Exhibit 10.1

 

FEI COMPANY

1995 STOCK INCENTIVE PLAN, AS AMENDED

As amended effective May 19, 2005

 

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

 

2.                                       Shares Subject to the Plan.  Subject to
adjustment as provided below and in paragraph 13, the shares to be offered under
the Plan shall consist of Common Stock of the Company, and the total number of
shares of Common Stock that may be issued under the Plan shall not exceed
8,000,0000 shares.  The shares issued under the Plan may be authorized and
unissued shares or reacquired shares.  If an option, stock appreciation right or
performance unit granted under the Plan expires, terminates or is canceled, the
unissued shares subject to such option, stock appreciation right or performance
unit shall again be available under the Plan.  If shares sold or awarded as a
bonus under the Plan are forfeited to the Company or repurchased by the Company,
the number of shares forfeited or repurchased shall again be available under the
Plan.

 

3.                                       Effective Date and Duration of Plan.

 

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

 

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

 

4.                                       Administration.

 

(a)                                Board of Directors.  The Plan shall be
administered by the Board of Directors of the Company, which shall determine and
designate from time to time the individuals to whom awards shall be made, the
amount of the awards and the other terms and conditions of the awards.  Subject
to the provisions of the Plan, the Board of Directors may from time to time
adopt and amend rules and regulations relating to administration of the Plan,
advance the lapse of any waiting period, accelerate any exercise date, waive or
modify any restriction applicable to shares (except those restrictions imposed
by law) and make all other determinations in the judgment of the Board of
Directors necessary or desirable for the administration of the Plan.  The
interpretation and construction of the provisions of the Plan and related
agreements by the Board

 

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of Directors shall be final and conclusive.  The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect, and it shall be the sole and final judge of such
expediency.

 

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

 

5.                                       Types of Awards; Eligibility.  The
Board of Directors may, from time to time, take the following action, separately
or in combination, under the Plan:  (i) grant Incentive Stock Options, as
defined in section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), as provided in paragraphs 6(a) and 6(b); (ii) grant options other than
Incentive Stock Options (“Non-Statutory Stock Options”) as provided in
paragraphs 6(a) and 6(c); (iii) award stock bonuses as provided in paragraph 7;
(iv) sell shares subject to restrictions as provided in paragraph 8; (v) grant
stock appreciation rights as provided in paragraph 9; (vi) grant cash bonus
rights as provided in paragraph 10; (vii) grant performance units as provided in
paragraph 11 and (viii) grant foreign qualified awards as provided in
paragraph 12.  Any such awards may be made to employees, including employees who
are officers or directors, and to other individuals described in paragraph 1 who
the Board of Directors believes have made or will make an important contribution
to the Company or any subsidiary of the Company; provided, however, that only
employees of the Company shall be eligible to receive Incentive Stock Options
under the Plan.  The Board of Directors shall select the individuals to whom
awards shall be made and shall specify the action taken with respect to each
individual to whom an award is made.  At the discretion of the Board of
Directors, an individual may be given an election to surrender an award in
exchange for the grant of a new award.  No employee may be granted options or
stock appreciation rights under the Plan for more than an aggregate of 200,000
shares of Common Stock in connection with the hiring of the employee or 250,000
shares of Common Stock otherwise in each calendar year thereafter.

 

6.                                       Option Grants.

 

(a)                                  General Rules Relating to Options.

 

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

 

(ii)                                  Exercise of Options.  Except as provided
in paragraph 6(a) (iv) or as determined by the Board of Directors, no option
granted under the Plan may be exercised unless at the time of such exercise the
optionee is employed by or in the service of the Company or any subsidiary of
the Company and shall have been so employed or provided such service

 

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continuously since the date such option was granted.  Absence on leave or on
account of illness or disability under rules established by the Board of
Directors shall not, however, be deemed an interruption of employment or service
for this purpose.  Unless otherwise determined by the Board of Directors,
vesting of options shall not continue during an absence on leave (including an
extended illness) or on account of disability.  Except as provided in
paragraphs 6(a) (iv) and 13, options granted under the Plan may be exercised
from time to time over the period stated in each option in such amounts and at
such times as shall be prescribed by the Board of Directors, provided that
options shall not be exercised for fractional shares.  Unless otherwise
determined by the Board of Directors, if the optionee does not exercise an
option in any one year with respect to the full number of shares to which the
optionee is entitled in that year, the optionee’s rights shall be cumulative and
the optionee may purchase those shares in any subsequent year during the term of
the option.

 

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

 

(iv)                              Termination of Employment or Service.

 

(A)                            General Rule.  Unless otherwise determined by the
Board of Directors, in the event the employment or service of the optionee with
the Company or a subsidiary terminates for any reason other than because of
physical disability or death as provided in subparagraphs 6(a)(iv)(B) and (C),
the option may be exercised at any time prior to the expiration date of the
option or the expiration of 30 days after the date of such termination,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option at the date of such termination.

 

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

 

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

 

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

 

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

 

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

 

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for issuance under the Plan shall be reduced by the number of shares issued upon
exercise of the option.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                   Option Price.  The option price for
Non-Statutory Stock Options shall be determined by the Board of Directors at the
time of grant and may be any amount determined by the Board of Directors.

 

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

 

7.                                       Stock Bonuses.  The Board of Directors
may award shares under the Plan as stock bonuses.  Shares awarded as a bonus
shall be subject to the terms, conditions, and restrictions

 

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

 

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

 

9.                                       Stock Appreciation Rights.

 

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

 

(b)                               Exercise.

 

(i)                                     Each stock appreciation right shall
entitle the holder, upon exercise, to receive from the Company in exchange
therefore an amount equal in value to the excess of the fair market value on the
date of

 

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exercise of one share of Common Stock of the Company over its fair market value
on the date of grant (or, in the case of a stock appreciation right granted in
connection with an option, the excess of the fair market value of one share of
Common Stock of the Company over the option price per share under the option to
which the stock appreciation right relates), multiplied by the number of shares
covered by the stock appreciation right or the option, or portion thereof, that
is surrendered.  No stock appreciation right shall be exercisable at a time that
the amount determined under this subparagraph is negative.  Payment by the
Company upon exercise of a stock appreciation right may be made in Common Stock
valued at fair market value, in cash, or partly in Common Stock and partly in
cash, all as determined by the Board of Directors.

 

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

 

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

 

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

 

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

 

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

 

(vii)                           Each participant who has exercised a stock
appreciation right shall, upon notification of the amount due, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state and
local tax

 

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withholding requirements.  If the participant fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the Company
to the participant including salary, subject to applicable law.  With the
consent of the Board of Directors a participant may satisfy this obligation, in
whole or in part, by having the Company withhold from any shares to be issued
upon the exercise that number of shares that would satisfy the withholding
amount due or by delivering Common Stock to the Company to satisfy the
withholding amount.

 

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

 

10.              Cash Bonus Rights.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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13.                                 Changes in Capital Structure.

 

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

 

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

 

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

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

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

 

(c)                                Dissolution of the Company.  In the event of
the dissolution of the Company, options shall be treated in accordance with
paragraph 13(b) (iii).

 

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

 

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14.                               Amendment of Plan.  The Board of Directors may
at any time, and from time to time, modify or amend the Plan in such respects as
it shall deem advisable because of changes in the law while the Plan is in
effect or for any other reason.  Except as provided in paragraphs 6(a)(iv), 9,
10 and 13, however, no change in an award already granted shall be made without
the written consent of the holder of such award.

 

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

 

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

 

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

 

18.                                 Option Grants to Non-Employee Directors.

 

(a)                                  Initial Board Grants.  Each person who is
Director when the Plan is adopted or who becomes a Non-Employee Director
thereafter shall be automatically granted an option to purchase 15,000 shares of
Common Stock on the date the Plan is approved by the shareholders of the Company
or when he or she becomes a Non-Employee Director.  A “Non-Employee Director” is
a director who is not an officer or employee of the Company or any of its
subsidiaries.

 

(b)                                 Additional Grants.  Each Non-Employee
Director shall be automatically granted an option to purchase additional shares
of Common Stock in each calendar year subsequent to the year in which such
Non-Employee Director was granted an option pursuant to paragraph 18(a), such
option to be granted as of the date of the Company’s annual meeting of
shareholders held in such calendar year, provided that the Non-Employee Director
continues to serve in such capacity as of such date.  The number of shares
subject to each additional grant shall be 7,500 shares for each Non-Employee
Director.

 

(c)                                  Exercise Price.  The exercise price of all
options granted pursuant to this paragraph 18 shall be equal to 100 percent of
the fair market value of the Common Stock determined pursuant to paragraph
6(b) (iv).

 

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(d)                                 Term of Option.  The term of each option
granted pursuant to this paragraph 18 shall be 10 years from the date of grant.

 

(e)                                  Exercisability.  Until an option expires or
is terminated and except as provided in paragraphs 18(f) and 13, an option
granted under this paragraph 18 shall be exercisable according to the following
schedule:  2.78% for each complete month of continuous service after the date of
grant, rounded up to the next full share, until fully vested.  For purposes of
this paragraph 18(e), a complete month shall be deemed to be the period which
starts on the day of grant and ends on the same day of the following calendar
month, so that each successive “complete month” ends on the same day of each
successive calendar month (or, in respect of any calendar month which does not
include such a day, that “complete month” shall end on the first day of the next
following calendar month).

 

 (f)                                 Termination As a Director.  If an optionee
ceases to be a director of the Company for any reason, including death, the
option may be exercised at any time prior to the expiration date of the option
or the expiration of 30 days (or 12 months in the event of death) after the last
day the optionee served as a director, whichever is the shorter period, but only
if and to the extent the optionee was entitled to exercise the option as of the
last day the optionee served as a director, provided, however, that in the event
of death, any outstanding unvested portion of the option shall become fully
vested and immediately exercisable as of the date of death.

 

(g)                                 Nontransferability.  Each option by its
terms shall be nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the optionee’s domicile at the time of
death, and each option by its terms shall be exercisable during the optionee’s
lifetime only by the optionee.

 

(h)                                 Exercise of Options.  Options may be
exercised upon payment of cash or shares of Common Stock of the Company in
accordance with paragraph 6(a) (v).

 

Adopted:                                             April 21, 1995

Approved by Shareholders:  May 5, 1995

 

Amendments approved by Shareholders:

 

May 15, 1996

May 15, 1997

May 21, 1998

June 10, 1999

May 18, 2000

October 18, 2001

May 16, 2002

May 15, 2003

May 20, 2004

May 19, 2005

 

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