Exhibit 10.3
LEAR CORPORATION
OUTSIDE DIRECTORS COMPENSATION PLAN
As Amended and Restated Effective January 1, 2009
(Conformed Copy through First Amendment)

 

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LEAR CORPORATION
OUTSIDE DIRECTORS COMPENSATION PLAN
Article 1. Establishment, Objectives and Duration
     1.1 Amendment and Restatement of Plan. Lear Corporation, a Delaware
corporation, hereby amends and restates the compensation plan for non-employee
directors known as the “Lear Corporation Outside Directors Compensation Plan”
(hereinafter referred to as the “Plan”), as set forth in this document.
     1.2 Plan Objectives. The objectives of the Plan are to give the Company an
advantage in attracting and retaining Outside Directors and to link the
interests of Outside Directors to those of the Company’s stockholders.
     1.3 Duration of the Plan. The Plan commenced on January 1, 2004 and will
remain in effect until the Board of Directors terminates it pursuant to
Section 9.1.
Article 2. Definitions
     The following defined terms have the meanings set forth below:
     “Accounts” means an Outside Director’s Stock Account and Interest Account.
     “Affiliate” means any person that, directly or indirectly, is in control
of, is controlled by, or is under common control with, the Company.
     “Annual Retainer” means the retainer fee established by the Board in
accordance with Section 5.1 and paid to an Outside Director for services
performed as a member of the Board of Directors for a Plan Year.
     “Beneficiary” means the person entitled under Section 6.6 to receive
payment of the balances remaining in an Outside Director’s Accounts in case the
Outside Director dies before the entire balances in those Accounts have been
paid.
     “Board” or “Board of Directors” means the Board of Directors of the
Company.
     “Change in Control” of the Company will be deemed to have occurred (as of a
particular day, as specified by the Board) as of the first day any one or more
of the following paragraphs is satisfied:

  (a)   any person (other than the Company or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company)
becomes the

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      beneficial owner, directly or indirectly, of securities of the Company,
representing more than twenty percent (twenty-five percent for all Restricted
Units awarded and all compensation initially deferred under the Plan on or after
January 1, 2007) of the combined voting power of the Company’s then outstanding
securities;     (b)   during any period of twenty-six consecutive months (not
including any period prior to the Effective Date), individuals who at the
beginning of that period constitute the Board (and any new Directors whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds of the Directors then still in
office who either were Directors at the beginning of the period or whose
election or nomination for election was so approved) cease for any reason
(except for death, disability or voluntary retirement) to constitute a majority
of the Board; or     (c)   the stockholders of the Company approve: (i) a plan
of complete liquidation or dissolution of the Company; (ii) an agreement for the
sale or disposition of all or substantially all the Company’s assets; or (iii) a
merger, consolidation or reorganization of the Company with or involving any
other corporation, other than a merger, consolidation or reorganization that
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least eighty
percent (seventy-five percent for all Restricted Units awarded and all
compensation initially deferred under the Plan on or after January 1, 2007) of
the combined voting power of the voting securities of the Company (or the
surviving entity) outstanding immediately after the merger, consolidation, or
reorganization.

     Notwithstanding the foregoing, to the extent necessary to avoid subjecting
Outside Directors to interest and additional tax under Section 409A of the Code,
no “Change in Control” will be deemed to occur unless and until paragraph (a),
(b) or (c), above, is satisfied and Section 409A(a)(2)(A)(v) of the Code is
satisfied.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor to it.
     “Committee Meeting Fee” means the fee established by the Board in
accordance with Section 5.1 and paid to an Outside Director for each attendance
at a meeting of a Board committee (including telephonic meetings but excluding
execution of unanimous written consents).
     “Common Stock Fair Market Value” means the average of the high and low
prices of publicly traded Shares on the national exchange on which the Shares
are listed as of a particular date.

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     “Company” means Lear Corporation, a Delaware corporation, and any successor
thereto as provided in Section 9.3.
     “Deferral Election” has the meaning ascribed to it in Section 6.1.
     “Deferral Fair Market Value” means the average of the high and low prices
of publicly traded Shares on the national exchange on which the Shares are
listed.
     “Director” means any individual who is a member of the Board of Directors.
     “Disability” means the individual is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months.
     “Effective Date” has the meaning ascribed to it in Section 8.1.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor to it.
     “Grandfathered Account” means the portion of an Account attributable to
compensation that was deferred and vested as of December 31, 2004.
     “Grant Date” means has the meaning ascribed to it in Section 5.2.
     “Grant Date Fair Market Value” means the average of the high and low prices
of publicly traded Shares on the national exchange on which the Shares are
listed on the date on which the Restricted Units are granted.
     “Installment Payment” has the meaning ascribed to it in Section 5.1.
     “Interest Account” means the portion of an Outside Director’s Account to
which credits are made under Section 6.4.
     “Meeting Fee” means the fee established by the Board in accordance with
Section 5.1 and paid to an Outside Director for each attendance at a meeting of
the Board of Directors (including telephonic meetings but excluding execution of
unanimous written consents).
     “Nongrandfathered Account” means the portion of an Account that is not a
Grandfathered Account.
     “Outside Director” means a Director who, at the time in question, is not an
employee of the Company or any of its Affiliates.
     “Plan” has the meaning ascribed to it in Section 1.1.

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     “Plan Year” means the 12 month period beginning on January 1 and ending on
the next following December 31.
     “Plan Year Accounts” for a given Plan Year means the portion of a
Participant’s Accounts attributable to compensation deferred for such Plan Year.
     “Plan Year Interest Account” for a given Plan Year means the portion of a
Participant’s Interest Account attributable to compensation deferred for such
Plan Year.
     “Plan Year Stock Account” for a given Plan Year means the portion of a
Participant’s Stock Account attributable to compensation deferred for such Plan
Year.
     “Presiding Director” means the Outside Director selected by the other
Outside Directors as the presiding Director at meetings of the Outside Directors
held in accordance with applicable rules of any securities exchange on which the
Company’s securities are listed.
     “Restricted Grant” means a grant made pursuant to Section 5.2 that is
subject to vesting and other restrictions as set forth in Article 7.
     “Restricted Unit” means a Stock Unit that is subject to vesting and other
restrictions as set forth in Article 7, as in effect prior to March 24, 2009.
     “Retirement” means a Separation from Service (a) upon or after attaining
70 years of age, or (b) upon or after serving six years as a Director, or
(c) upon such other circumstances that the Board, in its sole discretion,
affirmatively determines not to be adverse to the best interests of the Company.
     “Separation from Service” or “Separate from Service” means ceasing to be a
Director of the Company for any reason. Notwithstanding anything to the
contrary, the determination of whether an individual has had a Separation from
Service will be made in accordance with Code Section 409A and the regulations
thereunder.
     “Shares” means the shares of common stock, $.01 par value, of the Company,
including their associated preferred share purchase rights.
     “Stock Account” means the portion of an Outside Director’s Account to which
Stock Units are credited.
     “Stock Unit” means a notional Share credited under Section 6.3 to the
account of an Outside Director and payable in cash.
     “Termination Date” means the date on which an Outside Director has a
Separation from Service.
     “Vesting Date” means the original date on which the value of a Restricted
Unit is scheduled to be distributed.

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Article 3. Administration
     3.1 The Board of Directors. The Plan will be administered by the Board of
Directors. The Board of Directors will act by a majority of its members at the
time in office and eligible to vote on any particular matter, and may act either
by a vote at a meeting or in writing without a meeting.
     3.2 Authority of the Board of Directors. Except as limited by law and
subject to the provisions herein, the Board of Directors has full power to:
construe and interpret the Plan and any agreement or instrument entered into
under the Plan; establish, amend or waive rules and regulations for the Plan’s
administration; and amend the terms and conditions of the Plan. Further, the
Board of Directors will make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by law and consistent
with Section 3.1, the Board of Directors may delegate some or all of its
authority under this Plan.
     3.3 Decisions Binding. All determinations and decisions made by the Board
of Directors pursuant to the provisions of the Plan will be final, conclusive
and binding on all persons, including the Company, its stockholders, all
Affiliates, Outside Directors and their estates and beneficiaries.
Article 4. Eligibility
     Each Outside Director of the Board during a Plan Year will participate in
the Plan for that year.
Article 5. Annual Retainer and Restricted Units
     5.1 Amount Payable in Cash. Each Outside Director will be entitled to
receive an Annual Retainer in the amount determined from time to time by the
Board. Until changed by resolution of the Board of Directors, the Annual
Retainer will be $45,000 for each Outside Director, provided that the Annual
Retainer for the Presiding Director will be increased by $10,000. In addition,
the Annual Retainer for the chair of the Audit Committee will be increased by
$20,000 and the Annual Retainer for the chair of each of the following
committees will be increased by $10,000: Compensation Committee and Nominating
and Corporate Governance Committee. Notwithstanding the foregoing, effective
January 1, 2009, and until changed by resolution of the Board of Directors, each
of the amounts set forth above shall be reduced by twenty percent (20%) so that
the Annual Retainer will be $36,000 for each Outside Director, which will be
increased by $8,000 for the Presiding Director, by $16,000 for the chair of the
Audit Committee, and by $8,000 for the chair of each of the following
committees: Compensation Committee and Nominating and Corporate Governance
Committee.
     To the extent the Outside Director has not made a Deferral Election with
respect to the Annual Retainer, it will be paid in monthly cash installments
(the “Installment Payments”) to the Outside Director, payable on the last
business day of the month preceding the month to which the installment applies.
Each Installment Payment to an Outside Director will equal the quotient

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of the Outside Director’s Annual Retainer divided by twelve. To the extent
necessary, Installment Payments made after March 24, 2009, will be adjusted to
reflect the reduction of amounts payable under this Section 5.1 made by the
First Amendment to the Plan. Any Outside Director who first becomes an Outside
Director during a calendar month will be entitled to an Installment Payment for
that month unless, immediately before becoming an Outside Director, he or she
was a Director who was an employee of the Company or any of its Affiliates.
     Each Outside Director will be entitled to receive a Meeting Fee, in the
amount determined from time to time by the Board, for each meeting he or she
attends (including telephonic meetings but excluding execution of unanimous
written consents) of the Board of Directors. In addition, each Outside Director
will be entitled to receive a Committee Meeting Fee, in the amount determined
from time to time by the Board, for each meeting he or she attends (including
telephonic meetings but excluding execution of unanimous written consents) of a
Board committee. Until changed by resolution of the Board of Directors, the
Meeting Fee will be $1,500 and the Committee Meeting Fee will be $1,500. Unless
the Outside Director has made a Deferral Election with respect to them, Meeting
Fees and Committee Meeting Fees for the meetings, if any, attended during the
current month will be paid on the last business day of the month (at the same
time as the Installment Payment for the next month). Payment shall be made as
soon as practicable after adoption of the First Amendment to the Plan with
respect to Meeting Fees and Committee Meeting Fees for meetings, if any,
attended prior to the effective date of such First Amendment, for which payment
has not been received or deferred by the Outside Director. Notwithstanding the
foregoing, effective January 1, 2009, and until changed by resolution of the
Board of Directors, the Meeting Fee will be $1,200 and the Committee Meeting Fee
will be $1,200.
     5.2 Restricted Grant. Each Outside Director who is an Outside Director on
any day of the Plan Year on or prior to May 1 will be entitled to receive a
Restricted Grant pursuant to Article 7, on the last business day of January of
such Plan Year or, if later, on the first day on which such individual becomes
an Outside Director (the “Grant Date”). Until changed by resolution of the Board
of Directors, the Restricted Grant will be a credit to a notional account in the
amount of $72,000.

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Article 6. Deferral
     6.1 Deferral Election. Any Outside Director may elect to defer all or a
portion of the compensation payable to him or her under Section 5.1 for the Plan
Year by filing with the Secretary of the Company a written notice to that effect
on the Deferral Election Form attached hereto as Exhibit A (a “Deferral
Election”). Such election will be filed before the first day of the Plan Year to
which it relates. Notwithstanding the foregoing, an election may be filed within
30 days after a Director first becomes an Outside Director; provided, however,
the amount of compensation deferred pursuant to such election will not exceed
the portion of the Outside Director’s compensation earned after the date the
election is made. A Deferral Election may not be revoked or modified with
respect to compensation payable for any Plan Year for which it is effective.
Unless either the Deferral Election is terminated or modified as described below
or the Director Separates from Service, the Deferral Election will apply to
compensation payable under Section 5.1 with respect to each subsequent Plan
Year. An Outside Director may terminate or modify his or her current Deferral
Election by filing a new Deferral Election before the first day of the Plan Year
to which such termination or modification applies.
     6.2 Accounts. At the time an Outside Director makes a Deferral Election
under Section 6.1 he or she must also designate the portion of the deferred
compensation to be credited to a Stock Account and/or an Interest Account.
Notwithstanding the foregoing, all amounts deferred after March 24, 2009, will
be credited to an Interest Account.
     6.3 Stock Account. Prior to March 24, 2009, the amounts the Outside
Director elected to defer to a Stock Account were credited to that account as
Stock Units as of the date the compensation would otherwise have been payable
under Section 5.1. The number of Stock Units so credited equaled the amount of
compensation deferred divided by the Deferral Fair Market Value of a Share on
the day the compensation would otherwise have been paid if the Outside Director
had not made a Deferral Election.
     If the Company declares a cash dividend on its common stock, then, on the
payment date of the dividend, the Outside Director will be credited with
dividend equivalents equal to the amount of cash dividend per Share multiplied
by the number of Stock Units credited to the Outside Director’s Stock Account
through the record date. The dollar amount credited to the Outside Director
under the preceding sentence will be credited to the Outside Director’s Plan
Year Interest Account.
     6.4 Interest Account. The amounts the Outside Director elects to defer
under Section 6.1 will be credited to a Plan Year Interest Account as of the
date the compensation would otherwise have been payable under Section 5.1. The
amounts credited to the Interest Account will be credited with interest,
compounded monthly, from the date the compensation would otherwise have been
payable under Section 5.1 until the amount credited to the Interest Account is
paid to the Outside Director. The rate of interest credited under the previous
sentence will be the prime rate of interest as reported by the Midwest edition
of the Wall Street Journal for the second business day of each quarter on an
annual basis.

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     6.5 Distributions. The value of an Outside Director’s Plan Year Accounts
with respect to a Plan Year will be distributed, or will begin to be
distributed, to him or her or, in the event of his or her death, to his or her
Beneficiary, within 10 days following the earliest of:

  (a)   the date specified by the Outside Director in his or her Deferral
Election for such Plan Year Account;     (b)   the Outside Director’s
Termination Date; and     (c)   the date on which a Change in Control occurs.

     The amount payable to an Outside Director with respect to his or her Plan
Year Accounts for a given Plan Year will equal the sum of: (a) the dollar amount
credited to the Outside Director’s Plan Year Interest Account for such Plan
Year; and (b) the number of Stock Units credited to the Outside Director’s Plan
Year Stock Account for such Plan Year multiplied by the Deferral Fair Market
Value on the applicable payout date.
     Each Plan Year Account will be paid to the Outside Director in a lump sum
or in installments in accordance with his or her Deferral Election for such Plan
Year Account. If an Outside Director fails to elect a payout form (and has not
elected a payout form for any prior Plan Year that, in accordance with
Section 6.1, would be deemed to remain in effect until changed), his or her Plan
Year Account will be paid in a single lump sum.
     If an Outside Director elects to receive payment of his or her Plan Year
Account in installments, the payment period for the installments will not exceed
ten years. The amount of each installment payment will equal the product of
(a) the balance in the Outside Director’s Plan Year Account on the date the
payment is made multiplied by (b) a fraction, the numerator of which is one and
the denominator of which is the number of unpaid remaining installments. The
balance of the Plan Year Account will be appropriately reduced to reflect any
Installment Payments already made hereunder. Notwithstanding the foregoing, in
the event of a Change in Control, the balance remaining in an Outside Director’s
Accounts will be paid in a single lump sum payment within 10 days following the
Change in Control.
     If an Outside Director dies before he or she has received payment of all
amounts due hereunder, the balances remaining in the Outside Director’s Accounts
will be distributed to his or her Beneficiary in a single lump sum payment
within 90 days following the Outside Director’s death.

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     Notwithstanding anything to the contrary in this Section 6.5:

  (a)   To the extent necessary to avoid liability under Section 16(b) of the
Exchange Act, the amount attributable to any Stock Units that will have been
credited to the Outside Director’s Stock Account for a period of less than six
months will be distributed, or commence to be distributed, within 10 days
following the expiration of such six month period.     (b)   If the Compensation
Committee determines that the Outside Director is a “specified employee” (within
the meaning of Code Section 409A(a)(2)(B)), then notwithstanding any provision
in the Plan to the contrary, payments triggered by the Outside Director’s
Termination Date will not be paid until six months after the Outside Director’s
Termination Date or until the Outside Director’s earlier death. The foregoing
six-month delay provision will not affect the timing of payments that would
otherwise be paid more than six months after the Outside Director’s Termination
Date.

     6.6 Beneficiary. An Outside Director may designate, on the Beneficiary
Designation form attached hereto as Exhibit B, any person to whom payments are
to be made if the Outside Director dies before receiving payment of all amounts
due hereunder. A Beneficiary Designation form becomes effective only after the
signed form is filed with the Secretary of the Company while the Outside
Director is alive, and will cancel any prior Beneficiary Designation form. If
the Outside Director fails to designate a Beneficiary or if all designated
Beneficiaries predecease the Outside Director, the Outside Director’s
Beneficiary will be his or her estate.
Article 7. Restricted Grants and Outstanding Restricted Units
     7.1 Award Agreement. Each Restricted Grant will be evidenced by an award
agreement approved by the Board of Directors that specifies the vesting period
and such other provisions as the Board determines. The Board will establish
rules and procedures for the Restricted Grant, as it deems appropriate.
     7.2 Payment of Awards. The cash value of each Restricted Grant will be paid
to the Outside Director as soon as administratively feasible after the
Restricted Grant’s Vesting Date, or on a later date provided in the award
agreement; provided, however, that an Outside Director may defer the receipt of
such cash payment via a Deferral Election, pursuant to such procedures as may be
set forth in an award agreement or as otherwise set forth by the Board of
Directors in compliance with the requirements of Code section 409A.
     7.3 Termination and Change in Control. Each Restricted Grant award
agreement will set forth the extent to which the Outside Director has the right
to retain the unvested portion of the Restricted Grant after his or her
Termination Date. These terms will be determined by the Board of Directors in
its sole discretion, need not be uniform among all awards of Restricted Grants,
and may reflect, among other things, distinctions based on the reasons the award
recipient Separates from Service. Unless a Restricted Grant award agreement
provides

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otherwise, upon a Change in Control prior to or concurrently with the
Termination Date of an Outside Director, all unvested Restricted Grants will be
vested. If the Outside Director Separates from Service before the date that all
of the Restricted Grant vests, his or her right to receive a payment with
respect to the unvested portion of the Restricted Grant will be forfeited,
except as otherwise provided in the Restricted Unit award agreement.
     7.4 Outstanding Restricted Units. Restricted Units that were granted to an
Outside Director prior to March 24, 2009, that have not been paid out in cash as
of that date will continue to be governed by the terms of the relevant award
agreements, the terms of the Plan, and the terms of the Outside Director’s
Restricted Unit Payment Deferral Election as of the date such Restricted Units
were granted.
Article 8. Effective Date; Grandfathered Accounts.
     8.1 Effective Date. This amended and restated Plan is effective as of
January 1, 2009 (the “Effective Date”) with respect to Nongrandfathered Accounts
and will remain in effect as provided in Section 1.3 hereof.
     8.2 Grandfathered Accounts. An Outside Director’s Grandfathered Accounts
will remain subject to the terms and conditions of the Plan as in effect on
December 31, 2004.
Article 9. Miscellaneous
     9.1 Modification and Termination. The Board may at any time and from time
to time, alter, amend, modify or terminate the Plan in whole or in part.
     9.2 Indemnification. Each person who is or has been a member of the Board
will be indemnified and held harmless by the Company against and from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
that person in connection with or resulting from any claim, action, suit, or
proceeding to which that person may be a party or in which that person may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by that person in a settlement
approved by the Company, or paid by that person in satisfaction of any judgment
in any such action, suit, or proceeding against that person, provided he or she
gives the Company an opportunity, at its own expense, to handle and defend the
action, suit or proceeding before that person undertakes to handle and defend
it. The foregoing right of indemnification will not be exclusive of any other
rights of indemnification to which an individual may be entitled under the
Company’s Certificate of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify him or her or
hold him or her harmless.
     9.3 Successors. All obligations of the Company under the Plan with respect
to a given Plan Year will be binding on any successor to the Company, whether
the existence of the successor is the result of a direct or indirect purchase of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation, or otherwise.

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     9.4 Reservation of Rights. Nothing in this Plan or in any award agreement
granted hereunder will be construed to limit in any way the Board’s right to
remove an Outside Director from the Board of Directors.
Article 10. Legal Construction
     10.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein will also include the feminine; the plural will
include the singular and the singular will include the plural.
     10.2 Severability. If any provision of the Plan is held illegal or invalid
for any reason, the illegality or invalidity will not affect the remaining parts
of the Plan, and the Plan will be construed and enforced as if the illegal or
invalid provision had not been included.
     10.3 Requirements of Law. The issuance of payments under the Plan will be
subject to all applicable laws, rules, and regulations, and to any approvals
required by any governmental agencies or national securities exchanges.
     10.4 Securities Law and Tax Law Compliance.

  (a)   Insider Trading. To the extent any provision of the Plan or action by
the Board would subject any Outside Director to liability under Section 16(b) of
the Exchange Act, it will be deemed null and void, to the extent permitted by
law and deemed advisable by the Board.     (b)   Section 409A. This Plan is
intended to comply with Code Section 409A and the regulations thereunder, and
will be administered and interpreted in accordance with such intent. If the
Company determines that any provision of the Plan is or might be inconsistent
with the requirements of Code Section 409A, it will attempt in good faith to
make such changes to the Plan as may be necessary or appropriate to avoiding an
Outside Director’s becoming subject to adverse tax consequences under Code
Section 409A. No provision of the Plan will be interpreted to transfer any
liability for a failure to comply with Code Section 409A from an Outside
Director or any other individual to the Company.

     10.5 Unfunded Status of the Plan. The Plan is intended to constitute an
“unfunded” plan. With respect to any payments not yet made to an Outside
Director by the Company, nothing contained herein will give any rights to an
Outside Director that are greater than those of a general creditor of the
Company.
     10.6 Governing Law. The Plan will be construed in accordance with and
governed by the laws of the State of Delaware, determined without regard to its
conflict of law rules.
     10.7 Nontransferability. An Outside Director’s Accounts and any Restricted
Units granted hereunder may not be sold, transferred, pledged, assigned, or
otherwise alienated or

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hypothecated, other than by will or by the laws of descent and distribution, or
pursuant to a domestic relations order (as defined in Code section 414(p)). All
rights with respect to Accounts and Restricted Units will be available during
the Outside Director’s lifetime only to the Outside Director or the Outside
Director’s guardian or legal representative. The Board of Directors may, in its
discretion, require an Outside Director’s guardian or legal representative to
supply it with evidence the Board of Directors deems necessary to establish the
authority of the guardian or legal representative to act on behalf of the
Outside Director.
*      *      *      *      *

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