**Exhibit 10.3**

 

**UNOVA, INC.**

**2002DIRECTOR STOCK OPTION AND FEE PLAN**

 

**AsAmended Effective January 1, 2005**

 

**1.   *Purpose.***The UNOVA, Inc. 2002 Director Stock Option and Fee Plan (the **“Plan”**) is intended to provide an incentive to members ofthe board of directors of UNOVA, Inc., a Delaware corporation (the **“Company”**), who are neither officers nor employees of theCompany, to remain in the service of the Company and increase their efforts forthe success of the Company and to encourage such directors to own shares of theCompany’s stock, thereby aligning their interests more closely with theinterests of the Company’s shareholders. The Plan is also intended to assistthe Company in attracting experienced and qualified candidates to becomemembers of the Board.

 

**2.   *Definitions*.**

 

**“1997 Plan”**means the UNOVA, Inc. Director StockOption and Fee Plan, adopted September 24, 1997, and amended July 27,1999.

 

**“Average Quarterly Price”**means the average of the Fair Market Value ofCommon Stock on each trading date of a calendar quarter.

 

**“Accrued Quarterly Meeting Fees”**means the amount of Meeting Fees earned by aDirector for the preceding calendar quarter to which an Option Electionapplies.

 

**“Board”**means the Board of Directors of the Company.

 

**“Cash Account”**means the bookkeeping account established bythe Company for the deferral of Fees by Directors which will be credited withinterest pursuant to Section 6(d) hereof.

 

**“Code”**means the Internal Revenue Code of 1986, asamended.

 

**“Common Stock”**means the common stock, par value $.01 pershare, of the Company.

 

**“Deferral Election”**means an election pursuant to Section 6hereof to defer receipt of Fees into a Share Account or Cash Account.

 

**“Deferred Amounts”**mean the amounts credited to a Director’sShare Account or Cash Account pursuant to a Deferral Election or otherwisepursuant to Section 6(h).

 

**“Director”**means a member of the Board who is neither anofficer nor an employee of the Company. A director of the Company shall not bedeemed to be an employee of the Company solely by reason of the existence of aconsulting contract between such director and the Company or any subsidiarythereof pursuant to which the director agrees to provide consulting services asan independent consultant to the Company or its subsidiaries on a regular oroccasional basis for a stated consideration. The term “Director” as used inthis Plan shall include any person who may hereafter become an advisorydirector of the Company, as that term is used in the Company’s By-Laws.

 

**“Effective Date”**means January 1, 2002, subject toapproval by the Company’s shareholders as provided in Section 12 hereof.

 

**“Exchange Act”**means the Securities Exchange Act of 1934, asamended.

 

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**“Fair Market Value”**means, as of any given date, the average ofthe highest and lowest reported sales prices of the Common Stock on the NewYork Stock Exchange Composite Tape or, if not listed on such exchange, on anyother national securities exchange on which the Common Stock is listed or onNASDAQ. If there is no regular public trading market for such Common Stock, theFair Market Value of the Common Stock shall be determined by the Board in goodfaith.

 

**“Fees”**means Retainer Fees and Meeting Fees.

 

**“Meeting Fees”**means fees scheduled to be paid to a Directorfor attendance at Board or committee meetings.

 

**“Options”**means the options to purchase Common Stockgranted to a Director under (i) Section 5(d) pursuant to an OptionElection or (ii) under Section 7(a) as an annual grant.

 

**“Option Election”**means the election by a Director to receiveOptions in lieu of Meeting Fees as set forth in Section 5(d) hereof.

 

**“Option Ratio”**means (i) for calendar year 2002, one(1) share of Common Stock to be issued upon exercise of an Option dividedby One Dollar ($1.00) of Accrued Quarterly Meeting Fees, and (ii) forcalendar years after 2002, such number of shares of Common Stock per One Dollar($1.00) of Accrued Quarterly Meeting Fees, if any, as the Board may authorizefor such calendar year; *provided, however*,that the Option Ratio under this Plan for a calendar year shall be the same asthe option ratio offered to the Company’s senior management employees for suchcalendar year.

 

**“Retainer Fees”**means the annual retainer scheduled to bepaid to a Director for the calendar year and additional annual fees scheduledto be paid to a Director for serving as Chair of a Board committee.

 

**“Share Account”**means the bookkeeping account established bythe Company for the deferrals of Fees by Directors, which will be credited withShare Units pursuant to Section 6(a) hereof.

 

**“Share Election”**means the election by a Director to receiveshares of Common Stock in lieu of Meeting Fees as set forth in Section 5(b)hereof.

 

**“Share Unit”**means a share of Common Stock credited as abookkeeping entry to a Director’s Share Account. Each Share Unit shallrepresent the right to receive one share of Common Stock.

 

**“Subsequent Election”** means a Deferral Election with respect toFees earned during the current calendar year or prior calendar years as setforth in Section 6(b) hereof.

 

**3.   *Administration of the Plan*.**Subject to the express provisions of thePlan, the Board will have complete authority to interpret the Plan; toprescribe, amend, and rescind rules and regulations relating to the Plan; todetermine the terms and provisions of the respective option agreements (whichneed not be identical); and to make all other determinations necessary oradvisable for the administration of the Plan. The Board’s determination on thematters referred to in this Section 3 shall be conclusive.

 

**4.   *Stock Reserved for the Plan***. The number of shares of Common Stockauthorized for issuance under this Plan is 500,000 plus (i) the number ofshares reserved and available for issuance under the 1997 Plan on the EffectiveDate of this Plan and (ii) any shares subject to grants made under the1997 Plan, but which subsequently expire or are canceled, forfeited, orterminated. The number of shares of 

 

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Common Stock issuable underthis Plan shall be subject to adjustment pursuant to Section 10 hereof.Shares of Common Stock delivered hereunder may be either authorized butunissued shares or previously issued shares reacquired and held by the Companyas treasury shares.

 

**5.   *Terms and Conditions of Payment of Fees in the Form of Shares orOptions.***

 

**(a)  *Retainer Fees.***Subject to Section 5(f) hereof, each Director shall receive in theform of Common Stock (subject to a Deferral Election) all, or such lesseramount as the Board may determine from time to time in the exercise of itsjudgment, of his or her Retainer Fees earned in each calendar year. The sharesof Common Stock (and cash in lieu of fractional shares) issuable under thisSection 5(a) shall be issued quarterly in accordance withSection 5(c) hereof.

 

**(b)  *Meeting Fees; Share Election.***Subject to Section 5(f) hereof, eachDirector may make an annual election (the **“Share Election”**)to receive in the form of Common Stock (subject to a Deferral Election) any orall of his or her Meeting Fees earned in each calendar year; *provided, however*, that such Share Election must be madewith respect to at least an aggregate of 10% of the Director’s Meeting Fees, inmultiples of 10%. Unless a Director has made a Share Election with respect to100% of his or her Meeting Fees, a Director may also make an Option Electionfor a calendar year with respect to all or any portion of the remainingpercentage of his or her Meeting Fees. The shares of Common Stock (and cash inlieu of fractional shares) issuable pursuant to a Share Election shall beissued quarterly in accordance with Section 5(c) hereof. The ShareElection must be in writing and delivered to the Secretary of the Company on orprior to December 31 of the calendar year preceding the calendar year in whichthe applicable Fees are to be earned; *provided*, *however*, that any Director who commences service on theBoard on or subsequent to January 1 of a calendar year may make a ShareElection during the thirty-day period immediately following the commencement ofhis or her directorship. A Share Election, once made, shall be irrevocable forthe calendar year with respect to which it is made and shall remain in effectfor future calendar years unless revoked in writing or modified by a subsequentShare Election or Option Election, as the case may be, with respect to futurecalendar years on or prior to December 31 of the calendar year preceding thecalendar year in which such revocation shall take effect and in accordance withthe provisions hereof.

 

**(c)  *Issuance of Shares.***Shares of Common Stock issuable to a Directorpursuant to Sections 5(a) and 5(b) shall be issued to such Director on thefirst business day following the end of each calendar quarter. The total numberof shares of Common Stock to be so issued shall be determined by dividing(x) the dollar amount of the Director’s Retainer Fees for the precedingcalendar quarter and any Meeting Fees for the preceding calendar quarter towhich a Share Election applies, by (y) the Average Quarterly Price for thepreceding quarter. In no event shall the Company be required to issuefractional shares. In the event that a fractional share of Common Stock wouldotherwise be required to be issued, an amount in lieu thereof shall be paid incash based upon the Fair Market Value of such fractional share on the lastbusiness day of the preceding calendar quarter.

 

**(d)  *Meeting Fees; Option Election.***  If the Board authorizes theCompany for any calendar year to grant to any class of senior managementemployees options to purchase Common Stock in lieu of cash compensation, theBoard may also authorize the Company to grant Options to Directors for suchcalendar year in accordance with the terms of this Section 5(d) andSection 5(e). If authorized by the Board and subject to Section 5(f)hereof, each Director may make an annual election (the **“OptionElection”**) to receive in the form of Options any or all of his orher Meeting Fees earned in each calendar year; *provided,however,*that such Option Election must be made with respect to atleast an aggregate of 10% of the Director’s Meeting 

 

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Fees, in multiples of 10%.Unless a Director has made an Option Election with respect to 100% of his orher Meeting Fees, a Director may also make a Share Election for a calendar yearwith respect to all or any portion of the remaining percentage of his or herMeeting Fees. Options granted pursuant to an Option Election shall be grantedquarterly in accordance with Section 5(e) hereof. The Option Election mustbe in writing and delivered to the Secretary of the Company on or before December31 of the calendar year preceding the calendar year in which the applicableMeeting Fees are to be earned; *provided, however,*thatany Director who commences service on or subsequent to January 1 of acalendar year may make an Option Election during the thirty-day periodimmediately following the commencement of his or her directorship. An OptionElection, once made, shall be irrevocable for the calendar year with respect towhich it is made and shall remain in effect for future calendar years unlessrevoked in writing or modified by a subsequent Share Election or OptionElection, as the case may be, with respect to future calendar years on or priorto December 31 of the calendar year preceding the calendar year in which suchrevocation shall take effect and in accordance with the provisions hereof; *provided, however,*that if the Board does not authorize anOption Election for a calendar year, then a Director’s Option Election shallbecome void for that year and subsequent calendar years, a Director shall havethe right to make a Share Election for such calendar year in accordance withSection 5(b), provided that such Share Election is made or before December31 of the preceding calendar year, and such Director must make a new OptionElection for any subsequent calendar year for which the Board authorizes OptionElections.

 

**(e)  *Option Grants.***  Options to be granted to a Director pursuant toSection 5(d) shall be granted to such Director on the first business dayfollowing the end of each calendar quarter, except for the first quarter of2002, in which case the date of grant shall be April 15, 2002. The totalnumber of shares of Common Stock that a Director shall have the right topurchase pursuant to such Option shall be equal to the Option Ratio multipliedby such Director’s Accrued Quarterly Meeting Fees. In no event shall theCompany be required to grant Options to purchase fractional shares. If anOption to purchase a fractional share of Common Stock would otherwise berequired to be granted, the number of shares of Common Stock subject to suchOption shall be rounded up to the next highest whole number of shares. Theexercise price per share of Common Stock of each Option so granted(i) with respect to the first calendar quarter of 2002 shall be equal tothe Fair Market Value of the Common Stock on April 15, 2002, which is thedate of grant, and (ii) with respect to all subsequent calendar quartersshall be equal to the Fair Market Value of the Common Stock on the date ofgrant. Options shall be exercisable immediately on the date of grant, exceptthat no option shall be exercisable unless and until shareholder approval ofthis Plan. The Options shall have such other terms and conditions notinconsistent with the express provisions of this Plan regarding payment,expiration, termination, and transfer as the Board may determine from time totime, which terms and conditions need not be identical to those of the Optionsgranted pursuant to Section 7 of this Plan.

 

**(f)  *Termination of Services.***   If a Director ceases to bea Board member before the end of a calendar quarter, the Director shall receivein cash the Fees such Director would otherwise have been entitled to receivefor such quarter in the absence of this Plan.

 

**6.   *Terms and Conditions of Deferral Elections*.**

 

**(a)  *In General.***  Each Director may irrevocably elect annually to deferreceiving all or a portion of (i) the shares of Common Stock that wouldotherwise be issued in connection with such Director’s Retainer Fees in respectof a calendar year, (ii) the shares of Common Stock that would otherwisebe issued upon a Share Election, or (iii) such Director’s Meeting Fees inrespect of a calendar year that are not subject to a Share Election (a **“Deferral Election”**). A Director who 

 

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has made a Deferral Electionwith respect to shares of Common Stock shall have the number of shares ofCommon Stock that are the subject of the Deferral Election credited to a ShareAccount in the form of Share Units. A Director who has made a Deferral Electionwith respect to Meeting Fees that are not subject to a Share Election shallhave the amount of deferred fees credited to a Cash Account.

 

**(b)  *Timing of Deferral Election.***  The Deferral Election shall be inwriting and delivered to the Secretary of the Company on or prior to December31 of the calendar year preceding the calendar year in which the applicableFees are to be earned; *provided*, *however,* that a Director who commences service on the Board onor subsequent to January 1 of a calendar year may make a Deferral Electionduring the thirty-day period immediately following the commencement of his orher directorship; and *provided, further,*thatsuch Director may not defer payment of any Fees earned prior to the date onwhich such Director makes such Deferral Election. A Deferral Election, oncemade, shall be irrevocable for the calendar year with respect to which it is madeand shall remain in effect for future calendar years unless revoked or modifiedby a subsequent Deferral Election with respect to future calendar years on orprior to December 31 of the calendar year preceding the calendar year in whichsuch revocation shall take effect and in accordance with the provisions hereof.Any subsequent Deferral Election with respect to Fees earned during the currentcalendar year or prior calendar years (a **“Subsequent Election”**)shall be restricted as follows:

 
| (i)    |   | Any Subsequent Election  that either delays a payment or changes a payment election under Section 6(f)  hereof may not take effect for at least 12 months after the Subsequent  Election is made; |
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|   |   |                                                                                                                                                                                              |
| (ii)   |   | Payment under a Subsequent  Election must be delayed for at least five years from the original payment  date (except as otherwise set forth in Section 6(g) hereof); and                          |
|   |   |                                                                                                                                                                                              |
| (iii)  |   | Subsequent Elections must  be made at least 12 months prior to the date of the first scheduled payment  pursuant to Section 6(f) hereof.                                                          |

 

**(c)  *Share Accounts.***  Each Share Account shall be deemed to be invested in sharesof Common Stock. Whenever regular cash dividends are paid by the Company onoutstanding Common Stock, there shall be credited to the Director’s ShareAccount additional Share Units equal to (i) the aggregate dividend thatwould be payable on outstanding shares of Common Stock equal to the number ofShare Units in such Share Account on the record date for the dividend, dividedby (ii) the Fair Market Value of the Common Stock on the payment date ofthe dividend.

 

**(d)  *Cash Accounts.***  Each Director’s Cash Account shall be credited withinterest on the last day of each calendar quarter calculated on the basis ofthe average daily balance in the Cash Account during the calendar quarter. Theinterest rate for any calendar quarter shall be the prime rate of interest asreported in the *Wall Street Journal*as theprevailing prime rate of interest on the first business day of the calendarquarter.

 

**(e)  *Commencement of Payment.***  Except as otherwise provided inSection 6(g) hereof, a Director’s Deferred Amounts shall become payable inthe January following the year in which the Director terminates service as aDirector. Payments from a Share Account shall be made by converting Share Unitsinto Common Stock on a one-for-one basis, with payment of fractional shares tobe made in cash based upon the Fair Market Value of such fractional share onthe last business day of the preceding calendar quarter.

 

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**(f)  *Timing of Payments.***  Subject to Section 6(g) hereof, each Director shall electin his or her Deferral Election to receive payment of his or her DeferredAmounts either in a lump sum or in two to fifteen substantially equal annualinstallments.

 

**(g)  *Distributions Upon Death, Disability or Unforeseeable Emergency.***  In the event of a Director’sdeath, payment of the remaining portion of the Director’s Deferred Amounts willbe made to the Director’s beneficiary (or, if no beneficiary has been designated,to the Director’s estate or other legal representative) in the same form as theDirector has elected; *provided, however,*that if permitted under the Code and the rules and regulations promulgatedthereunder, such payment of the remaining portion of the Director’s DeferredAmounts will be made to the Director’s beneficiary (or, if no beneficiary hasbeen designated, to the Director’s estate or other legal representative) in alump sum as soon as practicable following the Director’s death. Notwithstandingany Deferral Election, in the event of disability (as defined in Section409A(a)(2)(C) of the Code) or severe financial hardship to a Director resultingfrom an illness or accident of the Director, the Director’s spouse or adependent (as defined in Section 152(a) of the Code) of the Director, loss ofthe Director’s property due to casualty, or other similar extraordinary andunforeseeable circumstances arising as a result of events beyond the control ofthe Director, a Director may, by providing written notice to the Secretary ofthe Company, withdraw any portion of the Share Units in his or her ShareAccount (in an equivalent number of shares of Common Stock) and/or cash in hisor her Cash Account provided that, as determined under regulations of the Secretaryof the Treasury, the amounts distributed with respect to an emergency do notexceed the amounts necessary to satisfy such emergency plus amounts necessaryto pay taxes reasonably anticipated as a result of the distribution, aftertaking into account the extent to which such hardship is or may be relievedthrough reimbursement or compensation by insurance or otherwise or byliquidation of the participant’s assets (to the extent the liquidation of suchassets would not itself cause severe financial hardship).

 

**(h)  *No Account Transfers.***  A Director may not transfer orconvert a Share Account to a Cash Account, or vice versa.

 

**(i)  *Status of Accounts.***  The Share and Cash Accounts shall not be funded, and allDeferred Amounts shall be held in the general assets of the Company and besubject to the general creditors of the Company.

 

**7.   *Annual Grants of Stock Options.***

 

**(a)  *Annual Grants.***  Commencing in 2005, Options to purchase 10,000 shares ofCommon Stock shall be granted to each Director automatically on the firstbusiness day of January in each year. Any person who becomes a Director at anyother time of the year shall receive a pro-rata portion of the Annual Grant,based upon the time remaining in such year. The Board shall have the right toincrease or decrease the number of shares of Common Stock subject to the annualgrant of Options to Directors as the Board may determine is necessary orappropriate to attract and retain persons to serve as members of the Board, itbeing understood that all such grants and changes in the number of optionsgranted shall comply with Section 16 of the Exchange Act and the rulespromulgated thereunder and the Internal Revenue Code of 1986, as amended.

 

**(b)  *Option Price Per Share.***  Options granted pursuant to thisSection 7 shall be exercisable at a price per share equal to the FairMarket Value of the Common Stock on the date of the grant of the Option.

 

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**(c)  *Period of Option.***  Each Option granted pursuant to this Section 7 shallbecome exercisable on the first anniversary of the date upon which it isgranted; *provided*, *however*,that all options granted pursuant to this Section 7 shall becomeexercisable in full upon the first to occur of (i) the retirement of theDirector in accordance with the mandatory retirement policy for members of theBoard, (ii) the total and permanent disability of the Director, or(iii) the death of the Director while a member of the Board. Each Optiongranted pursuant to the Plan shall remain exercisable until the expiration ofthree years following the first to occur of the retirement or resignation ofthe optionee as a director of the Company (or the failure of the optionee to bere-elected a director of the Company), the total and permanent disability ofthe optionee, or the death of the optionee.

 

**(d)  *Exercise of Options.***  Options may be exercised only bywritten notice to the Company at its corporate office accompanied by payment ofthe full consideration for the shares as to which they are exercised. Thepurchase price is to be paid in full to the Company upon the exercise of theoption (i) by cash, including a personal check payable to the order of theCompany, or (ii) by delivering Common Stock already owned by the optionee fora period of at least six months (valued at Fair Market Value as of the date ofdelivery), or (iii) any combination of cash and Common Stock so valued.

 

**(e)  *Nonstatutory Options.***  No option granted hereunder shallconstitute an “incentive stock option” as that term is defined in the Code.

 

**8.   *Modification, Extension, and Renewal of Options.***  The Board shall have the power tomodify, extend, or renew outstanding options and authorize the grant of newoptions in substitution therefor, provided that such power may not be exercisedin a manner which would (i) alter or impair any rights or obligations ofany option previously granted without the written consent of the optionee,(ii) adversely affect the qualification of the Plan or any otherstock-related plan of the Company under Rule 16b-3 under the Exchange Act,(iii) lower the exercise price of existing options, or(iv) substitute new options for previously granted options having a higherexercise price.

 

**9.   *Limitation of Rights.***

 

**(a)  *No Right to Continue as a Director.***  Neither the Plan, nor thegranting of an option or the making of a Share Election, Option Election orDeferral Election, or any other action taken pursuant to the Plan, shallconstitute or be evidence of any agreement or understanding, express or implied,that the Company will retain a Director for any period of time, or at any particularrate of compensation.

 

**(b)  *No Shareholder’s Rights.***  An optionee or a Director who hasmade a Share Election, Option Election or Deferral Election (or his or herrepresentative) shall have no rights as a shareholder with respect to theshares covered by his or her options, Share Election or Option Election or toany Share Units with respect to a Deferral Election until the date of theactual issuance to him or her (or such representative) of shares of CommonStock (either through the Company’s Direct Registration System or bycertification) and, subject to Sections 6(c) and 10 hereof, no adjustment willbe made for dividends or other rights for which the record date is prior to thedate such shares are issued.

 

**10.   *Effect of Certain Changes in Capitalization.***  In the event of any change incorporate capitalization (such as a stock split), any corporate transaction(such as any merger, consolidation or separation (including a spinoff)), anyother distribution of stock or property of the Company, any reorganization(whether or not such reorganization comes within the definition of such term in

 

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Section 368 of the Code)or any partial or complete liquidation of the Company, the Board shallequitably adjust the Share Account to reflect any such transaction and shallmake such substitution or adjustments in the aggregate number and kind ofshares reserved for issuance under the Plan, in the number, kind and optionprice of shares subject to outstanding options, in the number and kind ofshares subject to option grants pursuant to an Option Election and automaticoption grants pursuant to Section 7 and/or such other equitablesubstitution or adjustments in the terms of options as it may determine to beappropriate in its sole discretion; *provided*, *however*, that the number of shares subject to any optionshall always be a whole number.

 

**11.   *Change in Control*.**

 

**(a)  *Definition.***For purposes of the Plan, a **“Change in Control”**shallmean a change in the ownership or effective control of the Company, or in theownership of a substantial portion of the assets of the Company as provided inSection 409A(2)(A)(v) of the Code and the regulations thereunder andinterpretations thereof, as the same may be applicable from time to time.

 

**(b)  Consequencesof Change in Control.**  Notwithstandinganything in the Plan to the contrary, upon the occurrence of a Change inControl:

 
| (i)                                                                                                         | all Share Units credited  to a Share Account shall be converted into Common Stock and together with all |
|-------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
| Deferred Amounts credited  to a Cash Account shall be transferred as soon as practicable to each  Director; |
|                                                                                                        |
| (ii)                                                                                                        | Fees earned in respect of  the calendar quarter in which the Change in Control occurs shall be paid in  |
| cash as soon as  practicable; and                                                                           |
|                                                                                                        |
| (iii)                                                                                                       | all Options shall  immediately vest and become exercisable in full.                                     |

 

**12.   *Term of Plan.***  This Plan shall be effective as of the Effective Date,subject to approval of the Plan by the shareholders of the Company at the firstannual meeting of shareholders after the Effective Date. The Plan shallterminate on December 31, 2011, unless earlier terminated by the Board.Notwithstanding the Plan’s termination, amounts shall be delivered pursuant toany Deferral Election made prior to the Plan’s termination in accordance withsuch election. Options may be granted under the Plan at any time prior to thetermination of the Plan. Deferral Elections, Share Elections and OptionElections may not be made for any Fees which would be paid following the dateof the termination of the Plan. If the shareholders of the Company do notapprove this Plan, then this Plan shall be void, all Share Elections andDeferral Elections made with respect to this Plan shall be deemed to be ShareElections and Deferral Elections under the 1997 Plan, and all shares of CommonStock issued, Share Units credited to a Director’s Share Account, and Feescredited to a Director’s Cash Account under this Plan shall be deemed to havebeen issued and credited under the 1997 Plan.

 

**13.   *Amendment; Termination.***  The Board may at any time andfrom time to time alter, amend, suspend, or terminate the Plan in whole or inpart; *provided*, *however*,that no amendment which is required by any regulation, law or stock exchangerule to be approved by shareholders shall be effective unless it is approved bythe shareholders of the Company entitled to vote thereon. Notwithstanding theforegoing, no amendment shall affect adversely any of the rights of anyDirector, under any option or under any election theretofore in effect underthe Plan, or with respect to Deferred Amounts, without such Director’s consent.

 

**14.   *Nontransferability.***  No Option, or right or interest of any Director in DeferredAmounts, shall be transferable by a Director other than (i) by will or bythe laws of descent and distribution, 

 

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(ii) pursuant to aqualified domestic relations order (as defined in the Code or Title I of theEmployee Retirement Income Security Act of 1974, as amended), or (iii) inthe case of an Option, as otherwise expressly permitted under the applicableoption agreement including, if so permitted, pursuant to a gift to suchoptionee’s family, whether directly or indirectly or by means of a trust orpartnership or otherwise. All Options or rights with respect to DeferredAmounts shall be exercisable, during the Director’s lifetime, only by theDirector or by the guardian or legal representative of the Director or analternate payee pursuant to a qualified domestic relations order or, in thecase of an Option, by any person to whom such Option is transferred pursuant tothe preceding sentence. Under the Plan, it is understood that the term “optionee”includes the guardian and legal representative of the Director named in theoption agreement and any person to whom an Option is transferred by will or thelaws of descent and distribution, pursuant to a qualified domestic relationsorder or as otherwise described above.

 

**15.   *Beneficiaries.***  The Board shall establish such procedures as it deemsappropriate for a Director to designate a beneficiary to whom any amountspayable in the event of a Director’s death are to be paid or by whom anyOptions held by a Director may be exercised following his or her death.Directors shall make a beneficiary election with respect to Deferred Amounts atthe same time that a Deferral Election is made.

 

**16.   *Compliance with Law, Etc.***  Notwithstanding any otherprovision of the Plan or agreements made pursuant hereto, the Company shall notbe required to issue or deliver any certificate or certificates for shares ofCommon Stock under the Plan prior to fulfillment of all of the followingconditions:

 

(a)  thelisting, or approval for listing upon notice of issuance, of such shares on theNew York Stock Exchange or such other securities exchange or NASDAQ as may atthe time be the principal market for Common Stock;

 

(b)  anyregistration or other qualification of such shares of the Company under anystate or federal law or regulation, or the maintaining in effect of any suchregistration or other qualification which the Board shall, in its absolutediscretion upon the advice of counsel, deem necessary or advisable; and

 

(c)  theobtaining of any other consent, approval, or permit from any state or federalgovernmental agency, which the Board shall, in its absolute discretion afterreceiving the advice of counsel, determine to be necessary or advisable.

 

**17.   *Notice.***  Any written notice to the Company required by any of theprovisions of the Plan shall be addressed to the Secretary of the Company andshall become effective when it is received.

 

**18.   *Governing Law.***  The Plan and all determinations made and actions takenpursuant hereto shall be governed by the laws of the State of Delaware, withoutreference to principles of conflict of laws, and shall be construedaccordingly.

 

**19.   *Headings.***  The headings of sections and subsections herein areincluded solely for convenience of reference and shall not affect the meaningof any of the provisions of the Plan.

 

**20.   *Termination of the 1997 Plan.***  If the shareholders of theCompany approve this Plan as provided in Section 12 hereof, the 1997 Planshall terminate in accordance with Section 12 thereof as of the date ofsuch approval. In that case, Share Accounts and Cash Accounts maintained underthe 1997 Plan shall be converted to and maintained as Share Accounts and CashAccounts under this Plan. If the shareholders of the Company do not approvethis Plan, then the 1997 Plan shall continue in full force and effect untilterminated in accordance with the provisions thereof, all grants of optionsmade pursuant to 

 

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Sections 5(d) and 5(e) shallbe null and void, and all Share Elections and Deferral Elections made underthis Plan shall be deemed to have been made under the 1997 Plan.

 

**21.   *Savings Clause.***  This Plan is intended to comply in all respects with the AmericanJobs Creation Act of 2004 and the rules and regulations promulgated thereunder andthe interpretations thereof (collectively, the **“AJCA”**).In the event that any provision of this Plan violates AJCA or would result inimposition of any excise tax, penalties or similar adverse tax consequences tothe Company or any Director, such provision shall without further action by theBoard be modified, restricted or nullified, as appropriate to avoid such adversetax consequences. In addition, if the time or form of any payment election ismade in accordance with this Plan, but in violation of the AJCA, then suchpayment election shall be null and void, and all amounts deferred shall be paidor payments thereof shall commence on the earliest date permitted in accordancewith the AJCA without the imposition of any excise tax, penalties or otheradverse tax consequences to the Director and the Company.

 

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