Document:

Prepared and filed by St Ives Financial

Exhibit 10.1

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

	

    	 	 
	

IN RE RF TAGS ANTITRUST LITIGATION	:
:
:
:	Consolidated Case No. 02cv3730(JEI)

SETTLEMENT AGREEMENT
	

    	 	 

     WHEREAS, plaintiffs (“Plaintiffs”), individually and on behalf of an alleged class, have brought litigation consolidated in the above-referenced action alleging that defendant Checkpoint Systems, Inc. (“Checkpoint”) participated in monopolistic practices in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; and

     WHEREAS, Defendant has denied any and all liability to Plaintiffs and the Class (defined below) and has not admitted any of the allegations of the complaints filed or lodged by Plaintiffs or other class members, including without limitation the Consolidated Amended Class Action Complaint dated March 20, 2006; and

     WHEREAS, Plaintiffs and their attorneys (“Class Counsel”) have conducted a thorough investigation into the facts and issues raised in the Action (defined below); and

     WHEREAS, Plaintiffs and Defendant wish to settle and finally resolve all actual and potential claims arising out of or relating to the matters that have been or may be asserted against Defendant in the Action; and

     WHEREAS, Plaintiffs and Class Counsel have concluded that a settlement with Defendant on the terms set forth in this agreement of settlement (“Settlement Agreement”) is fair, reasonable and adequate, and is in the best interests of Plaintiffs and the Class in light of, among other things, the stage of the Action at which the Settlement Agreement is being executed, the Court’s findings and decision in the ID Security litigation, the factual investigation conducted by Class Counsel, the risks inherent in prosecuting the Action, and the benefits obtained under the Settlement Agreement; and

 
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     WHEREAS, Defendant, without admitting any of the allegations made by Plaintiffs or any liability whatsoever to Plaintiffs or the Class, has agreed to enter into this Settlement Agreement to conclude finally and definitively all claims relating to the Action and to reduce further expense, inconvenience, and the distraction of burdensome and protracted litigation; and

     WHEREAS, the parties agree that the claims of Plaintiffs against Defendant should be certified as a class action solely for purposes of the settlement of such claims, and the parties therefore stipulate to a Class for settlement purposes only as defined below;

     NOW, THEREFORE, in consideration of the covenants and agreements set forth in this Settlement Agreement, it is agreed by and among the undersigned that the claims of Plaintiffs and the Class shall be settled and compromised with Defendant, subject to approval of the Court as required by Rule 23(e) of the Federal Rules of Civil Procedure, on the following terms and conditions:

		
     1.     As used in this Settlement Agreement, the following terms are defined as follows:

	 	 	 	 
	 	 	a.	
 “Action” means all of the following consolidated actions, each of which is pending in the United States District Court for the District of New Jersey (the “Court”) and which were consolidated (or required to be consolidated) by the Court in its Case Management Order dated October 18, 2002:  Club Sports International, Inc., d/b/a Soccer CSI; Medi-Care Pharmacy, Inc.; Baby Mika, Inc.; 1700 Pharmacy Inc.; and Washington Square Pharmacy, Inc.

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	 	 	b.	
 “Class” means and is defined as follows for settlement purposes only:

	 	 	 	 
	 	 	 	All persons or entities in the United States or its territories who directly purchased Model 410 disposable radio frequency tags from Checkpoint Systems, Inc. at any time during the period of August 2, 1998 through December 31, 2002 (the “Class Period”).  Excluded from the Class are purchasers of  Model 410 RF Tags during that time period that purchased from Checkpoint via contracts that established the price of their Model 410 RF Tags, or that purchased under Checkpoint’s “comprehensive tag” program.

	 	 	 	 
	 	 	c.	
 “Class Period” means August 2, 1998 through December 31, 2002.

	 	 	 	 
	 	 	d.	
 “Lead Counsel” means the firms of Kohn, Swift & Graf, P.C., Spector, Roseman & Kodroff, and Cohen, Milstein, Hausfeld & Toll, P.L.L.C..

	 	 	 	 
	 	 	e.	
 “Class Counsel” means the attorneys and law firms appearing for plaintiffs in the Action.

	 	 	 	 
	 	 	f.	
 “Settlement Fund” means the total amount paid by Checkpoint pursuant to the terms of this Settlement Agreement.

	 	 	 	 
	 	 	g.	
 “Depository Bank” means Morgan Stanley Dean Witter, Conshohocken, PA, designated by Lead Counsel to serve as custodial trustee and to administer the Settlement Fund.

	 	 	 	 

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	 	 	h.	  “Effective Date” means
        the date upon which each and all of the following events shall have occurred:
        (i) the Court shall have certified the Class and approved this Settlement
        Agreement in all respects, pursuant to Rule 23 of the Federal Rules of
        Civil Procedure; (ii) entry shall have been made of the final judgment
        of dismissal with prejudice as to the Defendant against Plaintiffs and
        all members of the Class who have not timely excluded themselves from
        the Class, as contemplated by paragraph 16; and (iii) the time for any
        appeal from the final judgment of dismissal and the Court’s approval
        of this Settlement Agreement shall have expired, or, if appealed, the
        final judgment has been affirmed in its entirety by the Court of last
        resort to which any such appeal has been taken and such affirmance has
        become no longer subject to further appeal or review. Neither Rule 60
        of the Federal Rules of Civil Procedure nor the All Writs Act, 28 U.S.C. § 1651,
        shall be taken into consideration in calculating the above-stated time
        periods.

		 
		
     2.     Plaintiffs and Defendant shall use their best efforts to effectuate this Settlement Agreement as soon as practicable, including cooperating as set forth below in seeking the Court’s certification of the Class for settlement purposes only, the preliminary and final approval of this Settlement Agreement, and the Court’s approval of procedures to secure the prompt, complete and final dismissal with prejudice of the Action.

		 	 	 	 
		
     3.	a.	
Subject to the provisions of this Settlement Agreement, Defendant shall pay a total of $4.65 million – $3.2 million in the form of Model 410 RF Tags (retail value (as of the date of this Agreement, approximately 90 million Model 410 RF Tags)) and $1.45 million in cash – in full and final settlement of all claims in the Action, including without limitation claims for damages, interest thereon, attorneys’ fees, costs, and expenses.  

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	 	 	b.	
 Within 20 business days after the date of this Settlement Agreement, Defendant shall pay $250,000 by wire transfer to Morgan Stanley Dean Witter (“the Checkpoint Escrow Fund”), consistent with instructions to be provided by Lead Counsel.  Defendant shall pay the remainder ($1.2 million) by wire transfer to the Checkpoint Escrow Fund upon entry of an Order granting Preliminary Approval to the settlement.  The Settlement Fund shall be held in escrow and administered by Lead Counsel and the Depository Bank, pursuant to escrow agreements approved by Lead Counsel and Defendant.

	 	 	 	 
	 	 	c.	
 As part of the class notice program (see paragraph 13 below), Checkpoint will issue to the Class Members that are existing customers credits for Model 410 RF Tags.  The amount of the credits issues shall be determined  based on those customers’ pro rata purchases during the Class Period.  The credits will expire on September 30, 2007, i.e., class members will be required to redeem the credits by September 30, 2007.  Credits can be redeemed online, by telephone or by mail, in accordance with the terms of the Notice, Exhibit B hereto, and the claimed Model 410 RF Tags shall be shipped to the customers in the ordinary course of business.

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	 	 	d.	
 No later than December 31, 2007, to the extent that any tag credits have not been redeemed, Checkpoint shall distribute any remainder of the $3.2 million retail value of Model 410 RF Tags.  Such distribution shall be made pro rata to existing Checkpoint customers that have not timely excluded themselves from the Settlement Class, but only to the extent of a Class Member’s unredeemed credits.  All Model 410 RF Tags shall be issued and shipped on a pro rata basis to the class prior to December 31, 2007.  

	 	 	 	 
	 	 	e.	
 The recipients of the Model 410 RF Tags who redeem their credits will be required to pay normal, customary shipping charges, just as with orders placed in the ordinary course of business.  Checkpoint agrees to use best efforts to ship the tags along with another order placed by the class member in the ordinary counsel of business, in order to minimize the incremental shipping costs required under this paragraph.  For those Model 410 RF Tags that were not redeemed prior to September 30, 2007, Checkpoint may deduct the normal, customary shipping charges from the value of any remaining distribution using the most economical method of shipping that is customary in the ordinary course of business.   By January 15, 2008, Defendant shall file a status report with
Class Counsel confirming its completion of the pro rata tag distribution described herein. 

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	 	 	f.	
 Within 30 days after the Effective Date of the Settlement, Class Counsel will distribute $50,000 pro rata (i.e., based on purchases of Model 410 RF Tags during the Class Period) to all class members that are former Checkpoint customers that have not timely excluded themselves from the Settlement Class and that have submitted a valid claim.

		 
		
     4.     On the Effective Date Defendant shall be deemed to have finally and completely discharged its entire obligation to Plaintiffs and to each and every member of the Settlement Class for the payment of any sums or any other relief of any nature whatever in connection with the claims asserted in the Action, all other Released Claims as defined in paragraphs 23, 24 and 26, and this Settlement Agreement.

		 
		
     5.     Within thirty (30) days of the date of this Settlement Agreement, Defendant shall, at Defendant’s expense, provide to Lead Counsel a list in electronic form of all class members identifiable by reasonable means from Defendant’s records, including class members’ last known email and street addresses, and the dollar amount and pro rata share of their purchases of Model 410 RF Tags during the Class Period.

		 
		
     6.     The Settlement Fund is intended as and shall be a separate escrow fund of moneys and shall qualify as a “qualified settlement fund” within the meaning of Treasury Regulation Section 1.468B-1.  Lead Counsel or their designee shall be the “administrator” of the Settlement Fund within the meaning of Treasury Regulation Section 1.468B-2(k)(3).  Lead Counsel shall apply, or shall cause application to be made, to the Internal Revenue Service for an employer identification number on behalf of the Settlement Fund.  Lead Counsel shall cause to be prepared on behalf of the Settlement Fund any and all required tax returns and shall file such tax returns with all appropriate tax
authorities.  Lead Counsel shall cause any taxes shown due on such returns and payable by the Settlement Fund to be paid to the Internal Revenue Service or other tax authority on behalf of the Settlement Fund from the funds on deposit in the Settlement Fund. Lead Counsel shall do or cause to be done any and all other acts as may be required to cause the Settlement Fund to qualify and remain qualified as a “qualified settlement fund” as described above.

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     7.     Until such time after the Effective Date as the Settlement Fund is distributed consistent with the terms of this Agreement and as otherwise ordered by the Court, the Settlement Fund shall be invested and reinvested by Lead Counsel in United States Treasury Bills, Notes or other obligations of the United States or its instrumentalities of no more than six (6) months duration, except that such portions of the Settlement Fund as may reasonably be needed to pay current expenses associated with providing notice of the settlement to the Class, payment of taxes arising with respect to income earned by the Settlement Fund (including without limitation reasonable expenses of a tax attorney or consultant and
mailing and distribution costs and expenses related to filing tax returns), and Administrative Costs (as defined below), may be held in the form of cash or money market instruments.  All interest and gains earned on the Settlement Fund or any portion thereof shall become and remain a part thereof.  Defendant shall not be responsible for any losses, principal or otherwise, of the Settlement Fund.

		 
		
     8.     Administrative Costs, as used in this Settlement Agreement, are limited to payments made to administer the Settlement and Settlement Fund, including for preparation and mailing of tax forms and tax returns, and shall not include reimbursement for attorneys’ fees in connection with Administrative Costs.

 

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     9.     Before the Court issues a final order approving this Settlement Agreement, disbursements for reasonable expenses actually incurred in providing notice of the settlement to the Class, including the costs of printing, mailing, or publishing notice, or retaining a settlement administrator to carry out all responsibilities relating to providing such notice and administration, may be made from the Settlement Fund in a total amount not to exceed $50,000 without further order of the Court, and the amounts for incurred expenses shall not be refundable to Defendant in the event the Settlement Agreement is disapproved, voided, or otherwise fails to become final.  No other payments, disbursement, or transfers of
any kind, including Class Counsel’s attorneys’ fees and costs of litigation, from the Settlement Fund shall be made prior to the Effective Date without leave of Court for good cause shown.  Plaintiffs shall make reasonable efforts to minimize expenditures from the Settlement Fund.

		 
		
     10.     Defendant shall not have any responsibility to make any filings relating to the Settlement Fund, and Defendant shall have no responsibility to pay tax, including interest and penalties due thereon, on income earned by the Settlement Fund.  In the event the settlement is not consummated, and the Settlement Fund (or a portion thereof) is returned to Defendant, Defendant shall be responsible, respectively, for payment of all taxes on income earned on the Settlement Fund after the date of such return.

 

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     11.     Upon the execution of this Settlement Agreement, the prosecution and defense of the Action shall be stayed except insofar as is necessary to implement the terms of this Settlement Agreement.  

		 
		
     12.     No later than 15 days after the execution of this Settlement Agreement, unless otherwise extended by written agreement of the parties hereto, Plaintiffs shall submit to the Court a motion for preliminary approval of the Settlement Agreement, together with a proposed Order substantially in a form attached to this Settlement Agreement as Ex. A:

	 	 	 	 
	 	 	a.	
 Preliminarily approving this Settlement Agreement;

	 	 	 	 
	 	 	b.	
 Certifying the Class for settlement purposes only;

	 	 	 	 
	 	 	c.	
 Requiring appropriate notice to be given to the Class within thirty (30) days of preliminary approval in a form and manner found by the Court to be sufficient to satisfy the requirements of Fed. R. Civ. P. 23 and state and federal constitutional due process, which notice shall be in a form acceptable to the parties and the Court;

	 	 	 	 
	 	 	d.	
 Scheduling dates for Class members to request exclusion from the Class, or object to the Settlement Agreement, and for a hearing on final approval of the Settlement Agreement;

	 	 	 	 
	 	 	e.	
 Reserving jurisdiction as to each party to the settlement over the effectuation of the Settlement Agreement for all purposes, including enforcement of the terms hereof and resolving any disputes that may arise; and

	 	 	 	 

 

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	 	 	f.	  Providing that, pending a
        hearing on final approval of the settlement, all discovery and other
        proceedings in the Action are stayed, except for proceedings relating
        to the Settlement Agreement.

	 	 	 	 
	 	 	g.	
 Plaintiffs shall request that a hearing on its motion for preliminary approval of this Settlement Agreement be held within fifteen (15) days of the date of the motion.

		 
		
     13.     In connection with the motion filed pursuant to paragraph 12 above, Lead Counsel will submit to the Court proposed forms of notice to the Class substantially in the forms attached to this Settlement Agreement as Exs. B and C.  Lead Counsel will recommend to the Court that notice be given by electronic or first class mail, postage prepaid to those Class members who have been identified by reasonable means from Defendant’s records, pursuant to paragraph 5 above, at the last known email (in the first instance) or street (in the second instance) address identified in Defendant’s records, by posting of the Notice via a link prominently featured on the home page of Defendant’s web site,
and by publication of a summary notice in one trade publication to be agreed upon by the parties.  Subject to Court approval, the cost of providing notice shall be paid solely out of the Settlement Fund and prior to final judicial approval of this Settlement Agreement.  Such proposed notice to the Class, among other things, shall:

	 	 	 	 
	 	 	a.	
 Describe the nature of the litigation, who comprises the Class and the terms of the settlement;

 

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	 	 	b.	
 Direct a hearing to be held to determine the reasonableness, adequacy and fairness of this Settlement Agreement, including whether it should be approved by the Court;

	 	 	 	 
	 	 	c.	
 Provide that any class member who objects to the approval of this Settlement Agreement or to the final judgment to be entered in this litigation may appear at the hearing and show cause why the proposed settlement should not be approved as fair, reasonable, and adequate and why a final judgment should not be entered;

	 	 	 	 
	 	 	d.	
 Require that the objection of any such class member must be made in writing and that such objection, together with any supporting papers, must be filed with the Court within such time prior to the hearing as the Court may direct; and

	 	 	 	 
	 	 	e.	
 Direct class members wishing to exclude themselves from the Class as to the date and manner by which to do so.

		 
		
     14.     Defendant will have the right but not the obligation to withdraw from this Settlement Agreement if, as of the deadline fixed by the Court for members of the Class to exclude themselves pursuant to Fed. R. Civ. P. 23, a percentage of the Class set forth in a separate Supplemental Agreement Regarding Opt-Outs between the parties have submitted timely and valid notice that they are opting out of the Class.  Any decision by Defendant to withdraw from this Settlement Agreement pursuant to this paragraph will be in accordance with the procedures set forth in the Supplemental Agreement Regarding Opt-Outs.  The Supplemental Agreement Regarding Opt-Outs will not be filed with the Court unless and until a
dispute among the parties arises concerning its interpretation or application.

 

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     15.     In the event Defendant elects to withdraw from the Settlement Agreement then this Settlement Agreement shall terminate, shall be null and void and of no force and effect, and shall be treated as if the Court did not give preliminary approval to it, and the Settlement Fund shall be returned to Defendant as provided in paragraph 21 below.

		 
		
     16.     If the Court preliminarily approves this Settlement Agreement, and Defendant does not withdraw from this Settlement Agreement pursuant to its terms, Plaintiffs shall, at least one week prior to the hearing for final approval of this Settlement Agreement set by the Court, or some other time as the Court may order, submit to the Court a motion for entry of an order and final judgment substantially in the form attached to this Agreement as Exhibit D, which in substance shall:

	 	 	 	 
	 	 	a.	
 As to the Action, approve finally this Settlement Agreement and its terms as being a fair, reasonable and adequate settlement as to the class members within the meaning of Rule 23 of the Federal Rules of Civil Procedure and direct its consummation according to its terms;

	 	 	 	 
	 	 	b.	
 Direct that the Action be dismissed with prejudice and without costs;

	 	 	 	 
	 	 	c.	
 Discharge and release the Released Parties, as defined below, from all Released Claims and enjoin class members from further pursuing any Released Claim;

 

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	 	 	d.	
 Provide that Defendant shall have no other obligations to Plaintiffs or the Class;

	 	 	 	 
	 	 	e.	
 Determine that the Settlement Agreement and any proceedings taken pursuant thereto are not, and should not in any event be: (i) offered or received as evidence of a presumption, concession, or admission by any Released Party of any fact or matter; or (ii) offered or received as evidence of a presumption, concession or admission of any liability, fault, wrongdoing or other dereliction of duty, or (except with written consent of the Released Party) in any way referred to for any reason in the Action, or in any other civil, criminal, bankruptcy, or administrative action or proceeding; provided, however, that reference may be made to this Settlement Agreement in such proceedings as may be necessary to effectuate the provisions of this Settlement
Agreement;

	 	 	 	 
	 	 	f.	
 Reserve jurisdiction as to each party over the effectuation of the Settlement Agreement for all purposes, including enforcement of the terms hereof and resolving any disputes that may arise;

	 	 	 	 
	 	 	g.	
 Determine under Federal Rule of Civil Procedure 23 that there is no just reason for delay and direct that the judgment of dismissal with prejudice as to Defendant shall be final;

	 	 	 	 
	 	 	h.	
 Contain any other provisions mandated by this Settlement Agreement.

 

 

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     17.     This Settlement Agreement, if not terminated pursuant to any provision hereof, shall become final on the “Effective Date.” 

		 
		
     18.     Upon final approval of this Settlement Agreement, Plaintiffs and members of the Class who have not timely excluded themselves from the Class shall be deemed to have stipulated that the Action shall be dismissed with prejudice and without costs.

		 
		
     19.     Lead Counsel, on behalf of all Class Counsel, will apply to the Court for an award from the Settlement Fund of attorneys’ fees and reimbursement of costs from the Settlement Fund, and for an incentive award to Plaintiffs from the Settlement Fund.  Lead counsel will request that any attorneys’ fees and expenses awarded be paid to Lead Counsel and any incentive award be paid to Plaintiffs on the Effective Date.  Any court-awarded attorneys’ fees will be allocated by Lead Counsel among Class Counsel based on Lead Counsel’s assessment of Class Counsel’s relative contribution to the litigation.  Defendant agrees not to object to or take any steps whatever to undermine any
application by Lead Counsel for reasonable attorneys’ fees (not to exceed 30% percent of the Settlement Fund) and costs, or for a reasonable incentive award.

		 
		
     20.     In the event (i) the Court denies the motion for preliminary or final approval of, or otherwise refuses to approve, this Settlement Agreement or any material part of it, (ii) the final judgment contemplated by paragraph 18 hereof is not entered, (iii) the final judgment contemplated by paragraph 18 shall have been vacated, reversed or modified upon appeal, (iv) the Settlement Agreement is rescinded, withdrawn, or otherwise terminated in accordance with its terms, or (v) this Settlement Agreement does not become final for any reason, this Settlement Agreement shall be null and void and of no force and effect (unless all parties agree to proceed with the settlement as and if modified by the
Court, in which event the parties shall proceed with the Settlement Agreement as modified), and this Settlement Agreement and all negotiations and proceedings connected with it shall be without prejudice to the rights of any party hereto, shall not be deemed or construed to be an admission by any party of any fact or matter, and shall not be used in any way in these actions or in any other action or proceedings.

 

 

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     21.     In the event this Settlement Agreement is terminated, rescinded, is null and void, or does not become final for any reason, within five (5) business days of notice by Defendant of such event the Settlement Fund, including interest, shall be disbursed to Defendant by wire transfer into accounts designated by Defendant, less the portion attributable to Defendant of any Court-approved costs, including Administrative Costs incurred for administering the Settlement Fund and for giving notice and administering the settlement as provided for in this Settlement Agreement.  

		 
		
     22.     In addition to the effect of any final judgment entered in these actions, upon approval by the Court, this Settlement Agreement (i) shall inure to the benefit of and be binding upon Defendant and its past, present, and future parents, predecessors, subsidiaries, affiliates, and divisions, and all of their respective officers, directors, owners, partners, governors, employees, agents, nominees, successors, assigns and legal representatives, and (ii) shall also inure to the benefit of and be binding upon Plaintiffs and each and every member of the Class and their respective past, present, and future parents, predecessors, subsidiaries, affiliates, and divisions, and all of their respective officers,
directors, employees, governors, agents, nominees, successors, assigns, and legal representatives.

 

 

 

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     23.     Plaintiffs, on behalf of themselves and the Class and as the representative of the Class, and all class members, on their own behalf and on behalf of all of their respective officers, directors, shareholders, agents, employees, attorneys, predecessors, successors, representatives, executors, administrators, descendants, heirs, past, present, direct, or indirect subsidiaries, parents, divisions, or affiliates, and any assignors (past, current, or future) or assignees (past, current, or future) of Plaintiffs or any Class member and all assignors (past, current, or future) to or assignees (past, current, or future) from said assignors or any of the other persons or entities listed above in this sentence
(all of the above in this sentence hereinafter collectively the “Releasing Parties”), for good and valuable consideration and upon the Effective Date without further action, shall fully, finally, and forever release, relinquish, and discharge Defendant and each of its past, present, or future, and direct or indirect, parents, predecessors, successors, subsidiaries, affiliates, and divisions, and all of their respective past, present, or future officers, directors, managing directors, members, owners, partners, governors, shareholders, agents, employees, nominees, attorneys, predecessors, successors, assigns, indemnitees, and representatives (all of the above in this sentence beginning with “Defendant” hereinafter collectively the “Released Parties”) from
any and all claims, demands, rights, causes of action, suits, obligations, damages, or liabilities of any kind or description whatever, including costs, expenses and attorneys’ fees, known or unknown, suspected or unsuspected, asserted or unasserted, in law or equity, for monetary, declaratory, injunctive, or other relief, whether individual, class, representative, or other in nature, that Plaintiffs or any other Class member ever had, now has, or hereafter can, shall, or may have, arising out of, relating to, or having connection in any way whatever with, any act, fact, omission, cause, claim, count, matter or allegation that in whole or in part is the subject of, asserted in, or could have been asserted in, any of the complaints filed or lodged by any plaintiff in the Action
(including without limitation the Consolidated Amended Class Action Complaint), including without limitation any allegation arising under any federal or state antitrust, unfair trade practices, or competition law.  

 

 

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     24.     Each and every Releasing Party, through Plaintiffs as representatives of the Class, covenants and agrees that, as of the Effective Date, it shall be forever barred from instituting, maintaining, prosecuting, or assigning any and all Released Claims against, or collecting on any and all Released Claims from, any of the Released Parties (including without limitation by participating in, or recovering as a result of, any class or representative action, whether under federal, state, or other law, in which any Released Claims have been or may be brought).

		 
		
     25.     Defendant, for good and valuable consideration, and upon the Effective Date without further action, shall release and discharge Plaintiffs and every member of the Class that has not timely excluded itself, and each of their present and past parents, predecessors, subsidiaries, affiliates, divisions, officers, directors, governors, stockholders, employees, agents, and their respective successors, assigns or legal representatives, and Class Counsel from any and all claims, demands, causes of action, or obligations of any kind based upon the commencement and prosecution of the Action, including costs, expenses and attorneys’ fees.

		 
		
     26.     With respect to any and all Released Claims and upon the Effective Date without further action, for good and valuable consideration, Plaintiffs, on behalf of themselves and the Class and as the representative of the Class, shall expressly, and all class members shall be deemed to have, and by operation of the final judgment contemplated by this Settlement Agreement shall have, fully, finally, and forever expressly waived and relinquished, to the fullest extent permitted by law, any and all provisions, rights, and benefits of section 1542 of the California Civil Code and any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States or principle of
common law that is similar, comparable, or equivalent to section 1542 of the California Civil Code, which provides:

 

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	 	 	 	“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

Each member of the Class may hereafter discover facts other than or different from those which he, she, or it knows or believes to be true with respect to the Released Claims, but each member of the Class hereby expressly waives and fully, finally, and forever settles and releases, upon this Settlement Agreement becoming final, any known or unknown, suspected or unsuspected, contingent or non-contingent claim which is a Released Claim, without regard to the subsequent discovery or existence of such different or additional facts.

		
     27.     All notices, demands, and requests as specified herein shall be in writing and shall be sent, by electronic mail (if practicable) and overnight courier, to Lead Counsel and each of the undersigned Defendant’s counsel.  In no event shall the time period for taking any action under this Settlement Agreement be extended by reason of Fed. R. Civ. P. 6(e).

		 
		
     28.     The parties may execute this Settlement Agreement in counterparts, and the execution of the counterparts shall have the same effect as if all parties have signed the same instrument.  Any executed counterpart of this Agreement may be transmitted by facsimile, and such counterpart shall be treated as an original.

 

 

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     29.     The undersigned attorneys represent that they are authorized to execute this Settlement Agreement on behalf of the parties whom they respectively represent.  Other than as expressly set forth in this Settlement Agreement and the Supplemental Agreement Regarding Opt Outs, no party to the Settlement Agreement has relied on any representation of another party in entering into the Settlement Agreement.  No provision of this Settlement Agreement may be modified except by a writing signed by all parties hereto.

		 
		
     30.     This Settlement Agreement, together with the Supplemental Agreement Regarding Opt-Outs, constitutes the entire agreement among the parties pertaining to the subject matter thereof and supersedes all prior and contemporaneous undertakings of the parties in connection herewith.

		 
		
     31.     The parties agree that the United States District Court for the District of New Jersey shall retain jurisdiction over the interpretation, effectuation, and implementation of this Settlement Agreement.

		 
		
     32.     This Settlement Agreement may be pleaded as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit, or other proceeding that may be instituted, prosecuted, maintained, or attempted in breach of this Settlement Agreement.

     IN WITNESS THEREOF, the parties hereto have caused this Settlement Agreement to be executed by their duly authorized representatives on the ____ day of  June, 2006.

 

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	 	Michael J. Boni
	 	KOHN, SWIFT & GRAF, P.C.
	 	One South Broad Street
	 	Suite 2100
	 	Philadelphia, PA  19107
	 	(215) 238-1700
	 	 
	 	 
	 	 
	 	

	 	Eugene A. Spector
	 	SPECTOR ROSEMAN & KODROFF, P.C.
	 	1818 Market Street, Suite 2500
	 	Philadelphia, PA 19103
	 	(215) 496-0300
	 	 
	 	 
	 	 
	 	

	 	Paul T. Gallagher
	 	Andrea Hertzfeld
	 	COHEN, MILSTEIN, HAUSFELD & TOLL, P.L.L.C.
	 	1100 New York Ave. NW
	 	Suite 500, West Tower
	 	Washington, D.C. 20005
	 	(202) 408-4600 
	 	 
	 	Co-Lead Counsel for Plaintiffs
	 	 
	 	 
	 	 
	 	

	 	John DeQ. Briggs
	 	James G. Kress
	 	HOWREY LLP
	 	1299 Pennsylvania Avenue NW
	 	Washington, DC 20004
	 	(202) 783-0800
	 	 
	 	Attorneys for Defendant Checkpoint Systems, Inc.

21<PAGE>

                                                                    EXHIBIT 10.3

                            ERESEARCHTECHNOLOGY, INC.

                             2003 STOCK OPTION PLAN

1.   PURPOSE

     The purpose of the 2003 Stock Option Plan (referred to herein as the
"Plan") of eResearchTechnology, Inc. (the "Company") is to provide a means by
which certain employees and directors of, and others providing services to or
having a relationship with, the Company and its subsidiaries (as such term is
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code")) may be given an opportunity to purchase shares of common stock of the
Company ("Common Stock"). The Plan is intended to promote the interests of the
Company by encouraging stock ownership on the part of such individuals, by
enabling the Company and its subsidiaries to secure and retain the services of
highly qualified persons, and by providing such individuals with an additional
incentive to advance the success of the Company and its subsidiaries.

2.   ADMINISTRATION

     A. GENERAL. The Plan shall be administered by a Committee consisting of not
less than two directors (the "Committee") to be appointed from time to time by
the Board of Directors. Membership on the Committee shall in any event be
limited to those members of the Board who (i) are "Non-Employee Directors" as
defined in the regulations promulgated by the Securities and Exchange Commission
pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor statute or regulation, and (ii) "outside
directors" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Committee shall have the power to select
option holders, to establish the number of shares and other terms applicable to
each such option, to construe the provisions of the Plan and to adopt rules and
regulations governing the administration of the Plan. All decisions,
determinations and interpretations of the Committee shall be final and binding
on all holders of stock options ("Stock Options") granted under the Plan. All
power and authority granted hereunder to the Committee may, at the discretion of
the Board of Directors, be exercised by the Board of Directors, and unless the
context clearly indicates otherwise, all references herein to the "Committee"
shall be deemed to refer to the Board of Directors in the absence of the
appointment of the Committee or in the event of the exercise by the Board of
Directors of the Committee's power and authority. The members of the Board of
Directors or the Committee shall not be liable for any action or determination
made in good faith with respect to the Plan or to any Stock Option granted
pursuant thereto.

     B. ADDITIONAL POWERS. The Committee may: (i) modify or restrict exercise
procedures and any other Plan procedures; (ii) establish local country plans as
subplans to this Plan, each of which may be attached as an Appendix hereto and
to the extent that the Committee determines that the restrictions imposed by the
Plan preclude the achievement of the material

                                       1

<PAGE>

purposes of awarding Stock Options in jurisdictions outside the United States
under such a subplan, the Committee will have the authority and discretion to
modify those restrictions as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of jurisdictions
outside the United States; (iii) take any action, before or after a Stock Option
is granted, which it deems advisable to obtain or comply with any necessary
local government regulatory exemptions or approvals; provided that the Committee
may not take any action hereunder which would violate any securities law or any
governing statute.

3.   ELIGIBILITY

     The persons who shall be eligible to participate in this Plan and receive
Stock Options hereunder shall be the Company's directors and such employees and
other individuals who provide services to or otherwise have a relationship with
the Company or its subsidiaries as the Committee shall from time to time
determine. An eligible individual may receive more than one award of stock
options under the Plan.

4.   ALLOTMENT OF SHARES

     Subject to Section 6.A(v) of the Plan, the shares of the Common Stock,
$0.01 par value, of the Company that may be issued under the Plan shall be
850,000* shares. Such shares may be authorized and unissued shares (that are not
reserved for any other purpose) or shares issued and subsequently reacquired by
the Company. Without limiting the generality of the foregoing, whenever the
Company receives shares of Common Stock in connection with the exercise of or
payment for any Stock Options granted under the Plan, only the net number of
shares actually issued shall be counted against the foregoing limit. Shares that
by reason of the expiration of a Stock Option or otherwise are no longer subject
to purchase pursuant to a Stock Option granted under the Plan may be available
for subsequent grants of Stock Options under the Plan. Notwithstanding anything
to the contrary set forth in the Plan, the maximum number of shares of Common
Stock for which Stock Options may be granted to any employee in any calendar
year shall be 150,000 shares.

5.   EFFECTIVE DATE AND TERM OF PLAN

     The effective date of the Plan is the date on which it is approved by the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company present or represented by proxy and entitled to vote at a meeting of
stockholders or, if action is by written consent in lieu of a meeting of
stockholders, by the consent of the holders of a majority of the outstanding
shares of Common Stock of the Company. The Plan shall terminate one day before
the tenth anniversary of the effective date, but the Board of Directors may
terminate the Plan at any time prior thereto. Termination of the Plan shall not
alter or impair, without the consent of the option holder, any of the rights or
obligations of any Stock Option theretofore granted under the Plan, except or
specifically authorized herein.

6.   TERMS AND CONDITIONS

     A.   ALL STOCK OPTIONS

          Stock Options granted pursuant to this Plan shall be evidenced by
Stock Option agreements in such form not inconsistent with the Plan as the
Committee shall from time to time approve. Nothing in this Plan or any Stock
Option granted hereunder shall govern the

                                       2

<PAGE>

employment rights and duties between the option holder and the Company or
subsidiary. Neither this Plan, nor any grant or exercise pursuant thereto, shall
constitute an employment agreement among such parties. The following shall also
apply to all Stock Options granted under the Plan.

          (i)  OPTION PRICE

               The option price per share of Common Stock for each Stock Option
shall be determined by the Committee, consistent with the provisions of this
Plan.

          (ii) TIME OF EXERCISE OF OPTION

               Except as otherwise set forth herein, the Committee shall
establish the option period and time or times within the option period when the
Stock Option may be exercised in whole or in such parts as may be specified from
time to time by the Committee, provided that no Stock Option shall be
exercisable after ten years from the date of grant thereof. Unless otherwise
determined by the Committee in its sole discretion, no Stock Option shall be
exercisable until after the expiration of six months from the date of grant. The
Committee may in its discretion accelerate the time or times when any particular
Stock Option held by said option holder may be so exercised so that such time or
times are earlier than those originally provided in the Stock Option agreement,
upon such circumstances and subject to such terms and conditions as the
Committee deems appropriate. In all cases, exercise of a Stock Option shall be
subject to the provisions of Section 6A(vi).

          (iii) PAYMENT AND MANNER OF EXERCISE

               The entire option price shall be paid at the time the Stock
Option is exercised. To the extent that the right to purchase shares of Common
Stock has accrued hereunder, Stock Options may be exercised from time to time by
written notice to the Company stating the full number of shares with respect to
which the Stock Option is being exercised and the time of delivery thereof, in
accordance with such administrative procedures as may from time to time be
specified by the Committee. Such notice of exercise shall be accompanied by full
payment for the shares by: (1) certified or official bank check or the
equivalent thereof acceptable to Company; (2) at the sole discretion of the
Committee, by tendering to the Company shares of Common Stock, or requesting the
Company to accept shares to be acquired by exercising the Stock Option, having
an aggregate fair market value, determined by the Company at the date of
payment, equal to the option price, provided that such shares are not subject to
any pledge or other security interest; (3) at the sole discretion of the
Committee, by permitting the option holder to deliver written notice to the
Company and a broker, with irrevocable instructions to the broker promptly to
deliver to the Company the amount of sale or loan proceeds necessary to pay the
option price; or (4) at sole discretion of the Committee, any combination of the
foregoing.

               Upon exercise, the Company shall deliver to the option holder (or
other person entitled to exercise the Stock Option), at the principal office of
the Company, or such other place as shall be mutually agreed upon, a certificate
or certificates for such shares; provided, however, that the time of delivery
may be postponed by the Company for such periods as may be required for it with
reasonable diligence to comply with any requirements of law; and provided
further that in the event the Common Stock that is issuable upon exercise is not

                                       3

<PAGE>

registered under the Securities Act of 1933 (the "Act"), then the Company may
require that the registered owner deliver an investment representation in form
acceptable to the Company and its counsel, and the Company will place a legend
on the certificate for such Common Stock restricting the transfer of same. There
shall be no obligation or duty for the Company to register under the Act at any
time the Common Stock issuable upon exercise of the Stock Option. If the option
holder (or other person entitled to exercise the Stock Option) fails to accept
delivery, the option holder's payment shall be returned and the right to
exercise the Stock Option with respect to such undelivered shares shall be
terminated.

               The Committee may also, in its discretion and subject to prior
notification to the Company by an option holder, permit an option holder to
enter into an agreement with the Company's transfer agent or a brokerage firm of
national standing whereby the option holder will simultaneously exercise the
Stock Option and sell the shares acquired thereby through the Company's transfer
agent or such brokerage firm and either the Company's transfer agent or the
brokerage firm executing the sale will remit to the Company from the proceeds of
sale the exercise price of the shares as to which the Stock Option has been
exercised.

               The Company may, at any time, offer to buy out one or more Stock
Options for payment in cash, based on such terms and conditions as the Committee
shall establish and communicate to the option holder at the time that such offer
is made.

          (iv) NON-TRANSFERABILITY OF STOCK OPTION

               A Stock Option by its terms shall not be assignable or
transferable by the option holder otherwise than by will or by the laws of
descent and distribution.

          (v)  ADJUSTMENT IN EVENT OF RECAPITALIZATION OF THE COMPANY

               (a) CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Stock Option and the number of shares of Common Stock that have
been authorized for issuance under the Plan but as to which no Stock Options
have yet been granted or which have been returned to the Plan upon cancellation
or expiration of a Stock Option, including the maximum number of shares of
Common Stock for which Stock Options may be granted to any employee in any
calendar year, as well as the price per share of Common Stock covered by each
such outstanding Stock Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company, or other similar event that affects the Common
Stock such that an adjustment is required to preserve or prevent enlargement of
the benefits or potential benefits made available under the Plan. Such
adjustment shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to a Stock Option.

                                       4

<PAGE>

               (b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, all outstanding Stock Options will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Committee. The Committee may, in the exercise of its
discretion in such instances, declare that any Stock Option shall terminate as
of a date fixed by the Committee and give each option holder the right to
exercise the option holder's Stock Option as to all or any part of the shares of
Common Stock covered by the Stock Option, including shares as to which the Stock
Option would not otherwise be exercisable.

               (c) SALE OR MERGER. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Committee, in the exercise of its sole
discretion, may take such action as it deems desirable, including, but not
limited to: (i) causing a Stock Option to be assumed or an equivalent Stock
Option to be substituted by the successor corporation or a parent or subsidiary
of such successor corporation, (ii) providing that each option holder shall have
the right to exercise the option holder's Stock Option as to all of the shares
of Common Stock covered by the Stock Option, including shares as to which the
Stock Option would not otherwise be exercisable, or (iii) declaring that a Stock
Option shall terminate at a date fixed by the Committee provided that the option
holder is given notice and opportunity to exercise the then exercisable portion
of the option holder's Stock Option prior to such date.

          (vi) RIGHTS AFTER TERMINATION OF EMPLOYMENT

               In the event of termination of employment due to any cause other
than death or disability, rights to exercise the Stock Option to the extent
otherwise exercisable on the date of termination of employment, or to any
greater extent permitted by the Committee, shall terminate three months
following cessation of employment. In the event of termination of employment due
to disability (within the meaning of Section 22(e)(3) of the Code) or death,
such option holder or executor, administrator or devisee of an option holder,
shall have the right to exercise such Stock Option (to the extent otherwise
exercisable on the date of death or disability) at any time within one year
after cessation of employment by reason of such disability or death. In the
event of termination of employment for any reason, including death or
disability, any portion of the Stock Option not exercisable on the date of such
termination of employment shall expire unless otherwise provided by this Plan or
the Committee in its sole discretion.

          (vii) FAIR MARKET VALUE

               "Fair Market Value" on any date means: (a) if the Common Stock is
listed on a national securities exchange, the closing price reported as having
occurred on the primary exchange with which the Common Stock is listed and
traded; (b) if the Common Stock is not listed on any national securities
exchange but is quoted in the Nasdaq Stock Market on a last sale basis, the last
sale reported on such date, or, if there is no such sale on that date, then on
the last preceding date on which a sale was reported; or (c) if the Common Stock
is not listed on a national securities exchange nor quoted in the Nasdaq Stock
Market on a last sale basis, the amount determined by the Committee to be the
fair market value based upon a good faith attempt to value the Common Stock in
accordance with the Code and regulations promulgated thereunder.

     B.   NON-QUALIFIED STOCK OPTIONS

                                       5

<PAGE>

          The Committee may, in its discretion, grant Stock Options under the
Plan which, in whole or in part, do not qualify as incentive stock options under
Section 422 of the Code ("Non-Qualified Options"). The terms and conditions of
the Non-Qualified Options shall be governed by Section 6A above.

                                       6

<PAGE>

          (i)  OPTION PRICE

          The option price per share for each Non-Qualified Option shall not be
less than 100% of the fair market value of the Common Stock on the date the
Stock Option is granted. The fair market value shall be determined as set forth
in Section 6A(vii) above.

     C.   INCENTIVE STOCK OPTIONS

          The Committee may, in its discretion, grant Stock Options under the
Plan, which qualify, in whole or in part, as incentive stock options ("Incentive
Stock Option") under Section 422 of the Code. In addition to the terms and
conditions set forth in Section 6A above, the following terms and conditions
shall govern any Incentive Stock Option issued under the Plan.

          (i)  MAXIMUM FAIR MARKET VALUE OF INCENTIVE STOCK OPTIONS

               No option holder may have Incentive Stock Options that become
exercisable for the first time in any calendar year (under all Incentive Stock
Option plans of the Company and its subsidiary corporations) with an aggregate
fair market value (determined as of the time such Incentive Stock Option is
granted) in excess of $100,000.

          (ii) OPTION PRICE

               The option price per share for each Incentive Stock Option shall
be 100% of the Fair Market Value of the Common Stock on the date the Stock
Option is granted; provided, however, that in the case of the grant to an option
holder who owns Common Stock of the Company possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its
subsidiaries, the option price of such Stock Option shall be at least 110% of
the Fair Market Value of the Common Stock on the date the Stock Option is
granted. The Fair Market Value shall be determined as prescribed in Section
6A(vii) above.

          (iii) PERIOD OF STOCK OPTION

               Each Incentive Stock Option shall expire ten years from the date
it is granted or at the end of such shorter period as may be designated by the
Committee on the date of grant; provided, however, that in the case of the grant
of an Incentive Stock Option to an option holder who owns Common Stock of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its subsidiaries, such Stock Option shall not
be exercisable after the expiration of five years from the date it is granted.

          (iv) ELIGIBLE PARTICIPANTS

               Incentive Stock Options may be issued only to employees of the
Company or its parent or subsidiary corporation or corporations.

          (v)  INTERPRETATION

               No term of the Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered, nor shall any direct discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code.

                                       7

<PAGE>

     D.   SUBSTITUTION OF OPTIONS.

          Options may be granted under the Plan from time to time in
substitution for Stock Options held by employees of other corporations who are
about to become, and who do concurrently with the grant of such Stock Options
become, employees of the Company or a subsidiary of the Company as a result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or the acquisition by the Company or a subsidiary of
the Company of the assets of the employing corporation or the acquisition by the
Company or a subsidiary of the Company of stock of the employing corporation.
The terms and conditions of the substitute Options so granted may vary from the
terms and conditions set forth in this Section 6 to such extent as the Committee
at the time of grant may deem appropriate to conform, in whole or in part, to
the provisions of the Stock Options in substitution for which they are granted.

7.   FIXED OPTION GRANTS TO OUTSIDE DIRECTORS.

     A.   DEFINED TERMS

          (i) The term "Outside Directors" as utilized herein refers to any
individual who serves as a member of the Board of Directors of the Company and
who is neither (a) an employee of the Company, (c) the beneficial owner of 10%
or more of the outstanding Common Stock of the Company (a "Significant Holder"),
or (c) a stockholder, member or partner of any entity which itself is a
Significant Holder

          (ii) The term "Annual Meeting" as utilized herein refers to an Annual
Meeting of Stockholders of the Company.

     B.   INITIAL GRANTS

          Each Outside Director initially elected to the Board of Directors
after the effective date of the Plan shall be automatically granted, on the date
of such election, an option to acquire 10,000 shares of the Common Stock of the
Company.

     C.   ANNUAL GRANTS

          Commencing with the 2003 Annual Meeting, each Outside Director who is
a member of the Company's Board of Directors immediately following an Annual
Meeting shall be automatically granted, on the date of the Annual Meeting, an
option to acquire 10,000 shares of the Common Stock of the Company, provided
that an Outside Director first elected to the Board of Directors at such Annual
Meeting or within six months prior to such Annual Meeting shall not be eligible
for the annual grant otherwise to be issued at the date of such Annual Meeting.

     D.   TERMS OF FIXED OPTION GRANTS

          Stock Options granted pursuant to this Section 7 will be subject to
all of the terms and conditions of the Plan. In addition, each such Stock Option
granted pursuant to this Section 7 shall also be subject to the following terms
and conditions:

                                       8

<PAGE>

          (i) The option price per share shall be 100% of the Fair Market Value
of the Common Stock on the date the Stock Option is granted. The Fair Market
Value shall be determined as prescribed in Section 6A(vii) above;

          (ii) Each option will be immediately exercisable upon grant;

          (iii) Shares of Common Stock received upon exercise of the option
granted pursuant to this Section 7 may not be sold, transferred, assigned,
pledged or otherwise disposed of until at least six months and one day after the
date of grant;

          (iv) Each option will expire upon the earlier of (a) ten years from
the date of grant or (b) three months after the Outside Director ceases to serve
as a director for any reason; and

          (v) No Stock Option granted under this Section 7 shall constitute an
Incentive Stock Option.

8.   AMENDMENT OF PLAN

     The Committee, within its discretion, shall have authority to amend the
Plan and the terms of any Stock Option issued hereunder at any time, subject to
any required stockholder approval or any stockholder approval that the Committee
may deem advisable for any reason, such as for the purpose of obtaining or
retaining the statutory or regulatory benefits under tax, securities or other
laws as satisfying any applicable stock exchange or Nasdaq listing requirement.
The Committee may not, without the consent of the option holder alter or impair
any right or obligation under any Stock Option previously granted under the
Plan, except as specifically authorized herein.

9.   RIGHTS OF A SHAREHOLDER

     The recipient of any Stock Option under the Plan, unless otherwise provided
by the Plan or the Stock Option agreement, shall have no rights as a shareholder
unless and until certificates for shares of Common Stock are issued and
delivered to him.

10.  NO GUARANTY OF EMPLOYMENT OR PARTICIPATION

     Nothing contained in the Plan or in any Stock Option agreement entered into
pursuant to the Plan shall confer upon any option holder the right to continue
in the employment of the Company or any subsidiary of the Company or affect any
right that the Company or any subsidiary of the Company may have to terminate
the employment of such option holder. No person shall have a right to be
selected to participate in the Plan or, having been so selected, to receive any
future Stock Option grants.

11.  WITHHOLDING

     Whenever the Company proposes or is required to issue or transfer shares of
Common Stock under the Plan, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state, local or foreign withholding tax requirements prior to the delivery of
any certificate or certificates for such shares. If and to the extent authorized
by the Committee, in its sole discretion, an option holder may make an

                                       9

<PAGE>

election, by means of a form of election to be prescribed by the Committee, to
have shares of Common Stock that are acquired upon exercise of a Stock Option
withheld by the Company or to tender other shares of Common Stock or other
securities of the Company owned by the option holder to the Company at the time
of exercise of a Stock Option to pay the amount of tax that would otherwise be
required by law to be withheld by the Company as a result of any exercise of a
Stock Option. Any such election shall be irrevocable and shall be subject to
termination by the Committee, in its sole discretion, at any time. Any
securities so withheld or tendered will be valued by the Committee as of the
date of exercise.

12.  NON-UNIFORM DETERMINATIONS

     The Committee's determinations under the Plan (including without limitation
determinations of the persons to receive options, the form, amount and timing of
such grants, the terms and provisions of options and the agreements evidencing
same) need not be uniform and may be made selectively among persons who receive,
or are eligible to receive, grants of Stock Options under the Plan whether or
not such persons are similarly situated.

13.  RESERVATION OF SHARES

     The Company, during the term of the Plan, will at all times reserve and
keep available such number of shares as shall be sufficient to satisfy the
requirements of the Plan. Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any shares hereunder,
shall relieve the Company of any liability for the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained.

14.  EFFECT ON OTHER PLANS

     Participation in the Plan shall not affect an employee's eligibility to
participate in any other benefit or incentive plan of the Company or any
subsidiary of the Company. Any Stock Options granted pursuant to the Plan shall
not be used in determining the benefits provided under any other plan of the
Company or any subsidiary of the Company unless specifically provided.

15.  FORFEITURE

     Notwithstanding anything to the contrary in the Plan, if the Committee
finds, by a majority vote, after full consideration of the facts presented on
behalf of both the Company and any option holder, that the option holder has
been engaged in fraud, embezzlement, theft or commission of a felony or
retention by the Company or any subsidiary of the Company or that the option
holder has willfully disclosed confidential information of the Company or any
subsidiary of the Company and that such disclosure damaged the Company or any
subsidiary of the Company, the option holder shall forfeit all unexercised Stock
Options and all exercised Stock Options under which the Company has not yet
delivered the certificates. The decision of the Committee in interpreting and
applying the provisions of this Section 14 shall be final. No decision of the
Committee, however, shall affect the finality of the discharge or termination of
such option holder by the Company or any subsidiary of the Company in any
manner.

                                       10

<PAGE>

16.  NO PROHIBITION ON CORPORATE ACTION

     No provision of the Plan shall be construed to prevent the Company or any
officer or director thereof from taking any action deemed by the Company or such
officer or director to be appropriate or in the Company's best interest, whether
or not such action could have an adverse effect on the Plan or any Stock Options
granted hereunder, and no option holder or option holder's estate, personal
representative or beneficiary shall have any claim against the Company or any
officer or director thereof as a result of the taking of such action.

17.  INDEMNIFICATION

     With respect to the administration of the Plan, the Company shall indemnify
each present and future member of the Committee and the Board against, and each
member of the Committee and the Board shall be entitled without further action
on his or her part to indemnity from the Company for, all expenses (including
the amount of judgments and the amount of approved settlements made with a view
to the curtailment of costs of litigation, other than amounts paid to the
Company itself) reasonably incurred by him in connection with or arising out of,
any action, suit or proceeding in which he may be involved by reason of his or
her being or having been a member of the Committee or the Board, whether or not
he continues to be such member at the time of incurring such expenses; provided,
however, that such indemnity shall not include any expenses incurred by any such
member of the Committee or the Board (i) in respect of matters as to which he
shall be finally adjudged in any such action, suit or proceeding to have been
guilty of gross negligence or willful misconduct in the performance of his or
her duty as such member of the Committee or the Board; or (ii) in respect of any
matter in which any settlement is effected for an amount in excess of the amount
approved by the Company on the advice of its legal counsel; and provided further
that no right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee or the Board
unless, within 60 days after institution of any such action, suit or proceeding,
he shall have offered the Company in writing the opportunity to handle and
defend same at its own expense. The foregoing right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each such
member of the Committee or the Board and shall be in addition to all other
rights to which such member may be entitled as a matter of law, contract or
otherwise.

18.  MISCELLANEOUS PROVISIONS

     A. COMPLIANCE WITH PLAN PROVISIONS. No option holder or other person shall
have any right with respect to the Plan, the Common Stock reserved for issuance
under the Plan or in any Stock Option until a written option agreement shall
have been executed by the Company and the option holder and all the terms,
conditions and provisions of the Plan and the Stock Option applicable to such
option holder (and each person claiming under or through him) have been met.

     B. APPROVAL BY COMPANY. In the discretion of the Committee, no shares of
Common Stock, other securities or property of the Company or other forms of
payment shall be issued hereunder with respect to any Stock Option unless the
Company's General Counsel or Chief Financial Officer shall be satisfied that
such issuance will be in compliance with applicable federal, state, local and
foreign legal, securities exchange and other applicable requirements.

                                       11

<PAGE>

     C. COMPLIANCE WITH RULE 16B-3. To the extent that Rule 16b-3 under the
Exchange Act applies to awards granted under the Plan, it is the intention of
the Company that the Plan comply in all respects with the requirements of Rule
16b-3, that any ambiguities or inconsistencies in construction of the Plan be
interpreted to give effect to such intention and that, if the Plan shall not so
comply, whether on the date of adoption or by reason of any later amendment to
or interpretation of Rule 16b-3, the provisions of the Plan shall be deemed to
be automatically amended so as to bring them into full compliance with such
rule.

     D. UNFUNDED PLAN. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregations of assets under the Plan.

     E. EFFECTS OF ACCEPTANCE OF STOCK OPTION. By accepting any option or other
benefit under the Plan, each option holder and each person claiming under or
through him shall be conclusively deemed to have indicated his or her acceptance
and ratification of, and consent to, any action taken under the Plan by the
Company, the Board and/or the Committee or its delegates.

     F. CONSTRUCTION. The masculine pronoun shall include the feminine and
neuter, and the singular shall include the plural, where the context so
indicates.

     G. COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Plan, the granting
and exercising of Stock Options hereunder, and the other obligations of the
Company hereunder shall be subject to all applicable federal and state laws,
rules and regulations, and to such approval by all regulatory or governmental
agencies as may be required. The Company, in its discretion, may postpone the
granting and exercising of Stock Options, the issuance or delivery of Common
Stock under any Stock Option, or any other action sanctioned under the Plan to
permit the Company, with reasonable diligence, to complete such stock exchange
listing or registration or qualification of such Common Stock or other required
action under any federal or state law, rule or regulation and may require any
option holder to make such representations and furnish such information as it
may consider appropriate in connection with the issuance or delivery of Common
Stock in compliance with applicable laws, rules, and regulations. The Company
shall not be obligated by virtue of any provision of the Plan to recognize the
exercise of any Stock Option or to otherwise sell or issue Common Stock in
violation of any such laws, rules, or regulations; and any postponement of the
exercise or settlement of any Stock Option under this provision shall not extend
the term of such Stock Option. The Company, the Committee and the other
directors or officers of the Company shall not have any obligation or liability
to an option holder with respect to any Stock Option (or Common Stock issuable
thereunder) that shall lapse because of such postponement. Likewise, the
Committee may postpone the exercise of Stock Options, the issuance or delivery
of Common Stock under any Stock Option, and any action sanctioned under the Plan
to prevent the Company or any affiliate from being denied a federal income
deduction with respect to any Stock Option other than an Incentive Stock Option.

     H. GOVERNING LAW. The Plan and all stock option agreements hereunder shall
be construed in accordance with and governed by the laws of the State of
Delaware.

     I. NO IMPACT ON BENEFITS. Except as may otherwise be specifically stated
under any employee benefit plan, policy or program, no amount payable in
connection with any Stock

                                       12

<PAGE>

Option shall be treated as compensation for purposes of calculating an option
holder's rights and benefits under such plan, policy or program.

     J. NO CONSTRAINT ON CORPORATION ACTION. Nothing in this Plan shall be
construed to limit, impair or otherwise affect the Company's right or power to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, or to merge or consolidate, or dissolve, liquidate, sell
or transfer all or any part of its business or assets or, except as provided in
Section 8, to limit the power or right of the Company or any affiliate to take
any action which such entity deems to be necessary or appropriate.

     K. BENEFICIARY DESIGNATION. Each option holder under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
or by whom any right under the Plan is to be exercised in the event of the
option holder's death. Each designation will revoke all prior designations by
the same option holder, must be in a form prescribed by the Committee, and will
be effective only when filed by the option holder in writing with the Committee
during the option holder's lifetime. In the absence of any such designation,
benefits remaining unpaid at an option holder's death shall be paid to or
exercised by the option holder's surviving spouse, if any, or otherwise to or by
his or her estate.

*    Pursuant to Section 6(A)(v)(a) of the Plan, the number of shares reserved
     for issuance thereunder was increased from 850,000 to 3,818,625 as a result
     of a two-for-one stock split in May 2003 and three-for-two stock splits in
     each of November 2003 and May 2004, after taking into account certain
     option exercises prior to the May 2004 stock split. Effective April 25,
     2006, the Plan was amended to increase the number of shares reserved for
     issuance thereunder by 3,500,000 such that, as of May 3, 2006, there were a
     total of 7,318,625 shares reserved for issuance under the Plan, of which
     444,775 had been issued as of May 3, 2006.

                                       13

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