**Exhibit 10iii.7**

** **

**ILLINICORPORATION****INCENTIVE STOCK OPTION PLAN**

 

 

# SECTION I 

 

This Incentive Stock Option Plan for ILLINICORPORATION is intended to advance the interests of the Organization byproviding Key Employees who have substantial responsibility for the directionand management of the Company and its Subsidiaries with additional incentive topromote the success of the Organization’s business, and by encouraging the KeyEmployees to remain in the employ of the Organization.  The above aims will be accomplished throughthe granting of certain stock options. It is intended that options issued under the Plan qualify as ISOs, andthe provisions of the Plan shall be interpreted in accordance with thisintention.

#  

# SECTION II

 

The items defined belowshall have the following meanings throughout the Plan:

 

 

2.1         “Board” means the Board of Directors ofCompany.

 

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

 

2.3         “Company” means ILLINI CORPORATION, aIllinois corporation.

 

2.4         “ISOs” means stock options whichqualify as incentive stock options under Section 422 of the Code.

 

2.5         “Key Employees” means officers,executives and supervisory personnel, as well as other employees of the Companyor the Subsidiaries, who have substantial responsibility for the direction andmanagement of the Organization.

 

2.6         “Organization” means the Company andthe Subsidiaries.

 

2.7         “Optionee” means the person to whom anoption is granted.

 

2.8         “Plan” means the Incentive Stock OptionPlan as defined by the provisions hereof.

 

2.9         “Stock” or “Common Stock” means thevoting common stock of Company.

 

2.10       “Subsidiaries” means any subsidiarycorporation owned or controlled by the Company or one of the Subsidiaries.

 

2.11       “Ten Percent Shareholder” means anyindividual who at the time an option is granted owns directly or indirectlystock possessing more than 10% of the total combined voting power of allclasses of stock of the Company, taking into account the provisions of Section424(d) of the Code.

 

----

 

# SECTION III

 

The Board shall administer the Plan.  Subject to the provisions of the Plan, theBoard shall have the authority, in its sole and absolute discretion, to:  (a) determine the employees of theOrganization (from among the class of employees eligible under Section 4 toreceive options under the Plan) to whom options shall be granted; (b) determinethe time or times at which options shall be granted; (c) determine the optionprice of the shares subject to each option, which price shall not be less thanthe minimum specified in Section 6.1; (d) determine (subject to Section 6.2)the duration of the exercise period for each option subject to the vestinglimitations of the Plan; (e) determine the form of options granted hereunder;(f) determine the exact provisions of any ISO issued hereunder so long as suchprovisions are not inconsistent with Section 422 of the Code; and (g) interpretthe Plan and to prescribe, amend, and rescind rules and regulations relating toit.  For purposes of acting with respectto the Plan, a majority of the members of the Board shall constitute a quorumand the acts of a majority of the members present at any meeting at which aquorum is present, or acts approved in writing by a majority of the members ofthe Board, shall be deemed the acts of the Board.

 

# SECTION IV

 

4.1         Options shall be granted only to KeyEmployees.

 

4.2         The aggregate fair market value(determined at the time the option is granted) of the Stock with respect towhich ISOs are exercisable for the first time by an individual during anycalendar year (under this Plan or any other ISO plan of Company) shall notexceed $100,000.00.

 

4.3         Options granted under the Plan may beexercised in whole or in part throughout the duration of the exercise periodfor each option set by the Board subject to the following vesting requirements:

 

(a)       Twenty percent of the shares of CommonStock which may be purchased pursuant to an Option, shall be available forpurchase on or after one (1) year from the date of grant;

 

(b)      Twenty percent of the shares of CommonStock which may be purchased pursuant to an Option, shall be available forpurchase on or after two (2) years from the date of grant;

 

(c)       Twenty percent of the shares of CommonStock which may be purchased pursuant to an Option, shall be available forpurchase on or after three (3) years from the date of grant;

 

(d)      Twenty percent of the shares of CommonStock which may be purchased pursuant to an Option, shall be available forpurchase on or after four (4) years from the date of grant; and

 

2

----

 

(e)       Twenty percent of the shares of CommonStock which may be purchased pursuant to an Option, shall be available forpurchase on or after five (5) years from the date of grant.

 

In the event of termination of employment for anyreason other than death, the shares of Common Stock which may be purchasedpursuant to an Option shall be limited to number of shares which are fullyvested and available for purchase under this Section 4.3 as of the date andtime of termination of employment.  Inthe event of the death of an Optionee, all shares of Common stock which may bepurchased pursuant to an Option held by the Optionee shall be deemed fullyvested and available for purchase, subject to the limitation set forth inSection 4.2 of the Plan.

 

4.4         In the event of a “Change of Control”of the Company, as such term is defined under the regulations of the Securitiesand Exchange Commission, all shares of Common Stock which may be purchasedpursuant to an Option shall be deemed fully vested and available for purchase,subject to the limitation set forth in Section 4.2 of the Plan.

 

# SECTION V 

 

5.1         The maximum number of shares of Stockwhich may be issued pursuant to ISOs granted hereunder (subject to adjustmentas provided in Section 5.3 hereof) shall be 60,000 shares and, to the extentallowed by law, said number of shares will be reserved for use upon theexercise of options which may be granted at any time and from time to timeunder the Plan (subject to the provisions of Section 10).  These shares may be in whole or in part, asthe Board shall from time to time determine, authorized but unissued shares orunauthorized shares which may be authorized pursuant to powers of attorneygranted by shareholders of the Company. Any shares subject to an option under the Plan, which option for anyreason expires or is terminated unexercised as to such shares, may again besubjected to an option under the Plan.

 

5.2         In the event that additional shares ofStock are issued pursuant to a stock split or a stock dividend, the number ofshares of Stock then covered by each outstanding option granted hereunder shallbe increased proportionally and the per share price of such shares shall bedecreased proportionally with no change in the total purchase price of theshares then so covered.  The number ofshares of Stock reserved for the purpose of the Plan shall also be increasedproportionally.  In the event that theshares of Stock of the Company from time to time issued and outstanding arereduced by a combination of shares, the number of shares of Stock then coveredby each outstanding option granted hereunder shall be reduced proportionallyand the per share price shall be increased proportionally with no change in thetotal price of the shares then so covered. The number of shares of Stock reserved for the purposes of the Planshall also be reduced proportionally. No fractional shares shall be issued, and any fractional sharesresulting from the computations pursuant to this Section 5.2 shall beeliminated from the respective option. No adjustment shall be made for dividends (other than stock dividends)or the issuance to stockholders of rights to subscribe for additional commonstock or other securities.

 

3

----

 

# SECTION VI

 

6.1         The option price for each share ofStock covered by an ISO shall be an amount not less than 100% (or, in the caseof an ISO granted to a Ten Percent Shareholder, not less than 110%) of the fairmarket value of the Stock on the date the option is granted.

 

6.2         All ISOs issued under the Plan shall befor such period as the Board shall determine, but for not more than ten (10)years (or, if the Optionee is a Ten Percent Shareholder, five (5) years) fromthe date of grant thereof.

 

6.3         The period of the ISO, once it isgranted, may be reduced only as provided for in Section 7 in connection withthe termination of employment of the Optionee.

 

6.4         Except as provided in Section 7 hereof,no ISO may be exercised unless the Optionee is at the time of such exercise inthe employ of the Organization and shall have been continuously so employedsince the grant of the option.

 

6.5         Each option granted under the Planshall be non-transferable and shall be exercisable only by the Optionee to whomthe option is granted.  No optiongranted under the Plan or any of the rights and privileges thereby conferredshall be transferred, assigned, pledged, or hypothecated in any way (whether byoperation of law or otherwise), and no such option, right, or privilege shallbe subject to execution, attachment, or similar process.  Upon any attempt to so transfer, assign,pledge, hypothecate, or otherwise dispose of the option or of any right orprivilege conferred thereby, contrary to the provisions hereof, or upon thelevy of any attachment or similar process upon such option, right or privilege,the option and such rights and privileges shall immediately become null andvoid.

 

# SECTION VII 

 

7.1         In the event of an Optionee’stermination of employment for any reason, such Optionee or the Optionee’sguardian or personal representative may exercise any Options theretoforegranted, which have vested and are not then expired, within three (3) monthsafter such termination of employment; provided, however, in the case oftermination of employment due to permanent disability, the three month periodof exercise shall be extended to one year.

 

7.2         The transfer of a Key Employee from theCompany and any Subsidiary to the Company or any Subsidiary shall not be consideredan interruption or termination of employment for purposes of this Agreement.

 

# SECTION VIII 

 

8.1         The exercise of any ISO shall also becontingent upon receipt by the Company of cash or cashier’s check to its order,in an amount equal to the full option price of the shares being purchased.

 

4

----

 

8.2         No Optionee or his or her legalrepresentative, heir, or legatee, as the case may be, will be, or will bedeemed to be, a holder of any share subject to an option unless and untilappropriate documents evidencing such shares are issued under the provisions ofthe Plan.  Adjustment shall be made,however, for dividends for which the record date is after the date the optionis exercised but prior to the date such evidence of such shares is issued.

 

8.3         Each option shall be subject to thecondition that if at any time the Board shall determine, in its discretion,that the listing, registration, or qualification of the shares covered therebyupon any securities exchange or under any state or federal law or that theconsent or approval of any governmental regulatory body is necessary ordesirable as a condition of, or in connection with, the issue or purchase ofshares under such option, such shares will not be issued unless and until suchlisting, registration, qualification, consent, or approval shall have beeneffected or obtained free of any conditions not acceptable to the Board.

 

8.4         Neither the Plan nor any optionagreement covering options issued under the Plan is to be construed as acontract of employment of any kind whatsoever between a Key Employee and anypresent or future employer of Key Employee.

 

8.5         Exercise of an option shall result in adecrease in the number of shares of Stock which thereafter may be availableunder the Plan by the number of shares as to which the option is exercised.

 

# SECTION IX

 

No option shall be granted pursuant to the Plan afterten (10) years from the date the Plan is adopted by the Board, or the date thePlan is approved by the majority of the outstanding shares of each class ofCompany stock, whichever is earlier.

 

# SECTION X

 

The Board may at any time terminate the Plan, and atany time and from time to time modify and amend the Plan in any respect;provided, however, that no such amendment shall:  (a)increase (except in accordance with Section 5.2) the maximumnumber of shares for which options may be granted under the Plan either in theaggregate or to any individual Optionee; or (b) reduce (except in accordancewith Section 5.2) the minimum option prices which may be established under thePlan; or (c) extend the maximum periods provided for in Sections 6.2 and 10,respectively, during which options may be exercised or granted; or (d) changethe provisions relating to the determination of employees to whom options shallbe granted and the number of shares to be covered by such options; or (e)change the provisions relating to adjustments to be made upon changes incapitalization.  The termination or anymodification or amendment of the Plan shall not, without the consent of anOptionee, affect his or her rights under an option theretofore granted to suchOptionee.

 

5

----

 

# SECTION XI 

 

The Plan shall not affectthe provisions of any non-qualified stock options granted to any director oremployee of the Organization under any other plan relating to non-qualifiedstock options; nor shall it affect any of the rights of any employee or theOrganization to whom such a non-qualified stock option was granted.

 

# SECTION XII

 

This Plan shall becomeeffective on the later of the date of its adoption by the Board or its approvalby the vote of the holders of a majority of the outstanding shares of eachclass of the Company’s stock.  This Planshall not become effective unless such shareholder approval shall be obtainedwithin twelve (12) months before or after the adoption of the Plan by theBoard.

 

6

----