PHL_A 1008029 v 1




                             C-COR ELECTRONICS, INC.

                                 INCENTIVE PLAN


                                    ARTICLE I

                                     Purpose


The purpose of this Incentive Plan (the "Plan") is to enable C-COR  Electronics,
Inc. (the "Company") to offer certain  officers,  key employees and directors of
the  Company  equity  interests  in the  Company  and  other  incentive  awards,
including performance-based stock incentives, thereby attracting,  retaining and
rewarding such persons,  and  strengthening  the mutuality of interests  between
such persons and the Company's shareholders.


                                   ARTICLE II

                                   Definitions


For  purposes  of this  Plan,  the  following  terms  shall  have the  following
meanings:

2.1  "Award"  shall mean an award under this Plan of Stock  Options,  Restricted
Stock, Performance Shares or Performance Units.

2.2 "Board" shall mean the Board of Directors of the Company.

2.3 "Change of Control" shall mean the occurrence of any one of the following:

(a) Any  person  or group of  persons  acting in  concert  shall  have  acquired
ownership  of or the right to vote or to direct  the voting of shares of capital
stock of the Company  representing  30% or more of the total voting power of the
Company, or

(b) The Company shall have merged into or consolidated with another corporation,
or merged another corporation into the Company, on a basis whereby less than 50%
of the total voting power of the surviving  corporation is represented by shares
held  by  former   shareholders   of  the  Company   prior  to  such  merger  or
consolidation, or

(c) The  Company  shall  have  sold  more  than  50% of its  assets  to  another
corporation or other entity or person, or

(d) As the result of, or in connection  with, any cash tender or exchange offer,
merger or other business combination,  sale of assets or contested election, the
persons who were  Directors  of the Company  before  such  transaction  cease to
constitute a majority of Directors of the Company.

2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.

2.5 "Common Stock" shall mean the Common Stock, par value $.10 per share, of the
Company.

2.6 "Director" shall mean a member of the Board.

2.7  "Disability"  shall mean  Total  Disability  as  defined  in the  Company's
long-term disability plan.

2.8 "Fair Market Value" for purposes of this Plan, unless otherwise  required by
any applicable provision of the Code or any regulations issued thereunder, shall
mean, as of any date,  the closing sale price of a share of Common Stock for the
preceding business day as reported on the principal national securities exchange
on which the Common Stock is listed or admitted to trading, or, if not listed or
traded on any such  exchange,  the Nasdaq Stock Market  ("Nasdaq"),  or, if such
sale price is not  available,  the average of the bid and asked prices per share
reported on Nasdaq for such day, or, if such  quotations are not available,  the
fair market  value as  determined  by the Board,  which  determination  shall be
conclusive.

2.9  "Participant"  shall  mean an  individual  to whom an Award  has been  made
pursuant to this Plan.

2.10 "Performance Cycle" shall have the meaning set forth in Section 9.1.

2.11 "Performance Period" shall have the meaning set forth in Section 8.1.

2.12  "Performance  Share" shall mean an Award made  pursuant to Article VIII of
this  Plan of the  right  to  receive  Common  Stock  at the end of a  specified
Performance Period if specified performance goals are met.

2.13 "Performance  Unit" shall mean an Award made pursuant to Article IX of this
Plan of the right to receive a fixed  dollar  amount,  payable in cash or Common
Stock or a combination of both, at the end of a specified  Performance  Cycle if
specified performance goals are met.

2.14 "Restricted Stock" shall mean an Award of shares of Common Stock under this
Plan that is subject to forfeiture under Article VII.

2.15 "Restriction Period" shall have the meaning set forth in Section 7.2(c).

2.16 "Retirement"  shall mean retirement from employment with the Company or one
of its  subsidiaries,  provided that the employee at such time has been employed
by the Company or a subsidiary  of the Company for at least five years and is at
least 55 years old.

2.17  "Stock  Option" or "Option"  shall mean any option to  purchase  shares of
Common Stock granted pursuant to Article VI.

2.18  "Termination  of Employment"  shall mean (a)  termination of an employee's
employment with the Company and all of its subsidiaries for reasons other than a
military or personal leave of absence  granted by the Company or (b) the date on
which a Director ceases to be a member of the Board for any reason.


                                   ARTICLE III

                                 Administration

3.1 Administration. The Plan shall be administered and interpreted by the Board;
provided,  however,  that  the  Board  may  delegate  this  responsibility  to a
committee comprised of two or more members of the Board.

3.2 Awards. The Board shall have full authority to grant,  pursuant to the terms
of this Plan,  to persons  eligible  under  Article V: (i) Stock  Options,  (ii)
Restricted  Stock,  (iii)  Performance  Shares and (iv)  Performance  Units.  In
particular, the Board shall have the authority:

(a) to select  the  persons  eligible  under  Article V to whom  Stock  Options,
Restricted Stock, Performance Shares and Performance Units may from time to time
be granted hereunder;

(b) to determine  whether and to what extent Stock  Options,  Restricted  Stock,
Performance Shares and Performance Units, or any combination  thereof, are to be
granted hereunder to one or more persons eligible under Article V;

(c) to  determine  the  number of shares of Common  Stock to be  covered by each
Award granted hereunder; and

(d) to determine the terms and conditions,  not  inconsistent  with the terms of
this Plan, of any Award granted  hereunder  (including,  but not limited to, the
term, the option or purchase price,  any restriction or limitation,  any vesting
schedule or  acceleration  thereof,  or any  forfeiture  restrictions  or waiver
thereof,  regarding any Award and the shares of Common Stock  relating  thereto,
based on such factors as the Board shall determine, in its sole discretion).

3.3 Guidelines.  Subject to Article X hereof, the Board shall have the authority
to adopt, alter and repeal such administrative  rules,  guidelines and practices
governing this Plan as it shall, from time to time, deem advisable; to interpret
the terms and provisions of this Plan and any Award granted under this Plan (and
any agreements relating thereto);  and to otherwise supervise the administration
of this Plan. The Board may correct any defect, supply any omission or reconcile
any  inconsistency in this Plan or in any Award granted in the manner and to the
extent it shall deem  necessary to carry this Plan into effect.  Notwithstanding
the  foregoing,  no action of the Board under this  Section 3.3 shall impair the
rights of any Participant without the Participant's consent.

3.4 Decisions Final. Any decision,  interpretation or other action made or taken
in good faith by the Board arising out of or in  connection  with the Plan shall
be final,  binding and  conclusive on the Company,  all  Participants  and their
respective heirs, executors, administrators, successors and assigns.


                                   ARTICLE IV

                                Share Limitation


4.1 Shares.  The maximum  aggregate number of shares of Common Stock that may be
issued  under this Plan shall be  1,000,000  shares  (subject to any increase or
decrease  pursuant to Section 4.2), plus an additional number of shares equal to
the number of shares  remaining  available for grant under the 1988 Stock Option
Plan and the 1989 Non-Employee Directors'  Non-Qualified Stock Option Plan as of
the effective  date of this Plan pursuant to Section 13.1 hereof.  The shares of
Common Stock issued under this Plan may be either authorized and unissued Common
Stock or issued Common Stock  reacquired by the Company.  If any Option  granted
under this Plan shall expire,  terminate or be cancelled for any reason  without
having been exercised in full,  the number of unpurchased  shares shall again be
available  for the purposes of the Plan.  Further,  if any shares of  Restricted
Stock  granted  hereunder  are  forfeited  or any  Award of  Performance  Shares
terminates  without the  delivery  of such  shares,  the shares  subject to such
Award, to the extent of such forfeiture or termination, shall again be available
under this Plan.

4.2  Changes.  In  the  event  of  any  merger,  reorganization,  consolidation,
recapitalization, dividend (other than a regular cash dividend), stock split, or
other  change  in  corporate   structure   affecting  the  Common  Stock,   such
substitution  or  adjustment  shall be made in the maximum  aggregate  number of
shares that may be issued under this Plan,  in the maximum  aggregate  number of
shares with respect to which Options or Performance  Shares may be granted under
this Plan to any  individual  during any calendar year, in the number and option
price of shares subject to outstanding  Options  granted under this Plan, and in
the number of shares  subject to other  outstanding  Awards  granted  under this
Plan,  as  may  be  determined  to be  appropriate  by the  Board,  in its  sole
discretion, provided that the number of shares subject to any Award shall always
be a whole number.


                                    ARTICLE V

                                   Eligibility


5.1 Employees.  Officers and other employees of the Company and its subsidiaries
are eligible to be granted Awards under this Plan.

5.2 Directors.  Directors of the Company who are not employees of the Company or
any of its subsidiaries are eligible to be granted Awards under this Plan.


                                   ARTICLE VI

                                  Stock Options


6.1 Options.  Each Stock Option granted under this Plan shall be a non-qualified
stock option  (i.e.,  a stock  option that is not  intended to be an  "incentive
stock option" within the meaning of Section 422 of the Code).

6.2 Grants.  The Board shall have the authority to grant to any person  eligible
under Article V one or more Stock Options; provided, however, that no individual
may be  granted  Stock  Options  for more than  100,000  shares of Common  Stock
(subject  to any  increase  or  decrease  pursuant  to Section  4.2)  during any
calendar year.

6.3 Terms of Options.  Options  granted  under this Plan shall be subject to the
following  terms and  conditions  and shall  contain such  additional  terms and
conditions,  not  inconsistent  with the terms of this Plan,  as the Board shall
deem desirable:

(a) Stock Option  Certificate.  Each Stock  Option  shall be  evidenced  by, and
subject to the terms of, a Stock Option Certificate executed by the Company. The
Stock  Option  Certificate  shall  specify the number of shares of Common  Stock
subject to the Stock Option,  the option price,  the option term,  and the other
terms and conditions applicable to the Stock Option.

(b) Option Price.  The option price per share of Common Stock  purchasable  upon
exercise of a Stock Option shall be determined by the Board at the time of grant
but shall be not less than  100% of the Fair  Market  Value of a share of Common
Stock on the date of grant.

(c) Option Term. The term of each Stock Option shall be fixed by the Board,  but
no Stock Option shall be exercisable more than eight (8) years after the date it
is granted.

(d) Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and  conditions as shall be determined by the Board at the
time of grant.  The Board may waive any  installment  exercise or waiting period
provisions,  in whole or in part, at any time after the date of grant,  based on
such factors as the Board shall, in its sole discretion, deem appropriate.

(e) Method of Exercise.  Subject to such installment exercise and waiting period
provisions  as may be imposed by the Board,  Stock  Options may be  exercised in
whole or in part at any time during the option term, by giving written notice of
exercise to the Company  specifying  the number of shares of Common  Stock to be
purchased and the option price  therefor.  Such notice shall be  accompanied  by
payment in full of the option price in such form as the Board may accept and, if
requested,  by the  representation  described in Section 12.4.  Unless otherwise
determined  by the Board in its sole  discretion  at or after grant,  payment in
full or in part  may be made in the  form of  Common  Stock  duly  owned  by the
Participant  (and for which the Participant has good title free and clear of any
liens and  encumbrances),  based on the Fair Market Value of the Common Stock on
the date of  exercise,  or through a  broker-assisted  cashless  exercise.  Upon
payment in full of the option  price,  as provided  herein,  stock  certificates
representing  the number of shares of Common Stock to which the  Participant  is
entitled  shall be issued and  registered  in the name of, and delivered to, the
Participant.

(f) Death. Upon a Participant's  death, unless otherwise determined by the Board
at the time of grant,  all Stock Options held by such  Participant  shall become
fully exercisable and may thereafter be exercised by the legal representative of
the  Participant's  estate  for a  period  of one  year  from  the  date  of the
Participant's  death or until the  expiration  of the stated  term of such Stock
Option, whichever period is shorter.

(g) Disability.  Upon a Participant's Termination of Employment as a result of a
Disability  (as  determined  by the Board,  in its sole  discretion),  any Stock
Option  held  by such  Participant  that  was  exercisable  on the  date of such
Termination of Employment may thereafter be exercised by the  Participant  for a
period of one year from the date of such  Termination of Employment or until the
expiration of the stated term of such Stock Option, whichever period is shorter;
provided,  however,  that, if the Participant  dies within such one-year period,
any  unexercised  Stock  Option held by such  Participant  shall  thereafter  be
exercisable  by the  legal  representative  of the  Participant's  estate to the
extent to which it was  exercisable  at the time of  death,  for a period of one
year from the date of the  Participant's  death or until the  expiration  of the
stated term of such Stock Option, whichever period is shorter.

(h) Retirement. Upon a Participant's Retirement,  unless otherwise determined by
the Board at the time of grant, all Stock Options held by such Participant shall
become fully  exercisable  and may  thereafter  be exercised for a period of one
year from the date of the  Participant's  Retirement or until the  expiration of
the stated term of such Stock Option, whichever period is shorter.

(i) Termination of Employment.  Unless otherwise  determined by the Board at the
time of grant,  upon a  Participant's  Termination  of Employment for any reason
other than  death,  Disability  or  Retirement,  any Stock  Option  held by such
Participant  that was exercisable on the date of such  Termination of Employment
may thereafter be exercised by the  Participant for a period of 30 days or until
the  expiration  of the stated term of such Stock  Option,  whichever  period is
shorter.  Any  Stock  Option  that  was  not  exercisable  on the  date  of such
Termination of Employment shall terminate as of such date.

(j) Board Discretion.  Notwithstanding  any other provision of this Plan, upon a
Participant's  Termination  of  Employment  for  any  reason  (including  death,
Disability or Retirement), the Board may, in its sole discretion, accelerate the
exercisability of any outstanding  Stock Option held by such Participant  and/or
extend the post-termination  exercise periods set forth in subsections (f), (g),
(h) and (i) of this Section 6.3,  provided that such  post-termination  exercise
period may not extend  beyond the  expiration  of the stated  term of such Stock
Option.


                                   ARTICLE VII

                                Restricted Stock


7.1 Awards of  Restricted  Stock.  The Board shall have the  authority  to grant
Restricted  Stock to any  person  eligible  under  Article  V. The  Board  shall
determine to whom,  and the time or times at which,  grants of Restricted  Stock
will be made,  the number of shares to be included  in each  Award,  the time or
times  within  which  such  Awards may be subject  to  forfeiture,  the  vesting
schedule and rights to acceleration  thereof, and the other terms and conditions
of the Awards, in addition to those set forth in Section 7.2.

The  provisions of Restricted  Stock Awards need not be the same with respect to
each  Participant,  and such Awards to individual  Participants  need not be the
same in subsequent years.

7.2 Terms and Conditions.  Restricted Stock awarded pursuant to this Article VII
shall be subject to the following  terms and conditions and such other terms and
conditions,  not  inconsistent  with the terms of this Plan,  as the Board shall
deem desirable:

(a) Award  Certificate.  Each Restricted  Stock Award shall be evidenced by, and
subject to the terms of, a Restricted  Stock Award  Certificate  executed by the
Company.  The  Restricted  Stock Award  Certificate  shall specify the number of
shares of Common Stock subject to the Award, the time or times within which such
Restricted  Stock is subject to forfeiture  and the other terms,  conditions and
restrictions applicable to such Award.

(b) Stock Certificates.  When a Participant receives a Restricted Stock Award, a
stock  certificate or stock  certificates  representing  the number of shares of
Common  Stock  covered  by such  Restricted  Stock  Award  shall be  issued  and
registered in the name of the Participant. Such stock certificates shall be held
in  custody  by the  Company  as long as the  Restricted  Stock  is  subject  to
forfeiture.  When a Restricted Stock Award, or any portion thereof, ceases to be
subject to forfeiture,  the stock certificate or stock certificates representing
such shares shall be released from custody and delivered to the Participant. The
Participant  shall  have all of the  rights  of a holder of  Common  Stock  with
respect to shares  subject to a Restricted  Stock Award,  including the right to
vote such shares and to receive dividends  thereon,  except that the Participant
shall not be permitted to sell, transfer,  pledge or assign shares of Restricted
Stock as long as such shares are held in custody by the Company.

(c)  Restriction  Period.  Subject  to the  provisions  of  this  Plan  and  the
Restricted Stock Award Certificate, shares of Restricted Stock will be forfeited
to the Company upon a  Participant's  Termination of Employment  during a period
set by the  Board  commencing  with the  date of such  Award  (the  "Restriction
Period").  Subject  to the  provisions  of this  Plan,  the  Board,  in its sole
discretion, may provide for the lapse of such restrictions in installments.  The
Board may waive such  restrictions,  in whole or in part,  at any time after the
date of grant, based on such factors as the Board shall, in its sole discretion,
deem appropriate.

(d)  Termination of  Employment.  Subject to the provisions of this Plan and the
Restricted  Stock  Award  Certificate,   upon  a  Participant's  Termination  of
Employment  during  the  Restriction  Period  due  to  death  or  Disability  or
Retirement,  restrictions  will  lapse  with  respect  to a  percentage  of  the
Restricted  Stock  Award  granted  to  the  Participant  that  is  equal  to the
percentage  of the  Restriction  Period  that has  elapsed as of the date of the
Participant's  Termination of Employment,  and stock  certificates  representing
such shares of Common Stock shall be released  from custody and delivered to the
Participant  or  the   Participant's   estate,  as  the  case  may  be.  Upon  a
Participant's  Termination  of  Employment  for any  reason  other  than  death,
Disability  or  Retirement,  all  outstanding  Restricted  Stock Awards shall be
forfeited to the Company.

(e) Distributions.  In the event of a dividend or distribution  payable in stock
or a reclassification, stock split or split-up, the shares issued or declared in
respect of  Restricted  Stock shall be subject to the same terms and  conditions
relating to forfeiture as the Restricted Stock to which they relate.


                                  ARTICLE VIII

                               Performance Shares


8.1 Award of  Performance  Shares.  The Board shall have the  authority to grant
Performance  Shares to any person  eligible  under  Article  V. The Board  shall
determine  the  persons  to whom,  and the time or times at  which,  Performance
Shares shall be awarded, the number of Performance Shares to be included in each
Award, the duration of the period (the  "Performance  Period") during which, and
the  conditions  under  which,  receipt  of the  shares of Common  Stock will be
deferred,  and the other terms and  conditions of the Award in addition to those
set forth in Section 8.2.

The provisions of Performance  Share Awards need not be the same with respect to
each  Participant,  and such Awards to individual  Participants  need not be the
same in subsequent years.

8.2 Terms and Conditions.  Performance  Shares awarded  pursuant to this Article
VIII shall be subject to the following terms and conditions and such other terms
and conditions, not inconsistent with the terms of this Plan, as the Board shall
deem desirable:

(a) Conditions. The Board, in its sole discretion, shall specify the Performance
Period during which,  and the conditions  under which,  the receipt of shares of
Common  Stock  covered by the  Performance  Share  Award will be  deferred.  The
receipt of shares of Common Stock pursuant to a Performance Share Award shall be
conditioned  upon  the  attainment  of one  or  more  pre-established  objective
performance  goals.  Such goals must be  established by the Board in writing not
later than 90 days after the  commencement of the Performance  Period,  provided
that the outcome is substantially uncertain at the time the goal is established.
The  performance  goals may be based on the  Company's  stock  price,  return on
assets, return on capital employed,  return on shareholders'  equity,  earnings,
earnings  per share,  total  shareholder  return,  sales,  costs,  or such other
objective  performance  goals as may be  established  by the Board  from time to
time.

(b) Award  Certificate.  Each Performance Share Award shall be evidenced by, and
subject  to the  terms  of, a  Performance  Share  Certificate  executed  by the
Company. The Performance Share Certificate shall specify the number of shares of
Common  Stock  subject to the Award,  the  applicable  Performance  Period,  the
applicable  performance goals, and the other terms and conditions  applicable to
such Award.

(c) Stock  Certificates.  If the Board  determines,  after the expiration of the
Performance  Period,  that the  performance  goals  specified in the Performance
Share Certificate and all other material terms of the Award have been satisfied,
stock certificates  representing the number of shares of Common Stock covered by
the  Performance  Share Award shall be issued and registered in the name of, and
delivered to, the Participant.

(d) Termination of Employment.  Unless otherwise  determined by the Board at the
time of grant,  the  Performance  Shares will be forfeited upon a  Participant's
Termination  of  Employment  during  the  Performance   Period  for  any  reason
(including death, Disability or Retirement).

8.3 Individual  Limit.  The maximum number of shares of Common Stock that may be
subject  to  Performance  Share  Awards  granted  to any  individual  during any
calendar  year shall be 100,000  shares  (subject  to any  increase  or decrease
pursuant to Section 4.2).


                                   ARTICLE IX

                                Performance Units


9.1 Award of  Performance  Units.  The Board shall have the  authority  to grant
Performance  Units to any  person  eligible  under  Article  V. The Board  shall
determine the persons to whom, and the time or times at which, Performance Units
shall be awarded,  the number of Performance Units to be included in each Award,
the  duration of the period (the  "Performance  Cycle")  during  which,  and the
conditions  under which,  a  Participant's  right to  Performance  Units will be
vested,  the  ability of  Participants  to defer the  receipt of payment of such
Units,  and the other terms and conditions of the Award in addition to those set
forth in Section 9.2.

A Performance Unit shall have a fixed dollar value.

The provisions of  Performance  Unit Awards need not be the same with respect to
each  Participant,  and such Awards to individual  Participants  need not be the
same in subsequent years.

9.2 Terms and Conditions. The Performance Units awarded pursuant to this Article
IX shall be subject to the following  terms and  conditions and such other terms
and conditions, not inconsistent with the terms of this Plan, as the Board shall
deem desirable:

(a) Conditions. The Board, in its sole discretion, shall specify the Performance
Cycle during which, and the conditions under which, the  Participant's  right to
Performance  Units will be vested.  The  vesting of  Performance  Units shall be
conditioned  upon  the  attainment  of one  or  more  pre-established  objective
performance  goals.  Such goals must be  established by the Board in writing not
later than 90 days after the  commencement  of the Performance  Cycle,  provided
that the outcome is substantially uncertain at the time the goal is established.
The  performance  goals may be based on the  Company's  stock  price,  return on
assets, return on capital employed,  return on shareholders'  equity,  earnings,
earnings  per share,  total  shareholder  return,  sales,  costs,  or such other
objective  performance  goals as may be  established  by the Board  from time to
time.

(b) Award  Certificate.  Each  Performance Unit Award shall be evidenced by, and
subject to the terms of, a Performance Unit Certificate executed by the Company.
The Performance  Unit  Certificate  shall specify the dollar value of the Award,
the applicable  Performance  Cycle,  the applicable  performance  goals, and the
other terms and conditions applicable to such Award.

(c) Vesting;  Payment.  If the Board  determines,  after the  expiration  of the
Performance  Cycle, that the performance goals specified in the Performance Unit
Certificate and all other material terms of the Award have been  satisfied,  the
Performance Units will be vested and the Participant will receive payment of the
amount  specified in the  Performance  Unit  Certificate  as soon as practicable
thereafter. Payment may be made in cash, shares of Common Stock or a combination
of both, as determined by the Board, in its sole discretion.

(d) Termination of Employment.  Unless otherwise  determined by the Board at the
time of grant,  the  Performance  Units will be forfeited  upon a  Participant's
Termination of Employment during the Performance Cycle for any reason (including
death, Disability or Retirement).

9.3 Individual  Limit. The maximum dollar amount of Performance Unit Awards that
may be granted to any individual during any calendar year shall be $ 100,000.


                                    ARTICLE X

                            Termination or Amendment


10.1  Termination  or  Amendment  of Plan.  The  Board  may at any  time  amend,
discontinue or terminate  this Plan or any part hereof  (including any amendment
deemed  necessary  to ensure that the  Company  may comply  with any  regulatory
requirement  referred  to in  Article  XII);  provided,  however,  that,  unless
otherwise  required by law, the rights of a  Participant  with respect to Awards
granted  prior  to such  amendment,  discontinuance  or  termination  may not be
impaired without the consent of such Participant and, provided further, that the
Company will seek the approval of the Company's  shareholders  for any amendment
if such  approval  is  necessary  to  comply  with the  Code,  Federal  or state
securities law or any other applicable rules or regulations.

10.2 Amendment of Awards.  The Board may amend the terms of any Award previously
granted,  prospectively  or  retroactively,  but, subject to Article IV, no such
amendment  or other  action by the Board  shall  impair the rights of any holder
without the holder's  consent.  The Board may also  substitute new Stock Options
for previously granted Stock Options having higher option prices.


                                   ARTICLE XI

                                  Unfunded Plan


11.1 Unfunded  Status of Plan. This Plan is intended to constitute an "unfunded"
plan for  incentive and deferred  compensation.  With respect to any payment not
yet made to a Participant by the Company,  nothing  contained  herein shall give
any such  Participant  any  rights  that are  greater  than  those of a  general
creditor of the Company.


                                   ARTICLE XII

                               General Provisions


12.1  Nonassignment.  Except as  otherwise  provided  in this Plan,  Awards made
hereunder  and the rights and  privileges  conferred  thereby shall not be sold,
transferred,  assigned, pledged or hypothecated in any way (whether by operation
of law or  otherwise),  and shall not be subject  to  execution,  attachment  or
similar process. Upon any attempt to sell, transfer, assign, pledge, hypothecate
or  otherwise  dispose  of  such  Award,  right  or  privilege  contrary  to the
provisions  hereof,  or upon  the  levy of any  attachment  or  similar  process
thereon,  such  Award and the  rights  and  privileges  conferred  hereby  shall
immediately  terminate  and the Award  shall  immediately  be  forfeited  to the
Company.

12.2 Change of Control.  In the event of a Change of  Control,  all  outstanding
Stock Options shall  immediately  become fully exercisable and restrictions will
lapse with respect to a percentage of each  outstanding  Restricted  Stock Award
equal to the  percentage  of the  Restriction  Period that has elapsed as of the
date of the Change of Control. Stock certificates  representing the Common Stock
covered by any outstanding  Restricted Stock Award as to which restrictions have
lapsed shall be released from custody and delivered to the  Participants as soon
as practicable following the Change of Control. Stock certificates  representing
the Common  Stock  covered by any  outstanding  Stock Option shall be issued and
registered  in the  name of,  and  delivered  to,  the  Participants  as soon as
practicable  following exercise of such Option and payment by the Participant of
the option price and, if requested,  delivery of the representation described in
Section 12.4.  Unless otherwise  provided in a Participant's  Performance  Share
Certificate  or  Performance  Unit  Certificate,  a Change of Control  shall not
accelerate or otherwise  change the terms of outstanding  Performance  Shares or
Performance  Units,  which  shall  continue  to be  governed  by the  applicable
provisions of Articles VIII and IX, respectively.

12.3 Rights as Shareholder.  A Participant  shall not be deemed to be the holder
of Common Stock, or to have the rights of a holder of Common Stock, with respect
to shares subject to an Award unless and until stock  certificates  representing
such shares of Common Stock have been issued and  registered in the name of such
Participant.

12.4 Legend.  The Board may require each person  acquiring shares pursuant to an
Award under the Plan to represent to the Company in writing that the Participant
is  acquiring  the  shares  without a view to  distribution  thereof.  The stock
certificates  representing  such  shares may  include  any legend that the Board
deems appropriate to reflect any restrictions on transfer.

All  certificates  representing  shares of Common Stock delivered under the Plan
shall be subject to such stock  transfer  orders and other  restrictions  as the
Board may deem advisable under the rules,  regulations and other requirements of
the  Securities and Exchange  Commission,  any stock exchange or stock market on
which the Common Stock is then listed or traded, any applicable Federal or state
securities  law,  and any  applicable  corporate  law, and the Board may cause a
legend  or  legends  to be put on any  such  certificates  to  make  appropriate
reference to such restrictions.

12.5 Other Plans.  Nothing  contained in this Plan shall  prevent the Board from
adopting other or additional compensation  arrangements,  subject to shareholder
approval  if such  approval is  required;  and such  arrangements  may be either
generally applicable or applicable only in specific cases.

12.6 No Right to  Employment.  Neither  this  Plan  nor the  grant of any  Award
hereunder  shall give any  Participant or other person any right with respect to
continuance of employment by the Company or any subsidiary, nor shall there be a
limitation in any way on the right of the Company or a subsidiary to terminate a
Participant's  employment  at any time.  Neither  this Plan nor the grant of any
Award hereunder shall give any Director any right to continue as a member of the
Board or obligate the Company to nominate any  Director for  re-election  by the
Company's shareholders.

12.7 Withholding of Taxes. The Company shall have the right to reduce the number
of shares of Common  Stock  otherwise  deliverable  pursuant  to this Plan by an
amount that would have a Fair Market  Value equal to the amount of all  Federal,
state and local taxes  required to be withheld,  or to deduct the amount of such
taxes from any cash payment to be made to a  Participant,  pursuant to this Plan
or  otherwise.  In  connection  with such  withholding,  the Board may make such
arrangements as are consistent with the Plan as it may deem appropriate.

12.8 Listing and Other Conditions.

(a) If the  Common  Stock is listed on a  national  securities  exchange  or the
Nasdaq Stock Market,  the issuance of any shares of Common Stock  pursuant to an
Award shall be  conditioned  upon such shares being  listed on such  exchange or
stock  market.  The Company shall have no obligation to issue such shares unless
and until such shares are so listed,  and the right to exercise any Option or to
receive shares pursuant to any other Award shall be suspended until such listing
has been effected.

(b) If at any time counsel to the Company  shall be of the opinion that any sale
or  delivery  of shares of Common  Stock  pursuant  to an Award is or may in the
circumstances  be unlawful or result in the imposition of excise taxes under the
statutes, rules or regulations of any applicable jurisdiction, the Company shall
have no obligation to make such sale or delivery,  or to make any application or
to effect or to maintain any qualification or registration  under the Securities
Act of 1933, as amended,  or otherwise with respect to shares of Common Stock or
Awards,  and the right to exercise any Option or to receive  shares  pursuant to
any other Award shall be suspended  until, in the opinion of such counsel,  such
sale or delivery shall be lawful or shall not result in the imposition of excise
taxes.

(c) Upon  termination  of any period of suspension  under this Section 12.8, any
Award  affected  by such  suspension  which  shall  not  then  have  expired  or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become  available  during the period
of such suspension, but no such suspension shall extend the term of any Option.

12.9 Governing Law. This Plan and actions taken in connection  herewith shall be
governed  and  construed  in  accordance  with the laws of the  Commonwealth  of
Pennsylvania.

12.10  Construction.  Wherever any words are used in this Plan in the  masculine
gender they shall be  construed  as though  they were also used in the  feminine
gender in all cases where they would so apply,  and  wherever any words are used
herein in the  singular  form they shall be  construed  as though they were also
used in the plural form in all cases where they would so apply.

12.11  Liability.  No member of the Board nor any employee of the Company or any
of its subsidiaries shall be liable for any act or action hereunder,  whether of
omission or commission,  by any other member or employee or by any agent to whom
duties in connection  with the  administration  of this Plan have been delegated
or, except in circumstances  involving bad faith, gross negligence or fraud, for
anything done or omitted to be done by himself.

12.12 Other Benefits.  No payment  pursuant to an Award under this Plan shall be
deemed compensation for purposes of computing benefits under any retirement plan
of the  Company  nor affect any  benefits  under any other  benefit  plan now or
hereafter  in effect  under  which the  availability  or amount of  benefits  is
related to the level of compensation.

12.13 Costs. The Company shall bear all expenses incurred in administering  this
Plan, including expenses of issuing Common Stock pursuant to Awards hereunder.

12.14  Severability.  If any part of this Plan shall be determined to be invalid
or void in any respect, such determination shall not affect, impair,  invalidate
or nullify the remaining  provisions  of this Plan which shall  continue in full
force and effect.

12.15  Successors.  This Plan shall be binding  upon and inure to the benefit of
any successor or successors of the Company.

12.16 Headings. Article and section headings contained in this Plan are included
for convenience  only and are not to be used in construing or interpreting  this
Plan.


                                  ARTICLE XIII

                                  Term of Plan


13.1 Effective Date. This Plan shall be effective as of the date of its approval
by the Board.

13.1  Termination.  No Award shall be granted  pursuant to this Plan on or after
the tenth  anniversary of its approval by the Board, but Awards granted prior to
such tenth anniversary may extend beyond that date.