EXHIBIT 10.2

II-VI INCORPORATED

2018 OMNIBUS INCENTIVE PLAN

1. Purpose. The purposes of this II-VI Incorporated 2018 Omnibus Incentive Plan
(the “Plan”) are to optimize the profitability and growth of the Company by
providing certain eligible persons with annual and long-term incentives to
continue in the long-term service of the Company, and to create in such persons
a more direct interest in the future operations of the Company by relating
incentive compensation to increases in shareholder value, so that the income of
those participating in the Plan is more closely aligned with the income of the
Company’s shareholders. The Plan is also designed to provide Participants with
an incentive for excellence in individual performance, to promote teamwork among
Participants, and to motivate, attract and retain the services of employees,
consultants and directors for II-VI Incorporated and its subsidiaries and to
provide such persons with incentives and rewards for superior performance.

2. Definitions. As used in this Plan and unless otherwise specified in the
applicable Award Agreement, the following terms shall be defined as set forth
below:

2.1 “Award” means any Option, Stock Appreciation Right, Restricted Shares,
Restricted Share Units, Deferred Shares, Performance Shares, Performance Units,
or Incentive Cash Award granted under the Plan.

2.2 “Award Agreement” means an agreement, certificate, resolution or other form
of writing or other evidence approved by the Committee which sets forth the
terms and conditions of an Award, not inconsistent with the terms of the Plan.
An Award Agreement may be in an electronic medium and may be limited to a
notation on the Company’s books and records.

2.3 “Base Price” means the price to be used as the basis for determining the
Spread upon the exercise of a Freestanding Stock Appreciation Right.

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

2.5 “Change in Control” means, and shall be deemed to occur upon:
(i) consummation of a transaction in which the Company is merged or consolidated
with another entity the result of which is that immediately following such
transaction either (A) the persons who were the shareholders of the Company
immediately prior to the transaction have less than a majority of the combined
voting power for the election of directors of the Company or the entity owning
or controlling the Company immediately after the transaction; or (B) the
individuals who comprised the Board immediately prior to the transaction cease
to be at least a majority of the members of the Board or the board of directors
of the entity controlling the Company immediately after the transaction;
(ii) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then-outstanding securities in a
transaction or series of transactions not approved by the Board;
(iii) consummation of a transaction in which all or substantially all of the
Company’s assets are sold or otherwise transferred to another corporation not
controlled by, or under common control with, the Company or to a partnership,
firm, entity or one or more individuals not so controlled; (iv) a majority of
the members of the Board consisting of persons who were not nominated for
election as directors by, or on behalf of, the Board or with the express
concurrence of the Board; or (v) any liquidation of the Company. Notwithstanding
the foregoing or any provision of this Plan to the contrary, if an Award is
subject to Section 409A (and not excepted therefrom) and a Change in Control is
a distribution event for purposes of an Award, the foregoing definition of
Change in Control shall be interpreted, administered and construed in manner
necessary to ensure that the occurrence of any such event shall result in a
Change in Control only if such event qualifies as a change in the ownership or
effective control of a corporation, or a change in the ownership of a
substantial portion of the assets of a corporation, as applicable, within the
meaning of Treas. Reg. §1.409A-3(i)(5).

2.6 “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

2.7 “Committee” means the Compensation Committee of the Board.

2.8 “Common Stock” means the common stock, no par value, of the Company.

2.9 “Company” means II-VI Incorporated, a Pennsylvania corporation, or any
successor corporation

 

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2.10 “Consultant” means any non-Employee independent contractor or other service
provider engaged by the Company or a Subsidiary.

2.11 “Deferral Period” means the period of time during which Deferred Shares are
subject to deferral limitations under Section 8.

2.12 “Deferred Shares” means an Award pursuant to Section 8 of the right to
receive Shares at the end of a specified Deferral Period.

2.13 “Effective Date” means the date this Plan is approved by the shareholders
of the Company.

2.14 “Employee” means any person, including an officer, employed by the Company
or a Subsidiary.

2.15 “Fair Market Value” means the fair market value of the Shares as determined
by the Committee from time to time. Unless otherwise determined by the
Committee, the fair market value shall be the closing sales price for the Shares
reported on a consolidated basis on the Nasdaq National Market (or, if the
Shares are not trading on the Nasdaq National Market, on the principle market on
which the Shares are trading) on the relevant date or, if there were no sales on
such date, the closing sales price on the nearest preceding date on which sales
occurred. If the Shares are not reported on the basis of closing sale price,
then the average of the highest bid and lowest ask prices shall be used to
determine fair market value.

2.16 “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
applicable individual, any person sharing the applicable individual’s household
(other than a tenant or employee), a trust in which any one or more of these
persons have more than 50% of the beneficial interest, a foundation in which any
one or more of these persons (or the applicable individual) control the
management of assets, and any other entity in which one or more of these persons
(or the applicable individual) own more than 50% of the voting interests.

2.17 “Freestanding Stock Appreciation Right” means a Stock Appreciation Right
granted pursuant to Section 6 that is not granted in tandem with an Option or
similar right.

2.18 “Grant Date” means the date specified by the Committee on which a grant of
an Award shall become effective, which shall not be earlier than the date on
which the Committee takes action with respect thereto.

2.19 “Incentive Cash Award” means an award granted pursuant to Section 10, which
represents the opportunity to earn a future cash payment tied to the level of
achievement with respect to one or more Performance Objectives for a Performance
Period established by the Committee.

2.20 “Incentive Stock Option” means any Option that is intended to qualify as an
“incentive stock option” under Code Section 422 or any successor provision.

2.21 “Nonemployee Director” means a member of the Board who is not an Employee.

2.22 “Nonqualified Stock Option” means an Option that is not intended to qualify
as an Incentive Stock Option.

2.23 “Option” means any option to purchase Shares granted under Section 5.

2.24 “Optionee” means a Participant who holds an outstanding Option.

2.25 “Option Price” means the purchase price payable upon the exercise of an
Option.

2.26 “Participant” means an Employee, Consultant or Nonemployee Director who is
selected by the Committee to receive benefits under this Plan, provided that
only Employees shall be eligible to receive grants of Incentive Stock Options.

2.27 “Performance Objectives” means the performance objectives established
pursuant to this Plan for Participants who have received performance-based
Awards. Performance Objectives may be described in terms of

 

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Company-wide objectives or objectives that are related to the performance of the
individual Participant or the Subsidiary, division, department or function
within the Company or Subsidiary in which the Participant is employed.
Performance Objectives may be measured on an absolute or relative basis.
Relative performance may be measured by a group of peer companies or by a
financial market index. Any Performance Objectives may include any one or more
of the following performance criteria, either individually, alternatively or in
any combination, and subject to such modifications or variations as specified by
the Committee, applied to either the Company as a whole or to a business unit or
Subsidiary, either individually, alternatively or in any combination, and
measured over a period of time including any portion of a year, annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison
group, in each case as specified by the Committee: return on equity, diluted or
adjusted earnings per share, total earnings, earnings growth, return on capital,
return on assets, earnings before interest and taxes, sales, sales growth, gross
margin return on investment, increase in the fair market value of the Shares,
share price (including, but not limited to, growth measures and total
shareholder return), operating profit (including, but not limited to, “bonus
operating profit”), net earnings, cash flow (including, but not limited to,
operating cash flow and free cash flow), cash flow return on investment (which
equals net cash flow divided by total capital), inventory turns, financial
return ratios, total return to shareholders, market share, earnings
measures/ratios, economic value added (EVA), balance sheet measurements such as
receivable turnover, internal rate of return, increase in net present value or
expense targets, “Employer of Choice” or similar survey results, customer
satisfaction surveys, productivity, expense reduction levels, debt, debt
reduction, the completion of acquisitions, business expansion, product
diversification, new or expanded market penetration and other non-financial
operating and management performance objectives. The Committee may determine
that certain adjustments shall apply, in whole or in part, in such manner as
determined by the Committee, to exclude the effect of any of the following
events that occur during a performance period: the impairment of tangible or
intangible assets; litigation or claim judgments or settlements; the effect of
changes in tax law, accounting principles or other such laws or provisions
affecting reported results; business combinations, reorganizations and/or
restructuring programs, including, but not limited to, reductions in force and
early retirement incentives; currency fluctuations; and any unusual, infrequent
or non-recurring items, including, but not limited to, such items described in
management’s discussion and analysis of financial condition and results of
operations or the financial statements and notes thereto appearing in Company’s
annual report for the applicable period. If the Committee determines that a
change in the business, operations, corporate structure or capital structure of
the Company, or the manner in which it conducts its business, or other events or
circumstances or individual performance renders the Performance Objectives
unsuitable, the Committee may modify such Performance Objectives or the related
minimum acceptable level of achievement, in whole or in part, upward or
downward, as the Committee deems appropriate and equitable; provided, however,
that no such adjustment shall be authorized to the extent that such authority
would be inconsistent with the Plan or any award meeting the requirements (or an
applicable exception thereto) of Section 409A or other applicable statutory
provision.

2.28 “Performance Period” means the period of time within which the Performance
Objectives relating to a performance-based Award must be achieved.

2.29 “Performance Share” means a bookkeeping entry that records the equivalent
of one Share awarded pursuant to Section 9.

2.30 “Performance Unit” means a bookkeeping entry that records a unit equivalent
to $1.00 awarded pursuant to Section 9.

2.31 “Predecessor Plans” means the II-VI Incorporated 2005 Omnibus Incentive
Plan, the II-VI Incorporated 2009 Omnibus Incentive Plan, and/or the II-VI
Incorporated Second Amended and Restated 2012 Omnibus Incentive Plan, each as in
effect at the Effective Date.

2.32 “Restricted Shares” means an Award of Shares that are granted under and
subject to the terms, conditions and restrictions described in Section 7.

2.33 “Restricted Share Units” means an Award of the right to receive (as the
Committee determines) Shares, cash or other consideration equal to the Fair
Market Value of a Share for each Restricted Share Unit, granted under and
subject to the terms, conditions and restrictions described in Section 7.

2.34 “Section 409A” means Section 409A of the Code, the regulations and other
binding guidance promulgated thereunder, as they may now exist or may be amended
from time to time, or any successor to such section.

2.35 “Separation from Service” means a Participant’s termination of service with
the Company and its Subsidiaries, as determined by the Company, which
determination shall be final, binding and conclusive; provided that if an Award
is subject to Section 409A and is to be distributed on a Separation from
Service, then the definition of Separation from

 

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Service for such purpose shall comply with the definition provided in
Section 409A.

2.36 “Shares” means shares of Common Stock, as adjusted in accordance with
Section 12.

2.37 “Specified Employee” means a “specified employee” under Section 409A, as
determined in accordance with the procedures established by the Company.

2.38 “Spread” means, in the case of a Freestanding Stock Appreciation Right, the
amount by which the Fair Market Value on the date when any such right is
exercised exceeds the Base Price specified in such right or, in the case of a
Tandem Stock Appreciation Right, the amount by which the Fair Market Value on
the date when any such right is exercised exceeds the Option Price specified in
the related Option.

2.39 “Stock Appreciation Right” means a right granted under Section 6, including
a Freestanding Stock Appreciation Right or a Tandem Stock Appreciation Right.

2.40 “Subsidiary” means a corporation or other entity in which the Company has a
direct or indirect ownership or other equity interest, including any such
corporation or other entities which become a Subsidiary after adoption of the
Plan; provided that for purposes of determining whether any person may be a
Participant for purposes of any grant of Incentive Stock Options, “Subsidiary”
means any subsidiary corporation within the meaning of the Code Section 424(f)
or any successor provision thereof.

2.41 “Substitute Award” means any Award granted in assumption of or in
substitution for an award for an employee or other service provider of a company
or business acquired by the Company or a Subsidiary or with which the Company or
a Subsidiary combines.

2.42 “Tandem Stock Appreciation Right” means a Stock Appreciation Right granted
pursuant to Section 6 that is granted in tandem with an Option or any similar
right granted under any other plan of the Company.

2.43 “Ten Percent Stockholder” means an individual who owns more than 10% of the
total combined voting power of all classes of outstanding stock of the Company,
its parent or any of its Subsidiaries. In determining stock ownership, the
attribution rules of Section 424(d) of the Code shall be applied.

3. Shares Available Under the Plan; Maximum Awards.

3.1 Reserved Shares. Subject to adjustment as provided in Section 12, the
maximum number of Shares that may be delivered pursuant to Awards shall not
exceed the sum of (i) 3,550,000 Shares plus (ii) Shares with respect to any of
the awards granted under a Predecessor Plan, which are outstanding as of the
Effective Date, that expire unexercised or are terminated, surrendered, or
forfeited, in whole or in part, from and after the Effective Date. Such Shares
may be Shares of original issuance, Shares held in treasury, or Shares that have
been reacquired by the Company.

3.2 ISO Limit. Subject to adjustment as provided in Section 12, the maximum
number of Shares that may be delivered pursuant to the exercise of Incentive
Stock Options shall not exceed 3,550,000 Shares.

3.3 Predecessor Plan Awards. Upon the effectiveness of this Plan pursuant to
Section 19, no additional options or other awards shall be made pursuant to a
Predecessor Plan.

3.4 Share Counting Rules. To the extent that Awards expire or are terminated,
surrendered, or forfeited, in whole or in part, the Shares covered thereby shall
remain available under the Plan. Awards paid or settled solely in cash shall not
reduce the number of Shares available for Awards. In the case of any Substitute
Award, such Substitute Award shall not be counted against the number of Shares
reserved under the Plan. The full number of Shares with respect to which an
Option or Stock Appreciation Right is granted shall count against the aggregate
number of Shares available for grant under the Plan. Accordingly, if in
accordance with the Plan, a Participant pays the Option Price for an Option by
either tendering previously owned Shares or having the Company withhold Shares,
then such Shares surrendered to pay the Option Price shall continue to count
against the aggregate number of Shares available for grant under the Plan set
forth in Section 3.1. In addition, if in accordance with the Plan, a Participant
satisfies any tax withholding requirement with respect to any taxable event
arising as a result of the Plan by either tendering previously owned Shares or
having the Company withhold Shares, then such Shares surrendered to satisfy such
tax withholding requirements shall continue to count against the aggregate
number of Shares available for grant under the Plan set forth in Section 3.1.
Any Shares repurchased by the Company with cash proceeds from the

 

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exercise of Options shall not be added back to the pool of Shares available for
grant under the Plan set forth in Section 3.1.

3.5 Maximum Calendar Year Award for Nonemployee Directors. The maximum value of
Awards granted during any fiscal year to any Nonemployee Director, taken
together with any cash fees paid to that Nonemployee Director during the fiscal
year and the value of awards granted to the Nonemployee Director under any other
equity compensation plan of the Company during the fiscal year, shall not exceed
the following in total value (based on the Fair Market Value of the Shares
underlying the Award as of the Grant Date for Awards other than Options and
Stock Appreciation Rights, and based on the Grant Date fair value for accounting
purposes for Options and Stock Appreciation Rights): (1) $550,000 for each
Nonemployee Director other than the Chair of the Board (if applicable), and (2)
$850,000 for the non-employee Chair of the Board (if applicable); provided,
however, that awards granted to Nonemployee Directors upon their initial
election to the Board shall not count towards the limits in this paragraph. The
Board may make exceptions to the limits in this paragraph in extraordinary
circumstances for individual Nonemployee Directors; provided that the
Nonemployee Director receiving such additional compensation may not participate
in the decision to award such compensation.

4. Plan Administration.

4.1 Authority of Committee. This Plan shall be administered by the Committee,
provided that the full Board may at any time act as the Committee. Subject to
the terms of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the Plan, the Committee
shall have full power and discretionary authority to decide all matters relating
to the administration and interpretation of the Plan, provided, however, that
ministerial responsibilities of the Plan (e.g., management of day-to-day
matters) may be delegated to the Company’s officers, as set forth in Section 4.2
below. The Committee’s powers include, without limitation, the authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to a Participant; (iii) determine the number of Shares, or the relative
value, to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, Shares,
other securities, other Awards or other property, or canceled, forfeited, or
suspended and the method or methods by which Awards may be settled, exercised,
canceled, forfeited, or suspended; (vi) determine whether, to what extent, and
under what circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof or of the Board;
(vii) interpret and administer the Plan and any instrument or agreement relating
to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; (ix) advance the lapse of any waiting
period, accelerate any exercise date, waive or modify any restriction applicable
to Awards (except those restrictions imposed by law); (x) correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any Award
Agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect; and (xi) make any other determination and take any other
action that the Committee deems necessary or desirable for the administration of
the Plan. All decisions and determinations of the Committee shall be final,
conclusive and binding on the Company, the Participant and any and all
interested parties. Except to the extent prohibited by applicable law or
regulation, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may revoke any
such allocation at any time.

4.2 Committee Delegation. Except to the extent prohibited by applicable law or
regulation, the Committee may delegate all or any portion of its
responsibilities and powers to any person or persons selected by it, and may
revoke such delegation at any time. The Committee may, with respect to
Participants who are not directors or executive officers subject to filing
requirements of Section 16 of the Exchange Act, delegate to one or more officers
of the Company the authority to grant Awards to Participants, provided that the
Committee shall have fixed (i) the total number of Shares subject to such Awards
(other than Incentive Cash Awards) and (ii) the aggregate amount of cash
payments that may be subject to Incentive Cash Awards. No officer to whom
administrative authority has been delegated pursuant to this provision may waive
or modify any restriction applicable to an award to such officer under the Plan
or further delegate such officer’s authority under the Plan.

4.3 Clawbacks. To the extent permitted by applicable law and as set forth in the
applicable Award Agreement, the Committee may determine that an Award shall be
subject to the requirements of (i) Section 954 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (regarding recovery of erroneously awarded
compensation) and any implementing rules and regulations thereunder,
(ii) similar rules under the laws of any other jurisdiction, (iii) any
compensation recovery policies adopted by the Company to implement any such
requirements or (iv) any other compensation recovery policies as may be adopted
from time to time by the Company, all to the extent determined by the Committee
to be applicable to a Participant.

4.4 No Liability. No member of the Committee shall be liable to any person for
any such action taken or determination made in good faith.

 

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5. Options. The Committee may from time to time authorize grants to Participants
of options to purchase Shares upon such terms and conditions as the Committee
may determine in accordance with the following provisions:

5.1 Number of Shares. Each grant shall specify the number of Shares to which it
pertains.

5.2 Option Price. Each grant shall specify an Option Price per Share, which
shall be equal to or greater than the Fair Market Value per Share on the Grant
Date; provided, however, that in the event that a Participant is a Ten Percent
Stockholder as of the Grant Date, the Option Price of an Option granted to such
Participant that is intended to be an Incentive Stock Option shall be not less
than 110% of the Fair Market Value of a Share on the Grant Date.

5.3 Consideration. Each grant shall specify the form of consideration to be paid
in satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted Shares owned by the Optionee which have a value at the time of
exercise that is equal to the Option Price, (iii) any other legal consideration
that the Committee may deem appropriate, including without limitation any form
of consideration authorized under Section 5.4, on such basis as the Committee
may determine in accordance with this Plan, or (iv) any combination of the
foregoing.

5.4 Cashless Exercise. To the extent permitted by applicable law, any grant may
provide for the deferred payment of the Option Price from the proceeds of the
sale through a bank or broker on the date of exercise of some or all of the
Shares to which the exercise relates.

5.5 Performance-Based Options. Any grant of an Option may specify Performance
Objectives that must be achieved as a condition to the exercise of the Option.
Each grant of an Option may specify in respect of the specified Performance
Objectives a minimum acceptable level of achievement below which no portion of
the Option will be exercisable and may set forth a formula for determining the
portion of the Option to be exercisable if performance is at or above such
minimum acceptable level but falls short of the maximum achievement of the
specified Performance Objectives.

5.6 Vesting. Each Option grant may specify a period of continuous employment of
the Optionee by the Company or any Subsidiary (or, in the case of a Nonemployee
Director, service on the Board) that is necessary before the Options or portions
thereof shall become exercisable.

5.7 ISO Dollar Limitation. Options granted under this Plan may be Incentive
Stock Options, Nonqualified Stock Options or a combination of the foregoing,
provided that only Nonqualified Stock Options may be granted to Nonemployee
Directors. Each grant shall specify whether (or the extent to which) the Option
is an Incentive Stock Option or a Nonqualified Stock Option. Notwithstanding any
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year (under
all plans of the Company) exceeds $100,000 or such other amount limitation as
may be provided in the Code, such Options shall be treated as Nonqualified Stock
Options. The terms of any Incentive Stock Option granted under this Plan shall
comply in all respects with the provisions of Code Section 422, or any successor
provision thereto, and any regulations promulgated thereunder.

5.8 Exercise Period. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter. No Option granted under
this Plan may be exercised more than ten years from the Grant Date; provided,
however, that in the event that the Participant is a Ten Percent Stockholder, an
Option granted to such Participant that is intended to be an Incentive Stock
Option at the Grant Date shall not be exercisable after the expiration of five
years from its Grant Date.

5.9 Award Agreement. Each grant shall be evidenced by an Award Agreement
containing such terms and provisions as the Committee may determine consistent
with this Plan.

6. Stock Appreciation Rights. The Committee may also authorize grants to
Participants of Stock Appreciation Rights. A Stock Appreciation Right is the
right of the Participant to receive from the Company an amount, which shall be
determined by the Committee and shall be expressed as a percentage (not
exceeding 100 percent) of the Spread at the time of the exercise of such right.
Any grant of Stock Appreciation Rights under this Plan shall be upon such terms
and conditions as the Committee may determine in accordance with the following
provisions:

6.1 Payment in Cash or Shares. Any grant may specify that the amount payable
upon the exercise of a Stock Appreciation Right may be paid by the Company in
cash, Shares or any combination thereof and may (i) either grant to the
Participant, or reserve to the Committee, the right to elect among those
alternatives, or (ii) preclude the right of the Participant

 

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to receive, and the Company to issue, Shares or other equity securities in lieu
of cash.

6.2 Maximum SAR Payment. Any grant may specify that the amount payable upon the
exercise of a Stock Appreciation Right shall not exceed a maximum amount
specified by the Committee on the Grant Date.

6.3 Exercise Period. Any grant may specify (i) a waiting period or periods
before Stock Appreciation Rights shall become exercisable and (ii) permissible
dates or periods on or during which Stock Appreciation Rights shall be
exercisable.

6.4 Performance-Based Stock Appreciation Rights. Any grant of a Stock
Appreciation Right may specify Performance Objectives that must be achieved as a
condition to the exercise of the Stock Appreciation Right. Each grant of a Stock
Appreciation Right may specify in respect of the specified Performance
Objectives a minimum acceptable level of achievement below which no portion of
the Stock Appreciation Right will be exercisable and may set forth a formula for
determining the portion of the Stock Appreciation Right to be exercisable if
performance is at or above such minimum acceptable level but falls short of the
maximum achievement of the specified Performance Objectives.

6.5 Award Agreement. Each grant shall be evidenced by an Award Agreement which
shall describe the subject Stock Appreciation Rights, identify any related
Options, state that the Stock Appreciation Rights are subject to all of the
terms and conditions of this Plan and contain such other terms and provisions as
the Committee may determine consistent with this Plan.

6.6 Tandem Stock Appreciation Rights. Each grant of a Tandem Stock Appreciation
Right shall provide that such Tandem Stock Appreciation Right may be exercised
only (i) at a time when the related Option (or any similar right granted under
any other plan of the Company) is also exercisable and the Spread is positive;
and (ii) by surrender of all or a portion of the related Option (or such other
right) for cancellation in an amount equal to the portion of the Tandem Stock
Appreciation Right so exercised.

6.7 Exercise Period. No Stock Appreciation Right granted under this Plan may be
exercised more than ten years from the Grant Date.

6.8 Freestanding Stock Appreciation Rights. Regarding Freestanding Stock
Appreciation Rights only:

(i) Each grant shall specify in respect of each Freestanding Stock Appreciation
Right a Base Price per Share, which shall be equal to or greater than the Fair
Market Value on the Grant Date;

(ii) Successive grants may be made to the same Participant regardless of whether
any Freestanding Stock Appreciation Rights previously granted to such
Participant remain unexercised; and

(iii) Each grant shall specify the period or periods of continuous employment or
service of the Participant by the Company or any Subsidiary that are necessary
before the Freestanding Stock Appreciation Rights or installments thereof shall
become exercisable.

7. Restricted Shares and Restricted Share Units. The Committee may also
authorize grants to Participants of Restricted Shares and Restricted Share Units
upon such terms and conditions as the Committee may determine in accordance with
the following provisions:

7.1 Number of Shares. Each grant shall specify the number of Shares to be issued
to a Participant pursuant to the Award of Restricted Shares or Restricted Shares
Units.

7.2 Consideration. Each grant may be made without additional consideration from
the Participant or in consideration of a payment by the Participant that is less
than the Fair Market Value on the Grant Date.

7.3 Forfeiture/Transfer Restrictions. Each grant of Restricted Shares and
Restricted Share Units shall specify the duration of the period during which,
and the conditions under which, the Restricted Shares or Restricted Share Units
may be forfeited to the Company, and the other terms and conditions of such
Awards. Restricted Shares and Restricted Share Units may not be sold, assigned,
transferred, pledged or otherwise encumbered, except, in the case of Restricted
Shares, as provided in the Plan or the applicable Award Agreements.

 

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7.4 Rights/Dividends and Dividend Equivalents. Each grant of Restricted Shares
shall constitute an immediate transfer of the ownership of Shares to the
Participant in consideration of the performance of services, subject to terms
and conditions described in this Section 7 and in the Award Agreement evidencing
such Award and shall entitle the Participant to dividend, voting and other
ownership rights. Each grant of Restricted Share Units shall constitute a right
to receive Shares, cash or other consideration equal to the Fair Market Value of
a Share for each Restricted Share Unit granted, subject to the terms and
conditions described in this Section 7 and in the Award Agreement evidencing
such Award. The Committee may grant dividend equivalent rights to Participants
in connection with Awards of Restricted Share Units. The Committee may specify
whether such dividend or dividend equivalents shall be paid or distributed when
accrued, deferred (with or without interest), or reinvested, or deemed to have
been reinvested, in additional Shares; provided, however, that notwithstanding
any provision in the Plan to the contrary, in no event shall dividends or
dividend equivalents vest or otherwise be paid out prior to the time that the
underlying Award (or portion thereof) has vested and, accordingly, will be
subject to cancellation and forfeiture if such Award does not vest (including
for both time-based and performance-based Awards).

7.5 Stock Certificate. At the discretion of the Committee, the Company need not
issue stock certificates representing Restricted Shares and such Restricted
Shares may be evidenced in book entry form on the books and records of the
Company’s transfer agent. If certificates are issued for Restricted Shares,
unless otherwise directed by the Committee, all certificates representing
Restricted Shares, together with a stock power that shall be endorsed in blank
by the Participant with respect to such Shares, shall be held in custody by the
Company until all restrictions thereon have lapsed.

7.6 Performance-Based Restricted Shares or Restricted Share Units. Any grant or
the vesting thereof may be further conditioned upon the attainment of
Performance Objectives established by the Committee in accordance with the
applicable provisions of Section 9 regarding Performance Shares and Performance
Units.

7.7 Award Agreements. Each Award of Restricted Shares or Restricted Share Units
shall be evidenced by an Award Agreement containing such terms, and provisions
as the Committee may determine consistent with this Plan.

8. Deferred Shares. To the extent consistent with the provisions of Section 18
of this Plan, the Committee may authorize grants of Deferred Shares to
Participants upon such terms and conditions as the Committee may determine in
accordance with the following provisions:

8.1 Deferred Compensation. Each grant shall constitute the agreement by the
Company to issue or transfer Shares to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during
the Deferral Period of such conditions as the Committee may specify.

8.2 Consideration. Each grant may be made without the payment of additional
consideration from the Participant or in consideration of a payment by the
Participant that is less than the Fair Market Value on the Grant Date.

8.3 Deferral Period. Each grant shall provide that the Deferred Shares covered
thereby shall be subject to a Deferral Period, which shall be fixed by the
Committee on the Grant Date, and any grant or sale may provide for the earlier
termination of such period in the event of a Change in Control of the Company or
other similar transaction or event.

8.4 Dividend Equivalents and Other Ownership Rights. During the Deferral Period,
the Participant shall not have any right to transfer any rights under the Award,
shall not have any rights of ownership in the Deferred Shares and shall not have
any right to vote such Deferred Shares, but the Committee may on or after the
Grant Date authorize the payment of dividend equivalents on such Deferred Shares
in cash (with or without interest) or additional Shares on a current, deferred
or contingent basis; provided, however, that notwithstanding any provision in
the Plan to the contrary, in no event shall such dividend equivalents vest or
otherwise be paid out prior to the time that the underlying Award (or portion
thereof) has vested and, accordingly, will be subject to cancellation and
forfeiture if such Award does not vest (including for both time-based and
performance-based Awards).

8.5 Performance Objectives. Any grant or the vesting thereof may be further
conditioned upon the attainment of Performance Objectives established by the
Committee in accordance with the applicable provisions of Section 9 regarding
Performance Shares and Performance Units.

8.6 Award Agreement. Each grant shall be evidenced by an Award Agreement
containing such terms and provisions as the Committee may determine consistent
with this Plan.

9. Performance Shares and Performance Units. The Committee may also authorize
grants of Performance Shares and Performance Units, which shall become payable
to the Participant only upon the achievement of specified Performance

 

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Objectives, upon such terms and conditions as the Committee may determine in
accordance with the following provisions:

9.1 Number of Performance Shares or Units. Each grant shall specify the number
of Performance Shares or Performance Units to which it pertains, which may be
subject to adjustment to reflect changes in compensation or other factors.

9.2 Performance Period. The Performance Period with respect to each Performance
Share or Performance Unit shall be as set forth in the Award Agreement and may
be subject to earlier termination in the event of a Change in Control of the
Company or other similar transaction or event.

9.3 Performance Objectives. Each grant shall specify the Performance Objectives
that must be achieved by the Participant or the Company, as applicable, in order
for the Award to be earned.

9.4 Threshold Performance Objectives. Each grant may specify in respect of the
specified Performance Objectives a minimum acceptable level of achievement below
which no payment will be made and may set forth a formula for determining the
amount of any payment to be made if performance is at or above such minimum
acceptable level but falls short of the maximum achievement of the specified
Performance Objectives.

9.5 Payment of Performance Shares and Units. Each grant shall specify the time
and manner of payment of Performance Shares or Performance Units that shall have
been earned, and any grant may specify that any such amount may be paid by the
Company in cash, Shares or any combination thereof and may either grant to the
Participant or reserve to the Committee the right to elect among those
alternatives.

9.6 Maximum Payment. Any grant of Performance Shares or Performance Units may
specify that the amount payable, or the number of Shares issued, with respect
thereto may not exceed a maximum specified by the Committee on the Grant Date.

9.7 Dividend Equivalents. The Committee may grant dividend equivalent rights to
Participants in connection with Awards of Performance Shares. The Committee may
specify whether such dividend equivalents shall be paid or distributed when
accrued, deferred (with or without interest), or deemed to have been reinvested
in additional Shares; provided, however, that notwithstanding any provision in
the Plan to the contrary, in no event shall such dividend equivalents vest or
otherwise be paid out prior to the time that the underlying Award (or portion
thereof) has vested and, accordingly, will be subject to cancellation and
forfeiture if such Award does not vest (including for both time-based and
performance-based Awards).

9.8 Award Agreement. Each grant shall be evidenced by an Award Agreement which
shall state that the Performance Shares or Performance Units are subject to all
of the terms and conditions of this Plan and such other terms and provisions as
the Committee may determine consistent with this Plan.

10. Change in Control. Upon a Change in Control and except as may otherwise be
provided in the applicable Award Agreement, either of the following provisions
shall apply, depending on whether, and the extent to which, Awards are assumed,
converted or replaced by the resulting entity in the Change in Control:

10.1 Awards Assumed, Converted or Replaced. To the extent any Awards are
assumed, converted or replaced by the resulting entity in the Change in Control,
if, within two years after the date of the Change in Control, a Participant has
a Separation from Service either (1) by the Company other than for “cause” or
(2) by the Participant for “good reason” (each as defined in the applicable
Award Agreement), then such outstanding Awards that may be exercised shall
become fully exercisable, all restrictions with respect to such outstanding
Awards, other than for Performance Shares and Performance Units, shall lapse and
become vested and non-forfeitable, and for any outstanding Performance Shares
and Performance Units, the target payout opportunities attainable under such
Awards shall be deemed to have been fully earned as of the Separation from
Service based upon the greater of: (A) an assumed achievement of all relevant
performance goals at the “target” level, or (B) the actual level of achievement
of all relevant performance goals against target as of the Company’s fiscal
quarter end preceding the Change in Control and the Award.

10.2 Awards Not Assumed, Converted or Replaced. To the extent such Awards are
not assumed, converted or replaced by the resulting entity in the Change in
Control, then upon the Change in Control such outstanding Awards that may be
exercised shall become fully exercisable, all restrictions with respect to such
outstanding Awards, other than for Performance and or Performance Units, shall
lapse and become vested and non-forfeitable, and for any outstanding Performance
Shares and Performance Units, the target payout opportunities attainable under
such Awards shall be deemed to have been fully earned as of the Change in
Control based upon the greater of: (A) an assumed achievement of all relevant

 

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performance goals at the “target” level, or (B) the actual level of achievement
of all relevant performance goals against target as of the Company’s fiscal
quarter end preceding the Change in Control.

11. Transferability.

11.1 Transfer Restrictions. Except as provided in Section 11.2, no Award granted
under this Plan shall be transferable by a Participant other than by will or the
laws of descent and distribution, and Options and Stock Appreciation Rights
shall be exercisable during a Participant’s lifetime only by the Participant or,
in the event of the Participant’s legal incapacity, by his guardian or legal
representative acting in a fiduciary capacity on behalf of the Participant under
state law. Any attempt to transfer an Award in violation of this Plan shall
render such Award null and void.

11.2 Limited Transfer Rights. The Committee may expressly provide in an Award
Agreement (or an amendment to an Award Agreement) that a Participant may
transfer such Award (other than an Incentive Stock Option), in whole or in part,
to a Family Member. Subsequent transfers of Awards shall be prohibited except in
accordance with this Section 11.2. All terms and conditions of the Award,
including provisions relating to the termination of the Participant’s employment
or service with the Company or a Subsidiary, shall continue to apply following a
transfer made in accordance with this Section 11.2.

11.3 Restrictions on Transfer. Any Award made under this Plan may provide that
all or any part of the Shares that are to be issued or transferred by the
Company upon the exercise of Options or Stock Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or upon payment
under any grant of Performance Shares or Performance Units, or are no longer
subject to the substantial risk of forfeiture and restrictions on transfer
referred to in Section 7, shall be subject to further restrictions upon
transfer.

12. Adjustments. In the event (a) a stock dividend, stock split, combination or
exchange of Shares, recapitalization or other change in the capital structure of
the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization, partial or complete liquidation or other distribution
of assets (other than a normal cash dividend), issuance of rights or warrants to
purchase securities or (c) any other corporate transaction or event having an
effect similar to any of the foregoing affects the Common Stock such that an
adjustment is necessary in order to prevent dilution or enlargement of the
benefits or potential benefits to Participants intended to be made available
under the Plan, then the Committee shall, in an equitable manner, make or
provide for such adjustments in the (w) number of Shares covered by outstanding
Awards granted hereunder, (x) prices per share applicable to Options and Stock
Appreciation Rights granted hereunder, (y) kind of shares covered thereby
(including shares of another issuer) and/or (z) any Performance Objectives
applicable to the Awards, as the Committee in its sole discretion shall
determine in good faith to be equitably required in order to prevent such
dilution or enlargement of the benefits or intended benefits to Participants.
Moreover, in the event of any such transaction or event, the Committee may
provide in substitution for any or all outstanding Awards under this Plan such
alternative consideration as it may in good faith determine to be equitable
under the circumstances and may cancel all Awards in exchange for such
alternative consideration. If, in connection with any such transaction or event
in which the Company does not survive, the amount payable pursuant to any Award,
based on consideration per Share to be paid in connection with such transaction
or event and the Base Price, Option Price, Spread or otherwise of the Award, is
not a positive amount, the Committee may provide for cancellation of such Award
without any payment to the holder thereof. The Committee may also make or
provide for such adjustments in each of the limitations specified in Section 3
as the Committee in its sole discretion may in good faith determine to be
appropriate in order to reflect any transaction or event described in this
Section 12. The Committee will not, in any case, make any of the following
adjustments: (A) with respect to Awards of Incentive Stock Options, no such
adjustment shall be authorized to the extent that such authority would cause the
Plan to violate Section 422(b)(1) of the Code, as from time to time amended, and
(B) with respect to any Award subject to Section 409A, no such adjustment shall
be authorized to the extent that such authority would cause the Plan to fail to
comply with Section 409A (or an exception thereto).

13. Fractional Shares. The Company shall not be required to issue any fractional
Shares pursuant to this Plan. The Committee may provide for the elimination of
fractions or for the settlement thereof in cash.

14. Withholding Taxes. A Participant may be required to pay to the Company, a
Subsidiary or any affiliate, and the Company, Subsidiary or any affiliate shall
have the right and is hereby authorized to withhold from any Award, from any
payment due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant an amount (in cash, Shares,
other securities, other Awards or other property) sufficient to cover any
federal, state, local or foreign income taxes or such other applicable taxes
required by law in respect of an Award, its exercise, or any payment or transfer
under an Award or under the Plan and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes. The Company may, in its discretion, permit a Participant
(or any beneficiary or other Person entitled to act) to elect to pay a portion
or all of the amount such taxes in such manner as the

 

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Committee shall deem to be appropriate, including, but not limited to,
authorizing the Company to withhold, or agreeing to surrender to the Company,
Shares owned by such Participant or a portion of such forms of payment that
would otherwise be distributed pursuant to an Award in an amount not to exceed
the amount of applicable taxes based on not more than the maximum statutory
rates (or on such other basis that would not trigger adverse accounting
treatment under applicable accounting policies).

15. Certain Terminations of Employment, Hardship and Approved Leaves of Absence.
Notwithstanding any other provision of this Plan to the contrary, in the event
of termination of employment or service by reason of death, disability, normal
retirement, early retirement with the consent of the Company or leave of absence
approved by the Company, or in the event of hardship or other special
circumstances, of a Participant who holds an Option or Stock Appreciation Right
that is not immediately and fully exercisable, any Restricted Shares or
Restricted Share Units as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, any Deferred Shares as to
which the Deferral Period is not complete, any Performance Shares or Performance
Units that have not been fully earned, any Shares that are subject to any
transfer restriction pursuant to Section 11.3, or any Incentive Cash Award that
has not been fully earned, the Committee may in its sole discretion take any
action that it deems to be equitable under the circumstances or in the best
interests of the Company, including, without limitation, waiving or modifying
any limitation or requirement with respect to any Award under this Plan.

16. Foreign Participants. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for Awards to Participants who are foreign nationals, or who are
employed by or perform services for the Company or any Subsidiary outside of the
United States of America, as the Committee may consider necessary or appropriate
to accommodate differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements or
alternative versions of, this Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of this Plan as in effect
for any other purpose, provided that no such supplements, amendments,
restatements or alternative versions shall include any provisions that are
inconsistent with the terms of this Plan, as then in effect, unless this Plan
could have been amended to eliminate such inconsistency without further approval
by the shareholders of the Company.

17. Amendments and Other Matters.

17.1 Plan Amendments. This Plan may be amended from time to time by the Board,
but no such amendment shall increase any of the limitations specified in
Section 3, other than to reflect an adjustment made in accordance with
Section 12, without the further approval of the shareholders of the Company. The
Board may condition any amendment on the approval of the shareholders of the
Company if such approval is necessary or deemed advisable with respect to the
applicable listing or other requirements of a national securities exchange or
other applicable laws, policies or regulations. Notwithstanding anything to the
contrary contained herein, the Committee may also make any amendments or
modifications to this Plan and/or outstanding Awards in order to conform the
provisions of the Plan or such Awards with Code Section 409A regardless of
whether such modification, amendment, or termination of the Plan shall adversely
affect the rights of a Participant under the Plan or an Award Agreement.

17.2 Award Deferrals. The Committee may permit Participants to elect to defer
the issuance of Shares or the settlement or payment of Awards in cash under the
Plan pursuant to such rules, procedures or programs as it may establish for
purposes of this Plan. In the case of an award of Restricted Shares, the
deferral may be effected by the Participant’s agreement to forego or exchange
his or her award of Restricted Shares and receive an award of Deferred Shares.
The Committee also may provide that deferred settlements include the payment or
crediting of interest on the deferral amounts, or the payment or crediting of
dividend equivalents where the deferral amounts are denominated in Shares.

17.3 Conditional Awards. The Committee may condition the grant of any Award or
combination of Awards under the Plan on the surrender or deferral by the
Participant of his or her right to receive a cash award or other compensation
otherwise payable by the Company or any Subsidiary to the Participant.

17.4 Repricing Prohibited. Except in connection with a corporate transaction
involving the Company as provided for in Section 12, the terms of an outstanding
Option or Stock Appreciation Right may not be amended by the Committee to reduce
the exercise price of outstanding Options or Stock Appreciation Rights, or
cancel outstanding Options or Stock Appreciation Rights in exchange for cash,
other Awards, Options or Stock Appreciation Rights with an exercise price that
is less than the exercise price of the original Options or Stock Appreciation
Rights without the approval of the shareholders of the Company.

17.5 No Employment Right. This Plan shall not confer upon any Participant any
right with respect to continuance of employment or other service with the
Company or any Subsidiary and shall not interfere in any way with any

 

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right that the Company or any Subsidiary would otherwise have to terminate any
Participant’s employment or other service at any time.

18. Section 409A. Notwithstanding any provision of the Plan or an Award
Agreement to the contrary, if any Award or benefit provided under this Plan is
subject to the provisions of Section 409A, the provisions of the Plan and any
applicable Award Agreement shall be administered, interpreted and construed in a
manner necessary to comply with Section 409A or an exception thereto (or
disregarded to the extent such provision cannot be so administered, interpreted
or construed). The following provisions shall apply, as applicable:

18.1 If a Participant is a Specified Employee and a payment subject to
Section 409A (and not excepted therefrom) to the Participant is due upon
Separation from Service, such payment shall be delayed for a period of six
(6) months after the date the Participant Separates from Service (or, if
earlier, the death of the Participant). Any payment that would otherwise have
been due or owing during such six-month period will be paid immediately
following the end of the six-month period in the month following the month
containing the six-month anniversary of the date of termination unless another
compliant date is specified in the applicable agreement.

18.2 For purposes of Section 409A, and to the extent applicable to any Award or
benefit under the Plan, it is intended that distribution events qualify as
permissible distribution events for purposes of Section 409A and shall be
interpreted and construed accordingly. With respect to payments subject to
Section 409A, the Company reserves the right to accelerate and/or defer any
payment to the extent permitted and consistent with Section 409A. Whether a
Participant has Separated from Service or employment will be determined based on
all of the facts and circumstances and, to the extent applicable to any Award or
benefit, in accordance with the guidance issued under Section 409A. For this
purpose, a Participant will be presumed to have experienced a Separation from
Service when the level of bona fide services performed permanently decreases to
a level less than twenty percent (20%) of the average level of bona fide
services performed during the immediately preceding thirty-six (36) month period
or such other applicable period as provided by Section 409A.

18.3 The Committee, in its discretion, may specify the conditions under which
the payment of all or any portion of any Award may be deferred until a later
date. Deferrals shall be for such periods or until the occurrence of such
events, and upon such terms and conditions, as the Committee shall determine in
its discretion, in accordance with the provisions of Section 409A, the
regulations and other binding guidance promulgated thereunder; provided,
however, that no deferral shall be permitted with respect to Options, Stock
Appreciation Rights and other stock rights subject to Section 409A. An election
shall be made by filing an election with the Company (on a form provided by the
Company) on or prior to December 31st of the calendar year immediately preceding
the beginning of the calendar year (or other applicable service period) to which
such election relates (or at such other date as may be specified by the
Committee to the extent consistent with Section 409A) and shall be irrevocable
for such applicable calendar year (or other applicable service period). To the
extent authorized, a Participant who first becomes eligible to participate in
the Plan may file an election (“Initial Election”) at any time prior to the
30-day period following the date on which the Participant initially becomes
eligible to participate in the Plan (or at such other date as may be specified
by the Committee to the extent consistent with Section 409A). Any such Initial
Election shall only apply to compensation earned and payable for services
rendered after the effective date of the Election.

18.4 The grant of nonqualified Options, Stock Appreciation Rights and other
stock rights subject to Section 409A shall be granted under terms and conditions
consistent with Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not
constitute a deferral of compensation under Section 409A. Accordingly, any such
Award may be granted to Employees and Directors of the Company and its
subsidiaries and affiliates in which the Company has a controlling interest. In
determining whether the Company has a controlling interest, the rules of Treas.
Reg. § 1.414(c)-2(b)(2)(i) shall apply; provided that the language “at least 50
percent” shall be used instead of “at least 80 percent” in each place it
appears; provided, further, where legitimate business reasons exist (within the
meaning of Treas. Reg. § 1.409A-1(b)(5)(iii)(E)(i)), the language “at least 20
percent” shall be used instead of “at least 80 percent” in each place it
appears. The rules of Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 shall apply for
purposes of determining ownership interests.

18.5 In no event shall any member of the Board, the Committee or the Company (or
its employees, officers or directors) have any liability to any Participant (or
any other Person) due to the failure of an Award to satisfy the requirements of
Section 409A.

19. Effective Date. This Plan shall become effective upon its approval by the
shareholders of the Company.

20. Requirements of Law.

20.1 General. The Company shall not be required to sell or issue any Shares
under any Award if the sale or

 

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issuance of such Shares would constitute a violation by the Participant, any
other individual, or the Company of any law or regulation of any governmental
authority, including any federal or state securities laws or regulations. If at
any time the Company determines that the listing, registration, or qualification
of any Shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a term or condition
of, or in connection with, the issuance or purchase of Shares hereunder, no
Shares may be issued or sold to the Participant or any other individual
exercising an Option unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any terms and
conditions not acceptable to the Company, and any delay caused thereby shall in
no way affect the date of termination of the Award. Specifically, in connection
with the Securities Act of 1933 (the “Securities Act”), upon the exercise of any
Option or the delivery of any Shares underlying an Award, unless a registration
statement under such Act is in effect with respect to the Shares covered by such
Award, the Company shall not be required to sell or issue such Shares unless the
Committee has received evidence satisfactory to it that the Participant or any
other individual exercising an Option may acquire such Shares under an exemption
from registration under the Securities Act. The Company may, but shall not be
obligated to, register any securities covered hereby under the Securities Act.
The Company shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of Shares under the Plan to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option shall not be
exercisable until the Shares covered by such Option are registered or are exempt
from registration, the exercise of such Option (under circumstances in which the
laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption. The
Committee may require the Participant to sign such additional documentation,
make such representations, and furnish such information as the Committee may
consider appropriate in connection with the grant of Awards or issuance or
delivery of Shares in compliance with applicable laws.

20.2 Rule 16b-3. During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the Company
that Awards and the exercise of Options granted to officers and directors
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any term or condition of the Plan or action by
the Committee does not comply with the requirements of Rule 16b-3, it shall be
deemed inoperative to the extent permitted by law and deemed advisable by the
Committee, and shall not affect the validity of the Plan. In the event that Rule
16b-3 is revised or replaced, the Committee may modify the Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.

21. Termination. No Award shall be granted from and after the tenth anniversary
of the date upon which this Plan is approved by the shareholders of the Company
or after such date that the Board shall have adopted a resolution terminating
the Plan. This Plan shall remain in effect with respect to Awards outstanding at
that time.

22. Governing Law.

22.1 The validity, construction and effect of this Plan and any Award hereunder
will be determined in accordance with the internal laws of the Commonwealth of
Pennsylvania without giving effect to conflict of laws.

22.2 Any person who believes he or she is being denied any benefit or right
under the Plan may file a written claim with the Committee. Any claim must be
delivered to the Committee within forty-five (45) days of the specific event
giving rise to the claim. Untimely claims will not be processed and shall be
deemed denied. The Committee, or its designated agent, will notify the
Participant of its decision in writing as soon as administratively practicable.
Claims not responded to by the Committee in writing within ninety (90) days of
the date the written claim is delivered to the Committee shall be deemed denied.
The Committee’s decision is final and conclusive and binding on all persons. No
lawsuit relating to the Plan may be filed before a written claim is filed with
the Committee and is denied or deemed denied and any lawsuit must be filed
within one year of such denial or deemed denial or be forever barred.

22.3 For purposes of resolving any lawsuit that arises under the Plan, each
Participant, by virtue of receiving an Award, shall be deemed to have submitted
to and consented to the exclusive jurisdiction of the state and federal courts
located in the Commonwealth of Pennsylvania and to have agreed that any related
litigation shall be conducted solely in the courts of Butler County,
Pennsylvania or the federal courts for the U.S. for the Western District of
Pennsylvania, where the Plan is made and to be performed, and no other courts.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974.

 

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