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                                                                   EXHIBIT 10.25

                         TOLLGRADE COMMUNICATIONS, INC.
                    1998 EMPLOYEE INCENTIVE COMPENSATION PLAN
                      (AS AMENDED THROUGH JANUARY 24, 2002)


ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION.

1.1      ESTABLISHMENT OF THE PLAN. Tollgrade Communications, Inc., a
         Pennsylvania corporation (hereinafter referred to as the "Company"),
         hereby establishes an incentive compensation plan for all employees
         excluding officers and directors of the Company, to be known as the
         "Tollgrade Communications, Inc. 1998 Employee Incentive Compensation
         Plan" (hereinafter referred to as the "Plan"), as set forth in this
         document. The Plan permits the grant of Nonqualified Stock Options,
         Stock Appreciation Rights, Restricted Stock, Performance Shares and
         Performance Units. The Plan shall be effective as of January 29, 1998
         (the "Effective Date") and shall remain in effect as provided in
         SECTION 1.3 hereof.

1.2      OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
         profitability and growth of the Company through incentives which are
         consistent with the Company's goals and which link the personal
         interests of Employees to those of the Company's stockholders; to
         provide Employees with an incentive for excellence in individual
         performance; and to promote teamwork among Employees. The Plan is
         further intended to provide flexibility to the Company in its ability
         to motivate, attract, and retain the services of Employees who make
         significant contributions to the Company's success and allow Employees
         to share in the success of the Company.

1.3      DURATION OF THE PLAN. The Plan was adopted by the Board of Directors on
         January 29, 1998, and shall commence on the Effective Date, as
         described in SECTION 1.1 hereof, and shall remain in effect, subject to
         the right of the Board of Directors to amend or terminate the Plan at
         any time pursuant to ARTICLE 14 hereof, until all Shares subject to it
         shall have been purchased or acquired according to the Plan's
         provisions. However, in no event shall an Award be granted under the
         Plan on or after January 29, 2008.

ARTICLE 2. DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized:


2.1      "AWARD" means, individually or collectively, a grant under this Plan of
         Nonqualified Stock Options, Stock Appreciation Rights, Restricted
         Stock, Performance Shares or Performance Units.

2.2      "AWARD AGREEMENT" means an agreement entered into by the Company and
         each Employee setting forth the terms and provisions applicable to
         Awards granted under this Plan.

2.3      "BENEFICIAL OWNER" OR "BENEFICIAL OWNERSHIP" shall have the meaning
         ascribed to such term in Rule 13d-3 of the General Rules and
         Regulations under the Exchange Act.

2.4      "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the
         Company.

2.5      "CAUSE" shall mean with respect to the termination of an Employee's
         employment, unless otherwise determined by the Committee at the time of
         the grant of the Award (i) in the case where there is no employment
         agreement, change of control agreement or similar agreement in effect
         between the Employee and the Company at the time of the grant of the
         Award (or where there is such an agreement but it does not define
         "cause" or words of like import), termination due to an Employee's
         dishonesty, fraud, conviction of a felony, insubordination, willful
         misconduct, refusal to perform services, or unsatisfactory performance
         of his or her duties for the Company as determined by the Committee in
         its sole discretion; or (ii) in the case where there is an employment
         agreement, change in control agreement or similar agreement in effect
         between the Employee and the Company at the time of the grant of the
         Award that defines "cause" (or words of like import), as defined under
         such agreement.



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2.6      "CHANGE IN CONTROL" of the Company shall be deemed to have occurred (as
         of a particular day, as specified by the Board) if the Board, by a
         majority vote, agrees that a Change in Control has occurred, or is
         about to occur. Such a change shall not include, however, a
         restructuring, reorganization, merger or other change in capitalization
         in which the Persons who own an interest in the Company on the
         Effective Date (the "Current Owners") (or any individual or entity
         which received from a Current Owner an interest in the Company through
         will or the laws of descent and distribution) maintain more than a
         fifty percent (50%) interest in the resultant entity.

     Regardless of the Board's vote, a Change in Control will be deemed to have
     occurred as of the first day any one (1) or more of the following
     paragraphs shall have been satisfied:

     (a)  Any Person (other than the Person in control of the Company as of the
          Effective Date of the Plan, or other than a trustee or other fiduciary
          holding securities under an employee benefit plan of the Company, or a
          corporation owned directly or indirectly by the stockholders of the
          Company in substantially the same proportions as their ownership of
          stock in the Company), becomes the Beneficial Owner, directly or
          indirectly, of securities of the Company representing more than fifty
          percent (50%) of the combined voting power of the Company's then
          outstanding securities; or

     (b)  The stockholders of the Company approve:

          (i)       A plan of complete liquidation of the Company; or

          (ii)      An agreement for the sale or disposition of all or
                    substantially all of the Company's assets (other than one in
                    which the stockholders of the Company, as determined
                    immediately prior to such transaction, hold, directly or
                    indirectly, as determined immediately following such
                    transaction, a majority of the voting power of each
                    surviving, resulting or acquiring corporation which,
                    immediately following such transaction, holds more than 10%
                    of the consolidated assets of the Company immediately prior
                    to the transaction); or

          (iii)     A merger, consolidation, or reorganization of the Company
                    with or involving any other corporation, other than a
                    merger, consolidation, or reorganization that would result
                    in the voting securities of the Company outstanding
                    immediately prior thereto continuing to represent (either
                    by remaining outstanding or by being converted into voting
                    securities of the surviving entity) at least fifty percent
                    (50%) of the combined voting power of the voting securities
                    of the Company (or such surviving entity) outstanding
                    immediately after such merger, consolidation or
                    reorganization.

     However, in no event shall a Change in Control be deemed to have occurred,
     with respect to a Employee, if that Employee is part of a purchasing group
     which consummates the Change in Control transaction. The Employee shall be
     deemed "part of a purchasing group" for purposes of the preceding sentence
     if the Employee is an equity participant or has agreed to become an equity
     participant in the purchasing company or group (except for (i) passive
     ownership of less than five percent (5%) of the voting equity securities of
     the purchasing company; or (ii) ownership of equity participation in the
     purchasing company or group which is otherwise deemed not to be
     significant, as determined prior to the Change in Control by a majority of
     the nonemployee continuing Directors).

2.7  "CODE" means the Internal Revenue Code of 1986, as amended from time to
     time.

2.8  "COMMITTEE" means the Compensation Committee of the Board, as specified in
     ARTICLE 3 herein, or such other Committee appointed by the Board to
     administer the Plan with respect to grants of Awards.

2.9  "COMPANY" means Tollgrade Communications, Inc., a Pennsylvania corporation,
     any successor thereto as provided in ARTICLE 17 herein.

2.10 "DIRECTOR" means any individual who is a member of the Board of Directors
     of the Company.


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2.11   "EFFECTIVE DATE" shall have the meaning ascribed to such term in SECTION
       1.1 hereof.

2.12   "EMPLOYEE" means any full-time active employee of the Company who is not
       an Officer, as defined in SECTION 2.18 hereof. Directors shall not be
       considered employees under the Plan.

2.13   "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
       time to time, or any successor act thereto.

2.14   "FAIR MARKET VALUE" shall be the mean between the following prices, as
       applicable, for the date as of which fair market value is to be
       determined as quoted in The Wall Street Journal (or in such other
       reliable publication as the Committee, in its discretion, may determine
       to rely upon): (i) if the Common Stock is listed on the New York Stock
       Exchange, the highest and lowest sales prices per share of the Common
       Stock as quoted in the NYSE Composite Transactions listing for such date,
       (ii) if the Common Stock is not listed on such exchange, the highest and
       lowest sales prices per share of Common Stock for such date on (or on any
       composite index including) the principal united States securities
       exchange registered under the 1934 Act on which the Common Stock is
       listed or (iii) if the Common Stock is not listed on such exchange, the
       highest and lowest sales prices per share of the Common Stock for such
       date on the National Association of Securities Dealers Automated
       Quotations System or any successor system then in use ("NASDAQ"). If
       there are no such sale price quotations for the date as of which fair
       market value is to be determined but there are such sale price quotations
       within a reasonable period both before and after such date, then fair
       market value shall be determined by taking a weighted average of the
       means between the highest and lowest sales prices per share of the Common
       Stock as so quoted on the nearest date before and the nearest date after
       the date as of which fair market value is to be determined. The average
       should be weighted inversely by the respective number of trading days
       between the selling dates and the date as of which fair market value is
       to be determined. If there are no such sale prices quotations on or
       within a reasonable period both before and after the date as of which
       fair market value is to be determined, then fair market value of the
       Common Stock shall be the mean between the bona fide bid and asked prices
       per share of Common Stock as so quoted for such date on NASDAQ, or if
       none, the weighted average of the means between such bona fide bid and
       asked prices on the nearest trading date before and the nearest trading
       date after the date as of which fair market value is to be determined, if
       both such dates are within a reasonable period. The average is to be
       determined in the manner described above in this SECTION 2.14. If the
       fair market value of the Common Stock cannot be determined on any basis
       previously set forth in this SECTION 214 for the date as of which fair
       market value is to be determined, the Committee shall in good faith
       determine the fair market value of the Common Stock on such date. Fair
       market value shall be determined without regard to any restriction other
       than a restriction which, by its terms, will never lapse.

2.15   "FREESTANDING SAR" means an SAR that is granted independently of any
       Options, as described in ARTICLE 7 herein.

2.16   "INSIDER" shall mean an individual who, immediately prior to the grant of
       any Award, owns stock possessing more than ten percent (10%) of the total
       combined voting power of all classes of stock for the Company. For
       purposes of this SECTION 2.16, an individual (i) shall be considered as
       owning not only Shares of Stock owned individually but also all Shares of
       stock that are at the time owned, directly or indirectly, by or for the
       spouse, ancestors, lineal descendants and bothers and sisters (whether by
       whole or half blood) of such individual and (ii) shall be considered as
       owning proportionately any Shares owned, directly or indirectly, by or
       for any corporation, partnership, estate or trust in which such
       individual is a stockholder, partner or beneficiary.

2.17   "NONQUALIFIED STOCK OPTION" OR "NQSO" means an option to purchase Shares
       granted under ARTICLE 6 herein and which is not intended to meet the
       requirements of Code Section 422.

2.18   "OFFICER" means any person serving as an officer on behalf of the
       Company, as defined in the Company's bylaws and by requirements of
       Pennsylvania corporate law, and by the requirements of the rules of the
       National Association of Securities Dealers, Inc.

2.19   "OPTION" means a Nonqualified Stock Option, as described in ARTICLE 6
       herein.

2.20   "OPTION PRICE" means the price at which a Share may be purchased by a
       Employee pursuant to an Option.

2.21   "PERFORMANCE-BASED EXCEPTION" means the performance-based exception from
       the tax deductibility limitations of Code Section 162(m).



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2.22   "PERFORMANCE SHARE" means an Award granted to an Employee, as described
       in ARTICLE 9 herein.


2.23   "PERFORMANCE UNIT" means an award granted to an Employee, as described in
       ARTICLE 9 herein.

2.24   "PERIOD OF RESTRICTION" means the period during which the transfer of
       Shares of Restricted Stock is limited in some way (based upon the passage
       of time, the achievement of performance goals, or upon the occurrence of
       other events as determined by the Committee, at its discretion), and the
       Shares are subject to a substantial risk of forfeiture, as provided in
       ARTICLE 8 herein.

2.25   "PERSON" shall have the meaning ascribed to such term in Section 3(a)(9)
       of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
       including a "group" as defined in Section 13(d) thereof.

2.26   "RESTRICTED STOCK" means an award granted to an Employee pursuant to
       ARTICLE 8 herein.

2.27   "RETIREMENT" shall mean any voluntary termination of employment by an
       Employee following the attainment of age 65.

2.28   "SHARES" means the shares of Common Stock of the Company.

2.29   "STOCK APPRECIATION RIGHT" OR "SAR" means an Award, granted alone or in
       connection with a related Option, designated as an SAR, pursuant to the
       terms of ARTICLE 7 herein.

2.30   "TANDEM SAR" means an SAR that is granted in connection with a related
       Option pursuant to ARTICLE 7 herein, the exercise of which shall require
       forfeiture of the right to purchase a Share under the related Option (and
       when a Share is purchased under the Option, the Tandem SAR shall
       similarly be canceled).

ARTICLE 3. ADMINISTRATION

3.1    THE COMMITTEE. Except as set forth in SECTION 3.5 below, the Plan shall
       be administered by the Compensation Committee of the Board, or by any
       other Committee appointed by the Board consisting of not less than two
       (2) Directors who (i) are "non-employee" directors and otherwise meet the
       "disinterested administration" rules of Rule 16b-3 under the Exchange Act
       and (ii) are "outside directors" under Section 162(m)(4)(C) of the Code,
       or any successor provision. The members of the Committee shall be
       appointed from time to time by, and shall serve at the discretion of, the
       Board of Directors.

3.2    AUTHORITY OF THE COMMITTEE. Except as set forth in SECTION 3.4 below,
       except as limited by law or by the Articles of Incorporation or Bylaws of
       the Company, and subject to the provisions herein, the Committee shall
       have full power to grant Options (with or without SARs) and to award
       Restricted Stock, Performance Shares and Performance Units as described
       herein and to determine the Employees to whom any such award shall be
       made and the number of Shares to be covered thereby; determine the sizes
       and types of Awards; determine terms and conditions of Awards in a manner
       consistent with the Plan; construe and interpret the Plan and any
       agreement or instrument entered into under the Plan as they apply to
       Employees; and (subject to the provisions of ARTICLE 14 herein) amend the
       terms and conditions of any outstanding Award to the extent such terms
       and conditions are within the discretion of the Committee as provided in
       the Plan. Further, the Committee shall make all other determinations
       which may be necessary or advisable for the administration of the Plan,
       as the Plan applies to Employees. As permitted by law the Committee may
       delegate its authority as identified herein.

3.3    DECISIONS BINDING. All determinations and decisions made by the Committee
       pursuant to the provisions of the Plan and all related orders and
       resolutions of the Board shall be final, conclusive and binding on all
       persons, including the Company, its stockholders, Employees, and their
       estates and beneficiaries.

3.4    NON-COMPETITION. If a grantee of an Option, Restricted Stock, Performance
       Units or Performance Shares (i) engages in the operation or management of
       a business (whether as owner, partner, officer, director, employee or
       otherwise and whether during or after employment) which is in competition
       with the Company, (ii) induces or attempts to induce any customer,
       supplier, licensee or other individual, corporation or other business
       organization having a business relationship with the Company to cease
       doing business with the Company or any in any way interferes with the
       relationship between any such customer, supplier, licensee or other
       person and the Company or (iii) solicits any employee of the Company to
       leave the



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       employment thereof or in any way interferes with the relationship of such
       employee with the Company, the Committee, in its discretion, may
       immediately terminate all outstanding Options held by the grantee,
       declare forfeited all Restricted Stock held by the grantee as to which
       the restrictions have not yet lapsed and/or immediately cancel any award
       of Performance Units or Performance Shares. Whether a grantee has engaged
       in any of the activities referred to in the preceding sentence which
       would cause the outstanding Options to be terminated, and/or the
       Restricted Stock to be forfeited and/or any award of Performance Units or
       Performance Shares to be canceled shall be determined, in its discretion,
       by the Committee, and any such determination by the Committee shall be
       final and binding.


ARTICLE 4. SHARES SUBJECT TO THE PLAN

4.1    NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided
       in SECTION 4.3 herein, the number of Shares hereby reserved for issuance
       to Employees under the Plan shall be 990,000; provided that, of that
       total, the maximum number of Shares of Restricted Stock granted pursuant
       to ARTICLE 8 herein, shall be 50,000.

4.2    LAPSED AWARDS. If any Award granted under this Plan is canceled,
       terminates, expires or lapses for any reason (with the exception of
       termination of a Tandem SAR upon exercise of the related Option, or the
       termination of a related Option upon exercise of the corresponding Tandem
       SAR), any Shares subject to such Award shall again be available for the
       grant of an Award under the Plan.

4.3    ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate
       capitalization, such as a stock split, or a corporate transaction, such
       as any merger, consolidation, separation, including a spin-off, or other
       distribution of stock or property of the Company, any reorganization
       (whether or nor such reorganization comes within the definition of such
       term in Code Section 368) or any partial or complete liquidation of the
       Company, such adjustment shall be made in the number and class of Shares
       which may be delivered under SECTION 4.1 and in the number and class of
       and/or price of Shares subject to outstanding Awards granted under the
       Plan, and in the number and class of and/or price of Shares subject to
       outstanding Awards granted under the Plan, as may be determined to be
       appropriate and equitable by the Committee, in its sole discretion, to
       prevent dilution or enlargement of rights; provided, however, that the
       number of Shares subject to any Award shall always be a whole number.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

5.1    ELIGIBILITY. Persons eligible to participate in this Plan shall include
       all Employees of the Company, excluding Officers and Directors.

5.2    ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
       Committee may, from time to time, select from all eligible Employees
       those to whom Awards shall be granted and shall determine the nature and
       amount of each Award.

ARTICLE 6. STOCK OPTIONS

6.1    GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, the
       Committee may grant Nonqualified Stock Options in such number, and upon
       such terms, and at any time and from time to time as shall be determined
       by the Committee.

6.2    AWARD AGREEMENT. Each Option shall be evidenced by an Award Agreement
       that shall specify the Option Price, the duration of the Option, the
       number of Shares to which the Option pertains, and such other provisions
       as the Committee shall determine.


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6.3    OPTION PRICE. The Option Price at which each Option may be exercised
       shall be no less than one hundred percent (100%) of the fair market value
       per share of the Common Stock covered by the Option on the date of grant.
       For purposes of this SECTION 6.3, the fair market value of the Common
       Stock shall be as determined in SECTION 2.15.

6.4    DURATION OF OPTIONS. Each Option granted to an Employee shall expire at
       such time as the Committee shall determine at the time of grant;
       provided, however, that no Option shall be exercisable after the
       expiration of ten years from the date of grant.

6.5    EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
       exercisable at such times and be subject to such restrictions and
       conditions as the Committee shall in each instance approve, which need
       not be the same for each grant or for each Employee.

6.6    PAYMENT. Options granted under this Article 6 shall be exercised by the
       delivery of a written notice of exercise to the Company, setting forth
       the number of Shares with respect to which the Option is to be exercised,
       accompanied by full payment for the Shares.

       The Option Price upon exercise of the Option shall be payable to the
       Company in full either: (a) in cash in United States Dollars (including
       check, bank draft or money order), or (b) by tendering previously
       acquired Shares having an aggregate Fair Market Value at the time of
       exercise equal to the total Option Price, or (c) by a combination of (a)
       and (b).

       The Company will also cooperate with any person exercising an Option who
       participates in a cashless exercise program of a broker or other agent
       under which all or part of the Shares received upon exercise of the
       Option are sold through the broker or other agent or under which the
       broker or other agent makes a loan to such person. Notwithstanding the
       foregoing, unless the Committee, in its discretion, shall otherwise
       determine at the time of grant the exercise of the Option shall not be
       deemed to occur and no Shares of Common Stock will be issued by the
       Company upon exercise of the Option until the Company has received
       payment of the Option Price in full.

6.7    RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
       restrictions on any Shares acquired pursuant to the exercise of an Option
       granted under this ARTICLE 6 as it may deem advisable, including, without
       limitation, restrictions under applicable Federal securities laws, under
       the requirements of any stock exchange or market upon which such Shares
       are then listed and/or traded, and under any blue sky or other state
       securities laws applicable to such Shares.

6.8    TERMINATION OF EMPLOYMENT. Unless the Committee, in its discretion, shall
       otherwise determine:

       (i) If the employment of an Employee who is not disabled within the
       meaning of Section 422(c)(6) of the Code (a "Disabled Grantee") is
       voluntarily terminated with the consent of the Company or an Employee
       retires under any retirement plan of the Company, any Option held by such
       Employee shall be exercisable by the Employee (but only to the extent
       exercisable by the Employee immediately prior to the termination of
       employment) at any time prior to the expiration date of such Option or
       within one year after the date of termination, whichever is the shorter
       period;

       (ii) If the employment of an Employee who is a Disabled Grantee is
       voluntarily terminated with the consent of the Company, any outstanding
       Option held by such Employee shall be exercisable by the Employee in full
       (whether or not so exercisable by the Employee immediately prior to the
       termination of employment) at any time prior to the expiration date of
       such Option or within one year after the date of termination of
       employment, whichever is the shorter period;

       (iii) Following the death of an Employee during employment, any
       outstanding Option held by the Employee at the time of death shall be
       exercisable in full (whether or not so exercisable by the Employee
       immediately prior to the death of the Employee) by the person entitled to
       do so under the Will of the Employee, or, if the Employee shall fail to
       make testamentary disposition of the stock option or shall die intestate,
       by the legal representative of the Employee at any time prior to the
       expiration date of such stock option or within one year after the date of
       death of the Employee, whichever is the shorter period;



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       (iv) Following the death of an Employee after termination of employment
       during the period when an Option is exercisable, the Option shall be
       exercisable by such person entitled to do so under the Will of the
       Employee by such legal representative (but only to the extent exercisable
       by the Employee immediately prior to the termination of employment) at
       any time prior to the expiration date of such Option or within one year
       after the date of death, whichever is the shorter period;

       (v) Unless the exercise period of a stock option following termination of
       employment has been extended as provided in SECTION 13.1, if the
       employment of an Employee terminates for any reason other than voluntary
       termination with the consent of the Company, retirement under any
       retirement plan of the Company or death, all outstanding Options held by
       the Employee at the time of such termination of employment shall
       automatically terminate; provided, however, that if the employment of an
       Employee is involuntarily terminated by the Company without Cause, any
       Option held by such Employee at the time of such termination that was
       granted to Employee on or after May 3, 2001, shall be exercisable by the
       Employee (but only to the extent exercisable by the Employee immediately
       prior to the termination of employment) at any time prior to the
       expiration date of such Option or within one year after the date of
       termination of employment, whichever is the shorter period. Whether
       termination of employment is a voluntary termination with the consent of
       the Company or an involuntary termination with or without cause shall be
       determined, in its discretion, by the Committee and any such
       determination by the Committee shall be final and binding.


6.9    NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may be
       sold, transferred, pledged, assigned, or otherwise alienated or
       hypothecated, other than by Will or if the Employee dies intestate by the
       laws of descent and distribution of the state of domicile of the Employee
       at the time of death. Further, all Options granted to an Employee under
       the Plan shall be exercisable during his or her lifetime only by the
       Employee.


ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1    GRANT OF SARs. Subject to the terms and conditions of the Plan, SARs may
       be granted to Employees at any time and from time to time as shall be
       determined by the Committee. The Committee may grant Freestanding SARs,
       Tandem SARs, or any combination of these forms of SARs. The Committee
       shall have complete discretion in determining the number of SARs granted
       to each Employee (subject to ARTICLE 4 herein) and, consistent with the
       provisions of the Plan, in determining the terms and conditions
       pertaining to such SARs. The grant price of a Freestanding SAR shall
       equal the Fair Market Value of a Share on the date of grant of the SAR.
       The grant price of Tandem SARs shall equal the Option Price of the
       related Option, as provided in SECTION 6.3.

7.2    EXERCISE OF TANDEM SARs. Tandem SARs may be exercised for all or part of
       the Shares subject to the related Option upon the surrender of the right
       to exercise the equivalent portion of the related Option. A Tandem SAR
       may be exercised only with respect to the Shares for which its related
       Option is then exercisable.

7.3    EXERCISE OF FREESTANDING SARs. Freestanding SARs may be exercised upon
       whatever terms the Committee, in its sole discretion, imposes upon them.

7.4    SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
       that shall specify the grant price, the term of the SAR, and such other
       provisions as the Committee shall determine.

7.5    TERM OF SARs. The term of an SAR granted under the Plan shall be
       determined by the Committee, in its sole discretion; provided however,
       that such term shall not exceed ten (10) years.

7.6    PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, an Employee shall be
       entitled to receive payment from the Company in an amount determined by
       multiplying:

       (a) the difference between the Fair Market Value of a Share on the date
       of exercise over the grant price; by
       (b) the number of Shares with respect to which the SAR is granted.



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       At the discretion of the Committee, the payment upon SAR exercise may be
       in cash, in Shares of equivalent value, or in some combination thereof.

7.7    RULE 16b-3 REQUIREMENTS. Notwithstanding any other provision of the Plan,
       the Committee may impose such conditions on the exercise of an SAR as may
       be required to satisfy the requirements of Section 16 of the Exchange Act
       (or any successor rule).

7.8    TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the
       extent to which the Employee shall have the right to exercise the SAR
       following termination of the Employee's employment with the Company
       and/or its Subsidiaries. Such provisions shall be determined in the sole
       discretion of the Committee, shall be included in the Award Agreement
       entered into with Employees, need not be uniform among all SARs issued
       pursuant to the Plan, and may reflect distinctions based on the reasons
       for termination of such employment.

7.9    NONTRANSFERABILITY OF SARS. No SAR granted under the Plan may be sold,
       transferred, pledged, assigned, or otherwise alienated or hypothecated,
       other than by will or, if the grantee dies intestate, by the laws of
       descent and distribution of the state of domicile of the grantee at the
       time of death. Further, all SARs granted to an Employee under the Plan
       shall be exercisable during his or her lifetime only by such Employee.


ARTICLE 8. RESTRICTED STOCK

8.1    GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
       Plan, the Committee, at any time and from time to time, may grant Shares
       of Restricted Stock to Employees in such amounts as the Committee shall
       determine.

8.2    RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
       evidenced by a Restricted Stock Award Agreement that shall specify the
       Period(s) of Restriction, the number of Shares of Restricted Stock
       granted, and such other provisions as the Committee shall determine.

8.3    TRANSFERABILITY. Except as provided in this ARTICLE 8, the Shares of
       Restricted Stock granted herein may not be sold, transferred, pledged,
       assigned or otherwise alienated or hypothecated until the end of the
       applicable Period of Restriction established by the Committee and
       specified in the Restricted Stock Award Agreement, or upon earlier
       satisfaction of any other conditions, as specified by the Committee in
       its sole discretion and set forth in the Restricted Stock Award
       Agreement. All rights with respect to the Restricted Stock granted to an
       Employee under the Plan shall be available during his or her lifetime
       only to such Employee.

8.4    OTHER RESTRICTIONS. Subject to ARTICLE 10 herein, the Committee shall
       impose such other conditions and/or restrictions on any Shares of
       Restricted Stock granted pursuant to the Plan as it may deem advisable
       including, without limitation, a requirement that Employees pay a
       stipulated purchase price for each Share of Restricted Stock,
       restrictions based upon the achievement of specific performance goals
       (Company-wide, divisional, and/or individual), time-based restrictions on
       vesting following the attainment of the performance goals, and/or
       restrictions under applicable Federal or state securities laws. The
       Company shall retain the certificates representing Shares of Restricted
       Stock in the Company's possession until such time as all conditions
       and/or restrictions applicable to such Shares have been satisfied. Except
       as otherwise provided in this ARTICLE 8, Shares of Restricted Stock
       covered by each Restricted Stock grant made under the Plan shall become
       freely transferable by the Employee after the last day of the applicable
       Period of Restriction.

8.5    VOTING RIGHTS. During the Period of Restriction, Employees holding Shares
       of Restricted Stock granted hereunder may exercise full voting rights
       with respect to those Shares.

8.6    DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
       Employees holding Shares of Restricted Stock granted hereunder may be
       credited with regular cash dividends paid with respect to the underlying
       Shares while they are so held. The Committee may apply any restrictions
       to the dividends that the Committee deems appropriate. In the event that
       any dividend constitutes a "derivative security" or an "equity security"
       pursuant to




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       Rule 16(a) under the Exchange Act, such dividend shall be subject to a
       vesting period equal to the remaining vesting period of the Shares of
       Restricted Stock with respect to which the dividend is paid.

8.7    TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement shall
       set forth the extent to which the Employee shall have the right to
       receive unvested Restricted Shares following termination of the
       Employee's employment with the Company. Such provisions shall be
       determined in the sole discretion of the Committee, shall be included in
       the Award Agreement entered into with each Employee, need not be uniform
       among all Shares of Restricted Stock issued pursuant to the Plan, and may
       reflect distinctions based upon the reasons for termination of such
       employment.

ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES

9.1    GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
       Performance Units and/or Performance Shares may be granted to Employees
       in such amounts and upon such terms, and at any time and from time to
       time, as shall be determined by the Committee.

9.2    VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an
       initial value that is established by the Committee at the time of grant.
       Each Performance Share shall have an initial value equal to the Fair
       Market Value of a Share on the date of grant. The Committee shall set
       performance goals in its discretion which, depending upon the extent to
       which they are met, will determine the number and/or value of Performance
       Units/Shares that will be paid out to the Employee. For purposes of this
       ARTICLE 9, the time period during which the performance goals must be met
       shall be called a "Performance Period."

9.3    EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan,
       after the applicable Performance Period has ended, the holder of
       Performance Units/Shares shall be entitled to receive payout on the
       number and value of Performance Units/Shares earned by the Employee over
       the Performance Period, to be determined as a function of the extent to
       which the corresponding performance goals have been achieved.

9.4    FORM AND TIMING OF PERFORMANCE UNITS/SHARES. Payment of earned
       Performance Units/Shares shall be made in a single lump sum within
       seventy-five (75) calendar days following the close of the applicable
       Performance Period. Subject to the terms of this Plan, the Committee, in
       its sole discretion, may pay earned Performance Units/Shares in the form
       of cash or Shares (or a combination thereof) which have an aggregate Fair
       Market Value equal to the value of the earned Performance Units/Shares at
       the close of the applicable Performance Period. Such Shares may be
       granted subject to any restrictions deemed appropriate by the Committee.

       At the discretion of the Committee, Employees may be entitled to receive
       any dividends declared with respect to Shares which have been earned in
       connection with grants of Performance Units and/or Performance Shares
       which have been earned, but not yet distributed to Employees (such
       dividends shall be subject to the same accrual, forfeiture, and payout
       restrictions as apply to dividends earned with respect to Shares of
       Restricted Stock, as set forth in SECTION 8.6 herein). In addition,
       Employees may, at the discretion of the Committee, be entitled to
       exercise their voting rights with respect to such Shares.

9.5    TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT. Unless
       otherwise determined by the Committee and set forth in the Employee's
       Award Agreement, in the event the employment of an Employee is terminated
       by reason of death, disability or Retirement during a Performance Period,
       the Employee shall receive a payout of the Performance Units/Shares which
       is prorated, as specified by the Committee in its discretion. Payment of
       earned Performance Units/Shares shall be made at a time specified by the
       Committee in its sole discretion and set forth in the Employee's Award
       Agreement.

9.6    TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that an
       Employee's employment terminates for any reason other than those reasons
       set forth in SECTION 9.5 herein, all Performance Units/Shares shall be
       forfeited by the Employee to the Company unless determined otherwise by
       the Committee, as set forth in the Employee's Award Agreement.




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<PAGE>



9.7    NONTRANSFERABILITY. Performance Units/Shares may not be sold,
       transferred, pledged, assigned or otherwise alienated or hypothecated,
       other than by will or if the grantee dies intestate by the laws of
       descent and distribution of the state of domicile of the grantee at the
       time of death. Further, an Employee's rights under the Plan shall be
       exercisable during the Employee's lifetime only by the Employee or the
       Employee's legal representative.


ARTICLE 10. BENEFICIARY DESIGNATION

Each Employee under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Employee, shall be in a form prescribed by the
Company, and will be effective only when filed by the Employee in writing with
the Company during the Employee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Employee's death shall be paid to
the Employee's estate.

ARTICLE 11. DEFERRALS

The Committee may permit or require an Employee to defer such Employee's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Employee by virtue of the exercise of an Option or SAR, the lapse or waiver
of restrictions with respect to Restricted Stock, or the satisfaction of any
requirements or goals with respect to Performance Units/Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.


ARTICLE 12. RIGHTS OF EMPLOYEES

12.1   EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way
       the right of the Company to terminate any Employee's employment at any
       time, nor confer upon any Employee any right to continue in the employ of
       the Company.


12.2   PARTICIPATION. No Employee shall be entitled to have the right to be
       selected to receive an Award under this Plan, or having been so selected,
       to be selected to receive a future Award.

ARTICLE 13. CHANGE IN CONTROL

13.1   TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
       Control, unless otherwise specifically prohibited under applicable laws,
       or by the rules and regulations of any governing governmental agencies or
       national securities exchanges:

       (a) Any and all Options and SARs granted hereunder shall become
       immediately exercisable, and shall remain exercisable throughout their
       entire term;

       (b) Any restriction periods and restrictions imposed on Restricted
       Shares shall lapse;



       (c) The target payout opportunities attainable under all outstanding
       Awards of Restricted Stock, Performance Units and Performance Shares
       shall be deemed to have been fully earned for the entire Performance
       Period(s) as of the effective date of the Change in Control. The vesting
       of all Awards denominated in Shares shall be accelerated as of the
       effective date of the Change in Control, and there shall be paid out in
       cash to Employees within thirty (30) days following the effective date of
       the Change in Control an amount equal to one hundred percent (100%) of
       all targeted cash payout opportunities associated with outstanding
       cash-based Awards; and


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<PAGE>

       (d) Subject to ARTICLE 14 herein, the Committee shall have the authority
       to make any modifications to the Awards as determined by the Committee to
       be appropriate before the effective date of the Change in Control.

13.2   ACCELERATION OF AWARD VESTING. Notwithstanding any provision of this Plan
       or any Award Agreement provision to the contrary, the Committee, in its
       sole and exclusive discretion, shall have the power at any time to
       accelerate the vesting of any Award granted under the Plan to any
       Employee, including without limitation acceleration to such a date that
       would result in said Awards becoming immediately vested.

13.3   TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE IN CONTROL PROVISIONS.
       Notwithstanding any other provision of this Plan or any Award Agreement
       provision, the provisions of this ARTICLE 13 may not be terminated,
       amended or modified on or after the date of a Change in Control to affect
       adversely any Award theretofore granted under the plan without the prior
       written consent of the Employee with respect to said Employee's
       outstanding Awards; provided, however, the Board of Directors, upon
       recommendation of the committee, may terminate, amend, or modify this
       ARTICLE 13 at any time and from time to time prior to the date of a
       Change in Control.

ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION

14.1   AMENDMENT, MODIFICATION AND TERMINATION. The Board may at any time and
       from time to time, alter, amend, suspend, or terminate the Plan in whole
       or in part.

14.2   ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
       NONRECURRING EVENTS. The Committee may make adjustments in the terms and
       conditions of, and the criteria included in, Awards in recognition of
       unusual or nonrecurring events (including, without limitation, the events
       described in SECTION 4.3 hereof) affecting the Company or the financial
       statements of the Company or of changes in applicable laws, regulations,
       or accounting principles, whenever the Committee determined that such
       adjustments are appropriate in order to prevent dilution or enlargement
       of the benefits or potential benefits intended to be made available under
       the Plan; provided that no such adjustment shall be authorized to the
       extent that such authority would be inconsistent with the Plan's meeting
       the requirements of Section 162(m) of the Code, as from time to time
       amended.

14.3   AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of
       the Plan shall adversely affect in any material way any Award previously
       granted under the Plan, without the written consent of the Employee
       holding such Award.

14.4   COMPLIANCE WITH CODE 162(m). At all times when Code Section 162(m) is
       applicable, all Awards granted under this Plan shall comply with the
       requirements of Code Section 162(m); provided, however, that in the event
       the Committee determines that such compliance is not desired with respect
       to any Award or Awards available for grant under the Plan, then
       compliance with Code Section 162(m) will not be required. In addition, in
       the event that any changes are made to Code Section 162(m) to permit
       greater flexibility with respect to any Award or Awards available under
       the Plan, the Committee may, subject to this ARTICLE 14, make any
       adjustments it deems appropriate.

ARTICLE 15. WITHHOLDING

15.1   TAX WITHHOLDING. The Company shall have the power and the right to deduct
       or withhold, or require any Employee to remit to the Company, an amount
       sufficient to satisfy Federal, state and local taxes, domestic or
       foreign, required by law or regulation to be withheld with respect to any
       taxable event arising as a result of this Plan.

15.2   SHARE WITHHOLDING. With respect to withholding required upon the exercise
       of Options or SARs, upon the lapse of restrictions on Restricted Stock,
       or upon any other taxable event arising as a result of Awards granted
       hereunder, Employees may elect, subject to the approval of the Committee,
       to satisfy the withholding requirement, in whole or in part, by having
       the Company withhold Shares having a Fair Market Value on the date the
       tax is to be determined equal to the minimum statutory total tax which
       could be imposed on the action. All such elections shall be irrevocable,
       made in writing, signed by the Employee, and shall be subject to any
       restrictions or limitations that the Committee, in its sole discretion,
       may determine.




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<PAGE>

ARTICLE 16. INDEMNIFICATION

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
or she shall give the Company an opportunity at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other right of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

ARTICLE 17.          SUCCESSOR

All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding upon any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

ARTICLE 18. LEGAL CONSTRUCTION

18.1   GENDER AND NUMBER. Except where otherwise indicated by the context, any
       masculine term used herein shall also include the feminine; the plural
       shall include the singular and the singular shall include the plural.

18.2   SEVERABILITY. In the event any provision of the Plan shall be held
       illegal or invalid for any reason, the illegality or invalidity shall not
       affect the remaining parts of the Plan, and the Plan shall be construed
       and enforced as if the illegal or invalid provision had not been
       included.

18.3   REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
       under the Plan shall be subject to all applicable laws, rules, and
       regulations, and to such approvals by governmental agencies or national
       securities exchanges as may be required.

18.4   SECURITIES LAW COMPLIANCE. With respect to (i) any person who is required
       to file reports pursuant to the rules promulgated under Section 16 of the
       Exchange Act and (ii) insiders, transactions under this Plan are intended
       to comply with all applicable conditions of Rule 16b-3 or its successors
       under the Exchange Act. To the extent any provision of the Plan or action
       by the Committee fails to so comply, it will be deemed null and void to
       the extent permitted by law and deemed advisable by the Committee.

18.5   GOVERNING LAW. To the extent not preempted by Federal law, the Plan and
       all agreements hereunder, shall be construed in accordance with and
       governed by the laws of the Commonwealth of Pennsylvania.




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