Document:

Unassociated Document

    THIRD AMENDMENT TO CREDIT
AGREEMENT

    

    THIRD
AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 30, 2008 (the
“Third Amendment”) by and among NU HORIZONS ELECTRONICS CORP., a Delaware
corporation having its executive offices at 70 Maxess Road, Melville, New York
(the “Borrower”), each of the lenders that is a signatory thereto identified
under the caption “Lenders” on the
signature pages to the Credit Agreement (as defined below) (individually, a
“Lender”, and collectively, the “Lenders”), BANK OF AMERICA, N.A., a national
banking association, as  Documentation Agent for the Lenders, JPMORGAN
CHASE BANK, N.A., a national banking association, as Syndication Agent for the
Lenders, ISRAEL DISCOUNT BANK OF NEW YORK, a New York bank, as Syndication Agent
for the Lenders and CITIBANK, N.A., a national banking association, as
administrative agent for the Lenders (the “Administrative Agent”).

    

    RECITALS

    

    The
Borrower, the Lenders, the Documentation Agent, the Syndication Agents and the
Administrative Agent entered into an Amended and Restated Credit Agreement dated
as of January 31, 2007, as amended by a Consent and First Amendment to Credit
Agreement dated as of June 6, 2007 and a Second Amendment dated as of January 4,
2008, (collectively, the “Credit Agreement”), pursuant to which certain
financial accommodations were made available to the Borrower.

    

    The
Borrower has requested that the Lenders and the Administrative Agent modify
certain of the terms set forth in the Credit Agreement and the Lenders and the
Administrative Agent are willing to modify such terms but only upon and subject
to the following terms and conditions.

    

    NOW THEREFORE, in
consideration of the premises and mutual covenants and promises exchanged
herein, the parties hereto mutually agree as follows:

    

    Section 1. Definitions.  Except
as otherwise defined in this Third Amendment, terms defined in the Credit
Agreement are used herein as defined therein.

     

    Section 2. Amendment.  Subject
to the satisfaction of the conditions precedent specified in Section 4
below:

    

    (A)
Section 1.1 of the Credit Agreement is hereby amended by deleting clauses (b)
and (n) of the definition of “Eligible Accounts” and substituting the following
therefor:

    

    “(b) such
Accounts are not unpaid more than ninety (90) days after date of original
invoice provided, however, for those Account Debtors identified by the Borrower
as of the date of the Third Amendment and other Account Debtors hereinafter
designated by the Borrower for whom the Borrower and its Domestic Subsidiaries
extend payment terms of ninety (90) days (the “Extended Account Debtors”) on the
basis of credit considerations they deem appropriate (subject to approval by the
Administrative Agent), the number of days shall be increased to one hundred
twenty (120) days after date of original invoice with respect to the Accounts of
such Extended Account Debtors;”

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     “(n)
such Accounts are not owed by an Account Debtor who has Accounts unpaid more
than ninety (90) days (or in the case of an Extended Account Debtor, more than
one hundred twenty (120) days) after the date of the original invoice and which
constitute more than fifty (50%) percent of the total of Accounts of such
Account Debtor or Extended Account Debtor, as the case may be;”

    

    (B)
Section 1.1 of the Credit Agreement is hereby amended by deleting the definition
of “Eligible Inventory” and substituting the following therefor:

    

    “‘Eligible
Inventory’ shall mean all unencumbered inventory of raw material work in process
and finished goods of the Borrower and its Domestic Subsidiaries exclusive of
End of Life Inventory, other than up to $20,000,000.00 of the value of Eligible
End of Life Inventory, as each of such terms is herein defined, from time to
time on hand valued at the lowest of (a) cost, (b) market value, or (c) the
valuation consistent with that employed in the preparation of the financial
statements of the Borrower referred to in Section 5.1 hereof.  ‘End of
Life Inventory’ shall mean inventory that the vendor of which has discontinued
or declared obsolete and whose sale is final and without return
privileges.  ‘Eligible End of Life Inventory’ means End of Life
Inventory located in the United States for which the Borrower or its Domestic
Subsidiaries have irrevocable purchase orders to sell to creditworthy Account
Debtors who are obligated to take delivery of same within two years of the date
of the relevant purchase order.”

    

    
      Section 3. Conditions
Precedent.  The amendments to the Credit Agreement set
forth in Section 2 hereof shall become effective, on the date of this Third
Amendment, upon the execution and delivery of this Third Amendment by the
Borrower, the Administrative Agent and each of the Lenders necessary to
constitute the Required Lenders and the satisfaction of the following
conditions:

    

    

    (A) Certified Copies and Other
Documents.  The Administrative Agent shall have received
certificates of an officer of the Borrower dated the date of this Third
Amendment certifying (x) no changes in the certificate of incorporation or
by-laws from the date of the Agreement or attaching copies of any amendments,
(y) true and correct copies of resolutions adopted by the board of directors of
the Borrower (1) authorizing the borrowings and the other extensions of credit
from the Lenders under the Agreement as amended hereby, the execution, delivery
and performance by the Borrower of this Third Amendment, and any related
documents (2) approving forms in substantially execution form of this Third
Amendment, and any related documents and (3) authorizing officers of the
Borrower to execute and deliver this Third Amendment, and any related documents,
and (z) the incumbency and specimen signatures of the officers of the Borrower
executing any documents delivered to the Administrative Agent or a Lender by the
Borrower in connection herewith.

    

    
      
        
        

      

      
        - 2
-

        
          

        

      

      
        
        

      

    

    (B) Approval of the
Administrative Agent and Agent’s Counsel. All other documents and legal
matters in connection with the transactions contemplated by this Third Amendment
shall be satisfactory in form and substance to the Administrative Agent and its
counsel.

    

    Section 4. Representations and
Warranties.  The Borrower represents and warrants to the
Lenders that the representations and warranties set forth in the Credit
Agreement and in the other Loan Documents are true and complete on the date of
this Third Amendment and as if made on and as of the date hereof (or, if such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

    

    Section 5. Borrower’s
Acknowledgments.  The Borrower acknowledges and agrees that the
Borrower has no claims, counterclaims, offsets, or defenses to the Loan
Documents and the performance of the Borrower’s obligations thereunder or if the
Borrower did have any such claims, counterclaims, offsets or defenses to the
Loan Documents or any transaction related to the Loan Documents, the same are
hereby waived, relinquished and released in consideration of execution and
delivery of this Third Amendment.

    

    Section 6. Acknowledgement of
Guarantors.  The Guarantors acknowledge and consent to all of
the terms and conditions of this Third Amendment and agree that this Third
Amendment and all documents executed in connection herewith do not operate to
reduce or discharge the Guarantors’ obligations under the Credit Agreement or
the other Loan Documents.  The Guarantors further acknowledge and
agree that the Guarantors have no claims, counterclaims, offsets, or defenses to
the Loan Documents and the performance of the Guarantors’ obligations thereunder
or if the Guarantors did have any such claims, counterclaims, offsets or
defenses to the Loan Documents or any transaction related to the Loan Documents,
the same are hereby waived, relinquished and released in consideration of
execution and delivery of this Third Amendment.

    

    Section 7. Governing Law; Execution in
Counterparts.  Except as herein provided, the Credit Agreement
shall remain unchanged and in full force and effect.  This Third
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument and any of the
parties hereto may execute this Third Amendment by signing any such
counterpart.  This Third Amendment shall be governed by, and construed
in accordance with, the internal laws of the State of New York (without regard
to New York conflicts of laws principles).

    

    Section 8. Amendment
Fee.  The Borrower agrees that in consideration for the Lenders
executing this Third Amendment, it shall pay a fee (the “Amendment Fee”) to the
Administrative Agent for the account of each Lender that executed and delivered
this Third Amendment on or prior to 5:00 p.m. (New York City time) on May 30,
2008 (or such later time as the Borrower and the Administrative Agent shall
agree) in an amount equal to $15,000.00 to be shared pro rata among the Lenders
so executing and delivering this Third Amendment in proportion to their
Revolving Credit Commitments.  The Amendment Fee shall be earned upon
the effective date of this Third Amendment and shall be payable on June 4,
2008.

     

    Section 9. Expenses,
etc.  The Borrower agrees to pay or reimburse the
Administrative Agent for all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
expenses of Certilman Balin Adler & Hyman, LLP) in connection with the
negotiation, preparation, execution and delivery of this Third Amendment and the
transactions contemplated hereby.

    

    Section 10. Effective
Date.  This Third Amendment is dated for convenience as of May
30, 2008 and shall be effective as of such date, on the delivery of an executed
counterpart to the Borrower upon satisfaction of the conditions precedent
contained in Section 3 hereof.

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        - 3
-

        
          

        

      

      
        
        

      

    

     

    
      IN WITNESS WHEREOF, the
parties hereto have caused this Third Amendment to Credit Agreement to be duly
executed and delivered by their duly authorized officers, all as of the day and
year first above written.

      

      
        	 
      	
                Borrower:

              
	 
      	 
      	 
      
	 
      	
                NU
      HORIZONS ELECTRONICS CORP.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Kurt
      Freudenberg                               

              
	 
      	 
      	
                Kurt
      Freudenberg

              
	 
      	 
      	
                Vice
      President, Treasurer and

              
	 
      	 
      	
                Chief
      Financial Officer

              
	 
      	 
      	 
      
	 
      	
                Guarantors:

              
	 
      	 
      	 
      
	 
      	
                NIC
      COMPONENTS CORP.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Kurt
      Freudenberg                               

              
	 
      	 
      	
                Kurt
      Freudenberg

              
	 
      	 
      	
                Executive
      Vice President, Treasurer and

              
	 
      	 
      	
                Chief
      Financial Officer

              
	 
      	 
      	 
      
	 
      	
                NU
      HORIZONS INTERNATIONAL CORP.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Kurt
      Freudenberg                               

              
	 
      	 
      	
                Kurt
      Freudenberg

              
	 
      	 
      	
                Executive
      Vice President, Treasurer and

              
	 
      	 
      	
                Chief
      Financial Officer

              
	 
      	 
      	 
      
	 
      	
                TITAN
      SUPPLY CHAIN SERVICES CORP.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Kurt
      Freudenberg                               

              
	 
      	 
      	
                Kurt
      Freudenberg

              
	 
      	 
      	
                Executive
      Vice President, Treasurer and

              
	 
      	 
      	
                Chief
      Financial Officer

              
	 
      	 
      	 
      
	 
      	
                RAZOR
      ELECTRONICS, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Kurt
      Freudenberg                               

              
	 
      	 
      	
                Kurt
      Freudenberg

              
	 
      	 
      	
                Executive
      Vice President, Treasurer and

              
	 
      	 
      	
                Chief
      Financial Officer

              

      

       

      
        
          
          

        

        
          - 4
-

          
            

          

        

        
          
          

        

      

       

      
        	 
      	
                NuXCHANGE
      B2B SERVICES, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Kurt
      Freudenberg                               

              
	 
      	 
      	
                Kurt
      Freudenberg

              
	 
      	 
      	
                Executive
      Vice President, Treasurer and

              
	 
      	 
      	
                Chief
      Financial Officer

              
	 
      	 
      	 
      
	 
      	
                Administrative
      Agent:

              
	 
      	 
      	 
      
	 
      	
                CITIBANK,
      N.A.,

              
	 
      	
                as
      Administrative Agent

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Stuart N.
      Berman                               

              
	 
      	 
      	
                Stuart
      N. Berman

              
	 
      	 
      	
                Vice
      President

              
	 
      	 
      	 
      
	 
      	
                Documentation
      Agent:

              
	 
      	 
      	 
      
	 
      	
                BANK
      OF AMERICA, N.A.,

              
	 
      	
                as
      Documentation Agent

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Steven J.
      Melicharek                             

              
	 
      	 
      	
                Steven
      J. Melicharek

              
	 
      	 
      	
                Senior
      Vice President

              
	 
      	 
      	 
      
	 
      	
                Syndication
      Agent:

              
	 
      	 
      	 
      
	 
      	
                JPMORGAN
      CHASE BANK, N.A.,

              
	 
      	
                as
      Syndication Agent

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                     
               

              
	 
      	 
      	
                Alicia
      T. Schreibstein

              
	 
      	 
      	
                Vice
      President

              
	 
      	 
      	 
      
	 
      	
                ISRAEL
      DISCOUNT BANK OF NEW YORK, as Syndication Agent

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Scott
      Fishbein                               

              
	 
      	 
      	
                Scott
      Fishbein

              
	 
      	 
      	
                First
      Vice President

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Roy
      Grossman                               

              
	 
      	
                Name:

              	
                Roy
      Grossman

              
	 
      	
                Title:

              	
                Senior
      Vice President 1

              

      

       

      
        
          
          

        

        
          - 5
-

          
            

          

        

        
          
          

        

      

       

      
        	
                Notice
      Addresses:

              	
                Lenders:

              
	 
      	 
      	 
      
	
                CITIBANK,
      N.A.

              	
                CITIBANK,
      N.A.

              
	
                730
      Veterans Memorial Highway

              	 
      	 
      
	
                Hauppauge,
      NY 11788

              	
                By:

              	
                /s/ Stuart N.
      Berman                               

              
	 
      	 
      	
                Stuart
      N. Berman

              
	 
      	 
      	
                Vice
      President

              

      

      

      
        	
                JPMORGAN
      CHASE BANK, N.A.

              	
                JPMORGAN
      CHASE BANK, N.A.

              
	
                395
      North Service Road, Floor 3

              	 
      	  
      
	
                Melville,
      NY 11747

              	
                By:

              	
                          
              

              
	 
      	 
      	
                Alicia
      T. Schreibstein

              
	 
      	 
      	
                      Vice
      President

              

      

      

      
        	
                ISRAEL
      DISCOUNT BANK OF NEW YORK

              	
                ISRAEL
      DISCOUNT BANK OF NEW YORK

              
	
                511
      Fifth Avenue

              	 
      	 
      
	
                New
      York, NY 10017

              	
                By:

              	
                /s/ Scott
      Fishbein                               

              
	 
      	 
      	
                Scott
      Fishbein

              
	 
      	 
      	
                First
      Vice President

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Roy
      Grossman                               

              
	 
      	
                Name:

              	
                Roy
      Grossman

              
	 
      	
                Title:

              	
                Senior
      Vice President 1

              

      

      

      
        	
                BANK
      OF AMERICA, N.A.

              	
                BANK
      OF AMERICA, N.A.

              
	
                1185
      Avenue of the Americas

              	 
      	 
      
	
                New
      York, NY 10036

              	
                By:

              	
                /s/ Steven J.
      Melicharek                             

              
	 
      	 
      	
                Steven
      J. Melicharek

              
	 
      	 
      	
                Senior
      Vice President

              

      

      

      
        	
                SOVEREIGN
      BANK

              	
                SOVEREIGN
      BANK

              
	
                330
      South Service Road

              	 
      	 
      
	
                Melville,
      NY 11747

              	
                By:

              	
                /s/ Christine
      Gerula                               

              
	 
      	 
      	
                Christine
      Gerula

              
	 
      	 
      	
                Senior
      Vice President

              

      

      

      
        	
                HSBC
      BANK USA, NATIONAL

              	
                HSBC
      BANK USA, NATIONAL

              
	
                ASSOCIATION

              	
                ASSOCIATION

              
	
                534
      Broad Hollow Road

              	 
      	 
      
	
                Melville,
      NY 11747

              	
                By:

              	
                /s/ Christopher J.
      Mendelsohn              

              
	 
      	 
      	
                Christopher
      J. Mendelsohn

              
	 
      	 
      	
                First
      Vice President

              

      

      

      
        	
                CAPITAL
      ONE, N.A. ,

              	
                CAPITAL
      ONE, N.A.,

              
	
                275
      Broadhollow Road

              	
                formerly
      known as North Fork Bank

              
	
                Melville,
      NY 11747

              	 
      	 
      
	 
      	
                By:

              	
                /s/ Kevin
      Brown                               

              
	 
      	 
      	
                Kevin
      Brown

              
	 
      	 
      	
                Senior
      Vice President

              
	 
      	 
      	 
      
	
                BANK
      LEUMI USA

              	
                BANK
      LEUMI USA

              
	
                562
      Fifth Ave.

              	 
      	 
      
	
                New
      York, NY 10036

              	
                By:

              	
                /s/ Patrick J.
      Gaffney                               

              
	 
      	 
      	
                Patrick
      J. Gaffney

              
	 
      	 
      	
                Vice
      President

              

      

       

      
        
          
          

        

        
          - 6
-NU
HORIZONS ELECTRONICS CORP.

    2002 KEY EMPLOYEE STOCK
INCENTIVE PLAN, AS AMENDED

    

    

    SECTION
1.  GENERAL
PROVISIONS

    

    
      	
              1.1.

            	
              Name and General
      Purpose

            

    

    

    The name
of this plan is the Nu Horizons Electronics Corp. 2002 Key Employee Stock
Incentive Plan (hereinafter called the "Plan").  The Plan is intended
to be a broadly-based incentive plan which enables Nu Horizons Electronics Corp.
(the "Company") and its subsidiaries and affiliates to foster and promote the
interests of the Company by attracting and retaining officers and employees of,
and consultants to, the Company who contribute to the Company's success by their
ability, ingenuity and industry, to enable such officers, employees and
consultants to participate in the long-term success and growth of the Company by
giving them a proprietary interest in the Company and to provide incentive
compensation opportunities competitive with those of competing
corporations.

    

    
      	
              1.2

            	
              Definitions

            

    

    

    
      	
               
      

            	
              a.

            	
              "Affiliate"
      means any person or entity controlled by or under common control with the
      Company, by virtue of the ownership of voting securities, by contract or
      otherwise.

            

    

    

    
      	
               
      

            	
              b.

            	
              "Board" means
      the Board of Directors of the
Company.

            

    

    

    
      	
               
      

            	
              c.

            	
              "Change in
      Control" means a change of control of the Company, or in any person
      directly or indirectly controlling the Company, which shall
      mean:

            

    

    

    
      	
               
      

            	
              (a)

            	
              a
      change in control as such term is presently defined in Regulation
      240.12b-(2) under the Securities Exchange Act of 1934, as amended (the
      "Exchange Act"); or

            

    

    

    
      	
               
      

            	
              (b)

            	
              if
      any "person" (as such term is used in Section 13(d) and 14(d) of the
      Exchange Act) other than the Company or any "person" who on the date of
      this Agreement is a director or officer of the Company, becomes the
      "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act)
      directly or indirectly, of securities of the Company representing twenty
      percent (20%) or more of the voting power of the Company's then
      outstanding securities; or

            

    

    

    
      	
               
      

            	
              (c)

            	
              if
      during any period of two (2) consecutive years during the term of this
      Plan, individuals who at the beginning of such period constitute the Board
      of Directors, cease for any reason to constitute at least a majority
      thereof.

            

    

    

    
      	
               
      

            	
              d.

            	
              "Committee"
      means the Committee referred to in Section 1.3 of the
  Plan.

            

    

    

    
      	
               
      

            	
              e.

            	
              "Common Stock”
      means shares of the Common Stock, par value $.0066 per share, of the
      Company or any class of common stock into which such Common Stock may
      hereafter be converted or for which such Common Stock may be exchanged
      pursuant to the Company’s certificate of incorporation or as part of a
      recapitalization, reorganization or similar
  transaction.

            

    

    

    
      	
               
      

            	
              f.

            	
              "Company" means
      Nu Horizons Electronics Corp., a corporation organized under the laws of
      the State of Delaware (or any successor
  corporation).

            

    

    

    
      	
               
      

            	
              g.

            	
              "Fair Market
      Value" means the closing market price of the Common Stock on the
      Nasdaq Stock Market on the trading day prior to the date of the grant or
      on any other date on which the Common Stock is to be valued
      hereunder.  If no sale shall have been reported on the Nasdaq
      Stock Market consolidated reporting system on such date, Fair Market Value
      shall be determined by the
Committee.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              h.

            	
              “Option
      Agreement” means the option agreement described in Section 2.4 of
      the Plan.

            

    

    

    
      	
               
      

            	
              i.

            	
              "Participant"
      means any officer or employee of, or consultant to, the Company, a
      Subsidiary or an Affiliate who is selected by the Committee to participate
      in the Plan.

            

    

    

    
      	
               
      

            	
              j.

            	
              “Restricted
      Stock” means an award of shares of Common Stock that is subject to
      restrictions under Section 3 of the
Plan.

            

    

    

    
      	
               
      

            	
              k.

            	
              “Restricted Stock Award
      Agreement” means the award agreement described in Section 3.2 of
      the Plan.

            

    

    

    
      	
               
      

            	
              l.

            	
              "Restriction
      Period" means the period of time referred to in Section 3.3 of the
      Plan.

            

    

    

    
      	
               
      

            	
              m.

            	
              “Senior Executive
      Officers” means the Company’s Chairman of the Board, President,
      Executive Vice President and Vice
President(s).

            

    

    

    
      	
               
      

            	
              n.

            	
              “Stock Option”
      or “Option” means
      any option to purchase Common Stock (including Restricted Stock) under
      Section 2 of the Plan.

            

    

    

    
      	
               
      

            	
              o.

            	
              "Subsidiary"
      means any corporation in which the Company possesses directly or
      indirectly 50% or more of the combined voting power of all classes of
      stock of such corporation.

            

    

    

    
      	
               
      

            	
              p.

            	
              "Total
      Disability" means accidental bodily injury or sickness which wholly
      and continuously disabled an optionee.  The Committee, whose
      decisions shall be final, shall make a determination of Total
      Disability.

            

    

    

    
      	
              1.3

            	
              Administration of the
      Plan

            

    

    

    The Plan
shall be administered by the Board or by a Committee appointed by the Board
consisting of two or more members of the Board who are Non-Employee Directors
(as defined by Rule 16b).  The Committee shall serve at the pleasure
of the Board and shall have such powers as the Board may, from time to time,
confer upon it.

    

    Subject
to this Section 1.3, the Committee shall have sole and complete authority to
grant, pursuant to the terms of the Plan, Stock Options and Restricted
Stock.  In addition, the Committee shall have sole and complete
authority to adopt, alter, amend or revoke such administrative rules, guidelines
and practices governing the operation of the Plan as it shall, from time to
time, deem advisable, and to interpret the terms and provisions of the
Plan.

    

    The
Committee shall keep minutes of its meetings and of action taken by it without a
meeting.  A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.

    

    
      	
              1.4

            	
              Eligibility

            

    

    

    Stock
Options and Restricted Stock may be granted only to officers, employees or
consultants of the Company or a Subsidiary or Affiliate. Any person who has been
granted any Option and/or Restricted Stock may, if he is otherwise eligible, be
granted additional awards of Options and/or Restricted Stock.

    

    
      	
              1.5

            	
              Shares

            

    

    

    The
aggregate number of shares of Common Stock reserved and available for issuance
pursuant to the Plan shall be 2,000,000 shares of Common Stock, or the number
and kind of shares of stock or other securities which shall be substituted for
such shares or to which such shares shall be adjusted as provided in Section
1.6.

    

    Such
number of shares may be set aside out of the authorized but unissued shares of
Common Stock or out of issued shares of Common Stock acquired for and held in
the Treasury of the Company, not reserved for any other
purpose.  Shares subject to, but not sold or issued under, any Option
terminating or expiring for any reason prior to its exercise in full or shares
subject to, but as to which restrictions have not lapsed under, any Restricted
Stock award which are forfeited for any reason, will again be available for
distribution in connection with future awards granted during the balance of the
term of the Plan.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              1.6

            	
              Adjustments Due to
      Stock Splits, Mergers, Consolidation,
  Etc.

            

    

    

    If, at
any time, the Company shall take any action, whether by stock dividend, stock
split, combination of shares or otherwise, which results in a proportionate
increase or decrease in the number of shares of Common Stock theretofore issued
and outstanding, the number of shares which are reserved for issuance under the
Plan, the number of shares which, at such time, are subject to Options or
Restricted Stock awards granted under the Plan shall, to the extent deemed
appropriate by the Committee, be increased or decreased in the same proportion,
provided, however, that the Company shall not be obligated to issue fractional
shares.

    

    Likewise,
in the event of any change in the outstanding shares of Common Stock by reason
of any recapitalization, merger, consolidation, reorganization, combination or
exchange of shares or other corporate change, the Committee shall make such
substitution or adjustments, if any, as it deems to be appropriate, as to the
number or kind of shares of Common Stock or other securities which are reserved
for issuance under the Plan, and the number of shares of Common Stock or other
securities which, at such time, are subject to Options and/or Restricted Stock
awards granted under the Plan.

    

    In the
event of a Change in Control, at the option of the Board or Committee, the
following acceleration and valuation provisions shall apply:

    

    (a)           all
Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable, and an optionee will be permitted to
surrender for cancellation within sixty (60) days after such Change in Control
any Option or portion of an Option which was granted more than six (6) months
prior to the date of such surrender, to the extent not yet exercised, and to
receive a cash payment in an amount equal to the excess, if any, of the Fair
Market Value (on the date of surrender) of the shares of Common Stock subject to
the Option or portion thereof surrendered, over the aggregate purchase price for
such shares under the Option.

    

    (b)           the
restrictions applicable to any Restricted Stock outstanding on the date of such
Change in Control, to the extent not already vested under the Plan, shall lapse
and such shares shall be deemed fully vested.

    

    
      	
              1.7

            	
              Non-Alienation of
      Benefits

            

    

    

    Except as
herein specifically provided, no right or unpaid benefit under the Plan shall be
subject to alienation, assignment, pledge or charge and any attempt to alienate,
assign, pledge or charge the same shall be void.  If any Participant
or other person entitled to benefits hereunder should attempt to alienate,
assign, pledge or charge any benefit hereunder, then such benefit shall, in the
discretion of the Committee, cease.

    

    
      	
              1.8

            	
              Withholding or
      Deduction for Taxes

            

    

    

    If, at
any time, the Company or any Subsidiary or Affiliate is required, under
applicable laws and regulations, to withhold, or to make any deduction for any
taxes, or take any other action in connection with any Option exercise or
Restricted Stock award, the Participant shall  be required to pay to
the Company or such Subsidiary or Affiliate, the amount of any taxes required to
be withheld, or, in lieu thereof, at the option of the Company, the Company or
such Subsidiary or Affiliate may accept a sufficient number of shares of Common
Stock to cover the amount required to be withheld.

    

    
      	
              1.9

            	
              Administrative
      Expenses

            

    

    

    The
entire expense of administering the Plan shall be borne by the
Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              1.10

            	
              General
      Conditions

            

    

    

    a.           The
Board or the Committee may, from time to time, amend, suspend or terminate any
or all of the provisions of the Plan, provided that, without the Participant's
approval, no change may be made which would alter or impair any right
theretofore granted to any Participant.

    

    b.           With
the consent of the Participant affected thereby, the Committee may amend or
modify any outstanding Option in any manner not inconsistent with the terms of
the Plan, including, without limitation, and irrespective of the provisions of
Section 2.3(c) below, to accelerate the date or dates as of which an installment
of an Option becomes exercisable; provided, that the Committee shall not have
the right to reprice any outstanding Options without the affirmative vote of a
majority of the stockholders of the Company voting on the repricing
proposal.

    

    c.           The
Board or Committee may determine the terms and restrictions applicable to
Restricted Stock, subject to the provisions of Section 3 of the
Plan.

    

    d.           Nothing
contained in the Plan shall prohibit the Company or any Subsidiary or Affiliate
from establishing other additional incentive compensation arrangements for
employees of the Company or such Subsidiary or Affiliate, subject to stockholder
approval if such approval is required.

    

    e.           Nothing
in the Plan shall be deemed to limit, in any way, the right of the Company or
any Subsidiary or Affiliate to terminate a Participant's employment with the
Company (or such Subsidiary or Affiliate) at any time.

    

    f.           Any
decision or action taken by the Board or the Committee arising out of or in
connection with the construction, administration, interpretation and effect of
the Plan shall be conclusive and binding upon all Participants and any person
claiming under or through any Participant.

    

    g.           No
member of the Board or of the Committee shall be liable for any act or action,
whether of commission or omission, (i) by such member except in circumstances
involving actual bad faith, nor (ii) by any other member or by any officer,
agent or employee.

    

    
      	
              1.11

            	
              Compliance with
      Applicable Law

            

    

    

    Notwithstanding
any other provision of the Plan, the Company shall not be obligated to issue any
shares of Common Stock, or grant any Option or Restricted Stock award with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps, as in its judgment are
reasonably required to prevent any such violation.

    

    
      	
              1.12

            	
              Effective
      Dates

            

    

    

    The Plan was adopted by the Board on
May 23, 2002, subject to stockholder approval, which was obtained on September
24, 2002.  The Plan shall terminate on May 22, 2012.

    

     

    SECTION
2.  STOCK
OPTION GRANTS

    

    
      	
              2.1

            	
              Authority of
      Committee

            

    

    

    Subject to the provisions of the Plan,
the Committee shall have the sole and complete authority to determine (i) the
Participants to whom Options shall be granted; (ii) the number of shares to be
covered by each Option; and (iii) the conditions and limitations, if any, in
addition to those set forth in Sections 2 and 3 hereof, applicable to the
exercise of an Option, including without limitation, the nature and duration
of  the restrictions, if any, to be imposed upon the sale or other
disposition of shares acquired upon exercise of an Option.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Stock
Options granted under the Plan shall be non qualified stock
options.

    

    The Committee shall have the authority
to grant Options. Options may be issued either alone, in addition to or in
tandem with other awards granted under the Plan and/or cash awards made outside
of the Plan.

    

    
      	
              2.2

            	
              Option Exercise
      Price

            

    

    

    The price
of Common Stock purchased upon the exercise of Options granted pursuant to the
Plan shall be the Fair Market Value thereof at the time that the Option is
granted.

    

    The
purchase price is to be paid in full in cash, certified or bank cashier's check
or, at the option of the Company, Common Stock valued at its Fair Market Value
on the date of exercise, or a combination thereof, when the Option is exercised
and stock certificates will be delivered only against such payment.

    

    
      	
              2.3

            	
              Option
      Grants

            

    

    

    Each
Option will be subject to the following provisions:

    

    a.           Term of
Option

    

    An Option
will be for a term of not more than ten years from the date of
grant.

    

    b.           Exercise

    

    Unless
otherwise provided by the Committee and except in the manner described below
upon the death of the optionee, an Option may be exercised only in installments
as follows:  up to one-half of the subject shares on and after the
first anniversary of the date of grant, up to all of the subject shares on and
after the second such anniversary of the date of the grant of such Option, but
in no event later than the expiration of the term of the Option.

    

    An Option shall be exercisable during
the optionee's lifetime only by the optionee and shall not be exercisable by the
optionee unless, at all times since the date of grant and at the time of
exercise, such optionee is an employee of, or providing services to, the
Company, any parent corporation of the Company or any Subsidiary or Affiliate,
except that, upon termination of all such employment or provision of services
(other than by death, Total Disability, or by Total Disability followed by death
in the circumstances provided below), the optionee may exercise an Option at any
time within three months thereafter but only to the extent such Option is
exercisable on the date of such termination.

    

    Upon termination of all such employment
or provision of services by Total Disability, the optionee may exercise such
Options at any time within one year thereafter, but only to the extent such
Option is exercisable on the date of such termination.

    

    In the event of the death of an
optionee (i) while an employee of, or providing services to, the Company, any
parent corporation of the Company, or any Subsidiary or Affiliate, or (ii)
within three months after termination of employment or provision of services
(other than for Total Disability) or (iii) within one year after termination on
account of Total Disability of all such employment or provision of services,
such optionee's estate or any person who acquires the right to exercise such
option by bequest or inheritance or by reason of the death of the optionee may
exercise such optionee's Option at any time within the period of three years
from the date of death.  In the case of clauses (i) and (iii) above,
such Option shall be exercisable in full for all the remaining shares covered
thereby, but in the case of clause (ii) such Option shall be exercisable only to
the extent it was exercisable on the date of such termination of employment or
provision of services.

    

    Notwithstanding the foregoing
provisions regarding the exercise of an Option in the event of death, Total
Disability, other termination of employment or provision of services or
otherwise, in no event shall an Option be exercisable in whole or in part after
the termination date provided in the Option Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    c.           Transferability

    

    An Option granted under the Plan shall
not be transferable otherwise than by will or by the laws of descent and
distribution, or to the extent permitted by the Board or the Committee to (i) a
member or members of the optionee’s family, (ii) a trust, (iii) a family limited
partnership or (iv) a similar estate planning vehicle primarily for members of
the optionee’s family.

    

    2.4           Agreements

    

    In
consideration of any Options granted to a Participant under the Plan, each such
Participant shall enter into an Option Agreement with the Company providing,
consistent with the Plan, such terms as the Committee may deem
advisable.

    

    

    SECTION
3.  RESTRICTED STOCK
AWARDS

    

    
      	
              3.1

            	
              Authority
      of Committee

            

    

    

    Shares of
Restricted Stock may be issued either alone, in addition to or in tandem with
other awards granted under the Plan and/or cash awards made outside of the
Plan.  Subject to the provisions of the Plan, the Committee shall have
authority to determine (i) the Participants to whom, and the time or times at
which, grants of Restricted Stock will be made; (ii) the number of shares to be
awarded; (iii) the price (if any) to be paid by the recipient of Restricted
Stock, subject to Section 3.2 of the Plan; (iv) any performance contingencies
associated with the vesting of such Restricted Stock; (v) the default vesting
date of the award; (vi) the time or times within which such Restricted Stock
awards may be subject to forfeiture; and (vii) all other terms and conditions of
such awards.  The provisions of Restricted Stock awards need not be
the same with respect to each Participant.

    

    
      	
              3.2

            	
              Awards and
      Certificates

            

    

    

    a.           The
prospective recipient of a Restricted Stock award shall not have any rights with
respect to such award unless and until such recipient has entered into a
Restricted Stock Award Agreement with the Company evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    b.           The
purchase price for shares of Restricted Stock may be equal to or more than their
par value.

    

    c.           Awards
of Restricted Stock must be accepted within a period of 60 days (or such shorter
period as the Committee may specify at grant) after the award date, by executing
a Restricted Stock Award Agreement and paying the price, if any, required under
Section 3.2(b).

    

    d.           Each
participant receiving a Restricted Stock award shall be issued a stock
certificate in respect of such shares of Restricted Stock.  Such
certificate shall be registered in the name of such Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such award.

    

    e.           The
Committee shall require that (i) the stock certificates evidencing shares of
Restricted Stock be held in the custody of the Company until the restrictions
thereon shall have lapsed, and (ii) as a condition of any Restricted Stock
award, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Restricted Stock covered by such award.

    

    
      	
              3.3

            	
              Restrictions and
      Conditions

            

    

    

    The
shares of Restricted Stock awarded pursuant to this Section 3 shall be subject
to the following restrictions and conditions:

    

    a.           Subject
to the provisions of the Plan and the Restricted Stock Award Agreement, during a
period set by the Committee commencing with the date of such award (the
“Restriction Period”), the Participant shall not be permitted to sell, transfer,
pledge or assign shares of Restricted Stock awarded under the
Plan.  Unless otherwise specified by the Committee, the Restricted
Period shall be no less than seven years. The Committee shall condition any
lapse of the Restricted Period upon the attainment of specified performance
goals as determined by the Committee at the time of grant, including performance
goals such as cumulative earnings per share or average return on equity, and may
condition the vesting of Restricted Stock on such other factors as the Committee
may determine, in its sole discretion.  Within these limitations, the
Committee, in its sole discretion, may also provide for the lapse of the
Restricted Period in installments. The Committee may accelerate or waive the
restrictions contained in a Restricted Stock award in whole or in part, based on
attainment of additional service or performance criteria as the Committee may
determine, in its sole discretion.

    

    b.           Except
as provided in this Section 3.3(a) and Section 3.3(b) of the Plan, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of the Company, including the right to vote the
shares and the right to receive any regular cash dividends paid out of current
earnings.  The Committee, in its sole discretion, as determined at the
time of award, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested in additional
Restricted Stock to the extent shares are available under Section 1.5 of the
Plan for such reinvestment (taking into account then outstanding Stock Options),
or otherwise reinvested.  Stock dividends, splits and distributions
issued with respect to Restricted Stock shall be treated as additional shares of
Restricted Stock that are subject to the same restrictions and other terms and
conditions that apply to the shares with respect to which such dividends are
issued, and the Committee may require the Participant to deliver an additional
stock power covering the shares issuable pursuant to such stock dividend, split
or distribution.  Any other dividends or property distributed with
regard to Restricted Stock, other than regular dividends payable and paid out of
current earnings, shall be held by the Company subject to the same restrictions
as the Restricted Stock.

    

    c.           Subject
to the applicable provisions of the Restricted Stock Award Agreement and this
Section 3, upon termination of a Participant’s employment with, or provision of
services to, the Company and any Subsidiary or Affiliate for any reason during
the Restriction Period, all shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.

     

    d.           If
and when the Restriction Period expires without a prior forfeiture of the
Restricted Stock subject to such Restriction Period, certificates for an
appropriate number of unrestricted shares, and other property held by the
Company with respect to such Restricted Stock, shall be delivered to the
Participant promptly.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]