Document:

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                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "Agreement") is entered into as of
April 25, 2005 between Bone Care International, Inc., a Wisconsin corporation
(the "Company"), and Mr. Charles Bishop (the "Executive").

         WHEREAS, the Company desires to employ the Executive to serve as
Executive Vice President and Chief Scientific Officer of the Company, and the
Executive desires to be employed by the Company, upon the terms and subject to
the conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the Company and the Executive hereby agree as
follows:

         1. EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to be employed by the Company upon the terms and
subject to the conditions contained in this Agreement. The term of employment of
the Executive by the Company pursuant to this Agreement (the "Employment
Period") shall commence on the date hereof and shall continue until terminated
pursuant to Section 4 hereof.

         2. POSITION AND DUTIES; RESPONSIBILITIES. (a) Position and Duties. The
Company shall employ the Executive during the Employment Period as its Executive
Vice President and Chief Scientific Officer. The Executive shall report to the
Chief Executive Officer of the Company. During the Employment Period, the
Executive shall perform faithfully and loyally and to the best of the
Executive's abilities the duties assigned to the Executive hereunder and shall
devote the Executive's full business time, attention and effort to the affairs
of the Company and its subsidiaries and shall use the Executive's reasonable
best efforts to promote the interests of the Company and its subsidiaries. The
Executive may engage in charitable, civic or community activities and, with the
prior approval of the Chief Executive Officer, may serve as a director of any
other business corporation, provided that such activities or service do not
interfere with the Executive's duties hereunder or violate the terms of any of
the covenants contained in Sections 6 or 7 hereof.

         (b) Responsibilities. The Executive shall have the authority and
responsibility commensurate with the position of Executive Vice President and
Chief Scientific Officer. The Executive shall also perform such other duties
(not inconsistent with the position of Executive Vice President and Chief
Scientific Officer) on behalf of the Company and its subsidiaries as may from
time to time be authorized or directed by the Board of Directors of the Company
(the "Board") or by the Chief Executive Officer.

         3. COMPENSATION. (a) Base Salary. During the Employment Period, the
Company shall pay to the Executive a base salary at the rate of $295,000 per
annum ("Base Salary"), payable in accordance with the Company's normal payroll
practices. Such Base Salary shall be reviewed annually, and shall be subject to
such annual increases, if any, as determined by the Compensation Committee of
the Board.

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         (b) Annual Bonus. The Executive shall, in the sole discretion of the
Compensation Committee of the Board, be eligible to receive an annual incentive
bonus for such fiscal year ("Annual Bonus"), based upon the achievement of goals
established by the Compensation Committee. The Compensation Committee of the
Board shall determine, in its sole discretion, whether such goals have been
advised.

         (c) Other Benefits. During the Employment Period, the Executive shall
be entitled to participate in the Company's employee benefit plans generally
available to executives of the Company (such benefits being hereinafter referred
to as the "Employee Benefits"). The Executive shall be entitled to take time off
for vacation or illness in accordance with the Company's policy for executives
and to receive all other fringe benefits as are from time to time made generally
available to executives of the Company.

         (d) Expense Reimbursement. During the Employment Period, the Company
shall reimburse the Executive, in accordance with the Company's policies and
procedures, for all proper expenses incurred by the Executive in the performance
of the Executive's duties hereunder.

         4. TERMINATION. (a) Death. Upon the death of the Executive, this
Agreement shall automatically terminate and all rights of the Executive and the
Executive's heirs, executors and administrators to compensation and other
benefits under this Agreement shall cease immediately, except that the
Executive's heirs, executors or administrators, as the case may be, shall be
entitled to:

         (i) accrued Base Salary through and including the Executive's date of
     death;

         (ii) accrued Annual Bonus through and including the Executive's date of
     death; and

         (iii) other Employee Benefits to which the Executive was entitled on
     the date of death in accordance with the terms of the plans and programs of
     the Company.

         (b) Disability. The Company may, at its option, terminate this
Agreement upon written notice to the Executive if the Executive, because of
physical or mental incapacity or disability, fails to perform the essential
functions of the Executive's position, with or without reasonable accommodation,
required of the Executive hereunder for a continuous period of 180 days or any
240 days within any 12-month period. Upon such termination, all obligations of
the Company hereunder shall cease immediately, except that the Executive shall
be entitled to:

         (i) accrued Base Salary through and including the effective date of the
     Executive's termination of employment;

         (ii) accrued Annual Bonus through and including the effective date of
     the Executive's termination of employment; and

         (iii) other Employee Benefits to which the Executive is entitled upon
     termination of employment in accordance with the terms of the plans and
     programs of the Company.

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In the event of any dispute regarding the existence of the Executive's
incapacity or disability hereunder, the matter shall be resolved by the
determination of a physician selected by the Board and reasonably acceptable to
the Executive. The Executive shall submit to appropriate medical examinations
for purposes of such determination.

         (c) Cause. (i) The Company may, at its option, terminate the
     Executive's employment under this Agreement for Cause (as hereinafter
     defined) upon written notice to the Executive (the "Cause Notice"). The
     Cause Notice shall state the particular action(s) or inaction(s) giving
     rise to termination for Cause. The Executive shall have fifteen days after
     the Cause Notice is given to cure the particular action(s) or inaction(s),
     to the extent a cure is possible. If the Executive so effects a cure to the
     satisfaction of the Board, the Cause Notice shall be deemed rescinded and
     of no force or effect.

         (ii) As used in this Agreement, the term "Cause" shall mean any one or
     more of the following:

                  (A) a material breach by the Executive of the duties and
         responsibilities of the Executive which is demonstrably willful and
         deliberate on the Executive's part, which is committed in bad faith or
         without reasonable belief that such breach is in the best interest of
         the Company;

                  (B) the commission by the Executive of a felony involving
         moral turpitude;

                  (C) the commission by the Executive of theft, fraud, breach of
         trust or any significant act of dishonesty involving the Company or its
         subsidiaries;

                  (D) any breach by the Executive of any one or more of the
         covenants contained in Sections 6 or 7 hereof; or

                  (E) the significant violation by the Executive of the
         Company's code of business conduct and ethics or any statutory or
         common law duty of loyalty to the Company or its subsidiaries which is
         demonstrably willful and deliberate on the Executive's part.

         (iii) The exercise of the right of the Company to terminate this
     Agreement pursuant to this Section 4(c) shall not abrogate the rights or
     remedies of the Company in respect of the breach giving rise to such
     termination.

         (iv) If the Company terminates the Executive's employment for Cause,
     all obligations of the Company hereunder shall cease, except that the
     Executive shall be entitled to the payments and benefits specified in
     Sections 4(b)(i) and 4(b)(iii) hereof.

         (d) Termination Without Cause. The Company may, at its option,
terminate the Executive's employment under this Agreement upon written notice to
the Executive for a reason other than a reason set forth in Section 4(a), 4(b)
or 4(c). If the Company terminates the Executive's employment for any such
reason, all obligations of the Company hereunder shall cease immediately, except
that the Executive shall be entitled to:

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         (i) the payments and benefits specified in Sections 4(b)(i) through
     4(b)(iii) hereof, inclusive;

         (ii) the continuation of payment of amounts equal to the Base Salary
     which otherwise would have been payable hereunder had the Executive's
     employment hereunder not been terminated pursuant to this Section 4(d) for
     a period of twelve months; and

         (iii) the Company shall pay the Executive's COBRA premiums for health
     care continuation coverage for a period ending on the earliest of (A)
     twelve months; (B) the time for which the Executive is entitled to COBRA
     continuation coverage by law; and (C) the time at which the Executive is
     eligible for health insurance benefits from any other employer.

Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
employer, except as provided in clause (iii) of this Section 4(d).

         (e) Voluntary Termination. Upon 30 days prior written notice to the
Company (or such shorter period as may be permitted by the Board), the Executive
may voluntarily terminate the Executive's employment with the Company for any
reason. If the Executive voluntarily terminates the Executive's employment
pursuant to this Section 4(e), all obligations of the Company hereunder shall
cease immediately, except that the Executive shall be entitled to the payments
and benefits specified in Sections 4(b)(i) and 4(b)(iii) hereof.

         5. FEDERAL AND STATE WITHHOLDING. The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal, state and local withholding taxes in accordance with the
Executive's Form W-4 on file with the Company, and all applicable federal
employment taxes.

         6. NONSOLICITATION. (a) The Executive acknowledges that in the course
of the Executive's employment with the Company the Executive has and will become
familiar with trade secrets and other confidential information concerning the
Company and its subsidiaries and that the Executive's services will be of
special, unique and extraordinary value to the Company and its subsidiaries.

         (b) The Executive further agrees that during the period of Executive's
employment with the Company and the period, if any, during which the Executive
is receiving payments from the Company pursuant to Section 4 the Executive shall
not in any manner, directly or indirectly, induce or attempt to induce any
employee of the Company or any of its subsidiaries to terminate or abandon his
or her employment for any purpose whatsoever.

         (c) If, at any time of enforcement of this Section 6, a court or an
arbitrator holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period or
scope reasonable under such circumstances shall be substituted for the stated
period or scope and that the court or arbitrator shall be allowed to

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revise the restrictions contained herein to cover the maximum period, scope and
area permitted by law. This Agreement shall not authorize a court or arbitrator
to increase or broaden any of the restrictions in this Section 6.

         7. EMPLOYEE AGREEMENT. The Executive has executed and has delivered to
the Company the Company's Employee Agreement, a copy of which is attached
hereto. The Executive agrees to perform all of Executive's obligations
thereunder.

         8. ENFORCEMENT. The parties hereto agree that the Company and its
subsidiaries would be damaged irreparably in the event that any provision of
Section 6 or 7 of this Agreement were not performed in accordance with its terms
or were otherwise breached and that money damages would be an inadequate remedy
for any such nonperformance or breach. Accordingly, the Company and its
successors and permitted assigns shall be entitled, in addition to other rights
and remedies existing in their favor, to an injunction or injunctions to prevent
any breach or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security). The
Executive agrees that the Executive will submit to the personal jurisdiction of
the courts of the State of Wisconsin in any action by the Company to enforce
this Agreement or to obtain injunctive or other relief.

         9. REPRESENTATIONS. The Executive represents and warrants to the
Company that (a) the execution, delivery and performance of this Agreement by
the Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which the Executive is bound, (b) the
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity and (c)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of the Executive, enforceable in
accordance with its terms.

         10. SURVIVAL. Sections 6, 7 and 8 of this Agreement shall survive and
continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Employment Period.

         11. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given when (a) delivered
personally or by overnight courier to the following address of the other party
hereto (or such other address for such party as shall be specified by notice
given pursuant to this Section) or (b) sent by facsimile to the following
facsimile number of the other party hereto (or such other facsimile number for
such party as shall be specified by notice given pursuant to this Section), with
the confirmatory copy delivered by overnight courier to the address of such
party pursuant to this Section 11:

         If to the Company, to:

                  Bone Care International, Inc.
                  1600 Aspen Commons
                  Middleton, Wisconsin 53562
                  Attention:  Chief Executive Officer

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                  with a copy to

                  Steven Sutherland
                  Sidley Austin Brown & Wood LLP
                  10 S. Dearborn Street
                  Chicago, Illinois  60603

         If to the Executive, to:

                  Mr. Charles Bishop
                  PO Box 259298
                  Madison, WI 53725

         12 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

         13. ENTIRE AGREEMENT. This Agreement, including the attachments hereto,
constitutes the entire agreement and understanding between the parties with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related in any manner to the subject matter hereof.

         14. SUCCESSORS AND ASSIGNS. This Agreement shall be enforceable by the
Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and assigns. Executive
may not assign, pledge or encumber his interest in this Agreement or any part
thereof. The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by operation of law or by agreement in
form and substance reasonably satisfactory to Executive, to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

         15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Wisconsin
without regard to principles of conflict of laws.

         16. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

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         17. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                           BONE CARE INTERNATIONAL, INC.

                                           By: /s/ Paul L. Berns
                                               --------------------

                                           Title: President and CEO

                                           CHARLES BISHOP

                                           /s/ Charles W. Bishop
                                           -----------------------exv10w1

 

PHILADELPHIA CONSOLIDATED HOLDING CORP.

AMENDED AND RESTATED EMPLOYEES’ STOCK INCENTIVE AND

PERFORMANCE BASED COMPENSATION PLAN

Effective as of March 30, 2005

     1. PURPOSE AND SHAREHOLDER APPROVAL

          (a) The Philadelphia Consolidated Holding Corp. Amended and Restated Employees’ Stock
Incentive and Performance Based Compensation Plan (the “Plan”) is being adopted as an amendment and
restatement of the stock option plan (formerly known as the Philadelphia Consolidated Holding Corp.
Stock Option Plan) previously maintained by Philadelphia Consolidated Holding Corp., a Pennsylvania
corporation (referred to herein, along with its Subsidiaries, as appropriate, as the “Company”), as
a means for the provision of incentives and awards to those employees and members of the Board
largely responsible for the long term success of the Company.

          (b) The adoption of this amendment and restatement of the Plan is subject to its approval by
the Company’s shareholders. Any grants or awards made under the Plan shall be null and void if the
Plan is not so approved at the next regularly scheduled meeting of the Company’s shareholders. The
Plan is intended to meet certain requirements of the Code relating to the payment of compensation
that qualifies as “performance based compensation” which is exempt from certain limitations on
deduction imposed under Code Section 162(m).

          (c) The purpose of the Plan is to secure for the Company the benefits of the additional
incentive inherent in the ownership of its Common Stock by and through the grant of equity based
compensation to selected employees of the Company, and to help the Company secure and retain the
services of such employees.

     2. GENERAL PROVISIONS

          (a) Definitions. As used in the Plan:

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

               (ii) “Award” means a restricted stock award or restricted stock unit granted pursuant to
Section 5 of the Plan.

               (iii) “Award Agreement” means a written agreement between the Company and the Participant as
described in Section 5(f).

               (iv) “Board of Directors” or “Board” means the Board of Directors of the Company.

               (v) “Change in Control” means the date on which individuals who are Continuing Directors cease
to constitute a majority of the members of the Board. For these purposes Continuing Directors are
the members of the Board on the date this Plan is adopted, provided that any person becoming a
member of the Board subsequent to such date whose

 

 

election or nomination for election was supported by two thirds of those directors who were
Continuing Directors at that time of the election or nomination shall be deemed to be a Continuing
Director. In addition, a Change in Control shall be deemed to occur on the first to occur of any
of the following:

                    (A) approval by the Company’s shareholders (or by the Board, if shareholder action is not
required) of a plan or other arrangement pursuant to which the Company will be dissolved or
liquidated;

                    (B) approval by the shareholders of the Company (or by the Board, if shareholder action is not
required) of a definitive agreement to sell or otherwise dispose of substantially all of the assets
of the Company;

                    (C) approval of a merger or consolidation transaction by the shareholders of the Company (or
the Board, if shareholder action is not required) and of any other parties whose approval is
required for consummation of the particular transaction pursuant to which the Company will be
merged or consolidated with another entity, other than a merger or consolidation which results in
the Company’s shareholders (determined immediately prior to the consummation of the transaction)
having at least a majority of the voting power of the surviving entity’s voting securities
immediately after the consummation of the transaction and held by such shareholders in the same
proportion as such shareholders’ stock in the Company was held immediately before consummation of
the merger or consolidation; or

                    (D) acquisition by any entity, person or group, within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Act (other than (A) the Company or any of its subsidiaries or any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries
or (B) any person who, on the Effective Date, shall have been the beneficial owner of or have
voting control over shares of common stock of the Company possessing more than fifteen percent
(15%) of the aggregate voting power of the Company’s outstanding stock) shall have become the
beneficial owner of, or shall have obtained voting control over shares having more than fifty
percent (50%) of the voting power of the Company’s outstanding stock.

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

               (vii) “Committee” means the Company’s Compensation Committee, and/or any other committee or
committees as may be designated by the Board to act as the administrative committee for the Plan,
or the Board itself (any such committee or committees and the Board of Directors in its capacity as
administrative committee for the Plan are referred to herein as the “Committee”). The Committee
shall, to the extent possible and to the extent the Board determines it to be appropriate, consist
of two or more of its members who qualify as “Non-employee Directors.” For these purposes, the
term “Non-employee Director” means a member of the Company’s Board of Directors who qualifies as a
“non-employee” director as that term is defined in paragraph (b)(3) of Rule 16b-3 promulgated under
the Act, as an “outside” director as that term is defined in Treasury Regulation Section 1.162-27,
and as an “independent” director for purposes of any applicable rules of the Securities Exchange
Commission and/or the principal exchange on which the Company’s Common Stock is traded.

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               (viii) “Common Stock” means the common stock, no par value, of the Company.

               (ix) “Covered Employee” means each person who is either the chief executive officer of the
Company or whose total compensation is required to be reported to shareholders of the Company under
the Act by reason of being among the four highest compensated officers of the Company. The intent
of this definition is to identify those persons who are “covered employees” for purposes of the
applicable provisions of Code Section 162(m) and Treasury Regulations promulgated thereunder and is
to be interpreted consistent with this intent.

               (x) “Fair Market Value” means, with respect to any date such a determination is relevant, the
closing price of the Common Stock on the day of grant as reported on the National Market System of
the National Association of Securities Dealers, Inc. Automated Quotation System, or as reported on
such other stock exchange, wherever the Common Stock may be listed, on such date as reported in the
Wall Street Journal, or if there is no closing price reported, then Fair Market Value of the Common
Stock shall mean the average between the closing bid and asked prices for the Common Stock on such
date as reported. If there are no sales reports or bid or asked quotations, as the case may be,
for a given date, the closest preceding date on which there were sales reports or bid or asked
quotations shall be used, as applicable and as the Committee may determine.

               (xi) “Hypothetical Option” means a hypothetical grant of a Stock Option used for purposes of
determining the terms, conditions and value of an SAR granted under the Plan, as described in
Section 3(i).

               (xii) “Incentive Stock Option” means an option granted under the Plan, which is intended to
qualify as an incentive stock option under Section 422 of the Code.

               (xiii) “Non Qualified Stock Option” means an option granted under the Plan which is not an
Incentive Stock Option.

               (xiv) “Option Agreement” means a written agreement between the Company and a Participant to
whom a Stock Option has been granted, as described in Section 3(a).

               (xv) “Participant” means an employee of the Company or one or more of its Subsidiaries and any
member of the Board to whom a Stock Option, SAR, an Award and/or a Performance Share Award has been
granted under the Plan.

               (xvi) “Performance Share” means a share of Common Stock subject to a Performance Share Award.

               (xvii) “Performance Share Award” means an Award granted to a Participant in accordance with
the provisions of Section 4 of the Plan.

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               (xviii) “Performance Share Award Limitation” means the limitation on the Shares that may be
granted pursuant to Performance Share Awards to any one Participant, as set forth in Section 4 of
the Plan.

               (xix) “Performance Period” means any period designated as a Performance Period by the
Committee.

               (xx) “Performance Target” means the performance target fixed by the Committee for a particular
Performance Period.

               (xxi) “Rule 16b-3” means Rule 16b-3 promulgated under the Act or any successor Rule.

               (xxii) “SAR Agreement” means a written agreement between the Company and a Participant to whom
an SAR has been granted, consistent with the terms that would be in an Option Agreement, but
providing for settlement of the SAR by means of transfer of shares of Common Stock as set forth in
Section 3(i).

               (xxiii) “Stock Appreciation Right” or “SAR” means a grant that has all of the economic rights
and benefits of a Stock Option, but which provides the Participant on exercise with shares of
Common Stock having a Fair Market Value equal to the excess of the value of the Common Stock
hypothetically subject to such Stock Option over the purchase price that would be required to be
paid on the exercise of such Stock Option.

               (xxiv) “Stock Option” means an Incentive Stock Option or Non Qualified Stock Option granted
under the Plan.

               (xxv) “Subsidiary” means any corporation whose outstanding voting securities having ordinary
voting power to elect directors (other than securities having such power only by reason of the
happening of a contingency) shall at the time be 50% or more owned, directly or indirectly, by the
Company, and any other entity that would be a Subsidiary but for the fact that such entity is not a
corporation.

          (b) Administration of the Plan. The Plan shall be administered by the Committee,
which shall have the full discretionary power, subject to and within the express limits of the
Plan, to interpret and administer the Plan and Stock Options, SARs, Awards, and Performance Share
Awards granted under it, to make and interpret rules and regulations for the administration of the
Plan, and to make changes in and revoke such rules and regulations. The Committee, in the exercise
of these powers, shall generally (and not by way of limitation):

               (i) determine all questions of policy and expediency that may arise and may correct any
defect, omission, or inconsistency in the Plan or any agreement evidencing the grant of any Stock
Option, SAR, Award, or Performance Share Award in a manner and to the extent it shall deem
necessary to make the Plan fully effective;

               (ii) determine those individuals who are eligible to be Participants in the Plan to whom Stock
Options, SARs, Awards, and/or Performance Share Award may be

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granted and the number of any thereof to be granted to any Participant, consistent with the
provisions of the Plan;

               (iii) determine the terms of Stock Options, SARs, Awards, and Performance Share Awards
granted, consistent with and subject to the limitations contained in the Plan, which authority
includes, without limitation, the power to modify or amend any documentation provided to a
Participant to clarify or amend any applicable terms and conditions applicable to any outstanding
Stock Option, SAR, Award or Performance Share Award to the extent such amendment or modification is
consistent with the express provisions of the Plan and is not, absent the Participant’s consent,
detrimental to the rights of the Participant; and

               (iv) exercise such powers and perform such acts in connection with the Plan as are deemed
necessary or expedient to promote the best interests of the Company.

          (c) Effective Date. The Plan shall be effective as of March 30, 2005 (the “Effective
Date”), provided that the Plan is approved and ratified by the Company’s shareholders at the next
regularly scheduled meeting of the Company’s shareholders. If the Plan is not so approved by the
Company’s shareholders, the Plan (as herein amended and restated) and all grants previously made
hereunder (except to the extent such grants were permissible under the Plan as in effect without
regard to its amendment and restatement herein) become null and void.

          (d) Duration. If approved by the shareholders of the Company, as provided in Section
2(c), unless sooner terminated by the Board of Directors, the Plan shall remain in effect until
December 31, 2014.

          (e) Shares Subject to the Plan. The maximum number of shares of Common Stock which
may be subject to Stock Options, SARs and Awards granted under the Plan shall be 6,250,000
(including all shares previously available for grants under the Plan prior to the adoption of this
Amended and Restated plan document), subject to adjustment in accordance with Section 6(a), which
shares may be either authorized and unissued shares of Common Stock or authorized and issued shares
of Common Stock purchased or acquired by the Company for any purpose. If a Stock Option or portion
thereof shall expire or be terminated, canceled, or surrendered for any reason without being
exercised in full, the unpurchased shares of Common Stock which were subject to such Stock Option
or portion thereof shall be available for future grants of Stock Options, SARs or Awards under the
Plan. Upon the grant of an SAR, the number of shares of Common Stock that would be subject to the
Hypothetical Option shall be treated as reducing the shares available for grants under the Plan as
though the Hypothetical Option were an outstanding Stock Option; provided, however, that, if the
SAR, or portion thereof, shall expire or be terminated, canceled, or surrendered for any reason
without being exercised in full, the shares of Common Stock which were treated as though they were
subject to a Stock Option corresponding to the Hypothetical Option (or portion thereof) shall be
available for future grants of Stock Options, SARs or Awards under the Plan, and provided, further,
that upon the exercise of the SAR, the excess of the number of shares of Common Stock subject to
the Hypothetical Option over the number of shares of Common Stock actually issued on the exercise
of such SAR shall also be again available for future grants of Stock Options, SARs or Awards under
the Plan. In the event any Award is forfeited, any shares of Common Stock

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subject to such forfeited Award shall again be available for future grants of Stock Options,
SARs, or Awards.

          (f) Amendments. The Plan may be suspended, terminated, or reinstated, in whole or in
part, at any time by the Board of Directors. The Board of Directors may from time to time make
such amendments to the Plan as it may deem advisable; provided, however, that, without the approval
of the Company’s shareholders, no amendment shall be made which:

               (i) Increases the number of shares of Common Stock which may be subject to Stock Options,
SARs, or Awards granted under the Plan (other than as provided in Section 6(a)); or

               (ii) Extends the term of the Plan; or

               (iii) Increases the period during which a Stock Option or SAR may be exercised beyond ten (10)
years from the date of grant; or

               (iv) Otherwise materially increases the benefits accruing to Participants under the Plan; or

               (v) Materially modifies the requirements as to eligibility for participation in the Plan; or

               (vi) Changes the business criteria which may be used in establishing Performance Targets
pursuant to the provisions of Section 4 of the Plan or increase the Performance Share Award
Limitation.

Termination or amendment of the Plan shall not, without the consent of the Participant, negatively
affect such Participant’s rights under any Stock Option, SAR, or Award that has previously been
granted to such Participant.

          (g) Participants and Grants. The Committee shall have full discretionary authority
with respect to Stock Options, SARs, Awards, and Performance Share Awards granted under the Plan to
vary the terms, numbers of shares and maximum benefits with respect to each Participant, subject
only to the limitations and express rules of the Plan, and to include such other terms and
conditions as may be established at the Committee’s discretion to the extent such other terms and
conditions are not in conflict with applicable terms of the Plan.

- 6 -

 

     3. STOCK OPTIONS AND SARS

          (a) General. All Stock Options granted under the Plan shall be granted by the
Committee solely at the discretion of the Committee, and shall be evidenced by an Option Agreement
executed by the Company and the Participant to whom granted which agreement shall state the number
of shares of Common Stock which may be purchased upon the exercise thereof and shall contain such
investment representations and other terms and conditions as the Committee may from time to time
determine, or, in the case of Incentive Stock Options, as may be required by Section 422 of the
Code, or any other applicable law. Notwithstanding anything herein to the contrary, no employee
shall be granted during any one calendar year Stock Options entitling such employee to purchase
more than one hundred thousand (100,000) shares of Common Stock, as such number may be adjusted
pursuant to Section 6(a). For purposes of the preceding sentence, a grant of an SAR shall be
treated as though such grant were a grant of a Stock Option corresponding to the Hypothetical
Option.

          (b) Price. Subject to the provisions of Sections 3(f)(iv) and 6(a), the purchase
price per share of Common Stock subject to a Stock Option shall, in no case, be less than one
hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date the Stock
Option is granted.

          (c) Period. The duration or term of each Stock Option granted under the Plan shall be
for such period as the Committee shall determine but in no event more than ten (10) years from the
date of grant thereof.

          (d) Exercise. Subject to Section 6(b), no Stock Option shall be exercisable prior to
the expiration of six (6) months from the date it is granted. Once exercisable, a Stock Option
shall be exercisable, in whole or in part, by delivery of notice of exercise to the Secretary of
the Company at the principal office of the Company specifying the number of shares of Common Stock
as to which the Stock Option is then being exercised together with payment of the full purchase
price for the shares being purchased upon such exercise. Until the shares of Common Stock as to
which a Stock Option is exercised are paid for in full and issued, the Participant shall have none
of the rights of a shareholder of the Company with respect to such Common Stock.

          (e) Payment. The purchase price for shares of Common Stock as to which a Stock Option
has been exercised may be paid:

               (i) In United States dollars in cash, or by check, bank draft, or money order payable in
United States dollars to the order of the Company; or

               (ii) In the discretion of the Committee by promissory note in such form as the Committee deems
appropriate, executed by the Participant; provided, however, that in no event shall such payment be
permitted to the extent such an arrangement constitutes a violation of the Sarbanes-Oxley Act of
2002, or any other applicable law; or

               (iii) In the discretion of the Committee, by the delivery by the Participant to the Company of
whole shares of Common Stock having an aggregate Fair Market Value on the date of payment equal to
the aggregate of the purchase price of Common Stock as

- 7 -

 

to which the Stock Option is then being exercised or by the withholding of whole shares of
Common Stock having such Fair Market Value upon the exercise of such Stock Option; or

               (iv) In the discretion of the Committee, in United States dollars in cash, or by check, bank
draft, or money order payable in United States dollars to the order of the Company delivered to the
Company by a broker in exchange for its receipt of stock certificates from the Company in
accordance with instructions of the Participant to the broker pursuant to which the broker is
required to deliver to the Company the amount of sale or loan proceeds required to pay the purchase
price; or

               (v) In the discretion of the Committee, by a combination of any number of the foregoing. The
Committee may, in its discretion, impose limitations, conditions, and prohibitions on the use by a
Participant of shares of Common Stock to pay the purchase price payable by such Participant upon
the exercise of a Stock Option.

          (f) Special Rules for Incentive Stock Options. Notwithstanding any other provision of
the Plan, the following provisions shall apply to Incentive Stock Options granted under the Plan:

               (i) Incentive Stock Options shall only be granted to Participants who are employees of the
Company or its corporate Subsidiaries.

               (ii) To the extent that the aggregate Fair Market Value of stock with respect to which
Incentive Stock Options are exercisable for the first time by a Participant during any calendar
year under this Plan and under any other plan of the Company or a Subsidiary under which “incentive
stock options” (as that term is defined in Code Section 422) are granted exceeds $100,000, such
Stock Options shall be treated as Non Qualified Stock Options.

               (iii) Any Participant who disposes of shares of Common Stock acquired upon the exercise of an
Incentive Stock Option by sale or exchange either within two (2) years after the date of the grant
of the Incentive Stock Option under which the shares were acquired or within one (1) year of the
acquisition of such shares, shall promptly notify the Secretary of the Company at the principal
office of the Company of such disposition, the amount realized, the purchase price per share paid
upon exercise, and the date of disposition.

               (iv) No Incentive Stock Option shall be granted to a Participant who, at the time of the
grant, owns stock representing more than ten percent (10%) of the total combined voting power of
all classes of stock either of the Company or any parent or Subsidiary of the Company, unless the
purchase price of the shares of Common Stock purchasable upon exercise of such Incentive Stock
Option is at least one hundred ten percent (110%) of the Fair Market Value (at the time the
Incentive Stock Option is granted) of the Common Stock and the Incentive Stock Option is not
exercisable more than five (5) years from the date it is granted.

          (g) Expiration and Termination of Options. Except to the extent otherwise specified
in an Option Agreement, the following provisions shall be applicable:

               (i) In the event a Participant’s employment by the Company or its Subsidiaries shall be
terminated for cause, as determined by the Committee, while the Participant

- 8 -

 

holds Stock Options granted under the Plan, all Stock Options held by the Participant shall
expire immediately.

               (ii) If a Participant, while holding Stock Options, terminates his or her employment with the
Company for any reason other than death (and other than where the termination of employment is by
the Company for cause, resulting in immediate forfeiture of all Stock Options then held by the
Participant), then each Stock Option held by the Participant that has become exercisable as of the
date of such termination of employment, shall be exercisable by the Participant during the 30 days
following the date of such termination of employment.

               (iii) If a Participant’s employment terminates by reason of the Participant’s death, each
Stock Option that was held by such Participant shall become vested and exercisable and shall,
thereafter, be exercisable by the executor or administrator of the Participant’s estate or by the
person or persons to whom the deceased Participant’s rights thereunder shall have passed by will or
by the laws of descent or distribution until the earlier of the stated expiration date of the Stock
Option or the six month anniversary date of such Participant’s death. In the event a Participant
should die during the 30 day period following a termination of employment described in Section
3(g)(ii), above, such Participant shall be treated as though he or she had remained employed
through his date of death for purposes of this Section 3(g).

               (iv) All Stock Options that were not exercisable as of the date a Participant’s employment
terminates shall be immediately forfeited. Any Stock Options that were exercisable under this
Section 3(g) during a period following the Participant’s termination of employment, but that were
not exercised during such period, shall expire as of the end of such exercise period.

Notwithstanding the foregoing, the Committee may, at its discretion, provide for an extension of
the exercise of Stock Options or for continued vesting (increase in exercisable portion) of Stock
Options after a Participant’s termination of employment if the Committee determines that such
modification is necessary or appropriate.

          (h) Effect of Leaves of Absence. It shall not be considered a termination of
employment when a Participant is on military or sick leave or such other type of leave of absence
which is considered as continuing intact the employment relationship of the Participant with the
Company or its Subsidiaries. In case of such leave of absence, the employment relationship shall
be continued until the later of the date when such leave equals ninety consecutive (90) days or the
date when the Participant’s right to reemployment shall no longer be guaranteed either by statute
or contract.

          (i) Stock Appreciation Rights (SARs). In addition to the grant of Stock Options, as
set forth above, the Committee may also grant SARs to any person eligible to be a Participant,
which grant shall consist of a right that is the economic equivalent, and in all other regards is
identical to a Stock Option that could have been granted under the Plan (the “Hypothetical Option”)
that is permitted to be granted under the Plan, except that on the exercise of such SAR, the
Participant shall receive shares of Common Stock having a Fair Market Value that is equal to the
Fair Market Value of the shares of Common Stock that would be subject to

- 9 -

 

such Hypothetical Option, reduced by the amount that would be required to be paid by the
Participant as the purchase price on exercise of such Hypothetical Option. A grant of an SAR shall
be documented by means of an SAR Agreement containing the relevant terms and conditions of such
grant. For purposes of the limitation on the number of shares of Common Stock that may be subject
to Stock Options granted to any employee during any one calendar year, and for purposes of the
aggregate limitation on the number of shares of Common Stock that may be subject to grants under
the Plan, SARs shall be treated in the same manner as the Hypothetical Option would be treated if
such Hypothetical Option were granted as a Stock Option under the Plan.

          (j) Other Terms and Conditions. When granting Stock Options or SARs, the Committee
may establish such terms and conditions as it deems to be appropriate, at its discretion, that are
not in conflict with any express terms of the Plan, which terms and conditions shall be
incorporated in the Option or SAR Agreement, as the case may be, and which may include provisions
that establish a limit on the economic value that may be realized by a Participant from a Stock
Option or SAR, or that may cause the purchase price of such Stock Option (or Hypothetical Option,
in the case of an SAR) to vary from the original purchase price, provided that such variable
purchase price can never be less than the Fair Market Value of the shares of Common Stock subject
to such Stock Option (or Hypothetical Option), determined as of the date of grant.

     4. PERFORMANCE SHARE AWARDS

          (a) Performance Share Awards. The Committee may grant Performance Share Awards of
Performance Shares pursuant to the terms of Section 5, below, which shall include vesting
requirements based specifically on the attainment of one or more Performance Targets applicable to
any such Award, as set forth in this Section 4. In the event a Participant who has been granted a
Performance Share Award terminates his or her employment with the Company prior to the date on
which the applicable Performance Target or Targets have been met (i.e., prior to vesting), such
Performance Shares shall be immediately forfeited. In addition, the Committee shall have the
authority to cause a Performance Share Award to be forfeited, in whole or in part, at any time
prior to the Committee’s determination that such Performance Share Award has become vested by
reason of attainment of one or more of the applicable Performance Targets, at the Committee’s sole
discretion. Such absolute right to reduce or eliminate a Performance Share Award shall be
exercised by the Committee in light of the Committee’s review of all facts and circumstances the
Committee deems to be relevant. The Committee shall have no authority to cause any Performance
Share Award to become vested in the absence of the achievement of the applicable Performance
Target(s).

          (b) Establishment of Performance Targets.

               (i) The Committee shall establish one or more Performance Targets for each Performance Period,
which Performance Targets may vary for different Participants who may be granted Performance Share
Awards.

- 10 -

 

               (ii) In all cases, the Performance Target(s) established with respect to any Performance
Period shall be established within the first 90 days of the Performance Period or, if shorter,
within the first twenty five percent (25%) of such Performance Period.

               (iii) Each Performance Target established under the Plan shall constitute a goal as to which
an objective method or methods is available for determining whether such Performance Target has
been achieved. In addition, the Committee shall establish in connection with the Performance
Targets applicable to a Performance Period an objective method for computing the portion of a
particular Performance Share Award that may be treated as vested as a result of attaining such
Performance Target(s).

          (c) Vesting of Performance Share Awards. Vesting of Performance Share Awards shall be
determined at the time (or times) and in the manner established by the Committee for a Performance
Period; provided, however, that no portion of a Performance Share Award shall become vested unless
and until (i) the Plan is approved by the Company’s shareholders (and such shareholder approval is
still effective for purposes of the rules on performance-based compensation applicable in
connection with Code Section 162(m), as required under Section 4(d)), and (ii) the Committee has
certified in writing that the Performance Target or Target(s) for the particular Performance Period
for which a Performance Share Award is granted has been achieved

          (d) Subsequent Shareholder Approval. The Plan shall be again disclosed to the
Company’s shareholders for approval at the time or times required under Code Section 162(m) and/or
Treasury Regulations promulgated thereunder in order for the Performance Share Awards granted under
the Plan to continue to qualify as performance-based compensation that is exempt from the
limitations on deductibility of compensation under Code Section 162(m). No Performance Share
Awards shall become vested if such required shareholder approval has not been obtained.

          (e) Criteria to be Used in Establishing Performance Targets. In establishing any
Performance Target under the Plan, the Committee shall establish an objective business target based
upon one or more of the following business criteria (which may be determined for these purposes by
reference to (i) the Company as a whole, (ii) any of the Company’s subsidiaries, operating
divisions, business segments or other operating units, or (iii), any combination thereof):
earnings before interest, taxes, depreciation, and amortization; profit before taxes; stock price;
market share; gross revenue; net revenue; pretax income; net operating income; cash flow; earnings
per share; return on equity; return on invested capital or assets; cost reductions and savings;
return on revenues or productivity; loss ratio; expense ratio; combined ratio; actual as opposed to
budgeted departmental expense variance; new business production; product spread; premium growth; or
any variations or combinations of the preceding business criteria, which may also be modified at
the discretion of the Committee, to take into account extraordinary items or which may be adjusted
to reflect such costs or expense as the Committee deems appropriate.

          (f) Performance Share Award Limitation. Notwithstanding anything to the contrary
herein, no Participant shall receive a Performance Share Award for shares of Common Stock having a
Fair Market Value, as of the date of grant, in excess of $1,500,000.

- 11 -

 

               (i) The limitation set forth in this Section 4(f) shall be applied with respect to Performance
Share Awards that relate to a Performance Period longer than one year by multiplying that
limitation by a fraction equal to the number of full calendar months in the Performance Period
divided by twelve (12).

               (ii) If a Performance Period is less than a full year, the limitation of this Section 4(f)
shall apply without adjustment; provided, however, that any such short Performance Period shall be
treated as though it were a Performance Period that extends until the end of the one year period
that starts as of the first day of the short Performance Period, and any other Performance Periods
that overlap such one year period will be subject to further limitations as though such Performance
Periods were overlapping Performance Periods, as described in subsection 4(f)(iii).

               (iii) If Performance Share Awards with overlapping Performance Periods are granted to any one
employee, the limitations of this Section 4(f) shall be reduced with respect to any such
overlapping Performance Periods so that the aggregate value of such multiple Performance Share
Awards does not exceed the limitation set forth in the first sentence of this Section 4(f),
multiplied by a fraction, the numerator of which is the number of full calendar months occurring
during the period commencing as of the first day of the first to start of such overlapping
Performance Periods, and the last day of which is the last day of the last to end of such
overlapping Performance Periods, and the denominator of which is twelve (12).

The intent of subsections (i) through (iii) of this Section 4(f) is to cause each Performance Share
Award to satisfy the limitation of this Section 4(f) as if that were the only Performance Share
Award granted, and to cause, in addition, the aggregate value of Performance Share Awards granted
for overlapping Performance Periods, to comply with the limitation of this Section 4(f) as though
such multiple Performance Share Awards constituted a single Performance Share Award.

          (g) Termination of Employment. Except as otherwise expressly provided by the
Committee, no Participant shall be entitled to vest in any Performance Share Award that would
otherwise becomes vested with respect to such Participant if the Participant is no longer employed
by the Company as of the date such Performance Share Award would otherwise become vested.

     5. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

          (a) Grant. Common Stock may be granted from time to time under the Plan by the
Committee to Participants. An Award will consist either of Common Stock to be transferred to a
Participant without payment therefor upon completion of any restriction period relating to such
Award (“Restriction Period”) and satisfaction of any performance criteria, each as may be
established by the Committee, or of a present transfer of such Common Stock to a Participant,
subject to certain conditions of forfeiture applicable to such Award during its Restriction Period.
A Restriction Period may lapse with respect to an Award so that it vests in installments or so
that it vests all at once, all as established at the discretion of the Committee and set forth in
the applicable Award Agreement.

- 12 -

 

          (b) Restrictions. Except as otherwise provided in this Section 5, or as may be set
forth in an Award Agreement, no Award or shares of Common Stock relating to any Award may be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed of during the Restriction
Period. Notwithstanding the foregoing, the Restriction Period shall be deemed to end and all
restrictions on shares of the Common Stock subject to an Award shall lapse upon the Participant’s
death while still employed by the Company or serving as a member of the Board, as the case may be.
In addition, the Committee may, at its discretion, accelerate the end of the Restriction Period on
a case by case basis in the event the Committee determines, in light of the facts and
circumstances it deems relevant, that such accelerated vesting of an Award is appropriate.

          (c) Lapse. If a Participant terminates employment with the Company for any reason
other than by reason of death, as set forth in Section 5(b), before the expiration of the
Restriction Period, the Award shall lapse and all shares of Common Stock still subject to
restriction shall be forfeited and shall be reacquired by the Company without further
consideration.

          (d) Custody of Shares. The Committee may require that the Company hold certificates
for shares of Common Stock subject to an Award until the Restriction Period expires or until
restrictions thereon otherwise lapse, or may require that any certificates evidencing such shares
of Common Stock issued to a Participant bear such legends and statements as the Committee deems
appropriate to indicate that such shares are subject to restrictions, and may also require as a
condition of any Award that the Participant shall have delivered to the Company a stock power
endorsed in blank relating to the shares of Common Stock subject to the Award. The shares of
Common Stock subject to an Award shall in all events be issued promptly after the conclusion of the
Restriction Period and the satisfaction of any applicable performance criteria if not issued
previously.

          (e) Shareholder Rights. Each Participant who receives an Award shall have all of the
rights of a shareholder with respect to such shares of Common Stock attributable thereto, including
the right to vote the shares and receive dividends and other distributions.

          (f) Agreement. Each Award granted under the Plan shall be evidenced by an Award
Agreement, which shall set forth the number of shares of Common Stock subject to the Award, the
length of the Restriction Period, and such performance criteria relating to the vesting of the
shares of Common Stock to which the Award is subject as the Committee may, in its sole discretion,
determine.

          (g) Awards of Restricted Stock Units. In addition to Awards of restricted stock, as
otherwise permitted under this Section 5, the Committee may grant Awards of restricted stock units
to any person eligible to be a Participant, which grant shall consist of a right that is the
economic equivalent, and in all other regards is identical to an Award of restricted stock, except
that an Award of a restricted stock unit shall constitute a right to receive, at the time such an
Award becomes vested, or at such later date as may be established by the Committee, that number of
shares of Common Stock that would have been transferred to the grantee as of the date of grant had
the Award been an Award of restricted stock, rather than an Award of restricted stock units.
Notwithstanding the foregoing, in the event an arrangement is established by the

- 13 -

 

Committee that provides for delivery of such shares of Common Stock at a date that is later
than the vesting date, such arrangement shall be null and void, and such shares of Common Stock
shall be transferred as soon as practicable following the Award’s vesting date unless it is
determined that the arrangement for deferred delivery of such shares complies with the requirements
of Code Section 409A so that no tax is imposed on the grantee under Code Section 409A(a). The
intent of the preceding sentence is to ensure that any arrangements involving deferral of
compensation is compliant with applicable tax law, as set forth in Code Section 409A, and will not
result in either the imposition of any income tax liability prior to delivery of the shares of
Common Stock or in imposition of any penalty taxes that may apply to deferred compensation
arrangements not in compliance with Code Section 409A. For purposes of this Section 5(g),
references to Code Section 409A shall be interpreted as including Code Section 409A, any guidance
concerning such Code Section issued by Treasury or by the IRS, any Treasury Regulations promulgated
pursuant to such Code Section, and any similar or successor provisions of the Code and applicable
Treasury Regulations.

     6. MISCELLANEOUS PROVISIONS

          (a) Adjustments Upon Changes in Capitalization. In the event of changes to the
outstanding shares of Common Stock of the Company through reorganization, merger, consolidation,
recapitalization, reclassification, stock splits, stock dividend, stock consolidation or otherwise,
an appropriate and proportionate adjustment shall be made in the number and kind of shares as to
which Stock Options, SARs or Awards may be granted. A corresponding adjustment changing the number
or kind of shares and/or the purchase price per share of unexercised Stock Options, SARs, or Awards
or portions thereof which shall have been granted prior to any such change shall likewise be made.
With respect to Awards, adjustment under this Section 6(a) shall only apply to the portion of such
an Award with respect to which shares of Common Stock were not delivered to the Participant prior
to the change in question. Notwithstanding the foregoing, in the case of a reorganization, merger
or consolidation, or sale of all or substantially all of the assets of the Company, in lieu of
adjustments as aforesaid, the Committee may in its discretion accelerate the date after which a
Stock Option or SAR may or may not be exercised or the stated expiration date thereof and may
accelerate the termination date of any Award or Performance Period then in effect. Adjustments or
changes under this Section shall be made by the Committee, whose determination as to what
adjustments or changes shall be made, and the extent thereof, shall be final, binding, and
conclusive, which adjustments may include an adjustment of the property to be received in the event
of a sale of all or substantially all of the assets of the Company to provide a right of a grantee
to share in the distribution of such proceeds in the same manner as other shareholders of the
Company.

          (b) Change in Control. Except as may be otherwise provided in a grant document, upon
the occurrence of a Change in Control, all Stock Options, SARs, Awards, and Performance Share
Awards granted and outstanding under the Plan shall become immediately exercisable in full or fully
vested, as the case may be. In addition, in the event of a Change in Control, the Committee may
take whatever action it deems necessary or desirable with respect to outstanding grants, including,
without limitation, accelerating the vesting of any grant that has not otherwise become vested,
accelerating the expiration or termination date of any outstanding grants, or modifying the terms
of any outstanding grants to take into account the anticipated impact of the Change in Control.

- 14 -

 

          (c) Non-Transferability. No Stock Option, SAR, or Award granted under the Plan shall
be transferable by the Participant except by will or the laws of descent and distribution and no
Stock Option or SAR granted under the Plan shall be exercisable during the Participant’s lifetime
by any person other than the Participant or his guardian or legal representative. Notwithstanding
the foregoing, Common Stock acquired by exercise of a Stock Option, SAR, or in connection with an
Award that has become vested and transferable shall not be subject to any restriction under this
Section 6(c). In addition, this Section 6(c) shall not apply to any transfer made pursuant to a
“qualified domestic relations order,” within the meaning of Sections 401(a)(13) and 414(p) of the
Code or within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended, or (ii), to the extent permitted at the discretion of the Committee, to any transfer by
the Participant to his or her children, grandchildren or spouse or to one or more trusts for the
benefit of such family members or to partnerships in which such family members are the only
partners (any such transfer being a “Family Transfer”); provided that the Participant receives no
consideration for a Family Transfer and provided further that any transferred Stock Option, SAR, or
Award shall continue to be subject to the same terms and conditions that were applicable
immediately prior to the Family Transfer.

          (d) Withholding. The Company’s obligations in connection with this Plan shall be
subject to applicable federal, state, and local tax withholding requirements. Federal, state, and
local withholding tax due at the time of a grant or upon the exercise of any Stock Option or SAR,
upon the lapse of restrictions on any shares of Common Stock subject to an Award, or at the time
shares of Common Stock are required to be transferred to a Participant may, in the discretion of
the Committee, be paid in shares of Common Stock already owned by the Participant or through the
withholding of shares otherwise issuable to such Participant upon such terms and conditions as the
Committee shall determine. If the Participant shall either fail to pay, or make arrangements
satisfactory to the Committee for the payment, to the Company of all such federal, state, and local
taxes required to be withheld by the Company, then the Company shall, to the extent permitted by
law, have the right to deduct from any payment of any kind otherwise due to such Participant an
amount equal to any federal, state, or local taxes of any kind required to be withheld by the
Company or take any other actions the Committee deems necessary or appropriate to protect the
Company’s interests.

          (e) Compliance with Law and Approval of Regulatory Bodies. No Stock Option or SAR
shall be exercisable and no shares will be delivered under the Plan except in compliance with all
applicable federal and state laws and regulations including, without limitation, compliance with
all federal and state securities laws and withholding tax requirements and with the rules of the
National Market System of the National Association of Securities Dealers, Inc. Automated Quotation
System and/or of any domestic stock exchange on which the Common Stock may be listed. Any share
certificate issued to evidence shares for which a Stock Option or SAR is exercised or for which an
Award has been granted may bear legends and statements the Committee shall deem advisable to assure
compliance with federal and state laws and regulations. No Stock Option or SAR shall be
exercisable and no shares will be delivered under the Plan, until the Company has obtained consent
or approval from regulatory bodies, federal or state, having jurisdiction over such matters as the
Committee may deem advisable. In the case of an Award or the exercise of a Stock Option or SAR by
a person or estate acquiring the right to the Award or the exercise of a Stock Option or SAR as a
result of the death of the Participant, the Committee may require reasonable evidence as to the
ownership of the Stock

- 15 -

 

Option, SAR or Award and may require consents and releases of taxing authorities that it may
deem advisable.

          (f) No Right to Employment. Neither the adoption of the Plan nor its operation, nor
any document describing or referring to the Plan, or any part thereof, nor the granting of any
Stock Option, SAR or Award hereunder, shall confer upon any Participant under the Plan any right to
continue in the employ of the Company or any Subsidiary, or shall in any way affect the right and
power of the Company or any Subsidiary to terminate the employment of any Participant at any time
with or without assigning a reason therefor, to the same extent as might have been done if the Plan
had not been adopted.

          (g) Separability. If any of the terms or provisions of the Plan conflict with the
requirements of Rule 16b-3 or the performance-based compensation rules applicable pursuant to Code
Section 162(m), then such terms or provisions shall be deemed inoperative to the extent they so
conflict with any such requirements.

          (h) Interpretation of the Plan. Headings are given to the Sections of the Plan solely
as a convenience to facilitate reference, such headings, numbering, and paragraphing shall not in
any case be deemed in any way material or relevant to the construction of the Plan or any provision
hereof. The use of the masculine gender shall also include within its meaning the feminine. The
use of the singular shall also include within its meaning the plural and vice versa.

          (i) Use of Proceeds. Funds received by the Company upon the exercise of Stock Options
or otherwise in connection with the Plan shall be used for the general corporate purposes of the
Company.

          (j) Construction of Plan. The place of administration of the Plan shall be in the
Commonwealth of Pennsylvania, and the validity, construction, interpretation, administration, and
effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the Commonwealth of Pennsylvania, except to the
extent preempted by federal law, or where specific reference is made herein to federal statute or
applicable regulations.

- 16 -

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