EXHIBIT 10.1

 

2004 ALCOA STOCK

INCENTIVE PLAN

 

(as amended effective November 11, 2005)

 

[Alcoa logo]

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2004 ALCOA STOCK INCENTIVE PLAN

 

SECTION 1. PURPOSE. The purposes of the 2004 Alcoa Stock Incentive Plan are to
encourage selected employees of the Company and its Subsidiaries to acquire a
proprietary and vested interest in the long-term growth and financial success of
the Company, to generate an increased incentive to promote its well-being and
profitability, to link the interests of such employees to the long-term
interests of shareholders and to enhance the ability of the Company and its
Subsidiaries to attract and retain individuals of exceptional managerial,
technical and professional talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depend.

 

SECTION 2. DEFINITIONS. As used in the Plan, the following terms have the
meanings set forth below:

 

“Award” means any Option, Stock Appreciation Right, Contingent Stock Award,
Performance Share, Performance Unit, Other Stock Unit Award, or any other right,
interest, or option relating to Shares or other property granted pursuant to the
provisions of the Plan.

 

“Award Agreement” means any written agreement, contract, or other instrument or
document evidencing any Award granted by the Committee hereunder, which may, but
need not, be executed or acknowledged by both the Company and the Participant.

 

“Beneficial Owner” means beneficial owner as defined in Rule 13d-3 under the
Exchange Act.

 

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

 

“Change in Control” means the first to occur of any of the following events:

 

(a) An Entity, other than a trustee or other fiduciary of securities held under
an employee benefit plan of the Company or any of its Subsidiaries, is or
becomes a Beneficial Owner, directly or indirectly, of stock of the Company
representing 20% or more of the total voting power of the Company’s then
outstanding stock and securities; provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a transaction
that complies with clauses (i) or (ii) of subsection (c) of this definition;

 

(b) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”), cease for any reason to constitute a majority thereof; provided,

 

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however, that any individual becoming a director whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least
75% of the directors then comprising the Incumbent Board shall be considered as
though such individual was a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of an Entity other than the Board;

 

(c) there is consummated a merger, consolidation or other corporate transaction,
other than (i) a merger, consolidation or transaction that would result in the
voting securities of the Company outstanding immediately prior to such merger,
consolidation or transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving Entity
or any parent thereof) at least 55% of the combined voting power of the stock
and securities of the Company or such surviving Entity or any parent thereof
outstanding immediately after such merger, consolidation or transaction, or
(ii) a merger, consolidation or transaction effected to implement a
recapitalization of the Company (or similar transaction) in which no Entity is
or becomes the Beneficial Owner, directly or indirectly, of stock and securities
of the Company representing more than 20% of the combined voting power of the
Company’s then outstanding stock and securities;

 

(d) the sale or disposition by the Company of all or substantially all of the
Company’s assets other than a sale or disposition by the Company of all or
substantially all of the assets to an Entity at least 55% of the combined voting
power of the stock and securities of which is owned by Persons in substantially
the same proportions as their ownership of the Company’s voting stock
immediately prior to such sale; or

 

(e) the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company.

 

“Change in Control Price” means the higher of (a) the highest reported sales
price, regular way, of a Share in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which Shares are listed or
on NASDAQ during the 60-day period prior to and including the date of a Change
in Control or (b) if the Change in Control is the result of a tender or exchange
offer or a merger, consolidation or other corporate transaction, the highest
price per Share paid in such tender or exchange offer or corporate transaction.
To the extent that the consideration paid in any such transaction described
above consists all or in part of securities or other non-cash consideration, the
value of such securities or other non-cash consideration shall be determined in
the sole discretion of the Board.

 

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

 

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“Committee” means the Compensation and Benefits Committee of the Board, or any
successor to such committee, or a subcommittee thereof, composed of no fewer
than two directors, each of whom is a Non-Employee Director and an “outside
director” within the meaning of Section 162(m) of the Code, or any successor
provision thereto.

 

“Company” means Alcoa Inc., a Pennsylvania corporation.

 

“Contingent Stock” means any Share issued with the contingency or restriction
that the holder may not sell, transfer, pledge or assign such Share and with
such other contingencies or restrictions as the Committee, in its sole
discretion, may impose (including, without limitation, any contingency or
restriction on the right to vote such Share and the right to receive any cash
dividends), which contingencies and restrictions may lapse separately or in
combination, at such time or times, in installments or otherwise, as the
Committee may deem appropriate.

 

“Contingent Stock Award” means an award of Contingent Stock under Section 8
hereof.

 

“Covered Employee” means a “covered employee” within the meaning of
Section 162(m)(3) of the Code, or any successor provision thereto.

 

“Employee” means any employee of the Company or of any Subsidiary.

 

“Entity” means any individual, entity, person (within the meaning of
Section 3(a)(9) of the Exchange Act) or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than (a) any employee
plan established by the Company, (b) any affiliate (as defined in Rule 12b-2
promulgated under the Exchange Act) of the Company, (c) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(d) a corporation owned, directly or indirectly, by shareholders of the Company
in substantially the same proportions as their ownership of the Company.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, with respect to any property, the market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee.

 

“Non-Employee Director” has the meaning set forth in Rule 16b-3(b)(3) under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission.

 

“Option” means any right granted to a Participant under the Plan or predecessor
plan allowing such Participant to purchase Shares at such price or prices and
during such period or periods as the Committee shall determine. All Options
granted under the Plan or predecessor plan are intended to be nonqualified stock
options for purposes of the Code.

 

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“Other Stock Unit Award” means any right granted to a Participant by the
Committee pursuant to Section 10 hereof.

 

“Original Option” means any Option other than a Reload Option granted by the
company in connection with the Prior Plan or the predecessor plan.

 

“Participant” means an Employee who is selected by the Committee to receive an
Award under the Plan.

 

“Performance Award” means any Award of Performance Shares or Performance Units
pursuant to Section 9 hereof.

 

“Performance Period” means that period established by the Committee at the time
any Performance Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to such Award are to
be measured. A Performance Period may not be less than one year.

 

“Performance Share” means any grant pursuant to Section 9 hereof of a unit
valued by reference to a designated number of Shares, which value may be paid to
the Participant by delivery of such property as the Committee shall determine,
including, without limitation, cash, Shares or any combination thereof, upon
achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.

 

“Performance Unit” means any grant pursuant to Section 9 hereof of a unit valued
by reference to a designated amount of property other than Shares, which value
may be paid to the Participant by delivery of such property as the Committee
shall determine, including, without limitation, cash, Shares or any combination
thereof, upon achievement of such performance goals during the Performance
Period as the Committee shall establish at the time of such grant or thereafter.

 

“Person” means any individual, corporation, partnership, association, joint
stock company, trust, unincorporated organization or government or political
subdivision thereof.

 

“Plan” means this 2004 Alcoa Stock Incentive Plan.

 

“Prior Plan” means the Alcoa Stock Incentive Plan adopted by the Company
shareholders at the Company’s 1999 annual meeting.

 

“Reload Option” means an Option described in Section 6(e) of the Plan, granted
in connection with the exercise of an option under the Prior Plan or predecessor
plan (an “antecedent award”). As a condition to the grant of a Reload Option, a
Participant must elect at the time of exercise of the antecedent award that a
designated portion, as determined by the Committee, of the Shares issued upon
exercise of the antecedent award shall be restricted in terms of transfer for
the shorter of five years from the issuance date of the shares or the remainder
of the participant’s career with Alcoa.

 

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“Shares” means the shares of common stock of the Company, $1.00 par value.

 

“Stock Appreciation Right” means any right granted to a Participant pursuant to
Section 7 hereof to receive, upon exercise by the Participant, the excess of
(a) the Fair Market Value of one Share on the date of exercise or, if the
Committee shall so determine, at any time during a specified period before the
date of exercise over (b) the grant price of the right on the date of grant, or
if granted in connection with an outstanding Option on the date of grant of the
related Option, as specified by the Committee in its sole discretion, which,
except in the case of Substitute Awards or in connection with an adjustment
provided in Section 4(g), shall not be less than the Fair Market Value of one
Share on such date of grant of the right or the related Option, as the case may
be. Any payment by the Company in respect of such right may be made in cash,
Shares, other property or any combination thereof, as the Committee, in its sole
discretion, shall determine.

 

“Subsidiary” means any corporation in which the Company owns, directly or
indirectly, stock possessing 50 percent or more of the total combined voting
power of all classes of stock in such corporation, and any corporation,
partnership, joint venture, limited liability company or other business entity
as to which the Company possesses a significant ownership interest, directly or
indirectly, as determined by the Committee.

 

“Substitute Awards” means Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or
the right or obligation to make future awards, by a company acquired by the
Company or any of its Subsidiaries or with which the Company or any of its
Subsidiaries combines.

 

SECTION 3. ADMINISTRATION. The Plan shall be administered by the Committee. The
Committee shall have full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to: (i) select the Employees of the Company and
its Subsidiaries to whom Awards may from time to time be granted hereunder;
(ii) determine the type or types of Award to be granted to each Participant
hereunder; (iii) determine the number of Shares to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property or canceled or suspended; (vi) determine whether,
to what extent and under what circumstances cash, Shares and other property and
other amounts payable with respect to an Award under this Plan shall be deferred
either automatically or at the election of the Participant; (vii) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan. Decisions of the Committee shall be
final, conclusive and binding upon all persons, including the Company, any
Participant, any shareholder and any Employee.

 

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SECTION 4. SHARES SUBJECT TO THE PLAN.

 

(a) Subject to the adjustment provisions of Section 4(g) below and the
provisions of Section 4(b) through (f), commencing May 1, 2004, up to 30 million
Shares may be issued in connection with Options and Stock Appreciation Rights
under the Plan.

 

(b) In addition to the Shares authorized by Section 4(a), the following Shares
may be issued under the Plan:

 

(i) Shares available for future awards under the Prior Plan as of the effective
date of this Plan, and any shares that are not issued under the Prior Plan
because of the cancellation, termination or expiration of awards under the Prior
Plan or the predecessor plan.

 

(ii) If a Participant tenders, or has withheld, Shares in payment of all or part
of the option price under a stock option granted under the Plan, the Prior Plan,
or the predecessor plan, or in satisfaction of withholding tax obligations
thereunder, the Shares tendered by the Participant or so withheld shall become
available for issuance under the Plan.

 

(iii) If Shares that are issued under the Plan are subsequently forfeited in
accordance with the terms of the Award or an Award Agreement, the forfeited
Shares shall become available for issuance under the Plan.

 

(c) Subject to the adjustment provisions of Section 4(g), commencing May 1,
2004, up to 10 million Shares may be issued under Awards other than Options and
Stock Appreciation Rights.

 

(d) If an Award may be paid only in Shares or in either cash or Shares, the
Shares shall be deemed to be issued hereunder only when and to the extent that
payment is actually made in Shares. However, the Committee may authorize a cash
payment under an Award in lieu of Shares if there are insufficient Shares
available for issuance under the Plan.

 

(e) Any Shares issued hereunder may consist, in whole or in part, of authorized
and unissued shares, treasury shares or shares purchased in the open market or
otherwise.

 

(f) Shares issued or granted in connection with Substitute Awards shall not
reduce the Shares available for issuance under the Plan or to a Participant in
any calendar year.

 

(g) In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, reverse stock split, spin-off or similar
transaction or other change in corporate structure affecting the Shares, such
adjustments and other substitutions shall be made to the Plan and to Awards as
the Committee in its sole discretion deems equitable or appropriate, including,
without limitation, such adjustments in the aggregate number, class and kind of
securities that may be delivered under the Plan, in the aggregate or to any one
Participant, in the number, class, kind and option or exercise price of
securities subject to outstanding Options,

 

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Stock Appreciation Rights or other Awards granted under the Plan, and in the
number, class and kind of securities subject to Awards granted under the Plan
(including, if the Committee deems appropriate, the substitution of similar
options to purchase the shares of, or other awards denominated in the shares of,
another company) as the Committee may determine to be appropriate in its sole
discretion; provided that the number of Shares subject to any Award shall always
be a whole number.

 

SECTION 5. ELIGIBILITY. Any Employee shall be eligible to be selected as a
Participant.

 

SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Any Option
granted under the Plan may be evidenced by an Award Agreement in such form as
the Committee from time to time approves. Any such Option shall be subject to
the terms and conditions required by this Section 6 and to such additional terms
and conditions, not inconsistent with the provisions of the Plan, as the
Committee may deem appropriate in each case.

 

(a) Option Price. The purchase price per Share purchasable under an Option shall
be determined by the Committee in its sole discretion; provided that, except in
connection with an adjustment provided for in Section 4(g), such purchase price
shall not be less than the Fair Market Value of the Share on the date of the
grant of the Option.

 

(b) Option Period. The term of each Original Option granted hereunder shall not
exceed six years from the date the Option is granted.

 

(c) Exercisability. Options shall be exercisable at such time or times as
determined by the Committee at or subsequent to grant, provided, however, that
the minimum vesting period of an Option (excluding the Options granted on
January 13, 2005) shall be one year.

 

(d) Method Of Exercise. Subject to the other provisions of the Plan, any Option
may be exercised by the Participant in whole or in part at such time or times,
and the Participant may make payment of the Option price in such form or forms,
including, without limitation, payment by delivery of cash, Shares or other
consideration (including, where permitted by law and the Committee, Awards)
having a Fair Market Value on the exercise date equal to the total Option price,
or by any combination of cash, Shares and other consideration as the Committee
may specify in the applicable Award Agreement.

 

(e) Reload Options. A Reload Option entitles the Participant to purchase Shares
(i) that are covered by an antecedent award at the time of its exercise, but are
not issued upon such exercise, or (ii) whose aggregate grant price equals the
purchase price of the exercised antecedent award and any related tax
withholdings. The grant price per Share of the Reload Option shall be the Fair
Market Value per Share at the time of grant. The duration of a Reload Option
shall not extend beyond the expiration date of the antecedent award. No Options
with a reload feature can be granted under the Plan in 2004 or anytime
thereafter. Options and Reload Options granted under the Prior Plan or
predecessor plan in 2002, or prior thereto, will be eligible for grant of a

 

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Reload Option only once on and after January 1, 2004, which grant of a Reload
Option must occur anytime prior to the expiration of the antecedent award. For
Original Options granted under the Prior Plan in 2003, only that portion of the
grant that vests in 2004 will be eligible for grant of only one Reload Option,
which grant must occur on or before December 31, 2004.

 

(f) Transferability of Options. Notwithstanding the provisions of Section 14(a)
of the Plan, at the discretion of the Committee and in accordance with rules it
establishes from time to time, Participants may be permitted to transfer some or
all of their Options to one or more “family members” as such term is defined in
Form S-8 (or any successor form) promulgated under the Securities Act of 1933,
as amended.

 

SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
hereunder to Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need not be the same with
respect to each recipient. Any Stock Appreciation Right related to an Option may
be granted at the same time such Option is granted or at any time thereafter
before exercise or expiration of such Option. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of Shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.

 

SECTION 8. CONTINGENT STOCK

 

(a) Issuance. A Contingent Stock Award shall be subject to contingencies or
restrictions imposed by the Committee during a period of time specified by the
Committee (the “Contingency Period”). Contingent Stock Awards may be issued
hereunder to Participants, for no cash consideration or for such minimum
consideration as may be required by applicable law, either alone or in addition
to other Awards granted under the Plan. The provisions of Contingent Stock
Awards need not be the same with respect to each recipient.

 

(b) Registration. Any Contingent Stock issued hereunder may be evidenced in such
manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Contingent Stock awarded under the Plan, such certificate
shall be registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions, contingencies and restrictions
applicable to such Award.

 

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(c) Forfeiture. Except as otherwise determined by the Committee at the time of
grant or thereafter, upon termination of employment for any reason during the
Contingency Period, all Shares of Contingent Stock still subject to any
contingency or restriction shall be forfeited by the Participant and reacquired
by the Company. Noncontingent Shares, evidenced in such manner as the Committee
shall deem appropriate, shall be issued to the Participant promptly after the
Contingency Period, as determined or modified by the Committee, shall expire.

 

(d) Minimum Vesting Condition. The minimum Contingency Period applicable to any
Contingent Stock Award that is not subject to performance conditions restricting
transfer shall be three (3) years from the date of grant; provided, however,
that a Contingency Period of less than three (3) years may be approved for such
Awards with respect to up to 200,000 Shares under the Plan.

 

SECTION 9. PERFORMANCE AWARDS. Performance Awards may be granted hereunder to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award. Except as provided in
Section 11, Performance Awards will be paid only after the end of the relevant
Performance Period. Performance Awards may be paid in cash, Shares, other
property or any combination thereof in the sole discretion of the Committee at
the time of payment. The performance levels to be achieved for each Performance
Period and the amount of the Award to be paid shall be conclusively determined
by the Committee. Performance Awards may be paid in a lump sum or in
installments following the close of the Performance Period or, in accordance
with procedures established by the Committee, on a deferred basis.

 

SECTION 10. OTHER STOCK UNIT AWARDS.

 

(a) Other Awards of Shares and other Awards that are valued in whole or in part
by reference to, or are otherwise based on, Shares or other property (“Other
Stock Unit Awards”) may be granted hereunder to Participants, either alone or in
addition to other Awards granted under the Plan. Other Stock Unit Awards may be
paid in Shares, cash or any other form of property as the Committee shall
determine. Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees of the Company and its
Subsidiaries to whom, and the time or times at which, such Awards shall be made,
the number of Shares to be granted pursuant to such Awards and all other
conditions of the Awards. The provisions of Other Stock Unit Awards need not be
the same with respect to each recipient.

 

(b) Subject to the provisions of this Plan and any applicable Award Agreement,
Awards and Shares subject to Awards granted under this Section 10, may not be
sold, assigned, transferred, pledged or otherwise encumbered prior to the date
on which the Shares are issued, or, if later, the date on which any applicable
contingency, restriction, performance or deferral period lapses. For any Award
or Shares subject to any Award granted under this Section 10 the transferability
of which is conditioned only on the passage of time, such restriction period
shall be a minimum of three (3) years. Shares (including securities convertible
into Shares) subject to

 

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Awards granted under this Section 10 may be issued for no cash consideration or
for such minimum consideration as may be required by applicable law. Shares
(including securities convertible into Shares) purchased pursuant to a purchase
right granted under this Section 10 thereafter shall be purchased for such
consideration as the Committee shall in its sole discretion determine, which
shall not be less than the Fair Market Value of such Shares or other securities
as of the date such purchase right is granted.

 

SECTION 11. CHANGE IN CONTROL PROVISIONS.

 

(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, unless the Committee shall determine otherwise at the time of grant
with respect to a particular Award, in the event of a Change in Control:

 

(i) any Options and Stock Appreciation Rights outstanding as of the date such
Change in Control is determined to have occurred, and which are not then
exercisable and vested, shall become fully exercisable and vested to the full
extent of the original grant;

 

(ii) the contingencies, restrictions and deferral limitations applicable to any
Contingent Stock shall lapse, and such Contingent Stock shall become free of all
contingencies, restrictions and limitations and become fully vested and
transferable to the full extent of the original grant;

 

(iii) all Performance Awards shall be considered to be earned and payable at the
target amount of Shares covered by the Award, to the extent that the Change in
Control occurs during the Performance Period, or at the calculated award level,
to the extent that the Change in Control occurs after the Performance Period,
and shall be immediately settled or distributed. Any deferral, contingency or
other restriction applicable to such Performance Awards shall lapse; and

 

(iv) the contingencies, restrictions and deferral limitations and other
conditions applicable to any Other Stock Unit Awards or any other Awards shall
lapse, and such Other Stock Unit Awards or such other Awards shall become free
of all contingencies, restrictions, limitations or conditions and become fully
vested and transferable to the full extent of the original grant; and

 

(v) the restrictions applicable to any Shares received in connection with the
grant of a Reload Option shall lapse and such Shares shall be freely and fully
transferable.

 

(b) Change In Control Settlement. Notwithstanding any other provision of the
Plan, during the 60-day period from and after a Change in Control (the “Change
in Control Election Period”), a Participant holding an Option or Stock
Appreciation Right shall have the right, whether or not the Option or Stock
Appreciation Right is fully exercisable and in lieu of the payment of the
purchase price for the Shares being purchased under the Option or Stock
Appreciation Right and by giving notice to the Company, to elect (within the
Change in Control Election Period) to surrender all or part of the Option or
Stock Appreciation Right to the

 

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Company and to receive cash, within 30 days of such notice, in an amount equal
to the amount by which the Change in Control Price per Share on the date of such
election shall exceed the purchase price per Share under the Option or Stock
Appreciation Right multiplied by the number of Shares granted under the Option
or Stock Appreciation right as to which the right granted under this
Section 11(b) shall have been exercised.

 

(c) Other Forms of Settlement. The foregoing provisions of this Section 11 shall
not preclude other forms of settlement of outstanding Awards in the event of a
Change in Control, including a conversion or exchange of Awards for awards or
securities of any person that is a party to or initiates the Change in Control
transaction; provided that no Participant shall be required to accept any such
substituted or exchanged award or security without such Participant’s written
consent.

 

SECTION 12. CODE SECTION 162(m) PROVISIONS.

 

(a) Notwithstanding any other provision of this Plan, if the Committee
determines at the time Contingent Stock, a Performance Award or an Other Stock
Unit Award is granted to a Participant that such Participant is, or is likely to
be as of the end of the tax year in which the Company would claim a tax
deduction in connection with such Award, a Covered Employee, then the Committee
may provide that this Section 12 is applicable to such Award.

 

(b) If an Award is subject to this Section 12, then the lapsing of contingencies
or restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the achievement by the
Company or any Subsidiary, or any division or business unit thereof, as
appropriate, of one or more objective performance goals established by the
Committee, which shall be based on the attainment of specified levels of one or
any combination of the following: cumulative net income or cumulative net income
per share during the performance period; return on sales; return on assets;
return on capital; return on shareholders’ equity; cash flow; economic value
added; cumulative operating income; total shareholders’ return; cost reductions;
or achievement of environment, health & safety goals of the Company or the
Subsidiary or business unit of the Company for or within which the Participant
is primarily employed. Performance goals may be based upon the attainment of
specified levels of Company, Subsidiary or unit performance under one or more of
the measures described above relative to the performance of other comparator
companies or groups of companies, and may include a threshold level of
performance below which no Award will be earned, levels of performance at which
an Award will become partially earned, and a level of performance at which an
Award will be fully earned. Performance goals shall be set by the Committee
within the time period prescribed by, and shall otherwise comply with, the
requirements of Section 162(m) of the Code, or any successor provision thereto,
and the regulations thereunder.

 

(c) Notwithstanding any provision of this Plan other than Section 11, with
respect to any Award that is subject to this Section 12, the Committee may
adjust downwards, but not upwards, the amount payable pursuant to such Award,
and the Committee may not waive the achievement of the applicable performance
goals.

 

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(d) The Committee shall have the power to impose such other restrictions on
Awards subject to this Section 12 as it may deem necessary or appropriate to
ensure that such Awards satisfy all requirements for “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any
successor provision thereto.

 

(e) Notwithstanding any provision of this Plan other than Section 4(g), no
Participant may be granted Options and/or Stock Appreciation Rights in any
calendar year with respect to more than two million (2,000,000) Shares, or
Contingent Stock Awards or Performance Share Awards covering more than 300,000
Shares. The maximum dollar value payable with respect to Performance Units
and/or Other Stock Unit Awards that are valued with reference to property other
than Shares and granted to any Participant in any one calendar year is
$2,000,000.

 

SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter, suspend,
discontinue or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without (i) shareholder approval if: (x) such approval is
necessary to qualify for or comply with any tax or regulatory requirement for
which or with which the Board deems it necessary or desirable to qualify or
comply; or (y) a proposed amendment or alteration would materially increase the
benefits accruing to Participants, materially increase the maximum number of
shares which may be issued under the Plan or materially modify the Plan’s
eligibility requirements: or (ii) the consent of the affected Participant, if
such action would impair the rights of such Participant under any outstanding
Award. Notwithstanding anything to the contrary herein, the Committee may amend
the Plan in such manner as may be necessary so as to have the Plan conform to
local rules and regulations in any jurisdiction outside the United States.

 

The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without his or her consent. Notwithstanding any provision of
this Plan, the Committee may not amend the terms of any Option to reduce the
option price, nor amend the terms of any Contingent Stock Award or Other Stock
Unit Award to reduce the minimum vesting period specified therein.

 

SECTION 14. GENERAL PROVISIONS.

 

(a) Nontransferability of Awards. Unless the Committee determines otherwise at
the time the Award is granted or thereafter, and except for transfers of Options
permitted by Section 6(f) of the Plan: (i) no Award, and no Shares subject to
Awards described in Section 10 that have not been issued, or as to which any
applicable contingency, restriction, performance or deferral period has not
lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered,
except by will or by the laws of descent and distribution; provided that, if so
determined by the Committee, a Participant may, in the manner established by the
Committee, designate a beneficiary to exercise the rights of the Participant
with respect to any Award upon the death of the Participant, and (ii) each Award
shall be exercisable, during the Participant’s lifetime, only by the Participant
or, if permissible under applicable law, by the Participant’s guardian or legal
representative.

 

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(b) Award Term. Except to the extent already established in Section 6 (b), the
term of each Award shall be for such period of months or years from the date of
its grant as may be determined by the Committee.

 

(c) Award Entitlement. No Employee or Participant shall have any claim to be
granted any Award under the Plan and there is no obligation for uniformity of
treatment of Employees or Participants under the Plan.

 

(d) Terms and Conditions of Award. The prospective recipient of any Award under
the Plan shall be deemed to have become a Participant subject to all the
applicable terms and conditions of the Award upon the grant of the Award to the
prospective recipient, unless the prospective recipient notifies the Company
within 30 days of the grant that the prospective recipient does not accept the
Award.

 

(e) Award Adjustments. Except as provided in Section 12, the Committee shall be
authorized to make adjustments in Performance Award criteria or in the terms and
conditions of other Awards in recognition of unusual or nonrecurring events
affecting the Company or its financial statements or changes in applicable laws,
regulations or accounting principles. The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award in
the manner and to the extent it shall deem desirable to carry it into effect.

 

(f) Committee Right to Cancel. The Committee shall have full power and authority
to determine whether, to what extent and under what circumstances any Award
shall be canceled or suspended. In particular, but without limitation, all
outstanding Awards to any Participant shall be canceled if the Participant,
without the consent of the Committee, while employed by the Company or after
termination of such employment, becomes associated with, employed by, renders
services to or owns any interest in (other than any nonsubstantial interest, as
determined by the Committee) any business that is in competition with the
Company or with any business in which the Company has a substantial interest as
determined by the Committee or otherwise takes any action that in the judgment
of the Committee is not in the best interests of the Company.

 

(g) Stock Certificate Legends. All certificates for Shares delivered under the
Plan pursuant to any Award shall be subject to such stock 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 law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.

 

(h) Compliance with Securities Laws. No Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall
be outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. Federal securities laws and any other laws
to which such offer, if made, would be subject.

 

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(i) Award Deferrals; Dividends. The Committee shall be authorized to establish
procedures pursuant to which the payment of any Award may be deferred. Subject
to the provisions of the Plan and any Award Agreement, the recipient of an Award
(including, without limitation, any deferred Award) may, if so determined by the
Committee, be entitled to receive, currently or on a deferred basis, cash
dividends, or cash payments in amounts equivalent to cash dividends on Shares
(“Dividend Equivalents”), with respect to the number of Shares covered by the
Award, as determined by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have been reinvested
in additional Shares or otherwise reinvested.

 

(j) Consideration for Awards. Except as otherwise required in any applicable
Award Agreement or by the terms of the Plan, recipients of Awards under the Plan
shall not be required to make any payment or provide consideration other than
the rendering of services.

 

(k) Delegation of Authority by Committee. The Committee may delegate to one or
more executive officers (as that term is defined in Rule 3b-7 under the Exchange
Act) or a committee of executive officers the right to grant Awards to Employees
who are not executive officers or directors of the Company and to cancel or
suspend Awards to Employees who are not executive officers or directors of the
Company.

 

(l) Withholding Taxes. The Company shall be authorized to withhold from any
Award granted or payment due under the Plan the amount of withholding taxes due
in respect of an Award or payment hereunder and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes. The Committee shall be authorized to establish procedures
for election by Participants to satisfy such obligations for the payment of such
taxes by delivery of or transfer of Shares to the Company or by directing the
Company to retain Shares otherwise deliverable in connection with the Award.

 

(m) Other Compensatory Arrangements. 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.

 

(n) Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the Commonwealth of Pennsylvania and applicable Federal law.

 

(o) Severability. If any provision of this Plan is or becomes or is deemed
invalid, illegal or unenforceable in any jurisdiction, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws or
if it cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, it shall be stricken and
the remainder of the Plan shall remain in full force and effect.

 

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(p) Awards to NonU.S. Employees. Awards may be granted to Employees who are
foreign nationals or employed outside the United States, or both, on such terms
and conditions different from those applicable to Awards to Employees employed
in the United States as may, in the judgment of the Committee, be necessary or
desirable in order to recognize differences in local law or tax policy. The
Committee also may impose conditions on the exercise or vesting of Awards in
order to minimize the Company’s obligation with respect to tax equalization for
Employees on assignments outside their home countries.

 

(q) Repricing Prohibited. The repricing of Options or Stock Appreciation Right
Awards under the Plan is expressly prohibited. “Repricing” means the grant of a
new Option, Stock Appreciation Right or other Award in consideration of the
exchange, cancellation or forfeiture of an Award that has a higher grant price
than the new Award or the amendment of an outstanding Award to reduce the grant
price; provided, that the grant of a Substitute Award shall not be considered to
be repricing.

 

SECTION 15. TERM OF PLAN. The Plan shall be effective as of May 1, 2004. No
Award shall be granted pursuant to the Plan after April 30,2009, but any Award
theretofore granted may extend beyond that date.

 

SECTION 16. TERMINATION OF PRIOR PLAN. No stock options or other awards may be
granted under the Prior Plan or any predecessor plan after April 30, 2004, but
all such awards theretofore granted shall extend for the full stated terms
thereof and be administered under this Plan.

 

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