Exhibit 10.1

AMENDMENT TO EXECUTIVE’S TERMS OF EMPLOYMENT

 

This Amendment to Executive’s Terms of Employment (“Amendment”) dated May 7, 2018, is between Kimball International, Inc. an Indiana corporation, 1600 Royal Street, Jasper, Indiana 47549 (hereinafter “Kimball” or the “Company”), and Robert F. Schneider (hereinafter “Executive”).

 

RECITALS

 

A. The Company has previously entered into that certain Executive Employment Agreement with Executive, amended and restated effective as of June 26, 2015 (the “Agreement”), and that certain Change in Control Agreement, dated June 26, 2015, with Executive (the “Change in Control Agreement”), as well as provided other awards and benefits to Executive under plans and programs of the Company, including, but not limited to, the 2003 Stock Plan and the Annual Cash Incentive Plan, each as defined below.

 

B. Executive has notified the Company of his decision to retire from his current positions with the Company as Chief Executive Officer and Chairman of the Board.

 

C. The parties desire to amend the Agreement and certain other terms of other benefit plans and programs to ensure a smooth transition of Executive’s roles to one or more successors, and to provide for certain payments to be made to Executive during the transition period and at or following the effective date of his Retirement (as defined below).

 

AGREEMENT

 

In consideration of the foregoing and the following mutual covenants, promises and obligations and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

 

“ a) “2003 Stock Plan” means the Kimball International, Inc. 2003 Amended and Restated Stock Option and Incentive Plan or any successor plan, including but not limited to, the Kimball International, Inc. 2017 Stock Incentive Plan.”

 

2. Section 1(p) of the Agreement shall be amended and restated in its entirety to read as follows:

“ p) “Kimball” or the “Company” means Kimball International, Inc., any Affiliate, and any successor to the business or assets of Kimball International, Inc. that executes and delivers the agreement provided for in Section 11 of the Change in Control Agreement or which otherwise becomes bound by all of the terms and provisions of this Agreement by the operation of law.”

 

3. Section 1(t) of the Agreement shall be amended and restated in its entirety to read as follows:

“ t) “Profit Sharing Bonus” means the compensation paid to Executive pursuant to the 2010 Profit Sharing Incentive Bonus Plan or the 2016 Annual Cash Incentive Plan.”

 

4. The following definitions shall be added to Section 1 of the Agreement:

“ y) “Amendment” means the Amendment to Executive’s Terms of Employment dated May 7, 2018, between the Company and Executive.

z) “Annual Cash Incentive Plan” means the 2016 Annual Cash Incentive Plan (which replaces the Kimball International, Inc. 2010 Profit Sharing Incentive Bonus Plan), and any amendments thereto, or any successor plans thereof.

aa) “Continuous Service” means, solely for the purpose of the Amendment and the provisions of this Agreement amended thereby, the absence of any interruption or termination in the employment of Executive by the Company or an Affiliate. Continuous Service will not be considered interrupted in the case of: (i) sick leave, military leave or any other leave of absence approved by the Company; or (ii) transfer between the Company and an Affiliate or any successor to the Company. This definition does not include service by Executive solely as a non-employee member of the Board of the Company or, following the effective date of Executive’s Retirement, as an Advisor in accordance with new Section 2.1(d) of this Agreement.

bb) “Retirement” means any termination of Executive’s Continuous Service, other than for Cause, occurring the later of: (i) October 31, 2018; or (ii) the effective date of the appointment by the Company of a new Chief Executive Officer. Solely for purposes of new Section 5.1(e) of this Agreement, “Retirement” shall include retirement by the Executive at or after the point the Executive has reached the age of 55 and has a combination of age plus years of Continuous Service equal to or greater than 75.”

 

5. A new Section 2.1 shall be added to the Agreement, which shall read in its entirety as follows:

 

“ 2.1 Position(s) and Continued Service . Executive shall perform and discharge faithfully, diligently and to the best of his ability those duties and responsibilities prescribed by the Board of Directors including in positions set forth below:

 

a) Chief Executive Officer . Executive shall serve as Chief Executive Officer until the later of October 31, 2018, or the effective date of appointment by the Company of a new Chief Executive Officer. Duties and responsibilities of the Chief Executive Officer shall remain substantially the same as those performed by Executive since being appointed to the Chief Executive Officer role and such other duties and responsibilities as may be required by the Board of Directors;

 

b) Chairman of the Board . Executive shall serve as Chairman of the Board until the effective date of appointment by the Board of Directors of a new Chairman of the Board, which said appointment shall occur no later than the date of the 2018 Annual Shareholder Meeting;

 

c) Member of the Board of Directors . Following the appointment by the Board of Directors of a new Chairman of the Board, Executive shall remain a member of the Board of Directors until the earlier of (i) the expiration of his elected board term or (ii) the effective date of his resignation from the Board of Directors, either of his own volition or at the request of a majority of the then-sitting members of the Board of Directors. If requested by a majority of the then-sitting members of the Board of Directors upon, or at any time following, the appointment of the successor Chief Executive Officer, Executive agrees to resign as a member of the Board of Directors. The Board shall not nominate Executive for re-election to the Board of Directors at the expiration of his current board term unless the parties otherwise agree in writing; and

 

d) Advisor . The parties acknowledge and agree that from time to time Executive may be called upon to offer counsel and advice to the Company, the successor Chief Executive Officer and/or the Board on an unpaid, as-needed basis, from the effective date of appointment of the successor Chief Executive Officer through the eighteen-month post-separation period identified below.”

 

6. Section 3(b) of the Agreement shall be amended and restated in its entirety to read as follows:

 

“b) Non-Competition During Eighteen-Month Post-Employment

As a condition of at-will employment with Kimball, Executive agrees that for a period of eighteen (18) months after separation from Kimball (regardless of the reason for separation), but not to extend beyond June 30, 2020, Executive shall not directly or indirectly:

 

7. Section 3(d) of the Agreement shall be amended and restated in its entirety to read as follows:

“d) Other Limited Prohibitions

During Executive’s employment by Kimball and for eighteen (18 ) months post-separation (for whatever reason), but not to extend beyond June 30, 2020, Executive shall not:

 

 

 

 

8. A new Section 5.1 shall be added to the Agreement which shall read in its entirety as follows:

 

“5.1 Compensation and Benefits Following Execution of the Amendment and upon Retirement

 

a) Base Salary . From July 2, 2018 until the effective date of Executive’s Retirement, Executive shall receive annual salary in the amount of $2,400,000 to be paid on regular payroll dates according to the current Company schedule and practice for services provided in his roles as Chief Executive Officer and Chairman of the Board. Should Executive continue in his position as a member of the Board of Directors following the effective date of Executive’s Retirement, he shall receive payment for services consistent with that paid to other non-employee directors of Kimball.

 

b) Health Insurance . Executive shall continue to receive and be covered by health insurance provided by Kimball following execution of the Amendment until the effective date of his Retirement as a regular, full-time employee of the Company. Upon Retirement, Kimball shall offer to Executive health, dental and vision insurance coverage, as applicable, through COBRA continuation coverage. COBRA premiums shall be paid by Executive and reimbursed by Kimball for such COBRA coverage for a period of eighteen (18) months following the effective date of Executive’s Retirement or, if earlier, the termination of his COBRA coverage. Executive must timely elect and pay for COBRA continuation coverage for this provision to apply. Kimball shall reimburse Executive for such COBRA premiums, grossed up for applicable income and withholding taxes, within 21 days after Executive submits appropriate documentation evidencing payment of premiums. Executive shall submit such documentation no later than June 30, 2020.

 

c) Other Welfare and Related Benefits . Executive shall continue to receive and be covered by any and all other welfare and related benefits provided to Executive in his current position until the effective date of his Retirement, at which time Executive shall cease to be eligible for such welfare and related benefits except as set forth in the Agreement, the Amendment or in accordance with the current plans or practices of the Company, as amended from time to time.

 

d) Profit Sharing Bonus .

 

(i) Executive shall not participate in the Annual Cash Incentive Plan and shall not be eligible to receive a Profit Sharing Bonus or other payment thereunder, for fiscal year 2019 (commencing on July 1, 2018).

 

(ii) Executive shall receive full payout of his Profit Sharing Bonus earned under the Annual Cash Incentive Plan for fiscal year 2018, in accordance with the terms of the Annual Cash Incentive Plan, except as set out herein.

 

e) Treatment of Outstanding Stock Awards . All portions of outstanding stock awards granted to Executive prior to the date of the Amendment, as listed on Schedule 1 attached hereto and incorporated herein by reference, which remain unvested as of the effective date of Executive’s Retirement shall be treated as set forth below. The Amendment and this Section 5.1(e) shall supersede the applicable terms and conditions of such awards as provided for in the 2017 Stock Incentive Plan, the 2003 Stock Plan and the applicable award agreements:

 

(i) Restricted Share Units . All restricted share units (“RSUs”) awarded by award agreements set forth on Schedule 1 that are unvested as of the effective date of Executive’s Retirement shall vest on a pro rata basis on the effective date of Executive’s Retirement, calculated by multiplying the total number of Shares granted by a fraction determined by:

Numerator = number of months between the date of the award and the vesting date of such award that Executive maintained Continuous Service prior to such Retirement, including the month in which the Continuous Service ceases, which shall be considered a full month.

Denominator = 36 months.

Any unvested RSUs after such proration shall be forfeited.

 

(ii) RTSRs . All Relative Total Shareholder Return Performance Units (“RTSRs”) awarded by award agreements set forth on Schedule 1 that are unvested as of the effective date of Executive’s Retirement shall vest in accordance with the terms of the applicable RTSR award agreement entered into between Executive and the Company, with Performance Cycles as defined therein. The number of Performance Units earned by Executive will be prorated by multiplying the Performance Units determined to be earned for the Performance Cycle by a fraction determined by:

Numerator = number of months during the Performance Cycle that the Executive maintained Continuous Service prior to such Retirement, including the month in which the Continuous Service ceases, which shall be considered a full month.

Denominator = 36 months.

Any unvested RTSRs after such proration shall be forfeited. For purposes of the RTSR award agreements, “Retirement” shall be as defined in the Amendment and new Section 1(bb) of this Agreement.

 

(iii) LTPSAs . All Long-Term Performance Share Awards (the “LTPSAs”) awarded by award agreements set forth on Schedule 1 shall vest on June 30, 2019 on a pro rata basis, calculated by multiplying the total number of Shares in the remaining tranche by a fraction determined by:

Numerator = number of months in the five (5) fiscal years prior to and ending June 30, 2019, that Executive maintained Continuous Service prior to his Retirement, including the month in which the Continuous Service ceases, which shall be considered a full month.

Denominator = 60 months.

Any unvested LTPSAs after such proration shall be forfeited. For purposes of the LTPSA, “Retirement” shall be as defined in the Amendment and new Section 1(bb) of this Agreement.

 

f) Stock Awards.

 

(i) Executive shall not receive any awards under the 2017 Stock Incentive Plan for fiscal year 2019 (commencing July 1, 2018).

 

(ii) On May 7, 2018, the Company shall grant to Executive an award of (33,265) restricted share units (the “New RSUs”), which value is approximately equivalent to the value of Shares forfeited pursuant to section (e) above, and which is divided into two tranches for vesting purposes. The first tranche of New RSUs, in the number of (17,301) Shares, shall vest on June 30, 2019. The second tranche of New RSUs, in the number of (15,964) Shares, shall vest on June 30, 2020. Prior to the vesting date for each tranche, the Board of Directors, immediately prior to such date, shall determine in its sole discretion whether Executive has fulfilled all obligations pursuant to the terms of this Agreement and the Amendment. If the Board of Directors determines that Executive has not fulfilled such obligations, the New RSUs shall be forfeited and returned to the Company.”

 

9. Additional Terms of this Amendment.

 

a) Whistleblower Policy . Executive understands and agrees that nothing in this Amendment or the Agreement limits or interferes with his right, without notice to or authorization from the Company, to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, or any other self-regulatory organization or any other federal, state or local governmental agency or commission (each a “Governmental Agency”), or to testify, assist or participate in any investigation, hearing or proceeding conducted by a Governmental Agency. In the event Executive files a charge or complaint with a Governmental Agency, or a Governmental Agency asserts a claim on Executive’s behalf, Executive agrees that any release of claims upon Retirement will nevertheless bar Executive’s right (if any) to any monetary or other recovery (including reinstatement), except that Executive does not waive: (1) his right to receive an award from the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934 and (2) any other right where waiver is expressly prohibited by law.

 

b) Tax Withholding . The Company may withhold from any amounts payable to Executive under this Amendment or other program any federal, state, local or foreign taxes that are required to be withheld pursuant to applicable law or regulation.

 

c) No Representations and Non-Admission . Executive acknowledges that he has not relied on any representations or statements in determining to execute this Amendment. Nothing contained in this Amendment will be deemed or construed as an admission of wrongdoing or liability on the part of the Company or by Executive.

 

d) Understanding . This Amendment modifies the Agreement, the 2003 Stock Plan and award agreements thereunder, and the Annual Cash Incentive Plan, as set forth herein. All other terms of the Agreement, the 2003 Stock Plan and award agreements thereunder, and the Annual Cash Incentive Plan, as well as the Change of Control Agreement, remain in full force and effect. For purposes of clarity, to the extent that any benefit provided by this Amendment is provided under another agreement, plan or policy, such that there

would be a duplication of benefits to Executive, such benefit provided by this Amendment shall be nullified.

 

e) General Release . Upon Retirement, Executive agrees that to be eligible for benefits and rights provided by this Amendment, he must sign and not rescind a general release in the form acceptable to the Company. This requirement does not supersede any other requirement to sign a general release under any other plan or agreement.

 

f) 409A Interpretation . The parties do not intend that any term of this Amendment shall provide for the impermissible deferral or acceleration of income in violation of Section 409A of the Internal Revenue Code of 1986, as amended, and shall be interpreted accordingly. Executive shall not be deemed to have separated from service, as defined in Section 409A and regulations issued thereunder, while he provides services to the Company, including as a non-employee director, unless specifically provided under a plan or benefit subject to Section 409A.

 

 

    

Schedule 1

List of Share Award Agreements

 

Restricted Share Unit Award Agreement, dated July 6, 2017

Performance Unit Award Agreement, dated July 6, 2017

Restricted Share Unit Award Agreement, dated July 1, 2016

Performance Unit Award Agreement, dated July 1, 2016

Long-Term Performance Share Award, dated June 26, 2014

 

 

Exhibit 10.2

KIMBALL INTERNATIONAL, INC.

RESTRICTED SHARE UNIT AWARD AGREEMENT

THIS RESTRICTED SHARE UNIT AWARD AGREEMENT (“Award Agreement”), dated the 7th day of May, 2018 (“Award Date”), is granted by KIMBALL INTERNATIONAL, INC., an Indiana corporation (“Company”), to Robert F. Schneider (“Employee”) pursuant to the terms of the Company’s 2017 Stock Incentive Plan or any successor plan (“Plan”).

WHEREAS, Employee, who is the Chief Executive Officer and Chairman of the Board of the Company, has notified the Board of Directors of the Company (the “Board”) of his decision to retire from both positions with the Company;

WHEREAS, the Board and the Compensation and Governance Committee of the Company (the “Committee”) believe it to be in the best interests of the Company and its share owners that Employee’s Executive Employment Agreement, amended and restated effective as of June 26, 2015 (as amended, the “Employment Agreement”), and certain other terms of Employee’s other benefit plans and programs be amended to ensure a smooth transition of Employee’s roles to one or more successors, to incentivize and motivate Employee to continue to work for and manage the Company's affairs and aligning his personal interests with those of the Company's share owners during the transition, and to secure his additional obligations as set forth in the Amendment to Executive’s Terms of Employment dated May 7, 2018 (the “Amendment”); and

WHEREAS, pursuant to the terms of the Amendment, the Committee has approved the grant of this Restricted Share Unit Award to Employee.

NOW THEREFORE, in consideration of these premises and of services to be performed by Employee, the Company hereby grants this Restricted Share Unit Award to Employee on the terms and conditions hereinafter expressed and subject to the terms of the Plan, the Employment Agreement and the Amendment.

The Company hereby grants to Employee the right to receive a total of 33,265 Shares of Stock of the Company, subject to the terms and conditions set forth in this Award Agreement and the Plan (“Award”).

and subtracting any Shares of Stock that vested prior to the date of such Disability or death.

For any dividends declared and paid by the Company on its outstanding Stock, the same amount of dividends shall be credited to the Award (“Phantom Dividends”), which Phantom Dividends shall be subject to the same restrictions and risk of forfeiture as the Award as set forth in Section 3 above. The amount of such Phantom Dividends shall be accumulated (“Accumulated Phantom Dividends”) during the period commencing on the date of the Award and ending on the applicable Vesting Date. Upon the delivery of Shares in accordance with Section 5 below, such amount of Accumulated Phantom Dividends shall be granted to Employee in shares of Stock. The number of such shares to be granted shall be determined by dividing the Accumulated Phantom Dividends by the Fair Market Value of a Share of Stock on the applicable Vesting Date, rounded down to the nearest whole share.

The Shares issued to Employee upon vesting will be delivered, without restriction, to Employee as soon as practical after the applicable Vesting Date, but no later than sixty (60) days after the applicable Vesting Date, except as provided under Section 12 below. The Award will be payable in Stock.

6.     CHANGES IN CAPITALIZATION; CHANGE IN CONTROL

7.     TRANSFER

Neither this Award nor any right or interest of Employee in any Award under the Plan may be assigned, encumbered, transferred or exchanged, voluntarily or involuntarily, otherwise than by will or the laws of descent and distribution.

8.     VOTING RIGHTS

Employee will not have any voting rights with respect to the Restricted Share Units subject to this Award Agreement. Employee will obtain voting rights only after any vested Shares are transferred to Employee.

9.     TAXES AND WITHHOLDING

Issuance of the Award under this Award Agreement, under current applicable laws, will result in various federal and/or state taxes becoming due, including, but not limited to, income and social security. Employee is responsible for the timely payment of these taxes, and, if required by law, provision will be made by the Company to satisfy these obligations by withholding of Shares having a Fair Market Value on the date the taxes are required to be withheld approximately equal to the amount of federal, state and local taxes required to be withheld (but not to exceed the maximum individual statutory tax rate in each applicable jurisdiction). The value of the Shares withheld will be determined by using the appropriate method under applicable tax regulations.

10.     ADMINISTRATION

This Award Agreement and your rights under it are subject to all terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The parties acknowledge that the Committee or its designee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, in its sole discretion, all of which shall be binding on Employee.

11.     AMENDMENTS

In the event any new modifications or changes are made to existing laws or applicable stock exchange rules that render any or all of this Award Agreement illegal or unenforceable, this Award Agreement may be amended to the extent necessary in order to carry out the intention of the Award to Employee. The Committee may amend this Award Agreement in other respects, without Employee’s consent, if the amendment will not materially impair Employee’s rights under this Award Agreement as in effect immediately before the amendment.

13.     PLAN CONTROLLING

The Award is subject to all of the terms and conditions of the Plan except to the extent that those terms and conditions are supplemented or modified by this Award Agreement, as authorized by the Plan. Capitalized terms used in this Award Agreement and not otherwise defined herein shall have the meanings assigned to them in the Plan. All determinations and interpretations of the Committee shall be binding and conclusive upon Employee and his legal representatives.

14.     QUALIFICATION OF RIGHTS

Neither this Award Agreement nor the existence of the Award shall be construed as giving Employee any right (a) to be retained as an employee of the Company; or (b) as a shareholder with respect to the Shares of Stock underlying the Award until the certificates for the Stock have been issued and delivered to Employee or a book entry has been recorded in the name of Employee with the Company’s transfer agent.

15.     GOVERNING LAW

This Award Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Award Agreement to the substantive law of another jurisdiction. Any action or proceeding seeking to enforce the

terms of this Award Agreement or based on any right arising out of this Award Agreement must be brought in the appropriate court located in Dubois County, Indiana, or if jurisdiction will so permit, in the Federal District Court for the Southern District of Indiana located in Evansville, Indiana. The parties hereto consent to the jurisdiction and venue of said courts.

16.     REPRESENTATIONS AND WARRANTIES

17.     SUCCESSORS AND ASSIGNS

This Award Agreement shall be binding upon and inure to the benefit of the successors, assigns and heirs of the respective parties.

18.     WAIVER

The failure of a party to insist upon strict adherence to any term of this Award Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Award Agreement.

19.     TITLES

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Award Agreement.

20.     COUNTERPARTS/ COPIES

This Award Agreement may be signed in one or more counterparts, each of which will be deemed to be an original and all of which when taken together will constitute the same agreement. Any copy of this Award Agreement made by reliable means (for example, photocopy, scanned copy or facsimile), is considered an original.

IN WITNESS WHEREOF, the Company has caused the execution hereof by its duly authorized officer and Employee has agreed to the terms and conditions of this Award Agreement, all as of the day and date first above written.

Kimball International, Inc.

The undersigned employee has read, acknowledged and accepts the terms of the Award, the Award Agreement, and the Plan.

Exhibit 10.3

KIMBALL INTERNATIONAL, INC.

2016 ANNUAL CASH INCENTIVE PLAN

(as amended May 7, 2018)

Background. Your Board believes that the long-term success of your Company depends, in part, on its ability to recruit and retain outstanding individuals as employees and to furnish these employees maximum incentive to improve operations and increase profits. Your Board also believes it is important to align compensation of officers and eligible employees with the interests of Shareowners. In 2016, in accordance with this belief, your Board, upon recommendation of the Compensation and Governance Committee (“Committee”) of the Board (comprised of independent outside directors), unanimously adopted, and Shareowners approved, the Kimball International, Inc. 2016 Annual Cash Incentive Plan (the “Plan”). Your Board, upon recommendation of the Committee, unanimously adopted and approved amendments to this Plan in May, 2018. This Plan is effective for fiscal year 2017 and forward, as amended, and replaces, in full, the Amended and Restated 2010 Profit Sharing Bonus Plan.

The profit sharing framework of this Plan has been in place since prior to the Company becoming publicly traded in 1976. The Plan measures performance at two levels within the Company: (1) at the consolidated level (“Company”); and (2) at a business unit level for the performance of designated operations within the Company (“Business Unit”). All executive officers and other eligible employees participate at the Company level or a combination of the Company and Business Unit levels.

Goal. The goal of the Plan is to link an employee’s compensation to the financial success of the Company. The intent is to encourage participants to think, act and be rewarded like owners, and to seek out and undertake initiatives that continuously improve the performance of the Company.

Eligibility. Executive officers and all employees (other than temporary employees, employees engaged directly in manufacturing or delivery of product, employees on a sales incentive plan, and/or persons joining the Company as employees as a result of acquisition, as determined by the terms and conditions of the acquisition) are eligible to participate in the Plan (“Participants”).

Incentive Criteria. The Committee sets the performance measure and performance targets at the beginning of the fiscal year to incent desired results. The performance measure can vary from year to year and may be based on any one or any combination of the following business criteria: (i) operating income; (ii) earnings per share; (iii) return on capital; (iv) return on assets; (v) economic profit; (vi) market value per share; (vii) EBITDA; (viii) cash flow; (ix) net income (before or after taxes); (x) revenues; (xi) cost reduction goals; (xii) market share; and (xiii) total return to shareholders. The Committee must approve the performance targets (“Targets”) within the first 25% of the period of service to which the Targets relate, but not later than 90 days after the commencement of that period (“Relevant Time Period”). The Committee, within the Relevant Time Period, may make adjustments for non-operating income and loss and other performance measure computation elements as it deems appropriate to provide optimal incentives for eligible employees. If other adjustments are necessary beyond the Relevant Time Period, the NEOs will not be eligible to receive any cash incentive resulting from such adjustments.

Cash Incentive Amounts. The Plan establishes potential cash incentive amounts as a range of percentages of the Participant’s salary, with the cash incentive percentage increasing with higher levels of performance. The Plan also establishes different cash incentive percentage ranges across several Participant categories, setting higher incentive-percentage ranges for Participants who, by virtue of their responsibilities, are expected to have a greater effect on the Company’s financial success. Within the Relevant Time Period, the Committee has the discretion to increase Executive Officer potential cash incentive payout percentages under the Plan with a payout cap of 100 percent of base salary. The Committee may use this discretion to achieve a desired mix of short-term cash incentives as a percentage of total target compensation for a particular Executive Officer. At the highest responsibility level, Participants may earn cash incentives of up to 100 percent of base salary. The Plan is designed so that Participants will achieve maximum cash incentives only if the Company achieves maximum targeted performance levels, considering various economic indicators and improvement goals as determined by the Committee. A Participant’s

total cash incentive under the Plan may not exceed $1 million for any fiscal year. Awards under the Plan will be determined based on actual future performance.

Administration. For a particular fiscal year, the Committee must approve the Targets, performance measure computation adjustments, and any other conditions within the Relevant Time Period. At the end of each fiscal year, but before Plan incentives may be paid, the Committee must certify in writing that Targets and other conditions have been satisfied. For fiscal year 2018 only, the Company guarantees to pay at least 95% of the computed fiscal year 2018 payout to Participants that are employed by the Company on the date of payout. The Board may amend or terminate the Plan effective for future fiscal years. The Board will not, however, amend the Plan without Shareowner approval if such approval is required to comply with applicable law or to comply with applicable stock exchange requirements.

Cash Incentive Payments. Cash incentives will be paid during the following fiscal year in two cash installments - 50% in August and 50% in December, except for fiscal year 2018, in which there will be one cash installment payable in August. If a Participant’s employment is terminated before a scheduled payment date, the former employee will not be entitled to receive that cash incentive payment or any subsequent cash incentive payment, unless the Participant’s termination was caused by Retirement, death, or permanent disability, in which case, that Participant (or estate, in the event of the Participant’s death) will be entitled to receive all cash incentive payments for the previous fiscal year on the scheduled payment date(s), and a pro-rata share for the current fiscal year cash incentive if any which will be paid in full within 2½ months after the end of the Company’s fiscal year.

“Retirement” means any termination of a Participant’s employment, other than for Cause, occurring at or after the Participant has attained the minimum retirement age under the governmental retirement system for the applicable country (age 62 in the United States), or at or after the Participant has reached the age of 55 and has a combination of age plus years of Continuous Service equal to or greater than 75 and the Participant complies with the process for approval of Retirement established by the Company. “Continuous Service” means the absence of any interruption or termination in the provision of service to the Company by a Participant. Continuous Service will not be considered interrupted in the case of (i) sick leave, military leave or any other leave of absence approved by the Company; (ii) transfer between the Company and an Affiliate or any successor to the Company; or (iii) any change in status so long as the individual remains in the Continuous Service of the Company or any Affiliate. A Participant’s Continuous Service shall be deemed to have terminated either upon an actual cessation of providing services to the Company or any Affiliate or upon the entity to which the Participant provides services ceasing to be an Affiliate.

“Cause” means one or more of the following occurrences: (i) Participant's willful and continued failure to perform substantially the duties or responsibilities of Participant's position (other than by reason of Disability), or the willful and continued failure to follow lawful instructions of a senior executive or the Board of Directors, if such failure continues for a period of five days after the Company delivers to Participant a written notice identifying such failure; (ii) Participant's conviction of a felony or of another crime that reflects in a materially adverse manner on the Company in its markets or business operations; (iii) Participant's engaging in fraudulent or dishonest conduct, gross misconduct that is injurious to the Company or any misconduct that involves moral turpitude; or (iv) Participant’s failure to uphold a fiduciary duty to the Company or its shareholders. “Affiliate” means any entity that is a member, along with the Company, of a controlled group of corporations or a group of other trades or businesses under common control, within the meaning of Internal Revenue Code Section 414(b) or (c).

Repayment, Forfeiture . After the Committee certifies that Targets and other conditions have been satisfied as described above, no adjustments will be made to reflect any subsequent change in accounting, the effect of federal, state or municipal taxes later assessed or determined, or otherwise. Notwithstanding the foregoing, the Company reserves the right to, and in appropriate cases will, seek recovery of all or any portion of cash incentive payments made if (i) the amount of the cash incentive payment was calculated based upon the achievement of certain financial results that were subsequently the subject of a restatement of all or a portion of the Company’s financial statements; (ii) the Participant engaged in intentional misconduct that caused or partially caused the need for such a restatement; and (iii) the amount of the cash incentive payment that would have been awarded to a Participant would have been lower than the amount actually awarded had the financial results been properly reported. Further, the Company is not limited in its power to take other actions as it deems necessary to remedy the misconduct,

prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer in a manner it deems appropriate.

The foregoing policy may be amended as required to comply with (i) any applicable listing standards of a national securities exchange adopted in accordance with Section 10D of the Exchange Act (regarding recovering of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities and Exchange Commission adopted thereunder; (ii) similar rules under the laws of any other governing jurisdiction; and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Company in its discretion to be applicable to a Participant.