exv10w11



 





Exhibit 10.11




GENCORP INC.




1999 Equity and Performance Incentive Plan




     1. Purpose. The purpose of the 1999 Equity and Performance Incentive Plan is to attract and
retain directors, officers and other key employees for GenCorp Inc., an Ohio corporation and its
Subsidiaries and to provide to such persons incentives and rewards for superior performance.



     2. Definitions. As used in this Plan,



          “Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and shall
include both Tandem Appreciation Rights and Free-Standing Appreciation Rights.




          “Base Price” means the price to be used as the basis for determining the Spread upon the
exercise of a Free-Standing Appreciation Right and a Tandem Appreciation Right.




          “Board” means the Board of Directors of the Company and, to the extent of any delegation by
the Board to a committee (or subcommittee thereof) pursuant to Section 16 of this Plan, such
committee (or subcommittee).




          “Change in Control” shall have the meaning provided in Section 12 of this Plan.




          “Code” means the Internal Revenue Code of 1986, as amended from time to time.




          “Common Shares” means the Common Shares, par value $0.10 per share, of the Company or any
security into which such Common Shares may be changed by reason of any transaction or event of the
type referred to in Section 11 of this Plan.




          “Company” means GenCorp Inc., an Ohio corporation.




          “Covered Employee” means a Participant who is, or is determined by the Board to be likely to
become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor
provision).




          “Date of Grant” means the date specified by the Board on which a grant of Option Rights,
Appreciation Rights, Performance Shares or Performance Units or a grant or sale of Restricted
Shares or Deferred Shares shall become effective which date shall not be earlier than the date on
which the Board takes action with respect thereto.




          “Deferral Period” means the period of time during which Deferred Shares are subject to
deferral limitations under Section 7 of this Plan.




          “Deferred Shares” means an award made pursuant to Section 7 of this Plan of the right to
receive Common Shares at the end of a specified Deferral Period.




 









 








          “Director” means a member of the Board of Directors of the Company.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, as such law, rules and regulations may be amended from time to time.




          “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5
of this Plan that is not granted in tandem with an Option Right.




          “Immediate Family” has the meaning ascribed thereto in Rule 16a-1(e) under the Exchange Act
(or any successor rule to the same effect) as in effect from time to time.




          “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock
options” under Section 422 of the Code or any successor provision.




          “Management Objectives” means the measurable performance objective or objectives established
pursuant to this Plan for Participants who have received grants of Performance Shares or
Performance Units or, when so determined by the Board, Option Rights, Appreciation Rights,
Restricted Shares and dividend credits pursuant to this Plan. Management Objectives may be
described in terms of Company-wide objectives or objectives that are related to the performance of
the individual Participant or of the Subsidiary, division, department, region or function within
the Company or Subsidiary in which the Participant is employed. The Management Objectives may be
made relative to the performance of other corporations. The Management Objectives applicable to
any award to a Covered Employee shall be based on specified levels of or growth in one or more of
the following criteria:





	 	1.	 	cash flow;
	 	2.	 	earnings per share;
	 	3.	 	earnings before interest and taxes;
	 	4.	 	earnings per share growth;
	 	5.	 	net income;
	 	6.	 	return on assets;
	 	7.	 	return on assets employed;
	 	8.	 	return on equity;
	 	9.	 	return on invested capital;
	 	10.	 	return on total capital;
	 	11.	 	revenue growth;
	 	12.	 	stock price;
	 	13.	 	total return to stockholders;
	 	14.	 	economic value added; and
	 	15.	 	operating profit growth; or




any combination of the foregoing.




          If the Committee determines that a change in the business, operations, corporate structure or
capital structure of the Company, or the manner in which it conducts its business, or other events
or circumstances render the Management Objectives unsuitable, the Committee may in its discretion
modify such Management Objectives or the related minimum acceptable level of



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achievement, in whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Covered Employee where such action would result in the loss of the otherwise
available exemption of the award under Section 162(m) of the Code. In such case, the Committee
shall not make any modification of the Management Objectives or minimum acceptable level of
achievement.




          “Market Value” means (i) the closing price for Common Shares as reported in the New York Stock
Exchange Composite Transactions in the Wall Street Journal or similar publication selected
by the Board for the relevant date if Common Shares were traded on such day or, if none were then
traded, the last prior day on which Common Shares were so traded, or (ii), if clause (i) does not
apply, the fair market value of the Common Stock as determined by the Board.




          “Nonemployee Director” means a Director who is not an employee of the Company or any
Subsidiary.




          “Optionee” means the optionee named in an agreement evidencing an outstanding Option Right.




          “Option Price” means the purchase price payable on exercise of an Option Right.




          “Option Right” means the right to purchase Common Shares upon exercise of an option granted
pursuant to Section 4 or Section 9 of this Plan.




          “Participant” means a person who is selected by the Board to receive benefits under this Plan
and who is at the time an officer or other key employee of the Company or any one or more of its
Subsidiaries, or who has agreed to commence serving in any of such capacities within 30 days of the
Date of Grant, and shall also include each Nonemployee Director who receives an award of Option
Rights or Restricted Shares.




          “Performance Period” means, in respect of a Performance Share or Performance Unit, a period of
time established pursuant to Section 8 of this Plan within which the Management Objectives relating
to such Performance Share or Performance Unit are to be achieved.




          “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share
awarded pursuant to Section 8 of this Plan.




          “Performance Unit” means a bookkeeping entry that records a unit equivalent to $1.00 awarded
pursuant to Section 8 of this Plan.




          “Plan” means this GenCorp Inc. 1999 Equity and Performance Incentive Plan.




          “Restricted Shares” means Common Shares granted or sold pursuant to Section 6 or Section 9 of
this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers
referred to in such Section 6 has expired.




          “Rule 16b-3” means Rule 16b-3 under the Exchange Act (or any successor rule to the same
effect) as in effect from time to time.




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          “Spread” means the excess of the Market Value per Share on the date when an Appreciation Right
is exercised, or on the date when Option Rights are surrendered in payment of the Option Price of
other Option Rights, over the Option Price or Base Price provided for in the related Option Right
or Free-Standing Appreciation Right, respectively.




          “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose
outstanding shares or securities (representing the right to vote for the election of directors or
other managing authority) are, or (ii) which does not have outstanding shares or securities (as may
be the case in a partnership, joint venture or unincorporated association), but more than 50
percent of whose ownership interest representing the right generally to make decisions for such
other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company
except that for purposes of determining whether any person may be a Participant for purposes of any
grant of Incentive Stock Options, “Subsidiary” means any corporation in which, at the time, the
Company owns or controls, directly or indirectly, more than 50 percent of the total combined voting
power represented by all classes of stock issued by such corporation.




          “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this
Plan that is granted in tandem with an Option Right.




          “Voting Power” means at any time, the total votes relating to the then-outstanding securities
entitled to vote generally in the election of Directors.




     3. Shares Available Under the Plan. (a) Subject to adjustment as provided in Section 3(b) and
Section 11 of this Plan, the number of Common Shares that may be issued or transferred (i) upon the
exercise of Option Rights or Appreciation Rights, (ii) as Restricted Shares and released from
substantial risks of forfeiture thereof, (iii) as Deferred Shares, (iv) in payment of Performance
Shares or Performance Units that have been earned, (v) as awards to Nonemployee Directors or (vi)
in payment of dividend equivalents paid with respect to awards made under the Plan shall not exceed
in the aggregate 2,700,000 (Two Million Seven Hundred Thousand) Common Shares, plus any shares
described in Section 3(b). Such shares may be shares of original issuance or treasury shares or a
combination of the foregoing.



          (b) The number of shares available in Section 3(a) above shall be adjusted to account for
shares relating to awards that expire, are forfeited or are transferred, surrendered or
relinquished upon the payment of any Option Price by the transfer to the Company of Common Shares
or upon satisfaction of any withholding amount. Upon payment in cash of the benefit provided by
any award granted under this Plan, any shares that were covered by that award shall again be
available for issue or transfer hereunder.




          (c) Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and
subject to adjustment as provided in Section 11 of this Plan, (i) the aggregate number of Common
Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options
shall not exceed 1,000,000 Common Shares; (ii) no Participant shall be granted Option Rights and
Appreciation Rights, in the aggregate, for more than 1,000,000 Common Shares during any period of 3
consecutive years; (iii) the number of shares issued as Restricted Shares, Deferred Shares or
Performance Shares shall not in the aggregate exceed
900,000 Common Shares; (iv) during any period of three consecutive fiscal years, the maximum
number of Common Shares covered by awards of Restricted Shares, Deferred Shares or



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Performance
Shares granted to any one Participant shall not exceed 900,000 Common Shares; and (v) no
Nonemployee Director shall be granted Option Rights, Appreciation Rights and Restricted Shares, in
the aggregate, for more than 100,000 Common Shares during any fiscal year of the Company.




          (d) Notwithstanding any other provision of this Plan to the contrary, in no event shall any
Participant in any one calendar year receive an award of Performance Shares of Performance Units
having an aggregate maximum value as of their respective Dates of Grant in excess of $2,000,000.




     4. Option Rights. The Board may, from time to time and upon such terms and conditions as it
may determine, authorize the granting to Participants of options to purchase Common Shares. Each
such grant may utilize any or all of the authorizations, and shall be subject to all of the
requirements contained in the following provisions:



          (a) Each grant shall specify the number of Common Shares to which it pertains subject to the
limitations set forth in Section 3 of this Plan.




          (b) Each grant shall specify an Option Price per share, which may not be less than the Market
Value per Share on the Date of Grant.




          (c) Each grant shall specify whether the Option Price shall be payable (i) in cash or by check
acceptable to the Company, (ii) by the actual or constructive transfer to the Company of Common
Shares owned by the Optionee for at least 6 months (or other consideration authorized pursuant to
Section 4(d)) having a value at the time of exercise equal to the total Option Price, or (iii) by a
combination of such methods of payment.




          (d) The Board may determine, at or after the Date of Grant, that payment of the Option Price
of any Option Right (other than an Incentive Stock Option) may also be made in whole or in part in
the form of Restricted Shares or other Common Shares that are forfeitable or subject to
restrictions on transfer, Deferred Shares, Performance Shares (based, in each case, on the Market
Value per Share on the date of exercise), other Option Rights (based on the Spread on the date of
exercise) or Performance Units. Unless otherwise determined by the Board at or after the Date of
Grant, whenever any Option Price is paid in whole or in part by means of any of the forms of
consideration specified in this Section 4(d), the Common Shares received upon the exercise of the
Option Rights shall be subject to such risks of forfeiture or restrictions on transfer as may
correspond to any that apply to the consideration surrendered, but only to the extent, determined
with respect to the consideration surrendered, of (i) the number of shares or Performance Shares,
(ii) the Spread of any unexercisable portion of Option Rights, or (iii) the stated value of
Performance Units.




          (e) Any grant may provide for deferred payment of the Option Price from the proceeds of sale
through a bank or broker on a date satisfactory to the Company of some or all of the shares to
which such exercise relates.




          (f) Any grant may provide for payment of the Option Price, at the election of the Optionee, in
installments, with or without interest, upon terms determined by the Board.



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          (g) Successive grants may be made to the same Participant whether or not any Option Rights
previously granted to such Participant remain unexercised.




          (h) Each grant shall specify the period or periods of continuous service by the Optionee with
the Company or any Subsidiary that is necessary before the Option Rights or installments thereof
will become exercisable and may provide for the earlier exercise of such Option Rights in the event
of a Change in Control.




          (i) Any grant of Option Rights may specify Management Objectives that must be achieved as a
condition to the exercise of such rights.




          (j) Option Rights granted under this Plan may be (i) options, including, without limitation,
Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii)
options that are not intended so to qualify, or (iii) combinations of the foregoing.




          (k) The Board may, at or after the Date of Grant of any Option Rights (other than Incentive
Stock Options), provide for the payment of dividend equivalents to the Optionee on either a current
or deferred or contingent basis or may provide that such equivalents shall be credited against the
Option Price.




          (l) The exercise of an Option Right shall result in the cancellation on a share- for-share
basis of any Tandem Appreciation Right authorized under Section 5 of this Plan.




          (m) No Option Right shall be exercisable more than 10 years from the Date of Grant.




          (n) Each grant of Option Rights shall be evidenced by an agreement executed on behalf of the
Company by an officer and delivered to the Optionee and containing such terms and provisions,
consistent with this Plan, as the Board may approve.




     5. Appreciation Rights. (a) The Board may authorize the granting (i) to any Optionee, of
Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any
Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation Right shall be a right of
the Optionee, exercisable by surrender of the related Option Right, to receive from the Company an
amount determined by the Board, which shall be expressed as a percentage of the Spread (not
exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any
time prior to the exercise or termination of the related Option Rights; provided, however, that a
Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted
concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right shall be a right
of the Participant to receive from the Company an amount determined by the Board, which shall be
expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.



          (b) Each grant of Appreciation Rights may utilize any or all of the authorizations, and shall
be subject to all of the requirements, contained in the following provisions:



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               (i) Any grant may specify that the amount payable on exercise of an Appreciation Right
may be paid by the Company in cash, in Common Shares or in any combination thereof and may
either grant to the Participant or retain in the Board the right to elect among those
alternatives.




               (ii) Any grant may specify that the amount payable on exercise of an Appreciation Right
may not exceed a maximum specified by the Board at the Date of Grant.




               (iii) Any grant may specify waiting periods before exercise and permissible exercise
dates or periods.




               (iv) Any grant may specify that such Appreciation Right may be exercised only in the
event of, or earlier in the event of, a Change in Control.




               (v) Any grant may provide for the payment to the Participant of dividend equivalents
thereon in cash or Common Shares on a current, deferred or contingent basis.




               (vi) Any grant of Appreciation Rights may specify Management Objectives that must be
achieved as a condition of the exercise of such Rights.




               (vii) Each grant of Appreciation Rights shall be evidenced by an agreement executed on
behalf of the Company by an officer and delivered to and accepted by the Participant, which
agreement shall describe such Appreciation Rights, identify the related Option Rights (if
applicable), state that such Appreciation Rights are subject to all the terms and conditions
of this Plan, and contain such other terms and provisions, consistent with this Plan, as the
Board may approve.



          (c) Any grant of Tandem Appreciation Rights shall provide that such Rights may be exercised
only at a time when the related Option Right is also exercisable and at a time when the Spread is
positive, and by surrender of the related Option Right for cancellation.




          (d) Regarding Free-standing Appreciation Rights only:





               (i) Each grant shall specify in respect of each Free-standing Appreciation Right a Base
Price, which shall be equal to or greater or less than the Market Value per Share on the
Date of Grant;




               (ii) Successive grants may be made to the same Participant regardless of whether any
Free-standing Appreciation Rights previously granted to the Participant remain unexercised;
and




               (iii) No Free-standing Appreciation Right granted under this Plan may be exercised more
than 10 years from the Date of Grant.



     6. Restricted Shares. The Board may also authorize the grant or sale of Restricted Shares to
Participants. Each grant or sale of Restricted Stock may utilize any or all of the



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authorizations,
and shall be subject to all of the requirements, contained in the following provisions:




          (a) Each such grant or sale shall constitute an immediate transfer of the ownership of Common
Shares to the Participant in consideration of the performance of services, entitling such
Participant to voting, dividend and other ownership rights, but subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.




          (b) Each such grant or sale may be made without additional consideration or in consideration
of a payment by such Participant that is less than Market Value per Share at the Date of Grant.




          (c) Each such grant or sale shall provide that the Restricted Shares covered by such grant or
sale shall be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the
Code for a period of not less than 3 years to be determined by the Board at the Date of Grant and
may provide for the earlier lapse of such substantial risk of forfeiture in the event of a Change
in Control. If the Board conditions the noforfeitability of shares of Restricted Stock upon
service alone, such vesting may not occur before three years from the Date of Grant of such shares
of Restricted Stock, and if the Board conditions the nonforfeitability of shares of Restricted
Stock on Management Objectives, such nonforfeitability may not occur before one year from the Date
of Grant of such shares of Restricted Stock.




          (d) Each such grant or sale shall provide that during the period for which such substantial
risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited
or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which
restrictions may include, without limitation, rights of repurchase or first refusal in the Company
or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in
the hands of any transferee).




          (e) Any grant of Restricted Shares may specify Management Objectives that, if achieved, will
result in termination or early termination of the restrictions applicable to such shares. Each
grant may specify in respect of such Management Objectives a minimum acceptable level of
achievement and may set forth a formula for determining the number of Restricted Shares on which
restrictions will terminate if performance is at or above the minimum level, but falls short of
full achievement of the specified Management Objectives.




          (f) Any such grant or sale of Restricted Shares may require that any or all dividends or other
distributions paid thereon during the period of such restrictions be automatically deferred and
reinvested in additional Restricted Shares, which may be Subject to the same restrictions as the
underlying award.




          (g) Each grant or sale of Restricted Shares shall be evidenced by an agreement executed on
behalf of the Company by any officer and delivered to and accepted by the Participant and shall
contain such terms and provisions, consistent with this Plan, as the Board may approve. Unless
otherwise directed by the Board, all certificates representing Restricted Shares shall be held in
custody by the Company until all restrictions thereon shall have lapsed,
together with a stock power or powers executed by the Participant in whose name such
certificates are registered, endorsed in blank and covering such Shares.



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     7. Deferred Shares. The Board may also authorize the granting or sale of Deferred Shares to
Participants. Each grant or sale of Deferred Shares may utilize any or all of the authorizations,
and shall be subject to all of the requirements contained in the following provisions:



          (a) Each such grant or sale shall constitute the agreement by the Company to deliver Common
Shares to the Participant in the future in consideration of the performance of services, but
subject to the fulfillment of such conditions during the Deferral Period as the Board may specify.




          (b) Each such grant or sale may be made without additional consideration or in consideration
of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.




          (c) Each such grant or sale shall be subject to a Deferral Period of not less than one year,
as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other
modification of such Deferral Period in the event of a Change in Control. If the Board conditions
the nonforfeitability of shares of Deferred Stock upon service alone, such vesting may not occur
before three years from the Date of Grant of such shares of Deferred Stock, and if the Board
conditions the nonforfeitability of shares of Deferred Stock on Management Objectives, such
nonforfeitability may not occur before one year from the Date of Grant of such shares of Deferred
Stock.




          (d) During the Deferral Period, the Participant shall have no right to transfer any rights
under his or her award and shall have no rights of ownership in the Deferred Shares and shall have
no right to vote them, but the Board may, at or after the Date of Grant, authorize the payment of
dividend equivalents on such Shares on either a current or deferred or contingent basis, either in
cash or in additional Common Shares.




          (e) Each grant or sale of Deferred Shares shall be evidenced by an agreement executed on
behalf of the Company by any officer and delivered to and accepted by the Participant and shall
contain such terms and provisions, consistent with this Plan, as the Board may approve.




     8. Performance Shares and Performance Units. The Board may also authorize the granting of
Performance Shares and Performance Units that will become payable to a Participant upon achievement
of specified Management Objectives. Each such grant may utilize any or all of the authorizations,
and shall be subject to all of the requirements, contained in the following provisions:



          (a) Each grant shall specify the number of Performance Shares or Performance Units to which it
pertains, which number may be subject to adjustment to reflect changes in compensation or other
factors; provided, however, that no such adjustment shall be made in the case of a Covered Employee
where such action would result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code.




          (b) The Performance Period with respect to each Performance Share or Performance Unit shall be
such period of time not less than 1 year, commencing with the Date of



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Grant as shall be determined
by the Board at the time of grant which may be subject to earlier lapse or other modification in
the event of a Change in Control as set forth in the agreement specified in Section 8(g).




          (c) Any grant of Performance Shares or Performance Units shall specify Management Objectives
which, if achieved, will result in payment or early payment of the award, and each grant may
specify in respect of such specified Management Objectives a minimum acceptable level of
achievement and shall set forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the minimum level, but falls
short of full achievement of the specified Management Objectives. The grant of Performance Shares
or Performance Units shall specify that, before the Performance Shares or Performance Units shall
be earned and paid, the Board must certify that the Management Objectives have been satisfied.




          (d) Each grant shall specify the time and manner of payment of Performance Shares or
Performance Units that have been earned. Any grant may specify that the amount payable with
respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof
and may either grant to the Participant or retain in the Board the right to elect among those
alternatives.




          (e) Any grant of Performance Shares may specify that the amount payable with respect thereto
may not exceed a maximum specified by the Board at the Date of Grant. Any grant of Performance
Units may specify that the amount payable or the number of Common Shares issued with respect
thereto may not exceed maximums specified by the Board at the Date of Grant.




          (f) The Board may, at or after the Date of Grant of Performance Shares, provide for the
payment of dividend equivalents to the holder thereof on either a current or deferred or contingent
basis, either in cash or in additional Common Shares.




          (g) Each grant of Performance Shares or Performance Units shall be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and accepted by the Participant,
which agreement shall state that such Performance Shares or Performance Units are subject to all
the terms and conditions of this Plan, and contain such other terms and provisions, consistent with
this Plan, as the Board may approve.




     9. Awards to Nonemployee Directors. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Nonemployee Directors of Option Rights
and may also authorize the grant or sale of Restricted Shares to Nonemployee Directors.



          (a) Each grant of Option Rights awarded pursuant to this Section 9 shall be upon terms and
conditions consistent with Section 4 of this Plan and shall be evidenced by an agreement in such
form as shall be approved by the Board. Each grant shall specify an Option Price per share, which
shall not be less than the Market Value per Share on the Date of Grant. Each such Option Right
granted under the Plan shall expire not more than 10 years from the Date
of Grant and shall be subject to earlier termination as hereinafter provided. Unless
otherwise



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determined by the Board, such Option Rights shall be subject to the following additional
terms and conditions:





               (i) Each grant shall specify the number of Common Shares to which it pertains subject
to the limitations set forth in Section 3 of this Plan.




               (ii) Each such Option Right shall become exercisable six (6) months after the Date of
Grant. Such Option Rights shall become exercisable in full immediately in the event of a
Change in Control or other similar transaction or event.




               (iii) In the event of the termination of service on the Board by the holder of any such
Option Rights, other than by reason of disability, death or retirement, the then outstanding
Option Rights of such holder may be exercised to the extent that they would be exercisable
on the date of such termination until the date that is one year after the date of such
termination, but in no event after the expiration date of such Option Rights.




               (iv) In the event of the death, disability or retirement of the holder of any such
Option Rights, each of the then outstanding Option Rights of such holder may be exercised at
any time within one (1) year after such death, disability or retirement, but in no event
after the expiration date of the term of such Option Rights.




               (v) If a Nonemployee Director subsequently becomes an employee of the Company or a
Subsidiary while remaining a member of the Board, any Option Rights held under the Plan by
such individual at the time of such commencement of employment shall not be affected
thereby.




               (vi) Option Rights may be exercised by a Nonemployee Director only upon payment to the
Company in full of the Option Price of the Common Shares to be delivered. Such payment
shall be made in cash or in Common Shares then owned by the optionee for at least six
months, or in a combination of cash and such Common Shares.



          (b) Each grant or sale of Restricted Shares pursuant to this Section 9 shall be upon terms and
conditions consistent with Section 6 of this Plan.




     10. Transferability. (a) Except as otherwise determined by the Board, no Option Right,
Appreciation Right or other derivative security granted under the Plan shall be transferable by a
Participant other than by will or the laws of descent and distribution. Except as otherwise
determined by the Board, Option Rights and Appreciation Rights shall be exercisable during the
Optionee’s lifetime only by him or her or by his or her guardian or legal representative.



          (b) The Board may specify at the Date of Grant that part or all of the Common Shares that are
(i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation
Rights, upon the termination of the Deferral Period applicable to Deferred Shares or upon payment
under any grant of Performance Shares or Performance Units or (ii) no
longer subject to the substantial risk of forfeiture and restrictions on transfer referred to
in Section 6 of this Plan, shall be subject to further restrictions on transfer.



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          (c) Notwithstanding the provisions of Section 10(a), Option Rights (other than Incentive Stock
Options) shall be transferable by a Participant, without payment of consideration therefor by the
transferee, to any one or more members of the Participant’s Immediate Family (or to one or more
trusts established solely for the benefit of one or more members of the Participant’s Immediate
Family or to one or more partnerships in which the only partners are members of the Participant’s
Immediate Family); provided, however, that (i) no such transfer shall be effective unless
reasonable prior notice thereof is delivered to the Company and such transfer is thereafter
effected in accordance with any terms and conditions that shall have been made applicable thereto
by the Company or the Board and (ii) any such transferee shall be subject to the same terms and
conditions hereunder as the Participant.




     11. Adjustments. The Board may make or provide for such adjustments in the numbers of Common
Shares covered by outstanding Option Rights, Appreciation Rights, Deferred Shares, and Performance
Shares granted hereunder, in the Option Price and Base Price provided in outstanding Appreciation
Rights, and in the kind of shares covered thereby, as the Board, in its sole discretion, exercised
in good faith, may determine is equitably required to prevent dilution or enlargement of the rights
of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure of the Company, or
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or
complete liquidation or other distribution of assets, issuance of rights or warrants to purchase
securities, or (c) any other corporate transaction or event having an effect similar to any of the
foregoing. Moreover, in the event of any such transaction or event, the Board, in its discretion,
may provide in substitution for any or all outstanding awards under this Plan such alternative
consideration as it, in good faith, may determine to be equitable in the circumstances and may
require in connection therewith the surrender of all awards so replaced. The Board may also make
or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the
Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any
transaction or event described in this Section 11; provided, however, that any such adjustment to
the number specified in Section 3(c)(i) shall be made only if and to the extent that such
adjustment would not cause any Option intended to qualify as an Incentive Stock Option to fail so
to qualify.



     12. Change in Control. For purposes of this Plan, except as may be otherwise prescribed by
the Board in an agreement evidencing a grant or award made under the Plan, a Change in Control
means the occurrence during the Term of any of the following events, subject to the provisions of
Section 12(f) hereof:




          (a) All or substantially all of the assets of the Company are sold or transferred to
another corporation or entity, or the Company is merged, consolidated or reorganized into or
with another corporation or entity, with the result that upon conclusion of the transaction
less than 51% of the outstanding securities entitled to vote generally in the election of
directors or other capital interests of the surviving, resulting or acquiring corporation or
entity are beneficially owned (as that term is defined in Rule 13-d3 under the Exchange Act)
(such ownership, “Beneficial Ownership”), by the shareholders of the Company immediately
prior to the completion of the transaction; or




          (b) Any person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act (a “Person”)) has become the Beneficial Owner of



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securities representing
20% or more of the combined voting power of the then-outstanding voting securities of the
Company; or




          (c) The individuals who, as of January 1, 2006, constituted the Board (the “Incumbent
Directors”) cease for any reason, including without limitation as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute a majority thereof,
provided that (1) any individual becoming a director of the Company subsequent to January 1,
2006 shall be considered an Incumbent Director if such person’s election or nomination for
election was approved by a vote of at least two-thirds of the other Incumbent Directors and
(2) any individual whose initial assumption of office is in connection with or as a result
of an actual or threatened election contest relating to the election of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as
that term is used in Sections 13(d) and 14(d) of the Exchange Act) other than the Board,
including by reason of agreement intended to avoid or settle any such actual or threatened
contest or solicitation shall not be considered an Incumbent Director; or




          (d) There shall be an announcement of the intent of any Person (other than the Company,
any wholly-owned Subsidiary of the Company, or any employee stock ownership or other
employee benefit plan of the Company or any wholly-owned Subsidiary of the Company) to
commence a tender offer or exchange offer to acquire (when added to any shares as to which
such Person is the Beneficial Owner immediately prior to such tender or exchange offer)
beneficial ownership of 30% or more of the combined voting power of the then-outstanding
voting securities of the Company; or




          (e) The Board determines that (1) any particular actual or proposed merger,
consolidation, reorganization, sale or transfer of assets, accumulation of shares or tender
offer for shares of the Company or other transaction or event or series of transactions or
events will, or is likely to, if carried out, result in a Change in Control falling within
Subsections (a), (b), (c) or (d) and (2) it is in the best interests of the Company and its
shareholders, and will serve the intended purposes of this Section 12, if the provisions of
awards which provide for earlier exercise or earlier lapse of restrictions or conditions
upon a Change in Control shall thereupon become immediately operative.




          (f) Notwithstanding the foregoing provisions of this Section 12:




               (i) If any such merger, consolidation, reorganization, sale or transfer of
assets, or tender offer or other transaction or event or series of transactions or
events mentioned in Section 12(e) shall be abandoned, or any such accumulations of
shares shall be dispersed or otherwise resolved, the Board may, upon a majority
vote, including a majority vote of all then-continuing Incumbent Directors (such
vote, a “Majority Vote”), by notice to the Executive, nullify the effect thereof and
reinstate the award as previously in effect, but without prejudice to any action
that may have been taken prior to such nullification.




               (ii) Unless otherwise determined in a specific case by the Board, a “Change in
Control” shall not be deemed to have occurred for purposes of Section 12(b) or
Section 12(d) solely because (X) the Company, (Y) a Subsidiary,



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or (Z) any
Company-sponsored employee stock ownership plan or any other employee benefit plan
of the Company or any Subsidiary either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K
or Schedule 14A (or any successor schedule, form or report or item therein) under
the Exchange Act disclosing Beneficial Ownership by it of shares of the
then-outstanding voting securities of the Company, whether in excess of 20% or
otherwise, or because the Company reports that a change in control of the Company
has occurred or will occur in the future by reason of such beneficial ownership.



     For the avoidance of doubt, the fact that a particular event may not constitute a “Change in
Control” under any subsection of this Section 12 will not affect whether a Change in Control shall
be determined to have occurred under any other subparagraph.



     13. Fractional Shares. The Company shall not be required to issue any fractional Common
Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for the
settlement of fractions in cash.



     14. Withholding Taxes. To the extent that the Company is required to withhold federal, state,
local or foreign taxes in connection with any payment made or benefit realized by a Participant or
other person under this Plan, and the amounts available to the Company for such withholding are
insufficient, it shall be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory to the Company for
payment of the balance of such taxes required to be withheld, which arrangements (in the discretion
of the Board) may include relinquishment of a portion of such benefit. Common Shares or benefits
shall not be withheld in excess of the minimum number required for such tax withholding. The
Company and a Participant or such other person may also make arrangements with respect to the
payment in cash of any taxes with respect to which withholding is not required.



     15. Foreign Employees. In order to facilitate the making of any grant or combination of
grants under this Plan, the Board may provide for such special terms for awards to Participants who
are foreign nationals or who are employed by the Company or any Subsidiary outside of the United
States of America as the Board may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom. Moreover, the Board may approve such supplements to or
amendments, restatements or alternative versions of this Plan as it may consider necessary or
appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for
any other purpose, and the Secretary or other appropriate officer of the Company may certify any
such document as having been approved and adopted in the same manner as this Plan. No such special
terms, supplements, amendments or restatements, however, shall include any provisions that are
inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended
to eliminate such inconsistency without further approval by the shareholders of the Company.



     16. Administration of the Plan. (a) This Plan shall be administered by the Board, which may
from time to time delegate all or any part of its authority under this Plan to a committee of the
Board (or subcommittee thereof) consisting entirely of three Nonemployee Directors appointed by the
Board. A majority of the committee (or subcommittee) shall



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constitute a quorum, and the action of
the members of the committee (or subcommittee) present at any meeting at which a quorum is present,
or acts unanimously approved in writing, shall be the acts of the committee (or subcommittee). To
the extent of any such delegation, references in this Plan to the Board shall be deemed to be
references to any such committee or subcommittee.




          (b) The interpretation and construction by the Board of any provision of this Plan or of any
agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights,
Restricted Shares, Deferred Shares, Performance Shares or Performance Units and any determination
by the Board pursuant to any provision of this Plan or of any such agreement, notification or
document shall be final and conclusive. No member of the Board shall be liable for any such action
or determination made in good faith.




     17. Amendments, Etc. (a) The Board may at any time and from time to time amend the Plan in
whole or in part; provided, however, that any amendment which must be approved by the shareholders
of the Company in order to comply with applicable law or the rules of the New York Stock Exchange]
or, if the Common Shares are not traded on the New York Stock Exchange, the principal national
securities exchange upon which the Common Shares are traded or quoted, shall not be effective
unless and until such approval has been obtained. Presentation of this Plan or any amendment
hereof for shareholder approval shall not be construed to limit the Company’s authority to offer
similar or dissimilar benefits under other plans without shareholder approval.



          (b) The Board shall not, without the further approval of the shareholders of the Company,
authorize the amendment of any outstanding Option Right to reduce the Option Price. Furthermore,
no Option Right shall be cancelled and replaced with awards having a lower Option Price without
further approval of the shareholders of the Company. This Section 17(b) is intended to prohibit
the repricing of “underwater” Option Rights and shall not be construed to prohibit the adjustments
provided for in Section 11 of this Plan.




          (c) The Board also may permit Participants to elect to defer the issuance of Common Shares or
the settlement of awards in cash under the Plan pursuant to such rules, procedures or programs as
it may establish for purposes of this Plan. The Board also may provide that deferred issuances and
settlements include the payment or crediting of dividend equivalents or interest on the deferral
amounts.




          (d) The Board may condition the grant of any award or combination of awards authorized under
this Plan on the surrender or deferral by the Participant of his or her right to receive a cash
bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.




          (e) In case of termination of employment by reason of death, disability or normal or early
retirement, or in the case of hardship or other special circumstances, of a Participant who holds
an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Shares
as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, or any Deferred Shares as to which the Deferral Period has not been completed, or any
Performance Shares or Performance Units which have not been fully earned, or who holds Common
Shares subject to any transfer restriction imposed pursuant to Section 10(b) of this Plan, the
Board may, in its sole discretion, accelerate the time at which such



15









 






Option Right or Appreciation
Right may be exercised or the time at which such substantial risk of forfeiture or prohibition or
restriction on transfer will lapse or the time when such Deferral Period will end or the time at
which such Performance Shares or Performance Units will be deemed to have been fully earned or the
time when such transfer restriction will terminate or may waive any other limitation or requirement
under any such award.




          (f) This Plan shall not confer upon any Participant any right with respect to continuance of
employment or other service with the Company or any Subsidiary, nor shall it interfere in any way
with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s
employment or other service at any time.




          (g) To the extent that any provision of this Plan would prevent any Option Right that was
intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be
null and void with respect to such Option Right. Such provision, however, shall remain in effect
for other Option Rights and there shall be no further effect on any provision of this Plan.




     18. Termination. No grant shall be made under this Plan more than 10 years after the date on
which this Plan is first approved by the shareholders of the Company, but all grants made on or
prior to such date shall continue in effect thereafter subject to the terms thereof and of this
Plan.



     19. Exclusion from Certain Restrictions. Notwithstanding anything in this Plan to the
contrary, not more than eighty-one thousand (81,000) Common Shares in the aggregate available under
this Plan may be subject to awards as follows:




(a) in the case of grants of Restricted Stock, which do not meet the requirements of
the last sentence of Section 6(c);




(b) in the case of grants of Restricted Stock as to which the Board may accelerate
or waive any restrictions imposed under Section 6(d)




(c) in the case of grants of Deferred Stock, which do not meet the requirements of
the last sentence of Section 7(c); or




(d) in the case of Performance Shares and Performance Units, which do not meet the
requirements of Section 8(b).




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