SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934

(Amendment No.      )

Filed by the Registrant þ

Filed by a party other than the Registrant o

Check the appropriate box:

STONERIDGE, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

þ No fee required.

o Fee paid previously with preliminary materials:

           Not Applicable

           Not Applicable

           Not Applicable

      (4) Date Filed:

           Not Applicable

STONERIDGE, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To our Shareholders:

      The 2006 Annual Meeting of Shareholders of Stoneridge, Inc. will be held at 600 Golf Drive, Warren, Ohio 44483, on Monday, April 24, 2006, at 10:00 a.m., local time, for the following purposes:

      Only shareholders of record at the close of business on March 10, 2006, are entitled to notice of and to vote at the meeting or any adjournment thereof. Shareholders are urged to complete, sign and date the enclosed proxy and return it in the enclosed envelope. The principal address of Stoneridge, Inc. is 9400 East Market Street, Warren, Ohio 44484.

Dated: March 17, 2006

YOUR VOTE IS IMPORTANT

PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY

STONERIDGE, INC.

PROXY STATEMENT

      The Board of Directors of Stoneridge, Inc. (the “Company”) is sending you this proxy statement to ask for your vote as a Stoneridge shareholder on certain matters to be voted on at the Annual Meeting of Shareholders. The Annual Meeting of Shareholders will be held at 600 Golf Drive, Warren, Ohio 44483, on Monday, April 24, 2006, at 10:00 a.m., local time. The Board of Directors is mailing this proxy statement and the accompanying notice and proxy to you on or about March 17, 2006.

      Annual Report. A copy of the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2005, is enclosed with this proxy statement.

      Solicitation of Proxies. The Board of Directors is making this solicitation of proxies and will pay the cost of the solicitation. The Board of Directors has retained Georgeson Shareholder, at an estimated cost of $5,000, to assist the Company in the solicitation of proxies from brokers, nominees, institutions and individuals. In addition to solicitation of proxies by mail by Georgeson Shareholder, the Company’s employees may solicit proxies by telephone, facsimile or electronic mail.

      Proxies; Revocation of Proxies. The shares represented by your proxy will be voted in accordance with the instructions as indicated on your proxy. In the absence of any such instructions, they will be voted to elect the director nominees set forth under “Election of Directors” and FOR the proposal to approve the adoption of the Amended and Restated Long-Term Incentive Plan. Your presence at the Annual Meeting of Shareholders, without more, will not revoke your proxy. However, you may revoke your proxy at any time before it has been exercised by signing and delivering a later-dated proxy or by giving notice to the Company in writing at the Company’s address indicated on the attached Notice of Annual Meeting of Shareholders or in open meeting.

      Voting Eligibility. Only shareholders of record at the close of business on the record date, March 10, 2006, are entitled to receive notice of the Annual Meeting of Shareholders and to vote the common shares that they held on the record date at the meeting. On the record date, the Company’s voting securities outstanding consisted of 23,241,041 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table describes certain information regarding the beneficial ownership of the Company’s common shares as of February 10, 2006, by: (a) the Company’s directors; (b) each other person who is known by the Company to own beneficially more than 5% of the Company’s outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) the Company’s executive officers and directors as a group.

ELECTION OF DIRECTORS

      In accordance with the Company’s Code of Regulations, the number of directors has been fixed at ten. At the Annual Meeting of Shareholders, you will elect nine directors to hold office until the Company’s next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board of Directors proposes that the nominees described below, all of whom are currently serving as directors, be elected to the Board of Directors. Jeffrey P. Draime, one of the Company’s directors, is the son of D.M. Draime, Chairman of the Board of Directors. John C. Corey, the Company’s President and Chief Executive Officer, has an employment agreement with the Company, which provides that, during the term of the agreement, Mr. Corey shall be entitled to be nominated for election to the Board of Directors. At the Annual Meeting of Shareholders, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the nine nominees hereinafter named. The proxies cannot be voted for a greater number of persons than the number of nominees named. Because the number of directors is currently fixed at ten, after the Annual Meeting of Shareholders there will be a vacancy on the Board of Directors. The nominating and corporate governance committee retained a national search firm to recommend qualified persons to serve as directors for the Board of Directors to consider. The Board of Directors expects to appoint a new and independent person to fill the vacancy sometime after the Annual Meeting of Shareholders. If the vacancy is filled, the person filling it will serve as a director until the Annual Meeting of Shareholders in 2007.

      The director nominees are identified in the following table. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board of Directors expects that proxies will be voted for the election of a substitute nominee designated by the Board of Directors. The following information is furnished with respect to each person nominated for election as a director.

      The Board of Directors recommends that you vote “FOR” the following nominees.

Nominees for Election at the Annual Meeting of Shareholders

      Each of the nominees for election as a director has engaged in the principal occupation or activity indicated for at least five years, except for the following:

      Mr. D.M. Draime served as Interim President and Chief Executive Officer of the Company from January 2004 to May 2004.

      Mr. Corey was the President and Chief Operating Officer of Safety Components International (a supplier of air bags and components) from 1999 to 2000 and President and Chief Executive Officer of Safety Components International from October 2000 until January 2006. On January 9, 2006, Mr. Corey was appointed President and Chief Executive Officer of the Company.

      Mr. Epstein was a principal in the independent public accounting firm Gaintner, Bandler & Reed, P.L.C., from June 1999 to December 2001.

      Mr. Jacobs, a former partner of the accounting firm Arthur Andersen LLP, was Vice President-Finance, Chief Financial Officer and Treasurer of the Cleveland Browns from 1999 to 2001, when he became the organization’s Executive Vice President-Finance, Chief Financial Officer and Treasurer until December 2005. In January 2006, Mr. Jacobs became Executive Vice President-Finance and Chief Financial Officer of Brooklyn NY Holdings LLC, a privately held investment advisory company established to manage the assets of a family and family trust, including the Cleveland Browns.

      Directorships. Mr. Corey is a director and chairman of the board of directors of Haynes International (a producer of metal alloys). Mr. Jacobs is a director of Standard Pacific Corporation (a national residential home builder in southern California), serving as chairman of its audit committee and as a member of its nominating and corporate governance committee. Mr. Lasky is the chairman of the board of directors of JLG Industries, Inc. (a producer of access equipment). Mr. Cheney is a director of Chattem, Inc. (a manufacturer and seller of health and beauty products) and The Rowe Companies (a home furnishings company) and is a member of the compensation committee of Chattem, Inc.

      Independent Directors. The New York Stock Exchange (“NYSE”) rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board of Directors has determined that Messrs. Cheney, Epstein, Jacobs, Lasky and Linehan have no material relationship with the Company and that they are each independent. Mr. Gerald V. Pisani, the Company’s President and Chief Executive Officer in 2005 and until January 9, 2006, when he was appointed Vice Chairman, resigned from the Board of Directors on February 28, 2006. Therefore, currently the Board of Directors has five independent directors and four non-independent directors under the NYSE’s listed company rules. The Board of Directors has not adopted categorical standards of independence. In considering Mr. Linehan’s status as independent, the Board of Directors considered Mr. Linehan’s 11.81% limited partnership interest, and his 26.35% holdings of a 5% general partner, in Industrial Development Associates LP, a Maryland limited partnership real estate development company (“IDA”). The Company owns a 30% general partnership interest in IDA. D.M. Draime owns a 10% limited partnership interest in IDA. The Company previously leased a facility from IDA. The last lease payment made to IDA was on or about March 31, 2004. The Board of Directors considered Mr. Linehan’s limited partnership interest in IDA and found that it is an immaterial relationship to the

Company that has not and will not interfere with Mr. Linehan’s exercise of independent judgment as a director.

      Committees of the Board of Directors and Meeting Attendance. In 2005, the Board of Directors held nine meetings and took action by unanimous written consent on two occasions. The Board of Directors has appointed a compensation committee, an audit committee, and a nominating and corporate governance committee. Each member of the compensation, audit, and nominating and corporate governance committees is independent as defined under the listing standards of the NYSE. The Board of Directors does not currently have a finance committee. In 2005, each Board member attended at least 75% of the meetings of the Board of Directors and of the committees on which he serves. In addition, it is the Company’s policy that all directors attend the Annual Meeting of Shareholders. All directors attended the 2005 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the presiding director by the non-management directors to preside at the executive sessions of the non-management and independent directors. It is the Board of Directors’ practice to have the non-management directors meet regularly in executive session and to have the independent directors meet at least once a year in executive session.

      Compensation Committee. The compensation committee is currently comprised of Messrs. Cheney, Lasky and Linehan. This committee held seven meetings during 2005. The compensation committee reviews employment, development, reassignment and compensation matters involving corporate officers and other executive level employees, including issues related to salary, bonus and incentive arrangements. The compensation committee also administers the Company’s Long-Term Incentive Plan. The Board of Directors has adopted a charter for this committee, which is available on the Company’s web site at www.stoneridge.com.

      Audit Committee. The audit committee is currently comprised of Messrs. Cheney, Epstein and Jacobs. This committee held twelve meetings during 2005. Information regarding the functions performed by the audit committee is set forth in the “Audit Committee Report,” included in this proxy statement. The audit committee is governed by a written charter, which was approved by the Board of Directors. This charter is available on the Company’s web site at www.stoneridge.com.

      The Board of Directors has determined that all audit committee members are financially literate under the current listing standards of the NYSE. The Board of Directors also determined that Mr. Epstein qualifies as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002. In addition, under the Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the audit committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.

      Nominating and Corporate Governance Committee. The nominating and corporate governance committee is comprised of Messrs. Epstein, Lasky and Linehan. This committee held three meetings in 2005. The purpose of the nominating and corporate governance committee is to evaluate and recommend candidates for election as directors, make recommendations concerning the size and composition of the Board of Directors, develop and implement the Company’s corporate governance policies and assess the effectiveness of the Board of Directors. The Board of Directors has adopted a written charter for this committee, which is available on the Company’s web site at www.stoneridge.com.

      It is the policy of the nominating and corporate governance committee to consider individuals recommended by shareholders for membership on the Board of Directors. If a shareholder desires to recommend an individual for membership on the Board of Directors, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484, on or before January 15 for consideration by this committee for that year’s election of directors at the Annual Meeting of Shareholders.

      In addition, in order for a recommendation to be considered by the nominating and corporate governance committee, the Recommendation Notice must contain, at a minimum, the following: the name and address, as

they appear on the Company’s books, and telephone number of the shareholder making the recommendation, including information on the number of common shares owned and date(s) acquired, and if such person is not a shareholder of record or if such shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity; the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience and qualifications of that individual; a written acknowledgment by the individual being recommended that he or she has consented to that recommendation and consents to the Company’s undertaking of an investigation into that individual’s background, experience and qualifications in the event that the committee desires to do so; any information not already provided about the person’s background, experience and qualifications necessary for the Company to prepare the disclosure required to be included in the Company’s proxy statement about the individual being recommended; the disclosure of any relationship of the individual being recommended with the Company or any of its subsidiaries or affiliates, whether direct or indirect; the disclosure of any relation of the individual being recommended with the shareholder, whether direct or indirect, and, if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at the Company’s Annual Meeting of Shareholders (or a statement to the effect that no material interest is known to such shareholder).

      The nominating and corporate governance committee determines, and reviews with the Board of Directors on an annual basis, the desired skills and characteristics for directors as well as the composition of the Board of Directors as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, age, skill and experience in the context of the needs of the Board of Directors. At a minimum, directors should share the values of the Company and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board of Directors’ activities and the willingness to do so. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the committee will evaluate such recommended nominees considering the additional information regarding them contained in the Recommendation Notices. When seeking candidates for the Board of Directors, the committee may solicit suggestions from incumbent directors, management and third-party search firms. Ultimately, the nominating and corporate governance committee will recommend to the Board of Directors prospective nominees who the nominating and corporate governance committee believes will be effective, in conjunction with the other members of the Board of Directors, in collectively serving the long-term interests of the Company’s shareholders.

      The nominating and corporate governance committee recommended to the Board of Directors each of the nominees identified in “Election of Directors” on page 4. The committee proposed that Mr. Cheney be nominated for election to the Board of Directors notwithstanding the Company’s Corporate Governance Guidelines that provide that persons 76 years or older (unless they beneficially own 20% or more of the Company’s outstanding common shares) should not be nominated for election as a director. Notwithstanding this guideline, the committee and the Board of Directors believe because of his status as an independent director under the NYSE listed company rules that Mr. Cheney’s continued service as a director is in the best interest of the Company.

      Directors’ Compensation. Each director who is not an employee of the Company receives $35,000 per year for being a director, $1,000 for attending each meeting of the Board of Directors and $500 for each telephonic meeting of the Board of Directors. There is no additional fee received for attending committee meetings unless such meeting takes place on a day other than the same day as a meeting of the Board of Directors, in which case committee members receive $1,000 for attending such meetings and $500 when the meetings are held telephonically. The audit committee chairman receives additional compensation of $7,500 and the compensation committee chairman receives additional compensation of $4,000. Directors who are also employees of the Company are not paid any director’s fee. The Company reimburses out-of-pocket expenses incurred by all directors in connection with attending Board of Directors’ and committee meetings. In 2005, each non-employee director who served on the Board of Directors was granted 5,200 restricted common shares pursuant to the Directors’ Restricted Shares Plan, and the restrictions for those shares will lapse on April 18,

2006. In 2005, Jeffrey P. Draime used the Company’s corporate aircraft for personal travel. Mr. Draime received $8,444 in value for his personal aircraft usage. This amount has been calculated using the Standard Industry Fare Level (SIFL) tables found in the tax regulations.

      Communications with the Board of Directors. The Board of Directors believes that it is important for interested parties to have a process to send communications to the Board of Directors. Accordingly, persons who wish to communicate with the Board of Directors may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board of Directors or certain specified individual directors (such as the presiding director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.

Compensation Committee Report

      Introduction. The compensation committee is responsible for determining the compensation to be paid to the Company’s executive officers, including the named executive officers, and for administering the Company’s Long-Term Incentive Plan (the “LTIP”).

      The compensation committee’s philosophy with respect to the compensation of the Company’s executive officers is (i) to provide a total compensation package that enables the Company to attract and retain qualified executives and align their compensation with the Company’s overall business objectives and strategies, and (ii) to provide each executive officer with a significant economic stake in the Company’s success. To this end, the compensation committee determines executive compensation with a focus on compensating executive officers based on their responsibilities and performance as well as on individual business unit performance, the Company’s overall financial performance or both.

      The primary components of the Company’s executive compensation program are base salaries, bonuses and equity awards. The overall objective of the Company’s compensation strategy is not only to attract and retain the best possible executive talent but also to motivate the Company’s executives to achieve the goals inherent in the Company’s business strategy, to link executive and shareholder interests through equity-based plans and, finally, to provide a compensation package that recognizes individual contributions and overall business results.

      Each year the compensation committee conducts a review of the Company’s executive compensation program. In connection with the review of overall compensation for 2005, the compensation committee considered advice received from Towers Perrin, an independent compensation consulting firm retained by the compensation committee in 2004, including two comprehensive compensation reports prepared by Towers Perrin, one in 2004 (the “2004 Report”) and one in 2005 (the “2005 Report”). Among other things, the reports compared the compensation of the Company’s top executive officers to a peer group of public corporations. The compensation committee reviews the selection of peer companies used for compensation analysis. The peer groups used for compensation analysis are generally not the same as the peer group index in the Performance Graph included in this proxy statement. The compensation committee believes that the Company’s most direct competitors for executive talent are not necessarily all of the companies that would be included in the peer group established for comparing shareholder returns.

      The compensation committee designs compensation programs to ensure consistency, to the extent practical, throughout the executive compensation programs. In addition to the considerations described above for 2005, in reviewing the individual performance of the executives whose compensation is detailed in this proxy statement (other than the President and Chief Executive Officer) for purposes of determining (i) base salary adjustments, the compensation committee took into account the views of Gerald V. Pisani, who was the Company’s President and Chief Executive Officer at that time, and (ii) bonuses, the compensation committee took into account the views of Mr. Pisani and John C. Corey, the Company’s current President and Chief Executive Officer.

      Base Salaries and Other Annual Compensation. The compensation committee sets base salary levels for the Company’s executive officers on the basis of the executives’ responsibilities. In each case, due consideration is given to personal factors, such as the individual’s experience, performance and contributions. Also considered are external factors, such as salaries paid to similarly situated executive officers by peer companies. In the case of executive officers with responsibility for a particular business unit, that unit’s financial results are also considered. Annual adjustments to each executive officer’s salary are determined based on the foregoing factors and the considerations described above but with due consideration also being given to the Company’s recent overall financial performance or individual business unit performance, as applicable, and prevailing economic conditions, to the relationship of such adjustments to those being given to other executives, to the performance of the executive’s duties and responsibilities and to other individual performance-related criteria that may be relevant with respect to such executive officer at the time. Finally, the compensation committee, where appropriate, also considers non-financial performance measures. These include increases in market share, manufacturing efficiency gains, improvements in product quality and improvements in relations with customers, suppliers and employees. Finally, the compensation committee reviewed and considered the 2004 Report in determining base salaries for 2005. When determining the appropriate level of Mr. Pisani’s 2005 base salary, the compensation committee used the same factors that it considered in determining compensation levels for the Company’s other executive employees. Mr. Pisani’s base salary for 2005 was set at $510,000.

      Bonuses. The Company’s executive officers are eligible for annual cash bonuses. The compensation committee believes that a substantial portion of each executive’s overall compensation should be tied to quantifiable measures of the Company’s financial performance. The compensation committee considered the 2004 Report and management’s recommendation in establishing targeted bonus levels for each executive officer, including Mr. Pisani, assuming achievement of targeted financial performance. In the spring of 2005, the compensation committee approved the Company’s 2005 annual incentive (bonus) plan, which provided bonuses to executive officers of the Company, for achieving certain performance goals. The financial performance metrics portion of the plan was weighted at 67% of the overall plan and was comprised of three elements: (i) operating profit — 40%, (ii) flexed operating profit — 40%, and (iii) net working capital as a percent of sales — 20%. The individual based performance portion of the plan was weighted at 33% of the overall plan and was comprised of two to four measurable goals. At target, 100% payout was to be achieved for each element of the plan; at maximum target, 200% payout was to be achieved, while at minimum target, 50% payout was to be achieved. Below the minimum target, no incentive compensation would be earned. The 2005 annual incentive plan prorates incentive compensation earned between the minimum and maximum targets. The payment of bonus compensation under the 2005 plan was subject to the Company’s overall performance. The percentage of base salary that could have been earned by Mr. Pisani at target performance was 70%. However, due to the Company’s financial results in 2005 and the failure to meet applicable performance metrics, Mr. Pisani was not awarded a bonus under the 2005 annual incentive plan. Bonuses for 2005 to the Company’s other named executive officers under the 2005 annual incentive plan appear in the “Bonus” column of the Summary Compensation Table on page 11.

      Equity Awards. Under the LTIP, all executive officers may be granted share options and restricted common shares. The compensation committee believes that equity awards are a valuable motivating tool and provide a long-term incentive to management. The compensation committee did not grant any options in 2005. Instead, continuing but modifying a practice commenced in 2004, the compensation committee granted restricted common shares to the Company’s executive officers pursuant to the LTIP. In 2005, the compensation committee changed its practice in connection with awarding restricted common shares by linking a risk of forfeiture of a significant portion of the granted restricted common shares to the Company’s financial performance. The compensation committee believes that linking restricted common share grants to performance helps tie the Company’s executive officers’ overall compensation to returns to shareholders, which aligns the Company’s executives’ interests with the Company’s shareholders’ interests. In 2005, the grants of performance-based restricted common shares to the Company’s executive officers were linked to three years of performance. If the executive officers remain employees on April 18, 2008, and (i) if the Company achieves certain earnings per share targets, one-half of the performance-based restricted common shares will vest (no longer be subject to a risk of forfeiture) on that date, or (ii) if the Company achieves

certain performance measured against a peer group’s performance in terms of total return to shareholders, the other one-half of performance-based restricted common shares will vest on that date. Information on the restricted common shares granted during 2005 to the Company’s named executive officers appears in the “Restricted Share Awards” column of the Summary Compensation Table on page 11. The compensation committee granted Mr. Pisani 121,000 restricted common shares in 2005. Of that amount, 93,900 shares were linked to performance and were subsequently forfeited upon Mr. Pisani’s resignation from the Company on February 28, 2006.

      Conclusion. Through the programs described above, a significant portion of the Company’s executive compensation is linked directly to executive and the Company’s financial performance. The compensation committee intends to continue this policy and, in the future, also plans to consider ways to better link the LTIP to financial performance and returns to shareholders, recognizing that the fluctuations of the business cycle from time to time may result in an imbalance for a particular period.

Audit Committee Report

      In accordance with its written charter, the audit committee assists the Board of Directors in fulfilling its responsibility relating to corporate accounting, reporting practices of the Company, and the quality and integrity of the financial reports and other financial information provided by the Company to any governmental body or to the public. Management is responsible for the financial statements and the reporting process, including the system of internal controls. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles. The audit committee is comprised of three directors, all of whom are “independent” for audit committee purposes under the current listing standards of the NYSE.

      In discharging its oversight responsibility as to the audit process, the audit committee reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2005, with the Company’s management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The audit committee reviewed with the Company’s independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”), its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed by Statement on Auditing Standards No. 61, as amended by Statement on Auditing Standards No. 90, “Communication with Audit Committees.” The audit committee also obtained a formal written statement from Ernst & Young that described all relationships between Ernst & Young and the Company that might bear on Ernst & Young’s independence consistent with Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committee,” as amended or supplemented. The audit committee discussed with Ernst & Young any relationships that might impact Ernst & Young’s objectivity and independence and satisfied itself as to Ernst & Young’s independence. The audit committee also considered whether the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence. Management has the responsibility for the preparation of the Company’s financial statements, and Ernst & Young has the responsibility for the examination of those statements.

      The audit committee discussed with the Company’s internal auditor and Ernst & Young the overall scope and plans for their respective audits. The audit committee meets with the internal auditor and Ernst & Young, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal control, and the overall quality of the Company’s financial reporting.

      Based on the above-referenced review and discussions with management, the internal auditor and Ernst & Young, the audit committee recommended to the Board of Directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2005, for filing with the SEC.

EXECUTIVE COMPENSATION

      The table below describes the compensation paid for the last three fiscal years to the Company’s chief executive officer and the four other most highly compensated executive officers. The persons listed in the table below are sometimes referred to as “named executive officers.”

Summary Compensation Table

If declared, dividends will be paid on the restricted common shares.

Aggregated Option Exercises in Last Fiscal Year

and Fiscal Year-End Option Values

Change of Control Agreements

      Messrs. Pisani and Beaver have each entered into an agreement with the Company that guarantees the Company will pay to each of them two years of continued compensation (including bonuses) and benefits upon a change of control regardless of whether they remain employed by the Company. A change of control shall be deemed to have occurred if any shareholder or group of shareholders acquires more of the Company’s common shares than are owned by D.M. Draime and his direct descendants and trusts for the benefit of D.M. Draime and his direct descendants.

      On January 6, 2006, the Board of Directors, in consultation with the compensation committee of the Board of Directors, approved a new separate form of Change in Control Agreement (the “CIC Agreement”).

The CIC Agreement is intended to serve the best interests of the Company’s shareholders by providing an incentive to attract talented executives and by providing an incentive to key officers to continue in their positions on an objective and impartial basis and without distraction, whether based upon individual financial uncertainties or otherwise, or conflict of interest as a result of a possible or actual change in control of the Company. The CIC Agreement is a “double trigger” agreement. In order for the executives to receive the payments and benefits set forth in the agreement there first must occur both (i) a change in control of the Company and (ii) a termination of the executive’s employment by the Company without cause (or a voluntary termination by the executive under certain circumstances (i.e., reduction in duties, responsibilities or pay) that will be deemed to be a termination by the Company without cause) within two years of the change in control. If both events described above occur and the executive delivers a release to the Company, the Company will be obligated to pay the executive monthly (1/24^th) over a 24-month period the sum of (i) two times the executive’s annual base compensation plus (ii) two times the executive’s average annual bonus. In addition, the Company must pay the executive a lump sum payment equal to the pro rata annual bonus for the year of the termination and continue to cover the executive’s life and health insurance benefits for a period of twenty-four months following the termination.

      The Company has entered into a separate CIC Agreement with each of the following executive officers who are named in the Summary Compensation Table on page 11: Gerald V. Pisani, Edward F. Mosel, Mark J. Tervalon and Andrew M. Oakes; provided, however, Mr. Pisani’s CIC Agreement and the change in control agreement described above terminated on February 28, 2006, upon Mr. Pisani’s resignation from the Company.

Compensation Committee Interlocks and Insider Participation

      Messrs. Cheney, Lasky and Linehan were the members of the compensation committee in 2005 and there are no compensation committee interlocks.

Certain Relationships and Related Transactions

      Hunters Square. D.M. Draime, the Chairman of the Board of Directors, is a 50% owner of Hunters Square, Inc. (“HSI”), an Ohio corporation, which owns Hunters Square, an office complex and shopping mall located in Warren, Ohio. The Company leases office space in Hunters Square for use as the headquarters of the Company’s Alphabet Group. The Company pays all maintenance, tax and insurance costs related to the operation of the office. Lease payments made by the Company to HSI in 2005 were $342,000. The Company will continue to make lease payments as required under the lease agreement, which terminates in December 2009. The Company believes the terms of the lease are no less favorable to it than would be the terms of a third-party lease.

      Industrial Development Associates LP. Earl L. Linehan, one of the Company’s directors, and D.M. Draime, the Chairman of the Board of Directors, as limited partners, own 11.81% and 10.0%, respectively, in IDA, a Maryland limited partnership real estate development company in which the Company is a 30% general partner. Mr. Linehan also owns approximately 26.35% of MI Holding Company, a Maryland corporation, which is a 5% general partner of IDA. The Company previously leased a facility from IDA, and the last lease payment made to IDA was on or about March 31, 2004. The Company executed a limited guaranty agreement with IDA’s bank guaranteeing payment to the bank in connection with certain limited events such as when insurance or condemnation awards are received by IDA or the Company, losses are sustained by IDA as a result of fraud, and losses are sustained by IDA from hazardous substances or environmental pollution.

      Relationship with Counsel. Avery S. Cohen, one of the Company’s directors, is a partner in Baker & Hostetler LLP, a law firm, which has served as general outside counsel for the Company since 1993 and is expected to continue to do so in the future.

      Draime Family. Jeffrey P. Draime, one of the Company’s directors, is the son of D.M. Draime, the Chairman of the Board of Directors.

Performance Graph

      Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the Company’s common shares with the cumulative total return of hypothetical investments in the NYSE Market Index and the Hemscott — Industry Group 333 (Automotive Parts) Index based on the respective market price of each investment at December 31, 2000, 2001, 2002, 2003, 2004 and 2005, assuming in each case an initial investment of $100 on December 31, 2000, and reinvestment of dividends.

PROPOSAL: ADOPTION OF THE

AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN

      The Amended and Restated Long-Term Incentive Plan (the “2006 Plan”) was unanimously approved by the Board of Directors upon the recommendation of the compensation committee on February 18, 2006. The 2006 Plan is subject to approval by the Company’s shareholders, in accordance with applicable law and the listing standards of the NYSE. The description herein is a summary of the 2006 Plan and is subject to and qualified by the complete text of the 2006 Plan, which is set forth on Appendix A to this proxy statement.

      The Board of Directors adopted a Long-Term Incentive Plan that was approved by the Company’s shareholders on September 30, 1997 (the “1997 Plan”). The 1997 Plan, as amended, reserved 2,500,000 common shares for issuance. Awards of options (that have not been forfeited or expired) and restricted common shares totaling 1,832,050 common shares have been made to the Company’s employees under the 1997 Plan as of the record date, March 10, 2006. Of the outstanding options grants for 638,350 common shares, each currently has an exercise price greater than the closing price of the Company’s common shares on the NYSE on March 10, 2006 of $5.02. In addition, of the 527,609 restricted common shares granted under the 1997 Plan, which have vested (i.e., are no longer subject to a risk of forfeiture) or are subject to vesting, 143,100 restricted common shares are subject to forfeiture based on performance criteria as described in the Compensation Committee Report. There are 667,950 common shares available for issuance under the 1997 Plan as of March 10, 2006. Whether or not the 2006 Plan is approved, the Company expects that grants will continue to be made under the 1997 Plan until it expires. The 2006 Plan reserves 1,500,000 common shares for issuance, and, as of March 10, 2006, the aggregate market value of the 1,500,000 common shares proposed to be reserved for issuance under the 2006 Plan was $7,530,000.

      The Company is seeking shareholder approval of the 2006 Plan because the 1997 Plan will expire on June 30, 2007. The 2006 Plan will help the Company achieve the Company’s goal of promoting its long-term growth and profitability by enabling the Company to attract, retain and reward key employees and therefore align the interests of those employees with those of the Company’s shareholders. Without the adoption of the 2006 Plan, after the 1997 Plan expires, the Company would not have the ability to make equity-based awards to its key employees and would be greatly disadvantaged in attracting and retaining key employees.

      As described under the section heading “Compensation Committee Report,” the Company has made annual grants of restricted common shares or stock options to the Company’s executive officers under the 1997 Plan. The Company believes that the use of share-based benefits as part of the Company’s compensation package is of great importance in promoting the Company’s growth and continued success and is thus of substantial benefit to the Company’s shareholders and the Company.

Summary of the 2006 Plan

Federal Tax Consequences

      The following summary of the federal income tax consequences applicable to options awarded under the 2006 Plan is only a general summary of the applicable provisions of the Code and regulations promulgated thereunder as in effect on the date of this proxy statement. The actual federal, state, local and foreign tax consequences to the participant may vary depending upon his or her particular circumstances.

      An incentive stock option results in no taxable income to the participant or a deduction to the Company at the time it is granted or exercised. However, the excess of the fair market value of the shares acquired over the option price is an item of adjustment in computing the alternative minimum taxable income of the participant. If the participant holds the stock received as a result of an exercise of an incentive stock option for at least two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the stock (generally the amount received in excess of the option price) is treated as a long-term capital gain. If the shares are disposed of during this period, however (i.e., a “disqualifying disposition”), then the participant will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares on the date of exercise of the option over the option price (or, if less, the excess of the amount realized upon disposition over the option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be either a long-term or a short-term capital gain depending on whether the participant has held the stock for more than one year. In such case, the Company will be entitled to a deduction, in the year of such a disposition, for the amount includible in the participant’s income as compensation. The participant’s basis in the shares acquired upon exercise of an incentive stock option is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.

      If an incentive stock option is exercised by tendering previously owned shares, the following generally will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the participant’s basis and holding period (except for the disqualifying disposition period) for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. To the extent that the number of common shares received exceeds the number of common shares surrendered, no taxable income will be realized by the participant at that time; such excess common shares will be considered incentive stock option stock with a zero basis; and the holding period of the participant in such common shares will begin on the date such common shares are transferred to the participant. If the common shares surrendered were acquired as the result of the exercise of an incentive stock option and the surrender takes place within two years from the date the incentive stock option relating to the surrendered common shares was granted or within one year from the date of such exercise, the surrender will result in a disqualifying disposition and the participant will realize ordinary income at that time in the amount of the excess, if any, of the fair market value at the time of exercise of the common shares surrendered over the basis of such common shares. If any of the common shares received are disposed of in a disqualifying disposition, the participant will be treated as first disposing of the common shares with a zero basis.

      A non-qualified stock option results in no taxable income to the participant or deduction to the Company at the time it is granted. A participant exercising such an option will, at that time, realize taxable compensation in the amount of the difference between the option price and the then market value of the

shares. Subject to the applicable provisions of the Code, the Company will be allowed a deduction for federal income tax purposes in the year of exercise in an amount equal to the taxable compensation recognized by the participant.

      The participant’s basis in such shares is equal to the sum of the option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the shares will be a long-term or short-term gain (or loss), depending upon the holding period of the shares.

      If a non-qualified option is exercised by tendering previously owned shares, the following generally will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the participant’s basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The participant will have compensation income equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchanged shares; the participant’s basis in such excess shares will be equal to the amount of such compensation income; and the holding period in such shares will begin on the date of exercise.

Code Section 162(m)

      Under Section 162(m) of the Code, the Company’s allowable federal income tax deduction for compensation paid to certain of the Company’s executive officers is limited to $1,000,000 per year per officer. “Performance-based compensation” is generally excluded from this deduction limit. The amount includible in income of a participant on exercise of a nonqualified stock option under the 2006 Plan is intended to qualify as performance-based compensation under Section 162(m) and the regulations thereunder, which require the 2006 Plan to have been approved by the shareholders.

Vote Required for Approval

      The affirmative vote of a majority of the votes cast is required to adopt this proposal. Votes may be cast at the Annual Meeting of Shareholders, either in person or by properly executed proxy. Under Ohio law and the Company’s Amended and Restated Articles of Incorporation, as amended, abstentions and broker non-votes, if any, with respect to this proposal will, in effect, be votes against the proposal.

      The Board of Directors recommends that you vote FOR the proposal to adopt the 2006 Plan.

SHAREHOLDER PROPOSALS FOR 2007 ANNUAL MEETING OF SHAREHOLDERS

      Proposals of shareholders intended to be presented, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), at the Company’s 2007 Annual Meeting of Shareholders must be received by the Company at Stoneridge, Inc., 9400 East Market Street, Warren, Ohio 44484, on or before November 17, 2006, for inclusion in the Company’s proxy statement and form of proxy relating to the 2007 Annual Meeting of Shareholders. In order for a shareholder’s proposal outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) of the Exchange Act, such proposal must be received by the Company at the address listed in the immediately preceding sentence not later than January 31, 2007.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and owners of more than 10% of the Company’s common shares, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of the Company’s common shares and other equity securities. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a).

      To the Company’s knowledge, based solely on the Company’s review of the copies of such reports furnished to the Company and written representations that no other reports were required during the fiscal

year ended December 31, 2005, all Section 16(a) filing requirements applicable to the Company’s executive officers, directors and greater-than-10% beneficial owners were complied with except for Vincent F. Suttmeier, who inadvertently failed to file one Form 4 reporting one transaction on a timely basis.

CORPORATE GOVERNANCE

      Committee Charters. The Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ audit, compensation and nominating and corporate governance committees are posted on the Company’s web site at www.stoneridge.com. Written copies of these documents will be available to any shareholder upon request. Requests should be directed to Investor Relations at the Company’s address listed on the Notice of Annual Meeting of Shareholders.

      Corporate Ethics Hotline. The Company established a corporate ethics hotline as part of the Company’s Whistleblower Policy and Procedures to allow persons to lodge complaints about accounting, auditing and internal control matters, and to allow an employee to lodge a concern, confidentially and anonymously, about any accounting and auditing matter. Information about lodging such complaints or making such concerns known is contained in the Company’s Whistleblower Policy and Procedures, which is posted on the Company’s web site at www.stoneridge.com.

OTHER MATTERS

      In connection with the audit of the 2005 financial statements, the Company entered into an engagement agreement with Ernst & Young which set forth the terms by which Ernst & Young will perform audit services for the Company. That agreement is subject to alternative dispute resolution procedures and an exclusion of punitive damages. The Company has not selected the Company’s independent registered public accounting firm for the current fiscal year. The audit committee of the Board of Directors will make this selection later in the year. Representatives of Ernst & Young, which served as the Company’s independent registered public accounting firm during 2005 and are expected to be present at the Annual Meeting of Shareholders, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Audit Fees

      The aggregate fees billed for professional services rendered by Ernst & Young for the audit of the Company’s annual financial statements for the years ended December 31, 2005 and 2004, including reviews of the financial statements included in the Company’s Forms 10-Q filed with the SEC and statutory audits required during 2005 and 2004, were $1,414,923 and $1,554,891, respectively. These fees included approximately $500,000 and $750,000 for 2005 and 2004, respectively, related to Sarbanes-Oxley Section 404 audit requirements.

Audit-Related Fees

      The aggregate fees billed for assurance and related services rendered by Ernst & Young that were reasonably related to the performance of the audit or review of the Company’s financial statements for the years ended December 31, 2005 and 2004 were $31,310 and $83,308, respectively. These fees primarily related to audits of employee benefit plans as well as general assistance with the implementation of new regulatory pronouncements.

Tax Fees

      The aggregate fees billed for tax-related services rendered to the Company by Ernst & Young for the years ended December 31, 2005 and 2004 were $162,530 and $437,960, respectively. These fees primarily related to tax audits, tax compliance, tax consulting and both domestic and international tax planning.

All Other Fees

      The aggregate fees billed for all other services rendered by Ernst & Young for the years ended December 31, 2005 and 2004 were $57,988 and $23,719, respectively. These fees primarily related to regulatory reviews and advisory services provided to the compensation committee of the Board of Directors.

Engagement of the Independent Auditor

      In accordance with the SEC’s rules issued pursuant to the Sarbanes-Oxley Act of 2002, the audit committee pre-approves all audit and non-audit services provided by the Company’s independent auditor. As such the audit committee approved all audit and non-audit services provided to the Company by Ernst & Young. The audit committee has not adopted a pre-approval policy that would permit management to engage Ernst & Young. The chair of the committee may pre-approve the rendering of services on behalf of the audit committee, provided the matter is then presented to the full committee at the next scheduled meeting.

Miscellaneous

      If the enclosed proxy card is executed and returned to us, the persons named in it will vote the shares represented by that proxy at the meeting. The form of proxy permits specification of a vote for the election of directors as set forth under “Election of Directors” above, the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees. When a choice has been specified in the proxy, the common shares represented will be voted in accordance with that specification. If no specification is made, those common shares will be voted at the meeting to elect directors as set forth under “Election of Directors” above and FOR the proposal to approve the adoption of the 2006 Plan. The holders of shares of a majority of the common shares outstanding on the record date, present in person or by proxy, shall constitute a quorum for the transaction of business to be considered at the Annual Meeting of Shareholders. Under Ohio law and the Company’s Amended and Restated Articles of Incorporation, as amended, broker non-votes and abstaining votes will not be counted in favor of or against any nominee but will be counted as present for purposes of determining whether a quorum has been achieved at the meeting and will, in effect, be votes against the proposal to approve the adoption of the 2006 Plan. Director nominees who receive the greatest number of affirmative votes will be elected directors. The proposal to approve the adoption of the 2006 Plan must receive the affirmative vote of a majority of the Company’s common shares present at the meeting. All other matters to be considered at the meeting require for approval the favorable vote of a majority of the common shares voted at the meeting in person or by proxy (or such different percentage as established by applicable law). If any other matter properly comes before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. The Company does not know of any other matter that will be presented for action at the meeting and the Company has not received any timely notice that any of the Company’s shareholders intend to present a proposal at the meeting.

Dated: March 17, 2006

APPENDIX A

STONERIDGE, INC.

AMENDED AND RESTATED

LONG-TERM INCENTIVE PLAN

      Section 1.     Purpose; Definitions.

      The purpose of the Stoneridge, Inc. Amended and Restated Long-Term Incentive Plan (the “Plan”) is to enable Stoneridge, Inc. (the “Company”) and its Subsidiaries (as defined below) to attract, retain and reward key employees of the Company and of its Affiliates and to strengthen the mutuality of interests between those employees and the Company’s shareholders by offering such employees equity or equity-based incentives thereby increasing their proprietary interest in the Company’s business and enhancing their personal interest in the Company’s success.

      For purposes of the Plan, the following terms are defined as follows:

      Section 2.     Administration.

      The Plan shall be administered by the Compensation Committee of the Board or such other committee authorized by the Board to administer the Plan (the “Committee”), or absent the Committee, the full Board. The Committee shall consist of not less than three directors of the Company all of whom shall be Outside Directors, Non-Employee Directors and Independent Directors (as defined by the listing standards of the NYSE if the Company’s Shares are traded on the New York Stock Exchange). Those directors shall be appointed by the Board and shall serve as the Committee at the pleasure of the Board.

      The Committee shall have full power to interpret and administer the Plan and full authority to select the individuals to whom Awards will be granted and to determine the type and amount of any Awards to be granted to each participant, the consideration, if any, to be paid for any Awards, the timing of any Awards, the terms and conditions of any Award granted under the Plan, and the terms and conditions of the related agreements that will be entered into with participants. As to the selection of and grant of Awards to participants who are not executive officers of the Company or any Subsidiary or Affiliate or Section 16 Participants, the Committee may delegate its responsibilities to members of the Company’s management in a manner consistent with applicable law and provided that such participant’s compensation is not subject to the limitations of Section 162(m) of the Code.

      The Committee shall have the authority to adopt, alter and repeal such rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); to direct employees of the Company or other advisors to prepare such materials or perform such analyses as the Committee deems necessary or appropriate; and otherwise to supervise the administration of the Plan.

      Any interpretation or administration of the Plan by the Committee, and all actions and determinations of the Committee, shall be final, binding and conclusive on the Company, its shareholders, Subsidiaries, Affiliates, all participants in the Plan, their respective legal representatives, successors and assigns, and all persons claiming under or through any of them. No member of the Board or of the Committee shall incur any liability for any action taken or omitted, or any determination made, in good faith in connection with the Plan.

      Section 3.     Shares Subject to the Plan.

      (a) Aggregate Shares Subject to the Plan. Subject to adjustment as provided in Section 3(c), the total number of Shares reserved and available for Awards under the Plan is 1,500,000 (this is an additional 1,500,000 Shares to the 2,500,000 Shares included in the Company original equity incentive plan, as amended, that expires on June 30, 2007), pursuant to which the maximum number of Shares which may be issued subject to Incentive Stock Options is 500,000. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares.

      (b) Forfeiture or Termination of Awards of Shares. If any Shares subject to any Award granted hereunder are forfeited or an Award otherwise terminates or expires without the issuance of Shares, the Shares subject to that Award shall again be available for distribution in connection with future Awards under the Plan as set forth in Section 3(a), unless the participant who had been awarded those forfeited Shares or the expired or terminated Award has theretofore received dividends or other benefits of ownership with respect to those Shares. For purposes hereof, a participant shall not be deemed to have received a benefit of ownership with respect to those Shares by the exercise of voting rights or the accumulation of dividends that are not realized because of the forfeiture of those Shares or the expiration or termination of the related Award without issuance of those Shares.

      (c) Adjustment. In the event of any merger, reorganization, consolidation, recapitalization, share dividend, share split, combination of shares or other change in corporate structure of the Company affecting the Shares, such substitution or adjustment shall be made in the aggregate number of Shares reserved for issuance under the Plan, in the number and option price of Shares subject to outstanding options granted under the Plan, in the number and purchase price of Shares subject to outstanding Share Purchase Rights granted under the Plan, in the number of Share Appreciation Rights granted under the Plan, in the number of underlying Shares granted under the Plan will be based on, and in the number of Shares subject to Restricted Share Awards, Deferred Share Awards and any other outstanding Awards granted under the Plan as may be approved by the Committee, in its sole discretion; but the number of Shares subject to any Award shall always be a whole number. Any fractional Shares shall be eliminated.

      (d) Annual Award Limit. No participant may be granted Stock Options or other Awards under the Plan with respect to an aggregate of more than 400,000 Shares (subject to adjustment as provided in Section 3(c) hereof) during any calendar year.

      Section 4.     Eligibility.

      Grants may be made from time to time to those officers and other key employees of the Company who are designated by the Committee in its sole and exclusive discretion. Eligible persons may include, but shall not necessarily be limited to, officers and key employees of the Company and any Subsidiary or Affiliate; however, Stock Options intended to qualify as Incentive Stock Options shall be granted only to eligible persons while actually employed by the Company, a Subsidiary or an Affiliate. The Committee may grant more than one Award to the same eligible person. No Award shall be granted to any eligible person during any period of time when such eligible person is on a leave of absence.

      Section 5.     Stock Options.

      (a) Grant. Stock Options may be granted alone, in addition to or in tandem with other Awards granted under the Plan or cash awards made outside the Plan. The Committee shall determine the individuals to whom, and the time or times at which, grants of Stock Options will be made, the number of Shares purchasable under each Stock Option, and the other terms and conditions of the Stock Option in addition to those set forth in Sections 5(b) and 5(c). Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve.

      Stock Options granted under the Plan may be of two types which shall be indicated on their face: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Subject to Section 5(c) hereof, the Committee shall have the authority to grant to any participant Incentive Stock Options, Non-Qualified Stock Options or both types of Stock Options.

      (b) Terms and Conditions. Options granted under the Plan shall be evidenced by an agreement (“Option Agreements”), shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

      (c) Incentive Stock Options. Notwithstanding Sections 5(b)(5) and (6), an Incentive Stock Option shall be exercisable by (i) a participant’s authorized legal representative (if the participant is unable to exercise the Incentive Stock Option as a result of the participant’s Disability) only if, and to the extent, permitted by Section 422 of the Code and (ii) by the participant’s estate, in the case of death, or authorized legal representative, in the case of Disability, no later than ten years from the date the Incentive Stock Option was granted (in addition to any other restrictions or limitations that may apply). Anything in the Plan to the contrary notwithstanding, no term or provision of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the participants affected, to disqualify any Incentive Stock Option under such Section 422 or any successor section thereto.

      (d) Buyout Provisions. The Committee may at any time buy out for a payment in cash, Shares, Deferred Shares or Restricted Shares an Option previously granted, based on such terms and conditions as the Committee shall establish and agree upon with the participant, but no such transaction involving a Section 16 Participant shall be structured or effected in a manner that would result in any liability on the part of the participant under, Section 16(b) of the Exchange Act or the rules and regulations promulgated thereunder.

      Section 6.     Restricted Shares.

      (a) Grant. Restricted Shares may be issued alone, in addition to or in tandem with other Awards under the Plan or cash awards made outside the Plan. The Committee shall determine the individuals to whom, and

the time or times at which, grants of Restricted Shares will be made, the number of Restricted Shares to be awarded to each participant, the price (if any) to be paid by the participant (subject to Section 6(b)), the date or dates upon which Restricted Share Awards will vest and the period or periods within which those Restricted Share Awards may be subject to forfeiture, and the other terms and conditions of those Awards in addition to those set forth in Section 6(b).

      The Committee may condition the grant of Restricted Shares upon the attainment of specified performance goals or such other factors as the Committee may determine in its sole discretion.

      (b) Terms and Conditions. Restricted Shares awarded under the Plan shall be subject to the following terms and conditions and such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable. A participant who receives a Restricted Share Award shall not have any rights with respect to that Award, unless and until the participant has executed an agreement evidencing the Award in the form approved from time to time by the Committee and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of that Award.

      Section 7.     Deferred Shares.

      (a) Grant. Deferred Shares may be awarded alone, in addition to or in tandem with other Awards granted under the Plan or cash awards made outside the Plan. The Committee shall determine the individuals to whom, and the time or times at which, Deferred Shares shall be awarded, the number of Deferred Shares to be awarded to any participant, the duration of the period (the “Deferral Period”) during which, and the conditions under which, receipt of the Shares will be deferred, and the other terms and conditions of the Award in addition to those set forth in Section 7(b).

      The Committee may condition the grant of Deferred Shares upon the attainment of specified performance goals or such other factors as the Committee shall determine, in its sole discretion.

      (b) Terms and Conditions. Deferred Share Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

      Section 8.     Share Purchase Rights.

      (a) Grant. Share Purchase Rights may be granted alone, in addition to or in tandem with other Awards granted under the Plan or cash awards made outside the Plan. The Committee shall determine the individuals to whom, and the time or times at which, grants of Share Purchase Rights will be made, the number of Shares which may be purchased pursuant to the Share Purchase Rights, and the other terms and conditions of the Share Purchase Rights in addition to those set forth in Section 8(b). The Shares subject to the Share Purchase Rights must be purchased at the Fair Market Value of such Shares on the date of grant. Subject to Section 8(b) hereof, the Committee may also impose such deferral, forfeiture or other terms and conditions as it shall determine, in its sole discretion, on such Share Purchase Rights or the exercise thereof.

      Each Share Purchase Right Award shall be confirmed by, and be subject to the terms of, a Share Purchase Rights Agreement which shall be in form approved by the Committee.

      (b) Terms and Conditions. Share Purchase Rights may contain such additional terms and conditions not inconsistent with the terms of the Plan as the Committee shall deem desirable and shall generally be exercisable for such period as shall be determined by the Committee. However, Share Purchase Rights granted to Section 16 Participants shall not become exercisable earlier than six months and one day after the grant date. Share Purchase Rights shall not be transferable by a participant other than by will or by the laws of descent and distribution.

      Section 9.     Share Appreciation Rights.

      (a) Grant. Share Appreciation Rights may be granted in connection with all or any part of an Option. Share Appreciation Rights may be exercised in whole or in part at such times under such conditions as may be specified by the Committee in the participant’s Option Agreement.

      (b) Terms and Conditions. The following terms and conditions will apply to all Share Appreciation Rights that are granted in connection with Options:

      Section 10.     Other Share-Based Awards.

      (a) Grant. Other Awards of Shares and other Awards that are valued, in whole or in part, by reference to, or are otherwise based on, Shares, including, without limitation, performance shares, convertible preferred shares, convertible debentures, exchangeable securities, and Share Awards or options valued by reference to Book Value or subsidiary performance, may be granted alone, in addition to or in tandem with other Awards granted under the Plan or cash awards made outside of the Plan.

      At the time the Shares or Other Share-Based Awards are granted, the Committee shall determine the individuals to whom and the time or times at which such Shares or Other Share-Based Awards shall be awarded, the number of Shares to be used in computing an Award or which are to be awarded pursuant to such Awards, the consideration, if any, to be paid for such Shares or Other Share-Based Awards, and all other terms and conditions of the Awards in addition to those set forth in Section 10(b). The Committee will also have the right, at its sole discretion, to settle such Awards in Shares, Restricted Shares or cash in an amount equal to then value of the Shares or Other Share-Based Awards.

      The provisions of Other Share-Based Awards need not be the same with respect to each participant.

      (b) Terms and Conditions. Other Share-Based Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable.

      Section 11.     Change In Control Provision.

      (a) Impact of Event. Notwithstanding any other provisions hereof or in any agreement to the contrary, in the event of: (i) a “Change in Control” as defined in Section 11(b) or (ii) a “Potential Change in Control” as defined in Section 11(c), the following acceleration and valuation provisions shall apply:

      (b) Definition of Change in Control. For purposes of Section 11(a), a “Change in Control” means the occurrence of any of the following: (i) the Board or shareholders of the Company approve a consolidation or merger that results in the shareholders of the Company immediately prior to the transaction giving rise to the consolidation or merger owning less than 50% of the total combined voting power of all classes of stock entitled to vote of the surviving entity immediately after the consummation of the transaction giving rise to the merger or consolidation; (ii) the Board or shareholders of the Company approve the sale of substantially all of the assets of the Company or the liquidation or dissolution of the Company; (iii) any person or other entity (other than the Company or a Subsidiary or any Company employee benefit plan (including any trustee of any such plan acting in its capacity as trustee)) purchases any Shares (or securities convertible into Shares) pursuant to a tender or exchange offer without the prior consent of the Board of Directors, or becomes the beneficial owner of securities of the Company representing 25% or more of the voting power of the Company’s outstanding securities; or (iv) during any two-year period, individuals who at the beginning of such period constitute the entire Board of Directors cease to constitute a majority of the Board of Directors, unless the election or the nomination for election of each new director is approved by at least two-thirds of the directors then still in office who were directors at the beginning of that period.

      (c) Definition of Potential Change in Control. For purposes of Section 11(a), a “Potential Change in Control” means the happening of any one of the following:

      (d) Change in Control Price. For purposes of this Section 11, “Change in Control Price,” means the highest price per share paid in any transaction reported on the New York Stock Exchange Composite Index (or, if the Shares are not then traded on the New York Stock Exchange, the highest price paid as reported for any national exchange on which the Shares are then traded) or paid or offered in any bona fide transaction related to a Change in Control or Potential Change in Control of the Company, at any time during the 60-day period immediately preceding the occurrence of the Change in Control (or, when applicable, the occurrence of the Potential Change in Control event).

      Section 12.     Form and Timing of Payment Under Awards; Deferrals.

      Subject to the terms of the Plan and any applicable Award Agreement (as may be amended pursuant to Section 13 hereof), payments to be made by the Company, a Subsidiary or Affiliate upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Shares, other Awards or other property, and may be made in a single payment or transfer or in installments; provided, however, that settlement in other than Shares must be authorized by the applicable Award Agreement. The settlement of any Award may be accelerated and cash paid in lieu of Shares in connection with such settlement; provided, however, that settlement in cash must be authorized by the applicable Award Agreement. The acceleration of any Award that does not result in a cash settlement must also be authorized by the applicable Award Agreement. If and to the extent permitted by and in accordance with Section 409A of the Code and the regulations thereunder, installment or deferred payments may be required by the Committee or permitted at the election of the participant on terms and conditions approved by the Committee, including without limitation the ability to defer awards pursuant to any deferred compensation plan maintained by the Company, a Subsidiary or Affiliate. Payments may include, without limitation, provisions for the payment or crediting of a reasonable interest rate on installment or deferred payments or other amounts in respect of installment or deferred payments denominated in Shares.

      Section 13.     Amendments and Termination.

      The Board may at any time, in its sole discretion, amend, alter or discontinue the Plan, but no such amendment, alteration or discontinuation shall be made that would (i) impair the rights of a participant under an Award theretofore granted, without the participant’s consent, or (ii) require shareholder approval under any applicable law, rule, regulation or listing standard of an exchange or market on which the Shares are listed and/or traded, unless such shareholder approval is received. The Company shall submit to the shareholders of the Company for their approval any amendments to the Plan which are required by Section 16 of the Exchange Act or the rules and regulations thereunder, or Section 162(m) of the Code, or the listing standards of an exchange or market on which the Shares are listed and/or traded to be approved by the shareholders.

      The Committee may at any time, in its sole discretion, amend the terms of any Award, but no such amendment shall be made that would impair the rights of a participant under an Award theretofore granted, without the participant’s consent; nor shall any such amendment be made which would make the applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable to any Section 16 Participant holding the Award without the participant’s consent.

      Subject to the above provisions, the Board shall have all necessary authority to amend the Plan to clarify any provision or to take into account changes in applicable securities and tax laws and accounting rules, as well as other developments.

      Section 14.     Unfunded Status of Plan.

      The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a participant by the Company, nothing contained herein shall give that participant any rights that are greater than those of a general creditor of the Company.

      Section 15.     General Provisions.

      (a) The Committee may require each participant acquiring Shares pursuant to an Award under the Plan to represent to and agree with the Company in writing that the participant is acquiring the Shares without a view to distribution thereof. The certificates for any such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

      All Shares or other securities delivered under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any certificates for those Shares to make appropriate reference to such restrictions.

      (b) Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

      (c) Neither the adoption of the Plan, nor its operation, nor any document describing, implementing or referring to the Plan, or any part thereof, shall confer upon any participant under the Plan any right to continue in the employ, or as a director, of the Company or any Subsidiary or Affiliate, or shall in any way affect the right and power of the Company or any Subsidiary or Affiliate to terminate the employment, or service as a director, of any participant under the Plan at any time with or without assigning a reason therefor, to the same extent as the Company or any Subsidiary or Affiliate might have done if the Plan had not been adopted.

      (d) For purposes of this Plan, a transfer of a participant between the Company and its Subsidiaries and Affiliates shall not be deemed a termination of employment.

      (e) No later than the date as of which an amount first becomes includable in the gross income of the participant for federal income tax purposes with respect to any award under the Plan, the participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state or local taxes or other items of any kind required by law to be withheld with respect to that amount. Subject to the following sentence, unless otherwise determined by the Committee, withholding obligations may be settled with Shares, including unrestricted Shares previously owned by the participant or Shares that are part of the Award that gives rise to the withholding requirement. Notwithstanding the foregoing, any right by a Section 16 Participant to elect to settle any tax withholding obligation with Shares that are part of an Award must be set forth in the agreement evidencing the Award or be approved by the Committee, in its sole discretion. The obligations of the Company under the Plan shall be conditional on those payments or arrangements and the Company and its Subsidiaries and Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise payable to the participant. Shares withheld by, or otherwise remitted to, the Company to satisfy a participant’s tax withholding obligations upon the lapse of restrictions on Restricted Shares or the exercise of Options or Share Appreciation Rights granted under the Plan or upon any other payment or issuance of shares under the Plan will not be available for the use of new awards under the Plan.

      (f) The actual or deemed reinvestment of dividends in additional Restricted Shares (or in Deferred Shares or other types of Awards) at the time of any dividend payment shall be permissible only if sufficient Shares are available under Section 3 for such reinvestment (taking into account then outstanding Stock Options, Share Purchase Rights and other Plan Awards).

      (g) The Plan, all Awards made and actions taken thereunder and any agreements relating thereto shall be governed by and construed in accordance with the laws of the State of Ohio.

      (h) All agreements entered into with participants pursuant to the Plan shall be subject to the Plan.

      (i) The provisions of Awards need not be the same with respect to each participant.

      (j) The Plan is intended, and shall be interpreted, to comply with Section 409A of the Code. Anything in this Plan to the contrary notwithstanding, if it is determined that any payment to be made to a “specified employee”, as defined in Section 409A of the Code, is considered “nonqualified deferred compensation” subject to Section 409A of the Code, then such payment if made upon a “separation of service”, as defined in Section 409A of the Code, shall be delayed for six months following the specified employee’s separation of service.

      Section 16.     Shareholder Approval; Effective Date of Plan.

      The Company’s Long-Term Incentive Plan (the “Original Plan”), which authorized the issuance of 1,000,000 common shares, was adopted by the Board on August 5, 1997 and by the shareholders on September 30, 1997. On May 7, 2001, the shareholders approved an amendment to the Original Plan to authorize an additional 1,500,000 common shares for issuance under the Original Plan. No awards may be made pursuant to the Original Plan after June 30, 2007.

      This Amended and Restated Long-Term Incentive Plan was adopted by the Board of Directors on February 18, 2006, and this Amended and Restated Long-Term Incentive Plan is subject to the approval by the holders of the Company’s outstanding Shares, in accordance with applicable law and the listing standards of the New York Stock Exchange. This Amended and Restated Long-Term Incentive Plan will become effective on the date of such shareholder approval.

      Section 17.     Term of Plan.

      No Award shall be granted pursuant to the Plan on or after April 24, 2016, but Awards granted prior to such date may extend beyond that date.