Document:

Exhibit
10.2

CONSENT AND SECOND AMENDMENT

TO

CREDIT AGREEMENT

This
CONSENT AND SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 20,
2006,  by and among SITEL CORPORATION, a Minnesota
corporation (“Parent”), and each of Parent’s Subsidiaries identified on
the signature pages hereof (such Subsidiaries, together with Parent, are
referred to hereinafter each individually as a “Borrower”, and
collectively, as the “Borrowers”), and ABLECO FINANCE LLC, a Delaware
limited liability company, as a Lender, the arranger and administrative agent
for the Lenders (as defined below) and collateral agent for the Lender Group (as
defined below) (in such capacities, together with its successors and assigns in
such capacities, the “Agent”) and the other Lenders party hereto.

WHEREAS,
Borrowers, Agent and certain lenders identified on the signature pages thereto
(such lenders, together with their respective successors and permitted assigns,
are referred to hereinafter each individually as a “Lender”, and
collectively, as the “Lenders”; and together with Agent, collectively
the “Lender Group”) are parties to that certain Credit Agreement dated
as of August 19, 2005 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”);

WHEREAS,
(i) the Borrowers desire to increase the face amount of the letter of credit
issued by US Bank on behalf of Parent and listed on Schedule 4.19 to the Credit
Agreement from $900,000 to $1,350,000 (the “US Bank L/C Increase”) and
to increase the amount of cash and cash equivalents pledged to US Bank to
secure such letter of credit as described on Schedule P-1 to the Credit
Agreement from $900,000 to $1,350,000 (the “US Bank Lien Increase” and,
together with the US Bank L/C Increase, the “US Bank Transactions”) and
(ii) SITEL do Brasil Ltda (“SITEL Brazil”) desires to borrow up to an
additional BRL 500,000 from Safra and desires to apply the proceeds of such
additional borrowing to repay amounts listed on Schedule 2 to that certain
Waiver, Consent and First Amendment to Credit Agreement dated August 15, 2006
among Agent, Collateral Agent, Lenders and Borrowers owing to Sudameris (the “SITEL
Brazil Refinancing”);

WHEREAS, Borrowers have requested that Agent and
Required Lenders consent to the US Bank Transactions and the SITEL Brazil
Refinancing and the undersigned Required Lenders have agreed to do so subject
to the terms and conditions contained herein; and

WHEREAS, Borrowers, Agent and Required Lenders have
further agreed to amend Section 6.17(a)(iii) of the Credit Agreement, subject
to the terms and conditions contained herein.

NOW,
THEREFORE, in consideration of the foregoing recitals, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

1.             Defined
Terms.  Unless otherwise defined
herein, capitalized terms used herein shall have the meanings ascribed to such
terms in the Credit Agreement.

2.             Consent. Subject to the satisfaction of the
conditions set forth in Section 5 below, notwithstanding any provision in the
Credit Agreement or the other Loan Documents to the contrary, Agent and the
Required Lenders hereby consent to the US Bank Transactions and the SITEL
Brazil Refinancing.  For the avoidance of
doubt, no portion of any Indebtedness basket set forth in Section 6.1 or 6.16
of the Credit Agreement, any Investment basket set forth in the definition of
Permitted Investments or any Lien basket set forth in the definition of
Permitted Liens or in Section 6.16 of the Credit Agreement shall be deemed
utilized by the US Bank Transactions and the SITEL Brazil Refinancing.  This consent is a limited consent and shall
not be deemed to constitute a consent with respect to any other current or
future departure from the requirements of any provision of the Credit Agreement
or any other Loan Documents.

3.             Amendments to Credit Agreement.  Subject to the satisfaction of the conditions
set forth in Section 5 of this Amendment, Section 6.17(a)(iii) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

(iii)          Leverage Ratio.  A
Leverage Ratio, measured on a quarter-end basis, of not more than the ratio set
forth in the following table for the applicable period set forth opposite
thereto:

	
  Applicable Ratio

  	
  Applicable
  Period

  
	
  2.50:1.0

  	
  For the 4 fiscal
  quarters ending March 31, 2006 and June 30, 2006

  
	
  2.25:1.0

  	
  For the 4 fiscal
  quarters ending September 30, 2006 and December 31, 2006

  
	
  2.00:1.0

  	
  For the 4 fiscal
  quarters ending each fiscal quarter thereafter

  

 

4.             Ratification.  This Amendment, subject to satisfaction of
the conditions provided below, shall constitute consents and amendments to the
Credit Agreement and all of the Loan Documents as appropriate to express the
agreements contained herein.  In all
other respects, the Credit Agreement and the Loan Documents shall remain
unchanged and in full force and effect in accordance with their original terms.

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5.             Conditions Precedent.  The effectiveness of this Amendment is
subject to the following conditions precedent:

(a)           Borrowers,
Agent and the Required Lenders shall have executed and delivered to Agent this
Amendment;

(b)           Borrowers,
WFF Foreign
Borrowers, WFF, WF Canada and the “Required Lenders” under the WFF Credit
Agreement shall have executed and delivered a consent to the WFF Credit
Agreement in form and substance reasonably satisfactory to Agent; and

(c)           Agent
shall have received the amendment fee payable pursuant to Section 6 below.

6.             Amendment Fee.  Borrowers hereby agree to pay to Agent on the
date hereof, for distribution to the Lenders based on their Pro Rata Shares, an
amendment fee equal to $50,000.  The
foregoing amendment fee is fully-earned and due and payable in immediately
available funds on the date hereof, non-refundable, and is in addition to, and
not in lieu of, all other fees charged to the Borrowers under the Loan
Documents.

7.             Release.  Each Borrower hereby absolutely and
unconditionally releases and forever discharges Agent and the Lenders, and any
and all participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which such
Borrower has had, now has or has made claim to have against any such person for
or by reason of any act, omission, matter, cause or thing whatsoever arising
from the beginning of time to and including the date of this Amendment, whether
such claims, demands and causes of action are matured or unmatured or known (and
for the avoidance of doubt, not including any act, omission, matter, cause or
thing whatsoever arising after the date of this Amendment) or unknown.

8.             Miscellaneous.

(a)           Warranties and Absence of Defaults.  In order to induce Agent and Required Lenders
to enter into this Amendment, each Borrower hereby warrants to Agent and the Lenders, as of
the date hereof, that:

(i)            the representations
and warranties contained in the Credit Agreement or in the other Loan Documents
shall be true and correct in all material respects on and as of the date
hereof, as though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date); and

(ii)           no Default or Event of Default shall have occurred and be
continuing on the date hereof.

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(b)           Expenses.  Borrowers, jointly and severally, agree to
pay on demand all reasonable costs and expenses of Agent (including the reasonable
fees and expenses of outside counsel for Agent) in connection with the
preparation, negotiation, execution, delivery and administration of this
Amendment and all other instruments or documents provided for herein or
delivered or to be delivered hereunder or in connection herewith.  All obligations provided herein shall survive
any termination of this Amendment and the Credit Agreement.

(c)           Governing
Law.  This Amendment shall be a
contract made under and governed by the internal laws of the State of New York.

(d)           Counterparts.  This Amendment may be executed in any number
of counterparts, and by the parties hereto on the same or separate
counterparts, and each such counterpart, when executed and delivered, shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same Amendment.  Delivery of an executed counterpart of this
Amendment by telefacsimile or electronic mail shall be equally as effective as
delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart
of this Amendment by telefacsimile or electronic mail shall also deliver an
original executed counterpart of this Amendment, but the failure to do so shall
not affect the validity, enforceability or binding effect of this Amendment.

[Signature Pages Follow.]

 4
 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed by their respective
officers thereunto duly authorized and delivered as of the date first above
written.

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  SITEL
  CORPORATION, 

  a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald E. Reno

  
	
   

  	
  Title:

  	
  Vice President of Finance
  and Treasury

  
	
   

  	
   

  	
   

  

 

	
   

  	
  NATIONAL
  ACTION FINANCIAL 

  SERVICES, INC.,

  a Georgia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald E. Reno

  
	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  

 

	
   

  	
  SITEL
  HOME MORTGAGE CORP., 

  a Nebraska corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald E. Reno

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  

 

	
   

  	
  FINANCIAL
  INSURANCE SERVICES, 

  INC., 

  a Nebraska corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald E. Reno

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  

 

	
   

  	
  SITEL
  INTERNATIONAL LLC, 

  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald E. Reno

  
	
   

  	
  Title:

  	
  Vice President of Finance
  and Treasury

  
	
   

  	
   

  	
   

  

 

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  AGENT AND ON
  BEHALF OF ITSELF 

  
	
   

  	
  AND ITS AFFILIATE ASSIGNS, AS A
  

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  ABLECO FINANCE LLC, 

  a Delaware limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

 

 

 6EXHIBIT
4.1

MICROFIELD
GROUP, INC.

AMENDED
2004 STOCK INCENTIVE PLAN

1.             Purpose.  The purpose of this Stock Incentive Plan
(the “Plan”) is to enable Microfield Group, Inc. (the “Company”) to attract and
retain the services of (1) selected employees, officers and directors of
the Company or of any subsidiary of the Company and (2) selected
nonemployee agents, consultants, advisors, persons involved in the sale or
distribution of the Company’s products and independent Contractors of the
Company or any subsidiary.

2.             Shares Subject to the Plan.  Subject to adjustment
as provided below and in paragraph 13, the shares to be offered under the
Plan shall consist of Common Stock of the Company, and the total number of
shares of Common Stock that may be issued under the Plan shall not exceed
20,000,000 shares.  The shares issued
under the Plan may be authorized and unissued shares or reacquired shares.  If an option, stock appreciation right or
performance unit granted under the Plan expires, terminates or is cancelled,
the unissued shares subject to such option, stock appreciation right or
performance unit shall again be available under the Plan.  If shares sold or awarded as a bonus under
the Plan are forfeited to the Company or repurchased by the Company, the number
of shares forfeited or repurchased shall again be available under the Plan.

3.             Effective
Date and Duration of Plan.

(a)           Effective Date.  The Plan shall
become effective as of upon the approval of the Plan by the shareholders and
the filing of the Articles of Amendment expanding authorized shares of Common
Stock to 125,000,000 shares.  No option,
stock appreciation right or performance unit granted under the Plan to an
officer who is subject to Section 16(b) of the Securities Exchange Act of
1934, as amended (an “Officer”) or a director, and no incentive stock option,
shall become exercisable, however, until the Plan is approved by the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at a shareholders meeting at which a quorum is present and any such
awards under the Plan prior to such approval shall be conditioned on and
subject to such approval.  Subject to
this limitation, options, stock appreciation rights and performance units may
be granted and shares may be awarded as bonuses or sold under the Plan at any
time after the effective date and before termination of the Plan.

(b)           Duration.  The Plan shall continue
in effect until all shares available for issuance under the Plan have been
issued and all restrictions on such shares have lapsed.  The Board of Directors may suspend or
terminate the Plan at any time except with respect to options, performance
units and shares subject to restrictions then outstanding under the Plan.  Termination shall not affect any outstanding
options, any right of the Company to repurchase shares or the forfeitability of
shares issued under the Plan.

 1
 

 

4.             Administration.

(a)           Board of Directors.  The Plan shall
be administered by the Board of Directors of the Company, which shall determine
and designate from time to time the individuals to whom awards shall be made,
the amount of the awards and the other terms and conditions of the awards.  Subject to the provisions of the Plan, the
Board of Directors may from time to time adopt and amend rules and regulations
relating to administration of the Plan, advance the lapse of any waiting
period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. 
The interpretation and construction of the provisions of the Plan and
related agreements by the Board of Directors shall be final and
conclusive.  The Board of Directors may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any related agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be the sole and final judge
of such expediency.

(b)           Committee.  The Board of Directors
may delegate to a committee of the Board of Directors or specified officers of
the Company, or both (the “Committee”) any or all authority for administration
of the Plan.  If authority is delegated
to a Committee, all references to the Board of Directors in the Plan shall mean
and relate to the Committee except (i) as otherwise provided by the Board
of Directors, (ii) that only the Board of Directors may amend or terminate
the Plan as provided in paragraphs 3 and 14 and (iii) that a
Committee including officers of the Company shall not be permitted to grant
options to persons who are officers of the Company.  If awards are to be made under the Plan to
Officers or directors, authority for selection of Officers and directors for
participation and decisions concerning the timing, pricing and amount of a
grant or award, if not determined under a formula meeting the requirements of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
shall be delegated to a committee consisting of two or more disinterested
directors.

5.             Types of Awards; Eligibility.  The Board of
Directors may, from time to time, take the following action, separately or in
combination, under the Plan:  (i) grant Incentive Stock Options,
as defined in Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”), as provided in paragraphs 6(a) and 6(b); (ii) grant
options other than Incentive Stock Options (“Non-Statutory Stock Options”)
as provided in paragraphs 6(a) and 6(c); (iii) award stock bonuses as
provided in paragraph 7; (iv) sell shares subject to restrictions as
provided in paragraph 8; (v) grant stock appreciation rights as
provided in paragraph 9; (vi) grant cash bonus rights as provided in
paragraph 10; (vii) grant performance units as provided in
paragraph 11 and (viii) grant foreign qualified awards as provided in
paragraph 12.  Any such awards may
be made to employees, including employees who are officers or directors, and to
other individuals described in paragraph 1 who the Board of Directors
believes have made or will make an important contribution to the Company or any
subsidiary of the Company; provided, however, that only employees of the
Company shall be eligible to receive Incentive Stock Options under the
Plan.  The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the
action taken with respect to each individual to whom an award is made.  At the discretion of the Board of Directors,
an individual may be given an election to surrender an award in exchange for
the grant of a new award.  No employee
may be granted options or stock

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appreciation
rights under the Plan or any other similar plan of the Company for more than an
aggregate of 200,000 shares of Common Stock in connection with the hiring of
the employee or 100,000 shares of Common Stock in any calendar year otherwise.

6.             Option
Grants.

(a)           General Rules Relating to Options.

(i)            Terms
of Grant.  The Board of Directors may grant options under the
Plan.  With respect to each option grant,
the Board of Directors shall determine the number of shares subject to the
option, the option price, the period of the option, the time or times at which
the option may be exercised and whether the option is an Incentive Stock Option
or a Non-Statutory Stock Option. 
At the time of the grant of an option or at any time thereafter, the
Board of Directors may provide that an optionee who exercised an option with
Common Stock of the Company shall automatically receive a new option to
purchase additional shares equal to the number of shares surrendered and may
specify the terms and conditions of such new options.

(ii)           Exercise
of Options.  Except as provided in paragraph 6(a)(iv) or as
determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of such exercise the optionee is employed by or in
the service of the Company or any 
subsidiary of the Company and shall have been so employed or provided
such service continuously since the date such option was granted.  Absence on leave or on account of illness or
disability under rules established by the Board of Directors shall not,
however, be deemed an interruption of employment or service for this
purpose.  Unless otherwise determined by
the Board of Directors, vesting of options shall not continue during an absence
on leave (including an extended illness) or on account of disability.  Except as provided in
paragraphs 6(a)(iv) and 13, options granted under the Plan may be exercised
from time to time over the period stated in each option in such amounts and at
such times as shall be prescribed by the Board of Directors, provided that
options shall not be exercised for fractional shares.  Unless otherwise determined by the Board of
Directors, if the optionee does not exercise an option in any one year with
respect to the full number of shares to which the optionee is entitled in that
year, the optionee’s rights shall be cumulative and the optionee may purchase
those shares in any subsequent year during the term of the option.  Unless otherwise determined by the Board of
Directors, if an Officer exercises an option within six months of the grant of
the option, the shares acquired upon exercise of the option may not be sold
until six months after the date of grant of the option.

(iii)          Nontransferability.  Each
Incentive Stock Option and, unless otherwise determined by the Board of
Directors with respect to an option granted to a person who is neither an
Officer nor a director of the Company, each other option granted under the Plan
by its terms shall be nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the laws of descent
and distribution of the state or country of the optionee’s domicile at the time
of death.

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(iv)          Termination
of Employment or Service.

(A)          General
Rule.  Unless otherwise determined by the Board of Directors, in
the event the employment or service of the optionee with the Company or a
subsidiary terminates for any reason other than because of physical disability
or death as provided in subparagraphs 6(a)(iv)(B) and (C), the option may
be exercised at any time prior to the expiration date of the option or the
expiration of 30 days after the date of such termination, whichever is the
shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.

(B)           Termination
Because of Total Disability.  Unless otherwise determined by the
Board of Directors, in the event of the termination of employment or service
because of total disability, the option may be exercised at any time prior to
the expiration date of the option or the expiration of 12 months after the
date of such termination, whichever is the shorter period, but only if and to
the extent the optionee was entitled to exercise the option at the date of such
termination.  The term “total disability”
means a medically determinable mental or physical impairment which is expected
to result in death or which has lasted or is expected to last for a continuous
period of 12 months or more and which causes the optionee to be unable, in
the opinion of the Company and two independent physicians, to perform his or
her duties as an employee, director, officer or consultant of the Company and
to be engaged in any substantial gainful activity.  Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Company.

(C)           Termination
Because of Death.  Unless otherwise determined by the Board of
Directors, in the event of the death of an optionee while employed by or
providing service to the Company or a subsidiary, the option may be exercised
at any time prior to the expiration date of the option or the expiration of
12 months after the date of death, whichever is the shorter period, but
only if and to the extent the optionee was entitled to exercise the option at
the date of death and only by the person or persons to whom such optionee’s
rights under the option shall pass by the optionee’s will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.

(D)          Amendment
of Exercise Period Applicable to Termination.  The Board of
Directors, at the time of grant or, with respect to an option that is not an
Incentive Stock Option, at any time thereafter, may extend the 30-day and
12-month exercise periods any length of time not longer than the original
expiration date of the option, and may increase the portion of an option that
is exercisable, subject to such terms and conditions as the Board of Directors
may determine.

(E)           Failure
to Exercise Option.  To the extent that the option of any
deceased optionee or of any optionee whose employment or service terminates is
not exercised within the applicable period, all further rights to purchase
shares pursuant to such option shall cease and terminate.

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(v)           Purchase
of Shares.  Unless the Board of Directors determines otherwise,
shares may be acquired pursuant to an option granted under the Plan only upon
receipt by the Company of notice in writing from the optionee of the optionee’s
intention to exercise, specifying the number of shares as to which the optionee
desires to exercise the option and the date on which the optionee desires to
complete the transaction, and if required in order to comply with the
Securities Act of 1933, as amended, containing a representation that it is the
optionee’s present intention to acquire the shares for investment and not with
a view to distribution.  Unless the Board
of Directors determines otherwise, on or before the date specified for
completion of the purchase of shares pursuant to an option, the optionee must
have paid the Company the full purchase price of such shares in cash
(including, with the consent of the Board of Directors, cash that may be the
proceeds of a loan from the Company (provided that, with respect to an
Incentive Stock Option, such loan is approved at the time of option grant)) or,
with the consent of the Board of Directors, in whole or in part, in Common
Stock of the Company valued at fair market value, restricted stock, performance
units or other contingent awards denominated in either stock or cash,
promissory notes and other forms of consideration.  The fair market value of Common Stock
provided in payment of the purchase price shall be determined by the Board of
Directors.  If the Common Stock of the
Company is not publicly traded on the date the option is exercised, the Board
of Directors may consider any valuation methods it deems appropriate and may,
but is not required to, obtain one or more independent appraisals of the
Company.  If the Common Stock of the
Company is publicly traded on the date the option is exercised, the fair market
value of Common Stock provided in payment of the purchase price shall be the
closing price of the Common Stock as reported in The Wall
Street Journal on the last trading day preceding the date the option
is exercised, or such other reported value of the Common Stock as shall be
specified by the Board of Directors.  No
shares shall be issued until full payment for the shares has been made.  With the consent of the Board of Directors
(which, in the case of an Incentive Stock Option, shall be given only at the
time of option grant), an optionee may request the Company to apply
automatically the shares to be received upon the exercise of a portion of a
stock option (even though stock certificates have not yet been issued) to
satisfy the purchase price for additional portions of the option.  Each optionee who has exercised an option
shall immediately upon notification of the amount due, if any, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements.  If
additional withholding is or becomes required beyond any amount deposited
before delivery of the certificates, the optionee shall pay such amount to the
Company on demand.  If the optionee fails
to pay the amount demanded, the Company may withhold that amount from other
amounts payable by the Company to the optionee, including salary, subject to
applicable law.  With the consent of the
Board of Directors an optionee may satisfy this obligation, in whole or in
part, by having the Company withhold from the shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount due or
by delivering to the Company Common Stock to satisfy the withholding
amount.  Upon the exercise of an option,
the number of shares reserved for issuance under the Plan shall be reduced by
the number of shares issued upon exercise of the option.

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(b)           Incentive Stock Options.  Incentive
Stock Options shall be subject to the following additional terms and
conditions:

(i)            Limitation
on Amount of Grants.  No employee may be granted Incentive Stock
Options under the Plan if the aggregate fair market value, on the date of
grant, of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by that employee during any calendar year under
the Plan and under all incentive stock option plans (within the meaning of
Section 422 of the Code) of the Company or any parent or subsidiary of the
Company exceeds $100,000.

(ii)           Limitations
on Grants to 10 Percent Shareholders.  An Incentive Stock Option
may be granted under the Plan to an employee possessing more than
10 percent of the total combined voting power of all classes of stock of
the Company or of any parent or subsidiary of the Company only if the option price
is at least 110 percent of the fair market value, as described in
paragraph 6(b)(iv), of the Common Stock subject to the option on the date
it is granted and the option by its terms is not exercisable after the
expiration of five years from the date it is granted.

(iii)          Duration
of Options.  Subject to paragraphs 6(a)(ii) and 6(b)(ii),
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that no Incentive Stock Option
shall be exercisable after the expiration of 10 years from the date it is
granted.

(iv)          Option
Price.  The option price per share shall be determined by the
Board of Directors at the time of grant. 
Except as provided in paragraph 6(b)(ii), the option price shall not
be less than 100 percent of the fair market value of the Common Stock
covered by the Incentive Stock Option at the date the option is granted.  The fair market value shall be determined by
the Board of Directors.  If the Common
Stock of the Company is not publicly traded on the date the option is granted,
the Board of Directors may consider any valuation methods it deems appropriate
and may, but is not required to, obtain one or more independent appraisals of
the Company.  If the Common Stock of the
Company is publicly traded on the, date the option is exercised, the fair
market value shall be deemed to be the closing price of the Common Stock as
reported in The Wall Street Journal on the day
preceding the date the option is granted, or, if there has been no sale on that
date, on the last preceding date on which a sale occurred or such other value
of the Common Stock as shall be specified by the Board of Directors.

(v)           Limitation
on Time of Grant.  No Incentive Stock Option shall be granted on
or after the tenth anniversary of the effective date of the Plan.

(vi)          Conversion
of Incentive Stock Options.  The Board of Directors may at any
time without the consent of the optionee convert an Incentive Stock Option to a
Non-Statutory Stock Option.

(c)           Non-Statutory Stock Options.  Non-Statutory
Stock Options shall be subject to the following terms and conditions in
addition to those set forth in Section 6(a) above:

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(i)            Option
Price.  The option price for Non-Statutory Stock Options
shall be determined by the Board of Directors at the time of grant and may be
any amount determined by the Board of Directors.

(ii)           Duration
of Options.  Non-Statutory Stock Options granted under the
Plan shall continue in effect for the period fixed by the Board of Directors.

7.             Stock Bonuses.  The Board of Directors may award
shares under the Plan as stock bonuses. 
Shares awarded as a bonus shall be subject to the terms, conditions, and
restrictions determined by the Board of Directors.  The restrictions may include restrictions
concerning transferability and forfeiture of the shares awarded, together with
such other restrictions as may be determined by the Board of Directors.  If shares are subject to forfeiture, all
dividends or other distributions paid by the Company with respect to the shares
shall be retained by the Company until the shares are no longer subject to
forfeiture, at which time all accumulated amounts shall be paid to the
recipient.  The Board of Directors may
require the recipient to sign an agreement as a condition of the award, but may
not require the recipient to pay any monetary consideration other than amounts
necessary to satisfy tax withholding requirements.  The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the Board
of Directors.  The certificates
representing the shares awarded shall bear any legends required by the Board of
Directors.  Unless otherwise determined
by the Board of Directors, shares awarded as a stock bonus to an Officer may
not be sold until six months after the date of the award.  The Company may require any recipient of a
stock bonus to pay to the Company in cash upon demand amounts necessary to
satisfy any applicable federal, state or local tax withholding
requirements.  If the recipient fails to
pay the amount demanded, the Company may withhold that amount from other
amounts payable by the Company to the recipient, including salary or fees for
services, subject to applicable law. 
With the consent of the Board of Directors, a recipient may deliver
Common Stock to the Company to satisfy this withholding obligation.  Upon the issuance of a stock bonus, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued.

8.             Restricted Stock.  The Board of Directors may
issue shares under the Plan for such consideration (including promissory notes
and services) as determined by the Board of Directors.  Shares issued under the Plan shall be subject
to the terms, conditions and restrictions determined by the Board of
Directors.  The restrictions may include
restrictions concerning transferability, repurchase by the Company and
forfeiture of the shares issued, together with such other restrictions as may
be determined by the Board of Directors. 
If shares are subject to forfeiture or repurchase by the Company, all
dividends or other distributions paid by the Company with respect to the shares
shall be retained by the Company until the shares are no longer subject to
forfeiture or repurchase, at which time all accumulated amounts shall be paid
to the recipient.  All Common Stock
issued pursuant to this paragraph 8 shall be subject to a purchase
agreement, which shall be executed by the Company and the prospective recipient
of the shares prior to the delivery of certificates representing such shares to
the recipient.  The purchase agreement
may contain any terms, conditions, restrictions, representations and warranties
required by the Board of Directors.  The
certificates representing the shares shall bear any legends required by the
Board of Directors.  Unless otherwise
determined by the Board of

 7
 

 

Directors, shares
issued under this paragraph 8 to an Officer may not be sold until six
months after the shares are issued.  The
Company may require any purchaser of restricted stock to pay to the Company in
cash upon demand amounts necessary to satisfy any applicable federal, state or
local tax withholding requirements.  If
the purchaser fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the purchaser, including
salary, subject to applicable law.  With
the consent of the Board of Directors, a purchaser may deliver Common Stock to
the Company to satisfy this withholding obligation.  Upon the issuance of restricted stock, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued.

9.             Stock
Appreciation Rights.

(a)           Grant.  Stock appreciation rights
may be granted under the Plan by the Board of Directors, subject to such rules,
terms, and conditions as the Board of Directors prescribes.

(b)           Exercise.

(i)            Each
stock appreciation right shall entitle the holder, upon exercise, to receive
from the Company in exchange therefor an amount equal in value to the excess of
the fair market value on the date of exercise of one share of Common Stock of
the Company over its fair market value on the date of grant (or, in the case of
a stock appreciation right granted in connection with an option, the excess of
the fair market value of one share of Common Stock of the Company over the
option price per share under the option to which the stock appreciation right
relates), multiplied by the number of shares covered by the stock appreciation
right or the option, or portion thereof, that is surrendered.  No stock appreciation right shall be
exercisable at a time that the amount determined under this subparagraph is
negative.  Payment by the Company upon
exercise of a stock appreciation right may be made in Common Stock valued at
fair market value, in cash, or partly in Common Stock and partly in cash, all
as determined by the Board of Directors.

(ii)           A
stock appreciation right shall be exercisable only at the time or times
established by the Board of Directors. 
If a stock appreciation right is granted in connection with an option,
the following rules shall apply:  (1) the stock appreciation
right shall be exercisable only to the extent and on the same conditions that
the related option could be exercised; (2) the stock appreciation rights
shall be exercisable only when the fair market value of the stock exceeds the
option price of the related option; (3) the stock appreciation right shall
be for no more than 100 percent of the excess of the fair market value of
the stock at the time of exercise over the option price; (4) upon exercise
of the stock appreciation right, the option or portion thereof to which the
stock appreciation right relates terminates; and (5) upon exercise of the
option, the related stock appreciation right or portion thereof terminates.  Unless otherwise determined by the Board of
Directors, no stock appreciation right granted to an Officer or director may be
exercised during the first six months following the date it is granted.

 8
 

 

(iii)          The
Board of Directors may withdraw any stock appreciation right granted under the
Plan at any time and may impose any conditions upon the exercise of a stock
appreciation right or adopt rules and regulations from time to time affecting
the rights of holders of stock appreciation rights.  Such rules and regulations may govern the
right to exercise stock appreciation rights granted prior to adoption or
amendment of such rules and regulations as well as stock appreciation rights
granted thereafter.

(iv)          For
purposes of this paragraph 9, the fair market value of the Common Stock
shall be determined as of the date the stock appreciation right is exercised,
under the methods set forth in paragraph 6(b)(iv).

(v)           No
fractional shares shall be issued upon exercise of a stock appreciation
right.  In lieu thereof, cash may be paid
in an amount equal to the value of the fraction or, if the Board of Directors
shall determine, the number of shares may be rounded downward to the next whole
share.

(vi)          Each
stock appreciation right granted in connection with an Incentive Stock Option,
and unless otherwise determined by the Board of Directors with respect to a
stock appreciation right granted to a person who is neither an Officer nor a
director of the Company, each other stock appreciation right granted under the
Plan by its terms shall be nonassignable and nontransferable by the holder,
either voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or country of the holder’s domicile at
the time of death, and each stock appreciation right by its terms shall be
exercisable during the holder’s lifetime only by the holder.

(vii)         Each
participant who has exercised a stock appreciation right shall, upon
notification of the amount due, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
requirements.  If the participant fails
to pay the amount demanded, the Company may withhold that amount from other
amounts payable by the Company to the participant including salary, subject to
applicable law.  With the consent of the
Board of Directors a participant may satisfy this obligation, in whole or in
part, by having the Company withhold from any shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount due a
or by delivering Common Stock to the Company to satisfy the withholding amount.

(viii)        Upon
the exercise of a stock appreciation right for shares, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued.  Cash payments of stock
appreciation rights shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan.

10.           Cash Bonus Rights.

(a)           Grant.  The Board of Directors may
grant cash bonus rights under the Plan in connection with (i) options
granted or previously granted, (ii) stock appreciation rights granted or
previously granted, (iii) stock bonuses awarded or previously awarded and
(iv) shares sold or

 9
 

 

previously sold under the Plan.  Cash bonus rights will be subject to rules,
terms and conditions as the Board of Directors may prescribe.  Unless otherwise determined by the Board of
Directors with respect to a cash bonus right granted to a person who is neither
an Officer nor a director of the Company, each cash bonus right granted under
the Plan by its terms shall be nonassignable and nontransferable by the holder,
either voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or country of the holder’s domicile at
the time of death.  The payment of a cash
bonus shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.

(b)           Cash Bonus Rights in Connection With Options.  A
cash bonus right granted in connection with an option will entitle an optionee
to a cash bonus when the related option is exercised (or terminates in
connection with the exercise of a stock appreciation right related to the
option) in whole or in part if, in the sole discretion of the Board of Directors,
the bonus right will result in a tax deduction that the Company has sufficient
taxable income to use.  If an optionee
purchases shares upon exercise of an option and does not exercise a related
stock appreciation right, the amount of the bonus, if any, shall be determined
by multiplying the excess of the total fair market value of the shares to be
acquired upon the exercise over the total option price for the shares by the
applicable bonus percentage.  If the
optionee exercises a related stock appreciation right in connection with the
termination of an option, the amount of the bonus, if any, shall be determined
by multiplying the total fair market value of the shares and cash received
pursuant to the exercise of the stock appreciation right by the applicable
bonus percentage.  The bonus percentage
applicable to a bonus right, including a previously granted bonus right, may be
changed from time to time at the sole discretion of the Board of Directors but
shall in no event exceed 75 percent.

(c)           Cash Bonus Rights in Connection With Stock Bonus.  A
cash bonus right granted in connection with a stock bonus will entitle the
recipient to a cash bonus payable when the stock bonus is awarded or
restrictions, if any, to which the stock is subject lapse.  If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised.  The amount and
timing of payment of a cash bonus shall be determined by the Board of
Directors.

(d)           Cash Bonus Rights in Connection With Stock
Purchases.  A cash bonus right granted in connection
with the purchase of stock pursuant to paragraph 8 will entitle the
recipient to a cash bonus when the shares are purchased or restrictions, if
any, to which the stock is subject lapse. 
Any cash bonus right granted in connection with shares purchased
pursuant to paragraph 8 shall terminate and may not be exercised in the
event the shares are repurchased by the Company or forfeited by the holder
pursuant to applicable restrictions.  The
amount of any cash bonus to be awarded and timing of payment of a cash bonus
shall be determined by the Board of Directors.

(e)           Taxes.  The Company shall withhold
from any cash bonus paid pursuant to paragraph 10 the amount necessary to
satisfy any applicable federal, state and local withholding requirements.

 10
 

 

11.           Performance Units.  The Board of Directors may
grant performance units consisting of monetary units which may be earned in
whole or in part if the Company achieves certain goals established by the Board
of Directors over a designated period of time, but not in any event more than
10 years.  The goals established by
the Board of Directors may include earnings per share, return on shareholders’
equity, return on invested capital, and such other goals as may be established
by the Board of Directors.  In the event
that the minimum performance goal established by the Board of Directors is not
achieved at the conclusion of a period, no payment shall be made to the
participants.  In the event the maximum
corporate goal is achieved, 100 percent of the monetary value of the
performance units shall be paid to or vested in the participants.  Partial achievement of the maximum goal may
result in a payment or vesting corresponding to the degree of achievement as
determined by the Board of Directors. 
Payment of an award earned may be in cash or in Common Stock or in a
combination of both, and may be made when earned, or vested and deferred, as
the Board of Directors determines. 
Deferred awards shall earn interest on the terms and at a rate
determined by the Board of Directors. 
Unless otherwise determined by the Board of Directors with respect to a
performance unit granted to a person who is neither an Officer nor a director
of the Company, each performance unit granted under the Plan by its terms shall
be nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder’s domicile at the time of death.  Each participant who has been awarded a
performance unit shall, upon notification of the amount due, pay to the Company
in cash amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements.  If the
participant fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the participant, including
salary or fees for services, subject to applicable law.  With the consent of the Board of Directors a
participant may satisfy this obligation, in whole or in part, by having the
Company withhold from any shares to be issued that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the Company
to satisfy the withholding amount.  The
payment of a performance unit in cash shall not reduce the number of shares of
Common Stock reserved for issuance under the Plan.  The number of shares reserved for issuance
under the Plan shall be reduced by the number of shares issued upon payment of
an award.

12.           Foreign Qualified Grants.  Awards under the Plan
may be granted to such officers and employees of the Company and its
subsidiaries and such other persons described in paragraph 1 residing in
foreign jurisdictions as the Board of Directors may determine from time to
time.  The Board of Directors may adopt
such supplements to the Plan as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no award shall be granted
under any such supplement with terms which are more beneficial to the
participants than the terms permitted by the Plan.

13.           Changes in Capital Structure.

(a)           Stock Splits; Stock Dividends.  If
the outstanding Common Stock of the Company is hereafter increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any stock split, combination of shares
or dividend payable in shares, recapitalization or reclassification

 11
 

 

appropriate adjustment shall be made by the
Board of Directors in the number and kind of shares available for grants under
the Plan.  In addition, the Board of
Directors shall make appropriate adjustment in the number and kind of shares as
to which outstanding options, or portions thereof then unexercised, shall be
exercisable, so that the optionee’s proportionate interest before and after the
occurrence of the event is maintained. 
Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Board of
Directors.  Any such adjustments made by
the Board of Directors shall be conclusive.

(b)           Mergers, Reorganizations, Etc.  In
the event of a merger, consolidation, plan of exchange, acquisition of property
or stock, separation, reorganization or liquidation to which the Company or a
subsidiary is a party or a sale of all or substantially all of the Company’s
assets (each, a “Transaction”), the Board of Directors shall, in its sole discretion
and to the extent possible under the structure of the Transaction, select one
of the following alternatives for treating outstanding options under the Plan:

(i)            Outstanding
options shall remain in effect in accordance with their terms.

(ii)           Outstanding
options shall be converted into options to purchase stock in the corporation
that is the surviving or acquiring corporation in the Transaction.  The amount, type of securities subject
thereto and exercise price of the converted options shall be determined by the
Board of Directors of the Company, taking into account the relative values of
the companies involved in the Transaction and the exchange rate, if any, used
in determining shares of the surviving corporation to be issued to holders of
shares of the Company.  Unless otherwise
determined by the Board of Directors, the converted options shall be vested
only to the extent that the vesting requirements relating to options granted
hereunder have been satisfied.

(iii)          The
Board of Directors shall provide a 30-day period prior to the
consummation of the Transaction during which outstanding options may be
exercised to the extent then exercisable, and upon the expiration of such 30-day
period, all unexercised options shall immediately terminate.  The Board of Directors may, in its sole
discretion, accelerate the exercisability of options so that they are
exercisable in full during such 30-day period.

(c)           Dissolution of the Company.  In the
event of the dissolution of the Company, options shall be treated in accordance
with paragraph 13(b)(iii).

(d)           Rights Issued by Another Corporation.  The
Board of Directors may also grant options, stock appreciation rights,
performance units, stock bonuses and cash bonuses and issue restricted stock
under the Plan having terms, conditions and provisions that vary from those
specified in this Plan provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
stock appreciation rights, stock bonuses, cash bonuses, restricted stock and
performance units granted, awarded or issued by another

 12
 

 

corporation and assumed or otherwise agreed
to be provided for by the Company pursuant to or by reason of a Transaction.

14.           Amendment of Plan.  The Board of Directors may at
any time, and from time to time, modify or amend the Plan in such respects
as it shall deem advisable because of changes in the law while the Plan is
in effect or for any other reason. 
Except as provided in paragraphs 6(a)(iv), 9, 10 and 13, however,
no change in an award already granted shall be made without the written
consent of the holder of such award.

15.           Approvals.  The obligations of the Company under
the Plan are subject to the approval of state and federal authorities or
agencies with jurisdiction in the matter. 
The Company will use its best efforts to take steps required by state or
federal law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange on which the Company’s
shares may then be listed, in connection with the grants under the Plan.  The foregoing notwithstanding, the Company
shall not be obligated to issue or deliver Common Stock under the Plan if such
issuance or delivery would violate applicable state or federal securities laws.

16.           Employment and Service Rights.  Nothing in the
Plan or any award pursuant to the Plan shall (i) confer upon any employee
any right to be continued in the employment of the Company or any subsidiary or
interfere in any way with the right of the Company or any subsidiary by whom
such employee is employed to terminate such employee’s employment at any time,
for any reason, with or without cause, or to decrease such employee’s
compensation or benefits, or (ii) confer upon any person engaged by the
Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company.

17.           Rights as a Shareholder.  The recipient of any
award under the Plan shall have no rights as a shareholder with respect to any
Common Stock until the date of issue to the recipient of a stock certificate
for such shares.  Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.

Adopted:  April
28, 2006

Approved by
Shareholders:  June 7, 2006

 13

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