Exhibit 10.3

ORTHOVITA, INC.

2007 OMNIBUS EQUITY COMPENSATION PLAN

1. Purpose

The purpose of the Orthovita, Inc. 2007 Omnibus Equity Compensation Plan (the
“Plan”) is to provide (i) designated employees of Orthovita, Inc. (the
“Company”) and its parent or subsidiaries, (ii) non-employee members of the
board of directors of the Company and (iii) consultants who perform valuable
services for the Company or its subsidiaries with the opportunity to receive
grants of stock options, stock units, stock awards, stock appreciation rights
and other stock-based awards. The Company believes that the Plan will encourage
the participants to contribute materially to the growth of the Company, thereby
benefiting the Company’s shareholders, and will align the economic interests of
the participants with those of the shareholders.

The Orthovita, Inc. 1997 Equity Compensation Plan (the “1997 Plan”) will be
merged with and into this Plan as of the Effective Date, and no additional
grants will be made thereafter under the 1997 Plan. Outstanding grants under the
1997 Plan will continue in effect according to their terms as in effect on the
Effective Date (subject to such amendments as the Committee (as defined below)
determines, consistent with the 1997 Plan), and the shares with respect to
outstanding grants under the 1997 Plan will be issued or transferred under this
Plan.

2. Definitions

Whenever used in this Plan, the following terms will have the respective
meanings set forth below:

(a) “Board” means the Company’s Board of Directors.

(b) “Change of Control” shall be deemed to have occurred if:

(i) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the
Company; provided that a Change of Control shall not be deemed to occur as a
result of a transaction in which the Company becomes a subsidiary of another
corporation and in which the shareholders of the Company, immediately prior to
the transaction, will beneficially own, immediately after the transaction,
shares entitling such shareholders to more than 50% of all votes to which all
shareholders of the parent corporation would be entitled in the election of
directors;

(ii) The consummation of (A) a merger or consolidation of the Company with
another corporation where the shareholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such shareholders to more than 50% of
all votes to which all shareholders of the

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surviving corporation would be entitled in the election of directors, (B) a sale
or other disposition of all or substantially all of the assets of the Company,
or (C) a liquidation or dissolution of the Company; or

(iii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority of
the Board; provided, that any person becoming a director subsequent to such date
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the Incumbent Directors who are
directors at the time of such vote shall be, for purposes of this Plan, an
Incumbent Director.

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

(d) “Committee” means (i) with respect to Grants to Employees and Consultants,
the Board, Compensation Committee of the Board or another committee appointed by
the Board to administer the Plan, (ii) with respect to Grants made to
Non-Employee Directors, the Board, and (iii) with respect to Grants that are
intended to be “qualified performance-based compensation” under section 162(m)
of the Code, a committee that consists of two or more persons appointed by the
Board, all of whom shall be “outside directors” as defined under section 162(m)
of the Code and related Treasury regulations.

(e) “Company” means Orthovita, Inc. and any successor corporation.

(f) “Company Stock” means the common stock of the Company.

(g) “Consultants” means any consultant or advisor who performs services to the
Company or any of its subsidiaries.

(h) “Disability” shall mean a Participant’s becoming disabled within the meaning
of the Company’s long-term disability plan then in effect.

(i) “Dividend Equivalent” means an amount calculated with respect to a Stock
Unit, which is determined by multiplying the number of shares of Company Stock
subject to the Stock Unit by the per-share cash dividend, or the per-share fair
market value (as determined by the Committee) of any dividend in consideration
other than cash, paid by the Company on its Company Stock. If interest is
credited on accumulated dividend equivalents, the term “Dividend Equivalent”
shall include the accrued interest.

(j) “Effective Date” of the Plan means April 12, 2007, subject to approval of
the Plan by the shareholders of the Company.

(k) “Employed by, or provide services to, the Employer” shall mean employment as
an Employee, Consultant or Non-Employee Director (so that, for purposes of
exercising Options and SARs and satisfying conditions with respect to Stock
Units, Stock Awards and Other Stock-Based Awards, a Participant shall not be
considered to have terminated employment until the Participant ceases to be an
Employee, Consultant and Non-Employee Director), unless the Board determines
otherwise in the Grant Agreement.

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(l) “Employee” means an employee of the Employer (including an officer or
director who is also an employee), but excluding any person who is classified by
the Employer as a “contractor” or “consultant,” no matter how characterized by
the Internal Revenue Service, other governmental agency or a court. Any change
of characterization of an individual by the Internal Revenue Service or any
court or government agency shall have no effect upon the classification of an
individual as an Employee for purposes of this Plan, unless the Committee
determines otherwise.

(m) “Employer” means the Company and its subsidiaries.

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

(o) “Exercise Price” means the per share price at which shares of Company Stock
may be purchased under an Option, as designated by the Committee.

(p) “Fair Market Value” of Company Stock means, unless the Committee determines
otherwise with respect to a particular Grant, (i) if the principal trading
market for the Company Stock is a national securities exchange, the last
reported sale price of Company Stock on the relevant date or (if there were no
trades on that date) the latest preceding date upon which a sale was reported,
(ii) if the Company Stock is not principally traded on such exchange, the mean
between the last reported “bid” and “asked” prices of Company Stock on the
relevant date, as reported on the OTC Bulletin Board or (iii) if the Company
Stock is not publicly traded or, if publicly traded, is not so reported, the
Fair Market Value per share shall be as determined by the Committee.

(q) “Grant” means an Option, Stock Unit, Stock Award, SAR or Other Stock-Based
Award granted under the Plan.

(r) “Grant Agreement” means the written instrument that sets forth the terms and
conditions of a Grant, including all amendments thereto.

(s) “Incentive Stock Option” means an Option that is intended to meet the
requirements of an incentive stock option under section 422 of the Code.

(t) “Non-Employee Director” means a member of the Board who is not an Employee.

(u) “Nonqualified Stock Option” means an Option that is not intended to be taxed
as an incentive stock option under section 422 of the Code.

(v) “1933 Act” means the Securities Act of 1933, as amended.

(w) “Option” means an option to purchase shares of Company Stock, as described
in Section 7.

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(x) “Other Stock-Based Award” means a grant that is based on, measured by or
payable in Company Stock (other than an Option, Stock Unit, Stock Award or SAR),
as described in Section 11.

(y) “Participant” means an Employee, Non-Employee Director or Consultant
designated by the Committee to participate in the Plan.

(z) “Plan” means this Orthovita, Inc. 2007 Omnibus Equity Compensation Plan, as
may be amended from time to time.

(aa) “SAR” means a stock appreciation right as described in Section 10.

(bb) “Stock Award” means an award of Company Stock as described in Section 9.

(cc) “Stock Unit” means an award of a phantom unit representing a share of
Company Stock, as described in Section 8.

(dd) “Termination for Cause” shall mean, except to the extent otherwise provided
in a Participant’s Grant Agreement, a finding by the Board, after full
consideration of the facts presented on behalf of both the Employer and the
Participant, that the Participant has breached his or her employment or service
contract with the Employer, or has been engaged in disloyalty to the Employer,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his or her employment or service,
or has disclosed trade secrets or confidential information of the Employer to
persons not entitled to receive such information.

3. Administration

(a) Committee. The Plan shall be administered and interpreted by the Committee.
Ministerial functions may be performed by an administrative committee comprised
of Company employees appointed by the Committee.

(b) Committee Authority. The Committee shall have the authority to (i) determine
the Participants to whom Grants shall be made under the Plan, (ii) determine the
type, size and terms and conditions of the Grants to be made to each such
Participant, (iii) determine the time when the Grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms and conditions of any previously issued Grant, subject to the
provisions of Section 19 below, and (v) deal with any other matters arising
under the Plan.

(c) Committee Determinations. The Committee shall have full power and express
discretionary authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee’s
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the Plan or in any awards granted hereunder.
All

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powers of the Committee shall be executed in its sole discretion, in the best
interest of the Company, not as a fiduciary, and in keeping with the objectives
of the Plan and need not be uniform as to similarly situated Participants.

(d) Delegation of Authority. Notwithstanding the foregoing, the Board may
delegate to the Chief Executive Officer, in his capacity as a Board member of
the Company, the authority to make grants under the Plan, which grants shall not
exceed 50,000 option shares to any person per year, to Employees or Consultants
of the Company and its subsidiaries who are not subject to the restrictions of
section 16(b) of the Exchange Act and who are not expected to be subject to the
limitations of section 162(m) of the Code. The grant of authority under this
subsection 1(d) shall be subject to such conditions and limitations as may be
determined by the Board.

4. Grants

(a) Grants under the Plan may consist of Options as described in Section 7,
Stock Units as described in Section 8, Stock Awards as described in Section 9,
SARs as described in Section 10 and Other Stock-Based Awards as described in
Section 11. All Grants shall be subject to such terms and conditions as the
Committee deems appropriate and as are specified in writing by the Committee to
the Participant in the Grant Agreement.

(b) All Grants shall be made conditional upon the Participant’s acknowledgement,
in writing or by acceptance of the Grant, that all decisions and determinations
of the Committee shall be final and binding on the Participant, his or her
beneficiaries and any other person having or claiming an interest under such
Grant. Grants under a particular Section of the Plan need not be uniform as
among the Participants.

5. Shares Subject to the Plan

(a) Shares Authorized. The total aggregate number of shares of Company Stock
that may be issued under the Plan is 10,217,770 shares, subject to adjustment as
described in subsection (d) below. This aggregate number shall include the
shares remaining to be issued under the 1997 Plan (including shares with respect
to outstanding grants and shares available for future grants).

(b) Source of Shares; Share Counting. Shares issued under the Plan may be
authorized but unissued shares of Company Stock or reacquired shares of Company
Stock, including shares purchased by the Company on the open market for purposes
of the Plan. If and to the extent Options or SARs granted under the Plan
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised, and if and to the extent that any Stock Awards, Stock
Units, or Other Stock-Based Awards are forfeited or terminated, or otherwise are
not paid in full, the shares reserved for such Grants shall again be available
for purposes of the Plan. Shares of Stock surrendered in payment of the Exercise
Price of an Option, and shares withheld or surrendered for payment of taxes,
shall not be available for re-issuance under the Plan. If SARs are granted, the
full number of

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shares subject to the SARs shall be considered issued under the Plan, without
regard to the number of shares issued upon exercise of the SARs and without
regard to any cash settlement of the SARs. To the extent that a Grant of Stock
Units or other Stock-Based Awards is designated in the Grant Agreement to be
paid in cash, and not in shares of Company Stock, such Grants shall not count
against the share limits in subsection (a).

(c) Individual Limits. All Grants under the Plan shall be expressed in shares of
Company Stock. The maximum aggregate number of shares of Company Stock with
respect to which all Grants may be made under the Plan to any individual during
any calendar year shall be 500,000 shares, subject to adjustment as described in
subsection (d) below. The individual limits of this subsection (d) shall apply
without regard to whether the Grants are to be paid in Company Stock or cash.
All cash payments (other than with respect to Dividend Equivalents) shall equal
the Fair Market Value of the shares of Company Stock to which the cash payments
relate.

(d) Adjustments. If there is any change in the number or kind of shares of
Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation, (iii) by reason of a
reclassification or change in par value, or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company’s receipt of consideration, or if the value of
outstanding shares of Company Stock is substantially reduced as a result of a
spinoff or the Company’s payment of an extraordinary dividend or distribution,
the maximum number of shares of Company Stock available for issuance under the
Plan, the maximum number of shares of Company Stock for which any individual may
receive Grants in any year, the kind and number of shares covered by outstanding
Grants, the kind and number of shares issued and to be issued under the Plan,
and the price per share or the applicable market value of such Grants shall be
equitably adjusted by the Committee to reflect any increase or decrease in the
number of, or change in the kind or value of, the issued shares of Company Stock
to preclude, to the extent practicable, the enlargement or dilution of rights
and benefits under the Plan and such outstanding Grants; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated. In
addition, in the event of a Change of Control of the Company, the provisions of
Section 16 of the Plan shall apply. Any adjustments to outstanding Grants shall
be consistent with section 409A or 424 of the Code, to the extent applicable.
Any adjustments determined by the Committee shall be final, binding and
conclusive.

6. Eligibility for Participation

(a) Eligible Persons. All Employees, Non-Employee Directors and Consultants
shall be eligible to participate in the Plan.

(b) Selection of Participants. The Committee shall select Employees,
Non-Employee Directors and Consultants to receive Grants and shall determine the
number of shares of Company Stock subject to each Grant.

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7. Options

(a) General Requirements. The Committee may grant Options to Employees,
Non-Employee Directors or Consultants upon such terms and conditions as the
Committee deems appropriate under this Section 7. The Committee shall determine
the number of shares of Company Stock that will be subject to each Grant of
Options to Employees, Non-Employee Directors or Consultants.

(b) Type of Option, Price and Term.

(i) The Committee may grant Incentive Stock Options or Nonqualified Stock
Options or any combination of the two, all in accordance with the terms and
conditions set forth herein. Incentive Stock Options may be granted only to
Employees of the Company or its parents or subsidiaries, as defined in section
424 of the Code. Nonqualified Stock Options may be granted to Employees,
Non-Employee Directors or Consultants.

(ii) The Exercise Price of Company Stock subject to an Option shall be
determined by the Committee and may be equal to or greater than the Fair Market
Value of a share of Company Stock on the date the Option is granted. However, an
Incentive Stock Option may not be granted to an Employee who, at the time of
grant, owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any parent or subsidiary, as defined in
section 424 of the Code, unless the Exercise Price per share is not less than
110% of the Fair Market Value of the Company Stock on the date of grant.

(iii) The Committee shall determine the term of each Option, which shall not
exceed ten years from the date of grant. However, an Incentive Stock Option that
is granted to an Employee who, at the time of grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary, as defined in section 424 of the Code, may
not have a term that exceeds five years from the date of grant.

(c) Exercisability of Options.

(i) Options shall become exercisable in accordance with such terms and
conditions as may be determined by the Committee and specified in the Grant
Agreement. The Committee may grant Options that are subject to achievement of
performance goals or other conditions. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.

(ii) The Committee may provide in a Grant Agreement that the Participant may
elect to exercise part or all of an Option before it otherwise has become
exercisable. Any shares so purchased shall be restricted shares and shall be
subject to a repurchase right in favor of the Company during a specified
restriction period, with the repurchase price equal to the lesser of (A) the
Exercise Price or (B) the Fair Market Value of such shares at the time of
repurchase, or such other restrictions as the Committee deems appropriate.

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(iii) Options granted to persons who are non-exempt employees under the Fair
Labor Standards Act of 1938, as amended, may not be exercisable for at least six
months after the date of grant (except that such Options may become exercisable,
as determined by the Committee, upon the Participant’s death, disability or
retirement, or upon a Change of Control or other circumstances permitted by
applicable regulations).

(d) Termination of Employment, Disability or Death.

(i) Except as provided below or in a Grant Agreement, an Option may only be
exercised while the Participant is employed by, or provide services to, the
Employer as an Employee, Consultant or member of the Board. In the event that a
Participant ceases to be employed by, or provide services to, the Employer for
any reason other than a Disability, death, or Termination for Cause, any Option
which is otherwise exercisable by the Participant shall terminate unless
exercised within 90 days of the date on which the Participant ceases to be
employed by, or provide services to, the Employer (or within such other period
of time as may be specified in the Grant Agreement), but in any event no later
than the date of expiration of the Option term. Any of the Participant’s Options
that are not otherwise exercisable as of the date on which the Participant
ceases to be employed by, or provide services to, the Employer shall terminate
as of such date.

(ii) In the event the Participant ceases to be employed by, or provide services
to, the Employer on account of a Termination for Cause, any Option held by the
Participant shall terminate as of the date the Participant ceases to be employed
by, or provide services to, the Employer. In addition, the Participant shall
automatically forfeit all Option shares for any exercised portion of an Option
for which the Employer has not yet delivered the share certificates, upon refund
by the Employer of the Exercise Price paid by the Participant for such shares.

(iii) In the event the Participant ceases to be employed by, or provide services
to, the Employer because of the Participant’s Disability, any Option which is
otherwise exercisable by the Participant shall terminate unless exercised within
one year after the date on which the Participant ceases to be employed by, or
provide services to, the Employer (or within such other period of time as may be
specified in the Grant Agreement), but in any event no later than the date of
expiration of the Option term. Any of the Participant’s Options which are not
otherwise exercisable as of the date on which the Participant ceases to be
employed by, or provide services to, the Employer shall terminate as of such
date.

(iv) If the Participant dies while employed by, or provide services to, the
Employer or within 90 days after the date on which the Participant ceases to be
employed or provide services on account of a termination of employment or
service specified in Section 5(d)(i) above (or within such other period of time
as may be specified in the Grant Agreement), any Option that is otherwise
exercisable by the Participant shall terminate unless exercised within one year
after the date on which the Participant ceases to be employed by, or provide
services to, the Employer (or within such other period of time as may be
specified in the Grant Agreement), but in any event no later than the date of
expiration of the Option term. Any of the Participant’s Options that are not
otherwise exercisable as of the date on which the Participant ceases to be
employed by, or provide services to, the Employer shall terminate as of such
date.

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(e) Exercise of Options. A Participant may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Company. The Participant shall pay the Exercise Price for the Option (i) in
cash, (ii) if permitted by the Committee, by delivering shares of Company Stock
owned by the Participant and having a Fair Market Value on the date of exercise
equal to the Exercise Price or by attestation to ownership of shares of Company
Stock having an aggregate Fair Market Value on the date of exercise equal to the
Exercise Price, (iii) by payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board, (iv) by such other
method as the Committee may approve, to the extent permitted by applicable law,
or (v) through any combination of the foregoing. Shares of Company Stock used to
exercise an Option shall have been held by the Participant for the requisite
period of time to avoid adverse accounting consequences to the Company with
respect to the Option. Payment for the shares pursuant to the Option, and any
required withholding taxes, must be received by the time specified by the
Committee depending on the type of payment being made, but in all cases prior to
the issuance of the Company Stock.

(f) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide
that, if the aggregate Fair Market Value of the stock on the date of the grant
with respect to which Incentive Stock Options are exercisable for the first time
by a Participant during any calendar year, under the Plan or any other stock
option plan of the Company or a parent or subsidiary, as defined in section 424
of the Code, exceeds $100,000, then the Option, as to the excess, shall be
treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be
granted to any person who is not an Employee of the Company or a parent or
subsidiary, as defined in section 424 of the Code.

8. Stock Units

(a) General Requirements. The Committee may grant Stock Units to Employees,
Non-Employee Directors or Consultants, upon such terms and conditions as the
Committee deems appropriate under this Section 8. Each Stock Unit shall
represent the right of the Participant to receive a share of Company Stock or an
amount based on the value of a share of Company Stock. All Stock Units shall be
credited to bookkeeping accounts on the Company’s records for purposes of the
Plan.

(b) Terms of Stock Units. The Committee may grant Stock Units that are payable
on terms and conditions determined by the Committee, which may include payment
based on achievement of performance goals. Stock Units may be paid at the end of
a specified vesting or performance period, or payment may be deferred to a date
authorized by the Committee. The Committee shall determine the number of Stock
Units to be granted and the requirements applicable to such Stock Units.

(c) Payment With Respect to Stock Units. Payment with respect to Stock Units
shall be made in cash, in Company Stock, or in a combination of the two, as
determined by the Committee. The Grant Agreement shall specify the maximum
number of shares that can be issued under the Stock Units.

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(d) Requirement of Employment or Service. The Committee shall determine in the
Grant Agreement under what circumstances a Participant may retain Stock Units
after termination of the Participant’s employment or service, and the
circumstances under which Stock Units may be forfeited. Unless the Committee
determines otherwise, if the Participant ceases to be employed by, or provide
service to, the Employer during a specified period, or if other conditions
established by the Committee are not met, the Participant’s Stock Units shall be
forfeited.

(e) Dividend Equivalents. The Committee may grant Dividend Equivalents in
connection with Stock Units, under such terms and conditions as the Committee
deems appropriate. Dividend Equivalents may be paid to Participants currently or
may be deferred. All Dividend Equivalents that are not paid currently shall be
credited to bookkeeping accounts on the Company’s records for purposes of the
Plan. Dividend Equivalents may be accrued as a cash obligation, or may be
converted to additional Stock Units for the Participant, and deferred Dividend
Equivalents may accrue interest, all as determined by the Committee. The
Committee may provide that Dividend Equivalents shall be payable based on the
achievement of specific performance goals. Dividend Equivalents may be payable
in cash or shares of Company Stock or in a combination of the two, as determined
by the Committee.

9. Stock Awards

(a) General Requirements. The Committee may issue shares of Company Stock to
Employees, Non-Employee Directors or Consultants under a Stock Award, upon such
terms and conditions as the Committee deems appropriate under this Section 9.
Shares of Company Stock issued pursuant to Stock Awards may be issued for cash
consideration or for no cash consideration, and subject to restrictions or no
restrictions, as determined by the Committee. The Committee may establish
conditions under which restrictions on Stock Awards shall lapse over a period of
time or according to such other criteria as the Committee deems appropriate,
including restrictions based upon the achievement of specific performance goals.
The Committee shall determine the number of shares of Company Stock to be issued
pursuant to a Stock Award.

(b) Requirement of Employment or Service. The Committee shall determine in the
Grant Agreement under what circumstances a Participant may retain Stock Awards
after termination of the Participant’s employment or service, and the
circumstances under which Stock Awards may be forfeited. Unless the Committee
determines otherwise, if the Participant ceases to be employed by, or provide
services to, the Employer during a period designated in the Grant Agreement, or
if other specified conditions are not met, the Stock Award shall terminate as to
all shares covered by the Grant as to which the restrictions have not lapsed,
and those shares of Company Stock must be immediately returned to the Company.

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(c) Restrictions on Transfer. While Stock Awards are subject to restrictions, a
Participant may not sell, assign, transfer, pledge or otherwise dispose of the
shares of a Stock Award except upon death as described in Section 15(a). If
certificates are issued, each certificate for a share of a Stock Award shall
contain a legend giving appropriate notice of the restrictions in the Grant. The
Participant shall be entitled to have the legend removed when all restrictions
on such shares have lapsed. The Company may retain possession of any
certificates for Stock Awards until all restrictions on such shares have lapsed.

(d) Right to Vote and to Receive Dividends. The Committee shall determine to
what extent, and under what conditions, the Participant shall have the right to
vote shares of Stock Awards and to receive any dividends or other distributions
paid on such shares during the restriction period. Unless the Committee
determines otherwise, while Stock Awards are subject to any restrictions, the
Participant shall have the right to vote shares of Stock Awards and to receive
any dividends or other distributions paid on such shares, subject to any
restrictions deemed appropriate by the Committee. The Committee may determine
that dividends on Stock Awards shall be withheld while the Stock Awards are
subject to restrictions and that the dividends shall be payable only upon the
lapse of the restrictions on the Stock Awards, or on such other terms as the
Committee determines. Dividends that are not paid currently shall be credited to
bookkeeping accounts on the Company’s records for purposes of the Plan.
Accumulated dividends may accrue interest, as determined by the Committee, and
shall be paid in cash, shares of Company Stock, or in such other form as
dividends are paid on Company Stock, as determined by the Committee.

10. Stock Appreciation Rights

(a) General Requirements. The Committee may grant SARs to Employees,
Non-Employee Directors or Consultants separately or in tandem with an Option.
The Committee shall establish the number of shares, the terms and the base
amount of the SAR at the time the SAR is granted. The base amount of each SAR
shall not be less than the Fair Market Value of a share of Company Stock as of
the date of grant of the SAR.

(b) Tandem SARs. The Committee may grant tandem SARs either at the time the
Option is granted or at any time thereafter while the Option remains
outstanding; provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the date of the grant of the Incentive Stock Option.
In the case of tandem SARs, the number of SARs granted to a Participant that
shall be exercisable during a specified period shall not exceed the number of
shares of Company Stock that the Participant may purchase upon the exercise of
the related Option during such period. Upon the exercise of an Option, the SARs
relating to the Company Stock covered by such Option shall terminate. Upon the
exercise of SARs, the related Option shall terminate to the extent of an equal
number of shares of Company Stock.

(c) Exercisability. An SAR shall become exercisable in accordance with such
terms and conditions as may be specified. The Committee may grant SARs that are
subject to achievement of performance goals or other conditions. The Committee
may accelerate the exercisability of any or all outstanding SARs at any time for
any reason. The Committee shall determine in the Grant Agreement under what
circumstances and during what periods a Participant may exercise an SAR after
termination of employment or service. A

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tandem SAR shall be exercisable only while the Option to which it is related is
exercisable. SARs may only be exercised while the Participant is employed by, or
providing services to, the Employer or during the applicable period after
termination of employment as described in Section 7(d).

(d) Grants to Non-Exempt Employees. SARs granted to persons who are non-exempt
employees under the Fair Labor Standards Act of 1938, as amended, may not be
exercisable for at least six months after the date of grant (except that such
SARs may become exercisable, as determined by the Committee, upon the
Participant’s death, Disability or retirement, or upon a Change of Control or
other circumstances permitted by applicable regulations).

(e) Exercise of SARs. When a Participant exercises SARs, the Participant shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised. The stock appreciation for an SAR
is the amount by which the Fair Market Value of the underlying Company Stock on
the date of exercise of the SAR exceeds the base amount of the SAR as specified
in the Grant Agreement.

(f) Form of Payment. The Committee shall determine whether the stock
appreciation for an SAR shall be paid in the form of shares of Company Stock,
cash or a combination of the two. For purposes of calculating the number of
shares of Company Stock to be received, shares of Company Stock shall be valued
at their Fair Market Value on the date of exercise of the SAR. If shares of
Company Stock are to be received upon exercise of an SAR, cash shall be
delivered in lieu of any fractional share.

11. Other Stock-Based Awards

The Committee may grant other awards not specified in Sections 7, 8, 9 or 10
above that are based on or measured by Company Stock to Employees, Non-Employee
Directors or Consultants, on such terms and conditions as the Committee deems
appropriate. Other Stock-Based Awards may be granted subject to achievement of
performance goals or other conditions and may be payable in Company Stock or
cash, or in a combination of the two, as determined by the Committee in the
Grant Agreement.

12. Qualified Performance-Based Compensation

(a) Designation as Qualified Performance-Based Compensation. The Committee may
determine that Stock Units, Stock Awards or Other Stock-Based Awards granted to
an Employee shall be considered “qualified performance-based compensation” under
section 162(m) of the Code, in which case the provisions of this Section 12
shall apply.

(b) Performance Goals. When Grants are made under this Section 12, the Committee
shall establish in writing (i) the objective performance goals that must be met,
(ii) the period during which performance will be measured, (iii) the maximum
amounts that may be paid if the performance goals are met, and (iv) any other
conditions that the Committee deems appropriate and consistent with the
requirements of section 162(m) of the Code for “qualified performance-based
compensation.” The performance goals shall satisfy the requirements for
“qualified performance-based compensation,” including the requirement

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that the achievement of the goals be substantially uncertain at the time they
are established and that the performance goals be established in such a way that
a third party with knowledge of the relevant facts could determine whether and
to what extent the performance goals have been met. The Committee shall not have
discretion to increase the amount of compensation that is payable, but may
reduce the amount of compensation that is payable, pursuant to Grants identified
by the Committee as “qualified performance-based compensation.”

(c) Criteria Used for Objective Performance Goals. The Committee shall use
objectively determinable performance goals based on one or more of the following
criteria: stock price, earnings per share, price-earnings multiples, net
earnings, operating earnings, revenue, number of days sales outstanding in
accounts receivable, productivity, margin, EBITDA (earnings before interest,
taxes, depreciation and amortization), net capital employed, return on assets,
shareholder return, return on equity, return on capital employed, growth in
assets, unit volume, sales, cash flow, market share, relative performance to a
comparison group designated by the Committee, or strategic business criteria
consisting of one or more objectives based on meeting specified revenue goals,
market penetration goals, customer growth, geographic business expansion goals,
cost targets, budgetary goals, regulatory approvals or clearances of products,
regulatory, clinical trial and product development milestones, or goals relating
to acquisitions or divestitures. The performance goals may relate to one or more
business units or the performance of the Company and its subsidiaries as a
whole, or any combination of the foregoing. Performance goals need not be
uniform as among Participants.

(d) Timing of Establishment of Goals. The Committee shall establish the
performance goals in writing either before the beginning of the performance
period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the performance period or (ii) the date on which 25% of the
performance period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code.

(e) Certification of Results. The Committee shall certify the performance
results for the performance period specified in the Grant Agreement after the
performance period ends. The Committee shall determine the amount, if any, to be
paid pursuant to each Grant based on the achievement of the performance goals
and the satisfaction of all other terms of the Grant Agreement.

(f) Death, Disability or Other Circumstances. The Committee may provide in the
Grant Agreement that Grants under this Section 12 shall be payable, in whole or
in part, in the event of the Participant’s death or disability, a Change of
Control or under other circumstances consistent with the Treasury regulations
and rulings under section 162(m) of the Code.

13. Deferrals

The Committee may permit or require a Participant to defer receipt of the
payment of cash or the delivery of shares that would otherwise be due to the
Participant in connection with any Grant. The Committee shall establish rules
and procedures for any such deferrals, consistent with applicable requirements
of section 409A of the Code.

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14. Withholding of Taxes

(a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company may require that the Participant or other person
receiving or exercising Grants pay to the Company the amount of any federal,
state or local taxes that the Company is required to withhold with respect to
such Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.

(b) Election to Withhold Shares. If the Committee so permits, shares of Company
Stock may be withheld to satisfy the Company’s tax withholding obligation with
respect to Grants paid in Company Stock, at the time such Grants become taxable,
up to an amount that does not exceed the minimum applicable withholding tax rate
for federal (including FICA), state and local tax liabilities.

15. Transferability of Grants

(a) Restrictions on Transfer. Except as described in subsection (b) below, only
the Participant may exercise rights under a Grant during the Participant’s
lifetime, and a Participant may not transfer those rights except by will or by
the laws of descent and distribution. When a Participant dies, the personal
representative or other person entitled to succeed to the rights of the
Participant may exercise such rights. Any such successor must furnish proof
satisfactory to the Company of his or her right to receive the Grant under the
Participant’s will or under the applicable laws of descent and distribution.

(b) Transfer of Nonqualified Stock Options to or for Family Members.
Notwithstanding the foregoing, the Committee may provide, in a Grant Agreement,
that a Participant may transfer Nonqualified Stock Options to family members, or
one or more trusts or other entities for the benefit of or owned by family
members, consistent with applicable securities laws, according to such terms as
the Committee may determine; provided that the Participant receives no
consideration for the transfer of a Nonqualified Stock Option and the
transferred Nonqualified Stock Option shall continue to be subject to the same
terms and conditions as were applicable to the Nonqualified Stock Option
immediately before the transfer.

16. Consequences of a Change of Control

(a) In the event of a Change of Control, unless the Committee determines
otherwise: (i) all outstanding Options and SARs shall be fully exercisable, and
restrictions on outstanding Stock Awards and Stock Units shall lapse, as of the
date of the Change of Control or at such other time as the Committee determines,
and (ii) the Committee may require that Participants surrender their outstanding
Options and SARs in exchange for one or more payments by the Company, in cash or
Company Stock as determined by the Committee, in an amount equal to the amount,
if any, by which the then Fair Market Value of the shares of Company Stock
subject to the Participant’s unexercised Options and SARs exceeds the Exercise
Price, and on such terms as the Committee determines.

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(b) In addition, in the event of a Change of Control, the Committee may take any
one or more of the following actions with respect to any or all outstanding
Grants, without the consent of any Participant: (i) after giving Participants an
opportunity to exercise their outstanding Options and SARs, the Committee may
terminate any or all unexercised Options and SARs at such time as the Committee
deems appropriate, (ii) with respect to Participants holding Stock Units and
Other Stock-Based Awards, the Committee may determine that such Participants
shall receive one or more payments in settlement of such Stock Units and Other
Stock-Based Awards, in such amount and form and on such terms as may be
determined by the Committee, or (iii) the Committee may determine that all
outstanding Options and SARs that are not exercised shall be assumed by, or
replaced with comparable options or rights by the surviving corporation (or a
parent or subsidiary of the surviving corporation), and other outstanding Grants
that remain in effect after the Change of Control shall be converted to similar
grants of the surviving corporation (or a parent or subsidiary of the surviving
corporation). Such acceleration, surrender, termination, settlement or
conversion shall take place as of the date of the Change of Control or such
other date as the Committee may specify. The Committee may provide in a Grant
Agreement that a sale or other transaction involving a subsidiary or other
business unit of the Company shall be considered a Change of Control for
purposes of a Grant, or the Committee may establish other provisions that shall
be applicable in the event of a specified transaction.

17. Requirements for Issuance of Shares

No Company Stock shall be issued in connection with any Grant hereunder unless
and until all legal requirements applicable to the issuance of such Company
Stock have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any Grant made to any Participant
hereunder on such Participant’s undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be required
by applicable laws, regulations and interpretations, including any requirement
that a legend be placed thereon. No Participant shall have any right as a
shareholder with respect to Company Stock covered by a Grant until shares have
been issued to the Participant.

18. Amendment and Termination of the Plan

(a) Amendment. The Board may amend or terminate the Plan at any time; provided,
however, that the Board shall not amend the Plan without approval of the
shareholders of the Company if such approval is required in order to comply with
the Code or applicable laws, or to comply with applicable stock exchange
requirements. No amendment or termination of this Plan shall, without the
consent of the Participant, materially impair any rights or obligations under
any Grant previously made to the Participant under the Plan, unless such right
has been reserved in the Plan or the Grant Agreement, or except as provided in

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Section 19(b) below. Notwithstanding anything in the Plan to the contrary, the
Board may amend the Plan in such manner as it deems appropriate in the event of
a change in applicable law or regulations.

(b) No Repricing Without Shareholder Approval. Except for adjustments
contemplated by Section 5(d), the Committee may not reprice Options or SARs, nor
may the Board amend the Plan to permit repricing of Options or SARs, unless the
shareholders of the Company provide prior approval for such repricing.

(c) Shareholder Approval for “Qualified Performance-Based Compensation.” If
Grants are made under Section 12 above, the Plan must be reapproved by the
Company’s shareholders no later than the first shareholders meeting that occurs
in the fifth year following the year in which the shareholders previously
approved the provisions of Section 12, if additional Grants are to be made under
Section 12 and if required by section 162(m) of the Code or the regulations
thereunder.

(d) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its Effective Date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the shareholders. The termination of the Plan shall not impair the power and
authority of the Committee with respect to an outstanding Grant.

19. Miscellaneous

(a) Effective Date. The Plan shall be effective as of the Effective Date.

(b) Grants in Connection with Corporate Transactions and Otherwise. Nothing
contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including Grants to employees thereof
who become Employees, or for other proper corporate purposes, or (ii) limit the
right of the Company to grant stock options or make other stock-based awards
outside of this Plan. Without limiting the foregoing, the Committee may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company in substitution for a grant
made by such corporation. The terms and conditions of the Grants may vary from
the terms and conditions required by the Plan and from those of the substituted
stock incentives, as determined by the Committee

(c) Compliance with Law. The Plan, the exercise of Options and the obligations
of the Company to issue or transfer shares of Company Stock under Grants shall
be subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to persons subject to section
16 of the Exchange Act, it is the intent of the Company that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3
or its successors under the Exchange Act. In addition, it is the intent of the
Company that Incentive Stock Options comply with the applicable provisions of

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section 422 of the Code, that Grants of “qualified performance-based
compensation” comply with the applicable provisions of section 162(m) of the
Code and that, to the extent applicable, Grants comply with the requirements of
section 409A of the Code or an exception from such requirements. To the extent
that any legal requirement of section 16 of the Exchange Act or section 422,
162(m) or 409A of the Code as set forth in the Plan ceases to be required under
section 16 of the Exchange Act or section 422, 162(m) or 409A of the Code, that
Plan provision shall cease to apply. The Committee may revoke any Grant if it is
contrary to law or modify a Grant to bring it into compliance with any valid and
mandatory government regulation. The Committee may also adopt rules regarding
the withholding of taxes on payments to Participants. The Committee may, in its
sole discretion, agree to limit its authority under this Section.

(d) Enforceability. The Plan shall be binding upon and enforceable against the
Company and its successors and assigns.

(e) Funding of the Plan; Limitation on Rights. This Plan shall be unfunded. The
Company shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the payment of any Grants under
this Plan. Nothing contained in the Plan and no action taken pursuant hereto
shall create or be construed to create a fiduciary relationship between the
Company and any Participant or any other person. No Participant or any other
person shall under any circumstances acquire any property interest in any
specific assets of the Company. To the extent that any person acquires a right
to receive payment from the Company hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Company.

(f) Rights of Participants. Nothing in this Plan shall entitle any Employee,
Non-Employee Director or Consultant or other person to any claim or right to
receive a Grant under this Plan. Neither this Plan nor any action taken
hereunder shall be construed as giving any individual any rights to be retained
by or in the employment or service of the Employer.

(g) No Fractional Shares. No fractional shares of Company Stock shall be issued
or delivered pursuant to the Plan or any Grant. The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

(h) Employees Subject to Taxation Outside the United States. With respect to
Participants who are subject to taxation in countries other than the United
States, the Committee may make Grants on such terms and conditions as the
Committee deems appropriate to comply with the laws of the applicable countries,
and the Committee may create such procedures, addenda and subplans and make such
modifications as may be necessary or advisable to comply with such laws.

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