Document:

exv4w2

 

EXHIBIT 4.2

AMENDED UCBH HOLDINGS, INC.

1998 STOCK OPTION PLAN

1. DEFINITIONS.

     (a) “Affiliate” means (i) a member of a controlled group of corporations
of which the Company is a member or (ii) an unincorporated trade or business
which is under common control with the Company as determined in accordance with
Section 414(c) of the Internal Revenue Code of 1986, as amended, (the “Code”)
and the regulations issued thereunder. For purposes hereof, a “controlled
group of corporations” shall mean a controlled group of corporations as defined
in Section 1563(a) of the Code determined without regard to Section 1563(a)(4)
and (e)(3)(C).

     (b) “Alternate Option Payment Mechanism” refers to one of several methods
available to a Participant to fund the exercise of a stock option set out in
Section 13 hereof. These mechanisms include: broker assisted cashless exercise
and stock for stock exchange.

     (c) “Award” means a grant of one or some combination of one or more
Non-statutory Stock Options, Incentive Stock Options and Option related rights
under the provisions of this Plan.

     (d) “Bank” means United Commercial Bank.

     (e) “Board of Directors” or “Board” means the board of directors of the
Company.

     (f) “Change in Control” means a change in control of the Bank or the
Company of a nature that; (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”); or (ii) results in a Change in Control within the
meaning of the Home Owners’ Loan Act of 1933, as amended (“HOLA”) and the Rules
and Regulations promulgated by the Office of Thrift Supervision (“OTS”) (or its
predecessor agency), as in effect on the date hereof (provided, that in
applying the definition of change in control as set forth under such rules and
regulations the Board shall substitute its judgment for that of the OTS); or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (A) any “person” (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank or the Company, representing 25% or more of the Bank’s
or Company’s outstanding securities except for any securities of the Bank
purchased by the Company formed by the Bank for that purpose in connection with
the reorganization of the Bank and any securities purchased by any tax
qualified employee benefit plan of the Bank or Company; or (B) individuals who
constitute the Board on the date hereof (the “Incumbent Board”) cease for any
reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was approved
by a vote of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company’s stockholders was
approved by the same Nominating Committee serving under an Incumbent Board,
shall be, for purposes of this clause (B), considered as though he were a
member of the Incumbent Board; or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Bank or
Company or similar transaction occurs in which the Bank or Company is not the
resulting entity; or (D) a solicitation of shareholders of the Company, by
someone other than the current management of the Company, seeking stockholder
approval of a plan of reorganization, merger or consolidation of the Bank or
Company or similar transaction with one or more corporations, as a result of
which the outstanding shares of the class of securities then subject to the
plan are exchanged for or converted into cash or property or securities not
issued by the Bank or Company; or (E) a tender offer is made for 25% or more of
the voting securities of the Bank or Company.

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

     (h) “Committee” means a committee consisting of the entire Board of
Directors or consisting solely of two or more members of the Board of Directors
who are non-employee directors as such term is defined under Rule
16b-3(b)(3)(i) under the Exchange Act as promulgated by the Securities and
Exchange Commission.

     (i) “Common Stock” means the Common Stock of the Company, par value, $.01
per share or any stock exchanged for shares of Common Stock pursuant to Section
14 hereof.

     (j) “Company” means UCBH Holdings, Inc.

     (k) “Date of Grant” means the effective date of an Award.

     (l) “Disability” means the permanent and total inability by reason of
mental or physical infirmity, or both, of a Participant to perform the work
customarily assigned to him, or in the case of a Director, to serve on the
Board. Additionally, a medical doctor selected or approved by the Board of
Directors must advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said Participant’s
lifetime.

     (m) “Effective Date” means April 17, 1998, the effective date of the Plan.

     (n) “Employee” means any person who is currently employed by the Company
or an Affiliate, including officers, but such term shall not include Outside
Directors.

     (o) “Employee Participant” means an Employee who holds an outstanding
Award under the terms of the Plan.

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

     (q) “Exercise Price” means the purchase price per share of Common Stock
deliverable upon the exercise of each Option in order for the option to be
exchanged for shares of Common Stock.

     (r) “Fair Market Value” means, when used in connection with the Common
Stock on a certain date, the price of the last reported sale of the Common
Stock at the close of the regular trading day’s market (not including any after
hours market), as reported by the National Association of Securities Dealers
Automated Quotation System (“NASDAQ”), the New York Stock Exchange (“NYSE”) or
the American Stock Exchange (“AMEX”) (as published by the Wall Street Journal,
if published) on such date or if the Common Stock was not traded on such date,
on the next preceding day on which the Common Stock was traded thereon or the
last previous date on which a sale is reported. If the Common Stock is not
reported on the NASDAQ, AMEX or the NYSE, the Fair Market Value of the Common
Stock is the value so determined by the Board in good faith.

     (s) “Incentive Stock Option” means an Option granted by the Committee to a
Participant, which Option is designated by the Committee as an Incentive Stock
Option pursuant to Section 7 hereof and is intended to be such under Section
422 of the Code.

     (t) “Limited Right” means the right to receive an amount of cash based
upon the terms set forth in Section 8 hereof.

     (u) “Non-statutory Stock Option” means an Option granted by the Committee
to a Participant pursuant to Section 6 hereof, which is not designated by the
Committee as an Incentive Stock Option or which is redesignated by the
Committee under Section 7 as a Non-Statutory Stock Option.

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     (v) “Option” means the right to buy a fixed amount of Common Stock at the
Exercise Price within a limited period of time designated as the term of the
option as granted under Section 6 or 7 hereof.

     (w) “Outside Director” means a member of the Board of Directors of the
Company or its Affiliates, who is not also an Employee.

     (x) “Outside Director Participant” means an Outside Director who holds an
outstanding Award under the terms of the Plan.

     (y) “Participant” means any Employee or Outside Director who holds an
outstanding Award under the terms of the Plan.

     (z) “Retirement” with respect to an Employee Participant means termination
of employment which constitutes retirement under any tax qualified plan
maintained by the Bank or the Company. However, “Retirement” will not be
deemed to have occurred for purposes of this Plan if a Participant continues to
serve on the Board of Directors of the Company or its Affiliates even if such
Participant is receiving retirement benefits under any retirement plan of the
Bank or the Company. With respect to an Outside Director Participant,
“Retirement” means the termination of service from the Board of Directors of
the Company or its Affiliates following written notice to the Board as a whole
of such Outside Director’s intention to retire or retirement as determined by
the Bank (or the Company’s) bylaws, or by reaching age 65, except that an
Outside Director shall not be deemed to have retired for purposes of the Plan
in the event he continues to serve as a consultant to the Board or as an
advisory director.

     (aa) “Termination for Cause” shall mean, in the case of an Outside
Director, removal from the Board of Directors, or, in the case of an Employee,
termination of employment, in both such cases as determined by the Board of
Directors, because of an act or acts of gross misconduct, willful neglect of
duties or commission of a felony or equivalent violation of law. No act, or
the failure to act, on Participant’s part shall be “willful” unless done, or
omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interest of the Bank or one of its
Affiliates.

2. ADMINISTRATION.

     (a) The Plan as regards Awards to employees of the Company or its
Affiliates, shall be granted and administered by the Committee. The Committee
is authorized, subject to the provisions of the Plan, to grant awards to
Employees and Outside Directors and to establish such rules and regulations as
it deems necessary for the proper administration of the Plan and to make
whatever determinations and interpretations in connection with the Plan it
deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.

     (b) Awards to Outside Directors shall be granted and administered by the
Committee, pursuant to the terms of this Plan.

3. TYPES OF AWARDS AND RELATED RIGHTS.

     The following Awards and related rights as described in Sections 6 through
11 hereof may be granted under the Plan:

     (a) Non-statutory Stock Options;

     (b) Incentive Stock Options;

     (c) Limited Rights

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4. STOCK SUBJECT TO THE PLAN.

     Subject to adjustment as provided in Section 14, the maximum number of
shares reserved for Awards under the Plan is 9,567,6001  shares of the Common
Stock. These shares of Common Stock may be either authorized but unissued
shares or authorized shares previously issued and reacquired by the Company.
To the extent that Awards are granted under the Plan, the shares underlying
such Awards will be unavailable for any other use including future grants under
the Plan except that, to the extent that Awards terminate, expire, are
forfeited or are canceled without having been exercised (in the case of Limited
Rights, exercised for cash), new Awards may be made with respect to these
shares.

5. ELIGIBILITY.

     Subject to the terms herein all Employees and Outside Directors shall be
eligible to receive Awards under the Plan.

6. NON-STATUTORY STOCK OPTIONS.

     The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded in the Plan, from time to time,
grant Non-statutory Stock Options to Employees and Outside Directors and, upon
such terms and conditions as the Committee may determine, grant Non-statutory
Stock Options in exchange for and upon surrender of previously granted Awards
under this Plan. Non-statutory Stock Options granted under this Plan are
subject to the following terms and conditions:

     (a) Exercise Price. The Exercise Price of each Non-statutory Stock Option
shall be determined by the Committee on the date the option is granted. Such
Exercise Price shall not be less than 100% of the Fair Market Value of the
Common Stock on the Date of Grant. Shares may be purchased only upon full
payment of the Exercise Price or upon operation of an Alternate Option Payment
Mechanism set out in Section 9 hereof.

     (b) Terms of Options. The term during which each Non-statutory Stock
Option may be exercised shall be determined by the Committee, but in no event
shall a Non-statutory Stock Option be exercisable in whole or in part more than
10 years from the Date of Grant. The Committee shall determine the date on
which each Non-statutory Stock Option shall become exercisable. The shares
comprising each installment may be purchased in whole or in part at any time
during the term of such Option after such installment becomes exercisable. The
Committee may, in its sole discretion, accelerate the time at which any
Non-statutory Stock Option may be exercised in whole or in part. The
acceleration of any Non-statutory Stock Option under the authority of this
paragraph creates no right, expectation or reliance on the part of any other
Participant or that certain Participant regarding any other unaccelerated
Non-statutory Stock Options.

     (c) Termination of Employment or Service. Upon the termination of a
Participant’s employment or service in the event of Disability, death or Change
in Control, all Non-statutory Stock Options shall immediately vest and be
exercisable for one year after such termination. In the event of Termination
for Cause or termination of a Participant’s employment or service for any other
reason including voluntary resignation, all Non-statutory Stock Options shall
be exercisable for a period of one year only as to those options which have
vested as of the date of the Participant’s termination of employment or
service. Any unvested Non-statutory Stock Options shall become null and void
and shall not be exercisable by or delivered to the Participant after such date
of termination.

	1	 	This number and all other share numbers referred to in this Plan reflect the
adjustments pursuant to the Company#s stock splits and additional shares
reserved pursuant to the Plan as of April 24, 2003.

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7. INCENTIVE STOCK OPTIONS.

     The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded in the Plan, from time to time,
grant Incentive Stock Options to Employees. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:

     (a) Exercise Price. The Exercise Price of each Incentive Stock Option
shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. However, if at the time an Incentive Stock Option is granted to
a Participant, the Participant owns Common Stock representing more than 10% of
the total combined voting securities of the Bank (or, under Section 424(d) of
the Code, is deemed to own Common Stock representing more than 10% of the total
combined voting power of all classes of stock of the Bank, by reason of the
ownership of such classes of stock, directly or indirectly, by or for any
brother, sister, spouse, ancestor or lineal descendent of such Participant, or
by or for any corporation, partnership, estate or trust of which such
Participant is a shareholder, partner or beneficiary), (“10% Owner”), the
Exercise Price per share of Common Stock deliverable upon the exercise of each
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Date of Grant. Shares may be purchased only upon
payment of the full Exercise Price or upon operation of an Alternate Option
Payment Mechanism set out in Section 9 hereof.

     (b) Amounts of Options. Incentive Stock Options may be granted to any
Employee in such amounts as determined by the Committee; provided that the
amount granted is consistent with the terms of Section 422 of the Code. In the
case of an option intended to qualify as an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time the Option is granted)
of the Common Stock with respect to which Incentive Stock Options granted are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Participant’s employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000. The provisions of this
Section 7(b) shall be construed and applied in accordance with Section 422(d)
of the Code and the regulations, if any, promulgated thereunder. To the extent
an award under this Section 7 exceeds this $100,000 limit, the portion of the
Options in excess of such limit shall be deemed a Non-statutory Stock Option.
The Committee shall have discretion to redesignate Options granted as Incentive
Stock Options as Non-Statutory Stock Options. Such redesignation shall not be
deemed to be a new grant or a regrant of such Options. Such Non-statutory
Stock Options shall be subject to Section 6 hereof.

     (c) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. If at the time an Incentive Stock Option is granted to
a Participant who is a 10% Owner, the Incentive Stock Option granted to such
Employee Participant shall not be exercisable after the expiration of five
years from the Date of Grant. No Incentive Stock Option granted under this
Plan is transferable except by will or the laws of descent and distribution and
is exercisable in his lifetime only by the Employee Participant to whom it is
granted.

     The Committee shall determine the date on which each Incentive Stock
Option shall become exercisable. The shares comprising each installment may be
purchased in whole or in part at any time during the term of such option after
such installment becomes exercisable. The Committee may, in its sole
discretion, accelerate the time at which any Incentive Stock Option may be
exercised in whole or in part. The acceleration of any Incentive Stock Option
under the authority of this paragraph creates no right, expectation or reliance
on the part of any other Participant or that certain Participant regarding any
other unaccelerated Incentive Stock Options.

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     (d) Termination of Employment. Upon the termination of a Participant’s
employment or service in the event of Disability, Retirement, death or Change
in Control, all Incentive Stock Options shall immediately vest and be
exercisable for one year after such termination. In the event of Termination
for Cause or termination of a Participant’s employment or service for any other
reason including voluntary resignation, all Incentive Stock Options shall be
exercisable for a period of one year only as to those options which have
vested as of the date of the Participant’s termination of employment or
service. Any unvested Incentive Stock Options shall become null and void and
shall not be exercisable by or delivered to the Participant after such date of
termination.

     (e) Compliance with Code. The Options granted under this Section are
intended to qualify as incentive stock options within the meaning of Section
422 of the Code, but the Company makes no warranty as to the qualification of
any option as an incentive stock option within the meaning of Section 422 of
the Code. All Options that do not so qualify shall be treated as Non-statutory
Stock Options.

8. LIMITED RIGHTS.

     Simultaneously with the grant of any Option to an Employee, the Committee
may grant a Limited Right with respect to all or some of the shares covered by
such Option. Limited Rights granted under this Plan are subject to the
following terms and conditions:

     (a) Terms of Rights. In no event shall a Limited Right be exercisable in
whole or in part before the expiration of six months from the Date of Grant of
the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control.

     The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, and only when the Fair Market Value of the underlying
shares on the day of exercise is greater than the Exercise Price of the
underlying Option.

     Upon exercise of a Limited Right, the underlying Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the purchase price and the Fair Market Value of the Common
Stock subject to the underlying option. The Limited Right is transferable only
when the underlying option is transferable and under the same conditions.

     (b) Payment. Upon exercise of a Limited Right, the holder shall promptly
receive from the Company an amount of cash or some other payment option found
in Section 12, equal to the difference between the Exercise Price of the
underlying option and the Fair Market Value of the Common Stock subject to the
underlying Option on the date the Limited Right is exercised, multiplied by the
number of shares with respect to which such Limited Right is being exercised.
Payments shall be less an applicable tax withholding as set forth in Section
15.

9. ALTERNATE OPTION PAYMENT MECHANISM

     The Committee has sole discretion to determine what form of payment it
will accept for the exercise of an Option. The Committee may indicate
acceptable forms in the Award Agreement covering such Options or may reserve
its decision to the time of exercise. No Option is to be considered exercised
until payment in full is accepted by the Committee or its agent.

     (a) Cash Payment. The exercise price may be paid in cash or by certified
check.

     (b) Borrowed Funds. To the extent permitted by law, the Committee may
permit all or a portion of the exercise price of an Option to be paid through
borrowed funds.

     (c) Exchange of Common Stock.

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          (i) The Committee may permit payment by the tendering of previously
acquired shares of Common Stock. This includes the use of “pyramiding
transactions” whereby some number of Options are exercised. The shares gained
through the exercise are then tendered back to the Bank as payment for some
other number of Options. This transaction may be repeated as needed to
exercise all of the Options available.

          (ii) Any shares of Common Stock tendered in payment of the exercise price
of an Option shall be valued at the Fair Market Value of the Common Stock on
the date prior to the date of exercise.

10. RIGHTS OF A SHAREHOLDER

     No Participant shall have any rights as a shareholder with respect to any
shares covered by an Option until the date of issuance of a stock certificate
for such shares. Nothing in this Plan or in any Award granted confers on any
person any right to continue in the employ or service of the Company or its
Affiliates or interferes in any way with the right of the Company or its
Affiliates to terminate a Participant’s services as an officer or other
employee at any time.

11. NON-TRANSFERABILITY

     Except to the extent permitted or restricted by the Code, the rules
promulgated under Section 16(b) of the Exchange Act or any successor statutes
or rules:

          (i) The recipient of an Award shall not sell, transfer, assign, pledge, or
otherwise encumber shares subject to the Award until full vesting of such
shares has occurred. For purposes of this section, the separation of
beneficial ownership and legal title through the use of any “swap” transaction
is deemed to be a prohibited encumbrance.

          (ii) Unless determined otherwise by the Committee and except in the event
of the Participant’s death or pursuant to a domestic relations order, an Award
is not transferable and may be earned in his lifetime only by the Participant
to whom it is granted. Upon the death of a Participant, an Award is
transferable by will or the laws of intestate succession. The designation of a
beneficiary does not constitute a transfer.

          (iii) If a recipient of an Award is subject to the provisions of Section
16 of the Exchange Act, shares of Common Stock subject to such Award may not,
without the written consent of the Committee (which consent may be given in the
Stock Award Agreement), be sold or otherwise disposed of within six months
following the date of grant of the Award.

12. AGREEMENT WITH GRANTEES.

     Each Award will be evidenced by a written agreement, executed by the
Participant and the Company or its Affiliates that describes the conditions for
receiving the Awards including the date of Award, the Exercise Price, the terms
or other applicable periods, and other terms and conditions as may be required
or imposed by the Plan, the Committee, the Board of Directors, tax law
considerations or applicable securities law considerations.

13. DESIGNATION OF BENEFICIARY.

     A Participant may, with the consent of the Committee, designate a person
or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Company and may be revoked in writing. If a
Participant fails effectively to designate a beneficiary, then the
Participant’s estate will be deemed to be the beneficiary.

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14. DILUTION AND OTHER ADJUSTMENTS.

     In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Company, the Committee will make such
adjustments to previously granted Awards, to prevent dilution or enlargement of
the rights of the Participant including any or all of the following:

     (a) adjustments in the aggregate number or kind of shares of Common Stock
that may underlie future Awards under the Plan;

     (b) adjustments in the aggregate number or kind of shares of Common Stock
underlying Awards already made under the Plan;

     (c) adjustments in the purchase price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such Options.

     No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All awards under
this Plan shall be binding upon any successors or assigns of the Company.

15. TAX WITHHOLDING.

     Awards under this Plan shall be subject to tax withholding to the extent
required by any governmental authority. Any withholding shall comply with Rule
16b-3, if applicable, or any amendment or successor rule. Shares of Common
Stock withheld to pay for tax withholding amounts shall be valued at their Fair
Market Value on the date the Award is deemed taxable to the Participant.

16. AMENDMENT OF THE PLAN.

     The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options, unless
permitted by the rules and regulations or staff pronouncements promulgated
under the Code, shall be submitted for shareholder approval to the extent
required by such law, regulation or interpretation.

     Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions, sections, and subsections of this Plan
will remain in full force and effect.

     No such termination, modification or amendment may affect the rights of a
Participant under an outstanding Award without the written permission of such
Participant

17. EFFECTIVE DATE OF PLAN.

     The Effective Date of the Plan shall be April 17, 1998.

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18. TERMINATION OF THE PLAN.

     The right to grant Awards under the Plan will terminate upon the earlier
of ten (10) years after the Effective Date of the Plan or the exercise of
Options, or related Limited Rights equivalent to the maximum number of shares
reserved under the Plan as set forth in Section 4. The Board of Directors has
the right to suspend or terminate the Plan at any time, provided that no such
action will, without the consent of a Participant or Outside Director
Participant, adversely affect his vested rights under a previously granted
Award.

19. APPLICABLE LAW.

     The Plan will be administered in accordance with the laws of the State of
Delaware to the extent not superseded by federal law.

20. SUCCESSORS AND ASSIGNS.

     All awards under this Plan shall be binding upon any successors or assigns
of the Company including any holding company that may be formed by the Company.

21. DELEGATION OF AUTHORITY.

     The Committee may delegate all authority for: the determination of forms
of payment to be made by or received by the Plan; the execution of Award
Agreements; the determination of Fair Market Value; the determination of all
other aspects of administration of the Plan to the executive officer(s) of the
Company. The Committee may rely on the descriptions, representations, reports
and estimates provided to it by the management of the Company for
determinations to be made pursuant to the Plan.

IN WITNESS WHEREOF, the Board of Directors of the Company has adopted this
Plan, as amended, at its regularly scheduled meeting on April 24, 2003, to be
executed by its duly authorized executive officer and the corporate seal to be
affixed and duly attested.

	 	 	 	 	 	 	 
	[CORPORATE SEAL]	 	 	 	UCBH Holdings, Inc.
	 
	 	 	 	 	 	 
	April 24, 2003

	 	 	 	By:
	 	/s/ Thomas S. Wu
	
 

	 	 	 	 	 	
 
	Date

	 	 	 	 	 	Thomas S. Wu
	

	 	 	 	 	 	Chairman, President and Chief Executive Officer
	 
	 	 	 	 	 	 
	ADOPTED BY THE BOARD OF DIRECTORS:
	 
	 	 	 	 	 	 
	April 24, 2003

	 	 	 	By:
	 	/s/ Eileen Romero
	
 

	 	 	 	 	 	
 
	Date

	 	 	 	 	 	Secretary

9<PAGE>
                                                                   EXHIBIT 10.31

                               SECOND AMENDMENT TO
                         AMENDED AND RESTATED REVOLVING
                          CREDIT AND SECURITY AGREEMENT

      THIS SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND
SECURITY AGREEMENT ("Amendment"), dated as of August 6, 2004, is by and among
ROBOTIC VISION SYSTEMS, INC., a corporation organized under the laws of the
State of Delaware ("Borrower"), RVSI INVESTORS, L.L.C., a limited liability
company organized under the laws of the State of Delaware ("RI") and the other
lenders which are now or which hereafter become a party to the Credit Agreement
referred to below (collectively, "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity,
"Agent").

                                    RECITALS

      A. Agent, RI, as a Lender, and Borrower are parties to a certain Amended
and Restated Revolving Credit and Security Agreement dated as of November 26,
2003, as same may be amended, restated or replaced from time to time, including
pursuant to the First Amendment (defined below) (the "Credit Agreement"),
pursuant to which Lender has agreed to extend financial accommodations to
Borrower as described therein.

      B. Agent, RI, as a Lender, and Borrower entered into a certain First
Amendment to Amended and Restated Revolving Credit and Security Agreement dated
as of June 25, 2004 (the "First Amendment").

      C. On or about July 26, 2004 Borrower received gross cash proceeds of
sales of Common Stock in the amount of approximately $2,400,000 and such
proceeds were delivered to Agent and applied to repay interest due in respect of
the Revolving Advances and in consequence thereof Borrower has requested an
increase in the Maximum Non-Guaranteed Revolving Advance Amount and, in
connection therewith, Borrower has requested that Agent and Lender amend the
definition of "Additional Maximum Non-Guaranteed Revolving Advance Amount" in
the Credit Agreement in order to make available $2,000,000 in Borrower's
revolving line of credit thereunder. Subject to the terms and conditions set
forth herein, Agent and Lender have agreed to such request as provided herein.

      D. Borrower has requested and Agent and Lender have agreed to amend the
Credit Agreement as provided herein.

      NOW, THEREFORE, for and in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

      1. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the meanings provided for in the Credit Agreement.

<PAGE>

      2. AMENDMENT. Upon satisfaction of the conditions precedent set forth in
Section 3 of this Amendment, the Credit Agreement is hereby amended as follows:

            2.1. Section 1 of the Credit Agreement is hereby amended by:

                  (a) amending and restating the defined term "Additional
            Maximum Non-Guaranteed Revolving Advance Amount" set forth therein,
            as follows:

                        "Additional Maximum Non-Guaranteed Revolving Advance
                        Amount" shall mean $2,000,000.

      3. CONDITIONS PRECEDENT. The amendments set forth in Section 2 above shall
be effective upon the execution and delivery of this Amendment by Borrower,
Agent and Lender and the delivery to Agent (or, in the case of the Additional
Shares described in clause (b) below, to Lender) of the following, all in form
and substance acceptable to Agent and Lender:

                  (a) required third party consents in respect of the terms of
            this Amendment, including that of the Export-Import Bank of the
            United States ("EXIM");

                  (b) 19,710 shares of Borrower's Common Stock issued to RI (the
            "Additional Shares"), all of which Additional Shares shall be duly
            authorized, validly issued, fully paid, and nonassessable as of the
            date of issuance thereof, shall be deemed Registrable Securities (as
            such term is defined in that certain Registration Rights Agreement
            dated as of June 25, 2004 made by and between Borrower and RI (the
            "June 2004 Registration Rights Agreement")), and shall be registered
            on the next-filed registration statement that may be used for the
            registration of such Additional Shares, but in no event no later
            than the Effectiveness Deadline Date (as that term is defined in the
            June 2004 Registration Rights Agreement) (with Borrower agreeing to
            all of the foregoing by its signature below);

                  (c) Reaffirmation of that certain Subordination, Forbearance
            and Waiver of Offset Rights Agreement dated April 11, 2003 executed
            by Pat V. Costa and Borrower; and

                  (d) such other documents as Agent and Lender may reasonably
            request in connection with this Amendment.

Reference is made to the First Amendment. By their signatures below, the parties
hereto acknowledge and agree that each of the conditions precedent to the
effectiveness of the First Amendment have been either satisfied or waived.

                                      -2-

<PAGE>

      4. EXPENSES. Borrower shall pay all fees, costs and expenses incurred by,
or charged by Agent, Lender and EXIM in connection with this Amendment and the
agreements, documents and other items contemplated hereunder.

      5. REAFFIRMATION OF GRANTS OF SECURITY INTERESTS. Borrower heretofore or
hereafter expressly acknowledges and agrees that all collateral, security
interests, liens, pledges and mortgages heretofore or hereafter granted to Agent
and Lender including, without limitation, such collateral, security interests,
liens, pledges and mortgages granted under the Credit Agreement and all
supplements thereto, or any of the Other Documents and all supplements thereto,
extend to and secure all of the obligations of Borrower to Agent and Lender, now
existing or hereafter arising including, without limitation, those arising in
connection with the Credit Agreement, as amended by this Amendment, upon the
terms set forth in such agreements, all of which security interests, liens,
pledges and mortgages are hereby ratified, reaffirmed, confirmed and approved.

      6. MISCELLANEOUS.

            6.1. LIMITED NATURE OF AMENDMENT. The parties hereto acknowledge and
agree that the terms and provisions of this Amendment amend, add to and
constitute a part of the Credit Agreement. Except as expressly waived or
modified and amended by the terms of this Amendment, all of the other terms and
conditions of the Credit Agreement and all documents executed in connection
therewith or referred to or incorporated therein remain in full force and effect
and are hereby ratified, reaffirmed, confirmed and approved.

            6.2. CONFLICT. If there is an express conflict between the terms of
this Amendment and the terms of the Credit Agreement, or any of the other
agreements or documents executed in connection therewith or referred to or
incorporated therein, the terms of this Amendment shall govern and control.

            6.3. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original.

            6.4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Agent and Lender as follows: (A) Borrower has all necessary
corporate power and authority to execute and deliver this Amendment and perform
its obligations hereunder; (B) this Amendment and the Credit Agreement, as
amended hereby, constitute the legal, valid and binding obligations of Borrower
and are enforceable against Borrower in accordance with their terms; and (C) all
representations and warranties of Borrower contained in the Credit Agreement,
the Other Documents and all other agreements, instruments and other writings
relating thereto are true and complete as of the date hereof.

            6.5. RESERVATION OF RIGHTS, RELEASE AND COVENANT NOT TO SUE.

            (a) Reference is made to that certain letter from Agent and Lender
      to Borrower dated June 23, 2004 reserving all rights with respect to
      certain Events of Default specified therein (the "Reservation of Rights
      Letter"). It is

                                      -3-

<PAGE>

      agreed and understood that the terms of the Reservation of Rights Letter
      are reaffirmed in all respects and that nothing herein shall be construed
      as a waiver of any existing Events of Default. Borrower hereby
      acknowledges and agrees that it has no defenses, offsets, recoupment,
      claims or counterclaims against or with respect to Agent or any Lender or
      against the enforcement of the Credit Agreement or any of the Other
      Documents, as modified hereby, and that the Agent and each Lender have not
      waived any of their respective rights or remedies under any such documents
      (individually and collectively "Defenses").

            (b) Borrower hereby forever releases and discharges each Released
      Party (defined below), jointly and severally, from any and all claims,
      demands, controversies, actions, causes of action, obligations,
      liabilities, costs, expenses, fees (including attorneys' and other
      professionals' fees, costs and expenses), and damages of whatsoever
      character, nature and kind, at law or in equity, which Borrower may now
      have against the Released Parties, or any of them, or which Borrower ever
      had, or which Borrower, its respective representatives, successors or
      assigns hereafter can, shall or may have, arising from or related in any
      way to the Credit Agreement, this Amendment or any of the Other Documents,
      or for, upon, or by reason of any other matter, cause or thing whatsoever,
      whether or not related in any way to the Credit Agreement, this Amendment
      or any of the Other Documents, arising or relating to the period prior to
      the date hereof (individually and collectively "Liabilities"). It is the
      intention of the parties hereto that the foregoing acknowledgment and
      release shall be effective as a bar to all Defenses and Liabilities, past
      and present, known and unknown, suspected and unsuspected arising from or
      in any way related to any act or omission) of any kind whatsoever, by any
      Released Party in any capacity whatsoever, occurring or commencing prior
      to the date hereof, including without limitation any act or omission, or
      series of similar or related acts or omissions, commencing prior to the
      date hereof and continuing after the date hereof. "Released Party" means
      (i) Agent, (ii) each Lender, (iii) each direct and indirect member of each
      Lender, (iv) each direct and indirect affiliate of Agent, each Lender and
      each direct and indirect member of each Lender, (v) each officer,
      director, member, partner, equity owner, agent, servant, employee,
      attorney and other representative of each of the Released Parties
      identified in clauses (i) through (iv) of this sentence, and (vi) each
      successor and assign of each Released Party.

            (c) In addition, in order to further induce Agent and Lender to
      enter this Amendment, and for other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, Borrower, on
      behalf of itself and its successors, assigns, and other legal
      representatives, hereby absolutely, unconditionally and irrevocably,
      covenants and agrees with and in favor of each Released Party that it will
      not sue (at law, in equity, in any regulatory proceeding or otherwise) any
      Released Party on the basis of any

                                      -4-

<PAGE>

      Liabilities. If Borrower or any of its successors, assigns or other legal
      representatives violates the foregoing covenant, Borrower, for itself and
      its successors, assigns and legal representatives, agrees to pay, in
      addition to such other damages as any Released Party may sustain as a
      result of such violation, all attorneys' fees and costs incurred by any
      Released Party as a result of such violation. Borrower hereby covenants
      and agrees that, but for the granting of this covenant pursuant to this
      Amendment, neither Agent nor Lender would have entered into this
      Amendment, and both Agent and Lender are materially relying hereon in
      entering into this Amendment.

            6.6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws (as opposed to conflicts of law
provisions) of the State of New York.

                            [SIGNATURE PAGE FOLLOWS]

                                      -5-

<PAGE>

      IN WITNESS WHEREOF, each of the parties has signed this Amendment as of
the day and year first above written.

                                BORROWER:

                                ROBOTIC VISION SYSTEMS, INC.

                                By: /s/ Jeffrey P. Lucas
                                   _________________________________________
                                Name:_______________________________________
                                Title:______________________________________

                                AGENT:

                                PNC BANK, NATIONAL ASSOCIATION, as Agent

                                By: /s/ Patrick McConnell
                                   _________________________________________
                                Name:_______________________________________
                                Title:______________________________________

                                LENDER:

                                RVSI INVESTORS, L.L.C., as Lender

                                By:      EGI-FUND (02-04) INVESTORS, L.L.C., its
                                         Managing Member

                                         By: /s/ Donald J. Liebentritt
                                            ____________________________________
                                         Name:__________________________________
                                         Title:_________________________________

                                      -6-

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