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                                                                     Exhibit 4.1


                           SAFEGUARD SCIENTIFICS, INC.
                    2001 ASSOCIATES EQUITY COMPENSATION PLAN

            The purpose of the Safeguard Scientifics, Inc. 2001 Associates
Equity Compensation Plan (the "Plan") is to provide (i) designated employees of
Safeguard Scientifics, Inc. (the "Company") and its subsidiaries, (ii)
individuals to whom an offer of employment has been extended, and (iii) certain
advisors who perform services for the Company or its subsidiaries, with the
opportunity to receive grants of nonqualified stock options, stock appreciation
rights, restricted stock, performance units and other stock-based awards. No
person who is an officer (within the meaning of the rules of the New York Stock
Exchange) or a director of the Company shall be entitled to receive any awards
hereunder. The Company believes that the Plan will encourage the participants to
contribute materially to the growth of the Company, thereby benefiting the
Company's shareholders, and will align the economic interests of the
participants with those of the shareholders.

            1.    Administration

                  (a) Committee. The Plan shall be administered and interpreted
by a committee (the "Committee") appointed by the Board of Directors of the
Company. The Committee shall consist of two or more persons appointed by the
Board, all of whom may be "outside directors" as defined under section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") and related Treasury
regulations and may be "non-employee directors" as defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Except to the extent prohibited by applicable law or the applicable rules of a
stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members or may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time. If the Committee does not exist, or for any other reason
determined by the Board, the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee.

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

                  (c) Committee Determinations. The Committee shall have full
power and authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee's
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the
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Plan or in any awards granted hereunder. All powers of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated individuals.

            2.    Grants

                  (a) Generally. Awards under the Plan may consist of grants of
nonqualified stock options as described in Section 5 ("Options"), restricted
stock as described in Section 6 ("Restricted Stock"), stock appreciation rights
as described in Section 7 ("SARs"), performance units as described in Section 8
("Performance Units"), and other stock-based awards as described in Section 9
("Other Stock-Based Grants") (hereinafter collectively referred to as "Grants").
All Grants shall be subject to the terms and conditions set forth herein and to
such other terms and conditions consistent with this Plan as the Committee deems
appropriate and as are specified in writing by the Committee to the individual
in a grant instrument (the "Grant Instrument") or an amendment to the Grant
Instrument. The Committee shall approve the basic form and provisions of each
Grant Instrument. Grants under a particular Section of the Plan need not be
uniform as among the grantees.

                  (b) Stand-Alone, Additional, Tandem, and Substitute Grants.
Grants made under the Plan may, in the discretion of the Committee, be made
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Grants or any grant made under another plan of the Company, any
subsidiary or affiliate, or any business entity to be acquired by the Company or
a subsidiary or affiliate, or any other right of a Grantee to receive payment
from the Company or any subsidiary or affiliate ("Non-Plan Grants"). Grants made
in addition to or in tandem with other Grants or Non-Plan Grants may be granted
either as of the same time as or a different time from the grant of such other
Grants or Non-Plan Grants. Except as otherwise required by law, the Committee
may determine that, in making a new Grant, the value of any surrendered Grant or
Non-Plan Grant (as determined by the Committee in its sole discretion) may be
applied to reduce the exercise price of any Option, grant price of any SAR, or
purchase price of any other Grant.

                  (c) Form and Timing of Payment under Grants; Deferrals.
Subject to the terms of the Plan and any applicable Grant document, payments to
be made by the Company or a subsidiary or affiliate upon the exercise of an
Option or other Grant or settlement of a Grant may be made in such forms as the
Committee shall determine, including, without limitation, cash, Company Stock
(hereinafter defined), other Grants or other property, and may be made in a
single payment or transfer, in installments, or on a deferred basis. The
settlement of any Grant may be accelerated, and cash paid in lieu of Company
Stock in connection with such settlement, in the discretion of the Committee or
upon occurrence of one or more specified events. Installment or deferred
payments may be required by the Committee or permitted at the election of the
Grantee on terms and conditions established by the Committee. Payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of dividend equivalents, other rights or other amounts in respect of
installment or deferred payments denominated in Company Stock.
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            3.    Shares Subject to the Plan

                  (a) Shares Authorized. Subject to the adjustment specified
below, the aggregate number of shares of common stock of the Company ("Company
Stock") that may be issued or transferred under the Plan is 1,200,000 shares.
The maximum aggregate number of shares of Company Stock that shall be subject to
Grants made under the Plan to any individual during any calendar year shall be
1,000,000 shares. The shares may be authorized but unissued shares of Company
Stock or reacquired shares of Company Stock, including shares purchased by the
Company on the open market for purposes of the Plan. If and to the extent
Options or SARs granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any
shares of Restricted Stock, Performance Units or Other Stock-Based Grants are
forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.

                  (b) Adjustments. If there is any change in the number or kind
of shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the Company
is the surviving corporation, (iii) by reason of a reclassification or change in
par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution (as may be determined from time to time
by the Committee), the maximum number of shares of Company Stock available for
Grants, the maximum number of shares of Company Stock that any individual
participating in the Plan may be granted in any year, the number of shares
covered by outstanding Grants, the kind of shares issued under the Plan, and the
price per share or the applicable market value of such Grants shall be
appropriately adjusted by the Committee to reflect any increase or decrease in
the number of, or change in the kind or value of, issued shares of Company Stock
to preclude, to the extent practicable, the enlargement or dilution of rights
and benefits under such Grants; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated by rounding any portion of a
share equal to .5 or greater up, and any portion of a share equal to less than
 .5 down, in each case to the nearest whole number. Any adjustments determined by
the Committee shall be conclusive and binding on all persons having any interest
in the Plan or in any awards granted hereunder.

            4.    Eligibility for Participation

                  (a) Eligible Persons. All employees of the Company and its
subsidiaries ("Employees") and individuals to whom an offer of employment has
been extended ("New Hire") shall be eligible to participate in the Plan;
provided however that (i) Employees shall not be deemed to include any person
who, at the time of the award under this Plan, is an officer of the Company
within the meaning of the rules of the New York Stock Exchange, and (ii) no
awards shall be made under this plan to any person who, at the time of the award
under this Plan, is a director of the Company. Advisors who perform services at
the Company's request ("Key Advisors") shall be eligible to participate in the
Plan if the Key Advisors render bona fide
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services to the Company and its subsidiaries or business ventures in which the
Company has a significant interest, such services are not in connection with the
offer or sale of securities in a capital-raising transaction, and the Key
Advisors do not directly or indirectly promote or maintain a market for the
Company's securities.

                  (b) Selection of Grantees. The Committee shall select the
Employees, New Hires, and Key Advisors to receive Grants and shall determine the
number of shares of Company Stock subject to a particular Grant in such manner
as the Committee determines. Employees, New Hires, and Key Advisors who receive
Grants under this Plan shall hereinafter be referred to as "Grantees."

            5.    Granting of Options

                  (a) Number of Shares. The Committee shall determine the number
of shares of Company Stock that will be subject to each Grant of Options to
Employees, New Hires, and Key Advisors.

                  (b)   Type of Option and Price.

                        (i) The Committee may grant Nonqualified Stock Options
that are not intended to qualify as "incentive stock options" within the meaning
of section 422 of the Code, all in accordance with the terms and conditions set
forth herein. Nonqualified Stock Options may be granted to Employees, New Hires,
and Key Advisors.

                        (ii) The purchase price (the "Exercise Price") of
Company Stock subject to an Option shall be determined by the Committee and may
be equal to, greater than, or less than the Fair Market Value (as defined below)
of a share of Company Stock on the date the Option is granted.

                        (iii) If the Company Stock is publicly traded, then,
except as otherwise determined by the Committee, the following rules regarding
the determination of Fair Market Value per share apply:

      (x) if the principal trading market for the Company Stock is a national
securities exchange or the Nasdaq National Market, the mean between the highest
and lowest quoted selling prices on the relevant date or (if there 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 such exchange or
market, the mean between the last reported "bid" and "asked" prices of Company
Stock on the relevant date, as reported on Nasdaq or, if not so reported, as
reported by the National Daily Quotation Bureau, Inc. or as reported in a
customary financial reporting service, as applicable and as the Committee
determines. If the Company Stock is not 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
Committee.
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                  (c) Option Term. The Committee shall determine the term of
each Option. The term of any Option shall not exceed ten years from the date of
grant.

                  (d) Exercisability of Options.

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

                        (ii) Notwithstanding the foregoing, the Option may, but
need not, include a provision whereby the Grantee may elect at any time while an
Employee or Key Advisor to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased shall be subject to a repurchase right in favor of
the Company (which the Company shall have the right, but not the obligation, to
exercise), with the repurchase price to be equal to the original purchase price,
and any other restrictions the Committee determines to be appropriate.

                  (e)   Termination of Employment, Disability or Death.

                        (i)   Except as provided below, an Option may only be
exercised while the Grantee is employed by, or providing service to, the Company
as an Employee or Key Advisor. In the event that a Grantee ceases to be employed
by, or providing service to the Company for any reason other than Disability,
death or termination for Cause, any Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within 90 days after the date on which
the Grantee ceases to be employed by, or providing service to, the Company (or
within such other period of time as may be specified by the Committee), but in
any event no later than the date of expiration of the Option term. Except as
otherwise provided by the Committee, any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by, or providing service to, the Company shall terminate as of such date.

                        (ii) In the event the Grantee ceases to be employed by,
or providing service to, the Company on account of a termination for Cause by
the Company, any Option held by the Grantee shall terminate as of the date the
Grantee ceases to be employed by, or providing service to, the Company. In
addition, notwithstanding any other provisions of this Section 5, if the
Committee determines that the Grantee has engaged in conduct that constitutes
Cause at any time while the Grantee is employed by, or providing service to, the
Company or after the Grantee's termination of employment or service, any Option
held by the Grantee shall immediately terminate, and the Grantee shall
automatically forfeit all shares underlying any exercised portion of an Option
for which the Company has not yet delivered the share certificates, upon refund
by the Company of the Exercise Price paid by the Grantee for such shares. Upon
any exercise of an Option, the Company may withhold delivery of share
certificates pending resolution of an inquiry that could lead to a finding
resulting in a forfeiture.
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                        (iii) In the event the Grantee ceases to be employed by,
or providing service to, the Company because the Grantee incurs a Disability,
any Option which is otherwise exercisable by the Grantee shall terminate unless
exercised within one year after the date on which the Grantee ceases to be
employed by, or provide service to, the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the
date of expiration of the Option term. Except as otherwise provided by the
Committee, any of the Grantee's Options which are not otherwise exercisable as
of the date on which the Grantee ceases to be employed by, or providing service
to, the Company shall terminate as of such date.

                        (iv) If the Grantee dies while employed by, or providing
service to, the Company or within 90 days after the date on which the Grantee
ceases to be employed or providing service on account of a termination specified
in Section 5(e)(i) above (or within such other period of time as may be
specified by the Committee), any Option that is otherwise exercisable by the
Grantee shall terminate unless exercised within one year after the date on which
the Grantee ceases to be employed by, or providing service to, the Company (or
within such other period of time as may be specified by the Committee), but in
any event no later than the date of expiration of the Option term. Except as
otherwise provided by the Committee, any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by, or providing service to, the Company shall terminate as of such date.

                        (v)   For purposes of Sections 5(e), 6, 7, 8 and 9:

      (A) "Company," when used in the phrase "employed by the Company," shall
mean the Company and its parent, subsidiary corporations, and any business
venture in which the Company has a significant interest or other entities, as
determined by the Committee.

      (B) "Employed by, or providing service to, the Company" shall mean
employment or service as an Employee of Safeguard or any subsidiary or business
venture in which the Company has a significant interest, or Key Advisor (so
that, for purposes of exercising Options and SARs and satisfying conditions with
respect to Restricted Stock, Performance Units and Other Stock-Based Grants, a
Grantee shall not be considered to have terminated employment or service until
the Grantee ceases to be an Employee of Safeguard or any subsidiary or business
venture in which the Company has a significant interest, or Key Advisor), unless
the Committee determines otherwise. The Committee's determination as to a
participant's employment or other provision of services, termination of
employment or cessation of the provision of services, leave of absence, or
reemployment shall be conclusive on all persons unless determined to be
incorrect.

      (C) "Disability" shall mean a Grantee's becoming disabled within the
meaning of section 22(e)(3) of the Code.

      (D) "Cause" shall mean the determination of the Committee that any one or
more of the following events has occurred:
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      (1) the Grantee's conviction of any act which constitutes a felony under
applicable federal or state law, either in connection with the performance of
the Grantee's obligations on behalf of the Company or which affects the
Grantee's ability to perform his or her obligations as an employee, board member
or advisor of the Company or under any employment agreement, non-competition
agreement, confidentiality agreement or like agreement or covenant between the
Grantee and the Company (any such agreement or covenant being herein referred to
as an "Employment Agreement");

      (2) the Grantee's willful misconduct in connection with the performance of
his or her duties and responsibilities as an employee, board member or advisor
of the Company or under any Employment Agreement, which willful misconduct is
not cured by the Grantee within 10 days of his or her receipt of written notice
thereof from the Committee;

      (3) the Grantee's commission of an act of embezzlement, fraud or
dishonesty which results in a loss, damage or injury to the Company;

      (4) the Grantee's substantial and continuing neglect, gross negligence or
inattention in the performance of his or her duties as an employee, board member
or advisor of the Company or under any Employment Agreement which is not cured
by the Grantee within 10 days of his or her receipt of written notice thereof
from the Committee;

      (5) the Grantee's unauthorized use or disclosure or any trade secret or
confidential information of the Company which adversely affects the business of
the Company, provided that any disclosure of any trade secret or confidential
information of the Company to a third party in the ordinary course of business
who signs a confidentiality agreement shall not be deemed a breach of this
subparagraph;

      (6) the Grantee's material breach of any of the provisions of any
Employment Agreement, which material breach is not cured by the Grantee within
10 days of his or her receipt of a written notice from the Company specifying
such material breach; or

      (7) the Grantee has voluntarily terminated his or her employment or
service with the Company and breaches his or her noncompetition agreement with
the Company.

                  (f) Exercise of Options. A Grantee may exercise an Option that
has become exercisable, in whole or in part, by delivering a notice of exercise
to the Company with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Committee:

                        (i)   in cash,

                        (ii)  by delivering shares of Company Stock owned by the
Grantee for the period necessary to avoid a charge to the Company's earnings for
financial reporting purposes (including Company Stock acquired in connection
with the exercise of an
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Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price,

                        (iii) by payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board, or

                        (iv) by such other method of payment as the Committee
may approve.

                        Shares of Company Stock used to exercise an Option shall
have been held by the Grantee for the requisite period of time to avoid adverse
accounting consequences to the Company with respect to the Option. The Grantee
shall pay the Exercise Price and the amount of any withholding tax due (pursuant
to Section 11) at the time of exercise.

                  (g) Reload Options. In the event that shares of Company Stock
are used to exercise an Option, the terms of such Option may provide for a Grant
of additional Options, or the Committee may grant additional Options, to
purchase a number of shares of Company Stock equal to the number of whole shares
used to exercise the Option and the number of whole shares, if any, withheld in
payment of any taxes. Such Options shall be granted with an Exercise Price equal
to the Fair Market Value of the Company Stock at the date of grant of such
additional Options, or at such other Exercise Price as the Committee may
establish, for a term not longer than the unexpired term of the exercised option
and on such other terms as the Committee shall determine.

            6.    Restricted Stock Grants

            The Committee may issue or transfer shares of Company Stock to a
Grantee under a Grant of Restricted Stock upon such terms as the Committee deems
appropriate. The following provisions are applicable to Restricted Stock:

                  (a) General Requirements. Shares of Company Stock issued or
transferred pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, as determined by the Committee. The
Committee may establish conditions under which restrictions on shares of
Restricted Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of time during which the
Restricted Stock will remain subject to restrictions will be designated in the
Grant Instrument as the "Restriction Period."

                  (b) Number of Shares. The Committee shall determine the number
of shares of Company Stock to be issued or transferred pursuant to a Restricted
Stock Grant and the restrictions applicable to such shares.

                  (c) Requirement of Employment or Service. If the Grantee
ceases to be employed by, or providing services to, the Company (as defined in
Section 5(e)) during a period designated in the Grant Instrument as the
Restriction Period, or if other specified
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conditions are not met, the Restricted Stock Grant shall terminate as to all
shares covered by the Grant as to which the restrictions have not lapsed, and
those shares of Company Stock must be immediately returned to the Company. The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.

                  (d) Restrictions on Transfer and Legend on Stock Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 13(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Committee may determine that the Company will not
issue certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.

                  (e) Right to Vote and to Receive Dividends. Unless the
Committee determines otherwise, during the Restriction Period, the Grantee shall
have the right to vote shares of Restricted Stock and to receive any dividends
or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee, including, without limitation, the achievement of
specfic performance goals.

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

            7.    Stock Appreciation Rights

                  (a) General Requirements. The Committee may grant stock
appreciation rights ("SARs") to a Grantee 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 while
the Option remains outstanding. The Committee shall establish the base amount of
the SAR at the time the SAR is granted. Unless the Committee determines
otherwise, the base amount of each SAR shall be equal to the per share Exercise
Price of the related Option or, if there is no related Option, the Fair Market
Value of a share of Company Stock as of the date of Grant of the SAR.

                  (b) Tandem SARs. In the case of tandem SARs, the number of
SARs granted to a Grantee that shall be exercisable during a specified period
shall not exceed the number of shares of Company Stock that the Grantee 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 purchased pursuant
to 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.
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                  (c) Exercisability. A SAR shall be exercisable during the
period specified by the Committee in the Grant Instrument and shall be subject
to such vesting and other restrictions as may be specified in the Grant
Instrument. The Committee may accelerate the exercisability of any or all
outstanding SARs at any time for any reason. SARs may only be exercised while
the Grantee is employed by, or providing service to, the Company or during the
applicable period after termination of employment as described in Section 5(e).
A tandem SAR shall be exercisable only during the period when the Option to
which it is related is also exercisable. No SAR may be exercised for cash by an
officer or director of the Company or any of its subsidiaries who is subject to
Section 16 of the Exchange Act, except in accordance with Rule 16b-3 under the
Exchange Act.

                  (d) Value of SARs. When a Grantee exercises SARs, the Grantee
shall receive in settlement of such SARs an amount equal to the value of the
stock appreciation for the number of SARs exercised, payable in cash, Company
Stock or a combination thereof, as determined by the Committee. The stock
appreciation for a 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 (a).

                  (e) Form of Payment. The Committee shall determine whether the
appreciation in a SAR shall be paid in the form of cash, shares of Company
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate. 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.

            8.    Performance Units

                  (a) General Requirements. The Committee may grant performance
units ("Performance Units") to a Grantee. Each Performance Unit shall represent
the right of the Grantee to receive an amount based on the value of the
Performance Unit, if performance goals established by the Committee are met. A
Performance Unit shall be based on the Fair Market Value of a share of Company
Stock or on such other measurement base as the Committee deems appropriate. The
Committee shall determine the number of Performance Units to be granted and the
requirements applicable to such Units.

                  (b) Performance Period and Performance Goals. When Performance
Units are granted, the Committee shall establish the performance period during
which performance shall be measured (the "Performance Period"), performance
goals applicable to the Units ("Performance Goals") and such other conditions of
the Grant as the Committee deems appropriate. Performance Goals may relate to
the financial performance of the Company or its operating units, the performance
of Company Stock, individual performance, or such other criteria as the
Committee deems appropriate.
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                  (c) Payment with respect to Performance Units. At the end of
each Performance Period, the Committee shall determine to what extent the
Performance Goals and other conditions of the Performance Units are met and the
amount, if any, to be paid with respect to the Performance Units. Payments with
respect to Performance Units shall be made in cash, in Company Stock, or in a
combination of the two, as determined by the Committee.

                  (d) Requirement of Employment or Service. If the Grantee
ceases to be employed by, or providing service to, the Company (as defined in
Section 5(e)) during a Performance Period, or if other conditions established by
the Committee are not met, the Grantee's Performance Units shall be forfeited.
The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.

            9.    Other Stock-Based Grants

                  (a) General Requirements. The Committee may, subject to
limitations under applicable law, grant to a Grantee such other Grants that may
be denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Company Stock or factors that may influence
the value of Company Stock, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Company Stock, purchase rights for Company Stock, Grants with value and payment
contingent upon performance of the Company or business units thereof or any
other factors designated by the Committee, and Grants valued by reference to the
book value of Company Stock or the value of securities of or the performance of
specified subsidiaries or affiliates or other business units. The Committee
shall determine the terms and conditions of such Grants. Company Stock delivered
pursuant to a Grant in the nature of a purchase right granted under this Section
9 shall be purchased for such consideration and paid for at such times, by such
methods and in such forms, including, without limitation, cash, Company Stock,
other Grants, notes, or other property, as the Committee shall determine. Cash
grants, as an element of or supplement to any other Grant under the Plan, may
also be made pursuant to this Section 9.

                  (b) Requirement of Employment. If with respect to any Other
Stock-Based Grant, the Grantee ceases to be employed by the Company (as defined
in Section 5(e)) before all conditions of vesting or exercise have been met, or
if other conditions established by the Committee are not met, the Grantee's
Other Stock-Based Grant shall be forfeited. The Committee may, however, provide
for complete or partial exceptions to this requirement as it deems appropriate.

            10.   Qualified Performance-Based Compensation.

                  (a) Designation as Qualified Performance-Based Compensation.
The Committee may determine that Performance Units, Restricted Stock or Other
Stock-Based Grants granted to an Employee shall be considered "qualified
performance-based compensation" under section 162(m) of the Code. The provisions
of this Section 10 shall apply to Grants of Performance Units, Restricted Stock
and Other Stock-Based Grants that are to be considered "qualified
performance-based compensation" under section 162(m) of the Code.
<PAGE>   12
                  (b) Performance Goals. When Performance Units, Restricted
Stock or Other Stock-Based Grants that are to be considered "qualified
performance-based compensation" are granted, the Committee shall establish in
writing (i) the objective performance goals that must be met in order for
restrictions on the Restricted Stock to lapse or amounts to be paid under the
Performance Units, (ii) the Performance Period during which the performance
goals must be met, (iii) the threshold, target and maximum amounts that may be
paid if the performance goals are met, and (iv) any other conditions, including
without limitation provisions relating to death, disability, other termination
of employment or Reorganization or Change of Control, that the Committee deems
appropriate and consistent with the Plan and section 162(m) of the Code. The
performance goals may relate to the Employee's business unit or the performance
of the Company and its subsidiaries as a whole, or any combination of the
foregoing. The Committee shall use objectively determinable performance goals
based on one or more of the following criteria: stock price, earnings per share,
net earnings, operating earnings, return on assets, shareholder return, return
on equity, growth in assets, unit volume, sales, market share, or strategic
business criteria consisting of one or more objectives based on meeting specific
revenue goals, market penetration goals, geographic business expansion goals,
cost targets or goals relating to acquisitions or divestitures or capital
raising activities (including without limitation rights offerings and share
subscription programs) for the Company (as defined in Section 5(e)(v)(A)
hereof).

                  (c) Establishment of Goals. The Committee shall establish the
performance goals in writing either before the beginning of the Performance
Period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the Performance Period or (ii) the date on which 25% of the
Performance Period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code. The
performance goals shall satisfy the requirements for "qualified
performance-based compensation," including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the goals be established in such a way that a third party with knowledge of
the relevant facts could determine whether and to what extent the performance
goals have been met. The Committee shall not have discretion to increase the
amount of compensation that is payable upon achievement of the designated
performance goals; however, subject to any restrictions in section 162(m) of the
Code, the Committee may reduce the amount of compensation that is payable upon
achievement of the designated performance goals.

                  (d) Maximum Payment. If Restricted Stock, or Performance Units
or Other Stock-Based Grants measured with respect to the fair market value of
the Company Stock, are granted, not more than 1,000,000 shares may be granted to
any Grantee for any Performance Period. If Performance Units are measured with
respect to other criteria, the maximum amount that may be paid to a Grantee with
respect to a Performance Period is $1,000,000.

                  (e) Announcement of Grants. The Committee shall certify and
announce the results for each Performance Period to all Grantees immediately
following the announcement of the Company's financial results for the
Performance Period. If and to the extent
<PAGE>   13
that the Committee does not certify that the performance goals have been met,
the grants of Restricted Stock, Performance Units or Other Stock-Based Grants
for the Performance Period shall be forfeited.

            11.   Withholding of Taxes

                  (a) Required Withholding. All Grants under the Plan shall be
subject to applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to the Grantee, any federal, state or local taxes
required by law to be withheld with respect to such Grants. In the case of
Options and other Grants paid in Company Stock, the Company may require the
Grantee or other person receiving such shares to pay to the Company the amount
of any such taxes that the Company is required to withhold with respect to such
Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.

                  (b) Election to Withhold Shares. If the Committee so permits,
a Grantee may elect to satisfy the Company's income tax withholding obligation
with respect to an Option, SAR, Restricted Stock, Performance Units or Other
Stock-Based Grant paid in Company Stock by having shares withheld up to an
amount that does not exceed the Grantee's minimum applicable withholding tax
rate for federal (including FICA), state and local tax liabilities. The election
must be in a form and manner prescribed by the Committee and shall be subject to
the prior approval of the Committee.

            12.   Loan Provisions.

            With the consent of the Committee, and subject to any limitations
imposed by applicable law and other obligations binding upon the Company, the
Company may make, guarantee or arrange for a loan or loans to a Grantee with
respect to the exercise of any Option or other payment in connection with any
Grant, including the payment by a Grantee of any or all federal, state or local
taxes due in connection with any Grant. Subject to such limitations, the
Committee shall have full authority to decide whether to make a loan or loans
hereunder and to determine the amount, terms and provisions of any such loan or
loans.

            13.   Transferability of Grants

                  (a) Nontransferability of Grants. Except as provided below or
as provided by the terms of an Other Stock-Based Grant, only the Grantee may
exercise rights under a Grant during the Grantee's lifetime. A Grantee may not
transfer those rights except by will or by the laws of descent and distribution
or if permitted in any specific case by the Committee, pursuant to a domestic
relations order (as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the regulations thereunder). When a
Grantee dies, the personal representative or other person entitled to succeed to
the rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof
<PAGE>   14
satisfactory to the Company of his or her right to receive the Grant under the
Grantee's will or under the applicable laws of descent and distribution.

                  (b) Transfer of Nonqualified Stock Options. Notwithstanding
the foregoing, the Committee may provide, in a Grant Instrument or other written
agreement, that a Grantee may transfer Grants to family members or other persons
or entities, consistent with applicable securities laws, according to such terms
as the Committee may determine; provided that the Grantee receives no
consideration for the transfer of such Grants and the transferred Grant shall
continue to be subject to the same terms and conditions as were applicable to
the Grant immediately before the transfer.

            14.   Reorganization or Change of Control of the Company.

                  (a) Reorganization. As used herein, a "Reorganization" shall
be deemed to have occurred if the shareholders of the Company approve (or, if
shareholder approval is not required, the Board approves) an agreement providing
for (i) the merger or consolidation of the Company with another corporation
where the shareholders of the Company, immediately prior to the merger or
consolidation, will not beneficially own, immediately after the merger or
consolidation, shares entitling such shareholders to more than 50% of all votes
to which all shareholders of the surviving corporation would be entitled in the
election of directors (without consideration of the rights of any class of stock
to elect directors by a separate class vote), (ii) the sale or other disposition
of all or substantially all of the assets of the Company, or (iii) a liquidation
or dissolution of the Company.


                  (b) As used herein, a "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 a majority of the voting power of the then outstanding
securities of the Company except where the acquisition is approved by the Board;
or

                        (ii) Any person has commenced a tender offer or exchange
offer for a majority of the voting power of the then outstanding shares of the
Company.


                  (c) Assumption of Grants. Upon a Reorganization or Change of
Control where the Company is not the surviving corporation (or survives only as
a subsidiary of another corporation), unless the Committee determines otherwise,
all outstanding Options and SARs that are not exercised shall be assumed by, or
replaced with comparable options or rights by, the surviving corporation (or a
parent of the surviving corporation), and other outstanding Grants shall be
converted to similar grants of the surviving corporation or a parent of the
surviving corporation).
<PAGE>   15
                  (d) Other Alternatives. Notwithstanding the foregoing, in the
event of a Reorganization or Change of Control, the Committee may take one or
both of the following actions: the Committee may (i) require that Grantees
surrender their outstanding Options and SARs in exchange for a payment by the
Company, in cash or Company Stock as determined by the Committee, in an amount
equal to the amount by which the then Fair Market Value of the shares of Company
Stock subject to the Grantee's unexercised Options and SARs exceeds the Exercise
Price of the Options or the base amount of the SARs, as applicable, or (ii)
after giving Grantees an opportunity to exercise their outstanding Options and
SARs or otherwise realize the value of all of their other Grants, terminate any
or all unexercised Options, SARs and Grants at such time as the Committee deems
appropriate. Such surrender or termination shall take place as of the date of
the Reorganization or Change of Control or such other date as the Committee may
specify. The Committee shall have no obligation to take any of the foregoing
actions and, in the absence of any such actions, outstanding Grants shall
continue in effect according to their terms (subject to any assumption pursuant
to Subsection (b)).

                  (e) Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Reorganization or Change of Control, the Committee
shall not have the right to take any actions described in the Plan (including
without limitation actions described in Subsection (d) above) that would make
the Reorganization or Change of Control ineligible for pooling of interests
accounting treatment or that would make the Reorganization or Change of Control
ineligible for desired tax treatment if, in the absence of such right, the
Reorganization or Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Reorganization or
Change of Control. The Committee shall have the right, however, to provide in
any Grant Instrument or other written agreement with the Grantee that the terms
of the Grant, including without limitation, any vesting provision, may change
upon the occurrence of a Change of Control or Reorganization.

            15.   Requirements for Issuance or Transfer of Shares

                  (a) Shareholder's Agreement. The Committee may require that a
Grantee execute a shareholder's agreement, with such terms as the Committee
deems appropriate, with respect to any Company Stock distributed pursuant to
this Plan.

                  (b) Limitations on Issuance or Transfer of Shares. No Company
Stock shall be issued or transferred in connection with any Grant hereunder
unless and until all legal requirements applicable to the issuance or transfer
of such Company Stock have been complied with to the satisfaction of the
Committee. The Committee shall have the right to condition any Grant made to any
Grantee hereunder on such Grantee's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be
<PAGE>   16
required by applicable laws, regulations and interpretations, including any
requirement that a legend be placed thereon.

            16.   Amendment and Termination of the Plan

                  (a) Amendment. The Board or the Committee may amend or
terminate the Plan at any time.

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

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

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

            17.   Funding of the Plan

            This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants. Notwithstanding the foregoing, the Committee may authorize the creation
of trusts and deposit therein cash, Company Stock, other Grants or other
property, or make other arrangements to meet the Company's obligations under the
Plan. Such trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Grantee.

            18.   Rights of Grantees

            Nothing in this Plan shall entitle any Grantee or other person to
any claim or right to be granted a Grant under this Plan. Neither this Plan nor
any action taken hereunder shall be construed as giving any individual any
rights to be retained by or in the employ of the Company or any other employment
rights.

            19.   No Fractional Shares
<PAGE>   17
            No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.

            20.   Headings

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

            21.   Effective Date of the Plan

            The Plan shall be effective on February 21, 2001.

            22.   Miscellaneous

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

                  (b) 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
persons subject to section 16 of the Exchange Act, it is the intent of the
Company that the Plan and all transactions under the Plan comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act.
The Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation. The
Committee may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.

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