**Exhibit 10.1**

 

**MOTHERSWORK, INC.**

 

**2005EQUITY INCENTIVE PLAN**

 

# **SECTION 1.         Purpose; Definitions.**Thepurposes of the Mothers Work, Inc. 2005 Equity Incentive Plan (the “Plan”)are to: (a) enable Mothers Work, Inc. (the “Company”) and itsaffiliated companies to recruit and retain highly qualified personnel;(b) provide those personnel with an incentive for productivity; and(c) provide those personnel with an opportunity to share in the growth andvalue of the Company.

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For purposesof the Plan, the following terms will have the meanings defined below, unlessthe context clearly requires a different meaning:

 

## ( )    “Affiliate”means, with respect to a Person, a Person that directly or indirectly controls,is controlled by, or is under common control with such Person.

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## ( )    “Award”means an award of Options, SARs, Restricted Stock or Restricted Stock Unitsmade under this Plan.

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## ( )    “AwardAgreement” means, with respect to any particular Award, the writtendocument that sets forth the terms of that particular Award.

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## ( )    “Board”means the Board of Directors of the Company, as constituted from time to time; *provided, however*, that if the Board appoints a Committee toperform some or all of the Board’s administrative functions hereunder,references to the “Board” will be deemed to also refer to that Committee inconnection with matters to be performed by that Committee.

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## (a)   “Cause”means (i) conviction of, or the entry of a plea of guilty or no contestto, a felony or any other crime that causes the Company or its Affiliatespublic disgrace or disrepute, or adversely affects the Company’s or itsAffiliates’ operations or financial performance, (ii) gross negligence orwillful misconduct with respect to the Company or any of its Affiliates,including, without limitation fraud, embezzlement, theft or proven dishonestyin the course of employment; (iii) alcohol abuse or use of controlleddrugs other than in accordance with a physician’s prescription; or(iv) material breach of any agreement with or duty owed to the Company orany of its Affiliates. Notwithstanding the foregoing, if a Participant and theCompany (or any of its Affiliates) have entered into an employment agreement,consulting agreement or other similar agreement that specifically defines “cause,”then with respect to such Participant, “Cause” shall have the meaning definedin that employment agreement, consulting agreement or other agreement.

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## (b)   “Changein Control” means the occurrence of any of the following, in onetransaction or a series of related transactions: (i) any “person” (as such termis used in Sections 13(d) and 14(d) of the Exchange Act) becoming a “beneficialowner” (as defined in Rule 13d-3 under the Exchange Act), directly orindirectly, of securities of the Company representing more than 50% of thevoting power of 

 

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## the Company’s then outstanding securities; (ii) a consolidation, share exchange,reorganization or merger of the Company resulting in the stockholders of theCompany immediately prior to such event not owning at least a majority of thevoting power of the resulting entity’s securities outstanding immediatelyfollowing such event; (iii) the sale or other disposition of all orsubstantially all the assets of the Company, (iv) a liquidation or dissolutionof the Company, or (v) any similar event deemed by the Board to constitute aChange in Control for purposes of this Plan.

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## (c)   “Code”means the Internal Revenue Code of 1986, as amended from time to time, and anysuccessor thereto.

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## (d)   “Committee”means a committee appointed by the Board in accordance with Section 2 ofthe Plan.

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## (e)   “Director”means a member of the Board.

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## (f)    “Disability”means a condition rendering a Participant Disabled.

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## (g)   “Disabled”will have the same meaning as set forth in Section 22(e)(3) of the Code.

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## (h)   “ExchangeAct” means the Securities Exchange Act of 1934, as amended.

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## (i)    “FairMarket Value” means, as of any date: (i) if the Shares are not thenpublicly traded, the value of such Shares on that date, as determined by theBoard in its sole and absolute discretion; or (ii) if the Shares arepublicly traded, the closing price for a Share on the principal nationalsecurities exchange on which the Shares are listed or admitted to trading or,if the Shares are not listed or admitted to trading on any national securitiesexchange, but are traded in the over-the-counter market, the closing sale priceof a Share or, if no sale is publicly reported, the average of the closing bidand asked quotations for a Share, as reported by The Nasdaq Stock Market, Inc. (“Nasdaq”)or any comparable system or, if the Common Stock is not listed on Nasdaq or acomparable system, the closing sale price of a Share or, if no sale is publiclyreported, the average of the closing bid and asked prices, as furnished by twomembers of the National Association of Securities Dealers, Inc. who make amarket in the Common Stock selected from time to time by the Company for thatpurpose.

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## (j)    “IncentiveStock Option” means any Option intended to be an “Incentive Stock Option”within the meaning of Section 422 of the Code.

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## (k)   “Non-EmployeeDirector” will have the meaning set forth in Rule 16b-3(b)(3)(i)promulgated by the Securities and Exchange Commission under the Exchange Act,or any successor definition adopted by the Securities and Exchange Commission; *provided, however*, that the Board or the Committee may, tothe extent that it deems necessary to comply with Section 162(m) of theCode or regulations thereunder, require that each “Non-Employee Director” alsobe an “outside director” as that term is defined in regulations underSection 162(m) of the Code.

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## (l)    “Non-QualifiedStock Option” means any Option that is not an Incentive Stock Option.

 

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## (m)  “Option”means any option to purchase Shares (including Restricted Stock, if the Boardso determines) granted pursuant to Section 5 hereof.

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## (n)   “Parent”means, in respect of the Company, a “parent corporation” as defined inSections 424(e) of the Code

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## (o)   “Participant”means an employee, consultant, Director, or other service provider of or to theCompany or any of its respective Affiliates to whom an Award is granted.

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## (p)   “Person”means an individual, partnership, corporation, limited liability company,trust, joint venture, unincorporated association, or other entity orassociation.

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## (q)   “RestrictedStock” means Shares that are subject to restrictions pursuant to Section8 hereof.

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## (r)    “Restricted Stock Unit” means a right granted under and subject to restrictions pursuant to Section8 hereof.

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## (s)   “SAR” means a stock appreciation rightgranted under the Plan and described in Section 6 hereof.

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## (t)    “Shares”means shares of the Company’s common stock, par value $.01, subject tosubstitution or adjustment as provided in Section 3(c) hereof.

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## (u)   “Subsidiary”means, in respect of the Company, a subsidiary company as defined inSections 424(f) and (g) of the Code.

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# **SECTION 2.         Administration.**The Plan will be administered by the Board; *provided, however*, that the Board may at any time appoint aCommittee to perform some or all of the Board’s administrative functionshereunder;*and provided further*, that theauthority of any Committee appointed pursuant to this Section 2 will besubject to such terms and conditions as the Board may prescribe and will becoextensive with, and not in lieu of, the authority of the Board hereunder.

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Subject to therequirements of the Company’s by-laws and certificate of incorporation anyother agreement that governs the appointment of Board committees, any Committeeestablished under this Section 2 will be composed of not fewer than twomembers, each of whom will serve for such period of time as the Boarddetermines; *provided, however*,that if the Company has a class of securities required to be registered underSection 12 of the Exchange Act, all members of any Committee establishedpursuant to this Section 2 will be Non-Employee Directors. From time totime the Board may increase the size of the Committee and appoint additionalmembers thereto, remove members (with or without cause) and appoint new membersin substitution therefor, fill vacancies however caused, or remove all membersof the Committee and thereafter directly administer the Plan.

 

The Board willhave full authority to grant Awards under this Plan and determine the terms ofsuch Awards. Such authority will include the right to:

 

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## (a)   select thepersons to whom Awards are granted (consistent with the eligibility conditionsset forth in Section 4);

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## (b)   determinethe type of Award to be granted;

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## (c)   determinethe number of Shares, if any, to be covered by each Award;

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## (d)   establishthe vesting or forfeiture terms of each Award;

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## (e)   determinewhether and under what circumstances an Option may be exercised without apayment of cash under Section 5(d); and

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## (f)    determinewhether, to what extent and under what circumstances Shares and other amountspayable with respect to an Award may be deferred either automatically or at theelection of the Participant.

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The Board willhave the authority to adopt, alter and repeal such administrative rules,guidelines and practices governing the Plan as it, from time to time, deemsadvisable; to establish the terms and form of each Award Agreement; tointerpret the terms and provisions of the Plan and any Award issued under thePlan (and any Award Agreement); and to otherwise supervise the administrationof the Plan. The Board may correct any defect, supply any omission or reconcileany inconsistency in the Plan or in any Award Agreement in the manner and tothe extent it deems necessary to carry out the intent of the Plan.

 

All decisionsmade by the Board pursuant to the provisions of the Plan will be final andbinding on all persons, including the Company and Participants. No Directorwill be liable for any good faith determination, act or omission in connectionwith the Plan or any Award.

 

# **SECTION 3.         Shares Subject to the Plan**.

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## (a)   SharesSubject to the Plan. The Shares to be subject to or related to Awards underthe Plan will be authorized and unissued Shares of the Company, whether or notpreviously issued and subsequently acquired by the Company. The maximum numberof Shares that may be issued in respect of Awards under the Plan is 500,000. TheCompany will reserve for the purposes of the Plan, out of its authorized andunissued Shares, such number of Shares. Notwithstanding the foregoing, noindividual may granted Options or SARs with respect to more than 200,000 Sharesin any calendar year. In addition, not more than 250,000 Shares will be issuedhereunder in respect of Restricted Stock or Restricted Stock Units

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## (b)   Effectof the Expiration or Termination of Awards. If and to the extent that anOption or SAR expires, terminates or is canceled or forfeited for any reasonwithout having been exercised in full, the Shares associated with that Optionor SAR will again become available for grant under the Plan. Similarly, if andto the extent an Award of Restricted Stock or Restricted Stock Unit iscanceled, forfeited or repurchased for any reason, the Shares subject to thatAward will again become available for grant under the Plan. In addition, if anyShare is withheld pursuant to Section 11(e) in settlement of a taxwithholding obligation associated with an Award, that Share will again becomeavailable for grant under the Plan.

 

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## (c)   OtherAdjustment. In the event of any recapitalization, stock split orcombination, stock dividend or other similar event or transaction affecting theShares, equitable substitutions or adjustments may be made by****the Board, in its sole and absolute discretion: (i) tothe aggregate number, class and/or issuer of the securities reserved forissuance under the Plan; (ii) to the number, class and/or issuer ofsecurities subject to outstanding Awards; and (iii) to the exercise priceof outstanding Options or SARs.

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## (d)   Changein Control. Notwithstanding anything to the contrary set forth in the Plan,upon or in anticipation of any Change in Control, the Board may, in its soleand absolute discretion and without the need for the consent of anyParticipant, take one or more of the following actions contingent upon theoccurrence of that Change in Control: (i) cause any or all outstanding Optionsor SARs to become vested and/or immediately exercisable, in whole or in part;(ii) cause any or all outstanding Restricted Stock or Restricted Stock Units****to become non-forfeitable, in whole or inpart; (iii) cancel any Option in exchange for a substitute option in a mannerconsistent with the requirements of Treas. Reg. §1.424-1(a)(notwithstanding the fact that the original Option may never have been intendedto satisfy the requirements for treatment as an Incentive Stock Option); (iv)cancel any Restricted Stock, Restricted Stock Units or SAR in exchange forrestricted stock, restricted stock units or stock appreciation rights inrespect of the capital stock of any successor corporation or its parent; (v)cancel any Option or SAR in exchange for cash and/or other substituteconsideration with a value equal to (A) the number of Shares subject to thatOption or SAR, multiplied by (B) the difference, if any, between the FairMarket Value per Share on the date of the Change in Control and the exerciseprice of that Option or SAR; *provided,*thatif the Fair Market Value per Share on the date of the Change in Control doesnot exceed the exercise price of any such Option or SAR, the Board may cancelthat Option or SAR without any payment of consideration therefor; or (vi)cancel any Restricted Stock Unit in exchange for cash and/or other substituteconsideration with a value equal to the Fair Market Value per Share on the dateof the Change in Control. In the discretion of the Board, any cash orsubstitute consideration payable upon cancellation of an Award may be subjectedto vesting terms substantially identical to those that applied to the cancelledAward immediately prior to the Change in Control.

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# **SECTION 4.         Eligibility.**Employees,Directors, consultants, and other individuals who provide services to theCompany or its Affiliates are eligible to be granted Awards under the Plan;*provided, however*, that only employees ofthe Company, its Parent or a Subsidiary are eligible to be granted IncentiveStock Options.

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# **SECTION 5.         Options.**Optionsgranted under the Plan may be of two types: (i) Incentive Stock Options or(ii) Non-Qualified Stock Options. Any Option granted under the Plan willbe in such form as the Board may at the time of such grant approve. Withoutlimiting the generality of Section 3(a), any or all of the Sharesreserved for issuance under Section 3(a) may be issued in respect ofIncentive Stock Options.

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The AwardAgreement evidencing any Option will incorporate the following terms andconditions and will contain such additional terms and conditions, notinconsistent with the terms of the Plan, as the Board deems appropriate in itssole and absolute discretion:

 

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## (a)   OptionPrice. The exercise price per Share purchasable under any Option will bedetermined by the Board and will not be less than 100% of the Fair Market Valueper Share on the date of the grant. However, any Incentive Stock Option grantedto any Participant who, at the time the Option is granted, owns more than 10%of the voting power of all classes of shares of the Company, its Parent or aSubsidiary will have an exercise price per Share of not less than 110% of FairMarket Value per Share on the date of the grant.

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## (b)   OptionTerm. The term of each Option will be fixed by the Board, but no Optionwill be exercisable more than 10 years after the date the Option is granted. However,any Incentive Stock Option granted to any Participant who, at the time suchOption is granted, owns more than 10% of the voting power of all classes ofshares of the Company, its Parent or a Subsidiary may not have a term of morethan five years. No Option may be exercised by any person after expiration ofthe term of the Option.

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## (c)   Exercisability.Options will vest and be exercisable at such time or times and subject to suchterms and conditions as determined by the Board.

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## (d)   Methodof Exercise. Subject to the terms of the applicable Award Agreement, theexercisability provisions of Section 5(c) and the termination provisionsof Section 7, Options may be exercised in whole or in part from time totime during their term by the delivery of written notice to the Companyspecifying the number of Shares to be purchased. Such notice will beaccompanied by payment in full of the purchase price, either by certified orbank check, or such other means as the Board may accept. As determined by theBoard, in its sole discretion, payment of the exercise price of an Option maybe made in the form of previously acquired Shares based on the Fair MarketValue of the Shares on the date the Option is exercised; *provided,however*, that, in the case of an Incentive Stock Option, the rightto make a payment in the form of previously acquired Shares may be authorizedonly at the time the Option is granted.

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No Shares willbe issued upon exercise of an Option until full payment therefor has been made.A Participant will not have the right to distributions or dividends or anyother rights of a stockholder with respect to Shares subject to the Optionuntil the Participant has given written notice of exercise, has paid in fullfor such Shares, if requested, has given the representation described in Section11(a) hereof and fulfills such other conditions as may be set forth in theapplicable Award Agreement.

 

## (e)   IncentiveStock Option Limitations. In the case of an Incentive Stock Option, theaggregate Fair Market Value (determined as of the time of grant) of the Shareswith respect to which Incentive Stock Options are exercisable for the firsttime by the Participant during any calendar year under the Plan and/or anyother plan of the Company, its Parent or any Subsidiary will not exceed$100,000. For purposes of applying the foregoing limitation, Incentive StockOptions will be taken into account in the order granted. To the extent anyOption does not meet such limitation, that Option will be treated for allpurposes as a Non-Qualified Stock Option.

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## (f)    Terminationof Service. Unless otherwise specified in the applicable Award Agreement,Options will be subject to the terms of Section 7 with respect toexercise upon or following termination of employment or other service.

 

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## (g)   Transferabilityof Options. Except as may otherwise be specifically determined by the Boardwith respect to a particular Option: (i) no Option will be transferable by theParticipant other than by will or by the laws of descent and distribution, and(ii) during the Participant’s lifetime, an Option will be exercisable only bythe Participant (or, in the event of the Participant’s Disability, by hispersonal representative).

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# **SECTION 6.         StockAppreciation Rights.**

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## (a)   Natureof Award. Upon the exercise of a SAR, its holder will be entitled toreceive an amount equal to the excess (if any) of: (i) the Fair MarketValue of the Shares covered by such SAR as of the date such SAR is exercised,over (ii) the Fair Market Value of the Shares covered by such SAR as ofthe date such SAR was granted. Such amount may be paid in either cash and/orShares, as determined by the Board in its sole and absolute discretion.

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## (b)   Termsand Conditions. The Award Agreement evidencing any SAR will incorporate thefollowing terms and conditions and will contain such additional terms andconditions, not inconsistent with the terms of the Plan, as the Board deemsappropriate in its sole and absolute discretion:

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### (i)            Termof SAR. Unless otherwise specified in the Award Agreement, the term of aSAR will be ten years.

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### (ii)           Exercisability.SARs will vest and become exercisable at such time or times and subject to suchterms and conditions as will be determined by the Board at the time of grant.

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### (iii)          Methodof Exercise. Subject to terms of the applicable Award Agreement, theexercisability provisions of Section 6(b)(ii)and the terminationprovisions of Section 7, SARs may be exercised in whole or in part fromtime to time during their term by delivery of written notice to the Companyspecifying the portion of the SAR to be exercised.

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### (iv)          Terminationof Service. Unless otherwise specified in the Award Agreement, SARs will besubject to the terms of Section 7 with respect to exercise upontermination of employment or other service.

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### (v)           Non-Transferability.Except as may otherwise be specifically determined by the Board with respect toa particular SAR: (A) SARs may not be sold, pledged, assigned, hypothecated,gifted, transferred or disposed of in any manner either voluntarily orinvoluntarily by operation of law, other than by will or by the laws of descentor distribution, and (B) during the Participant’s lifetime, SARs will beexercisable only by the Participant (or, in the event of the Participant’sDisability, by his personal representative).

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# **SECTION 7.         Termination of Service.**Unless otherwise specified with respect toa particular Option or SAR in the applicable Award Agreement, Options or SARsgranted hereunder will be exercisable after termination of service only to theextent specified in this Section 7.

 

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## (a)   Terminationby Reason of Death. If a Participant’s service with the Company or anyAffiliate terminates by reason of death, any Option or SAR held by suchParticipant may thereafter be exercised, to the extent then exercisable or onsuch accelerated basis as the Board may determine at or after grant, by thelegal representative of the estate or by the legatee of the Participant underthe will of the Participant, for a period expiring (i) at such time as maybe specified by the Board at or after grant, or (ii) if not specified bythe Board, then 12 months from the date of death, or (iii) if sooner thanthe applicable period specified under (i) or (ii) above, upon theexpiration of the stated term of such Option or SAR.

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## (b)   Terminationby Reason of Disability. If a Participant’s service with the Company or anyAffiliate terminates by reason of Disability, any Option or SAR held by suchParticipant may thereafter be exercised by the Participant or his personalrepresentative, to the extent it was exercisable at the time of termination, oron such accelerated basis as the Board may determine at or after grant, for aperiod expiring (i) at such time as may be specified by the Board at orafter grant, or (ii) if not specified by the Board, then 12 months from thedate of termination of service, or (iii) if sooner than the applicableperiod specified under (i) or (ii) above, upon the expiration of the statedterm of such Option or SAR.

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## (c)   Cause.If a Participant’s service with the Company or any Affiliate is terminated forCause: (i) any Option or SAR not already exercised will be immediately andautomatically forfeited as of the date of such termination, and (ii) anyShares for which the Company has not yet delivered share certificates will beimmediately and automatically forfeited and the Company will refund to theParticipant the Option exercise price paid for such Shares, if any.

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## (d)   OtherTermination. If a Participant’s service with the Company or any Affiliateterminates for any reason other than death, Disability or Cause, any Option orSAR held by such Participant may thereafter be exercised by the Participant, tothe extent it was exercisable at the time of such termination, or on suchaccelerated basis as the Board may determine at or after grant, for a period expiring(i) at such time as may be specified by the Board at or after grant, or(ii) if not specified by the Board, then 90 days from the date oftermination of service, or (iii) if sooner than the applicable periodspecified under (i) or (ii) above, upon the expiration of the stated term ofsuch Option or SAR.

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# **SECTION 8.         Restricted Stock**.

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## (a)   Issuance.Restricted Stock may be issued either alone or in conjunction with other Awards.The Board will determine the time or times within which Restricted Stock may besubject to forfeiture, and all other conditions of such Awards. The purchaseprice for Restricted Stock may, but need not, be zero. The prospectiverecipient of an Award of Restricted Stock will not have any rights with respectto such Award, unless and until such recipient has delivered to the Company anexecuted Award Agreement and has otherwise complied with the applicable termsand conditions of such Award.

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## (b)   Certificates.A share certificate will be issued in connection with each Award of RestrictedStock. Such certificate will be registered in the name of the Participantreceiving 

 

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## the Award, and will bear the following legend and/or any other legendrequired by this Plan, the Award Agreement or by applicable law:

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**THE TRANSFERABILITY OF THIS CERTIFICATE ANDTHE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THEMOTHERS WORK, INC. 2005 EQUITY INCENTIVE PLAN AND AN AWARD AGREEMENT ENTEREDINTO BETWEEN [THE PARTICIPANT] AND MOTHERS WORK, INC. COPIES OF THAT PLAN ANDAGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF MOTHERS WORK, INC. AND WILLBE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON REQUESTTO THE SECRETARY OF THE COMPANY.**

 

Sharecertificates evidencing Restricted Stock will be held in custody by the Companyor in escrow by an escrow agent until the restrictions thereon have lapsed. Asa condition to any Award of Restricted Stock, the Participant may be requiredto deliver to the Company a share power, endorsed in blank, relating to theShares covered by such Award.

 

## (c)   Restrictionsand Conditions. The Award Agreement evidencing the grant of any RestrictedStock will incorporate the following terms and conditions and such additionalterms and conditions, not inconsistent with the terms of the Plan, as the Boarddeems appropriate in its sole and absolute discretion:

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### (i)            Duringa period commencing with the date of an Award of Restricted Stock and ending atsuch time or times as specified by the Board (the “Restriction Period”),the Participant will not be permitted to sell, transfer, pledge, assign orotherwise encumber Restricted Stock awarded under the Plan. The Board maycondition the lapse of restrictions on Restricted Stock upon the continued employmentor service of the recipient, the attainment of specified individual orcorporate performance goals, or such other factors as the Board may determine,in its sole and absolute discretion.

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### (ii)           Exceptas provided in this paragraph (ii) or the applicable Award Agreement, oncethe Participant has been issued a certificate or certificates for RestrictedStock, the Participant will have, with respect to the Restricted Stock, all ofthe rights of a stockholder of the Company, including the right to vote theShares, and the right to receive any cash distributions or dividends. TheBoard, in its sole discretion, may require cash distributions or dividends tobe subjected to the same Restriction Period as is applicable to the RestrictedStock with respect to which such amounts are paid, or, if the Board sodetermines, reinvested in additional Restricted Stock to the extent Shares areavailable under Section 3(a) of the Plan. Any distributions or dividendspaid in the form of securities with respect to Restricted Stock will be subjectto the same terms and conditions as the Restricted Stock with respect to whichthey were paid, including, without limitation, the same Restriction Period.

 

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### (iii)          Subjectto the provisions of the applicable Award Agreement, if a Participant’s servicewith the Company and it Affiliates terminates prior to the expiration of theapplicable Restriction Period, the Participant’s Restricted Stock that thenremains subject to forfeiture will then be forfeited automatically.

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### (iv)          Ifand when the Restriction Period expires without a prior forfeiture of theRestricted Stock subject to such Restriction Period (or if and when therestrictions applicable to Restricted Stock are removed pursuant to Section3(d) or otherwise), the certificates for such Shares will be replaced withnew certificates, without the restrictive legends described in Section 8(b)applicable to such lapsed restrictions, and such new certificates will bedelivered to the Participant, the Participant’s representative (if theParticipant has suffered a Disability), or the Participant’s estate or heir (ifthe Participant has died).

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# **SECTION 9.         Restricted****Stock Units****.**Subject to the other termsof the Plan, the Board may grant Restricted Stock Units to eligible individualsand may impose conditions on such units as it may deem appropriate. EachRestricted Stock Unit shall be evidenced by an Award Agreement in the form thatis approved by the Board and that is not inconsistent with the terms andconditions of the Plan. Each Restricted Stock Unit will represent a right toreceive from the Company, upon fulfillment of any applicable conditions, anamount equal to the Fair Market Value (at the time of the distribution) of oneShare. Distributions may be made in cash and/or Shares. All other termsgoverning Restricted Stock Units, such as vesting, time and form of payment andtermination of units shall be set forth in the applicable Award Agreement.

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# **SECTION 10.       Amendmentsand Termination.**The Board may amend, alter or discontinue the Plan at any time. However,except as otherwise provided in Section 3, no amendment, alteration ordiscontinuation will be made which would impair the rights of a Participantwith respect to an Award without that Participant’s consent or which, withoutthe approval of such amendment within 365 days of its adoption by the Board bythe Company’s stockholders in a manner consistent with Treas. Reg. § 1.422-3,would: (i) increase the total number of Shares reserved for issuancehereunder, or (ii) change the persons or class of persons eligible toreceive Awards.

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# **SECTION 11.       General Provisions**.

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## (a)   The Boardmay require each Participant to represent to and agree with the Company inwriting that the Participant is acquiring securities of the Company forinvestment purposes and without a view to distribution thereof and as to suchother matters as the Board believes are appropriate.

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## (b)   Allcertificates for Shares or other securities delivered under the Plan will besubject to such share-transfer orders and other restrictions as the Board maydeem advisable under the rules, regulations and other requirements of theSecurities Act of 1933, as amended, the Exchange Act, any stock exchange uponwhich the Shares are then listed, and any other applicable federal or statesecurities law, and the Board may cause a legend or legends to be put on anysuch certificates to make appropriate reference to such restrictions.

 

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## (c)   Nothingcontained in the Plan will prevent the Board from adopting other or additionalcompensation arrangements, subject to stockholder approval if such approval isrequired.

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## (d)   Neither theadoption of the Plan nor the execution of any document in connection with thePlan will: (i) confer upon any employee of the Company or an Affiliate anyright to continued employment or engagement with the Company or such Affiliate,or (ii) interfere in any way with the right of the Company or such Affiliateto terminate the employment of any of its employees at any time.

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## (e)   No laterthan the date as of which an amount first becomes includible in the grossincome of the Participant for federal income tax purposes with respect to anyAward under the Plan, the Participant will pay to the Company, or makearrangements satisfactory to the Company regarding the payment of, any federal,state or local taxes of any kind required by law to be withheld with respect tosuch amount. Unless otherwise determined by the Board, the minimum requiredwithholding obligations may be settled with Shares, including Shares that arepart of the Award that gives rise to the withholding requirement. Theobligations of the Company under the Plan will be conditioned on such paymentor arrangements and the Company will have the right to deduct any such taxesfrom any payment of any kind otherwise due to the Participant.

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# **SECTION 12.       EffectiveDate of Plan.**Subjectto the approval of the Plan by the Company’s stockholders within 12 months ofthe Plan’s adoption by the Board, the Plan will become effective on the datethat it is adopted by the Board.

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# **SECTION 13.       Termof Plan.**ThePlan will continue in effect until terminated in accordance with Section 10;*provided, however,* that no IncentiveStock Option will be granted hereunder on or after the 10th anniversary of thedate of stockholder approval of the Plan (or, if the stockholders approve anamendment that increases the number of shares subject to the Plan, the 10thanniversary of the date of such approval); *but provided further,*that Incentive Stock Options granted prior to such 10th anniversarymay extend beyond that date.

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# **SECTION 14.       InvalidProvisions.**In the event that any provision of this Planis found to be invalid or otherwise unenforceable under any applicable law,such invalidity or unenforceability will not be construed as rendering anyother provisions contained herein as invalid or unenforceable, and all suchother provisions will be given full force and effect to the same extent as thoughthe invalid or unenforceable provision was not contained herein.

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# **SECTION 15.       Governing Law.**The Planand all Awards granted hereunder will be governed by and construed inaccordance with the laws and judicial decisions of the Commonwealth of Pennsylvania,without regard to the application of the principles of conflicts of laws.

 

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# **SECTION 16.       BoardAction.**Notwithstandinganything to the contrary set forth in the Plan, any and all actions of the Boardor Committee, as the case may be, taken under or in connection with the Planand any agreements, instruments, documents, certificates or other writingsentered into, executed, granted, issued and/or delivered pursuant to the termshereof, will be subject to and limited by any and all votes, consents,approvals, waivers or other actions of all or certain stockholders of theCompany or other persons required by:

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## (a)   the Company’sCertificate of Incorporation (as the same may be amended and/or restated fromtime to time);

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## (b)   the Company’sBylaws (as the same may be amended and/or restated from time to time); and

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## (c)   any otheragreement, instrument, document or writing now or hereafter existing, betweenor among the Company and its stockholders or other persons (as the same may beamended from time to time).

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# **SECTION 17.       Notices.**Any notice tobe given to the Company pursuant to the provisions of this Plan must be givenin writing and addressed, if to the Company, to its principal executive officeto the attention of its Chief Financial Officer (or such other person as theCompany may designate in writing from time to time), and, if to a Participant,to the address contained in the Company’s personnel files, or at such otheraddress as that Participant may hereafter designate in writing to the Company. Anysuch notice will be deemed duly given: if delivered personally or viarecognized overnight delivery service, on the date and at the time sodelivered; if sent via telecopier or email, on the date and at the timetelecopied or emailed with confirmation of delivery; or, if mailed, five (5)days after the date of mailing by registered or certified mail.

 

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