Exhibit 10.1**K-TRON INTERNATIONAL, INC.****2006 EQUITY COMPENSATION PLAN**(As amended on May 11, 2007)
 

 
K-TRON INTERNATIONAL, INC.2006 EQUITY COMPENSATION PLAN(As amended on May 11, 2007)     The purpose of the K-Tron International, Inc. 2006 Equity Compensation Plan (the “Plan”) is toprovide (i) employees of K-Tron International, Inc. (the “Company”) and its subsidiaries and (ii)non-employee members of the Board of Directors of the Company with the opportunity to receivegrants of incentive stock options, nonqualified stock options, stock appreciation rights, stockawards, stock units and other stock-based awards. The Company believes that the Plan willencourage the participants to contribute materially to the growth of the Company, therebybenefitting the Company’s shareholders, and will align the economic interests of the participantswith those of the shareholders.     *Section 1. Definitions*     The following terms shall have the meanings set forth below for purposes of the Plan:          (a) “Board” shall mean the Board of Directors of the Company.          (b) “Cause” shall mean, except to the extent specified otherwise by the Committee, a findingby the Committee that the Grantee (i) has breached his or her employment or service contract withthe Employer, (ii) has engaged in disloyalty to the Employer, including, without limitation, fraud,embezzlement, theft, commission of a felony or proven dishonesty, (iii) has disclosed trade secretsor confidential information of the Employer to persons not entitled to receive such information,(iv) has breached any written non-competition, non-solicitation or confidentiality agreementbetween the Grantee and the Employer or (v) has engaged in such other behavior detrimental to theinterests of the Employer as the Committee determines.          (c) “Change of Control” shall be deemed to have occurred upon:               (i) A liquidation or dissolution of the Company or a sale (excluding transfers tosubsidiaries) of all or substantially all of the Company’s assets;               (ii) As a result of a tender offer, stock purchase, other stock acquisition, merger,consolidation, recapitalization, reverse split or sale or transfer of assets, any person or group(as such terms are used in and under Section 13(d) of the Exchange Act) becomes the beneficialowner (as defined in Rule 13-d under the Exchange Act), directly or indirectly, of securities ofthe Company representing 15% or more of the outstanding common stock of the Company or the combinedvoting power of the Company’s then outstanding securities; or               (iii) During any period of two consecutive years, individuals who, at the beginning of suchperiod, constitute the Board cease for any reason to constitute at
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least a majority thereof, unless the election, or the nomination for election by the Company’sshareholders, of at least two-thirds of the directors who were not directors at the beginning ofsuch period was approved by a vote of at least two-thirds of the directors then still in office whowere either directors at the beginning of the period or who, in connection with their election ornomination, received the foregoing two-thirds approval.          (d) “Code” shall mean the Internal Revenue Code of 1986, as amended.          (e) “Committee” shall mean the committee, consisting of members of the Board, designated bythe Board to administer the Plan.          (f) “Company” shall mean K-Tron International, Inc. and shall include its successors.          (g) “Company Stock” shall mean common stock of the Company.          (h) “Disability” or “Disabled” shall mean a Grantee’s becoming disabled within the meaning ofsection 22(e)(3) of the Code, within the meaning of the Employer’s long-term disability planapplicable to the Grantee or as otherwise determined by the Committee.          (i) “Dividend Equivalent” shall mean an amount determined by multiplying the number of sharesof Company Stock subject to a Grant by the per-share cash dividend paid by the Company on itsoutstanding Company Stock, or the per-share fair market value (as determined by the Committee) ofany dividend paid on its outstanding Company Stock in consideration other than cash.          (j) “Employee” shall mean an employee of the Company or a subsidiary of the Company.          (k) “Employed by, or providing service to, the Employer” shall mean employment or service asan Employee or member of the Board (so that, for purposes of exercising Options and SARs andsatisfying conditions with respect to Stock Awards and Performance Units, a Grantee who has servedas both an Employee and a director shall not be considered to have terminated employment or serviceuntil the Grantee ceases to be both an Employee and member of the Board).          (l) “Employer” shall mean the Company and each of its subsidiaries.          (m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.          (n)“Exercise Price” shall mean the purchase price of CompanyStock subject to an Option.
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          (o) “Fair Market Value” shall mean:               (i) If the Company Stock is publicly traded, then the Fair Market Value per share shall bedetermined as follows: (x) if the principal trading market for the Company Stock is a nationalsecurities exchange or Nasdaq, the last reported sale price thereof on the relevant date or (ifthere were no trades on that date) the latest preceding date upon which a sale was reported, or (y)if the Company Stock is not principally traded on any such exchange or on Nasdaq, the mean betweenthe last reported “bid” and “asked” prices on a share of Company Stock on the relevant date, asreported by the OTC Bulletin Board or, if shares are not reported on the OTC Bulletin Board, onpinksheets.com.               (ii) If the Company Stock is not publicly traded or, if publicly traded, is not subject toreported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value pershare shall be as determined by the Committee.          (p) “Grant” shall mean a grant of Options, SARs, Stock Awards, Stock Units or OtherStock-Based Awards under the Plan.          (q) “Grant Instrument” shall mean the agreement that sets forth the terms of a Grant,including any amendments.          (r) “Grantee” shall mean an Employee or Non-Employee Director who receives a Grant under thePlan.          (s) “Incentive Stock Option” shall mean an option to purchase Company Stock that is intendedto meet the requirements of section 422 of the Code.          (t) “Non-Employee Director” shall mean a member of the Board who is not an Employee.          (u) “Nonqualified Stock Option” shall mean an option to purchase Company Stock that is notintended to meet the requirements of section 422 of the Code.          (v) “Option” shall mean an Incentive Stock Option or Nonqualified Stock Option granted underthe Plan.          (w) “Other Stock-Based Award” shall mean any Grant based on, measured by or payable in CompanyStock, as described in Section 10.          (x) “SAR” shall mean a stock appreciation right with respect to a share of Company Stock.          (y) “Stock Award” shall mean an award of Company Stock, with or without restrictions.          (z) “Stock Unit” shall mean a unit that represents a hypothetical share of Company Stock.
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     *Section 2. Administration*          (a) Committee. The Plan shall be administered and interpreted by the Board or by aCommittee appointed by the Board. The Committee, if applicable, should consist of two or morepersons who are “outside directors” as defined under section 162(m) of the Code, and relatedTreasury regulations, and “non-employee directors” as defined under Rule 16b-3 under the ExchangeAct. The Board shall approve and administer all grants made to Non-Employee Directors. TheCommittee may delegate authority to one or more subcommittees, as it deems appropriate. To theextent that the Board or a subcommittee administers the Plan, references in the Plan to the“Committee” shall be deemed to refer to the Board or such subcommittee. In the absence of aspecific designation by the Board to the contrary, the Plan shall be administered by theCompensation and Human Resources Committee of the Board or any successor Board committee performingsubstantially the same functions.          (b) Committee Authority. The Committee shall have the sole authority to (i) determinethe individuals to whom grants shall be made under the Plan, (ii) determine the type, size andterms of the grants to be made to each such individual, (iii) determine the time when the grantswill be made and the duration of any applicable exercise or restriction period, including thecriteria for exercisability and the acceleration of exercisability, (iv) amend the terms of anypreviously issued grant, subject to the provisions of Section 18 below, and (v) deal with any othermatters arising under the Plan.          (c) Committee Determinations. The Committee shall have full power and authority toadminister 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 itsbusiness as it deems necessary or advisable, in its sole discretion. The Committee’sinterpretations of the Plan and all determinations made by the Committee pursuant to the powersvested in it hereunder shall be conclusive and binding on all persons having any interest in thePlan or in any awards granted hereunder. All powers of the Committee shall be executed in its solediscretion, in the best interest of the Company, not as a fiduciary, and in keeping with theobjectives of the Plan and need not be uniform as to similarly situated individuals.     *Section 3. Grants*     Awards under the Plan may consist of grants of Options as described in Section 6, Stock Awardsas described in Section 7, Stock Units as described in Section 8, SARs as described in Section 9and Other Stock-Based Awards as described in Section 10. All Grants shall be subject to the termsand conditions set forth herein and to such other terms and conditions consistent with this Plan asthe Committee deems appropriate and as are specified in writing by the Committee to the individualin the Grant Instrument. All Grants shall be made conditional upon the Grantee’s acknowledgement,in writing or by acceptance of the Grant, that all decisions and determinations of the Committeeshall be final and binding on the Grantee, his or her beneficiaries and any other person having orclaiming an interest under such Grant. Grants under a particular Section of the Plan need not beuniform as among the Grantees.
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     *Section 4. Shares Subject to the Plan*          (a) Shares Authorized. Subject to adjustment as described below, the aggregate numberof shares of Company Stock that may be issued or transferred under the Plan is 200,000 shares.Shares issued or transferred under the Plan may be authorized but unissued shares of Company Stockor reacquired shares of Company Stock, including shares purchased by the Company on the open marketfor purposes of the Plan. If and to the extent Options or SARs granted under the Plan terminate,expire or are canceled, forfeited, exchanged or surrendered without having been exercised or if anyStock Awards, Stock Units or Other Stock-Based Awards are forfeited or terminated, the sharessubject to such Grants shall again be available for purposes of the Plan.          (b) Individual Limits. All Grants under the Plan shall be expressed in shares ofStock. The maximum aggregate number of shares of Company Stock that shall be subject to Grantsmade under the Plan to any individual during any calendar year shall be 50,000 shares, subject toadjustment as described below.          (c) Adjustments. If there is any change in the number or kind of shares of CompanyStock outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, orcombination or exchange of shares, (ii) a merger, reorganization or consolidation, (iii) areclassification or change in par value, or (iv) any other extraordinary or unusual event affectingthe outstanding Company Stock as a class without the Company’s receipt of consideration, or if thevalue of outstanding shares of Company Stock is substantially reduced as a result of a spinoff orthe Company’s payment of an extraordinary dividend or distribution, the maximum number of shares ofCompany Stock available for issuance or transfer under the Plan, the maximum number of shares ofCompany Stock for which any individual may receive Grants in any year, the kind and number ofshares covered by outstanding Grants, the kind and number of shares issued or transferred and to beissued or transferred under the Plan, and the price per share or the applicable market value ofsuch Grants shall be equitably adjusted by the Committee to reflect any increase or decrease in thenumber of, or change in the kind or value of, the issued shares of Company Stock to preclude, tothe extent practicable, the enlargement or dilution of rights and benefits under the Plan and suchoutstanding Grants; provided, however, that any fractional shares resulting from such adjustmentshall be eliminated. In addition, in the event of a Change of Control of the Company, theprovisions of Section 16 of the Plan shall apply. Any adjustments to outstanding Grants shall beconsistent with section 409A or 424 of the Code, to the extent applicable. Any adjustmentsdetermined by the Committee shall be final, binding and conclusive.     *Section 5. Eligibility for Participation*          (a) Eligible Persons. All Employees (including, for all purposes of the Plan, anEmployee who is a member of the Board) and Non-Employee Directors shall be eligible to participatein the Plan.
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          (b) Selection of Grantees. The Committee shall select the Employees and Non-EmployeeDirectors to receive Grants and shall determine the number of shares of Company Stock subject to aparticular Grant in such manner as the Committee determines.     *Section 6. Options*     The Committee may grant Options to an Employee or Non-Employee Director upon such terms as theCommittee deems appropriate. The following provisions are applicable to Options:          (a) Number of Shares. The Committee shall determine the number of shares of CompanyStock that will be subject to each Grant of Options to Employees and Non-Employee Directors.          (b) Type of Option and Price.               (i) The Committee may grant Incentive Stock Options or Nonqualified Stock Options or anycombination of the two, all in accordance with the terms and conditions set forth herein.Incentive Stock Options may be granted only to employees of the Company or its parent or subsidiarycorporations, as defined in section 424 of the Code. Nonqualified Stock Options may be granted toEmployees and Non-Employee Directors.               (ii) The Exercise Price of Company Stock subject to an Option shall be determined by theCommittee and may be equal to or greater than the Fair Market Value of a share of Company Stock onthe date the Option is granted; provided, however, that an Incentive Stock Option may not begranted to an Employee who, at the time of grant, owns stock possessing more than 10% of the totalcombined voting power of all classes of stock of the Company, or any parent or subsidiarycorporation of the Company, as defined in section 424 of the Code, unless the Exercise Price pershare is not less than 110% of the Fair Market Value of a share of Company Stock on the date ofgrant.          (c) Option Term. The Committee shall determine the term of each Option. The term ofany Option shall not exceed ten years from the date of grant. However, an Incentive Stock Optionthat is granted to an Employee who, at the time of grant, owns stock possessing more than 10% ofthe total combined voting power of all classes of stock of the Company, or any parent or subsidiarycorporation of the Company, as defined in section 424 of the Code, may not have a term that exceedsfive years from the date of grant.          (d) Exercisability of Options. Options shall become exercisable in accordance withsuch terms and conditions, consistent with the Plan, as may be determined by the Committee andspecified in the Grant Instrument. The Committee may accelerate the exercisability of any or alloutstanding Options at any time for any reason.          (e) Termination of Employment, Disability or Death.               (i) Except as provided below, an Option may only be exercised while the Grantee is employedby, or providing service to, the Employer as an Employee or member of the Board.
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               (ii) In the event that a Grantee ceases to be employed by, or provide service to, the Employerfor any reason other than Disability, death or termination for Cause, any Option which is otherwiseexercisable by the Grantee shall terminate unless exercised within 90 days after the date on whichthe Grantee ceases to be employed by, or provide service to, the Employer (or within such otherperiod of time as may be specified by the Committee), but in any event no later than the date ofexpiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’sOptions that are not otherwise exercisable as of the date on which the Grantee ceases to beemployed by, or provide service to, the Employer shall terminate as of such date.               (iii) In the event the Grantee ceases to be employed by, or provide service to, the Company onaccount of a termination for Cause by the Employer, any Option held by the Grantee shall terminateas of the date the Grantee ceases to be employed by, or provide service to, the Employer. Inaddition, notwithstanding any other provisions of this Section 6, if the Committee determines thatthe Grantee has engaged in conduct that constitutes Cause at any time while the Grantee is employedby, or providing service to, the Employer or after the Grantee’s termination of employment orservice, any Option held by the Grantee shall immediately terminate and the Grantee shallautomatically forfeit all shares underlying any exercised portion of an Option for which theCompany has not yet delivered the share certificates, upon refund by the Company of the ExercisePrice paid by the Grantee for such shares. Upon any exercise of an Option, the Company maywithhold delivery of share certificates pending resolution of an inquiry that could lead to afinding resulting in a forfeiture.               (iv) In the event the Grantee ceases to be employed by, or provide service to, the Employerbecause the Grantee is Disabled, any Option which is otherwise exercisable by the Grantee shallterminate unless exercised within one year after the date on which the Grantee ceases to beemployed by, or provide service to, the Employer (or within such other period of time as may bespecified by the Committee), but in any event no later than the date of expiration of the Optionterm. Except as otherwise provided by the Committee, any of the Grantee’s Options which are nototherwise exercisable as of the date on which the Grantee ceases to be employed by, or provideservice to, the Employer shall terminate as of such date.               (v) If the Grantee dies while employed by, or providing service to, the Employer or within 90days after the date on which the Grantee ceases to be employed or provide service on account of atermination specified in Section 6(e)(ii) above (or within such other period of time as may bespecified by the Committee), any Option that is otherwise exercisable by the Grantee shallterminate unless exercised within one year after the date on which the Grantee ceases to beemployed by, or provide service to, the Employer (or within such other period of time as may bespecified by the Committee), but in any event no later than the date of expiration of the Optionterm. Except as otherwise provided by the Committee, any of the Grantee’s Options that are nototherwise exercisable as of the date on which the Grantee ceases to be employed by, or provideservice to, the Employer shall terminate as of such date.          (f) Exercise of Options. A Grantee may exercise an Option that has becomeexercisable, in whole or in part, by delivering a notice of exercise to the Company. The Granteeshall pay the Exercise Price for an Option as specified by the Committee (w) in cash, (x) unless
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the Committee determines otherwise, by delivering shares of Company Stock owned by the Granteeand having a Fair Market Value on the date of exercise at least equal to the Exercise Price or byattestation (on a form prescribed by the Committee) to ownership of shares of Company Stock havinga Fair Market Value on the date of exercise at least equal to the Exercise Price, (y) by paymentthrough a broker in accordance with procedures permitted by Regulation T of the Federal ReserveBoard, or (z) by such other method as the Committee may approve. Shares of Company Stock used toexercise an Option shall have been held by the Grantee for the requisite period of time necessaryto avoid adverse accounting consequences to the Company with respect to the Option. Payment forthe shares to be issued or transferred pursuant to the Option, and any required withholding taxes,must be received by the Company by the time specified by the Committee depending on the type ofpayment being made, but in all cases prior to the issuance or transfer of such shares.          (g) Limits on Incentive Stock Options. Each Incentive Stock Option shall providethat, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respectto which Incentive Stock Options are exercisable for the first time by a Grantee during anycalendar year, under the Plan or any other stock option plan of the Company or a parent orsubsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a NonqualifiedStock Option. An Incentive Stock Option shall not be granted to any person who is not an Employeeof the Company or a parent or subsidiary corporation (within the meaning of section 424(f) of theCode) of the Company.     *Section 7. Stock Awards*     The Committee may issue or transfer shares of Company Stock to an Employee or Non-EmployeeDirector under a Stock Award, upon such terms as the Committee deems appropriate. The followingprovisions are applicable to Stock Awards:          (a) General Requirements. Shares of Company Stock issued or transferred pursuant toStock Awards may be issued or transferred for consideration or for no consideration, and subject torestrictions or no restrictions, as determined by the Committee. The Committee may, but shall notbe required to, establish conditions under which restrictions on Stock Awards shall lapse over aperiod of time or according to such other criteria as the Committee deems appropriate, including,without limitation, restrictions based upon the achievement of specific performance goals. Theperiod of time during which the Stock Awards will remain subject to restrictions will be designatedin the Grant Instrument as the “Restriction Period.”          (b) Number of Shares. The Committee shall determine the number of shares of CompanyStock to be issued or transferred pursuant to a Stock Award and the restrictions applicable to suchshares.          (c) Requirement of Employment or Service. If the Grantee ceases to be employed by, orprovide service to, the Employer during a period designated in the Grant Instrument as theRestriction Period, or if other specified conditions are not met, the Stock Award shall terminateas to all shares covered by the Grant as to which the restrictions have not lapsed, and thoseshares of Company Stock must be immediately returned to the Company. The
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Committee may, however, provide for complete or partial exceptions to this requirement as itdeems appropriate.          (d) Restrictions on Transfer and Legend on Stock Certificate. During the RestrictionPeriod, a Grantee may not sell, assign, transfer, pledge or otherwise dispose of the shares of aStock Award except under Section 15(a) below. Unless otherwise determined by the Committee, theCompany will retain possession of certificates for shares of Stock Awards until all restrictions onsuch shares have lapsed. Each certificate for a Stock Award, unless held by the Company, shallcontain a legend giving appropriate notice of the restrictions in the Grant. The Grantee shall beentitled to have the legend removed from the stock certificate covering the shares subject torestrictions when all restrictions on such shares have lapsed. The Committee may determine thatthe Company will not issue certificates for Stock Awards until all restrictions on such shares havelapsed.          (e) Right to Vote and to Receive Dividends. Unless the Committee determinesotherwise, during the Restriction Period, the Grantee shall have the right to vote shares of StockAwards and to receive any dividends or other distributions paid on such shares, subject to anyrestrictions deemed appropriate by the Committee, including, without limitation, the achievement ofspecific performance goals.          (f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse uponthe expiration of the applicable Restriction Period and the satisfaction of all conditions, if any,imposed by the Committee. The Committee may determine, as to any or all Stock Awards, that therestrictions shall lapse without regard to any Restriction Period.     *Section 8. Stock Units*     The Committee may grant Stock Units, each of which shall represent one hypothetical share ofCompany Stock, to an Employee or Non-Employee Director, upon such terms and conditions as theCommittee deems appropriate. The following provisions are applicable to Stock Units:          (a) Crediting of Units. Each Stock Unit shall represent the right of the Grantee toreceive a share of Company Stock or an amount of cash based on the value of a share of CompanyStock, if and when specified conditions are met. All Stock Units shall be credited to bookkeepingaccounts established on the Company’s records for purposes of the Plan.          (b) Terms of Stock Units. The Committee may grant Stock Units that are payable ifspecified performance goals or other conditions are met, or under other circumstances. Stock Unitsmay be paid at the end of a specified performance period or other period, or payment may bedeferred to a date authorized by the Committee. The Committee shall determine the number of StockUnits to be granted and the requirements applicable to such Stock Units.          (c) Requirement of Employment or Service. If the Grantee ceases to be employed by, orprovide service to, the Employer prior to the vesting of Stock Units, or if other conditionsestablished by the Committee are not met, the Grantee’s Stock Units shall be
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forfeited. The Committee may, however, provide for complete or partial exceptions to thisrequirement as it deems appropriate.          (d) Payment With Respect to Stock Units. Payments with respect to Stock Units shallbe made in cash, Company Stock or any combination of the foregoing, as the Committee shalldetermine.     *Section 9. Stock Appreciation Rights*     The Committee may grant SARs to an Employee or Non-Employee Director separately or in tandemwith any Option. The following provisions are applicable to SARs:          (a) General Requirements. The Committee may grant SARs to an Employee or Non-EmployeeDirector separately or in tandem with any Option (for all or a portion of the applicable Option).Tandem SARs may be granted either at the time the Option is granted or at any time thereafter whilethe Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option,SARs may be granted only at the time of the Grant of the Incentive Stock Option. The Committeeshall establish the base amount of the SAR at the time the SAR is granted. The base amount of eachSAR shall be equal to the per share Exercise Price of the related Option or, if there is no relatedOption, an amount equal to or greater than the Fair Market Value of a share of Company Stock as ofthe date of Grant of the SAR.          (b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a Granteethat shall be exercisable during a specified period shall not exceed the number of shares ofCompany Stock that the Grantee may purchase upon the exercise of the related Option during suchperiod. Upon the exercise of an Option, the SARs relating to the Company Stock covered by suchOption shall terminate. Upon the exercise of SARs, the related Option shall terminate to theextent of an equal number of shares of Company Stock.          (c) Exercisability. An SAR shall be exercisable during the period specified by theCommittee in the Grant Instrument and shall be subject to such vesting and other restrictions asmay be specified in the Grant Instrument. The Committee may accelerate the exercisability of anyor all outstanding SARs at any time for any reason. SARs may only be exercised while the Granteeis employed by, or providing service to, the Employer or during the applicable period aftertermination of employment or service as described in Section 6(e) above. A tandem SAR shall beexercisable only during the period when the Option to which it is related is also exercisable.          (d) Value of SARs. When a Grantee exercises SARs, the Grantee shall receive insettlement of such SARs an amount equal to the value of the stock appreciation for the number ofSARs exercised. The stock appreciation for an SAR is the amount by which the Fair Market Value ofthe underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SARas described in subsection (a).          (e) Form of Payment. The appreciation in an SAR shall be paid in shares of CompanyStock, cash or any combination of the foregoing, as the Committee shall determine.
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For purposes of calculating the number of shares of Company Stock to be received, shares ofCompany Stock shall be valued at their Fair Market Value on the date of exercise of the SAR.     *Section 10. Other Stock-Based Awards*     The Committee may grant Other Stock-Based Awards, which are awards (other than those describedin Sections 6, 7, 8 and 9 of the Plan) that are based on or measured by Company Stock, to anyEmployee or Non-Employee Director, on such terms and conditions as the Committee shall determine.Other Stock-Based Awards may be awarded subject to the achievement of performance goals or otherconditions and may be payable in cash, Company Stock or any combination of the foregoing, as theCommittee shall determine.     *Section 11. Dividend Equivalents*     The Committee may grant Dividend Equivalents in connection Stock Units or Other Stock-BasedAwards. Dividend Equivalents may be paid currently or accrued as contingent cash obligations andmay be payable in cash or shares of Company Stock, and upon such terms as the Committee mayestablish, including, without limitation, the achievement of specific performance goals.     *Section 12. Qualified Performance-Based Compensation*     The Committee may determine that Stock Awards, Stock Units, Other Stock-Based Awards andDividend Equivalents granted to an Employee shall be considered “qualified performance-basedcompensation” under section 162(m) of the Code. The following provisions shall apply to Grants ofStock Awards, Stock Units, Other Stock-Based Awards and Dividend Equivalents that are to beconsidered “qualified performance-based compensation” under section 162(m) of the Code:          (a) Performance Goals.               (i) When Stock Awards, Stock Units, Other Stock-Based Awards or Dividend Equivalents that areto be considered “qualified performance-based compensation” are granted, the Committee shallestablish in writing (A) the objective performance goals that must be met, (B) the performanceperiod during which the performance will be measured, (C) the threshold, target and maximum amountsthat may be paid if the performance goals are met, and (D) any other conditions that the Committeedeems appropriate and consistent with the Plan and Section 162(m) of the Code.               (ii) The business criteria may relate to the Grantee’s business unit or the performance of theCompany and its parents and subsidiaries as a whole, or any combination of the foregoing. TheCommittee shall use objectively determinable performance goals based on one or more of thefollowing criteria: stock price, earnings per share, net earnings, operating earnings, earningsbefore income taxes, EBITDA (earnings before income tax expense, interest expense, and depreciationand amortization expense), return on assets, shareholder return, return on equity, growth inassets, unit volume, sales or market share, or
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strategic business criteria consisting of one or more objectives based on meeting specifiedrevenue goals, market penetration goals, geographic business expansion goals, cost targets or goalsrelating to acquisitions or divestitures.          (b) Establishment of Goals. The Committee shall establish the performance goals inwriting either before the beginning of the performance period or during a period ending no laterthan the earlier of (i) 90 days after the beginning of the performance period or (ii) the date onwhich 25% of the performance period has been completed, or such other date as may be required orpermitted under applicable regulations under section 162(m) of the Code. The performance goalsshall satisfy the requirements for “qualified performance-based compensation,” including therequirement that the achievement of the goals be substantially uncertain at the time they areestablished and that the goals be established in such a way that a third party with knowledge ofthe relevant facts could determine whether and to what extent the performance goals have been met.The Committee shall not have discretion to increase the amount of compensation that is payable uponachievement of the designated performance goals.          (c) Announcement of Grants. The Committee shall certify and announce the results foreach performance period to all Grantees after the announcement of the Company’s financial resultsfor the performance period. If and to the extent that the Committee does not certify that theperformance goals have been met, the grants of Stock Awards, Stock Units, Other Stock-Based Awardsand Dividend Equivalents for the performance period shall be forfeited or shall not be made, asapplicable. If Dividend Equivalents are granted as “qualified performance-based compensation”under section 162(m) of the Code, a Grantee may not accrue more than $50,000 of such DividendEquivalents during any calendar year.          (d) Death, Disability or Other Circumstances. The Committee may provide that StockAwards, Stock Units, Other Stock-Based Awards and Dividend Equivalents shall be payable orrestrictions on such Grants shall lapse, in whole or in part, in the event of the Grantee’s deathor Disability during the performance period, or under other circumstances consistent with theTreasury regulations and rulings under section 162(m) of the Code.     *Section 13. Deferrals*     The Committee may permit or require a Grantee to defer receipt of the payment of cash or thedelivery of shares that would otherwise be due to such Grantee in connection with any Stock Unitsor Other Stock-Based Awards. If any such deferral election is permitted or required, the Committeeshall establish rules and procedures for such deferrals and may provide for interest or otherearnings to be paid on such deferrals. The rules and procedures for any such deferrals shall beconsistent with applicable requirements of section 409A of the Code.     *Section 14. Withholding of Taxes*     (a) Required Withholding. All Grants under the Plan shall be subject to applicablefederal (including FICA), state and local tax withholding requirements. The Employer may requirethat the Grantee or other person receiving or exercising Grants pay to the Employer the amount ofany federal, state or local taxes that the Employer is required to
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withhold with respect to such Grants, or the Employer may deduct from other wages paid by theEmployer the amount of any withholding taxes due with respect to such Grants.          (b) Election to Withhold Shares. If the Committee so permits, a Grantee may elect tosatisfy the Employer’s tax withholding obligation with respect to Grants paid in Company Stock byhaving shares withheld up to an amount that does not exceed the Grantee’s minimum applicablewithholding tax rate for federal (including FICA), state and local tax liabilities. The electionmust be in a form and manner prescribed by the Committee and may be subject to the prior approvalof the Committee.     *Section 15. Transferability of Grants*          (a) Nontransferability of Grants. Except as provided below, only the Grantee mayexercise rights under a Grant during the Grantee’s lifetime. A Grantee may not transfer thoserights except (i) by will or by the laws of descent and distribution or (ii) with respect to Grantsother than Incentive Stock Options, pursuant to a domestic relations order. When a Grantee dies,the personal representative or other person entitled to succeed to the rights of the Grantee mayexercise such rights. Any such successor must furnish proof satisfactory to the Company of his orher right to receive the Grant under the Grantee’s will or under the applicable laws of descent anddistribution.          (b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, theCommittee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified StockOptions to family members, or one or more trusts or other entities for the benefit of or owned byfamily members, consistent with the applicable securities laws, according to such terms as theCommittee may determine; provided that the Grantee receives no consideration for the transfer of anOption and the transferred Option shall continue to be subject to the same terms and conditions aswere applicable to the Option immediately before the transfer.     *Section 16. Consequences of a Change of Control*          (a) Notice and Acceleration. If the Company becomes aware that a Change of Controlhas occurred or will occur, the Company shall provide to each Grantee who holds outstanding Grantswritten notice of such Change of Control. Effective upon the date of the Change of Control, (i)all outstanding Options and SARs shall automatically accelerate and become fully exercisable, (ii)the restrictions and conditions on all outstanding Stock Awards shall immediately lapse, and (iii)all Stock Units, Other Stock-Based Awards and Dividend Equivalents shall become fully vested andshall be paid at their target values, or in such greater amounts as the Committee may determine.          (b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change ofControl, the Committee may take one or more of the following actions with respect to any or alloutstanding Grants: the Committee may (i) require that Grantees surrender their outstanding Optionsand SARs in exchange for one or more payments by the Company, in cash or Company Stock asdetermined by the Committee, in an amount equal to the amount by which the then Fair Market Valueof the shares of Company Stock subject to the Grantee’s unexercised
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Options and SARs exceeds the Exercise Price of the Options or the base amount of the SARs, asapplicable, (ii) after giving Grantees an opportunity to exercise their outstanding Options andSARs, terminate any or all unexercised Options and SARs at such time as the Committee deemsappropriate, or (iii) determine that outstanding Options and SARs that are not exercised shall beassumed by, or replaced with comparable options or rights by, the surviving corporation (or aparent or subsidiary of the surviving corporation). Such surrender or termination shall take placeas of the date of the Change of Control or such other date as the Committee may specify.     *Section 17. Requirements for Issuance or Transfer of Shares*     No Company Stock shall be issued or transferred in connection with any Grant hereunder unlessand until all legal requirements applicable to the issuance or transfer of such Company Stock havebeen complied with to the satisfaction of the Committee. The Committee shall have the right tocondition any Grant on the Grantee’s undertaking in writing to comply with such restrictions on hisor her subsequent disposition of the shares of Company Stock as the Committee shall deem necessaryor advisable, and certificates representing such shares may be legended to reflect any suchrestrictions. Certificates representing shares of Company Stock issued or transferred under thePlan may be subject to such stop-transfer orders and other restrictions as the Committee deemsappropriate to comply with applicable laws, regulations and interpretations, including anyrequirement that a legend be placed thereon.     *Section 18. Amendment and Termination of the Plan*          (a) Amendment. The Board may amend or terminate the Plan at any time; provided,however, that the Board shall not amend the Plan without shareholder approval if such approval isrequired in order to comply with the Code or other applicable law, or to comply with applicablestock exchange requirements.          (b) No Repricing Without Shareholder Approval. Notwithstanding anything in the Planto the contrary, the Committee may not reprice Options, nor may the Board amend the Plan to permitrepricing of Options, unless the shareholders of the Company provide prior approval for suchrepricing. An adjustment to an Option pursuant to Section 4(c) above shall not constitute arepricing of the Option.          (c) Shareholder Re-Approval Requirement. If Stock Awards, Stock Units, OtherStock-Based Awards or Dividend Equivalents are granted as “qualified performance-basedcompensation” under Section 12 above, the Plan must be reapproved by the shareholders no later thanthe first shareholders meeting that occurs in the fifth year following the year in which theshareholders previously approved the provisions of Section 12, if required by section 162(m) of theCode or the regulations thereunder.          (d) Termination of Plan. The Plan shall terminate on the day immediately precedingthe tenth anniversary of its effective date, unless the Plan is terminated earlier by the Board oris extended by the Board with the approval of the shareholders.
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          (e) Termination and Amendment of Outstanding Grants. A termination or amendment ofthe Plan that occurs after a Grant is made shall not materially impair the rights of a Granteeunless the Grantee consents or unless the Committee acts under Section 19(f) below. Thetermination of the Plan shall not impair the power and authority of the Committee with respect toan outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may beterminated or amended under Section 19(f) below or may be amended by agreement of the Company andthe Grantee consistent with the Plan.          (f) Effective Date of the Plan. The Plan was originally effective on May 12, 2006.The Plan as amended herein is effective on May 11, 2007.     *Section 19. Miscellaneous*          (a) Grants in Connection with Corporate Transactions and Otherwise. Nothing containedin the Plan shall be construed to (i) limit the right of the Committee to make Grants under thePlan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, ofthe business or assets of any corporation, firm or association, including Grants to employeesthereof who become Employees, or (ii) limit the right of the Company to grant stock options or makeother awards outside of the Plan. The Committee may make a Grant to an employee of anothercorporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition ofstock or property, reorganization or liquidation involving the Company, in substitution for a stockoption or stock awards grant made by such corporation. Notwithstanding anything in the Plan to thecontrary, the Committee may establish such terms and conditions of the new Grants as it deemsappropriate, including setting the Exercise Price of Options or the base price of SARs at a pricenecessary to retain for the Grantee the same economic value as the prior options or rights.          (b) Governing Document. The Plan shall be the controlling document. No otherstatements, representations, explanatory materials or examples, oral or written, may amend the Planin any manner. The Plan shall be binding upon and enforceable against the Company and itssuccessors and assigns.          (c) Funding of the Plan. The Plan shall be unfunded. The Company shall not berequired to establish any special or separate fund or to make any other segregation of assets toassure the payment of any Grants under the Plan.          (d) Rights of Grantees. Nothing in the Plan shall entitle any Employee, Non-EmployeeDirector or other person to any claim or right to be granted a Grant under the Plan. Neither thePlan nor any action taken hereunder shall be construed as giving any individual any rights to beretained by or in the employ of the Employer or any other employment rights.          (e) No Fractional Shares. No fractional shares of Company Stock shall be issued ordelivered pursuant to the Plan or any Grant. Except as otherwise provided under the Plan, theCommittee shall determine whether cash, other awards or other property shall be issued
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or paid in lieu of such fractional shares or whether such fractional shares or any rightsthereto shall be forfeited or otherwise eliminated.          (f) Compliance with Law. The Plan, the exercise of Options and SARs and theobligations of the Company to issue or transfer shares of Company Stock under Grants shall besubject to all applicable laws and regulations, and to approvals by any governmental or regulatoryagency as may be required. With respect to persons subject to section 16 of the Exchange Act, itis the intent of the Company that the Plan and all transactions under the Plan comply with allapplicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it isthe intent of the Company that Incentive Stock Options comply with the applicable provisions ofsection 422 of the Code, that Grants of “qualified performance-based compensation” comply with theapplicable provisions of section 162(m) of the Code and that, to the extent applicable, Grantscomply with the requirements of section 409A of the Code. To the extent that any legal requirementof section 16 of the Exchange Act or section 422, 162(m) or 409A of the Code as set forth in thePlan ceases to be required under section 16 of the Exchange Act or section 422, 162(m) or 409A ofthe Code, that Plan provision shall cease to apply. The Committee may revoke any Grant if it iscontrary to law or modify a Grant to bring it into compliance with any valid and mandatorygovernment regulation.          (g) Employees Subject to Taxation Outside the United States. With respect to Granteeswho are believed by the Committee to be subject to taxation in countries other than the UnitedStates, the Committee may make Grants on such terms and conditions, consistent with the Plan, asthe Committee deems appropriate to comply with the laws of the applicable countries, and theCommittee may create such procedures, addenda and subplans and make such modifications as may benecessary or advisable to comply with such laws.          (h) Governing Law. The validity, construction, interpretation and effect of the Planand Grant Instruments issued under the Plan shall be governed and construed by and determined inaccordance with the laws of New Jersey, without giving effect to the conflict of laws provisionsthereof.
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