Exhibit 10.16
 
PULSE ELECTRONICS CORPORATION
ANNUAL AND LONG-TERM INCENTIVE PLAN

Effective January 3, 2011

The purpose of the Pulse Electronics Corporation Annual and Long-Term Incentive
Plan (the “Plan”) is to provide designated employees of the Company with the
opportunity to receive a mix of annual incentive awards in the form of cash and
long-term incentive awards in the form of Restricted Stock or Options.  In both
cases, the Company believes that the Plan will enhance the incentive for
Participants to contribute materially to the growth and profitability of the
Company, thereby benefiting the Company and its shareholders.

The Board has adopted the Plan, effective with respect to Awards granted on or
after January 3, 2011.

1.           Definitions.  For purposes of this Plan, the terms and phrases set
forth below shall have the meanings so indicated.

(a)           “Annual Incentive Award” shall mean, with respect to a fiscal year
of the Company and any Participant, the cash award earned by such Participant
pursuant to Section 3 below.

(b)           “Award” shall mean an Annual Incentive Award or a Long-Term
Incentive Award.

(c)           “Board” shall mean the Board of Directors of Pulse Electronics
Corporation, or of any successor thereto.

(d)           “Business Unit Net Operating Profit” shall mean, with respect to a
fiscal year of the Company, the net operating profit of a discrete business
unit, generally as calculated on a non-GAAP basis and before annual incentive
awards (including Annual Incentive Awards payable under this Plan and any annual
cash incentives payable to the Chief Executive officer), but in any event as
described and calculated by the Committee.

(e)           “Business Unit Net Operating Profit Goal” shall mean, with respect
to a fiscal year of the Company, the Business Unit Net Operating Profit amount
designated by the Committee for purposes of this Plan.

(f)           “Business Unit Participant” shall mean, with respect to a fiscal
year of the Company, a United States-based employee of the Company identified by
the Committee as employed in connection with a discrete business unit and
identified as eligible to participate in the Plan by the Committee.

(g)           “Business Unit Revenue” shall mean, with respect to a fiscal year
of the Company, the revenue earned by a discrete business unit as described and
calculated by the Committee.

(h)           “Business Unit Revenue Goal” shall mean, with respect to a fiscal
year of the Company, the Business Unit Revenue amount designated by the
Committee for purposes of this Plan.

(i)           “Cause, with respect to any Participant, shall have the meaning
set forth in any unexpired employment or severance agreement between the
Participant and the Company and, in the absence of any such agreement, shall
mean (i) the continued and willful failure of the Participant to follow the
lawful orders of his or her direct superior, (ii) violation by the Participant
of a material published rule or regulation of the Company or a provision of the
Company’s Statement of Principles or Code of Business Conduct (in effect from
time to time), or (iii) conviction of a crime which renders the Participant
unable to perform his or her duties effectively; provided that in the case of
(i) or (ii) above, the Company shall give the Participant written notice of the
action or omission which the Company believes to constitute Cause and the
Participant shall have 30 calendar days to cure such action or
omission.  Determination of Cause by the Committee shall be final and binding on
all parties.

 
 

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(j)           “Change of Control” shall have the same meaning as such term is
defined in the Restricted Stock Plan.

(k)           “Code” means the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.

(l)           “Committee” means a committee of two or more members of the Board
who are “outside directors” as defined under Section 162(m) of the Code and
“non-employee directors” as defined under Rule 16b-3 of the Exchange Act, and
who meet such other criteria as may be prescribed by applicable stock exchange
rules.

(m)           “Company” means Pulse Electronics Corporation, formerly known as
“Technitrol, Inc.,” and its direct and indirect subsidiaries.

(n)           “Consolidated Net Operating Profit” shall mean, with respect to a
fiscal year of the Company, the net operating profit of the Company as
calculated on a non-GAAP basis and before annual incentive awards (including
Annual Incentive Awards payable under this Plan and any annual cash incentives
payable to the Chief Executive Officer), but in any event as described and
calculated by the Committee.

(o)           “Consolidated Net Operating Profit Goal” shall mean, with respect
to a fiscal year of the Company, the Consolidated Net Operating Profit amount
designated by the Committee for purposes of this Plan.

(p)           “Consolidated Revenue” shall mean, with respect to a fiscal year
of the Company, the revenue earned by the Company as described and calculated by
the Committee.

(q)           “Consolidated Revenue Goal” shall mean, with respect to a fiscal
year of the Company, the Consolidated Revenue amount designated by the Committee
for purposes of this Plan.

(r)            “Corporate Participant” shall mean, with respect to a fiscal year
of the Company, a United States-based employee who is identified by the
Committee as having a position and responsibilities that are not specific to a
discrete business unit of the Company and is identified as eligible to
participate in the Plan by the Committee.

(s)           “Earnings Per Share” shall mean the earnings per share of the
common stock of Pulse Electronics Corporation as described and calculated by the
Committee.

(t)           “Earnings Per Share Goal” shall mean, with respect to a fiscal
year of the Company, the goal measured with respect to Earnings Per Share
designated by the Committee for purposes of this Plan.

(u)           “Effective Date” shall mean January 3, 2011.

(v)           “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended, and U. S. Department of Labor Regulations promulgated
thereunder.

(w)           “Exchange Act” shall mean the Securities and Exchange Act of 1934,
as amended, and rules and regulations issued by the U. S. Securities and
Exchange Commission thereunder.

(x)           “GAAP” shall mean generally accepted accounting principles in the
United States.
 
 
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(y)           “Goal” shall mean a Business Unit Net Operating Profit Goal, a
Business Unit Revenue Goal, a Consolidated Net Operating Profit Goal, a
Consolidated Revenue Goal, an Earnings Per Share Goal, or a Performance Target.

(z)           “Long-Term Incentive Award” shall mean, with respect to a fiscal
year of the Company and any Participant, the Restricted Stock and Options earned
by such Participant pursuant to Section 4 below.

(aa)           “Options” shall mean options to acquire common stock of the
Company granted under the Stock Option Plan.

(bb)           “Participant” shall mean a Business Unit Participant or a
Corporate Participant.

(cc)           “Plan” shall mean this Pulse Electronics Corporation  Annual and
Long-Term Incentive Plan, as the same may be amended from time to time.

(dd)           “Restricted Stock” shall mean common stock of Pulse Electronics
Corporation awarded under and subject to the terms of the Restricted Stock Plan,
and subject to vesting conditions as set forth in Section 4 below.

(ee)           “Restricted Stock Plan” shall mean the Restricted Stock Plan II
of Technitrol, Inc. (As Amended and Restated Effective as of March 1, 2010).

(ff)           “Section 16 Officer” shall mean an employee of the Company
identified by the Board as being subject to the requirements and limitations of
Section 16 of the Exchange Act with respect to the Company.

(gg)           “Stock Option Plan” shall mean the Technitrol, Inc. 2001 Stock
Option Plan (As Amended and Restated Effective as of March 1, 2010).

(hh)           “Target Annual Incentive Award” shall mean, with respect to a
fiscal year of the Company and a Participant, the amount determined pursuant to
Section 3 below.

(ii)           “Value” shall mean, in the case of one share of Restricted Stock,
the closing price of one share of common stock of the Company as reported on the
stock exchange on which such stock is listed on the day of its transfer to a
Participant; or, in the case of an Option awarded to a Participant, shall mean
the value assigned to that Option by the Company for purposes of its financial
statements prepared in accordance with GAAP.
 
2.           Administration.  The Plan shall be administered and interpreted by
the Committee.  However, the Board may retain the right to ratify, approve or
amend any awards as it deems appropriate.  If the Board requires ratification or
approval of an award and the award is not ratified or approved by the Board,
such award shall not be effective.

3.           Annual Incentive Awards.  For each fiscal year of the Company
beginning on or after the Effective Date, the Committee shall make cash awards
to employees in accordance with the criteria and requirements set forth below.

(a)           No Annual Incentive Awards shall be made for a fiscal year unless
the Consolidated Net Operating Profit is at least –

 
(i)
$3,000,000 for the fiscal year ending in 2011;

 
(ii)
$4,000,000 for the fiscal year ending in 2012; and

 
(iii)
$5,000,000 for fiscal years ending in 2013 and thereafter.

 
 
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(b)           No Participant shall receive an Annual Incentive Award for a
fiscal year if, in the discretionary judgment of the Committee, his or her
performance of services for the Company during the fiscal year is found to have
been unsatisfactory.  After the determination of the level of Annual Incentive
Awards for Participants pursuant to Section 3(d) and 3(e) below, the Committee
may increase or decrease the amount of the Annual Incentive Award for one or
more of the Chief Financial Officer, Chief Operating Officer and other Section
16 Officers by up to 20% of that Participant’s award amount, based on the
Committee’s discretionary determination of the quality of the Participant’s
individual performance during the fiscal year, and the Chief Executive Officer
or his or her delegate may, in his or her discretion, increase or decrease the
amount of the Annual Incentive Award for one or more Participants (other than
the Chief Financial Officer, Chief Operating Officer and other Section 16
Officers) by up to 20% of each Participant’s award amount based on the Chief
Executive Officer’s or his or her delegate’s assessment of the individual
performance of such Participant, provided:

(i)           such adjustments cannot result in the aggregate of all Annual
Incentive Awards for a fiscal year to exceed the aggregate determined prior to
any adjustments; and

(ii)           no increase to a Participant’s Annual Incentive Award shall be
made pursuant to this Section 3(b) if such Participant, in the judgment of the
Committee, is or is likely to be a “covered employee,” within the meaning of
Section 162(m)(3) of the Code, with respect to the taxable year of the Company
for which the Participant’s Annual Incentive Award would otherwise be taken into
account as a deduction by the Company for federal income tax purposes.

(c)           Annual Incentive Awards for a fiscal year shall be paid as soon as
practicable following the close of the fiscal year, but no later than the 15th
day of the third calendar month beginning thereafter.  A Participant shall
forfeit his or her Annual Incentive Award for a fiscal year if he or she is not
employed through the end of the fiscal year, or if he or she is terminated for
Cause before payment of the Annual Incentive Award.

(d)           Corporate Participants.  The Target Annual Incentive Award for a
Corporate Participant shall be the percentage of his or her base salary as of
the first day of the fiscal year assigned to his or her position with the
Company in accordance with the following schedule:
 

 
Position
Percentage
 
Chief Financial Officer and
   
              Chief Operating Officer
50%
 
Other Section 16 Officers
35%
 
Vice Presidents and other Officers as
   
               identified by the Committee
25%
 
Division General Managers and
   
              Global/Senior Directors
25%
 
Directors and Principal Engineers
25%

 
The Target Annual Incentive Award shall be achieved if each of the Earnings Per
Share Goal, the Consolidated Net Operating Profit Goal and the Consolidated
Revenue Goal is met but not exceeded for the fiscal year.  Otherwise, the Annual
Incentive Award for the fiscal year will be the sum of the amounts earned on a
Goal-by-Goal basis, as follows:

(i)           No weight will be assigned to any Goal unless at least 75% of that
Goal has been achieved.

(ii)           If at least 75% but not more than 100% of the Earnings Per Share
Goal is achieved, 25% to 50% of the Target Annual Incentive Award shall be
earned, with the precise percentage to be based on straight-line interpolation
between 75% and 100%.  Subject to the limitation set forth in Section 3(f)
below, if more than 100% of the Earnings Per Share Goal is achieved, up to an
additional 50% of the Target Annual Incentive Award shall be earned, with the
precise additional percentage to be based on straight-line interpolation between
100% and 125%.
 
 
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(iii)           If at least 75% but not more than 100% of the Consolidated Net
Operating Profit Goal is achieved, 12.5% to 25% of the Target Annual Incentive
Award shall be earned, with the precise percentage to be based on straight-line
interpolation between 75% and 100%.  Subject to the limitation set forth in
Section 3(f) below, if more than 100% of the Consolidated Net Operating Profit
Goal is achieved, up to an additional 25% of the Target Annual Incentive Award
shall be earned, with the precise additional percentage to be based on
straight-line interpolation between 100% and 125%.

(iv)           If at least 75% but not more than 100% of the Consolidated
Revenue Goal is achieved, 12.5% to 25% of the Target Annual Incentive Award
shall be earned, with the precise percentage to be based on straight-line
interpolation between 75% and 100%.  Subject to the limitation set forth in
Section 3(f) below, if more than 100% of the Consolidated Revenue Goal is
achieved, up to an additional 25% of the Target Annual Incentive Award shall be
earned, with the precise additional percentage to be based on straight-line
interpolation between 100% and 125%.

(v)           The Committee, in its discretion, may provide for the payment of
Annual Incentive Awards to all or less than all Corporate Participants in such
amounts as it determines if no Annual Incentive Awards would otherwise be
awarded pursuant to the formulae set forth in this Section 3(d), or for the
payment of Annual Incentive Awards to all or less than all Corporate
Participants in such amounts as it determines that are greater than the amounts
otherwise determined pursuant to such formulae.

(e)            Business Unit Participants.  The Target Annual Incentive Award
for a Business Unit Participant shall be the percentage of his or her base
salary as of the first day of the fiscal year assigned to his or her position
with the Company in accordance with the following schedule:
 

 
Position
Percentage
 
Vice Presidents and other Officers as
   
               identified by the Committee
25%
 
Division General Managers and
   
              Global/Senior Directors
25%
 
Directors and Principal Engineers
25%

 
The Target Annual Incentive Award shall be achieved if each of the Earnings Per
Share Goal, the Business Unit Net Operating Profit Goal and the Business Unit
Revenue Goal is met but not exceeded for the fiscal year.  Otherwise, the Annual
Incentive Award for the fiscal year will be the sum of the amounts earned on a
Goal-by-Goal basis, as follows:

(i)           No weight will be assigned to any Goal unless at least 75% of that
Goal has been achieved.
 
(ii)           If at least 75% but not more than 100% of the Earnings Per Share
Goal is achieved, 25% to 50% of the Target Annual Incentive Award shall be
earned, with the precise percentage to be based on straight-line interpolation
between 75% and 100%.  Subject to the limitation set forth in Section 3(f)
below, if more than 100% of the Earnings Per Share Goal is achieved, up to an
additional 50% of the Target Annual Incentive Award shall be earned, with the
precise additional percentage to be based on straight-line interpolation between
100% and 125%.

(iii)           If at least 75% but not more than 100% of the Business Unit
Consolidated Net Operating Profit Goal is achieved, 12.5% to 25% of the Target
Annual Incentive Award shall be earned, with the precise percentage to be based
on straight-line interpolation between 75% and 100%.  Subject to the limitation
set forth in Section 3(f) below, if more than 100% of the Business Unit Net
Operating Profit Goal is achieved, up to an additional 25% of the Target Annual
Incentive Award shall be earned, with the precise additional percentage to be
based on straight-line interpolation between 100% and 125%.
 
 
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(iv)           If at least 75% but not more than 100% of the Business Unit
Revenue Goal is achieved, 12.5% to 25% of the Target Annual Incentive Award
shall be earned, with the precise percentage to be based on straight-line
interpolation between 75% and 100%.  Subject to the limitation set forth in
Section 3(f) below, if more than 100% of the Business Unit Revenue Goal is
achieved, up to an additional 25% of the Target Annual Incentive Award shall be
earned, with the precise additional percentage to be based on straight-line
interpolation between 100% and 125%.

(v)           The Committee, in its discretion, may provide for the payment of
Annual Incentive Awards to all or less than all Business Unit Participants in
such amounts as it determines if no Annual Incentive Awards would otherwise be
awarded pursuant to the formulae set forth in this Section 3(e), or for the
payment of Annual Incentive Awards to all or less than all Business Unit
Participants in such amounts as it determines that are greater than the amounts
otherwise determined pursuant to such formulae.

(f)           The aggregate increases in all Participants’ Annual Incentive
Awards for a fiscal year attributable to the achievement of more than 100% of
one or more Goals shall not exceed 25% of the dollar amount by which the
Consolidated Net Operating Profit exceeds the Consolidated Net Operating Profit
Goal.  Each Participant’s Annual Incentive Award shall be reduced
proportionately to the extent necessary to take into account this
limitation.  The Committee, in its discretion, may waive the limitation set
forth in this Section 3(f) for one or more fiscal years, in full or in part.

4.           Long-Term Incentive Awards.  For each fiscal year of the Company
beginning on or after the Effective Date, the Committee shall make awards of
Restricted Stock and Options to employees, whom are employed at the time of the
award, in accordance with the criteria and requirements set forth below.

(a)           Each share of Restricted Stock transferred to a Participant shall
be subject to forfeiture upon the Participant’s termination of employment with
the Company for any reason prior to the completion of three years of continuous
employment with the Company from the date of the award of the Restricted
Stock.  Upon completion of such three-year period of continuous service, such
risk of forfeiture shall lapse and the Restricted Stock shall become fully
vested.

(b)           With respect to each Option awarded to a Participant, 25% of the
number of shares of common stock of the Company subject to the Option shall
become exercisable upon the first through fourth anniversaries of the date of
the award of the Option, provided that the Participant remains in the continuous
employment of the Company through such anniversary.  Upon termination of
employment with the Company for any reason prior to an anniversary date, the
portion of the Option which had not then become exercisable shall be forfeited.
 
(c)           Corporate Participants.  The Long-Term Incentive Award for a
Corporate Participant for a fiscal year shall be the percentage of his or her
base salary as of the first day of the fiscal year assigned to his or her
position with the Company in accordance with the following schedule:
 

 
Position
Percentage
 
Chief Financial Officer and
   
              Chief Operating Officer
50%
 
Other Section 16 Officers
35%
 
Vice Presidents and other Officers as
   
               identified by the Committee
15%
 
Division General Managers and
   
              Global/Senior Directors
15%
 
Directors and Principal Engineers
10%

 
 
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The Committee may, in its discretion at the time of grant, decrease each of the
above percentages in a uniform manner to a percentage of base salary not less
than half the percentage set forth in the above schedule.

The value of the Long-Term Incentive Award for the Chief Financial Officer,
Chief Operating Officer or Other Section 16 Officers shall be delivered to that
Corporate Participant by means of a transfer of Restricted Stock having a Value
equal to 40% of such total value and Options having a Value equal to 60% of such
total value.  The value of the Long-Term Incentive Award for any other Corporate
Participant identified in the above schedule shall be delivered to that
Corporate Participant by means of a transfer of Restricted Stock having a Value
equal to 60% of such total value and Options having a Value equal to 40% of such
total value.  In determining the number of shares of Restricted Stock to be
awarded to each Corporate Participant, the Value of each share shall be
determined after taking into account the value of any cash award provided by the
Committee in its sole discretion under Section 5 of the Restricted Stock Plan,
and such cash award if any shall be measured as of the day of transfer as if
such cash award was paid at such time instead of upon vesting.
 
(d)           Business Unit Participants.  The Long-Term Incentive Award for a
Business Unit Participant for a fiscal year shall be the percentage of his or
her base salary as of the first day of the fiscal year assigned to his or her
position with the Company in accordance with the following schedule:
 

 
Position
Percentage
 
Vice Presidents and other Officers as
   
               identified by the Committee
15%
 
Division General Managers and
   
              Global/Senior Directors
15%
 
Directors and Principal Engineers
10%

 
The Committee may, in its discretion at the time of grant, decrease each of the
above percentages in a uniform manner to a percentage of base salary not less
than half the percentage set forth in the above schedule.

The value of the Long-Term Incentive Award for a Business Unit Participant shall
be delivered to that Business Unit Participant by means of a transfer of
Restricted Stock having a Value equal to 60% of such total value and Options
having a Value equal to 40% of such total value.  In determining the number of
shares of Restricted Stock to be awarded to each Business Unit Participant, the
Value of each share shall be determined after taking into account the value of
any cash award provided by the Committee in its sole discretion under Section 5
of the Restricted Stock Plan, and such cash award if any shall be measured as of
the day of transfer as if such cash award was paid at such time instead of upon
vesting.
 
(e)           Notwithstanding Section 4(c) and 4(d) above, at the time of grant,
the Committee may, in its discretion, increase or decrease the Long-Term
Incentive Award to one or more of the Chief Financial Officer, Chief Operating
Officer and Other Section 16 Officers by up to 20% of that Participant’s award
amount, based on the Committee’s assessment of the individual performance of
such Corporate Participants, and the Chief Executive Officer or his or her
delegate may, in his or her discretion, increase or decrease the Long-Term
Incentive Award to one or more Corporate Participants (other than the Chief
Financial Officer, Chief Operating Officer or Other Section 16 Officers) or
Business Unit Participants by up to 20% of each Participant’s award amount,
based on the Chief Executive Officer’s or his or her delegate’s assessment of
the individual performance of such Participant, provided that the aggregate
value of all Long-Term Incentive Awards pursuant to Section 4(c) and 4(d) shall
not exceed the value of such Long-Term Incentive Awards absent such adjustments.
 
 
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(f)           Long Term Incentive Awards for a fiscal year shall be paid no
later than the 15th day of the fourth calendar month following the close of the
preceding fiscal year.

5.           Awards for Other Employees.

(a)           In consultation with the Chief Executive Officer of the Company,
the Committee shall authorize Annual Incentive Awards to one or more
United-States based employees below the levels of Directors and Principal
Engineers for a fiscal year of the Company which, in the aggregate, shall not
exceed 15% of the sum of (i) the aggregate Annual Incentive Awards made to
Participants under this Plan for such fiscal year, and (ii) the annual bonus or
cash incentive compensation awarded to the Company’s Chief Executive Officer for
such fiscal year.

(b)           In consultation with the Chief Executive Officer of the Company,
the Committee shall authorize Annual Incentive Awards to one or more
non-United-States based employees for a fiscal year of the Company which, in the
aggregate, shall not exceed 10% of the sum of (i) the aggregate Annual Incentive
Awards made to Participants under this Plan for such fiscal year, and (ii) the
annual bonus or cash incentive compensation awarded to the Company’s Chief
Executive Officer for such fiscal year.

(c)           In consultation with the Chief Executive Officer of the Company,
the Committee shall authorize Long-Term Incentive Awards to one or more
United-States based employees below the levels of Directors and Principal
Engineers for a fiscal year of the Company the value of which, in the aggregate,
shall not exceed 10% of the sum of (i) the aggregate value of the Long-Term
Incentive Awards made to Participants under this Plan for such fiscal year, and
(ii) the value of the long-term incentives awarded to the Company’s Chief
Executive Officer for such fiscal year.

(d)           In consultation with the Chief Executive Officer of the Company,
the Committee shall authorize Long-Term Incentive Awards to one or more
non-United-States based employees for a fiscal year of the Company the value of
which, in the aggregate, shall not exceed 15% of the sum of (i) the aggregate
value of Long-Term Incentive Awards made to Participants under this Plan for
such fiscal year, and (ii) the value of the long-term incentives awarded to the
Company’s Chief Executive Officer for such fiscal year.

(e)           In consultation with the Chief Executive Officer of the Company,
the Committee shall issue awards from the pools established under this Section 5
at or about the same time as awards are made under Section 4.

6.           Withholding of Taxes.  All Awards under the Plan shall be subject
to applicable federal (including FICA), state and local tax withholding
requirements.  The Company may require that the Participant or other person
receiving an Award pay to the Company the amount of any federal, state or local
taxes that the Company is required to withhold with respect to such Award and
may require such payment as a precondition for receipt of such Award, or the
Company may deduct from other wages paid by the Company the amount of any
withholding taxes due with respect to such Award.

7.           Consequences of a Change of Control.  Unless the Committee has
established the effect of a Change of Control on a particular Award at the time
such Award was made, or a Participant’s employment agreement (or similar
document) provides for treatment of any outstanding Award in the event of a
Change of Control, the Committee may, in the event of a Change of Control,
(a) determine the extent to which a Goal with respect to any incomplete fiscal
year applicable to Awards in effect on the date of the Change of Control have
been met based on such audited or unaudited financial information then available
as it deems necessary, and (b) cause to be paid or delivered to each Participant
partial or full Awards with respect to the fiscal year based on the Committee’s
determination of the degree of attainment of the Goals and the portion of the
fiscal year that has been completed.
 
 
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8.             Amendment and Termination of the Plan.
 
(a)           Amendment.       The Board may amend or terminate the Plan at any
time.

(b)           Termination and Amendment of Outstanding Awards.  A termination or
amendment of the Plan that occurs after an Award is made shall not materially
impair the rights of a Participant with respect to prior Awards unless the
Participant consents in writing.  The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Award. 
Whether or not the Plan has terminated, an outstanding Award may be amended by
agreement of the Company and the Participant consistent with the Plan.

(c)           Governing Document.   The Plan shall be the controlling document. 
No other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner.  The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
 
9.             Funding of the Plan.     The Plan shall be unfunded and is not
intended to be subject to ERISA. 

10.           Rights of Participants.   Nothing in the Plan shall entitle any
employee or other person to any claim or right to be awarded an Award under the
Plan.  Neither the Plan nor any action taken hereunder shall be construed as
giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.

11.           Headings.       Section headings are for reference only.  In the
event of a conflict between a title and the content of a section, the content of
the section shall control.

12.           Effective Date of the Plan. The Plan shall be effective as of the
Effective Date.

13.           Miscellaneous.

(a)           Compliance with Law.    The Plan shall be subject to all
applicable laws and to approvals by any governmental or regulatory agency as may
be required.  It is the intent of the Company that the Plan and applicable
Awards under the Plan comply with the applicable provisions of Section 162(m) of
the Code and Section 409A of the Code (with respect to Awards subject to
Section 409A of the Code).  To the extent that any legal requirement of
Section 162(m) or 409A of the Code ceases to be required by law or that the
restrictions thereof are liberalized, the Committee may provide, in its sole
discretion, that Plan provisions and restrictions relating to such legal
requirements shall cease to apply or be liberalized, as appropriate.  The
Committee may revoke any Award if it is contrary to law or modify an Award to
bring it into compliance with any valid and mandatory government regulation. 
The Committee may, in its sole discretion, agree to limit its authority under
this Section.

(b)           Governing Law.  The validity, construction, interpretation and
effect of the Plan shall be governed and construed by and determined in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to the conflict of laws provisions thereof.

 
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