Exhibit 10.1


 


CEPHALON,
INC.
NON-QUALIFIED
DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2005)


 


1.                                      PURPOSE.  The purpose of the Plan is to provide
Eligible Employees with the opportunity to defer a portion of their Bonus on a
tax-favored basis.  The Corporation
intends that the Plan shall at all times be maintained on an unfunded basis for
federal income tax purposes under the Code and administered as a nonqualified “top-hat”
plan exempt from the substantive requirements of ERISA.  The Corporation also intends that the Plan be
operated in accordance with the requirements of Section 409A of the
Code.  The Plan, as amended and restated,
shall be effective as of the Effective Date. 
All capitalized terms shall be as defined in Paragraph 2 below.


 


2.                                      DEFINITIONS.  Certain terms shall be defined hereunder as
follows:


 


(a)                                  “Beneficiary”
means the person, persons, trust or trusts which a Participant shall from time
to time designate in writing to receive any benefits payable to him under this
Plan in the event of his death.


 


(b)                                  “Board”
means the Board of Directors of the Corporation.


 


(c)                                  “Bonus”
means the amount earned by a Participant under the Employer’s annual
Performance Incentive Plan.


 


(d)                                  “Bonus
Deferral” means the portion of Bonus as to which a Participant has made an
irrevocable election to defer receipt until the date specified in the
Participant’s Enrollment Agreement.


 


(e)                                  “Change
in Control” means:


 


(i)                                     For purposes of
determining whether a Change in Control has occurred with respect to whether a
Participant’s Pre-2005 Account will be distributed on account of the Change in
Control and the funding and crediting requirements with respect to the
Participant’s Deferred Bonus Account as provided in Paragraphs 16(a) and
(b), a Change in Control means a change in ownership or control of the
Corporation effected through any of the following transactions: (A) the
direct or


 


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indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the Exchange Act) of securities possessing more than thirty percent (30%) of
the combined voting power of the Corporation’s outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation’s stockholders
which the Board does not recommend such stockholders to accept; (B) a change
in the composition of the Board over a period of twenty-four (24) months or
less such that a majority of the Board members ceases, by reason of one or more
contested elections for Board memberships, to be comprised of individuals who
either (1) have been Board members continuously since the beginning of
such period, or (2) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (1) who were still in office at the time such election
or nomination was approved by the Board; (C) a merger or consolidation in
which securities possessing more than fifty percent (50%) of the combined
voting power of the Company’s outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction; or (D) the sale, transfer or other
disposition of more than 75% of the Company’s assets in a single or related
series of transactions.


 


(ii)                                  For purposes of
determining whether a Change in Control has occurred with respect to whether a
Participant’s Post-2004 Account will be distributed on account of the Change in
Control, a Change in Control means the occurrence of a change in the ownership
or effective control of the Corporation (as defined in Prop. Treas. Reg.
§1.409A-3(g)(5)(v)), a change in effective control of the Corporation (as
defined in Prop. Treas. Reg. §1.409A-3(g)(5)(vi)), or a change in the ownership
of a substantial portion of the assets of the Corporation (as defined in Prop.
Treas. Reg. §1.409A-3(g)(5)(vii)).


 


(f)                                    “Code”
means the Internal Revenue Code of 1986, as amended from time to time.


 


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(g)                                 “Committee”
means the Stock Option and Compensation Committee of the Board (or any
successor thereto) or its delegate, or such other committee appointed by the
Board to administer the Plan.  If no
members have been appointed to the Committee, the Board shall act as the Committee.


 


(h)                                 “Corporation”
means Cephalon, Inc. or any successor thereto.


 


(i)                                    “Deferred
Bonus Account” means a Participant’s Post-2004 Account and Pre-2005 Account, as
applicable.


 


(j)                                    “Effective
Date” means January 1, 2005, the effective date of this amendment and
restatement of the Plan.  The Plan was
initially effective on November 1, 1993.


 


(k)                                “Eligible
Employee” means each Employee designated by the Committee as eligible to
participate in the Plan.


 


(l)                                    “Employee”
means any individual employed by the Employer as an employee; provided, however,
to qualify as an “Employee” for purposes of the Plan, the individual must be a
member of a group of “key management or highly compensated employees” of the
Employer, within the meaning of Sections 201, 301 and 401 of ERISA.


 


(m)                              “Employer”
means the Corporation or any subsidiary of the Corporation.


 


(n)                                 “Enrollment
Agreement” means the authorization from which an Eligible Employee files with
the Committee to participate in the Plan.


 


(o)                                  “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from to
time.


 


(p)                                  “Identification
Date” means December 31.


 


(q)                                  “Key
Employee” means a Participant who is one of the following: (i) an officer
of the Employer who has annual compensation greater than $135,000 (or such
other amount as may be in effect under section 416(i)(1)(A)(i) of the
Code), (ii) a 5% owner of the Employer, or (iii) a 1% owner of the
Employer who has annual compensation from the Employer greater than $150,000,
subject to such other determinations made by the Committee, in its sole
discretion, in a manner consistent with the regulations issued under Section 409A
of the Code.


 


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(r)                                  “Normal
Retirement Age” means the attainment of the later of age 55 or 10 years of
participation in the Plan.


 


(s)                                  “Plan”
means the Cephalon, Inc. Non-Qualified Deferred Compensation Plan, as it
may be amended from time to time.


 


(t)                                    “Plan
Administrator” means the Committee.


 


(u)                                 “Plan
Year” means the period beginning on January 1 and ending on December 31.


 


(v)                                   “Post-2004
Account” means the bookkeeping account established by the Corporation to which
are credited Bonus Deferrals, and notational earnings and losses thereon, for
Bonus Deferrals that were earned and vested, and deferred to the Plan, after December 31,
2004.


 


(w)                                “Pre-2005
Account” means the bookkeeping account established by the Corporation to which
are credited Bonus Deferrals, and notational earnings and losses thereon, for
Bonus Deferrals that were earned and vested, and deferred to the Plan, prior to
January 1, 2005.


 


(x)                                  “Profit
Sharing Plan” means the Cephalon, Inc. 401(k) Profit Sharing Plan.


 


(y)                                  “Separation
Date” means the date on which a Participant incurs a Separation From Service.


 


(z)                                  “Separation
From Service” means a Participant’s separation from service with the Employer
within the meaning of Section 409A of the Code and the regulations issued
thereunder.


 


(aa)                            “Specified
Employee” means a Participant who at any time during the twelve (12) month
period ending on an Identification Date is a Key Employee.  If a Participant would be deemed a Key
Employee as of an Identification Date, the Participant is treated as a “Specified
Employee” for the twelve (12) month period beginning on the fourth month
following the end of the twelve (12) month period following the Identification
Date.  Notwithstanding the foregoing,
unless otherwise provided under Section 409A of the Code and its
corresponding regulations, no Participant shall be deemed a Specified Employee
if at the time of the Participant’s Separation From Service no stock of the


 


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Corporation, or any entity required to be
aggregated with the Corporation pursuant to Section 414(b) or 414(c) of
the Code, is publicly traded on an established securities market or otherwise.


 


(bb)                            “Trust”
means a grantor “rabbi” trust.


 


(cc)                            “Unforeseeable
Emergency” means the Participant has experienced an “unforeseeable emergency”
within the meaning of Prop. Treas. Reg. §1.409A-3(g)(3)(i).


 


3.                                      PARTICIPATION.  Any person who was a Participant in the Plan
immediately prior to the Effective Date shall continue to be a Participant in
the Plan as of the Effective Date.  Any
person who is an Eligible Employee as of the Effective Date, or becomes an
Eligible Employee after the Effective Date, shall be eligible to become a
Participant in the Plan in accordance with the requirements of Paragraph 4
below.  A Participant who ceases as an
Eligible Employee shall cease to be eligible to elect to make future Bonus
Deferrals to the Plan.


 


4.                                      DEFERRAL
OF COMPENSATION; GENERAL RULE AND SPECIAL RULES.


 


(a)                                  Except as otherwise
provided in subparagraph (b) below, annually all Eligible Employees will
be offered the opportunity to make a Bonus Deferral with respect to Bonus to be
earned in the following Plan Year.  Any
Eligible Employee may enroll in the Plan effective as of the first day of a
Plan Year by filing a completed and fully executed Enrollment Agreement with
the Committee by the date set by the Committee, but in any event prior to December 31
of the preceding Plan Year.  Pursuant to
said Enrollment Agreement, the Eligible Employee shall irrevocably elect,
except as provided in subparagraph (c) below, to defer the portion of the
Participant’s Bonus up to the amount mutually agreed upon by the Committee and
the Participant.  Prior to the beginning
of each Plan Year, a new Enrollment Agreement must be executed to make a Bonus
Deferral for such Plan Year.


 


(b)                                  As an exception to
the general rule set forth in subparagraph (a) regarding the timing
of the election by an Eligible Employee to elect to make a Bonus Deferral for
the following Plan Year, an Employee who first becomes an Eligible Employee
during a Plan Year may irrevocably elect to make a Bonus Deferral for the Bonus
to be earned during the Plan Year, provided the Eligible Employee makes the
Bonus Deferral election within


 


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thirty (30) days after the date on which he
first becomes an Eligible Employee, the deferral election is made at least six (6) months
prior to the end of the performance period, the Bonus is not substantially
certain to be paid or readily ascertainable at the time of the Bonus Deferral
election and the performance period applicable to the Eligible Employee is a
period of at least twelve (12) months.


 


(c)                                  A
Participant’s election to defer his Bonus for any Plan Year shall be
irrevocable as of the last day of the preceding Plan Year, except that:


 


(i)                                    a
Participant may revoke his Bonus Deferral with respect to the Plan Year in
which he takes a withdrawal as a result of an Unforeseeable Emergency.


 


(ii)                                to
the extent required by the Profit Sharing Plan, a Participant who takes a
hardship withdrawal from the Profit Sharing Plan pursuant to Treas. Reg. Treas.
Reg. §1.401(k)-1(d)(3) shall not be permitted to make Bonus Deferrals for
a six (6) month period beginning on the date of such withdrawal.


 


(iii)                            in
accordance with procedures established by the Committee, a Participant may,
prior to January 1, 2006, revoke his 2005 Bonus Deferral election and any
such Bonus shall be paid to the Participant at the same time bonuses are
normally paid under the annual incentive.


 


5.                                      ELECTION TO TIME AND FORM OF DISTRIBUTION.


 


(a)                                  At the time he makes
a deferral election, the Participant must designate in his Enrollment Agreement
whether the Bonus Deferral will commence to be paid at a specified time or on
account of a Separation From Service; provided, however, that if the
Participant does not specify the timing of the distribution in his Enrollment
Agreement, the distribution will not be paid until the Participant’s Separation
From Service.  For purposes of this
subparagraph (a), a specified time must meet the requirements of Section 409A(2)(A)(iv) of
the Code and the corresponding regulations with respect to any amounts credited
to the Participant’s Post-2004 Account.


 


(b)                                  At the time he makes
a deferral election, the Participant must also designate in his Enrollment
Agreement the form of distribution; provided, however, that if the Participant
does not specify the form of the distribution in his Enrollment Agreement, the
distribution will be paid in a lump sum. 
A Participant may elect to receive his benefit


 


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under the Plan in a lump sum or in
installments over the period of time permitted by the Committee.


 


(c)                                  A Participant may
subsequently elect to defer the distribution of any amounts credited to the
Participant’s Post-2004 Account to a later date than that provided in the
Enrollment Agreement, or change the form of the distribution to a different
form permitted under the Plan, by providing written notice of such election to
the Committee at least twelve (12) months prior to the date on which the
distribution was originally scheduled to be paid and the new distribution date
or new form of distribution cannot commence sooner than five (5) years
from the date the distribution was originally scheduled to be distributed;
provided that any election made pursuant to this subparagraph (c) shall
not become effective for twelve (12) months from the date on which it was
made.  Notwithstanding the immediately
preceding sentence, the Committee shall provide each Participant who elected to
make a Bonus Deferral for the 2005 and/or 2006 Plan Year with the opportunity
to make a one-time election during the 2006 Plan Year to change the time and
form of distribution of such Bonus Deferral that the Participant designated in
the Enrollment Agreement without having to meet the requirements set forth in
the immediately preceding sentence; provided, that this election may only be
made during the 2006 Plan Year and will be subject to the terms and conditions
determined by the Committee.


 


6.                                      RECORDS.  The Corporation shall maintain appropriate
records of each Participant’s Bonus Deferrals with respect to each Plan
Year.  The Corporation shall credit to a
Deferred Bonus Account all Bonus Deferrals elected by the Participant.


 


7.                                      AUTHORIZED
INVESTMENTS.  Subject to
Paragraph 16, all Bonus Deferrals credited to the Deferred Bonus Account for a
Participant may be kept in cash or invested by the Corporation in such manner,
in such portions and in such amounts as the Committee in its sole discretion,
may elect.  In the exercise of the
foregoing discretionary investment powers, the Committee may engage investment
advisers and, if it so desires, may delegate to such advisers full or limited
authority to select the assets in which the Bonus Deferrals are to be invested.


 


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8.                                      INVESTMENT
INCOME.  Subject to Paragraph 16,
each Participant’s separate Deferred Bonus Account will be increased annually
at the rate of ten percent (10%) per annum or at any other rate prospectively
specified by a separate Committee resolution. 
Any Committee resolution changing the growth rate shall make specific
reference to this Plan including the date hereof.


 


9.                                      STATUS
OF INVESTMENTS.   All investments
made by the Corporation under this Plan will be deemed made solely for the
purpose of aiding the Corporation in measuring and meeting its obligations
under this Plan.  The Corporation shall
be the sole owner of all such investments and of all rights and privileges
conferred by the terms of the instruments evidencing such investments.  Nothing stated herein will cause such
investments or any Deferred Bonus Account to be treated as anything but the
general assets of the Corporation, nor will anything stated herein cause such
investments to represent the vested, secured or preferred interest of any
Participant or his Beneficiaries.


 


10.                               GENERAL
CREDITOR STATUS.   A Participant
shall have no claim with respect to any particular asset of the Corporation or
any other Employer, but shall be and shall remain at all times a general
unsecured creditor of the Corporation and, therefore, a Participant’s rights
under the Plan shall have no priority over the rights of any general unsecured
creditor of the Corporation.  The Plan
constitutes a mere promise by the Corporation to make benefits payments in the
future.


 


11.                               FORM OF
DISTRIBUTION FOR PAYMENTS MADE PRIOR TO SEPARATION FROM SERVICE.  If a Participant has designated a specified
date in accordance with the requirements of Paragraph 5 above, the Participant’s
Deferred Bonus Account shall be paid (or commence to be paid if the form
designated is annual installments) in cash in the form designated by the
Participant on the specified date or, if determined by the Committee for
administrative reasons, a later date within the same calendar year of the
specified date, or, if later, by the 15th day of the third calendar month
following the specified date; provided, however, notwithstanding the specified
date designated by the Participant, that if the Participant has a Separation
From Service prior to the Specified Date, the value of the Participant’s
Deferred Bonus Account shall be paid to the


 


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Participant as provided in Paragraph 12, 13
or 14 below, as applicable.  In the event
the Participant elects to receive a distribution in the form of installments,
the amount of each annual installment shall be equal to the fair market value
of the assets in such Participant’s Deferred Bonus Account (or the applicable
portion thereof) valued as of the date of the initial payment to the
Participant divided by the number of years over which payments are to be
received as elected by such Participant. 
Notwithstanding the foregoing, the total amount payable to such
Participant, and correspondingly each future annual installment, shall be
appropriately increased or decreased as the case may be, in the same manner as
set forth in Paragraph 8 of this Plan, to reflect the appreciation in value and
the net income on the funds which remain invested in the Deferred Bonus
Account.


 


12.                               Payments
Upon Normal Retirement Age. 
Unless the Participant elected in his Enrollment Agreement that his Pre-2005
Account will be distributed on a specified date, upon the Participant’s
attainment of Normal Retirement Age, such Participant shall receive, or begin
to receive, payment of the amount credited to his Pre-2005 Account.  Such amount shall be paid in cash in the form
elected by the Participant in the Enrollment Agreement beginning on the date to
be determined by the Committee, but in no event more than three (3) months
from the date of the Participant’s attaining Normal Retirement Age.  In the event the Participant elects to
receive such distribution in the form of installments, the amount of each
annual installment shall be equal to the fair market value of the assets in
such Participant’s Pre-2005 Account (or the applicable portion thereof) valued
as of the date of the initial payment to the Participant divided by the number
of years over which payments are to be received as elected by such Participant.  Notwithstanding the foregoing, the total
amount payable to such Participant, and correspondingly each future annual
installment, shall be appropriately increased or decreased as the case may be,
in the same manner as set forth in Paragraph 8 of this Plan, to reflect the
appreciation in value and the net income on the funds which remain invested in
the Participant’s Pre-2005 Account. 
Notwithstanding anything in the Plan to the contrary, this Paragraph 12
shall not apply to any portion of the Participant’s Deferred Bonus Account that
consists of the Post-2004 Account.


 


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13.                               PAYMENTS
UPON SEPARATION FROM SERVICE. 
Notwithstanding any election made by a Participant hereunder, in the
event of a Participant’s Separation From Service for any reason (except death)
prior to the specified date, if any, elected by Participant for the
distribution of his Deferred Bonus Account (or, with respect to the Participant’s
Pre-2005 Account, Normal Retirement Age), the balance credited to the
Participant’s Deferred Bonus Account shall be paid to the Participant as
follows:


 


(a)                                  payment
of the Participant’s Deferred Bonus Account shall be paid to the Participant in
cash in the form of a lump sum at the time of the Participant’s Separation From
Service, or as soon as administratively practicable thereafter; provided,
however, that if at the time of the Participant’s Separation From Service (i) the
Participant is a Specified Employee, the payment shall be made to the
Participant in accordance with the requirements of subparagraph (b) below,
or (ii) with respect to the Participant’s Pre-2005 Account, this Paragraph
13 shall not apply if the Participant has already commenced receiving his
benefit pursuant to Paragraph 12 above.


 


(b)                                  if the Participant is
a Specified Employee at the time of his Separation From Service, payment of the
Participant’s Post-2004 Account shall be paid to the Participant in cash in a
lump sum commencing as soon as administratively practicable after the first day
of the seventh month following the Participant’s Separation Date.


 


14.                               DEATH
OF PARTICIPANT.


 


(a)                                  If a Participant dies
while employed by the Employer and prior to commencement of receipt of his
benefit, the Corporation shall pay to his Beneficiary the amount credited to
the Participant’s Deferred Bonus Account in cash in the form of a lump
sum.  Payment of a Participant’s Deferred
Bonus Account shall be made as soon as administratively practicable following
the date of the Participant’s death.


 


(b)                                  If a Participant dies
after the commencement of the payments to him under the Plan, but before all
payments have been made, the Corporation shall continue such payments to his
Beneficiary at the same times and in the same amounts as would have been paid
had the Participant lived for the entire payout period elected by him.


 


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(c)                                  A Participant shall
at all times retain the right to change the Beneficiary designated in his
Enrollment Agreement by notifying the Committee in writing on a form to be
provided by the Corporation.  If there is
no Beneficiary designated at the time of the death of the Participant or if the
designated Beneficiary does not survive the Participant, the Beneficiary shall
be the Participant’s spouse, and if no such spouse is then living, Participant’s
estate.  If Participant’s spouse shall
receive payments hereunder but die prior to payment in full of the remainder of
the deferred compensation, the balance owed by the Corporation shall be paid to
the estate of such spouse under the same payment schedule.


 


15.                               UNFORESEEABLE
EMERGENCY.   If the Participant
experiences an Unforeseeable Emergency, the Participant may make a request to
the Committee to receive an immediate distribution from his Deferred Bonus
Account.  If the Committee determines
that the Participant has experienced an Unforeseeable Emergency, the
Corporation may make a distribution to the Participant.  Except as otherwise provided in regulations
under Section 409A of the Code, the amounts distributed to a Participant
pursuant to an Unforeseeable Emergency shall not exceed the amounts necessary
to satisfy such Unforeseeable Emergency, plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after taking into
account the extent to which such hardship is or may be relieved through
reimbursement of compensation by insurance or otherwise or by liquidation of
the Participant’s assets (to the extent the liquidation of such assets would
not itself cause severe financial hardship). 
With respect to that portion of the Deferred Bonus Account which is
distributed to a Participant in accordance with this Paragraph 15, the value of
such amount shall be reduced from the Participant’s Deferred Bonus
Account.  Notwithstanding anything in
this Plan to the contrary, a Participant who receives a distribution pursuant
to this Paragraph 15 in any Plan Year shall not be entitled to make any further
Bonus Deferrals for the remainder of such Plan Year.


 


16.                               CHANGE
IN CONTROL.


 


(a)                                  The Corporation shall
establish a Trust with a bank or other financial institution that is
independent of the Corporation and is authorized to exercise corporate trustee
powers under applicable federal or state law, to serve as a


 


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funding vehicle for benefits payable under
the terms of this Plan.  Prior to a
Change in Control, as defined below, or in the event that the action
contemplated hereby cannot be effected prior to a Change in Control, then
immediately upon such a Change in Control, the Corporation shall make a
contribution to the Trust in an amount, which together with any amounts then
held in the Trust, is sufficient to fully pay the Participants and their
beneficiaries all of the benefits to which such Participants and beneficiaries
are entitled under the Plan as of the date of the Change in Control if such
benefits were then immediately due and payable. 
After a Change in Control has occurred, the Corporation shall be
obligated to continue to cause additional contributions to be made as may be
necessary from time to time to ensure that at all times the Trust contains
sufficient funds, on a current basis, to provide the entire benefits due to the
Participants and their beneficiaries under the Plan.  Except as may otherwise be provided in the
Trust, prior to the time a Change in Control is imminent, the Corporation may,
but shall not be required to, fund the Trust. 
If the Corporation makes a contribution to the Trust in anticipation of
a Change in Control and a Change in Control does not occur, the Corporation
may, if and to the extent permitted by the Trust, obtain the return of such
contribution, together with the earnings thereon.


 


(b)                                  In the event of a
Change in Control, the rate at which each Participant’s separate Deferred Bonus
Account shall be increased from and after the date of such Change in Control
shall not be less than the lesser of (i) ten percent (10%) per annum, or (ii) one
percentage point above the prime interest rate then being charged by the
trustee (or any other lending institution designated by the Corporation, prior
to a Change in Control) to its qualified customers.


 


(c)                                  Prior to January 1,
1997, or, if later, at the time of the Participant’s commencement of
participation in the Plan, the Participant shall make an irrevocable one-time
election with respect to his Deferred Bonus Account whether, in the event of a
Change in Control, (i) to receive an immediate lump sum distribution of
his Deferred Bonus Account as of the date of a Change in Control, such
distribution to be made as soon as administratively practicable, but


 


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in no event more than ninety (90) days,
following the occurrence of such Change in Control, or (ii) to have his
benefits under the Plan distributed to him (or his beneficiary) at such time or
times and in such manner as is otherwise provided in this Plan.


 


(d)                                  The Trust shall
constitute an unfunded arrangement for tax purposes and for purposes of Title I
of ERISA and the assets of the Trust shall be subject to the claims of the
creditors of the Corporation in the event of the Corporation’s insolvency, all
as set forth in the Trust.  With respect
to any payments not yet made to a Participant or Beneficiary, nothing contained
herein shall give any such Participant or Beneficiary any rights to assets that
are greater than those of a general creditor of the Corporation.


 


17.                               NO
ASSIGNMENT.  A Participant’s
rights to benefit payments under this Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors of the Participant or the Participant’s
Beneficiary.


 


18.                               REVOCATION
AND AMENDMENT.  This Plan may be
amended or terminated at any time at the sole discretion of the Committee;
provided, however, that any such amendment or termination shall not affect the
rights of any Participant which may have accrued under the Plan at the time of
amendment or termination. 
Notwithstanding the foregoing, if the Committee determines that, in
order to avoid current taxation of amounts deferred under the Plan or to comply
with applicable law, additional restrictions must be placed on Participants’
rights under the Plan or to comply with applicable law, including, but not
limited to Section 409A of the Code and its corresponding regulations, the
Committee or its delegate may, in its sole discretion, amend the Plan to impose
such restrictions, and/or cease deferrals under the Plan with respect to all
Deferred Bonus Accounts, affected Deferred Bonus Accounts or the affected
portions of the Deferred Bonus Accounts and no Participant consent shall be
required to make any such amendments.  If
the Committee terminates the Plan, Participants shall be entitled to a
distribution of their benefit under the Plan; provided that the Corporation
distributes to each Participant, in a lump sum


 


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payment, the balance of the Participant’s
Deferred Bonus Account as of the date the termination occurs; provided,
however, that no such termination may occur unless the Employer terminates all
arrangements sponsored by the Employer that would be aggregated with the Plan
under Prop. Treas. Reg. §1.409A-1(c) if the Participant participated in
all of the arrangements that are terminated, no payments other than the
payments that would be payable under the terms of the Plan if the termination
had not occurred are made within twelve (12) months of the termination of the
Plan, all payments from the Plan are made within twenty-four (24) months of the
termination of the Plan, and the Employer does not adopt a new plan or
arrangement that would be aggregated with the terminated Plan if the
Participant participated in both plans or arrangements at any time within the
five (5) years following the date of the termination.


 


19.                               NO
EMPLOYMENT GUARANTEE.   Nothing
contained in this Plan shall be construed as conferring upon any Participant
the right to continue in the employment of the Employer.


 


20.                               AUTHORITY
OF COMMITTEE.  The Committee
shall have the full power and authority to interpret, construe and administer
this Plan.  The Committee’s
interpretations and construction hereof and actions hereunder, including any
valuation of a Deferred Bonus Account, or the amount(s) to be paid there from,
shall be binding and conclusive on all persons for all purposes.  No member of the Committee shall be liable to
any person for any action taken or omitted in connection with the
interpretation or administration of this Plan unless attributable to his own
willful misconduct or lack of good faith. 
As a condition of participating in the Plan, a Participant expressly
express agrees that all decisions and determinations of the Committee shall be
binding and conclusive on the Participant, the Participant’s Beneficiaries and
any other person having or claiming an interest on behalf of, or for the
benefit of, the Participant or the Beneficiary.


 


21.                               BENEFIT.  This Plan shall inure to the benefit of and
be binding upon the Corporation and the Participant, together with their
respective successors, heirs and personal representatives.


 


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22.                               CLAIMS
PROCEDURES.  At any time the Plan
Administrator makes a determination adverse to a Participant or Beneficiary
with respect to a claim for payment or participation under the Plan, the Plan
Administrator shall notify the claimant in writing of such determination, such
notification shall be in a manner calculated to be understood by the claimant,
and shall set forth: (a) the specific reason or reasons for such
determination; (b) a reference to the specific provision or provisions of
the Plan on which such determination is based; (c) a description of any
additional material or information necessary to perfect the claim, and an
explanation of the reason that such material is required; and (d) a
description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the claimant’s right to bring a civil
action under section 502(a) of ERISA following an adverse benefit
determination on review.


 


A person who
receives notice of an adverse determination by the Plan Administrator with
respect to a claim may request, within 60 days of receipt of such notice, that
the Plan Administrator review the Plan Administrator’s determination.  This request may be made on behalf of a
claimant by a duly authorized representative. 
The claimant or representative may review pertinent documents and submit
issues and comments with respect to the controversy to the Plan
Administrator.  The Plan Administrator
shall render a decision within 60 days of a request for review (or within 120
days under special circumstances), which decision shall be in writing, set forth
in a manner calculated to be understood by the claimant, and shall set forth (i) the
specific reason or reasons for the decision reached; (ii) the specific
provisions of the Plan on which the decision is based; (iii) a statement
that the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records or other
information relevant to the claimant’s claim for benefits; and (iv) a
statement describing any voluntary appeal procedures offered by the Plan and
the claimant’s right to obtain information about such procedures, and a
statement of the claimant’s right to bring an action under section 502(a) of
ERISA.  A copy of the ruling shall be
forwarded to the claimant.


 


23.                               WITHHOLDING OF TAXES.  The Corporation may make such provisions and
take such actions as it may deem necessary or appropriate for the withholding
of any taxes which


 


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the Employer is required by law or regulation
of any governmental authority, whether Federal, state or local, to withhold in
connection with any benefits under the Plan, including, but not limited to, the
withholding of appropriate sums from any amount otherwise payable to the
Participant (or his Beneficiary).  Each Participant,
however, shall be responsible for the payment of all individual tax liabilities
relating to any such benefits.


 


24.                               GOVERNING
LAW.    The Plan shall be
governed by the laws of the Commonwealth of Pennsylvania.


 


25.                               LANGUAGE.  Whenever used in this Plan, the singular
number shall include the plural, the plural the singular, and the use of any
gender shall include all genders.


 


26.                               EFFECTIVE
DATE.  This Plan, as amended and
restated herein, shall be effective as of the Effective Date.


 


27.                               SECTION 409A
OF THE CODE.  The Plan is
intended to comply with the applicable requirements of Section 409A of the
Code and its corresponding regulations and related guidance, and shall be
maintained and administrated in accordance with Section 409A of the Code to
the extent Section 409A of the Code applies to the Plan.  Notwithstanding anything in the Plan to the
contrary, elections to defer Bonus to the Plan, and distributions from the
Plan, may only be made in a manner, and upon an event, permitted by Section 409A
of the Code.  To the extent that any
provision of the Plan would cause a conflict with the requirements of Section 409A
of the Code, or would cause the administration of the Plan to fail to satisfy
the requirements of Section 409A of the Code, such provision shall be
deemed null and void to the extent permitted by applicable law.


 


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