HANDLEMAN CO /MI/
AMENDMENT TO STOCK OPTION AND INCENTIVE PLANS
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<TYPE>EX-10.3
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<DESCRIPTION>AMENDMENT TO STOCK OPTION AND INCENTIVE PLANS
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<TITLE>Amendment to Stock Option and Incentive Plans</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">Exhibit 10.3 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><U>AMENDMENT TO HANDLEMAN COMPANY 1998 AND 2001</U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2"><U>STOCK OPTION AND INCENTIVE PLANS</U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Paragraph 17 of the 1998
Stock Option and Incentive Plan and Paragraph 16 of the 2001 Stock Option and Incentive Plan are amended, in their entirety, as follows: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">If the employment of a Participant by the Corporation or a Subsidiary shall be terminated (or an outside director&#146;s service as a
director shall terminate), the Committee may, in its discretion, permit the exercise of stock options granted to such Participant (a) for a period not to exceed three months following such termination of employment (or one year following termination
of employment on account of the Participant&#146;s death or permanent disability) with respect to Incentive Options, and (b) for a period not to extend beyond the expiration date with respect to Nonqualified Options. In no event, however, shall a
stock option be exercisable subsequent to its expiration date. A stock option may only be exercised after termination of a Participant&#146;s employment (or of an outside director&#146;s service as a director) to the extent exercisable on the date
of termination of employment (or termination of service as an outside director); provided, however, that if the termination of a Participant&#146;s employment (or of an outside director&#146;s service as a director) is due to the Participant&#146;s
death or permanent disability, all stock options granted to such Participant shall thereupon become exercisable in full; and provided further, that if the termination of a Participant&#146;s employment (or of an outside director&#146;s service as a
director) is due to the Participant&#146;s retirement at a retirement age permitted under the Corporation&#146;s retirement plan the stock options will become exercisable following the termination of employment or service as a director in accordance
with the provisions established at the time of grant in the relevant stock option agreement or agreements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">As adopted by the Board of Directors on September 8, 2004. </FONT></P>
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