**Exhibit 10.1**

 

**FEICOMPANY**

**1995STOCK INCENTIVE PLAN, AS AMENDED**

As amendedeffective May 17, 2007

 

1.     **Purpose**. The purpose of this StockIncentive Plan (the “Plan”) is to enable FEI Company (the “Company”) to attractand retain the services of (1) selected employees, officers and directorsof the Company or of any subsidiary of the Company and (2) selectednon-employee agents, consultants, advisors, persons involved in the sale ordistribution of the Company’s products and independent contractors of the Companyor any subsidiary.

 

2.     **Shares Subject to the Plan**.Subject to adjustment as provided below and in paragraph 14, the shares to beoffered under the Plan shall consist of Common Stock of the Company, and thetotal number of shares of Common Stock that may be issued under the Plan shallnot exceed 9,500,000 shares. The shares issued under the Plan may be authorizedand unissued shares or reacquired shares. If an option, stock appreciationright, restricted stock unit or performance unit granted under the Planexpires, terminates or is canceled, the unissued shares subject to such option,stock appreciation right, restricted stock unit or performance unit shall againbe available under the Plan. If shares sold or awarded as a bonus under thePlan are forfeited to the Company or repurchased by the Company, the number ofshares forfeited or repurchased shall again be available under the Plan.

 

3.     **Effective Date and Duration of Plan**.

 

(a)   ***Effective Date.***The Plan shall become effective as of April 21, 1995. No option, stockappreciation right, restricted stock unit or performance unit granted under thePlan shall become exercisable, however, until the Plan is approved by theaffirmative vote of the holders of a majority of the shares of Common Stockrepresented at a shareholders meeting at which a quorum is present and any suchawards under the Plan prior to such approval shall be conditioned on andsubject to such approval. Subject to this limitation, options, stockappreciation rights, restricted stock units and performance units may begranted and shares may be awarded as bonuses or sold under the Plan at any timeafter the effective date and before termination of the Plan.

 

(b)   ***Duration.***The Plan shall continue in effect until all shares available for issuance underthe Plan have been issued and all restrictions on such shares have lapsed. TheBoard of Directors may suspend or terminate the Plan at any time except withrespect to options, performance units, restricted stock units and sharessubject to restrictions then outstanding under the Plan. Termination shall notaffect any outstanding options, any right of the Company to repurchase sharesor the forfeitability of shares issued under the Plan.

 

4.     **Administration**.

 

(a)   ***Board of Directors.***The Plan shall be administered by the Board of Directors of the Company, whichshall determine and designate from time to time the individuals to whom awardsshall be made, the amount of the awards and the other terms and conditions ofthe awards. Subject to the provisions of the Plan, the Board of Directors mayfrom time to time adopt and amend rules and regulations relating toadministration of the Plan, advance the lapse of any waiting period, accelerateany exercise date, waive or modify any restriction applicable to shares (exceptthose restrictions imposed by law) and make all other determinations in thejudgment of the Board of Directors necessary or desirable for theadministration of the Plan. The interpretation and construction of theprovisions of the Plan and related agreements by the Board of Directors shallbe final and conclusive. The Board of Directors may correct any defect orsupply any omission or reconcile any inconsistency in the Plan or in anyrelated agreement in the manner and to the extent it shall deem expedient tocarry the Plan into effect, and it shall be the sole and final judge of suchexpediency.

 

(b)   ***Committee.***The Board of Directors may delegate to a committee of the Board of Directors orspecified officers of the Company, or both (the “Committee”) any or allauthority for administration of the Plan. If authority is delegated to aCommittee, all references to the Board of Directors in the Plan shall mean andrelate to the Committee except (i) as otherwise provided by the Board ofDirectors, (ii) that only the Board of Directors may amend or terminatethe Plan as provided in paragraphs 3 and 15 and (iii) that a Committeeincluding officers of the Company shall not be permitted to grant options topersons who are officers of the Company. To the extent that the Board of 

 

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Directors determines itto be desirable to qualify awards granted hereunder as “performance-basedcompensation” within the meaning of Section 162(m) of the InternalRevenue Code of 1986, as amended (the “Code”), the Plan shall be administeredby a Committee of two or more “outside directors” within the meaning of Section 162(m) ofthe Code.

 

5.     **Types of Awards; Eligibility**. TheBoard of Directors may, from time to time, take the following action,separately or in combination, under the Plan: (i) grant Incentive StockOptions, as defined in section 422 of the Code, as provided inparagraphs 6(a) and 6(b); (ii) grant options other than IncentiveStock Options (“Non-Statutory Stock Options”) as provided in paragraphs 6(a) and6(c); (iii) award stock bonuses as provided in paragraph 7; (iv) sellshares subject to restrictions as provided in paragraph 8; (v) grant stockappreciation rights as provided in paragraph 9; (vi) grant cash bonusrights as provided in paragraph 10; (vii) grant performance units asprovided in paragraph 11; (viii) grant foreign qualified awards asprovided in paragraph 12; and (ix) grant restricted stock units asprovided in paragraph 13. Any such awards may be made to employees, includingemployees who are officers or directors, and to other individuals described inparagraph 1 who the Board of Directors believes have made or will make animportant contribution to the Company or any subsidiary of the Company; provided,however, that only employees of the Company shall be eligible to receiveIncentive Stock Options under the Plan. The Board of Directors shall select theindividuals to whom awards shall be made and shall specify the action takenwith respect to each individual to whom an award is made. At the discretion ofthe Board of Directors, an individual may be given an election to surrender anaward in exchange for the grant of a new award.

 

6.     **Option Grants**.

 

(a)   ***General Rules Relatingto Options.***

 

(i)     Termsof Grant. The Board of Directors may grant options under the Plan. With respectto each option grant, the Board of Directors shall determine the number ofshares subject to the option, the option price, the period of the option, thetime or times at which the option may be exercised and whether the option is anIncentive Stock Option or a Non-Statutory Stock Option. At the time of thegrant of an option or at any time thereafter, the Board of Directors mayprovide that an optionee who exercised an option with Common Stock of theCompany shall automatically receive a new option to purchase additional sharesequal to the number of shares surrendered and may specify the terms andconditions of such new options.

 

(ii)    Exerciseof Options. Except as provided in paragraph 6(a) (iv) or asdetermined by the Board of Directors, no option granted under the Plan may beexercised unless at the time of such exercise the optionee is employed by or inthe service of the Company or any subsidiary of the Company and shall have beenso employed or provided such service continuously since the date such optionwas granted. Absence on leave or on account of illness or disability under rules establishedby the Board of Directors shall not, however, be deemed an interruption ofemployment or service for this purpose. Unless otherwise determined by theBoard of Directors, vesting of options shall not continue during an absence onleave (including an extended illness) or on account of disability. Except asprovided in paragraphs 6(a) (iv) and 14, options granted under thePlan may be exercised from time to time over the period stated in each optionin such amounts and at such times as shall be prescribed by the Board ofDirectors, provided that options shall not be exercised for fractional shares.Unless otherwise determined by the Board of Directors, if the optionee does notexercise an option in any one year with respect to the full number of shares towhich the optionee is entitled in that year, the optionee’s rights shall be cumulativeand the optionee may purchase those shares in any subsequent year during theterm of the option.

 

(iii)   Nontransferability.Each Incentive Stock Option and, unless otherwise determined by the Board ofDirectors, each other option granted under the Plan by its terms shall benonassignable and nontransferable by the optionee, either voluntarily or byoperation of law, except by will or by the laws of descent and distribution ofthe state or country of the optionee’s domicile at the time of death.

 

(iv)   Terminationof Employment or Service.

 

(A)  General Rule. Unless otherwise determined bythe Board of Directors, in the event the employment or service of the optioneewith the Company or a subsidiary terminates for any reason other than becauseof physical disability or death as provided in subparagraphs 6(a)(iv)(B) and(C), the option may be 

 

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exercised at any time prior to the expiration date ofthe option or the expiration of 30 days after the date of such termination,whichever is the shorter period, but only if and to the extent the optionee wasentitled to exercise the option at the date of such termination.

 

(B)   Termination Because of Total Disability.Unless otherwise determined by the Board of Directors, in the event of thetermination of employment or service because of total disability, the optionmay be exercised at any time prior to the expiration date of the option or theexpiration of 12 months after the date of such termination, whichever is theshorter period, but only if and to the extent the optionee was entitled toexercise the option at the date of such termination. The term “total disability”means a medically determinable mental or physical impairment which is expectedto result in death or which has lasted or is expected to last for a continuousperiod of 12 months or more and which causes the optionee to be unable, in theopinion of the Company and two independent physicians, to perform his or herduties as an employee, director, officer or consultant of the Company and to beengaged in any substantial gainful activity. Total disability shall be deemedto have occurred on the first day after the Company and the two independentphysicians have furnished their opinion of total disability to the Company.

 

(C)   Termination Because of Death. Unlessotherwise determined by the Board of Directors, in the event of the death of anoptionee while employed by or providing service to the Company or a subsidiary,the option may be exercised at any time prior to the expiration date of theoption or the expiration of 12 months after the date of death, whichever is theshorter period, for any portion of the option exercisable as of the date ofdeath and any outstanding unvested portion of the option, which shall becomefully vested and immediately exercisable as of the date of death, and only bythe person or persons to whom such optionee’s rights under the option shallpass by the optionee’s will or by the laws of descent and distribution of thestate or country of domicile at the time of death.

 

(D)  Amendment of Exercise Period Applicable toTermination. The Board of Directors, at the time of grant or, with respect toan option that is not an Incentive Stock Option, at any time thereafter, mayextend the 30-day and 12-month exercise periods any length of time not longerthan the original expiration date of the option, and may increase the portionof an option that is exercisable, subject to such terms and conditions as theBoard of Directors may determine.

 

(E)   Failure to Exercise Option. To the extentthat the option of any deceased optionee or of any optionee whose employment orservice terminates is not exercised within the applicable period, all furtherrights to purchase shares pursuant to such option shall cease and terminate.

 

(v)     Purchaseof Shares. Unless the Board of Directors determines otherwise, shares may beacquired pursuant to an option granted under the Plan only upon receipt by theCompany of notice in writing from the optionee of the optionee’s intention toexercise, specifying the number of shares as to which the optionee desires toexercise the option and the date on which the optionee desires to complete thetransaction, and if required in order to comply with the Securities Act of1933, as amended, containing a representation that it is the optionee’s presentintention to acquire the shares for investment and not with a view todistribution. Unless the Board of Directors determines otherwise, on or beforethe date specified for completion of the purchase of shares pursuant to anoption, the optionee must have paid the Company the full purchase price of suchshares in cash (including, with the consent of the Board of Directors, cashthat may be the proceeds of a loan from the Company (provided that, withrespect to an Incentive Stock Option, such loan is approved at the time ofoption grant)) or, with the consent of the Board of Directors, in whole or inpart, in Common Stock of the Company valued at fair market value, restricted stock,performance units or other contingent awards denominated in either stock orcash, promissory notes and other forms of consideration. The fair market valueof Common Stock provided in payment of the purchase price shall be determinedby the Board of Directors. If the Common Stock of the Company is not publiclytraded on the date the option is exercised, the Board of Directors may considerany valuation methods it deems appropriate and may, but is not required to,obtain one or more independent appraisals of the Company. If the Common Stockof the Company is publicly traded on the date the option is exercised, the fairmarket value of Common Stock provided in payment of the purchase price shall bethe closing price of the Common Stock as reported in*The WallStreet Journal* on the last trading day preceding the date the optionis exercised, or such other reported value of the Common Stock as shall bespecified by the Board of Directors. No shares shall be issued until fullpayment for the shares has been made. With the consent of the Board ofDirectors (which, in the case of an Incentive Stock Option, shall be given onlyat the time of option grant), an optionee may request the Company to applyautomatically the shares to be received upon the exercise of a portion of astock option (even though stock certificates have not yet been issued) tosatisfy the 

 

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purchase price for additional portions of the option.Each optionee who has exercised an option shall immediately upon notificationof the amount due, if any, pay to the Company in cash amounts necessary tosatisfy any applicable federal, state and local tax withholding requirements.If additional withholding is or becomes required beyond any amount depositedbefore delivery of the certificates, the optionee shall pay such amount to theCompany on demand. If the optionee fails to pay the amount demanded, theCompany may withhold that amount from other amounts payable by the Company tothe optionee, including salary, subject to applicable law. With the consent ofthe Board of Directors an optionee may satisfy this obligation, in whole or inpart, by having the Company withhold from the shares to be issued upon theexercise that number of shares that would satisfy the withholding amount due orby delivering to the Company Common Stock to satisfy the withholding amount.Upon the exercise of an option, the number of shares reserved for issuanceunder the Plan shall be reduced by the number of shares issued upon exercise ofthe option.

 

(b)   ***Incentive Stock Options***.Incentive Stock Options shall be subject to the following additional terms andconditions:

 

(i)     Limitationon Amount of Grants. No employee may be granted Incentive Stock Options underthe Plan if the aggregate fair market value, on the date of grant, of theCommon Stock with respect to which Incentive Stock Options are exercisable forthe first time by that employee during any calendar year under the Plan andunder all incentive stock option plans (within the meaning of section 422of the Code) of the Company or any parent or subsidiary of the Company exceeds$100,000.

 

(ii)    Limitationson Grants to 10 Percent Shareholders. An Incentive Stock Option may be grantedunder the Plan to an employee possessing more than 10 percent of the totalcombined voting power of all classes of stock of the Company or of any parentor subsidiary of the Company only if the option price is at least 110 percentof the fair market value, as described in paragraph 6(b)(iv), of the CommonStock subject to the option on the date it is granted and the option by itsterms is not exercisable after the expiration of five years from the date it isgranted.

 

(iii)   Durationof Options. Subject to paragraphs 6(a) (ii) and 6(b) (ii),Incentive Stock Options granted under the Plan shall continue in effect for theperiod fixed by the Board of Directors, except that no Incentive Stock Optionshall be exercisable after the expiration of 10 years from the date it isgranted.

 

(iv)   OptionPrice. The option price per share shall be determined by the Board of Directorsat the time of grant. Except as provided in paragraph 6(b) (ii), theoption price shall not be less than 100 percent of the fair market value of theCommon Stock covered by the Incentive Stock Option at the date the option isgranted. The fair market value shall be determined by the Board of Directors.If the Common Stock of the Company is not publicly traded on the date theoption is granted, the Board of Directors may consider any valuation methods itdeems appropriate and may, but is not required to, obtain one or moreindependent appraisals of the Company. If the Common Stock of the Company ispublicly traded on the date the option is exercised, the fair market valueshall be deemed to be the closing price of the Common Stock as reported in*The Wall Street Journal* on the day preceding the date theoption is granted, or, if there has been no sale on that date, on the lastpreceding date on which a sale occurred or such other value of the Common Stockas shall be specified by the Board of Directors.

 

(v)    Limitationon Time of Grant. No Incentive Stock Option shall be granted on or after thetenth anniversary of the effective date of the Plan.

 

(vi)   Conversionof Incentive Stock Options. The Board of Directors may at any time without theconsent of the optionee convert an Incentive Stock Option to a Non-StatutoryStock Option.

 

(c)   ***Non-Statutory StockOptions***. Non-Statutory Stock Options shall be subject to thefollowing terms and conditions in addition to those set forth in Section 6(a) above:

 

(i)    OptionPrice. The option price for Non-Statutory Stock Options shall be determined bythe Board of Directors at the time of grant and may be any amount determined bythe Board of Directors. Notwithstanding the foregoing, with respect toNon-Statutory Stock Options intended to qualify as “performance-basedcompensation” within the meaning of Section 162(m) of the Code, theoption price will be no less than 100 percent of the fair market value pershare on the date of grant.

 

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(ii)     Durationof Options. Non-Statutory Stock Options granted under the Plan shall continuein effect for the period fixed by the Board of Directors.

 

7.     **Stock Bonuses**. The Board ofDirectors may award shares under the Plan as stock bonuses. Shares awarded as abonus shall be subject to the terms, conditions, and restrictions determined bythe Board of Directors. The restrictions may include restrictions concerningtransferability and forfeiture of the shares awarded, together with such otherrestrictions as may be determined by the Board of Directors. If shares aresubject to forfeiture, all dividends or other distributions paid by the Companywith respect to the shares shall be retained by the Company until the sharesare no longer subject to forfeiture, at which time all accumulated amountsshall be paid to the recipient. The Board of Directors may require therecipient to sign an agreement as a condition of the award, but may not requirethe recipient to pay any monetary consideration other than amounts necessary tosatisfy tax withholding requirements. The agreement may contain any terms,conditions, restrictions, representations and warranties required by the Boardof Directors. The certificates representing the shares awarded shall bear anylegends required by the Board of Directors. The Company may require anyrecipient of a stock bonus to pay to the Company in cash upon demand amountsnecessary to satisfy any applicable federal, state or local tax withholdingrequirements. If the recipient fails to pay the amount demanded, the Companymay withhold that amount from other amounts payable by the Company to therecipient, including salary or fees for services, subject to applicable law.With the consent of the Board of Directors, a recipient may deliver CommonStock to the Company to satisfy this withholding obligation. Upon the issuanceof a stock bonus, the number of shares reserved for issuance under the Planshall be reduced by the number of shares issued.

 

8.     **Restricted Stock**. The Board ofDirectors may issue shares under the Plan for such consideration (includingpromissory notes and services) as determined by the Board of Directors. Sharesissued under the Plan shall be subject to the terms, conditions andrestrictions determined by the Board of Directors. The restrictions may includerestrictions concerning transferability, repurchase by the Company andforfeiture of the shares issued, together with such other restrictions as maybe determined by the Board of Directors. If shares are subject to forfeiture orrepurchase by the Company, all dividends or other distributions paid by theCompany with respect to the shares shall be retained by the Company until theshares are no longer subject to forfeiture or repurchase, at which time allaccumulated amounts shall be paid to the recipient. All Common Stock issuedpursuant to this paragraph 8 shall be subject to a purchase agreement, whichshall be executed by the Company and the prospective recipient of the sharesprior to the delivery of certificates representing such shares to therecipient. The purchase agreement may contain any terms, conditions,restrictions, representations and warranties required by the Board ofDirectors. The certificates representing the shares shall bear any legendsrequired by the Board of Directors. The Company may require any purchaser ofrestricted stock to pay to the Company in cash upon demand amounts necessary tosatisfy any applicable federal, state or local tax withholding requirements. Ifthe purchaser fails to pay the amount demanded, the Company may withhold thatamount from other amounts payable by the Company to the purchaser, includingsalary, subject to applicable law. With the consent of the Board of Directors,a purchaser may deliver Common Stock to the Company to satisfy this withholdingobligation. Upon the issuance of restricted stock, the number of sharesreserved for issuance under the Plan shall be reduced by the number of sharesissued.

 

9.     **Stock Appreciation Rights**.

 

(a)   ***Grant.***Stock appreciation rights may be granted under the Plan by the Board ofDirectors, subject to such rules, terms, and conditions as the Board ofDirectors prescribes.

 

(b)   ***Exercise.***

 

(i)     Eachstock appreciation right shall entitle the holder, upon exercise, to receivefrom the Company in exchange therefore an amount equal in value to the excessof the fair market value on the date of exercise of one share of Common Stockof the Company over its fair market value on the date of grant (or, in the caseof a stock appreciation right granted in connection with an option, the excessof the fair market value of one share of Common Stock of the Company over theoption price per share under the option to which the stock appreciation rightrelates), multiplied by the number of shares covered by the stock appreciationright or the option, or portion thereof, that is surrendered. No stockappreciation right shall be exercisable at a time that the amount determinedunder this subparagraph is negative. Payment by the Company upon exercise of astock appreciation right may be made in 

 

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Common Stock valued at fair market value, in cash, orpartly in Common Stock and partly in cash, all as determined by the Board ofDirectors.

 

(ii)    Astock appreciation right shall be exercisable only at the time or timesestablished by the Board of Directors. If a stock appreciation right is grantedin connection with an option, the following rules shall apply: (1) thestock appreciation right shall be exercisable only to the extent and on thesame conditions that the related option could be exercised; (2) the stockappreciation rights shall be exercisable only when the fair market value of thestock exceeds the option price of the related option; (3) the stockappreciation right shall be for no more than 100 percent of the excess of thefair market value of the stock at the time of exercise over the option price; (4) uponexercise of the stock appreciation right, the option or portion thereof towhich the stock appreciation right relates terminates; and (5) uponexercise of the option, the related stock appreciation right or portion thereofterminates.

 

(iii)    TheBoard of Directors may withdraw any stock appreciation right granted under thePlan at any time and may impose any conditions upon the exercise of a stockappreciation right or adopt rules and regulations from time to timeaffecting the rights of holders of stock appreciation rights. Such rules andregulations may govern the right to exercise stock appreciation rights grantedprior to adoption or amendment of such rules and regulations as well asstock appreciation rights granted thereafter.

 

(iv)    Forpurposes of this paragraph 9, the fair market value of the Common Stock shallbe determined as of the date the stock appreciation right is exercised, underthe methods set forth in paragraph 6(b) (iv).

 

(v)    No fractional shares shall be issued upon exercise of a stock appreciationright. In lieu thereof, cash may be paid in an amount equal to the value of thefraction or, if the Board of Directors shall determine, the number of sharesmay be rounded downward to the next whole share.

 

(vi)    Eachstock appreciation right granted in connection with an Incentive Stock Option,and unless otherwise determined by the Board of Directors, each other stockappreciation right granted under the Plan by its terms shall be nonassignableand nontransferable by the holder, either voluntarily or by operation of law,except by will or by the laws of descent and distribution of the state orcountry of the holder’s domicile at the time of death, and each stockappreciation right by its terms shall be exercisable during the holder’slifetime only by the holder.

 

(vii)   Eachparticipant who has exercised a stock appreciation right shall, uponnotification of the amount due, pay to the Company in cash amounts necessary tosatisfy any applicable federal, state and local tax withholding requirements.If the participant fails to pay the amount demanded, the Company may withholdthat amount from other amounts payable by the Company to the participantincluding salary, subject to applicable law. With the consent of the Board ofDirectors a participant may satisfy this obligation, in whole or in part, byhaving the Company withhold from any shares to be issued upon the exercise thatnumber of shares that would satisfy the withholding amount due or by deliveringCommon Stock to the Company to satisfy the withholding amount.

 

(viii)  Upon theexercise of a stock appreciation right for shares, the number of sharesreserved for issuance under the Plan shall be reduced by the number of sharesissued. Cash payments of stock appreciation rights shall not reduce the numberof shares of Common Stock reserved for issuance under the Plan.

 

10.   **Cash Bonus Rights**.

 

(a)   ***Grant.*** TheBoard of Directors may grant cash bonus rights under the Plan in connectionwith (i) options granted or previously granted, (ii) stockappreciation rights granted or previously granted, (iii) stock bonusesawarded or previously awarded and (iv) shares sold or previously soldunder the Plan. Cash bonus rights will be subject to rules, terms andconditions as the Board of Directors may prescribe. Unless otherwise determinedby the Board of Directors, each cash bonus right granted under the Plan by itsterms shall be nonassignable and nontransferable by the holder, eithervoluntarily or by operation of law, except by will or by the laws of descentand distribution of the state or country of the holder’s domicile at the timeof death. The payment of a cash bonus shall not reduce the number of shares ofCommon Stock reserved for issuance under the Plan.

 

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(b)   ***Cash Bonus Rights inConnection With Options.*** A cash bonus right granted inconnection with an option will entitle an optionee to a cash bonus when therelated option is exercised (or terminates in connection with the exercise of astock appreciation right related to the option) in whole or in part if, in thesole discretion of the Board of Directors, the bonus right will result in a taxdeduction that the Company has sufficient taxable income to use. If an optioneepurchases shares upon exercise of an option and does not exercise a relatedstock appreciation right, the amount of the bonus, if any, shall be determinedby multiplying the excess of the total fair market value of the shares to beacquired upon the exercise over the total option price for the shares by theapplicable bonus percentage. If the optionee exercises a related stockappreciation right in connection with the termination of an option, the amountof the bonus, if any, shall be determined by multiplying the total fair marketvalue of the shares and cash received pursuant to the exercise of the stockappreciation right by the applicable bonus percentage. The bonus percentageapplicable to a bonus right, including a previously granted bonus right, may bechanged from time to time at the sole discretion of the Board of Directors butshall in no event exceed 75 percent.

 

(c)   ***Cash Bonus Rights inConnection With Stock Bonus.*** A cash bonus right granted inconnection with a stock bonus will entitle the recipient to a cash bonus payablewhen the stock bonus is awarded or restrictions, if any, to which the stock issubject lapse. If bonus stock awarded is subject to restrictions and isrepurchased by the Company or forfeited by the holder, the cash bonus rightgranted in connection with the stock bonus shall terminate and may not beexercised. The amount and timing of payment of a cash bonus shall be determinedby the Board of Directors.

 

(d)   ***Cash Bonus Rights inConnection With Stock Purchases.*** A cash bonus right granted inconnection with the purchase of stock pursuant to paragraph 8 will entitle therecipient to a cash bonus when the shares are purchased or restrictions, ifany, to which the stock is subject lapse. Any cash bonus right granted inconnection with shares purchased pursuant to paragraph 8 shall terminate andmay not be exercised in the event the shares are repurchased by the Company orforfeited by the holder pursuant to applicable restrictions. The amount of anycash bonus to be awarded and timing of payment of a cash bonus shall bedetermined by the Board of Directors.

 

(e)   ***Taxes.*** TheCompany shall withhold from any cash bonus paid pursuant to paragraph 10 theamount necessary to satisfy any applicable federal, state and local withholdingrequirements.

 

11.   **Performance Units**.The Board of Directors may grant performance units consisting of monetary unitswhich may be earned in whole or in part if the Company achieves certain goalsestablished by the Board of Directors over a designated period of time, but notin any event more than 10 years. The goals established by the Board ofDirectors may include earnings per share, return on shareholders’ equity,return on invested capital, and such other goals as may be established by theBoard of Directors. In the event that the minimum performance goal establishedby the Board of Directors is not achieved at the conclusion of a period, nopayment shall be made to the participants. In the event the maximum corporategoal is achieved, 100 percent of the monetary value of the performance unitsshall be paid to or vested in the participants. Partial achievement of themaximum goal may result in a payment or vesting corresponding to the degree ofachievement as determined by the Board of Directors. Payment of an award earnedmay be in cash or in Common Stock or in a combination of both, and may be madewhen earned, or vested and deferred, as the Board of Directors determines.Deferred awards shall earn interest on the terms and at a rate determined bythe Board of Directors. Unless otherwise determined by the Board of Directors,each performance unit granted under the Plan by its terms shall benonassignable and nontransferable by the holder, either voluntarily or byoperation of law, except by will or by the laws of descent and distribution ofthe state or country of the holder’s domicile at the time of death. Eachparticipant who has been awarded a performance unit shall, upon notification ofthe amount due, pay to the Company in cash amounts necessary to satisfy anyapplicable federal, state and local tax withholding requirements. If theparticipant fails to pay the amount demanded, the Company may withhold thatamount from other amounts payable by the Company to the participant, includingsalary or fees for services, subject to applicable law. With the consent of theBoard of Directors a participant may satisfy this obligation, in whole or inpart, by having the Company withhold from any shares to be issued that numberof shares that would satisfy the withholding amount due or by delivering CommonStock to the Company to satisfy the withholding amount. The payment of aperformance unit in cash shall not reduce the number of shares of Common Stockreserved for issuance under the Plan. The number of shares reserved forissuance under the Plan shall be reduced by the number of shares issued uponpayment of an award.

 

12.   **Foreign Qualified Grants**.Awards under the Plan may be granted to such officers and employees of the 

 

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Company and its subsidiariesand such other persons described in paragraph 1 residing in foreignjurisdictions as the Board of Directors may determine from time to time. TheBoard of Directors may adopt such supplements to the Plan as may be necessaryto comply with the applicable laws of such foreign jurisdictions and to affordparticipants favorable treatment under such laws; provided, however, that noaward shall be granted under any such supplement with terms which are morebeneficial to the participants than the terms permitted by the Plan.

 

13.   **Restricted Stock Units.**

 

(a)   ***Grant.***Restricted stock units may be granted at any time and from time to time asdetermined by the Board of Directors. For this purpose, a restricted stock unitshall mean a bookkeeping entry representing an amount equal to the fair marketvalue of one share of Common Stock, granted pursuant to this paragraph 13. Eachrestricted stock unit represents an unfunded and unsecured obligation of theCompany. Each restricted stock unit grant will be evidenced by an agreementthat will specify such other terms and conditions as the Board of Directors, inits sole discretion, will determine, including all terms, conditions, andrestrictions related to the grant, the number of restricted stock units and theform of payout, which, subject to paragraph 13(d), may be left to thediscretion of the Board of Directors.

 

(b)   ***Vesting Criteria and OtherTerms.*** The Board of Directors will set vesting criteria in itsdiscretion, which, depending on the extent to which the criteria are met, willdetermine the number of restricted stock units that will be paid out to theparticipant. The Board of Directors may set vesting criteria based upon theachievement of Company-wide, business unit, or individual goals (including, butnot limited to, continued employment), or any other basis determined by theBoard of Directors in its discretion.

 

(c)   ***Earning Restricted StockUnits.*** Upon meeting the applicable vesting criteria, theparticipant will be entitled to receive a payout as specified in the awardagreement. Notwithstanding the foregoing, at any time after the grant ofrestricted stock units, the Board of Directors, in its sole discretion, mayreduce or waive any vesting criteria that must be met to receive a payout.

 

(d)   ***Form ******and Timingof Payment.*** Payment of earned restricted stock units will bemade as soon as practicable after the date(s) set forth in the awardagreement. The Board of Directors, in its sole discretion, may pay earnedrestricted stock units in cash, shares of Common Stock, or a combinationthereof. Shares of Common Stock represented by restricted stock units that arefully paid in cash again will be available for grant under the Plan.

 

(e)   ***Cancellation.***On the date set forth in the award agreement, all unearned restricted stockunits will be forfeited to the Company.

 

(f)    ***Transferability.***Unless otherwise determined by the Board of Directors, each restricted stockunit granted under the Plan by its terms shall be nonassignable andnontransferable by the holder, either voluntarily or by operation of law,except by will or by the laws of descent and distribution of the state orcountry of the holder’s domicile at the time of death.

 

14.   **Changes in CapitalStructure.**

 

(a)   ***Stock Splits; StockDividends****.* If theoutstanding Common Stock of the Company is hereafter increased or decreased orchanged into or exchanged for a different number or kind of shares or othersecurities of the Company by reason of any stock split, combination of sharesor dividend payable in shares, recapitalization or reclassification appropriateadjustment shall be made by the Board of Directors in the number and kind ofshares available for grants under the Plan. In addition, the Board of Directorsshall make appropriate adjustment in the number and kind of shares as to whichoutstanding options, or portions thereof then unexercised, shall beexercisable, so that the optionee’s proportionate interest before and after theoccurrence of the event is maintained. Notwithstanding the foregoing, the Boardof Directors shall have no obligation to effect any adjustment that would ormight result in the issuance of fractional shares, and any fractional sharesresulting from any adjustment may be disregarded or provided for in any mannerdetermined by the Board of Directors. Any such adjustments made by the Board ofDirectors shall be conclusive.

 

(b)   ***Mergers, Reorganizations,Etc****.* In the event of a merger,consolidation, plan of exchange, acquisition of 

 

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property or stock,separation, reorganization or liquidation to which the Company or a subsidiaryis a party or a sale of all or substantially all of the Company’s assets (each,a “Transaction”), the Board of Directors shall, in its sole discretion and tothe extent possible under the structure of the Transaction, select one of thefollowing alternatives for treating outstanding options under the Plan:

 

(i)     Outstandingoptions shall remain in effect in accordance with their terms.

 

(ii)    Outstandingoptions shall be converted into options to purchase stock in the corporationthat is the surviving or acquiring corporation in the Transaction. The amount,type of securities subject thereto and exercise price of the converted optionsshall be determined by the Board of Directors of the Company, taking intoaccount the relative values of the companies involved in the Transaction andthe exchange rate, if any, used in determining shares of the survivingcorporation to be issued to holders of shares of the Company. Unless otherwisedetermined by the Board of Directors, the converted options shall be vestedonly to the extent that the vesting requirements relating to options grantedhereunder have been satisfied.

 

(iii)   TheBoard of Directors shall provide a 30-day period prior to the consummation ofthe Transaction during which outstanding options may be exercised to the extentthen exercisable, and upon the expiration of such 30-day period, allunexercised options shall immediately terminate. The Board of Directors may, inits sole discretion, accelerate the exercisability of options so that they areexercisable in full during such 30-day period.

 

(c)   ***Dissolution of the Company****.* In the event of the dissolution of the Company, optionsshall be treated in accordance with paragraph 14(b)(iii).

 

(d)   ***Rights Issued by AnotherCorporation****.* The Board ofDirectors may also grant options, stock appreciation rights, performance units,stock bonuses and cash bonuses and issue restricted stock under the Plan havingterms, conditions and provisions that vary from those specified in this Planprovided that any such awards are granted in substitution for, or in connectionwith the assumption of, existing options, stock appreciation rights, stockbonuses, cash bonuses, restricted stock and performance units granted, awardedor issued by another corporation and assumed or otherwise agreed to be providedfor by the Company pursuant to or by reason of a Transaction.

 

15.   **Amendment of Plan**.The Board of Directors may at any time, and from time to time, modify or amendthe Plan in such respects as it shall deem advisable because of changes in thelaw while the Plan is in effect or for any other reason. Except as provided inparagraphs 6(a)(iv), 9, 10 and 14, however, no change in an award alreadygranted shall be made without the written consent of the holder of such award.

 

16.   **Approvals**. Theobligations of the Company under the Plan are subject to the approval of stateand federal authorities or agencies with jurisdiction in the matter. TheCompany will use its best efforts to take steps required by state or federallaw or applicable regulations, including rules and regulations of theSecurities and Exchange Commission and any stock exchange on which the Company’sshares may then be listed, in connection with the grants under the Plan. Theforegoing notwithstanding, the Company shall not be obligated to issue ordeliver Common Stock under the Plan if such issuance or delivery would violateapplicable state or federal securities laws.

 

17.   **Employment and ServiceRights**. Nothing in the Plan or any award pursuant to the Plan shall (i) conferupon any employee any right to be continued in the employment of the Company orany subsidiary or interfere in any way with the right of the Company or any subsidiaryby whom such employee is employed to terminate such employee’s employment atany time, for any reason, with or without cause, or to decrease such employee’scompensation or benefits, or (ii) confer upon any person engaged by theCompany any right to be retained or employed by the Company or to thecontinuation, extension, renewal, or modification of any compensation,contract, or arrangement with or by the Company.

 

18.   **Rights as a Shareholder**.The recipient of any award under the Plan shall have no rights as a shareholderwith respect to any Common Stock until the date of issue to the recipient of astock certificate for such shares. Except as otherwise expressly provided inthe Plan, no adjustment shall be made for dividends or other rights for whichthe record date occurs prior to the date such stock certificate is issued.

 

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19.   **Restricted****Stock Unit Grants toNon-Employee Directors**.

 

(a)   ***Initial Board Grants***. Each Non-EmployeeDirector shall be automatically granted restricted stock units equal to 5,000shares of Common Stock on the date such person first becomes a Non-EmployeeDirector, whether through election by the shareholders of the Company orappointment by the Board of Directors to fill a vacancy. A “Non-EmployeeDirector” is a director who is not an officer or employee of the Company or anyof its subsidiaries. Notwithstanding the foregoing, a director who ceases to bean employee of the Company but remains a director of the Company and therebybecomes a Non-Employee Director shall not receive the grant of restricted stockunits provided under this paragraph 19(a).

 

(b)   ***Additional Grants***. Each Non-Employee Directorshall be automatically granted additional restricted stock units equal to 2,500shares of Common Stock in each calendar year subsequent to the year in whichsuch person became a Non-Employee Director, such restricted stock units to begranted as of the date of the Company’s annual meeting of shareholders held insuch calendar year, provided that the Non-Employee Director continues to servein such capacity as of such date.

 

(c)   ***Terms of Restricted Stock Units***.

 

(i)     AwardAgreement. Each award of restricted stock units granted pursuant to thisparagraph 19 shall be evidenced by an agreement that will specify the number ofrestricted stock units and such other terms and conditions as the Board ofDirectors, in its sole discretion, shall determine, including all terms,conditions, and restrictions related to the grant and the form of payout,which, subject to paragraph 19(c)(iii), may be left tot he discretion of theBoard of Directors.

 

(ii)    Vesting.Each award of restricted stock units shall vest as to twenty-five (25%) of therestricted stock units on each anniversary of its date of grant provided thatthe Non-employee Director continues to serve as a director of the Company onsuch date. Notwithstanding the foregoing, if the Non-employee Director ceasesto be a director of the Company due to death, one hundred percent (100%) of theunvested portion of the restricted stock units subject to the award shall veston the date of the Non-employee Director’s death.

 

(iii)   Form andTiming of Payment. Payment of restricted stock units shall be made as soon aspracticable following the date on which such restricted stock units vest inaccordance with paragraph 19(ii). The Board of Directors, in its solediscretion, may pay vested restricted stock units in cash, shares of CommonStock, or a combination thereof. Shares of Common Stock represented byrestricted stock units that are fully paid in cash shall again be available forgrant under the Plan.

 

(d)   ***Section 409A Compliance*.**Unless otherwise determined by the Board of Directors, grants made underthis paragraph 19 shall comply with the provisions of Section 409A of theCode. The Board of Directors of the Company reserves the right to amend thisparagraph 19 as it deems necessary or advisable, in its sole discretion andwithout the consent of the Employee, to comply with Section 409A of theCode or to otherwise avoid imposition of any additional tax or incomerecognition under Section 409A of the Code.

 

(e)   ***Nontransferability.*** Each restricted stockunit by its terms shall be nonassignable and nontransferable by the holder,either voluntarily or by operation of law, except by will or by the laws ofdescent and distribution of the state or country of the holder’s domicile atthe time of death.

 

20.   **Code Section 162(m) Provisions.**

 

(a)   ***Option and SAR AnnualShare Limit.*** No individual shall be granted, in any calendaryear, options and stock appreciation rights to purchase more than 250,000shares of Common Stock; provided, however, that such limit shall be 200,000shares of Common Stock in the individual’s first calendar year of Company service.

 

(b)   ***Restricted Stock, StockBonus, Restricted Stock Unit and Performance Unit Annual Limits.***No individual shall be granted, in any calendar year, more than 75,000 sharesof Common Stock in the aggregate of the following: (i) restricted stock, (ii) stockbonuses, or (iii) restricted stock units. No individual shall be granted,in any calendar year, performance units having an initial value greater than$2,000,000.

 

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(c)   ***Section 162(m) PerformanceGoals.*** “Performance Goals” shall mean the goal(s) (orcombined goal(s)) determined by the Committee (in its discretion) to beapplicable to an employee with respect to an award of restricted stock, stockbonuses, restricted stock units and performance units. As determined by theCommittee, the Performance Goals applicable to an award may provide for atargeted level or levels of achievement using one or more of the followingmeasures: (a) Operating Income, (b) Pretax Income, and (c) Returnon Sales. The Performance Goals may differ from employee to employee and fromaward to award. Any criteria used may be measured, as applicable, (i) inabsolute terms, (ii) in relative terms (including, but not limited to,passage of time and/or against another company or companies), (iii) on aper-share basis, (iv) against the performance of the Company as a whole orof a business unit of the Company, and/or (v) to the extent not otherwisespecified by the definition of the Performance Goal, on a pre-tax or after-taxbasis. Prior to the Determination Date, the Committee shall determine whetherany element(s) or item(s) shall be included in or excluded from thecalculation of any Performance Goal with respect to any Participants.

 

(i)     “OperatingIncome” means the Company’s or a business unit’s income from operationsdetermined in accordance with generally accepted accounting principles.

 

(ii)    “PretaxIncome” means the Company’s or a business unit’s income before taxes,determined in accordance with generally accepted accounting principles.

 

(iii)   “Returnon Sales” means the percentage equal to the Company’s or a business unit’sOperating Income before incentive compensation, divided by the Company’s or thebusiness unit’s, as applicable, revenue, determined in accordance withgenerally accepted accounting principles.

 

(d)   ***Section 162(m) PerformanceRestrictions.*** For purposes of qualifying grants of restrictedstock, stock bonuses, restricted stock units and performance units as “performance-basedcompensation” under Section 162(m) of the Code, the Committee, in itsdiscretion, may set restrictions based upon the achievement of PerformanceGoals. The Performance Goals shall be set by the Committee on or before thelatest date permissible to enable the restricted stock, stock bonuses,restricted stock units and performance units to qualify as “performance-basedcompensation” under Section 162(m) of the Code. In grantingrestricted stock, stock bonuses, restricted stock units and performance unitswhich are intended to qualify under Section 162(m) of the Code, theCommittee shall follow any procedures determined by it from time to time to benecessary or appropriate to ensure qualification of the award under Section 162(m) ofthe Code (e.g., in determining the Performance Goals).

 

(e)   ***Changes in Capitalization.***The numerical limitations in Sections 20(a) and 20(b) shall beadjusted proportionately in connection with any change in the Company’scapitalization as described in Section 14(a).

 

(f)    If an award is cancelled in the same calendaryear in which it was granted (other than in connection with a transactiondescribed in Section 14 of the Plan), the cancelled award will be countedagainst the limits set forth in subsections (a) and (b) above. Forthis purpose, if the exercise price of an option is reduced, the transactionwill be treated as a cancellation of the option and the grant of a new option.

 

Adopted: April 21,1995

Approved by Shareholders: May 5, 1995

 

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