EXHIBIT 10(www)

QUAKER CHEMICAL CORPORATION

2006 LONG-TERM PERFORMANCE INCENTIVE PLAN

(Amended and Restated effective November 8, 2006)

 

1. PURPOSE OF THE PLAN

This 2006 Long-Term Performance Incentive Plan (the “Plan”) is being established
to (a) provide incentives and awards to non-employee directors, consultants and
those employees largely responsible for the long-term success of Quaker Chemical
Corporation (the “Company”) and its 50% or more owned subsidiaries, (b) enable
the Company to attract and retain executives, non-employee directors and
consultants in the future, and (c) encourage employees, non-employee directors
and consultants to acquire a proprietary interest in the performance of the
Company by purchasing and owning shares of the Company’s Common Stock.

The adoption of the Plan is subject to the approval of the Plan by the Company’s
shareholders and shall not become effective until so approved. The Plan is
intended to replace the Company’s 2001 Long-Term Performance Incentive Plan (the
“2001 Plan”). If the Plan is approved by the Company’s shareholders, no further
grants of stock options, and no awards of restricted stock or grants of
performance incentive units or stock appreciation rights, shall be made under
the 2001 Plan. If the Plan is not so approved by the Company’s shareholders, the
Plan shall be null and void, and the 2001 Plan shall continue in effect without
change, provided that no awards shall be granted under the 2001 Plan with
respect to performance periods beginning after the first shareholders meeting in
2006.

 

2. GENERAL PROVISIONS

2.1 Definitions. As used in the Plan, the following terms shall have the
following meanings unless otherwise required by the context:

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

(b) “Award” means an Equity Award granted to a Non-employee Director or
Consultant, or an Equity Award or Performance Incentive Unit granted to an
Employee.

(c) “Board of Directors” means the Board of Directors of the Company.

(d) “Change in Control” means, except as provided in Section 10.3, the date on
which:

(i) any person (a “Person”), as such term is used in Sections 13(d) and 14(d) of
the Act (other than (A) the Company and/or its wholly owned subsidiaries;
(B) any “employee stock ownership plan” (as that term is defined in Code
Section 4975(e)(7)) or other employee benefit plan of the Company and any
trustee or other fiduciary in such capacity holding securities under such plan;
(C) any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the
Company; or (D) any other Person who, within the one year prior to the event
which would otherwise be a Change in Control, is an executive officer of the
Company or any group of Persons of which he or she voluntarily is a part), is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company’s then outstanding securities or such
lesser percentage of voting power, but not less than 15%, as determined by the
members of the Board of Directors of the Company who are independent directors
(as defined in the New York Stock Exchange, Inc. Listed Company Manual);
provided, however, that a Change in Control shall not be deemed to have occurred
under the provisions of this subsection (i) by reason of the beneficial
ownership of voting securities by members of the Benoliel Family (as defined
below) unless and until the beneficial ownership of all members of the Benoliel
Family (including any other individuals or entities who or which, together with
any member or members of the Benoliel Family, are deemed under Sections 13(d) or
14(d) of the Act to constitute a single Person) exceeds 50% of the combined
voting power of the Company’s then outstanding securities;

(ii) during any two-year period after the effective date of the Plan, Directors
of the Company in office at the beginning of such period plus any new Director
(other than a Director designated by a Person who has entered into an agreement
with the Company to effect a transaction within the purview of subsections
(i) or (iii) hereof) whose election by the Board of Directors or whose
nomination for election by the Company’s shareholders was approved by a vote of
at least two-thirds of the

 

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Directors then still in office who either were Directors at the beginning of the
period or whose election or nomination for election was previously so approved,
shall cease for any reason to constitute at least a majority of the Board of
Directors;

(iii) the consummation of (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which the Company’s Common Stock would be converted into cash, securities,
and/or other property, other than a merger of the Company in which holders of
Common Stock immediately prior to the merger have the same proportionate
ownership of voting securities of the surviving corporation immediately after
the merger as they had in the Common Stock immediately before; or (B) any sale,
lease, exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets or earning power of the
Company; or

(iv) the Company’s shareholders or the Company’s Board of Directors shall
approve the liquidation or dissolution of the Company.

As used in this subsection, “members of the Benoliel Family” shall mean Peter A.
Benoliel, his wife and children and their respective spouses and children, and
all trusts created by or for the benefit of any of them.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means (i) the Compensation/Management Development Committee of
the Board of Directors, (ii) such other committee of the Board of Directors that
consists solely of two (2) or more members of the Board of Directors, each of
whom qualifies both as an “outside director” (as that term is used for purposes
of Code Section 162(m)) and as a “non-employee director” (as that term is used
for purposes of Rule 16b-3 under the Act) with respect to the Plan, or
(iii) such other committee as the Compensation/Management Development Committee,
in its discretion, shall establish that consists of one or more members of the
Board of Directors (such as the Chairman of the Board) for purposes of granting
Equity Awards to Employees who are not Covered Employees and who are not subject
to Section 16(b) of the Act.

(g) “Common Stock” means the Common Stock, par value $1.00 per share, of the
Company.

(h) “Consultant” shall mean an individual who is not an Employee or a
Non-employee Director and who has entered into a consulting arrangement with the
Company to provide bona fide services that (i) are not in connection with the
offer or sale of securities in a capital-raising transaction, and (ii) do not
directly or indirectly promote or maintain a market for the Company’s
securities.

(i) “Covered Employee” means each person who is either the chief executive
officer of the Company or whose total compensation is required to be reported to
shareholders of the Company under the Act by reason of being among the four
highest compensated officers (other than the chief executive officer) of the
Company. The intent of this definition is to identify those persons who are
“covered employees” for purposes of the applicable provisions of Code
Section 162(m) and this definition is to be interpreted consistent with this
intent. The provisions of the Plan that specifically apply only to Covered
Employees shall apply to a Participant if he or she is reasonably expected to be
a Covered Employee with respect to the taxable year in which the Performance
Period begins, or the taxable year in which the Performance Award is to be paid.

(j) “Employee” means an individual who is employed by the Company or a
Subsidiary.

(k) “Equity Award” means a Stock Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit or Stock Grant made under the Plan.

(l) “Fair Market Value” means, with respect to the applicable date, the last
sale price for a share of Common Stock as quoted on the New York Stock Exchange
for that date or, if not reported on the New York Stock Exchange for that date,
as quoted on the principal exchange on which the Common Stock is listed or
traded; provided, however, if no such sales are made on such date, then on the
next preceding date on which there are such sales. If for any day the Fair
Market Value of a share of Common Stock is not determinable by any of the
foregoing means, then the Fair Market Value for such day shall be determined in
good faith by the Committee under a method that complies with Code Sections 422
and 409A and that is adopted by the Committee.

(m) “Incentive Stock Option” means an option granted under the Plan which is
intended to qualify as an incentive stock option under Code Section 422.

(n) “Non-employee Director” means a director of the Company who is not an
Employee.

(o) “Non-Qualified Stock Option” means an option granted under the Plan which is
not an Incentive Stock Option.

 

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(p) “Participant” means an Employee, Non-employee Director or Consultant to whom
an Award has been granted under the Plan.

(q) “Performance Award” means Performance Stock, Performance Stock Units and
Performance Incentive Units.

(r) “Performance Incentive Unit” means a unit granted pursuant to Article 8.

(s) “Performance Period” means a period of one or more consecutive calendar
years or other periods as determined by the Committee. Nothing herein shall
prohibit the creation of multiple Performance Periods which may overlap with
other Performance Periods established under the Plan. In no event, however,
shall a Performance Period begin on or after the first shareholder meeting that
occurs in 2011 unless shareholder approval is obtained as required under Code
Section 162(m).

(t) “Performance Program Target” means a performance program target fixed by the
Committee for a particular Performance Period as provided in Article 9.

(u) “Performance Stock” means a type of Restricted Stock, where the lapse of
restrictions is based on achievement of one or more Performance Program Targets.

(v) “Performance Stock Unit” means a type of Restricted Stock Unit, the vesting
of which is based on achievement of one or more Performance Program Targets.

(w) “Restricted Stock” means Common Stock subject to restrictions determined by
the Committee and granted pursuant to Article 6.

(x) “Restricted Stock Unit” means a unit granted pursuant to Article 7.

(y) “Short-Term Deferral Date” means, (i) with respect to a Performance Stock
Unit or Performance Incentive Unit, the 15th day of the third month following
the end of the Performance Period for which such Award was made, and (ii) with
respect to a Restricted Stock Unit that is not a Performance Stock Unit, the
15th day of the third month following the end of the calendar year in which the
Unit is no longer subject to a substantial risk of forfeiture. Payment shall be
treated as made on the Short-Term Deferral Date if payment is made on such Date
or on a later date that is as soon as practicable after such Date and within the
same calendar year, and a Participant shall have no right to interest as a
result of payment on such later date. Notwithstanding the foregoing, for
purposes of determining the date payment “would otherwise be made” with respect
to a Performance Incentive Unit under Sections 8.3 and 9.4, the date payment is
actually made to similarly situated Participants with respect to the Performance
Period shall be determinative, and not the Short-Term Deferral Date (if the
actual payment date is not the Short-Term Deferral Date).

(z) “Stock Appreciation Right” means a right granted pursuant to Article 4.

(aa) “Stock Grant” means a grant of unrestricted shares of Common Stock pursuant
to Article 5.

(bb) “Stock Option” means an Incentive Stock Option or Non-Qualified Stock
Option granted pursuant to Article 3.

(cc) “Subsidiary” means any corporation or other entity, the equity of which is
50% or more owned, directly or indirectly, by the Company.

(dd) “Termination of Service” shall mean (i) with respect to an Award granted to
an Employee, the termination of the employment relationship between the Employee
and the Company and all Subsidiaries; (ii) with respect to an Equity Award
granted to a Non-employee Director, the cessation of the provision of services
as a director of the Company; and (iii) with respect to an Equity Award granted
to a Consultant, the termination of the consulting arrangement between the
Consultant and the Company; provided, however, that if a Participant’s status
changes from Employee, Non-employee Director or Consultant to any other status
eligible to receive an Award under the Plan, the Committee may provide that no
Termination of Service occurs for purposes of the Plan until the Participant’s
new status with the Company and all Subsidiaries terminates. For purposes of
this paragraph, if a Participant is an Employee of a Subsidiary and not the
Company, the Participant shall incur a Termination of Service when such
corporation ceases to be a Subsidiary, unless the Committee determines
otherwise.

 

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(ee) “Total Disability” shall mean the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months. Such
determination shall be made by a physician selected by the Committee and
reasonably acceptable to the Participant or the Participant’s legal
representative.

2.2 Administration of the Plan.

(a) The Plan shall be administered by the Committee, which shall have the full
power, subject to and within the limits of the Plan, to interpret and administer
the Plan and Awards granted under it, make and interpret rules and regulations
for the administration of the Plan, and make changes in and revoke such rules
and regulations. The Committee also shall have the authority to adopt
modifications, amendments, procedures, sub-plans and the like, which may be
inconsistent with the provisions of the Plan, as are necessary to comply with
the laws and regulations of other countries in which the Company operates in
order to assure the viability of Awards granted under the Plan to individuals in
such other countries. The Committee, in the exercise of these powers, shall
(i) generally determine all questions of policy and expediency that may arise
and may correct any defect, omission, or inconsistency in the Plan or any
agreement evidencing the grant of an Award in a manner and to the extent it
shall deem necessary to make the Plan fully effective; (ii) determine those
Employees, Non-employee Directors and Consultants to whom Awards shall be
granted, the type of Award to be granted and the number of Awards to be granted,
consistent with the provisions of the Plan; (iii) determine the terms of Awards
granted consistent with the provisions of the Plan; and (iv) generally, exercise
such powers and perform such acts in connection with the Plan as are deemed
necessary or expedient to promote the best interests of the Company.

(b) The Board may, at its discretion, select one or more of its members who are
eligible to be members of the Committee as alternate members of the Committee
who may take the place of any absent member or members of the Committee at any
meeting of the Committee. The Committee may act only by a majority vote of its
members then in office; the Committee may authorize any one or more of its
members or any officer of the Company to execute and deliver documents on behalf
of the Committee.

2.3 Effective Date. The Plan shall be effective as of March 6, 2006, provided
that the Plan is approved and ratified by the Company’s shareholders at the
Company’s 2006 Annual Meeting of Shareholders. If the Plan is not so approved by
the Company’s shareholders, the Plan and all Awards previously granted
thereunder shall become null and void.

2.4 Duration. If approved by the shareholders of the Company as provided in
Section 2.3, unless sooner terminated by the Board of Directors, the Plan shall
remain in effect until March 5, 2016.

2.5 Shares Subject to the Plan; Equity Award Limits. The maximum aggregate
number of shares of Common Stock which may be subject to Equity Awards granted
under the Plan shall be 1,000,000 (which is also the maximum aggregate number of
shares that may be subject to Incentive Stock Options under the Plan), subject
to the following limits:

(a) No Employee shall be granted during any one calendar year Stock Options
entitling such Employee to purchase more than five hundred thousand
(500,000) shares of Common Stock;

(b) No Employee shall be granted during any one calendar year Stock Appreciation
Rights entitling such Employee to appreciation with respect to more than five
hundred thousand (500,000) shares of Common Stock;

(c) The aggregate number of shares of Common Stock subject to Performance Stock
granted to an Employee during any one calendar year shall not exceed five
hundred thousand (500,000) shares;

(d) The aggregate number of shares of Common Stock subject to Performance Stock
Units granted to an Employee during any one calendar year shall not exceed five
hundred thousand (500,000) shares;

(e) No more than five hundred thousand (500,000) shares of Common Stock shall be
available for the granting of Restricted Stock under the Plan;

(f) No more than five hundred thousand (500,000) shares of Common Stock shall be
available for the granting of Restricted Stock Units under the Plan; and

(g) No more than two hundred and fifty thousand (250,000) shares of Common Stock
shall be available for the granting of Stock Grants under the Plan.

 

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Each limit in the preceding sentence shall be subject to adjustment in
accordance with Section 11.2. If an Equity Award expires, terminates for any
reason, or is canceled, forfeited or settled in cash rather than stock, the
number of shares of Common Stock with respect to which such Equity Award
expired, terminated, or was canceled, forfeited or settled in cash, shall be
available for future grants of Equity Awards under the Plan, except as otherwise
required under Code Section 162(m). If any Stock Option is exercised by
withholding or surrendering Common Stock to the Company as full or partial
payment or if tax withholding requirements are satisfied by withholding or
surrendering Common Stock to the Company, only the number of shares issued net
of Common Stock withheld or surrendered shall be deemed delivered for purposes
of applying the limits set forth in this Section. Shares subject to Equity
Awards may be either authorized and unissued shares of Common Stock or
authorized and issued shares of Common Stock purchased or acquired by the
Company for any purpose.

2.6 Amendments and Termination. The Plan may be suspended, terminated, or
reinstated, in whole or in part, at any time by the Board of Directors. The
Board of Directors may from time to time make such amendments to the Plan as it
may deem advisable, and the Committee may amend any outstanding Award at any
time (including an amendment that applies to a Participant who has incurred a
Termination of Service); provided, however, that, without the approval of the
Company’s shareholders, no amendment shall be made which:

(a) Increases the maximum number of shares of Common Stock which may be subject
to Incentive Stock Options granted under the Plan (other than as provided in
Section 11.2);

(b) Materially modifies the requirements as to eligibility for participation in
the Plan with respect to Incentive Stock Options;

(c) To the extent compliance with Code Section 162(m) is desired, modifies the
Plan in a manner that would cause any Award to fail to meet the requirements to
be treated under Code Section 162(m) as “performance-based compensation”; or

(d) Requires shareholder approval under the rules of the exchange or market on
which the Common Stock is listed or traded.

If the Fair Market Value of Common Stock subject to a Stock Option or Stock
Appreciation Right has declined since the Equity Award was granted, the
Committee, in its sole discretion, may (i) cancel any or all such Stock Options
or Stock Appreciation Rights in exchange for cash or the grant of a new Award,
or (ii) reduce the exercise price of any or all such Stock Options or reduce the
amount over which appreciation of a Stock Appreciation Right is measured;
provided, however, that such reduced amount shall not be less than the Fair
Market Value on the date such reduction is made.

No amendment, suspension or termination of the Plan or amendment of an
outstanding Award shall affect the Participant’s rights under an outstanding
Award or cause the modification (within the meaning of Code Section 424(h)) of
an Incentive Stock Option, without the consent of the Participant affected
thereby. The foregoing limitation on amendments, suspension and termination
shall not apply to any amendment, suspension or termination (i) pursuant to
Section 11.2, or (ii) that the Committee, in its sole discretion, determines as
necessary or appropriate to avoid the additional tax under Code
Section 409A(a)(1)(B).

2.7 Participants and Grants. The Committee may grant one or more Awards to
Non-employee Directors, Consultants and those Employees who the Committee
determines hold positions which enable them to have an impact on the long-term
success of the Company or its Subsidiaries. In determining the number of shares
of Common Stock subject to an Equity Award and the number of Performance
Incentive Units to be granted to an Employee, the Committee shall consider the
Employee’s base salary, his or her expected contribution to the long-term
performance of the Company, and such other relevant facts as the Committee shall
deem appropriate. More than one Award may be granted to any Employee,
Non-employee Director or Consultant, and terms and conditions of Awards and
types of Awards need not be consistent from Participant to Participant.

 

3. STOCK OPTIONS

3.1 General. Each Stock Option granted under the Plan to an Employee,
Non-employee Director or Consultant shall be granted by the Committee in its
sole discretion, and shall be evidenced by an agreement which shall state the
number of shares of Common Stock which may be purchased upon the exercise
thereof and shall contain such investment representations and other terms and
conditions as the Committee may from time to time determine that are not
inconsistent with the terms of the Plan, Code Section 409A and, for Incentive
Stock Options, Code Section 422.

3.2 Price. Subject to the provisions of Section 3.6(d), the purchase price per
share of Common Stock subject to a Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Value of a share of Common Stock on
the date the Stock Option is granted, except as provided in Section 2.6
regarding repricing.

 

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3.3 Period. The duration or term of each Stock Option granted under the Plan
shall be for such period as the Committee shall determine but in no event more
than ten (10) years from the date of grant thereof.

3.4 Exercise. A Stock Option shall be exercisable in such installments, upon
fulfillment of such conditions (such as performance-based requirements), or on
such dates as the Committee may specify. Once exercisable, a Stock Option shall
be exercisable, in whole or in part, by delivery of a notice of exercise to the
Secretary of the Company at the principal office of the Company specifying the
number of shares of Common Stock as to which the Stock Option is then being
exercised together with payment of the full purchase price for the shares being
purchased upon such exercise. Until the shares of Common Stock as to which a
Stock Option is exercised are paid for in full and issued, the Participant shall
have none of the rights of a shareholder of the Company with respect to such
Common Stock.

3.5 Payment. The Committee, in its sole discretion, shall determine from the
alternatives set forth in subsections (a) through (d) the methods by which the
exercise price may be paid. To the extent the agreement evidencing a Stock
Option does not include one or more alternatives, the Committee hereby
specifically reserves the right to exercise its discretion to allow the
Participant to pay the exercise price using such alternative.

(a) In United States dollars in cash, or by check, bank draft, or money order
payable in United States dollars to the order of the Company;

(b) By the delivery by the Participant to the Company of whole shares of Common
Stock having an aggregate Fair Market Value on the date of exercise equal to the
aggregate of the purchase price of Common Stock as to which the Stock Option is
then being exercised or by the withholding of whole shares of Common Stock
having such Fair Market Value upon the exercise of such Stock Option;

(c) In United States dollars in cash, or by check, bank draft, or money order
payable in United States dollars to the order of the Company delivered to the
Company by a broker in exchange for its receipt of stock certificates from the
Company in accordance with instructions of the Participant to the broker
pursuant to which the broker is required to deliver to the Company the amount
required to pay the purchase price; or

(d) By a combination of any number of the foregoing.

The Committee may, in its discretion, impose limitations, conditions, and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.

3.6 Special Rules for Incentive Stock Options. Notwithstanding any other
provision of the Plan, the following provisions shall apply to Incentive Stock
Options granted under the Plan:

(a) Incentive Stock Options shall only be granted to Participants who are
Employees.

(b) To the extent that the aggregate Fair Market Value (as of the date of grant)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by a Participant during any calendar year under this Plan and
under any other plan of the Company or a Subsidiary under which “incentive stock
options” (as that term is defined in Code Section 422) are granted exceeds
$100,000, such Stock Options shall be treated as Non-Qualified Stock Options.

(c) Any Participant who disposes of shares of Common Stock acquired upon the
exercise of an Incentive Stock Option by sale or exchange either within two
(2) years after the date of the grant of the Incentive Stock Option under which
the shares were acquired or within one (1) year of the acquisition of such
shares, shall promptly notify the Secretary of the Company at the principal
office of the Company of such disposition, the amount realized, the purchase
price per share paid upon exercise, and the date of disposition.

(d) No Incentive Stock Option shall be granted to a Participant who, at the time
of the grant, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock either of the Company or any
parent or Subsidiary of the Company, unless the purchase price of the shares of
Common Stock purchasable upon exercise of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value (at the time the
Incentive Stock Option is granted) of the Common Stock and the Incentive Stock
Option is not exercisable more than five (5) years from the date it is granted.

 

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3.7 Termination of Service.

(a) In the event a Participant incurs a Termination of Service for cause, as
determined by the Committee in its sole discretion, while the Participant holds
Stock Options granted under the Plan, all Stock Options held by the Participant
shall expire immediately.

(b) Except as otherwise provided in subsection (a) or in the agreement
evidencing the Participant’s Stock Option, if a Participant, while holding a
Stock Option, (i) incurs a Termination of Service on or after reaching his
“normal retirement age” or “early retirement age” as such terms are defined in
the Quaker Chemical Corporation Pension Plan, or (ii) dies prior to Termination
of Service, then each Stock Option held by the Participant shall be exercisable
by the Participant (or, in the case of death, by the executor or administrator
of the Participant’s estate or by the person or persons to whom the deceased
Participant’s rights thereunder shall have passed by will or by the laws of
descent or distribution) until the earlier of (A) its stated expiration date or
(B) the date occurring three (3) years after the date of such Termination of
Service or death, as the case may be. Except as otherwise provided in the
agreement evidencing the Participant’s Stock Option, if a Participant shall
incur a Termination of Service as a result of the Participant’s Total Disability
while such Participant is holding a Stock Option, then each Stock Option held by
the Participant shall be exercisable by the Participant (or, in the case of
death, by the executor or administrator of the Participant’s estate or by the
person or persons to whom the deceased Participant’s rights thereunder shall
have passed by will or by the laws of descent or distribution) until its stated
expiration date.

(c) Except as otherwise provided in the agreement evidencing the Participant’s
Stock Option, if a Participant shall incur a Termination of Service for any
reason not specified in Sections 3.7(a) or (b), the Participant shall, to the
extent otherwise exercisable at the date of Termination of Service, have the
right to exercise the Stock Options held by him or her at the date of
Termination of Service for a period of three (3) months or, in the case of Stock
Options which are not intended to be Incentive Stock Options, such extended
period as the Committee may, in its sole discretion, determine; provided,
however, that in no event shall such Stock Options be exercisable after their
stated expiration date.

(d) The Committee may accelerate the date as of which a Stock Option becomes
exercisable, if the Committee in its discretion deems such acceleration to be
desirable.

(e) To the extent a Stock Option held by a Participant is not exercisable at the
time of (or as a result of) his or her Termination of Service, such Stock Option
shall terminate.

3.8 Effect of Leaves of Absence. It shall not be considered a Termination of
Service when a Participant is on military or sick leave or such other type of
leave of absence which is considered as continuing intact the relationship of
the Participant with the Company or its Subsidiaries. In case of such leave of
absence, the relationship shall be continued until the later of the date when
such leave equals ninety (90) days or the date when the Participant’s right to
reemployment shall no longer be guaranteed either by statute or contract.

 

4. STOCK APPRECIATION RIGHTS

4.1 General. Each Stock Appreciation Right granted under the Plan to an
Employee, Non-employee Director or Consultant shall be granted by the Committee
in its sole discretion and shall be evidenced by an agreement which shall state
the number of shares of Common Stock with respect to which appreciation shall be
measured and shall contain such investment representations and other terms and
conditions as the Committee may from time to time determine that are not
inconsistent with the provisions of the Plan and Code Section 409A.

4.2 Amount Payable on Exercise. A Stock Appreciation Right entitles the
Participant to receive, with respect to each share of Common Stock to which the
Stock Appreciation Right is exercised, the excess of the Fair Market Value of
the share on the date of exercise over the Fair Market Value of the share on the
date the Stock Appreciation Right is granted (the “Spread”). Such excess shall
be paid in cash, shares of Common Stock (having a Fair Market Value on the date
of exercise equal to the Spread), or a combination thereof, as determined by the
Committee.

4.3 Period. The duration or term of each Stock Appreciation Right granted under
the Plan shall be for such period as the Committee shall determine but in no
event more than ten (10) years from the date of grant thereof.

4.4 Exercise. A Stock Appreciation Right shall be exercisable in such
installments, upon fulfillment of such conditions (such as performance-based
requirements), or on such dates as the Committee may specify. Once exercisable,
a Stock Appreciation Right shall be exercisable, in whole or in part, by
delivery of a notice of exercise to the Secretary of the Company at the
principal office of the Company specifying the number of shares of Common Stock
as to which the Stock Appreciation Right is then being exercised.

 

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4.5 Termination of Service. For purposes of determining the extent to which, and
the period during which, a Stock Appreciation Right may be exercised following a
Participant’s Termination of Service, Section 3.7 shall be applied by replacing
the terms “Stock Option” and “Stock Options” in each place such terms appear in
Section 3.7, with the terms “Stock Appreciation Right” and “Stock Appreciation
Rights,” respectively.

4.6 Effect of Leaves of Absence. It shall not be considered a Termination of
Service when a Participant is on military or sick leave or such other type of
leave of absence which is considered as continuing intact the relationship of
the Participant with the Company or its Subsidiaries. In case of such leave of
absence, the relationship shall be continued until the later of the date when
such leave equals ninety (90) days or the date when the Participant’s right to
reemployment shall no longer be guaranteed either by statute or contract.

 

5. STOCK GRANTS

The Committee may make a Stock Grant to an Employee, Non-employee Director or
Consultant. Such Stock Grant shall be fully vested on the date made.

 

6. RESTRICTED STOCK

6.1 Grant. Restricted Stock may be granted by the Committee to an Employee,
Non-employee Director or Consultant under this Article for no consideration in
the form of an award of Common Stock subject to restrictions. At the time
Restricted Stock is granted, the Committee shall determine whether the
Restricted Stock is Performance Stock (where the lapse of restrictions is based
on Performance Program Targets), or Restricted Stock that is not Performance
Stock (where the lapse of restrictions is based on times and/or conditions
determined by the Committee). The period beginning on the date of grant and
ending on the date the restrictions lapse is the “Restriction Period.”

6.2 Restrictions. Except as otherwise provided in this Article, Restricted Stock
shall not be sold, exchanged, transferred, pledged, assigned, hypothecated, or
otherwise encumbered or disposed of during the Restriction Period.

6.3 Lapse of Restrictions.

(a) Restricted Stock Other Than Performance Stock. With respect to Restricted
Stock that is not Performance Stock, the restrictions described in Section 6.2
shall lapse at the earliest of (i) such time or times, and on such conditions,
as the Committee may specify at the time of grant, (ii) the Participant’s death
prior to Termination of Service, (iii) the Participant’s Total Disability prior
to Termination of Service, (iv) except as otherwise provided in the agreement
evidencing the Participant’s Restricted Stock award, the Participant’s
Termination of Service at or after attaining his or her “normal retirement age”
as defined in the Quaker Chemical Corporation Pension Plan, or (v) a Change in
Control occurring before the Participant’s Termination of Service. The Committee
may at any time accelerate the time at which the restrictions on all or any part
of the shares of Restricted Stock (other than Performance Stock) will lapse.

(b) Performance Stock. With respect to Performance Stock granted to a
Participant, the restrictions described in Section 6.2 shall lapse after the end
of the relevant Performance Period based on the Performance Program Targets
established in accordance with Article 9 and achieved for such Period. As
promptly as practicable after the end of the Performance Period, the Committee
shall, in accordance with Article 9, determine the extent to which the
Performance Program Targets have been achieved. Except as provided in
Section 10.3, the extent to which such restrictions lapse shall be based solely
on the achievement of Performance Program Targets, in accordance with Article 9;
the Committee shall not have the discretion to increase the extent to which such
restrictions lapse. Except as provided in Section 9.4 and Section 10.3, if a
Participant incurs a Termination of Service for any reason prior to the date the
Restriction Period would otherwise lapse with respect to Performance Stock, the
Participant shall forfeit all Performance Stock granted with respect to such
Performance Period. The Restriction Period with respect to Performance Stock
shall end on the date the Committee makes its determination regarding
achievement of Performance Program Targets in accordance with Article 9, but
only to the extent such targets are achieved.

 

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(c) In General. Upon the lapse of restrictions in accordance with this
Section 6.3 with respect to a share of Restricted Stock, the Restriction Period
shall end and such share of Common Stock shall cease to be Restricted Stock for
purposes of the Plan. Except as provided in Section 9.4 and Article 10, any
Restricted Stock with respect to which the Restriction Period has not lapsed at
the time of (or as a result of) the Participant’s Termination of Service, shall
be forfeited.

6.4 Custody of Shares. The Committee may require under such terms and conditions
as it deems appropriate or desirable that the certificates for shares of
Restricted Stock be held in custody by a bank or other institution or that the
Company may itself hold such certificates in custody until the lapse of
restrictions under Section 6.3 and may require as a condition of any grant of
Restricted Stock that the Participant shall have delivered to the Company a
stock power endorsed in blank relating to the shares of Common Stock subject to
the Award. The shares of Common Stock that cease to be Restricted Stock under
Section 6.3(c) shall be issued promptly after the conclusion of the Restriction
Period and the satisfaction of any applicable withholding requirements.

6.5 Shareholder Rights. Each Participant who receives Restricted Stock shall
have all of the rights of a shareholder with respect to such shares, subject to
the restrictions set forth in Section 6.2, including the right to vote the
shares and receive dividends and other distributions. Any shares of Common Stock
or other securities of the Company received by a Participant with respect to a
share of Restricted Stock, as a stock dividend, or in connection with a stock
split or combination, share exchange or other recapitalization, shall have the
same status and be subject to the same restrictions as such Restricted Stock.

 

7. RESTRICTED STOCK UNITS

7.1 Nature of Restricted Stock Units. A Restricted Stock Unit entitles the
Participant to receive one share of Common Stock, cash equal to the Fair Market
Value of a share of Common Stock on the date of vesting, or a combination
thereof, with respect to each Restricted Stock Unit that vests in accordance
with Section 7.3; any fractional Restricted Stock Unit shall be payable in cash.
The Committee, in its sole discretion, shall determine the medium of payment.

7.2 Grant of Restricted Stock Units. At the time of grant, the Committee shall
determine (a) the Employee, Non-employee Director or Consultant receiving the
grant, (b) the number of Restricted Stock Units subject to the Award,
(c) whether the Restricted Stock Unit is a Performance Stock Unit (where vesting
is based on Performance Program Targets), or a Restricted Stock Unit that is not
a Performance Stock Unit (where vesting is based on times and/or conditions
determined by the Committee), and (d) when such Restricted Stock Units shall
vest in accordance with Section 7.3. The Company shall establish a bookkeeping
account in the Participant’s name which reflects the number and type of
Restricted Stock Units standing to the credit of the Participant.

7.3 Vesting.

(a) Restricted Stock Units Other Than Performance Stock Units. With respect to
Restricted Stock Units that are not Performance Stock Units, the Committee shall
determine the time period and conditions (such as continued employment or
performance measures) that must be met in order for such Restricted Stock Units
to vest; provided, however, that Restricted Stock Units that are not Performance
Stock Units shall vest on the Participant’s death prior to Termination of
Service.

(b) Performance Stock Units. The Committee shall determine the extent to which a
Participant’s Performance Stock Units vest after the end of the relevant
Performance Period, based on the Performance Program Targets established in
accordance with Article 9 and achieved for such Period. As promptly as
practicable after the end of the Performance Period, the Committee shall, in
accordance with Article 9, determine the extent to which the Performance Program
Targets have been achieved. Except as provided in Section 10.3, the extent to
which Performance Stock Units vest shall be based solely on the achievement of
Performance Program Targets, in accordance with Article 9; the Committee shall
not have the discretion to increase the extent to which such Performance Stock
Units vest. Except as provided in Section 9.4 and Section 10.3, if a Participant
incurs a Termination of Service for any reason prior to the date Performance
Stock Units would otherwise vest, the Participant shall forfeit all Performance
Stock Units granted with respect to such Performance Period. Performance Stock
Units shall vest on the date the Committee makes its determinations regarding
achievement of Performance Program Targets in accordance with Article 9, but
only to the extent such targets are achieved.

(c) Payment. Except as otherwise provided in the agreement evidencing the
Participant’s Restricted Stock Unit grant, payment with respect to a Restricted
Stock Unit shall be made on the Short-Term Deferral Date.

 

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7.4 Dividend Equivalent Rights. The Company shall credit to the Participant’s
bookkeeping account, on each date that the Company pays a cash dividend to
holders of Common Stock generally, an additional number of Restricted Stock
Units equal to the total number of Restricted Stock Units credited to the
Participant’s bookkeeping account on such date, multiplied by the dollar amount
of the per share cash dividend, and divided by the Fair Market Value of a share
of Common Stock on such date. Restricted Stock Units attributable to such
dividend equivalent rights shall be subject to the same terms and conditions as
the Restricted Stock Units to which such dividend equivalent rights relate.

 

8. PERFORMANCE INCENTIVE UNITS

8.1 Grants. The Committee may grant Performance Incentive Units to an Employee
with respect to a Performance Period. However, no Participant shall receive,
under the terms of the Plan, compensation payable in cash attributable to his or
her Performance Incentive Units during any one calendar year an amount in excess
of the lesser of five (5) times the Participant’s base salary, or five million
dollars ($5,000,000).

8.2 Stated Value and Change in Performance Targets.

(b) Stated Value. Within the period set forth in Section 9.2, the Committee
shall establish the value (which shall be expressed in dollars) of Performance
Incentive Units (the “Stated Value”) to be granted to a Participant with respect
to a Performance Period, and shall fix the percentage, if any, of the Stated
Value to be earned upon the achievement of the Performance Program Targets
established for the relevant Performance Period. In no event, however, shall the
percentage of Stated Value to be earned upon achievement of the maximum
Performance Program Target established with respect to a Performance Period
exceed 200% of Stated Value fixed for that Performance Period.

(b) Change in Performance Targets. If the Committee determines that an
unforeseen change during a Performance Period in the Company’s business
operations, corporate structure, capital structure, or manner in which it
conducts business is significant, nonrecurring and material and that the
Performance Program Targets established for the Performance Period are no longer
suitable, the Committee may, but only with the concurrence of the Board of
Directors, modify the Performance Program Targets as it deems appropriate and
equitable; provided, however, that no such modification shall increase the
Performance Program Targets in effect for any Performance Period (i.e.,
establish a target that is more difficult to achieve than the original
Performance Program Target); and provided, further, that no such modification
shall be made that would cause the benefits payable to a Covered Employee with
respect to such Performance Program Target to fail to qualify as
“performance-based compensation” for purposes of Code Section 162(m).

8.3 Payment. As promptly as practicable after the end of each Performance
Period, the Committee shall, pursuant to Article 9, determine the earned
percentage of Stated Value of the Performance Incentive Units granted with
respect to such completed Performance Period. The Company shall, on the
Short-Term Deferral Date, pay to each Participant holding Performance Incentive
Units granted with respect to such completed Performance Period, for each such
Performance Incentive Unit held by him or her, an amount equal to the product
obtained by multiplying Stated Value by the earned percentage of Stated Value;
provided, however, that except as provided in Section 9.4 and Section 10.3, no
amounts shall be due or payable with respect to any Performance Incentive Units
if the Participant to whom such Performance Incentive Units have been granted
incurs a Termination of Service for any reason prior to the date the payment
would otherwise be made with respect to such Performance Incentive Units.

 

9. COMMON RULES FOR PERFORMANCE AWARDS

9.1 In General. Notwithstanding any provision of the Plan to the contrary, this
Article 9 shall apply to Performance Awards. This Article 9 is intended to
ensure that Performance Awards granted to any Participant who is a Covered
Employee shall qualify as “performance-based compensation” for purposes of Code
Section 162(m). All discretionary actions taken under the Plan with respect to
such Performance Awards shall be exercised exclusively by the Committee.

9.2 Committee Determinations. With respect to Performance Awards, the Committee
shall determine:

(a) The Employee to whom the Award shall be granted;

(b) The type of Award to be granted;

(c) The Performance Period applicable to the Award;

(d) The Performance Program Target(s) applicable to the Award; and

 

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(e) Other terms and conditions of the Award consistent with the terms of the
Plan.

All such determinations shall be made within the first ninety (90) days of the
Performance Period or, if shorter, within the first 25% of such Performance
Period, provided in either case that the outcome is substantially uncertain when
the Performance Program Targets are established. Each of the above
determinations shall be made by the Committee in its sole discretion without any
requirement for consistency among, for example, (i) the types of Awards granted
to Participants, and (ii) the Performance Periods or Performance Program Targets
applicable to Participants or to different types of Awards.

9.3 Performance Program Targets.

(a) The Performance Program Targets shall provide an objective method for
determining whether the Performance Program Targets have been achieved, and an
objective method for computing the amount to be paid, or the number of shares of
Common Stock which shall vest or be distributed, to the Participant based on the
attainment of one or more goals included in the Performance Program Targets.

(b) Performance Program Targets shall be based upon one or more of the following
business criteria (which may be determined for these purposes by reference to
(i) the Company as a whole, (ii) any of the Company’s subsidiaries, operating
divisions, regional business units or other operating units, or (iii) any
combination thereof): profit before taxes, stock price, market share, gross
revenue, net revenue, pre-tax income, operating income, cash flow, earnings per
share, return on equity, return on invested capital or assets, cost reductions
and savings, return on revenues or productivity, or any variations of the
preceding business criteria, which may be modified at the discretion of the
Committee to take into account significant nonrecurring items or which may be
adjusted to reflect such costs or expense as the Committee deems appropriate;
provided, however, that with respect to Performance Awards granted to a Covered
Employee, any such modification or adjustment shall be established not later
than the end of the period stated in Section 9.2. Performance Program Targets
may also be based upon a Participant’s attainment of personal objectives with
respect to any of the foregoing business criteria or implementing policies and
plans, negotiating transactions and sales, developing long-term business goals
or exercising managerial responsibility; provided, however, that with respect to
a Covered Employee, such objectives and criteria are consistent with the goal of
providing for deductibility under Code Section 162(m).

(c) Measurements of actual performance against the Performance Program Targets
established by the Committee shall be objectively determinable and shall, to the
extent applicable, be determined according to generally accepted accounting
principles as in existence on the date on which the Performance Program Targets
are established and, without regard to any changes in such principles after such
date, except where the Committee has specified that such changes shall be taken
into account and, with respect to Covered Employees, such specification is made
not later than the end of the period set forth in Section 9.2. The Committee may
provide for appropriate adjustments to any business criteria used in connection
with measuring attainment of Performance Program Targets to take into account
fluctuations in exchange rates, where relevant.

9.4 Termination of Service Prior to End of Restriction Period, Vesting or
Payment Date.

(a) Employment Requirement. Except as provided in Section 10.3, no Performance
Award shall be payable under the Plan to any Participant who incurs a
Termination of Service prior to the date the Restriction Period ends (with
respect to Performance Stock), the date of vesting (with respect to Performance
Stock Units), or the date the payment would otherwise be made (with respect to
Performance Incentive Units), unless:

(i) The Participant incurs a Termination of Service prior to such date, but
after one-half of the Performance Period has elapsed, on account of his or her
death or Total Disability, on or after attainment of his or her “normal
retirement age” or “early retirement age” as such terms are defined in the
Quaker Chemical Corporation Pension Plan, or under such other circumstances as
the Committee shall, in its sole discretion, determine; or

(ii) The Committee, in its sole discretion, specifically provides for payment of
the Participant’s Performance Award if the Participant incurs a Termination of
Service after the end of the Performance Period but before such date.

Except as provided in Section 10.3, if a Participant incurs a Termination of
Service prior to the date the Restriction Period ends (with respect to
Performance Stock), the date of vesting (with respect to Performance Stock
Units), or the date the payment would otherwise be made (with respect to
Performance Incentive Units) under any circumstances other than those described
above, the Performance Award shall be forfeited on the date of such Termination
of Service.

 

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(b) Proration of Performance Award.

(i) If a Participant is on a leave of absence during a Performance Period, the
Participant’s Performance Award shall be prorated based on active service during
the Performance Period, except as provided in Section 10.3.

(ii) If a Participant incurs a Termination of Service under the circumstances
set forth in Section 9.4(a)(i), any Performance Award payable shall be prorated
based on active service during the Performance Period, except as provided in
Section 10.3.

9.5 Conditions to Payment or Vesting. No Participant may receive any payment (of
unrestricted Common Stock or cash) with respect to a Performance Award unless
and until (A) the Plan is approved by the Company’s shareholders, and (B) except
as provided in Section 10.3, the Committee responsible for the administration of
the Plan with respect to such Participant has certified in writing that the
Performance Program Target or Targets for a Performance Period have been
achieved.

 

10. CHANGE IN CONTROL

10.1 Stock Options and Stock Appreciation Rights. Upon the occurrence of a
Change in Control, all Stock Options and Stock Appreciation Rights granted and
outstanding under the Plan shall become immediately exercisable in full
regardless of any terms of such an Award to the contrary; provided, however,
that the extent to which a Stock Option or Stock Appreciation Right is
exercisable shall not be increased under this Section if the Participant
incurred a Termination of Service before the Change in Control.

10.2 Restricted Stock other than Performance Stock. Upon the occurrence of a
Change in Control, the restrictions described in Section 6.2 shall lapse with
respect to all Restricted Stock other than Performance Stock outstanding on the
date of the Change in Control; provided, however, that this section shall not
apply to a participant who incurred a Termination of Service before the Change
in Control.

10.3 Restricted Stock Units and Performance Awards.

(a) In General. This Section 10.3 shall apply to a Participant who (i) is an
Employee, Non-employee Director or Consultant on the day before the Change in
Control, and (ii) in the case of a Performance Award relating to a Performance
Period that has not ended as of the date of the Change in Control, is
(A) employed by the Company (or any successor thereto as a result of the Change
in Control) on the March 1 immediately following such Change in Control, or
(B) has incurred a Termination of Service by action of the Company (or any
successor thereto as a result of the Change in Control) without cause (as
determined by the Committee, in its sole discretion) prior to such March 1.

(b) Performance Stock. Notwithstanding any provision of the Plan to the
contrary, in the event of a Change in Control, (i) with respect to Performance
Stock that is (A) held by a Participant described in subsection (a), and
(B) relates to a Performance Period that ended before the date of the Change in
Control, the restrictions described in Section 6.2 shall lapse on the date of
such Change in Control based on achievement during the applicable Performance
Period, and (ii) the Company (or any successor thereto as a result of the Change
in Control) shall pay (in cash or unrestricted Common Stock) to each Participant
described in subsection (a) (or his or her beneficiary) the pro rata portion of
the Participant's Performance Stock with respect to any Performance Period in
which such Change in Control occurs, such payment to be made on the March 1
immediately following such Change in Control. The pro rata portion shall be
calculated on the fractional portion (the numerator of the fraction being the
number of days between the first day of the applicable Performance Period and
the date of such Change in Control, and the denominator being the total number
of days in the applicable Performance Period) of the Performance Stock for which
the restrictions described in Section 6.2 would have lapsed had the Change in
Control not occurred, and the target level of performance been achieved for the
applicable Performance Period.

(c) Restricted Stock Units and Performance Incentive Units. Notwithstanding any
provision of the Plan to the contrary, this subsection (c) shall apply in the
event of a Change in Control; provided, however, that in the event any payment
under this subsection (c) on account of a Change in Control would not qualify as
a short-term deferral (within the meaning of regulations under Code
Section 409A), this subsection (c) shall apply to such payment only in the event
such Change in Control is also a change in control within the meaning of
regulations issued under Code Section 409A:

(i) On the date of such Change in Control, all outstanding Restricted Stock
Units (other than Performance Stock Units) held by a Participant described in
subsection (a) shall vest and shall be paid (in cash or unrestricted Common
Stock, as determined by the Committee, in its sole discretion) to such
Participant;

 

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(ii) Performance Stock Units that are (A) held by a Participant described in
subsection (a), and (B) relate to a Performance Period that ended before the
date of the Change in Control, shall be paid (in cash or unrestricted Common
Stock, as determined by the Committee, in its sole discretion) to such
Participant on the date of such Change in Control, based on achievement during
the applicable Performance Period;

(iii) Performance Incentive Units that are (A) held by a Participant described
in subsection (a), and (B) relate to a Performance Period that ended before the
date of the Change in Control, shall be paid to such Participant on the date of
such Change in Control, based on achievement during the applicable Performance
Period; and

(iv) The Company (or any successor thereto as a result of the Change in Control)
shall pay to each Participant described in subsection (a) (or his or her
beneficiary) the pro rata portion of the Participant's Performance Stock Units
(in cash or unrestricted Common Stock) and Performance Incentive Units (in cash)
with respect to any Performance Period in which such Change in Control occurs,
such payment to be made on the March 1 immediately following such Change in
Control. The pro rata portion shall be calculated on the fractional portion (the
numerator of the fraction being the number of days between the first day of the
applicable Performance Period and the date of such Change in Control, and the
denominator being the total number of days in the applicable Performance Period)
of (A) with respect to Performance Stock Units, the Performance Stock Units that
would have become vested had the Change in Control not occurred, and the target
level of performance been achieved for the applicable Performance Period, and
(B) with respect to Performance Incentive Units, the amount that would have been
payable had the Change in Control not occurred, and the target level of
performance been achieved for the applicable Performance Period.

 

11. MISCELLANEOUS PROVISIONS

11.1 Agreement. Each Equity Award granted under the Plan shall be evidenced by
an agreement between the Company and the Participant which shall set forth the
number of shares of Common Stock subject to the Equity Award, and such terms and
conditions of the Equity Award as the Committee may, in its sole discretion,
determine that are not inconsistent with the terms of the Plan, Code
Section 409A and, for Incentive Stock Options, Code Section 422.

11.2 Adjustments Upon Changes in Capitalization. In the event of changes to the
outstanding shares of Common Stock of the Company through reorganization,
merger, consolidation, recapitalization, reclassification, stock splits, stock
dividend, spin-off, stock consolidation or otherwise, or in the event of a sale
of all or substantially all of the assets of the Company, an appropriate and
proportionate adjustment shall be made in the number and kind of shares as to
which Awards may be granted. A corresponding adjustment changing the number and
kind of shares issuable upon exercise or vesting of outstanding Stock Options,
Stock Appreciation Rights and/or Restricted Stock Units (as well as the exercise
price of outstanding Stock Options and the amount over which appreciation of
outstanding Stock Appreciation Rights is measured) shall likewise be made.
Notwithstanding the foregoing, in the case of a reorganization, merger or
consolidation, or sale of all or substantially all of the assets of the Company,
in lieu of adjustments as aforesaid, the Committee may in its discretion
accelerate the date after which a Stock Option or Stock Appreciation Right may
or may not be exercised or the stated expiration date thereof and may accelerate
the termination date of any Award or Performance Period then in effect;
provided, however, that not fewer than seven (7) days’ advance notice shall be
provided to each Participant whose Award is to be so terminated. Adjustments or
changes under this Section shall be made by the Committee, whose determination
as to what adjustments or changes shall be made, and the extent thereof, shall
be final, binding, and conclusive; provided, however, that no such adjustment or
change shall cause the modification (within the meaning of Section 409A of the
Code) of an outstanding Stock Option or Stock Appreciation Right.

11.3 Non-Transferability. No Incentive Stock Option, Restricted Stock,
Restricted Stock Unit or Performance Incentive Unit shall be assignable or
transferable by the Participant except by will or the laws of descent and
distribution. No Incentive Stock Option shall be exercisable during the
Participant’s lifetime by any person other than the Participant or his or her
guardian or legal representative. Except as provided in the agreement evidencing
a Participant’s Award, such limits on assignment, transfer and exercise shall
also apply to Non-Qualified Stock Options and Stock Appreciation Rights.

11.4 Withholding. The Company’s obligations in connection with this Plan shall
be subject to applicable Federal, state, and local tax withholding requirements.
Federal, state, and local withholding tax due with respect to an Award may, in
the discretion of the Committee, be paid in shares of Common Stock already owned
by the Participant or through the withholding of shares otherwise issuable to
such Participant upon such terms and conditions as the Committee shall
determine; provided, however, that the number of shares withheld to satisfy the
tax withholding requirements with respect to any Award shall be limited to the
extent necessary to avoid adverse accounting consequences. If the Participant
shall either fail to pay, or make arrangements satisfactory to the Committee for
the payment, to the Company of all such Federal, state, and local taxes required
to be withheld by the Company, then the Company shall, to the extent permitted
by law, have the right to deduct from any payment of any kind otherwise due to
such Participant an amount equal to any Federal, state, or local taxes of any
kind required to be withheld by the Company.

 

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11.5 Deferrals. The Committee may permit a Participant to defer receipt of any
Common Stock issuable (or cash payable) upon exercise of a Stock Option or Stock
Appreciation Right, the lapse of the Restriction Period applicable to Restricted
Stock, the vesting of Restricted Stock Units or the payment of cash pursuant to
a Performance Incentive Unit, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of
interest, or dividend equivalents, including converting such credits into
deferred Common Stock equivalents. In no event, however, shall such deferrals be
permitted unless the agreement evidencing the Participant’s Award specifically
permits deferrals under this Section.

11.6 Compliance with Law and Approval of Regulatory Bodies. No Stock Option or
Stock Appreciation Right shall be exercisable and no shares will be delivered
under the Plan except in compliance with all applicable Federal and state laws
and regulations including, without limitation, compliance with all Federal and
state securities laws and withholding tax requirements and with the rules of the
New York Stock Exchange and of all domestic stock exchanges on which the Common
Stock may be listed. Any share certificate issued to evidence shares for which a
Stock Option or Stock Appreciation Right is exercised or for which an Award has
been granted may bear legends and statements the Committee shall deem advisable
to assure compliance with Federal and state laws and regulations. No Stock
Option or Stock Appreciation Right shall be exercisable and no shares will be
delivered under the Plan, until the Company has obtained consent or approval
from regulatory bodies, Federal or state, having jurisdiction over such matters
as the Committee may deem advisable. In the case of a payment (in cash or Common
Stock) with respect to an Award to a person or estate acquiring the right to
payment as a result of the death of the Participant, the Committee may require
reasonable evidence as to the ownership of the Award and may require consents
and releases of taxing authorities that it may deem advisable.

11.7 No Right to Employment. Neither the adoption of the Plan nor its operation,
nor any document describing or referring to the Plan, or any part thereof, nor
the granting of any Award shall confer upon any Participant under the Plan any
right to continue in the employ of the Company or any Subsidiary, or shall in
any way affect the right and power of the Company or any Subsidiary to terminate
the employment of any Participant at any time with or without assigning a reason
therefor, to the same extent as might have been done if the Plan had not been
adopted.

11.8 Exclusion from Pension Computations. By acceptance of a grant of an Award
under the Plan, the recipient shall be deemed to agree that any income realized
upon the receipt, exercise, or vesting thereof or upon the disposition of the
shares received upon exercise will not be taken into account as “base
remuneration,” “wages,” “salary,” or “compensation” in determining the amount of
any contribution to or payment or any other benefit under any pension,
retirement, incentive, profit-sharing, or deferred compensation plan of the
Company or any Subsidiary, except to the extent any such amount is taken into
consideration under the express terms of any such plan.

11.9 Interpretation of the Plan. Headings are given to the Articles and Sections
of the Plan solely as a convenience to facilitate reference. Such headings,
numbering, and paragraphing shall not in any case be deemed in any way material
or relevant to the construction of the Plan or any provision hereof. The use of
the masculine gender shall also include within its meaning the feminine. The use
of the singular shall also include within its meaning the plural and vice versa.

11.10 Use of Proceeds. Funds received by the Company upon the exercise of Stock
Options granted under the Plan shall be used for the general corporate purposes
of the Company.

11.11 Construction of Plan. The place of administration of the Plan shall be in
the Commonwealth of Pennsylvania, and the validity, construction,
interpretation, administration, and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined solely in
accordance with the laws of the Commonwealth of Pennsylvania (without reference
to principles of conflicts of laws) to the extent Federal law is not applicable.

11.12 Successors. The provisions of the Plan shall bind and inure to the benefit
of the Company and its successors and assigns. The term “successors” as used
herein shall include any corporate or other business entity which shall, whether
by merger, consolidation, share exchange, purchase or otherwise, acquire all or
substantially all of the business and assets of the Company.

11.13 Unfunded Plan. Except as provided in Article 6, the Plan shall be unfunded
and the Company shall not be required to segregate any assets that may at any
time be represented by Awards under the Plan. Any liability of the Company to
any person with respect to any Award under this Plan shall be based solely upon
any contractual obligations that may be created pursuant to the Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.

 

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