Document:

<PAGE>
                                                                     EXHIBIT 4.3

--------------------------------------------------------------------------------
          BOOK-ENTRY-ONLY COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) -
             WITHOUT OWNER OPTION TO REDEEM/PASS-THROUGH SECURITIES/
                           AND ASSET-BACKED SECURITIES
--------------------------------------------------------------------------------

                           Letter of Representations*
                      [to be Completed by Issuer and Agent]

                   Discover Card Master Trust I, Series 2002-5
                   -------------------------------------------
                                [Name of Issuer]

                         U.S. Bank National Association
                         ------------------------------
                                 [Name of Agent]

                                                               December 11, 2002
                                                               -----------------
                                                                     [Date]

Attention:  General Counsel's Office
The Depository Trust Company
55 Water Street 49th Floor
New York, NY 10041-0099

         Re:     Floating Rate Class A Credit Card Pass-Through Certificates and
                 Floating Rate Class B Credit Card Pass-Through Certificates,
                 Discover Card Master Trust I, Series 2002-5
                 --------------------------------------------------------
                          [Issue description ("The Securities")]

Ladies and Gentlemen:

         This letter sets forth our understanding with respect to certain
matters relating to the Securities. Agent shall act as trustee, paying agent,
fiscal agent, or other such agent of Issuer with respect to the Securities. The
Securities have been issued pursuant to a trust indenture, trust agreement,
pooling and servicing agreement or other such document authorizing the issuance
of the Securities dated October 1, 1993 (the "Document"). ["Underwriter/
Placement Agent"]**

----------

*        This Letter of Representations includes the Addendum attached hereto,
         which modifies and supercedes this Letter of Representations to the
         extent set forth therein.

**       Morgan Stanley & Co. Incorporated; Banc of America Securities LLC;
         Deutsche Bank Securities Inc.; Barclays Capital Inc.; Commerzbank
         Capital Markets Corp.; and RBC Dominion Securities Corporation

<PAGE>
is distributing the Securities through The Depository Trust Company ("DTC").

                  To induce DTC to accept the Securities as eligible for deposit
at DTC, and to act in accordance with its Rules with respect to the Securities,
Issuer and Agent make the following representations to DTC:

                  1. Prior to closing on the Securities on December 11, 2002
there shall be deposited with DTC one or more Security certificates registered
in the name of DTC's nominee, Cede & Co., for each stated maturity of the
Securities in the face amounts set forth on Schedule A hereto, the total of
which represents 100% of the principal amount of such Securities. If however,
the aggregate principal amount of any maturity exceeds $400 million, one
certificate shall be issued with respect to each $400 million of principal
amount and an additional certificate shall be issued with respect to any
remaining principal amount. Each Security certificate shall bear the following
legend:

                           Unless this certificate is presented by an authorized
         representative of The Depository Trust Company, a New York corporation
         ("DTC"), to Issuer or its agent for registration of transfer, exchange,
         or payment, and any certificate issued is registered in the name of
         Cede & Co. or in such other name as is requested by an authorized
         representative of DTC (and any payment is made to Cede & Co. or to such
         other entity as is requested by an authorized representative of DTC),
         ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
         TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
         & Co., has an interest herein.

Issuer represents:

                  The Security certificate(s) shall remain in Agent's custody as
a "Balance Certificate" subject to the provisions of the Balance Certificate
Agreement between Agent and DTC currently in effect.

                  On each day on which Agent is open for business and on which
it receives an instruction originated by a DTC participant ("Participant")
through DTC's Deposit/Withdrawal at Custodian ("DWAC") system to increase the
Participant's account by a specified number of Securities (a "Deposit
Instruction"), Agent shall, no later than 6:30 p.m. (Eastern Time) that day,
either approve or cancel the Deposit Instruction through the DWAC system.

                  On each day on which Agent is open for business and on which
it receives an instruction originated by Participant through the DWAC system to
decrease the Participant's account by a specified number of Securities (a
"Withdrawal Instruction"), Agent shall, no later than 6:30 pm. (Eastern Time)
that day, either approve or cancel the Withdrawal Instruction through the DWAC
system.

                                       2
<PAGE>

                  Agent agrees that its approval of a Deposit or Withdrawal
Instruction shall be deemed to be the receipt by DTC of a new reissued or
reregistered certificated Security on registration of transfer to the name of
Cede & Co. for the quantity of Securities evidenced by the Balance Certificate
after the Deposit or Withdrawal Instruction is effected.

                  2. Issuer: (a) understands that DTC has no Obligation to, and
will not, communicate to its Participants or to any person having an interest in
the Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.

                  3. In the event of any solicitation of consents from or voting
by holders of the Securities, Issuer or Agent shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall send notice of such record date to DTC no fewer
than 15 calendar days in advance of such record date. Notices to DTC pursuant to
this Paragraph by telecopy shall be directed to DTC's Reorganization Department,
Proxy Unit at (212) 855-5181 or (212) 855-5182. If the party sending the notice
does not receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (212) 855-5202. Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:

                                    Supervisor, Proxy Unit
                                    Reorganization Department
                                    The Depository Trust Company
                                    55 Water Street 50th Floor
                                    New York, NY 10041-0099

                  4. In the event of a full or partial redemption, Issuer or
Agent shall send a notice to DTC specifying: (a) the amount of the redemption or
refunding; (b) in the case of a refunding, the maturity date(s) established
under the refunding; and (c) the date such notice is to be distributed to
Security holders (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g. legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Agent shall
forward such notice either in a separate secure transmission for each CUSIP
number or in a secure transmission for multiple CUSIP numbers (if applicable)
which includes a manifest or list of each CUSIP number submitted in that
transmission. (The party sending such notice shall have a method to verify
subsequently the use of such means and the timeliness of such notice). The
Publication Date shall be no fewer than 30 days nor more than 60 days prior to
the redemption date or, in the case of an advance refunding, the date that the
proceeds are deposited in escrow. Notices to DTC pursuant to this Paragraph by
telecopy shall be directed to DTC's Call Notification Department at (516)
227-4164 or (516) 227-4190. If the party sending the notice does not receive a
telecopy receipt from DTC confirming that the notice has been received,
such party shall telephone (516) 227-4070. Notices to DTC pursuant to this
Paragraph, by mail or by any other means, shall be sent to:

                                      -3-
<PAGE>

                               Manager, Call Notification Department
                               The Depository Trust Company
                               711 Stewart Avenue
                               Garden City, NY  11530-4719

                  5. In the event of an invitation to tender the Securities
(including mandatory tenders, exchanges, and capital changes), notice by Issuer
or Agent to Security holders shall be sent to DTC specifying the terms of the
tender and the Publication Date of such notice. Such notice shall be sent to DTC
by a secure means (e.g. legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is in
DTC's possession no later than the close of business on the business day before
or, if possible, two business days before the Publication Date. Issuer or Agent
shall forward such notice either in a separate secure transmission for each
CUSIP number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number submitted in
that transmission. (The party sending such notice shall have a method to verify
subsequently the use and timeliness of such notice.) Notices to DTC pursuant to
this Paragraph and notices of other corporate actions by telecopy shall be
directed to DTC's Reorganization Department at (212) 855-5488. If the party
sending the notice does not receive a telecopy receipt from DTC confirming that
the notice has been received, such party shall telephone (212) 855-5290. Notices
to DTC pursuant to this Paragraph, by mail or by any other means, shall be sent
to:

                               Manager, Reorganization Department
                               Reorganization Window
                               The Depository Trust Company
                               55 Water Street 50TH Floor
                               New York, NY  10041-0099

                  6. It is understood that if the Security holders shall at any
time have the right to tender the Securities to Issuer and require that Issuer
repurchase such holders' Securities pursuant to the document and Cede & Co., as
nominee of DTC, or its registered assigns, as the record owner, is entitled to
tender the Securities, such tenders will be effected by means of DTC's Repayment
Option Procedures. Under the Repayment Option Procedures, DTC shall receive,
during the applicable tender period, instructions from its Participants to
tender Securities for purchase. Issuer and Agent agree that such tender for
purchase may be made by DTC by means of a book-entry credit of such Securities
to the account of Agent, provided that such credit is made on or before the
final day of the applicable tender period. DTC agrees that promptly after the
recording of any such book-entry credit, it will provide to Agent an Agent
Receipt and Confirmation or the equivalent, in accordance with the Repayment
Option Procedures, identifying the Securities and the aggregate principal amount
thereof as to which such tender for purchase has been made.

                  Agent shall send DTC notice regarding such optional tender by
hand or by a secure means (e.g., legible facsimile transmission, registered or
certified mail, overnight delivery) in a timely manner designed to assure that
such notice is in DTC's possession no later than the close of business two
business days before the Publication Date. The Publication Date shall be no
fewer than 15 days prior to the expiration date of the applicable tender period.
Such notice shall state whether any partial redemption of the Securities is
scheduled to occur during the applicable optional tender

                                      -4-
<PAGE>

period. Notices to DTC pursuant to this Paragraph by telecopy shall be directed
to DTC's Put Bond Unit at (212) 855-5235. If the party sending the notice does
not receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (212) 855-5230. Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:

                                Supervisor, Put Bond Unit
                                Reorganization Window
                                The Depository Trust Company
                                55 Water Street 50TH Floor
                                New York, NY  10041-0099

                  7. All notices and payment advices sent to DTC shall contain
the CUSIP number of the Securities.

                  8. Issuer or Agent shall send DTC written notice with respect
to the dollar amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably five, but
no fewer than two, business days prior to such payment date. Such notices, which
shall also contain the current pool factor, any special adjustments to
principal/interest rates (e.g., adjustments due to deferred interest or
shortfall), and Agent contact's name and telephone number, shall be sent by
telecopy to DTC's Dividend Department at (212) 855-4555, and receipt of such
notices shall be confirmed by telephoning (212) 855-4550. Notices to DTC,
pursuant to this Paragraph, by mail or by any other means, shall be sent to:

                                Manager, Announcements
                                Dividend Department
                                The Depository Trust Company
                                55 Water Street 25TH Floor
                                New York, NY  10041-0099

                  9. Issuer represents: The interest accrual period is payment
date to payment date.

                  10. Issuer or Agent shall provide a written notice of interest
payment information, including the stated coupon rate information, to DTC as
soon as the information is available. Issuer or Agent shall provide such notice
directly to DTC electronically, as previously arranged by Issuer or Agent and
DTC. If electronic transmission has not been arranged, absent any other
arrangements between Issuer or Agent and DTC, such information shall be sent by
telecopy to DTC's Dividend Department at (212) 855-4555 or (212) 855-4556. If
the party sending the notice does not receive a telecopy receipt from DTC
confirming that the notice has been received, such party shall telephone (212)
855-4550. Notices to DTC pursuant to this Paragraph, by mail or by any other
means, shall be sent to DTC's Dividend Department as indicated in Paragraph 8.

                                      -5-
<PAGE>

                  11. Interest payments and principal payments that are part of
periodic principal-and-interest payments shall be received by Cede & Co., as
nominee of DTC, or its registered assigns, in same-day funds no later than 2:30
p.m. (Eastern Time) on each payment date. Issuer shall remit by 1:00 p.m.
(Eastern Time) on the payment date all such interest payments due Agent, or at
such earlier time as may be required by Agent to guarantee that DTC shall
receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on the
payment date. Absent any other arrangements between Issuer or Agent and DTC,
such funds shall be wired to the Dividend Deposit Account number that will be
stamped on the signature page hereof at the time DTC executes this Letter of
Representations.

                  12. Issuer or Agent shall provide DTC's Dividend Department,
no later than 12:00 noon (Eastern Time) on the payment date, automated
notification of CUSIP-level detail. If the circumstances prevent the funds paid
to DTC from equaling the dollar amount associated with the detail payments by
12:00 noon (Eastern Time), Issuer or Agent must provide CUSIP-level
reconciliation to DTC no later than 2:30 p.m. (Eastern Time). Reconciliation
must be provided by either automated means or written format. Such
reconciliation notice, if sent by telecopy, shall be directed to DTC Dividend
Department at (212) 855-4633 and receipt of such reconciliation notice shall be
confirmed by telephoning (212) 855-4430.

                  13. Maturity and redemption payments allocated with respect to
each CUSIP number shall be received by Cede & Co., as nominee of DTC, or its
registered assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on
the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment
date all such maturity and redemption payments due Agent, or at such earlier
time as required by Agent to guarantee that DTC shall receive payment in
same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date.
Absent any other arrangements between Issuer or Agent and DTC, such funds shall
be wired to the Redemption Deposit Account number that will be stamped on the
signature page hereof at the time DTC executes this Letter of Representations.

                  14. Principal payments (plus accrued interest, if any) as the
result of optional tenders for purchase effected by means of DTC's Repayment
Option Procedures shall be received by Cede & Co., as nominee of DTC, or its
registered assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on
the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment
date all such reorganization payments due Agent, or at such earlier time as
required by Agent to guarantee that DTC shall receive payment in same-day funds
no later than 2:30 p.m. (Eastern Time) on the payment date. Absent any other
arrangements between Issuer or Agent and DTC, such funds shall be wired to the
Reorganization Deposit Account number that will be stamped on the signature page
hereof at the time DTC executes this Letter of Representations.

                  15. Agent shall send DTC all periodic certificate holders
remittance reports with respect to the Securities. If sent by facsimile
transmission, such reports shall be sent to (212) 855-4777. If the party sending
the report does not receive a telecopy receipt from DTC confirming that the
notice has been received, such party shall telephone (212) 855-4590.

                  16. DTC may direct Issuer or Agent to use any other number or
address as the number or address to which notices or payments of interest or
principal may be sent.

                                      -6-
<PAGE>

                  17. In the event of a redemption, acceleration, or any other
similar transaction (e.g., tender made and accepted in response to Issuer's or
Agent's invitation) necessitating a reduction in the aggregate principal amount
of Securities outstanding or an advance refunding of part of the Securities
outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue
and authenticate a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction in principal except in the case of final maturity, in which case the
certificate will be presented to Issuer or Agent prior to payment, if required.

                  18. In the event that Issuer determines that beneficial owners
of Securities shall be able to obtain certificated Securities, Issuer or Agent
shall notify DTC of the availability of certificates. In such event, Issuer or
Agent shall issue, transfer, and exchange certificates in appropriate amounts,
as required by DTC and others.

                  19. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time be giving reasonable
notice to Issuer or Agent (at which time DTC will confirm with Issuer or Agent
the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Agent shall cooperate fully with DTC
by taking appropriate action to make available one or more separate certificates
evidencing Securities to any Participant having Securities credited to its DTC
accounts.

                  20. Nothing herein shall be deemed to require Agent to advance
funds on behalf of Issuer.

                  21. This Letter of Representations may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts together shall constitute but one and the
same instrument.

                  22. This Letter of Representations shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to principles of conflicts of law.

                  23. The sender of each notice delivered to DTC pursuant to
this Letter of Representations is responsible for confirming that such notice
was properly received by DTC.

                  24. Issuer recognizes that DTC does not in any way undertake
to, and shall not have any responsibility to, monitor or ascertain the
compliance of any transactions in the Securities with the following, as amended
from time to time: (a) any exemptions from registration under the Securities Act
of 1933; (b) the Investment Company Act of 1940; (c) the Employee Retirement
Income Security Act of 1974; (d) the Internal Revenue Code of 1986; (e) any
rules of any self-regulatory organizations (as defined under the Securities
Exchange Act of 1934); or (f) any other local, state, or federal laws or
regulations thereunder.

                  25. Issuer hereby authorizes DTC to provide to Agent listings
of Participants' holdings, known as Securities Position Listings ("SPLs") with
respect to the Securities from time to time at the request of the Agent. DTC
charges a fee for such SPLs. This authorization, unless revoked by Issuer, shall
continue with respect to the Securities while any Securities are on deposit

                                      -7-
<PAGE>

at DTC, until and unless Agent shall no longer be acting. In such event, Issuer
shall provide DTC with similar evidence, satisfactory to DTC, of the
authorization of any successor thereto so to act. Requests for SPLs shall be
sent by telecopy to the Proxy Unit of DTC's Reorganization Department at (212)
855-5181 or (212) 855-5182. Receipt of such requests shall be confirmed by
telephoning (212) 855-5202. Requests for SPLs, sent by mail or by any other
means, shall be directed to the address indicated in Paragraph 3.

                  26. Issuer and Agent shall comply with the applicable
requirements stated in DTC's Operational Arrangements, as they may be amended
from time to time. DTC's Operational Arrangements are posted on DTC's website at
"www.DTC.org."

                  27. The following riders(s), attached hereto, are hereby
incorporated into this Letter of Representations:

     (1) Addendum and (2) Rider

                                      -8-

<PAGE>
NOTES:

A. IF THERE IS AN AGENT (AS DEFINED IN THIS
LETTER OF REPRESENTATIONS), AGENT AS WELL AS
ISSUER MUST SIGN THIS LETTER. IF THERE IS NO
AGENT, IN SIGNING THIS LETTER ISSUER ITSELF
UNDERTAKES TO PERFORM ALL OF THE OBLIGATIONS
SET FORTH HEREIN.

B. SCHEDULE B CONTAINS STATEMENTS THAT DTC
BELIEVES ACCURATELY DESCRIBE DTC, THE METHOD
OF EFFECTING BOOK-ENTRY TRANSFERS OF
SECURITIES DISTRIBUTED THROUGH DTC, AND
CERTAIN RELATED MATTERS.

                                Very truly yours,

                                DISCOVER MASTER TRUST I, by U.S. BANK NATIONAL
                                ASSOCIATION, not in its individual capacity,
                                but solely as Trustee
                                ------------------------------------------------
                                                  [Issuer]

                                By:           /s/ Patricia M. Child
                                   ---------------------------------------------
                                          [Authorized Officer's Signature]

                                         U.S. BANK NATIONAL ASSOCIATION
                                ------------------------------------------------
                                                    [Agent]

                                By:            /s/ Patricia M. Child
                                   ---------------------------------------------
                                          [Authorized Officer's Signature]

Received and Accepted:
THE DEPOSITORY TRUST COMPANY

By:   /s/ Richard B. Nesson
   ----------------------------------

Funds should be wired to:
The Chase Manhattan Bank
ABA #021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company

[Select Appropriate Account.]

Dividend Deposit Account #066-026776
Redemption Deposit Account #066-027306
Reorganization Deposit Account #066-027608

cc:      Underwriter/Placement Agent
         Underwriter's/Placement Agent's Counsel

                                      -9-
<PAGE>
                                   SCHEDULE A

                   DISCOVER CARD MASTER TRUST I, SERIES 2002-5

    $1,200,000,000 FLOATING RATE CLASS A CREDIT CARD PASS-THROUGH CERTIFICATES
  AND $63,158,000 FLOATING RATE CLASS B CREDIT CARD PASS-THROUGH CERTIFICATES

<Table>
<Caption>
     Class A Certificates
         CUSIP Number         Principal Amount            Maturity Date*             Interest Rate
     --------------------     ----------------            --------------             -------------
<S>                           <C>                         <C>                        <C>
         25466KEE5

     Certificate Number:
     -------------------
              1                 $400,000,000              May 16, 2007               Floating Rate
              2                 $400,000,000              May 16, 2007               Floating Rate
              3                 $400,000,000              May 16, 2007               Floating Rate

     Class B Certificates
         CUSIP Number
     --------------------
         25466KEF2

     Certificate Number:
     -------------------
              1                 $ 63,158,000              May 16, 2007               Floating Rate

</Table>

----------
* Last Possible Distribution Date

                                      -10-
<PAGE>

                                                                      SCHEDULE B

                        SAMPLE OFFERING DOCUMENT LANGUAGE
                       DESCRIBING BOOK-ENTRY-ONLY ISSUANCE

     1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities will
be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Security certificate will
be issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. [If, however, the
aggregate principal amount of [any] issue exceeds $400 million, one certificate
will be issued with respect to each $400 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]

     2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC, an the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Direct and Indirect Participants are on file with the
Securities Exchange Commission.

     3. Purchases of Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Securities, except in the event that use of the book-entry system
for the Securities is discontinued.

                                      -11-

<PAGE>

     4. To facilitate subsequent transfers, all Securities deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other name as may be requested by an authorized
representative of DTC. The deposit of Securities with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities. DTC's records reflect only the identify of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.

     5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. [Beneficial Owners of Securities may wish to
take certain steps to augment transmission to them of notices of significant
events with respect to the Securities, such as redemptions, tenders, defaults,
and proposed amendments to the security documents. Beneficial Owners of
Securities may wish to ascertain that the nominee holding the Securities for
their benefit has agreed to obtain and transmit notices of Beneficial Owners, or
in the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of the notices be provided
directly to them.]

     6. [Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]

     7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or
vote with respect to the Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).

     8. Redemption proceeds, distributions, and dividend payments on the
Securities will be made to Cede & Co., or such other nominee as may be requested
by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipt of funds and corresponding detail
information from Issuer or Agent on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer funds or registered in "street name," and will be the responsibility of
such Participant and not of DTC, Agent, or Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividends to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.

                                      -12-
<PAGE>

     9. [A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to [Tender/Remarketing] Agent,
and shall effect delivery of such Securities by causing the Direct Participant
to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities
in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Securities are transferred by Direct
Participants on DTC's records and followed by a book-entry credit of tendered
Securities to [Tender/Remarketing] Agent's DTC account.]

     10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.

     11. Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.

     12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.

                                      -13-
<PAGE>
                                    ADDENDUM

                                       to
                Letter of Representations dated December 11, 2002
                  Discover Card Master Trust I, Series 2002-5

General:                           For purposes of this Letter of
                                   Representations:

                                   "Securities" shall mean the $1,200,000,000
                                   aggregate principal amount of Floating Rate
                                   Class A Credit Card Pass-Through Certificates
                                   and the $63,158,000 aggregate principal
                                   amount of Floating Rate Class B Credit Card
                                   Pass-Through Certificates issued by Discover
                                   Card Master Trust I, Series 2002-5 and
                                   "Security holders" shall mean the holders of
                                   such certificates;

                                   "Issuer" shall mean Discover Card Master
                                   Trust I; and

                                   "Document" shall mean the Pooling and
                                   Servicing Agreement dated as of October 1,
                                   1993, as amended and as supplemented by the
                                   Series Supplement dated as of December 11,
                                   2002 each by and between Discover Bank
                                   (formerly known as Greenwood Trust Company)
                                   as Master Servicer, Servicer and Seller and
                                   the Agent.

Paragraph 8:                       The following is hereby added after the third
                                   sentence of Paragraph 8:

                                            "Issuer or Agent will forward such
                                            notice either in a separate secure
                                            transmission for each CUSIP number
                                            or in a secure transmission for
                                            multiple CUSIP numbers (if
                                            applicable) which includes a
                                            manifest or list of each CUSIP
                                            submitted in that transmission."

Paragraph 16:                      The following is hereby inserted after the
                                   word "Agent" in line 1 of Paragraph 16:

                                            ", and if requested, shall confirm
                                            such direction in writing if
                                            practicable,"

Paragraph 17:                      The following is hereby inserted at the end
                                   of Paragraph 17 before the period:

                                            "provided, however, that this
                                            paragraph shall not apply to any
                                            event that causes a reduction in the
                                            aggregate principal amount of
                                            Securities outstanding that occurs
                                            in accordance with their terms,
                                            including, without limitation, an
                                            Amortization Event (as defined in
                                            the Document)".

<PAGE>

                                      RIDER

                  Issuer and Agent acknowledge that DTC is not a party to the
Document and that no obligations or liabilities shall be deemed to accrue to DTC
with regard to the Document.Culp, Inc. 2002 Stock Option Plan

 

CULP, INC.

2002 STOCK OPTION PLAN

ARTICLE I

GENERAL PROVISIONS

     1.1 Purpose of the Plan. This Plan is intended to promote the interests
of the Company by giving eligible persons who provide services to the Company
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company as an incentive to continue their
employment or service. Capitalized terms used in the Plan shall have the
meanings given to them in Appendix A attached hereto.

     1.2 Administration
of the Plan.

     (a)  The Plan shall be administered by the Board; provided, however, that
any or all administrative functions otherwise exercisable by the Board may be
delegated to the Committee. Members of the Committee shall serve for such
period of time as the Board may determine and shall be subject to removal by
the Board at any time. The Board also may, at any time, terminate the
functions of the Committee and reassume all powers and authority previously
delegated to the Committee. The Board or the Committee, as the Plan
Administrator, shall have full power and authority (subject to the provisions
of the Plan) to establish such rules and regulations as it may deem appropriate
for the proper administration of the Plan and to make such determinations
under, and issue such interpretations of, the Plan and any outstanding Options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any Option issued hereunder.

     (b)  Subject to the terms of the Plan, the Plan Administrator shall have
full power and authority to determine which eligible persons will receive
Option grants, the time or times when such grants will be made, the number of
shares to be covered by each grant, the status of each Option as either an
Incentive Option or a Non-Qualified Option, the time or times when each Option
is exercisable, the vesting schedule (if any) applicable to granted Options,
the maximum term for which an Option shall remain outstanding, and all other
terms and conditions of an Option granted under the Plan.

     1.3 Eligibility. Only Employees are eligible to receive grants of
Incentive Options. The persons eligible to receive grants of Non-Qualified
Options are (a) Employees, (b) non-employee members of the Board or the board
of directors of any Parent or Subsidiary, and (c) consultants and other
independent advisors who provide services to the Company (or any Parent or
Subsidiary). Additionally, the maximum number of shares of Common Stock that
may be covered by an Option granted to any one individual shall be 50,000
shares during any one calendar year period.

     1.4 Stock Subject to the Plan. The stock issuable under the Plan shall be
shares of authorized but unissued Common Stock. The maximum number of shares
of Common Stock that may be issued under the Plan shall not exceed 1,000,0000
shares, and all such shares shall be available for issuance pursuant to the
grant of Incentive Options. Shares of Common Stock subject to outstanding
Options shall be available for subsequent issuance under the Plan to the extent
any Options expire or terminate for any reason prior to their exercise in full.

 

     1.5 Adjustments in Common Stock. Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other similar change, the Plan
Administrator shall cause appropriate adjustments to be made to (a) the maximum
number and/or class of securities issuable under the Plan and (b) the number
and/or class of securities and the exercise price per share in effect under
each outstanding Option, in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments determined by the Plan Administrator
shall be final, binding and conclusive.

ARTICLE II

OPTION GRANT PROGRAM

     2.1 Grant of Options Generally. Each Option granted under this Plan shall
have such terms and conditions as approved by the Plan Administrator. Subject
to the provisions of this Plan, each Option shall be evidenced by one or more
documents in the form approved by the Plan Administrator, and no grant shall be
effective unless and until both the Company and the person to whom the Option
is being granted shall have executed such documents as required by the Plan
Administrator.

     2.2 Exercise Price. The exercise price per share of each Option shall be
fixed by the Plan Administrator and, subject to the terms and conditions set
forth herein, may be equal to or greater than the Fair Market Value per share
of Common Stock on the Option grant date.

     2.3 Vesting, Exercise and Term of Options. Each Option shall vest and be
exercisable at such time or times and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the Option grant. No Option, however, shall have a term in excess of ten (10)
years from the Option grant date.

     2.4 Exercise Procedures.

     (a)  Subject to
Section 2.7, an Option may be exercised only by the Optionee
to whom such Option was granted under the Plan. An Option shall be exercisable
at such time or times as set forth herein and in the documents evidencing the
grant of the Option. Notwithstanding anything in the Plan to the contrary, the
Plan Administrator, in its sole discretion, may at any time and from time to
time accelerate the date for exercising all or any part of an Option. In no
event, however, may an Option be exercised after the expiration of its fixed
term.

     (b) Each Option granted under the Plan shall be deemed exercised when the
holder thereof (i) shall indicate the decision to do so in writing delivered to
the Company, (ii) shall at the same time tender to the Company payment in full
of the exercise price for the shares for which the Option is exercised in
accordance with Section 2.4(c), (iii) shall tender to the Company in accordance
with the Plan Administrator’s instructions payment in full of all federal and
state withholding or other employment taxes applicable to the taxable income,
if any, of the holder resulting from such exercise, (iv) shall execute an
option exercise agreement in form and substance satisfactory to the Plan
Administrator, and (v) shall comply with such other requirements as the Plan
Administrator may establish.

 

     (c)  In connection with the exercise of any Option, the Optionee shall pay
the exercise price to the Company in cash, by check, or in such other manner as
permitted by the Plan Administrator, which may include the surrender of shares
of Common Stock or other unexercised Options held by the Optionee.
Notwithstanding the foregoing, should the Common Stock be registered under
Section 12 of the Exchange Act at the time an Option is exercised, then the
exercise price may also be paid as follows:

		
	 	     (i) in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Company’s earnings for financial
reporting purposes and valued at Fair Market Value on the exercise date,
or
	 
	 	     (ii) through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable instructions
(A) to a Company-designated brokerage firm to effect the immediate sale
of the purchased shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares and (B) to the
Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.

     (d)  An Option granted under the Plan may be exercised for any lesser
number of shares than the full amount for which it could be exercised. Such a
partial exercise shall not affect the right to exercise the Option for the
remaining shares from time to time in accordance with the Plan and the
documents evidencing the grant of the Option.

     2.5 Effect of Termination of Service. The following provisions shall
govern the exercise of Options held by an Optionee at the time of such
Optionee’s cessation of Service or death:

     (a)  should the Optionee cease to remain in Service for any reason other
than death, Permanent Disability or Misconduct, then the Optionee shall have a
period of three (3) months following the date of cessation of Service or such
longer period determined by the Plan Administrator, in its sole discretion, to
exercise each outstanding Option held by such Optionee;

     (b)  should the Optionee’s Service terminate by reason of Permanent
Disability, then the Optionee shall have a period of twelve (12) months
following the date of cessation of Service or such longer period determined by
the Plan Administrator, in its sole discretion, to exercise each outstanding
Option held by such Optionee;

     (c)  if the Optionee dies while holding an outstanding Option, then the
personal representative of his or her estate or the Person or Persons to whom
the Option is transferred pursuant to the Optionee’s will or the laws of
inheritance shall have twelve (12) months following the date of cessation of
Service or such longer period determined by the Plan Administrator, in its sole
discretion, to exercise each outstanding Option held by the Optionee;

     (d)  should the Optionee’s Service be terminated for Misconduct, then all
outstanding Options held by the Optionee shall terminate immediately and cease
to remain outstanding, regardless of whether any Options have vested; and

     (e)  during the applicable post-Service exercise period, an Option may be
exercised only if it has vested and for no more than the aggregate number of
shares for which the vested Option is exercisable on the date of the Optionee’s
cessation of Service. The Option shall, immediately upon the Optionee’s
cessation of Service, terminate and cease to be outstanding with respect to any
and all Option shares for

 

which the Option is not otherwise exercisable at that time.
Upon the expiration of the applicable exercise period or (if earlier) upon the
expiration of the Option term, the Option shall terminate and cease to be
outstanding.

     2.6 Stockholder Rights. The holder of an Option shall have no stockholder
rights with respect to the shares subject to the Option until such Person shall
have exercised the Option in accordance with Section 2.4 and become the record
holder of the purchased shares. Each Person who validly exercises an Option
and is issued shares of Common Stock by the Company shall be subject to all of
the terms and conditions set forth in the applicable purchase agreement to be
executed by such person upon exercise.

     2.7 Transferability of Options.

     (a)  Except as set forth in Section 2.7(b), Options may be transferred only
by will or the laws of inheritance upon the death of an Optionee. Otherwise,
no Option may be assigned, pledged, hypothecated or transferred in any manner.
Upon any attempt to assign, pledge, hypothecate or transfer an Option, such
Option shall immediately be cancelled and terminated.

     (b)  The Plan Administrator, may, in its sole discretion, permit a
Non-Qualified Option to be assigned in whole or in part during the Optionee’s
lifetime as a gift to (i) one or more members of the Optionee’s immediate
family, (ii) a trust in which Optionee and/or one or more of such family
members hold more than fifty percent (50%) of the beneficial interest, or (iii)
an entity in which more than fifty percent (50%) of the voting interests are
owned by the Optionee and/or one or more of such family members. The terms
applicable to the assigned Non-Qualified Option shall be the same as those in
effect for such Option immediately prior to the assignment, as more fully set
forth herein and in the documents evidencing the grant of the Option.

     2.8 Incentive Options. All Incentive Options shall be subject to the
terms set forth in this Section 2.8. Options that are not specifically
designated as Incentive Options in the documentation evidencing the grant of
such Options, or that are specifically designated as Non-Qualified Options,
shall not be subject to the terms of this Section 2.8.

     (a)  Eligibility. Incentive Options may be granted only to Employees.

     (b)  Exercise Price. An Incentive Option’s exercise price per share of
Common Stock shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the date such Option is granted.

     (c)  Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more Incentive Options granted to any Employee under the Plan (or any
other option plan of the Company or any Parent or Subsidiary) may for the first
time become exercisable during any one calendar year shall not exceed One
Hundred Thousand Dollars ($100,000). To the extent an Employee holds two or
more Incentive Options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such Incentive
Options shall be applied on the basis of the order in which such Options are
granted.

     (d)  Ten Percent (10%) Stockholder. If an Employee to whom an Incentive
Option is granted is a Ten Percent (10%) Stockholder, then the Incentive
Option’s exercise price per share of Common Stock shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common

 

Stock
on the Option grant date, and the Incentive Option’s term shall not exceed five
years from the date of grant.

     2.9 Change of Control Transactions.

     (a)  The Plan Administrator may, in its sole and absolute discretion,
determine that any outstanding Option shall become fully exercisable on an
accelerated basis immediately prior to a Change of Control, notwithstanding the
fact that any portion of such Option shall not have vested.

     (b)  Unless otherwise determined by the Plan Administrator, (i) upon
consummation of a Change of Control in which the Company is not the surviving
entity, all outstanding Options, to the extent not exercised, shall terminate
and cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof), and (ii) upon consummation of a Change of
Control in which the Company is the surviving entity, all outstanding Options,
to the extent not exercised, shall remain outstanding in full force and effect
on the same terms and conditions.

     (c)  The Plan Administrator shall have the discretion at any time to
provide for the immediate termination of any consent, repurchase or first
refusal rights of the Company with respect to the shares subject to those
Options upon the occurrence of a Change of Control, whether or not the Options
are to be assumed by any successor corporation (or parent thereof).

     (d)  In the event that any Option shall survive and remain outstanding
after a Change of Control, the Plan Administrator shall have full power and
authority at any time to structure or amend an Option so that it will
automatically vest on an accelerated basis should the Optionee’s Service
terminate by reason of an Involuntary Termination within a designated period
following the effective date of the Change of Control.

     (e)  The portion of any Incentive Option accelerated in connection with a
Change of Control shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollars ($100,000) limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of an Option shall be exercisable as a Non-Qualified Option and shall
be treated as such under the federal tax laws.

     (f)  The grant of Options under the Plan shall in no way affect the right
of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, enter into a share exchange,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

ARTICLE III

MISCELLANEOUS

     3.1 Compliance with Securities Laws. The Plan Administrator shall take
such action as may be necessary to cause the administration of this Plan,
including the grant of Options and the issuance of shares of Common Stock
pursuant to the exercise thereof, to be made in compliance with all federal and
state securities laws.

 

     3.2 Effective Date and Term.

     (a)  The Plan shall become effective when adopted by the Board, but no
Option granted under the Plan may be exercised, and no shares shall be issued
pursuant to the exercise of any Options, until the Plan is approved by the
Company’s stockholders. Additionally, no Incentive Option shall be deemed to
have been granted unless and until this Plan is approved by the Company’s
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the date of the Board’s adoption of the Plan, then all Options
previously granted under the Plan shall terminate and cease to be outstanding,
and no further Options shall be granted and no shares shall be issued pursuant
to the exercise of any Options.

     (b)  No further Options may be granted under the Plan upon the earlier of
(a) the expiration of the ten (10)-year period from the date the Plan is
adopted by the Board, (b) the date on which all shares available for issuance
under the Plan shall have been issued or (c) the termination of all outstanding
Options in connection with an Change of Control in which the Company is not the
surviving entity or otherwise. All Options outstanding upon the expiration of
the ten (10)-year period referenced in subclause (a) above shall continue to
have full force and effect in accordance with the provisions of the documents
evidencing the grant of such Options.

     3.3 Amendment of the Plan. The Board shall have complete and exclusive
power and authority to amend or modify the Plan in any or all respects.
However, no such amendment or modification shall adversely affect any rights
and obligations in respect of any outstanding Options unless the holder thereof
consents to such amendment or modification. In addition, certain amendments
may require stockholder approval pursuant to applicable laws or regulations.

     3.4 Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of North Carolina.

     3.5 Severability. If any provision of this Plan or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Plan and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.

     3.6 Section Titles. The headings herein are inserted as a matter of
convenience only and do not define, limit or describe the scope of this Plan or
the intent of the provisions hereof.

     3.7 No Employment or Service Rights. Nothing in the Plan shall confer
upon any Optionee the right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Company (or any Parent or Subsidiary employing or retaining such person) or of
the Optionee, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.

     3.8 Notices. Any notice required to be given or delivered to the Company
under the Plan shall be in writing addressed to the Company at its principal
corporate offices. Any notice required to be given to an Optionee shall be in
writing and addressed to the address indicated on the option agreement executed
by the Optionee in connection with an Option grant. All notices shall be
deemed effective upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.

 

Exhibit 4.1

APPENDIX A

Defined Terms

     The following terms shall have the following meanings under the Plan:

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

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Committee” means the Company’s compensation committee or a committee of
one or more Board members appointed by the Board to exercise one or more
administrative functions under the Plan.

     “Common Stock” means the common stock, $0.05 par value, of the Company.

     “Company” means Culp, Inc., a North Carolina corporation, and any
successor corporation to all or substantially all the assets or voting stock of
Culp, Inc. that shall by appropriate action adopt the Plan.

     A “Change of Control” shall be deemed to have occurred on:

		
	 	     (a) the date on which any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than the
Company or any entity owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of Common Stock, becomes the beneficial owner (as defined in Rules 13d-3
and 13d-5 under the Exchange Act) of shares representing more than 40% of
the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors of the Company; or
	 
	 	     (b) the date on which (i) the Company merges with any other entity,
(ii) the Company enters into a statutory share exchange with another
entity, or (iii) the Company conveys, transfers or leases all or
substantially all of its assets to any person; provided, however, that in
the case of subclauses (i) and (ii), a Change of Control shall not be
deemed to have occurred if the stockholders of the Company immediately
before such transaction own, directly or indirectly immediately following
such transaction, more than 60% of the combined voting power of the
outstanding securities of the corporation resulting from such transaction
in substantially the same proportions as their ownership of securities
immediately before such transaction.

     “Employee” means an individual who is in the employ of the Company (or any
Parent or Subsidiary), subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of
performance.

     “Exercise Date” means the date on which the Company shall have received
written notice of the exercise of an Option.

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

     “Fair Market Value” per share of Common Stock on any relevant date shall
be the average closing selling price per share of Common Stock for the ten (10)
business days preceding the date in question on

 

 

the Stock Exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange.

     “Incentive Option” means an Option that satisfies the requirements of
Section 422 of the Code.

     “Involuntary Termination” means the termination of the Service of any
individual by reason of:

		
	 	     (i) such individual’s involuntary dismissal or discharge by the
Company (or any successor corporation or any Parent or Subsidiary, as
applicable) for reasons other than Misconduct, or
	 
	 	     (ii) such individual’s voluntary resignation following (A) a change
in his or her position with the Company (or any successor corporation or
any Parent or Subsidiary, as applicable) which materially reduces his or
her duties and responsibilities or the level of management to which he or
she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and target bonuses under any
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of such individual’s place of
employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected without the individual’s
consent; provided, however, that at the time of such resignation, the
Company (or any successor corporation or any Parent or Subsidiary, as
applicable) would not have reason to terminate such individual’s
employment for Misconduct.

     “Misconduct” means (i) the commission of any act of fraud, embezzlement or
dishonesty by a person against the Company (or any successor corporation or any
Parent or Subsidiary, as applicable), (ii) any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Company (or
any successor corporation or any Parent or Subsidiary, as applicable), (iii)
intoxication with alcohol or drugs while conducting employer business during
regular business hours, (iv) a conviction of, or a plea of
guilty or nolo
contendre by, such person for a criminal felony conviction, (v) the continued
failure or inability of such person to fulfill the essential functions of his
or her employment, or (vi) any other misconduct by such person that causes or
would reasonably be expected to cause material harm to the business of the
Company (or any successor corporation or any Parent or Subsidiary, as
applicable), as reasonably determined in good faith by the Board.

     “Non-Qualified Option” means an Option that does not satisfy the
requirements of Section 422 of the Code.

     “Option” means an Incentive Stock Option or Non-Qualified Option granted
under the Plan.

     “Optionee” means any person to whom an Option is granted under the Plan.

     “Parent” means any corporation or limited liability company (other than
the Company) in an unbroken chain of entities ending with the Company, provided
each entity in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all equity interests in one of the other entities in
such chain.

     “Permanent Disability” means the inability of a person to perform the
essential functions of the person’s duties as an Employee by reason of any
medically determinable physical or mental impairment that is expected to result
in such person’s death or has lasted or can be expected to last for a period of
six (6) consecutive months or more, as reasonably determined by the Board.

 

 

     “Plan” means the Culp, Inc. 2002 Stock Option Plan, as set forth herein.

     “Plan Administrator” means either the Board or the Committee acting in its
capacity as administrator of the Plan.

     “Service” means the provision of services to the Company (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a non-employee member
of the board of directors or a consultant or independent advisor, except to the
extent otherwise specifically provided in the documents evidencing the Option
grant or stock issuance.

     “Stock Exchange” means either the American Stock Exchange or the New York
Stock Exchange.

     “Subsidiary” means any corporation or limited liability company with
respect to which the company owns, directly or indirectly, stock or other
equity interests possessing fifty percent (50%) or more of the total combined
voting power of all classes of equity.

     “Ten Percent (10%) Stockholder” means the owner of stock (as determined
under Section 424(d) of the Code) possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company (or any
Parent or Subsidiary).

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