**Exhibit 10.3**

 

**INTERMEC, INC.**

**2002 DIRECTOR STOCK OPTION AND FEE PLAN**

 

**As Amended Effective January 1, 2006**

 

**1.****             *****Purpose.***The UNOVA, Inc. 2002 Director StockOption and Fee Plan (the **“Plan”**) isintended to provide an incentive to members of the board of directors of Intermec, Inc.,a Delaware corporation (the **“Company”**),who are neither officers nor employees of the Company, to remain in the serviceof the Company and increase their efforts for the success of the Company and toencourage such directors to own shares of the Company’s stock, thereby aligningtheir interests more closely with the interests of the Company’s shareholders.The Plan is also intended to assist the Company in attracting experienced andqualified candidates to become members of the Board.

 

**2.****             *****Definitions*****.**

 

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

 

**“AdverseTax Consequences under Section 409A”** means the accelerated inclusion, 20 percentadditional tax rate, and associated interest charge that will apply to anydeferred compensation included in taxable income of a Director under Section 409A(a)(1)(B) ofthe Code.

 

**“AnnualGrant”** means theannual grant of Options, if any, made to Directors under Section 7(a) ofthe Plan.

 

**“AverageQuarterly Price”**meansthe average of the Fair Market Value of Common Stock on each trading date of acalendar quarter.

 

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

 

**“CashAccount”**means thebookkeeping account established by the Company for the deferral of Fees byDirectors which will be credited with interest pursuant to Section 6(d) hereof.

 

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

 

**“CommonStock”**means thecommon stock, par value $.01 per share, of the Company.

 

**“DeferralElection”**means anelection pursuant to Section 6 hereof to defer receipt of Fees into aShare Account or Cash Account.

 

**“DeferredAmounts”**mean theamounts credited to a Director’s Share Account or Cash Account pursuant to aDeferral Election or otherwise pursuant to Section 6(h).

 

**“Director”**means a member of theBoard who is neither an officer nor an employee of the Company. A director ofthe Company shall not be deemed to be an employee of the Company solely byreason of the existence of a consulting contract between such director and theCompany or any subsidiary thereof pursuant to which the director agrees toprovide consulting services as an independent consultant to the Company or itssubsidiaries on a regular or occasional basis for a stated consideration. Theterm “Director” as used in this Plan shall include any person who may hereafterbecome an advisory director of the Company, as that term is used in the Company’sBy-Laws.

 

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**“EffectiveDate”**means January 1,2002, subject to approval by the Company’s shareholders as provided in Section 12hereof.

 

**“ExchangeAct”**means theSecurities Exchange Act of 1934, as amended.

 

**“FairMarket Value”**means,as of any given date, the average of the highest and lowest reported sales pricesof the Common Stock on the New York Stock Exchange Composite Tape or, if notlisted on such exchange, on any other national securities exchange on which theCommon Stock is listed or on NASDAQ. If there is no regular public tradingmarket for such Common Stock, the Fair Market Value of the Common Stock shallbe determined by the Board in good faith.

 

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

 

**“MeetingFees”**means feesscheduled to be paid to a Director for attendance at Board or committeemeetings.

 

**“Options”**means the options topurchase Common Stock granted to a Director under Section 7(a) as an AnnualGrant.

 

**“RetainerFees”**means theannual retainer scheduled to be paid to a Director for the calendar year andadditional annual fees scheduled to be paid to a Director for serving as Chairof a Board committee.

 

**“ShareAccount”**means thebookkeeping account established by the Company for the deferrals of Fees byDirectors, which will be credited with Share Units pursuant to Section 6(a) hereof.

 

**“ShareElection”**means theelection by a Director to receive shares of Common Stock in lieu of MeetingFees as set forth in Section 5(b) hereof.

 

**“ShareUnit”**means a shareof Common Stock credited as a bookkeeping entry to a Director’s Share Account.Each Share Unit shall represent the right to receive one share of Common Stock.

 

**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;to determine the terms and provisions of the respective option agreements(which need not be identical); and to make all other determinations necessaryor advisable for the administration of the Plan. The Board shall have the rightto delegate its authority to administer the Plan to the Governance andNominating Committee or another Board committee consisting solely ofindependent Directors. The Board’s or such committee’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 Common Stock issuable under this Plan shallbe subject to adjustment pursuant to Section 10 hereof. Shares of CommonStock delivered hereunder may be either authorized but unissued shares orpreviously issued shares reacquired and held by the Company as treasury shares.

 

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**5.****                                     *****Terms and Conditions of Paymentof Fees in the Form of Shares or Options.***

 

**(a)****         *****Retainer Fees.***Each Director shall receive in the form ofCommon Stock (subject to a Deferral Election) all, or such lesser amount as theBoard may determine from time to time in the exercise of its judgment, ofhis or her Retainer Fees earned in each calendar year. The shares of CommonStock (and cash in lieu of fractional shares) issuable under this Section 5(a) shallbe issued quarterly in accordance with Section 5(c) hereof.

 

**(b)****         *****Meeting Fees; Share Election.***Each Director may make an annualelection (the **“Share Election”**) to receive inthe form of Common Stock (subject to a Deferral Election) all of his orher Meeting Fees earned in each calendar year. The shares of Common Stock (and cashin lieu 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 inwhich the applicable Meeting Fees are to be earned; *provided*,*however*, that any Director who commencesservice on the Board on or subsequent to January 1 of a calendar year may makea Share Election during the thirty-day period immediately following thecommencement of his or her directorship. A Share Election, once made, shall beirrevocable for the calendar year with respect to which it is made and shallremain in effect for future calendar years unless revoked in writing ormodified by a subsequent Share Election with respect to future calendar years onor prior to December 31 of the calendar year preceding the calendar yearin which such revocation shall take effect and in accordance with theprovisions 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 Directoron the first business day following the end of each calendar quarter. The totalnumber of shares of Common Stock to be so issued shall be determined bydividing (x) the dollar amount of the Director’s Retainer Fees for thepreceding calendar quarter and any Meeting Fees for the preceding calendarquarter to which a Share Election applies, by (y) the Average Quarterly Pricefor the preceding 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.

 

**6.****             *****Terms and Conditions of DeferralElections*****.**

 

**(a)****         *****In General.***Each Director may irrevocably electannually to defer receiving all or a portion of (i) the shares of CommonStock that would otherwise be issued in connection with such Director’sRetainer Fees in respect of a calendar year, (ii) the shares of CommonStock that would otherwise be issued upon a Share Election, or (iii) suchDirector’s Meeting Fees in respect of a calendar year that are not subject to aShare Election (a **“Deferral Election”**).A Director who has made a Deferral Election with respect to shares of CommonStock shall have the number of shares of Common Stock that are the subject ofthe Deferral Election credited to a Share Account in the form of ShareUnits. A Director who has made a Deferral Election with respect to Meeting Feesthat are not subject to a Share Election shall have the amount of deferred feescredited to a Cash Account.

 

**(b)****         *****Timing of Deferral Election.***The Deferral Election shall be in writing anddelivered to the Secretary of the Company on or prior to December 31 ofthe calendar year preceding the calendar year in which the applicable Fees areto be earned; *provided*, *however,*that a Director who commences service on the Board on or subsequent to January 1of a calendar year may make

 

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aprospective Deferral Election during the thirty-day period immediately followingthe commencement of his or her directorship, and, accordingly, such DeferralElection shall apply only with respect to compensation paid for services to beperformed subsequent to the Deferral Election. A Deferral Election, once made,shall be irrevocable for the calendar year with respect to which it is made andshall remain in effect for future calendar years unless revoked or modified bya subsequent Deferral Election with respect to future calendar years on orprior to December 31 of the calendar year preceding the calendar year inwhich such revocation shall take effect and in accordance with the provisionshereof. No subsequent Deferral Election may be made with respect to Feesearned during the current calendar year or prior calendar years.

 

**(c)****         *****Share Accounts.***Each Share Account shall be deemed to beinvested in shares of Common Stock. Whenever regular cash dividends are paid bythe Company on outstanding Common Stock, there shall be credited to theDirector’s Share Account additional Share Units equal to (i) the aggregatedividend that would be payable on outstanding shares of Common Stock equal tothe number of Share Units in such Share Account on the record date for thedividend, divided by (ii) the Fair Market Value of the Common Stock on thepayment date of the dividend.

 

**(d)****         *****Cash Accounts.***Each Director’s Cash Account shall becredited with interest on the last day of each calendar quarter calculated onthe basis of the average daily balance in the Cash Account during the calendarquarter. The interest rate for any calendar quarter shall be the prime rate ofinterest as reported in the *Wall Street Journal*asthe prevailing prime rate of interest on the first business day of the calendarquarter.

 

**(e)****         *****Commencement of Payment.***Except as otherwise provided in Section 6(g) hereof,a Director’s Deferred Amounts shall become payable in the January followingthe year in which the Director terminates service as a Director. Payments froma Share Account shall be made by converting Share Units into Common Stock on aone-for-one basis, with payment of fractional shares to be made in cash basedupon the Fair Market Value of such fractional share on the last business day ofthe preceding calendar quarter.

 

**(f)****           *****Timing of Payments.***Subject to Section 6(g) hereof,each Director shall elect in his or her Deferral Election to receive payment ofhis or her Deferred Amounts either in a lump sum or in two to fifteensubstantially equal annual installments.

 

**(g)****        *****Distributions Upon Death,Disability or Unforeseeable Emergency.***In the event of a Director’s death, payment of the remaining portion ofthe Director’s Deferred Amounts will be made to the Director’s beneficiary (or,if no beneficiary has been designated, to the Director’s estate or other legalrepresentative) in the same form as the Director has elected; *provided, however,* that if permitted under the Code and the rules andregulations promulgated thereunder, such payment of the remaining portion ofthe Director’s Deferred Amounts will be made to the Director’s beneficiary (or,if no beneficiary has been designated, to the Director’s estate or other legalrepresentative) in a lump sum as soon as practicable following the Director’sdeath. Notwithstanding any Deferral Election, in the event of disability (asdefined in Section 409A(a)(2)(C) of the Code) or severe financialhardship to a Director resulting from an illness or accident of the Director,the Director’s spouse or a dependent (as defined in Section 152(a) ofthe Code) of the Director, loss of the Director’s property due to casualty, orother similar extraordinary and unforeseeable circumstances arising as a resultof events beyond the control of the Director, a Director may, by providingwritten notice to the Secretary of the Company, withdraw any portion of theShare Units in his or her Share Account (in an equivalent number of shares ofCommon Stock) and/or cash in his or her Cash Account, provided that, asdetermined under regulations of the Secretary of the Treasury, the amountsdistributed with respect to an

 

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emergencydo not exceed the amounts necessary to satisfy such emergency plus amountsnecessary to pay taxes reasonably anticipated as a result of the distribution,after taking into account the extent to which such hardship is or may berelieved through 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 or convert aShare Account to a Cash Account, or vice versa.

 

**(i)****           *****Status of Accounts.***The Share and Cash Accounts shall not befunded, and all Deferred Amounts shall be held in the general assets of theCompany and be subject to the general creditors of the Company.

 

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

 

**(a)****         *****Annual Grants.***Commencing in 2005, Options to purchase 10,000shares of Common Stock shall be granted to each Director automatically on thefirst business day of January in each year. Any person who becomes aDirector at any other time of the year shall receive a pro-rata portion of theAnnual Grant, based upon the time remaining in such year. The Board shall havethe right to increase or decrease the number of shares of Common Stock subjectto the Annual Grant as the Board may determine is necessary or appropriateto attract and retain persons to serve as members of the Board, it beingunderstood that all such grants and changes in the number of options grantedshall comply with Section 16 of the Exchange Act and the rules promulgatedthereunder and the Code.

 

**(b)****         *****Option Price Per Share.***Options granted pursuant to this Section 7shall be exercisable at a price per share equal to the Fair Market Value of theCommon Stock on the date of the grant of the Option.

 

**(c)****         *****Period of Option.***Each Option granted pursuant to this Section 7shall immediately vest, shall be immediately exercisable, and shall remainexercisable until the tenth anniversary of the date of grant, at which time itshall expire.

 

**(d)****         *****Exercise of Options.***Options may be exercised only by writtennotice to the Company at its corporate office accompanied by payment of thefull consideration for the shares as to which they are exercised. The purchaseprice is to be paid in full to the Company upon the exercise of the option (i) bycash, including a personal check payable to the order of the Company, or (ii) bydelivering Common Stock already owned by the optionee for a period of at leastsix months (valued at Fair Market Value as of the date of delivery), or (iii) anycombination of cash and Common Stock so valued.

 

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

 

**8.****             *****Modification, Extension, andRenewal of Options.***TheBoard shall have the power to modify, extend, or renew outstanding options andauthorize the grant of new options in substitution therefor, provided that suchpower may not be exercised in a manner which would (i) alter orimpair any rights or obligations of any option previously granted without thewritten consent of the optionee, (ii) adversely affect the qualificationof the Plan or any other stock-related plan of the Company under Rule 16b-3under the Exchange Act, (iii) lower the exercise price of existingoptions, (iv) substitute new options for previously granted options havinga higher exercise price, or (v) cause an option to become

 

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subjectto Section 409A of the Code.

 

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

 

**(a)****         *****No Right to Continue as aDirector.***Neither thePlan, nor the granting of an option or the making of a Share Election orDeferral Election, or any other action taken pursuant to the Plan, shallconstitute or be evidence of any agreement or understanding, express orimplied, that the Company will retain a Director for any period of time, or atany particular rate of compensation.

 

**(b)****         *****No Shareholder’s Rights.***An optionee or a Director who has made aShare Election or Deferral Election (or his or her representative) shall haveno rights as a shareholder with respect to the shares covered by his or her Optionsor Share Election or to any Share Units with respect to a Deferral Electionuntil the date of the actual issuance to him or her (or such representative) ofshares of Common Stock (either through the Company’s Direct Registration Systemor by certification) and, subject to Sections 6(c) and 10 hereof, noadjustment will be made for dividends or other rights for which the record dateis prior to the date such shares are issued.

 

**10.****      *****Effect of Certain Changes inCapitalization.***In theevent of any change in corporate capitalization (such as a stock split), anycorporate transaction (such as any merger, consolidation or separation(including a spinoff)), any other distribution of stock or property of theCompany, any reorganization (whether or not such reorganization comes withinthe definition of such term in Section 368 of the Code) or any partial orcomplete liquidation of the Company, the Board shall equitably adjust the ShareAccount to reflect any such transaction and shall make such substitution oradjustments in the aggregate number and kind of shares reserved for issuanceunder the Plan, in the number, kind and option price of shares subject tooutstanding Options, in the number and kind of shares subject to Annual Grantspursuant to Section 7 and/or such other equitable substitution oradjustments in the terms of Options as it may determine to be appropriatein 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”**shall mean a change in the ownership oreffective control of the Company, or in the ownership of a substantial portionof the assets of the Company as provided in Section 409A(2)(A)(v) ofthe Code and the regulations thereunder and interpretations thereof, as thesame may be applicable from time to time.

 

**(b)***         ***Consequences of 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 beconverted into Common Stock and together with all Deferred Amounts credited toa Cash Account shall be transferred as soon as practicable to each Director;

 

(ii)  Fees earned in respect of the calendar quarter in whichthe Change in Control occurs shall be paid in cash as soon as practicable; and

 

(iii)  all Options shall immediately vest and becomeexercisable in full.

 

**(c)****         ****Definition Modified to ExtentRequired by Section 409A of the Code.**Notwithstanding the foregoing, to the extent necessary to comply with Section 409Aof the Code,

 

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inthe case of any payment hereunder that in the determination of the Companywould be considered “nonqualified deferred compensation” subject to Section 409Aand as to which, in the determination of the Company, the requirements of Section 409A(a)(2)(A)(v) ofthe Code would apply, an event or occurrence described above shall beconsidered a “Change of Control” only if it also constitutes a change ofownership or effective control of the Company, or a change in ownership of theCompany’s assets, described in Section 409A(a)(2)(A)(v) of the Code.

 

**12.****      *****Term of Plan.***This Plan shall be effective as of theEffective Date, subject to approval of the Plan by the shareholders of theCompany at the first annual meeting of shareholders after the Effective Date.The Plan shall terminate on December 31, 2011, unless earlier terminatedby the Board. Notwithstanding the Plan’s termination, amounts shall bedelivered pursuant to any Deferral Election made prior to the Plan’s terminationin accordance with such election. Options may be granted under the Plan atany time prior to the termination of the Plan. Deferral Elections and ShareElections may not be made for any Fees which would be paid following thedate of 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 and from timeto time alter, amend, suspend, or terminate the Plan in whole or in part; *provided*, *however*, thatno amendment which is required by any regulation, law or stock exchange rule tobe approved by shareholders shall be effective unless it is approved by theshareholders 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 anyDirector in Deferred Amounts, shall be transferable by a Director other than (i) bywill or by the laws of descent and distribution, (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 asit deems appropriate for a Director to designate a beneficiary to whom anyamounts payable in the event of a Director’s death are to be paid or by whomany Options held by a Director may be exercised following his or herdeath. Directors shall make a beneficiary election with respect to DeferredAmounts at the same time that a Deferral Election is made.

 

**16.****      *****Compliance with Law, Etc.*** Notwithstanding any other provision ofthe Plan or agreements made pursuant hereto, the Company shall not be requiredto issue or deliver any certificate or certificates for shares of Common Stockunder the Plan prior to fulfillment of all of the following conditions:

 

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(a)  the listing, or approval for listing upon notice ofissuance, of such shares on the New York Stock Exchange or such othersecurities exchange or NASDAQ as may at the time be the principal marketfor Common Stock;

 

(b)  any registration or other qualification of such sharesof the Company under any state or federal law or regulation, or the maintainingin effect of any such registration or other qualification which the Boardshall, in its absolute discretion upon the advice of counsel, deem necessary oradvisable; and

 

(c)  the obtaining of any other consent, approval, or permitfrom any state or federal governmental agency, which the Board shall, in itsabsolute discretion after receiving the advice of counsel, determine to benecessary or advisable.

 

**17.****      *****Notice.***Any written notice to the Company required byany of the provisions of the Plan shall be addressed to the Secretary of theCompany and shall become effective when it is received.

 

**18.****      *****Governing Law.***The Plan and all determinations made andactions taken pursuant hereto shall be governed by the laws of the State ofDelaware, without reference to principles of conflict of laws, and shall beconstrued accordingly.

 

**19.****      *****Headings.***The headings of sections and subsectionsherein are included solely for convenience of reference and shall not affectthe meaning of any of the provisions of the Plan.

 

**20.****      *****Termination of the 1997 Plan.***If the shareholders of the Company approvethis Plan as provided in Section 12 hereof, the 1997 Plan shall terminatein accordance with Section 12 thereof as of the date of such approval. Inthat case, Share Accounts and Cash Accounts maintained under the 1997 Planshall be converted to and maintained as Share Accounts and Cash Accounts underthis Plan. If the shareholders of the Company do not approve this Plan, thenthe 1997 Plan shall continue in full force and effect until terminated in accordancewith the provisions thereof, all grants of options made pursuant to Sections 5(d) and5(e) shall be null and void, and all Share Elections and DeferralElections made under this Plan shall be deemed to have been made under the 1997Plan.

 

**21.****      *****Savings Clause.***This Plan is intended to comply in allrespects with Section 409A of the Code and the rules and regulationspromulgated thereunder. In the event that any provision of this Plan wouldresult in Adverse Tax Consequences or similar adverse tax consequences to theCompany 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 electionis made in accordance with this Plan, but in violation of Section 409A ofthe Code, then such payment election shall be null and void, and all amountsdeferred shall be paid or payments thereof shall commence on the earliest datepermitted in accordance with Section 409A of the Code without theimposition of any Adverse Tax Consequences under Section 409A or otheradverse tax consequences to the Director and the Company.

 

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