Document:

Exhibit 10.78

 

AMENDED

EXECUTIVE SALARY CONTINUATION AGREEMENT

This Amended Salary
Continuation Agreement (the “Agreement”) is
made effective March 1, 2007 (the “Effective Date”),
and is entered into by and between Central Valley Community Bank (the “Bank”) and Gary Quisenberry (the “Executive”),
each a “Party” and together the “Parties.”

RECITALS

A.                                   This
Agreement amends and supersedes the prior Executive Salary Continuation
Agreement between the Parties, dated June 7, 2000, and Amendment No. 1 to the
prior agreement, dated February 1, 2005.

B.                                     The
Executive is a valued Executive of the Bank.

C.                                     The
Bank’s Board of Directors (the “Board”) has
determined that the Executive’s services to the Bank are valuable.  The Bank and the Executive desire to enter
into this Agreement under which the Bank has agreed to make certain payments to
the Executive at retirement.

D.                                    The
Parties intend that this Agreement shall constitute an unfunded arrangement
maintained primarily to provide supplemental retirement benefits for the
Executive under the Employee Retirement Security Act of 1974, as amended (“ERISA”).  The parties
further intend that this Agreement shall constitute a nonqualified deferred
compensation arrangement under the Internal Revenue Code (“Code”).  The Executive is fully advised of the Bank’s
financial status and has had substantial input in the design of and benefits
provided under this Agreement.

AGREEMENT

In consideration
of the mutual promises, covenants, and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:

I.              EMPLOYMENT

The Bank agrees to
employ the Executive in such capacity as the Bank may from time to time
determine. The Executive will continue in the employ of the Bank in such
capacity and with such duties and responsibilities as may be assigned to him,
and with such compensation as may be determined from time to time by the Board.
At all times, unless modified in writing, employment shall be at-will.  Subject to the terms of this Agreement,
either the Bank or the Executive may terminate the employment relationship at
any time, for any reason or for no reason.

 1
 

II.            FRINGE BENEFITS

The salary
continuation benefits provided by this Agreement are granted by the Bank as a
fringe benefit to the Executive and are not part of any salary reduction plan
or an arrangement deferring a bonus or a salary increase. The Executive has no
option to take any current payment or bonus in lieu of salary continuation benefits.

III.           RETIREMENT BENEFIT AND EARLY RETIREMENT BENEFIT

For purposes of this
section, “Retirement” and “Retire”
mean that the Executive remains in the continuous employ of the Bank from the
Effective Date and then retires from active employment (and his Employment
Terminates) with the Bank, after attaining age sixty (60).

A.            Retirement Benefit.

If
the Executive Retires on or after December 31, 2015, the Bank shall pay the
Executive an annual retirement benefit equal to Fifty Thousand Dollars and
No/100 ($50,000.00), in equal monthly installments (1/12 of the annual
benefit), for a period of one hundred and eighty (180) months, commencing with
the first day of the month following the date of the Executive’s
Retirement.  Beginning with the thirteenth
month that benefits are paid, and continuing thereafter until paid in full, the
annual benefit shall be increased each year by three percent (3%) from the
previous year’s benefit to account for cost of living increases.  In the event of the Executive’s death prior
to the date all payments have been made, Section IV of this Agreement shall
control.

B.            Early Retirement
Benefit.

If
the Executive Retires on or after May 26, 2011 and prior to December 31, 2015,
the Bank shall pay the Executive an annual early retirement benefit, based on
the month of retirement, equal to:

	
  Retirement

  Month

  	
   

  	
  Annual

  Amount

  	
   

  
	
  May 2011

  	
   

  	
  $

  	
  27,083.34

  	
   

  
	
  June 2011

  	
   

  	
  $

  	
  27,500.00

  	
   

  
	
  July 2011

  	
   

  	
  $

  	
  27,916.67

  	
   

  
	
  August 2011

  	
   

  	
  $

  	
  28,333.34

  	
   

  
	
  September 2011

  	
   

  	
  $

  	
  28,750.00

  	
   

  
	
  October 2011

  	
   

  	
  $

  	
  29,166.67

  	
   

  
	
  November 2011

  	
   

  	
  $

  	
  29,583.34

  	
   

  
	
  December 2011

  	
   

  	
  $

  	
  30,000.00

  	
   

  
	
  January 2012

  	
   

  	
  $

  	
  30,416.67

  	
   

  
	
  February 2012

  	
   

  	
  $

  	
  30,833.34

  	
   

  
	
  March 2012

  	
   

  	
  $

  	
  31,250.01

  	
   

  
	
  April 2012

  	
   

  	
  $

  	
  31,666.67

  	
   

  
	
  May 2012

  	
   

  	
  $

  	
  32,083.34

  	
   

  
	
  June 2012

  	
   

  	
  $

  	
  32,500.01

  	
   

  
	
  July 2012

  	
   

  	
  $

  	
  32,916.67

  	
   

  
	
  August 2012

  	
   

  	
  $

  	
  33,333.34

  	
   

  
	
  September 2012

  	
   

  	
  $

  	
  33,750.01

  	
   

  
	
  October 2012

  	
   

  	
  $

  	
  34,166.67

  	
   

  
	
  November 2012

  	
   

  	
  $

  	
  34,583.34

  	
   

  
	
  December 2012

  	
   

  	
  $

  	
  35,000.01

  	
   

  
	
  January 2013

  	
   

  	
  $

  	
  35,416.68

  	
   

  
	
  February 2013

  	
   

  	
  $

  	
  35,833.34

  	
   

  
	
  March 2013

  	
   

  	
  $

  	
  36,250.01

  	
   

  
	
  April 2013

  	
   

  	
  $

  	
  36,666.68

  	
   

  
	
  May 2013

  	
   

  	
  $

  	
  37,083.34

  	
   

  
	
  June 2013

  	
   

  	
  $

  	
  37,500.01

  	
   

  
	
  July 2013

  	
   

  	
  $

  	
  37,916.68

  	
   

  
	
  August 2013

  	
   

  	
  $

  	
  38,333.34

  	
   

  
	
  September 2013

  	
   

  	
  $

  	
  38,750.01

  	
   

  
	
  October 2013

  	
   

  	
  $

  	
  39,166.68

  	
   

  
	
  November 2013

  	
   

  	
  $

  	
  39,583.35

  	
   

  
	
  December 2013

  	
   

  	
  $

  	
  40,000.01

  	
   

  
	
  January 2014

  	
   

  	
  $

  	
  40,416.68

  	
   

  
	
  February 2014

  	
   

  	
  $

  	
  40,833.35

  	
   

  
	
  March 2014

  	
   

  	
  $

  	
  41,250.01

  	
   

  
	
  April 2014

  	
   

  	
  $

  	
  41,666.68

  	
   

  
	
  May 2014

  	
   

  	
  $

  	
  42,083.35

  	
   

  
	
  June 2014

  	
   

  	
  $

  	
  42,500.01

  	
   

  
	
  July 2014

  	
   

  	
  $

  	
  42,916.68

  	
   

  
	
  August 2014

  	
   

  	
  $

  	
  43,333.35

  	
   

  
	
  September 2014

  	
   

  	
  $

  	
  43,750.02

  	
   

  
	
  October 2014

  	
   

  	
  $

  	
  44,166.68

  	
   

  
	
  November 2014

  	
   

  	
  $

  	
  44,583.35

  	
   

  
	
  December 2014

  	
   

  	
  $

  	
  45,000.02

  	
   

  
	
  January 2015

  	
   

  	
  $

  	
  45,416.68

  	
   

  
	
  February 2015

  	
   

  	
  $

  	
  45,833.35

  	
   

  
	
  March 2015

  	
   

  	
  $

  	
  46,250.02

  	
   

  
	
  April 2015

  	
   

  	
  $

  	
  46,666.68

  	
   

  
	
  May 2015

  	
   

  	
  $

  	
  47,083.35

  	
   

  
	
  June 2015

  	
   

  	
  $

  	
  47,500.02

  	
   

  
	
  July 2015

  	
   

  	
  $

  	
  47,916.69

  	
   

  
	
  August 2015

  	
   

  	
  $

  	
  48,333.35

  	
   

  
	
  September 2015

  	
   

  	
  $

  	
  48,750.02

  	
   

  
	
  October 2015

  	
   

  	
  $

  	
  49,166.69

  	
   

  
	
  November 2015

  	
   

  	
  $

  	
  49,583.35

  	
   

  
	
  December 2015

  	
   

  	
  $

  	
  50,000.00

  	
   

  

 

 2
 

The
early retirement benefit shall be paid in lieu of any other benefit under this
Agreement, in equal monthly installments (1/12 of the annual benefit) for a
period of one hundred and eighty (180) months, commencing with the first day of
the month following the date of the Executive’s Retirement.  Beginning with the thirteenth month that
benefits are paid, and continuing thereafter until paid in full, the annual
benefit shall be increased each year by three percent (3%) from the previous
year’s benefit to account for cost of living increases.  In the event of the Executive’s death prior
to the date all payments have been made, Section IV of this Agreement shall
control.

IV.           DEATH BENEFIT

In the event of
the Executive’s death, no benefits shall be payable hereunder and this
Agreement shall automatically terminate. 
If the Executive is already in pay status at the time of his death, no
further payments will be made, and his right to any additional payments will
terminate.  Notwithstanding the
foregoing, in the event that the Policy(ies) described in that certain Amended
Life Insurance Endorsement Method Split Dollar Agreement between the Bank and
Executive of even date herewith (the “Split Dollar Agreement”) is/are
surrendered, lapse or are otherwise terminated by the Bank, and the Bank does
not replace such Policy(ies) with other comparable life insurance, such that no
death benefits are payable under the Split Dollar Agreement, then in the event
of the Executive’s death, Executive’s beneficiaries under the Split Dollar
Agreement shall be entitled to the payment of the benefits, if any, described
in Section VI(A) or VI(B) of the Split Dollar Agreement, as applicable, in lieu
of any other benefit under this Agreement.

V.            TERMINATION OF EMPLOYMENT AND DISABILITY

“Termination of Employment” or “ Employment
Terminates “ means that the Executive’s employment with the Bank is
terminated and the Executive actually separates from service with the Bank and
does not continue in his prior capacity. 
Termination of Employment does not include the Executive’s military
leave, sick leave or other bona fide leave of absence (such as temporary employment
with the government) if the period of leave does not exceed six months, or if
longer, so long as his right to reemployment with the Bank is provided either
in contract or by statute. 
Notwithstanding anything to the contrary, the terms “Termination of
Employment” and “Employment Terminates” shall be interpreted in accordance with
Code Section 409A, together with regulations and guidance promulgated
thereunder, as amended from time to time (collectively referred to as “Code
Section 409A”).

A.            Voluntary
Termination of Employment.

In the event of the Executive’s Voluntary
Termination prior to Retirement or prior to a Change In Control, this Agreement
shall immediately terminate and the Executive shall not be entitled to receive
any benefits under this Agreement.  “Voluntary Termination” means Executive’s Employment
Terminates prior to Retirement by Executive’s voluntary action.

 3
 

B.            Involuntary
Termination of Employment.

In the event of the Executive’s Involuntary
Termination prior to Retirement, the Bank shall pay the Executive an
involuntary termination benefit, in lieu of any other benefit under this
Agreement, in an amount equal to the present value of an annual retirement
benefit of Fifty Thousand Dollars ($50,000) per year for fifteen (15) years,
reduced by ten percent (10%) for each year prior to December 31, 2015 that
Involuntary Termination occurs (prorated by month), determined as of the first
day of the month in which Involuntary Termination occurs.  The benefit shall be paid in a lump sum, determined
by using the assumptions set forth in Section IX(L) and the payment shall be
made on the date the Executive attains age sixty-five (65).  “Involuntary  Termination” means the Executive’s Employment Terminates by
action of the Bank prior to Retirement, and such Termination of Employment is
not For Cause.

C.            Termination of
Employment For Cause.

In the event Executive’s
Employment Terminates For Cause prior to Retirement, then this Agreement shall
immediately terminate and the Executive shall forfeit all benefits and shall
not be entitled to receive any benefits under this Agreement.  “For Cause”
shall mean any of the following actions by the Executive that result in an
adverse effect on the Bank: (1) gross negligence or gross neglect; (2) the
commission of a felony or gross misdemeanor involving moral turpitude, fraud,
or dishonesty; (3) the willful violation of any law, rule, or regulation (other
than a traffic violation or similar offense); (4) an intentional failure to
perform stated duties; or (5) a breach of fiduciary duty involving personal
profit.  If a dispute arises as to
whether Termination of Employment was For Cause, such dispute shall be resolved
by arbitration as set forth in this Agreement.

D.            Disability.

In the event the Executive becomes Disabled
prior to Retirement or Termination of Employment, and the Executive’s
Employment terminates because of such Disability, the Bank shall pay the
Executive an annual benefit, in lieu of any other benefit under this Agreement,
equal to Fifty Thousand Dollars and No/100 ($50,000.00), reduced by ten percent
(10%) for each year prior to December 31, 2015 that Involuntary Termination
occurs (prorated by month), determined as of the first day of the month in
which Involuntary Termination occurs. 
The benefit shall be paid in equal monthly installments (1/12 of the
annual benefit), for a period of one hundred and eighty (180) months,
commencing with the first day of the month following the date of the Executive’s
termination due to Disability.  Beginning
with the thirteenth month that benefits are paid, and continuing thereafter
until paid in full, the annual benefit shall be increased each year by three
percent (3%) from the previous year’s benefit to account for cost of living
increases.  In the event of the Executive’s
death prior to the date all payments have been made, Section IV of this
Agreement shall control.

“Disabled” or “Disability” shall mean that the
Executive (1) is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a

 4
 

continuous period of not less than 12 months;
or (2) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering Bank employees. 
If there is a dispute regarding whether the Executive is Disabled, such
dispute shall be resolved by a mutually agreeable physician.  Such resolution shall be binding upon all
Parties to this Agreement.  The
determination of Disability shall be made in a uniform and nondiscriminatory
manner applied to all Bank employees under similar circumstances.  Notwithstanding anything to the contrary, the
term “Disability” shall be interpreted in accordance with Code Section
409A.  In the event of the Executive’s
death, Section IV of this Agreement shall control.

VI.           CHANGE IN CONTROL

Upon
a Change In Control, if, within twenty four (24) months of the Change In
Control, (i) the Executive’s Employment Terminates (whether Voluntary
Termination or Involuntary Termination) for any reason other than For Cause;
(ii) the Executive’s job responsibilities substantially change; or (iii) the
Executive is relocated, then the Bank shall pay the Executive a lump sum
payment equal to the present value (calculated using the assumptions set forth
in section IX(L), determined as of the date of payment) of one hundred percent
(100%) of the benefit that the Executive would have received under Section
III(A) had the Executive been employed by the Bank until December 31, 2015.  The lump sum payment shall be made on the
first day of the month following the date of the act giving rise to the payment
(i.e., the date of termination of employment, substantial change in job
responsibilities or relocation).  Change
In Control benefit projections are included in Exhibit A attached hereto.  The payment of a lump sum pursuant to this
Section shall be in lieu of any other benefit under this Agreement.  Any benefit payable under this Section shall
be subject to reduction or elimination as provided in Section XII.

A “Change In Control” shall be deemed to have occurred on the
date that any one person, or more than one person acting as a group, acquires
ownership of stock of the Bank that, together with stock held by such person or
group, constitutes more than fifty percent (50%) of the total fair market value
or total voting power of the stock of the Bank. 
However, if any one person or more than one person acting as a group, is
considered to own more than fifty percent (50%) of the total fair market value
or total voting power of the stock of the Bank, the acquisition of additional
stock by the same person or persons will not be considered to cause a Change In
Control.  Further, an increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the Bank acquires its stock in exchange for
property will not be considered to cause a Change In Control.  Transfers of Bank stock on account of death,
gift, transfers between family members or transfers to a qualified retirement
plan maintained by the Bank shall not be considered in determining whether
there has been a Change In Control.  For
purposes of this Section, the term “Bank” shall include any holding company,
meaning any corporation that is a majority shareholder of the Bank.  A “Change In Control” shall be interpreted in
accordance with the definition of “Change in Ownership” under Code Section
409A, and to the extent that an event or series of events does not constitute a
“Change in Ownership” under Code Section 409A, the event or series of events
will not constitute a “Change In Control” under this Agreement.

 5
 

VII.         SPECIFIED EMPLOYEE REQUIREMENTS

Notwithstanding anything
to the contrary, payments made under this Agreement shall be delayed so that no
payments are made during the first six (6) months following Termination of
Employment, if such delay is required by the Specified Employee requirements of
Code Section 409A.

VIII.        RESTRICTIONS ON FUNDING

The
Bank shall have no obligation to set aside, earmark or entrust any fund or
money with which to pay its obligations under this Agreement. To the extent the
Executive or any successor in interest becomes eligible to receive benefits
under this Agreement, he or she shall be and remain simply a general creditor
of the Bank in the same manner as any other creditor having a general claim for
matured and unpaid compensation.

The
Bank reserves the absolute right, in its sole discretion, to purchase life
insurance in conjunction with the benefits provided under this Agreement.  The Bank further reserves the absolute right,
in its sole discretion, to establish a grantor trust which may be used to hold Bank
assets to be maintained as reserves against the Bank’s unfunded, unsecured
obligations hereunder.  Such reserves
shall at all times be subject to the claims of the Bank’s creditors.  If a trust or other vehicle is established,
the Bank’s obligations hereunder shall be reduced to the extent assets are
utilized to meet its obligations.  Any
trust established by the Bank and the assets held in trust shall conform in
substance to the terms of the model trust described in Revenue Procedure 92-64,
1992-33 IRB 11 (8-17-92).  The Bank
reserves the absolute right, in its sole discretion, to terminate any life
insurance purchased or any grantor trust established for these purposes at any
time, in whole or in part.  At no time
shall the Executive have any lien or right, title or interest in or to any
specific investment or to any assets of the Bank.  If the Bank elects to invest in a life insurance,
disability or annuity policy upon the life of the Executive, then the Executive
shall assist the Bank by freely submitting to a physical exam and supplying
such additional information necessary to obtain such insurance or annuities.

IX.           MISCELLANEOUS

A.            Prohibition Against
Alienation or Assignment.

The Executive, his surviving spouse, and any
other beneficiary(ies) under this Agreement shall not have any power or right
to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any benefit which may become payable hereunder.  No benefits shall be subject to seizure for
the payment of any debts, judgments, alimony or separate maintenance owed by
the Executive or the Executive’s beneficiary(ies), or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise. In the
event the Executive or any beneficiary attempts to assign, commute, hypothecate,
transfer or dispose of the benefits which may become payable hereunder, the
Bank’s liabilities shall forthwith cease and terminate.

 6
 

B.            Binding Obligation
of the Bank and any Successor in Interest.

The Bank shall not merge or consolidate into
or with another bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person agrees, in writing, to assume
and discharge the Bank’s duties and obligations under this Agreement. This Agreement
shall be binding upon the Parties hereto, their successors, beneficiaries,
heirs and personal representatives.

C.            Amendment or
Revocation.

It is agreed by and between the Parties that,
during the lifetime of the Executive, this Agreement may be amended or revoked
at any time or times, in whole or in part, by the mutual written consent of the
Executive and the Bank.

D.            Gender.

Whenever in this Agreement words are used in
the masculine or neuter gender, they shall be read and construed as in the
masculine, feminine or neuter gender, whenever they should so apply.

E.             Effect on Other
Bank Benefit Plans.

Nothing contained in this Agreement shall
affect the Executive’s right or shall create any rights to participate in or be
covered by any qualified or non-qualified pension, profit-sharing, group, bonus
or other supplemental compensation or fringe benefit plan sponsored or offered
by the Bank.

F.             Headings.

Headings and subheadings in this Agreement are
inserted for reference and convenience only and shall not be deemed a part of
this Agreement.

G.            Applicable Law.

The validity and interpretation of this
Agreement shall be governed by applicable federal law and the laws of the State
of California.

H.            12 U.S.C. § 1828(k).

Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. § 1828(k) or any regulations promulgated thereunder.

I.              Partial
Invalidity.

If any term, provision, covenant, or condition
of this Agreement is determined by an arbitrator or a court to be invalid,
void, or unenforceable, such determination shall not render any other term,
provision, covenant, or condition invalid, void, or unenforceable,

 7
 

and the Agreement shall remain in full force
and effect notwithstanding such partial invalidity.

J.             Not a Contract of
Employment.

This Agreement shall not be deemed to
constitute a contract of employment between the Parties, nor shall any
provision hereof restrict the right of the Bank to discharge the Executive, or
restrict the right of the Executive to terminate employment. At all times, the
Executive’s employment shall remain at-will.

K.            Effective Date.

The effective date of this Agreement shall be
March 1, 2007.

L.             Present Value.

All present value calculations under this
Agreement shall be based on the following discount rate:

	
  Discount Rate:

  	
   

  	
  The discount rate as used in the FASB 87
  calculations for this Agreement.

  

 

M.           Contradiction in
Terms of Agreement and Exhibits.

If there is a contradiction in the terms of
this Agreement and the exhibits attached hereto with respect to the benefits
payable, then the terms set forth in the Agreement shall control.

X.            ERISA PROVISIONS

A.            Named Fiduciary and
Plan Administrator.

The “Named Fiduciary and Plan
Administrator” of this Agreement shall be Central Valley Community
Bank.  The Board, in its discretion, may
appoint one or more individuals to serve in this capacity.  As Named Fiduciary and Plan Administrator,
the Bank shall be responsible for the management, control and administration of
the Agreement.  The Named Fiduciary may
delegate to others certain aspects of the management and operation, including
the employment of advisors and the delegation of ministerial duties to
qualified individuals.

B.            Claims Procedure
and Arbitration.

In the event a dispute arises with respect to
benefits under this Agreement and the disputed benefits are not paid, then the
Executive or his beneficiaries may make a written claim to the Named Fiduciary
and Plan Administrator named above within sixty (60) days from the date
payments are refused.  The Named
Fiduciary and Plan Administrator shall review the written claim and, if the
claim is denied in whole or in part, they shall respond in writing within sixty
(60) days of receipt of such claim, stating specific reasons

 8
 

for the denial, and providing references to
the provisions of this Agreement upon which the denial is based and any
additional material or information necessary to perfect the claim.  Such written notice shall further indicate
the additional steps to be taken by claimant(s) if a further review of the
claim is desired.  A claim shall be
deemed denied if the Named Fiduciary and Plan Administrator fail to take any
action within the prescribed sixty (60) day period.

If claimants desire a second review they shall
notify the Named Fiduciary and Plan Administrator in writing within sixty (60)
days of the initial claim denial. 
Claimants may review this Agreement or any documents relating thereto
and submit any written issues and comments that may be appropriate.  In their sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide a written
decision within sixty (60) days of receipt of such claim.  This decision shall likewise state the
specific reasons for the decision and shall include reference to specific
provisions of this Agreement upon which the decision is based.

If claimants continue to dispute the benefit
denial based upon completed performance of this Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may submit the
dispute to an Arbitrator for final arbitration. 
The Arbitrator shall be selected by mutual agreement of the Bank and the
claimants.  The Arbitrator shall operate
under any generally recognized set of arbitration rules.  The Parties agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the decision
of such Arbitrator with respect to any controversy properly submitted to it for
determination.

Where a dispute arises as to benefits
forfeited as a result of the Bank’s discharge of the Executive For Cause, such
dispute shall likewise be submitted to arbitration as described above and the
Parties agree to be bound by the Arbitrator’s decision.

XI.                                TERMINATION OR MODIFICATION OF AGREEMENT BY REASON
OF CHANGES IN THE LAW, RULES OR REGULATIONS

The Bank is
entering into this Agreement upon the assumption that certain existing tax
laws, rules and regulations will continue in effect in their current form. If
any such assumptions should change and the change has a detrimental effect on
this Agreement, then the Bank reserves the right to terminate or modify this
Agreement.  This paragraph shall become
null and void effective immediately upon a Change In Control.

XII.         EXCESS PARACHUTE PAYMENTS

Notwithstanding
any provision of this Agreement to the contrary, if all or a portion of any
benefit payment under this Agreement, alone or together with any other
compensation or benefit, will be a non-deductible expense to the Bank by reason
of Code section 280G, the Bank may, in its sole discretion, reduce the benefits
payable under this Agreement as necessary to avoid the application of section
280G.  The Bank shall have the power to
reduce benefits payable under this Agreement to zero, if necessary.

 9
 

XIII.        COMPETITION AFTER TERMINATION OF EMPLOYMENT

The Bank shall not
pay any benefit under this Agreement if the Executive, without the prior
written consent of the Bank, engages in, becomes interested in, directly or
indirectly, as a sole proprietor, as a partner in a partnership, or as a
substantial shareholder in a corporation, or becomes associated with, in the
capacity of employee, director, officer, principal, agent, trustee or in any
other capacity whatsoever, any enterprise conducted in the trading area (a 50
mile radius) of the business of the Bank, which enterprise is, or may deemed to
be, competitive with any business carried on by the Bank as of the date of
termination of the Executive’s employment or his Retirement. This section shall
not apply following a Change In Control.

XIV.        PROHIBITION AGAINST ACCELERATION

Notwithstanding anything
to the contrary, neither the time nor scheduling of payments under this Agreement
may be accelerated unless such acceleration is permissible under Code Section
409A, other applicable law and the terms of this Agreement.

IN WITNESS WHEREOF, the Parties acknowledge that each has
carefully read this Agreement and executed the original on 3/1/07 and
that, upon execution, each has received a conforming copy.

	
  BANK:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
  CENTRAL VALLEY
  COMMUNITY BANK

  	
   

  	
  GARY QUISENBERRY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel Doyle

  	
   

  	
   

  	
  /s/ Gary Quisenberry

  	
   

  
	
  Name: Daniel
  Doyle

  	
   

  	
  Gary Quisenberry

  
	
  Title: President
  and Chief Executive Officer

  	
   

  	
   

  
						

 

 10
 

EXHIBIT A

	
  Executive Salary Continuation Plan

  	
   

  	
  Plan
  Year Reporting

  
	
  Schedule
  A

  	
   

  	
   

  

 

Gary David Quisenberry

Birth Date: 5/26/1951

Plan Anniversary Date: 1/1/2008

Normal Retirement: 12/31/2015, Age 64

Payments:
Monthly for 15 years

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Early Involuntary

  Termination

  	
   

  	
  Early Retirement

  5/26/2011

  	
   

  	
  Disability

  	
   

  	
  Change in Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Lump Sum Benefit

  	
   

  	
  Annual Benefit

  	
   

  	
  Annual Benefit

  	
   

  	
  Lump Sum Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amount Payable at

  	
   

  	
  Amount Payable at

  	
   

  	
  Amount Payable at

  	
   

  	
  Amount Payable at

  	
   

  
	
  Values

  	
   

  	
  Discount

  	
   

  	
  Benefit

  	
   

  	
  Accrual

  	
   

  	
  Normal Retirement Age

  	
   

  	
  Separation from Service

  	
   

  	
  Separation from Service

  	
   

  	
  Separation from Service

  	
   

  
	
  as of

  	
   

  	
  Rate

  	
   

  	
  Level

  	
   

  	
  Balance

  	
   

  	
  Vesting

  	
   

  	
  Based on

  	
   

  	
  Vesting

  	
   

  	
  Based on

  	
   

  	
  Vesting

  	
   

  	
  Based on Benefit

  	
   

  	
  Vesting

  	
   

  	
  Based on Accrual

  	
   

  
	
   

  	
   

  	
  (1)

  	
   

  	
  (2)

  	
   

  	
  (3)

  	
   

  	
  (4)

  	
   

  	
  (5)

  	
   

  	
  (6)

  	
   

  	
  (7)

  	
   

  	
  (8)

  	
   

  	
  (9)

  	
   

  	
  (10)

  	
   

  	
  (11)

  	
   

  
	
  Dec 2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  176,470

  	
   

  	
  100

  	
  %

  	
  59,544

  	
   

  	
  0

  	
  %

  	
  0

  	
   

  	
  10

  	
  %

  	
  5,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  12/31/2006 Accrual Balance Rollover

  	
   

  
	
  Dec 2007(1)

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  208,435

  	
   

  	
  100

  	
  %

  	
  119,088

  	
   

  	
  0

  	
  %

  	
  0

  	
   

  	
  20

  	
  %

  	
  10,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2008

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  242,371

  	
   

  	
  100

  	
  %

  	
  178,631

  	
   

  	
  0

  	
  %

  	
  0

  	
   

  	
  30

  	
  %

  	
  15,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2009

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  278,400

  	
   

  	
  100

  	
  %

  	
  238,175

  	
   

  	
  0

  	
  %

  	
  0

  	
   

  	
  40

  	
  %

  	
  20,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2010

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  316,652

  	
   

  	
  100

  	
  %

  	
  297,719

  	
   

  	
  0

  	
  %

  	
  0

  	
   

  	
  50

  	
  %

  	
  25,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2011

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  357,263

  	
   

  	
  100

  	
  %

  	
  357,263

  	
   

  	
  100

  	
  %

  	
  30,000

  	
   

  	
  60

  	
  %

  	
  30,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2012

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  416,807

  	
   

  	
  100

  	
  %

  	
  416,807

  	
   

  	
  100

  	
  %

  	
  35,000

  	
   

  	
  70

  	
  %

  	
  35,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2013

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  476,351

  	
   

  	
  100

  	
  %

  	
  476,350

  	
   

  	
  100

  	
  %

  	
  40,000

  	
   

  	
  80

  	
  %

  	
  40,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2014

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  535,895

  	
   

  	
  100

  	
  %

  	
  535,894

  	
   

  	
  100

  	
  %

  	
  45,000

  	
   

  	
  90

  	
  %

  	
  45,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  
	
  Dec 2015

  	
   

  	
  6.00

  	
  %

  	
  50,000

  	
   

  	
  595,438

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  	
  100

  	
  %

  	
  50,000

  	
   

  	
  100

  	
  %

  	
  50,000

  	
   

  	
  100

  	
  %

  	
  595,438

  	
   

  

 

December
31, 2015 Retirement; January 1, 2016 First Payment Date

(1)
The first line reflects 12 months of data, January 2007 to December 2007

 

(2)
The benefit mount includes a 3.00% guaranteed inflator in the payout period.

 

(3) Beginning on the first anniversary during the applicable installment
period and each anniversary thereafter, the annual benefit amount shall increase
by 3.00%.  The annual benefit amount will
be distributed in 12 equal monthly payments for a total of 18

 

1).  The Early Involuntary
Termination Benefit above is the Present Value of $50,000 payable in 180
monthly installments, reduced by 10% for each year prior to December 31,
2015.  The benefit is payable on the date
the Executive attains age (65).

 

*IF THERE IS A
CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A AND THE AGREEMENT,
THE TERMS AND PROVISIONS OF THE AGREEMENT SHALL PREVAIL.  IF A TRIGGERING EVENT OCCURS, REFER TO THE
AGREEMENT TO DETERMINE THE ACTUAL BENEFIT AMOUNT BASED ON THE DATE OF THE
EVENT.

 11EXHIBIT 10.3

TUCOWS INC.

2006 EQUITY
COMPENSATION PLAN

1.                Purpose.

The purpose of the
2006 Equity Compensation Plan (the “Plan”) is to provide eligible persons with
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in Tucows Inc. (the “Company”). The Company believes that
the Plan will encourage the participants to contribute materially to the growth
of the Company, thereby benefitting the Company’s shareholders, and will align
the economic interests of the participants with those of the shareholders.

2.                Definitions.

Whenever used in this Plan, the following terms will
have the respective meanings set forth below:

(a)          “Board”
means the Company’s Board of Directors.

(b)         “Change of
Control” shall be deemed to have occurred if:

(i)          Any “person” (as such term is used in sections 13(d) and
14(d) of the Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing more than 40% of the voting power of the then outstanding
securities of the Company; provided that a Change of Control shall not be
deemed to occur as a result of a transaction in which the Company becomes a
subsidiary of another corporation and in which the shareholders of the Company,
immediately prior to the transaction, will beneficially own, immediately after
the transaction, shares entitling such shareholders to more than 40% of all
votes to which all shareholders of the parent corporation would be entitled in
the election of directors;

(ii)        The consummation of (i) a merger or
consolidation of the Company with another corporation where the shareholders of
the Company, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 40% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors, (ii) a sale or other disposition of all or substantially all of
the assets of the Company, or (iii) a liquidation or dissolution of the
Company; or

(iii)       After the date on which this Plan is
approved by the shareholders of the Company, directors are elected such that a
majority of the members of the Board shall have been members of the Board for
less than two years, unless the election or nomination for election of each new
director who was not a director at the beginning of such two-year period
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.

(c)          “Code”
means the Internal Revenue Code of 1986, as amended.

(d)         “Company”
means Tucows Inc. and any successor corporation.

(e)          “Company
Stock” means the common stock of the Company.

(f)    “Consultant” means a consultant or advisor of the Company or
a subsidiary of the Company, provided that the Company can issue securities to
such consultant or advisor under the Plan pursuant to exemptions from
prospectus and registration requirements of applicable securities laws.

(g)   “Disability” means the inability of the Participant to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.

 1
 

(h)   “Dividend Equivalent” means an amount determined by
multiplying the number of shares of Company Stock subject to a Grant by the
per-share cash dividend, or the per-share fair market value (as determined by
the Plan Administrator) of any dividend in consideration other than cash, paid
by the Company on its Company Stock.

(i)    “Employee” means an employee of the Employer (including an
officer or director who is also an employee).

(j)    “Employer” means the Company and its subsidiaries.

(k)   “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

(l)    “Exercise Price” means the per share price at which shares
of Company Stock may be purchased under an Option, as designated by the Plan
Administrator.

(m)  “Fair Market Value” of Company Stock means (i) if the
Company Stock is traded on a securities exchange, the Nasdaq National Market or
AIM, the last reported sale price of Company Stock at the close of regular
hours trading on the relevant date on the exchange or market determined by the
Plan Administrator to be the primary market for the Company Stock, or (if there
were no trades on that date) the latest preceding date upon which a sale was
reported, (ii) if the Company Stock is not traded on such exchange or market,
the mean between the last reported “bid” and “asked” prices of Company Stock at
the close of regular hours trading on the relevant date, as reported on Nasdaq
or, if not so reported, as reported by the National Daily Quotation Bureau, Inc.
or as reported in a customary financial reporting service, as applicable and as
the Plan Administrator determines, or (iii) if the Company Stock is not
publicly traded or, if publicly traded, is not subject to reported transactions
or “bid” or “asked” quotations as set forth above, the Fair Market Value per
share shall be as determined by the Plan Administrator.

(n)   “Grant” means an Option, Restricted Stock Unit, Stock Award,
Performance Unit, SAR, Dividend Equivalent or Other Stock-Based Award granted
under the Plan.

(o)   “Grant Agreement” means the written instrument that sets
forth the terms and conditions of a Grant, including all amendments thereto.

(p)   “Incentive Stock Option” means an Option that is intended to
meet the requirements of an incentive stock option under section 422 of the
Code.

(q)   “Insider” means

(i)          every director or senior officer of the Company;

(ii)        every director or senior officer of a
company that is itself an insider or subsidiary of the Company; and

(iii)       any person or company who beneficially
owns, directly or indirectly, voting securities of the Company or who exercises
control or direction over voting securities of the Company or a combination of
both carrying more than 10% of the voting rights attached to all outstanding
voting securities of the Company other than voting securities held by the
person or company as the underwriter in the course of a distribution.

(r)           “Non-Employee
Director” means a member of the Board who is not an Employee.

(s)    “Nonqualified Stock Option” means an Option that is not
intended to meet the requirements of an incentive stock option under section
422 of the Code.

(t)            “Option” means
an option to purchase shares of Company Stock, as described in Section 7.

 2
 

(u)         “Other
Stock-Based Award” means any Grant based on, measured by or payable
in Company Stock (other than a Grant described in Sections 7, 9, 10, 11 or 12(a) of
the Plan), as described in Section 12.

(v)   “Participant” means an Employee, Non-Employee Director or
Consultant designated by the Plan Administrator to participate in the Plan.

(w)  “Performance Unit” means an award of a performance unit as
described in Section 11.

(x)   “Plan” means this Tucows Inc. 2006 Equity Compensation Plan,
as in effect from time to time.

(y)   Plan Administrator” means the particular entity, whether the
Compensation Committee, the Board or other committees or delegate thereof (in
the event the Board or Compensation Committee has delegated its authority
pursuant to Section 3), which is authorized to administer the Plan with
respect to one or more classes of eligible persons, to the extent such entity
is carrying out its administrative functions under the Plan with respect to the
persons then subject to its jurisdiction.

(z)   “Restricted Stock Unit” means an award of a phantom unit
representing a share of Company Stock as described in Section 9.

(aa)    “SAR”
means a stock appreciation right as described in Section 11.

(bb) “Section 16 Insider” means an officer or director of
the Company subject to the short-swing profit liability provisions of Section 16
of the Exchange Act.

(cc) “Stock Award” means an award of Company Stock as described
in Section 9.

(dd) “10% Shareholder” shall mean the owner of stock (as
determined under Code Section 424(d)) possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
(or any parent or subsidiary).

(ee) “Withholding Taxes” shall mean all applicable income and
employment taxes, social insurance, payroll taxes, contributions, payment on
account obligations or other payments required to be withheld by the Employer
in connection with a Grant.

3.                Administration.

(a)   The Plan
shall be administered by the Compensation Committee of the Board with respect
to grants to Section 16 Insiders. Administration of the Plan with respect
to all other eligible persons may, at the Board’s discretion, be vested in the
Compensation Committee or another committee appointed by the Board, or the
Board may retain the power to administer the Plan with respect to such persons.
However, any discretionary awards to members of the Compensation Committee must
be authorized and approved by a disinterested majority of the Board. Administration
of the formula option grants to Non-Employee Directors under Section 8
shall be self-executing in accordance with the terms of that program, and no
Plan Administrator shall exercise any discretionary functions with respect to
any award under that program.

(b)   The Board
or Committee may delegate to one or more officers of the Company designated by
the Board or the Compensation Committee, the authority to administer Grants to
eligible persons other than directors or officers of the Company within
specified guidelines established by the Board or the Compensation Committee and
subject to applicable law.

(c)   The Plan
Administrator shall have the sole authority to (i) determine the
Participants to whom Grants shall be made under the Plan, (ii) determine
the type, size and terms and conditions of the Grants to be made to each such
Participant, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or vesting period, including the criteria
for exercisability or vesting and the acceleration of exercisability or
vesting, (iv) amend the terms and conditions of any previously issued 

 3
 

Grant, subject to the
provisions of Section 19 below, and (v) deal with any other matters
arising under the Plan.

(d)   The Plan
Administrator shall have full power and express discretionary authority to
administer and interpret the Plan, to make factual determinations and to adopt
or amend such rules, regulations, agreements and instruments for implementing
the Plan and for the conduct of its business as it deems necessary or
advisable, in its sole discretion. The Plan Administrator’s interpretations of
the Plan and all determinations made by the Plan Administrator pursuant to the
powers vested in it hereunder shall be conclusive and binding on all persons
having any interest in the Plan or in any awards granted hereunder. All powers
of the Plan Administrator shall be executed in its sole discretion, in the best
interest of the Company, not as a fiduciary, and in keeping with the objectives
of the Plan and need not be uniform as to similarly situated Participants.

4.     Grants.   Grants
under the Plan may consist of Options as described in Section 7,
Restricted Stock Units as described in Section 9, Stock Awards as
described in Section 10, Performance Units as described in Section 11
and SARs or Other Stock-Based Awards as described in Section 12. All
Grants shall be subject to such terms and conditions as the Plan Administrator
deems appropriate (but subject to the terms hereof) and as are specified in
writing by the Plan Administrator to the Participant in the Grant Agreement.

5.     Shares Subject to the Plan.

(a)   Shares
Authorized. The total aggregate number of shares of Company Stock that may
be issued under the Plan is 5,000,000 shares, subject to adjustment as
described in subsection (e) below.

(b)   Source
of Shares; Share Counting. Shares issued under the Plan may be authorized
but unissued shares of Company Stock or reacquired shares of Company Stock,
including shares purchased by the Company on the open market for purposes of
the Plan, subject to compliance with applicable law. If and to the extent
outstanding Grants under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered prior to the issuance of shares of Company
Stock, the shares reserved for such Grants shall again be available for
issuance under the Plan. Unvested shares issued under the Plan and subsequently
cancelled or repurchased by the Company pursuant to the Company’s repurchase
rights under the Plan at a price per share not greater than the original issue
price paid per share (subject to compliance with applicable securities
legislation) shall again be available for issuance under the Plan. In addition,
should the Exercise Price of an Option under the Plan be paid with shares of
Company Stock, the authorized reserve of Company Stock under the Plan shall be
reduced only by the net number of shares issued under the exercised Option. Should
shares of Company Stock otherwise issuable under the Plan be withheld by the
Company in satisfaction of the withholding taxes incurred in connection with the
issuance, exercise or vesting of a Grant under the Plan, the number of shares
of Company Stock available for issuance under the Plan shall be reduced only by
the net number of shares issued with respect to that Grant. If SARs are
exercised, only the net number of shares actually issued upon exercise of the
SARs shall be considered issued under the Plan for purposes of this subsection
(b). To the extent that Grants are paid in cash, and not in shares of Company
Stock, any shares previously reserved for issuance pursuant to such Grants
shall again be available for purposes of the Plan.

(c)   Individual
Limits. The maximum aggregate number of shares of Company Stock with
respect to which all Grants may be made under the Plan to any individual during
any calendar year shall be 500,000 shares, subject to adjustment as described
in subsection (e) below.

(d)   Insider
Limits. The number of shares of Company stock issuable to all Participants
who are Insiders in the aggregate, under this Plan and all other “security based
compensation arrangements” (within the meaning of the rules of the Toronto
Stock Exchange) of the Company, may not exceed ten percent (10%) of the
outstanding shares of Company Stock and the number of shares of Company Stock 

 4
 

issued to all Participants
who are Insiders in the aggregate within any one (1) year period, under
the Plan and all other security based compensation arrangements of the Company,
may not exceed ten percent (10%) of the issued and outstanding shares of
Company Stock.

(e)   Adjustments.
In the event of a stock dividend, spinoff, extraordinary distribution (whether
in cash, securities or other property), recapitalization, reclassification,
stock split, or combination or exchange of shares, or any other event affecting
the outstanding Company Stock as a class without the Company’s receipt of
consideration, equitable adjustments shall be made to the maximum number and/or
class of securities issuable under the Plan, the maximum number and/or class of
securities for which any individual may receive Grants in any year, the number
and/or class of securities for which option grants are subsequently to be made
to Non-Employee Directors under Section 8, the number and/or class of
securities covered by outstanding Grants, and the price per share or the
applicable market value of such Grants. The adjustments shall be made by the
Plan Administrator in such manner as the Plan Administrator deems appropriate
in order to prevent the dilution or enlargement of benefits hereunder and such
adjustments shall be final, binding and conclusive.

6.     Eligibility for
Participation.

All Employees,
including Employees who are officers or members of the Board, all Non-Employee
Directors and all Consultants shall be eligible to participate in the Plan.

7.     Options.

(a)   General
Requirements. The Plan Administrator may grant Options to an eligible person
upon such terms and conditions as the Plan Administrator deems appropriate
under this Section 7. The Plan Administrator shall determine the number of
shares of Company Stock that will be subject to each Grant of Options under the
Plan. 

(b)   Type of
Option, Price and Term.

(i)          The Plan Administrator may grant Incentive Stock Options or
Nonqualified Stock Options or any combination of the two, all in accordance
with the terms and conditions set forth herein. Incentive Stock Options shall
be subject to the provisions of subsection (f) below.

(ii)        The Exercise Price of Company Stock
subject to an Option shall be determined by the Plan Administrator and may be
equal to or greater than the Fair Market Value of a share of Company Stock on
the date the Option is granted.

(iii)       The Plan Administrator shall determine
the term of each Option, which shall not exceed seven years from the date of
grant.

(c)   Exercisability of Options.

(i)          Options shall become exercisable in accordance with such
terms and conditions as may be determined by the Plan Administrator and
specified in the Grant Agreement. The Plan Administrator may accelerate the
exercisability of any or all outstanding Options at any time for any reason.

(ii)        Subject to compliance with applicable
law, the Plan Administrator may provide in a Grant Agreement that the
Participant may elect to exercise part or all of an Option before it otherwise
has become exercisable. Any shares so purchased shall be restricted shares and
shall be subject to a repurchase right in favor of the Company during a
specified restriction period (subject to compliance with applicable law) and
such other restrictions as the Plan Administrator deems appropriate.

(iii)       Options granted to U.S. persons who are
non-exempt employees under the Fair Labor Standards Act of 1938, as
amended, may not be exercisable for at least six months after the date of grant
(except that such Options may become exercisable, as determined by the Plan
Administrator, upon the 

 5
 

Participant’s death,
Disability or retirement, or upon a Change of Control or other circumstances
permitted by applicable regulations).

(d)   Termination
of Employment or Service. Except as otherwise provided in the Grant
Agreement, in the event of the termination of a Participant’s employment or
service, for any reason (whether or not for cause) other an as a result of
death or Disability of the Participant, the Participant may exercise all of the
Participant’s options which have vested and are exercisable on the date of
resignation or notice of termination of the Participant’s employment or service
(the “Termination Date”), as the case may be, until the earlier of the expiry
date(s) of the Options and the date that is three (3) months from the
Termination Date, or such other date as may be determined by the Plan
Administrator, and approved by the stock exchange on which the shares of the
Company trade. In the event of the termination of a Participant’s employment or
service as a result of the death or Disability of the Participant, all of the
Participant’s Options which have vested and are exercisable as at the date of
death or Disability (such date, also the “Termination Date”) shall be
exercisable until the earlier of the expiry date(s) of the Options and the
date that is one (1) year from the Termination Date, or such other date as
may be determined by the Plan Administrator, and approved by the stock exchange
on which the shares of the Company trade to the extent required by the rules of
such stock exchange. Except as otherwise determined by the Plan Administrator,
in the event of the termination of the Participant’s employment or service for
any reason as contemplated in this Section 7(d), all of the Participant’s
Options which have not vested on the Termination Date shall expire and
terminate and be of no further force and effect, as of that date.

(e)   Payment
of Exercise Price. The Participant shall pay the Exercise Price for the
Option (i) in cash, (ii) if permitted by the Plan Administrator and
subject to compliance with applicable law, by delivering shares of Company
Stock owned by the Participant and having a Fair Market Value on the date of
exercise equal to the Exercise Price or by attestation to ownership of shares
of Company Stock having an aggregate Fair Market Value on the date of exercise
equal to the Exercise Price, or (iii) by such other method as the Plan
Administrator may approve. Shares of Company Stock used to exercise an Option
shall have been held by the Participant for the requisite period of time to
avoid adverse accounting consequences to the Company with respect to the Option.
Payment for the shares pursuant to the Option, and any required Withholding
Taxes, must be received by the time specified by the Plan Administrator
depending on the type of payment being made.

(f)    Limits
on Incentive Stock Options.

(i)          Incentive Stock Options may only be granted to Employees.

(ii)        Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of
the grant with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary, as defined in
section 424 of the Code, exceeds $100,000, then the Option, as to the excess,
shall be treated as a Nonqualified Stock Option.

(iii)       If any Employee to whom an Incentive
Option is granted is a 10% Shareholder, then the exercise price per share shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.

(g)   Shareholder
Rights. The holder of an Option shall have no shareholder rights with
respect to the shares subject to the Option until such person shall have
exercised the Option, paid the Exercise Price and become a holder of record of
the purchased shares.

 6
 

8.     Formula Option Grants to Non-Employee Directors; Grants to Committee Members.

A Non-Employee
Director or a Non-Employee Director who is a member of a committee of the Board
(a “Committee Member”) shall be entitled to receive Nonqualified Stock Options
in accordance with this Section 8.

(a)   Initial
Grant. Each Non-Employee Director who first becomes a member of the Board
on or after the effective date of this Plan (as specified in Section 19),
will receive a grant of a Nonqualified Stock Option to purchase 15,000 shares
of Company Stock immediately upon the date he or she becomes a member of the
Board.

Each Committee Member on the effective date of this
Plan (as specified in Section 18) will receive a grant of a Nonqualified
Stock Option to purchase 10,000 shares of Company Stock with respect to each
committee such Committee Member sits on as of such date. Each Committee Member
who first becomes a Committee Member after the effective date of this Plan (as
specified in Section 18), will receive a grant of a Nonqualified Stock
Option to purchase 10,000 shares of Company Stock with respect to each
committee such Committee Member sits on immediately upon the date he or she
becomes a Committee Member.

(b)   Annual
Grants. On each date that the Company holds its annual meeting of
shareholders, commencing with the 2006 calendar year, each Non-Employee
Director in office both immediately before and after the annual election of directors
will receive a grant of a Nonqualified Stock Option to purchase 5,000 shares of
Company Stock. The date of grant of such annual Grants shall be the date of
such annual meeting of shareholders.

On each date that
the Company holds its annual meeting of shareholders, commencing with the 2006
calendar year, each Committee Member in office both immediately before and
after the annual election of directors will receive a grant of a Nonqualified
Stock Option to purchase 5,000 shares of Company Stock with respect to each
committee such Committee Member sits on as of such date. The date of grant of
such annual Grants shall be the date of such annual meeting of shareholders.

(c)   Option
Price. The exercise price per share of Company Stock subject to an Option
granted under this Section 8 shall be equal to the Fair Market Value of a
share of Company Stock on the date of grant.

(d)   Option
Term. The term of each Option granted pursuant to this Section 8 shall
be five (5) years.

(e)   Exercisability.
Options granted under this Section 8 shall be fully and immediately
exercisable upon the date of grant.

(f)    Applicability
of Plan  Provisions. Except as otherwise
provided in, and not inconsistent with, this Section 8, the Nonqualified
Stock Options granted to Non-Employee Directors and Committee Members shall be
subject to the provisions of this Plan applicable to Nonqualified Stock Options
granted to other Participants.

9.     Restricted
Stock Units.

(a)   General  Requirements. The Plan Administrator may grant
Restricted Stock Units to an eligible person upon such terms and conditions as
the Plan Administrator deems appropriate under this Section 9. Each
Restricted Stock Unit shall represent the right of the Participant to receive a
share of Company Stock or an amount based on the value of a share of Company
Stock. The Plan Administrator shall determine the number of Restricted Stock
Units to be granted and the requirements applicable to such Restricted Stock
Units. All Restricted Stock Units shall be credited to bookkeeping accounts on
the Company’s records for purposes of the Plan.

(b)   Terms of
Restricted Stock Units. The Plan Administrator may grant Restricted Stock
Units that are payable on terms and conditions determined by the Plan
Administrator, which may include payment based on achievement of performance
goals or satisfaction of specified service requirements. Restricted 

 7
 

Stock Units may be paid at
the end of a specified vesting or performance period, or payment may be
deferred to a date authorized by the Plan Administrator.

(c)   Payment
With Respect to Stock Units. Payment with respect to Restricted Stock Units
shall be made in cash, in Company Stock, or in a combination of the two, as
determined by the Plan Administrator.

(d)   Requirement
of Employment or Service. The Plan Administrator shall determine in the
Grant Agreement under what circumstances a Participant may retain Restricted
Stock Units after termination of the Participant’s employment or service, and
the circumstances under which Restricted Stock Units may be forfeited.

(e)   Shareholder
Rights. The Participant shall not have any shareholder rights with respect
to the shares of Company Stock subject to a Restricted Stock Unit until that
award vests and the shares of Company Stock are actually issued thereunder.

10.   Stock
Awards.

(a)   General
Requirements. The Plan Administrator may issue shares of Company Stock to
an eligible person under a Stock Award upon such terms and conditions as the
Plan Administrator deems appropriate under this Section 10 subject to the
requirements of applicable law. Shares of Company Stock issued pursuant to
Stock Awards may be issued for cash consideration or for no cash consideration,
and subject to such vesting restrictions, as determined by the Plan
Administrator. The Plan Administrator may establish vesting conditions on Stock
Awards which shall lapse over a period of time or according to such other
criteria as the Plan Administrator deems appropriate, including the achievement
of specific performance goals. The Plan Administrator shall determine the
number of shares of Company Stock to be issued pursuant to a Stock Award.

(b)   Requirement
of Employment or Service. The Plan Administrator shall determine in the Grant
Agreement under what circumstances a Participant may retain Stock Awards after
termination of the Participant’s employment or service, and the circumstances
under which Stock Awards may be forfeited.

(c)   Restrictions
on Transfer. A Participant may not sell, assign, transfer, pledge or
otherwise dispose of an unvested Stock Award except upon death as described in Section 15(a).
Unvested shares issued pursuant to Stock Awards may, in the Plan Administrator’s
discretion, be held in escrow by the Company until the Participant’s interest
in such shares vests or may be issued directly to the Participant with
restrictive legends on the certificates evidencing those unvested shares.

(d)   Shareholder
Rights. Subject to the restrictions on transfer under Section 10(c) above,
the Participant shall have full shareholder rights with respect to any shares
of Company Stock issued to the Participant under a Stock Award, whether or not
the Participant’s interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares.

 8

11.   Performance Units.

(a)   General
Requirements. The Plan Administrator may grant Performance Units to an
eligible person upon such terms and conditions as the Plan Administrator deems
appropriate under this Section 11. Each Performance Unit shall represent
the right of a Participant to receive an amount equal to the value of the
Performance Unit, determined in the manner established by the Plan
Administrator at the time of grant.

(b)   Performance
Period. At the time of grant of each Performance Unit, the Plan
Administrator shall establish a performance period during which performance
shall be measured (“Performance Period”). There may be more than one grant in
existence at any one time, and Performance Periods may differ.

(c)   Performance
Goals. Prior to the beginning of a Performance Period, the Plan
Administrator shall establish in writing performance goals for the Company and
its various operating units (“Performance Goals”). The Performance Goals will
be comprised of specified levels of one or more performance criteria as the
Plan Administrator may deem appropriate such as: earnings per share, net
earnings, operating earnings, unit volume, net sales, market share, balance
sheet measurements, cash return on assets, shareholder return, or return on
capital. The Plan Administrator may disregard or offset the effect of any
special charges or gains or cumulative effect of a change in accounting in
determining the attainment of Performance Goals. Awards of Performance Units
may also be payable when Company performance, as measured by one or more of the
above criteria, as compared to peer companies, meets or exceeds an objective
target established by the Plan Administrator.

(d)   Performance
Measures. Performance Units shall be granted to a Participant contingent
upon the attainment of Performance Goals in accordance with Section 11(c).

(e)   Performance
Unit Value. Each Performance Unit shall have a maximum dollar value
established by the Committee at the time of the grant. Performance Units earned
will be determined by the Plan Administrator in respect of a Performance Period
in relation to the degree of attainment of Performance Goals. The measure of a
Performance Unit may, in the Plan Administrator’s discretion, be equal to the
Fair Market Value of a share of Company Stock.

(f)    Grant
Criteria. In determining the number of Performance Units to be granted to
any Participant, the Plan Administrator shall take into account the Participant’s
responsibility level, performance, potential, cash compensation level, other
incentive awards, and such other considerations as it deems appropriate.

(g)   Payment.
Following the end of a Performance Period, a Participant holding Performance
Units will be entitled to receive payment of an amount, not exceeding the
maximum value of the Performance Units, based on the achievement of the
Performance Goals for such Performance Period, as determined by the Plan
Administrator. Payment of Performance Units shall be made in cash, except that,
in the discretion of the Plan Administrator, Performance Units which are
measured using Company Stock may be paid in shares of Company Stock. Payment
shall be made in a lump sum or in installments and shall be subject to such
other terms and conditions as shall be determined by the Plan Administrator.

12.   Stock
Appreciation Rights and Other Stock-Based Awards.

(a)   SARs.
The Plan Administrator may grant SARs to an eligible person separately or in
tandem with an Option. The following provisions shall be applicable to SARs:

(i)    Base
Price. The Plan Administrator shall establish the base price of the SAR at
the time the SAR is granted. The base price of each SAR shall be equal to the
per share Exercise Price of the related Option or, if there is no related
Option, an amount that is at least equal to the Fair Market Value of a share of
Company Stock as of the date of grant of the SAR.

 9
 

(ii)   Tandem
SARs. The Plan Administrator may grant tandem SARs either at the time the
Option is granted or at any time thereafter while the Option remains
outstanding; provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the date of the grant of the Incentive Stock Option.
In the case of tandem SARs, the number of SARs granted to a Participant that
shall be exercisable during a specified period shall not exceed the number of
shares of Company Stock that the Participant may purchase upon the exercise of
the related Option during such period. Upon the exercise of an Option, the SARs
relating to the Company Stock covered by such Option shall terminate. Upon the
exercise of SARs, the related Option shall terminate to the extent of an equal
number of shares of Company Stock.

(iii)  Exercisability.
An SAR shall be exercisable during the period specified by the Plan
Administrator in the Grant Agreement and shall be subject to such vesting and
other restrictions as may be specified in the Grant Agreement. The Plan
Administrator may grant SARs that are subject to achievement of performance
goals or other conditions. The Plan Administrator may accelerate the exercisability
of any or all outstanding SARs at any time for any reason. The Plan
Administrator shall determine in the Grant Agreement under what circumstances
and during what periods a Participant may exercise an SAR after termination of
employment or service. A tandem SAR shall be exercisable only while the Option
to which it is related is exercisable.

(iv)  Grants
to Non-Exempt Employees. SARs granted to U.S. persons who are non-exempt
employees under the Fair Labor Standards Act of 1938, as amended, may not be
exercisable for at least six months after the date of grant (except that such
SARs may become exercisable, as determined by the Plan Administrator, upon the
Participant’s death, Disability or retirement, or upon a Change of Control or
other circumstances permitted by applicable regulations).

(v)    Settlement
of SARs. When a Participant exercises SARs, the Participant shall receive
in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised. The stock appreciation for an
SAR is the amount by which the Fair Market Value of the underlying Company
Stock on the date of exercise of the SAR exceeds the base amount of the SAR as
described in subsection (i).

(vi)  Form of
Payment. The Plan Administrator shall determine whether the stock
appreciation for an SAR shall be paid in the form of shares of Company Stock,
cash or a combination of the two. For purposes of calculating the number of
shares of Company Stock to be received, shares of Company Stock shall be valued
at their Fair Market Value on the date of exercise of the SAR. If shares of
Company Stock are to be received upon exercise of an SAR, cash shall be
delivered in lieu of any fractional share.

(b)   Other
Stock-Based Awards. The Plan Administrator may grant other awards not
specified in Sections 7, 9, 10, 11 or 12(a) above that are based on or
measured by Company Stock to eligible persons, on such terms and conditions as
the Plan Administrator deems appropriate. Other Stock-Based Awards may be
granted subject to achievement of performance goals or other conditions and may
be payable in Company Stock or cash, or in a combination of the two, as
determined by the Plan Administrator in the Grant Agreement.

13.   Dividend
Equivalents.

(a)   General
Requirements. When the Plan Administrator makes a Grant under the Plan, the
Plan Administrator may grant Dividend Equivalents in connection with the Grant,
under such terms and conditions as the Plan Administrator deems appropriate
under this Section 13. Dividend Equivalents may be paid to Participants
currently or may be deferred, as determined by the Plan Administrator. All
Dividend Equivalents that are not paid currently shall be credited to
bookkeeping accounts on the Company’s records for purposes of the Plan. Dividend
Equivalents may be accrued as a cash obligation, or 

 10
 

may be converted to
Restricted Stock Units for the Participant, and deferred Dividend Equivalents
may accrue interest, all as determined by the Plan Administrator. The Plan
Administrator may provide that Dividend Equivalents shall be payable based on
the achievement of specific performance goals.

(b)   Payment
with Respect to Dividend Equivalents. Dividend Equivalents may be payable
in cash or shares of Company Stock or in a combination of the two, as determined
by the Plan Administrator.

14.   Deferrals.

The Plan
Administrator may permit or require a Participant to defer receipt of the
payment of cash or the delivery of shares that would otherwise be due to the
Participant in connection with any Grant. The Plan Administrator shall
establish rules and procedures for any such deferrals, consistent with
applicable requirements of section 409A of the Code and applicable provisions
of the Income Tax Act (Canada).

15.   Withholding
of Taxes.

(a)   Required
Withholding. All Grants under the Plan shall be subject to satisfaction of
all applicable Withholding Taxes. The Company may require that the Participant
or other person receiving or exercising Grants pay to the Company the amount of
any Withholding Taxes that the Company is required to withhold with respect to
such Grants, or the Company may at its sole discretion and to the extent
permitted by law, deduct from other wages paid by the Company the amount of any
Withholding Taxes due with respect to such Grants.

(b)   Election
to Withhold Shares. If the Plan Administrator so permits, a Participant may
elect to satisfy the Withholding Taxes with respect to Grants paid in Company
Stock by having shares withheld, at the time such Grants become taxable, up to
an amount that does not exceed the minimum applicable withholding tax rate. The
election must be in a form and manner prescribed by the Plan Administrator.

16.   Transferability
of Grants.

(a)   Restrictions
on Transfer. Except as described below, only the Participant may exercise
rights under a Grant during the Participant’s lifetime, and a Participant may
not transfer those rights except by will or by the laws of descent and
distribution. When a Participant dies, the personal representative or other
person entitled to succeed to the rights of the Participant may exercise such
rights. Any such successor must furnish proof satisfactory to the Company of
his or her right to receive the Grant under the Participant’s will or under the
applicable laws of descent and distribution.

(b)   Transfer
of Nonqualified Stock Options to or for Family Members. Notwithstanding the
foregoing but subject to applicable securities legislation, the Plan
Administrator may provide, in a Grant Agreement, that a Participant may
transfer Nonqualified Stock Options to family members, or one or more trusts or
other entities for the benefit of or owned by family members, consistent with
the applicable securities laws, according to such terms as the Plan
Administrator may determine; provided that the Participant receives no
consideration for the transfer of an Option and the transferred Option shall
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer.

17.   Consequences
of a Change of Control.

In the event of a
Change of Control, the Plan Administrator may take any one or more of the
following actions with respect to all outstanding Grants, without the consent
of any Participant: (i) the Plan Administrator may determine that
outstanding Options and SARs shall become fully exercisable, and restrictions
on outstanding Stock Awards, Restricted Stock Units and Performance Units shall
lapse so that such grants shall become fully vested, as of the date of the
Change of Control or at such other time as the Plan Administrator determines, (ii) the
Plan Administrator may require that Participants surrender their outstanding
Options and SARs in exchange for one or more payments by the Company, in cash
or 

 11
 

Company
Stock as determined by the Plan Administrator, in an amount equal to the amount
by which the then Fair Market Value of the shares of Company Stock subject to
the Participant’s unexercised Options and SARs exceeds the Exercise Price (or
the Base Price), if any, payable in accordance with the same exercise or
vesting schedule applicable to those Grants and on such other terms as the Plan
Administrator determines, (iii) after giving Participants an opportunity
to exercise their outstanding Options and SARs, the Plan Administrator may
terminate any or all unexercised Options and SARs at such time as the Plan
Administrator deems appropriate, (iv) with respect to Participants holding
Restricted Stock Units, Performance Units, Other Stock-Based Awards or Dividend
Equivalents, the Plan Administrator may determine that such Participants shall
receive one or more payments in settlement of such Restricted Stock Units,
Performance Units, Other Stock-Based Awards or Dividend Equivalents, in such
amount and form and on such terms as may be determined by the Plan Administrator
(including payment in accordance with the same vesting schedule applicable to
those Grants), (v) the Plan Administrator may terminate all unvested
Restricted Stock Units, Performance Units, Other Stock-Based Awards or Dividend
Equivalent Rights and require the surrender of any unvested shares subject to
Stock Awards or (vi) the Plan Administrator may determine that Grants that
remain outstanding after the Change of Control shall be assumed by the
successor corporation or otherwise continued in effect. Such acceleration,
surrender, termination, settlement or assumption shall take place as of the
date of the Change of Control or such other date as the Plan Administrator may
specify.

(a)   Other
Transactions. The Plan Administrator may provide in a Grant Agreement that
a sale or other transaction involving a subsidiary or other business unit of
the Company shall be considered a Change of Control for purposes of a Grant, or
the Plan Administrator may establish other provisions that shall be applicable
in the event of a specified transaction.

18.   Requirements
for Issuance of Shares.

No Company Stock
shall be issued in connection with any Grant hereunder unless and until all
legal requirements applicable to the issuance of such Company Stock have been
complied with to the satisfaction of the Plan Administrator. The Plan
Administrator shall have the right to condition any Grant made to any
Participant hereunder on such Participant’s undertaking in writing to comply
with such restrictions on his or her subsequent disposition of such shares of
Company Stock as the Plan Administrator shall deem necessary or advisable, and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon. No Participant shall have any
right as a shareholder with respect to Company Stock covered by a Grant until
shares have been issued to the Participant.

19.   Effective
Date, Amendment and Termination of the Plan.

(a)   Effective
Date. The Plan shall become effective upon its adoption by the shareholders
at the 2006 Annual Shareholders Meeting.

(b)   Amendment.
The Board may amend or terminate the Plan at any time; provided, however, no
amendment or termination of this Plan shall, without the consent of the
Participant, materially impair any rights or obligations under any Grant
previously made to the Participant under the Plan, unless such right has been
reserved in the Plan or the Grant Agreement. In addition, amendments to the
Plan shall be subject to approval of the shareholders and regulatory
authorities to the extent required by applicable law or regulation or pursuant
to the rules or listing standards of any securities exchange (or the
Nasdaq National Market or AIM) on which the Company Stock is traded. For
greater specificity, the Board may make such amendments to the Plan as it deems
desirable or necessary, without the approval of the Company’s shareholders,
except any such amendment to:  (i) change
the maximum number of shares of Company Stock that may be issued under the
Plan, whether as a fixed number of shares or as a fixed 

 12
 

percentage of the number
of shares outstanding from time to time (other than to reflect an adjustment
pursuant to Section 5(e), unless
otherwise required by any securities exchange or market on which the shares of
the Company are listed); (ii) materially increase benefits to
Participants, including any change to permit a repricing or decrease the
exercise price of an Option; (iii) reduce the exercise price or purchase
price or extend the term of any Grant under the Plan which would benefit an
Insider; (iv) materially expand the class of participants eligible to
participate in the Plan; (v) expand the types of awards provided under the
Plan; or (vi) increase the limits on the number of shares of Company Stock
issuable to Participants who are Insiders, as set forth in section 5(d), and
any shareholder approval required in respect of an amendment to increase such
limits shall exclude the votes attaching to shares of Company Stock, if any,
held by Participants who are Insiders. Notwithstanding anything in the Plan to
the contrary but subject to this section 19(b), the Board may amend the Plan in
such manner as it deems appropriate in the event of a change in applicable law
or regulations.

(c)   Termination
of Plan. The Plan shall terminate on the day immediately preceding the
fourth anniversary of its Effective Date, unless the Plan is terminated earlier
by the Board or is extended by the Board with the approval of the shareholders.
The termination of the Plan shall not impair the power and authority of the
Plan Administrator with respect to an outstanding Grant.

20.   Miscellaneous.

(a)   Compliance
with Law. The Plan, the exercise of Options and SARs and the obligations of
the Company to issue or transfer shares of Company Stock under Grants shall be
subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to Section 16 Insiders,
it is the intent of the Company that the Plan and all transactions under the
Plan comply with all applicable provisions of Rule 16b-3 or its
successors under the Exchange Act. In addition, it is the intent of the Company
that Incentive Stock Options comply with the applicable provisions of section
422 of the Code, that Grants of “qualified performance-based compensation”
comply with the applicable provisions of section 162(m) of the Code and
that, to the extent applicable, Grants comply with the requirements of section
409A of the Code. To the extent that any legal requirement of section 16 of the
Exchange Act or section 422, 162(m) or 409A of the Code as set forth in
the Plan ceases to be required under section 16 of the Exchange Act or section
422, 162(m) or 409A of the Code, that Plan provision shall cease to apply.
The Plan Administrator may revoke any Grant if it is contrary to law or modify
a Grant to bring it into compliance with any valid and mandatory government
regulation. The Plan Administrator may also adopt rules regarding the
withholding of taxes on payments to Participants. The Plan Administrator may,
in its sole discretion, agree to limit its authority under this Section.

(b)   Enforceability.
The Plan shall be binding upon and enforceable against the Company and its
successors and assigns.

(c)   Funding
of the Plan; Limitation on Rights. This Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the payment of any Grants under this Plan.
Nothing contained in the Plan and no action taken pursuant hereto shall create
or be construed to create a fiduciary relationship between the Company and any
Participant or any other person. No Participant or any other person shall under
any circumstances acquire any property interest in any specific assets of the
Company. To the extent that any person acquires a right to receive payment from
the Company hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.

(d)   Participation
Voluntary. The participation of any Participant of the Plan is entirely
voluntary and not obligatory and shall not be interpreted as conferring any
rights or privileges, other than those rights and privileges expressly provided
in the Plan. In particular, participation in the Plan does not constitute a
condition of employment, appointment or engagement to provide services, or
constitute a commitment on the part of the Employer to continued employment,
appointment or engagement to provide services, and 

 13
 

neither the Plan nor any
Grant under the Plan shall be construed as granting a Participant a right to be
retained as an Employee, Non-Employee Director or Consultant or a claim or
right to any future Grants under the Plan. Neither the Plan nor any action
taken hereunder shall interfere with the right of the Employer to terminate the
employment, appointment or provision of services of such Participant at any
time. The payment of any sum of money in cash in lieu of notice of termination
of employment, appointment or provision of services shall not be considered as
extending the period of employment, appointment or the provision of services
for the purposes of the Plan.

(e)   No
Fractional Shares. No fractional shares of Company Stock shall be issued or
delivered pursuant to the Plan or any Grant. The Plan Administrator shall
determine whether cash, other awards or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

(f)    Employees
Resident Outside the United States. With respect to Participants who are
resident in countries other than the United States, the Plan Administrator may
make Grants on such terms and conditions as the Plan Administrator deems
appropriate to comply with the laws of the applicable countries, and the Plan
Administrator may create such procedures, addenda and subplans and make such
modifications as may be necessary or advisable to comply with such laws.

(g)   Governing
Law. The validity, construction, interpretation and effect of the Plan and
Grant Agreements issued under the Plan shall be governed and construed by and
determined in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the conflict of laws provisions thereof.

 14

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