Document:

Exhibit
10.34

 

 

SEVENTH AMENDMENT

TO AMENDED AND RESTATED FINANCING AGREEMENT

 

THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED
FINANCING AGREEMENT (this “Amendment”) is made and entered into
effective as of December 16, 2003, by and among THE CIT GROUP/BUSINESS CREDIT,
INC. a New York corporation (hereinafter “CITBC”), in its individual
capacity and as Agent (hereinafter the “Agent”) for itself and the
Lenders hereafter named, WELLS FARGO
FOOTHILL, INC.,  a California corporation formerly known as Foothill Capital
Corporation (“FCC”), CONGRESS FINANCIAL CORPORATION (SOUTHWEST),
a Texas corporation (“CFC”), LASALLE BANK NATIONAL ASSOCIATION, a
national banking association (“LaSalle”), and any other party hereafter
becoming a Lender pursuant to Section 13 of the Agreement (as hereinafter
defined), each individually sometimes referred to as a “Lender” and
collectively the “Lenders”), LONE STAR TECHNOLOGIES, INC., a Delaware
corporation (herein “Parent”), LONE STAR STEEL COMPANY, a Delaware
corporation (herein “LSSC”), FINTUBE TECHNOLOGIES, INC., an Oklahoma
corporation (herein “FTI”), LONE STAR LOGISTICS, INC., a Texas
corporation (“Logistics”), STAR TUBULAR SERVICES, INC., a Texas
corporation formerly known as T&N Lone Star Warehouse Co. (“Star Tubular”),
TEXAS & NORTHERN RAILWAY COMPANY, a Texas corporation (“T&N Railway”),
FINTUBE CANADA, INC., a Delaware corporation (“FCI”), BELLVILLE TUBE
COMPANY, L.P., a Texas limited partnership, as successor in interest by
conversion to Bellville Tube Corporation, a Texas corporation (“BTCLP”),
WHEELING MACHINE PRODUCTS, L.P., a Texas limited partnership, successor in
interest by conversion to Wheeling Machine Products, Inc., formerly known as
Wheeling Acquisition Corporation and Star Tubular Technologies (Houston), Inc.
(“Wheeling”), STAR CAPITAL FUNDING, INC., a Delaware corporation (“Star
Capital”), DELTA TUBULAR PROCESSING, L.P., a Texas limited partnership,
successor in interest by conversion to Delta Tubular Processing, Inc., formerly
known as Delta Lone Star Acquisition, Inc. (“Delta Processing”), and
DELTA TUBULAR INTERNATIONAL, L.P., a Texas limited partnership, successor in
interest by conversion to Delta Tubular International, Inc., formerly known as
Star Tubular International. Inc., a Texas corporation (“Delta International”)  (herein Parent, LSSC, FTI, Logistics, Star
Tubular, T&N Railway, FCI, BTCLP, Wheeling, Star Capital, Delta Processing
and Delta International each individually a “Company” and collectively
as the “Companies”), ENVIRONMENTAL HOLDINGS, INC., a Delaware
corporation (“EHI”), ZINKLAHOMA, INC., a Delaware corporation (“Zinklahoma”),
LONE STAR STEEL INTERNATIONAL, INC., a Delaware corporation (“Steel
International”), LONE STAR STEEL SALES COMPANY, a Delaware corporation (“Steel
Sales”), ROTAC, INC., a Texas corporation (“Rotac”), LONE STAR ST
HOLDINGS, INC., a Delaware corporation (“ST Holdings”), BELLVILLE TUBE
GENERAL, LLC, a Nevada limited liability company (“BTG”), LONE STAR
NEVADA HOLDINGS, LLC, a Nevada limited liability company, formerly known as
Bellville Tube Limited, LLC (“Nevada Holdings”), STAR TUBULAR
TECHNOLOGIES, INC., a Delaware corporation (“STT”), WHEELING MACHINE
PRODUCTS GENERAL, LLC, a Nevada limited liability company (“Wheeling General”),
DELTA TUBULAR PROCESSING GENERAL, LLC, a Nevada limited liability company (“Delta
Processing General”), DELTA TUBULAR INTERNATIONAL GENERAL, LLC, a Nevada
limited liability company (“Delta International General”) and STAR
TUBULAR

 

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TECHOLOGIES (YOUNGSTOWN),
INC., an Ohio corporation (“STT Ohio”) (herein EHI, Zinklahoma, Steel
International, Steel Sales, Rotac, ST Holdings, BTG, Nevada Holdings, STT,
Wheeling General, Delta Processing General, Delta International General and STT
Ohio, each individually as “Guarantor” and collectively as the “Guarantors”),
and STAR ENERGY GROUP, LLC, a Delaware limited liability company (“SEG”
or the “New Guarantor”).

 

RECITALS:

 

A.                                   WHEREAS,
pursuant to the terms and subject to the conditions of that certain Amended and
Restated Financing Agreement dated as of October 8, 2001 between the Agent, the
Companies and the Guarantors (such Amended and Restated Financing Agreement, as
the same is hereby amended and may hereafter be amended from time to time,
being hereinafter referred to as the “Agreement”), the Companies were
granted a $100,000,000 revolving line of credit which included a letter of
credit facility;

 

B.                                     WHEREAS,
payment of the Obligations of the Companies is supported by (a) the guaranties
of the Guarantors (other than BTG, BTL, STT, Wheeling General, Delta Processing
General, Delta International General and STT Ohio) pursuant to that certain
Guaranty dated as of October 8, 2001 executed by the Guarantors (other than
BTG, BTL, STT, Wheeling General, Delta Processing General, Delta International
General and STT Ohio), (b) the guaranties of BTG and BTL pursuant to that
certain Guaranty dated as of December 31, 2001 executed by BTG and BTL, (c) the
guarantee of STT pursuant to that certain Guaranty dated as of September 30,
2002 executed by STT, and (d) the guarantee of Wheeling General, Delta
Processing General, Delta International General and STT Ohio pursuant to that
certain Guaranty dated August 29, 2003 
(collectively, the “Guaranties”);

 

C.                                     WHEREAS,
to secure, in part, the Obligations (as defined in the Agreement), the
Companies and the Guarantors have heretofore executed in favor of the Agent
certain Loan Documents (as defined in the Agreement), including, without
limitation, the Guaranties, which Loan Documents shall continue in full force
and effect upon the execution of this Amendment, all of the Loan Documents to
continue to secure the payment by the Companies of the Obligations, all as more
fully set forth therein and herein;

 

D.                                    WHEREAS,
the Companies have requested and, pursuant to the terms and subject to the
conditions hereof and in connection herewith, the Agent and the Lenders have
agreed to increase the Revolving Line of Credit (as defined in the Agreement)
to $125,000,000 and add SEG as a Guarantor and Obligor under the Loan
Agreement;

 

E.                                      WHEREAS,
in furtherance of the foregoing and to evidence the agreements of the parties
hereto in relation thereto the parties hereto desire to amend the Agreement as
hereinafter provided;

 

NOW, THEREFORE, in consideration of the premises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:

 

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AGREEMENT:

 

ARTICLE I

 

DEFINITIONS

 

1.01                        Capitalized terms used in this
Amendment are defined in the Agreement, as amended hereby, unless otherwise
stated.

 

ARTICLE II

 

AMENDMENTS TO AGREEMENT

 

Effective as of the
respective date herein indicated, the Agreement is hereby amended as follows:

 

2.01                        Amendment
and Restatement of Definition of “Acquisition”.  Effective as of the date of execution of this Amendment, the
definition of “Acquisition” set forth in Section 1 of the Agreement is amended
and restated to read in its entirety as follows:

 

“Acquisition shall mean
the purchase or other acquisition (including merger or consolidation) of any or
all of the following:  (a) more
than 50% of the Capital Stock of any Person; and (b) all or a part of the assets
of, or all or any part of a division of, any Person.”

 

2.02                        Amendment and Restatement of Definition of
“Anniversary Date”.  Effective as of the date of execution of
this Amendment, the definition of “Anniversary Date” set forth in Section 1 of
the Agreement is amended and restated to read in its entirety as follows:

 

“Anniversary Date
shall mean December 16, 2006 and the same date in every year thereafter.”

 

2.03                        Amendment
and Restatement of Definition of “Early Termination Fee”.  Effective as of the date of execution of
this Amendment, the definition of “Early Termination Fee” set forth in Section
1 of the Agreement is amended and restated to read in its entirety as follows:

 

“Early Termination Fee  shall:
(a)  mean the fee the Agent on
behalf of the Lenders is entitled to charge the Companies in the event the
Parent terminates the Revolving Line of Credit or this Financing Agreement on a
date prior to an Anniversary Date (the period from the Early Termination Date
to the Anniversary Date being herein called the “Early Termination Period”);
and (b) be determined by
multiplying the Revolving Line of Credit by (x) two percent (2%) per annum for
the portion, if any, of the Early Termination

 

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Period occurring on or before one (1) year from the
Seventh Amendment Closing Date, (y) one percent (1%) per annum for the portion,
if any, of the Early Termination Period occurring after one (1) year from the
Seventh Amendment Closing Date but on or before two (2) years from the Seventh
Amendment Closing Date; and (z) one-half of one percent (1/2%) per annum for
the portion, if any, of the Early Termination Period occurring after two (2)
years from the Seventh Amendment Closing Date but prior to an Anniversary Date,
in each case for partial years, prorated on the basis of the number of days
from the Early Termination Date to the end of such partial year.”

 

2.04                        Amendment
of Definition of “Guarantor” and “Guarantors”.  Effective as of the date of execution of this Amendment, the
references to “Guarantor” and “Guarantors” in the preamble to the Agreement and
throughout the Agreement shall be amended to include SEG (in addition to the
existing Guarantors).

 

2.05                        Amendment
and Restatement of Definition of “Permitted Merger”.  Effective as of the date of execution of
this Amendment, the definition of “Permitted Merger” set forth in Section 1 of
the Agreement is amended and restated to read in its entirety as follows:

 

“Permitted
Merger shall mean (a) the merger or consolidation of
any Guarantor with or into any other Guarantor, (b) the merger or
consolidation of any Guarantor with or into any Company as long as such Company
is the surviving Person, (c) the merger or consolidation of a Company into
another Company, (d) conversion of an Obligor into a different type of entity,
and (e) a merger or consolidation which is a Permitted Acquisition.”

 

2.06                        Amendment
and Restatement of Definition of “Revolving Line of Credit”.  Effective as of the date of execution of
this Amendment, the definition of “Revolving Line of Credit” set forth in
Section 1 of the Agreement is amended and restated to read in its entirety as
follows:

 

“Revolving Line of Credit shall mean the
aggregate commitment of the Lenders to make loans and advances pursuant to Section
3 of this Financing Agreement and issue Letters of Credit Guaranties pursuant
to Section 5 hereof to the Companies, in the aggregate amount of $125,000,000.”

 

2.07                        New
Definition.  Effective as of the date of this Amendment,
Section 1 of the Agreement is amended by adding the following new definition
thereto, to be inserted in appropriate alphabetical order:

 

“Seventh Amendment Closing Date shall mean December 16, 2003.”

 

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2.08                        Amendment of Subparagraph 7.5(a).  Effective as of the date hereof, the first sentence of clause
(a) of Paragraph 7.5 of Section 7 of the Agreement is hereby amended
in its entirety to read as follows:

 

“Each of the Obligors agrees to maintain insurance on
its Real Estate (other than undeveloped acreage), Equipment and Inventory under
such policies of insurance, with such insurance companies, in such reasonable
amounts and covering such insurable risks as are at all times reasonably
satisfactory to the Agent, Agent agreeing that flood insurance is not required
on any of the Real Estate owned by the Obligors as of the Seventh Amendment
Closing Date.”

 

2.09                        Amendment of Paragraph 7.8. 
Effective as of the date hereof, clause (b) of Paragraph 7.8 of
Section 7 of the Agreement is hereby amended in its entirety to read as
follows:

 

“(b) within forty five (45) days after the end of each
Fiscal Quarter a Consolidated Balance Sheet and Consolidating Balance Sheet as
at the end of such period and statements of profit and loss, cash flow and shareholders’
equity of the Companies and their consolidated subsidiaries, certified by an
authorized financial or accounting officer of the Companies; provided, however,
during any time when there are Revolving Loans outstanding, the financial
statements required by this clause (b) shall be prepared as of the end of each
calendar month and delivered within thirty (30) days after the end of each such
calendar month;”

 

2.10                        Amendment of Subparagraph 7.9(f).  Effective as of the date hereof, Subparagraph 7.9(f) of
Section 7 of the Agreement is hereby amended in its entirety to read as
follows:

 

“Assume, guarantee, endorse, or otherwise become
liable upon the obligations of any person, firm, entity or corporation, except
by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business and except (i) for
assumptions or guaranties of Permitted Indebtedness and (ii) for assumptions
and guaranties of accounts payable and other liabilities in connection with a
Permitted Acquisition or Permitted Merger;”

 

2.11                        Amendment of Subparagraphs 7.10(a) and 7.10(b).  Effective as of the date hereof,
Subparagraphs 7.10(a) and 7.10(b) of Section 7 of the Agreement are hereby
amended in their entirety to read as follows:

 

“(a)                            maintain
at all times during each Fiscal Quarter a Net Worth of not less than
$174,000,000, such amount to be increased on the last day of each successive
Fiscal Quarter, beginning with the Fiscal Quarter ending December 31,
2003, by an amount

 

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equal to the sum of (i) seventy-five percent
(75%) of the net income as defined by GAAP (with no deductions for net losses)
of the Companies and their consolidated subsidiaries during such Fiscal Quarter
(income of Subsidiaries acquired during any Fiscal Quarter shall be included
for only the period from the date of acquisition to the end of such Fiscal
Quarter), plus (ii) seventy-five percent (75%) of the net proceeds of any
equity issuance received by any Company during such Fiscal Quarter, and
decreased by (iii) the amount of any write-down of goodwill subsequent to
June 30, 2001, as a result of a determination that the value of the
goodwill or the acquired business related thereto is impaired; provided,
however, during any time when there are Revolving Loans outstanding, the
foregoing Net Worth covenant shall be tested at the end of each calendar month.

 

(b)                                 if
at any time Availability is less than $40,000,000 (the “Fixed Charge
Coverage Ratio Event”), the Companies shall maintain as of the end of the
Fiscal Quarter immediately prior to the date the Fixed Charge Coverage Ratio
Event occurred and each Fiscal Quarter thereafter for the 12 month period
ending with each such Fiscal Quarter, a Fixed Charge Coverage Ratio of not less
than 1.25 to 1.00; provided, however, during any time when there
are Revolving Loans outstanding, the foregoing Fixed Charge Coverage Ratio
covenant shall be tested at the end of each calendar month for the 12 month
period ending with each such calendar month.”

 

 

2.12                        Amendment of Schedules. 
Effective as of the date hereof, Schedules 1, 7(1), 7(14)(f),
7(14)(g), 7(14)(l), 7(14)(o) and 7(14)(p) of the Agreement are amended to add
to such Schedules the information requested thereon with respect to the New
Guarantor, such additions to such Schedules being described on Exhibit A
attached hereto

 

2.13                        Revolving
Loan Commitment. 
Effective as of the date of execution of this Amendment, the Revolving
Loan Commitment for each Lender will be the amount set forth under each
Lender’s name on the signature page hereof.

 

 

ARTICLE III

 

ASSUMPTION OF OBLIGATIONS AND
GRANT OF LIENS

 

3.01                        Assumption
of Obligations and Grant of Lien by SEG.  Effective as of the date of this Amendment, SEG agrees (a) to be
a Guarantor and Obligor under the Agreement and under that certain
Subordination Agreement dated October 8, 2001 executed by the
Companies and the Guarantors for the benefit of Agent and the other Lenders
(the “Subordination Agreement”), (b) to be bound by the terms and
provisions of the Agreement as a Guarantor and Obligor thereunder and to be
bound by the terms of the Subordination Agreement as a Guarantor and Obligor
thereunder to the same extent and with the same force and effect as if SEG had
been originally named as a party in each of such documents, (c) to assume all
covenants, agreements and duties as a Guarantor and Obligor under the Agreement
and as a Guarantor and Obligor under the Subordination Agreement, and (d) to
execute and deliver to CIT concurrently with the execution

 

6

 

hereof, a guaranty
agreement (in form and substance satisfactory to Agent) guaranteeing the prompt
payment and performance of all of the Obligations.   SEG hereby also grants to Agent for the benefit of the Lenders a
security interest in all Collateral now or hereafter owned by SEG pursuant to
the terms of Section 6 of the Agreement. 
SEG authorizes Agent to file financing statements covering the
Collateral in an authenticated record without its signature and ratify any such
filings made prior to the date hereof by Agent.

 

ARTICLE IV

 

CONDITIONS PRECEDENT

 

4.01                        Conditions to Effectiveness.  The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent in a manner
satisfactory to Agent, unless specifically waived in writing by Agent:

 

(a)                                  Agent
shall have received each of the following, each in form and substance
satisfactory to Agent, in its sole discretion, and, where applicable, each duly
executed by each party thereto, other than Agent:

 

(i)                                     This
Amendment, duly executed by Companies, the Guarantors and SEG;

 

(ii)                                  Certified
copies of the resolutions of the Board of Directors, Board of Managers or
Executive Committee of each of the Companies, the Guarantors and SEG,
authorizing the execution, delivery and performance of this Amendment and any
and all other Loan Documents executed by any of the Companies, the Guarantors
or SEG in connection therewith, along with a certificate of incumbency
certified by the secretary of SEG, and, if there has been any change from the
most recent incumbency certificates delivered by any of the Companies or the
Guarantors, a certificate of incumbency certified by the secretary of each of
the Companies and each of the Guarantors, with specimen signatures of the
officers of the Companies, the Guarantors and SEG who are authorized to sign
such documents, all in form and substance satisfactory to the Agent;

 

(iii)                               Fifth
Amendment to Stock Pledge Amendment duly signed by the Parent pledging all of
its ownership interest in SEG;

 

(iv)                              Pledge
Agreement duly signed by SEG pledging all of its membership interests in Nevada
Holdings, BTG, Wheeling General, Delta Processing General and Delta
International General;

 

(v)                                 A
Guaranty duly signed by SEG;

 

(vi)                              Opinion
from Fulbright & Jaworski L.L.P. opining, in form and substance
satisfactory to Agent, which shall cover such matters

 

7

 

incident to the
transactions contemplated by this Amendment as Agent may reasonably require and
the Companies, the Guarantors and SEG hereby authorize and direct such counsel
to deliver such opinions to Agent;

 

(vii)                           Evidence
satisfactory to the Agent that casualty insurance policies of all Companies and
Guarantors listing Agent as loss payee or additional insured, as the case may
be, have been amended to cover the New Guarantor as well as all Companies and
all Guarantors, and are in full force and effect, in form and substance
satisfactory to Agent; and

 

(viii)                        All
other documents Agent may request with respect to any matter relevant to this
Amendment or the transactions contemplated hereby.

 

(b)                                 The
representations and warranties contained herein and in the Agreement and the
other documents executed in connection with the Agreement (herein referred to
as “Loan Documents”), as each is amended hereby, shall be true and
correct as of the date hereof, as if made on the date hereof, except for such
representations and warranties as are by their express terms limited to a
specific date.

 

(c)                                  No
Default or Event of Default shall have occurred and be continuing, unless such
Default or Event of Default has been otherwise specifically waived in writing
by Agent.

 

(d)                                 All
corporate proceedings taken in connection with the transactions contemplated by
this Amendment and all documents, instruments and other legal matters incident
thereto shall be satisfactory to Agent.

 

(e)                                  The
Companies shall pay Agent an amendment fee in the amount of $343,750 for the
financial accommodations provided herein, such amendment fee to be distributed
by Agent as follows:  (i) $100,000 to
CITBC, (ii) $81,250 to CFC, (iii) $81,250 to FCC, and (iv) $81,250 to LaSalle.

 

ARTICLE V

NO WAIVER

 

5.01                        No Waiver.  Nothing contained herein shall be construed
as a waiver by Agent of any covenant or provision of the Agreement, the other
Loan Documents, this Amendment or any other contract or instrument between the
Obligors and Agent, and the failure of Agent at any time or times hereafter to
require strict performance by the Obligors of any provision thereof shall not
waive, affect or diminish any right of Agent to thereafter demand strict
compliance therewith. Agent hereby reserves all rights granted under the
Agreement, the other Loan Documents, this Amendment, and any other contract or
instrument between the Obligors and Agent.

 

8

 

ARTICLE VI

RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

 

6.01                        Ratifications.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and the other Loan Documents, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect.  The
Companies, the Guarantors and Agent agree that the Agreement and the other Loan
Documents, as amended hereby, shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.

 

6.02                        Representations
and Warranties. The Companies and the Guarantors hereby represent and
warrant to Agent that (a) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate or limited
partnership or limited liability company action (as applicable) on the part of
the Companies and the Guarantors and will not violate the Articles (or
Certificates) of Incorporation or Bylaws of the Companies and the Guarantors
that are corporations or the limited partnership agreements or certificates of
limited partnership of the Companies and the Guarantors that are limited
partnerships or the articles of formation/organization, regulations or limited
liability company agreements of the Companies that are limited liability
companies; (b) each of the Company’s and Guarantor’s Board of Directors or
Executive Committee (or the general partner of the applicable limited
partnership) or the members or the Board of Managers of the applicable limited
liability company has authorized the execution, delivery and performance of
this Amendment and any and all other Loan Documents executed and/or delivered
in connection herewith; (c) the representations and warranties contained in the
Agreement, as amended hereby, and any other Loan Document are true and correct
on and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date; (d) no Default or Event of Default
under the Agreement, as amended hereby, has occurred and is continuing, unless
such Default or Event of Default has been specifically waived in writing by
Agent; (e) the Companies and the Guarantors are in full compliance with all
covenants and agreements contained in the Agreement and the other Loan
Documents, as amended hereby; and (f) the Companies and the Guarantors have not
amended their Articles (or Certificates) of Incorporation or their Bylaws or
similar organizational documents since the date of the Agreement, except as
otherwise disclosed to Agent.

 

ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

7.01                        Survival
of Representations and Warranties. 
All representations and warranties made in the Agreement or any other
Loan Document, including, without limitation, any document furnished in
connection with this Amendment, shall survive the execution and delivery of
this Amendment and the other Loan Documents, and no investigation by Agent or
any closing shall affect the representations and warranties or the right of
Agent to rely upon them.

 

9

 

7.02                        Reference
to Agreement.  Each of the
Agreement and the other Loan Documents, and any and all other Loan Documents,
documents or instruments now or hereafter executed and delivered pursuant to
the terms hereof or pursuant to the terms of the Agreement, as amended hereby,
are hereby amended so that any reference in the Agreement and such other Loan
Documents to the Agreement shall mean a reference to the Agreement, as amended
hereby.

 

7.03                        Expenses
of Agent.  As provided in the
Agreement, Companies agree to pay on demand all costs and expenses incurred by
Agent in connection with the preparation, negotiation, and execution of this
Amendment and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including, without
limitation, the costs and fees of Agent’s legal counsel, and all costs and
expenses incurred by Agent in connection with the enforcement or preservation
of any rights under the Agreement, as amended hereby, or any other Loan
Documents, including, without, limitation, the costs and fees of Agent’s legal
counsel.

 

7.04                        Severability.  Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

 

7.05                        Successors
and Assigns.  This Amendment is
binding upon and shall inure to the benefit of Agent and Companies and their
respective successors and assigns, except that Companies may not assign or
transfer any of their rights or obligations hereunder without the prior written
consent of Agent.

 

7.06                        Counterparts.  This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.

 

7.07                        Effect
of Waiver.  No consent or
waiver, express or implied, by Agent to or for any breach of or deviation from
any covenant or condition by Companies shall be deemed a consent to or waiver
of any other breach of the same or any other covenant, condition or duty.

 

7.08                        Headings.  The headings, captions, and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.

 

7.09                        Applicable
Law.  THIS AMENDMENT AND ALL
OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE
AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

 

7.10                        Final
Agreement.  THE AGREEMENT AND
THE OTHER LOAN DOCUMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE
EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE
THIS AMENDMENT IS EXECUTED.  THE
AGREEMENT AND THE OTHER LOAN

 

10

 

DOCUMENTS, AS AMENDED
HEREBY, MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.  NO MODIFICATION, RESCISSION, WAIVER, RELEASE
OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A
WRITTEN AGREEMENT SIGNED BY COMPANIES AND AGENT.

 

7.11                        Release
by the Companies. THE COMPANIES HEREBY ACKNOWLEDGE THAT THEY HAVE NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART
OF ITS LIABILITY TO REPAY THE “OBLIGATIONS” OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM AGENT. 
THE COMPANIES HEREBY VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER
DISCHARGE AGENT, THE OTHER LENDERS, AND THEIR RESPECTIVE PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”), FROM
ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE COMPANIES MAY NOW OR HEREAFTER HAVE AGAINST
THE RELEASED PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE
OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY “LOANS”, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF
THIS AMENDMENT.

 

7.12                        Release
by the Guarantors.  Each
Guarantor hereby consents to the terms of this Amendment, confirms and ratifies
the terms of the Guaranty executed by such Guarantor, acknowledges that such
Guaranty is in full force and effect and ratifies the same, and acknowledges
that such Guarantor has no defense, counterclaim, set-off or any other claim to
diminish such Guarantor’s liability under such document. THE GUARANTORS EACH
HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE RELEASED PARTIES,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE GUARANTORS MAY NOW OR HEREAFTER HAVE AGAINST
THE RELEASED PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE
OUT OF CONTRACT, TORT, VIOLATION OF

 

11

 

LAW OR
REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY “LOANS”, INCLUDING, WITHOUT
LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER CREDIT
DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

 

[The
Remainder of this Page Intentionally Left Blank]

 

12

 

IN WITNESS WHEREOF, this Amendment has been executed
and is effective as of the date first above-written.

 

COMPANIES:

 

LONE STAR TECHNOLOGIES, INC.

FINTUBE TECHNOLOGIES, INC.

LONE STAR STEEL COMPANY

LONE STAR LOGISTICS, INC.

STAR TUBULAR SERVICES, INC.,
formerly known as T&N LONE STAR
WAREHOUSE CO.

TEXAS & NORTHERN RAILWAY COMPANY

FINTUBE CANADA, INC.
STAR CAPITAL FUNDING, INC.

 

 

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  
	
  Title:

  	
  Vice President of each of the

  foregoing companies

  
				

 

BELLVILLE TUBE COMPANY, L.P.

as successor in interest by conversion to

Bellville Tube Corporation

 

	
  By:

  	
  Bellville Tube General, LLC,

  its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

WHEELING MACHINE PRODUCTS, L.P., 

as successor in interest by conversion to Wheeling Machine Products, Inc.,

formerly known as Wheeling Acquisition Corporation and Star Tubular
Technologies (Houston), Inc.

 

	
  By:

  	
  Wheeling Machine Products General, LLC,

  its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

DELTA
TUBULAR PROCESSING, L.P.

as successor in interest by conversion to

Delta Tubular Processing, Inc., formerly known as Lone Star Acquisition, Inc.

 

	
  By:

  	
  Delta Tubular Processing General, LLC,

  its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

DELTA
TUBULAR INTERNATIONAL, L.P.

as successor in interest by conversion to

Delta Tubular International, Inc., formerly known as Star Tubular
International. Inc,

 

	
  By:

  	
  Delta Tubular International General, LLC,

  its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
   

  	
  Name:

  	
  Robert F. Spears

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

GUARANTORS:

 

ENVIRONMENTAL HOLDINGS, INC.

ZINKLAHOMA, INC.

LONE STAR STEEL INTERNATIONAL, INC.

LONE STAR STEEL SALES COMPANY

ROTAC, INC.

LONE STAR ST HOLDINGS, INC.

STAR TUBULAR TECHNOLOGIES, INC.

STAR TUBULAR TECHNOLOGIES (YOUNGSTOWN), INC

 

 

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  
	
  Title:

  	
  Vice President of each of the

  foregoing companies

  
				

 

 

BELLVILLE TUBE GENERAL, LLC
LONE STAR NEVADA HOLDINGS, LLC,

formerly known as Belleville Tube Limited, LLC

WHEELING
MACHINE PRODUCTS GENERAL, LLC
DELTA TUBULAR PROCESSING GENERAL, LLC

DELTA TUBULAR INTERNATIONAL GENERAL, LLC,

 

 

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  
	
  Title:

  	
  Vice President of each of the

  foregoing limited liability companies

  
				

 

NEW
GUARANTOR:

 

STAR
ENERGY GROUP, LLC

 

 

	
  By:

  	
  /s/ Robert F. Spears

  	
   

  
	
  Name:

  	
  Robert F. Spears

  
	
  Title:

  	
  Vice President

  
				

 

LENDERS:

 

THE CIT GROUP/BUSINESS CREDIT, INC.

as Agent and Lender

 

 

	
  By:

  	
  /s/ Mark Porter

  	
   

  
	
  Name:

  	
  Mark Porter

  
	
  Title:

  	
  Vice President

  
				

 

Revolving Loan Commitment:  $40,000,000.00

 

 

WELLS
FARGO FOOTHILL, INC., formerly
known as Foothill Capital Corporation
as Lender

 

 

	
  By:

  	
  /s/ Lan Wong

  	
   

  
	
  Name:

  	
  Lan Wong

  
	
  Title:

  	
  Vice President

  
					

 

Revolving Loan Commitment:  $30,000,000.00

 

 

LASALLE BANK NATIONAL ASSOCIATION

as Lender

 

	
  By:

  	
  /s/ June
  Courtney

  	
   

  
	
  Name:

  	
  June Courtney

  
	
  Title:

  	
  Senior Vice
  President

  
					

 

Revolving Loan Commitment:  $25,000,000.00

 

 

CONGRESS
FINANCIAL CORPORATION (SOUTHWEST)

as Lender

 

	
  By:

  	
  /s/ Joe T. Curdy

  	
   

  
	
  Name:

  	
  Joe T. Curdy

  
	
  Title:

  	
  Vice President

  
					

 

Revolving Loan Commitment:  $30,000,000.00

 

 

EXHIBIT
A

to

SEVENTH
AMENDED AND RESTATED FINANCING AGREEMENT

 

Addition
to Schedule 1

 

None

 

Addition
to Schedule 7(l)

 

Exact Name of Obligor:

Star Energy Group, LLC

 

 

State of Incorporation:

Delaware

 

 

Federal Tax I.D. No.:

20-0307551

 

 

Chief Executive Office(s):

15660 Dallas Parkway, Suite 500

Dallas, Texas 75248

 

 

Tradenames:

None

 

 

Prior Names:

None

 

 

Charter No.:

DE3707019 (Filing Number)

 

 

Addition
to Schedule 7(14)(f)

 

Locations of Owned Real Property:

 

None

 

Locations of Leased Real Property:

 

333 N. Sam Houston Parkway, Suite 405/406

Houston, TX 
77060

 

 

Additions
to Schedule 7(14)(g)

 

None

 

Additions
to Schedule 7(14)(l)

 

None

 

Additions
to Schedule 7(14)(o)

 

Subsidiaries of Lone Star Technologies, Inc.:

 

Star Energy Group, LLC

 

Additions
to Schedule 7(14)(p)

 

NoneExhibit 10.7

 

 

1997
OMNIBUS INCENTIVE PLAN

 

MB
Financial, Inc.

 

As
modified through February 24, 2004

 

 

MB FINANCIAL, INC.

 

1997 OMNIBUS INCENTIVE PLAN

 

TABLE OF CONTENTS

 

	
   

  	
  Section

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  1.  ESTABLISHMENT, PURPOSE AND DURATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Establishment of the Plan

  	
   

  
	
   

  	
  1.2

  	
  Purpose of the Plan

  	
   

  
	
   

  	
  1.3

  	
  Duration of the Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  2.  DEFINITIONS AND CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Definitions

  	
   

  
	
   

  	
  2.2

  	
  Gender and Number

  	
   

  
	
   

  	
  2.3

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  3.  ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  The
  Committee

  	
   

  
	
   

  	
  3.2

  	
  Authority of the Committee

  	
   

  
	
   

  	
  3.3

  	
  Decisions Binding

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  4.  SHARES SUBJECT TO THE PLAN; AWARDS TO DIRECTORS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Number of Shares

  	
   

  
	
   

  	
  4.2

  	
  Maximum
  Awards

  	
   

  
	
   

  	
  4.3

  	
  Awards to Directors

  	
   

  
	
   

  	
  4.4

  	
  Lapsed
  Awards

  	
   

  
	
   

  	
  4.5

  	
  Adjustments in Authorized Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  5.  ELIGIBILITY AND PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Eligibility

  	
   

  
	
   

  	
  5.2

  	
  Actual Participation

  	
   

  

 

i

 

	
  ARTICLE  6.  STOCK OPTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Grant of Options

  	
   

  
	
   

  	
  6.2

  	
  Option Agreement

  	
   

  
	
   

  	
  6.3

  	
  Exercise
  Price

  	
   

  
	
   

  	
  6.4

  	
  Duration of Options

  	
   

  
	
   

  	
  6.5

  	
  Exercise of Options

  	
   

  
	
   

  	
  6.6

  	
  Payment

  	
   

  
	
   

  	
  6.7

  	
  Restrictions on Share Transferability

  	
   

  
	
   

  	
  6.8

  	
  Termination of Employment or Service Due to
  Death, Disability or Retirement

  	
   

  
	
   

  	
  6.9

  	
  Termination of Employment for Other Reasons

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  7.  STOCK APPRECIATION RIGHTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Grant
  of SARs

  	
   

  
	
   

  	
  7.2

  	
  Exercise of SARs

  	
   

  
	
   

  	
  7.3

  	
  SAR
  Agreement

  	
   

  
	
   

  	
  7.4

  	
  Term
  of SARs

  	
   

  
	
   

  	
  7.5

  	
  Payment of SAR Amount

  	
   

  
	
   

  	
  7.6

  	
  Termination of Employment or Service Due to Death, Disability or
  Retirement

  	
   

  
	
   

  	
  7.7

  	
  Termination
  of Employment for Other Reasons

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  8.  RESTRICTED STOCK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Grant of Restricted Stock

  	
   

  
	
   

  	
  8.2

  	
  Restricted Stock Agreement

  	
   

  
	
   

  	
  8.3

  	
  Other Restrictions

  	
   

  
	
   

  	
  8.4

  	
  Certificate Legend

  	
   

  
	
   

  	
  8.5

  	
  Removal of Restrictions

  	
   

  
	
   

  	
  8.6

  	
  Voting
  Rights

  	
   

  
	
   

  	
  8.7

  	
  Dividends and Other Distributions

  	
   

  
	
   

  	
  8.8

  	
  Termination
  of Employment or Service Due to Death, Disability or Retirement

  	
   

  
	
   

  	
  8.9

  	
  Termination
  of Employment or Service for Other Reasons

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  9.  TRANSFERABILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  10.  BENEFICIARY DESIGNATION

  	
   

  

 

ii

 

	
  ARTICLE  11.  RIGHTS OF EMPLOYEES AND DIRECTORS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Employment or Service

  	
   

  
	
   

  	
  11.2

  	
  Participation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  12.  CHANGE IN CONTROL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  In
  General

  	
   

  
	
   

  	
  12.2

  	
  Definition

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  13.  AMENDMENT, MODIFICATION AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Amendment, Modification and Termination

  	
   

  
	
   

  	
  13.2

  	
  Awards Previously Granted

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  14.  WITHHOLDING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Tax Withholding

  	
   

  
	
   

  	
  14.2

  	
  Share Withholding

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  15.  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  16.  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE  17.  REQUIREMENTS OF LAW

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  Requirements of Law

  	
   

  
	
   

  	
  17.2

  	
  Governing Law

  	
   

  

 

iii

 

MB FINANCIAL, INC.

 

1997 OMNIBUS INCENTIVE PLAN

 

ARTICLE 1.  ESTABLISHMENT, PURPOSE AND DURATION

 

1.1 Establishment of the Plan. The Company
hereby establishes an incentive compensation plan to be known as the “MB
Financial, Inc. 1997 Omnibus Incentive Plan” (the “Plan”), as set forth in this
document. The Plan permits the granting of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights and Restricted Stock.

 

Upon approval
by the Board of Directors of the Company, subject to ratification by an
affirmative vote of holders of a majority of Shares present and entitled to
vote at the 1997 Annual Meeting of the Company at which a quorum is present,
the Plan shall become effective as of January 1, 1997 (the “Effective Date”),
and shall remain in effect as provided in Section 1.3 herein.  The Plan was subsequently modified on
July 30, 1997, February 10, 1999, April 18, 2002, May 15, 2002,
January 22, 2003, November 19, 2003 and February 24, 2004.

 

1.2 Purpose of the Plan.  The purpose of the Plan is to promote the success, and enhance
the value, of the Company by linking the personal interests of Employees and
Directors with those of Company shareholders.

 

The Plan is
further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of Employees and Directors upon
whose judgment, interest, and special effort the successful conduct of its
operation largely is dependent.

 

1.3 Duration of the Plan.  Subject to approval by the Board of Directors
of the Company and ratification by the shareholders of the Company, the Plan
shall commence on the Effective Date, as described in Section 1.1 herein,
and shall remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 13 herein.  However, in no event may an Award be granted
under the Plan on or after the fifteenth anniversary of the Plan’s Effective
Date.

 

ARTICLE 2.  DEFINITIONS AND CONSTRUCTION

 

2.1 Definitions. 
Whenever used in the Plan, the following terms shall have the meanings
set forth below:

 

(a)                      “Award”
means, individually or collectively, a grant under the Plan of Options, Stock
Appreciation Rights or Restricted Stock.

 

(b)                     “Board”
or “Board or Directors” means the Board of Directors of the Company.

 

(c)                      “Board Compensation” has the
meaning set forth in Section 4.3 herein.

 

1

 

(d)                     “Cause”
means Participant’s personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties or willful violation of any law, rule, regulation (other
than traffic violations or similar offenses) or final cease-and-desist
order.  For purposes of this subsection,
no act, or failure to act, on Participant’s part shall be considered “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 Company. In
determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the financial institutions industry.  A Participant may be terminated for Cause by
an executive officer of the Company, and a Participant who is an executive
officer of the Company may be terminated for Cause by the Board of Directors.

 

(e)                      “Change
in Control” of the Company has the meaning set forth in Section 12.2
herein.

 

(f)                        “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor code thereto, and the rules and regulations thereunder.

 

(g)                     “Committee”
means the Committee, as specified in Section 3.1 herein, appointed by the
Board to administer the Plan.

 

(h)                     “Company”
means (i) with respect to periods prior to November 6, 2001, MB Financial,
Inc., a Delaware corporation, and (ii) with respect to periods on and after
November 6, 2001, MB Financial, Inc., a Maryland corporation, or any
successor thereto.

 

(i)                         “Director”
means any individual who is a member of the Board of Directors or the board of
directors of a Subsidiary or an advisory director of the Company or a
Subsidiary who is not currently an Employee of the Company or a Subsidiary.

 

(j)                         “Disability”
means a permanent and total disability, within the meaning of Code
Section 22(e)(3), as determined by the Committee in good faith, upon
receipt of sufficient competent medical advice from one or more individuals,
selected by the Committee, who are qualified to give professional medical
advice.

 

(k)                      “Employee”
means a full-time, nonunion, salaried employee of the Company or any
Subsidiary.  Directors who are not
otherwise employed by the Company or any Subsidiary shall not be considered
Employees under the Plan.

 

(l)                         “Exercise
Price” means the price at which a Share may be purchased by a Participant
pursuant to an Option, as determined by the Committee.

 

2

 

(m)                   “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time,
or any successor statute thereto, and the rules and regulations thereunder.

 

(n)                     “Fair
Market Value” means the closing market price per share of one Share on the
relevant date, according to a stock quotation source selected by the
Committee.  If the Shares did not trade
on the relevant date, then Fair Market Value is determined as of the most
recent date for which a quoted price is available, or as of the most recent
date for which quoted bid and asked prices are available, whichever is most
recent.  Should Fair Market Value be
determined at the time of the most recent quoted bid and asked prices, Fair
Market Value shall be equal to the bid price.

 

(o)                     Reserved.

 

(p)                     “Grant
Price” means the stock price above which a SAR entitles the recipient to any
increase in value, as determined by the Committee.

 

(q)                     “Incentive
Stock Option” or “ISO” means an option to purchase Shares, granted under
Article 6 herein, which is designated as an Incentive Stock Option and
meets the requirements of Section 422 of the Code.

 

(r)                        “Nonqualified
Stock Option” or “NQSO” means an option to purchase Shares, granted under
Section 4.3 herein or Article 6 herein, which is not an Incentive
Stock Option.

 

(s)                      “Option”
means an Incentive Stock Option or a Nonqualified Stock Option.

 

(t)                        “Participant”
means an Employee or Director who has outstanding an Award granted under the
Plan.

 

(u)                     “Period
of Restriction” means the period during which the transfer of Shares of
Restricted Stock is limited in some way (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to
a substantial risk of forfeiture, as provided in Article 8 herein.

 

(v)                     “Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act.

 

(w)                   “Retirement”
means termination of a Participant’s employment with the Company and its
Subsidiaries after the Participant attains age 65.

 

(x)                       “Related”
means (i) in the case of a SAR or other right, a SAR or other right which is granted
in connection with, and to the extent exercisable, in whole or in part, in lieu
of, an Option or another right and (ii) in the case of an Option, an Option
with respect to which and to the extent a SAR or other right is exercisable, in
whole or in part, in lieu thereof.

 

3

 

(y)                     “Restricted
Stock” means an Award granted pursuant to Section 4.3 herein or
Article 8 herein.

 

(z)                       “Shares”
means shares of the common stock of the Company.

 

(aa)                “Stock
Appreciation Right” or “SAR” means an Award, designated as an SAR, granted
pursuant to Article 7 herein.

 

(bb)              “Stock
Split” has the meaning set forth in Section 4.1 herein.

 

(cc)                “Subsidiary”
means any corporation in which the Company owns directly, or indirectly through
subsidiaries, at least 50% of the total combined voting power of all classes of
stock, or any other entity (including, but not limited to, partnerships and
joint ventures) in which the Company owns at least 50% of the combined equity
thereof.

 

2.2 Gender and Number.  Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural shall include the
singular and the singular shall include the plural.

 

2.3 Severability. 
In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.

 

ARTICLE 3.  ADMINISTRATION

 

3.1 The Committee. 
The Plan shall be administered by a Committee, consisting of two or more
members of the Board of Directors, each of whom (i) shall be an “outside
director,” as defined under Section 162(m) of the Code and (ii) shall be a
“Non-Employee Director,” as defined in Rule 16b-3 under the Exchange Act.  The members of the Committee shall be
appointed by the Board of Directors.

 

3.2 Authority of the Committee.  The Committee shall have full power except
as limited by law or by the charter or bylaws of the Company or by resolutions
adopted by the Board of Directors, and subject to the provisions herein, to
determine the size and types of Awards; to determine the terms and conditions
of such Awards in a manner consistent with the Plan; to construe and interpret
the Plan and any agreement or instrument entered into under the Plan; to
establish, amend, or waive rules and regulations for the Plan’s administration;
and (subject to the provisions of Article 13 herein) to amend the terms
and conditions of any outstanding Award to the extent such terms and conditions
are within the discretion of the Committee as provided in the Plan.  Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of
the Plan.  As permitted by law, the
Committee may delegate its authorities as identified hereunder.

 

3.3 Decisions Binding.  All determinations and decisions made by the Committee pursuant
to the provisions of the Plan and all related orders or resolutions of the
Board of

 

4

 

Directors shall be final, conclusive, and
binding on all Persons, including the Company, its shareholders, employees,
Participants, and their respective successors.

 

ARTICLE 4.  SHARES SUBJECT TO THE PLAN; AWARDS TO
DIRECTORS

 

4.1 Number of Shares.  Subject to adjustment as provided in Section 4.5 herein, the
total number of Shares available for grant under the Plan may not exceed
3,750,000 (which reflects the adjustment for the three-for-two stock split in
the form of a 50% stock dividend paid on the Shares on December 21, 2003
(the “Stock Split”)).  These Shares may
be either authorized but unissued, or Shares that have been reacquired by the
Company.  Subject to Section 4.4
herein, the grant of an Option, Stock Appreciation Right or Restricted Stock
Award shall reduce the Shares available for grant under the Plan by the number
of Shares subject to such Award.

 

4.2 Maximum Awards. 
During any calendar year, no Participant may be granted Awards under the
Plan with respect to more than 112,500 Shares (which reflects the adjustment
for the Stock Split), subject to adjustment as provided in Section 4.5
herein. During the term of the Plan, Awards with respect to no more than
300,000 Shares (which reflects the adjustment for the Stock Split) may be in
the form of Restricted Stock, subject to adjustment as provided in
Section 4.5 herein.

 

4.3 Awards to Directors.  Directors of the Company are entitled to
take up to 100%, or such lesser percentage as may from time to time be
determined by the Committee, of their annual retainer and fees for attendance
at meetings of the Board of Directors and committees thereof (such annual
retainer and fees being referred to below as “Board Compensation”) in the form
of Nonqualified Stock Options and/or Shares of Restricted Stock.  These Options and Shares of Restricted Stock
will be granted at such times as shall be determined by the Committee.  The election for Options and/or Shares of
Restricted Stock shall be made in accordance with the procedures therefor
established by the Committee from time to time.  The Exercise Price of an Option granted to a Director of the
Company pursuant to this Section 4.3 shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and the number of Shares
purchasable under the Option will be equal to the amount of the Board
Compensation earned by the Director as to which an election for Options has
been made by the Director in accordance with the procedures established by the
Committee divided by the per share value of the Option using a Black-Scholes
model based on a five-year option, rounded to the nearest whole Share.  The number of Shares of Restricted Stock
granted to a Director of the Company pursuant to this Section 4.3 will be
equal to the amount of the Board Compensation earned by the Director as to
which an election for Shares of Restricted Stock has been made by the Director
in accordance with the procedures established by the Committee divided by the
Fair Market Value of a Share on the date of grant, rounded to the nearest whole
Share. An Option granted pursuant to this Section 4.3 will have a
five-year term and vest in full immediately upon grant, provided that no Shares
acquired upon exercise of the Option may be sold within six months following
the date of grant.  Shares of Restricted
Stock granted pursuant to this Section 4.3 will vest, based upon
continuing service, in full on the one-year anniversary of the date of grant
unless vested earlier pursuant to Section 8.8 or 8.9 herein.

 

5

 

4.4 Lapsed Awards. 
If any Award granted under the Plan terminates, expires, or lapses for
any reason, any Shares subject to such Award again shall be available for the
grant of an Award under the Plan, with the exception of Restricted Stock Awards
upon which dividends have been paid to the Participants.

 

4.5 Adjustments in Authorized Shares.  In the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
split-up, Share combination, or other change in the corporate structure of the
Company affecting the Shares, such adjustment shall be made in the number and
class of Shares which may be issued under the Plan, and in the number and class
of and/or price of Shares subject to outstanding Options, SARs and Restricted
Stock granted under the Plan, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; and provided that the number of Shares subject to any
Award shall always be a whole number.

 

ARTICLE 5.  ELIGIBILITY 
AND  PARTICIPATION

 

5.1 Eligibility. 
Persons eligible to participate in the Plan include all Employees,
including Employees who are members of the Board or the board of directors of
any Subsidiary, and all Directors, including Directors of the Company and its
Subsidiaries.

 

5.2 Actual Participation.  Subject to the provisions of the Plan, the
Committee may, from time to time, select from all Employees and Directors,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award.  Subject to
Section 4.3 herein, no Employee or Director shall be entitled to be
granted an Award under the Plan.

 

ARTICLE 6.  STOCK 
OPTIONS

 

6.1 Grant of Options.  Subject to the terms and provisions of the Plan, Options may be
granted to Employees and Directors at any time and from time to time as shall
be determined by the Committee.  Subject
to Sections 4.1 and 4.2, the Committee shall have complete discretion in
determining the number of Shares subject to Options granted to each
Participant.  Options granted to
Directors shall consist only of NQSOs and not ISOs.

 

6.2 Option Agreement.  Each Option grant shall be evidenced by an Option agreement that
shall specify the Exercise Price, the duration of the Option, the number of
Shares to which the Option pertains, the percentage of the Option that becomes
exercisable on specified dates in the future, and such other provisions as the
Committee shall determine.  The Option
agreement also shall specify whether the Option is intended to be an ISO or a
NQSO.

 

6.3 Exercise Price. 
The Exercise Price for each grant of an Option shall be determined by
the Committee, provided that the Exercise Price shall not be less than 100% of
the Fair Market Value of a Share on the date the Option is granted.  In the event any holder of 10% or more of
the Shares receives a grant of ISOs, the Exercise Price shall be not less than
110% of the Fair Market Value of a Share on the date of grant.  Once an Option has been granted, the
Exercise Price with respect thereto may not be changed except for any
adjustments pursuant to Section 4.5 herein.

 

6

 

6.4 Duration of Options.  Each Option granted shall expire at such
time as the Committee shall determine at the time of grant; provided, however,
that no Option shall be exercisable later than the fifteenth anniversary date
of its grant.

 

6.5 Exercise of Options.  Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant.

 

6.6 Payment. 
Options shall be exercised by the delivery of a written notice of
exercise to the Chief Financial Officer of the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by payment in full of the Exercise Price.

 

Upon exercise
of any Option, the Exercise Price shall be payable to the Company in full
either (a) in cash or its equivalent, or (b) by tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to
the aggregate Exercise Price, or (c) by a combination of (a) and (b).  In addition, the Company may establish a
cashless exercise program in accordance with applicable laws and regulations.

 

As soon as
practicable after receipt of a written notification of exercise and payment in
full of the Exercise Price, the Company shall deliver to the Participant, in
the Participant’s name, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option(s).

 

6.7 Restrictions on Share Transferability.  The Committee shall impose such restrictions
on any Shares acquired pursuant to the exercise of an Option under the Plan as
it may deem advisable, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.

 

6.8 Termination of Employment or
Service Due to Death, Disability or Retirement.

 

(a)                      Termination
by Death.  In the event the
employment or service of a Participant is terminated by reason of death, any
outstanding Options granted to that Participant that are not exercisable as of
the date of termination shall immediately become exercisable.  Unless otherwise set forth in the Option
agreement provided for in Section 6.2 herein, all Options granted to such
Participant shall remain exercisable until their respective expiration dates,
or for one year after the date of death, whichever period is shorter, by such
Person or Persons as shall have acquired the Participant’s rights under the
Option by will or by the laws of descent and distribution.

 

(b)                     Termination
by Disability.  In the event the
employment or service of a Participant is terminated by reason of Disability,
any outstanding Options granted to that Participant that are not exercisable as
of the date of termination shall immediately become exercisable. Unless
otherwise set forth in the Option agreement provided for in Section 6.2
herein, all Options granted to such Participant shall remain exercisable until
their respective expiration dates, or for one year after the date that the
Participant’s employment or

 

7

 

service is terminated by reason of
Disability, whichever period is shorter. Unless otherwise set forth in the
Option agreement provided for in Section 6.2 herein, should the
Participant die during this period, exercisability of the Participant’s Options
shall be permitted for a period of one year following the date of death.

 

(c)                      Termination
by Retirement.  In the event the
employment of an Employee is terminated by reason of Retirement, or the service
of a Director is terminated after age 65, any outstanding Options granted to
that Employee or Director that are not exercisable as of the date of
termination shall immediately become exercisable.  Unless otherwise set forth in the Option agreement provided for
in Section 6.2 herein, all Options granted to such Participant shall
remain exercisable until their respective expiration dates, or for one year
after the date of termination, whichever period is shorter.

 

(d)                     Exercise Limitations on ISOs.  In
the case of ISOs, the tax treatment prescribed under Section 422 of the
Code may not be available if the Options are not exercised within the time
periods provided by Section 422 for each of the various types of
employment termination.

 

6.9 Termination of Employment for Other
Reasons.  If the employment of
an Employee or the service of a Director shall terminate for any reason other
than the reasons set forth in Section 6.8 herein, except for Cause, all
outstanding Options that are not exercisable as of the date of termination
immediately shall expire and terminate (and shall once again become available
for grant under the Plan). However, the Committee, in its sole discretion,
shall have the right to waive such termination and to immediately make
exercisable all or any portion of such Options.  Thereafter, unless otherwise set forth in the Option agreement
provided for in Section 6.2 herein, all such exercisable Options shall
remain exercisable until their respective expiration dates, or for one year
after the date of termination, whichever period is shorter.

 

If the
employment or service of a Participant shall terminate for Cause, all
outstanding Options immediately shall be forfeited to the Company and no
additional exercise period shall be allowed, regardless of the exercisability
status of the Options.

 

ARTICLE 7.  STOCK 
APPRECIATION  RIGHTS

 

7.1 Grant of SARs. 
Subject to the terms and conditions of the Plan, SARs may be granted to
Employees and Directors at any time and from time to time as shall be
determined by the Committee.  A SAR may
be Related to an Option or may be granted independently of any Option as the
Committee shall from time to time in each case determine.  In the case of a Related Option, such
Related Option shall cease to be exercisable to the extent of the Shares with
respect to which the Related SAR was exercised.  Upon the exercise or termination of a Related Option, any Related
SAR shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.

 

8

 

The Committee
shall have complete discretion in determining the number of SARs granted to
each Participant (subject to Sections 4.1 and 4.2 herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs.  However, the Grant Price
of a SAR shall be at least equal to 100% of the Fair Market Value of a Share on
the date of grant of the SAR.

 

7.2 Exercise of SARs.  SARs may be exercised upon whatever terms and conditions the
Committee, in its sole discretion, imposes upon the SARs.

 

7.3 SAR Agreement. 
Each SAR grant shall be evidenced by a SAR agreement that shall specify
the Grant Price, the term of the SAR, and such other provisions as the
Committee shall determine.

 

7.4 Term of SARs. 
The term of a SAR granted under the Plan shall be determined by the
Committee, in its sole discretion; however, such term shall not exceed fifteen
years.

 

7.5 Payment of SAR Amount.  Upon exercise of a SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

 

(a)                      The
difference between the Fair Market Value of a Share on the date of exercise
over the Grant Price; and

 

(b)                     The
number of Shares with respect to which the SAR is exercised.

 

At the
discretion of the Committee, the payment upon exercise of a SAR may be in cash,
in Shares of equivalent value, or in some combination thereof.

 

7.6 Termination of Employment or Service
Due to Death, Disability or Retirement.

 

(a)                      Termination
by Death.  In the event the
employment or service of a Participant is terminated by reason of death, any
outstanding SARs granted to that Participant that are not exercisable as of the
date of termination shall immediately become exercisable.  Unless otherwise set forth in the SAR
agreement provided for in Section 7.3 herein, all SARs granted to such
Participant shall remain exercisable until their respective expiration dates,
or for one year after the date of death, whichever period is shorter, by such
Person or Persons as shall have acquired the Participant’s rights under the
SARs by will or by the laws of descent and distribution.

 

(b)                     Termination
by Disability.  In the event the
employment or service of a Participant is terminated by reason of Disability,
any outstanding SARs granted to that Participant that are not exercisable as of
the date of termination shall immediately become exercisable.  Unless otherwise set forth in the SAR
agreement provided for in Section 7.3 herein, all SARs granted to such
Participant shall remain exercisable until their respective expiration dates,
or for one year after the date the Participant’s employment or service is
terminated by reason of Disability, whichever period is shorter.  Unless otherwise set forth in the SAR
agreement provided for in Section 7.3 herein,

 

9

 

in the event the Participant dies during this
period, exercisability shall be permitted for a period of one year following
the date of death.

 

(c)                      Termination
by Retirement. In the event the employment of an Employee is terminated by
reason of Retirement, or the service of a Director is terminated after age 65,
any outstanding SARs granted to that Participant that are not exercisable as of
the date of termination shall immediately become exercisable.  Unless otherwise set forth in the SAR
agreement provided for in Section 7.3 herein, all SARs granted to such
Participant shall remain exercisable until their respective expiration dates,
or for one year after the date that employment was terminated, whichever period
is shorter.

 

7.7 Termination
of Employment for Other Reasons.  If the employment of an Employee or the
service of a Director shall terminate for any reason other than the reasons
described in Section 7.6 herein, except for Cause, all unexercised SARs
held by the Participant at that time immediately shall expire and terminate
(and shall once again become available for grant under the Plan).  However, the Committee, in its sole
discretion, shall have the right to waive such termination and to make
exercisable all or any portion of such SARs. 
Thereafter, unless otherwise set forth in the SAR agreement provided for
in Section 7.3 herein, all such exercisable SARs shall remain exercisable
until their expiration dates, or for one year after the date of termination,
whichever period is shorter.

 

If the
employment or service of the Participant shall terminate for Cause, all
outstanding SARs immediately shall be forfeited to the Company and no
additional exercise period shall be allowed, regardless of the exercisability
status of the SARs.

 

ARTICLE 8.  RESTRICTED 
STOCK

 

8.1 Grant of Restricted Stock. Subject to
the limitations set forth in Section 4.2 herein and the other terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock to Employees and Directors in such amounts as
the Committee shall determine.  Unless
vested earlier pursuant to Section 8.8 or 8.9 herein, Shares of Restricted
Stock shall vest, based upon continuing employment or service, over a minimum
of three years, with the exception of: (i) Shares awarded based upon
performance, which shall vest, based also upon continuing employment or
service, over a minimum of one year; (ii) Shares granted to Directors of the
Company pursuant to Section 4.3 herein, which shall vest, based upon
continuing service, in full on the one-year anniversary of the date of grant;
and (iii) Shares granted to a person not previously an Employee or Director, or
following a bona fide period of non-employment, as an inducement material to
the individual’s entering into employment with the Company or any Subsidiary,
which shall not be subject to a minimum vesting period.

 

8.2 Restricted Stock Agreement.  Each Restricted Stock grant shall be
evidenced by a Restricted Stock agreement that shall specify the Period of
Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.

 

10

 

8.3 Other Restrictions.  In addition to the restrictions set forth in Section 8.1
herein, the Committee may impose such restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, vesting based upon the achievement of specific performance goals
(Company-wide, Subsidiary, and/or individual), and/or restrictions under
applicable Federal or state securities laws; and may legend the certificate
representing Restricted Stock to give appropriate notice of such restrictions.  The Committee may also require that
Participants make cash payments at the time of grant or upon lapsing of
restrictions.  Such cash payments, if
imposed, will be in an amount not less than the par value of the Shares.

 

8.4 Certificate Legend.  In addition to any legends placed on certificates pursuant to
Section 8.3 herein, each certificate representing Shares of Restricted
Stock granted pursuant to the Plan shall bear the following legend:

 

“The sale or other transfer of the shares of
stock represented by this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on transfer as set forth
in the MB Financial, Inc. 1997 Omnibus Incentive Plan and in a Restricted Stock
agreement dated                      .  A copy of the Plan and such Restricted Stock
agreement may be obtained from the Chief Financial Officer of MB Financial,
Inc.”

 

8.5 Removal of Restrictions.  Except as otherwise provided in this
Section, Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction. 
Once the Shares are released from the restrictions, the Participant
shall be entitled to have the legend required by Section 8.4 herein removed
from his or her Share certificate.

 

8.6 Voting Rights. 
During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares.

 

8.7 Dividends and Other Distributions.  During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held.  If
any such dividends or distributions are paid in Shares, the Shares shall be
subject to the same restrictions on transferability and forfeitability as the
Shares of Restricted Stock with respect to which they were paid.

 

8.8 Termination
of Employment or Service Due to Death, Disability or
Retirement.  In the event that a
Participant’s employment or service is terminated by reason of death,
Disability or Retirement, the restrictions on the Participant’s Shares of
Restricted Stock shall lapse as of the date of termination.

 

8.9 Termination
of Employment or Service for Other Reasons.  If the employment or service of the
Participant shall terminate for any reason other than those reasons described
in Section 8.8 herein, including a termination for Cause, all nonvested
Shares of Restricted Stock held by the Participant at that time immediately
shall be forfeited and returned to the Company (and shall once again become
available for grant under the Plan, except that Shares upon which

 

11

 

dividends have been paid to a Participant may
not become available for re-grant under the Plan); provided, however, that with
the exception of a termination of employment or service for Cause, the
Committee, in its sole discretion, shall have the right to provide for lapsing
of the restrictions on Restricted Stock following termination of employment or
service for any reason other than those described in Section 8.8 herein,
upon such terms and provisions as it deems proper.

 

ARTICLE 9.  TRANSFERABILITY

 

No Award
granted under the Plan shall be transferable otherwise than by will, the laws
of descent and distribution or pursuant to a qualified domestic relations
order, except that an Award may be transferred by gift to any member of the
Participant’s immediate family or to a trust for the benefit of one or more of
such immediate family members if the Committee so specifies in the Award
agreement.  During the lifetime of an
Award recipient, an Award shall be exercisable only by the Award recipient
unless it has been transferred as permitted hereby, in which case it shall be
exercisable only by such transferee. 
For the purpose of this Article 9 a Participant’s “immediate
family” shall mean the Participant’s spouse, children and grandchildren.

 

ARTICLE 10.  BENEFICIARY 
DESIGNATION

 

Each
Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by
the Company, and will be effective only when filed by the Participant in
writing with the Chief Financial Officer of the Company during the
Participant’s lifetime.  In the absence
of any such designation, benefits remaining unpaid at the Participant’s death
shall be paid to the Participant’s estate.

 

ARTICLE 11.  RIGHTS 
OF  EMPLOYEES  AND 
DIRECTORS

 

11.1               Employment or Service.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any
Participant’s employment or service at any time, nor confer upon any
Participant any right to continue in the employ or service of the Company or
any Subsidiary.

 

For purposes
of the Plan, transfer of employment or service of a Participant between the
Company and any one of its Subsidiaries (or between Subsidiaries) shall not be
deemed a termination of employment or service.

 

11.2               Participation. 
Subject to Section 4.3 herein, no Employee or Director shall be
entitled to be selected to receive an Award under the Plan, or, having been so
selected, to be selected to receive a future Award.

 

12

 

ARTICLE 12.  CHANGE 
IN  CONTROL

 

12.1               In General. 
Unless otherwise set forth in the applicable Award agreement, in the
event of a Change in Control of the Company as defined in Section 12.2
herein, all Awards granted under the Plan that are still outstanding and not
yet exercisable or vested shall become immediately exercisable or vested as of
the date of the Change in Control and shall remain exercisable and vested for
their term.

 

12.2               Definition. 
For purposes of the Plan, a Change in Control shall mean (i) any third
person, including a “group” as defined in Section 13(d)(3) of the Exchange
Act, shall become the beneficial owner of Shares of the Company with respect to
which 25% or more of the total number of votes for the election of the Board of
Directors of the Company may be cast, (ii) as a result of, or in connection
with, any cash tender offer, merger or other business combination, sale of
assets or contested election, or combination of the foregoing, the persons who
were directors of the Company shall cease to constitute a majority of the Board
of Directors of the Company, or (iii) the closing of a transaction in which the
Company will cease to be an independent publicly-owned corporation or for a
sale or other disposition of all or substantially all the assets of the
Company.

 

The Board has
final authority to determine the exact date on which a Change in Control has
been deemed to have occurred.

 

ARTICLE 13.  AMENDMENT, MODIFICATION AND TERMINATION

 

13.1               Amendment,
Modification and Termination.  The Board may, at any time and from time to
time, terminate, amend, or modify the Plan without the consent of shareholders
or Participants, except that any such action will be subject to the approval of
the Company’s shareholders if, when and to the extent such shareholder approval
is necessary or required for purposes of any applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Shares may then be listed or quoted, or if the Board, in its
discretion, determines to seek such shareholder approval.  The Committee may not materially waive any
conditions of, or rights of the Company under, or modify or amend the terms of
any outstanding Award, nor may the Committee amend, alter, suspend, discontinue
or terminate any outstanding Award without the consent of the Participant or
holder thereof, except as otherwise herein provided.  The Committee may not reprice any Award that has been granted.

 

13.2               Awards Previously Granted.  No termination, amendment, or modification
of the Plan shall in any manner adversely affect any Award previously granted
under the Plan, without the written consent of the Participant.

 

ARTICLE 14.  WITHHOLDING

 

14.1               Tax Withholding.  The Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant’s FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of the Plan.

 

13

 

14.2               Share Withholding.  With respect to withholding required upon the exercise of
Options, upon the lapse of restrictions on Restricted Stock, or upon any other
taxable event hereunder, Employees may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value, on the date the
tax is to be determined, equal to the minimum marginal tax which could be
imposed on the transaction.

 

ARTICLE 15.  INDEMNIFICATION

 

Each Person
who is or shall have been a member of the Committee, or of the Board, shall be
indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan and against and
from any and all amounts paid by him or her in settlement thereof, with the
Company’s approval, or paid by him or her in satisfaction of any judgment in
any such action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her own
behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such Persons may be entitled under the Company’s charter or bylaws, as
a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

 

ARTICLE 16.  SUCCESSORS

 

All
obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company.

 

ARTICLE 17.  REQUIREMENTS OF LAW

 

17.1               Requirements of Law.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

17.2               Governing Law. 
To the extent not preempted by Federal law, (i) with respect to Awards
made prior to November 6, 2001, the Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware, and (ii) with respect to Awards made on or after November 6,
2001, the Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Maryland.

 

14

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