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                                                                     EXHIBIT 4.3

                                CFS BANCORP, INC.
                             2003 STOCK OPTION PLAN

                                    SECTION 1

                              PURPOSE AND DURATION

      1.1. ADOPTION OF THE PLAN. CFS Bancorp, Inc., a Delaware corporation,
hereby adopts the CFS Bancorp, Inc. 2003 Stock Option Plan, as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options and Incentive
Stock Options. This Plan and the grant of Options hereunder are expressly
conditioned upon the Plan's approval by the shareholders of the Company.

      1.2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide an
established plan to attract and retain persons of ability as key employees and
directors and to motivate employees, key employees and directors to exert their
best efforts on behalf of the Company and its Affiliates through the grant of
Options to purchase Shares.

                                    SECTION 2

                                   DEFINITIONS

      For purposes of the Plan, the following words and phrases will have the
following meanings unless a different meaning is plainly required by the
context:

      2.1. "1934 ACT" means the Securities Exchange Act of 1934, as amended.
Reference to a specific Section of the 1934 Act or regulation thereunder will
include such section or regulation, any valid regulation promulgated under such
Section, and any comparable provision of any future legislation or regulation
amending, supplementing, or superseding such Section or regulation.

      2.2. "AFFILIATE" means any corporation or any other entity (including, but
not limited to, partnerships, limited liability companies, joint ventures and
Subsidiaries) controlling, controlled by or under common control with the
Company.

      2.3. "BENEFICIARY" means the person or persons designated by a Participant
to receive the benefits under the Plan, if any, which become payable as a result
of the Participant's death.

      2.4. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company serving at the time that the Plan is approved by the shareholders of the
Company or thereafter.
<PAGE>
      2.5. "CASHLESS EXERCISE" means, if there is a public market for the
Shares, the payment of the Exercise Price of Options, (a) through a "same day
sale" commitment from the Participant and an NASD Dealer whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of the Shares so
purchased in order to pay the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such stock to forward the Exercise Price
directly to the Company, or (b) through a "margin" commitment from the
Participant and an NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company.

      2.6. "CAUSE" means, for purposes of determining whether and when a
Participant has incurred a Termination of Service for Cause, "Cause" as defined
in the Participant's employment agreement. If the Participant does not have an
employment agreement, "Cause" means,

      (a)   In the case of an Employee, any insubordination to, or disobedience
            of the directions of the Board of Directors or, in the case of a
            Participant who is not the Chief Executive Officer of the Company,
            any insubordination to, or disobedience of the directions of the
            Chief Executive Officer of the Company; or

      (b)   The willful and continued failure of a Participant to perform his
            required duties as an Employee or Non-employee Director; or

      (c)   Any conviction of, or the entering of any plea of guilty or nolo
            contendere by, the Participant for any felony; or

      (d)   Any act of the Participant of dishonesty, fraud, theft,
            misappropriation or embezzlement; or

      (e)   Any misappropriation, usurping or taking by the Participant of any
            corporate opportunity of the Company; or

      (f)   Any medical diagnosis of the Participant of alcoholism or unlawful
            drug, chemical or substance abuse or addiction to the extent that
            such alcoholism, abuse or addiction adversely affects the ability of
            the Participant to perform his duties and responsibilities hereunder
            or adversely affects the Company or its business, operations or
            affairs, with the Participant hereby agreeing to make himself
            promptly available to a medical doctor selected by and paid for by
            the Company for such diagnosis and consenting to provide the results
            of such diagnosis to the Company promptly; or

      (g)   Any material noncompliance by the Participant with any applicable
            employee handbooks, rules, policies or procedures of the Company in
            effect from time to time; or

      (h)   Any breach by the Participant of any provision of his employment
            agreement, if any; or

      (i)   Any breach of fiduciary duty involving personal profit; or

      (j)   Incompetence or intentional failure to perform stated duties; or
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      (k)   Willful violation of any law, rule or regulation (other than traffic
            violations or similar offenses) or final cease and desist order.

      2.7. "CHANGE IN CONTROL" will have the meaning given to such term in
Section 9.2.

      2.8. "CODE" means the Internal Revenue Code of 1986, as amended. Reference
to a specific Section of the Code or regulation thereunder will include such
Section or regulation, any valid regulation promulgated under such Section, and
any comparable provision of any future law, legislation, or regulation amending,
supplementing, or superseding such Section or regulation.

      2.9. "COMMITTEE" means the Compensation Committee of the Board, or such
other committee appointed by the Board pursuant to Section 3.1 to administer the
Plan, serving on the date the Plan is approved by the shareholders of the
Company or thereafter.

      2.10. "COMPANY" means CFS Bancorp, Inc., a Delaware corporation, and any
successor thereto which assumes the obligations of such corporation under the
Plan.

      2.11. "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.

      2.12. "DISABILITY" means an illness or physical or mental disability or
incapacity of the Participant to such an extent that the Participant cannot
adequately perform his duties and responsibilities (as reasonably determined by
the Company) for a period of at least ninety (90) consecutive days; provided,
however, that any medical diagnosis of the Participant of alcoholism or drug,
chemical or substance abuse or addiction will not be included in the definition
of "Disability." A Disability must be evidenced by signed, written opinions of
at least two (2) independent, qualified medical doctors selected by the Board of
Directors and paid for by the Company.

      2.13. "EFFECTIVE DATE" means April 29, 2003, which is the date as of which
both the Board of Directors and the shareholders of the Company had approved the
Plan.

      2.14. "ELIGIBLE TRANSFEREES" will have the meaning given to such term in
Section 11.7.

      2.15. "EMPLOYEE" means an officer, key employee, or other employee of the
Company or an Affiliate, whether the individual is employed on the date the Plan
is approved by the shareholders of the Company or becomes employed subsequent to
such approval.

      2.16. "EXERCISE PRICE" means the price at which a Share may be purchased
by a Participant pursuant to the exercise of an Option.

      2.17. "FAIR MARKET VALUE" means, on any given date, the closing sale price
of Shares on the principal national securities exchange on which the Shares are
listed, or, if the Shares were not traded on such date, on the last preceding
day on which Shares were traded.

      2.18. "GOOD REASON" means "Good Reason" as defined in the Participant's
employment agreement, if any. If the Participant does not have an employment
agreement with the Company, this definition will have no effect.
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      2.19. "GRANT DATE" means, with respect to any Option granted under the
Plan, the date on which the Option was granted by the Committee, regardless if
the Option Agreement to which the Option relates is executed subsequent to such
date.

      2.20. "INCENTIVE STOCK OPTION" means an Option granted under the Plan to
purchase Shares which is designated as an Incentive Stock Option and is intended
to meet the requirements of Code Section 422.

      2.21. "NASD DEALER" means a broker-dealer who is a member of the National
Association of Securities Dealers, Inc.

      2.22. "NON-EMPLOYEE DIRECTOR" means any individual who is a member of the
Board of Directors of the Company or an Affiliate or the Board of Directors of
Citizens Financial Services, FSB, including an Advisory Director or a Director
Emeritus of those Boards, who is not an Employee.

      2.23. "NONQUALIFIED STOCK OPTION" means an Option granted under the Plan
to purchase Shares which is not an Incentive Stock Option.

      2.24. "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.

      2.25. "OPTION AGREEMENT" means the written agreement which sets forth the
terms and provisions applicable to each Option granted under the Plan.

      2.26. "OPTION PERIOD" means the period during which an Option will be
exercisable in accordance with the applicable Option Agreement and Section 6.

      2.27. "PARTICIPANT" means an Employee or Non-employee Director to whom an
Option has been granted.

      2.28. "PLAN" means the CFS Bancorp, Inc. 2003 Stock Option Plan, as set
forth in this instrument and as amended from time to time.

      2.29. "RETIREMENT" means, in the case of an Employee, the date a
Participant attains age sixty-five (65), or such other date as specified by the
Committee in the Option Agreement, and in the case of a Non-employee Director,
retirement from service on the Board or any successor thereto (including service
as a Director Emeritus) after attaining the age of 65, or such other date as
specified by the Committee in the Option Agreement.

      2.30. "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act, and
any future rule or regulation amending, supplementing or superseding such rule.

      2.31. "SECTION 16 PERSON" means a person subject to potential liability
under Section 16(b) of the 1934 Act with respect to transactions which involve
equity securities of the Company.

      2.32. "SHARES" means the whole shares of issued and outstanding regular
voting common stock of the Company, whether presently or hereafter issued and
outstanding, and any other stock or securities resulting from adjustment thereof
as provided in Section 4.5 or the stock of any successor to the Company which is
so designated for the purposes of the Plan.
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      2.33. "SUBSIDIARY" means any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. A Subsidiary includes any
Subsidiary of the Company as of the Effective Date and each corporation that
becomes a Subsidiary of the Company after the Effective Date.

      2.34. "TERMINATION OF SERVICE" means, with respect to an Employee, the
occurrence of any act or event or any failure to act whether pursuant to an
employment agreement or otherwise, that actually or effectively causes or
results in a Participant ceasing, for whatever reason, to be an Employee,
including, but not limited to, death, Disability, Retirement, termination by the
Company or an Affiliate of the Participant's employment with the Company or an
Affiliate (whether with or without Cause) and voluntary resignation or
termination by the Participant of his or her employment with the Company or an
Affiliate (whether with or without Good Reason). A Termination of Service also
will occur with respect to an Employee who is employed by an Affiliate if the
Affiliate ceases to be an Affiliate of the Company and the Participant will not
immediately thereafter become an Employee of the Company or another Affiliate.
For purposes of the Plan, transfers or changes of employment of a Participant
between the Company and an Affiliate (or between Affiliates) will not be deemed
a Termination of Service. Termination of Service means, with respect to a
Non-employee Director, the failure to be re-elected to the Board of Directors of
the Company or an Affiliate or other removal from that Board.

                                    SECTION 3

                                 ADMINISTRATION

      3.1. THE COMMITTEE. The Plan will be administered by the Committee. The
decision or action of a majority of the actual number of members of the
Committee will constitute the decision or action of the Committee. The Committee
will consist of not less than three (3) Directors. The members of the Committee
will be appointed from time to time by, and will serve at the pleasure of, the
Board of Directors. It is intended that the Committee be comprised solely of
Directors who both are (a) "non-employee directors" under Rule 16b-3, and (b)
"outside directors" as described in Code Section 162(m)(3)(C)(ii). Failure of
the Committee to be so comprised will not result in the cancellation,
termination, expiration, or lapse of any Option.

      3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Articles of Incorporation or By-Laws of the Company, and subject to the
provisions of the Plan, the Committee will have full power and discretion to
select Employees and Non-employee Directors who will participate in the Plan;
determine the sizes and types of Options; determine the terms and conditions of
Options in a manner consistent with the Plan; construe and interpret the Plan,
all Option Agreements and any other agreements or instruments entered into under
the Plan; establish, amend or waive rules and regulations for the Plan's
administration; and amend the terms and conditions of any outstanding Option and
applicable Option Agreement to the extent such terms and conditions are within
the discretion of the Committee as provided in the Plan. Further, the Committee
will make all other determinations which may be necessary or advisable for the
administration of the Plan. Each Option will be evidenced by a written Option
Agreement between the Company and the Participant and will contain such terms
and conditions established by the Committee consistent with the provisions of
the Plan. Any notice or document required to be given to or filed with the
Committee will be properly given or filed if hand delivered (and a
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delivery receipt is received) or mailed by certified mail, return receipt
requested, postage paid, to the Committee at 707 Ridge Road, Munster, Indiana
46321.

      3.3. DELEGATION BY THE COMMITTEE. The Committee, in its sole discretion
and on such terms and conditions as it may provide, may delegate all or any part
of its authority and powers under the Plan to one or more Directors or officers
of the Company; provided, however, that the Committee may not delegate its
authority and powers (a) with respect to grants to Section 16 Persons, or (b) in
any way which would jeopardize the Plan's qualification under Code Section
162(m) or Rule 16b-3.

      3.4. DECISIONS BINDING. All determinations and decisions made by the
Committee, the Board and any delegate of the Committee pursuant to Section 3.3
will be final, conclusive and binding on all persons, including the Company and
Participants. No such determinations will be subject to de novo review if
challenged in court.

                                    SECTION 4

                           SHARES SUBJECT TO THE PLAN

      4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 4.5,
the maximum number of Shares cumulatively available for issuance under the Plan
will not exceed Six Hundred Thousand (600,000) Shares less the total number of
Shares previously issued under the Plan. Shares issued under the Plan may be
either authorized but unissued Shares, treasury Shares or reacquired Shares
(including Shares purchased in the open market), or any combination thereof, as
the Committee may from time to time determine in its sole discretion.

      Shares covered by an Option that are forfeited or that remain unpurchased
or undistributed upon termination or expiration of any such Option may be made
the subject of further Options to the same or other Participants. If the
exercise price of any Option is satisfied by tendering Shares (by either actual
delivery or attestation), only the number of Shares actually issued, net of the
Shares tendered, will be deemed issued for purposes of determining the number of
Shares available for grants under the Plan.

      4.2. RELEASE OF SHARES. Subject to the limitations set forth in the Plan,
the Committee will have full authority to determine the number of Shares
available for Options, and in its sole discretion may include (without
limitation) as available for distribution any Shares that have ceased to be
subject to an Option; any Shares subject to an Option that have been forfeited;
any Shares under an Option that otherwise terminates without the issuance of
Shares being made to a Participant; any Shares received by the Company in
connection with the exercise of an Option, including the satisfaction of any tax
liability or tax withholding obligation; or any Shares repurchased by the
Company in the open market or otherwise, having an aggregate repurchase price no
greater than the amount of cash proceeds received by the Company from the
exercise of Options granted hereunder. Any Shares that are available immediately
prior to the termination of the Plan, or any Shares returned to the Company for
any reason subsequent to the termination of the Plan, may be transferred to a
successor plan.

      4.3. RESTRICTIONS ON SHARES. Shares issued on the exercise of an Option
will be subject to the terms and conditions specified herein and to such other
terms, conditions and restrictions as the Committee in its sole discretion may
determine or provide in the Option Agreement. The Company will not be required
to issue or deliver any certificates for Shares, cash or other property prior to
(a) the listing of such Shares on any stock exchange (or other public market) on
which the Shares may then be listed (or
<PAGE>
regularly traded), and (b) the completion of any registration or qualification
of such shares under federal, state, local or other law, or any ruling or
regulation of any government body which the Committee determines to be necessary
or advisable. The Company may cause any certificate for Shares to be delivered
hereunder to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Shares as provided in the Plan or as the
Committee may otherwise require. Participants, or any other persons entitled to
benefits under the Plan, must furnish to the Committee such documents, evidence,
data or other information as the Committee considers necessary or desirable for
the purpose of administering the Plan. The benefits under the Plan for each
Participant, and each other person who is entitled to benefits hereunder, are to
be provided on the condition that he furnish full, true and complete data,
evidence, or other information, and that he will promptly sign any document
reasonably related to the administration of the Plan requested by the Committee.
No fractional Shares will be issued under the Plan; rather, fractional shares
will be aggregated and then rounded to the next lower whole Share.

      4.4. SHAREHOLDER RIGHTS. No person will have any rights of a shareholder
(including, but not limited to, voting and dividend rights) as to Shares subject
to an Option until, after proper exercise or vesting of the Option or other
action as may be required by the Committee in its sole discretion, such Shares
will have been recorded on the Company's official shareholder records (or the
records of its transfer agents or registrars) as having been issued and
transferred to the Participant. Upon exercise of the Option or any portion
thereof, the Company will have a reasonable period in which to issue and
transfer the Shares to the Participant, and the Participant will not be treated
as a shareholder for any purpose whatsoever prior to such issuance and transfer.
No payment or adjustment will be made for cash dividends or other rights for
which the record date is prior to the date such Shares are recorded as issued
and transferred in the Company' official shareholder records (or the records of
its transfer agents or registrars), except as provided herein or in an Option
Agreement.

      4.5. CHANGES IN STOCK.

            4.5.1. SUBSTITUTION OF STOCK AND ASSUMPTION OF PLAN. In the event of
      any change in the Shares by virtue of any stock dividends, stock splits,
      recapitalizations, or reclassifications or any acquisition, merger,
      consolidation, share exchange, tender offer, or other combination
      involving the Company that does not constitute a Change in Control but
      that results in the acquisition of a Subsidiary by the Company, or in the
      event that other stock will be substituted for the Shares as the result of
      any merger, consolidation, share exchange, or reorganization or any
      similar transaction which constitutes a Change in Control of the Company,
      the Committee will correspondingly adjust (a) the number, kind, and class
      of Shares which may be delivered under the Plan, (b) the number, kind,
      class, and price of Shares subject to outstanding Options (except for
      mergers or other combinations in which the Company is the surviving
      entity), and (c) the numerical limits of Sections 4.1 and 6.1 all in such
      manner as the Committee in its sole discretion determines to be advisable
      or appropriate to prevent the dilution or diminution of such Options;
      provided, however, in no event will the One Hundred Thousand Dollars
      ($100,000) limit on ISOs contained in Section 6.1 be affected by an
      adjustment under this Section 4.5.1. The Committee's determination in this
      respect will be final and conclusive.

            4.5.2.CONVERSION OF SHARES. In the event of a Change in Control of
      the Company pursuant to which another person or entity acquires control of
      the Company (such other person or entity being the "Successor"), the kind
      of shares of stock which will be subject to the Plan and to each
      outstanding Option will, automatically by virtue of such Change in
      Control, be converted into and replaced by securities of the Successor
      having full voting, dividend, distribution, preference, and liquidation
      rights, and the number of shares subject to an Option, the calculation
<PAGE>
      of an Option's value, and the purchase price per share upon exercise of
      the Option will be correspondingly adjusted so that, by virtue of such
      Change in Control of the Company, each Participant will have the right to
      purchase (a) that number of shares of stock of the Successor which have a
      Fair Market Value, as of the date of such Change in Control of the
      Company, equal to the Fair Market Value, as of the date of such Change in
      Control of the Company, of the Shares of the Company theretofore subject
      to each Option, and (b) for a purchase price per share which, when
      multiplied by the number of shares of stock of the Successor subject to
      each Option, will equal the aggregate exercise price at which the
      Participant could have acquired all of the Shares of the Company
      previously optioned to the Participant.

                                    SECTION 5

                                   ELIGIBILITY

      5.1. ELIGIBILITY. Except as herein provided, the individuals who will be
eligible to participate in the Plan and be granted Options will be those
individuals who are Employees or Non-employee Directors. The Committee may, from
time to time and in its sole discretion, select Employees and Non-employee
Directors to be granted Options and will determine the terms and conditions with
respect thereto. In making any such selection and in determining the form of the
Option, the Committee may give consideration to the functions and
responsibilities of the Employee's or Non-employee Director's contributions to
the Company or its Affiliates, the value of the Employee's or Non-employee
Director's services (past, present, and future) to the Company or its
Affiliates, and such other factors deemed relevant by the Committee in its sole
discretion. Committee members will not be eligible to participate in the Plan
while serving as Committee members. An Employee or Non-employee Director will
become a Participant in the Plan as of the date specified by the Committee. A
Participant can be removed as an active Participant by the Committee effective
as of any date.

      5.2. NO CONTRACT OF EMPLOYMENT. Neither the Plan nor any Option Agreement
executed under the Plan will constitute a contract of employment between a
Participant and the Company or an Affiliate, and participation in the Plan will
not give a Participant the right to be rehired by or retained in the employment
of the Company or an Affiliate.

                                    SECTION 6

                                  STOCK OPTIONS

      6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
the Committee, at any time and from time to time, may grant Options to any
Employee or Non-employee Director in such amounts as the Committee, in its sole
discretion, may determine. The Committee may grant Incentive Stock Options,
Nonqualified Stock Options or any combination thereof; provided, however,
Participants who are Non-employee Directors may be granted only Nonqualified
Stock Options. Subject to the terms and provisions of the Plan, the Committee,
in its sole discretion, will determine the number of Shares subject to each
Option; provided, however, that no Participant may be granted Incentive Stock
Options under the Plan which would result in Shares with an aggregate Fair
Market Value (measured on the Grant Date(s)) of more than One Hundred Thousand
Dollars ($100,000) first becoming exercisable in any one calendar year.
<PAGE>
      6.2. OPTION AGREEMENT. Each Option will be evidenced by an Option
Agreement that will specify the Exercise Price, the number of Shares to which
the Option relates, the Option Period, any conditions to exercise of the Option,
and such other terms and conditions as the Committee, in its sole discretion,
determines. The Option Agreement also will specify whether the Option is
intended to be an Incentive Stock Option or a Nonqualified Stock Option. All
grants of Options intended to constitute Incentive Stock Options will be made in
accordance, and all Option Agreements pursuant to which Incentive Stock Options
are granted will comply, with the requirements of Code Section 422.

      6.3. EXERCISE PRICE. Subject to the provisions of this Section 6.3, the
Exercise Price for each Option will be determined by the Committee in its sole
discretion.

            6.3.1. NONQUALIFIED STOCK OPTIONS. In the case of a Nonqualified
      Stock Option, the per Share Exercise Price will not be less than one
      hundred percent (100%) of the Fair Market Value of the Shares to which the
      Nonqualified Stock Option relates, determined as of the Grant Date.

            6.3.2. INCENTIVE STOCK OPTIONS. In the case of an Incentive Stock
      Option, the Exercise Price will not be less than one hundred percent
      (100%) of the Fair Market Value of the Shares to which the Incentive Stock
      Option relates determined as of the Grant Date; provided, however, that
      if, on the Grant Date, the Participant (together with persons whose stock
      ownership is attributed to the Participant pursuant to Code Section
      424(d)) owns securities possessing more than ten percent (10%) of the
      total combined voting power of all classes of stock of the Company or any
      of its Subsidiaries, the Exercise Price will not be less than one hundred
      ten percent (110%) of the Fair Market Value of the Shares to which the
      Incentive Stock Option relates determined as of the Grant Date.

            6.3.3. SUBSTITUTE OPTIONS. Notwithstanding the provisions of
      Sections 6.3.1 and 6.3.2, in the event the Company or an Affiliate
      consummates a transaction described in Code Section 424(a) (e.g., the
      acquisition of property or stock from an unrelated corporation),
      individuals who become Employees on account of such transaction may be
      granted Options in substitution for options granted by such former
      employer or recipient of services. If such substitute Options are granted,
      the Committee, in its sole discretion and consistent with Code Section
      424(a), may determine that such substitute Options will have an exercise
      price of less than one hundred percent (100%) of the Fair Market Value of
      the Shares to which the Options relate determined as of the applicable
      Grant Dates. In carrying out the provisions of this Section 6.3.3, the
      Committee will apply the principles contained in Section 4.5.

      6.4. DURATION OF OPTIONS. Subject to the terms and provisions of Sections
7 and 9, the Option Period with respect to each Option will commence and expire
at such times as the Committee provides in the Option Agreement, provided that:

      (a)   Incentive and Nonqualified Stock Options will not be exercisable
            later than the tenth anniversary of their respective Grant Dates;

      (b)   Incentive Stock Options granted to an Employee who possesses more
            than ten percent (10%) of the total combined voting power of all
            classes of Shares of the Company, taking into account the
            attribution rules of Code Section 422(d), will not be exercisable
            later than the fifth anniversary of their Grant Date(s); and
<PAGE>
      (c)   Subject to the limits of this Section 6, the Committee may, in its
            sole discretion, after an Option is granted, extend the maximum term
            of the Option.

      6.5. EXERCISABILITY OF OPTIONS. Subject to the provisions of Section 9 and
this Section 6, all Options granted under the Plan will be exercisable at such
times, under such terms and subject to such restrictions and conditions as the
Committee determines in its sole discretion and specifies in the Option
Agreements to which such Options relate. Notwithstanding the preceding sentence,
an Option may not be exercised in whole or in part if the exercise would result
in compensation to the Participant which is not deductible by the Company due to
the application of Code Section 162(m). After an Option is granted, the
Committee, in its sole discretion, may accelerate the exercisability of the
Option.

      6.6. METHOD OF EXERCISE. Subject to the provisions of this Section 6 and
the applicable Option Agreement, a Participant may exercise an Option, in whole
or in part, at any time during the Option Period to which the Option relates by
giving written notice to the Company of exercise on a form provided by the
Committee (if available). Such notice will specify the number of Shares subject
to the Option to be purchased and will be accompanied by payment in full of the
total Exercise Price by cash or check or such other form of payment as the
Company may accept. If permitted by the Committee or the applicable Option
Agreement, payment in full or in part may also be made by:

      (a)   Delivering Shares already owned by the Participant for more than six
            (6) months and having a total Fair Market Value on the date of such
            delivery equal to the total Exercise Price;

      (b)   The delivery of cash by a broker-dealer as a Cashless Exercise;

      (c)   The certification of ownership of Shares owned by the Participant to
            the satisfaction of the Committee for later delivery to the Company
            as specified by the Committee; or

      (d)   Any combination of the foregoing.

      No Shares will be issued until full payment therefor has been made. A
Participant will have all of the rights of a shareholder of the Company holding
the class of Shares subject to such Option (including, if applicable, the right
to vote the shares and the right to receive dividends) when the Participant has
given written notice of exercise, has paid the total Exercise Price, and such
Shares have been recorded on the Company's official shareholder records (or the
records of its transfer agents or registrars) as having been issued and
transferred to the Participant.

      6.7. RESTRICTIONS ON SHARE TRANSFERABILITY. In addition to the
restrictions imposed by Section 11.7, the Committee may impose such restrictions
on any Shares acquired pursuant to the exercise of an Option as it may deem
advisable or appropriate in its sole discretion, including, but not limited to,
restrictions related to applicable Federal and state securities laws and the
requirements of any national securities exchange or market on which Shares are
then listed or regularly traded.

      6.8. TERMINATION BY REASON OF DEATH, DISABILITY, OR RETIREMENT. Unless
otherwise provided in the Option Agreement, as determined by the Committee in
its sole discretion, if a Participant incurs a Termination of Service due to
death, Disability or Retirement, any unexpired and unexercised Options held by
the Participant will thereafter be fully exercisable until the expiration of the
Option Period.
<PAGE>
      6.9. OTHER TERMINATION. Unless otherwise provided in the Option Agreement,
as determined by the Committee in its sole discretion, if a Participant incurs a
Termination of Service that is involuntary on the part of the Participant (but
is not due to death or Disability or is not with Cause) or is voluntary on the
part of the Participant for Good Reason (but is not due to Retirement), any
Options held by the Participant will terminate, except that such Options, to the
extent then exercisable at the time of such Termination of Service, may be
exercised until the expiration of the shorter of the following two (2) periods:
(a) the thirty (30) consecutive day period commencing on the date of such
Termination of Service, or (b) the date on which the Option Period expires. If a
Participant incurs a Termination of Service which is for Cause, or the
Participant voluntarily terminates without Good Reason, all of his Options will
terminate immediately as of the date of such Termination of Service.

      6.10. SPECIAL PROVISION FOR INCENTIVE STOCK OPTIONS. Notwithstanding any
other provision of the Plan to the contrary, an Incentive Stock Option will not
be exercisable (a) more than three (3) months after the Participant's
Termination of Service for any reason other than Disability, or (b) more than
one (1) year after the Participant's Termination of Service by reason of
Disability.

                                    SECTION 7

                      AMENDMENT, TERMINATION, AND DURATION

       7.1. AMENDMENT, SUSPENSION, OR TERMINATION. The Board of Directors of the
Company may supplement, amend, alter or discontinue the Plan in its sole
discretion at any time and from time to time, but no supplement, amendment,
alteration or discontinuation will be made which would impair the rights of a
Participant under an Option that has been granted, without the Participant's
consent, except that any supplement, amendment, alteration or discontinuation
may be made to (a) avoid a material charge or expense to the Company or an
Affiliate, (b) cause the Plan to comply with applicable law, or (c) permit the
Company or an Affiliate to claim a tax deduction under applicable law. In
addition, subject to the provisions of this Section 7.1, the Board of Directors
of the Company, in its sole discretion at any time and from time to time, may
supplement, amend, alter or discontinue the Plan without the approval of the
Company's shareholders (a) to the extent such approval is not required by
applicable law or listing standards or the terms of a written agreement, and (b)
so long as any such amendment or alteration does not increase the number of
Shares subject to the Plan (other than pursuant to Section 4.5) or increase the
maximum number of Options the Committee may grant to an individual Participant
under the Plan. The Committee may supplement, amend, alter or discontinue the
terms of any Option theretofore granted, prospectively or retroactively, on the
same conditions and limitations (and exceptions to limitations) as apply to the
Board under the foregoing provisions of this Section 7.1, and further subject to
any approval or limitations the Board may impose.

      7.2. DURATION OF THE PLAN AND SHAREHOLDER APPROVAL. The Plan is effective
on the Effective Date and, subject to Section 7.1 (regarding the Board's right
to supplement, amend, alter, or discontinue the Plan), will remain in effect
thereafter; provided, however, that the provisions of the Plan are contingent
upon the Plan being approved by the shareholders of the Company within twelve
(12) months from the date of the adoption of the Plan by the Company's Board of
Directors; and provided further, however, that no Incentive Stock Option may be
granted under the Plan after the tenth anniversary of the Effective Date.
<PAGE>
                                    SECTION 8

                                 TAX WITHHOLDING

      8.1. WITHHOLDING REQUIREMENTS. Prior to the delivery of any Shares or cash
pursuant to the payment or exercise of an Option, the Company will have the
power and the right to deduct or withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy all Federal, state and local income
and employment taxes required to be withheld with respect to the payment or
exercise of such Option.

      8.2. WITHHOLDING ARRANGEMENTS. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part, by
(a) electing to have the Company withhold otherwise deliverable Shares (except
in the case of exercises of Incentive Stock Options) or (b) delivering to the
Company Shares then owned by the Participant having a Fair Market Value equal to
the amount required to be withheld; provided, however, that any shares delivered
to the Company satisfy the ownership requirements specified in Section 6.6(a).
The amount of the withholding requirement will be deemed to include any amount
that the Committee agrees may be withheld at the time any such election is made,
not to exceed, in the case of income tax withholding, the amount determined,
based upon minimum statutory requirements, by using the maximum federal, state,
or local marginal income tax rates applicable to the Participant with respect to
the Option on the date that the amount of income tax to be withheld is
determined. The Fair Market Value of the Shares to be withheld or delivered will
be determined as of the date that the taxes are required to be withheld.

                                    SECTION 9

                                CHANGE IN CONTROL

      9.1. CHANGE IN CONTROL. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control of the Company, all Options
granted under the Plan that are outstanding and that are not then exercisable
will, unless otherwise provided for in the Option Agreements applicable thereto,
become immediately exercisable, as of the first date the Change in Control has
been deemed to have occurred.

      9.2. DEFINITION. For purposes of Section 9.1, a "Change in Control" means
the occurrence of any of the following: (i) an event that would be required to
be reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A pursuant to the 1934 Act, or any successor thereto, whether or
not any class of securities of the Company is registered under the 1934 Act;
(ii) any "person" is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities except for any securities purchased by the Company or the
Bank; or (iii) during any period of thirty-six consecutive months during the
term of an Option, individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
<PAGE>
      For purposes of the definition of "Change in Control," a Person or group
of Persons does not include the CFS Bancorp, Inc. Employee Stock Ownership Plan
Trust which forms a part of the CFS Bancorp, Inc. Employee Stock Ownership Plan
(the "ESOP"), or any other employee benefit plan, Subsidiary or Affiliate of the
Company, and the outstanding shares of common stock of the Company, on a fully
diluted basis, include all shares owned by the ESOP, whether allocated or
unallocated to the accounts of participants, thereunder.

       For purposes of the definition of "Change in Control," the term "Person"
means any natural person, proprietorship, partnership, corporation, limited
liability company, organization, firm, business, joint venture, association,
trust or other entity and any government agency, body or authority.

                                   SECTION 10

                               LEGAL CONSTRUCTION

      10.1. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also will include the feminine, the plural will
include the singular, and the singular will include the plural.

      10.2. SEVERABILITY. In the event any provision of the Plan is held illegal
or invalid for any reason, the illegality or invalidity will not affect the
remaining parts of the Plan, and the Plan will be construed and enforced as if
the illegal or invalid provision had never been included herein.

      10.3. REQUIREMENTS OF LAW. The grant of Options and the issuance of Shares
will be subject to all applicable statutes, laws, rules and regulations and to
such approvals and requirements as may be required from time to time by any
governmental authorities or any securities exchange or market on which the
Shares are then listed or traded.

      10.4. GOVERNING LAW. Except to the extent preempted by the Federal laws of
the United States of America, the Plan and all Option Agreements will be
construed in accordance with and governed by the laws of the State of Delaware
without giving effect to any choice or conflict of law provisions, principles or
rules (whether of the State of Delaware or any other jurisdiction) that would
cause the application of any laws of any jurisdiction other than the State of
Delaware.

      10.5. HEADINGS. The descriptive headings and sections of the Plan are
provided herein for convenience of reference only and will not serve as a basis
for interpretation or construction.

      10.6. MISTAKE OF FACT. Any mistake of fact or misstatement of facts will
be corrected when it becomes known by a proper adjustment to an Option or Option
Agreement.

      10.7. EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person relying
thereon considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
<PAGE>
                                   SECTION 11

                                  MISCELLANEOUS

      11.1. NO EFFECT ON EMPLOYMENT OR SERVICE. Neither the Plan nor the grant
of any Options or the execution of any Option Agreement will confer on any
Participant any right to continued employment by the Company or will interfere
with or limit in any way the right of the Company to terminate any Participant's
employment or service at any time, with or without Cause. Employment with the
Company and its Affiliates is on an at-will basis only, unless otherwise
provided by a written employment agreement, if any, between the Participant and
the Company or an Affiliate, as the case may be. If there is any conflict
between the provisions of the Plan and an employment agreement between a
Participant and the Company, the provisions of this Plan will control,
including, but not limited to, the vesting and nonforfeiture of any Options.

      11.2. NO COMPANY OBLIGATION. Unless required by applicable law, the
Company, an Affiliate, the Board of Directors and the Committee will not have
any duty or obligation to affirmatively disclose material information to a
record or beneficial holder of Shares or an Option, and such holder will have no
right to be advised of any material information regarding the Company or any
Affiliate at any time prior to, upon, or in connection with the receipt,
exercise, or distribution of an Option. In addition, the Company, an Affiliate,
the Board of Directors, the Committee, and any attorneys, accountants, advisors
or agents for any of the foregoing will not provide any advice, counsel or
recommendation to any Participant with respect to, without limitation, any
Option, any exercise of an Option or any tax consequences relating to an Option.

      11.3. PARTICIPATION. No Employee or Non-employee Director will have the
right to be selected to receive an Option or, having been selected, to be
selected to receive a future Option. Participation in the Plan will not give any
Participant any right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan.

      11.4. LIABILITY; INDEMNIFICATION; AND RELEASE. No member of the Board, the
Committee or any officer or employee of the Company or any Affiliate will be
personally liable for any action, failure to act, decision, or determination
made in good faith in connection with the Plan. By participating in the Plan,
each Participant agrees to release and hold harmless the Company and its
Affiliates (and their respective directors, officers, and employees) and the
Committee from and against any tax liability, including, but not limited to,
interest and penalties, incurred by the Participant in connection with his
receipt of Options and the exercise thereof. Each person who is or has been a
member of the Committee or the Board will be indemnified and held harmless by
the Company against and from (a) any loss, cost, liability or expense
(including, but not limited to, attorneys' fees) that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under the Plan or any
Option Agreement, and (b) any and all amounts paid by him in settlement thereof,
with the Company's prior written approval or paid by him in satisfaction of any
judgment in any such claim, action, suit or proceeding against him; provided,
however, that he will give the Company an opportunity, at the Company's expense,
to handle and defend such claim, action, suit or proceeding before he undertakes
to handle and defend the same on his own behalf. The foregoing right of
indemnification will not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or By-Laws, by contract, as a matter of law or otherwise, or under any power
that the Company may have to indemnify them or hold them harmless.
<PAGE>
      11.5. SUCCESSORS. All obligations of the Company under the Plan, with
respect to Options granted hereunder, will be binding on any successor to the
Company, whether or not the existence of such successor is the result of a
Change in Control of the Company.

      11.6. BENEFICIARY DESIGNATIONS. Any Participant may designate, on such
forms as may be provided by the Committee for such purpose, a Beneficiary to
whom any vested but unpaid Option will be paid in the event of the Participant's
death. Each such designation will revoke all prior designations by the
Participant and will be effective only if given in a form and manner acceptable
to the Committee. In the absence of any such designation, any vested benefits
remaining unpaid at the Participant's death will be paid to the Participant's
estate and, subject to the terms of the Plan and of the applicable Option
Agreement, any unexercised vested Option may be exercised by the administrator
or executor of the Participant's estate.

      11.7. NONTRANSFERABILITY OF OPTIONS. Except as provided in Sections 11.7.1
and 11.7.2, no Option can be sold, transferred, assigned, margined, encumbered,
bequeathed, gifted, alienated, hypothecated, pledged or otherwise disposed of,
whether by operation of law, whether voluntarily or involuntarily or otherwise,
other than by will or by the laws of descent and distribution. In addition, no
Option will be subject to execution, attachment or similar process. Any
attempted or purported transfer of an Option in contravention of the Plan or an
Option Agreement will be null and void ab initio and of no force or effect
whatsoever. All rights with respect to an Option granted to a Participant will
be exercisable during his lifetime only by the Participant.

            11.7.1. LIMITED TRANSFERS OF NONQUALIFIED STOCK OPTIONS.
      Notwithstanding the foregoing, the Committee may, in its sole discretion,
      permit the transfer of Nonqualified Stock Options by a Participant to (a)
      the Participant's spouse, any children or lineal descendants of the
      Participant or the Participant's spouse or the spouse(s) of any such
      children or lineal descendants ("Immediate Family Members"), (b) a trust
      or trusts for the exclusive benefit of Immediate Family Members, or (c) a
      partnership or limited liability company in which the Participant and/or
      the Immediate Family Members are the only equity owners, (collectively,
      "Eligible Transferees"); provided, however, that, in the event the
      Committee permits the transferability of Nonqualified Stock Options
      granted to the Participant, the Committee may subsequently, in its sole
      discretion, amend, modify, revoke or restrict, without the prior consent,
      authorization or agreement of the Eligible Transferee, the ability of the
      Participant to transfer Nonqualified Stock Options that have not been
      already transferred to an Eligible Transferee. An Option that is
      transferred to an Immediate Family Member will not be transferable by such
      Immediate Family Member, except for any transfer by such Immediate Family
      Member's will or by the laws of descent and distribution upon the death of
      such Immediate Family Member. Incentive Stock Options will not be
      transferable pursuant to this Section 11.7.
<PAGE>
            11.7.2. EXERCISE BY ELIGIBLE TRANSFEREES. In the event the
      Committee, in its sole discretion, permits the transfer of Nonqualified
      Stock Options by a Participant to an Eligible Transferee under Section
      11.7.1, the Options transferred to the Eligible Transferee must be
      exercised by such Eligible Transferee and, in the event of the death of
      such Eligible Transferee, by such Eligible Transferee's executor or
      administrator only in the same manner, to the same extent and under the
      same circumstances (including, but not limited to, the time period within
      which the Options must be exercised) as the Participant could have
      exercised such Options. The Participant, or in the event of his death, the
      Participant's estate, will remain liable for all federal, state, local and
      other taxes applicable upon the exercise of a Nonqualified Stock Option by
      an Eligible Transferee.

      11.8. NO RIGHTS AS SHAREHOLDER. No Participant (or any Beneficiary) will
have any of the rights or privileges of a shareholder of the Company with
respect to any Shares issuable pursuant to an Option (or the exercise thereof),
unless and until certificates representing such Shares have been recorded on the
Company's official shareholder records (or the records of its transfer agents or
registrars) as having been issued and transferred to the Participant (or his or
her Beneficiary).

      11.9. MITIGATION OF EXCISE TAX. Subject to any other agreement providing
for the Company's indemnification of the tax liability described herein, if any
payment or right accruing to a Participant under the Plan (without the
application of this Section 11.9), either alone or together with other payments
or rights accruing to the Participant from the Company or an Affiliate ("Total
Payments"), would constitute a "parachute payment", as defined in Code Section
280G and regulations thereunder, such payment or right will be reduced to the
largest amount or greatest right that will result in no portion of the amount
payable or right accruing under the Plan being subject to an excise tax under
Code Section 4999 or being disallowed as a deduction under Code Section 280G.
The determination of whether any reduction in the rights or payments under the
Plan is to apply will be made by the Committee in good faith after consultation
with the Participant, and such determination will be conclusive and binding on
the Participant. The Participant will cooperate in good faith with the Committee
in making such determination and providing the necessary information for this
purpose.

      11.10. FUNDING. Shares to be distributed under the Plan will be issued
directly by the Company from its authorized but unissued Shares or acquired by
the Company on the open market, or a combination thereof. Neither the Company
nor any of its Affiliates will be required to segregate on its books or
otherwise establish any funding procedure for any amount to be used for the
payment of benefits under the Plan. The Company or any of its Affiliates may,
however, in its sole discretion, set funds aside in investments to meet any
anticipated obligations under the Plan. Any such action or set-aside will not be
deemed to create a trust of any kind between the Company or any of its
Affiliates and any Participant or other person entitled to benefits under the
Plan or to constitute the funding of any Plan benefits. Consequently, any person
entitled to a payment under the Plan will have no rights greater than the rights
of any other unsecured general creditor of the Company or its Affiliates.
<PAGE>
      11.11. USE OF PROCEEDS. The proceeds received by the Company from the sale
of Shares pursuant to the Plan will be used for general corporate purposes.

                                    CFS BANCORP, INC.

DATED: March 13, 2003

                                    By:  /s/ James W. Prisby
                                        ------------------------------------
                                             James W. Prisby, President

ATTEST:

By:  /s/ Monica F. Sullivan
    -----------------------------------------
      Monica F. Sullivan, Corporate Secretary<PAGE>
                                                                     EXHIBIT 4.1

                     Cumulative Redeemable Preferred Shares

     WHEREAS, the Board of Directors of the Company has authorized the issuance
from time to time of securities of the Company or certain of its subsidiaries
(including Ordinary Shares, Preferred Shares, Debt Securities, Trust Preferred
Securities, Guaranties and Warrants and Manditorily Convertible Securities (each
as defined in the Resolutions of the Board of Directors of the Company (the
"March Board Resolutions") adopted at the Meeting of the Board of Directors held
on March 1, 2002)) in an aggregate amount of U.S. $1,500,000,000 at such times
and on such terms as the Executive Committee may determine.

     WHEREAS, the Company has been authorized by the Board of Directors pursuant
to the Resolutions of the Board of Directors of the Company (the "February Board
Resolutions") adopted at the Meeting of the Board of Directors held on February
27, 2003, to issue and sell up to $575,000,000 of Securities of the Company, and
has delegated to the Chairman and Chief Executive Officer the authority of the
Executive Committee granted to it under the March Board Resolutions with respect
to such issuance and sale.

     WHEREAS, all of the authority granted to the Executive Committee of the
Board of Directors of the Company under the March Board Resolutions has been
delegated to Brian Duperreault, Peter Menikoff and Phillip Bancroft, pursuant to
the February Board Resolutions, who have the authority to approve, among other
things, the type of security or securities to be issued and sold, the time at
which such Securities shall be sold and any other terms with respect to the
offering of the Securities not inconsistent with the Board Resolutions, any such
action to be memorialized in a resolution which shall be placed in the minute
book of the Board of Directors of the Company; provided that any such authority
with respect to the issuance of preferred stock of the Company shall be
delegated to Messrs. Duperreault and Menikoff acting as a committee of the Board
of Directors (the "Preferred Stock Committee").

     NOW THERFORE BE IT:

     1. RESOLVED that, a class of Other Shares in the capital of the Company be
designated as "Cumulative Redeemable Preferred Shares". The Cumulative
Redeemable Preferred Shares shall be cumulative redeemable preferred shares and,
subject to the Articles and the provisions of and restrictions contained in the
Companies Law (2002 Revision) and every statutory modification or re-enactment
thereof for the time being in force (the "Law"), shall have the following
preferences and rights and shall be subject to the following restrictions:

(a)  Liquidation Preference. On any voluntary or involuntary liquidation,
     dissolution or winding-up of the affairs of the Company, the assets of the
     Company legally available for distribution among shareholders shall be
     applied first in repaying to the holders of the Cumulative Redeemable
     Preferred Shares (the "Holders") an amount equal to US$250.00 per
     Cumulative Redeemable Preferred Share (inclusive of the nominal amount
     thereof) plus all accrued and unpaid dividends (whether or not earned or
     declared), if any, to the date fixed for distribution, in preference to the
     repayment of such nominal amount of and any share premium or other amounts
     paid on the ordinary shares (the "Ordinary Shares") or any other shares
     ranking junior in right of payment to the Cumulative Redeemable Preferred
     Shares as to the voluntary or involuntary liquidation, dissolution or
     winding-up

<PAGE>

     of the affairs of the Company or as to dividends (including the Ordinary
     Shares, the "Junior Shares") to the holders of such Junior Shares, without
     interest on such unpaid dividends. In the event that upon any such
     voluntary or involuntary liquidation, dissolution or winding-up, the assets
     of the Company available are insufficient to pay the amount of the
     liquidation distributions on all outstanding Cumulative Redeemable
     Preferred Shares as referred to above and the corresponding amounts payable
     on all other shares ranking pari passu with the Cumulative Redeemable
     Preferred Shares with respect to the payment of dividends and amounts upon
     any voluntary or involuntary liquidation, dissolution or winding-up of the
     affairs of the Company (including, without limitation, the Series A
     Preferred Shares) ("Parity Shares"), then the holders of the Cumulative
     Redeemable Preferred Shares and all such Parity Shares shall share ratably
     in such distribution of assets in proportion to the full liquidating
     distributions to which they would otherwise be respectively entitled. The
     Cumulative Redeemable Preferred Shares shall not be convertible into or
     exchangeable for any other shares of the Company.

(b)  Dividend Rights.

(i)  The holders of the Cumulative Redeemable Preferred Shares shall be entitled
     to receive cumulative preferential cash dividends in respect of their
     Cumulative Redeemable Preferred Shares at the percentage rate per annum on
     their liquidation value specified by the Attorneys (as defined below) (or
     by either of them) on the date of pricing of such shares (the "Pricing
     Date"). Such dividends shall be payable in arrears in equal amounts (except
     as set forth below with respect to the initial dividend period) on March
     1st, June 1st, September 1st and December 1st when, as and if declared by
     the Directors in each year or, if such date is not a day on which banks are
     authorised to open for business in New York and Bermuda (a "Business Day"),
     on the Business Day immediately after such date. Such dividends will begin
     to accrue and will be cumulative from the date of original issuance. The
     first dividend, which if declared will be payable on September 1, 2003,
     will represent the period of time from and will accrue from the date of
     original issuance up to August 31, 2003. The dividend for such initial
     period and any other dividend payable on the Cumulative Redeemable
     Preferred Shares for any partial dividend period shall be computed on the
     basis of a 360-day year consisting of twelve (12) 30-day months. Dividends
     will be payable to holders of record as they appear in the Company's
     register of members at the close of business on the applicable record date,
     which will be one day prior to the dividend payment date as long as all of
     the Cumulative Redeemable Preferred Shares remain in book-entry form. If
     any of the Cumulative Redeemable Preferred Shares are not in book-entry
     form, the record date will be 15 days prior to the dividend payment date
     (whether or not such date is a Business Day). Holders of Cumulative
     Redeemable Preferred Shares will not be entitled to any dividends in excess
     of full cumulative dividends as described above. Dividends on the
     Cumulative Redeemable Preferred Shares will accrue and will be fully
     cumulative, whether or not there are funds legally available for the
     payment of such dividends and whether or not the dividends are declared. No
     interest or sum of money in lieu of interest will be payable on any
     dividend payment or on any payment on Cumulative Redeemable Preferred
     Shares which is in arrears. Any dividend payment made on Cumulative
     Redeemable Preferred Shares will first be credited against the earliest
     accrued but unpaid dividend due with respect to Cumulative Redeemable
     Preferred Shares which remains payable. No

<PAGE>

      dividends on the Cumulative Redeemable Preferred Shares will be declared
      if prohibited by law or regulation.

(ii)  As long as any Cumulative Redeemable Preferred Shares are outstanding, no
      dividends or other distributions may be declared or paid or set apart for
      payment on any class or series of Parity Shares for any period unless
      either (1) full cumulative dividends have been or contemporaneously are
      declared and paid or declared and a sum sufficient for the payment thereof
      set apart for such payments on the Cumulative Redeemable Preferred Shares
      for all dividend periods terminating on or prior to the dividend payment
      date on such Parity Shares, or (2) all dividends declared upon the
      Cumulative Redeemable Preferred Shares and any Parity Shares are declared
      pro rata so that the amount of dividends declared per share on the
      Cumulative Redeemable Preferred Shares and any Parity Shares will in all
      cases bear to each other the same ratio that accrued and unpaid dividends
      per share on the Cumulative Redeemable Preferred Shares and such Parity
      Shares bear to each other.

(iii) As long as any Cumulative Redeemable Preferred Shares are outstanding (1)
      no dividends (other than those paid in ordinary shares or other shares
      ranking junior in right of payment to the Cumulative Redeemable Preferred
      Shares as to dividends and as to any voluntary or involuntary distribution
      of assets on liquidation, dissolution or winding-up of the affairs of the
      Company (including the ordinary shares, "Fully Junior Shares")) may be
      declared or paid or set apart for payment upon any Junior Shares, (2) no
      other distribution (other than those paid in Fully Junior Shares) may be

      declared or paid or set apart for payment upon any Junior Shares and (3)
      no Junior Shares will be redeemed, purchased or otherwise acquired (other
      than a redemption, purchase or other acquisition of ordinary shares made
      for purposes of any employee incentive, stock, benefit or any similar plan
      of the Company or any of its subsidiaries) for any consideration (or any
      moneys be paid to or made available for a sinking fund or the redemption
      of any Junior Shares) by the Company (except by conversion into or
      exchange for Fully Junior Shares), unless, in any such case, full
      cumulative dividends on the Cumulative Redeemable Preferred Shares and any
      Parity Shares have been or contemporaneously are declared and paid, or
      declared and a sum sufficient for the payment thereof set apart for
      payment, for all dividend periods terminating on or prior to the date such
      dividends or distributions are declared or paid on the Junior Shares, or
      such Junior Shares are redeemed, purchased or otherwise acquired.

(c)   Voting Rights.

(i)   Subject to clause (iii) below, and unless required by law or court order,
      the holders of Cumulative Redeemable Preferred Shares shall not be
      entitled to receive notice of nor to attend nor to vote at any general
      meeting of the Company.

(ii)  The holders of Cumulative Redeemable Preferred Shares shall be entitled to
      one vote for each share held at any separate general meeting of that class
      (i.e., Cumulative Redeemable Preferred Shares). Subject to the applicable
      provisions of the Articles and the Law, unless the Cumulative Redeemable
      Preferred Shares have been previously redeemed or called for redemption
      (and funds necessary for such redemption have been

<PAGE>

      set apart by the Company in trust for the benefit of the holders of the
      Cumulative Redeemable Preferred Shares so called for redemption), the
      Company may not take any action which would vary the rights attached to
      the Cumulative Redeemable Preferred Shares without the written consent of
      the holders of three-fourths of the Cumulative Redeemable Preferred Shares
      or the sanction of a special resolution passed by two-thirds of the votes
      cast at a general meeting of the holders of the Cumulative Redeemable
      Preferred Shares. At every separate meeting of the holders of the
      Cumulative Redeemable Preferred Shares, the necessary quorum shall be any
      one or more persons present in person or by proxy holding not less than
      one-third of the issued shares of that class. Notwithstanding the
      foregoing and subject to the applicable provisions of the Articles and the
      Law, holders of the Cumulative Redeemable Preferred Shares are not
      entitled to vote on the issuance of any shares that are in parity with the
      Cumulative Redeemable Preferred Shares with respect to payment of
      dividends and distribution of assets in liquidation.

(iii) If at any time the equivalent of six (6) or more full quarterly dividends
      (whether consecutive or not) on the Cumulative Redeemable Preferred Shares
      shall be in arrears (whether or not such dividends shall have been earned
      or declared), then during such period until all such arrearages in
      dividends shall have been paid in full, and only during such period (the
      "Voting Period"), the holders of the Cumulative Redeemable Preferred
      Shares voting together as a single class with any other series or classes
      of Other Shares also in arrears and having such right shall be entitled by
      ordinary resolution at a separate meeting of such holders to elect two
      persons and nominate such elected persons for appointment by the Board of
      Directors as additional Directors of the Company. In no event shall there
      be more than two Directors elected by the holders of Other Shares (whether
      voting alone as a series or class or with another series or class so in
      arrears and having such right).

(iv)  Any Director who shall have been elected pursuant to paragraph (2)(c)(iii)
      above may be removed at any time during a Voting Period, either for or
      without cause, by, and only by, ordinary resolution of the holders of the
      outstanding Other Shares of the relevant series at a special separate
      general meeting of such holders called for that purpose. Any vacancy
      thereby created may be filled during such Voting Period by ordinary
      resolution of the holders of Other Shares of all the relevant series at
      such a meeting. Any Director elected by holders of Other Shares pursuant
      to this provision, or by any Director so elected as herein contemplated,
      who dies, resigns or otherwise ceases to be a Director during a Voting
      Period shall, except as otherwise provided in the preceding sentence, be
      replaced by the remaining Director theretofore elected by the holders of
      Other Shares nominating a replacement for appointment by the Board of
      Directors, provided that if no remaining additional Director is then in
      office, additional Directors will be elected in accordance with the
      procedures described above. At the end of the Voting Period, the holders
      of Other Shares of all of the relevant series shall be automatically
      divested of all voting powers vested in them by this provision, but
      subject always to subsequent vesting of such voting power in the holders
      of Other Shares in the event of any similar cumulated arrearage in payment
      of quarterly dividends occurring thereafter. The term of all Directors
      elected and appointed pursuant to this provision shall in all events
      expire at the end of the applicable Voting Period and if the size of the
      Board was increased for purpose

<PAGE>

     of the additional Directors, the number of Directors constituting the Board
     shall be reduced accordingly. The provisions of the Articles relating to
     general meetings shall apply, mutatis mutandis, to every such separate
     meeting, except that the necessary quorum shall be any one or more persons
     present in person or by proxy holding not less than fifty percent (50%) of
     the issued Other Shares of the relevant series.

(d)  Redemption. The Company shall be entitled to redeem all or any of the
     Cumulative Redeemable Preferred Shares as follows:

(i)  Subject to clauses (ii), (iii) and (iv), the Cumulative Redeemable
     Preferred Shares shall not be redeemable by the Company prior to May 30,
     2008, except as discussed in clauses (ii), (iii) or (iv). On or after such
     date, the Company shall be entitled at any time in whole or from time to
     time in part by not less than thirty (30) days nor more than sixty (60)
     days prior written notice to the relevant Holders, in such form and given
     in such manner as the Directors shall from time to time determine and in
     accordance with paragraph (e) below, to redeem all or any of the Cumulative
     Redeemable Preferred Shares pursuant to this clause for cash at a
     redemption price of US$250.00 per share being redeemed (inclusive of the
     nominal value thereof) plus all accrued and unpaid dividends, if any,
     thereon to the date of redemption, without interest on such unpaid
     dividends. Holders of the Cumulative Redeemable Preferred Shares to be
     redeemed will be entitled to the redemption price following the surrender
     of certificates for such shares at the price designated in the notice.

(ii) At any time prior to May 30, 2008, if the Company shall have submitted to
     the holders of Ordinary Shares a proposal for an amalgamation,
     consolidation, merger, arrangement, reconstruction, reincorporation,
     deregistration or any other similar transaction involving the Company that
     requires or shall have submitted any proposal for any other matter that, as
     a result of any change in Cayman Islands Law after May 7, 2003 (whether by
     enactment or official interpretation), that requires, in each case, a vote
     of the holders of the Cumulative Redeemable Preferred Shares at the time
     outstanding, voting separately as a single class (alone or with one or more
     other classes or series of preferred shares, including the Company's Series
     A Preferred Shares), the Company shall have the option by not less than
     thirty (30) days nor more than sixty (60) days prior written notice to the
     relevant Holders, in such form and given in such manner as the Directors
     shall from time to time determine and in accordance with paragraph (e)
     below, to redeem all of the outstanding Cumulative Redeemable Preferred
     Shares pursuant to this clause for cash at a redemption price of US$260.00
     per share being redeemed (inclusive of the nominal value thereof) plus all
     accrued and unpaid dividends, if any, to the date of redemption, without
     interest on such unpaid dividends.

(iii) If there is a "change in tax law" that would require the Company or any
     successor company to pay additional amounts with respect to the Cumulative
     Redeemable Preferred Shares on the next succeeding dividend payment date,
     and the payment of those additional amounts cannot be avoided by the use of
     any reasonable measures available to the Company or any successor company,
     the Company shall have the option at any time thereafter by not less than
     thirty (30) days nor more than sixty (60) days prior written notice to the
     relevant Holders, in such form and given in such manner as the Directors

<PAGE>

     shall from time to time determine and in accordance with paragraph (e)
     below, to redeem any or all Cumulative Redeemable Preferred Shares pursuant
     to this clause for cash at a redemption price of US$250.00 per share being
     redeemed (inclusive of the nominal value thereof) plus accrued and unpaid
     dividends, if any, to the date of redemption, without interest on such
     unpaid dividends. For the purposes of this provision, a "change in tax law"
     shall be (a) a change in or amendment to laws, regulations or rulings of
     any jurisdiction, political subdivision or taxing authority described in
     the next sentence, (b) a change in the official application or
     interpretation of those laws, regulations or rulings, or (c) any execution
     of or amendment to any treaty affecting taxation to which any jurisdiction,
     political subdivision or taxing authority described in the next sentence is
     party after May 7, 2003. The jurisdictions, political subdivisions and
     taxing authorities referred to in the previous sentence are (a) the Cayman
     Islands or any political subdivision or governmental authority of or in the
     Cayman Islands with the power to tax, (b) any jurisdiction from or through
     which the Company or its paying agent is making payments on the Cumulative
     Redeemable Preferred Shares or any political subdivision or governmental
     authority of or in that jurisdiction with the power to tax, or (c) any
     other jurisdiction in which the Company or its successor company is
     organized or generally subject to taxation or any political subdivision or
     governmental authority of or in that jurisdiction with the power to tax.

(iv) If the entity formed by a consolidation, merger or amalgamation involving
     the Company or the entity to which the Company conveys, transfers or leases
     substantially all of its properties and assets is required to pay
     additional amounts in respect of any tax, assessment or governmental charge
     imposed on any holder of Cumulative Redeemable Preferred Shares as a result
     of a change in tax law that occurred after the date of the consolidation,
     merger, amalgamation, conveyance, transfer or lease, and the payment of
     those amounts cannot be avoided by the use of any reasonable measures
     available to the Company or any successor company, the Company shall have
     the option at any time thereafter by not less than thirty (30) days nor
     more than sixty (60) days prior written notice to the relevant Holders, in
     such form and given in such manner as the Directors shall from time to time
     determine and in accordance with paragraph (e) below, to redeem any or all
     Cumulative Redeemable Preferred Shares pursuant to this clause for cash at
     a redemption price of US$250.00 per share being redeemed (inclusive of the
     nominal value thereof) plus all accrued and unpaid dividends, if any, to
     the date of redemption.

(e)  Notice of any redemption described herein will be mailed at least thirty
     (30) days but not more than sixty (60) days before the redemption date to
     each holder of record of Cumulative Redeemable Preferred Shares to be
     redeemed at the address shown in the register of members of the Company.
     Each notice will state as appropriate: (1) the redemption date; (2) the
     number of Cumulative Redeemable Preferred Shares to be redeemed; (3) the
     redemption price; (4) the place or places where certificates for Cumulative
     Redeemable Preferred Shares are to be surrendered for payment of the
     redemption price if any such certificates are outstanding; and (5) where
     applicable, that dividends on the Cumulative Redeemable Preferred Shares to
     be redeemed will cease to accrue on such redemption date. If fewer than all
     Cumulative Redeemable Preferred Shares are to be redeemed, the notice
     mailed to each such holder thereof will also specify the number of
     Cumulative Redeemable Preferred Shares to be redeemed from such

<PAGE>

     holder. The notice shall contain (i) the name and address of the relevant
     bank or trust company to be used for purposes of redemption (if any) and
     (ii) a statement as to the deposit or intent to deposit the redemption
     funds in such trust account.

(f)  If fewer than all of the outstanding Cumulative Redeemable Preferred Shares
     are to be redeemed, the number of shares to be redeemed will be determined
     by the Directors in their absolute discretion and such Cumulative
     Redeemable Preferred Shares may be redeemed pro rata from the holders of
     record in proportion to the number of Cumulative Redeemable Preferred
     Shares held by such holders (with adjustments to avoid redemption of
     fractional shares) or by lot.

(g)  If notice of redemption of any Cumulative Redeemable Preferred Shares has
     been given and if the funds necessary for such redemption have been set
     apart by the Company in trust for the benefit of the holders of Cumulative
     Redeemable Preferred Shares so called for redemption, then from and after
     the redemption date, dividends will cease to accrue on the Cumulative
     Redeemable Preferred Shares being redeemed, the Cumulative Redeemable
     Preferred Shares will no longer be deemed to be outstanding and all rights
     of the holders of such shares will terminate, except the right to receive
     the redemption price.

(h)  If a redemption date falls after a dividend record date and prior to the
     corresponding dividend payment date, the holders of Cumulative Redeemable
     Preferred Shares at the close of business on the dividend record date will
     be entitled to receive the dividend payable with respect to such Cumulative
     Redeemable Preferred Shares on the corresponding dividend payment date
     notwithstanding the redemption thereof between the dividend record date and
     the corresponding dividend payment date or a default in the payment of the
     dividend due on such dividend payment date.

(i)  Unless full cumulative dividends on all Cumulative Redeemable Preferred
     Shares and all Parity Shares shall have been declared and paid, or declared
     and a sum sufficient for the payment thereof set apart for payment for all
     past dividend periods terminating on or prior to the date of a redemption,
     purchase or other acquisition, no Cumulative Redeemable Preferred Shares or
     any Parity Shares may be redeemed, purchased or otherwise acquired by the
     Company unless all Cumulative Redeemable Preferred Shares and any Parity
     Shares are redeemed; provided, that, the Company may acquire fewer than all
     of the Cumulative Redeemable Preferred Shares or any Parity Shares pursuant
     to a purchase or exchange offer made on the same terms to holders of all
     Cumulative Redeemable Preferred Shares and Parity Shares as determined in
     good faith by the Board of Directors of the Company.

(j)  The Company, subject to (1) certain limitations contained in the Company's
     Articles of Association, (2) the special rights granted to any of the
     Company's issued and outstanding shares, (3) applicable law and (4) the
     Company's requirement pursuant to clause (i) to make a purchase or exchange
     offering on the same terms to holders of all outstanding Cumulative
     Redeemable Preferred Shares and Parity Shares, may, at any time and from
     time to time, purchase outstanding Cumulative Redeemable Preferred Shares.
     Any such purchase made by the Company may be made in the open market, by
     tender to all holders of Cumulative Redeemable Preferred Shares, by private
     agreement

<PAGE>

     or otherwise as the Directors see fit. Any Cumulative Redeemable Preferred
     Shares purchased by the Company for its own account (other than in the
     ordinary course of business of dealing in securities) will be cancelled by
     the Company and will no longer be issued and outstanding.

(k)  The Cumulative Redeemable Preferred Shares may be purchased or redeemed by
     the Company out of profits, from the proceeds of a fresh issue of shares
     made for the purpose of the redemption or purchase, out of capital or from
     the share premium account.

(l)  Payment of the redemption amount shall only be effected upon surrender to
     the Company for cancellation of any share certificate in respect of the
     Cumulative Redeemable Preferred Shares (to the extent such certificates are
     outstanding) to be redeemed and shall be made as promptly as practicable.
     If any certificate so surrendered includes Cumulative Redeemable Preferred
     Shares not being redeemed, a new certificate for the remaining Cumulative
     Redeemable Preferred Shares shall be issued to the holder in accordance
     with the Articles of Association of the Company without charge to such
     holder.

(m)  The Directors may make such further regulations concerning the
     administerial process of redemption as they shall from time to time deem
     necessary so long as the rights of the Holders are not varied.

(n)  The rights conferred upon the holders of the Cumulative Redeemable
     Preferred Shares shall not be deemed to be varied by the creation or issue
     of any Parity Shares, Junior Shares or Fully Junior Shares.

(o)  Payments of Additional Amounts. Payments on the Cumulative Redeemable
     Preferred Shares shall be made free and clear of and without deduction or
     withholding for or on account of any present or future taxes, assessments
     or other governmental charges imposed by any jurisdiction, political
     subdivision or taxing authority described in clause 1(d)(iii) of these
     Resolutions, unless the deduction or withholding of such taxes, assessments
     or other governmental charges is required by law, regulations or rulings or
     the application or official interpretation of such law, regulations or
     rulings. In that event, the Company shall pay or cause to be paid
     additional amounts to the registered holders of the Cumulative Redeemable
     Preferred Shares as additional dividends to make up for any deduction or
     withholding for any present or future taxes, assessments or other
     governmental charges imposed by any jurisdiction, political subdivision or
     taxing authority described in clause 1(d)(iii) of these Resolutions in
     respect of any amounts that the Company or a successor company must pay
     with respect to the Cumulative Redeemable Preferred Shares, so that the net
     amounts paid to the holders of the Cumulative Redeemable Preferred Shares,
     after that deduction or withholding, shall equal the respective amounts
     that would have been receivable by such holders had no such withholding or
     deduction been required. However, the Company shall not be obligated to pay
     additional amounts to any holder that:

(i)  resides in or is a citizen of the jurisdiction, political subdivision or
     taxing authority imposing the taxes, assessments or other governmental
     charges that would otherwise

<PAGE>

     trigger the Company's obligation to pay additional amounts; or (ii) is a
     fiduciary, partnership, limited liability company or other pass-thru entity
     if, and to the extent that, the payment of additional amounts would be
     required by a jurisdiction, political subdivision or taxing authority
     described in clause 1(d)(iii) of these Resolutions to be included in the
     income for tax purposes of a beneficiary or settlor with respect to that
     fiduciary or a member of that partnership, limited liability company or
     other pass-thru entity who would not have been entitled to any additional
     amounts had that beneficiary, settlor or member held those Cumulative
     Redeemable Preferred Shares directly.

     In addition, the Company shall not be obligated to pay any additional
amounts to a holder of Cumulative Redeemable Preferred Shares on account of:

               (i) any tax, assessment or other governmental charge that would
          not have been imposed but for the existence of any present or former
          connection between the holder, or certain other persons, and the
          taxing jurisdiction or political subdivision, or any Cumulative
          Redeemable Preferred Shares presented for payment more than thirty
          (30) days after the Relevant Date; (ii) any estate, inheritance, gift,
          sales, transfer, personal property or similar tax, assessment or other
          governmental charge; (iii) any tax, assessment or other governmental
          charge that is payable otherwise than by withholding or deduction from
          payment of the liquidation preference of or any dividends on the
          Cumulative Redeemable Preferred Shares; (iv) any tax, assessment or
          other governmental charge that is imposed or withheld by reason of the
          failure by the holder or the beneficial owner of the Cumulative
          Redeemable Preferred Shares to promptly comply with a request by the
          Company to (a) provide information, documents, certifications or other
          evidence concerning the nationality, residence or identity of the
          holder or beneficial owner or (b) make and deliver any declaration or
          other similar claim, other than a claim for refund of a tax,
          assessment or other governmental charge withheld by the Company, or
          satisfy any information or reporting requirements, which, in the case
          of clauses (a) or (b), is required or imposed by a statute, treaty,
          regulation or administrative practice of the taxing jurisdiction as a
          precondition to exemption from all or part of that tax, assessment or
          other governmental charge; or (v) any combination of the items
          identified by the subparagraphs above.

     The "Relevant Date" means, in respect of any payment, the date on which
such payment first becomes due and payable, but if the full amount of the moneys
payable has not been received by the depositary on or prior to such due date, it
means the first date on which, the full amount of such moneys having been so
received and being available for payment to holders, notice to that effect shall
have been duly given to the holders of the Cumulative Redeemable Preferred
Shares.

<PAGE>

(p)  No Preemptive Rights. The Cumulative Redeemable Preferred Shares shall not
     be entitled to the benefits of any retirement or sinking fund. No holder of
     Cumulative Redeemable Preferred Shares, solely by reason of any such
     holding, has or will have any preemptive right to subscribe for any
     additional issue of the Company's shares of any class or series or to any
     security convertible into any such shares.

(q)  Ranking. Any class or series of shares of the Company shall be deemed to
     rank (1) prior to the Cumulative Redeemable Preferred Shares, as to the
     payment of dividends and as to any voluntary or involuntary return of
     assets on liquidation, dissolution, winding-up or otherwise of the Company,
     if the holders of such class or series shall be entitled to the receipt of
     dividends or of amounts distributable upon any voluntary or involuntary
     return of assets on liquidation, dissolution, winding up or otherwise, as
     the case may be, in preference or priority to the holders of the Cumulative
     Redeemable Preferred Shares, (2) on a parity with the Cumulative Redeemable
     Preferred Shares as to the payment of dividends and as to distribution of
     assets upon any voluntary or involuntary return of assets on liquidation,
     dissolution, winding up or otherwise of the Company, whether or not the
     dividend rates, dividend payment dates or redemption or liquidation prices
     per share thereof shall be different from those of the Cumulative
     Redeemable Preferred Shares, if the holders of such class or series and the
     Cumulative Redeemable Preferred Shares shall be entitled to the receipt of
     dividends and of amounts distributable upon any voluntary or involuntary
     return of assets on liquidation, dissolution, winding up or otherwise of
     the Company in proportion to their respective amounts of accrued and unpaid
     dividends per share or liquidation preferences, without preference or
     priority one over the other or (3) junior to the Cumulative Redeemable
     Preferred Shares, as to the payment of dividends and as to distribution of
     assets upon any voluntary or involuntary return of assets on liquidation,
     dissolution, winding up or otherwise of the Company, if such class or
     series is ordinary shares or other shares ranking junior in right of
     payment to Cumulative Redeemable Preferred Shares as to dividends and/or as
     to the distribution of assets upon any voluntary or involuntary return of
     assets on liquidation, dissolution, winding up or otherwise of the Company.
     The Cumulative Redeemable Preferred Shares will rank on a parity with the
     Series A Preferred Shares as to the payment of dividends and as to
     distribution of assets upon any voluntary or involuntary return of assets
     on liquidation, dissolution, winding up or otherwise of the Company.

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