employment or services to the Company or its Subsidiaries which in no way adversely affectsthe Company and its Subsidiaries or its reputation or the ability of the Participant to perform hisor her employment-related duties or services or to represent the Company or any Subsidiary of theCompany that employs such Participant or to which the Participant performs services), (iv) failureto reasonably cooperate, following a request to do so by the Company, in any internal orgovernmental investigation of the Company or any of its Subsidiaries or (v) material breach of anywritten covenant or agreement with the Company or any of its Subsidiaries not to disclose anyinformation pertaining to the Company or such Subsidiary or not to compete or interfere with theCompany or such Subsidiary; *provided*that, in the case of any Participant who, as of the date ofdetermination, is party to an effective services, severance or employment agreement with theCompany or any Subsidiary, “Cause” shall have the meaning, if any, specified in such agreement.          2.6 “Change in Capitalization” means any increase or reduction in the number of Shares, anychange (including, but not limited to, in the case of a spin-off, dividend or other distribution inrespect of Shares, a change in value) in the Shares or any exchange of Shares for a differentnumber or kind of shares or other securities of the Company or another corporation, by reason of areclassification, recapitalization, merger, consolidation, reorganization, spin-off, split-up,issuance of warrants, rights or debentures, stock dividend, stock split or reverse stock split,cash dividend, property dividend, combination or exchange of shares, repurchase of shares, changein corporate structure or otherwise.          2.7 “Change in Control” means the occurrence of any of the following:               (a) An acquisition (other than directly from the Company) of any voting securities of theCompany (the “Voting Securities”) by any “Person” (as the term “person” is used for purposes ofSection 13(d) or 14(d) of the Exchange Act), immediately after which such Person has “BeneficialOwnership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more thanthirty percent (30%) of (i) the then-outstanding Shares or (ii) the combined voting power of theCompany’s then-outstanding Voting Securities; *provided, however,*that in determining whether aChange in Control has occurred pursuant to this paragraph (a), the acquisition of Shares or VotingSecurities in a Non-Control Acquisition (as hereinafter defined) shall not constitute a Change inControl. A “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (ora trust forming a part thereof) maintained by (A) the Company or (B) any corporation or otherPerson the majority of the voting power, voting equity securities or equity interest of which isowned, directly or indirectly, by the Company (for purposes of this definition, a “RelatedEntity”), (ii) the Company, any Principal Stockholder or any Related Entity, or (iii) any Person inconnection with a Non-Control Transaction (as hereinafter defined);               (b) The consummation of:                    (i) A merger, consolidation or reorganization (x) with or into the Company or (y) inwhich securities of the Company are issued (a “Merger”), unless such Merger is a “Non-ControlTransaction.” A “Non-Control Transaction” shall mean a Merger in which:
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                         (A) the shareholders of the Company immediately before such Merger own directly or indirectlyimmediately following such Merger at least a majority of the combined voting power of theoutstanding voting securities of (1) the corporation resulting from such Merger (the “SurvivingCorporation”), if fifty percent (50%) or more of the combined voting power of the then outstandingvoting securities by the Surviving Corporation is not Beneficially Owned, directly or indirectly,by another Person (a “Parent Corporation”) or (2) if there is one or more than one ParentCorporation, the ultimate Parent Corporation;                         (B) the individuals who were members of the Board immediately prior to the execution of theagreement providing for such Merger constitute at least a majority of the members of the board ofdirectors of (1) the Surviving Corporation, if there is no Parent Corporation, or (2) if there isone or more than one Parent Corporation, the ultimate Parent Corporation; and                         (C) no Person other than (1) the Company or another corporation that is a party to theagreement of Merger, (2) any Related Entity, (3) any employee benefit plan (or any trust forming apart thereof) that, immediately prior to the Merger, was maintained by the Company or any RelatedEntity, or (4) any Person who, immediately prior to the Merger, had Beneficial Ownership of thirtypercent (30%) or more of the then outstanding Shares or Voting Securities, has BeneficialOwnership, directly or indirectly, of thirty percent (30%) or more of the combined voting power ofthe outstanding voting securities or common stock of (x) the Surviving Corporation, if there is noParent Corporation, or (y) if there is one or more than one Parent Corporation, the ultimate ParentCorporation.                    (ii) A complete liquidation or dissolution of the Company; or                    (iii) The sale or other disposition of all or substantially all of the assets of theCompany and its Subsidiaries taken as a whole to any Person (other than (x) a transfer to a RelatedEntity or (y) the distribution to the Company’s shareholders of the stock of a Related Entity orany other assets).               Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely becauseany Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amountof the then outstanding Shares or Voting Securities as a result of the acquisition of Shares orVoting Securities by the Company which, by reducing the number of Shares or Voting Securities thenoutstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons;*provided*that if a Change in Control would occur (but for the operation of this sentence) as aresult of the acquisition of Shares or Voting Securities by the Company and, after such shareacquisition by the Company, the Subject Person becomes the Beneficial Owner of any additionalShares or Voting Securities and such Beneficial Ownership increases the percentage of the thenoutstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change inControl shall occur.          2.7A “Change in Control Related Termination” means with respect to any Participant who is aparty to an effective services, severance or employment agreement with the
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Company or any Subsidiary, the meaning for “Change in Control Related Termination” specified insuch agreement.          2.8 “Code” means the Internal Revenue Code of 1986, as amended.          2.9 “Committee” means the Committee which administers the Plan as provided in Section 3.          2.10 “Company” means CVR Energy, Inc., a Delaware corporation.          2.11 “Director” means a member of the Board.          2.11A “Disability” means a Participant’s inability, due to physical or mental ill health, toperform the essential functions of the Participant’s job, with or without a reasonableaccommodation, for 180 days during any 365 day period irrespective of whether such days areconsecutive; provided that, in the case of any Participant who is a party to an effective services,severance or employment agreement with the Company or any Subsidiary, the meaning for “Disability”will have the meaning (if any) specified in such agreement.          2.12 “Division” means any of the operating units or divisions of the Company designated as aDivision by the Committee.          2.13 “Dividend Equivalent Right” means a right to receive cash or Shares based on the value ofdividends that are paid with respect to Shares.          2.14 “Effective Date” means the date of approval of the Plan by the Company’s shareholders’pursuant to Section 19.5.          2.15 “Eligible Individual” means any of the following individuals: (a) any Director, officeror employee of the Company or a Subsidiary, (b) any individual to whom the Company or a Subsidiaryhas extended a formal, written offer of employment, and (c) any consultant or advisor of theCompany or a Subsidiary.          2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended.          2.17 “Fair Market Value” on any date means:               (a) if the Shares are listed for trading on the New York Stock Exchange, the closing price atthe close of the primary trading session of the Shares on such date on the New York Stock Exchange,or if there has been no such closing price of the Shares on such date, on the next preceding dateon which there was such a closing price;               (b) if the Shares are not listed for trading on the New York Stock Exchange, but are listed onanother national securities exchange, the closing price at the close of the primary trading sessionof the Shares on such date on such exchange, or if there has been no
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such closing price of the Shares on such date, on the next preceding date on which there wassuch a closing price;               (c) if the Shares are not listed on the New York Stock Exchange or on another nationalsecurities exchange, the last sale price at the end of normal market hours of the Shares on suchdate as quoted on the National Association of Securities Dealers Automated Quotation System(“NASDAQ”) or, if no such price shall have been quoted for such date, on the next preceding datefor which such price was so quoted; or               (d) if the Shares are not listed for trading on a national securities exchange or are notauthorized for quotation on NASDAQ, the fair market value of the Shares as determined in good faithby the Committee, and in the case of Incentive Stock Options, in accordance with Section 422 of theCode.          2.18 “Full Value Award” means a grant of Restricted Stock, a Restricted Stock Unit, aPerformance Award, a Share Award or any or all of them.          2.18A “Good Reason” means with respect to any Participant who is a party to an effectiveservices, severance or employment agreement with the Company or any Subsidiary, the meaning for“Good Reason” specified in such agreement.          2.19 “Incentive Stock Option” means an Option satisfying the requirements of Section 422 ofthe Code and designated by the Committee as an Incentive Stock Option.          2.20 “Initial Public Offering” means the consummation of the first public offering of Sharespursuant to a registration statement (other than a Form S-8 or successor forms) filed with, anddeclared effective by, the Securities and Exchange Commission.          2.21 “Nonemployee Director” means a Director who is a “nonemployee director” within themeaning of Rule 16b-3 promulgated under the Exchange Act.          2.22 “Nonqualified Stock Option” means an Option which is not an Incentive Stock Option.          2.23 “Option” means a Nonqualified Stock Option and/or an Incentive Stock Option.          2.24 “Outside Director” means a Director who is an “outside director” within the meaning ofSection 162(m) of the Code and the regulations promulgated thereunder.          2.25 “Parent” means any corporation which is a “parent corporation” (within the meaning ofSection 424(e) of the Code) with respect to the Company.          2.26 “Participant” means a person to whom an Award or Option has been granted under the Plan.
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          2.27 “Performance Awards” means Performance Share Units, Performance Units, Performance-BasedRestricted Stock or any or all of them.          2.28 “Performance-Based Compensation” means any Option or Award that is intended to constitute“performance based compensation” within the meaning of Section 162(m)(4)(C) of the Code and theregulations promulgated thereunder.          2.29 “Performance-Based Restricted Stock” means Shares issued or transferred to an EligibleIndividual under Section 9.2.          2.30 “Performance Cycle” means the time period specified by the Committee at the timePerformance Awards are granted during which the performance of the Company, a Subsidiary or aDivision will be measured.          2.31 “Performance Objectives” means the objectives set forth in Section 9.3 for the purpose ofdetermining the degree of payout and/or vesting of Performance Awards.          2.32 “Performance Share Units” means Performance Share Units granted to an Eligible Individualunder Section 9.1.          2.33 “Performance Units” means Performance Units granted to an Eligible Individual underSection 9.1.          2.34 “Plan” means this 2007 CVR Energy, Inc. Long Term Incentive Plan, as amended from time totime.          2.35 “Principal Stockholder” means each of Kelso Investment Associates VII, L.P., a Delawarelimited partnership, KEP VI, LLC, a Delaware limited liability company, GS Capital Partners V Fund,L.P., a Delaware limited partnership, GS Capital Partners V Offshore Fund, L.P., a Cayman Islandsexempted limited partnership, GS Capital Partners V Institutional, L.P., a Delaware limitedpartnership and GS Capital Partners V GmbH & Co. KG, a German limited partnership.          2.36 “Restricted Stock” means Shares issued or transferred to an Eligible Individual pursuantto Section 8.          2.37 “Restricted Stock Units” means rights granted to an Eligible Individual under Section 8representing a number of hypothetical Shares.          2.37A “Retirement” means a Participant’s termination or resignation of employment with theCompany or any Subsidiary for any reason (other than for Cause or by reason of the Participant’sdeath) following the date the Participant attains age 65; provided that, in the case of anyParticipant who is a party to an effective services, severance or employment agreement with theCompany or any Subsidiary, the meaning of “Retirement” will have the meaning (if any) specified insuch agreement.
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          2.38 “Share Award” means an Award of Shares granted pursuant to Section 10.          2.39 “Shares” means the common stock, par value $.01 per share, of the Company and any othersecurities into which such shares are changed or for which such shares are exchanged.          2.40 “Stock Appreciation Right” means a right to receive all or some portion of the increase,if any, in the value of the Shares as provided in Section 6 hereof.          2.41 “Subsidiary” means (a) except as provided in subsection (b) below, any corporation whichis a subsidiary corporation within the meaning of Section 424(f) of the Code with respect to theCompany, and (b) in relation to the eligibility to receive Options or Awards other than IncentiveStock Options and continued employment for purposes of Options and Awards (unless the Committeedetermines otherwise), any entity, whether or not incorporated, in which the Company directly orindirectly owns at least 50% or more of the outstanding equity or other ownership interests.          2.42 “Ten-Percent Shareholder” means an Eligible Individual who, at the time an IncentiveStock Option is to be granted to him or her, owns (within the meaning of Section 422(b)(6) of theCode) stock possessing more than ten percent (10%) of the total combined voting power of allclasses of stock of the Company, a Parent or a Subsidiary.          2.43 “Termination Date” means the date that is ten (10) years after the Effective Date, unlessthe Plan is earlier terminated by the Board pursuant to Section 15 hereof.          2.44 “Transition Period” means the period beginning with an Initial Public Offering and endingas of the earlier of (i) the date of the first annual meeting of shareholders of the Company atwhich directors are to be elected that occurs after the close of the third calendar year followingthe calendar year in which the Initial Public Offering occurs and (ii) the expiration of the“reliance period” under Treasury Regulation Section 1.162-27(f)(2).     3. **Administration****.**          3.1 Committees; Procedure. The Plan shall be administered by a Committee which, untilthe Board appoints a different Committee, shall be the Compensation Committee of the Board. TheCommittee may adopt such rules, regulations and guidelines as it deems are necessary or appropriatefor the administration of the Plan. The Committee shall consist of at least two (2) Directors andmay consist of the entire Board; *provided*, *however*, that from and after the date of an InitialPublic Offering (a) if the Committee consists of less than the entire Board, then, with respect toany Option or Award granted to an Eligible Individual who is subject to Section 16 of the ExchangeAct, the Committee shall consist of at least two Directors, each of whom shall be a Non-EmployeeDirector, and (b) to the extent necessary for any Option or Award intended to qualify asPerformance-Based Compensation to so qualify, the Committee shall consist of at least twoDirectors, each of whom shall be an Outside Director. For purposes of the preceding sentence, ifone or more members of the Committee is not a Nonemployee Director and an Outside Director butrecuses himself or herself or abstains from voting with
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respect to a particular action taken by the Committee, then the Committee, with respect tothat action, shall be deemed to consist only of the members of the Committee who have not recusedthemselves or abstained from voting.          3.2 Board Reservation and Delegation. Except to the extent necessary for any Award orOption intended to qualify as Performance-Based Compensation to so qualify, the Board may, in itsdiscretion, reserve to itself or exercise any or all of the authority and responsibility of theCommittee hereunder and may consist of one or more Directors who may, but need not be officers oremployees of the Company. To the extent the Board has reserved to itself, or exercised theauthority and responsibility of the Committee, all references to the Committee in the Plan shall beto the Board.          3.3 Committee Powers. Subject to the express terms and conditions set forth herein,the Committee shall have the power from time to time to:               (a) select those Eligible Individuals to whom Options shall be granted under the Plan and thenumber of such Options to be granted and prescribe the terms and conditions (which need not beidentical) of each such Option, including the exercise price per Share, the vesting schedule andthe duration of each Option, and make any amendment or modification to any Option Agreementconsistent with the terms of the Plan;               (b) select those Eligible Individuals to whom Awards shall be granted under the Plan anddetermine the number of Shares or amount of cash in respect of which each Award is granted, theterms and conditions (which need not be identical) of each such Award, and make any amendment ormodification to any Agreement consistent with the terms of the Plan;               (c) construe and interpret the Plan and the Options and Awards granted hereunder andestablish, amend and revoke rules and regulations for the administration of the Plan, including,but not limited to, correcting any defect or supplying any omission, or reconciling anyinconsistency in the Plan or in any Agreement, in the manner and to the extent it shall deemnecessary or advisable, including so that the Plan and the operation of the Plan comply with Rule16b-3 under the Exchange Act, the Code to the extent applicable and other applicable law, andotherwise to make the Plan fully effective;               (d) determine the duration and purposes for leaves of absence which may be granted to aParticipant on an individual basis without constituting a termination of employment or service forpurposes of the Plan;               (e) cancel, with the consent of the Participant, outstanding Awards and Options;               (f) exercise its discretion with respect to the powers and rights granted to it as set forthin the Plan; and
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               (g) generally, exercise such powers and perform such acts as are deemed necessary or advisableto promote the best interests of the Company with respect to the Plan.          All decisions and determinations by the Committee in the exercise of the above powers shall befinal, binding and conclusive upon the Company, its Subsidiaries, the Participants and all otherpersons having any interest therein.          3.4 Notwithstanding anything herein to the contrary, with respect to Participants workingoutside the United States, the Committee may determine the terms and conditions of Options andAwards and make such adjustments to the terms thereof as are necessary or advisable to fulfill thepurposes of the Plan taking into account matters of local law or practice, including tax andsecurities laws of jurisdictions outside the United States.          3.5 Indemnification. No member of the Committee shall be liable for any action,failure to act, determination or interpretation made in good faith with respect to the Plan or anytransaction hereunder. The Company hereby agrees to indemnify each member of the Committee for allcosts and expenses and, to the extent permitted by applicable law, any liability incurred inconnection with defending against, responding to, negotiating for the settlement of or otherwisedealing with any claim, cause of action or dispute of any kind arising in connection with anyactions in administering the Plan or in authorizing or denying authorization to any transactionhereunder.          3.6 No Repricing of Options or Stock Appreciation Rights. The Committee shall have noauthority to make any adjustment (other than in connection with a stock dividend, recapitalizationor other transaction where an adjustment is permitted or required under the terms of the Plan) oramendment, and no such adjustment or amendment shall be made, that reduces or would have the effectof reducing the exercise price of an Option or Stock Appreciation Right previously granted underthe Plan, whether through amendment, cancellation or replacement grants, or other means, unless theCompany’s shareholders shall have approved such adjustment or amendment.          4. **Stock Subject to the Plan; Grant Limitations****.**               4.1 Aggregate Number of Shares Authorized for Issuance. Subject to any adjustment asprovided in the Plan, the Shares to be issued under the Plan may be, in whole or in part,authorized but unissued Shares or issued Shares which shall have been reacquired by the Company andheld by it as treasury shares. The aggregate number of Shares that may be made the subject ofAwards or Options granted under the Plan shall not exceed 7,500,000, no more than 1,000,000 ofwhich may be granted as Incentive Stock Options.               4.2 Individual Limit. The aggregate number of Shares that may be the subject ofOptions, Stock Appreciation Rights, Performance-Based Restricted Stock and Performance Share Unitsgranted to an Eligible Individual in any three calendar year period may not exceed 6,000,000. Themaximum dollar amount of cash or the Fair Market Value of Shares
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that any individual may receive in any calendar year in respect of Performance Units may notexceed $3,000,000.               4.3 Calculating Shares Available.                    (a) Upon the granting of an Award or an Option, the number of Shares available under thisSection 4 for the granting of further Awards and Options shall be reduced as follows:                         (i) In connection with the granting of an Option, Stock Appreciation Right (otherthan a Stock Appreciation Right Related to an Option), Restricted Stock Unit, Share Award or Awardof Restricted Stock, Performance-Based Restricted Stock or Performance Share Units, the number ofShares available under this Section 4 for the granting of further Options and Awards shall bereduced by the number of Shares in respect of which the Option or Award is granted or denominated.                         (ii) In connection with the granting of a Performance Unit, the number of Sharesavailable under this Section 4 for the granting of further Options and Awards initially shall bereduced by the Share Equivalent number of Performance Units granted, with a correspondingadjustment if the Performance Unit is ultimately settled in whole or in part with a differentnumber of Shares. For purposes of this Section 4, the “Share Equivalent” number of PerformanceUnits shall be equal to the quotient of (i) the aggregate dollar amount in which the PerformanceUnits are denominated, divided by (ii) the Fair Market Value of a Share on the date of grant.                         (iii) In connection with the granting of a Dividend Equivalent Right, the number ofShares available under this Section 4 shall not be reduced; *provided, however*, that if Shares areissued in settlement of a Dividend Equivalent Right, the number of Shares available for thegranting of further Options and Awards under this Section 4 shall be reduced by the number ofShares so issued.                    (b) Notwithstanding Section 4.3(a), in the event that an Award is granted that, pursuant tothe terms of the Agreement, cannot be settled in Shares, the aggregate number of Shares that may bemade the subject of Awards or Options granted under the Plan shall not be reduced. Whenever anyoutstanding Option or Award or portion thereof expires, is canceled, is settled in cash or isotherwise terminated for any reason without having been exercised or payment having been made inrespect of the entire Option or Award, the number of Shares available under this Section 4 shall beincreased by the number of Shares previously allocable under Section 4.3(a) to the expired,canceled, settled or otherwise terminated portion of the Option or Award.                    (c) Notwithstanding anything in this Section 4.3 to the contrary, (i) Shares tendered as fullor partial payment of the Option Price shall not increase the number of Shares available under thisSection 4, (ii) Shares tendered as settlement of tax withholding obligations shall not increase thenumber of Shares available under this Section 4,
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and (iii) Shares repurchased by the Company using proceeds from the exercise of Options shallnot be available for issuance under the Plan.                    (d) Where two or more Awards are granted with respect to the same Shares, such Shares shall betaken into account only once for purposes of this Section 4.3.          5. **Stock Options****.**               5.1 Authority of Committee. Subject to the provisions of the Plan, the Committee shallhave full and final authority to select those Eligible Individuals who will receive Options, andthe terms and conditions of the grant to any such Eligible Individual shall be set forth in anAgreement. Incentive Stock Options may be granted only to Eligible Individuals who are employees ofthe Company or any Subsidiary on the date the Incentive Stock Option is granted.               5.2 Exercise Price. The purchase price or the manner in which the exercise price is tobe determined for Shares under each Option shall be determined by the Committee and set forth inthe Agreement; *provided, however*, that the exercise price per Share under each Option shall not beless than the greater of (i) the par value of a Share and (ii) 100% of the Fair Market Value of aShare on the date the Option is granted (110% in the case of an Incentive Stock Option granted to aTen-Percent Shareholder).               5.3 Maximum Duration. Options granted hereunder shall be for such term as theCommittee shall determine; *provided*that an Incentive Stock Option shall not be exercisable afterthe expiration of ten (10) years from the date it is granted (five (5) years in the case of anIncentive Stock Option granted to a Ten-Percent Shareholder) and a Nonqualified Stock Option shallnot be exercisable after the expiration of ten (10) years from the date it is granted; *provided,further, however*, that unless the Committee provides otherwise, an Option (other than an IncentiveStock Option) may, upon the death of the Participant prior to the expiration of the Option, beexercised for up to one (1) year following the date of the Participant’s death, even if such periodextends beyond ten (10) years from the date the Option is granted. The Committee may, subsequent tothe granting of any Option, extend the term thereof, but in no event shall the term as so extendedexceed the maximum term provided for in the preceding sentence.               5.4 Vesting. The Committee shall determine the time or times at which an Option shallbecome vested and exercisable. To the extent not exercised, installments shall accumulate and beexercisable, in whole or in part, at any time after becoming exercisable, but not later than thedate the Option expires. The Committee may accelerate the exercisability of any Option or portionthereof at any time.               5.5 Limitations on Incentive Stock Options. To the extent that the aggregate FairMarket Value (determined as of the date of the grant) of Shares with respect to which IncentiveStock Options granted under the Plan and “incentive stock options” (within the meaning of Section422 of the Code) granted under all other plans of the Company or its Subsidiaries (in either casedetermined without regard to this Section 5.5) are exercisable by a
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Participant for the first time during any calendar year exceeds $100,000, such Incentive StockOptions shall be treated as Nonqualified Stock Options. In applying the limitation in the precedingsentence in the case of multiple Option grants, unless otherwise required by applicable law,Options which were intended to be Incentive Stock Options shall be treated as Nonqualified StockOptions according to the order in which they were granted such that the most recently grantedOptions are first treated as Nonqualified Stock Options.               5.6 Transferability. Except as otherwise provided in this Section 5.6, no Option shallbe transferable by the Participant otherwise than by will or by the laws of descent anddistribution, and an Option shall be exercisable during the lifetime of such Participant only bythe Participant or his or her guardian or legal representative. The Committee may set forth in theAgreement evidencing an Option (other than an Incentive Stock Option) at the time of grant orthereafter, that the Option, or a portion thereof, may be transferred to any third party, includingbut not limited to, members of the Participant’s immediate family, to trusts solely for the benefitof such immediate family members and to partnerships in which such family members and/or trusts arethe only partners. In addition, for purposes of the Plan, unless otherwise determined by theCommittee at the time of grant or thereafter, a transferee of an Option pursuant to this Section5.6 shall be deemed to be the Participant; *provided*that the rights of any such transfereethereafter shall be nontransferable except that such transferee, where applicable under the termsof the transfer by the Participant, shall have the right previously held by the Participant todesignate a Beneficiary. For this purpose, immediate family means the Participant’s spouse,parents, children, stepchildren and grandchildren and the spouses of such parents, children,stepchildren and grandchildren. The terms of an Option shall be final, binding and conclusive uponthe beneficiaries, executors, administrators, heirs and successors of the Participant.Notwithstanding Section 19.2, or the terms of any Agreement, the Company or any Subsidiary shallnot withhold any amount attributable to the Participant’s tax liability from any payment of cash orShares to a transferee or transferee’s Beneficiary under this Section 5.6, but may require thepayment of an amount equal to the Company’s or any Subsidiary’s withholding tax obligation as acondition to exercise or as a condition to the release of cash or Shares upon exercise or upontransfer of the option.               5.7 Method of Exercise. The exercise of an Option shall be made only by giving writtennotice delivered in person or by mail to the person designated by the Company, specifying thenumber of Shares to be exercised and, to the extent applicable, accompanied by payment therefor andotherwise in accordance with the Agreement pursuant to which the Option was granted. The exerciseprice for any Shares purchased pursuant to the exercise of an Option shall be paid in any or anycombination of the following forms: (a) cash or its equivalent (e.g., a check) or (b) if permittedby the Committee, the transfer, either actually or by attestation, to the Company of Shares thathave been held by the Participant for at least six (6) months (or such lesser period as may bepermitted by the Committee) prior to the exercise of the Option, such transfer to be upon suchterms and conditions as determined by the Committee or (c) in the form of other property asdetermined by the Committee. In addition, Options may be exercised through a registeredbroker-dealer pursuant to such cashless exercise procedures that are, from time to time, deemedacceptable by the Committee. Any Shares transferred to the Company as payment of the exercise priceunder an Option shall be valued at their Fair Market Value on the last business day preceding thedate of exercise of such Option. If requested by the Committee,
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the Participant shall deliver the Agreement evidencing the Option to the Company, which shallendorse thereon a notation of such exercise and return such Agreement to the Participant. Nofractional Shares (or cash in lieu thereof) shall be issued upon exercise of an Option and thenumber of Shares that may be purchased upon exercise shall be rounded to the nearest number ofwhole Shares.               5.8 Rights of Participants. No Participant shall be deemed for any purpose to be theowner of any Shares subject to any Option unless and until (a) the Option shall have been exercisedpursuant to the terms thereof, (b) the Company shall have issued and delivered Shares (whether ornot certificated) to the Participant, a securities broker acting on behalf of the Participant orsuch other nominee of the Participant, and (c) the Participant’s name, or the name of his or herbroker or other nominee, shall have been entered as a shareholder of record on the books of theCompany. Thereupon, the Participant shall have full voting, dividend and other ownership rightswith respect to such Shares, subject to such terms and conditions as may be set forth in theapplicable Agreement.               5.9 Effect of Change in Control. The effect of a Change in Control on an Option may beset forth in the applicable Agreement.          6. **Stock Appreciation Rights****.**               6.1 Grant. The Committee may in its discretion, either alone or in connection with thegrant of an Option, grant Stock Appreciation Rights to Eligible Individuals in accordance with thePlan, the terms and conditions of which shall be set forth in an Agreement. A Stock AppreciationRight may be granted (a) at any time if unrelated to an Option or (b) if related to an Option,either at the time of grant or at any time thereafter during the term of the Option.               6.2 Stock Appreciation Right Related to an Option. If granted in connection with anOption, a Stock Appreciation Right shall cover the same Shares covered by the Option (or suchlesser number of Shares as the Committee may determine) and shall, except as provided in thisSection 6, be subject to the same terms and conditions as the related Option.                    (a) Exercise; Transferability. A Stock Appreciation Right granted in connection withan Option (i) shall be exercisable at such time or times and only to the extent that the relatedOption is exercisable, (ii) shall be exercisable only if the Fair Market Value of a Share on thedate of exercise exceeds the exercise price specified in the Agreement evidencing the relatedIncentive Stock Option and (iii) shall not be transferable except to the extent the related Optionis transferable.                    (b) Amount Payable. Upon the exercise of a Stock Appreciation Right related to anOption, the Participant shall be entitled to receive an amount determined by multiplying (i) theexcess of the Fair Market Value of a Share on the last business day preceding the date of exerciseof such Stock Appreciation Right over the per Share exercise price under the related Option, by(ii) the number of Shares as to which such Stock Appreciation Right is being exercised.Notwithstanding the foregoing, the Committee may limit in any manner
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the amount payable with respect to any Stock Appreciation Right by including such a limit inthe Agreement evidencing the Stock Appreciation Right at the time it is granted.                    (c) Treatment of Related Options and Stock Appreciation Rights Upon Exercise. Upon theexercise of a Stock Appreciation Right granted in connection with an Option, the Option shall becanceled to the extent of the number of Shares as to which the Stock Appreciation Right isexercised, and upon the exercise of an Option granted in connection with a Stock AppreciationRight, the Stock Appreciation Right shall be canceled to the extent of the number of Shares as towhich the Option is exercised or surrendered.               6.3 Stock Appreciation Right Unrelated to an Option. A Stock Appreciation Rightunrelated to an Option shall cover such number of Shares as the Committee shall determine.                    (a) Terms; Duration. Stock Appreciation Rights unrelated to Options shall contain suchterms and conditions as to exercisability, vesting and duration as the Committee shall determine,but in no event shall they have a term of greater than ten (10) years; *provided*that unless theCommittee provides otherwise a Stock Appreciation Right may, upon the death of the Participantprior to the expiration of the Award, be exercised for up to one (1) year following the date of theParticipant’s death even if such period extends beyond ten (10) years from the date the StockAppreciation Right is granted.                    (b) Amount Payable. Upon exercise of a Stock Appreciation Right unrelated to anOption, the Grantee shall be entitled to receive an amount determined by multiplying (i) the excessof the Fair Market Value of a Share on the last business day preceding the date of exercise of suchStock Appreciation Right over the Fair Market Value of a Share on the date the Stock AppreciationRight was granted, by (ii) the number of Shares as to which the Stock Appreciation Right is beingexercised. Notwithstanding the foregoing, the Committee may limit in any manner the amount payablewith respect to any Stock Appreciation Right by including such a limit in the Agreement evidencingthe Stock Appreciation Right at the time it is granted.                    (c) Transferability. (i) Except as otherwise provided in this Section 6.3(c), no StockAppreciation Right unrelated to an Option shall be transferable by the Participant otherwise thanby will or the laws of descent and distribution, and a Stock Appreciation Right shall beexercisable during the lifetime of such Participant only by the Participant or his or her guardianor legal representative. The Committee may set forth in the Agreement evidencing a StockAppreciation Right at the time of grant or thereafter, that the Award, or a portion thereof, may betransferred to any third party, including but not limited to, members of the Participant’simmediate family, to trusts solely for the benefit of such immediate family members and topartnerships in which such family members and/or trusts are the only partners. In addition, forpurposes of the Plan, unless otherwise determined by the Committee at the time of grant orthereafter, a transferee of a Stock Appreciation Right pursuant to this Section 6.3(c) shall bedeemed to be the Participant; *provided*that the rights of any such transferee thereafter shall benontransferable except that such transferee, where applicable under the terms of the transfer bythe Participant, shall have the right previously held by the Participant
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to designate a Beneficiary. For this purpose, immediate family means the Participant’s spouse,parents, children, stepchildren and grandchildren and the spouses of such parents, children,stepchildren and grandchildren. The terms of a Stock Appreciation Right shall be final, binding andconclusive upon the beneficiaries, executors, administrators, heirs and successors of theParticipant. Notwithstanding Section 19.2, or the terms of any Agreement, the Company or anySubsidiary shall not withhold any amount attributable to the Participant’s tax liability from anypayment of cash or Shares to a transferee or transferee’s Beneficiary under this Section 6.3(c),but may require the payment of an amount equal to the Company’s or any Subsidiary’s withholding taxobligation as a condition to exercise or as a condition to the release of cash or Shares uponexercise or upon transfer of the Stock Appreciation Right.               6.4 Method of Exercise. Stock Appreciation Rights shall be exercised by a Participantonly by giving written notice delivered in person or by mail to the person designated by theCompany, specifying the number of Shares with respect to which the Stock Appreciation Right isbeing exercised. If requested by the Committee, the Participant shall deliver the Agreementevidencing the Stock Appreciation Right being exercised and the Agreement evidencing any relatedOption to the Company, which shall endorse thereon a notation of such exercise and return suchAgreement to the Participant.               6.5 Form of Payment. Payment of the amount determined under Section 6.2(b) or 6.3(b)may be made in the discretion of the Committee solely in whole Shares in a number determined attheir Fair Market Value on the last business day preceding the date of exercise of the StockAppreciation Right, or solely in cash, or in a combination of cash and Shares. If the Committeedecides to make full payment in Shares and the amount payable results in a fractional Share,payment for the fractional Share will be made in cash.               6.6 Effect of Change in Control. The effect of a Change in Control on a StockAppreciation Right may be set forth in the applicable Agreement.          7. **Dividend Equivalent Rights****.**               The Committee may in its discretion, grant Dividend Equivalent Rights either in tandem with anOption or Award or as a separate Award, to Eligible Individuals in accordance with the Plan. Theterms and conditions applicable to each Dividend Equivalent Right shall be specified in theAgreement under which the Dividend Equivalent Right is granted. Amounts payable in respect ofDividend Equivalent Rights may be payable currently or, if applicable, deferred until the lapsingof restrictions on such Dividend Equivalent Rights or until the vesting, exercise, payment,settlement or other lapse of restrictions on the Option or Award to which the Dividend EquivalentRights relate. In the event that the amount payable in respect of Dividend Equivalent Rights are tobe deferred, the Committee shall determine whether such amounts are to be held in cash orreinvested in Shares or deemed (notionally) to be reinvested in Shares. If amounts payable inrespect of Dividend Equivalent Rights are to be held in cash, there may be credited at the end ofeach year (or portion thereof) interest on the amount of the account at the beginning of the yearat a rate per annum as the Committee, in its discretion, may determine. Dividend Equivalent Rightsmay be settled in cash or Shares or a combination thereof, in a single installment or multipleinstallments, as determined by the Committee.
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          8. **Restricted Stock; Restricted Stock Units****.**               8.1 Restricted Stock. The Committee may grant to Eligible Individuals Awards ofRestricted Stock, which shall be evidenced by an Agreement. Each Agreement shall contain suchrestrictions, terms and conditions as the Committee may, in its discretion, determine and (withoutlimiting the generality of the foregoing) such Agreements may require that an appropriate legend beplaced on Share certificates. Awards of Restricted Stock shall be subject to the terms andprovisions set forth below in this Section 8.1.                    (a) Rights of Participant. Shares of Restricted Stock granted pursuant to an Awardhereunder shall be issued in the name of the Participant as soon as reasonably practicable afterthe Award is granted provided that the Participant has executed an Agreement evidencing the Award,the appropriate blank stock powers and, in the discretion of the Committee, an escrow agreement andany other documents which the Committee may require as a condition to the issuance of such Shares.At the discretion of the Committee, Shares issued in connection with an Award of Restricted Stockshall be deposited together with the stock powers with an escrow agent (which may be the Company)designated by the Committee. Unless the Committee determines otherwise and as set forth in theAgreement, upon delivery of the Shares to the escrow agent, the Participant shall have all of therights of a shareholder with respect to such Shares, including the right to vote the Shares and toreceive all dividends or other distributions paid or made with respect to the Shares.                    (b) Non-transferability. Until all restrictions upon the Shares of Restricted Stockawarded to a Participant shall have lapsed in the manner set forth in Section 8.1(c), such Sharesshall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwisehypothecated.                    (c) Lapse of Restrictions.                         (i) Generally. Restrictions upon Shares of Restricted Stock awardedhereunder shall lapse at such time or times and on such terms and conditions as the Committee maydetermine. The Agreement evidencing the Award shall set forth any such restrictions.                         (ii) Effect of Change in Control. The effect of a Change in Control on anAwards of Shares of Restricted Stock may be set forth in the applicable Agreement.                    (d) Treatment of Dividends. At the time an Award of Restricted Stock is granted, theCommittee may, in its discretion, determine that the payment to the Participant of dividends, or aspecified portion thereof, declared or paid on such Shares by the Company shall be (i) deferreduntil the lapsing of the restrictions imposed upon such Shares and (ii) held by the Company for theaccount of the Participant until such time. In the event that dividends are to be deferred, theCommittee shall determine whether such dividends are to be reinvested in Shares (which shall beheld as additional Shares of Restricted Stock) or held in
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cash. If deferred dividends are to be held in cash, there may be credited interest on theamount of the account at such times and at a rate per annum as the Committee, in its discretion,may determine. Payment of deferred dividends in respect of Shares of Restricted Stock (whether heldin cash or as additional Shares of Restricted Stock), together with interest accrued thereon, ifany, shall be made upon the lapsing of restrictions imposed on the Shares in respect of which thedeferred dividends were paid, and any dividends deferred (together with any interest accruedthereon) in respect of any Shares of Restricted Stock shall be forfeited upon the forfeiture ofsuch Shares.                    (e) Delivery of Shares. Upon the lapse of the restrictions on Shares of RestrictedStock, the Committee shall cause a stock certificate or evidence of book entry Shares to bedelivered to the Participant with respect to such Shares of Restricted Stock, free of allrestrictions hereunder.               8.2 Restricted Stock Unit Awards. The Committee may grant to Eligible IndividualsAwards of Restricted Stock Units, which shall be evidenced by an Agreement. Each such Agreementshall contain such restrictions, terms and conditions as the Committee may, in its discretion,determine. Awards of Restricted Stock Units shall be subject to the terms and provisions set forthbelow in this Section 8.2.                    (a) Payment of Awards. Each Restricted Stock Unit shall represent the right of theParticipant to receive a payment upon vesting of the Restricted Stock Unit or on any later datespecified by the Committee equal to the Fair Market Value of a Share as of the date the RestrictedStock Unit was granted, the vesting date or such other date as determined by the Committee at thetime the Restricted Stock Unit was granted. The Committee may, at the time a Restricted Stock Unitis granted, provide a limitation on the amount payable in respect of each Restricted Stock Unit.The Committee may provide for the settlement of Restricted Stock Units in cash or with Shareshaving a Fair Market Value equal to the payment to which the Participant has become entitled.                    (b) Effect of Change in Control. The effect of a Change in Control on an Award ofRestricted Stock Units shall be set forth in the applicable Agreement.          9. **Performance Awards****.**               9.1 Performance Units and Performance Share Units. The Committee, in its discretion,may grant Awards of Performance Units and/or Performance Share Units to Eligible Individuals, theterms and conditions of which shall be set forth in an Agreement.                    (a) Performance Units. Performance Units shall be denominated in a specified dollaramount and, contingent upon the attainment of specified Performance Objectives within thePerformance Cycle, represent the right to receive payment as provided in Sections 9.1(c) and (d) ofthe specified dollar amount or a percentage of the specified dollar amount depending on the levelof Performance Objective attained; *provided, however*, that the Committee may at the time aPerformance Unit is granted specify a maximum amount payable in respect of a vested PerformanceUnit. Each Agreement shall specify the number of
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Performance Units to which it relates, the Performance Objectives which must be satisfied inorder for the Performance Units to vest and the Performance Cycle within which such PerformanceObjectives must be satisfied.                    (b) Performance Share Units. Performance Share Units shall be denominated in Sharesand, contingent upon the attainment of specified Performance Objectives within the PerformanceCycle, each Performance Share Unit represents the right to receive payment as provided in Sections9.1(c) and (d) of the Fair Market Value of a Share on the date the Performance Share Unit wasgranted, the date the Performance Share Unit became vested or any other date specified by theCommittee or a percentage of such amount depending on the level of Performance Objective attained;*provided, however*, that the Committee may at the time a Performance Share Unit is granted specify amaximum amount payable in respect of a vested Performance Share Unit. Each Agreement shall specifythe number of Performance Share Units to which it relates, the Performance Objectives which must besatisfied in order for the Performance Share Units to vest and the Performance Cycle within whichsuch Performance Objectives must be satisfied.                    (c) Vesting and Forfeiture. Subject to Sections 9.3(c) and 9.4, a Participant shallbecome vested with respect to the Performance Share Units and Performance Units to the extent thatthe Performance Objectives for the Performance Cycle and other terms and conditions set forth inthe Agreement are satisfied; *provided, however,*that, except as may be provided pursuant toSection 9.4, no Performance Cycle for Performance Share Units and Performance Units shall be lessthan one (1) year.                    (d) Payment of Awards. Subject to Sections 9.3(c) and 9.4, payment to Participants inrespect of vested Performance Share Units and Performance Units shall be made as soon aspracticable after the last day of the Performance Cycle to which such Award relates or at suchother time or times as the Committee may determine, but in no event later than 21/2months after the end of the calendar year in which the Performance Cycle is completed. Subject toSection 9.4, such payments may be made entirely in Shares valued at their Fair Market Value,entirely in cash, or in such combination of Shares and cash as the Committee in its discretionshall determine at any time prior to such payment; *provided, however*, that if the Committee in itsdiscretion determines to make such payment entirely or partially in Shares of Restricted Stock, theCommittee must determine the extent to which such payment will be in Shares of Restricted Stock andthe terms of such Restricted Stock at the time the Award is granted.               9.2 Performance-Based Restricted Stock. The Committee, in its discretion, may grantAwards of Performance-Based Restricted Stock to Eligible Individuals, the terms and conditions ofwhich shall be set forth in an Agreement. Each Agreement may require that an appropriate legend beplaced on Share certificates. Awards of Performance-Based Restricted Stock shall be subject to thefollowing terms and provisions:                    (a) Rights of Participant. Performance-Based Restricted Stock shall be issued in thename of the Participant as soon as reasonably practicable after the Award is granted or at suchother time or times as the Committee may determine; *provided, however*, that
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no Performance-Based Restricted Stock shall be issued until the Participant has executed anAgreement evidencing the Award, the appropriate blank stock powers and, in the discretion of theCommittee, an escrow agreement and any other documents which the Committee may require as acondition to the issuance of such Performance-Based Restricted Stock. At the discretion of theCommittee, Shares issued in connection with an Award of Performance-Based Restricted Stock shall bedeposited together with the stock powers with an escrow agent (which may be the Company) designatedby the Committee. Except as restricted by the terms of the Agreement, upon delivery of the Sharesto the escrow agent, the Participant shall have, in the discretion of the Committee, all of therights of a shareholder with respect to such Shares, including the right to vote the Shares and toreceive all dividends or other distributions paid or made with respect to the Shares. EachAgreement shall specify the number of Shares of Performance-Based Restricted Stock to which itrelates, the Performance Objectives which must be satisfied in order for the Performance-BasedRestricted Stock to vest and the Performance Cycle within which such Performance Objectives must besatisfied.                    (b) Lapse of Restrictions. Subject to Sections 9.3(c) and 9.4, restrictions uponPerformance-Based Restricted Stock awarded hereunder shall lapse and such Performance-BasedRestricted Stock shall become vested at such time or times and on such terms, conditions andsatisfaction of Performance Objectives as the Committee may, in its discretion, determine at thetime an Award is granted; *provided, however,*that, except as may be provided pursuant toSection 9.4, no Performance Cycle for Performance-Based Restricted Stock shall be less than one(1) year.                    (c) Treatment of Dividends. At the time the Award of Performance-Based RestrictedStock is granted, the Committee may, in its discretion, determine that the payment to theParticipant of dividends, or a specified portion thereof, declared or paid on Shares represented bysuch Award which have been issued by the Company to the Participant shall be (i) deferred until thelapsing of the restrictions imposed upon such Performance-Based Restricted Stock and (ii) held bythe Company for the account of the Participant until such time. In the event that dividends are tobe deferred, the Committee shall determine whether such dividends are to be reinvested in Shares(which shall be held as additional Shares of Performance-Based Restricted Stock) or held in cash.If deferred dividends are to be held in cash, there may be credited interest on the amount of theaccount at such times and at a rate per annum as the Committee, in its discretion, may determine.Payment of deferred dividends in respect of Shares of Performance-Based Restricted Stock (whetherheld in cash or in additional Shares of Performance-Based Restricted Stock), together with interestaccrued thereon, if any, shall be made upon the lapsing of restrictions imposed on thePerformance-Based Restricted Stock in respect of which the deferred dividends were paid, and anydividends deferred (together with any interest accrued thereon) in respect of any Performance-BasedRestricted Stock shall be forfeited upon the forfeiture of such Performance-Based Restricted Stock.                    (d) Delivery of Shares. Upon the lapse of the restrictions on Shares ofPerformance-Based Restricted Stock awarded hereunder, the Committee shall cause a stock certificateor evidence of book entry Shares to be delivered to the Participant with respect to such Shares,free of all restrictions hereunder.
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               9.3 Performance Objectives                    (a) Establishment. Performance Objectives for Performance Awards may be expressed interms of (i) stock price, (ii) earnings per share, (iii) operating income, (iv) return on equity orassets, (v) cash flow, (vi) EBITDA, (vii) revenues, (viii) overall revenue or sales growth, (ix)expense reduction or management, (x) market position, (xi) total shareholder return, (xii) returnon investment, (xiii) earnings before interest and taxes (EBIT), (xiv) net income, (xv) return onnet assets, (xvi) economic value added, (xvii) shareholder value added, (xviii) cash flow return oninvestment, (xix) net operating profit, (xx) net operating profit after tax, (xxi) return oncapital, (xxii) return on invested capital, or (xxiii) any combination, including one or moreratios, of the foregoing. Performance Objectives may be in respect of the performance of theCompany, any of its Subsidiaries, any of its Divisions or any combination thereof. PerformanceObjectives may be absolute or relative (to prior performance of the Company or to the performanceof one or more other entities or external indices) and may be expressed in terms of a progressionwithin a specified range. In the case of a Performance Award which is intended to constitutePerformance-Based Compensation, the Performance Objectives with respect to a Performance Cycleshall be established in writing by the Committee by the earlier of (i) the date on which a quarterof the Performance Cycle has elapsed and (ii) the date which is ninety (90) days after thecommencement of the Performance Cycle, and in any event while the performance relating to thePerformance Objectives remain substantially uncertain.                    (b) Effect of Certain Events. The Committee may, at the time the PerformanceObjectives in respect of a Performance Award are established, provide for the manner in whichperformance will be measured against the Performance Objectives to reflect the effects ofextraordinary items, gain or loss on the disposal of a business segment (other than provisions foroperating losses or income during the phase-out period), unusual or infrequently occurring eventsand transactions that have been publicly disclosed, changes in accounting principles, the impact ofspecified corporate transactions (such as a stock split or stock dividend), special charges and taxlaw changes, all as determined in accordance with generally accepted accounting principles (to theextent applicable); *provided*, that in respect of Performance Awards intended to constitutePerformance-Based Compensation, such provisions shall be permitted only to the extent permittedunder Section 162(m) of the Code and the regulations promulgated thereunder without adverselyaffecting the treatment of any Performance Award as Performance-Based Compensation.                    (c) Determination of Performance. Prior to the vesting, payment, settlement or lapsingof any restrictions with respect to any Performance Award, the Committee shall certify in writingthat the applicable Performance Objectives have been satisfied to the extent necessary for suchAward to qualify as Performance-Based Compensation. In respect of a Performance Award, theCommittee may, in its sole discretion, reduce the amount of cash paid or number of Shares issuedthat become vested or on which restrictions lapse. The Committee shall not be entitled to exerciseany discretion otherwise authorized hereunder with respect to any Performance Award intended toconstitute Performance Based Compensation if the ability to exercise such discretion or theexercise of such discretion itself would cause the compensation attributable to such Awards to failto qualify as Performance-Based Compensation.
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               9.4 Effect of Change in Control. The effect of a Change in Control on a PerformanceAward may be set forth in the applicable Agreement.               9.5 Non-transferability. Until the vesting of Performance Units and Performance ShareUnits or the lapsing of any restrictions on Performance-Based Restricted Stock, as the case may be,such Performance Units, Performance Share Units or Performance-Based Restricted Stock shall not besold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated.          10. **Share Awards****.**          The Committee may grant a Share Award to any Eligible Individual on such terms and conditionsas the Committee may determine in its sole discretion. Share Awards may be made as additionalcompensation for services rendered by the Eligible Individual or may be in lieu of cash or othercompensation to which the Eligible Individual is entitled from the Company.          11. **Effect of a Termination of Employment**.          The Agreement evidencing the grant of each Option and each Award shall set forth the terms andconditions applicable to such Option or Award upon (a) a termination or change in the status of theemployment of the Participant by the Company, a Subsidiary or a Division (including a terminationor change by reason of the sale of a Subsidiary or a Division), or (b) in the case of a Director,the cessation of the Director’s service on the Board, which shall be as the Committee may, in itsdiscretion, determine at the time the Option or Award is granted or thereafter.          12. **Adjustment Upon Changes in Capitalization****.**               12.1 In the event of a Change in Capitalization, the Committee shall conclusively determinethe appropriate adjustments, if any, to (a) the maximum number and class of Shares or other stockor securities with respect to which Options or Awards may be granted under the Plan, (b) themaximum number and class of Shares or other stock or securities that may be issued upon exercise ofIncentive Stock Options, (c) the maximum number and class of Shares or other stock or securitieswith respect to which Options or Awards may be granted to any Eligible Individual in any calendaryear, (d) the number and class of Shares or other stock or securities, cash or other property whichare subject to outstanding Options or Awards granted under the Plan and the exercise pricetherefore, if applicable and (e) the Performance Objectives.               12.2 Any such adjustment in the Shares or other stock or securities (a) subject to outstandingIncentive Stock Options (including any adjustments in the exercise price) shall be made in suchmanner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only tothe extent otherwise permitted by Sections 422 and 424 of the Code or (b) subject to outstandingOptions or Awards that are intended to qualify as Performance-Based Compensation shall be made insuch a manner as not to adversely affect the treatment of the Options or Awards asPerformance-Based Compensation.
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               12.3 If, by reason of a Change in Capitalization, a Participant shall be entitled to, or shallbe entitled to exercise an Option with respect to, new, additional or different shares of stock orsecurities of the Company or any other corporation, such new, additional or different shares shallthereupon be subject to all of the conditions, restrictions and performance criteria which wereapplicable to the Shares subject to the Award or Option, as the case may be, prior to such Changein Capitalization.          13. **Effect of Certain Transactions****.**          Subject to the terms of an Agreement, following (a) the liquidation or dissolution of theCompany or (b) a merger or consolidation of the Company (a “Transaction”), either (i) eachoutstanding Option or Award shall be treated as provided for in the agreement entered into inconnection with the Transaction or (ii) if not so provided in such agreement, each Optionee andGrantee shall be entitled to receive in respect of each Share subject to any outstanding Options orAwards, as the case may be, upon exercise of any Option or payment or transfer in respect of anyAward, the same number and kind of stock, securities, cash, property or other consideration thateach holder of a Share was entitled to receive in the Transaction in respect of a Share; *provided,however*, that such stock, securities, cash, property, or other consideration shall remain subjectto all of the conditions, restrictions and performance criteria which were applicable to theOptions and Awards prior to such Transaction. Without limiting the generality of the foregoing, thetreatment of outstanding Options and Stock Appreciation Rights pursuant to clause (i) of thisSection 13 in connection with a Transaction may include the cancellation of outstanding Options andStock Appreciation Rights upon consummation of the Transaction provided either (x) the holders ofaffected Options and Stock Appreciation Rights have been given a period of at least fifteen(15) days prior to the date of the consummation of the Transaction to exercise the Options or StockAppreciation Rights (whether or not they were otherwise exercisable) or (y) the holders of theaffected Options and Stock Appreciation Rights are paid (in cash or cash equivalents) in respect ofeach Share covered by the Option or Stock Appreciation Right being cancelled an amount equal to theexcess, if any, of the per share price paid or distributed to stockholders in the transaction (thevalue of any non-cash consideration to be determined by the Committee in its sole discretion) overthe exercise price of the Option or Stock Appreciation Right. For avoidance of doubt, (1) thecancellation of Options and Stock Appreciation Rights pursuant to clause (y) of the precedingsentence may be effected notwithstanding anything to the contrary contained in this Plan or anyAgreement and (2) if the amount determined pursuant to clause (y) of the preceding sentence is zeroor less, the affected Option or Stock Appreciation Right may be cancelled without any paymenttherefor. The treatment of any Option or Award as provided in this Section 13 shall be conclusivelypresumed to be appropriate for purposes of Section 12.          14. **Interpretation****.**               14.1 Section 16 Compliance. The Plan is intended to comply with Rule 16b-3 promulgatedunder the Exchange Act and the Committee shall interpret and administer the provisions of the Planor any Agreement in a manner consistent therewith. Any
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provisions inconsistent with such Rule shall be inoperative and shall not affect the validityof the Plan.               14.2 Section 162(m). Unless otherwise determined by the Committee at the time ofgrant, each Option, Stock Appreciation Right and Performance Award is intended to be PerformanceBased Compensation. Unless otherwise determined by the Committee, if any provision of the Plan orany Agreement relating to an Option or Award that is intended to be Performance-Based Compensationdoes not comply or is inconsistent with Section 162(m) of the Code or the regulations promulgatedthereunder (including IRS Regulation § 1.162-27), such provision shall be construed or deemedamended to the extent necessary to conform to such requirements, and no provision shall be deemedto confer upon the Committee discretion to increase the amount of compensation otherwise payable inconnection with any such Option or Award upon the attainment of the Performance Objectives.               14.3 Compliance With Section 409A. All Options and Awards granted under the Plan areintended either not to be subject to Section 409A of the Code or, if subject to Section 409A of theCode, to be administered, operated and construed in compliance with Section 409A of the Code andany guidance issued thereunder. Notwithstanding this or any other provision of the Plan to thecontrary, the Committee may amend the Plan or any Option or Award granted hereunder in any manner,or take any other action that it determines, in its sole discretion, is necessary, appropriate oradvisable (including replacing any Option or Award) to cause the Plan or any Option or Awardgranted hereunder to comply with Section 409A and any guidance issued thereunder or to not besubject to Section 409A. Any such action, once taken, shall be deemed to be effective from theearliest date necessary to avoid a violation of Section 409A and shall be final, binding andconclusive on all Eligible Individuals and other individuals having or claiming any right orinterest under the Plan.          15. **Termination and Amendment of the Plan or Modification of Options and Awards****.**               15.1 Plan Amendment or Termination. The Board may at any time terminate the Plan andthe Board may at any time and from time to time amend, modify or suspend the Plan; *provided,however*, that:                    (a) no such amendment, modification, suspension or termination shall impair or adversely alterany Options or Awards theretofore granted under the Plan, except with the consent of theParticipant, nor shall any amendment, modification, suspension or termination deprive anyParticipant of any Shares which he or she may have acquired through or as a result of the Plan; and                    (b) to the extent necessary under any applicable law, regulation or exchange requirement, noother amendment shall be effective unless approved by the shareholders of the Company in accordancewith applicable law, regulation or exchange requirement.
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               15.2 Modification of Options and Awards. No modification of an Option or Award shalladversely alter or impair any rights or obligations under the Option or Award without the consentof the Participant.          16. **Non-Exclusivity of the Plan****.**          The adoption of the Plan by the Board shall not be construed as amending, modifying orrescinding any previously approved incentive arrangement or as creating any limitations on thepower of the Board to adopt such other incentive arrangements as it may deem desirable, including,without limitation, the granting of stock options otherwise than under the Plan, and sucharrangements may be either applicable generally or only in specific cases.          17. **Limitation of Liability****.**          As illustrative of the limitations of liability of the Company, but not intended to beexhaustive thereof, nothing in the Plan shall be construed to:               (a) give any person any right to be granted an Option or Award other than at the solediscretion of the Committee;               (b) give any person any rights whatsoever with respect to Shares except as specificallyprovided in the Plan;               (c) limit in any way the right of the Company or any Subsidiary to terminate the employment ofany person at any time; or               (d) be evidence of any agreement or understanding, express or implied, that the Company willemploy any person at any particular rate of compensation or for any particular period of time.          18. **Regulations and Other Approvals; Governing Law****.**               18.1 Except as to matters of federal law, the Plan and the rights of all persons claiminghereunder shall be construed and determined in accordance with the laws of the State of Delawarewithout giving effect to conflicts of laws principles thereof.               18.2 The obligation of the Company to sell or deliver Shares with respect to Options andAwards granted under the Plan shall be subject to all applicable laws, rules and regulations,including all applicable federal and state securities laws, and the obtaining of all such approvalsby governmental agencies as may be deemed necessary or appropriate by the Committee.               18.3 The Board may make such changes as may be necessary or appropriate to comply with therules and regulations of any government authority, or to obtain for Eligible Individuals grantedIncentive Stock Options the tax benefits under the applicable provisions of the Code andregulations promulgated thereunder.
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               18.4 Each grant of an Option and Award and the issuance of Shares or other settlement of theOption or Award is subject to the compliance with all applicable federal, state or foreign law.Further, if at any time the Committee determines, in its discretion, that the listing, registrationor qualification of Shares issuable pursuant to the Plan is required by any securities exchange orunder any federal, state or foreign law, or the consent or approval of any governmental regulatorybody is necessary or desirable as a condition of, or in connection with, the grant of an Option orAward or the issuance of Shares, no Options or Awards shall be or shall be deemed to be granted orpayment made or Shares issued, in whole or in part, unless listing, registration, qualification,consent or approval has been effected or obtained free of any conditions that are not acceptable tothe Committee. Any person exercising an Option or receiving Shares in connection with any otherAward shall make such representations and agreements and furnish such information as the Board orCommittee may request to assure compliance with the foregoing or any other applicable legalrequirements.               18.5 Notwithstanding anything contained in the Plan or any Agreement to the contrary, in theevent that the disposition of Shares acquired pursuant to the Plan is not covered by a then currentregistration statement under the Securities Act of 1933, as amended (the “Securities Act”), and isnot otherwise exempt from such registration, such Shares shall be restricted against transfer tothe extent required by the Securities Act and Rule 144 or other regulations promulgated thereunder.The Committee may require any individual receiving Shares pursuant to an Option or Award grantedunder the Plan, as a condition precedent to receipt of such Shares, to represent and warrant to theCompany in writing that the Shares acquired by such individual are acquired without a view to anydistribution thereof and will not be sold or transferred other than pursuant to an effectiveregistration thereof under the Securities Act or pursuant to an exemption applicable under theSecurities Act or the rules and regulations promulgated thereunder. The certificates evidencing anyof such Shares shall be appropriately amended or have an appropriate legend placed thereon toreflect their status as restricted securities as aforesaid.          19. **Miscellaneous****.**               19.1 Multiple Agreements. The terms of each Option or Award may differ from otherOptions or Awards granted under the Plan at the same time, or at some other time. The Committee mayalso grant more than one Option or Award to a given Eligible Individual during the term of thePlan, either in addition to, or subject to Section 3.6, in substitution for, one or more Options orAwards previously granted to that Eligible Individual.               19.2 Withholding of Taxes.                    (a) The Company or any Subsidiary may withhold from any payment of cash or Shares to aParticipant or other person under the Plan an amount sufficient to cover any withholding taxeswhich may become required with respect to such payment or shall take any other action as it deemsnecessary to satisfy any income or other tax withholding requirements as a result of the grant orexercise of any Award under the Plan. The Company or any Subsidiary shall have the right to requirethe payment of any such taxes and require that any
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person furnish information deemed necessary by the Company or any Subsidiary to meet any taxreporting obligation as a condition to exercise or before making any payment pursuant to an Awardor Option. If specified in an Agreement at the time of grant or otherwise approved by theCommittee, a Participant may, in satisfaction of his or her obligation to pay withholding taxes inconnection with the exercise, vesting or other settlement of an Option or Award, elect to (i) makea cash payment to the Company, (ii) have withheld a portion of the Shares then issuable to him orher, or (iii) surrender Shares owned by the Participant prior to the exercise, vesting or othersettlement of an Option or Award, in each case having an aggregate Fair Market Value equal to thewithholding taxes.                    (b) If a Participant makes a disposition, within the meaning of Section 424(c) of the Code andregulations promulgated thereunder, of any Share or Shares issued to such Participant pursuant tothe exercise of an Incentive Stock Option within the two-year period commencing on the day afterthe date of the grant or within the one-year period commencing on the day after the date oftransfer of such Share or Shares to the Participant pursuant to such exercise, the Participantshall, within ten (10) days of such disposition, notify the Company thereof, by delivery of writtennotice to the Company at its principal executive office.               19.3 Plan Unfunded. The Plan shall be unfunded. Except for reserving a sufficientnumber of authorized Shares to the extent required by law to meet the requirements of the Plan, theCompany shall not be required to establish any special or separate fund or to make any othersegregation of assets to assure payment of any Award or Option granted under the Plan.               19.4 Beneficiary Designation. Each Participant may, from time to time, name one ormore individuals (each, a “Beneficiary”) to whom any benefit under the Plan is to be paid in caseof the Participant’s death before he or she receives any or all of such benefit. Each suchdesignation shall revoke all prior designations by the same Participant, shall be in a formprescribed by the Company, and will be effective only when filed by the Participant in writing withthe Company during the Participant’s lifetime. In the absence of any such designation, benefitsremaining unpaid at the Participant’s death shall be paid to the Participant’s estate.               19.5 Effective Date/Term. The effective date of the Plan shall be as determined by theBoard, subject only to the approval by the affirmative vote of the holders of a majority of thesecurities of the Company present, or represented, and entitled to vote at a meeting ofshareholders duly held in accordance with the applicable laws of the State of Delaware withintwelve (12) months after the adoption of the Plan by the Board (the “Effective Date”).                    The Plan shall terminate on the Termination Date. No Option or Award shall be granted afterthe Termination Date. The applicable terms of the Plan, and any terms and conditions applicable toOptions and Awards granted prior to the Termination Date shall survive the termination of the Planand continue to apply to such Options and Awards.
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                    19.6 Post-Transition Period. Following the end of the Transition Period, any Option orAward granted under the Plan which is intended to be Performance-Based Compensation, shall besubject to the approval of the material terms of the Plan by the stockholders of the Company inaccordance with Section 162(m) of the Code and the regulations promulgated thereunder.
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