**Exhibit10.3**

** **

**UNOVA, INC.**

**2002DIRECTOR STOCK OPTION AND FEE PLAN**

 

**AsAmended Effective January 1, 2005**

 

**                1.     *Purpose.* **The UNOVA, Inc. 2002Director Stock Option and Fee Plan (the **“Plan”**) isintended to provide an incentive to members of the board of directors ofUNOVA, 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, adoptedSeptember 24, 1997, and amended July 27, 1999.

 

**                “AverageQuarterly Price”**means the average of the Fair Market Value of CommonStock on each trading date of a calendar quarter.

 

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

 

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

 

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

 

                **“Code”**meansthe Internal Revenue Code of 1986, as amended.

 

                **“Common Stock”**meansthe common stock, par value $.01 per share, of the Company.

 

                **“Deferral Election”**meansan election pursuant to Section 6 hereof to defer receipt of Fees into aShare Account or Cash Account.

 

                **“Deferred Amounts”**meanthe amounts credited to a Director’s Share Account or Cash Account pursuant toa Deferral Election or otherwise pursuant to Section 6(h).

 

                **“Director”**meansa member of the Board who is neither an officer nor an employee of the Company.A director of the Company shall not be deemed to be an employee of the Companysolely by reason of the existence of a consulting contract between suchdirector and the Company or any subsidiary thereof pursuant to which thedirector agrees to provide consulting services as an independent consultant tothe Company or its subsidiaries on a regular or occasional basis for a statedconsideration. The term “Director” as used in this Plan shall include anyperson who may hereafter become an advisory director of the Company, as that termis used in the Company’s By-Laws.

 

                **“Effective Date”**meansJanuary 1, 2002, subject to approval by the Company’s shareholders asprovided in Section 12 hereof.

 

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

 

                **“Fair Market Value”**means,as of any given date, the average of the highest and lowest reported salesprices of the Common Stock on the New York Stock Exchange Composite Tape or, ifnot listed on such exchange, on any other national securities exchange on whichthe Common 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”**meansRetainer Fees and Meeting Fees.

 

                **“Meeting Fees”**meansfees scheduled to be paid to a Director for attendance at Board or committeemeetings.

 

                **“Options”**meansthe options to purchase Common Stock granted to a Director under(i) Section 5(d) pursuant to an Option Election or (ii) underSection 7(a) as an annual grant.

 

                **“Option Election”**meansthe election by a Director to receive Options in lieu of Meeting Fees as setforth in Section 5(d) hereof.

 

                **“Option Ratio”**means(i) for calendar year 2002, one (1) share of Common Stock to beissued upon exercise of an Option divided by One Dollar ($1.00) of AccruedQuarterly Meeting Fees, and (ii) for calendar years after 2002, suchnumber of shares of Common Stock per One Dollar ($1.00) of Accrued QuarterlyMeeting Fees, if any, as the Board may authorize for such calendar year; *provided, however*, that the Option Ratio under this Plan fora calendar year shall be the same as the option ratio offered to the Company’ssenior management employees for such calendar year.

 

                **“Retainer Fees”**meansthe annual retainer scheduled to be paid to a Director for the calendar yearand additional annual fees scheduled to be paid to a Director for serving asChair of a Board committee.

 

                **“Share Account”**meansthe bookkeeping account established by the Company for the deferrals of Fees byDirectors, which will be credited with Share Units pursuant toSection 6(a) hereof.

 

                **“Share Election”**meansthe election by a Director to receive shares of Common Stock in lieu of MeetingFees as set forth in Section 5(b) hereof.

 

                **“Share Unit”**meansa share of Common Stock credited as a bookkeeping entry to a Director’s ShareAccount. Each Share Unit shall represent the right to receive one share ofCommon Stock.

 

                **“Subsequent Election”**means a Deferral Election with respect to Fees earned during the currentcalendar year or prior calendar years as set forth in Section 6(b) hereof.

 

                **3.     *Administration of the Plan*.  **Subject to the express provisionsof the Plan, 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 thePlan***.  The numberof shares of Common Stock authorized for issuance under this Plan is 500,000plus (i) the number of shares reserved and available for issuance underthe 1997 Plan on the Effective Date of this Plan and (ii) any sharessubject to grants made under the 1997 

 

 

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Plan, but which subsequentlyexpire or are canceled, forfeited, or terminated. The number of shares ofCommon Stock issuable under this Plan shall be subject to adjustment pursuantto Section 10 hereof. Shares of Common Stock delivered hereunder may beeither authorized but unissued shares or previously issued shares reacquiredand held by the Company as treasury shares.

 

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

 

**        (a)   *Retainer Fees. ***Subject toSection 5(f) hereof, each Director shall receive in the form of CommonStock (subject to a Deferral Election) all, or such lesser amount as the Boardmay determine from time to time in the exercise of its judgment, of his or herRetainer Fees earned in each calendar year. The shares of Common Stock (andcash 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. ***Subject toSection 5(f) hereof, each Director may make an annual election (the **“Share Election”**) to receive in the form of Common Stock(subject to a Deferral Election) any or all of his or her Meeting Fees earnedin each calendar year; *provided, however*,that such Share Election must be made with respect to at least an aggregate of10% of the Director’s Meeting Fees, in multiples of 10%. Unless a Director hasmade a Share Election with respect to 100% of his or her Meeting Fees, aDirector may also make an Option Election for a calendar year with respect toall or any portion of the remaining percentage of his or her Meeting Fees. Theshares of Common Stock (and cash in lieu of fractional shares) issuablepursuant to a Share Election shall be issued quarterly in accordance withSection 5(c) hereof. The Share Election must be in writing and deliveredto the Secretary of the Company on or prior to December 31 of the calendar yearpreceding the calendar year in which the applicable Fees are to be earned; *provided*, *however*, thatany Director who commences service on the Board on or subsequent toJanuary 1 of a calendar year may make a Share Election during thethirty-day period immediately following the commencement of his or herdirectorship. A Share Election, once made, shall be irrevocable for thecalendar year with respect to which it is made and shall remain in effect forfuture 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 ofCommon Stock issuable to a Director pursuant to Sections 5(a) and 5(b) shall beissued to such Director on the first business day following the end of eachcalendar quarter. The total number of shares of Common Stock to be so issuedshall be determined by dividing (x) the dollar amount of the Director’sRetainer Fees for the preceding calendar quarter and any Meeting Fees for thepreceding calendar quarter to which a Share Election applies, by (y) theAverage Quarterly Price for the preceding quarter. In no event shall theCompany be required to issue fractional shares. In the event that a fractionalshare of Common Stock would otherwise be required to be issued, an amount inlieu thereof shall be paid in cash based upon the Fair Market Value of suchfractional share on the last business day of the preceding calendar quarter.

 

**        (d)   *Meeting Fees; Option Election.***  Ifthe Board authorizes the Company for any calendar year to grant to any class ofsenior management employees options to purchase Common Stock in lieu of cashcompensation, the Board may also authorize the Company to grant Options toDirectors for such calendar year in accordance with the terms of thisSection 5(d) and Section 5(e). If authorized by the Board and subjectto Section 5(f) hereof, each Director may make an annual election (the **“Option Election”**) to receive in the form of Options any orall of his or her Meeting Fees earned in each calendar year; *provided, however,*that such Option 

 

 

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Electionmust be made with respect to at least an aggregate of 10% of the Director’sMeeting Fees, in multiples of 10%. Unless a Director has made an OptionElection with respect to 100% of his or her Meeting Fees, a Director may alsomake a Share Election for a calendar year with respect to all or any portion ofthe remaining percentage of his or her Meeting Fees. Options granted pursuantto an Option Election shall be granted quarterly in accordance withSection 5(e) hereof. The Option Election must be in writing and deliveredto the Secretary of the Company on or before December 31 of the calendar year precedingthe calendar year in which the applicable Meeting Fees are to be earned; *provided, however,*that any Director who commences service onor subsequent to January 1 of a calendar year may make an Option Electionduring the thirty-day period immediately following the commencement of his orher directorship. An Option Election, once made, shall be irrevocable for thecalendar year with respect to which it is made and shall remain in effect forfuture 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; *provided, however,*thatif the Board does not authorize an Option Election for a calendar year, then aDirector’s Option Election shall become void for that year and subsequentcalendar years, a Director shall have the right to make a Share Election forsuch calendar year in accordance with Section 5(b), provided that suchShare Election is made or before December 31 of the preceding calendar year,and such Director must make a new Option Election for any subsequent calendaryear for which the Board authorizes Option Elections.

 

**        (e)   *Option Grants.***  Optionsto be granted to a Director pursuant to Section 5(d) shall be granted tosuch Director on the first business day following the end of each calendarquarter, except for the first quarter of 2002, in which case the date of grantshall be April 15, 2002. The total number of shares of Common Stock that aDirector shall have the right to purchase pursuant to such Option shall beequal to the Option Ratio multiplied by such Director’s Accrued QuarterlyMeeting Fees. In no event shall the Company be required to grant Options topurchase fractional shares. If an Option to purchase a fractional share ofCommon Stock would otherwise be required to be granted, the number of shares ofCommon Stock subject to such Option shall be rounded up to the next highestwhole number of shares. The exercise price per share of Common Stock of eachOption so granted (i) with respect to the first calendar quarter of 2002shall be equal to the Fair Market Value of the Common Stock on April 15,2002, which is the date of grant, and (ii) with respect to all subsequentcalendar quarters shall be equal to the Fair Market Value of the Common Stockon the date of grant. Options shall be exercisable immediately on the date ofgrant, except that no option shall be exercisable unless and until shareholderapproval of this Plan. The Options shall have such other terms and conditionsnot inconsistent 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.***   Ifa Director ceases to be a Board member before the end of a calendar quarter,the Director shall receive in cash the Fees such Director would otherwise havebeen entitled to receive for such quarter in the absence of this Plan.

 

**6.     *Terms and Conditions ofDeferral Elections*.**

 

**        (a)   *In General.***  EachDirector may irrevocably elect annually to defer receiving all or a portion of(i) the shares of Common Stock that would otherwise be issued inconnection with such Director’s Retainer Fees in respect of a calendar year,(ii) the shares of Common Stock that would otherwise be issued upon aShare Election, or (iii) such Director’s Meeting Fees in respect of a 

 

 

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calendar year that are not subject to a Share Election (a **“Deferral Election”**). A Director who has made a DeferralElection with respect to shares of Common Stock shall have the number of sharesof Common Stock that are the subject of the Deferral Election credited to aShare Account in the form of Share Units. A Director who has made a DeferralElection with respect to Meeting Fees that are not subject to a Share Electionshall have the amount of deferred fees credited to a Cash Account.

 

**        (b)   *Timing of Deferral Election.***  TheDeferral Election shall be in writing and delivered to the Secretary of theCompany on or prior to December 31 of the calendar year preceding the calendaryear in which the applicable Fees are to be earned; *provided*,*however,* that a Director who commencesservice on the Board on or subsequent to January 1 of a calendar year maymake a Deferral Election during the thirty-day period immediately following thecommencement of his or her directorship; and *provided,further,*that such Director may not defer payment of any Fees earnedprior to the date on which such Director makes such Deferral Election. ADeferral Election, once made, shall be irrevocable for the calendar year withrespect to which it is made and shall remain in effect for future calendaryears unless revoked or modified by a subsequent Deferral Election with respectto future calendar years on or prior to December 31 of the calendar yearpreceding the calendar year in which such revocation shall take effect and inaccordance with the provisions hereof. Any subsequent Deferral Election with respect to Fees earned during thecurrent calendar year or prior calendar years (a **“SubsequentElection”**) shall be restricted as follows:

 

(i)            Any SubsequentElection that either delays a payment or changes a payment election underSection 6(f) hereof may not take effect for at least 12 months after theSubsequent Election is made;

 

(ii)         Payment under aSubsequent Election must be delayed for at least five years from the originalpayment date (except as otherwise set forth in Section 6(g) hereof); and

 

(iii)      SubsequentElections must be made at least 12 months prior to the date of the firstscheduled payment pursuant to Section 6(f) hereof.

 

**        (c)   *Share Accounts.***  EachShare Account shall be deemed to be invested in shares of Common Stock.Whenever regular cash dividends are paid by the Company on outstanding CommonStock, there shall be credited to the Director’s Share Account additional ShareUnits equal to (i) the aggregate dividend that would be payable onoutstanding shares of Common Stock equal to the number of Share Units in suchShare Account on the record date for the dividend, divided by (ii) theFair Market Value of the Common Stock on the payment date of the dividend.

 

**        (d)   *Cash Accounts.***  EachDirector’s Cash Account shall be credited with interest on the last day of eachcalendar quarter calculated on the basis of the average daily balance in theCash Account during the calendar quarter. The interest rate for any calendarquarter shall be the prime rate of interest as reported in the *Wall Street Journal*as the prevailing prime rate of intereston the first business day of the calendar quarter.

 

**        (e)   *Commencement of Payment.***  Exceptas otherwise provided in Section 6(g) hereof, a Director’s DeferredAmounts shall become payable in the January following the year in which theDirector terminates service as a Director. Payments from a Share Account shallbe made by converting Share Units into Common Stock on a one-for-one basis,with payment of fractional shares to be made in cash based upon the Fair MarketValue of such fractional share on the last 

 

 

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business day of the preceding calendar quarter.

 

**        (f)    *Timing of Payments.***  Subjectto Section 6(g) hereof, each Director shall elect in his or her DeferralElection to receive payment of his or her Deferred Amounts either in a lump sumor in two to fifteen substantially equal annual installments.

 

**        (g)   *Distributions Upon Death, Disability orUnforeseeable Emergency.***  In the event ofa Director’s death, 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 thesame form as the Director 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 a dependent(as defined in Section 152(a) of the Code) of the Director, loss of theDirector’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 theSecretary of the Treasury, the amounts distributed with respect to an 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.***  ADirector may not transfer or convert a Share Account to a Cash Account, or viceversa.

 

**        (i)    *Status of Accounts.***  TheShare and Cash Accounts shall not be funded, and all Deferred Amounts shall beheld in the general assets of the Company and be subject to the generalcreditors of the Company.

 

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

 

**        (a)   *Annual Grants.***  Commencingin 2005, Options to purchase 10,000 shares of Common Stock shall be granted toeach Director automatically on the first business day of January in eachyear.  Any person who becomes a Directorat any other time of the year shall receive a pro-rata portion of the AnnualGrant, based upon the time remaining in such year. The Board shall have theright to increase or decrease the number of shares of Common Stock subject tothe annual grant of Options to Directors as the Board may determine isnecessary or appropriate to attract and retain persons to serve as members ofthe Board, it being understood that all such grants and changes in the numberof options granted shall comply with Section 16 of the Exchange Act andthe rules promulgated thereunder and the Internal Revenue Code of 1986, asamended.

 

**        (b)   *Option Price Per Share.***  Optionsgranted pursuant to this Section 7 shall be exercisable at a price pershare equal to the Fair Market Value of the Common Stock on the date of thegrant of the Option.

 

 

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**        (c)   *Period of Option.***  EachOption granted pursuant to this Section 7 shall become exercisable on thefirst anniversary of the date upon which it is granted; *provided*,*however*, that all options grantedpursuant to this Section 7 shall become exercisable in full upon the firstto occur of (i) the retirement of the Director in accordance with themandatory retirement policy for members of the Board, (ii) the total andpermanent disability of the Director, or (iii) the death of the Directorwhile a member of the Board. Each Option granted pursuant to the Plan shallremain exercisable until the expiration of three years following the first tooccur of the retirement or resignation of the optionee as a director of theCompany (or the failure of the optionee to be re-elected a director of theCompany), the total and permanent disability of the optionee, or the death ofthe optionee.

 

**        (d)   *Exercise of Options.***  Optionsmay be exercised only by written notice to the Company at its corporate officeaccompanied by payment of the full consideration for the shares as to whichthey are exercised. The purchase price is to be paid in full to the Companyupon the exercise of the option (i) by cash, including a personal checkpayable to the order of the Company, or (ii) by delivering Common Stockalready owned by the optionee for a period of at least six months (valued atFair Market Value as of the date of delivery), or (iii) any combination ofcash and Common Stock so valued.

 

**        (e)   *Nonstatutory Options.***  Nooption granted hereunder shall constitute an “incentive stock option” as thatterm is defined in the Code.

 

**                8.     *Modification, Extension,and Renewal of Options.***  The Board shallhave the power to modify, extend, or renew outstanding options and authorizethe grant of new options in substitution therefor, provided that such power maynot be exercised in a manner which would (i) alter or impair any rights orobligations of any option previously granted without the written consent of theoptionee, (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.***  Neitherthe Plan, nor the granting of an option or the making of a Share Election,Option Election or Deferral Election, or any other action taken pursuant to thePlan, shall constitute or be evidence of any agreement or understanding,express or implied, that the Company will retain a Director for any period oftime, or at any particular rate of compensation.

 

**        (b)   *No Shareholder’s Rights.***  Anoptionee or a Director who has made a Share Election, Option Election orDeferral Election (or his or her representative) shall have no rights as ashareholder with respect to the shares covered by his or her options, ShareElection or Option Election or to any Share Units with respect to a DeferralElection until the date of the actual issuance to him or her (or suchrepresentative) of shares of Common Stock (either through the Company’s Direct RegistrationSystem or 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 Changesin Capitalization.***  In the event ofany change in corporate capitalization (such as a stock split), any corporatetransaction (such as any merger, consolidation or separation (including aspinoff)), any other distribution of stock or property of the Company, any 

 

 

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reorganization (whether ornot such reorganization comes within the definition of such term in Section 368of the Code) or any partial or complete liquidation of the Company, the Boardshall equitably adjust the Share Account to reflect any such transaction andshall make 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 inControl”**shall mean a change in the ownership or effective controlof the Company, or in the ownership of a substantial portion of the assets ofthe Company as provided in Section 409A(2)(A)(v) of the Code and theregulations thereunder and interpretations thereof, as the same may beapplicable from time to time.

 

**        (b)***  ***Consequences of Change inControl.**  Notwithstanding anything in the Plan tothe contrary, upon the occurrence of a Change in Control:

 

        (i)  all Share Units creditedto a Share Account shall be converted into Common Stock and together with allDeferred Amounts credited to a Cash Account shall be transferred as soon aspracticable to each Director;

 

        (ii)  Fees earned in respectof the calendar quarter in which the Change in Control occurs shall be paid incash as soon as practicable; and

 

        (iii)  all Options shallimmediately vest and become exercisable in full.

 

**                12.  *Term of Plan.***  ThisPlan shall be effective as of the Effective Date, subject to approval of thePlan by the shareholders of the Company at the first annual meeting ofshareholders after the Effective Date. The Plan shall terminate onDecember 31, 2011, unless earlier terminated by the Board. Notwithstandingthe Plan’s termination, amounts shall be delivered pursuant to any DeferralElection made prior to the Plan’s termination in accordance with such election.Options may be granted under the Plan at any time prior to the termination ofthe Plan. Deferral Elections, Share Elections and Option Elections may not bemade for any Fees which would be paid following the date of the termination ofthe Plan. If the shareholders of the Company do not approve this Plan, thenthis Plan shall be void, all Share Elections and Deferral Elections made withrespect to this Plan shall be deemed to be Share Elections and DeferralElections under the 1997 Plan, and all shares of Common Stock issued, ShareUnits credited to a Director’s Share Account, and Fees credited to a Director’sCash Account under this Plan shall be deemed to have been issued and creditedunder the 1997 Plan.

 

**                13.  *Amendment; Termination.***  TheBoard may at any time and from time to time alter, amend, suspend, or terminatethe Plan in whole or in part; *provided*, *however*, that no amendment which is required by anyregulation, law or stock exchange rule to be approved by shareholders shall beeffective unless it is approved by the shareholders of the Company entitled tovote thereon. Notwithstanding the foregoing, no amendment shall affectadversely any of the rights of any Director, under any option or under anyelection theretofore in effect under the Plan, or with respect to DeferredAmounts, without such Director’s consent.

 

**                14.  *Nontransferability.***  NoOption, or right or interest of any Director in Deferred Amounts, 

 

 

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shall be transferable by aDirector other than (i) by will or by the laws of descent anddistribution, (ii) pursuant to a qualified domestic relations order (asdefined in the Code or Title I of the Employee Retirement Income Security Actof 1974, as amended), or (iii) in the case of an Option, as otherwiseexpressly permitted under the applicable option agreement including, if sopermitted, pursuant to a gift to such optionee’s family, whether directly orindirectly or by means of a trust or partnership or otherwise. All Options orrights with respect to Deferred Amounts shall be exercisable, during theDirector’s lifetime, only by the Director or by the guardian or legalrepresentative of the Director or an alternate payee pursuant to a qualifieddomestic relations order or, in the case of an Option, by any person to whomsuch Option is transferred pursuant to the preceding sentence. Under the Plan,it is understood that the term “optionee” includes the guardian and legalrepresentative of the Director named in the option agreement and any person towhom an Option is transferred by will or the laws of descent and distribution,pursuant to a qualified domestic relations order or as otherwise describedabove.

 

**                15.  *Beneficiaries.***  TheBoard shall establish such procedures as it deems appropriate for a Director todesignate a beneficiary to whom any amounts payable in the event of a Director’sdeath are to be paid or by whom any Options held by a Director may be exercisedfollowing his or her death. Directors shall make a beneficiary election withrespect to Deferred Amounts at the same time that a Deferral Election is made.

 

**                16.  *Compliance with Law, Etc.***  Notwithstandingany other provision of the Plan or agreements made pursuant hereto, the Companyshall not be required to issue or deliver any certificate or certificates forshares of Common Stock under the Plan prior to fulfillment of all of thefollowing conditions:

 

        (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.***  Anywritten notice to the Company required by any of the provisions of the Planshall be addressed to the Secretary of the Company and shall become effectivewhen it is received.

 

**                18.  *Governing Law.***  ThePlan and all determinations made and actions taken pursuant hereto shall begoverned by the laws of the State of Delaware, without reference to principlesof conflict of laws, and shall be construed accordingly.

 

**                19.  *Headings.***  Theheadings of sections and subsections herein are included solely for convenienceof reference and shall not affect the meaning of any of the provisions of thePlan.

 

**                20.  *Termination of the 1997Plan.***  If the shareholders of the Companyapprove this Plan as provided in Section 12 hereof, the 1997 Plan shallterminate in accordance with Section 12 thereof as of the date of suchapproval. In that case, Share Accounts and Cash Accounts maintained under the1997 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 

 

 

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effect until terminated inaccordance with the provisions thereof, all grants of options made pursuant toSections 5(d) and 5(e) shall be null and void, and all Share Elections andDeferral Elections made under this Plan shall be deemed to have been made underthe 1997 Plan.

 

**                21.  *Savings Clause.***  ThisPlan is intended to comply in all respects with the American Jobs Creation Actof 2004 and the rules and regulations promulgated thereunder and theinterpretations thereof (collectively, the **“AJCA”**). In theevent 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 thetime or form of any payment election is made in accordance with this Plan, butin violation of the AJCA, then such payment election shall be null and void,and all amounts deferred shall be paid or payments thereof shall commence onthe earliest date permitted in accordance with the AJCA without the impositionof any excise tax, penalties or other adverse tax consequences to the Directorand the Company.

 

 

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