Document:

Exhibit 10iii.7

 

ILLINI

CORPORATION

INCENTIVE STOCK OPTION PLAN

 

 

SECTION I 

 

This Incentive Stock Option Plan for ILLINI

CORPORATION is intended to advance the interests of the Organization by

providing Key Employees who have substantial responsibility for the direction

and management of the Company and its Subsidiaries with additional incentive to

promote the success of the Organization’s business, and by encouraging the Key

Employees to remain in the employ of the Organization.  The above aims will be accomplished through

the granting of certain stock options. 

It is intended that options issued under the Plan qualify as ISOs, and

the provisions of the Plan shall be interpreted in accordance with this

intention.

 

SECTION II

 

The items defined below

shall have the following meanings throughout the Plan:

 

 

2.1         “Board” means the Board of Directors of

Company.

 

2.2         “Code” means the Internal Revenue Code

of 1986, as amended.

 

2.3         “Company” means ILLINI CORPORATION, a

Illinois corporation.

 

2.4         “ISOs” means stock options which

qualify 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 Company

or the Subsidiaries, who have substantial responsibility for the direction and

management of the Organization.

 

2.6         “Organization” means the Company and

the Subsidiaries.

 

2.7         “Optionee” means the person to whom an

option is granted.

 

2.8         “Plan” means the Incentive Stock Option

Plan as defined by the provisions hereof.

 

2.9         “Stock” or “Common Stock” means the

voting common stock of Company.

 

2.10       “Subsidiaries” means any subsidiary

corporation owned or controlled by the Company or one of the Subsidiaries.

 

2.11       “Ten Percent Shareholder” means any

individual who at the time an option is granted owns directly or indirectly

stock possessing more than 10% of the total combined voting power of all

classes of stock of the Company, taking into account the provisions of Section

424(d) of the Code.

 

 

SECTION III

 

The Board shall administer the Plan.  Subject to the provisions of the Plan, the

Board shall have the authority, in its sole and absolute discretion, to:  (a) determine the employees of the

Organization (from among the class of employees eligible under Section 4 to

receive options under the Plan) to whom options shall be granted; (b) determine

the time or times at which options shall be granted; (c) determine the option

price of the shares subject to each option, which price shall not be less than

the 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 vesting

limitations of the Plan; (e) determine the form of options granted hereunder;

(f) determine the exact provisions of any ISO issued hereunder so long as such

provisions are not inconsistent with Section 422 of the Code; and (g) interpret

the Plan and to prescribe, amend, and rescind rules and regulations relating to

it.  For purposes of acting with respect

to the Plan, a majority of the members of the Board shall constitute a quorum

and the acts of a majority of the members present at any meeting at which a

quorum is present, or acts approved in writing by a majority of the members of

the Board, shall be deemed the acts of the Board.

 

SECTION IV

 

4.1         Options shall be granted only to Key

Employees.

 

4.2         The aggregate fair market value

(determined at the time the option is granted) of the Stock with respect to

which ISOs are exercisable for the first time by an individual during any

calendar year (under this Plan or any other ISO plan of Company) shall not

exceed $100,000.00.

 

4.3         Options granted under the Plan may be

exercised in whole or in part throughout the duration of the exercise period

for each option set by the Board subject to the following vesting requirements:

 

(a)       Twenty percent of the shares of Common

Stock which may be purchased pursuant to an Option, shall be available for

purchase on or after one (1) year from the date of grant;

 

(b)      Twenty percent of the shares of Common

Stock which may be purchased pursuant to an Option, shall be available for

purchase on or after two (2) years from the date of grant;

 

(c)       Twenty percent of the shares of Common

Stock which may be purchased pursuant to an Option, shall be available for

purchase on or after three (3) years from the date of grant;

 

(d)      Twenty percent of the shares of Common

Stock which may be purchased pursuant to an Option, shall be available for

purchase on or after four (4) years from the date of grant; and

 

2

 

(e)       Twenty percent of the shares of Common

Stock which may be purchased pursuant to an Option, shall be available for

purchase on or after five (5) years from the date of grant.

 

In the event of termination of employment for any

reason other than death, the shares of Common Stock which may be purchased

pursuant to an Option shall be limited to number of shares which are fully

vested and available for purchase under this Section 4.3 as of the date and

time of termination of employment.  In

the event of the death of an Optionee, all shares of Common stock which may be

purchased pursuant to an Option held by the Optionee shall be deemed fully

vested and available for purchase, subject to the limitation set forth in

Section 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 Securities

and Exchange Commission, all shares of Common Stock which may be purchased

pursuant 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 Stock

which may be issued pursuant to ISOs granted hereunder (subject to adjustment

as provided in Section 5.3 hereof) shall be 60,000 shares and, to the extent

allowed by law, said number of shares will be reserved for use upon the

exercise of options which may be granted at any time and from time to time

under the Plan (subject to the provisions of Section 10).  These shares may be in whole or in part, as

the Board shall from time to time determine, authorized but unissued shares or

unauthorized shares which may be authorized pursuant to powers of attorney

granted by shareholders of the Company. 

Any shares subject to an option under the Plan, which option for any

reason expires or is terminated unexercised as to such shares, may again be

subjected to an option under the Plan.

 

5.2         In the event that additional shares of

Stock are issued pursuant to a stock split or a stock dividend, the number of

shares of Stock then covered by each outstanding option granted hereunder shall

be increased proportionally and the per share price of such shares shall be

decreased proportionally with no change in the total purchase price of the

shares then so covered.  The number of

shares of Stock reserved for the purpose of the Plan shall also be increased

proportionally.  In the event that the

shares of Stock of the Company from time to time issued and outstanding are

reduced by a combination of shares, the number of shares of Stock then covered

by each outstanding option granted hereunder shall be reduced proportionally

and the per share price shall be increased proportionally with no change in the

total price of the shares then so covered. 

The number of shares of Stock reserved for the purposes of the Plan

shall also be reduced proportionally. 

No fractional shares shall be issued, and any fractional shares

resulting from the computations pursuant to this Section 5.2 shall be

eliminated 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 common

stock or other securities.

 

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SECTION VI

 

6.1         The option price for each share of

Stock covered by an ISO shall be an amount not less than 100% (or, in the case

of an ISO granted to a Ten Percent Shareholder, not less than 110%) of the fair

market value of the Stock on the date the option is granted.

 

6.2         All ISOs issued under the Plan shall be

for 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) from

the date of grant thereof.

 

6.3         The period of the ISO, once it is

granted, may be reduced only as provided for in Section 7 in connection with

the 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 in

the employ of the Organization and shall have been continuously so employed

since the grant of the option.

 

6.5         Each option granted under the Plan

shall be non-transferable and shall be exercisable only by the Optionee to whom

the option is granted.  No option

granted under the Plan or any of the rights and privileges thereby conferred

shall be transferred, assigned, pledged, or hypothecated in any way (whether by

operation of law or otherwise), and no such option, right, or privilege shall

be 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 or

privilege conferred thereby, contrary to the provisions hereof, or upon the

levy of any attachment or similar process upon such option, right or privilege,

the option and such rights and privileges shall immediately become null and

void.

 

SECTION VII 

 

7.1         In the event of an Optionee’s

termination of employment for any reason, such Optionee or the Optionee’s

guardian or personal representative may exercise any Options theretofore

granted, which have vested and are not then expired, within three (3) months

after such termination of employment; provided, however, in the case of

termination of employment due to permanent disability, the three month period

of exercise shall be extended to one year.

 

7.2         The transfer of a Key Employee from the

Company and any Subsidiary to the Company or any Subsidiary shall not be considered

an interruption or termination of employment for purposes of this Agreement.

 

SECTION VIII 

 

8.1         The exercise of any ISO shall also be

contingent 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 legal

representative, heir, or legatee, as the case may be, will be, or will be

deemed to be, a holder of any share subject to an option unless and until

appropriate documents evidencing such shares are issued under the provisions of

the Plan.  Adjustment shall be made,

however, for dividends for which the record date is after the date the option

is exercised but prior to the date such evidence of such shares is issued.

 

8.3         Each option shall be subject to the

condition that if at any time the Board shall determine, in its discretion,

that the listing, registration, or qualification of the shares covered thereby

upon any securities exchange or under any state or federal law or that the

consent or approval of any governmental regulatory body is necessary or

desirable as a condition of, or in connection with, the issue or purchase of

shares under such option, such shares will not be issued unless and until such

listing, registration, qualification, consent, or approval shall have been

effected or obtained free of any conditions not acceptable to the Board.

 

8.4         Neither the Plan nor any option

agreement covering options issued under the Plan is to be construed as a

contract of employment of any kind whatsoever between a Key Employee and any

present or future employer of Key Employee.

 

8.5         Exercise of an option shall result in a

decrease in the number of shares of Stock which thereafter may be available

under 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 after

ten (10) years from the date the Plan is adopted by the Board, or the date the

Plan is approved by the majority of the outstanding shares of each class of

Company stock, whichever is earlier.

 

SECTION X

 

The Board may at any time terminate the Plan, and at

any 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 maximum

number of shares for which options may be granted under the Plan either in the

aggregate or to any individual Optionee; or (b) reduce (except in accordance

with Section 5.2) the minimum option prices which may be established under the

Plan; 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) change

the provisions relating to the determination of employees to whom options shall

be 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 in

capitalization.  The termination or any

modification or amendment of the Plan shall not, without the consent of an

Optionee, affect his or her rights under an option theretofore granted to such

Optionee.

 

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SECTION XI 

 

The Plan shall not affect

the provisions of any non-qualified stock options granted to any director or

employee of the Organization under any other plan relating to non-qualified

stock options; nor shall it affect any of the rights of any employee or the

Organization to whom such a non-qualified stock option was granted.

 

SECTION XII

 

This Plan shall become

effective on the later of the date of its adoption by the Board or its approval

by the vote of the holders of a majority of the outstanding shares of each

class of the Company’s stock.  This Plan

shall not become effective unless such shareholder approval shall be obtained

within twelve (12) months before or after the adoption of the Plan by the

Board.

 

6Exhibit 10.31

 

SEVERANCE AND CHANGE OF

CONTROL AGREEMENT

 

THIS SEVERANCE
AND CHANGE OF CONTROL AGREEMENT (the “Agreement”) is made effective of June 21, 2002, between JNI Corporation, a
Delaware corporation (“JNI”), and Paul Kim
(“Employee”), subject to JNI’s Board of Directors’ approval.

 

RECITALS

 

A.                                   Employee
is presently employed as the Vice President
of Finance of JNI.

 

B.                                     Employee
and JNI desire to memorialize in writing their understanding regarding
severance payments and vesting of options in the event of a Change in Control.

 

C.                                     Employee
and JNI acknowledge that this Agreement constitutes the entire agreement
between the parties relating to severance benefits and supersedes any and all
other agreements, either oral or in writing, between Employee and JNI and all
other subsidiaries or affiliates of JNI with respect to the matters discussed
herein.

 

D.                                    JNI
desires to make consistent all of its arrangements with its employees with
respect to the rights and responsibilities of such employees following a change
of control and Employee acknowledges the need for such consistency.

 

AGREEMENT

 

In
consideration of the promises and of the mutual covenants contained herein, and
for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties do hereby agree as follows:

 

1.  Effect of Certain Terminations after
Change in Control.

 

1.1  Severance Package.  If within one (1) year after a Change in
Control (as that term is defined below) Employee’s employment is terminated
without “Cause,” or Employee resigns for “Good Reason,” then JNI will provide
Employee with the following “Severance Package,” provided Employee complies
with the conditions set forth in section 1.2 below: (i) Employee will receive a
severance payment equal to twelve (12) months’ of Employee’s base salary,
payable [in a lump sum within 30 days of such termination without Cause or
resignation for Good Reason]; and (ii) accelerated vesting of all options
granted to Employee under JNI’s stock option plans that, as of the date of such
termination without Cause or voluntary resignation for Good Reason, remain
unexercised and unvested, to the extent permissible by law.  The acceleration of vesting provision set
forth in this section 1.1 is notwithstanding and in addition to any existing
vesting provisions set forth in JNI’s stock option plans.

 

 

1.2  Conditions to Receive Severance Package.  The Severance Package described above will
be paid provided Employee meets the following conditions: (a) Employee complies
with all surviving provisions of any confidentiality or proprietary rights
agreement signed by Employee; and (b) Employee executes a full general release,
in a form acceptable to JNI, releasing all claims, known or unknown, that
Employee may have against JNI, and any subsidiary or related entity, their
officers, directors, employees and agents, arising out of or any way related to
Employee’s employment or termination of employment with JNI.

 

1.3  280G.  Notwithstanding section 1.1 above, if it is determined that the
amounts payable to Employee under this Agreement, when considered together with
any other amounts payable to Employee as a result of a Change in Control, cause
such payments to be treated as excess parachute payments within the meaning of
Section 280G of the Internal Revenue Code, JNI shall reduce the amount payable
to Employee under this section 1.1 (to the least extent possible) to an amount
that will not subject Employee to the imposition of tax under Section 4999 of
the Internal Revenue Code.

 

1.4  Change in Control.  A “Change in Control” means: (i) the
acquisition by an individual person or entity or a group of individuals or
entities acting in concert, directly or indirectly, through one transaction or
a series of related transactions, of more than 50% of the outstanding voting
securities of JNI; (ii) a merger or consolidated of JNI with or into another
entity after the stockholders of JNI immediately prior to such transaction hold
less than 50% of the voting securities of the surviving entity; or (iii) a sale
of all or substantially all of the assets of JNI.

 

1.5  Termination for “Cause.”  For purposes of this Agreement, a
termination for “Cause” occurs if Employee is terminated for any of the
following reasons: (i) theft, dishonesty, or falsification of any JNI records;
(ii) improper disclosure of JNI’s confidential or proprietary information;
(iii) Employee’s failure or inability to perform any reasonable assigned duties
after written notice from JNI of, and a reasonable opportunity to cure, such
failure or inability; or (iv) Employee’s conviction of any criminal act which
impairs his ability to perform his duties as an employee of JNI.  Notwithstanding the foregoing clause (iii),
Employee may not be terminated for Cause as a result of his failure or inability
to perform assigned duties which are substantially inconsistent with  his duties and responsibilities in effect
during the year preceding the Change in Control (or such shorter period of time
as Employee was employed by JNI).

 

1.6  Voluntary Resignation for “Good Reason.”  After a Change in Control, Employee may
terminate Employee’s employment with JNI for “Good Reason” by serving notice of
resignation to JNI with a description of the circumstances giving rise to the
Good Reason.  For purposes of this Agreement,
“Good Reason” means: (i) Employee’s compensation, including salary, bonus and
equity compensation, are reduced from the compensation level in effect for
Employee during the year preceding the Change in Control (or such shorter
period of time as Employee was employed by JNI); (ii) a material diminution of
Employee’s title or duties with JNI; or (iii) JNI relocates Employee’s
principal place of work to a location more than sixty (60) miles from 10945
Vista Sorrento Parkway, San Diego, CA 92130, without Employee’s prior written
approval.

 

2

 

1.7  Payment Upon Death or Disability.  Neither death nor disability shall affect
JNI’s obligations hereunder.

 

2.  At-Will Employment.  Employee acknowledges that Employee
continues as an at-will employee and agrees that nothing in this Agreement is
intended to or should be construed to contradict, modify or alter Employee’s
at-will employment relationship with JNI.

 

3.  No Other Severance Benefits.  Employee acknowledges and agrees that the
Severance Package provided pursuant to this Agreement is in lieu of any other
severance benefits to which Employee may be eligible under any other agreement
and/or JNI severance plan or practice.

 

4.  General Provisions.

 

4.1  Severability.  If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.

 

4.2  Successors and Assigns.  The rights and obligations of JNI under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of JNI.  Employee
shall not be entitled to assign any of his rights or obligations under this
Agreement, other than to his estate as provided in section 1.7.

 

4.3  Applicable Law.  This Agreement shall be interpreted,
construed, governed and enforced in accordance with the laws of the United
States of American and the State of California.  Each of the parties irrevocably consents to the exclusive
jurisdiction of the federal and state courts located in San Diego, California,
as applicable, for any matter arising out of or relating to this Agreement.

 

4.4  Amendments.  No amendment or modification of the terms or conditions of this
Agreement shall be valid unless in subsequent writing and signed by the parties
thereto.

 

IN WITNESS
WHEREOF, the parties hereto execute this Agreement, effective as of the date
first above written.

 

	
  EMPLOYEE:

  	
   

  	
  JNI CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Paul H.
  Kim       7/10/02

  	
   

  	
   

  	
  By:

  	
  /s/ John C.
  Stiska

  	
   

  
	
  PAUL H. KIM

  	
   

  	
  Title:

  	
  Interim CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  10945 Vista
  Sorrento Parkway

  
	
   

  	
   

  	
   

  	
   

  	
  San Diego,
  CA 92130

  
									

 

3

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