Exhibit 10.1

 

FEI COMPANY

1995 STOCK INCENTIVE PLAN, AS AMENDED

As amended effective May 17, 2007

 

1.     Purpose. The purpose of this Stock Incentive Plan (the “Plan”) is to
enable FEI Company (the “Company”) to attract and retain the services of
(1) selected employees, officers and directors of the Company or of any
subsidiary of the Company and (2) selected non-employee agents, consultants,
advisors, persons involved in the sale or distribution of the Company’s products
and independent contractors of the Company or any subsidiary.

 

2.     Shares Subject to the Plan. Subject to adjustment as provided below and
in paragraph 14, the shares to be offered under the Plan shall consist of Common
Stock of the Company, and the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 9,500,000 shares. The shares issued under
the Plan may be authorized and unissued shares or reacquired shares. If an
option, stock appreciation right, restricted stock unit or performance unit
granted under the Plan expires, terminates or is canceled, the unissued shares
subject to such option, stock appreciation right, restricted stock unit or
performance unit shall again be available under the Plan. If shares sold or
awarded as a bonus under the Plan are forfeited to the Company or repurchased by
the Company, the number of shares forfeited or repurchased shall again be
available under the Plan.

 

3.     Effective Date and Duration of Plan.

 

(a)   Effective Date. The Plan shall become effective as of April 21, 1995. No
option, stock appreciation right, restricted stock unit or performance unit
granted under the Plan shall become exercisable, however, until the Plan is
approved by the affirmative vote of the holders of a majority of the shares of
Common Stock represented at a shareholders meeting at which a quorum is present
and any such awards under the Plan prior to such approval shall be conditioned
on and subject to such approval. Subject to this limitation, options, stock
appreciation rights, restricted stock units and performance units may be granted
and shares may be awarded as bonuses or sold under the Plan at any time after
the effective date and before termination of the Plan.

 

(b)   Duration. The Plan shall continue in effect until all shares available for
issuance under the Plan have been issued and all restrictions on such shares
have lapsed. The Board of Directors may suspend or terminate the Plan at any
time except with respect to options, performance units, restricted stock units
and shares subject to restrictions then outstanding under the Plan. Termination
shall not affect any outstanding options, any right of the Company to repurchase
shares or the forfeitability of shares issued under the Plan.

 

4.     Administration.

 

(a)   Board of Directors. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to time
the individuals to whom awards shall be made, the amount of the awards and the
other terms and conditions of the awards. Subject to the provisions of the Plan,
the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The interpretation and
construction of the provisions of the Plan and related agreements by the Board
of Directors shall be final and conclusive. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect, and it shall be the sole and final judge of such
expediency.

 

(b)   Committee. The Board of Directors may delegate to a committee of the Board
of Directors or specified officers of the Company, or both (the “Committee”) any
or all authority for administration of the Plan. If authority is delegated to a
Committee, all references to the Board of Directors in the Plan shall mean and
relate to the Committee except (i) as otherwise provided by the Board of
Directors, (ii) that only the Board of Directors may amend or terminate the Plan
as provided in paragraphs 3 and 15 and (iii) that a Committee including officers
of the Company shall not be permitted to grant options to persons who are
officers of the Company. To the extent that the Board of

 

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Directors determines it to be desirable to qualify awards granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”), the Plan shall be
administered by a Committee of two or more “outside directors” within the
meaning of Section 162(m) of the Code.

 

5.     Types of Awards; Eligibility. The Board of Directors may, from time to
time, take the following action, separately or in combination, under the Plan:
(i) grant Incentive Stock Options, as defined in section 422 of the Code, as
provided in paragraphs 6(a) and 6(b); (ii) grant options other than Incentive
Stock Options (“Non-Statutory Stock Options”) as provided in paragraphs 6(a) and
6(c); (iii) award stock bonuses as provided in paragraph 7; (iv) sell shares
subject to restrictions as provided in paragraph 8; (v) grant stock appreciation
rights as provided in paragraph 9; (vi) grant cash bonus rights as provided in
paragraph 10; (vii) grant performance units as provided in paragraph 11;
(viii) grant foreign qualified awards as provided in paragraph 12; and
(ix) grant restricted stock units as provided in paragraph 13. Any such awards
may be made to employees, including employees who are officers or directors, and
to other individuals described in paragraph 1 who the Board of Directors
believes have made or will make an important contribution to the Company or any
subsidiary of the Company; provided, however, that only employees of the Company
shall be eligible to receive Incentive Stock Options under the Plan. The Board
of Directors shall select the individuals to whom awards shall be made and shall
specify the action taken with respect to each individual to whom an award is
made. At the discretion of the Board of Directors, an individual may be given an
election to surrender an award in exchange for the grant of a new award.

 

6.     Option Grants.

 

(a)   General Rules Relating to Options.

 

(i)     Terms of Grant. The Board of Directors may grant options under the Plan.
With respect to each option grant, the Board of Directors shall determine the
number of shares subject to the option, the option price, the period of the
option, the time or times at which the option may be exercised and whether the
option is an Incentive Stock Option or a Non-Statutory Stock Option. At the time
of the grant of an option or at any time thereafter, the Board of Directors may
provide that an optionee who exercised an option with Common Stock of the
Company shall automatically receive a new option to purchase additional shares
equal to the number of shares surrendered and may specify the terms and
conditions of such new options.

 

(ii)    Exercise of Options. Except as provided in paragraph 6(a) (iv) or as
determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of such exercise the optionee is employed by or in
the service of the Company or any subsidiary of the Company and shall have been
so employed or provided such service continuously since the date such option was
granted. Absence on leave or on account of illness or disability under
rules established by the Board of Directors shall not, however, be deemed an
interruption of employment or service for this purpose. Unless otherwise
determined by the Board of Directors, vesting of options shall not continue
during an absence on leave (including an extended illness) or on account of
disability. Except as provided in paragraphs 6(a) (iv) and 14, options granted
under the Plan may be exercised from time to time over the period stated in each
option in such amounts and at such times as shall be prescribed by the Board of
Directors, provided that options shall not be exercised for fractional shares.
Unless otherwise determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full number of shares to
which the optionee is entitled in that year, the optionee’s rights shall be
cumulative and the optionee may purchase those shares in any subsequent year
during the term of the option.

 

(iii)   Nontransferability. Each Incentive Stock Option and, unless otherwise
determined by the Board of Directors, each other option granted under the Plan
by its terms shall be nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the optionee’s domicile at the time of
death.

 

(iv)   Termination of Employment or Service.

 

(A)  General Rule. Unless otherwise determined by the Board of Directors, in the
event the employment or service of the optionee with the Company or a subsidiary
terminates for any reason other than because of physical disability or death as
provided in subparagraphs 6(a)(iv)(B) and (C), the option may be

 

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exercised at any time prior to the expiration date of the option or the
expiration of 30 days after the date of such termination, whichever is the
shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.

 

(B)   Termination Because of Total Disability. Unless otherwise determined by
the Board of Directors, in the event of the termination of employment or service
because of total disability, the option may be exercised at any time prior to
the expiration date of the option or the expiration of 12 months after the date
of such termination, whichever is the shorter period, but only if and to the
extent the optionee was entitled to exercise the option at the date of such
termination. The term “total disability” means a medically determinable mental
or physical impairment which is expected to result in death or which has lasted
or is expected to last for a continuous period of 12 months or more and which
causes the optionee to be unable, in the opinion of the Company and two
independent physicians, to perform his or her duties as an employee, director,
officer or consultant of the Company and to be engaged in any substantial
gainful activity. Total disability shall be deemed to have occurred on the first
day after the Company and the two independent physicians have furnished their
opinion of total disability to the Company.

 

(C)   Termination Because of Death. Unless otherwise determined by the Board of
Directors, in the event of the death of an optionee while employed by or
providing service to the Company or a subsidiary, the option may be exercised at
any time prior to the expiration date of the option or the expiration of 12
months after the date of death, whichever is the shorter period, for any portion
of the option exercisable as of the date of death and any outstanding unvested
portion of the option, which shall become fully vested and immediately
exercisable as of the date of death, and only by the person or persons to whom
such optionee’s rights under the option shall pass by the optionee’s will or by
the laws of descent and distribution of the state or country of domicile at the
time of death.

 

(D)  Amendment of Exercise Period Applicable to Termination. The Board of
Directors, at the time of grant or, with respect to an option that is not an
Incentive Stock Option, at any time thereafter, may extend the 30-day and
12-month exercise periods any length of time not longer than the original
expiration date of the option, and may increase the portion of an option that is
exercisable, subject to such terms and conditions as the Board of Directors may
determine.

 

(E)   Failure to Exercise Option. To the extent that the option of any deceased
optionee or of any optionee whose employment or service terminates is not
exercised within the applicable period, all further rights to purchase shares
pursuant to such option shall cease and terminate.

 

(v)     Purchase of Shares. Unless the Board of Directors determines otherwise,
shares may be acquired pursuant to an option granted under the Plan only upon
receipt by the Company of notice in writing from the optionee of the optionee’s
intention to exercise, specifying the number of shares as to which the optionee
desires to exercise the option and the date on which the optionee desires to
complete the transaction, and if required in order to comply with the Securities
Act of 1933, as amended, containing a representation that it is the optionee’s
present intention to acquire the shares for investment and not with a view to
distribution. Unless the Board of Directors determines otherwise, on or before
the date specified for completion of the purchase of shares pursuant to an
option, the optionee must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of Directors, cash that
may be the proceeds of a loan from the Company (provided that, with respect to
an Incentive Stock Option, such loan is approved at the time of option grant))
or, with the consent of the Board of Directors, in whole or in part, in Common
Stock of the Company valued at fair market value, restricted stock, performance
units or other contingent awards denominated in either stock or cash, promissory
notes and other forms of consideration. The fair market value of Common Stock
provided in payment of the purchase price shall be determined by the Board of
Directors. If the Common Stock of the Company is not publicly traded on the date
the option is exercised, the Board of Directors may consider any valuation
methods it deems appropriate and may, but is not required to, obtain one or more
independent appraisals of the Company. If the Common Stock of the Company is
publicly traded on the date the option is exercised, the fair market value of
Common Stock provided in payment of the purchase price shall be the closing
price of the Common Stock as reported in The Wall Street Journal on the last
trading day preceding the date the option is exercised, or such other reported
value of the Common Stock as shall be specified by the Board of Directors. No
shares shall be issued until full payment for the shares has been made. With the
consent of the Board of Directors (which, in the case of an Incentive Stock
Option, shall be given only at the time of option grant), an optionee may
request the Company to apply automatically the shares to be received upon the
exercise of a portion of a stock option (even though stock certificates have not
yet been issued) to satisfy the

 

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purchase price for additional portions of the option. Each optionee who has
exercised an option shall immediately upon notification of the amount due, if
any, pay to the Company in cash amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements. If additional withholding
is or becomes required beyond any amount deposited before delivery of the
certificates, the optionee shall pay such amount to the Company on demand. If
the optionee fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the optionee, including
salary, subject to applicable law. With the consent of the Board of Directors an
optionee may satisfy this obligation, in whole or in part, by having the Company
withhold from the shares to be issued upon the exercise that number of shares
that would satisfy the withholding amount due or by delivering to the Company
Common Stock to satisfy the withholding amount. Upon the exercise of an option,
the number of shares reserved for issuance under the Plan shall be reduced by
the number of shares issued upon exercise of the option.

 

(b)   Incentive Stock Options. Incentive Stock Options shall be subject to the
following additional terms and conditions:

 

(i)     Limitation on Amount of Grants. No employee may be granted Incentive
Stock Options under the Plan if the aggregate fair market value, on the date of
grant, of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by that employee during any calendar year under
the Plan and under all incentive stock option plans (within the meaning of
section 422 of the Code) of the Company or any parent or subsidiary of the
Company exceeds $100,000.

 

(ii)    Limitations on Grants to 10 Percent Shareholders. An Incentive Stock
Option may be granted under the Plan to an employee possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option price
is at least 110 percent of the fair market value, as described in paragraph
6(b)(iv), of the Common Stock subject to the option on the date it is granted
and the option by its terms is not exercisable after the expiration of five
years from the date it is granted.

 

(iii)   Duration of Options. Subject to paragraphs 6(a) (ii) and 6(b) (ii),
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that no Incentive Stock Option
shall be exercisable after the expiration of 10 years from the date it is
granted.

 

(iv)   Option Price. The option price per share shall be determined by the Board
of Directors at the time of grant. Except as provided in paragraph 6(b) (ii),
the option price shall not be less than 100 percent of the fair market value of
the Common Stock covered by the Incentive Stock Option at the date the option is
granted. The fair market value shall be determined by the Board of Directors. If
the Common Stock of the Company is not publicly traded on the date the option is
granted, the Board of Directors may consider any valuation methods it deems
appropriate and may, but is not required to, obtain one or more independent
appraisals of the Company. If the Common Stock of the Company is publicly traded
on the date the option is exercised, the fair market value shall be deemed to be
the closing price of the Common Stock as reported in The Wall Street Journal on
the day preceding the date the option is granted, or, if there has been no sale
on that date, on the last preceding date on which a sale occurred or such other
value of the Common Stock as shall be specified by the Board of Directors.

 

(v)    Limitation on Time of Grant. No Incentive Stock Option shall be granted
on or after the tenth anniversary of the effective date of the Plan.

 

(vi)   Conversion of Incentive Stock Options. The Board of Directors may at any
time without the consent of the optionee convert an Incentive Stock Option to a
Non-Statutory Stock Option.

 

(c)   Non-Statutory Stock Options. Non-Statutory Stock Options shall be subject
to the following terms and conditions in addition to those set forth in
Section 6(a) above:

 

(i)    Option Price. The option price for Non-Statutory Stock Options shall be
determined by the Board of Directors at the time of grant and may be any amount
determined by the Board of Directors. Notwithstanding the foregoing, with
respect to Non-Statutory Stock Options intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the option price
will be no less than 100 percent of the fair market value per share on the date
of grant.

 

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(ii)     Duration of Options. Non-Statutory Stock Options granted under the Plan
shall continue in effect for the period fixed by the Board of Directors.

 

7.     Stock Bonuses. The Board of Directors may award shares under the Plan as
stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions, and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with such other restrictions as may be
determined by the Board of Directors. If shares are subject to forfeiture, all
dividends or other distributions paid by the Company with respect to the shares
shall be retained by the Company until the shares are no longer subject to
forfeiture, at which time all accumulated amounts shall be paid to the
recipient. The Board of Directors may require the recipient to sign an agreement
as a condition of the award, but may not require the recipient to pay any
monetary consideration other than amounts necessary to satisfy tax withholding
requirements. The agreement may contain any terms, conditions, restrictions,
representations and warranties required by the Board of Directors. The
certificates representing the shares awarded shall bear any legends required by
the Board of Directors. The Company may require any recipient of a stock bonus
to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the recipient, including salary or
fees for services, subject to applicable law. With the consent of the Board of
Directors, a recipient may deliver Common Stock to the Company to satisfy this
withholding obligation. Upon the issuance of a stock bonus, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued.

 

8.     Restricted Stock. The Board of Directors may issue shares under the Plan
for such consideration (including promissory notes and services) as determined
by the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with such other
restrictions as may be determined by the Board of Directors. If shares are
subject to forfeiture or repurchase by the Company, all dividends or other
distributions paid by the Company with respect to the shares shall be retained
by the Company until the shares are no longer subject to forfeiture or
repurchase, at which time all accumulated amounts shall be paid to the
recipient. All Common Stock issued pursuant to this paragraph 8 shall be subject
to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates representing the shares shall bear any
legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the purchaser,
including salary, subject to applicable law. With the consent of the Board of
Directors, a purchaser may deliver Common Stock to the Company to satisfy this
withholding obligation. Upon the issuance of restricted stock, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.

 

9.     Stock Appreciation Rights.

 

(a)   Grant. Stock appreciation rights may be granted under the Plan by the
Board of Directors, subject to such rules, terms, and conditions as the Board of
Directors prescribes.

 

(b)   Exercise.

 

(i)     Each stock appreciation right shall entitle the holder, upon exercise,
to receive from the Company in exchange therefore an amount equal in value to
the excess of the fair market value on the date of exercise of one share of
Common Stock of the Company over its fair market value on the date of grant (or,
in the case of a stock appreciation right granted in connection with an option,
the excess of the fair market value of one share of Common Stock of the Company
over the option price per share under the option to which the stock appreciation
right relates), multiplied by the number of shares covered by the stock
appreciation right or the option, or portion thereof, that is surrendered. No
stock appreciation right shall be exercisable at a time that the amount
determined under this subparagraph is negative. Payment by the Company upon
exercise of a stock appreciation right may be made in

 

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Common Stock valued at fair market value, in cash, or partly in Common Stock and
partly in cash, all as determined by the Board of Directors.

 

(ii)    A stock appreciation right shall be exercisable only at the time or
times established by the Board of Directors. If a stock appreciation right is
granted in connection with an option, the following rules shall apply: (1) the
stock appreciation right shall be exercisable only to the extent and on the same
conditions that the related option could be exercised; (2) the stock
appreciation rights shall be exercisable only when the fair market value of the
stock exceeds the option price of the related option; (3) the stock appreciation
right shall be for no more than 100 percent of the excess of the fair market
value of the stock at the time of exercise over the option price; (4) upon
exercise of the stock appreciation right, the option or portion thereof to which
the stock appreciation right relates terminates; and (5) upon exercise of the
option, the related stock appreciation right or portion thereof terminates.

 

(iii)    The Board of Directors may withdraw any stock appreciation right
granted under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations from time
to time affecting the rights of holders of stock appreciation rights. Such
rules and regulations may govern the right to exercise stock appreciation rights
granted prior to adoption or amendment of such rules and regulations as well as
stock appreciation rights granted thereafter.

 

(iv)    For purposes of this paragraph 9, the fair market value of the Common
Stock shall be determined as of the date the stock appreciation right is
exercised, under the methods set forth in paragraph 6(b) (iv).

 

(v)     No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash may be paid in an amount equal to the
value of the fraction or, if the Board of Directors shall determine, the number
of shares may be rounded downward to the next whole share.

 

(vi)    Each stock appreciation right granted in connection with an Incentive
Stock Option, and unless otherwise determined by the Board of Directors, each
other stock appreciation right granted under the Plan by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder’s domicile at the time of death, and each
stock appreciation right by its terms shall be exercisable during the holder’s
lifetime only by the holder.

 

(vii)   Each participant who has exercised a stock appreciation right shall,
upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state and local tax withholding
requirements. If the participant fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the consent of the
Board of Directors a participant may satisfy this obligation, in whole or in
part, by having the Company withhold from any shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount due or
by delivering Common Stock to the Company to satisfy the withholding amount.

 

(viii)  Upon the exercise of a stock appreciation right for shares, the number
of shares reserved for issuance under the Plan shall be reduced by the number of
shares issued. Cash payments of stock appreciation rights shall not reduce the
number of shares of Common Stock reserved for issuance under the Plan.

 

10.   Cash Bonus Rights.

 

(a)   Grant. The Board of Directors may grant cash bonus rights under the Plan
in connection with (i) options granted or previously granted, (ii) stock
appreciation rights granted or previously granted, (iii) stock bonuses awarded
or previously awarded and (iv) shares sold or previously sold under the Plan.
Cash bonus rights will be subject to rules, terms and conditions as the Board of
Directors may prescribe. Unless otherwise determined by the Board of Directors,
each cash bonus right granted under the Plan by its terms shall be nonassignable
and nontransferable by the holder, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the holder’s domicile at the time of death. The payment of a cash
bonus shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.

 

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(b)   Cash Bonus Rights in Connection With Options. A cash bonus right granted
in connection with an option will entitle an optionee to a cash bonus when the
related option is exercised (or terminates in connection with the exercise of a
stock appreciation right related to the option) in whole or in part if, in the
sole discretion of the Board of Directors, the bonus right will result in a tax
deduction that the Company has sufficient taxable income to use. If an optionee
purchases shares upon exercise of an option and does not exercise a related
stock appreciation right, the amount of the bonus, if any, shall be determined
by multiplying the excess of the total fair market value of the shares to be
acquired upon the exercise over the total option price for the shares by the
applicable bonus percentage. If the optionee exercises a related stock
appreciation right in connection with the termination of an option, the amount
of the bonus, if any, shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right, including a previously granted bonus right, may be
changed from time to time at the sole discretion of the Board of Directors but
shall in no event exceed 75 percent.

 

(c)   Cash Bonus Rights in Connection With Stock Bonus. A cash bonus right
granted in connection with a stock bonus will entitle the recipient to a cash
bonus payable when the stock bonus is awarded or restrictions, if any, to which
the stock is subject lapse. If bonus stock awarded is subject to restrictions
and is repurchased by the Company or forfeited by the holder, the cash bonus
right granted in connection with the stock bonus shall terminate and may not be
exercised. The amount and timing of payment of a cash bonus shall be determined
by the Board of Directors.

 

(d)   Cash Bonus Rights in Connection With Stock Purchases. A cash bonus right
granted in connection with the purchase of stock pursuant to paragraph 8 will
entitle the recipient to a cash bonus when the shares are purchased or
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to paragraph 8 shall
terminate and may not be exercised in the event the shares are repurchased by
the Company or forfeited by the holder pursuant to applicable restrictions. The
amount of any cash bonus to be awarded and timing of payment of a cash bonus
shall be determined by the Board of Directors.

 

(e)   Taxes. The Company shall withhold from any cash bonus paid pursuant to
paragraph 10 the amount necessary to satisfy any applicable federal, state and
local withholding requirements.

 

11.   Performance Units. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
shareholders’ equity, return on invested capital, and such other goals as may be
established by the Board of Directors. In the event that the minimum performance
goal established by the Board of Directors is not achieved at the conclusion of
a period, no payment shall be made to the participants. In the event the maximum
corporate goal is achieved, 100 percent of the monetary value of the performance
units shall be paid to or vested in the participants. Partial achievement of the
maximum goal may result in a payment or vesting corresponding to the degree of
achievement as determined by the Board of Directors. Payment of an award earned
may be in cash or in Common Stock or in a combination of both, and may be made
when earned, or vested and deferred, as the Board of Directors determines.
Deferred awards shall earn interest on the terms and at a rate determined by the
Board of Directors. Unless otherwise determined by the Board of Directors, each
performance unit granted under the Plan by its terms shall be nonassignable and
nontransferable by the holder, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution of the state or country of
the holder’s domicile at the time of death. Each participant who has been
awarded a performance unit shall, upon notification of the amount due, pay to
the Company in cash amounts necessary to satisfy any applicable federal, state
and local tax withholding requirements. If the participant fails to pay the
amount demanded, the Company may withhold that amount from other amounts payable
by the Company to the participant, including salary or fees for services,
subject to applicable law. With the consent of the Board of Directors a
participant may satisfy this obligation, in whole or in part, by having the
Company withhold from any shares to be issued that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the Company
to satisfy the withholding amount. The payment of a performance unit in cash
shall not reduce the number of shares of Common Stock reserved for issuance
under the Plan. The number of shares reserved for issuance under the Plan shall
be reduced by the number of shares issued upon payment of an award.

 

12.   Foreign Qualified Grants. Awards under the Plan may be granted to such
officers and employees of the

 

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Company and its subsidiaries and such other persons described in paragraph 1
residing in foreign jurisdictions as the Board of Directors may determine from
time to time. The Board of Directors may adopt such supplements to the Plan as
may be necessary to comply with the applicable laws of such foreign
jurisdictions and to afford participants favorable treatment under such laws;
provided, however, that no award shall be granted under any such supplement with
terms which are more beneficial to the participants than the terms permitted by
the Plan.

 

13.   Restricted Stock Units.

 

(a)   Grant. Restricted stock units may be granted at any time and from time to
time as determined by the Board of Directors. For this purpose, a restricted
stock unit shall mean a bookkeeping entry representing an amount equal to the
fair market value of one share of Common Stock, granted pursuant to this
paragraph 13. Each restricted stock unit represents an unfunded and unsecured
obligation of the Company. Each restricted stock unit grant will be evidenced by
an agreement that will specify such other terms and conditions as the Board of
Directors, in its sole discretion, will determine, including all terms,
conditions, and restrictions related to the grant, the number of restricted
stock units and the form of payout, which, subject to paragraph 13(d), may be
left to the discretion of the Board of Directors.

 

(b)   Vesting Criteria and Other Terms. The Board of Directors will set vesting
criteria in its discretion, which, depending on the extent to which the criteria
are met, will determine the number of restricted stock units that will be paid
out to the participant. The Board of Directors may set vesting criteria based
upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis
determined by the Board of Directors in its discretion.

 

(c)   Earning Restricted Stock Units. Upon meeting the applicable vesting
criteria, the participant will be entitled to receive a payout as specified in
the award agreement. Notwithstanding the foregoing, at any time after the grant
of restricted stock units, the Board of Directors, in its sole discretion, may
reduce or waive any vesting criteria that must be met to receive a payout.

 

(d)   Form and Timing of Payment. Payment of earned restricted stock units will
be made as soon as practicable after the date(s) set forth in the award
agreement. The Board of Directors, in its sole discretion, may pay earned
restricted stock units in cash, shares of Common Stock, or a combination
thereof. Shares of Common Stock represented by restricted stock units that are
fully paid in cash again will be available for grant under the Plan.

 

(e)   Cancellation. On the date set forth in the award agreement, all unearned
restricted stock units will be forfeited to the Company.

 

(f)    Transferability. Unless otherwise determined by the Board of Directors,
each restricted stock unit granted under the Plan by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder’s domicile at the time of death.

 

14.   Changes in Capital Structure.

 

(a)   Stock Splits; Stock Dividends. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any stock split, combination of shares or dividend payable in shares,
recapitalization or reclassification appropriate adjustment shall be made by the
Board of Directors in the number and kind of shares available for grants under
the Plan. In addition, the Board of Directors shall make appropriate adjustment
in the number and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, so that the optionee’s
proportionate interest before and after the occurrence of the event is
maintained. Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors shall be
conclusive.

 

(b)   Mergers, Reorganizations, Etc. In the event of a merger, consolidation,
plan of exchange, acquisition of

 

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property or stock, separation, reorganization or liquidation to which the
Company or a subsidiary is a party or a sale of all or substantially all of the
Company’s assets (each, a “Transaction”), the Board of Directors shall, in its
sole discretion and to the extent possible under the structure of the
Transaction, select one of the following alternatives for treating outstanding
options under the Plan:

 

(i)     Outstanding options shall remain in effect in accordance with their
terms.

 

(ii)    Outstanding options shall be converted into options to purchase stock in
the corporation that is the surviving or acquiring corporation in the
Transaction. The amount, type of securities subject thereto and exercise price
of the converted options shall be determined by the Board of Directors of the
Company, taking into account the relative values of the companies involved in
the Transaction and the exchange rate, if any, used in determining shares of the
surviving corporation to be issued to holders of shares of the Company. Unless
otherwise determined by the Board of Directors, the converted options shall be
vested only to the extent that the vesting requirements relating to options
granted hereunder have been satisfied.

 

(iii)   The Board of Directors shall provide a 30-day period prior to the
consummation of the Transaction during which outstanding options may be
exercised to the extent then exercisable, and upon the expiration of such 30-day
period, all unexercised options shall immediately terminate. The Board of
Directors may, in its sole discretion, accelerate the exercisability of options
so that they are exercisable in full during such 30-day period.

 

(c)   Dissolution of the Company. In the event of the dissolution of the
Company, options shall be treated in accordance with paragraph 14(b)(iii).

 

(d)   Rights Issued by Another Corporation. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a Transaction.

 

15.   Amendment of Plan. The Board of Directors may at any time, and from time
to time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in paragraphs 6(a)(iv), 9, 10 and 14, however, no
change in an award already granted shall be made without the written consent of
the holder of such award.

 

16.   Approvals. The obligations of the Company under the Plan are subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company’s shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to issue
or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws.

 

17.   Employment and Service Rights. Nothing in the Plan or any award pursuant
to the Plan shall (i) confer upon any employee any right to be continued in the
employment of the Company or any subsidiary or interfere in any way with the
right of the Company or any subsidiary by whom such employee is employed to
terminate such employee’s employment at any time, for any reason, with or
without cause, or to decrease such employee’s compensation or benefits, or
(ii) confer upon any person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.

 

18.   Rights as a Shareholder. The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any Common Stock until the date
of issue to the recipient of a stock certificate for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.

 

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19.   Restricted Stock Unit Grants to Non-Employee Directors.

 

(a)   Initial Board Grants. Each Non-Employee Director shall be automatically
granted restricted stock units equal to 5,000 shares of Common Stock on the date
such person first becomes a Non-Employee Director, whether through election by
the shareholders of the Company or appointment by the Board of Directors to fill
a vacancy. A “Non-Employee Director” is a director who is not an officer or
employee of the Company or any of its subsidiaries. Notwithstanding the
foregoing, a director who ceases to be an employee of the Company but remains a
director of the Company and thereby becomes a Non-Employee Director shall not
receive the grant of restricted stock units provided under this paragraph 19(a).

 

(b)   Additional Grants. Each Non-Employee Director shall be automatically
granted additional restricted stock units equal to 2,500 shares of Common Stock
in each calendar year subsequent to the year in which such person became a
Non-Employee Director, such restricted stock units to be granted as of the date
of the Company’s annual meeting of shareholders held in such calendar year,
provided that the Non-Employee Director continues to serve in such capacity as
of such date.

 

(c)   Terms of Restricted Stock Units.

 

(i)     Award Agreement. Each award of restricted stock units granted pursuant
to this paragraph 19 shall be evidenced by an agreement that will specify the
number of restricted stock units and such other terms and conditions as the
Board of Directors, in its sole discretion, shall determine, including all
terms, conditions, and restrictions related to the grant and the form of payout,
which, subject to paragraph 19(c)(iii), may be left tot he discretion of the
Board of Directors.

 

(ii)    Vesting. Each award of restricted stock units shall vest as to
twenty-five (25%) of the restricted stock units on each anniversary of its date
of grant provided that the Non-employee Director continues to serve as a
director of the Company on such date. Notwithstanding the foregoing, if the
Non-employee Director ceases to be a director of the Company due to death, one
hundred percent (100%) of the unvested portion of the restricted stock units
subject to the award shall vest on the date of the Non-employee Director’s
death.

 

(iii)   Form and Timing of Payment. Payment of restricted stock units shall be
made as soon as practicable following the date on which such restricted stock
units vest in accordance with paragraph 19(ii). The Board of Directors, in its
sole discretion, may pay vested restricted stock units in cash, shares of Common
Stock, or a combination thereof. Shares of Common Stock represented by
restricted stock units that are fully paid in cash shall again be available for
grant under the Plan.

 

(d)   Section 409A Compliance. Unless otherwise determined by the Board of
Directors, grants made under this paragraph 19 shall comply with the provisions
of Section 409A of the Code. The Board of Directors of the Company reserves the
right to amend this paragraph 19 as it deems necessary or advisable, in its sole
discretion and without the consent of the Employee, to comply with Section 409A
of the Code or to otherwise avoid imposition of any additional tax or income
recognition under Section 409A of the Code.

 

(e)   Nontransferability. Each restricted stock unit by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder’s domicile at the time of death.

 

20.   Code Section 162(m) Provisions.

 

(a)   Option and SAR Annual Share Limit. No individual shall be granted, in any
calendar year, options and stock appreciation rights to purchase more than
250,000 shares of Common Stock; provided, however, that such limit shall be
200,000 shares of Common Stock in the individual’s first calendar year of
Company service.

 

(b)   Restricted Stock, Stock Bonus, Restricted Stock Unit and Performance Unit
Annual Limits. No individual shall be granted, in any calendar year, more than
75,000 shares of Common Stock in the aggregate of the following: (i) restricted
stock, (ii) stock bonuses, or (iii) restricted stock units. No individual shall
be granted, in any calendar year, performance units having an initial value
greater than $2,000,000.

 

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(c)   Section 162(m) Performance Goals. “Performance Goals” shall mean the
goal(s) (or combined goal(s)) determined by the Committee (in its discretion) to
be applicable to an employee with respect to an award of restricted stock, stock
bonuses, restricted stock units and performance units. As determined by the
Committee, the Performance Goals applicable to an award may provide for a
targeted level or levels of achievement using one or more of the following
measures: (a) Operating Income, (b) Pretax Income, and (c) Return on Sales. The
Performance Goals may differ from employee to employee and from award to award.
Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in
relative terms (including, but not limited to, passage of time and/or against
another company or companies), (iii) on a per-share basis, (iv) against the
performance of the Company as a whole or of a business unit of the Company,
and/or (v) to the extent not otherwise specified by the definition of the
Performance Goal, on a pre-tax or after-tax basis. Prior to the Determination
Date, the Committee shall determine whether any element(s) or item(s) shall be
included in or excluded from the calculation of any Performance Goal with
respect to any Participants.

 

(i)     “Operating Income” means the Company’s or a business unit’s income from
operations determined in accordance with generally accepted accounting
principles.

 

(ii)    “Pretax Income” means the Company’s or a business unit’s income before
taxes, determined in accordance with generally accepted accounting principles.

 

(iii)   “Return on Sales” means the percentage equal to the Company’s or a
business unit’s Operating Income before incentive compensation, divided by the
Company’s or the business unit’s, as applicable, revenue, determined in
accordance with generally accepted accounting principles.

 

(d)   Section 162(m) Performance Restrictions. For purposes of qualifying grants
of restricted stock, stock bonuses, restricted stock units and performance units
as “performance-based compensation” under Section 162(m) of the Code, the
Committee, in its discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals shall be set by the Committee on or
before the latest date permissible to enable the restricted stock, stock
bonuses, restricted stock units and performance units to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
restricted stock, stock bonuses, restricted stock units and performance units
which are intended to qualify under Section 162(m) of the Code, the Committee
shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the award under Section 162(m) of the
Code (e.g., in determining the Performance Goals).

 

(e)   Changes in Capitalization. The numerical limitations in Sections 20(a) and
20(b) shall be adjusted proportionately in connection with any change in the
Company’s capitalization as described in Section 14(a).

 

(f)    If an award is cancelled in the same calendar year in which it was
granted (other than in connection with a transaction described in Section 14 of
the Plan), the cancelled award will be counted against the limits set forth in
subsections (a) and (b) above. For this purpose, if the exercise price of an
option is reduced, the transaction will be treated as a cancellation of the
option and the grant of a new option.

 

Adopted: April 21, 1995

Approved by Shareholders: May 5, 1995

 

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