Exhibit
4.1


TUCOWS
INC.


2006
EQUITY COMPENSATION PLAN


1.                                      Purpose.


The purpose of the
2006 Equity Compensation Plan (the “Plan”) is to provide eligible persons with
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in Tucows Inc. (the “Company”).  The Company believes that the Plan will
encourage the participants to contribute materially to the growth of the
Company, thereby benefitting the Company’s shareholders, and will align the
economic interests of the participants with those of the shareholders.


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 40% 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 40% of all votes to which all shareholders of the parent corporation would
be entitled in the election of directors;


(ii)           The consummation of (i) 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 40% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors, (ii) a sale or other disposition of all or substantially all of the
assets of the Company, or (iii) a liquidation or dissolution of the Company; or


(iii)          After the date on which this Plan is
approved by the shareholders of the Company, directors are elected such that a
majority of the members of the Board shall have been members of the Board for
less than two years, unless the election or nomination for election of each new
director who was not a director at the beginning of such two-year period
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.


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













(d)           “Company” means
Tucows Inc. and any successor corporation.


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


(f)            “Consultant”
means a consultant or advisor of the Company or a subsidiary of the Company,
provided that the Company can issue securities to such consultant or advisor
under the Plan pursuant to exemptions from prospectus and registration
requirements of applicable securities laws.


(g)           “Disability”
means the inability of the Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.


(h)           “Dividend Equivalent”
means an amount determined by multiplying the number of shares of Company Stock
subject to a Grant by the per-share cash dividend, or the per-share fair market
value (as determined by the Plan Administrator) of any dividend in
consideration other than cash, paid by the Company on its Company Stock.


(i)             “Employee”
means an employee of the Employer (including an officer or director who is also
an employee).


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


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


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


(m)          “Fair Market Value”
of Company Stock means (i) if the Company Stock is traded on a securities
exchange, the Nasdaq National Market or AIM, the last reported sale price of
Company Stock at the close of regular hours trading on the relevant date on the
exchange or market determined by the Plan Administrator to be the primary
market for the Company Stock, 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 traded on such exchange or market, the mean between the last reported “bid”
and “asked” prices of Company Stock at the close of regular hours trading 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 Plan Administrator
determines, or (iii) if the Company Stock is not publicly traded or, if
publicly traded, is not subject to reported transactions or “bid” or “asked”
quotations as set forth above, the Fair Market Value per share shall be as
determined by the Plan Administrator.


(n)           “Grant” means
an Option, Restricted Stock Unit, Stock Award, Performance Unit, SAR, Dividend
Equivalent or Other Stock-Based Award granted under the Plan.


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



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


(q)           “Insider” means


(i)            every director or senior officer of
the Company;


(ii)           every director or senior officer of a
company that is itself an insider or subsidiary of the Company; and


(iii)          any person or company who beneficially
owns, directly or indirectly, voting securities of the Company or who exercises
control or direction over voting securities of the Company or a combination of
both carrying more than 10% of the voting rights attached to all outstanding
voting securities of the Company other than voting securities held by the
person or company as the underwriter in the course of a distribution.


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


(s)           “Nonqualified Stock Option”
means an Option that is not intended to meet the requirements of an incentive
stock option under section 422 of the Code.


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


(u)           “Other Stock-Based Award”
means any Grant based on, measured by or payable in Company Stock (other than a
Grant described in Sections 7, 9, 10, 11 or 12(a) of the Plan), as described in
Section 12.


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


(w)          “Performance Unit”
means an award of a performance unit as described in Section 11.


(x)            “Plan” means
this Tucows Inc. 2006 Equity Compensation Plan, as in effect from time to time.


(y)           Plan Administrator”
means the particular entity, whether the Compensation Committee, the Board or
other committees or delegate thereof (in the event the Board or Compensation
Committee has delegated its authority pursuant to Section 3), which is
authorized to administer the Plan with respect to one or more classes of
eligible persons, to the extent such entity is carrying out its administrative
functions under the Plan with respect to the persons then subject to its
jurisdiction.


(z)            “Restricted Stock Unit”
means an award of a phantom unit representing a share of Company Stock as
described in Section 9.



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(aa)         “SAR” means a
stock appreciation right as described in Section 11.


(bb)         “Section 16 Insider”
means an officer or director of the Company subject to the short-swing profit
liability provisions of Section 16 of the Exchange Act.


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


(dd)         “10% Shareholder”
shall mean the owner of stock (as determined under Code Section 424(d))
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company (or any parent or subsidiary).


(ee)         “Withholding Taxes”
shall mean all applicable income and employment taxes, social insurance,
payroll taxes, contributions, payment on account obligations or other payments
required to be withheld by the Employer in connection with a Grant.


3.                                      Administration.


(a)           The Plan shall be administered by the
Compensation Committee of the Board with respect to grants to Section 16
Insiders.  Administration of the Plan
with respect to all other eligible persons may, at the Board’s discretion, be
vested in the Compensation Committee or another committee appointed by the
Board, or the Board may retain the power to administer the Plan with respect to
such persons.  However, any discretionary
awards to members of the Compensation Committee must be authorized and approved
by a disinterested majority of the Board. 
Administration of the formula option grants to Non-Employee Directors under
Section 8 shall be self-executing in accordance with the terms of that program,
and no Plan Administrator shall exercise any discretionary functions with
respect to any award under that program.


(b)           The Board or Committee may delegate
to one or more officers of the Company designated by the Board or the
Compensation Committee, the authority to administer Grants to eligible persons
other than directors or officers of the Company within specified guidelines
established by the Board or the Compensation Committee and subject to
applicable law.


(c)           The Plan Administrator shall have the
sole 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 vesting
period, including the criteria for exercisability or vesting and the
acceleration of exercisability or vesting, (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.


(d)           The Plan Administrator 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 Plan Administrator’s
interpretations of the Plan and all determinations made by the Plan
Administrator 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 powers of the
Plan Administrator shall be



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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.


4.             Grants.  Grants under the Plan may
consist of Options as described in Section 7, Restricted Stock Units as
described in Section 9, Stock Awards as described in Section 10, Performance
Units as described in Section 11 and SARs or Other Stock-Based Awards as
described in Section 12.  All Grants
shall be subject to such terms and conditions as the Plan Administrator deems
appropriate (but subject to the terms hereof) and as are specified in writing
by the Plan Administrator to the Participant in the Grant Agreement.


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 5,000,000 shares, subject to
adjustment as described in subsection (e) below.


(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, subject to compliance with applicable law.  If and to the extent outstanding Grants under
the Plan terminate, expire, or are canceled, forfeited, exchanged or
surrendered prior to the issuance of shares of Company Stock, the shares
reserved for such Grants shall again be available for issuance under the Plan.  Unvested shares issued under the Plan and
subsequently cancelled or repurchased by the Company pursuant to the Company’s
repurchase rights under the Plan at a price per share not greater than the
original issue price paid per share (subject to compliance with applicable
securities legislation) shall again be available for issuance under the
Plan.  In addition, should the Exercise
Price of an Option under the Plan be paid with shares of Company Stock, the
authorized reserve of Company Stock under the Plan shall be reduced only by the
net number of shares issued under the exercised Option.  Should shares of Company Stock otherwise
issuable under the Plan be withheld by the Company in satisfaction of the
withholding taxes incurred in connection with the issuance, exercise or vesting
of a Grant under the Plan, the number of shares of Company Stock available for
issuance under the Plan shall be reduced only by the net number of shares
issued with respect to that Grant.  If
SARs are exercised, only the net number of shares actually issued upon exercise
of the SARs shall be considered issued under the Plan for purposes of this
subsection (b).  To the extent that
Grants are paid in cash, and not in shares of Company Stock, any shares
previously reserved for issuance pursuant to such Grants shall again be
available for purposes of the Plan.


(c)           Individual Limits.  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 (e) below.


(d)           Insider Limits.  The number of shares of Company stock
issuable to all Participants who are Insiders in the aggregate, under this Plan
and all other “security based compensation arrangements” (within the meaning of
the rules of the Toronto Stock Exchange) of



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the Company, may not exceed ten percent (10%) of the
outstanding shares of Company Stock and the number of shares of Company Stock
issued to all Participants who are Insiders in the aggregate within any one (1)
year period, under the Plan and all other security based compensation
arrangements of the Company, may not exceed ten percent (10%) of the issued and
outstanding shares of Company Stock.


(e)           Adjustments.  In the event of a stock dividend, spinoff,
extraordinary distribution (whether in cash, securities or other property),
recapitalization, reclassification, stock split, or combination or exchange of
shares, or any other event affecting the outstanding Company Stock as a class
without the Company’s receipt of consideration, equitable adjustments shall be
made to the maximum number and/or class of securities issuable under the Plan,
the maximum number and/or class of securities for which any individual may
receive Grants in any year, the number and/or class of securities for which
option grants are subsequently to be made to Non-Employee Directors under
Section 8, the number and/or class of securities covered by outstanding Grants,
and the price per share or the applicable market value of such Grants.  The adjustments shall be made by the Plan
Administrator in such manner as the Plan Administrator deems appropriate in
order to prevent the dilution or enlargement of benefits hereunder and such
adjustments shall be final, binding and conclusive.


6.             Eligibility for Participation.


All Employees,
including Employees who are officers or members of the Board, all Non-Employee
Directors and all Consultants shall be eligible to participate in the Plan.


7.                                      Options.


(a)           General Requirements.  The Plan Administrator may grant Options to
an eligible person upon such terms and conditions as the Plan Administrator
deems appropriate under this Section 7. 
The Plan Administrator shall determine the number of shares of Company
Stock that will be subject to each Grant of Options under the Plan.  


(b)           Type of Option, Price and Term.


(i)            The Plan Administrator 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 shall be subject to
the provisions of subsection (f) below.


(ii)           The Exercise Price of Company Stock
subject to an Option shall be determined by the Plan Administrator 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.


(iii)          The Plan Administrator shall determine
the term of each Option, which shall not exceed seven years from the date of
grant.



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(c)           Exercisability of Options.


(i)            Options shall become exercisable in
accordance with such terms and conditions as may be determined by the Plan
Administrator and specified in the Grant Agreement.  The Plan Administrator may accelerate the
exercisability of any or all outstanding Options at any time for any reason.


(ii)           Subject to compliance with applicable
law, the Plan Administrator 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 (subject to
compliance with applicable law) and such other restrictions as the Plan
Administrator deems appropriate.


(iii)          Options granted to U.S. 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 Plan
Administrator, 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 or
Service.  Except as otherwise
provided in the Grant Agreement, in the event of the termination of a
Participant’s employment or service, for any reason (whether or not for cause)
other an as a result of death or Disability of the Participant, the Participant
may exercise all of the Participant’s options which have vested and are
exercisable on the date of resignation or notice of termination of the
Participant’s employment or service (the “Termination Date”), as the case may
be, until the earlier of the expiry date(s) of the Options and the date that is
three (3) months from the Termination Date, or such other date as may be
determined by the Plan Administrator, and approved by the stock exchange on
which the shares of the Company trade. 
In the event of the termination of a Participant’s employment or service
as a result of the death or Disability of the Participant, all of the
Participant’s Options which have vested and are exercisable as at the date of
death or Disability (such date, also the “Termination Date”) shall be
exercisable until the earlier of the expiry date(s) of the Options and the date
that is one (1) year from the Termination Date, or such other date as may be
determined by the Plan Administrator, and approved by the stock exchange on
which the shares of the Company trade to the extent required by the rules of
such stock exchange.  Except as otherwise
determined by the Plan Administrator, in the event of the termination of the
Participant’s employment or service for any reason as contemplated in this
Section 7(d), all of the Participant’s Options which have not vested on the
Termination Date shall expire and terminate and be of no further force and
effect, as of that date.


(e)           Payment of Exercise Price.   The Participant shall pay the Exercise Price
for the Option (i) in cash, (ii) if permitted by the Plan Administrator and
subject to compliance with applicable law, 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, or (iii) by such other method as the Plan
Administrator may



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approve.  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 Plan Administrator depending on the type of payment being made.


(f)            Limits on Incentive Stock Options.


(i)            Incentive Stock Options may only be
granted to Employees.


(ii)           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.


(iii)          If any Employee to whom an Incentive
Option is granted is a 10% Shareholder, then the exercise price per share shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.


(g)           Shareholder Rights.  The holder of an Option shall have no
shareholder rights with respect to the shares subject to the Option until such
person shall have exercised the Option, paid the Exercise Price and become a
holder of record of the purchased shares.


8.                                      Formula
Option Grants to Non-Employee Directors; Grants to Committee Members.


A Non-Employee
Director or a Non-Employee Director who is a member of a committee of the Board
(a “Committee Member”) shall be entitled to receive Nonqualified Stock Options
in accordance with this Section 8.


(a)           Initial Grant.  Each Non-Employee Director who first becomes
a member of the Board on or after the effective date of this Plan (as specified
in Section 19), will receive a grant of a Nonqualified Stock Option to purchase
15,000 shares of Company Stock immediately upon the date he or she becomes a
member of the Board.


Each Committee
Member on the effective date of this Plan (as specified in Section 18) will
receive a grant of a Nonqualified Stock Option to purchase 10,000 shares of
Company Stock with respect to each committee such Committee Member sits on as
of such date.  Each Committee Member who
first becomes a Committee Member after the effective date of this Plan (as
specified in Section 18), will receive a grant of a Nonqualified Stock Option
to purchase 10,000 shares of Company Stock with respect to each committee such
Committee Member sits on immediately upon the date he or she becomes a
Committee Member.



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(b)           Annual Grants.  On each date that the Company holds its
annual meeting of shareholders, commencing with the 2006 calendar year, each
Non-Employee Director in office both immediately before and after the annual
election of directors will receive a grant of a Nonqualified Stock Option to
purchase 5,000 shares of Company Stock. 
The date of grant of such annual Grants shall be the date of such annual
meeting of shareholders.


On each date that
the Company holds its annual meeting of shareholders, commencing with the 2006
calendar year, each Committee Member in office both immediately before and
after the annual election of directors will receive a grant of a Nonqualified
Stock Option to purchase 5,000 shares of Company Stock with respect to each
committee such Committee Member sits on as of such date.  The date of grant of such annual Grants shall
be the date of such annual meeting of shareholders.


(c)           Option Price.  The exercise price per share of Company Stock
subject to an Option granted under this Section 8 shall be equal to the Fair
Market Value of a share of Company Stock on the date of grant.


(d)           Option Term.  The term of each Option granted pursuant to
this Section 8 shall be five (5) years.


(e)           Exercisability.  Options granted under this Section 8 shall be
fully and immediately exercisable upon the date of grant.


(f)            Applicability of Plan Provisions.  Except as otherwise provided in, and not
inconsistent with, this Section 8, the Nonqualified Stock Options granted to
Non-Employee Directors and Committee Members shall be subject to the provisions
of this Plan applicable to Nonqualified Stock Options granted to other
Participants.


9.                                      Restricted
Stock Units.


(a)           General Requirements.  The Plan Administrator may grant Restricted
Stock Units to an eligible person upon such terms and conditions as the Plan
Administrator deems appropriate under this Section 9.  Each Restricted 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. 
The Plan Administrator shall determine the number of Restricted Stock
Units to be granted and the requirements applicable to such Restricted Stock
Units.  All Restricted Stock Units shall
be credited to bookkeeping accounts on the Company’s records for purposes of
the Plan.


(b)           Terms of Restricted Stock Units.  The Plan Administrator may grant Restricted
Stock Units that are payable on terms and conditions determined by the Plan
Administrator, which may include payment based on achievement of performance
goals or satisfaction of specified service requirements.  Restricted 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 Plan Administrator.



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(c)           Payment With Respect to Stock
Units.  Payment with respect to
Restricted Stock Units shall be made in cash, in Company Stock, or in a
combination of the two, as determined by the Plan Administrator.


(d)           Requirement of Employment or
Service.  The Plan Administrator
shall determine in the Grant Agreement under what circumstances a Participant
may retain Restricted Stock Units after termination of the Participant’s
employment or service, and the circumstances under which Restricted Stock Units
may be forfeited.


(e)           Shareholder Rights.  The Participant shall not have any
shareholder rights with respect to the shares of Company Stock subject to a
Restricted Stock Unit until that award vests and the shares of Company Stock
are actually issued thereunder.


10.                               Stock
Awards.


(a)           General Requirements. The Plan
Administrator may issue shares of Company Stock to an eligible person under a
Stock Award upon such terms and conditions as the Plan Administrator deems
appropriate under this Section 10 subject to the requirements of applicable
law.  Shares of Company Stock issued pursuant
to Stock Awards may be issued for cash consideration or for no cash
consideration, and subject to such vesting restrictions, as determined by the
Plan Administrator.  The Plan
Administrator may establish vesting conditions on Stock Awards which shall
lapse over a period of time or according to such other criteria as the Plan
Administrator deems appropriate, including the achievement of specific
performance goals.  The Plan
Administrator shall determine the number of shares of Company Stock to be issued
pursuant to a Stock Award.


(b)           Requirement of Employment or
Service.  The Plan Administrator
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.


(c)           Restrictions on Transfer.  A Participant may not sell, assign, transfer,
pledge or otherwise dispose of an unvested Stock Award except upon death as
described in Section 15(a).  Unvested
shares issued pursuant to Stock Awards may, in the Plan Administrator’s
discretion, be held in escrow by the Company until the Participant’s interest
in such shares vests or may be issued directly to the Participant with
restrictive legends on the certificates evidencing those unvested shares.


(d)           Shareholder Rights.  Subject to the restrictions on transfer under
Section 10(c) above, the Participant shall have full shareholder rights with
respect to any shares of Company Stock issued to the Participant under a Stock
Award, whether or not the Participant’s interest in those shares is
vested.  Accordingly, the Participant
shall have the right to vote such shares and to receive any regular cash
dividends paid on such shares.



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11.                               Performance
Units.


(a)           General Requirements.  The Plan Administrator may grant Performance
Units to an eligible person upon such terms and conditions as the Plan
Administrator deems appropriate under this Section 11.  Each Performance Unit shall represent the
right of a Participant to receive an amount equal to the value of the
Performance Unit, determined in the manner established by the Plan
Administrator at the time of grant.


(b)           Performance Period.  At the time of grant of each Performance
Unit, the Plan Administrator shall establish a performance period during which
performance shall be measured (“Performance Period”).  There may be more than one grant in existence
at any one time, and Performance Periods may differ.


(c)           Performance Goals.  Prior to the beginning of a Performance
Period, the Plan Administrator shall establish in writing performance goals for
the Company and its various operating units (“Performance Goals”).  The Performance Goals will be comprised of
specified levels of one or more performance criteria as the Plan Administrator
may deem appropriate such as: earnings per share, net earnings, operating
earnings, unit volume, net sales, market share, balance sheet measurements,
cash return on assets, shareholder return, or return on capital.  The Plan Administrator may disregard or
offset the effect of any special charges or gains or cumulative effect of a
change in accounting in determining the attainment of Performance Goals.  Awards of Performance Units may also be
payable when Company performance, as measured by one or more of the above
criteria, as compared to peer companies, meets or exceeds an objective target
established by the Plan Administrator.


(d)           Performance Measures.  Performance Units shall be granted to a
Participant contingent upon the attainment of Performance Goals in accordance
with Section 11(c).


(e)           Performance Unit Value.  Each Performance Unit shall have a maximum
dollar value established by the Committee at the time of the grant.  Performance Units earned will be determined
by the Plan Administrator in respect of a Performance Period in relation to the
degree of attainment of Performance Goals. 
The measure of a Performance Unit may, in the Plan Administrator’s
discretion, be equal to the Fair Market Value of a share of Company Stock.


(f)            Grant Criteria.  In determining the number of Performance
Units to be granted to any Participant, the Plan Administrator shall take into
account the Participant’s responsibility level, performance, potential, cash
compensation level, other incentive awards, and such other considerations as it
deems appropriate.


(g)           Payment.  Following the end of a Performance Period, a
Participant holding Performance Units will be entitled to receive payment of an
amount, not exceeding the maximum value of the Performance Units, based on the
achievement of the Performance Goals for such Performance Period, as determined
by the Plan Administrator.  Payment of
Performance Units shall be made in cash, except that, in the discretion of the
Plan Administrator, Performance Units which are measured using Company Stock
may be paid in shares of Company Stock.



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Payment shall be made in a lump sum or in installments
and shall be subject to such other terms and conditions as shall be determined
by the Plan Administrator.


12.                               Stock
Appreciation Rights and Other Stock-Based Awards.


(a)           SARs.  The Plan Administrator may grant SARs to an
eligible person separately or in tandem with an Option.  The following provisions shall be applicable
to SARs:


(i)            Base Price.  The Plan Administrator shall establish the
base price of the SAR at the time the SAR is granted.  The base price of each SAR shall be equal to
the per share Exercise Price of the related Option or, if there is no related Option,
an amount that is at least equal to the Fair Market Value of a share of Company
Stock as of the date of grant of the SAR.


(ii)           Tandem SARs.  The Plan Administrator 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.


(iii)          Exercisability.  An SAR shall be exercisable during the period
specified by the Plan Administrator in the Grant Agreement and shall be subject
to such vesting and other restrictions as may be specified in the Grant
Agreement.  The Plan Administrator may
grant SARs that are subject to achievement of performance goals or other
conditions.  The Plan Administrator may
accelerate the exercisability of any or all outstanding SARs at any time for
any reason.  The Plan Administrator 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 tandem SAR shall be
exercisable only while the Option to which it is related is exercisable.


(iv)          Grants to Non-Exempt
Employees.  SARs granted to U.S.
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 Plan Administrator, upon the Participant’s death, Disability or retirement,
or upon a Change of Control or other circumstances permitted by applicable
regulations).


(v)           Settlement 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 described in
subsection (i).



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(vi)          Form of Payment.  The Plan Administrator 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.


(b)           Other Stock-Based Awards.  The Plan Administrator may grant other awards
not specified in Sections 7, 9, 10, 11 or 12(a) above that are based on or
measured by Company Stock to eligible persons, on such terms and conditions as
the Plan Administrator 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 Plan Administrator
in the Grant Agreement.


13.          Dividend
Equivalents.


(a)           General Requirements.  When the Plan Administrator makes a Grant
under the Plan, the Plan Administrator may grant Dividend Equivalents in
connection with the Grant, under such terms and conditions as the Plan
Administrator deems appropriate under this Section 13.  Dividend Equivalents may be paid to
Participants currently or may be deferred, as determined by the Plan
Administrator.  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 Restricted Stock Units for the Participant, and deferred Dividend
Equivalents may accrue interest, all as determined by the Plan Administrator.  The Plan Administrator may provide that
Dividend Equivalents shall be payable based on the achievement of specific
performance goals.


(b)           Payment with Respect to Dividend
Equivalents.  Dividend Equivalents
may be payable in cash or shares of Company Stock or in a combination of the
two, as determined by the Plan Administrator.


14.                               Deferrals.


The Plan
Administrator 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 Plan Administrator shall establish rules and procedures for any such
deferrals, consistent with applicable requirements of section 409A of the Code
and applicable provisions of the Income Tax Act (Canada).


15.                               Withholding
of Taxes.


(a)           Required Withholding.  All Grants under the Plan shall be subject to
satisfaction of all applicable Withholding Taxes.  The Company may require that the Participant
or other person receiving or exercising Grants pay to the Company the amount of
any Withholding Taxes that the Company is required to withhold with respect to
such Grants, or the Company may at its sole discretion and to the extent
permitted by law, deduct from other wages paid by the Company the amount of any
Withholding Taxes due with respect to such Grants.



 13
 









(b)           Election to Withhold Shares.  If the Plan Administrator so permits, a
Participant may elect to satisfy the Withholding Taxes with respect to Grants
paid in Company Stock by having shares withheld, at the time such Grants become
taxable, up to an amount that does not exceed the minimum applicable
withholding tax rate.  The election must
be in a form and manner prescribed by the Plan Administrator.


16.                               Transferability
of Grants.


(a)           Restrictions on Transfer.  Except as described 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 but subject to applicable securities
legislation, the Plan Administrator 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 the applicable securities laws, according to such terms as the
Plan Administrator may determine; provided that the Participant receives no
consideration for the transfer of an Option and the transferred Option shall
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer.


17.                               Consequences
of a Change of Control.


In the event of a Change
of Control, the Plan Administrator may take any one or more of the following
actions with respect to all outstanding Grants, without the consent of any
Participant: (i) the Plan Administrator may determine that outstanding Options
and SARs shall become fully exercisable, and restrictions on outstanding Stock
Awards, Restricted Stock Units and Performance Units shall lapse so that such
grants shall become fully vested, as of the date of the Change of Control or at
such other time as the Plan Administrator determines, (ii) the Plan
Administrator 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 Plan Administrator, in an amount equal to the amount
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 (or
the Base Price), if any, payable in accordance with the same exercise or
vesting schedule applicable to those Grants and on such other terms as the Plan
Administrator determines, (iii) after giving Participants an opportunity to
exercise their outstanding Options and SARs, the Plan Administrator may
terminate any or all unexercised Options and SARs at such time as the Plan
Administrator deems appropriate, (iv) with respect to Participants holding
Restricted Stock Units, Performance Units, Other Stock-Based Awards or Dividend
Equivalents, the Plan Administrator may determine that such Participants shall
receive one or more payments in settlement of such Restricted Stock Units,
Performance Units, Other



 14
 









Stock-Based Awards or Dividend Equivalents, in such
amount and form and on such terms as may be determined by the Plan
Administrator (including payment in accordance with the same vesting schedule
applicable to those Grants), (v) the Plan Administrator may terminate all
unvested Restricted Stock Units, Performance Units, Other Stock-Based Awards or
Dividend Equivalent Rights and require the surrender of any unvested shares
subject to Stock Awards or (vi) the Plan Administrator may determine that
Grants that remain outstanding after the Change of Control shall be assumed by
the successor corporation or otherwise continued in effect.  Such acceleration, surrender, termination,
settlement or assumption shall take place as of the date of the Change of
Control or such other date as the Plan Administrator may specify.


(a)           Other Transactions.  The Plan Administrator 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 Plan Administrator may establish other provisions
that shall be applicable in the event of a specified transaction.


18.                               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 Plan Administrator.  The Plan Administrator 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 Plan
Administrator 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.


19.                               Effective
Date, Amendment and Termination of the Plan.


(a)           Effective Date.  The Plan shall become effective upon its
adoption by the shareholders at the 2006 Annual Shareholders Meeting.


(b)           Amendment.  The Board may amend or terminate the Plan at
any time; provided, however, 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.  In addition, amendments to the Plan shall be
subject to approval of the shareholders and regulatory authorities to the
extent required by applicable law or regulation or pursuant to the rules or
listing standards of any securities exchange (or the Nasdaq National Market or
AIM) on which the Company Stock is traded. 
For greater specificity, the Board may make such amendments to the Plan
as it deems desirable or necessary, without the approval of the Company’s
shareholders, except any such amendment to: 
(i) change the maximum number of shares of Company Stock that may be
issued under the Plan, whether as a fixed number of shares or as a fixed
percentage of the number of shares outstanding from time to time (other than to
reflect an adjustment



 15
 









pursuant to Section 5(e), unless
otherwise required by any securities exchange or market on which the shares of
the Company are listed); (ii) materially increase benefits to Participants,
including any change to permit a repricing or decrease the exercise price of an
Option; (iii) reduce the exercise price or purchase price or extend the term of
any Grant under the Plan which would benefit an Insider; (iv) materially expand
the class of participants eligible to participate in the Plan; (v) expand the
types of awards provided under the Plan; or (vi) increase the limits on the
number of shares of Company Stock issuable to Participants who are Insiders, as
set forth in section 5(d), and any shareholder approval required in respect of
an amendment to increase such limits shall exclude the votes attaching to
shares of Company Stock, if any, held by Participants who are Insiders.  Notwithstanding anything in the Plan to the
contrary but subject to this section 19(b), the Board may amend the Plan in
such manner as it deems appropriate in the event of a change in applicable law or
regulations.


(c)           Termination of Plan.  The Plan shall terminate on the day
immediately preceding the fourth 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 Plan
Administrator with respect to an outstanding Grant.


20.                               Miscellaneous.


(a)           Compliance with Law.  The Plan, the exercise of Options and SARs
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 Section 16 Insiders, 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 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.  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 Plan Administrator 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 Plan Administrator may also adopt rules
regarding the withholding of taxes on payments to Participants.  The Plan Administrator may, in its sole
discretion, agree to limit its authority under this Section.


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


(c)           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



 16
 









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.


(d)           Participation Voluntary.  The participation of any Participant of the
Plan is entirely voluntary and not obligatory and shall not be interpreted as
conferring any rights or privileges, other than those rights and privileges
expressly provided in the Plan.  In
particular, participation in the Plan does not constitute a condition of
employment, appointment or engagement to provide services, or constitute a
commitment on the part of the Employer to continued employment, appointment or
engagement to provide services, and neither the Plan nor any Grant under the
Plan shall be construed as granting a Participant a right to be retained as an
Employee, Non-Employee Director or Consultant or a claim or right to any future
Grants under the Plan.  Neither the Plan
nor any action taken hereunder shall interfere with the right of the Employer
to terminate the employment, appointment or provision of services of such
Participant at any time.  The payment of
any sum of money in cash in lieu of notice of termination of employment,
appointment or provision of services shall not be considered as extending the
period of employment, appointment or the provision of services for the purposes
of the Plan.


(e)           No Fractional Shares.  No fractional shares of Company Stock shall
be issued or delivered pursuant to the Plan or any Grant.  The Plan Administrator 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.


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


(g)           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.



 17