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                                                                 EXHIBIT 10(iii)

                       KULICKE AND SOFFA INDUSTRIES, INC.

                      1994 EMPLOYEE INCENTIVE STOCK OPTION
                       AND NON-QUALIFIED STOCK OPTION PLAN
               (As Amended and Restated Effective March 21, 2003)

                                    SECTION I
                                     PURPOSE

         This KULICKE AND SOFFA INDUSTRIES, INC. 1994 EMPLOYEE STOCK OPTION PLAN
("Plan") is intended to provide a means whereby KULICKE AND SOFFA INDUSTRIES,
INC. ("Company") and any Subsidiary (as hereinafter defined) may, through the
grant of incentive stock options and non-qualified stock options (collectively,
"Options") to officers and other Key Employees (as defined in Section 3),
attract and retain such Key Employees and motivate such Key Employees to
exercise their best efforts on behalf of the Company and of any Subsidiary.

         As used in the Plan, the term "incentive stock options" ("ISOs") means
Options which qualify as incentive stock options within the meaning of section
422 of the Internal Revenue Code of 1986, as amended from time to time ("Code"),
at the time they are granted and which are either designated as ISOs in the
Grant Letters (as hereinafter defined) covering such Options or which are
designated as ISOs by the Committee (as defined in Section 2 hereof) at the time
of grant. The term "non-qualified stock options" ("NQSOs") means all other
Options granted under the Plan. The term "Subsidiary" means any corporation
(whether or not in existence at the time the Plan is adopted) which, at the time
an Option is granted, is a subsidiary of the Company under the definition of
"subsidiary corporation" contained in section 424(f) of the Code or any similar
provision hereafter enacted.

                                    SECTION 2
                                 ADMINISTRATION

         The Plan shall be administered by the Company's Compensation Committee
("Committee"), which shall consist solely of not fewer than two (2)
"non-employee directors" (within the meaning of Rule 16b-3(b)(3) under the
Securities Exchange Act of 1934, or any successor thereto) of the Company who
are also "outside directors" (within the meaning of Treas. Reg.
Section 1.162-27(e)(3), or any successor thereto), who shall be appointed by,
and shall serve at the pleasure of, the Company's Board of Directors ("Board").
Each member of such Committee, while serving as such, shall be deemed to be
acting in his or her capacity as a director of the Company.

         The Committee shall have the authority, subject to the terms of the
Plan, to select the persons to be granted ISOs and NQSOs under the Plan, to
grant Options on behalf of the Company, and to set the date of grant and the
other terms of such Options. The Committee may correct any defect, supply any
omission and reconcile any inconsistency in the Plan and in any Option granted
hereunder in the manner and to the extent it shall deem desirable. The Committee
also shall have the authority to establish such rules and regulations, not
inconsistent with the provisions of the Plan, for the proper administration of
the Plan, and to amend, modify or rescind any such rules and regulations, and to
make such determinations and interpretations under, or in connection with, the
Plan, as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and conclusive upon the
Company, its Subsidiaries and its shareholders and all officers and employees
and former officers and employees, and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them. The Committee may delegate to the
Office of the President and/or to other senior officers of the Company its
duties under the Plan pursuant to such conditions or limitations as the
Committee may establish, except that only the Committee may make any awards to
or determinations regarding grants to employees who are subject to Section 16 of
the Securities Exchange Act of 1934.

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         No member of the Board or the Committee, and no delegate of the
Committee, shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted hereunder.

                                    SECTION 3
                                   ELIGIBILITY

         The class of employees who shall be eligible to receive Options under
the Plan shall be the Key Employees (including any directors who also are Key
Employees) of the Company and/or of a Subsidiary. A "Key Employee" is an officer
or other employee who occupies a responsible executive, professional, managerial
or administrative position and who the Committee believes has the capacity to
contribute to the long-term success of the Company and its Subsidiaries. More
than one Option may be granted to a Key Employee under the Plan.

                                    SECTION 4
                                      STOCK

         Subject to adjustment as hereinafter provided, the aggregate number of
shares of common stock of the Company, no par value ("Common Shares"), that may
be subject to Options under the Plan shall equal (i) 850,000 shares reduced by
the number of shares subject to options outstanding immediately prior to July
17, 2000, (ii) multiplied by two, (iii) reduced by the number of shares subject
to options issued on or after July 17, 2000, and (iv) increased by the number of
shares subject to options expiring or terminating on or after July 17, 2000,
which aggregate number equals 178,348 shares as of the effective date of this
amended and restated Plan. Shares issuable under the Plan may be authorized but
unissued shares or reacquired shares, as the Company may determine from time to
time. Any Common Shares subject to an Option which expires or otherwise
terminates for any reason whatever (including, without limitation, the Key
Employee's surrender thereof) without having been exercised shall continue to be
available for the granting of Options under the Plan.

         Notwithstanding anything in this Plan to the contrary, no Key Employee
shall receive Options for more than 600,000 Common Shares under the Plan;
provided, however, that in the case of a Key Employee who has exercised options
under the Plan prior to July 17, 2000, the maximum number of Common Shares
available to such Key Employee shall equal (i) 300,000 Common Shares reduced by
the number of Common Shares received by the Key Employee upon the exercise of
Options under this Plan prior to July 17, 2000, (b) multiplied by two. If an
Option is cancelled, the Common Shares covered by the cancelled Option shall be
counted against such maximum number of shares for which Options may be granted
to a single Key Employee. If the exercise price of an Option is reduced after
the date of grant, the transaction shall be treated as a cancellation of the
original Option and the grant of a new Option for purposes of counting the
maximum number of shares for which Options may be granted to a single Key
Employee.

                                    SECTION 5
                                  ANNUAL LIMIT

         (a)      ISOs. The aggregate Fair Market Value (determined as of the
date the ISO is granted) of the Common Shares with respect to which ISOs become
exercisable for the first time by a Key Employee during any calendar year (under
this Plan and any other ISO plan of the Company or any parent corporation
(within the meaning of section 424(e) of the Code ("Parent")) or Subsidiary)
shall not exceed $100,000. The term "Fair Market Value" shall mean the value of
the Common Shares arrived at by a good faith determination of the Committee and
shall be:

                  (1)      The quoted closing price, if there is a market for
and there are sales of Common Shares on a registered securities exchange or in
an over the counter market, on the date specified;

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                  (2)      The weighted average of the quoted closing prices on
the nearest date before and the nearest date after the specified date, if there
are no sales of Common Shares on the specified date but there are such sales on
dates within a reasonable period both before and after the specified date;

                  (3)      The mean between the bid and asked prices, as
reported by the National Quotation Bureau on the specified date, if actual sales
are not available during a reasonable period beginning before and ending after
the specified date; or

                  (4)      Such other method of determining Fair Market Value as
shall be authorized by the Code, or the rules or regulations thereunder, and
adopted by the Committee.

                  Where the Fair Market Value of Common Shares is determined
under (2) above, the average of the closing prices on the nearest sales date
before and the nearest date after the specified date shall be weighted inversely
by the respective numbers of trading days between the dates of reported sales
and the specified date (i.e., the valuation date), in accordance with Treasury
Regulation Section 20.2031-2(b)(1), or any successor thereto, under the Code.

         (b)      OPTIONS OVER ANNUAL LIMIT. If an Option intended as an ISO is
granted to a Key Employee and such Option may not be treated in whole or in part
as an ISO pursuant to the limitation in (a) above, such Option shall be treated
as an ISO to the extent it may be so treated under such limitation and as a NQSO
as to the remainder. For purposes of determining whether an ISO would cause such
limitation to be exceeded, ISOs shall be taken into account in the order
granted.

         (c)      NQSOs. The annual limit set forth above for ISOs shall not
apply to NQSOs.

                                    SECTION 6
                                     OPTIONS

         (a)      GRANTING OF OPTIONS. From time to time until the expiration or
earlier suspension or discontinuance of the Plan, the Committee may, on behalf
of the Company, grant to Key Employees under the Plan such Options as it
determines are warranted, subject to the limitations of the Plan; provided,
however, that grants of ISOs and NQSOs shall be separate and not in tandem
(i.e., a Key Employee's exercise of an ISO shall not affect his or her right to
exercise an NQSO, and vice versa). The granting of an Option under the Plan
shall not be deemed either to entitle the Key Employee to, or to disqualify the
Key Employee from, any participation in any other grant of Options under the
Plan. In making any determination as to whether a Key Employee shall be granted
an Option and as to the number of shares to be covered by such Option, the
Committee shall take into account the duties of the Key Employee, the
Committee's views as to his or her present and potential contributions to the
success of the Company or a Subsidiary, and such other factors as the Committee
shall deem relevant in accomplishing the purposes of the Plan. Moreover, the
Committee may determine that the Grant Letter (as defined below) shall provide
that said Option may be exercised only if certain conditions, as determined by
the Committee, are fulfilled.

         (b)      TERMS AND CONDITIONS OF OPTIONS. The Options granted pursuant
to the Plan shall specify whether they are ISOs or NQSOs; however, if the Option
is not designated in the Grant Letter as an ISO or NQSO, the Option shall
constitute an ISO if it complies with the terms of section 422 of the Code, and
otherwise, it shall constitute an NQSO. In addition, the Options granted
pursuant to the Plan shall include expressly or by reference the following terms
and conditions, as well as such other provisions not inconsistent with the
provisions of this Plan as the Committee shall deem desirable, and for ISOs
granted under this Plan, the provisions of section 422(b) of the Code:

                  (1)      NUMBER OF SHARES. A statement of the number of Common
Shares to which the Option pertains.

                  (2)      PRICE. A statement of the Option exercise price,
which shall be determined and fixed by the Committee in its discretion at the
time of grant, but shall not be less than 100% (110% in the

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case of an ISO granted to a more than 10% shareholder as provided in Subsection
(9) below) of the Fair Market Value of the optioned Common Shares on the date
the Option is granted.

                  (3)      TERM.

                           (A)      ISOs. Subject to earlier termination as
provided in Subsections (5), (6) and (7) below, the term of each ISO shall be
not more than 10 years (5 years in the case of a more than 10% shareholder as
provided in (9) below) from the date of grant.

                           (B)      NQSOs. Subject to earlier termination as
provided in Subsections (5), (6) and (7) below, the term of each NQSO shall be
not more than 10 years from the date of grant.

                  (4)      EXERCISE.

                           (A)      GENERAL. Options shall be exercisable in
such installments, on such dates, and/or upon fulfillment of such other
conditions as the Committee may specify, provided, however, that Options granted
prior to October 2, 2001, shall be exercisable in such installments commencing
not less than 12 months from the date of grant; and further provided that:

                                    (i)      In the case of new Options granted
to a Key Employee in replacement for options (whether granted under this Plan or
otherwise) held by the Key Employee, the new Options may be made exercisable, if
so determined by the Committee, in its discretion, at the earliest date the
replaced options were exercisable; and

                                    (ii)     The Committee may accelerate the
exercise date of any outstanding Options in its discretion, if it deems such
acceleration to be desirable.

                           Any Common Shares the right to the purchase of which
has accrued under an Option may be purchased at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised, in whole or in
part, from time to time by giving written notice of exercise to the Company at
its principal office, specifying the number of Common Shares to be purchased and
accompanied by payment in full of the aggregate Option exercise price for such
shares. Options may not be exercised in installments of less than 25 shares,
unless such Option is exhausted upon its exercise. Only full shares shall be
issued under the Plan, and any fractional share which might otherwise be
issuable upon the exercise of an Option granted hereunder shall be forfeited.

                           (B)      MANNER OF PAYMENT. The Option price shall be
payable:

                                    (i)      In cash or its equivalent;

                                    (ii)     In the case of Options granted on
or after May 16, 2000, in Common Shares previously acquired by the Key Employee;
provided that if such Common Shares were acquired through the exercise of an ISO
or NQSO, such shares have been held by the Key Employee for such period of time
as required to be considered "mature" shares for purposes of accounting
treatment; and further provided, that with respect to Options granted prior to
May 16, 2000, in the case of an ISO, if the Committee, in its discretion, causes
the Grant Letter so to provide and in the case of an NQSO if the Committee, in
its discretion, so determines at or prior to the time of exercise, in Common
Shares previously acquired by the Key Employee, provided that if such shares
were acquired through the exercise of an ISO granted under this Plan or any
other plan of the Company and are used to pay the Option exercise price of an
ISO, such shares have been held by the Key Employee for a period of not less
than the holding period described in section 422(a)(1) of the Code on the date
of exercise, or if such Common Shares were acquired through exercise of an NQSO
or ISO granted under this Plan or any other plan of the Company and are used to
pay the Option exercise price of an NQSO, such shares have been held by the Key
Employee for a period of more than 12 months on the date of exercise; or

                                    (iii)    In any combination of (i) and (ii)
above.

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                  In the event such Option exercise price is paid, in whole or
in part, with Common Shares, the portion of the Option exercise price so paid
shall equal the Fair Market Value on the date of exercise of the Option of the
Common Shares surrendered in payment of such Option exercise price.

                  (5)      TERMINATION OF EMPLOYMENT. If a Key Employee's
employment by the Company (and Subsidiaries) is terminated by either party prior
to the expiration date fixed for his or her Option for any reason other than
death, disability, or Cause (as hereinafter defined), such Option may be
exercised, to the extent of the number of shares with respect to which the Key
Employee could have exercised it on the date of such termination, or to any
greater extent permitted by the Committee, by the Key Employee at any time prior
to the earlier of:

                           (A)      The expiration date specified in such
Option; or

                           (B)      Three months after the date of such
termination of employment.

With respect to Options granted on or after October 8, 1996, the foregoing
provisions of this Subsection (5) shall apply in the event of termination of
employment for any reason other than death, disability, Retirement, or Cause.

                  If a Key Employee's employment by the Company (and
Subsidiaries) is terminated for Cause, all Options held by the Key Employee
shall terminate concurrently with receipt by the Optionee of oral or written
notice that his or her employment has been terminated. For purposes of this
Plan, termination for Cause shall include termination by reason of any dishonest
or illegal act, or any willful refusal or failure to perform duties properly
assigned.

                  (5a)     EXERCISE UPON RETIREMENT OF KEY EMPLOYEE. With
respect to Options granted on or after October 8, 1996, if a Key Employee's
employment is terminated prior to the expiration date fixed for his or her
Option by reason of Retirement (as hereinafter defined), such Option shall
accelerate and may be exercised, to the extent it remains unexercised on the
date of such Retirement, by the Key Employee at any time prior to the earlier
of:

                           (A)      The expiration date specified in such
Option; or

                           (B)      Three months after the date of such
Retirement.

                  For purposes of this Plan, Retirement shall mean, effective
for options granted on or after February 12, 2002, a Key Employee's retirement
from the Company and its Subsidiaries at or after attaining age 50 and
completing at least three years of employment with the Company and its
Subsidiaries, provided the sum of the Employee's age and years of employment
with the Company and its Subsidiaries equals or exceeds 60. With respect to
options granted prior to February 12, 2002, Retirement shall mean (i) for
options granted on or after May 16, 2000, a Key Employee's retirement from the
Company and its Subsidiaries at or after attaining age 65 and completing at
least five years of employment with the Company and its Subsidiaries, or before
such time if expressly agreed to by the Company, and (ii) for options granted
prior to May 16, 2000, a Key Employee's retirement from the Company and its
Subsidiaries at or after age 65 or before age 65 if expressly agreed to by the
Company. The Office of the President of the Company shall have the authority to
grant requests for termination on account of Retirement under the Plan, provided
the age and/or employment requirements of the applicable standard are met.

                  (6)      EXERCISE UPON DISABILITY OF KEY EMPLOYEE. Effective
with respect to Options outstanding on October 8, 1996 and Options granted on
and after such date, if a Key Employee shall become disabled (within the meaning
of section 22(e)(3) of the Code) during his or her employment and, prior to the
expiration date fixed for his or her Option, his or her employment is terminated
as a consequence of such disability, such Option shall accelerate and may be
exercised, to the extent it remains unexercised on the date of such termination,
by the Key Employee at any time prior to the earlier of:

<PAGE>

                           (A)      The expiration date specified in such
Option; or

                           (B)      One year after the date of such termination
of employment.

                  In the event of the Key Employee's legal disability, such
Option may be so exercised by the Key Employee's legal representative.

                  (7)      EXERCISE UPON DEATH OF KEY EMPLOYEE. Effective with
respect to Options outstanding on October 8, 1996 and Options granted on and
after such date, if a Key Employee shall die during his or her employment and
prior to the expiration date fixed for his or her Option, or if a Key Employee
whose employment is terminated for any reason shall die following his or her
termination of employment but prior to the earliest of:

                           (A)      The expiration date fixed for his or her
Option;

                           (B)      The expiration of the period determined
under Subsections (5), (5a) (if applicable), and (6) above; or

                           (C)      In the case of an ISO which is to remain an
ISO, three months following termination of employment;

his or her Option shall accelerate and may be exercised, to the extent it
remains unexercised on the date of his or her death, by the Key Employee's
estate, personal representative or beneficiary who acquired the right to
exercise such Option by bequest or inheritance or by reason of the death of the
Key Employee, at any time prior to the earlier of:

                                    (i)      The expiration date specified in
such Option; or

                                    (ii)     One year after the date of death.

                  (8)      RIGHTS AS A SHAREHOLDER. A Key Employee shall have no
rights as a shareholder with respect to any shares covered by his or her Option
until the issuance of a stock certificate to him or her for such shares.

                  (9)      TEN PERCENT SHAREHOLDER. If the Key Employee owns
more than 10% of the total combined voting power of all shares of stock of the
Company or of a Subsidiary or Parent at the time an ISO is granted to such Key
Employee, the Option exercise price for the ISO shall be not less than 110% of
the Fair Market Value of the optioned Common Shares on the date the ISO is
granted, and such ISO, by its terms, shall not be exercisable after the
expiration of five years after the date the ISO is granted. The conditions set
forth in this Subsection (9) shall not apply to NQSOs.

         (c)      GRANT LETTERS. Options granted under the Plan shall be
evidenced by written documents ("Grant Letters") in such form as the Committee
shall, from time to time, approve, which Grant Letters shall contain such
provisions, not inconsistent with the provisions of the Plan, for NQSOs granted
pursuant to the Plan, and such conditions, not inconsistent with section 422(b)
of the Code or the provisions of the Plan, for ISOs granted pursuant to the
Plan, as the Committee shall deem advisable, and which Grant Letters shall
specify whether the Option is an ISO or NQSO; provided, however, if the Option
is not designated in the Grant Letter as an ISO or NQSO, the Option shall
constitute an ISO if it complies with the terms of section 422 of the Code, and
otherwise, it shall constitute an NQSO. Each Key Employee shall be bound by the
terms of the Grant Letter.

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                                    SECTION 7
                               CAPITAL ADJUSTMENTS

         The number of shares which may be issued under the Plan, the maximum
number of shares with respect to which Options may be granted to any Key
Employee under the Plan, both as stated in Section 4 hereof, and the number of
shares issuable upon exercise of outstanding Options under the Plan (as well as
the Option exercise price per share under such outstanding Options) shall,
subject to the provisions of section 424(a) of the Code, be adjusted, as may be
deemed appropriate by the Committee, to reflect any stock dividend, stock split,
share combination, or similar change in the capitalization of the Company.

         In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation; provided, however, that in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Options if it determines that such termination
is in the best interests of the Company. If the Committee decides to terminate
outstanding Options, the Committee shall give each Key Employee holding an
Option to be terminated not less than ten days' notice prior to any such
termination by reason of such a corporate transaction, and any such Option which
is to be so terminated shall become fully exercisable and may be exercised up
to, and including the date immediately preceding such termination.

         The Committee also may, in its discretion, change the terms of any
outstanding Option to reflect any such corporate transaction, provided that, in
the case of ISOs which are to remain ISOs, such change is excluded from the
definition of a "modification" under section 424(h) of the Code unless the
Option holder consents to such change.

                                    SECTION 8
                                CHANGE IN CONTROL

         All Options shall become fully vested and exercisable upon a Change in
Control of the Company. "Change in Control" shall mean any of the following
events:

         (a)      An acquisition (other than directly from the Company of any
voting securities of the Company ("Voting Securities") by any "Person" (as such
term is used for purposes of section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) immediately after which such Person
has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of 50% or more of the combined voting power of all then
outstanding Voting Securities, provided, however, that any such acquisition
approved by two-thirds of the Incumbent Board (as hereinafter defined) shall not
be deemed to be a Change in Control;

         (b)      The individuals who, as of December 13, 1994, are members of
the Company's Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board of Directors; provided, however,
that if the election, or nomination for election by the shareholders, of any new
director was approved by a vote of at least two-thirds of the members of the
Board of Directors who constitute Incumbent Board members, such new directors
shall for all purposes be considered as members of the Incumbent Board as of
December 13, 1994; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest;

         (c)      Approval by shareholders of the Company of (1) a merger or
consolidation involving the Company if the shareholders of the Company
immediately before such merger or consolidation do not own,

<PAGE>

directly or indirectly, immediately following such merger or consolidation more
than 50% of the combined voting power of the outstanding Voting Securities of
the corporation resulting from such merger or consolidation in substantially the
same proportion as their ownership of the Voting Securities immediately before
such merger or consolidation or (2) a complete liquidation or dissolution of the
Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company; or

         (d)      Acceptance of shareholders of the Company of shares in a share
exchange if the shareholders of the Company immediately before such share
exchange do not own, directly or indirectly, immediately following such share
exchange more than 50% of the combined voting power of the outstanding Voting
Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.

                                    SECTION 9
                     AMENDMENT OR DISCONTINUANCE OF THE PLAN

         At any time and from time to time, the Board may suspend or terminate
the Plan or amend it, and the Committee may amend any outstanding Options, in
any respect whatsoever, except that the following amendments shall require the
approval by the affirmative votes of holders of at least a majority of the
shares present, or represented, and entitled to vote at a duly held meeting of
shareholders of the Company:

         (a)      Any amendment which would:

                  (1)      Materially increase the benefits accruing to
directors and officers, within the meaning of Rule 16a-1(f) under the 1934 Act
(hereinafter referred to as "Officers"), under the Plan;

                  (2)      Materially increase the number of Common Shares which
may be issued to directors and Officers under the Plan; or

                  (3)      Materially modify the requirements as to eligibility
for directors and Officers to participate in the Plan;

         (b)      With respect to ISOs, any amendment which would:

                  (1)      Change the class of employees eligible to participate
in the Plan;

                  (2)      Except as permitted under Section 7 hereof, increase
the maximum number of Common Shares with respect to which ISOs may be granted
under the Plan; or

                  (3)      Extend the duration of the Plan under Section 10
hereof with respect to any ISOs granted hereunder; and

         (c)      Any amendment which would require shareholder approval
pursuant to Treasury Regulation Section 1.162-27(e)(4)(vi), or any successor
thereto.

         Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an outstanding
Option without the consent of such holder.

<PAGE>

                                   SECTION 10
                               TERMINATION OF PLAN

         Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
December 12, 2004, which date is within ten years after the date the Plan was
adopted by the Board, and no Options hereunder shall be granted thereafter.
Nothing contained in this Section 10, however, shall terminate or affect the
continued existence of rights created under Options issued hereunder and
outstanding on December 12, 2004 which by their terms extend beyond such date.

                                   SECTION 11
                                 EFFECTIVE DATE

         This Plan became effective on December 13, 1994 (the date the Plan was
adopted by the Board), and was approved by shareholders on February 14, 1995. As
amended and restated, the Plan shall be effective March 21, 2003.

                                   SECTION 12
                                  MISCELLANEOUS

         (a)      GOVERNING LAW. The Plan and the Grant Letters entered into,
and the Options granted thereunder, shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the operation of, and the
rights of Key Employees under, the Plan, the Grant Letters, and the Options
shall be governed by applicable federal law and otherwise by the laws of the
Commonwealth of Pennsylvania.

         (b)      RIGHTS. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any individual any right to be
granted an Option, or any other right hereunder, unless and until the Committee
shall have granted such individual an Option, and then his or her rights shall
be only such as are provided by this Plan and the Grant Letter.

         Any Option under the Plan shall not entitle the holder thereof to any
rights as a shareholder of the Company prior to the exercise of such Option and
the issuance of the shares pursuant thereto. Further, notwithstanding any
provisions of the Plan or any Grant Letter with a Key Employee, the Company
shall have the right, in its discretion, to retire a Key Employee at any time
pursuant to its retirement rules or otherwise to terminate his or her employment
at any time for any reason whatsoever.

         (c)      NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon a Key Employee to exercise such Option.

         (d)      NON-TRANSFERABILITY. No Option which is to remain an ISO and,
except as otherwise provided by the Committee, no other Option shall be
assignable or transferable by the Key Employee otherwise than by will or by the
laws of descent and distribution, and subject to the preceding clause, during
the lifetime of the Key Employee, any Options shall be exercisable only by him
or her or by his or her guardian or legal representative. If a Key Employee is
married at the time of exercise of an Option and if the Key Employee so requests
at the time of exercise, the certificate or certificates issued shall be
registered in the name of the Key Employee and the Key Employee's spouse,
jointly, with right of survivorship.

         (e)      WITHHOLDING AND USE OF SHARES TO SATISFY TAX OBLIGATIONS. The
obligation of the Company to deliver Common Shares to a Key Employee pursuant to
any Option under the Plan shall be subject to applicable federal, state and
local tax withholding requirements.

<PAGE>

         With respect to Options granted on or after May 16, 2000, in order to
satisfy the withholding requirements of applicable federal tax laws, Key
Employees may satisfy the minimum required federal withholding tax, in whole or
in part, by returning to the Company Common Shares, which shares shall be
valued, for this purpose, at their Fair Market Value on the date of exercise of
the Option (or if later, the date on which the Key Employee recognizes ordinary
income with respect to such exercise) ("Determination Date"). Alternatively, the
Committee, in its discretion, may permit the Key Employee to satisfy the minimum
required federal withholding tax, in whole or in part, by electing to have the
Company withhold Common Shares. An election to use Common Shares to satisfy tax
withholding requirements must be made in compliance with and subject to any
withholding rules adopted by the Committee. The Company may not withhold shares
in excess of the number necessary to satisfy the minimum required federal income
tax withholding requirements. In the event Common Shares acquired under the
exercise of an Option, granted under this Plan or any other plan of the Company,
are used to satisfy such withholding requirement, such Common Shares must have
been held by the Key Employee for such period of time as required to be
considered "mature" shares for purposes of accounting treatment; provided,
however, with respect to Options granted prior to May 16, 2000, in the event
Common Shares acquired under the exercise of an ISO, granted under this Plan or
any other plan of the Company, are used to satisfy such withholding
requirements, such Common Shares must have been held by the Key Employee for a
period of not less than the holding period described in section 422(a)(1) of the
Code on the Determination Date, or if such Common Shares were acquired through
exercise of an NQSO, granted under the Plan or any other plan of the Company,
such option must have been granted to the Key Employee at least six (6) months
prior to the Determination Date.

         (f)      LISTING AND REGISTRATION OF SHARES. Each Option shall be
subject to the requirement that, if at any time the Committee shall determine,
in its discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Option
or the purchase or vesting of shares thereunder, or that action by the Company
or by the Key Employee should be taken in order to obtain an exemption from any
such requirement, no such Option may be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent, approval, or
action shall have been effected, obtained, or taken under conditions acceptable
to the Committee. Without limiting the generality of the foregoing, each Key
Employee or his or her legal representative or beneficiary may also be required
to give satisfactory assurance that shares purchased upon exercise of an Option
are being purchased for investment and not with a view to distribution, and
certificates representing such shares may be legended accordingly.

         (g)      MODIFICATION OF OPTION. With respect to Options outstanding on
February 9, 1999, and to Options granted on and after such date, notwithstanding
any provisions of this Plan to the contrary (other than Section 7), the option
price of an outstanding Option shall not, without the prior approval of the
Company's stockholders, be reduced whether through amendment, cancellation,
replacement grants, or other similar means; provided, however, that this shall
not preclude the grant, in accordance with the provisions of this Plan, of
additional Options: (1) not in replacement, in whole or in part, of cancelled
Options, or (2) following expiration of Options.