Document:

<PAGE>

                                                                 Exhibit 10.3(f)

                      EIGHTH AMENDMENT TO CREDIT AGREEMENT

          THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment") dated and
effective as of February 20, 2004, is made by and among FREEMARKETS, INC., a
Delaware corporation (the "Borrower"), the Banks (as hereinafter defined),
SILICON VALLEY BANK, individually and in its capacity as Syndication Agent (the
"Syndication Agent"), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
administrative agent for the Banks (hereinafter referred to in such capacity as
the "Agent").

                              W I T N E S S E T H:

          WHEREAS, reference is made to that certain Credit Agreement, dated as
of November 3, 2000, by and among Borrower, the Banks from time to time party
thereto, the Syndication Agent, and the Agent, as amended by a First Amendment
thereto dated as of December 8, 2000, a Second Amendment thereto dated as of
February 7, 2001, a Third Amendment thereto dated as of October 31, 2001, a
Fourth Amendment thereto dated as of October 10, 2002, a Fifth Amendment thereto
dated as of December 26, 2002, a Sixth Amendment thereto dated as of February
28, 2003, and a Seventh Amendment thereto dated as of December 23, 2003 (as so
amended, the "Credit Agreement"); and

          WHEREAS, the parties hereto desire to amend certain terms of the
Credit Agreement as hereinafter provided.

          NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:

          1.   Definitions.

          Capitalized terms used herein unless otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement as amended by this
Amendment.

          2.   Amendment of Credit Agreement.

               (a)  The following defined term and the definition therefor is
hereby added to Section 1.1 [Certain Definitions.] of the Credit Agreement and
is inserted in correct alphabetical order:

                    "Ariba Merger Date shall mean the date that is one Business
                    Day immediately preceding the date of the consummation of
                    the merger of the Borrower with Ariba, Inc."

               (b)  The definition of EBITDA as set forth in Section 1.1
[Certain Definitions.] of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

<PAGE>

                    "EBITDA shall mean for any fiscal quarter, determined for
                    the Borrower and its Subsidiaries in accordance with GAAP on
                    a consolidated basis, the net income for such quarter (as a
                    positive number) adjusted as follows: (i) increased by
                    adding back to such amount, the amount of each of the
                    following expenses actually deducted during such fiscal
                    quarter in the determination of such net income: interest
                    expense, income taxes, depreciation, amortization and
                    noncash items of expense; (ii) if the fiscal quarter for
                    which EBITDA is being determined is the fiscal quarter of
                    the Borrower ended December 31, 2003, then increased by
                    adding back to such amount, the amount equal to the lesser
                    of (y) $5,200,000, and (z) the actual amount of
                    non-recurring charges related to the closing of the
                    Borrower's Brussels, Belgium operations and write off of
                    future lease obligations related to the abandonment of the
                    28th floor in FreeMarkets Center, which charges are actually
                    deducted during such fiscal quarter in the determination of
                    such net income; (iii) if the fiscal quarter for which
                    EBITDA is being determined is the fiscal quarter of the
                    Borrower ended March 31, 2004 or June 30, 2004, then
                    increased by adding back to such amount, the amount equal to
                    the lesser of (a) $5,000,000, and (b) the actual aggregate
                    amount of any restructuring charges incurred by the
                    Borrower; and (iv) reduced by subtracting from such amount
                    the amount of non-cash income actually included during such
                    fiscal quarter in the determination of such net income. "

               (c)  The definition of Expiration Date as set forth in Section
1.1 [Certain Definitions.] of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

                    "Expiration Date shall mean, with respect to the Revolving
                    Credit Commitments, the earlier of (i) August 30, 2004, or
                    (ii) the Ariba Merger Date, as such date may be hereafter
                    extended in accordance with Section 2.10 hereof."

               (d)  Section 3.4 [Term Loan Notes.] of the Credit Agreement is
hereby amended and restated to read as follows:

                    "3.4     Term Loan Notes.

                             The Obligation of the Borrower to repay the unpaid
                    principal amount of the Term Loans made to it by each Bank,
                    together with interest thereon, shall be evidenced by a Term
                    Note payable to the order of each Bank in a face amount
                    equal to the Term Loan of such Bank. The principal amount as
                    provided therein of the Term Notes shall be payable in
                    thirty-six equal monthly installments, each in the amount of
                    $111,111.11, payable commencing on December 1, 2001, and on
                    the first day of each month thereafter through and including
                    a payment of all outstanding amounts on the earlier to occur
                    of (i) November 1, 2004, or (ii) the Ariba Merger Date."

                                       2
<PAGE>

               (e)  Section 8.2.19 [Minimum EBITDA.] of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:

                    "8.2.19  Minimum EBITDA.

                             The Borrower shall not permit EBITDA: (a) to be
                    less than the amount specified below for the specified
                    period if the specified amount is either zero or a positive
                    number (i.e., by way of example and without limitation at
                    12/31/2003, EBITDA (being income and therefore a positive
                    number) shall not be less than $2,500,000), and (b) to be
                    greater than the amount specified below for the specified
                    period if the specified amount is a negative number (i.e.,
                    by way of example and without limitation at 3/31/2003,
                    EBITDA (being a loss and therefore a negative number) shall
                    not be a loss greater than ($7,500,000)):

                         Period                                    Amount
                         ------                                    ------
                    Fiscal quarter                                          $0
                    ended 9/30/2002
                    Fiscal quarter                                  $2,500,000
                    ended 12/31/2002
                    Fiscal quarter                                 ($7,500,000)
                    ended 3/31/2003
                    Fiscal quarter                                 ($5,000,000)
                    ended 6/30/2003
                    Fiscal quarter                                          $0
                    ended 9/30/2003
                    Fiscal quarter                                  $2,500,000
                    ended 12/31/2003
                    Fiscal quarter                                 ($5,000,000)
                    ended 3/31/2004
                    Fiscal quarter
                    ended 6/30/2004 and each fiscal quarter
                      ended thereafter                             ($5,000,000)

     3. Conditions of Effectiveness of this Amendment. The effectiveness of this
Amendment is expressly conditioned upon satisfaction of each of the following
conditions precedent:

                                       3
<PAGE>

          (a) Fees and Expenses. The Borrower shall pay or cause to be paid to
the Agent for itself and for the account of the Banks the reasonable costs and
expenses of the Agent and the Banks including, without limitation, reasonable
fees of the Agent's counsel and the Syndication Agent's counsel in connection
with this Amendment. The Borrower shall pay to the Agent for the benefit of each
Bank a fee equal to 0.125% of the Revolving Credit Commitment of each Bank as of
the date hereof.

          (b) No Default. Confirmation of Representations and Warranties, etc.
As of the date hereof after giving effect hereto, no Event of Default or
Potential Default shall have occurred. The Borrower by executing this Amendment
hereby certifies and confirms that as of the date hereof and after giving effect
to this Amendment: (a) the execution, delivery and performance of this Amendment
and any and all other documents executed and/or delivered in connection herewith
have been authorized by all requisite corporate action on the part of the
Borrower and will not violate the Borrower's articles of incorporation or
bylaws, (b) no Event of Default or Potential Default has occurred or would
result from the execution, delivery and performance of this Amendment, (c) the
representations and warranties of the Loan Parties contained in the Credit
Agreement and the other Loan Documents are true and correct on and as of the
date hereof with the same force and effect as though made by the Loan Parties on
such date (except representations and warranties which relate solely to an
earlier date or time), and (d) the Credit Agreement (as amended by a First
Amendment thereto dated as of December 8, 2000, a Second Amendment thereto dated
as of February 7, 2001, a Third Amendment thereto dated as of October 31, 2001,
a Fourth Amendment thereto dated as of October 10, 2002, a Fifth Amendment
thereto dated as of December 26, 2002, a Sixth Amendment dated as of February
28, 2003, a Seventh Amendment dated as of December 23, 2003, and this Amendment)
and all other Loan Documents are and remain legal, valid, binding and
enforceable obligations in accordance with the terms thereof.

          (c) Term Notes. The Borrower shall have executed and delivered to the
Agent on behalf of the Banks the amended and restated Term Notes.

          (d) Confirmation of Guaranty. Each of the Guarantors shall have
executed the Confirmation of Guaranty in the form attached hereto as Exhibit A.

          (e) Organization, Authorization and Incumbency. There shall be
delivered to the Agent for the benefit of each Bank a certificate, dated as of
the date hereof and signed by the Secretary or an Assistant Secretary of each
Loan Party, certifying as appropriate as to:

               (i) all action taken by such Loan Party in connection with this
Amendment and the other Loan Documents;

               (ii) the names of the officer or officers authorized to sign this
Amendment and the other documents executed and delivered in connection herewith
and described in this Section 3 and the true signatures of such officer or
officers and specifying the officers authorized to act on behalf of each Loan
Party for purposes of the Loan Documents and the true signatures of such
officers, on which the Agent and each Bank may conclusively rely; and

                                       4
<PAGE>

               (iii) copies of its organizational documents, including its
certificate of incorporation and bylaws if it is a corporation, its certificate
of partnership and partnership agreement if it is a partnership, and its
certificate of organization and limited liability company operating agreement if
it is a limited liability company, in each case as in effect on the date hereof,
certified by the appropriate state official where such documents are filed in a
state office together with certificates from the appropriate state officials as
to the continued existence and good standing of each of the Loan Parties in each
state where organized or qualified to do business; provided that each of the
Loan Parties may, in lieu of delivering copies of the foregoing organizational
documents and good standing certificates, certify that the organizational
documents and good standing certificates previously delivered by the Loan
Parties to the Agent remain in full force and effect and have not been modified,
amended or rescinded.

          (f) Consents and Approvals. To the extent any consent, approval,
order, or authorization or registration, declaration, or filing with any
governmental authority or other person or legal entity is required in connection
with the valid execution and delivery of this Amendment or the carrying out or
performance of any of the transactions required or contemplated by this
Amendment, all such consents, approvals, orders or authorizations shall have
been obtained or all such registrations, declarations, or filings shall have
been accomplished prior to the consummation of this Amendment.

          (g) Opinion of Counsel. There shall be delivered to the Agent for the
benefit of each Bank a written opinion dated the date hereof of legal counsel to
the Loan Parties, with such opinion to be in form and substance satisfactory to
the Agent.

          (h) Legal Details; Counterparts. All legal details and proceedings in
connection with the transactions contemplated by this Amendment shall be in form
and substance satisfactory to the Agent, the Agent shall have received from the
Borrower and the Required Banks an executed original of this Amendment and the
Agent shall have received all such other counterpart originals or certified or
other copies of such documents and proceedings in connection with such
transactions, in form and substance satisfactory to the Agent.

This Amendment shall become effective when it has been executed by the Loan
Parties, the Agent and the Required Banks and each of the other conditions set
forth in this Section 3 has been satisfied.

     4. Force and Effect. The Credit Agreement is amended hereby, and any
reference to the Credit Agreement or other Loan Documents in any document,
instrument, or agreement shall hereafter mean and include the Credit Agreement
as amended hereby. No novation is intended or shall occur by or as a result of
this Amendment. Borrower reconfirms, restates, and ratifies the Credit Agreement
as amended hereby and each of the other Loan Documents. This Amendment is not
intended to constitute, nor does it constitute, an interruption, suspension of
continuity, satisfaction, discharge of prior duties, novation, or termination of
the liens, security interests, indebtedness, loans, liabilities, expenses, or
obligations under the Credit Agreement or the other Loan Documents. The Borrower
and the Agent and each of the Banks acknowledges and agrees that the Collateral
has continued to secure the indebtedness, loans, liabilities, expenses, and
obligations under the Credit Agreement since the date of execution of each
applicable Loan Document, and all liens and security interests in the Collateral
which were

                                       5
<PAGE>

granted pursuant to any of the Loan Documents shall remain in full force and
effect from and after the date hereof.

     5. Governing Law. This Amendment shall be deemed to be a contract under the
laws of the Commonwealth of Pennsylvania and for all purposes shall be governed
by and construed and enforced in accordance with the internal laws of the
Commonwealth of Pennsylvania without regard to its conflict of laws principles.

     6. Counterparts. This Amendment may be signed in any number of counterparts
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

                         [SIGNATURES BEGIN ON NEXT PAGE]

                                       6
<PAGE>

         [SIGNATURE PAGE 1 OF 3 TO EIGHTH AMENDMENT TO CREDIT AGREEMENT]

     IN WITNESS WHEREOF and intending to be legally bound hereby, the parties
hereto have executed this Amendment as of the date first above written.

<TABLE>
<CAPTION>
<S>                                             <C>
ATTEST:                                         FREEMARKETS, INC.

                                                  By:                                         [Seal]
--------------------------------------------         -----------------------------------------
Name:                                             Name:
     ---------------------------------------           ---------------------------------------
Title:                                            Title:
      --------------------------------------            --------------------------------------

</TABLE>

<PAGE>

         [SIGNATURE PAGE 2 OF 3 TO EIGHTH AMENDMENT TO CREDIT AGREEMENT]

                                     PNC BANK, NATIONAL ASSOCIATION,
                                     individually and as Agent

                                     By:
                                         ---------------------------------------
                                     Name:
                                           -------------------------------------
                                     Title:
                                            ------------------------------------

<PAGE>

         [SIGNATURE PAGE 3 OF 3 TO EIGHTH AMENDMENT TO CREDIT AGREEMENT]

                                     SILICON VALLEY BANK,
                                     individually and as Syndication Agent

                                     By:
                                         ---------------------------------------
                                     Name:
                                           -------------------------------------
                                     Title:
                                            ------------------------------------

<PAGE>

                                    EXHIBIT A

                            CONFIRMATION OF GUARANTY

                                February 20, 2004

To:  FreeMarkets Investment Company, Inc. ("Guarantor")

     Reference is made to that certain Credit Agreement, dated as of November 3,
2000, as amended by a First Amendment thereto dated as of December 8, 2000, a
Second Amendment thereto dated as of February 7, 2001, a Third Amendment thereto
dated as of October 31, 2001, a Fourth Amendment dated as of October 10, 2002, a
Fifth Amendment thereto dated as of December 26, 2002, a Sixth Amendment thereto
dated as of February 28, 2003, a Seventh Amendment thereto dated as of December
23, 2003, and the Eighth Amendment (as defined below) (the "Credit Agreement"),
by and among FreeMarkets, Inc., a Delaware corporation (the "Borrower"), the
Banks from time to time party thereto (the "Banks"), Silicon Valley Bank,
individually and in its capacity as Syndication Agent and PNC Bank, National
Association, as administrative agent for the Banks ("Agent"). All terms used
herein unless otherwise defined herein shall have the meanings as set forth in
the Credit Agreement.

     The Borrower has requested that the Banks and the Agent enter into that
certain Eighth Amendment to the Credit Agreement, dated as of the date hereof
(the "Eighth Amendment"), a copy of which has been delivered to each Loan Party.

     This letter agreement will confirm that the Guarantor has read and
understands the Eighth Amendment. In order to induce the Banks and the Agent to
enter into that Eighth Amendment, the Guarantor hereby consents to the Eighth
Amendment and all prior amendments described above and ratifies and confirms its
respective obligations under each of the Loan Documents (including all exhibits
and schedules thereto) to which it is a party by signing below as indicated,
including without limitation each Guaranty Agreement and each Security Agreement
to which it is a party. The Guarantor hereby acknowledges and agrees that
nothing contained in any of the Loan Documents is intended to create, nor shall
it constitute an interruption, suspension of continuity, satisfaction, discharge
of prior duties, novation or termination of the liens, security interests,
indebtedness, loans, liabilities, expenses or obligations of the Loan Parties
under the Credit Agreement or any other Loan Document.

                                     Very truly yours,

                                     PNC BANK, NATIONAL ASSOCIATION,
                                     as Agent

                                     By:
                                         ---------------------------------------

<PAGE>

                   [SIGNATURE PAGE TO CONFIRMATION OF GUARANTY
                            DATED FEBRUARY 20, 2004]

Intending to be legally bound
hereby, the undersigned has
accepted and agreed to the
foregoing as of the date and
year first above written.

GUARANTOR:

FREEMARKETS INVESTMENT COMPANY, INC.

By:
   ----------------------------------------------
Name:
     --------------------------------------------
Title:
      -------------------------------------------EX-10.6 Amended and Restated 2002 Stock Plan

 

EXHIBIT 10.6

FIRSTMERIT CORPORATION

AMENDED AND RESTATED

2002 STOCK PLAN

EFFECTIVE APRIL 22, 2004

 

 

FIRSTMERIT CORPORATION

AMENDED AND RESTATED

2002 STOCK PLAN

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	I.	 	 	 	INTRODUCTION 	1	 	 	 	 	 
	 
	 	A.	 	 	 	Purpose Of The Plan	 	 	1	 	 	 	 	 
	 
	 	B.	 	 	 	Definitions	 	 	1	 	 	 	 	 
	II.	 	 	 	EMPLOYEES STOCK OPTION PROGRAM	5	 	 	 	 	 
	 
	 	A.	 	 	 	Administration	 	 	5	 	 	 	 	 
	 
	 	B.	 	 	 	Participation	 	 	5	 	 	 	 	 
	 
	 	C.	 	 	 	Maximum Number Of Shares Available	 	 	5	 	 	 	 	 
	 
	 	D.	 	 	 	Adjustments	 	 	5	 	 	 	 	 
	 
	 	E.	 	 	 	Registration Conditions	 	 	6	 	 	 	 	 
	 
	 	F.	 	 	 	Committee Action	 	 	6	 	 	 	 	 
	 
	 	G.	 	 	 	Stock Options	 	 	6	 	 	 	 	 
	 
	 	H.	 	 	 	Amendment And Termination	 	 	8	 	 	 	 	 
	III.
	 	 	 	 	 	DIRECTORS STOCK OPTION PROGRAM	 	 	9	 	 	 	 	 
	 
	 	A.	 	 	 	Administration	 	 	9	 	 	 	 	 
	 
	 	B.	 	 	 	Participation	 	 	9	 	 	 	 	 
	 
	 	C.	 	 	 	Maximum Number Of Shares Available	 	 	9	 	 	 	 	 
	 
	 	D.	 	 	 	Adjustments	 	 	9	 	 	 	 	 
	 
	 	E.	 	 	 	Registration Conditions	 	 	9	 	 	 	 	 
	 
	 	F.	 	 	 	Stock Options	 	 	10	 	 	 	 	 
	 
	 	G.	 	 	 	Amendment And Termination	 	 	10	 	 	 	 	 
	IV.
	 	 	 	 	 	EMPLOYEES RESTRICTED STOCK PROGRAM	 	 	11	 	 	 	 	 
	 
	 	A.	 	 	 	Administration	 	 	11	 	 	 	 	 
	 
	 	B.	 	 	 	Participation	 	 	11	 	 	 	 	 
	 
	 	C.	 	 	 	Maximum Number Of Shares Available	 	 	12	 	 	 	 	 
	 
	 	D.	 	 	 	Awards	 	 	12	 	 	 	 	 
	 
	 	E.	 	 	 	Restrictions	 	 	12	 	 	 	 	 
	 
	 	F.	 	 	 	Enforcement Of Restrictions	 	 	13	 	 	 	 	 
	 
	 	G.	 	 	 	Privileges Of Employee- Participant	 	 	13	 	 	 	 	 
	 
	 	H.	 	 	 	Non-Transferability	 	 	13	 	 	 	 	 
	 
	 	I.	 	 	 	Withholding Taxes	 	 	13	 	 	 	 	 
	 
	 	J.	 	 	 	Lien On Shares	 	 	13	 	 	 	 	 
	 
	 	K.	 	 	 	Share Issuance And Transfer Restrictions	 	 	14	 	 	 	 	 
	 
	 	L.	 	 	 	Acceleration On Change Of Control	 	 	14	 	 	 	 	 
	 
	 	M.	 	 	 	Effective Date And Duration	 	 	15	 	 	 	 	 
	 
	 	N.	 	 	 	Exclusivity	 	 	15	 	 	 	 	 
	 
	 	O.	 	 	 	Amendment And Termination	 	 	15	 	 	 	 	 
	V.	 	 	 	DIRECTORS RESTRICTED STOCK PROGRAM	15	 	 	 	 	 
	 
	 	A.	 	 	 	Administration	 	 	15	 	 	 	 	 
	 
	 	B.	 	 	 	Participation	 	 	15	 	 	 	 	 
	 
	 	C.	 	 	 	Maximum Number Of Shares Available	 	 	16	 	 	 	 	 
	 
	 	D.	 	 	 	Awards	 	 	16	 	 	 	 	 
	 
	 	E.	 	 	 	Restrictions	 	 	16	 	 	 	 	 

2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	F.	 	 	 	Enforcement Of Restrictions	 	 	17	 	 	 	 	 
	 
	 	G.	 	 	 	Privileges Of Employee-Participant	 	 	17	 	 	 	 	 
	 
	 	H.	 	 	 	Non-Transferability	 	 	17	 	 	 	 	 
	 
	 	I.	 	 	 	Withholding Taxes	 	 	17	 	 	 	 	 
	 
	 	J.	 	 	 	Lien Of Shares	 	 	17	 	 	 	 	 
	 
	 	K.	 	 	 	Share Issuance And Transfer Restrictions	 	 	18	 	 	 	 	 
	 
	 	L.	 	 	 	Acceleration On Change Of Control	 	 	18	 	 	 	 	 
	 
	 	M.	 	 	 	Effective Date And Duration	 	 	19	 	 	 	 	 
	 
	 	N.	 	 	 	Exclusivity	 	 	19	 	 	 	 	 
	 
	 	O.	 	 	 	Amendment And Termination	 	 	19	 	 	 	 	 
	V.	 	 	 	GENERAL PROVISIONS	19	 	 	 	 	 
	 
	 	A.	 	 	 	Government And Other Regulations	 	 	19	 	 	 	 	 
	 
	 	B.	 	 	 	Other Compensation Plans And Programs	 	 	19	 	 	 	 	 
	 
	 	C.	 	 	 	Miscellaneous Provisions	 	 	19	 	 	 	 	 
	 
	 	D.	 	 	 	Effective Date	 	 	22	 	 	 	 	 

3

 

FIRSTMERIT CORPORATION

AMENDED AND RESTATED

2002 STOCK PLAN

     FirstMerit Corporation (the “Company”) adopted the 2002 Stock Plan
(“Plan”), subject to shareholder approval at the 2002 Annual Shareholders
Meeting, and amendments approved by the Board were approved by the shareholders
at the 2004 Annual Shareholders Meeting. The number of shares of “Common Stock”
approved and reserved under the Plan, subject to the actual shares available
for grant under the Plan, is 3,700,000 for the “Employees Stock Option Program”
and the “Employees Restricted Stock Program,” and 300,000 for the “Directors
Stock Option Program” and the “Directors Restricted Stock Program.” The
maximum number of shares of Common Stock which can be granted as part of the
3,700,000 shares under the Employees Restricted Stock Program is 500,000. The
maximum number of shares of Common Stock which can be granted as part of the
300,000 shares under the Directors Restricted Stock Program is 75,000. No
stock option can be granted under the Plan for less than “Fair Market Value” on
the date of grant. The maximum annual grant of options or restricted shares
under the Plan to any one individual shall not exceed one and one-half percent
(1.5%) of the total outstanding shares of Common Stock of the Company, in the
aggregate, per calendar year.

I. INTRODUCTION

	A.	 	Purpose Of The Plan

     FirstMerit Corporation has established the Plan to further its long-term
financial success by creating the opportunity to employees and non-employee
Directors of the Company and its Subsidiaries to receive stock and stock-based
compensation whereby they can share in achieving and sustaining such success.
The Plan also provides a means to attract and retain the executive talent
needed to achieve the Company’s long-term growth and profitability objectives.

	B.	 	Definitions

     When used in the Plan, the following terms shall have the meanings set
forth below:

     “Award(s)” shall mean Incentive Stock Options, Non-Qualified Stock
Options, Reload Stock Options, or Restricted Stock Awards granted under the
Plan.

     “Award Agreement” shall mean an agreement which shall evidence the
particular terms, conditions, rights and duties of the Company and the
Participant with respect to an Award.

     “Board” shall mean the Board of Directors of the Company.

     “Change of Control” shall mean the occurrence of any one of the following
events:

     (a) individuals who, on April 19, 2000, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority
of the Board, provided that any person becoming a director subsequent to April
19, 2000 whose election or nomination for election was approved by a vote of at
least 2/3rds of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no director

1

 

of the Company initially as a result of an actual or threatened election
contest with respect to directors or any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than
the Board shall be deemed to be an Incumbent Director;

     (b) any “person” (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company’s then outstanding securities eligible to vote for the election
of the Board (the “Company Voting Securities”); provided, however, that the
event described in this paragraph (b) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions:

     (i) by the Company or any Subsidiary,

     (ii) by any employee benefit plan sponsored or maintained by the
Company or any Subsidiary,

     (iii) by any underwriter temporarily holding securities pursuant to
an offering of such securities,

     (iv) pursuant to a Non-Control Transaction (as defined in paragraph
(c)), or

     (v) a transaction (other than one described in (c) below) in which
Company Voting Securities are acquired from the Company, if a majority of
the Incumbent Directors then on the Board approve a resolution providing
expressly that the acquisition pursuant to this clause (v) does not
constitute a Change in Control under this paragraph (b);

     (c) the consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company’s shareholders, whether
for such transaction or the issuance of securities in the transaction (a
“Business Combination”), unless immediately following such Business
Combination:

     (i) more than 50% of the total voting power of (x) the corporation
resulting from such Business Combination (the “Surviving Entity”), or (y)
if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors (“Total Voting Power”) of the Surviving
Entity (the “Parent Entity”), is represented by Company Voting Securities
that were outstanding immediately prior to such Business Combination (or,
if applicable, shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportion as the
voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination,

     (ii) no person (other than any employee benefit plan (or related
trusts) sponsored or maintained by the Surviving Entity or the Parent
Entity), is or becomes the beneficial owner, directly or indirectly, of
25% or more of the Total Voting Power of the outstanding voting
securities eligible to elect directors of the Parent Entity (or, if there
is no Parent Entity, the Surviving Entity), and

     (iii) at least a majority of the members of the Board of Directors
of the Parent Entity (or, if there is no Parent Entity, the Surviving
Entity) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board’s approval of the execution
of the

2

 

initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in
(i), (ii) and (iii) above shall be deemed to be a “Non-Control
Transaction”); or

     (d) the shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company.

     Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 25% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the
number of Company Voting Securities outstanding; provided, that if after such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person by more
than one percent, a Change in Control of the Company shall then occur.

     “Committee” shall mean the Compensation Committee of the Board, or such
other Committee of the Board which shall be designated by the Board to
administer the Plan. If the Board does not designate the Nominating Committee
as the Committee, the Committee will be composed of two (2) or more persons who
are from time to time appointed to serve by the Board. Each member of the
Committee will be a “non-employee director” within the meaning of Rule 16b-3 of
the Securities Exchange Act or any successor rule, as any such rule may be
amended from time to time and will qualify as an “outside director” within the
meaning of Code Section 162(m) (“Qualified Director”). A person may be
appointed to the Committee who does not qualify as a “non-employee director” if
the Committee adopts and follows a recusal procedure which qualifies under the
Section 16 Rules.

     “Company” shall mean FirstMerit Corporation and any successor in a
reorganization or similar transaction.

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Common Stock” shall mean the common stock of the Company, no par value
per share, and may be either stock previously authorized but unissued, or stock
reacquired by the Company.

     “Director” shall mean a duly elected member of the Board.

     “Directors Restricted Stock Program” shall mean the restricted stock
program delineated in Article V of this Plan.

     “Directors Stock Option Program” shall mean the stock option program
delineated in Article III of this Plan.

     “Director-Participant” shall mean a Director who is not also a full-time
employee of the Company or any of its Subsidiaries.

     “Disability” shall mean the inability of an Employee-Participant to
perform the services normally rendered due to any physical or mental impairment
that can be expected to be of either permanent or indefinite duration, as
determined by the Committee on the basis of appropriate medical evidence, and
that results in the Employee-Participant’s Termination of Employment; provided,
however, that with respect to any Employee-Participant who has entered into an
employment agreement with the Company or any of its Subsidiaries, the term of
which has not expired at the time a determination concerning

3

 

Disability is to
be made, Disability shall have the meaning attributed to “permanent disability”
in such employment agreement.

     “Employees Restricted Stock Program” shall mean the restricted stock
program delineated in Article IV of this Plan.

     “Employees Stock Option Program” shall mean the stock option program
delineated in Article II of this Plan.

     “Employee-Participant” shall mean an employee (including a Director who is
also a full-time employee) of the Company or any of its Subsidiaries.

     “Fair Market Value” shall mean with respect to a given day, the closing
sales price of a share of Common Stock, as reported by such responsible
reporting service as the Committee may select, or if there were no transactions
in the Common Stock on such day, then the last preceding day on which
transactions took place. The foregoing notwithstanding, the Committee may
determine the Fair Market Value in such other manner as it may deem more
appropriate for Plan purposes or as is required by applicable laws or
regulations.

     “Incentive Stock Option” or “ISO” shall mean a right to purchase the
Company’s Common Stock which is intended to comply with the terms and
conditions for an incentive stock option as set forth in Section 422 of the
Code, or such other sections of the Code as may be in effect from time to time.

     “Nasdaq” shall mean The Nasdaq Stock Market, Inc.

     “Non-Qualified Stock Option” or “NQSO” shall mean a right to purchase the
Company’s Common Stock which is not intended to comply with the terms and
conditions for a tax-qualified stock option, as set forth in Section 422 of the
Code, or such other sections of the Code as may be in effect from time to time.

     “Participant” shall mean an Employee-Participant or a
Director-Participant.

     “Plan” shall mean the Company’s 2002 Stock Plan, as set forth herein.

     “Reload Stock Option” shall mean an option granted to an
Employee-Participant who has paid for shares subject to option through the
delivery of shares of Common Stock having an aggregate Fair Market Value as
determined on the date of exercise equal to the option price.

     “Restricted Shares” shall mean those shares of Common Stock reserved for
issuance as Awards under the Employees Restricted Stock Program and the
Directors Restricted Stock Program, as further provided in Article IV(D) and
Article V(D).

     “Retirement” shall mean an Employee-Participant’s Termination of
Employment by reason of retirement at his normal retirement date, pursuant to
and in accordance with a pension, retirement or similar plan or other regular
retirement practice of the Company or any of its Subsidiaries, or in accordance
with the early retirement provision(s) thereof.

     “Securities Act” shall mean the Securities Act of 1933, as amended.

     “Securities Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended.

4

 

     “Subsidiaries” shall mean the majority-owned subsidiaries of the Company.

     “Termination of Employment” shall mean a cessation of the
employee-employer relationship between an Employee-Participant and the Company
or its Subsidiaries for any reason.

     “Termination of Service” shall mean a cessation of the Director’s
relationship with the Company for any reason.

II. EMPLOYEES STOCK OPTION PROGRAM

	A.	 	Administration

     The Employees Stock Option Program shall be administered by the Committee,
which, subject to the express provisions of the Employees Stock Option Program,
shall have full and exclusive authority to interpret the Employees Stock Option
Program, to prescribe, amend and rescind rules and regulations relating to the
Employees Stock Option Program and to make all other determinations deemed
necessary or advisable in the implementation and administration of the
Employees Stock Option Program; provided, however, that subject to the express
provisions hereof or unless required by applicable law or regulation, no action
of the Committee shall adversely affect the terms and conditions of any Award
made to, or any rights hereunder or under any Award Agreement of, any
Employee-Participant, without such Employee-Participant’s consent. The
Committee’s interpretation and construction of the Employees Stock Option
Program shall be conclusive and binding on all persons, including the Company
and all Employee-Participants.

	B.	 	Participation

     The Committee shall, from time to time, make recommendations to the Board
with respect to the selection of Employee-Participants and the Award or Awards
to be granted to each Employee-Participant, and thereafter grant such Award or
Awards upon the approval of a majority of the members of the Board
present and voting upon such approval, who are Qualified Directors. In making
its recommendations, the Committee may take into account the nature of the
services rendered or expected to be rendered by the respective
Employee-Participants, their present and potential contributions to the
Company’s success, and such other factors as the Committee in its discretion
shall deem relevant.

	C.	 	Maximum Number Of Shares Available

     The maximum number of shares which may be granted under the Employees
Stock Option Program is three million seven hundred thousand (3,700,000)
shares, less shares granted under the Employees Restricted Stock Program.

     No Incentive Stock Options shall be granted after January 1, 2012, or such
other period required under the Code.

	D.	 	Adjustments

     In the event of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations, exchanges of shares, spin-offs, liquidations,
reclassifications or other similar changes in the capitalization of the
Company, the number of shares of Common Stock available for grant under
this Employees Stock Option Program shall be adjusted proportionately or
otherwise by the Board and, where deemed appropriate, the number of shares
covered by outstanding stock options and the option

5

 

price of outstanding stock
options shall be similarly adjusted. No adjustment to the exercise price of an
outstanding stock option shall be made without there having been a change in
the capitalization of the Company of a type set forth above.

	E.	 	Registration Conditions

     Unless issued pursuant to a registration statement under the Securities
Act, no shares shall be issued to an Employee-Participant under the Employees
Stock Option Program unless the Employee-Participant represents to and agrees
with the Company that such shares are being acquired for investment and not
with a view to the resale or distribution thereof, or such other documentation
as may be required by the Company unless, in the opinion of counsel to the
Company, such representation, agreement or documentation is not necessary to
comply with the Securities Act.

     Any restriction on the resale of shares shall be evidenced by an
appropriate legend on the stock certificate.

     The Company shall not be obligated to deliver any Common Stock until it
has been listed on each securities exchange on which the Common Stock may then
be listed or until there has been qualification under or compliance with such
federal or state laws, rules or regulations as the Company may deem applicable.

     The Company shall use reasonable efforts to obtain such listing,
qualification and compliance.

	F.	 	Committee Action

     The Committee may, through Award Agreements, limit its discretion under
this Employees Stock Option Program. To the extent such discretion is not
specifically waived in an Award Agreement, the Committee shall retain such
discretion.

	G.	 	Stock Options

     All stock options granted to Employee-Participants under the Employees
Stock Option Program shall be evidenced by Award Agreements which shall be
subject to applicable provisions of the Employees Stock Option Program, and
such other provisions as the Committee may adopt, including the following
provisions:

     1. PRICE. The option price per share of Non-Qualified Stock Options
(“NQSOs”) and the option price per share of Incentive Stock Options (“ISOs”)
shall not be less than 100 percent of the Fair Market Value of a share of
Common Stock on the date of grant. If a NQSO is to meet the requirements of
Section 162(m) of the Code, it shall be issued at Fair Market Value on the date
of grant.

     2. PERIOD. An ISO shall not be exercisable for a term longer than ten
(10) years from date of grant. NQSOs shall have a term as established by the
Committee.

     3. TIME OF EXERCISE. The Committee may prescribe the timing of the
exercise of the stock option and any minimums and installment provisions and
may accelerate the time at which a stock option becomes exercisable, provided
that with respect to ISOs, no such acceleration shall result in a violation of
Section 6 of this Paragraph G.

6

 

     4. EXERCISE PROCEDURES. A stock option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Company and
payment of the full price of the shares being purchased.

     5. PAYMENT. The price of an exercised stock option, or portion thereof,
may be paid pursuant to Paragraph VI.C.11.

     6. SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. If the aggregate Fair Market
Value of Common Stock with respect to which ISOs are exercisable for the first
time by an Employee-Participant during any calendar year (under this Employees
Stock Option Program and all other plans of the Company and its Subsidiaries)
exceeds One Hundred Thousand Dollars ($100,000), such ISOs shall be treated as
NQSOs to the extent of the excess. In applying the foregoing limitation, ISOs
shall be taken into account in the order in which they were granted, and the
Fair Market Value of Common Stock subject to such ISOs shall be determined as
of the date of grant. If such limit is exceeded in any calendar year, the
Company shall have the right to designate which shares of Common Stock
purchased pursuant to such ISOs shall be treated as having been acquired by the
Employee-Participant pursuant to an ISO.

     7. RELOAD STOCK OPTIONS. A Reload Stock Option may be granted by the
Committee in an Award Agreement. If a Reload Stock Option has been granted,
and the stock option is exercised while the Employee-Participant is employed by
the Company and the Employee-Participant pays for the shares subject to an
option through the delivery of Common Stock having an aggregate Fair Market
Value as determined on the date of exercise equal to the option price, the
Employee-Participant will be granted a Reload Stock Option on the date of such
exercise. The Reload Stock Option Award shall equal the number of whole shares
of Common Stock used to pay the purchase price, and the exercise price of the
Reload Stock Option shall equal the then Fair Market Value of the Common Stock
on the date of grant of the Reload Stock Option. If the Company withholds
shares of Common Stock to cover applicable income and employment taxes related
to the exercise of an option, then the Reload Stock Option Award shall equal
the number of whole shares of Common Stock used to pay the purchase price less
the number of shares withheld. Shares of stock acquired upon the exercise of
the stock option where a Reload Stock Option Award has been made, may not be
sold or otherwise transferred, including, without limitation, transfers by way
of gift, for a period of six months after the date of such shares are received.

     Subject to the provisions of the Employees Stock Option Program, the
Reload Stock Option may be exercised between its date of grant and the date of
expiration of the original stock option. If any of the shares of stock
acquired upon the exercise of the stock option which resulted in the grant of
the Reload
Stock Option during the six-month period following the date such shares were
received, are sold or otherwise transferred, including, without limitation,
transfers by way of gift, the Reload Stock Option shall be cancelled.

     A Reload Stock Option shall be evidenced by an Award Agreement containing
such other terms and conditions as the Committee approves. No Reload Stock
Option shall be granted with respect to a stock option exercised after the
Employee-Participant’s Retirement, Disability, death or other Termination of
Employment.

     8. EFFECT OF LEAVES OF ABSENCE. It shall not be considered a Termination
of Employment when an Employee-Participant is placed by the Company or any of
its Subsidiaries on military leave, sick leave or other bona fide leave of
absence. In case of such leave of absence, the employment relationship for
Employees Stock Option Program purposes shall be continued until the later of
the date when such leave of absence equals ninety (90) days or when the
Employee-Participant’s right to reemployment with the Company or any of its
Subsidiaries shall no longer be guaranteed either by statute or contract.

7

 

     9. TERMINATION OF EMPLOYMENT. In the event of Termination of Employment,
the following provisions shall apply with respect to ISOs and NQSOs unless
waived by the Committee, or as otherwise specifically provided in the Award
Agreement.

	 	a.	 	TERMINATION DUE TO DEATH, DISABILITY OR
RETIREMENT. NQSOs and ISOs shall be exercisable for a period
equal to the lesser of five (5) years or the remaining option
term; provided, however, that if the Employee-Participant
elects to exercise his ISOs (i) later than three (3) months
after the date of his Termination of Employment due to
Retirement or (ii) twelve (12) months after the date of his
Termination of Employment due to Disability, such ISOs shall
be treated as NQSOs under the Code for purposes of calculating
the federal income tax applicable as a result of the exercise
of such ISOs and the subsequent disposition of the acquired
shares.
	 
	 	b.	 	OTHER TERMINATION. If an Employee-Participant’s
employment with the Company or any of its Subsidiaries is
terminated for any reason other than death, Disability or
Retirement, all Awards under this Employees Stock Option
Program shall be immediately canceled, except that if the
termination is by the Company or any of its Subsidiaries or
for any reason other than misconduct or misfeasance, the
Employee-Participant shall have thirty (30) days thereafter
within which to exercise his options to the extent that the
options are otherwise exercisable immediately prior to such
termination; and further, if such termination is attributable
to a Change of Control, such Award shall not be canceled but
shall continue as though the Employee-Participant remained in
the employ of the Company or any of its Subsidiaries during
the remaining option term of the Award and shall vest
immediately.
	 
	 	c.	 	LIMITATIONS ON EXERCISE. Notwithstanding the
foregoing, the Committee may rescind the right to exercise
stock options following Termination of Employment if the
Employee-Participant has been found to be directly or
indirectly engaged in any activity which is in competition
with the Company or any of its Subsidiaries or is otherwise
adverse to, or not in the best interest of, the Company or any
of its Subsidiaries. Further, no option agreement for ISOs
may extend their exercise period beyond the time allowed by
the Code.

	H.	 	Amendment And Termination

     The Board may, at any time and from time to time, suspend or terminate the
Employees Stock Option Program in whole or amend it from time to time in such
respects as the Board may deem appropriate, subject, however, to the Code, the
securities laws and the rules of Nasdaq.

8

 

III. DIRECTORS STOCK OPTION PROGRAM

	A.	 	Administration

     The Directors Stock Option Program is a self-executing grant program which
shall be administered by the Secretary of the Company. Subject to the express
provisions of the Directors Stock Option Program, the Secretary shall have full
and exclusive authority to interpret the Directors Stock Option Program, and to
make such determinations deemed necessary or advisable in the implementation
and administration of the Directors Stock Option Program; provided, however,
that subject to the express provisions hereof or unless required by applicable
law or regulation, no action of the Secretary shall
adversely affect the terms and conditions of any Award made to, or any rights
hereunder or under any Award Agreement of, any Director-Participant without
such Director-Participant’s consent.

	B.	 	Participation

     All Directors who are not also full-time employees of the Company or a
Subsidiary shall be Director-Participants in the Directors Stock Option Program
and shall be awarded options to purchase three thousand (3,000) shares each
year on the day following the annual shareholders meeting. The Board reserves
the right to amend the Plan from time to time to change the number of options
granted to the Directors, but in no event can the Committee increase the annual
grant to exceed options to acquire ten thousand (10,000) shares per year.

	C.	 	Maximum Number Of Shares Available

     The maximum number of shares which may be granted under this Directors
Stock Option Program is three hundred thousand (300,000) shares, less shares
granted under the Directors Restricted Stock Program.

	D.	 	Adjustments

     In the event of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations, exchanges of shares, spin-offs, liquidations,
reclassifications or other similar changes in the capitalization of the
Company, the number of shares of Common Stock available for grant under
this Directors Stock Option Program shall be adjusted proportionately or
otherwise by the Board, and where deemed appropriate, the number of shares
covered by outstanding stock options and the option price of outstanding stock
options shall be similarly adjusted. No adjustment to the exercise price of an
outstanding stock option shall be made without there having been a change in
the capitalization of the Company of a type set forth above.

	E.	 	Registration Conditions

     Unless issued pursuant to a registration statement under the Securities
Act, no shares shall be issued to a Director-Participant under the Directors
Stock Option Program unless the Director-Participant represents to and agrees
with the Company that such shares are being acquired for investment and not
with a view to the resale or distribution thereof, or such other documentation
as may be required by the Company unless, in the opinion of counsel to the
Company, such representation, agreement or documentation is not necessary to
comply with the Securities Act.

     Any restriction on the resale of shares shall be evidenced by an
appropriate legend on the stock certificate.

9

 

     The Company shall not be obligated to deliver any Common Stock until it
has been listed on each securities exchange on which the Common Stock may then
be listed or until there has been qualification under or compliance with such
federal or state laws, rules or regulations as the Company may deem applicable.
The Company shall use reasonable efforts to obtain such listing, qualification
and compliance.

	F.	 	Stock Options

     All stock options granted to Director-Participants under the Directors
Stock Option Program shall be evidenced by Award Agreements which shall be
subject to applicable provisions of the Directors Stock Option Program,
including the following provisions:

     1. PRICE. The option price per share shall be 100 percent of the Fair
Market Value of a share of Common Stock on the date of grant.

     2. PERIOD. Any option granted under the Directors Stock Option Program
shall be exercisable for a term of ten (10) years from the date of grant.

     3. TIME OF EXERCISE. The Committee may prescribe the timing of the
exercise of the stock option and any minimums and installment provisions and
may accelerate the time at which a stock option becomes exercisable.

     4. EXERCISE PROCEDURES. A stock option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Company and
payment of the full price of the shares being purchased.

     5. PAYMENT. The price of an exercised stock option, or portion thereof,
may be paid pursuant to Paragraph VI.C.11.

     6. TERMINATION OF SERVICE. In the event of Termination of Service, the
following provisions shall apply:

	 	a.	 	DISCHARGE FOR CAUSE. All outstanding
options shall be canceled at termination if a Director’s
Termination of Service is for cause.
	 
	 	b.	 	TERMINATION OTHER THAN FOR CAUSE.
Options shall be exercisable for a period equal to the
lesser of five (5) years or the remaining option term if
a Director is discharged other than for Cause.

	G.	 	Amendment And Termination

     The Board may, at any time and from time to time, amend, suspend or
terminate the Directors Stock Option Program, subject to the applicable
requirements and restrictions of the Code, the securities laws and the rules of
Nasdaq. The Directors Stock Option Program may not be materially amended
without shareholder approval, however, an increase in the number of shares for
which an annual option may be granted as provided in Article III, Section B,
shall not be deemed a material amendment requiring shareholder approval.

10

 

IV. EMPLOYEES RESTRICTED STOCK PROGRAM

	A.	 	Administration

     The Employees Restricted Stock Program shall be administered by the
Committee. A majority of members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Employees Restricted
Stock Program may be made without notice or meeting, by a writing signed by a
majority of the Committee members.

     In accordance with and subject to the provisions of the Employees
Restricted Stock Program, the Committee shall, from time to time, recommend to
the Board:

	 	1.	 	the Employee-Participants from those employees meeting the
eligibility criteria described in Paragraph B,
	 
	 	2.	 	the number of shares to be subject to each Award,
	 
	 	3.	 	the time at which Awards are made,
	 
	 	4.	 	the duration and nature of Award restrictions,
	 
	 	5.	 	such other provisions of the Awards as may be deemed
necessary or desirable, consistent with the terms of the Employees
Restricted Stock Program, and
	 
	 	6.	 	the form or forms of the Award Agreements to be entered into
with Employee- Participants.

     The Committee shall have the authority, subject to the provisions of the
Employees Restricted Stock Program, to establish, adopt and revise such rules
and regulations relating to the Employees Restricted Stock Program as it may
deem necessary or desirable for the administration of the Employees Restricted
Stock Program. Each determination, interpretation or other action made or
taken by the Committee pursuant to the provisions of the Employees Restricted
Stock Program shall be conclusive and binding for all purposes and on all
persons, including without limitation the Company, the stockholders of the
Company, the Committee and each of the members thereof, the Board, officers and
employees of the Company and the Employee-Participants and their respective
successors in interest.

	B.	 	Participation

     Employee-Participants shall be such key employees (including officers) of
the Company and any present or future Subsidiary as the Committee, in its sole
discretion, determines to be mainly responsible for the success and future
growth and profitability of the Company and value to its stockholders and whom
the Committee may designate from time to time to receive Awards under the
Employees Restricted Stock Program. Awards may be granted under this Employees
Restricted Stock Program to persons who have previously received Awards or
other benefits under this or other plans of the Company.

     The Committee shall, from time to time, make recommendations to the Board
with respect to the selection of Employee-Participants and the Award or Awards
to be granted to each Employee-Participant, and thereafter grant such Award or
Awards upon the approval of a majority of the members of the Board who are
present and voting upon such approval and who are Qualified Directors. In
making its

11

 

recommendations, the Committee may take into account the nature of
the services rendered or expected to be rendered by the respective
Employee-Participants, their present and potential contributions to the
Company’s success, and such other factors as the Committee in its discretion
shall deem relevant.

	C.	 	Maximum Number Of Shares Available

     The maximum number of shares which may be granted under the Employees
Restricted Stock Program is five hundred thousand (500,000) shares, which may
be authorized but unissued or treasury shares.

     Any shares subject to Awards may thereafter be subject to new Awards under
this Employees Restricted Stock Program if shares of Common Stock are issued
under such Awards and are thereafter reacquired by the Company pursuant to
rights reserved by the Company upon issuance thereof, including, without
limitation, the forfeiture of shares subject to an Award prior to the lapse of
restrictions.

     If the Company shall at any time change the number of issued shares of
Common Stock without new considerations to the Company (by stock dividends,
stock splits or similar transactions), the total number of shares reserved for
issuance under the Employees Restricted Stock Program shall be adjusted
proportionately. Awards may also contain provisions for their continuation or
for other equitable
adjustments after changes in the Common Stock resulting from reorganization,
sale, merger, consolidation or similar circumstances.

	D.	 	Awards

     Awards may consist of grants of Restricted Shares to Employee-Participants
as a bonus for service rendered to the Company without other payment therefor
or for payment at less than Fair Market Value. In addition to the restrictions
described in Paragraph E, any Award under the Employees Restricted Stock
Program may be subject to such other provisions (whether or not applicable to
an Award to any other Employee-Participant) as the Committee deems appropriate,
including, without limitation, provisions for the forfeiture of and
restrictions on the sale, resale or other disposition of shares acquired under
any Award, provisions giving the Company the right to repurchase shares
acquired under any Award, provisions to comply with federal and state
securities laws, or understandings or conditions as to the
Employee-Participant’s employment in addition to those specifically provided
for under the Employees Restricted Stock Program.

	E.	 	Restrictions

     An Employee-Participant shall not have a right to retain any Restricted
Shares granted under an Award unless and until such restrictions have by their
terms lapsed. The lapsing of such restrictions is referred to herein as
“Vesting,” and the shares after Vesting has occurred are referred to herein as
“Vested Shares.” The restrictions which the Committee may place on the Awards
include, without limitation, the Employee-Participant’s continued employment
with the Company for certain periods of time as determined by the Committee and
the attainment of various performance goals by the Employee-Participant and/or
the Company as specified by the Committee with respect to such Award. The
Committee may, in its sole discretion, require different periods of employment
or different performance goals with respect to different Employee-Participants,
with respect to different Awards or with
respect to separate, designated portions of an Award. The Committee may, in
its sole discretion, terminate restrictions on shares issued pursuant to an
Award prior to the time such restrictions otherwise would have lapsed. Any
Restricted Shares granted under an Award which have not become Vested Shares on
or before the termination date, if any, set forth in the Award Agreement shall
permanently be forfeited, and shall thereafter become available for reissuance
under the Plan.

12

 

	F.	 	Enforcement Of Restrictions

     The Committee, in its sole discretion, may employ one or more methods of
enforcing the restrictions referred to in Paragraphs E, G, H and J including,
without limitation, the following:

	 	1.	 	placing a legend on the stock certificates referring to the
restrictions,
	 
	 	2.	 	requiring the Employee-Participant to keep stock
certificates, duly endorsed, in the custody of the Company or its
designated agent while the restrictions remain in effect,
	 
	 	3.	 	not issuing certificates for Restricted Shares until the shares become
Vested Shares, or
	 
	 	4.	 	retaining a possessory lien in the Award Shares as provided in
Paragraph J below.

	G.	 	Privileges Of Employee Participant

     Restricted Shares shall constitute issued and outstanding shares of the
Company for all corporate purposes, and the Employee-Participant shall have all
voting and (subject to any Award restrictions) all dividend, liquidation and
other rights with respect to Restricted Shares while the corresponding Award
remains in effect, as if such Employee-Participant were a holder of record of
unrestricted shares of Common Stock. Notwithstanding the foregoing, prior to
the time at which a Restricted Share becomes a Vested Share, the
Employee-Participant’s right to assign or transfer such Restricted Share shall
be subject to the limitations of Paragraph H. Certificates representing
Restricted Shares shall bear a restrictive legend disclosing the restrictions,
the existence of the Employees Restricted Stock Program and the existence of
the applicable Award.

	H.	 	Non-Transferability

     No right or interest of any Employee-Participant in any Award made
pursuant to the Employees Restricted Stock Program shall, prior to the
satisfaction of all restrictions applicable thereto, be assignable or
transferable, in whole or in part, during the lifetime of the
Employee-Participant, either voluntarily or
involuntarily, or be made subject to any lien (except as provided in Paragraphs
F and J), directly or indirectly, by operation of law or otherwise, including
execution, levy, garnishment, attachment, pledge or bankruptcy. In the event
of an Employee-Participant’s death, his right and interest in any Award shall,
to the extent provided in the Award, be transferable by testamentary will or
the laws of descent and distribution, and the issuance of any shares subject to
an Award shall be made to the Employee-Participant’s legal representatives,
heirs or legatees upon furnishing the Committee with evidence satisfactory to
the Committee of such status.

	I.	 	Withholding Taxes

     The Company is entitled to withhold and deduct or take such other action
as delineated in Section VI.C.4.

	J.	 	Lien On Shares

     The Company may, in its sole discretion, require that an
Employee-Participant, as a condition to the receipt of an Award, grant to the
Company a possessory lien on the Restricted Shares in order to secure
retransfer of the shares into the name of the Company, and ensure adequate
provision for any tax withholding obligations arising with respect to such
Award, and to that end, may require that certificates

13

 

evidencing Restricted
Shares be deposited by the Employee-Participant with the Company, together with
stock powers or other instruments of assignment, each endorsed in blank, which
will permit the transfer to the Company of all or any portion of the Restricted
Shares which are forfeited or required to be retained to satisfy the
Employee-Participant’s withholding obligations to the Company.

	K.	 	Share Issuance And Transfer Restrictions

     1. SHARE ISSUANCE. Notwithstanding any other provision of the Employees
Restricted Stock Program or any Award Agreement entered into pursuant hereto,
the Company shall not be required to issue or deliver any certificate for
shares under this Employees Restricted Stock Program unless and until both of
the following are satisfied:

	 	a.	 	either:

	 	i.	 	there shall be in effect with respect
to such shares a registration statement under the
Securities Act and any applicable state securities laws,
if the Committee, in its sole discretion, shall have
determined to file, cause to become effective and
maintain the effectiveness of such registration
statement, or
	 
	 	ii.	 	if the Committee has determined not
to so register the shares, exemptions from registration
under the Securities Act and applicable state securities
laws shall be available for such issuance as determined
by counsel for the Company, and there shall have been
received from the Employee-Participant (or in the event
of death or Disability, the Employee-Participant’s
heir(s) or legal representative(s)) any representations
or agreements requested by the Company in order to
permit such issuance to be made pursuant to such
exemptions, and

	 	b.	 	there shall have been obtained any other consent,
approval or permit from any state or federal government agency
which the Committee shall, in its sole discretion and upon the
advice of counsel, deem necessary or advisable.

     2. TRANSFERS OF VESTED SHARES. Vested Shares may not be sold, assigned,
transferred, pledged, encumbered or otherwise disposed of (whether voluntarily
or involuntarily) except pursuant to registration under the Securities Act and
applicable state securities laws or pursuant to exemptions from such
registrations. The Company may condition the sale, assignment, transfer,
pledge,
encumbrance or other disposition of such shares not issued pursuant to an
effective and current registration statement under the Securities Act and all
applicable state securities laws, on the receipt from the party to whom the
shares are to be so transferred of any representations or agreements requested
by the Company in order to permit such transfer to be made.

     3 LEGENDS. Unless a registration under the Securities Act is in effect
with respect to the issuance or transfer of Vested Shares, each certificate
representing such shares will be endorsed with a legend in the form determined
necessary by the Committee or its counsel.

	L.	 	Acceleration On Change Of Control

     The Committee may provide, in its sole discretion, in one or more Awards,
that notwithstanding the provisions of each Award which would result in a
forfeiture as a result of the Employee-Participant’s

14

 

termination of employment
with the Company prior to the Vesting of Restricted Shares, the Restricted
Shares subject to such Award shall immediately become Vested Shares as a result
of a Change of Control.

	M.	 	Effective Date And Duration

     The Employees Restricted Stock Program shall continue in effect until it
is terminated by action of the Board, but such termination shall not affect the
then outstanding terms of any Award. No Award shall be granted more than ten
(10) years after the date of adoption of the Employees Restricted Stock Option
Program.

	N.	 	Exclusivity

     Nothing contained in this Employees Restricted Stock Program is intended
to amend, modify or rescind any previously approved compensation plans or
programs adopted by the Company. The Employees Restricted Stock Program will
be construed to be in addition to any and all such other plans or programs.

	O.	 	Amendment And Termination

     The Board may amend the Employees Restricted Stock Program from time to
time or terminate the Employees Restricted Stock Program at any time. The
Employees Restricted Stock Program may not be materially amended without
shareholder approval, although an increase in the number of shares for which an
annual Restricted Share Award may be granted as provided in Article IV, Section
B, shall not be deemed a material amendment requiring shareholder approval. In
addition, the Company may amend the terms of any Award previously granted under
this Employees Restricted Stock Program, prospectively or retroactively,
although no action authorized by this Paragraph O shall impair the rights of
any Employee-Participant without his consent.

V. DIRECTORS RESTRICTED STOCK PROGRAM

	A.	 	Administration

     The Directors Restricted Stock Program is a self-executing grant program
which shall be administered by the Secretary of the Company. Subject to the
express provisions of the Directors Restricted Stock Program, the Secretary
shall have full and exclusive authority to interpret the Directors Restricted
Stock Program, and to make such determinations deemed necessary or advisable in
the implementation and administration of the Directors Restricted Stock
Program; provided, however, that subject to the express provisions hereof or
unless required by applicable law or regulation, no action of the Secretary
shall adversely affect the terms and conditions of any Award made to, or any
rights hereunder or under any Award Agreement of, any Director-Participant
without such Director-Participant’s consent.

	B.	 	Participation

     All Directors who are not also full-time employees of the Company or a
Subsidiary shall be Director-Participants in the Directors Restricted Stock
Program and shall be awarded 500 Restricted Shares each year on the day
following the annual shareholders meeting. In addition, each
Director-Participant shall be awarded 1,000 Restricted Shares on the date
immediately after such Director-Participant is first elected to the Board, and
each Director-Participant on April 22, 2004, shall receive on April 22, 2004, a
one-time Award of 1,000 Restricted Shares. The Board reserves the right to
amend the

15

 

Plan from time to time to change the number of Restricted Shares
granted to the Directors, but in no event can the Committee (i) increase the
annual grant to exceed two-thousand five hundred (2,500) shares per year or
(ii) grant a combination of Restricted Shares and options pursuant to the
Directors Stock Option Program, such that the sum of (x) four times the number
of Restricted Shares awarded under the Directors Restricted Stock Program plus
(y) the number of shares that may be purchased upon the exercise of options
awarded under the Directors Stock Option Plan, exceeds 10,000 in one year to
each Director-Participant.

	C.	 	Maximum Number Of Shares Available

     The maximum number of shares which may be granted under the Directors
Restricted Stock Program is seventy-five thousand (75,000) shares, which may be
authorized but unissued or treasury shares.

     Any shares subject to Awards may thereafter be subject to new Awards under
this Directors Restricted Stock Program if shares of Common Stock are issued
under such Awards and are thereafter reacquired by the Company pursuant to
rights reserved by the Company upon issuance thereof, including, without
limitation, the forfeiture of shares subject to an Award prior to the lapse of
restrictions.

     If the Company shall at any time change the number of issued shares of
Common Stock without new consideration to the Company (by stock dividends,
stock splits or similar transactions), the total number of shares reserved for
issuance under the Directors Restricted Stock Program shall be adjusted
proportionately. Awards may also contain provisions for their continuation or
for other equitable

adjustments after changes in the Common Stock resulting from reorganization,
sale, merger, consolidation or similar circumstances.

	D.	 	Awards

     Any Award under the Directors Restricted Stock Program will be evidenced
by a written award agreement and may be subject to such provisions as the
Committee deems appropriate, including, without limitation, provisions for the
forfeiture of and restrictions on the sale, resale or other disposition of
shares acquired under any Award, provisions giving the Company the right to
repurchase shares acquired under any Award, provisions to comply with federal
and state securities laws, or understandings or conditions as to the
Director-Participant’s service on the Board, in addition to those specifically
provided for under the Directors Restricted Stock Program.

	E.	 	Restrictions

     A Director-Participant shall not have a right to retain any Restricted
Shares granted under an Award unless and until such restrictions have by their
terms lapsed. The lapsing of such restrictions is referred to herein as
“Vesting,” and the shares after Vesting has occurred are referred to herein as
“Vested Shares.” The restrictions which the Committee may place on the Awards
include, without limitation, the Director-Participant’s continued service on
the Board for certain periods of time as determined by the Committee and the
attainment of various performance goals by the Company as specified by the
Committee with respect to such Award. The Committee may, in its sole
discretion, terminate restrictions on shares issued pursuant to an Award prior
to the time such restrictions otherwise would have lapsed. Any Restricted
Shares granted under an Award which have not become Vested Shares on or before
the termination date, if any, set forth in the Award Agreement shall
permanently be forfeited, and shall thereafter become available for reissuance
under the Plan.

16

 

	F.	 	Enforcement Of Restrictions

     The Committee, in its sole discretion, may employ one or more methods of
enforcing the restrictions referred to in Paragraphs E, G, H and J including,
without limitation, the following:

	 	1.	 	placing a legend on the stock certificates referring to the
restrictions,
	 
	 	2.	 	requiring the Director-Participant to keep stock
certificates, duly endorsed, in the custody of the Company or its
designated agent while the restrictions remain in effect,
	 
	 	3.	 	not issuing certificates for Restricted Shares until the shares become
Vested Shares, or
	 
	 	4.	 	retaining a possessory lien in the Award Shares as provided in
Paragraph J below.

	G.	 	Privileges Of Director Participant

     Restricted Shares shall constitute issued and outstanding shares of the
Company for all corporate purposes, and the Director-Participant shall have all
voting and (subject to any Award restrictions) all dividend, liquidation and
other rights with respect to Restricted Shares while the corresponding Award
remains in effect, as if such Director-Participant were a holder of record of
unrestricted shares of Common Stock. Notwithstanding the foregoing, prior to
the time at which a Restricted Share becomes a Vested Share, the
Employee-Participant’s right to assign or transfer such Restricted Share shall
be subject to the limitations of Paragraph H. Certificates representing
Restricted Shares shall bear a restrictive legend disclosing the restrictions,
the existence of the Directors Restricted Stock Program and the existence of
the applicable Award.

	H.	 	Non-Transferability

     No right or interest of any Director-Participant in any Award made
pursuant to the Directors Restricted Stock Program shall, prior to the
satisfaction of all restrictions applicable thereto, be assignable or
transferable, in whole or in part, during the lifetime of the
Director-Participant, either voluntarily or
involuntarily, or be made subject to any lien (except as provided in Paragraphs
F and J), directly or indirectly, by operation of law or otherwise, including
execution, levy, garnishment, attachment, pledge or bankruptcy. In the event
of a Director-Participant’s death, his right and interest in any Award shall,
to the extent provided in the Award, be transferable by testamentary will or
the laws of descent and distribution, and the issuance of any shares subject to
an Award shall be made to the Director-Participant’s legal representatives,
heirs or legatees upon furnishing the Committee with evidence satisfactory to
the Committee of such status.

	I.	 	Withholding Taxes

     The Company is entitled to withhold and deduct or take such other action
as delineated in Section VI.C.4.

	J.	 	Lien On Shares

     The Company may, in its sole discretion, require that a
Director-Participant, as a condition to the receipt of an Award, grant to the
Company a possessory lien on the Restricted Shares in order to secure
retransfer of the shares into the name of the Company, and ensure adequate
provision for any tax withholding obligations arising with respect to such
Award, and to that end, may require that certificates evidencing Restricted
Shares be deposited by the Director-Participant with the Company, together with

17

 

stock powers or other instruments of assignment, each endorsed in blank, which
will permit the transfer to the Company of all or any portion of the Restricted
Shares which are forfeited or required to be retained to satisfy the
Director-Participant’s withholding obligations to the Company.

	K.	 	Share Issuance And Transfer Restrictions

     1. SHARE ISSUANCE. Notwithstanding any other provision of the Directors
Restricted Stock Program or any Award Agreement entered into pursuant hereto,
the Company shall not be required to issue or deliver any certificate for
shares under this Directors Restricted Stock Program unless and until both of
the following are satisfied:

	 	a.	 	either:

	 	i.	 	there shall be in effect with respect
to such shares a registration statement under the
Securities Act and any applicable state securities laws,
if the Committee, in its sole discretion, shall have
determined to file, cause to become effective and
maintain the effectiveness of such registration
statement, or
	 
	 	ii.	 	if the Committee has determined not
to so register the shares, exemptions from registration
under the Securities Act and applicable state securities
laws shall be available for such issuance as determined
by counsel for the Company, and there shall have been
received from the Director-Participant (or in the event
of death or Disability, the Director-Participant’s
heir(s) or legal representative(s)) any representations
or agreements requested by the Company in order to
permit such issuance to be made pursuant to such
exemptions, and

	 	b.	 	there shall have been obtained any other consent,
approval or permit from any state or federal government agency
which the Committee shall, in its sole discretion and upon the
advice of counsel, deem necessary or advisable.

     2. TRANSFERS OF VESTED SHARES. Vested Shares may not be sold, assigned,
transferred, pledged, encumbered or otherwise disposed of (whether voluntarily
or involuntarily) except pursuant to registration under the Securities Act and
applicable state securities laws or pursuant to exemptions from such
registrations. The Company may condition the sale, assignment, transfer,
pledge,
encumbrance or other disposition of such shares not issued pursuant to an
effective and current registration statement under the Securities Act and all
applicable state securities laws, on the receipt from the party to whom the
shares are to be so transferred of any representations or agreements requested
by the Company in order to permit such transfer to be made.

     3 LEGENDS. Unless a registration under the Securities Act is in effect
with respect to the issuance or transfer of Vested Shares, each certificate
representing such shares will be endorsed with a legend in the form determined
necessary by the Committee or its counsel.

	L.	 	Acceleration On Change Of Control

     All Restricted Shares subject to Awards under the Directors Restricted
Stock Program shall immediately become Vested Shares as a result of a Change of
Control.

18

 

	M.	 	Effective Date And Duration

     The Directors Restricted Stock Program shall continue in effect until it
is terminated by action of the Board, but such termination shall not affect the
then outstanding terms of any Award. No Award shall be granted more than ten
(10) years after the date of adoption of the Directors Restricted Stock
Program.

	N.	 	Exclusivity

     Nothing contained in this Directors Restricted Stock Program is intended
to amend, modify or rescind any previously approved compensation plans or
programs adopted by the Company. The Directors Restricted Stock Program will
be construed to be in addition to any and all such other plans or programs.

	O.	 	Amendment And Termination

     The Board may amend the Directors Restricted Stock Program from time to
time or terminate the Directors Restricted Stock Program at any time. The
Directors Restricted Stock Program may not be materially amended without
shareholder approval, although an increase in the number of shares for which an
annual Restricted Share Award may be granted as provided in Article V, Section
B, shall not be deemed a material amendment requiring shareholder approval. In
addition, the Company may amend the terms of any Award previously granted under
this Directors Restricted Stock Program, prospectively or retroactively,
although no action authorized by this Paragraph O shall impair the rights of
any Director-Participant without his consent.

VI. GENERAL PROVISIONS

	A.	 	Government And Other Regulations

     The obligation of the Company to issue Awards under the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any government agencies as may be required.

	B.	 	Other Compensation Plans And Programs

     The Plan shall not be deemed to preclude the implementation by the Company
and its Subsidiaries of other compensation plans or programs which may be in
effect from time to time.

	C.	 	Miscellaneous Provisions

     1. NO RIGHT TO CONTINUE EMPLOYMENT. Nothing in the Plan or in any Award
or Award Agreement confers upon any Employee-Participant the right to continue
in the employ of the Company or its Subsidiaries or interferes with or
restricts in any way the rights of the Company or its Subsidiaries to discharge
any Employee-Participant at any time for any reason whatsoever, with or without
cause.

     2. NON-TRANSFERABILITY. Except as provided herein, no right or interest
of any Participant in any Award under the Plan shall be (a) assignable or
transferable, except by will or the laws of descent and distribution, a valid
beneficiary designation made in accordance with procedures established by the
Committee, or as expressly stated herein, or (b) liable for, or subject to, any
lien, obligation or liability. An ISO may be exercised only by the Participant
during his lifetime, by his estate or by the person who acquires the right to
exercise such option by bequest or inheritance.

19

 

     The Board may, in its discretion, authorize all or a portion of the
options to be granted to a Participant, and may also amend outstanding options
to provide, that they include terms which permit transfer by such Participant
to (i) the spouse, children or grandchildren of the Participant (the “Immediate
Family Members”), (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, (iii) a partnership in which such Immediate Family
Members are the only partners, (iv) a limited liability company in which such
Immediate Family Members are the only members; provided that (x) there may be
no consideration for any such transfer, (y) the stock option agreement pursuant
to which such options are granted must be approved by the Board, and must
expressly provide for transferability in a manner consistent with this Section,
and (z) subsequent transfers of transferred options shall be prohibited except
those in accordance with the section(s) herein dealing with transfers by will
or the laws of descent and distribution. Following transfer, any such options
shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for all purposes
hereof, the term “Participant” shall be deemed to refer to the “Transferee.”
The events of termination of any option will continue to be applied with
respect to the original Participant, following which the options shall be
exercisable by the transferee only to the extent (if at all), and for the
periods specified in the Program or option agreement. The Participant in all
such cases will remain subject to and liable for the withholding taxes due or
payable upon exercise by the Transferee.

     The Board may also, in its discretion, pursuant to the requirements and
restrictions listed above, and except as listed in this paragraph, authorize
all or a portion of the options to be granted to a Participant, to permit a
non-conforming transfer, such as a sale to a family member or family
corporation
for estate planning purposes. Nothing herein or in any action by the Board
shall be construed as an amendment to any option other than those expressly
indicated by the action of the Board.

     The Company shall not have any obligation to provide notice to the
Transferee of the termination or acceleration of an option for any reason.

     3. DESIGNATION OF BENEFICIARY. A Participant, in accordance with
procedures established by the Committee, may designate a person or persons to
receive, in the event of the Participant’s death, (a) any payments with respect
to which the Participant would then be entitled, and
(b) the right to continue to participate in the Plan to the extent of such
Participant’s outstanding Awards. Such designation shall be made upon forms
supplied by and delivered to the Company and may be revoked in writing.

     4. WITHHOLDING TAXES.

     The Company’s obligation to deliver shares of Common Stock or cash upon
the exercise of stock options granted will be subject to the satisfaction of
all applicable federal, state and local income tax and employment tax
withholding requirements. The Committee (or plan administrator) may, in its
discretion and in accordance with any applicable tax or securities laws
(including the applicable safe-harbor provisions of Securities and Exchange
Commission Rule 16b-3), provide any or all holders of a NQSOs (other than the
automatic grants made pursuant to Directors Stock Option Program) or Restricted
Shares that are not Vested Shares under the Plan, with the right to use shares
of the Company’s Common Stock in satisfaction of all or part of the federal,
state and local income tax and employment tax liabilities incurred by such
holders in connection with the exercise of their options or the Vesting of
their Restricted Shares
(the “Taxes”). Such right may be provided to any such option holder in either
or both of the following formats:

	 	(a)	 	Stock Withholding: The holder of the NQSO or
Restricted Shares may be provided with the election to have
the Company withhold, from the shares of

20

 

	 	 	 	Common Stock
otherwise issuable upon the exercise of such NQSO or the
Vesting of such Restricted Shares, a portion of those shares
with an aggregate fair market value not to exceed one hundred
percent (100%) of the applicable Taxes.
	 
	 	(b)	 	Stock Delivery: Provide the holder of the NQSO or
the Restricted Shares with the election to deliver to the
Company, at the time the NQSO is exercised or the Vesting of
such Restricted Shares, one or more shares of Common Stock
previously acquired by such individual (other than in
connection with the option exercise or share Vesting
triggering the Taxes) with an aggregate fair market value
equal to the designated percentage (up to 100% as specified by
the option holder) of the Taxes incurred in connection with
such option exercise or share Vesting.

     5. PLAN EXPENSES. Any expenses of administering the Plan shall be borne
by the Company.

     6. CONSTRUCTION OF PLAN. The interpretation of the Plan and the
application of any rules implemented hereunder shall be determined solely in
accordance with the laws of the State of Ohio.

     7. UNFUNDED PLAN. The Plan shall be unfunded, and the Company shall not
be required to segregate any assets which may at any time be represented by
Awards. Any liability of the Company to any person with respect to an Award
under this Plan shall be based solely upon any obligations which may be created
by this Plan; no such obligation of the Company shall be deemed to be secured
by any pledge or other encumbrance on any property of the Company.

     8. BENEFIT PLAN COMPUTATIONS. Any benefits received or amounts paid to a
Participant with respect to any Award granted under the Plan shall not have any
effect on the level of benefits provided to or received by any Participant, or
the Participant’s estate or beneficiary, as part of any employee benefit plan
(other than the Plan) of the Company.

     9. PRONOUNS, SINGULAR AND PLURAL. The masculine may be read as feminine,
the singular as plural and the plural as singular as necessary to give effect
to the Plan.

     10. MAXIMUM ANNUAL GRANT. In no event shall any one individual
participating in the Plan, be granted stock options and/or Restricted Shares
for more than one and one-half percent (1.5%) of the total outstanding shares
of Common Stock of the Company, in the aggregate, per calendar year.

     11. PAYMENT. The exercise price will be payable in one of the alternative
forms specified below:

	 	(a)	 	full payment in cash or check made payable to the Company’s
order; or
	 
	 	(b)	 	full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the
Company’s reported earnings and valued at fair market value on
the Exercise Date (as such term is defined below); or
	 
	 	(c)	 	full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a
charge to the Company’s reported earnings and valued at Fair
Market Value on the Exercise Date and cash or check payable to
the Company’s order; or

21

 

	 	(d)	 	full payment through a sale and remittance
procedure pursuant to which the Participant will provide
irrevocable written directives to a designated brokerage firm
to effect the immediate sale of the purchased shares and remit
to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares and shall
concurrently provide written instructions to the Company to
deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.

     For purposes of this subparagraph, the “Exercise Date” will be the date on
which written notice of the option exercise is delivered to the Company.
Except to the extent the sale and remittance procedure specified above is
utilized for the exercise of the option, payment of the option price for the
purchased shares must accompany the exercise notice.

	D.	 	Effective Date

     The Plan and amendments became effective on approval by shareholders of
the Company. The Plan and all outstanding Awards shall remain in effect until
all outstanding Awards have been exercised, expired or canceled.

22

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