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EXHIBIT 99
INKINE PHARMACEUTICAL COMPANY, INC.
1999 EQUITY COMPENSATION PLAN
The purpose of the InKine Pharmaceutical Company, Inc. 1999 Equity
Compensation Plan (the "Plan") is to provide (i) designated officers (including
officers who are also directors) and other employees of InKine Pharmaceutical
Company, Inc. (the "Company") and its subsidiaries, and (ii) non-employee
members of the board of directors of the Company (the "Board") with the
opportunity to receive grants of incentive stock options, nonqualified stock
options or restricted stock. The Company believes that the Plan will encourage
the participants to contribute materially to the growth of the Company, thereby
benefiting the Company's shareholders, and will align the economic interests of
the participants with those of the shareholders. For purposes of the Plan, the
term subsidiary shall refer to any company (whether a corporation, partnership,
joint venture or other entity) in which the Company owns, directly or
indirectly, a majority of the shares of capital stock or other equity interest.
1. ADMINISTRATION.
a. Committee. The Plan shall be administered and interpreted
by a committee (the "Committee"), which shall consist of two or more persons
appointed by the Board, all of whom shall be "outside directors" as defined
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and related Treasury regulations and non-employee directors as defined
under Rule 16b-3 under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"). Notwithstanding the foregoing, the Board may ratify or approve
(and, in the case of Grants to the members of the Committee, shall approve)
Grants, in which case references to the Committee shall be deemed to include the
Board.
b. Committee Authority. The Committee shall have the sole
authority to (i) determine the individuals to whom grants shall be made under
the Plan, (ii) determine the type, size and terms of the grants to be made to
each such individual, (iii) determine the time when the grants will be made and
the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, and (iv)
deal with any other matters arising under the Plan.
c. Committee Determinations. The Committee shall have full
power and authority to administer and interpret the Plan, make factual
determinations and adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee's
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the Plan or in any awards granted hereunder.
All powers of the Committee shall be executed in its sole discretion, in the
best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
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2. GRANTS.
Awards under the Plan may consist of grants of stock options
as described in Section 5 ("Options") or restricted stock as described in
Section 6 ("Restricted Stock") or a combination of both (hereinafter
individually or collectively referred to as "Grants"). All Grants shall be
subject to the terms and conditions set forth herein and to those other terms
and conditions consistent with this Plan as the Committee deems appropriate and
as are specified in writing by the Committee to the individual in a grant
instrument or an amendment to the grant instrument (the "Grant Instrument"). The
Committee shall approve the form and provisions of each Grant Instrument. Grants
under a particular Section of the Plan need not be uniform as among the
grantees.
3. SHARES SUBJECT TO THE PLAN.
a. Shares Authorized. Subject to the adjustment specified
below, the aggregate number of shares of common stock of the Company (the
"Company Stock") that may be issued or transferred under the Plan is 1,000,000
shares. The maximum number of shares of Company Stock that may be issued or
transferred as Restricted Stock shall not exceed twenty five percent (25%) of
the aggregate number of shares of Company Stock that may be issued or
transferred under the Plan. Notwithstanding anything in the Plan to the
contrary, the maximum aggregate number of shares of Company Stock that shall be
subject to Grants made under the Plan to any one individual during any calendar
year shall be 250,000 shares. The shares may be authorized but unissued shares
of Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan. If and to
the extent Options granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised or if any
shares of Restricted Stock are forfeited, the shares subject to such Grants
shall again be available for purposes of the Plan. Notwithstanding anything in
the Plan to the contrary, the Committee shall not amend any Grant Instrument to
decrease the Exercise Price of an Option below the Fair Market Value of the
Option as of the date on which such Option was granted, and the Committee shall
not exchange or substitute any Option for an Option at an Exercise Price that is
below the Fair Market Value of the exchanged or substituted Option as of the
date on which the exchanged or substituted Option was granted.
b. Adjustments. If there is any change in the number or kind
of shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split, or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the Company
is the surviving corporation, (iii) by reason of a reclassification or change in
par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in a year, the number of
shares covered by outstanding Grants, the kind of shares issued under the Plan,
and the price per share or the applicable market value of such Grants may be
appropriately adjusted by the Committee to reflect any increase or decrease in
the number of, or change in the kind or value of, issued shares of Company Stock
to preclude, to the extent practicable, the enlargement or dilution of rights
and benefits under such Grants; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. Any adjustments determined
by the Committee shall be final, binding and conclusive.
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4. ELIGIBILITY FOR PARTICIPATION.
a. Eligible Persons. All employees of the Company and its
subsidiaries ("Employees"), including Employees who are officers or members of
the Board, and members of the Board who are not Employees ("Non-Employee
Directors") shall be eligible to participate in the Plan.
b. Selection of Grantees. The Committee shall select the
Employees and Non-Employee Directors to receive Grants and determine the number
of shares of Company Stock subject to a particular Grant in such manner as the
Committee determines. Employees and Non-Employee Directors who receive Grants
under this Plan shall hereinafter be referred to as "Grantees."
5. OPTION GRANTS.
a. Number of Shares. The Committee, in its sole discretion,
shall determine the number of shares of Company Stock that will be subject to
each Grant of Options to any Employee or Non-Employee Director.
b. Type of Option and Price.
i. The Committee may grant Options that are intended
to qualify as "incentive stock options" within the meaning of Section 422 of the
Code ("Incentive Stock Options") or Options which are not intended to so qualify
("Nonqualified Stock Options") or any combination of Incentive Stock Options and
Nonqualified Stock Options, all in accordance with the terms and conditions set
forth herein.
ii. The purchase price (the "Exercise Price") of
Company Stock subject to an Option shall be determined by the Committee and
shall not be less than the Fair Market Value (as defined below) of a share of
such Stock on the date the Option is granted; provided, however, that an
Incentive Stock Option may not be granted to an Employee who, at the time of
grant, owns stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or any "parent corporation" or
"subsidiary corporation" of the Company (within the meaning of Sections 424(e)
and 424(f) of the Code, respectively), unless the Exercise Price per share is
not less than 110% of the Fair Market Value of Company Stock on the date of
grant.
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iii. If the Company Stock is publicly traded, then
the Fair Market Value per share shall be determined as follows: (1) if the
principal trading market for the Company Stock is a national securities exchange
or the Nasdaq National Market, the last reported sale price thereof on the
relevant date or (if there were no trades on that date) the latest preceding
date upon which a sale was reported, or (2) if the Company Stock is not
principally traded on such exchange or market, the mean between the last
reported "bid" and "asked" prices of Company Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines. If the Company Stock is
not publicly traded or, if publicly traded, is not subject to reported
transactions or "bid" or "asked" quotations as set forth above, the Fair Market
Value per share shall be as determined by the Committee.
c. Option Term. The Committee shall determine the term of each
Option. The term of any Option shall not exceed ten years from the date of
grant. However, an Incentive Stock Option that is granted to an Employee who, at
the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.
d. Exercisability of Options. Options shall become exercisable
in accordance with such terms and conditions, consistent with the Plan, as may
be determined by the Committee, in its sole discretion, and specified in the
Grant Instrument. The Committee, in its sole discretion, may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
e. Termination of Employment or Service.
i. Except as provided below, an Option may only be
exercised while the Grantee is employed by, or providing service to, the Company
as an Employee or Non-Employee Director. In the event that a Grantee ceases to
be employed by, or provide service to, the Company for any reason, any Option
which is otherwise exercisable by the Grantee shall terminate unless exercised
within such time period after the date on which the Grantee ceases to be
employed by, or provide service to, the Company as determined by the Committee,
but in any event no later than the date of expiration of the Option term
(Post-Termination Exercise Period). The Committee may specify the
Post-Termination Exercise Period applicable to a Grantee in the Grant Instrument
or at any time thereafter; provided, however, that the Post-Termination Exercise
Period shall extend for at least 30 days after the date on which the Grantee is
notified of the Post-Termination Exercise Period. Except as otherwise provided
by the Committee, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.
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ii. Notwithstanding the foregoing, in the event the
Grantee ceases to be employed by, or provide service to, the Company on account
of termination for Cause (as hereinafter defined) by the Company, any Option
held by the Grantee shall terminate as of the date the Grantee ceases to be
employed by, or provide service to, the Company, and the Grantee shall
automatically forfeit all shares underlying any exercised portion of an Option
for which the Company has not yet delivered the share certificates, upon refund
by the Company of the Exercise Price paid by the Grantee for such shares.
iii. For purposes of this Section 5(e) and Section 6:
(A) the term "Company" shall refer to the Company and its subsidiaries; (B)
"Employed by", or "provide service to", the Company shall mean employment or
service as an Employee or Non-Employee Director (so that, for purposes of
exercising Options and satisfying conditions with respect to Restricted Stock, a
Grantee shall not be considered to have terminated employment or service until
the Grantee ceases to be an Employee and/or a Non-Employee Director), unless the
Committee determines otherwise; (C) "Cause" shall mean (i) the Grantee's willful
misconduct with respect to the business and affairs of the Company or any
subsidiary or affiliate thereof; (ii) the Grantee's gross neglect of duties or
failure to act which materially and adversely affects the business or affairs of
the Company or any subsidiary or affiliate thereof; (iii) the Grantee's
commission of an act involving embezzlement or fraud or conviction for any
felony; or (iv) the Grantee's breach of an employment agreement with the Company
or any subsidiary or affiliate thereof.
f. Exercise of Options. A Grantee may exercise an Option that
has become exercisable, in whole or in part, by delivering a notice of exercise
to the Committee with payment of the Exercise Price. The Grantee shall pay the
Exercise Price specified in the Grant Instrument (i) in cash, (ii) with the
approval of the Committee, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price,
or (iii) by such other method as the Committee may approve, including payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board. Such notice may instruct the Company to deliver shares of
Company Stock due upon the exercise of the Option to any registered broker or
dealer designated by the Committee ("Designated Broker") in lieu of delivery to
the Grantee. Such instructions must designate the account into which the shares
are to be deposited. The Grantee may tender a notice of exercise, which has been
properly executed by the Grantee, and the aforementioned delivery instructions
to any Designated Broker. Shares of Company Stock used to exercise an Option
shall have been held by the Grantee for the requisite period of time to avoid
adverse accounting consequences to the Company with respect to the Option. The
Grantee shall pay the Exercise Price and the amount of any withholding tax due
at the time of exercise.
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g. Limits on Incentive Stock Options. Each Incentive Stock
Option shall provide that, if the aggregate Fair Market Value of the Company
Stock on the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year, under the
Plan or any other stock option plan of the Company or subsidiary, exceeds
$100,000, then such Option, as to the excess, shall be treated as a Nonqualified
Stock Option. An Incentive Stock Option shall not be granted to any person who
is not an Employee of the Company or a parent corporation or a subsidiary
corporation (within the meaning of Sections 424(e) and 424(f) of the Code,
respectively).
6. RESTRICTED STOCK GRANTS.
The Committee may issue or transfer shares of Company Stock to
any Employee or Non-Employee Director under a Grant of Restricted Stock, upon
such terms as the Committee deems appropriate. The following provisions are
applicable to Restricted Stock:
i. General Requirements. Shares of Company Stock
issued or transferred pursuant to Restricted Stock Grants may be issued or
transferred for cash consideration or for no cash consideration, at the sole
discretion of the Committee. The Committee may establish conditions under which
restrictions on shares of Restricted Stock shall lapse over a period of time or
according to such other criteria as the Committee deems appropriate. The period
of time during which the Restricted Stock will remain subject to restrictions
will be designated in the Grant Instrument as the "Restriction Period."
ii. Number of Shares. The Committee shall determine
the number of shares of Company Stock to be issued or transferred pursuant to a
Restricted Stock Grant and the restrictions applicable to such shares.
iii. Requirement of Employment or Service. If the
Grantee ceases to be employed by, or provide service to, the Company during a
period designated in the Grant Instrument as the Restriction Period, or if other
specified conditions are not met, the Restricted Stock Grant shall terminate as
to all shares covered by the Grant as to which the restrictions have not lapsed,
and those shares of Company Stock must be immediately returned to the Company.
The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.
iv. Restrictions on Transfer and Legend on Stock
Certificate. During the Restriction Period, a Grantee may not sell, assign,
transfer, pledge or otherwise dispose of the shares of Restricted Stock except
to a Successor Grantee under Section 8(a). Each certificate for a share of
Restricted Stock shall contain a legend giving appropriate notice of the
restrictions in the Grant. The Grantee shall be entitled to receive a stock
certificate or certificates, or have the legend removed from the stock
certificate or certificates covering any of the shares subject to restrictions,
as applicable, when all restrictions on such shares have lapsed. The Committee,
in its sole discretion, may determine that the Company will not issue
certificates for shares of Restricted Stock, or that the Company retain
possession of certificates for any shares issued pursuant to a Restricted Stock
Grant, until all restrictions on such shares have lapsed.
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v. Right to Vote and to Receive Cash Dividends.
Unless the Committee determines otherwise, during the Restriction Period, the
Grantee shall have the right to vote any shares of Restricted Stock which have
been issued or transferred to the Grantee on the stock transfer records of the
Company and to receive any dividends or other distributions paid on such shares,
subject to any restrictions deemed appropriate by the Committee.
vi. Lapse of Restrictions. All restrictions imposed
on Restricted Stock shall lapse upon the expiration of the applicable
Restriction Period and the satisfaction of all conditions imposed by the
Committee. The Committee may determine, as to any or all Restricted Stock
Grants, that all the restrictions shall lapse without regard to any Restriction
Period.
7. WITHHOLDING OF TAXES.
a. Required Withholding. All Grants under the Plan shall be
subject to applicable federal (including FICA), state and local tax withholding
requirements. The Company may require the Grantee or other person receiving
shares to pay to the Company the amount of any such taxes that the Company is
required to withhold with respect to such Grants, or the Company may deduct from
the amount payable under a Grant or from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.
b. Election to Withhold Shares. If the Committee so permits, a
Grantee may elect to satisfy the Company's income tax withholding obligation
with respect to an Option or Restricted Stock by having shares withheld up to an
amount that does not exceed the applicable withholding tax for federal
(including FICA), state and local tax liabilities. The election must be in the
form and manner prescribed by the Committee and is subject to the prior approval
of the Committee.
8. TRANSFERABILITY OF GRANTS.
a. Nontransferability of Grants. Except as provided below,
only the Grantee may exercise rights under a Grant during the Grantees lifetime.
The Grantee may not transfer those rights except by will or by the laws of
descent and distribution or, with respect to Grants other than Incentive Stock
Options, if permitted in any specific case by the Committee in its sole
discretion, pursuant to a qualified domestic relations order (as defined under
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended or the regulations thereunder). When a Grantee dies, the personal
representative or other person entitled to succeed to the rights of the Grantee
("Successor Grantee") may exercise such rights. A Successor Grantee must furnish
proof satisfactory to the Company of his or her right to receive the Grant under
the Grantee's will or under the applicable laws of descent and distribution.
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b. Transfer of Nonqualified Stock Options. Notwithstanding the
foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may
transfer Nonqualified Stock Options to family members, one or more trusts for
the benefit of family members, or one or more partnerships of which family
members are the only partners, or other persons or entities according to such
terms as the Committee may determine; provided that the Grantee receives no
consideration for the transfer of an Option and the transferred Option shall
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer.
9. CHANGE OF CONTROL OF THE COMPANY.
As used herein, a "Change of Control" shall mean the
occurrence of any of the following:
i. Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40% or more of the voting power of the
then outstanding securities of the Company;
ii. During any period of two consecutive calendar
years there is a change of 33 1/3% or more in the composition of the Board of
the Company in office at the beginning of the period except for changes approved
by at least one-half of the Directors then in office who were Directors at the
beginning of the period;
iii. The shareholders of the Company approve an
agreement providing for (A) the merger or consolidation of the Company with
another corporation where the shareholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such shareholders to 50% or more of
all votes (without consideration of the rights of any class of stock to elect
Directors by a separate class vote) to which all shareholders of the corporation
issuing cash or securities in the merger or consolidation would be entitled in
the election of directors, or where the members of the Board, immediately prior
to the merger or consolidation, would not, immediately after the merger or
consolidation, constitute a majority of the board of directors of the
corporation issuing cash or securities in the merger or consolidation, or (B)
the sale or other disposition of all or substantially all the assets of the
Company, or a liquidation, dissolution or statutory exchange of the Company; or
iv. Any person has commenced, or announced an
intention to commence, a tender offer or exchange offer for 40% or more of the
voting power of the then-outstanding securities of the Company.
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10. CONSEQUENCES OF A CHANGE OF CONTROL.
a. Notice and Acceleration. Upon a Change of Control, unless
the Committee determines otherwise, (i) the Company shall provide each Grantee
with outstanding Grants written notice of such Change of Control, (ii) all
outstanding Options shall automatically accelerate and become fully exercisable,
and (iii) the restrictions and conditions on all outstanding Restricted Stock
shall immediately lapse.
b. Assumption of Grants. Upon a Change of Control where the
Company is not the surviving corporation (or survives only as a subsidiary of
another corporation), unless the Committee determines otherwise, all outstanding
Options that are not exercised shall be assumed by, or replaced with comparable
options by, the surviving corporation.
c. Other Alternatives. Notwithstanding the foregoing, subject
to Subsection (d) below, in the event of a Change of Control, the Committee may
take one or both of the following actions: the Committee may (i) require that
Grantees surrender their outstanding Options in exchange for a payment by the
Company, in cash or Company Stock as determined by the Committee, in an amount
equal to the amount by which the then Fair Market Value of the shares of Company
Stock subject to the Grantee's unexercised Options exceeds the Exercise Price of
the Options or (ii) after giving Grantees an opportunity to exercise their
outstanding Options, terminate any or all unexercised Options at such time as
the Committee deems appropriate. Such surrender or termination shall take place
as of the date of the Change of Control or such other date as the Committee may
specify.
d. Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Change of Control, the Committee shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection (c) above) that would make the Change of Control
ineligible for pooling of interest accounting treatment or that would make the
Change of Control ineligible for desired tax treatment if, in the absence of
such right, the Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Change of Control.
11. REQUIREMENTS FOR ISSUANCE OR TRANSFER OF SHARES.
No Company Stock shall be issued or transferred in connection
with any Grant hereunder unless and until all legal requirements applicable to
the issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof, and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
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12. AMENDMENT AND TERMINATION OF THE PLAN.
a. Amendment. The Board may amend or terminate the Plan at any
time; provided, however, that the Committee shall not amend the Plan without
shareholder approval if such approval is required by Section 422 of the Code or
Section 162(m) of the Code.
b. Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Board or unless extended by the Board with the
approval of the shareholders.
c. Termination and Amendment of Outstanding Grants. A
termination or amendment of the Plan that occurs after a Grant is made shall not
materially impair the rights of a Grantee unless the Grantee consents or unless
the Committee acts under Section 18(b) hereof. The termination of the Plan shall
not impair the power and authority of the Committee with respect to an
outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant
may be terminated or amended under Section 18(b) hereof or may be amended by
agreement of the Company and the Grantee consistent with the Plan.
d. Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and assigns.
13. FUNDING OF THE PLAN.
This Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
14. RIGHTS OF PARTICIPANTS.
Nothing in this Plan shall entitle any Employee, Non-Employee
Director or other person to any claim or right to be granted a Grant under this
Plan. Neither this Plan nor any action taken hereunder shall be construed as
giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.
15. NO FRACTIONAL SHARES.
No fractional shares of Company Stock shall be issued or
delivered pursuant to the Plan or any Grant. The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
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16. HEADINGS.
Section headings are for reference only. In the event of a
conflict between a title and the content of a Section, the content of the
Section shall control.
17. EFFECTIVE DATE OF THE PLAN.
Subject to the approval of the Company's shareholders, this
Plan shall be effective on August 3, 1999.
18. MISCELLANEOUS.
a. Grants in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants to
employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Committee may make a Grant to an employee of another corporation
who becomes an Employee by reason of a corporate merger, consolidation,
acquisition of stock or property, reorganization or liquidation involving the
Company or any of its subsidiaries in substitution for a stock option or
restricted stock grant made by such corporation. The terms and conditions of the
substitute grants may vary from the terms and conditions required by the Plan
and from those of the substituted stock incentives. The Committee shall
prescribe the provisions of the substitute grants.
b. Compliance with Law. The Plan, the exercise of Options and
the obligations of the Company to issue or transfer shares of Company Stock
under Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. In addition,
it is the intent of the Company that the Plan and applicable grants under the
Plan comply with the applicable provisions of Sections 162(m) and 422 of the
Code. To the extent that any legal requirement of Section 16 of the Exchange Act
or Sections 162(m) or 422 of the Code as set forth in the Plan ceases to be
required under Section 16 of the Exchange Act or Sections 162(m) or 422 of the
Code, that provision shall cease to apply. The Committee may revoke any Grant if
it is contrary to law or modify a Grant to bring it into compliance with any
valid and mandatory government regulation. The Committee may, in its sole
discretion, agree to limit its authority under this Section.
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c. No Shareholder Rights. Except as otherwise provided by the
Committee, a Grantee or Successor Grantee shall have no rights as a shareholder
with respect to any shares of Company Stock covered by a Grant until the shares
are issued or transferred to the Grantee or Successor Grantee on the stock
transfer records of the Company.
d. Governing Law. The validity, construction, interpretation
and effect of the Plan and Grant Instruments issued under the Plan shall
exclusively be governed by and determined in accordance with the law of the
Commonwealth of Pennsylvania.
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