Exhibit 10.4

ICT GROUP, INC.

1996 EQUITY COMPENSATION PLAN

As Amended Through May 20, 2003

The purpose of the ICT Group, Inc. 1996 Equity Compensation Plan (the “Plan”) is
to provide (i) designated officers (including officers who are also directors)
and other employees of ICT Group, Inc. (the “Company”) and its subsidiaries, and
(ii) independent contractors and consultants who perform valuable services for
the Company or its subsidiaries, with the opportunity to receive grants of
incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock or other awards that are valued in whole or part by reference
to, or are otherwise based on, the common stock of the Company (hereinafter
collectively referred to as “Grants”). The Company believes that the Plan will
cause 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.

1. Administration

The Plan shall be administered and interpreted by a committee (the “Committee”),
which shall consist of two or more persons appointed by the Board of Directors
of the Company (the “Board”), all of whom shall be “disinterested persons” as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and “outside directors” as defined under section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”) and related Treasury
regulations.

The Committee shall have the sole authority to (i) determine the individuals to
whom grants shall be made under the Plan, (ii) determine the type, size and
terms of the grants to be made to each such individual, (iii) determine the time
when the grants will be made and the duration of any applicable exercise or
restriction period, including the criteria for vesting and the acceleration of
vesting and (iv) deal with any other matters arising under the Plan.

The Committee shall have full power and 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 interests in the Plan or in any
awards granted hereunder. All powers of the Committee shall be executed in its
sole discretion, in the best interest of the Company and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.

 

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2. Grants

All Grants shall be subject to the terms and conditions set forth herein and to
those other terms and conditions consistent with this Plan as the Committee
deems appropriate and as are specified in writing by the Committee to the
individual (the “Grant Letter”). The Committee shall approve the form and
provisions of each Grant Letter to an individual. Grants under a particular
Section of the Plan need not be uniform as among the grantees.

3. Shares Subject to the Plan

(a) Subject to the adjustment specified below, the aggregate number of shares of
common stock of the Company (the “Company Stock”) that may be issued under the
Plan is 2,220,000 shares. Notwithstanding anything in the Plan to the contrary,
the maximum aggregate number of shares of Company Stock that shall be subject to
Grants made under the Plan to any one individual during any calendar year shall
be 570,000 shares. The shares 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 granted under the Plan terminate, expire, or are cancelled, forfeited,
exchanged or surrendered without having been exercised or if any shares of
restricted stock are forfeited, the shares subject to such Grants shall again be
available for purposes of the Plan.

(b) If there is any change in the number or kind of shares of Company Stock
outstanding by reason of a stock dividend, a recapitalization, stock split, or
combination or exchange of shares, or merger, reorganization or consolidation in
which the Company is the surviving corporation, reclassification or change in
par value or by reason of any other extraordinary or unusual events 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 due to the Company’s payment of an extraordinary dividend
or distribution, the maximum number of shares of Company Stock available for
Grants, the maximum number of shares of Company Stock that may be subject to
Grants to any one individual under the Plan in any calendar year, the number of
shares covered by outstanding Grants, and the price per share or the applicable
market value of such Grants shall be proportionately adjusted by the Committee
to reflect any increase or decrease in the number or kind of issued shares of
Company Stock to preclude the enlargement or dilution of rights and benefits
under such Grants; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated. For purposes of this Section 3(b), “shares
of Company Stock” and “shares” include referenced shares with respect to stock
appreciation rights or other stock-based awards. The adjustments determined by
the Committee shall be final, binding and conclusive. Notwithstanding the
foregoing, no adjustment shall be authorized or made pursuant to this Section to
the extent that such authority or adjustment would cause any incentive stock
option to fail to comply with section 422 of the Code.

 

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4. Eligibility for Participation

All employees of the Company and its subsidiaries (within the meaning of section
424(f) of the Code) (“Employees”) including Employees who are officers or
members of the Board shall be eligible to participate in the Plan. Any
independent contractors or consultants who perform valuable services (other than
consulting services in connection with a capital transaction) for the Company or
any of its subsidiaries (“Consultants”) shall be eligible to participate in the
Plan, but shall not be eligible to receive incentive stock options. The
Committee shall select the Employees and Consultants to receive Grants and
determine the number of shares of Company Stock subject to a particular Grant in
such manner as the Committee determines. (Employees and Consultants who receive
Grants under this Plan shall hereinafter be referred to as “Grantees”.)

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 options granted to employees
thereof who become Employees of the Company, or for other proper corporate
purpose, or (ii) limit the right of the Company to grant stock options or make
other awards outside of this Plan.

5. Granting of Options

(a) Number of Shares. The Committee, in its sole discretion, shall determine the
number of shares of Company Stock that will be subject to each Grant of stock
options to any Employee or Consultant.

(b) Type of Option and Purchase Price. The Committee may grant options intended
to qualify as “incentive stock options” within the meaning of section 422 of the
Code (“Incentive Stock Options”) or options which are not intended to so qualify
(“Nonqualified Stock Options”) or any combination of Incentive Stock Options and
Nonqualified Stock Options (hereinafter collectively the “Stock Options”), all
in accordance with the terms and conditions set forth herein.

The purchase price of Company Stock subject to a Stock Option shall be
determined by the Committee and may be equal to, greater than, or less than the
Fair Market Value (as defined below) of a share of such Stock on the date such
Stock Option is granted; provided, however, that the purchase price of Company
Stock subject to an Incentive Stock Option shall be equal to, or greater than,
the Fair Market Value of a share of such Stock on the date such Stock Option is
granted.

If the Company Stock is traded in a public market, then the Fair Market Value
per share shall be, if the principal trading market for the Company Stock is a
national securities exchange or the Nasdaq National Market, the last reported
sale price thereof on the relevant date or (if there

 

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were no trades on that date) the latest preceding date upon which a sale was
reported, or, if the Company Stock is not principally traded on such exchange or
market, the mean between the last reported “bid” and “asked” prices thereof on
the relevant date, as reported on NASDAQ or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee determines. If
the Company Stock is not traded in a public market or subject to reported
transactions or “bid” or “ask” quotations as set forth above, the Fair Market
Value per share shall be as determined by the Committee.

(c) Option Term. The Committee shall determine the term of each Stock Option.
The term of any Stock Option shall not exceed ten years from the date of grant.

(d) Exercisability of Options. Stock Options shall become exercisable in
accordance with the terms and conditions determined by the Committee, in its
sole discretion, and specified in the Grant Letter. The Committee, in its sole
discretion, may accelerate the exercisability of any or all outstanding Stock
Option, at any time for any reason.

(e) Manner of Exercise. A Grantee may exercise a Stock Option which has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Committee with accompanying payment of the purchase price in accordance with
Subsection (g) below. Such notice may instruct the Company to deliver shares of
Company Stock due upon the exercise of the Stock Option to any registered broker
or dealer designated by the Committee (“Designated Broker”) in lieu of delivery
to the Grantee. Such instructions must designate the account into which the
shares are to be deposited. The Grantee may tender a notice of exercise, which
has been properly executed by the Grantee and the aforementioned delivery
instructions to any Designated Broker.

(f) Termination of Employment, Disability or Death.

(i) In the event that a Grantee ceases to be an Employee or Consultant, as the
case may be, of the Company for any reason other than a “disability,” death, or
“termination for cause,” any Stock Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within 90 days of the date on which the
Grantee ceases to be an Employee or Consultant of the Company (or within such
other period of time as may be specified in the Grant Letter), but in any event
no later than the date of expiration of the option term. Any of the Grantee’s
Stock Options which are not otherwise exercisable as of the date on which the
Grantee ceases to be an Employee or Consultant of the Company shall terminate as
of such date.

(ii) In the event the Grantee ceases to be an Employee or Consultant of the
Company on account of a “termination for cause” by the Company, any Stock Option
held by the Grantee shall terminate as of the date the Grantee ceases to be an
Employee or Consultant of the Company.

 

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(iii) In the event the Grantee ceases to be an Employee or Consultant of the
Company because the Grantee is “disabled”, any Stock Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within one year of
the date on which the Grantee ceases to be an Employee or Consultant of the
Company (or within such other period of time as may be specified in the Grant
Letter), but in any event no later than the date of expiration of the option
term. Any of the Grantee’s Stock Options which are not otherwise exercisable as
of the date on which the Grantee ceases to be an Employee or Consultant shall
terminate as of such date.

(iv) In the event of the death of the Grantee while the Grantee is an Employee
or Consultant of the Company or within not more than 90 days of the date on
which the Grantee ceases to be an Employee or Consultant of the Company on
account of a termination of employment specified in Section 5(f)(i) of the Plan
(or within such other period of time as may be specified in the Grant Letter),
any Stock Option which is otherwise exercisable by the Grantee shall terminate
unless exercised within one year of the date on which the Grantee ceases to be
an Employee or Consultant of the Company (or within such other period of time as
may be specified in the Grant Letter), but in any event no later than the date
of expiration of the option term. Any of the Grantee’s Stock Options which are
not otherwise exercisable as of the date on which the Grantee ceases to be an
Employee or Consultant shall terminate as of such date.

(v) For purposes of this Section 5(f), the term “Company” shall include the
Company’s subsidiaries (within the meaning of section 424(f) of the Code) and
the following terms shall be defined as follows: (A) “disability” shall mean a
Grantee’s becoming disabled within the meaning of section 22(e)(3) of the Code
and (B) “termination for cause” shall mean, except to the extent otherwise
provided in a Grantee’s Grant Letter, a finding by the Committee, after full
consideration of the facts presented on behalf of both the Company and the
Grantee, that the Grantee has breached his or her employment or service contract
with the Company, or has been engaged in disloyalty to the Company, 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 Company. In such event, in
addition to the immediate termination of the Stock Option, the Grantee shall
automatically forfeit all option shares for any exercised portion of a Stock
Option for which the Company has not yet delivered the share certificates upon
refund by the Company of the purchase price.

(g) Satisfaction of Purchase Price. The Grantee shall pay the purchase price
specified in the Grant Letter in (i) cash, (ii) with the approval of the
Committee, by delivering shares of Company Stock owned by the Grantee (including
Company Stock acquired in connection with the exercise of a Stock Option,
subject to such restrictions as the Committee deems appropriate) and having a
Fair Market Value on the date of exercise equal to the purchase price or
(iii) through any combination of (i) and (ii). The Grantee shall pay the
purchase price and the amount of withholding tax due, if any, at the time of
exercise. Shares of Company Stock shall not be issued upon exercise of a Stock
Option until the purchase price is fully paid and any required withholding is
made.

 

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(h) Rule 16b-3 Restrictions. Unless a Grantee who is an “insider,” as defined
under Section 16 of the Exchange Act, could otherwise transfer Company Stock
issued pursuant to a Stock Option without incurring liability under
Section 16(b) of the Exchange Act, at least six months must elapse from the date
of acquisition of a Stock Option by such a Grantee to the date of disposition of
the Company Stock issued upon exercise of such option.

(i) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide
that, to the extent that the aggregate Fair Market Value of the Company Stock on
the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year under the
Plan or any other stock option plan of the Company exceeds $100,000, then such
option as to the excess shall be treated as a Nonqualified Stock Option. An
Incentive Stock Option shall not be granted to any participant who is not an
Employee of the Company or any “subsidiary” (within the meaning of section
424(f) of the Code). An Incentive Stock Option shall not be granted to any
Employee who, at the time of grant, owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company or any
“parent” or “subsidiary” of the Company (within the meaning of section 424(f) of
the Code), unless the purchase price per share is not less than 110% of the Fair
Market Value of Company Stock on the date of grant and the option exercise
period is not more than five years from the date of grant.

6. Restricted Stock Grants

The Committee may issue or transfer shares of Company Stock to any Employee or
Consultant under a Grant (a “Restricted Stock Grant”), upon such terms as the
Committee deems appropriate. The following provisions are applicable to
Restricted Stock Grants:

(a) General Requirements. Shares of Company Stock issued pursuant to Restricted
Stock Grants may be issued for cash consideration or for no cash consideration,
at the sole discretion of the Committee. The Committee shall establish
conditions under which restrictions on the transfer of shares of Company Stock
shall lapse over a period of time or according to such other criteria as the
Committee deems appropriate (including such performance goals as the Committee
may establish). The period of years during which the Restricted Stock Grant will
remain subject to restrictions will be designated in the Grant Letter as the
“Restriction Period.”

(b) Number of Shares. The Committee shall grant to each Grantee a number of
shares of Company Stock pursuant to a Restricted Stock Grant in such manner as
the Committee determines.

(c) Termination of Employment or Services. If the Grantee’s employment or
service with the Company and its subsidiaries terminates during a period
designated in the Grant Letter as the Restriction Period, or if other specified
conditions are not met, the Restricted Stock Grant

 

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shall terminate as to all shares covered by the Grant as to which restrictions
on transfer have not lapsed and any such shares of Company Stock must be
immediately returned to the Company. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems equitable.

(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Company Stock to which such Restriction
Period applies except to a Successor Grantee under Section 9. The Committee, at
its sole discretion, may determine that the Company not issue certificates for
any shares subject to a Restricted Stock Grant or that the Company retain
possession of certificates for any shares issued pursuant to a Restricted Stock
Grant, until all restrictions on such shares have lapsed. Each certificate for a
share issued under a Restricted Stock Grant shall contain a legend giving
appropriate notice of the applicable restrictions in the Grant. The Grantee
shall be entitled to receive a stock certificate or certificates, or have the
legend removed from the stock certificate or certificates covering any of the
shares subject to restrictions, as applicable, when all restrictions on such
shares have lapsed.

(e) Right to Vote and to Receive Dividends. During the Restriction Period,
unless the Committee determines otherwise, the Grantee shall have the right to
vote, subject to the terms of Section 17, any shares subject to the Restricted
Stock Grant and the right to receive any dividends paid on such shares, subject
to such restrictions as the Committee deems appropriate.

(f) Lapse of Restrictions. All restrictions imposed under the Restricted Stock
Grant shall lapse upon the expiration of the applicable Restriction Period and
the satisfaction of any conditions imposed by the Committee. The Committee may
determine, as to any or all Restricted Stock Grants, that all the restrictions
shall lapse without regard to any Restriction Period.

7. Stock Appreciation Rights

(a) General Requirements. The Committee may grant stock appreciation rights
(“SARs”) to any Employee or Consultant, separately or in tandem with any Stock
Option (for all or a portion of the applicable Stock Option). With respect to
tandem SARs, such SARs may be granted either at the time the Stock Option is
granted or at any time thereafter while the Stock Option remains outstanding;
provided, however, that in the case of an Incentive Stock Option, such rights
may be granted only at the time of the Grant of such Stock Option. Unless the
Committee determines otherwise, the base amount of each SAR shall be equal to
the per share purchase price of the related Stock Option, if any, or if there is
not related Stock Option, the Fair Market Value of a share of Company Stock as
of the date of Grant of such SAR.

(b) Stock Options Terminate. Upon the exercise of a Stock Option, the SARs
relating to the Company Stock covered by such Stock Option, if any, shall
terminate. Upon the exercise of SARs, the related Stock Option, if any, shall
terminate to the extent of an equal number of shares of Company Stock.

 

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(c) Value of SARs. Upon a Grantee’s exercise of some or all of the Grantee’s
SARs, the Grantee shall receive in settlement of such SARs an amount equal to
the value of the stock appreciation for the number of SARs exercised, payable in
cash, Company Stock or a combination thereof. The stock appreciation for an SAR
is the amount by which (i) the Fair Market Value of the underlying Company Stock
on the date of exercise of such SAR exceeds (ii) the base amount of the SAR as
described in subsection (a).

(d) Form of Payment. At the time of such exercise, the Grantee shall have the
right to elect the portion of the amount to be received that shall consist of
cash and the portion that shall consist of Common Stock, which for purposes of
calculating the number of shares of Company Stock to be received, shall be
valued at their Fair Market Value on the date of exercise of such SARs. The
Committee shall have the right to disapprove a Grantee’s election to receive
cash in full or partial settlement of the SARs exercised and to require that
shares of Company Stock be delivered in lieu of cash. If shares of Company Stock
are to be received upon exercise of an SAR, cash shall be delivered in lieu of
any fractional share.

(e) Certain Restrictions. An SAR is exercisable during the period specified by
the Committee in the Grant Letter, provided that a tandem SAR is only
exercisable during the period when the Stock Option to which it is related is
also exercisable. No SAR may be exercised for cash by an officer or director of
the Company subject to Section 16 of the Exchange Act, in whole or in part,
except in accordance with Rule 16b-3 under the Exchange Act.

8. Stock-Based Awards.

The Committee is authorized, subject to limitations under applicable law, to
grant to any Employee or Consultant awards of Company Stock or cash awards
valued in whole or in part by reference to, or otherwise based on, Company
Stock. Such awards may be made subject to such conditions and restrictions, if
any, as the Committee may determine in its sole discretion, including the
achievement of such corporate or individual performance goals as the Committee
may establish.

9. Transferability of Grants

Only the Grantee or his or her authorized representative may exercise rights
under a Grant. Such persons may not transfer those rights except by will or by
the laws of descent and distribution or, with respect to Grants other than
Incentive Stock Options, if permitted by Rule 16b-3 under the Exchange Act and
if permitted in any specific case by the Committee in its sole discretion,
pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended or
the regulations thereunder. When a Grantee dies, the representative or other
person entitled to succeed to the

 

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rights of the Grantee (“Successor Grantee”) may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee’s will or under the applicable laws
of descent and distribution.

10. Change of Control of the Company

As used herein, a “Change of Control” shall be deemed to have occurred if:

(a) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the voting power of the then outstanding securities
of the Company;

(b) The stockholders of the Company approve an agreement providing for (i) the
merger or consolidation of the Company with another corporation where the
stockholders of the Company, immediately prior to the merger or consolidation,
would not beneficially own, immediately after the merger or consolidation,
shares entitling such stockholders to 30% or more of all votes (without
consideration of the rights of any class of stock to elect directors by a
separate class vote) to which all stockholders of the surviving corporation
would be entitled in the election of directors or where the members of the
Board, immediately prior to the merger or consolidation, would not, immediately
after the merger or consolidation, constitute a majority of the Board of the
surviving corporation or (ii) the sale or other disposition of all or
substantially all the assets of the Company, or a liquidation, dissolution or
statutory exchange of the Company;

(c) Any person has commenced, or announced an intention to commence, a tender
offer or exchange offer for 40% or more of the voting power of the then
outstanding securities of the Company; or

(d) During any period of two consecutive calendar years there is a change of 25%
or more in the composition of the Board in office at the beginning of the period
except for changes approved by at least two-thirds of the directors then in
office who were directors at the beginning of the period.

11. Consequences of a Change of Control

(a) Upon a Change of Control (i) the Company shall provide each Grantee with
outstanding Grants written notice of such Change of Control, (ii) all
outstanding Stock Options and SARs shall automatically accelerate and become
fully exercisable, (iii) the restrictions and conditions on all outstanding
Restricted Stock and any stock-based awards made pursuant to Section 8 shall
immediately lapse.

(b) In addition, upon a Change of Control described in Section 10(b)(i) where
the Company is not the surviving corporation (or survives only as a subsidiary
of another corporation), all outstanding Stock Options and SARs shall be assumed
or replaced with comparable options or rights by the surviving corporation.

 

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(c) Notwithstanding the foregoing, in the event of a Change of Control, the
Committee may take either or both of the following actions: (i) require that
Grantees surrender their outstanding Stock Options and SARs in exchange for a
payment by the Company, in cash or Company Stock as determined by the Committee,
in an amount equal to the amount by which the then Fair Market Value of the
shares of Company Stock subject to the Grantee’s outstanding Stock Options or
SARs exceeds the option purchase price of the Stock Options or base amount of
the SARs, as the case may be or (ii) terminate any or all outstanding Stock
Options or SARs at such time as the Committee deems appropriate. Any such
surrender shall take place as of the date of the Change of Control or such other
date as the Committee may specify, and, in the case of a Stock Option or SAR
held by a Grantee who is subject to Section 16(b) of the Exchange Act, any such
surrender or payment shall be made on such date as the Committee shall determine
consistent with Rule 16b-3 under the Exchange Act. The Committee shall not have
the right to take the actions described in this Subsection (c) if such right
would make the applicable Change of Control ineligible for pooling of interest
accounting treatment under APB No. 16 or make such Change of Control ineligible
for desired tax treatment with respect to such Change of Control and, but for
this provision, the Change of Control would otherwise qualify for and the
Company intends to use such treatment.

12. Amendment and Termination of the Plan

(a) Amendment. The Board may amend or terminate the Plan at any time; provided,
however, that any amendment that increases the aggregate number (or individual
limit for any single Grantee) of shares of Company Stock that may be issued
under the Plan (other than by operation of Section 3(b)), or modifies the
requirements as to eligibility for participation in the Plan, shall be subject
to approval by the shareholders of the Company and provided, further, that the
Board shall not amend the Plan without shareholder approval if such approval is
required by Rule 16b-3 of the Exchange Act or Section 162(m) of the Code.

(b) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date unless terminated earlier
by the Board or unless extended by the Board with the approval of the
shareholders.

(c) Termination and Amendment of Outstanding Grants. A termination or amendment
of the Plan that occurs after a Grant is made shall not materially impair the
rights of a Grantee unless the Grantee consents or unless the Committee acts
under Section 20(b) hereof. The termination of the Plan shall not impair the
power and authority of the Committee with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 20(b) hereof or may be amended by agreement of the
Company and the Grantee consistent with the Plan.

 

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(d) Governing Document. The Plan shall be the controlling document. No other
statements, representations, explanatory materials or examples, oral or written,
may amend the Plan in any manner. The Plan shall be binding upon and enforceable
against the Company and its successors and assigns.

13. Funding of the Plan

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. In no event shall interest be paid or
accrued on any Grant, including unpaid installments of Grants.

14. Rights of Participants

Nothing in this Plan shall entitle any Employee, Consultant or other person to
any claim or right to be granted 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 employ or service of the Company or any
other employment rights.

15. 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.

16. Withholding of Taxes

(a) Grantees may make an election to satisfy the Company income tax withholding
obligation with respect to a Stock Option, SAR, Restricted Stock Grant or other
award by having shares withheld up to an amount that does not exceed the
Grantee’s maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. Such election must be in the form and manner prescribed
by the Committee and is subject to the prior approval of the Committee. If the
Grantee is a director or officer (within the meaning of Rule 16a-1(f)
promulgated under the Exchange Act), if required under Rule 16b-3, such election
must be irrevocable and must be made six months prior to the date on which the
Stock Option is exercised or all the restrictions lapse with respect to such
shares.

(b) The Company shall have the right to deduct from all Grants paid in cash, or
from other wages paid to an employee of the Company, any federal, state or local
taxes required by law to be withheld with respect to such cash awards and, in
the case of Grants paid in Company Stock, the Grantee or other person receiving
such shares shall be required to pay to the Company the amount of any such taxes
which the Company is required to withhold with respect to such Grants or the
Company shall have the right to deduct from other wages paid to the employee by
the Company the amount of any withholding due with respect to such Grants.

 

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17. Voting Trust; Conditions and Requirements for Issuance of Shares

Unless the Committee determines otherwise, all Grants hereunder shall be
contingent upon the Grantee entering a voting trust agreement with respect to
shares issued pursuant to such Grant, if any, in the form and manner prescribed
by the Committee, and no shares of Company Stock shall be issued in connection
with any Grant hereunder unless the Grantee participates in such voting trust.

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 Grantee
hereunder on such Grantee’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 as a result of any
applicable law, regulation or official interpretation thereof 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 applicable
under such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.

18 Headings

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

19 Effective Date of the Plan.

The Plan was originally effective on May 8, 1996. The amendment and restatement
of the Plan was effective as of May 24, 2000 and subsequently amended as of
March, 2003.

20 Miscellaneous

(a) Substitute Grants. 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 or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation (“Substituted Stock
Incentives”). The terms and conditions of the substitute grant may vary from the
terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the substitute
grants.

 

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(b) Compliance with Law. The Plan, the exercise of Stock 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. 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 Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.

(c) Ownership of Stock. Except as otherwise provided by the Committee, a Grantee
or Successor Grantee shall have no rights as a shareholder with respect to any
shares of Company Stock covered by a Grant until the shares are issued to the
Grantee or Successor Grantee on the stock transfer records of the Company.

(d) Governing Law. The validity, construction, interpretation and effect of the
Plan and Grant Letters issued under the Plan shall exclusively be governed by
and determined in accordance with the law of the Commonwealth of Pennsylvania.

 

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