award
shall remain in full force and effect.
 

 

 

Exhibit 10.1

THE J. M. SMUCKER COMPANY

2006 EQUITY COMPENSATION PLAN

      1. Purpose. The purpose of The J. M. Smucker Company 2006 Equity Compensation Plan is to attract and retain Directors, consultants, officers and other employees of The J. M. Smucker Company, an Ohio corporation, and its Subsidiaries and to provide to such persons incentives and rewards for performance.

      2. Definitions. As used in this Plan,

 

 

 

      (a) “Appreciation Right” means a right granted pursuant to Section 5 or Section 9 of this Plan, and will include both Free-Standing Appreciation Rights and Tandem Appreciation Rights.

 

 

 

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

 

 

 

      (c) “Board” means the Board of Directors of the Company and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 12 of this Plan, such committee (or subcommittee).

 

 

 

      (d) “Change in Control” has the meaning set forth in Section 14 of this Plan.

 

 

 

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

 

 

 

      (f) “Common Shares” means the shares of common stock, without par value, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Section 13 of this Plan.

 

 

 

      (g) “Company” means The J. M. Smucker Company, an Ohio corporation and its successors.

 

 

 

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

 

 

 

      (i) “Date of Grant” means the date specified by the Board on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, Incentive Awards or other awards contemplated by Section 10 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by Section 10 of this Plan will become effective (which date will not be earlier than the date on which the Board takes action with respect thereto).

 

 

 

      (j) “Detrimental Activity” means:

 

 

 

 

      (i) Engaging in any activity, as an employee, principal, agent, or consultant for another entity that competes with the Company 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 Company or a Subsidiary, in any territory in which the Company 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 Company or a Subsidiary to terminate his or her employment with the Company or a Subsidiary.

 

 

 

      (iii) The disclosure to anyone outside the Company or a Subsidiary, or the use in other than the Company’s or a Subsidiary’s business, without prior written authorization from the Company, of any confidential, proprietary or trade secret information or material relating to the business of the Company and its Subsidiaries, acquired by the Participant during his or her employment with the Company or its Subsidiaries or while acting as a consultant for the Company or its Subsidiaries thereafter.

 


 

 

 

 

      (iv) The failure or refusal to disclose promptly and to assign to the Company 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 Company and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Company or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Company 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 Company or a Subsidiary.

 

 

 

 

      (vi) Any other conduct or act determined to be injurious, detrimental or prejudicial to any significant interest of the Company 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 Company.

 

 

 

 

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

 

 

 

      (l) “Effective Date” means the date that this Plan is approved by the shareholders of the Company.

 

 

 

      (m) “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Board that sets forth the terms and conditions of the awards granted. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, with the approval of the Board, need not be signed by a representative of the Company or a Participant.

 

 

 

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

 

 

 

      (o) “Existing Plans” means the 1987 Stock Option Plan, the Amended Restricted Stock Bonus Plan, the Amended and Restated 1997 Stock-Based Incentive Plan, the 1998 Equity and Performance Incentive Plan (As Amended and Restated Effective as of June 6, 2005), the Amended and Restated Nonemployee Director Stock Plan and the Nonemployee Director Stock Option Plan.

 

 

 

      (p) “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 or Section 9 of this Plan that is not granted in tandem with an Option Right.

 

 

 

      (q) “Incentive Awards” has the meaning set forth in Section 11 of this Plan.

 

 

 

      (r) “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.

 

 

 

      (s) “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 Incentive Awards or, when so determined by the Board, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend credits and other awards pursuant to this Plan. Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of the Subsidiary, division, department, region or function within the Company or Subsidiary in which the Participant is employed. The Management Objectives may be made relative to the performance of other companies. The

 


 

 

 

 

Management Objectives applicable to any award to a Covered Employee will be based on specified levels of or improvement in one or more of the following metrics:

 

 

 

 

      (iProfits (e.g., operating income, income from continuing operations, EBIT, EBT, net income, material margins, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and subject to GAAP definition);

 

 

 

      (ii) Cash Flow (e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment);

 

 

 

      (iii) Returns (e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity);

 

 

 

      (iv) Working Capital (e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables);

 

 

 

      (v) Profit Margins (e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds);

 

 

 

      (vi) Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt ratio);

 

 

 

      (vii) Sales Growth, Cost Initiative and Stock Price Metrics (e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and

 

 

 

      (viii) Strategic Initiative Key Deliverable Metrics consisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures.

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

 

 

 

      (t) “Market Value per Share” means, as of any particular date, the average of the high and low sales prices of the Common Shares as reported on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Common Shares are listed, or if there are no sales on such day, on the next preceding trading day during which a sale occurred. If there is no regular trading market for such Common Shares, the Market Value per Share shall be determined by the Board.

 

 

 

      (u) “Nonemployee Director” means a person who is a “nonemployee director” of the Company within the meaning of Rule 16b-3 of the Securities and Exchange Commission promulgated under the Exchange Act.

 

 

 

      (v) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.

 

 

 

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

 

 

 

      (x) “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.

 


 

 

 

 

      (y) “Participant” means a person who is selected by the Board to receive benefits under this Plan and who is at the time a consultant, an officer, or other employee of the Company or any one or more of its Subsidiaries, or who has agreed to commence serving in any of such capacities within 90 days of the Date of Grant, and will also include each Nonemployee Director who receives an award under this Plan.

 

 

 

      (z) “Performance Period” means, in respect of a Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Performance Share or Performance Unit are to be achieved.

 

 

 

      (aa) “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan.

 

 

 

      (bb) “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Board.

 

 

 

      (cc) “Plan” means The J. M. Smucker Company 2006 Equity Compensation Plan, as may be amended from time to time.

 

 

 

      (dd) “Restricted Stock” means Common Shares granted or sold pursuant to Section 6 or Section 9 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.

 

 

 

      (ee) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 or Section 9 of this Plan.

 

 

 

      (ff) “Restricted Stock Unit” means an award made pursuant to Section 7 or Section 9 of this Plan of the right to receive Common Shares at the end of a specified period. An award of Restricted Stock Units may be described as an award of “Deferred Stock Units”.

 

 

 

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

 

 

 

      (hh) “Subsidiary” means a corporation, company or other entity (i) at least 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but at least 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company except that 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 at the time the Company owns or controls, directly or indirectly, at least 50 percent of the total combined voting power represented by all classes of stock issued by such corporation.

 

 

 

      (ii) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 or Section 9 of this Plan that is granted in tandem with an Option Right.

      3. Shares Available Under the Plan.

 

 

 

      (a) Maximum Shares Available Under Plan.

 

 

 

 

      (i) Subject to adjustment as provided in Section 13 of this Plan, the number of Common Shares that may be issued or transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii) in payment of Restricted Stock and released from substantial risks of forfeiture thereof, (iii) in payment of Restricted Stock Units, (iv) in payment of Performance Shares or Performance Units that have been earned, (v) as awards to Nonemployee Directors, (vi) as awards contemplated by Section 10 of this Plan, or (vii) in payment of dividend equivalents paid with respect to awards

 


 

 

 

 

made under the Plan will not exceed in the aggregate 2,500,000 Common Shares. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.

 

 

 

      (ii) Common Shares covered by an award granted under the 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 shares available under the Plan as of a given date shall not be reduced by any shares relating to prior awards that have expired or have been forfeited or cancelled. Notwithstanding anything to the contrary contained herein: (A) 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 reduce the aggregate plan limit described above; (B) Common Shares withheld by the Company to satisfy the tax withholding obligation shall count against the plan limit described above; and (C) the 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 shares are actually issued to the participant upon exercise of the right, shall be considered issued or transferred pursuant to the Plan. In the event that the Company repurchases shares with Option Right proceeds, those shares will not be added to the aggregate plan limit described above.

 

 

 

 

      (bLife of Plan Limits. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment as provided in Section 13 of this Plan:

 

 

 

 

      (i) The aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 2,500,000 Common Shares.

 

 

 

      (ii) Awards will not be granted under Section 9 or Section 10 of the Plan to the extent they would involve the issuance of more than 250,000 shares in the aggregate.

 

 

 

 

      (c) Individual Participant Limits. Notwithstanding anything in this Section 3, or elsewhere in this Plan to the contrary, and subject to adjustment as provided in Section 13 of this Plan:

 

 

 

 

      (i) No Participant will be granted Option Rights or Appreciation Rights, in the aggregate, for more than 600,000 Common Shares during any calendar year.

 

 

 

      (ii) No Participant will be granted Restricted Stock or Restricted Stock Units that specify Management Objectives, Performance Shares or other awards under Section 10 of this Plan, in the aggregate, for more than 200,000 Common Shares during any calendar year.

 

 

 

      (iii) Notwithstanding any other provision of this Plan to the contrary, in no event will any Participant in any calendar year receive an award of Performance Units having an aggregate maximum value as of their respective Dates of Grant in excess of $4,000,000.

 

 

 

      (iv) The maximum value of any Incentive Award that may be earned by any Participant by achievement of Management Objectives in any calendar year shall not exceed $4,000,000 in cash and shall not exceed 200,000 Common Shares.

      4. Option Rights. The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of options to purchase Common Shares. Each such grant will be subject to all of the requirements contained in the following provisions:

 

 

 

      (a) Each grant will 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 will specify an Option Price per share, which may not be less than the Market Value per Share on the Date of Grant.

 

 

 

      (c) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee for at least six months having a value at the time of exercise equal to the total Option Price, (iii) by a combination of such methods of payment, or (iv) by such other methods as may be approved by the Board.

 


 

 

 

 

      (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 a date satisfactory to the Company of some or all of the shares to which such exercise relates.

 

 

 

      (e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.

 

 

 

      (f) Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable. A grant of Option Rights may provide for the earlier exercise of such Option Rights in the event of the retirement, the attainment of reasonable age and service requirements approved by the Board, death or disability of a 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, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

 

 

 

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

 

 

 

      (j) No Option Right will be exercisable more than 10 years from the Date of Grant.

 

 

 

      (k) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award shall be subject to this Plan and shall contain such terms and provisions, consistent with this Plan, as the Board may approve.

      5. Appreciation Rights.

 

 

 

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

 

 

 

      (b) Each grant of Appreciation Rights will be subject to all of the requirements contained in the following provisions:

 

 

 

 

      (i) Each grant will specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in Common Shares.

 

 

 

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

 

 

 

      (iii) Any grant may specify waiting periods before exercise and permissible exercise dates or periods.

 

 

 

      (iv) Any grant may specify that such Appreciation Right may be exercised only in the event of, or earlier in the event of, the retirement, the attainment of reasonable age and service requirements approved by the Board, death or disability of a Participant or a Change in Control.

 


 

 

 

 

      (v) Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights.

 

 

 

      (vi) Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Board may approve.

 

 

 

 

      (c) Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation. Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any Tandem Appreciation Rights previously granted to the Participant remain unexercised.

 

 

 

      (d) Regarding Free-Standing Appreciation Rights only:

 

 

 

 

      (i) Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which may not be less 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 the Participant remain unexercised; and

 

 

 

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

      6. Restricted Stock. The Board may also authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale will be subject to all of the requirements contained in the following provisions:

 

 

 

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

 

 

 

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

 

 

 

      (c) Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will 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 Board at the Date of Grant, or upon achievement of Management Objectives referred to in subparagraph (e) below. If the elimination of restrictions is based 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 on an annual, ratable basis during the three year period.

 

 

 

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

 

 

 

      (e) Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Stock; provided, however, that notwithstanding subparagraph (c) above, restrictions relating to Restricted Stock that vests upon the achievement of Management Objectives 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 shares of Restricted Stock on which restrictions will terminate if performance is at or above the minimum or threshold level or levels, or is at or above the target level or levels, but falls short of maximum achievement of the specified Management Objectives. The grant of Restricted Stock will specify that, before the termination or early

 


 

 

 

 

termination of restrictions applicable to such Restricted Stock, the Board must determine that the Management Objectives have been satisfied.

 

 

 

      (f) Notwithstanding anything to the contrary contained in this Plan, any grant or sale of Restricted Stock may provide for the earlier termination of restrictions on such Restricted Stock in the event of the retirement, the attainment of reasonable age and service requirements approved by the Board, death or disability of a Participant or a Change in Control.

 

 

 

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

 

 

 

      (h) Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve. Unless otherwise directed by the Board, (i) all certificates representing shares of Restricted Stock will be held in custody by the Company 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, endorsed in blank and covering such Shares or (ii) all 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.

      7. Restricted Stock Units. The Board may also authorize the granting or sale of Restricted Stock Units (which may also be referred to as Deferred Stock Units) to Participants. Each such grant or sale will be subject to all of the requirements contained in the following provisions:

 

 

 

      (a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares 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 Board may specify. If a grant of Restricted Stock Units specifies that the Restriction Period will terminate 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 shares of Restricted Stock Units on which restrictions will terminate if performance is at or above the minimum or threshold level or levels, or is at or above the target level or levels, but falls short of maximum achievement of the specified Management Objectives. The grant of such Restricted Stock Units will specify that, before the termination or early termination of restrictions applicable to such Restricted Stock Units, the Board must determine that the Management Objectives have been satisfied.

 

 

 

      (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 Board at 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 other modification of the Restriction Period in the event of the retirement, the attainment of reasonable age and service requirements approved by the Board, death or disability of a Participant or a Change in Control.

 

 

 

      (e) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may at the Date of Grant, authorize the payment of dividend equivalents on

 


 

 

 

 

such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

 

 

 

      (f) Each grant or sale will specify the time and manner of payment of the Restricted Stock Units that have been earned. Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common Shares.

 

 

 

      (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 Board may approve.

      8. Performance Shares and Performance Units. The Board may also authorize the granting of Performance Shares and Performance Units that will become payable to a Participant upon achievement of specified Management Objectives during the Performance Period. Each such grant will be subject to all of the requirements contained in the following provisions:

 

 

 

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

 

 

 

      (b) The Performance Period with respect to each Performance Share or Performance Unit will be such period of time (not less than one year) as will be determined by the Board at the time of grant, which may be subject to earlier lapse or other modification in the event of the retirement, death or disability of a Participant or a Change in Control.

 

 

 

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

 

 

 

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

 

 

 

      (e) Any grant of Performance Shares or Performance Units may specify that the amount payable or the number of Common Shares, shares of Restricted Stock or Restricted Stock Units with respect thereto may not exceed a maximum specified by the Board at the Date of Grant.

 

 

 

      (f) The Board may at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

 

 

 

      (g) Each grant of Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Board may approve.

      9. 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 Option Rights, Appreciation Rights or other awards contemplated by Section 10 of this Plan and may also authorize the grant or sale of Common Shares, Restricted Stock or Restricted Stock Units (which may also be referred to as Deferred Stock

 


 

Units) to Nonemployee Directors. Each grant of an award to a Nonemployee Director will be upon such terms and conditions as approved by the Board, will not be required to be subject to any minimum vesting period, and will be evidenced by an Evidence of Award in such form as will be approved by the Board. Each grant will specify in the case of an Option Right an Option Price per share, and in the case of a Free-Standing Appreciation Right, a Base Price per share, which will not be less than the Market Value per Share on the Date of Grant. Each Option Right and Free-Standing Appreciation Right granted under the Plan to a Nonemployee Director will expire not more than 10 years from the Date of Grant and will be subject to earlier termination as hereinafter provided. If a Nonemployee Director subsequently becomes an employee of the Company or a Subsidiary while remaining a member of the Board, any award held under this Plan by such individual at the time of such commencement of employment will not be affected thereby. Nonemployee Directors, pursuant to this Section 9, may be awarded, or may be permitted to elect to receive, pursuant to procedures established by the Board, all or any portion of their annual retainer, meeting fees or other fees in Common Shares, Restricted Stock, Restricted Stock Units or other awards under the Plan in lieu of cash.

      10. Other Awards.

 

 

 

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

 

 

 

      (b) The Board may grant Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Board.

 

 

 

      (c) Share-based awards, pursuant to this Section 10, are not required to be subject to any minimum vesting period.

      11. Incentive Awards. The Board is authorized to grant Incentive Awards, which awards shall represent a conditional right to receive Restricted Stock or Restricted Stock Units upon achievement of pre-established Management Objectives, subject to the following terms and conditions:

 

 

 

      (a) It is the intent of the Company that Incentive Awards under this Section 11 granted to persons who are Covered Employees within the meaning of Section 162(m) of the Code shall constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. Accordingly, this Section 11 shall be interpreted in a manner consistent with Section 162(m) of the Code.

 

 

 

      (b) If the Board determines to grant Incentive Awards with respect to any one or more fiscal years, the Board shall select the Participants to be granted such awards and establish the Management Objectives, amounts payable and other terms of settlement, and all other terms of such awards. Such determinations by the Board shall be made, in the case of any Covered Employee, not later than the end of the first quarter of that fiscal year or such earlier date as may be necessary to comply with Section 162(m) of the Code.

 

 

 

      (c) The Board shall specify whether and to what extent an Incentive Award shall be settled in shares of Restricted Stock, Restricted Stock Units or in a combination thereof at the time of grant of

 


 

 

 

 

such award. If any Restricted Stock or Restricted Stock Units are awarded in settlement of such an Award, such Restricted Stock or Restricted Stock Units shall be subject to a restriction on transferability and a risk of forfeiture for a period extending until at least the end of the third fiscal year following the year to which such award related (except that the restrictions may lapse on an annual, ratable basis during the three-year period and the Board may accelerate the lapse of such restrictions in the event of the retirement, the attainment of reasonable age and service requirements approved by the Board, death or disability of a Participant or a Change in Control). The Board may specify additional or longer restrictions on transferability and risks of forfeiture with respect to such Restricted Stock or Restricted Stock Units.

 

 

 

      (d) As promptly as practicable following completion of the year or other period with respect to which Management Objectives relating to Incentive Awards are to be achieved, the Board shall determine whether and to what extent such Management Objectives have in fact been achieved. All such determinations by the Board shall be made in writing. The Board may, in its discretion, increase or reduce the amounts payable in settlement of such an award after the date of grant and prior to settlement (including upon consideration by the Board of other performance criteria), except that the Committee may not exercise discretion to increase the amounts payable in settlement of such an award to a Covered Employee.

      12. Administration of the Plan.

 

 

 

      (a) This Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Executive Compensation Committee of the Board or any other committee of the Board (or a subcommittee thereof), as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board will be deemed to be references to such committee or subcommittee.

 

 

 

      (b) The interpretation and construction by the Board of any provision of this Plan or of any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Incentive Awards or other awards pursuant to Section 10 of this Plan and any determination by the Board pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive.

 

 

 

      (c) The Board or, to the extent of any delegation as provided in Section 12(a), the committee, may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Board, the committee, or 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 Board, the committee or such person may have under the Plan. The Board or the committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Board or the committee: (i) designate employees to be recipients of awards under this Plan; (ii) determine the size of any such awards; provided, however, that (A) the Board or the Committee shall not delegate such responsibilities to any such officer for awards granted to an employee who is a Director or an executive officer or any person subject to Section 162(m) of the Code; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Board or the committee, as the case may be, regarding the nature and scope of the awards granted pursuant to the authority delegated.

      13. Adjustments. The Board may make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of Common Shares covered by other awards granted pursuant to Section 10 hereof, in the Option Price and Base Price provided in outstanding Appreciation Rights, and in the kind of shares covered thereby, as the Board, in its sole discretion may determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation,

 


 

spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board, in its discretion, may provide in substitution for any or all outstanding awards under this Plan such alternative consideration, if any, as it may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. The Board may also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Section 13; provided, however, that any such adjustment to the number specified in Section 3(b)(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 so to qualify.

      14. Change in Control. For purposes of this Plan, except as may be otherwise prescribed by the Board in an Evidence of Award made under this Plan, a “Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

 

 

 

      (a) A filing pursuant to any federal or state law in connection with any tender offer for shares of the Company (other than a tender offer by the Company);

 

 

 

      (b) The occurrence of or the signing of any agreement for a merger, consolidation, combination (as defined in Section 1701.01(Q), Ohio Revised Code), or majority share acquisition (as defined in Section 1701.01(R), Ohio Revised Code) involving the Company and as a result of which the holders of shares of the Company prior to the transaction become, or will become, by reason of the transaction, the holders of such number of shares of the surviving or acquiring corporation as entitle them to exercise less than one-third of the voting power of such corporation in the election of directors;

 

 

 

      (c) The signing of any agreement for the sale of all or substantially all of the assets of the Company;

 

 

 

      (d) The adoption of any resolution of reorganization or dissolution of the Company by the shareholders;

 

 

 

      (e) The occurrence of any other event or series of events, which, in the opinion of the Board of Directors, will, or is likely to, if carried out, result in a change of control of the Company;

 

 

 

      (f) If during any period of two consecutive years, individuals who at the beginning of such period constitute the Directors of the Company cease for any reason to constitute a majority thereof (unless the election, or the nomination for election by the Company’s shareholders, of each Director of the Company first elected during such period was approved by a vote of at least two-thirds of the Directors then still in office who were Directors of the Company at the beginning of any such period); or

 

 

 

      (g) The acquisition by any person (including a group within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act other than the Company (or any of its Subsidiaries) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Company’s then outstanding securities, unless such acquisition is approved by the vote of at least two-thirds of the Directors of the Company then in office.

      15. Detrimental Activity. Any Evidence of Award may provide that if a Participant, either during employment by the Company or a Subsidiary or within a specified period after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, forthwith upon notice of such finding, the Participant shall:

 

 

 

      (a) Forfeit any award granted under the Plan then held by the Participant;

 

 

 

      (b) Return to the Company, in exchange for payment by the Company of any amount actually paid therefor by the Participant, all Common Shares that the Participant has not disposed of that were offered pursuant to this Plan within a specified period prior to the date of the commencement of such Detrimental Activity, and

 


 

 

 

 

      (c) With respect to any Common Shares so acquired that the Participant has disposed of, pay to the Company in cash the difference between:

 

 

 

 

      (i) Any amount actually paid therefor by the Participant pursuant to this Plan, and

 

 

 

      (ii) The Market Value per Share of the Common Shares on the date of such acquisition.

 

 

 

 

      (d) To the extent that such amounts are not paid to the Company, the Company may set off the amounts so payable to it against any amounts that may be owing from time to time by the Company or a Subsidiary to the Participant, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason.

      16. Non U.S. Participants. In order to facilitate the making of any grant or combination of grants under this Plan, the Board may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company under an agreement with a foreign nation or agency, as the Board may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Board 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 Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will 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 Company.

      17. Transferability.

 

 

 

      (a) Except as otherwise determined by the Board, no Option Right, Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, award contemplated by Section 9 or 10 of this Plan, Incentive Award or dividend equivalents paid with respect to awards made under the Plan shall be transferable by the Participant except by will or the laws of descent and distribution and, in no event shall any such award granted under the Plan be transferred for value. Except as otherwise determined by the Board, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.

 

 

 

      (b) The Board may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or Incentive Awards or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer.

      18. Withholding Taxes. To the extent that the Company 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 Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Board) may include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of Common Shares, and such Participant fails to make arrangements for the payment of tax, the Company shall withhold such Common Shares having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income and employment tax laws, the Participant may elect to satisfy the obligation, in whole or in part, by electing to have withheld, from the shares required to be delivered to the Participant, Common Shares having a value equal to the

 


 

amount required to be withheld (except in the case of Restricted Stock where an election under Section 83(b) of the Code has been made), or by delivering to the Company other Common Shares held by such Participant. The shares used for tax withholding will be valued at an amount equal to the Market Value per Share of such Common Shares on the date the benefit is to be included in Participant’s income. In no event shall the Market Value per Share of the Common Shares to be withheld and delivered pursuant to this Section to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld. Participants shall also make such arrangements as the Company may require for the payment of any withholding tax obligation that may arise in connection with the disposition of Common Shares acquired upon the exercise of Option Rights.

      19. 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 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 Company 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) In order to determine for purposes of Section 409A of the Code whether a Participant is employed by a member of the Company’s controlled group of corporations under Section 414(b) of the Code (or by a member of a group of trades or businesses under common control with the Company under Section 414(c) of the Code) and, therefore, whether the Common Shares that are or have been purchased by or awarded under this Plan to the Participant are shares of “service recipient” stock within the meaning of Section 409A of the Code:

 

 

 

 

      (i) In applying Code Section 1563(a)(1), (2) and (3) for purposes of determining the Company’s controlled group under Section 414(b) of the Code, the language “at least 50 percent” is to be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2) and (3), and

 

 

 

      (ii) In applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses under common control with the Company for purposes of Section 414(c) of the Code, the language “at least 50 percent” is to be used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2.

      20. Amendments.

 

 

 

      (a) The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan (i) would materially increase the benefits accruing to participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan or (iv) must otherwise be approved by the shareholders of the Company 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.

 

 

 

      (b) The Board will not, without the further approval of the shareholders of the Company, authorize the amendment of any outstanding Option Right or Appreciation Right to reduce the Option Price or the Base Price, as applicable. Furthermore, no Option Right or Appreciation Right will be cancelled and replaced with awards having a lower Option Price or Base Price without further approval of the shareholders of the Company. This Section 20(b) is intended to prohibit the repricing of Option Rights

 


 

 

 

 

and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 13 of this Plan.

 

 

 

      (c) If permitted by Section 409A of the Code, in the case of involuntary termination of employment or termination of employment by reason of death, disability, retirement, closing of business or operation units, or elimination of job position, or in the case of unforeseeable emergency or other special circumstances (including reaching reasonable age and service requirements approved by the Board from time to time), of or relating to a Participant who holds an Option Right or Appreciation Right not immediately exercisable in full, or any shares of Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Performance Shares or Performance Units or Incentive Awards which have not been fully earned, or any other awards made pursuant to Section 10 subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 17(b) of this Plan, the Board may, in its sole discretion, 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 or Incentive Awards 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 except in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.

 

 

 

      (d) Subject to Section 20(b) hereof, the Board may amend the terms of any award theretofore granted under this Plan prospectively or retroactively, except in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code. In such case, the Board will not make any modification of the Management Objectives or the level or levels of achievement with respect to such Covered Employee. Subject to Section 13 above, no such amendment shall impair the rights of any Participant without his or her consent. The Board 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.

      21. 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.

      22. Effective Date/Termination. This Plan will be effective as of the Effective Date. No grants will be made on or after the Effective Date under the Existing Plans, except that (i) outstanding awards granted under the Existing Plans will continue unaffected following the Effective Date; (ii) the provisions relating to the deferral of Director retainers and fees under the Amended and Restated Nonemployee Director Stock Plan shall continue to apply to services rendered through December 31, 2006; and (iii) awards of performance shares and performance units granted under the 1998 Equity and Performance Incentive Plan (As Amended and Restated Effective as of June 6, 2005) and outstanding as of the Effective Date may be converted to restricted stock under such plan once such performance shares and performance units are earned. No grant will be made under this Plan more than 10 years after the Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.

      23. Miscellaneous Provisions.

 

 

 

      (a) The Company will not be required to issue any fractional Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement of fractions in cash.

 

 

 

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

 


 

 

 

 

      (c) To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.

 

 

 

      (d) No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of stock thereunder, would be, in the opinion of counsel selected by the Board, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.

 

 

 

      (e) Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries shall not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder, except that no awards may be granted to an employee while he or she is absent on leave.

 

 

 

      (f) No Participant shall have any rights as a stockholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.

 

 

 

      (g) The Board may condition the grant of any award or combination of awards authorized under this 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 Company or a Subsidiary to the Participant.

 

 

 

      (h) Except with respect to Option Rights and Appreciation Rights, the Board may permit Participants to elect to defer the issuance of Common Shares 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 the requirements of Section 409A of the Code. The Board also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.

 

 

 

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