**Exhibit10.2**

 

**1993Director Option Plan as Amended Through May 13, 2003.**

 

**MONACO COACH CORPORATION**

 

**DIRECTOR STOCK PLAN**

 

# 1.                                       *Purposes ofthe Plan*.  The purposes ofthis Director Stock Plan are to attract and retain the best available personnelfor service as Outside Directors (as defined herein) of the Company, to provideadditional incentive to the Outside Directors of the Company to serve asDirectors, and to encourage their continued service on the Board.  To achieve these objectives, the Plan (i)provides for the automatic grant to Outside Directors of options to purchasethe Company’s Common Stock upon their becoming Directors and annuallythereafter and (ii) provides a means for Outside Directors to elect to receivea portion of their fees for service on the Board in the form of Common Stock oroptions to purchase Common Stock.

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All options grantedhereunder shall be “non-statutory stock options.”

 

# 2.                                       *Applicability of May 2002 Amendments*.  Options granted on or prior to May 16,2002 shall not be subject to Section 11(f) of the Plan.  Options granted subsequent to May 16,2002 shall be subject to Section 11(f) of the Plan.

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# 3.                                       *Definitions*.  As used herein, the following definitionsshall apply:

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## (a)                                  “AnnualRetainer” shall mean the amount which an Outside Director will be entitled toreceive for serving as a Director during a fiscal year, but shall not includereimbursement for expenses or fees with respect to any other services providedto the Company.

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## (b)                                 “*Board*”means the Board of Directors of the Company.

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## (c)                                  “*Code*”means the Internal Revenue Code of 1986, as amended.

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## (d)                                 “*Common**Stock*”means the Common Stock of the Company.

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## (e)                                  “*Company*”means Monaco Coach Corporation, a Delaware corporation.

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## (f)                                    “*Continuous**Status asa Director*” means the absence of any interruption or termination ofservice as a Director.

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## (g)                                 “*Director*”means a member of the Board.

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## (h)                                 “*Employee*”means any person, including officers and Directors, employed by the Company orany Parent or Subsidiary of the Company. The payment of a Director’s fee by the Company shall not be sufficientin and of itself to constitute “employment” by the Company.

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## (i)                                     “*Exchange Act*”means the Securities Exchange Act of 1934, as amended.

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## (j)                                     “*Fair MarketValue*” means, as of any date, the value of Common Stock determinedas follows:

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### (i)                                     Ifthe Common Stock is listed on any established stock exchange or a nationalmarket system, including without limitation the National Market System of theNational Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”)System, the Fair Market Value of a Share of Common Stock shall be the closingsales price for such stock (or the closing bid, if no sales were reported) asquoted on such system or exchange (or the exchange with the greatest volume oftrading in Common Stock) on the date of grant, as reported in The Wall StreetJournal or such other source as the Board deems reliable;

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### (ii)                                  Ifthe Common Stock is quoted on the NASDAQ System (but not on the National MarketSystem thereof) or regularly quoted by a recognized securities dealer butselling prices are not reported, the Fair Market Value of a Share of CommonStock shall be the mean between the bid and asked prices for the Common Stockon the day of determination, as reported in The Wall Street Journal or suchother source as the Board deems reliable, or;

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### (iii)                               Inthe absence of an established market for the Common Stock, the Fair MarketValue thereof shall be determined in good faith by the Board.

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## (k)                                  “*Fixed Option*” means a stock option grantedpursuant to Section 6 of the Plan.

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## (l)                                     “*Option*”means a Fixed Option or a Retainer Option.

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## (m)                               “*OptionedStock*” means the Common Stock subject to an Option.

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## (n)                                 “*Optionee*”means an Outside Director who receives an Option.

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## (o)                                 “*OutsideDirector*” means a Director who is not an Employee.

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## (p)                                 “*Parent*”means a “parent corporation”, whether now or hereafter existing, as defined inSection 424(e) of the Code.

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## (q)                                 “*Per Share Option Value*” shall mean thevalue of one Share of the Optioned Stock subject to a Retainer Option. For solong as the Company accounts for stock-based compensation using the intrinsicvalue method prescribed in Accounting Principles Board Opinion No. 25, the PerShare Option Value shall be calculated using the valuation method prescribed byStatement of Financial Accounting Standards No. 123, “Accounting forStock-Based Compensation,” and used in the footnotes to the Company’s auditedfinancial statements that it files with the Securities and Exchange Commission.  However, if the Company at any time beginsto treat stock options as an expense on its books and records, the Per ShareOption Value shall be calculated in accordance with the valuation method usedby the Company when valuing stock options to determine the compensation expensethat it records in the financial statements that it files with the Securitiesand Exchange Commission.

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## (r)                                    “*Plan*”means this Director Stock Plan, as amended.

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## (s)                                  “*Retainer Option*” means an option topurchase Common Stock granted pursuant to Section 7 of the Plan.

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## (t)                                    “*Share*”means a share of the Common Stock, as adjusted in accordance with Section 13 ofthe Plan.

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## (u)                                 *“Retirement*” means a Director whovoluntarily resigns from the Board on or after age sixty-two (62) and suchDirector has at least five (5) years of service on the Company’s Board of 

 

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## Directorsat the date of retirement; provided, that, the Administrator, notwithstandingthe foregoing, has the discretion to determine when a Director retires so longas such determination is not less favorable than provided for in the foregoingdefinition.

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## (v)                                 “*Subsidiary*”means a “subsidiary corporation”, whether now or hereafter existing, as definedin Section 424(f) of the Internal Revenue Code of 1986.

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# 4.                                       *StockSubject to the Plan*.  Subjectto the provisions of Section 13 of the Plan, the maximum aggregate number ofShares which may be optioned and/or sold under the Plan is 352,500 Shares (the“Pool”) of Common Stock.  The Shares maybe authorized but unissued, or reacquired Common Stock.

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If an Option shouldexpire or become unexercisable for any reason without having been exercised infull, the unpurchased Shares which were subject thereto shall, unless the Planshall have been terminated, become available for future grant under the Plan.

 

# 5.                                       *Administrationof the Plan*.

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## (a)                                  *Administrator*.  Except as otherwise required herein, thePlan shall be administered by the Board.

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## (b)                                 *Powers ofthe Board*.  Subject to theprovisions and restrictions of the Plan, the Board shall have the authority, inits discretion: (i) to determine, upon review of relevant information and inaccordance with Section 3(j) of the Plan, the Fair Market Value of the CommonStock; (ii) to interpret the Plan; (iii) to prescribe, amend and rescind rulesand regulations relating to the Plan; (iv) to authorize any person to executeon behalf of the Company any instrument required to effectuate the grant of anOption previously granted hereunder; and (v) to make all other determinations deemednecessary or advisable for the administration of the Plan.

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## (c)                                  *Effect ofBoard’s Decision*.  Alldecisions, determinations and interpretations of the Board shall be final.

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# 6.                                       *Procedurefor Fixed Option Grants*.  Allgrants of Fixed Options to Outside Directors under this Plan shall be automaticand non-discretionary and shall be made strictly in accordance with thefollowing provisions:

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(a)                                  Noperson shall have any discretion to select which Outside Directors shall begranted Fixed Options or to determine the number of Shares to be covered byFixed Options granted to Outside Directors.

 

(b)                                 EachOutside Director shall be automatically granted an initial Fixed Option topurchase eight thousand (8,000) Shares (the “First Option”) on the date whichsuch person first becomes a Director, whether through election by thestockholders of the Company or appointment by the Board to fill a vacancy.

 

(c)                                  EachOutside Director shall be automatically granted a subsequent Fixed Option topurchase four thousand (4,000) Shares (a “Subsequent Option”) onSeptember 30 of each year after the date of the First Option grant,provided such Outside Director shall have served on the Board for at least sixmonths prior to the date of the Subsequent Option grant and remains an OutsideDirector on such date.

 

(d)                                 Theterms of a First Option granted hereunder shall be as follows:

 

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(i)                                     theterm of the First Option shall be ten (10) years.

 

(ii)                                  theFirst Option shall be exercisable only while the Outside Director remains aDirector of the Company, except as set forth in Section 11 hereof.

 

(iii)                               theexercise price per Share shall be 100% of the Fair Market Value per Share onthe date of grant of the First Option.

 

(iv)                              theFirst Option shall become exercisable in installments cumulatively as to twentypercent (20%) of the Shares subject to the First Option one (1) year from itsdate of grant and as to twenty percent (20%) each year thereafter if, on eachsuch date, the Optionee has maintained his Continuous Status as a Director.

 

(e)                                  Theterms of a Subsequent Option granted hereunder shall be as follows:

 

(i)                                     theterm of the Subsequent Option shall be ten (10) years.

 

(ii)                                  theSubsequent Option shall be exercisable only while the Outside Director remainsa Director of the Company, except as set forth in Section 11 hereof.

 

(iii)                               theexercise price per Share shall be 100% of the Fair Market Value per Share onthe date of grant of the Subsequent Option.

 

(iv)                              theSubsequent Option shall become exercisable as to one hundred percent (100%) ofthe Shares subject to the Subsequent Option five (5) years from its date ofgrant if, on such date, the Optionee has maintained his Continuous Status as aDirector.

 

# 7.                                       *Procedurefor Election to receive Securities in Lieu of Cash Retainer*.

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## *(a)**                               CompensationAlternatives.*

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(i)                                     EachOutside Director who, in any fiscal year of the Company, delivers to theCompany written notice of an irrevocable election concerning the AnnualRetainer to be earned in the next fiscal year of the Company, will be entitledto select one of the following alternative means of payment for the value ofhis Annual Retainer in the next fiscal year of the Company:

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(1)                                  anamount between ten percent (10%) and fifty percent (50%) of the value of his orher Annual Retainer (in increments of 10% of the Annual Retainer) in the formof Common Stock (a “Common Stock Payment”) and the balance in cash (a “CashPayment”); or

 

(2)                                  anamount between ten percent (10%) and fifty percent (50%) of the value of his orher Annual Retainer (in increments of 10% of the Annual Retainer) in the formof an option to purchase shares of Common Stock (a “Retainer Option”) and thebalance in a Cash Payment.

 

(ii)                                  Ifany Outside Director fails to notify the Secretary of the Company in writingprior to the beginning of the next fiscal year of the Company of his desiredmeans to receive payment of the Annual Retainer for the next fiscal year, thenhe shall be deemed to have elected the entire value of the Annual Retainer incash.

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## (b)                                 *Common Stock Payment*.

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(i)                                     *Date of Payment*.  The Shares constituting any Common Stock Payment shall be issuedautomatically on the first business day following the last day of each fiscalquarter for the applicable year (a “Stock Grant Date”).  Each award of a Common Stock Payment shallbe evidenced by an agreement which shall reflect the terms and conditions ofthe Common Stock Payment and such additional terms and conditions as may bedetermined by the Board of a committee thereof.

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(ii)                                  *Number of Shares Subject to Common Stock Payment*.  The total number of Shares included in eachCommon Stock Payment shall be determined by dividing (A) the amount of thequarterly installment of the Annual Retainer that is to be paid in stock by (B)the Fair Market Value of one Share on the applicable Stock Grant Date.

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Any payment for afractional share automatically shall be paid in cash based upon the Fair MarketValue on the Grant Date of such fractional share.

 

## (c)                                  *Option Payment*.

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(i)                                     *Date of Payment*.  The Retainer Option shall be granted automatically on the firstbusiness day of the applicable fiscal year in which an Outside Director haselected to receive a Retainer Option (the “Option Grant Date”).

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(ii)                                  *Number of Shares Subject to Option*.  The number of Shares to be subject to anyRetainer Option granted shall be equal to that portion of the Annual Retainerthat the Outside Director elected to receive in the form of an Option dividedby the Per Share Option Value on the Option Grant Date.

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(iii)                               *Exercise Price*.  The per Share exercise price of a Retainer Option grantedpursuant to this Section 7 shall equal the Fair Market Value of one Share onthe Option Grant Date.

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(iv)                              *Vesting*. A Retainer Option shall become exercisable for one fourth (1/4th)of the Optioned Stock on the last day of each quarter during the applicableyear (a “Vesting Date”) so long as the Outside Director is serving as a memberof the Board on the Vesting Date.

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(v)                                 *Term.* The term of a Retainer Option shall be ten (10) years.

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(vi)                              *Exercisability*.  A Retainer Option shall be exercisable only while the OutsideDirector remains a Director of the Company, except as set forth inSection 11 hereof.

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## (d)                                 *Interim Period.*  Notwithstanding any other provision of the Plan, an OutsideDirector may elect to receive between ten percent (10%) and fifty percent (50%)of the value of his or her last two quarterly installments of the AnnualRetainer for 2003 (in increments of 10% of the Annual Retainer) in the form ofa Common Stock Payment or a Retainer Option if the Outside Director delivers tothe Company written notice of an irrevocable election concerning such portionof the 2003 Annual Retainer prior to July 1, 2003.

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(i)                                     *Interim Period Common Stock Paymen*t.  If an Outside Director elects to receive aCommon Stock Payment pursuant to this Section 7(d), a Common Stock Paymentshall be made on the first business day following the last day of the third andfourth quarters of 2003.  The number ofshares subject to such a Common Stock Payment shall be determined in accordancewith Section 7(b) hereof.

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(ii)                                  *Interim Period Retainer Option*.  If an Outside Director elects to receive aRetainer Option pursuant to this Section 7(d), the Retainer Option shall begranted on July 1, 2003.  Thenumber of shares of Common Stock subject to such Retainer Option and the perShare exercise price and other terms of such Retainer Option shall bedetermined in accordance with Section 7(c), however, with respect to suchRetainer Option, the “Option Grant Date” shall be July 1, 2003.  In addition, a Retainer Option grantedpursuant to this Section 7(d) shall become exercisable for one half (1/2) ofthe Optioned Stock on the last day of each of the last two quarters of 2003 solong as the Outside Director is serving as a member of the Board on such dates.

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# 8.                                       *Eligibility*.  Options and Common Stock Payments may begranted only to Outside Directors.  AllFixed Options shall be automatically granted in accordance with the terms setforth in Section 6 hereof.

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The Plan shall not conferupon any Outside Director any right with respect to continuation of service asa Director or nomination to serve as a Director, nor shall it interfere in anyway with any rights which the Director or the Company may have to terminate hisor her directorship at any time.

 

# 9.                                       *Term of Plan*.  The Plan shall become effective upon theearlier to occur of its adoption by the Board or its approval by thestockholders of the Company as described in Section 19 of the Plan.  It shall continue in effect untilMarch 1, 2012 unless sooner terminated under Section 14 of the Plan.

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# 10.                                 *Form ofConsideration*.  Theconsideration to be paid for the Shares to be issued upon exercise of anOption, including the method of payment, shall be determined by the Board andmay consist entirely of (i) cash, (ii) check, (iii) promissory note, (iv) othershares which (x) in the case of Shares acquired upon exercise of an Option,have been owned by the Optionee for more than six (6) months on the date ofsurrender, and (y) have a Fair Market Value on the date of surrender equal tothe aggregate exercise price of the Shares as to which said Option shall beexercised, (v) delivery of a properly executed exercise notice together withsuch other documentation as the Board and the broker, if applicable, shallrequire to effect an exercise of the Option and delivery to the Company of thesale or loan proceeds required to pay the exercise price, (vi) any combinationof the foregoing methods of payment, or (vii) such other consideration andmethod of payment for the issuance of Shares to the extent permitted underapplicable law.

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# 11.                                 *Exercise ofOption*.

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## (a)                                  *Procedurefor Exercise; Rights as a Stockholder*.  Any Option granted hereunder shall be exercisable at such timesas are set forth in Sections 6 and 7 hereof.

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An Option may not beexercised for a fraction of a Share.

 

An Option shall be deemedto be exercised when written notice of such exercise has been given to theCompany in accordance with the terms of the Option by the person entitled toexercise the Option and full payment for the Shares with respect to which theOption is exercised has been received by the Company.  Full payment may consist of any consideration and method ofpayment allowable under Section 10 of the Plan.  Until the issuance (as evidenced by the appropriate entry on thebooks of the Company or of a duly authorized transfer agent of the Company) ofthe stock certificate evidencing such Shares, no right to vote or receivedividends or any other rights as a stockholder shall exist with respect to theOptioned Stock, notwithstanding the exercise of the Option.  A share certificate or electronicnotification of share ownership for the number of Shares so acquired shall beissued or provided to the Optionee as soon as practicable after exercise of theOption.  No adjustment will be made fora dividend or other right for which the record date is prior to the date thestock certificate is issued, except as provided in Section 13 of the Plan.

 

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Exercise of an Option inany manner shall result in a decrease in the number of Shares which thereaftermay be available, both for purposes of the Plan and for sale under the Option,by the number of Shares as to which the Option is exercised.

 

## (b)                                 *Rule 16b-3*.  Options granted to Outside Directors mustcomply with the applicable provisions of Rule 16b-3 promulgated under the ExchangeAct or any successor thereto and shall contain such additional conditions orrestrictions as may be required thereunder to qualify for the maximum exemptionfrom Section 16 of the Exchange Act with respect to Plan transactions.

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## (c)                                  *Terminationof Continuous Status as a Director*. In the event an Optionee’s Continuous Status as a Director terminates(other than upon the Optionee’s death, total and permanent disability (asdefined in Section 22(e)(3) of the Code) or Retirement), the Optionee mayexercise his or her Option, but only within three (3) months from the date ofsuch termination, and only to the extent that the Optionee was entitled toexercise it at the date of such termination (but in no event later than theexpiration of its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Optionat the date of such termination, and to the extent that the Optionee does notexercise such Option (to the extent otherwise so entitled) within the timespecified herein, the Option shall terminate.

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## (d)                                 *Disabilityof Optionee*.  In the eventOptionee’s Continuous Status as a Director terminates as a result of total andpermanent disability (as defined in Section 22(e)(3) of the Code), any FixedOptions granted to such Optionee shall become vested and exercisable for thefull number of Shares covered by the Fixed Option and any Retainer Option shallbe exercisable to the extent that the Optionee was entitled to exercise theRetainer Option at the date of disability. The Optionee may exercise his or her Option, at any time within twelve(12) months from the date of such termination (but in no event later than theexpiration of the term of such Option as set forth in the Notice ofGrant).  If, after termination, theOptionee does not exercise his or her Option within the time specified herein,the Option shall terminate, and the Shares covered by such Option shall revertto the Plan.

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## (e)                                  *Death ofOptionee*.  In the event ofthe death of an Optionee, any Fixed Option shall become vested and exercisablefor the full number of Shares covered by the Fixed Option and any RetainerOption shall be exercisable to the extent that the Optionee was entitled toexercise the Retainer Option at the time of death.  The Option held by the Optionee at the time of death may beexercised at any time within twelve (12) months following the date of death bythe Optionee’s estate or by a person who acquired the right to exercise theOption by bequest or inheritance.  In noevent shall an Option be exercised later than the expiration of the term of theOption, as set forth in the Option agreement. If, after death, the Optionee’s estate or a person who acquired theright to exercise the Option by bequest or inheritance does not exercise theOption within the time specified herein, the Option shall terminate, and theShares covered by such Option shall revert to the Plan.

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## (f)                                    *Retirement of Optionee*.  In the event of an Optionee’s Retirementwhile a Director, any Fixed Option shall become vested and exercisable for thefull number of Shares covered by the Fixed Option and any Retainer Option shallbe exercisable to the extent that the Optionee was entitled to exercise theRetainer Option at the time of Retirement. Any Option held by the Optionee at the time of Retirement may beexercised at any time within twelve (12) months following the date ofRetirement.  In no event shall an Optionbe exercised later than the expiration of the term of the Option, as set forthin the Option Agreement; provided, however, that (i) this subsection (f) shallnot apply to grants made on or before May 16, 2002, and (ii) thissubsection (f) shall apply to grants made on or after May 17, 2002.  If the Option is not so exercised within thetime specified herein, the Option shall terminate, and the Shares covered bysuch Option shall revert to the Plan.

 

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# 12.                                 *Non-Transferabilityof Options*.  The Option maynot be sold, pledged, assigned, hypothecated, transferred, or disposed of inany manner other than by will or by the laws of descent or distribution and maybe exercised, during the lifetime of the Optionee, only by the Optionee.

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# 13.                                 *AdjustmentsUpon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change ofControl*.

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## (a)                                  *Changes inCapitalization*.  Subject toany required action by the stockholders of the Company, the number of Sharescovered by each outstanding Option and the number of Shares which have beenauthorized for issuance under the Plan but as to which no Options have yet beengranted or which have been returned to the Plan upon cancellation or expirationof an Option, as well as the price per Share covered by each such outstandingOption, shall be proportionately adjusted for any increase or decrease in thenumber of issued Shares resulting from a stock split, reverse stock split,stock dividend, combination or reclassification of the Common Stock, or anyother increase or decrease in the number of issued Shares effected withoutreceipt of consideration by the Company; provided, however, that conversion ofany convertible securities of the Company shall not be deemed to have been“effected without receipt of consideration.” Such adjustment shall be made bythe Board, whose determination in that respect shall be final, binding andconclusive.  Except as expresslyprovided herein, no issuance by the Company of shares of stock of any class, orsecurities convertible into shares of stock of any class, shall affect, and noadjustment by reason thereof shall be made with respect to, the number or priceof Shares subject to an Option.  Inaddition, a stock split, reverse stock split, stock dividend, combination orreclassification of the Common Stock, or any other increase or decrease in thenumber of issued Shares effected without receipt of consideration by theCompany shall not result in an adjustment to the number of shares granted toOutside Directors pursuant to Section 5(b)(ii) and Section 5(b)(iii) of thePlan subsequent to such stock split, reverse stock split, stock dividend,combination or reclassification of the Common Stock, or other increase ordecrease in the number of issued Shares effected without receipt ofconsideration by the Company.

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## (b)                                 *Dissolutionor Liquidation*.  In the eventof the proposed dissolution or liquidation of the Company, to the extent thatan Option has not been previously exercised, it will terminate immediatelyprior to the consummation of such proposed action.  The Board may, in the exercise of its sole discretion in suchinstances, declare that any Option shall terminate as of a date fixed by theBoard and give each Optionee the right to exercise his or her Option as to allor any part of the Optioned Stock, including Shares as to which the Optionwould not otherwise be exercisable.

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## (c)                                  *Merger orAsset Sale*.  In the event ofa merger of the Company with or into another corporation, or the sale ofsubstantially all of the assets of the Company, each outstanding Option shallbe assumed or an equivalent option shall be substituted by the successorcorporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporationdoes not agree to assume the Option or to substitute an equivalent option, theBoard shall, in lieu of such assumption or substitution, provide for theOptionee to have the right to exercise the Option as to all of the OptionedStock, including Shares as to which it would not otherwise be exercisable.  If the Board makes an Option fullyexercisable in lieu of assumption or substitution in the event of a merger orsale of assets, the Board shall notify the Optionee that the Option shall befully exercisable for a period of thirty (30) days from the date of suchnotice, and the Option will terminate upon the expiration of such period.  For the purposes of this paragraph, theOption shall be considered assumed if, following the merger or sale of assets,the option or right confers the right to purchase, for each Share of OptionedStock subject to the Option immediately prior to the merger or sale of assets,the consideration (whether stock, cash, or other securities or property)received in the merger or sale of assets by holders of Common Stock for eachShare held on the effective date of the transaction (and if holders wereoffered a choice of consideration, the type of consideration chosen by theholders of a majority of the outstanding Shares); provided, however, that ifsuch consideration received in the merger or sale of assets was

 

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## not solelycommon stock of the successor corporation or its Parent, the Board may, withthe consent of the successor corporation and the participant, provide for theconsideration to be received upon the exercise of the Option, for each Share ofOptioned Stock subject to the Option, to be solely common stock of thesuccessor corporation or its Parent equal in Fair Market Value to the per shareconsideration received by holders of Common Stock in the merger or sale ofassets.

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# 14.                                 *Amendmentand Termination of the Plan*.

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## (a)                                  *Amendmentand Termination*.  Except asset forth in Section 5, the Board may at any time amend, alter, suspend, ordiscontinue the Plan, but no amendment, alteration, suspension, ordiscontinuation shall be made which would impair the rights of any Optioneeunder any grant theretofore made, without his or her consent.  In addition, to the extent necessary anddesirable to comply with Rule 16b-3 under the Exchange Act (or any otherapplicable law or regulation), the Company shall obtain stockholder approval ofany Plan amendment in such a manner and to such a degree as required.

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## (b)                                 *Effect ofAmendment or Termination*. Any such amendment or termination of the Plan shall not affect Optionsalready granted and such Options shall remain in full force and effect as ifthis Plan had not been amended or terminated.

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# 15.                                 *Time ofGranting Options*.  The dateof grant of an Option shall, for all purposes, be the date determined inaccordance with Sections 6 and 7 hereof. Notice of the determination shall be given to each Outside Director towhom an Option is so granted within a reasonable time after the date of suchgrant.

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# 16.                                 *ConditionsUpon Issuance of Shares*. Shares shall not be issued pursuant to the exercise of an Option unlessthe exercise of such Option and the issuance and delivery of such Sharespursuant thereto shall comply with all relevant provisions of law, including,without limitation, the Securities Act of 1933, as amended, the Exchange Act,the rules and regulations promulgated thereunder, state securities laws, andthe requirements of any stock exchange upon which the Shares may then belisted, and shall be further subject to the approval of counsel for the Companywith respect to such compliance.

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As a condition to theexercise of an Option, the Company may require the person exercising suchOption to represent and warrant at the time of any such exercise that theShares are being purchased only for investment and without any presentintention to sell or distribute such Shares, if, in the opinion of counsel forthe Company, such a representation is required by any of the aforementionedrelevant provisions of law.

 

Inability of the Companyto obtain authority from any regulatory body having jurisdiction, whichauthority is deemed by the Company’s counsel to be necessary to the lawfulissuance and sale of any Shares hereunder, shall relieve the Company of anyliability in respect of the failure to issue or sell such Shares as to whichsuch requisite authority shall not have been obtained.

 

# 17.                                 *Reservationof Shares*.  The Company,during the term of this Plan, will at all times reserve and keep available suchnumber of Shares as shall be sufficient to satisfy the requirements of thePlan.

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# 18.                                 *OptionAgreements*.  Options shall beevidenced by written option agreements in such form as the Board shall approve.

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# 19.                                 *StockholderApproval*.  Continuance of thePlan shall be subject to approval by the stockholders of the Company at orprior to the first annual meeting of stockholders held subsequent to the 

 

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# grantingof an Option hereunder.  Suchstockholder approval shall be obtained in the degree and manner required underapplicable state and federal law.

 

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