EX-10.1



 






Exhibit 10.1




RESPIRONICS, INC.




2006 STOCK INCENTIVE PLAN




     The purposes of the 2006 Stock Incentive Plan (the “Plan”) are to encourage eligible
individuals to increase their efforts to make Respironics, Inc. (the “Corporation”) and its
Subsidiaries more successful, to provide an additional inducement for such individuals to remain
with the Corporation or a Subsidiary, to reward such individuals by providing an opportunity to
acquire shares of the Common Stock, par value $.01 per share, of the Corporation (the “Common
Stock”) on favorable terms and to provide a means through which the Corporation may attract able
persons to enter the service of the Corporation or one of its Subsidiaries as employees,
consultants or directors. For the purposes of the Plan, the term “Subsidiary” means any
corporation in an unbroken chain of corporations beginning with the Corporation, if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing at least
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.



SECTION 1




Administration




     The Plan shall be administered by a Committee (the “Committee”) appointed by the Board of
Directors of the Corporation (the “Board”) and consisting of not less than two members of the
Board, each of whom at the time of appointment to the Committee and at all times during service as
a member of the Committee shall be (1) a “non-employee director” as then defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor rule,
(2) an “outside director” as then defined in the regulations under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), or any successor provision and (3) an “independent”
director under the rules of the NASDAQ National Market System. Notwithstanding the foregoing,
unless otherwise determined by the Board, the Board shall administer the Plan, and otherwise
exercise the same authority as the Committee, with respect to grants to members of the Board who
are not employees of the Corporation or any Subsidiary (“Non-Employee Directors”).



     The Committee shall interpret the Plan and prescribe such rules, regulations and procedures in
connection with the operations of the Plan as it shall deem to be necessary and advisable for the
administration of the Plan consistent with the purposes of the Plan.



     The Committee shall keep records of action taken at its meetings. A majority of the Committee
shall constitute a quorum at any meeting, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all members of the Committee,
shall be the acts of the Committee.



     Any action of the Committee with respect to the Plan shall be final, conclusive and binding on
all persons, including the Corporation, Subsidiaries, Participants and any person claiming any
rights under the Plan from or through any Participants. The Committee may delegate to officers,
managers and/or agents of the Corporation or any Subsidiary the authority, subject to such terms as
the Committee shall determine, to perform administrative and other functions under the Plan.



 









 





SECTION 2




Eligibility




     Those employees of the Corporation or any Subsidiary who share responsibility for the
management, growth or protection of the business of the Corporation or any Subsidiary shall be
eligible to be granted stock options and stock appreciation rights and to receive restricted
shares, restricted share units, performance awards and other stock-based awards as described
herein. Non-Employee Directors shall be eligible to be granted nonstatutory stock options, as
described herein. Consultants of the Corporation or any Subsidiary shall be eligible to be granted
nonstatutory stock options and stock appreciation rights, and to receive restricted shares,
restricted share units, performance awards and other stock-based awards as described herein.
Eligible employees, Non-Employee Directors and consultants are collectively referred to herein as
“Participants”.



     Subject to the provisions of the Plan, the Committee shall have full and final authority, in
its discretion, to grant stock options and stock appreciation rights and to award restricted
shares, restricted share units, performance awards, and other stock-based awards as described
herein and to determine the Participants to whom any such grant shall be made and the number of
shares to be covered thereby. In determining the eligibility of any Participant, as well as in
determining the number of shares or value covered by each grant of a stock option, stock
appreciation right, restricted share award, restricted share unit, performance award, or other
stock-based award and whether stock appreciation rights shall be granted in conjunction with a
stock option or on a stand-alone basis, the Committee shall consider the position and the
responsibilities of the Participant being considered, the nature and value to the Corporation or a
Subsidiary of his or her services, his or her present and/or potential contribution to the success
of the Corporation or a Subsidiary and such other factors as the Committee may deem relevant.
Notwithstanding any other provision contained in the Plan except for Section 5(H)(ix) and Sections
11(A)(5)(b) and (c), with regard to Non-Employee Directors, the selection of those Non-Employee
Directors to whom stock options are to be granted, the timing of such grants, the number of shares
subject to any stock option, the exercise price of any stock option, the periods during which any
stock option may be exercised and the term of any stock option shall be as hereinafter provided,
and the Committee and the Board shall have no discretion as to such matters.



SECTION 3




Shares Available under the Plan




     The aggregate net number of shares of Common Stock which may be issued and as to which grants
of stock options, stock appreciation rights, restricted shares, restricted share units, performance
awards and other stock-based awards may be made under the Plan is 5,019,000 shares, subject to
adjustment and substitution as set forth in Section 10, all of which may be granted as incentive
stock options. Notwithstanding the foregoing sentence, the maximum aggregate number of shares of
the Common Stock which may be issued in connection with any grants of restricted shares, restricted
share units, performance awards and other stock-based awards pursuant to which the Participant does
not pay the fair market value for such share of Common Stock, measured as of the grant date, is
1,250,000 shares. For purposes of this Section 3, the number of shares of Common Stock to which an
award relates shall be counted against the number of shares of Common Stock available under the
Plan at the time of grant of the award, unless such number of shares of Common Stock cannot be
determined at that time, in which case the number of shares of Common Stock actually distributed
pursuant to the award shall be counted against the number of shares of Common Stock available under
the Plan at the time of distribution.



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     If any award under the Plan is cancelled by mutual consent or terminates or expires for any
reason without having been exercised in full, or if shares of Common Stock pursuant to an award are
forfeited pursuant to restrictions applicable to the award, or if payment is made to the
Participant in the form of cash, cash equivalents or other property other than shares of Common
Stock, the number of shares subject thereto shall again be available for purposes of the Plan. If
the exercise price of an award is paid by delivering to the Corporation shares of Common Stock
previously owned by the Participant or if shares of Common Stock are delivered or withheld for
purposes of satisfying a tax withholding obligation, the number of shares covered by the award
equal to the number of shares so delivered or withheld shall, however, be counted against the
number of shares of Common Stock granted and shall not again be available for awards under the
Plan. The shares which may be issued under the Plan may be either authorized but unissued shares
or treasury shares or partly each, as shall be determined from time to time by the Board.



     The maximum aggregate number of shares of Common Stock which shall be available for the grant
of stock options and stock appreciation rights to any one individual under the Plan during any
calendar year shall be limited to 800,000 shares. In any one calendar year during a particular
Performance Period, as hereinafter defined, the maximum amount which may be earned by any single
Participant under performance awards granted under the Plan for that calendar year of the
Performance Period shall be limited to (i) 100,000 shares of Common Stock in the case of
performance awards payable in shares of Common Stock and (ii) $3,000,000 in the case of performance
awards payable in cash or property (other than shares of Common Stock). In the case of multi-year
Performance Periods, the amount which is earned in any one calendar year of the Performance Period
is the amount paid for the Performance Period divided by the number of calendar years in the
period. In applying this limit, the number of shares of Common Stock or the amount earned by a
Participant shall be measured as of the close of the applicable calendar year which ends the
Performance Period, regardless of the fact that certification by the Committee and actual payment
to the Participant may occur in a subsequent calendar year or years. The limitation in this
paragraph shall be interpreted and applied in a manner consistent with Section 162(m) of the Code.



SECTION 4




Grant of Stock Options and Stock Appreciation Rights, Restricted Share Awards,

Restricted Share Unit Awards, Performance Awards and Other Stock-Based Awards




     The Committee shall have authority, in its discretion, (a) to grant “incentive stock options”
pursuant to Section 422 of the Code, (b) to grant “nonstatutory stock options” (i.e., stock options
which do not qualify under Sections 422 or 423 of the Code), (c) to award restricted shares, (d) to
award restricted share units, (e) to grant performance awards, (f) to grant other stock-based
awards, (g) to grant alternative stock appreciation rights in conjunction with incentive stock
options or nonstatutory stock options with the effect provided in Section 5(E) and (h) to grant
stock appreciation rights on a stand-alone basis with the effect provided in Section 5(F).
Alternative stock appreciation rights granted in conjunction with a stock option may only be
granted at the time the stock option is granted. Awards may be granted in tandem or on a
stand-alone basis, except for tandem grants as may be prohibited under the Code with respect to
incentive stock options.



     Notwithstanding any other provision contained in the Plan or in any stock option agreement,
but subject to the possible exercise of the Committee’s discretion contemplated in the last
sentence of this Section 4, the aggregate fair market value, determined as provided in Section 5(J)
on the date of grant, of the shares with respect to which incentive stock options are exercisable
for the first time by an employee during any calendar year under all plans of the corporation
employing such employee, any parent or subsidiary corporation of such corporation and any
predecessor corporation of any such corporation shall not exceed $100,000. If the date



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on which one or more of such incentive stock options could first be exercised would be
accelerated pursuant to any provision of the Plan or any stock option agreement, and the
acceleration of such exercise date would result in a violation of the restriction set forth in the
preceding sentence, then, notwithstanding any such provision, but subject to the provisions of the
next succeeding sentence, the exercise dates of such incentive stock options shall be accelerated
only to the date or dates, if any, that do not result in a violation of such restriction and, in
such event, the exercise dates of the incentive stock options with the lowest option prices shall
be accelerated to the earliest such dates. The Committee may, in its discretion, authorize the
acceleration of the exercise date of one or more incentive stock options even if such acceleration
would violate the $100,000 restriction set forth in the first sentence of this paragraph and even
if such incentive stock options are thereby converted in whole or in part to nonstatutory stock
options.




SECTION 5




Terms and Conditions of Stock Options, Alternative Stock

Appreciation Rights and Stand-Alone Stock Appreciation Rights




     Stock options, alternative stock appreciation rights and stand-alone stock appreciation rights
granted under the Plan shall be subject to the following terms and conditions:




     (A) Purchase Price. The purchase price at which each stock option may be
exercised (the “option price”) shall be such price as the Committee, in its discretion,
shall determine but shall not be less than one hundred percent (100%) of the fair market
value per share of the Common Stock covered by the stock option on the date of grant, except
that in the case of an incentive stock option granted to an employee who, immediately prior
to such grant, owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation or any Subsidiary (a “Ten Percent
Employee”), the option price shall not be less than one hundred ten percent (110%) of such
fair market value on the date of grant. For purposes of this Section 5(A), an individual
(i) shall be considered as owning not only shares of stock owned
individually but also all shares of stock that are at the time owned, directly or indirectly, by or for the spouse,
ancestors, lineal descendants and brothers and sisters (whether by the whole or half blood)
of such individual and (ii) shall be considered as owning proportionately any shares owned,
directly or indirectly, by or for any corporation, partnership, estate or trust in which
such individual is a shareholder, partner or beneficiary. The purchase price of any stock
option may not be reduced after grant, whether through amendment, cancellation, replacement
or otherwise.




     (B) Form of Payment. The option price for each stock option shall be paid in
full upon exercise and shall be payable in cash in United States dollars (including check,
bank draft or money order), which may include cash forwarded through a broker or other
agent-sponsored exercise or financing program; provided, however, that in lieu of such cash
the person exercising the stock option may (if authorized by the Committee at the time of
grant in the case of an incentive stock option, or at any time in the case of a nonstatutory
stock option) pay the option price in whole or in part by delivering
to the Corporation shares of Common Stock having a fair market value on the date of exercise of the stock
option, determined as provided in Section 5(J), equal to the option price for the shares
being purchased; except that any portion of the option price representing a fraction of a
share shall in any event be paid in cash, and delivered shares may be subject to terms and
conditions imposed by the Committee. Delivery of shares of Common Stock in payment of the
exercise price of a stock option, if authorized by the Committee, may be accomplished
through the effective transfer to the Corporation of shares of Common Stock held through a
broker or other agent. If the person exercising a stock



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option participates in a broker or other agent-sponsored exercise or financing program,
the Corporation will cooperate with all reasonable procedures of the broker or other agent
to permit participation by the person exercising the stock option in the exercise or
financing program. Notwithstanding any procedure of the broker or other agent-sponsored
exercise or financing program, if the option price is paid in cash, the exercise of the
stock option shall not be deemed to occur and no shares of Common Stock will be issued until
the Corporation has received full payment in cash (including check, bank draft or money
order) for the option price from the broker or other agent. The date of exercise of a stock
option shall be determined under procedures established by the Committee, and as of the date
of exercise the person exercising the stock option shall be considered for all purposes to
be the owner of the shares with respect to which the stock option has been exercised.




     (C) Exercisability. Subject to Section 11(B), a stock option granted to an
employee or a consultant shall become exercisable at such time or times and/or upon the
occurrence of such event or events as may be determined by the Committee. Unless otherwise
determined by the Committee and reflected in the stock option agreement with an employee or
a consultant, a stock option shall be exercisable from its date of grant. No stock option
shall be exercisable after the expiration of ten years (five years in the case of an
incentive stock option granted to a Ten Percent Employee) from the date of grant. A stock
option to the extent exercisable at any time may be exercised in whole or in part.




     (D) Non-Employee Director Grants. On the first business day following the
date an individual, who was not immediately preceding such date a member of the Board,
becomes a Non-Employee Director, such Non-Employee Director shall automatically and without
further action by the Board or the Committee be granted a nonstatutory stock option to
purchase 20,000 shares of Common Stock, subject to adjustment and substitution as set forth
in Section 10. On the third business day following the day of each annual meeting of the
shareholders of the Corporation, each Non-Employee Director shall automatically and without
further action by the Board or the Committee be granted a nonstatutory stock option to
purchase 13,000 shares of Common Stock, subject to adjustment and substitution as set forth
in Section 10. If the number of shares remaining available for the grant of stock options
under the Plan is not sufficient for each Non-Employee Director to be granted an option for
13,000 shares (or the number of adjusted or substituted shares pursuant to Section 10), then
each Non-Employee Director shall be granted an option for a number of whole shares equal to
the number of shares then remaining available divided by the number of Non-Employee
Directors, disregarding any fractions of a share. Subject to Section 11(B) and Section 5(H),
no stock option granted to a Non-Employee Director shall be exercisable by a grantee until
the first anniversary of the grant thereof, at which time it shall become exercisable for
25% of the shares covered thereby and shall thereafter be exercisable for an additional 25%
of the shares covered thereby on the second anniversary of the grant thereof and shall
thereafter be exercisable for the remaining 50% of the shares covered thereby on the third
anniversary of the grant thereof, such limitations being calculated, in the case of any
resulting fraction, to the nearest lower whole number of shares. Subject to Section 5(H)
providing for earlier termination of a stock option, any stock option granted to a
Non-Employee Director and not exercised in the year eligible shall continue to be
exercisable thereafter until the end of the term of such stock option.




     Notwithstanding the foregoing provisions of this Section 5(D), a Non-Employee Director
shall not be granted a nonstatutory stock option pursuant to this Plan in any year in which
the Non-Employee Director has been granted a nonstatutory stock option pursuant to the
Corporation’s 2000 Stock Incentive Plan (the “2000 Plan”) in the same



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year; provided that, in the event that the number of shares covered by the option
granted to such Non-Employee Director under the 2000 Plan for such year was less than the
number of shares of Common Stock set forth in the preceding paragraph, then such
Non-Employee Director shall be granted a nonstatutory stock option pursuant to this Plan for
the amount of any such deficiency.




     (E) Alternative Stock Appreciation Rights. Stock appreciation rights may be
granted in conjunction with a stock option and shall entitle the person exercising the stock
appreciation rights to surrender the related stock option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares of the Common Stock
having an aggregate fair market value on the date of exercise of the stock appreciation
rights equal to the excess of the fair market value of one share of the Common Stock on such
date of exercise over the option price per share times the number of shares covered by the
related stock option, or portion thereof, which is surrendered. The Committee shall have
the authority, in its discretion, to determine that the obligation of the Corporation shall
be paid in cash or part in cash and part in shares of the Common Stock. Stock appreciation
rights shall be exercisable to the extent that the related stock option is exercisable and
only by the same person who is entitled to exercise the related stock option; provided,
however, that stock appreciation rights granted in conjunction with an incentive stock
option shall not be exercisable unless the then fair market value of the Common Stock
exceeds the option price of the shares subject to the incentive stock option. Cash may be
paid in lieu of any fractional shares. The date of exercise of stock appreciation rights
shall be determined under procedures established by the Committee, and as of the date of
exercise the person exercising the stock appreciation rights shall be considered for all
purposes to be the owner of the shares to be received. To the extent that a stock option as
to which stock appreciation rights have been granted is exercised, canceled, terminates or
expires, the stock appreciation rights shall be canceled.




     (F) Stand-Alone Stock Appreciation Rights. Stand-alone stock appreciation
rights shall entitle the Participant to receive from the Corporation in exchange therefor
that number of shares of the Common Stock having an aggregate fair market value on the date
of exercise of the stand-alone stock appreciation rights equal to the excess of the fair
market value of one share of the Common Stock on such date of exercise over the grant price
per share of such stand-alone stock appreciation right, which may not be less than 100% of
the fair market value per share of the Common Stock on the date of grant of such stock
appreciation right, times the number of shares covered by the stand-alone stock appreciation
right, or portion thereof, which is exercised. The Committee shall have the authority, in
its discretion, to determine that the obligation of the Corporation shall be paid in cash or
part in cash and part in shares of the Common Stock. The date of exercise of stand-alone
stock appreciation rights shall be determined under procedures established by the Committee.
The term of any stand-alone stock appreciation right may not exceed ten years and the
exercise price may not be reduced after grant, whether through amendment, cancellation,
replacement or otherwise.




     (G) Non-Transferability. No incentive stock option and, except to the extent
otherwise determined by the Committee and reflected in the stock option agreement or an
amendment thereto, no nonstatutory stock option shall be transferable by the grantee
otherwise than by Will, or if the grantee dies intestate, by the laws of descent and
distribution of the state of domicile of the grantee at the time of death. All incentive
stock options and, except to the extent otherwise determined by the Committee and reflected
in the stock option agreement or an amendment thereto, all nonstatutory stock options shall
be exercisable during the lifetime of the grantee only by the grantee. Stock appreciation
rights are non-transferable.



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     (H) Post-termination Exercise Periods. Subject to the provisions of Section 4
in the case of incentive stock options, unless the Committee, in its discretion, shall
otherwise determine in the case of grants of stock options or stand-alone stock appreciation
rights to employees and consultants:




     (i) Employee/Consultant; Voluntary termination with consent, Involuntary
termination without cause, Retirement. If the employment or consulting relationship
of a grantee who is not disabled within the meaning of Section 422(c)(6) of the Code
(a “Disabled Grantee”) is voluntarily terminated with the consent of the Corporation
or a Subsidiary or is involuntarily terminated other than for “cause” as determined
by the Committee or a grantee who is an employee retires under any retirement plan
of the Corporation or a Subsidiary, any then outstanding stock option or stand-alone
stock appreciation right held by such grantee shall be exercisable by the grantee
(but only to the extent exercisable by the grantee immediately prior to the
termination of employment or consulting relationship) at any time prior to the
expiration date of such stock option or stand-alone stock appreciation right or
within three months after the date of termination of employment or consulting
relationship, whichever is the shorter period;




     (ii) Non-Employee Director; Termination other than resignation, removal for
cause or death. If a grantee ceases to be a Non-Employee Director of the
Corporation for any reason other than resignation, removal for cause or death, any
then outstanding nonstatutory stock option of such grantee (whether or not then held
by the grantee) shall be exercisable (but only to the extent exercisable by the
grantee immediately prior to ceasing to be a Non-Employee Director) at any time
prior to the expiration date of such stock option or within four years after the
date the grantee ceases to be a Non-Employee Director, whichever is the shorter
period;




     (iii) Employee/Consultant; Disabled. If the employment or consulting
relationship of a grantee who is a Disabled Grantee is voluntarily terminated with
the consent of the Corporation or a Subsidiary, any then outstanding stock option or
stand-alone stock appreciation right of such grantee (whether or not then held by
the grantee) shall be exercisable in full (whether or not so exercisable immediately
prior to the grantee’s termination of employment or the consulting relationship) at
any time prior to the expiration date of such stock option or stand-alone stock
appreciation right or within one year after the date of termination of service,
whichever is the shorter period;




     (iv) Employee/Consultant; Death during employment or service. Following the
death of a grantee during employment or a consulting relationship, any stock option
or stand-alone stock appreciation right of the grantee outstanding at the time of
death shall be exercisable in full (whether or not so exercisable immediately prior
to the death of the grantee) by the person entitled to do so under the Will of the
grantee, or, if the grantee shall fail to make testamentary disposition of the stock
option or stand-alone stock appreciation right or shall die intestate, by the legal
representative of the grantee (or, in the case of a nonstatutory stock option, if
permitted under the stock option agreement, by the grantee’s inter vivos transferee)
at any time prior to the expiration date of such stock option or stand-alone stock
appreciation right or within one year after the date of death, whichever is the
shorter period;




     (v) Non-Employee Director; Death during service. Following the death of a
grantee during service as a Non-Employee Director, any stock option of the grantee
outstanding at the time of death shall be exercisable in full (whether or



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not so exercisable immediately prior to the death of the grantee) by the person
entitled to do so under the Will of the grantee, or, if the grantee shall fail to
make testamentary disposition of the stock option or shall die intestate, by the
legal representative of the grantee (or, if permitted under the stock option
agreement, by the grantee’s inter vivos transferee) at any time prior to the
expiration date of such stock option or within two years after the date of death,
whichever is the shorter period;




     (vi) Employee/Consultant/Non-Employee Director; Death after termination of
employment or service. Following the death of a grantee after termination of
employment or a consulting relationship or after ceasing to be a Non-Employee
Director and during a period when a stock option or stand-alone stock appreciation
right is exercisable, any stock option or stand-alone stock appreciation right of
the grantee outstanding at the time of death shall be exercisable (but only to the
extent the stock option or stand-alone stock appreciation right was exercisable
immediately prior to the death of the grantee) by such person entitled to do so
under the Will of the grantee or by such legal representative (or, in the case of a
nonstatutory stock option, by such inter vivos transferee) at any time prior to the
expiration date of such stock option or stand-alone stock appreciation right or
within one year after the date of death, whichever is the shorter period;




     (vii) Employee; Other termination. Unless the exercise period of a stock
option following termination of employment has been extended as provided in Section
11(C), if the employment of a grantee terminates for any reason other than voluntary
termination with the consent of the Corporation or a Subsidiary, involuntary
termination other than for “cause”, retirement under any retirement plan of the
Corporation or a Subsidiary or death, all stock options and stand-alone stock
appreciation rights of the grantee outstanding at the time of such termination of
employment (whether or not then held by the grantee) shall automatically terminate;




     (viii) Consultant; Other termination. If the consulting relationship of a
grantee terminates for any reason other than voluntary termination with the consent
of the Corporation or a Subsidiary, involuntary termination other than for “cause”,
or death, all stock options and stand-alone stock appreciation rights of the grantee
outstanding at the time of such termination (whether or not then held by the
grantee) shall automatically terminate; and




     (ix) Non-Employee Director; Resignation, Removal for cause. Unless otherwise
determined by the Board in the case of a resignation, if during his or her term of
office as a Non-Employee Director a grantee resigns from the Board or is removed
from office for cause, any outstanding stock option of the grantee (whether or not
then held by the grantee) which is not exercisable by the grantee immediately prior
to resignation or removal shall terminate as of the date of resignation or removal,
and any outstanding stock option of the grantee (whether of not then held by the
grantee) which is exercisable by the grantee immediately prior to resignation or
removal shall be exercisable by the grantee (or, if permitted under the stock option
agreement, by the grantee’s inter vivos transferee) at any time prior to the
expiration date of such stock option or within 90 days after the date of resignation
or removal, whichever is the shorter period.




     Whether termination of employment or consulting relationship is a voluntary termination
with the consent of the Corporation, an involuntary termination with or



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without cause and whether a grantee is a Disabled Grantee shall be determined, in each
case, in its discretion, by the Committee, and any such determination by the Committee shall
be final and binding. Retention by the Corporation of a consultant shall terminate when the
consultant is notified in writing by the Corporation of the termination of his retention as
a consultant.




     If a grantee of a stock option or stock appreciation right engages in the operation or
management of a business (whether as owner, partner, officer, director, employee or
otherwise and whether during or after termination of employment or service as a Non-Employee
Director) which is in competition with the Corporation or any of its Subsidiaries, the
Committee may immediately terminate all outstanding stock options and stock appreciation
rights of the grantee (whether or not such stock options and stock appreciation rights are
then held by the grantee); provided, however, that this sentence shall not apply if the
exercise period of a stock option and/or stock appreciation right following termination of
employment has been extended as provided in Section 11(C). Whether a grantee has engaged in
the operation or management of a business which is in competition with the Corporation or
any of its Subsidiaries shall also be determined, in its discretion, by the Committee, and
any such determination by the Committee shall be final and binding.




     (I) Agreement. All stock options and stock appreciation rights shall be
confirmed by an agreement, or an amendment thereto, which shall be executed by the
Corporation and the grantee.




     (J) Fair Market Value. For all purposes under the Plan, fair market
value of the Common Stock shall be the mean between the following prices, as applicable, for
the date as of which fair market value is to be determined as quoted in The Wall
Street Journal (or in such other reliable publication as the Committee, in its discretion,
may determine to rely upon): (a) if the Common Stock is listed on the New York Stock
Exchange, the highest and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (b) if the Common Stock is not listed on
such exchange, the highest and lowest sales prices per share of Common Stock for such date
on (or on any composite index including) the principal United States securities exchange
registered under the Exchange Act on which the Common Stock is listed, or (c) if the Common
Stock is not listed on any such exchange, the highest and lowest sales prices per share of
Common Stock for such date on the National Association of Securities Dealers Automated
Quotations System or any successor system then in use (“NASDAQ”). If there are no such sale
price quotations for the date as of which fair market value is to be determined but there
are such sale price quotations within a reasonable period both before and after such date,
then fair market value shall be determined by taking a weighted average of the means between
the highest and lowest sales prices per share of Common Stock as so quoted on the nearest
date before and the nearest date after the date as of which fair market value is to be
determined. The average should be weighted inversely by the respective numbers of trading
days between the selling dates and the date as of which fair market value is to be
determined. If there are no such sale price quotations on or within a reasonable period
both before and after the date as of which fair market value is to be determined, then fair
market value of the Common Stock shall be the mean between the bona fide bid and asked
prices per share of Common Stock as so quoted for such date on NASDAQ, or if none, the
weighted average of the means between such bona fide bid and asked prices on the nearest
trading date before and the nearest trading date after the date as of which fair market
value is to be determined, if both such dates are within a reasonable period. The average
is to be determined in the manner described above in this Section 5(J). If the fair market
value of the Common Stock cannot be determined on the basis previously set forth in this




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Section 5(J) on the date as of which fair market value is to be determined, the
Committee shall in good faith determine the fair market value of the Common Stock on such
date. Fair market value shall be determined without regard to any restriction other than a
restriction which, by its terms, will never lapse.




     (K) Conditions. The obligation of the Corporation to issue shares of Common
Stock under the Plan shall be subject to (i) the effectiveness of a registration statement
under the Securities Act of 1933, as amended, with respect to such shares, if deemed
necessary or appropriate by counsel for the Corporation, (ii) the condition that the shares
shall have been listed (or authorized for listing upon official notice of issuance) upon
each stock exchange, if any, on which the Common Stock shares may then be listed and (iii)
all other applicable laws, regulations, rules and orders which may then be in effect.



     Subject to the foregoing provisions of this Section and the other provisions of the Plan, any
stock option or stock appreciation right granted under the Plan to employees or consultants may be
exercised at such times and in such amounts and be subject to such restrictions and other terms and
conditions, if any, as shall be determined, in its discretion, by the Committee and set forth in
the agreement referred to in Section 5(I), or an amendment thereto.



SECTION 6




Terms and Conditions of Restricted Shares




     Restricted share awards shall be evidenced by a written agreement in the form prescribed by
the Committee in its discretion, which shall set forth the number of shares of Common Stock
awarded, the restrictions imposed thereon (including, without limitation, restrictions on the right
of the grantee to sell, assign, transfer or encumber such shares while such shares are subject to
other restrictions imposed under this Section 6, and time and/or performance-based restrictions),
the duration of such restrictions, the events (which may, in the discretion of the Committee,
include performance-based events) the occurrence of which would cause a forfeiture of the
restricted shares in whole or in part and such other terms and conditions as the Committee in its
discretion deems appropriate. Restricted share awards shall be effective only upon execution of
the applicable restricted share agreement by the Corporation and the grantee. The restriction
period applicable to restricted shares shall, in the case of a time-based restriction, be not less
than three years, with ratable vesting over such period or, in the case of a performance-based
restriction period, be not less than one year.



     Following a restricted share award and prior to the lapse or termination of the applicable
restrictions, the Committee may deposit share certificates for such restricted shares in escrow.
Upon the lapse or termination of the applicable restrictions (and not before such time), the
grantee shall be issued or transferred share certificates for the restricted shares. From the date
a restricted share award is effective, the grantee shall be a shareholder with respect to all the
shares represented by such certificates and, unless otherwise determined by the Committee in its
discretion, shall have all the rights of a shareholder with respect to all such shares, including
the right to vote such shares and to receive all dividends and other distributions paid with
respect to such shares, subject only to the restrictions imposed by the Committee.



     If an awardee of restricted shares engages in the operation or management of a business
(whether as owner, partner, officer, director, employee or otherwise and whether during or after
termination of employment) which is in competition with the Corporation or any of its Subsidiaries,
the Committee may immediately declare forfeited all restricted shares held by the grantee as to
which the restrictions have not yet lapsed; provided, however, that this sentence shall not apply
if the lapse of the restrictions applicable to the restricted shares has been accelerated as
provided in Section 11(D). Whether a grantee has engaged in the operation or



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management of a business which is in competition with the Corporation or any of its
subsidiaries shall also be determined, in its discretion, by the Committee, and any such
determination by the Committee shall be final and binding.




SECTION 7




Terms and Conditions of Restricted Share Units




     Restricted share units shall be evidenced by a written agreement in the form prescribed by the
Committee in its discretion, which shall state the number of units awarded, the restrictions
imposed thereon (including, without limitation, restrictions on the right of the grantee to sell,
assign, transfer or encumber such units while such units are subject to other restrictions imposed
under this Section 7 and/or time and performance-based restrictions), the duration of such
restrictions, the events (which may, in the discretion of the Committee, include performance-based
events) the occurrence of which would cause a forfeiture of the restricted share units in whole or
in part and such other terms and conditions as the Committee, in its discretion, deems appropriate.
Restricted share unit awards shall be effective only upon execution of the applicable restricted
share unit agreement by the Corporation and the grantee.



     Unless otherwise determined by the Committee, each award of restricted share units shall be
made on the following terms and conditions, in addition to such other terms, conditions,
limitations and restrictions as the Committee, in its discretion, may determine to prescribe:




     (A) Payment Date. Except as provided in Section 11(D), the date on which each
restricted share unit shall vest and become payable shall be the earlier of:




     (i) The third anniversary of the date of the restricted share unit award; or




     (ii) The date of termination of the awardee’s employment or consulting
relationship with the Corporation or a Subsidiary if, and only if, such termination
is by reason of the awardee’s death or disability, as disability is determined under
Section 409A of the Code.




Within two and one-half months following the end of the calendar year in which vesting
occurs, the Corporation shall either pay to the awardee or his estate in cash an amount
equal to the number of restricted share units vested multiplied by the fair market value of
a share of the Common Stock on such date or, if so elected by an awardee prior to the time
of the award in a manner consistent with Section 409A of the Code, cause such amount to be
credited to the awardee’s account under the Corporation’s deferred compensation plan.
Notwithstanding the foregoing sentence, the Committee shall have the authority, in its
discretion, to determine that the obligation of the Corporation shall be paid in shares of
Common Stock or part in cash and part in shares of Common Stock.




     (B) Forfeiture. Upon the effective date of a termination of the awardee’s
employment or consulting relationship with the Corporation and its Subsidiaries for any
reason not specified in Section 7(A)(ii), all restricted share units shall immediately be
forfeited to the Corporation with consideration or further action being required of the
Corporation.




     (C) Dividend Equivalents. If an award of restricted share units is
outstanding as of the record date for determination of the shareholders of the Corporation
entitled to receive a cash dividend on its outstanding shares of Common Stock, unless
otherwise determined by the Committee, the Corporation or a Subsidiary shall pay to the
awardee on or as promptly as practicable following the payment date thereof an amount in
cash equal to the per share



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     amount of such dividend multiplied by the number of restricted share units held by the
awardee.



SECTION 8




Terms and Conditions of Performance Awards




     The Committee is authorized to grant performance awards to Participants on the following terms
and conditions:




     (A)
Right to Payment. A performance award shall represent a right to receive shares of Common Stock, cash, other property or any combination thereof based on the
achievement, or the level of achievement, during a specified Performance Period of one or
more Performance Goals established by the Committee at the time of the award.




     (B) Terms of Performance Awards. At the time a performance award is granted,
the Committee shall cause to be set forth in the award agreement or otherwise in writing (1)
the Performance Goals applicable to the award and the Performance Period during which the
achievement of the Performance Goals shall be measured, (2) the amount which may be earned
by the Participant based on the achievement, or the level of achievement, of the Performance
Goals or the formula by which such amount shall be determined and (3) such other terms and
conditions applicable to the award as the Committee may, in its discretion, determine to
include therein. The terms so established by the Committee shall be objective such that a
third party having knowledge of the relevant facts could determine whether or not any
Performance Goal has been achieved, or the extent of such achievement, and the amount, if
any, which has been earned by the Participant based on such performance. The Committee may
retain the discretion to reduce (but not to increase) the amount of a performance award
which will be earned based on the achievement of Performance Goals. When the Performance
Goals are established, the Committee shall also specify the manner in which the level of
achievement of such Performance Goals shall be calculated and the weighting assigned to such
Performance Goals. The Committee may determine that unusual items or certain specified
events or occurrences, including changes in accounting standards or tax laws and the effects
of non-operational items or extraordinary items as defined by generally accepted accounting
principles, shall be excluded from the calculation to the extent permitted in Section 162(m)
of the Code.




     (C) Performance Goals. “Performance Goals” shall mean one or more
preestablished, objective measures of performance during a specified “Performance Period”,
selected by the Committee in its discretion. Performance Goals may be based upon one or
more of the following objective performance measures and expressed in either, or a
combination of, absolute or relative values: earnings per share, earnings per share growth,
net income, net income growth, revenue growth, revenues, expenses, return on equity, return
on total capital, return on assets, earnings (including EBITDA and EBIT), cash flow,
operating cash flow, share price, economic value added, gross margin, operating income,
market share or total shareholder return. Performance Goals based on such performance
measures may be based either on the performance of the Company, a Subsidiary or
Subsidiaries, any branch, department, business unit or other portion thereof under such
measure for the Performance Period and/or upon a comparison of such performance with the
performance of a peer group of corporations, prior Performance Periods or other measure
selected or defined by the Committee at the time of making a performance award. The
Committee may in its discretion also determine to use other objective performance measures
as Performance Goals and/or other terms and conditions even if such performance award would
not qualify under Section 162(m) of the Code,



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provided that the Committee identifies the performance award as non-qualifying at the
time of award.




     (D) Committee Certification. Following completion of the applicable
Performance Period, and prior to any payment of a performance award to the Participant, the
Committee shall determine in accordance with the terms of the performance award and shall
certify in writing whether the applicable Performance Goal or Goals were achieved, or the
level of such achievement, and the amount, if any, earned by the Participant based upon such
performance. For this purpose, approved minutes of the meeting of the Committee at which
certification is made shall be sufficient to satisfy the requirement of a written
certification. Performance awards are not intended to provide for the deferral of
compensation, such that payment of performance awards shall be paid within two and one-half
months following the end of the calendar year in which the Performance Period ends or such
other time period if and to the extent as may be required to avoid characterization of such
awards as deferred compensation.



SECTION 9




Other Stock-Based Awards




     The Committee is authorized, subject to limitations under applicable law, to grant to
Participants, in lieu of salary or cash bonus, such other awards that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of
Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including,
without limitation, purchase rights, shares awarded which are not subject to any restrictions or
conditions, convertible securities, exchangeable securities or other rights convertible or
exchangeable into shares of Common Stock, as the Committee in its discretion may determine. In the
discretion of the Committee, such other stock-based awards, including shares of Common Stock, or
other types of awards authorized under the Plan, may be used in connection with, or to satisfy
obligations of the Corporation or a Subsidiary under, other compensation or incentive plans,
programs or arrangements of the Corporation or any Subsidiary for eligible Participants.



     The Committee shall determine the terms and conditions of other stock-based awards. Shares of
Common Stock or securities delivered pursuant to a purchase right granted under this Section 9
shall be purchased for such consideration, paid for by such methods and in such forms, including,
without limitation, cash, shares of Common Stock, or other property or any combination thereof, as
the Committee shall determine, but the value of such consideration shall not be less than the fair
market value of such shares of Common Stock or other securities on the date of grant of such
purchase right. Delivery of shares of Common Stock or other securities in payment of a purchase
right, if authorized by the Committee, may be accomplished through the effective transfer to the
Corporation of shares of Common Stock or other securities held by a broker or other agent. Unless
otherwise determined by the Committee, the Corporation will also cooperate with any person
exercising a purchase right who participates in a cashless exercise program of a broker or other
agent under which all or part of the shares of Common Stock or securities received upon exercise of
a purchase right are sold through the broker or other agent, or under which the broker or other
agent makes a loan to such person, for the purpose of paying the exercise price of a purchase
right. Notwithstanding the preceding sentence, unless the Committee, in its discretion, shall
otherwise determine, the exercise of the purchase right shall not be deemed to occur, and no shares
of Common Stock or other securities will be issued by the Corporation upon exercise of a purchase
right, until the Corporation has received payment in full of the exercise price.



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SECTION 10




Adjustment and Substitution of Shares




     If a dividend or other distribution shall be declared upon the Common Stock payable in shares
of Common Stock, the number of shares of Common Stock then subject to any outstanding stock
options, stock appreciation rights, restricted share units, performance awards, or other
stock-based awards, the number of shares of Common Stock which may be issued under the Plan but are
not then subject to outstanding stock options, stock appreciation rights, restricted share units,
performance awards, or other stock-based awards, the maximum number of shares as to which stock
options, stock appreciation rights or performance awards may be granted and as to which shares may
be awarded during any calendar year under Section 3, including any sub-limit contained within
Section 3, and the number of shares to be issued pursuant to stock options to Non-Employee
Directors as provided in Section 5(D), shall be adjusted by adding thereto the number of shares of
Common Stock which would have been distributable thereon if such shares had been outstanding on the
date fixed for determining the shareholders entitled to receive such stock dividend or
distribution. Shares of Common Stock so distributed with respect to any restricted shares held in
escrow shall also be held by the Corporation in escrow and shall be subject to the same
restrictions as are applicable to the restricted shares on which they were distributed.



     If the outstanding shares of Common Stock shall be changed into or exchangeable for a
different number or kind of shares of stock or other securities of the Corporation or another
corporation, or cash or other property, whether through reorganization, reclassification,
recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall
be substituted for each share of Common Stock subject to any then outstanding stock option, stock
appreciation right, restricted share unit, performance award or other stock-based award and for
each share of Common Stock which may be issued under the Plan but which is not then subject to any
outstanding stock option, stock appreciation right, restricted share unit, performance award or
other stock-based award, the number and kind of shares of stock or other securities (and in the
case of outstanding options, stock appreciation rights, restricted share units, performance awards
or other stock-based awards, the cash or other property) into which each outstanding share of the
Common Stock shall be so changed or for which each such share shall be exchangeable. Unless
otherwise determined by the Committee in its discretion, any such stock or securities, as well as
any cash or other property, into or for which any restricted shares held in escrow shall be changed
or exchangeable in any such transaction shall also be held by the Corporation in escrow and shall
be subject to the same restrictions as are applicable to the restricted shares in respect of which
such stock, securities, cash or other property was issued or distributed.



     In case of any adjustment or substitution as provided for in this Section 10, the aggregate
option or exercise price for all shares subject to each then outstanding stock option, stock
appreciation right, restricted share unit, performance award or other stock-based award prior to
such adjustment or substitution shall be the aggregate option or exercise price for all shares of
stock or other securities (including any fraction), cash or other property to which such shares
shall have been adjusted or which shall have been substituted for such shares. Any new option or
exercise price per share or other unit shall be carried to at least three decimal places with the
last decimal place rounded upwards to the nearest whole number.



     If the outstanding shares of the Common Stock shall be changed in value by reason of any
spin-off, split-off or split-up, or dividend in partial liquidation, dividend in property other
than cash, or extraordinary distribution to shareholders of the Common Stock, (a) the Committee
shall make any adjustments to any then outstanding stock option, stock appreciation right,
restricted share unit, performance award or other stock-based award which it determines are



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equitably required to prevent dilution or enlargement of the rights of optionees and awardees
which would otherwise result from any such transaction, and (b) unless otherwise determined by the
Committee in its discretion, any stock, securities, cash or other property distributed with respect
to any restricted shares held in escrow or for which any restricted shares held in escrow shall be
exchanged in any such transaction shall also be held by the Corporation in escrow and shall be
subject to the same restrictions as are applicable to the restricted shares in respect of which
such stock, securities, cash or other property was distributed or exchanged.




     No adjustment or substitution provided for in this Section 10 shall require the Corporation to
issue or sell a fraction of a share or other security. Accordingly, all fractional shares or other
securities which result from any such adjustment or substitution shall be eliminated and not
carried forward to any subsequent adjustment or substitution. Owners of restricted shares held in
escrow shall be treated in the same manner as owners of Common Stock not held in escrow with
respect to fractional shares created by an adjustment or substitution of shares, except that,
unless otherwise determined by the Committee in its discretion, any cash or other property paid in
lieu of a fractional share shall be subject to restrictions similar to those applicable to the
restricted shares exchanged therefor.



     If any such adjustment or substitution provided for in this Section 10 requires the approval
of shareholders in order to enable the Corporation to grant incentive stock options, then no such
adjustment or substitution shall be made without the required shareholder approval.
Notwithstanding the foregoing, in the case of incentive stock options, if the effect of any
such adjustment or substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of such stock option
within the meaning of Section 424 of the Code, the Committee may elect that such adjustment or
substitution not be made but rather shall use reasonable efforts to effect such other adjustment of
each then outstanding stock option as the Committee, in its discretion, shall deem equitable and
which will not result in any disqualification, modification, extension or renewal (within the
meaning of Section 424 of the Code) of such incentive stock option.



     In the case of an adjustment in the number of shares of Common Stock set forth in Section 5(D)
of the Plan on account of a dividend or other distribution declared upon the Common Stock payable
in shares of the Common Stock, the adjustment provided for in the first paragraph of this Section
10 may not be given any or only limited effect with respect to awards subsequent to the date of the
adjustment if the Board should determine at the time of such dividend or other distribution that no
or a specified limited adjustment would be more appropriate for purposes of the Plan. Similarly,
the adjustment provided for in the second paragraph of this Section 10 may be given a specified
limited effect if the Board should determine at the time of the transaction otherwise occasioning
such adjustment such limited effect would be more appropriate for purposes of the Plan.



SECTION 11




Additional Rights in Certain Events




(A) Definitions.




     For purposes of this Section 11, the following terms shall have the following meanings:




     (1) The term “Person” shall be used as that term is used in Sections 13(d) and 14(d)
of the Exchange Act.




     (2) Beneficial Ownership shall be determined as provided in Rule 13d-3 under the
Exchange Act as in effect on the effective date of the Plan.



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     (3) “Voting Shares” shall mean all securities of a company entitling the holders
thereof to vote in an annual election of Directors (without consideration of the rights of
any class of stock other than the Common Stock to elect Directors by a separate class vote);
and a specified percentage of “Voting Power” of a company shall mean such number of the
Voting Shares as shall enable the holders thereof to cast such percentage of all the votes
which could be cast in an annual election of directors (without consideration of the rights
of any class of stock other than the Common Stock to elect Directors by a separate class
vote).




     (4) “Tender Offer” shall mean a tender offer or exchange offer to acquire securities
of the Corporation (other than such an offer made by the Corporation or any Subsidiary),
whether or not such offer is approved or opposed by the Board.




     (5) “Section 11 Event” shall mean the date upon which any of the following events
occurs:




     (a) The Corporation acquires actual knowledge that any Person other than the
Corporation, a Subsidiary or any employee benefit plan(s) sponsored by the
Corporation has acquired the Beneficial Ownership, directly or indirectly, of
securities of the Corporation entitling such Person to 20% or more of the Voting
Power of the Corporation;




     (b) The occurrence of the date provided for in action by the Board or the
Committee, if any, to accelerate the exercise date of stock options and stock
appreciation rights and/or to release restrictions on restricted shares and
restricted share units with respect to any award, and/or to deem fulfillment of
performance goals applicable to performance awards following the making of a Tender
Offer to acquire securities of the Corporation entitling the holders thereof to 20%
or more of the Voting Power of the Corporation; or




     (c) The occurrence of the date provided for in action by the Board or the
Committee, if any, to accelerate the exercise date of stock options and stock
appreciation rights and/or to release restrictions on restricted shares and
restricted share units with respect to any award, and/or to deem fulfillment of
performance goals applicable to performance awards following the making of a
solicitation subject to Rule 14a-11 under the Exchange Act (or any successor Rule)
relating to the election or removal of 50% or more of the members of any class of
the Board by any person other than the Corporation; or




     (d) The shareholders of the Corporation shall approve a merger, consolidation,
share exchange, division or sale or other disposition of assets of the Corporation
as a result of which the shareholders of the Corporation immediately prior to such
transaction shall not hold, directly or indirectly, immediately following such
transaction a majority of the Voting Power of (i) in the case of a merger or
consolidation, the surviving or resulting corporation, (ii) in the case of a share
exchange, the acquiring corporation or (iii) in the case of a division or a sale or
other disposition of assets, each surviving, resulting or acquiring corporation
which, immediately following the transaction, holds more than 10% of the
consolidated assets of the Corporation immediately prior to the transaction;




provided, however, that (i) if securities beneficially owned by a grantee are included in
determining the Beneficial Ownership of a Person referred to in paragraph 5(a), (ii) a
grantee is required to be named pursuant Item 2 of the Schedule 14D-1 (or any similar
successor filing requirement) required to be filed by the bidder making a Tender Offer



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referred to in paragraph 5(b) or (iii) if a grantee is a “participant” as defined in 14a-11
under the Exchange Act (or any successor Rule) in a solicitation (other than a solicitation
by the Corporation) referred to in paragraph 5(c), then no Section 11 Event with respect to
such grantee shall be deemed to have occurred by reason of such event.




	(B)	 	Acceleration of the Exercise Date of Stock Options, Stock Appreciation Rights and other
purchase rights.





     Subject to the provisions of Section 4 in the case of incentive stock options, unless the
agreement referred to in Section 5(I), or an amendment thereto, shall otherwise provide,
notwithstanding any other provision contained in the Plan except for Section 11(F), in case any
“Section 11 Event” occurs all outstanding stock options, stock appreciation rights and other awards
pursuant to which the Participant may have exercise rights which are restricted or limited (other
than those held by a person referred to in the proviso to Section 11(A)(5)) shall become
immediately and fully exercisable whether or not otherwise exercisable by their terms.




	(C)	 	Exercise Period of Stock Options, Stock Appreciation Rights and other purchase rights.





     Subject to the provisions of Section 4 in the case of incentive stock options and to the
extent any stock options, stock appreciation rights or other purchase rights are exercisable on
the date of the grantee’s termination of employment, unless the agreement referred to in Section
5(I), or an amendment thereto, shall otherwise provide, notwithstanding any other provision
contained in the Plan except for Section 11(F), all stock options, stock appreciation rights or
other purchase rights held by a grantee (other than a grantee referred to in the proviso to Section
11(A)(5)) whose employment with the Corporation or a Subsidiary terminates within one year of any
Section 11 Event for any reason other than voluntary termination with the consent of the
Corporation or a Subsidiary, retirement under any retirement plan of the Corporation or a
Subsidiary or death shall be exercisable for a period of three months from the date of such
termination of employment, but in no event after the expiration date of the stock option, stock
appreciation rights or other purchase rights.




	(D)	 	Lapse of Restrictions on Restricted Share Awards and Restricted Share Unit Awards.





     If any “Section 11 Event” occurs prior to the scheduled lapse of all restrictions applicable
to restricted share awards and restricted share unit awards under the Plan (other than those held
by a person referred to in the proviso to Section 11(A)(5)), then unless the agreement referred to
in either Section 6 or Section 7, or an amendment thereto, shall otherwise provide, all such
restrictions shall lapse upon the occurrence of any such “Section 11 Event” regardless of the
scheduled lapse of such restrictions.




	(E)	 	Deemed Achievement of Performance Goals.





     If any “Section 11 Event” occurs prior to the end of any Performance Period, all performance
criteria and other conditions to payment of performance and other awards under which payments of
cash, shares of Common Stock or other property are subject to performance conditions shall be
deemed to be achieved or fulfilled and shall be waived by the Corporation.




	(F)	 	Limitation.





     Notwithstanding the foregoing Sections 11(B), (C), (D) and (E), the Committee may condition
the acceleration, extension of exercise period, lapse of restrictions and/or deemed achievement of
performance goals upon the occurrence of a change in ownership or effective



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control of the Corporation or in the ownership of a substantial portion of the assets of the
Corporation as determined under Section 409A of the Code.




SECTION 12




Effect of the Plan on the Rights of Participants and the Corporation




     Neither the adoption of the Plan nor any action of the Board or the Committee pursuant to the
Plan shall be deemed to give any employee, consultant or Non-Employee Director any right to be
granted a stock option or stock appreciation right or to be awarded restricted shares, restricted
share units, performance awards or other stock-based awards under the Plan. Nothing in the Plan,
in any stock option, or stock appreciation rights granted under the Plan, in any restricted share
award, restricted share unit, performance award or other stock-based award under the Plan or in any
agreement providing for any of the foregoing shall confer any right to any employee to continue in
the employ of the Corporation or any Subsidiary or any consultant or Non-Employee Director to
continue as a consultant or Non-Employee Director of the Corporation or a Subsidiary or interfere
in any way with the rights of the Corporation or any Subsidiary to terminate the employment of any
employee or relationship with a consultant at any time or with the rights of the shareholders of
the Corporation or the Board to elect and remove Non-Employee Directors.



SECTION 13




Amendment




     The right to amend the Plan at any time and from time to time and the right to revoke or
terminate the Plan are hereby specifically reserved to the Board; provided that no amendment of the
Plan shall be made without shareholder approval (1) if the effect of the amendment is (a) to make
any changes in the class of employees eligible to receive incentive stock options under the Plan,
(b) to increase the number of shares with respect to which incentive stock options may be granted
under the Plan or (2) if shareholder approval of the amendment is at the time required (a) by the
rules of the NASDAQ National Market System or any stock exchange on which the Common Stock may then
be listed or (b) for stock options, stock appreciation rights and performance awards granted under
the Plan to qualify as “performance based compensation” as then defined in the regulations under
Section 162(m) of the Code. No alteration, amendment, revocation or termination of the Plan shall,
without the written consent of the holder of a stock option, stock appreciation right or restricted
shares, restricted share units, performance awards or other stock-based awards theretofore awarded
under the Plan, adversely affect the rights of such holder with respect thereto; except that the
Corporation may amend this Plan from time to time without the consent of any Participant to the
extent deemed necessary or appropriate, in its sole discretion, to effect compliance with Section
409A of the Code, including regulations and interpretations thereunder, which amendments may result
in a reduction of benefits provided hereunder and/or other unfavorable changes to the Participant.



SECTION 14




Effective Date and Duration of Plan




     The effective date and date of adoption of the Plan shall be August 25, 2005, the date of
adoption of the Plan by the Board, provided that such adoption of the Plan by the Board is approved
by a majority of the votes cast at a duly held meeting of shareholders held on or prior to August
24, 2006 at which a quorum representing a majority of the outstanding voting stock of the
Corporation is, either in person or by proxy, present and voting. No stock option or stock
appreciation right granted under the Plan may be exercised, and no restricted shares, restricted
share units, performance awards or other stock-based awards may be awarded until after such



-18-









 




approval. No stock option or stock appreciation rights may be granted and no restricted
shares, restricted share units, performance awards or other stock-based awards may be awarded under
the Plan subsequent to August 24, 2015. Absent additional shareholder approval, no performance
award may be granted under the Plan subsequent to the Corporation’s annual meeting of shareholders
in 2010.




SECTION 15




Withholding




     To the extent required by applicable Federal, state, local or foreign law, the Participant or
his successor shall make arrangements satisfactory to the Corporation, in its discretion, for the
satisfaction of any withholding tax obligations that arise in connection with an award. The
Corporation shall not be required to issue any shares of Common Stock or make any cash or other
payment under the Plan until such obligations are satisfied.



     The Corporation is authorized to withhold from any award granted or any payment due under the
Plan, including from a distribution of shares of Common Stock, amounts of withholding taxes due
with respect to an award, its exercise or any payment thereunder, and to take such other action as
the Committee may deem necessary or advisable to enable the Corporation and Participants to satisfy
obligations for the payment of such taxes. This authority shall include authority to withhold or
receive shares of Common Stock, awards or other property and to make cash payments in respect
thereof in satisfaction of such tax obligations.



SECTION 16




Miscellaneous




     (A) Governing Law. The validity, interpretation, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be governed by the laws of the
Commonwealth of Pennsylvania (without regard to the conflicts of laws thereof), and applicable
Federal law.



     (B) Foreign Plan Requirements. To the extent the Committee deems it necessary,
appropriate or desirable to comply with foreign law or practices and to further the purpose of the
Plan, the Committee may, without amending this Plan, establish special rules and/or sub-plans
applicable to awards granted to Participants who are foreign nationals, are employed outside the
United States, or both, and may grant awards to such Participants in accordance with those rules.
In the event that the payment amount is calculated in a foreign currency, the payment amount will
be converted to U.S. dollars using the prevailing exchange rate
published in The Wall Street
Journal (or in such other reliable publication as the Committee, in its discretion, may determine
to rely on) on the relevant date.




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