Document:

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                                                                   EXHIBIT 10.1

                        PRINCETON NATIONAL BANCORP, INC.
                         2005 DEFERRED COMPENSATION PLAN

   1.    ESTABLISHMENT. Princeton National Bancorp, Inc., a Delaware corporation
(the "Company"), hereby establishes the Princeton National Bancorp, Inc. 2005
Deferred Compensation Plan (the "Plan").

   2.    EFFECTIVE DATE.  The Plan shall become effective January 1, 2005.

   3.    PURPOSE. The Plan has the purpose of advancing the interests of the
Company, the Company's subsidiary corporation and the shareholders of the
Company by helping the Company attract and retain the services of highly
qualified executives, upon whose judgment, initiative and efforts the Company is
substantially dependent. The Plan also has the objective of providing a means
for executives of the Company to accumulate savings through deferral of the
payment of their Compensation and to defer the taxation of such Compensation.

   4.    COMPLIANCE WITH LAW. The Company intends that this Plan comply with the
applicable provisions of applicable law, including, by way of example and not
limitation, Section 409A of the Internal Revenue Code of 1986 and the
regulations promulgated thereunder. Any provision of this Plan which is not in
compliance with such laws shall be deemed amended in such matter as is necessary
to comply with applicable law and the Participant's rights under this Plan shall
be subject to the provisions of the Plan so amended.

   5.    DEFINITIONS

   BANK.    The term "Bank" shall mean Citizens First National Bank.

   BOARD OF DIRECTORS.  The term "Board of Directors" or "Board" shall mean the
Board of Directors of the Company.

   CHANGE IN CONTROL.   A "Change in Control" shall be deemed to occur on the
earliest of:

         (I)    The acquisition by any individual, entity or group (within the
                meaning of Section 13(d)(3) or 14(d)(2) of the Securities
                Exchange Act of 1934, as amended (the "Exchange Act")) of
                beneficial ownership, as that term is defined in Rule 13d-3
                under the Exchange Act, of capital stock of Company entitled to
                exercise more than 25% or more of the outstanding voting power
                of all capital stock of Company entitled to vote for the
                election of directors ("Voting Stock");(i) The acquisition by
                any individual, entity or group (within the meaning of Section
                13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
                amended (the Exchange Act)) of beneficial ownership, as that
                term is defined in Rule 13d-3 under the Exchange Act, of capital
                stock of Bancorp entitled to

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                exercise more than twenty-five percent or more of the
                outstanding voting power of all capital stock of Bancorp
                entitled to vote for the election of directors (Voting Stock);

         (II)   The commencement by any entity, person, or group (other than
                Company or a subsidiary of Company) of a tender offer or an
                exchange offer for more than 20% of the outstanding Voting Stock
                of Company;(ii) The commencement by any entity, person, or group
                (other than Bancorp or a subsidiary of Bancorp) of a tender
                offer or an exchange offer for more than twenty percent of the
                outstanding Voting Stock of Bancorp;

         (III)  The effective time of (A) a merger or consolidation of Company
                with one or more other corporation as a result of which the
                holders of the outstanding Voting Stock of Company immediately
                prior to such merger or consolidation hold less than 25% of the
                Voting Stock of the surviving or resulting corporation or (B) a
                transfer of 25% or more of the Voting Stock, or substantially
                all of the property of Company, other than to an entity of which
                Company owns at least 50% of the Voting Stock; or (iii) The
                effective time of (A) a merger or consolidation of Bancorp with
                one or more other corporation as a result of which the holders
                of the outstanding Voting Stock of Bancorp immediately prior to
                such merger or consolidation hold less than twenty-five percent
                of the Voting Stock of the surviving or resulting corporation or
                (B) a transfer of 25% or more of the Voting Stock, or
                substantially all of the property of Bancorp, other than to an
                entity of which Bancorp owns at least 50% of the Voting Stock;
                or

         (IV)   The effective time of (A) a merger or consolidation of the Bank
                with one or more other corporations as a result of which the
                holders of the outstanding Voting Stock of the Bank immediately
                prior to such merger or consolidation hold less than 25% of the
                Voting Stock of the surviving or resulting corporation or (B) a
                transfer of 25% or more of the Voting Stock, or substantially
                all of the property of the Bank, other than to an entity of
                which Company or the Bank owns at least 50% of the Voting
                Stock.(iv) The effective time of (A) a merger or consolidation
                of the Bank with one or more other corporations as a result of
                which the holders of the outstanding Voting Stock of the Bank
                immediately prior to such merger or consolidation hold less than
                twenty-five percent of the Voting Stock of the surviving or
                resulting corporation or (B) a transfer of 25% or more of the
                Voting Stock, or substantially all of the property of the Bank,
                other than to an entity of which Bancorp or the Bank owns at
                least 50% of the Voting Stock.

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         COMPANY. The term "Company" shall mean the Princeton National Bancorp,
Inc., a Delaware Corporation and its successors and assigns.

         COMPENSATION. The term "Compensation" shall mean the total salary,
bonus and other cash compensation payable to a Participant.

         COMPENSATION COMMITTEE. The term "Compensation Committee" shall mean
the Compensation Committee of the Company's Board of Directors.

         CREDITING RATE. For any Plan Year, the term "Crediting Rate" shall mean
the prime rate minus one and one-half percent, as published in the Wall Street
Journal as of the first day of the applicable Plan Year.

         DEFERRAL ACCOUNT. The term "Deferral Account" shall have the meaning
given in Section 7 of the Plan.

         DISABILITY. The term "Disability" shall mean an inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months or is by
reason of any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than 3 months under an
accident and health plan covering employees of the Company.

         ELECTION AGREEMENT. The term "Election Agreement" shall mean each and
every Election Agreement executed by an Eligible Executive and delivered to the
Company hereunder, the form of which is attached to the Plan as Exhibit A, and
is incorporated by reference herein.

         ELIGIBLE EXECUTIVE. The term "Eligible Executive" shall mean any
present or future executive of the Company, or any affiliate of Company, that
adopts this Plan.

         KEY EMPLOYEE. The term "Key Employee" shall have the meaning as set
forth in Section 416(i) of the Internal Revenue Code of 1986.

         PARTICIPANT. The term "Participant" shall mean any past or present
Eligible Executive who has executed and delivered an Election Agreement to the
Company. The Compensation Committee shall have the discretion to determine
whether any executive of the Company shall be eligible to participate in this
Plan, provided that the executive selected for participation in the Plan is a
member of a select group of management or a highly compensated employee.

         PAYMENT DATE. The term "Payment Date" shall mean the earliest to occur
of the following dates:

         (I)    Separation from Service, or in the case of a Key Employee, 6
                months following Separation from Service; or

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         (II)   the Participant's death;

         (III)  the Participant's termination of service due to total and
                permanent Disability; or

         (IV)   the date of a Change in Control of the Company.

         PLAN. The term "Plan" shall mean the Princeton National Bancorp 2005
Deferred Compensation Plan, as it may be amended from time to time.

         PLAN YEAR. The Plan Year shall be January 1 to December 31 of each
year.

         SEPARATION FROM SERVICE. The term "Separation from Service" shall
encompass any event considered such by Section 409A and the regulations
promulgated thereunder.

         UNFORESEEABLE EMERGENCY. The term "Unforeseeable Emergency" shall mean
a severe financial hardship to the Participant resulting from an illness or
accident of the Participant, the Participant's spouse, or a dependent of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

         6. EXECUTIVE ELECTIONS. Each Eligible Executive shall be given an
opportunity by the Company on an annual basis to defer Compensation which such
Eligible Executive has the opportunity to earn during the next succeeding Plan
Year through service as an Eligible Executive. In order to participate in the
Plan for a particular Plan Year, an Eligible Executive must elect in writing to
participate, and such election must be made at least one month prior to the
first day of the applicable Plan Year, unless otherwise specified by the
Compensation Committee, except that the election for the first Plan Year may be
made at any time prior to the first day of its effective date. An Eligible
Executive may elect to defer receipt of any portion of Compensation payable for
the next succeeding Plan Year. An Eligible Executive or Participant may not
change an election for a Plan Year on or after the first day of that Plan Year
(except in the case of an Unforeseeable Emergency, and then, only to the extent
permitted by Section 409A and the regulations promulgated thereunder, as
determined by the Compensation Committee).

         To make an effective election, a properly completed and executed
Election Agreement must be received by the Company at the address specified on
such Election Agreement.

         7. DEFERRAL ACCOUNT

           (A) ESTABLISHMENT OF DEFERRAL ACCOUNT. The Company shall establish
and maintain a Deferral Account for each Participant. The Deferral Account shall
reflect all entries required to be made pursuant to the terms and conditions of
the Participant's Election Agreements made under Plan.

           (B) CREDITS TO DEFERRAL ACCOUNT. The Company shall credit to a
Participant's Deferral Account the Compensation that would be payable to the
Participant, had the Participant

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not elected to participate in the Plan. Such crediting shall occur as of the
date on which the Participant would have otherwise received the Compensation
being deferred pursuant to the Plan absent the Participant's deferral election.

           The Participant's Deferral Account shall be credited with Matching
Contributions as of the date and in such amount as is determined by the Company
in its sole discretion.

           Any deferrals (together with earnings) returned from the 401(k) Plan
will be deemed to have been deferred to the non-qualified plan.

           The Participant's Deferral Account shall be credited at an annual
rate equal to the Crediting Rate, compounded quarterly, and such credit shall
occur on a quarterly basis, based on the average balance of the Participant's
Deferral Account for that quarter. The Compensation Committee shall keep such
records as are necessary to determine the value of a Participant's Deferral
Account. The Compensation Committee shall adjust the Crediting Rate as of the
first day of each Plan Year.

         8. PAYMENT OF DEFERRAL ACCOUNT VALUE

            (A) DEFERRAL ACCOUNTS. Except as otherwise provided below, the
Company shall, with respect to the Deferral Account for each Participant, cause
to be paid to such Participant on or promptly after the applicable Payment Date,
the value of such Deferral Account in ten substantially equal annual payments,
which shall be determined by assuming that the rate of return on the Deferral
Account, while it is being paid to the Participant, is the Crediting Rate in
effect on the Payment Date, all pursuant to the express terms and conditions of
the Plan and the applicable Election Agreement. The Participant's deferral
election shall be made no later than January 1 of the year in which the
Participant is to perform services for which compensation would be payable to
the Participant. At the time of the Participant's initial deferral election, the
Participant shall designate the time and form of distribution of such deferred
compensation. The Participant may change his or her election with respect to the
timing and form of distribution only if (i) such election cannot take effect for
at least 12 months after it is made; (ii) except for distributions upon the
Participant's death, Disability, or Unforeseeable Emergency, the election must
defer the first scheduled payment for at least 5 years; and (iii) with respect
to payments to be made at a specified time or pursuant to a specified schedule,
the election must be made at least 12 months before the first scheduled payment.

            (B) UNFORESEEABLE EMERGENCY. Participant may withdraw all or a
portion of Participant's Plan account upon the occurrence of an Unforeseeable
Emergency. The amounts distributed with respect to an Unforeseeable Emergency
shall not exceed the amounts necessary to satisfy such emergency, plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant's assets (to the extent liquidation of such
assets would not itself cause severe financial hardship). Notwithstanding any
provision of this Section 8, any distribution on account of an unforeseeable
emergency shall satisfy the requirements of Code Section 409A and the
regulations thereunder.

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            (C) DISABILITY. If a Payment Date occurs by reason of a
determination by the Company that the Participant has become totally and
permanently disabled, and if the Disability is due to mental incapacity, any
cash payable shall be paid to the Participant's legally appointed personal
representative. If no such representative has been appointed, then payment shall
be made to the Participant's spouse, or if the Participant is then unmarried,
then cash to be paid shall be held until the persons, who would be entitled
thereto if the Participant were then to die intestate, make proper claim to the
Company for such amount. Such payment shall be made to the Participant if the
Disability is not due to mental incapacity.

            (D) DEATH. If a Payment Date occurs because the Participant dies,
any cash to be paid shall be promptly paid to the Participant's beneficiary (or
beneficiaries) as designated in the applicable Election Agreement, or, if none
are so designated, in the name of and to the legally appointed personal
representative of the Participant's estate. If no legal proceedings for such
appointment have been instituted within 60 days after receipt by the Company of
notice of the Participant's death, such payment shall be made as if no legal
representative has been appointed in accordance with Section 8(b) above.
Notwithstanding the foregoing, if cash payments have already commenced to a
Participant and the Participant dies, the remaining payments shall be made to
the individuals or entities as otherwise determined in this Section 8(d), at the
same time such payments would have been made to the Participant.

         9. ADMINISTRATION. The Compensation Committee shall be generally
responsible for the administration of the Plan, but may delegate any portion of
such responsibility that the Board determines to be appropriate. The
Compensation Committee shall have the power to interpret any Plan provision, to
prescribe, amend and rescind rules and regulations relating to the Plan and to
make all other determinations that they deem necessary or advisable to
administer the Plan. The Compensation Committee shall establish a claims
procedure for the Plan to resolve any disputes that may arise in the
administration of the Plan. The Company shall be the named fiduciary of the
Plan.

         10. STATUS OF DEFERRAL ACCOUNTS. The Company shall have full and
unrestricted use of all property or amounts payable pursuant to the Plan, and
title to and beneficial ownership of any assets which the Company may earmark to
pay the amounts hereunder shall at all times remain in the Company and no
Eligible Executive shall have any property interest whatsoever in any specific
assets of the Company. The Deferral Account is not intended to be a trust
account or escrow account for the benefit of a Participant or any other person,
or an asset segregation for the benefit of a Participant or any other person.
The sole right of a Participant, or a Participant's heirs or personal
representatives, is a right as an unsecured general creditor of the Company to
claim any dollar amounts consistent with the Participant's Election Agreement
and the Plan. Notwithstanding the above provisions, the Company may establish a
grantor trust to provide additional security to Participants that amounts under
this Plan will be properly paid, provided that the status of Participants with
respect to assets of the grantor trust remains that of general unsecured
creditors. In addition, the Company or the Bank may purchase insurance on a
Participant's life to provide for the payment of the Participant's Account
Balance, provided that the Company or the Bank is the sole owner of such
insurance. In the event insurance is purchased on the life of a Participant, and
the Participant commits suicide within two years

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following the purchase of such insurance or the Participant makes a material
misstatement of fact on an application for such life insurance, then the
Participant shall forfeit the portion of his or her Account Balance equal to the
premiums paid by the Company for such insurance. The Company shall provide each
Participant with an annual report of his or her Deferral Account balances within
30 days following the end of each Plan Year.

         11. AMENDMENT OR TERMINATION. The Compensation Committee may, at any
time and from time to time, terminate the Plan or make such amendments as it
deems advisable; provided, however, that no such termination or amendment shall
adversely affect or impair the contract rights of a Participant with respect to
an effective Election Agreement, unless such Participant shall consent in
writing to such termination or amendment. The Compensation Committee's right to
amend the Plan shall include the right to amend prospectively the Crediting Rate
and to change the form of payments that may be made from the Plan.

         12. NON-PLAN DEFERRAL ARRANGEMENTS. The Company does not intend that
this Plan affect any presently existing deferral arrangement or preclude the
Company from implementing additional deferral arrangements.

         13. COSTS OF ENFORCEMENT. The Company shall pay all expenses of a
Participant, including but not limited to attorney fees, incurred in enforcing
payments by the Company pursuant to this Plan.

         14. FUTURE EMPLOYMENT. Nothing in this Plan or in any Election
Agreement shall obligate a Participant to continue to serve as an executive, or
require the Company to employ the Participant for any period of time. For
purposes of this provision, the term "Company" shall include any affiliate of
the Company that adopts this Plan.

         15. NO ALIENATION. No amounts deliverable under the Plan or under an
Election Agreement shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrances or change, other than by will
or the laws of descent and distribution.

         16. WITHHOLDING. The Company is entitled to withhold and deduct from
any amounts due from the Company to a Participant, all legally required amounts
necessary to satisfy any federal, state or local withholding and
employment-related taxes arising directly or indirectly in connection with the
Plan or any Election Agreement, and the Company may require the Participant to
remit promptly to the Company the amount of such taxes before taking any future
actions with respect to the Participant's Deferral Accounts or Election
Agreements. For purposes of this provision, the term "Company" shall include the
any affiliate of the Company that has adopted this Plan.

         17. BINDING EFFECT. This Agreement shall bind the Participant, the
Company and any affiliate of the Company that has adopted the Plan, and their
beneficiaries, survivors, executors, administrators and transferees.

         18. APPLICABLE LAW. The Agreement and all rights hereunder shall be
governed by the laws of Illinois, except to the extent preempted by the laws of
the United States of America.

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                                  CERTIFICATION

         The foregoing Plan was duly adopted by the Board of Directors on
December 20, 2004.

                            PRINCETON NATIONAL BANCORP, INC.

                            By:/s/Lou Ann Birkey
                               -------------------------------------------------
                                  Its:     Vice President, Investor Relations &
                                           Corporate Secretary

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                                    EXHIBIT A

                        PRINCETON NATIONAL BANCORP, INC.

                           DEFERRED COMPENSATION PLAN

                               ELECTION AGREEMENT

                                DEFERRAL ELECTION

    For the Plan Year beginning January 1, 200  and ending December 31, 200 :
                                              -                            -

   [ ]   I elect to defer _____% of the Compensation payable to me by the
         Company in exchange for payment in cash upon the applicable Payment
         Date in accordance with the Plan. Notwithstanding the foregoing
         election, in no event do I wish to defer Compensation in excess of
         $________. (If the latter blank is not completed, there will be no
         dollar limit on the Compensation deferred for the above referenced Plan
         Year.)

   [ ]   I elect to defer $_____ of the Compensation payable to me by the
         Company in exchange for payment in cash upon the applicable Payment
         Date in accordance with the Plan. I will start at _____% and increase
         the percentage when I reach the 401(k) maximum deferral amount of $___.
         Notwithstanding the foregoing election, in no event do I wish to defer
         Compensation in excess of $_______.

   [ ]   I elect to receive payment of my Deferral Account under the Plan in a
         single lump sum as of the Payment Date determined in accordance with
         the Plan.

   [ ]   I elect to receive payment of my Deferral Account under the Plan in
         ____ (not to exceed 10) substantially equal annual payments commencing
         as of the Payment Date determined in accordance with the Plan.

                                      A-1

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                                 FORM OF BENEFIT

         Except as described below, your benefit payment will be paid or
commence to be paid upon your first Payment Date under the Plan. "Payment Date"
means the earliest of your Separation from Service, as defined in the Plan
(which includes voluntary or involuntary resignation), your death, the date of a
Change in Control or your Disability. You may change your election with respect
to the timing and form of distribution only if (i) such election cannot take
effect for at least 12 months after it is made; (ii) except for distributions
upon your death, Disability, or Unforeseeable Emergency, the election must defer
the first scheduled payment for at least 5 years; and (iii) with respect to
payments to be made at a specified time or pursuant to a specified schedule,
your election must be made at least 12 months before the first scheduled
payment.

         This Election Agreement must be delivered to the Company at Princeton
National Bancorp, Inc., 606 South Main Street, Princeton, Illinois 61356;
Attention: Secretary at least one month prior to the first day of the applicable
Plan Year, unless otherwise specified by the Compensation Committee.

                                      ------------------------------------------

                                      Dated:
                                            ------------------------------------

Accepted by the Company this      day of             .
                            -----        ------------

By:
         -----------------------------------------------------

Its:     President & C.E.O.

                                      A-2<PAGE>
                                                                     EXHIBIT 4.1

            CERTIFICATE OF DESIGNATIONS OF PREFERENCES AND RIGHTS OF
                      SERIES A CONVERTIBLE PREFERRED STOCK
                                       OF
                           Medical Discoveries, Inc.
                               A Utah corporation

      The undersigned, Judy M. Robinett and Stephen R. Drake certify that:

     1.   They are the duly acting President & CEO and Secretary, respectively,
of Medical Discoveries, Inc. a corporation organized and existing under the
laws of the State of Utah (the "Corporation").

     2.   Pursuant to authority conferred upon the Board of Directors by the
Amended and Restated Articles of Incorporation of the Corporation, and pursuant
to the provisions of Section 16-10a-821 of the Utah Revised Business
Corporation Act, said Board of Directors, pursuant to a meeting held October
10, 2004, adopted a resolution establishing the rights, preferences, privileges
and restrictions of, and the number of shares comprising, the Corporation's
Series A Convertible Preferred Stock, which resolution is as follows:

     RESOLVED, that a series of Preferred Stock in the Corporation, having the
rights, preferences, privileges and restrictions, and the number of shares
constituting such series and the designation of such series, set forth below
be, and it hereby is, authorized by the Board of Directors of the Corporation
pursuant to authority given by the Corporation's Amended and Restated Articles
of Incorporation.

     NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the determinations of, the number of shares constituting, and
the rights, preferences, privileges and restrictions relating to, a new series
of Preferred Stock as follows:

     (a)  Determination. The series of Preferred Stock is hereby designated
Series A Convertible Preferred Stock (the "Series A Preferred Stock").

     (b)  Authorized Shares. The number of authorized shares constituting the
Series A Preferred Stock shall be Twelve Thousand (12,000) shares of such
series.

     (c)  Dividends. The holder of the Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
any assets of the Corporation legally available therefore, such dividends as
may be declared from time to time by the Board of Directors.

     (d)  Liquidation Preference.

          (i)  Preference upon Liquidation, Dissolution or Winding Up. In the
event of any dissolution or winding up of the Corporation, whether voluntary or
involuntary, holders of each outstanding share of Series A Preferred Stock
shall be entitled to be paid first out of the assets of the Corporation
available for distribution to shareholders, whether such assets are capital,
surplus or earnings, an amount equal to $100.00 (the "Series A Purchase Price")
per share of Series A Preferred Stock held (as adjusted for any stock splits,
stock dividends or

                                      -1-
<PAGE>
recapitalizations of the Series A Preferred Stock) and any declared but unpaid
dividends on such share, before any payment shall be made to the holders of the
Common Stock, or any other stock of the Corporation ranking junior to the Series
A Preferred Stock with regard to any distribution of assets upon liquidation,
dissolution or winding up of the Corporation. The holders of the Series A
Preferred Stock shall be entitled to share ratably, in accordance with the
respective preferential amounts payable on such stock, in any distribution which
is not sufficient to pay in full the aggregate of the amounts payable thereon.
If, upon any liquidation, dissolution or winding up of the Corporation, the
assets to be distributed to the holders of the Series A Preferred Stock shall be
insufficient to permit payment to such shareholders of the full preferential
amounts aforesaid, then all of the assets of the Corporation available for
distribution to shareholders shall be distributed to the holders of Series A
Preferred Stock. Each holder of the Series A Preferred Stock shall be entitled
to receive that portion of the assets available for distribution as the number
of outstanding shares of Series A Preferred Stock held by such holder bears to
the total number of shares of Series A Preferred Stock. Such payment shall
constitute payment in full to the holders of the Series A Preferred Stock upon
the liquidation, dissolution or winding up of the Corporation. After such
payment shall have been made in full, or funds necessary for such payment shall
have been set aside by the Corporation in trust for the account of the holders
of Series A Preferred Stock, so as to be available for such payment, such
holders of Series A Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation.

     (ii) Consolidation, Merger and Other Corporation Events. A consolidation or
merger of the Corporation (except into or with a subsidiary corporation) or a
sale, lease, mortgage, pledge, exchange, transfer or other disposition of all or
substantially all of the assets of the Corporation or any reclassification of
the stock of the Corporation (other than a change in par value or from no par to
par, or from par to no par or as the result of an event described in subsection
(iv), (v), (vi) or (viii) of paragraph (f)), shall be regarded as a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of this paragraph (d), provided, however, in the case of a merger, if (a) the
Corporation is the surviving entity, (b) the Corporation's shareholders hold a
majority of the shares of the surviving entity, and (c) the Corporation's
directors hold a majority of the seats on the board of directors of the
surviving entity, then such merger shall not be regarded as a liquidation,
dissolution or winding up within the meaning of this paragraph (d). In no event
shall the issuance of new classes of stock, whether senior, junior or a parity
with the Series A Preferred Stock, or any stock splits, be deemed a
"reclassification" under or otherwise limited by the terms hereof.

     (iii) Distribution of Cash and Other Assets. In the event of a liquidation,
dissolution or winding up of the Corporation resulting in the availability of
assets other than cash for distribution to the holders of the Series A Preferred
Stock, the holders of the Series A Preferred Stock shall be entitled to a
distribution of cash and/or assets equal to the value of the liquidation
preference stated in subsection (i) of this paragraph (d), which valuation shall
be made solely by the Board of Directors, and provided that such Board of
Directors was acting in good faith, shall be conclusive.

     (iv) Distribution to Junior Security Holders. After the payment or
distribution to the holders of the Series A Preferred Stock of the full
preferential amounts aforesaid, the holders of Series A Preferred Stock shall
have no further rights in respect at such Series A Stock

                                      -2-
<PAGE>

which shall become null and void and the holders of the Common Stock then
outstanding, or any other stock of the Corporation ranking as to assets upon
liquidation, dissolution or winding up of the Corporation junior to the Series A
Preferred Stock, shall be entitled to receive ratably all of the remaining
assets of the Corporation.

                  (v) PREFERENCE; Priority. References to a stock that is
"SENIOR" to, on a "PARITY" with or "JUNIOR" to other stock as to liquidation
shall refer, respectively, to rights of priority of one series or class of stock
over another in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation. The Series A Preferred Stock shall be senior to
the Common Stock of the Corporation and senior to any subsequent series of
Preferred Stock issued by the Corporation.

         (e) Voting Rights. Except as otherwise required by law, the holder of
shares of Series A Preferred Stock shall not have the right to vote on matters
that come before the shareholders.

         (f) Conversion Rights. The holders of Series A Preferred Stock will
have the following conversion rights:

                  (i) Right to Convert. Subject to and in compliance with the
provisions of this paragraph (f), any issued and outstanding shares of Series A
Preferred Stock may, at the option of the holder, be converted at any time or
from time to time into fully paid and non-assessable shares of Common Stock at
the conversion rate in effect at the time of conversion, determined as provided
herein; provided, that a holder of Series A Preferred Stock may at any given
time convert only up to that number of shares of Series A Preferred Stock so
that, upon conversion, the aggregate beneficial ownership of the Corporation's
Common Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act
of 1934, as amended) of such holder and all persons affiliated with such holder
is not more than 9.99% of the Corporation's Common Stock then outstanding.

                  (ii) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Common Stock, and shall give written notice to the Corporation at such office
that he elects to convert the same and shall state therein the number of shares
of Series A Preferred Stock being converted. Thereupon, the Corporation shall
promptly issue and deliver at such office to such holder of Series A Preferred
Stock a certificate or certificates for the number of shares of Common Stock to
which he shall be entitled. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series A Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on such date.

                  (iii) Conversion Price. The number of shares into which one
share of Series A Preferred stock shall be convertible shall be determined by
dividing the Series A Purchase Price by the then existing Conversion Price (as
set forth below) (the "CONVERSION RATIO"). The "CONVERSION PRICE" per share for
the Series A Preferred Stock shall be equal to eighty-five

                                      -3-
<PAGE>
percent (85%) of the Market Price (as defined below and subject to adjustment
as described below), rounded to the nearest ten thousandth; provided, however,
that subject to the provisions of the next sentence, in no event shall the
Conversion Price be less than $0.05 per share (the "FLOOR PRICE") or exceed
$0.1967 (the "CEILING PRICE"). The Floor Price and Ceiling Price shall be
further adjusted upon the occurrence of any event in paragraph (f)(iv)-(vi).

     For purposes of determining the Conversion Price, the "MARKET PRICE" shall
be the average of the lowest three intra-day trading prices of the
Corporation's Common Stock (which need not occur on consecutive trading days)
during the 10 trading days immediately preceding the conversion date (which may
include trading days prior to the original issue date), provided, that such 10
trading day period shall be extended by the number of trading days during such
period on which (i) trading in the Corporation's Common Stock is suspended by,
or not traded on, the OTC Bulletin Board or a subsequent market on which the
common stock is then traded, or (ii) after the date of Registration Statement
(the "REGISTRATION STATEMENT") for the underlying shares of common stock of the
Corporation into which the Series A Preferred Stock may be converted is
declared effective by the SEC, the prospectus included in the Registration
Statement may not be used by the holder for resale of underlying shares of
common stock, is suspended by, or not traded on, the OTC Bulletin Board or a
subsequent market on which the common stock is then listed, or (iii) after the
date the Registration Statement is declared effective by the SEC, the
prospectus included in the Registration Statement for the underlying shares may
not be used by the holder for the resale of underlying shares of common stock
(provided such inability to use the prospectus is not (a) caused by the holder
or (b) as a result of the Company's filing of post-effective amendments to the
Registration Statement.)

     For purposes of illustration only, assuming the Ceiling Price is $0.22 per
share, if the Market Price is $0.40 at time of conversion, the Conversion Ratio
will be $100.00/$0.22, allowing the 12,000 shares of Series A Preferred Stock
to be converted into 5,454,545 shares of Common Stock.

     If an Event of Default occurs, as defined in the Subscription Agreement
for the Series A Preferred Stock, the Conversion Price shall be reduced to
seventy-five percent (75%) of the Market Price, provided, however, in no event
shall the Conversion Price be less than the Floor Price.

     (iv)  Adjustment for Stock Splits and Combinations.  If the Corporation
shall at any time, or from time to time after the date shares of the Series A
Preferred Stock are first issued (the "ORIGINAL ISSUE DATE"), effect a
subdivision of the outstanding Common Stock, the Floor Price and Ceiling Price
in effect immediately prior thereto shall be proportionately decreased, and
conversely, if the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the Floor
Price and Ceiling Price then in effect immediately before the combination shall
be proportionately increased. Any adjustment under this paragraph (f)(iv) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

     (v)  Adjustment for Certain Dividends and Distributions.  In the event the
Corporation at any time, or from time to time after the Original Issue Date,
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a

                                      -4-
<PAGE>

dividend or other distribution payable in additional shares of Common Stock,
then and in each such event the Floor Price and Ceiling Price then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the Floor Price and Ceiling Price then in effect by a
fraction:

                  (A) the numerator of which shall be the total number of shares
         of Common Stock issued and outstanding immediately prior to the time of
         such issuance or the close of business on such record date, and

                  (B) the denominator of which shall be the total number of
         shares of Common Stock issued and outstanding immediately prior to the
         time of such issuance or the close of business on such record date plus
         the number of shares of Common Stock issuable in payment of such
         dividend or distribution; provided, however, if such record date shall
         have been fixed and such dividend is not fully paid or if such
         distribution is not fully made on the date fixed therefor, the Floor
         Price and Ceiling Price shall be recomputed accordingly as of the close
         of business on such record date and thereafter, the Floor Price and
         Ceiling Price shall be adjusted pursuant to this paragraph (f)(v) as of
         the time of actual payment of such dividends or distributions.

         (vi) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of such Series A
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series A Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period giving application to all adjustments called for during such period
under this paragraph (f) with respect to the rights of the holders of the
Series A Preferred Stock.

         (vii) Adjustment for Reclassification Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Series A Preferred Stock shall
be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this paragraph (f)), then and in each such
event the holder of each share of Series A Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification or other change, by holders of the number of shares of Common
Stock into which such shares of Series A Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.

         (viii) Reorganization, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a

                                      -5-

<PAGE>
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this paragraph (f)) or a merger or consolidation of the Corporation
with or into another corporation, or the sale of all or substantially all of the
Corporation's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the holders of the Series A Preferred Stock shall thereafter be entitled to
receive upon conversion of such Series A Preferred Stock, the number of shares
of stock or other securities or property of the Corporation or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this paragraph (f) with respect to the rights of the holders of the Series A
Preferred Stock after the reorganization, merger, consolidation or sale to the
end that the provisions of this paragraph (f) including adjustment of the Floor
Price and Ceiling Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.

     (ix)  Sale of Common Stock or Securities Convertible Into Common Stock. In
the event the Corporation sells Common Stock or other securities convertible
into or exerciseable for Common Stock at a per share price, exercise price or
conversion price lower than the Conversion Price then in effect (other than in
connection with an acquisition of the securities, assets or business of another
company, joint ventures and employee stock options), the Conversion Price shall
be subject to weighted average anti-dilution adjustments.

     (x)  Certificate of Adjustment. In each case of an adjustment or
readjustment of the Floor Price and Ceiling Price or the securities issuable
upon conversion of the Series A Preferred Stock, the Corporation shall compute
such adjustment or readjustment in accordance herewith and the Corporation's
Chief Financial Officer shall prepare and sign a certificate showing such
adjustment or readjustment, and shall mail such certificate by first class mail,
postage prepaid, to each registered holder of the Series A Preferred Stock at
the holder's address as shown in the Corporation's books. The certificate shall
set forth such adjustment or readjustment, showing in detail the facts upon
which such adjustment or readjustment is based.

     (xi)  Notices of Record Date. In the event of (A) any taking by the
Corporation of a record of the holders of any class or series of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or (B) any reclassification or recapitalization
of the capital stock of the Corporation, any merger or consolidation of the
Corporation or any transfer of all or substantially all of the assets of the
Corporation to any other corporation, entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Series A Preferred Stock at least 10
days prior to the record date specified therein, a notice specifying (1) the
date on which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (2) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and (3) the time, if any is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares,
of Common Stock (or other securities) for securities or other property
deliverable upon

                                      -6-
<PAGE>
such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up.

                  (xii)    Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu
of any fractional shares to which the holder would otherwise be entitled, the
Corporation shall round down to the nearest whole number.

                  (xiii)   Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, Twenty-Four Million
(24,000,000) shares of Common Stock, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Series A Preferred
Stock, the Corporation will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.

                  (xiv)    Notices. Any notice required by the provisions of
this paragraph (f) to be given to the holders of shares of Series A Preferred
Stock shall be deemed given (A) if deposited in the United States mail, postage
prepaid, or (B) if given by any other reliable or generally accepted means
(including by facsimile or by a nationally recognized overnight courier
service), in each case addressed to each holder of record at his address (or
facsimile number) appearing on the books of the Corporation.

                  (xv)     Payment of Taxes. The Corporation will pay all
transfer taxes and other governmental charges that may be imposed in respect of
the issue or delivery of shares of Common Stock upon conversion of shares of
Series A Preferred Stock.

                  (xvi)    No Dilution or Impairment. The Corporation shall not
amend its Amended and Restated Articles of Incorporation or participate in any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, for the purpose of
avoiding or seeking to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, without the approval
of a majority of the then outstanding Series A Preferred Stock.

         (g)      No Re-issuance of Preferred Stock. Any shares of Series A
Preferred Stock acquired by the Corporation by reason of purchase, conversion
or otherwise shall be canceled, retired and eliminated from the shares of
Series A Preferred Stock that the Corporation shall be authorized to issue. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth in the Amended and Restated Articles of Incorporation or in any
certificate of determination creating a series of Preferred Stock or any
similar stock or as otherwise required by law.

         (h)      Severability. If any right, preference or limitation of the
Series A Preferred Stock set forth herein is invalid, unlawful or incapable of
being enforced by reason of any rule, law or

                                      -7-
<PAGE>
public policy, all other rights, preferences and limitations set forth herein
that can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall nevertheless remain in full force and effect,
and no right, preference or limitation herein shall be deemed dependent upon
any other such right, preference or limitation unless so expressed herein.

     3.  The number of authorized shares of Preferred Stock of the Corporation
is 50,000,000, and the number of shares of Series A Stock, none of which has
been issued, is 12,000.

     Each of the undersigned declares under penalty of perjury that the matters
set out in the foregoing Certificate are true of his or her own knowledge.
Executed at ____________, ____________, on this _____ day of October, 2004.

                                             /s/ Judy M. Robinett
                                             --------------------------------
                                             Name:  Judy M. Robinett
                                             Title: President & CEO

                                             /s/ Stephen R. Drake
                                             --------------------------------
                                             Name:  Stephen R. Drake
                                             Title: Secretary

                                      -8-

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