Document:

EXHIBIT 10.32

This  note  supercedes  and  replaces  the note dated December 20, 1999 executed
by  the  Borrower  in  favor  of  the  Bank  in  the  amount  of  $10,000,000.00

PROMISSORY  NOTE

U.S.  $10,000,000.00
     --------------

March  16,  2000  New  York,  New  York
--------------

1.     OBLIGATION  AND  REPAYMENT:  For  value received, Borrower absolutely and
       unconditionally  promises to pay to the order of the Bank, at the Office,
       without  defense,  setoff  or  counterclaim,  the principal amount of Ten
       Million  and 00/100 United States Dollars, together with interest and any
       other  sum(s)  due  as specified below. The principal amount of this Note
       shall  be  due  and  payable as follows (complete one of the following as
       applicable):

       (A)    [  ]  ON  DEMAND.

       (B)    On  May  31,  2001;  and

       (C)    In  consecutive  installments, of which each but the last shall be
              $_____________  and  the  last of which shall be equal to the then
              unpaid  principal balance of this Note. The first such installment
              shall  be due on ______________, 19__. Each subsequent installment
              shall  be  due  on  the  corresponding day of each month/ quarter/
              other  __________ thereafter (or if there is no such corresponding
              day,  on  the  last  day  of such period). The remaining principal
              balance  shall  be  due  on  ______________,  19__.

       (D)    [X]  In  accordance  with  the  attached  Rider.

2.     INTEREST: Subject to paragraph A(2) of the Terms and Conditions, interest
       shall  accrue  on the principal amount of this Note outstanding from time
       to  time  at  the  following  rate (the "Loan Rate") (complete one of the
       following  as  applicable):

       (A)    A  fixed  rate  equal  to  ______%  per  year.

       (B)    A  Variable  Prime-Based Rate equal to the Prime Rate plus ______%
              per  year.

       (C)    [X]  In  accordance  with  the  attached  Rider.

       Interest  shall  be payable monthly/ quarterly/ (other) _____________ and
       at any Payment Date and at any time that any part of the principal or any
       installment  of  this  Note  is  paid.

3.     RIDERS:  IN  THE  EVENT  OF  ANY  INCONSISTENCY BETWEEN THIS NOTE AND ANY
       RIDER(S)  TO  WHICH THIS NOTE IS SUBJECT, THE PROVISIONS OF SUCH RIDER(S)
       SHALL  PREVAIL.  THIS  NOTE  IS  SUBJECT  TO  ANY RIDER(S) REFERRED TO IN
       PARAGRAPH  1(D)  AND/OR  2(C) AND TO THE FOLLOWING RIDER(S), ALL OF WHICH
       ARE  PART  OF  THIS  NOTE:

                  Multiple-Loan  Rider  to  Promissory  Note
                  --------------------------------------
                           (Libor-Based  Rate)

4.     ADDRESS  AND  IDENTIFICATION  OF  BORROWER:

       Address:   800  Regency  Parkway
               ---------------------------------------------------------
                  Cary,  NC  27511
               ---------------------------------------------------------
       Telex  or  similar  number:
                               -----------------------------------------
       Answerback:
                  ------------------------------------------------------
       Telecopy  or  similar  number:
                                  --------------------------------------
       Social  Security  or  Taxpayer  ID  number:
                                             ---------------------------

5.     AGREEMENT  TO  ALL TERMS AND CONDITION; AUTHORIZATION TO COMPLETE BLANKS:
       THIS  NOTE  IS SUBJECT TO THE TERMS AND CONDITIONS SET FORTH BELOW AND ON
       THE  REVERSE  SIDE OF THIS NOTE. EACH OF THE UNDERSIGNED AGREES TO ALL OF
       THE  PROVISIONS  OF THIS NOTE, INCLUDING THE TERMS AND CONDITIONS AND ANY
       RIDER(S).  THE  BANK  IS  AUTHORIZED  TO COMPLETE ANY BLANK SPACE IN THIS
       NOTE.  SUCH COMPLETION SHALL BE CONCLUSIVE, FINAL AND BINDING ON BORROWER
       IN  THE  ABSENCE  OF  MANIFEST  ERROR.

6.     NO  REPRESENTATIONS  OR  AGREEMENTS  BY THE BANK: EACH OF THE UNDERSIGNED
       ACKNOWLEDGES  THAT  THE  BANK  HAS  MADE  NO  REPRESENTATION,  COVENANT,
       COMMITMENT  OR  AGREEMENT  TO  BORROWER  EXCEPT  PURSUANT  TO ANY WRITTEN
       DOCUMENT  EXECUTED  BY  THE  BANK.

7.     NO REPRESENTATION OF NONENFORCEMENT: EACH OF THE UNDERSIGNED ACKNOWLEDGES
       THAT  NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED OR INDICATED
       THAT  THE BANK WILL NOT ENFORCE ANY PROVISION OF THIS NOTE, INCLUDING THE
       TERMS  AND  CONDITIONS  AND  ANY  RIDER(S), IN THE EVENT OF LITIGATION OR
       OTHERWISE.

8.     WAIVER  OF  JURY  TRIAL:  BORROWER  WAIVES, AND UNDERSTANDS THAT THE BANK
       WAIVES,  THE  RIGHT  TO  A JURY TRIAL WITH RESPECT TO ANY DISPUTE ARISING
       HEREUNDER  OR RELATING TO ANY OF THE LIABILITIES; ANY JUDICIAL PROCEEDING
       WITH  RESPECT  TO  ANY  SUCH  DISPUTE  SHALL  TAKE  PLACE WITHOUT A JURY.

9.     EXECUTION  OF  PROMISSORY  NOTE:

       Print  name  of  Borrower:  Level  8  Systems,  Inc.
                               -------------------------------------------------
       (Signature)  By:        /s/  Steven  Dmiszewicki
                      ----------------------------------------------------------
       Print  name:            Steven  Dmiszewicki
                      ----------------------------------------------------------
       Title  or  capacity:     President
                         -------------------------------------------------------
       (if  signing  on  behalf  of  Borrower)
       (Signature)  By:        /s/  Dennis  McKinnie
                      ----------------------------------------------------------
       Print  Name:            Dennis  McKinnie
                      ----------------------------------------------------------
       Title  or  capacity:     SVP,  Secretary
                         -------------------------------------------------------
       (if  signing  on  behalf  of  Borrower)

================================================================================

                              TERMS  AND  CONDITIONS

Definitions  are  set  forth  in  paragraph  M

A.     CALCULATION  AND  ACCRUAL  OF INTEREST: (1) GENERALITY. Interest shall be
       calculated  on  a  daily  basis on outstanding balances at the Applicable
       Rate,  divided  by  360, on the actual days elapsed. During any time that
       the  Applicable  Rate  would exceed the applicable maximum lawful rate of
       interest,  the  Applicable  Rate  shall  automatically be reduced to such
       maximum  rate.  Any  interest payment made in excess of such maximum rate
       shall be applied as, and deemed to be, in the Bank's sole discretion, (a)
       a  payment of any of the Liabilities, in such manner as determined by the
       Bank,  or  (b)  cash  collateral  to  be  retained  by the Bank to secure
       repayment  of this Note. (2) INCREASED RATE. Interest shall accrue at the
       Increased  Rate  upon  and  after (a) the occurrence of any Debtor Relief
       Action,  (b) any demand of payment of this Note (if payable on demand) or
       (c) the occurrence of any Event of Default (if this Note is payable other
       than  on  demand).  (3) ACCRUAL. To the extent permitted by Law, interest
       shall  accrue at the Applicable Rate on all unpaid Liabilities under this
       Note,  including  but  not  limited to any unpaid interest and any unpaid
       obligation  owed  pursuant  to  paragraph  B  (Indemnification).

B.     INDEMNIFICATION:  To the extent permitted by Law: (1) TAXES: All payments
       under  this  Note  shall be made free and clear of, and without deduction
       for,  any  Taxes.  If  Borrower  shall be required to deduct any Taxes in
       respect  of  any  sum  payable  under this Note, then (a) the sum payable
       shall  be increased so that the Bank shall receive an amount equal to the
       sum  the  Bank  would  have received had no deductions been made, and (b)
       Borrower  shall make such deductions and shall pay the amount deducted to
       the  relevant  Governmental  Authority. Borrower shall pay to the Bank on
       demand,  and shall indemnify and hold the Bank harmless from, any and all
       Taxes  paid  by  the Bank and any and all liability (including penalties,
       interest  and  expenses)  with respect thereto, whether or not such Taxes
       were  correctly  or  legally asserted. Within 30 days after any Taxes are
       paid, Borrower shall furnish evidence thereof to the Bank. (2) REGULATORY
       COSTS.  In  the  event  that  in  connection

       with  the  transaction(s),  contemplated  by  this Note and/or the Bank's
       funding  of  such  transaction(s),  the  Bank  is  required  to incur any
       Regulatory Costs in order to comply with any Law issued after the date of
       this  Note,  then  Borrower  shall  pay  the  Bank  on  demand, and shall
       indemnify  and  hold  the  Bank harmless from any and all such Regulatory
       Costs. (3) COSTS AND EXPENSES. Borrower shall pay the Bank on demand, and
       shall  indemnify  and  hold the Bank harmless from, any and all costs and
       expenses.  (4) PREPAYMENT COSTS. If Borrower makes any payment of Prepaid
       Principal  (voluntarily  or not), and if the Applicable Rate with respect
       to  such  Prepaid  Principal  is  not  a  Variable Prime-Based Rate, then
       Borrower  shall  pay  to  the Bank an amount sufficient to compensate the
       Bank for its Prepayment Costs. Borrower acknowledges that determining the
       actual  amount  of Prepayment Costs may be difficult or impossible in any
       specific  instance.  Accordingly,  Borrower  agrees that Prepayment Costs
       shall  be  deemed to be the excess, if any, of (i) the product of (A) the
       Prepaid  Principle,  times  (B) the Applicable Rate divided by 360, times
       (C)  the  remaining  number  of  days from the date of the payment to the
       applicable Payment Date, over (ii) that amount of interest which the Bank
       determines  that the holder of a Treasury Obligation selected by the Bank
       in  the  amount  (or  as close to such amount as feasible) of the Prepaid
       Principal  and  having  a maturity date on (or as soon after as feasible)
       the  applicable  Payment Date would earn if that Treasury Obligation were
       purchased  in  the  secondary market on the date the Prepaid Principal is
       paid  to  the  Bank  and  were held to maturity. Borrower agrees that the
       determination  of  Prepayment  Costs  shall  be  based on amounts which a
       holder  of a Treasury Obligation could receive under these circumstances,
       whether  or  not  the  Bank actually invests the Prepaid Principal in any
       Treasury  Obligation.  (5) BANK CERTIFICATE. The Bank's certificate as to
       any  amounts  owing under this paragraph shall be prima facia evidence of
       Borrower's  obligation.

C.     SET  OFF:  Every  Account of Borrower with the Bank shall be subject to a
       lien  and  to  being set off against the Liabilities. The Bank may at any
       time  at its option and without notice, except as may be required by law,
       charge  and/or  appropriate and apply all or any part of any such Account
       toward  the  payment  of  any  of  the  Liabilities.

D.     EVENTS  OF  DEFAULT: The remainder of this paragraph D shall not apply if
       this  Note  is payable on demand. Each of the following shall be an Event
       of  Default hereunder: (1) NONPAYMENT. (a) The nonpayment when due of any
       part of the Liabilities; (b) the prohibition by any Law of payment of any
       part  of any of the Liabilities; (2) BANKRUPTCY; ADVERSE PROCEEDINGS. (a)
       The  occurrence  of  any  Debtor  Relief Action; (b) the appointment of a
       receiver,  trustee,  committee,  custodian,  personal  representative  or
       similar  official  for  any Party or for any Material part of any Party's
       property;  (c)  any  action taken by any Party to authorize or consent to
       any  action  set  forth in subparagraph D(2)(a) or (b); (d) the rendering
       against  any  Party  of  one  or  more  judgments, orders, decrees and/or
       arbitration  awards  (whether  for  the payment of money or injunctive or
       other  relief) which in the aggregate are Material to such Party, if they
       continue in effect for 30 days without being vacated, discharged, stayed,
       satisfied  or  performed;  (e)  the  issuance  or  filing of any warrant,
       process,  order  of attachment, garnishment or other lien or levy against
       any  Material  part  of any Party's property; (f) the commencement of any
       proceeding  under, or the use of any of the provisions of any Law against
       any  Material  part of any Party's property, including but not limited to
       any  Law  (i)  relating to the enforcement of judgments or (ii) providing
       for  forfeiture  to,  or  condemnation,  appropriation, seizure or taking
       possession  by,  or  on  order  of  any  Governmental  Authority; (g) the
       forfeiture  to,  or  the  condemnation,  appropriation, seizure or taking
       possession  by,  or  on  the order of, any Governmental Authority, of any
       Material part of any Party's property; (h) any Party being charged with a
       crime  by indictment, information or the like. (3) NONCOMPLIANCE. (a) Any
       Default with respect to any Agreement with or to the Bank, (b) the giving
       to  the  Bank  by or on behalf of any Party at any time of any materially
       incorrect  or  incomplete  representation,  warranty,  statement  or
       information;  (c) the failure of any Party to furnish to the Bank, copies
       of  its  financial  statements  and such other information respecting its
       business,  properties,  condition  or operations, financial or otherwise,
       promptly  when,  and in such form as, reasonably required or requested by
       the Bank; (d) any Party's failure or refusal, upon reasonable notice from
       the  Bank,  to  permit the Bank's representative(s) to visit such Party's
       premises  during  normal  business  hours  and  to  examine  and  make
       photographs,  copies  and  extracts  of  such Party's property and of its
       books  and records; (e) any Party's concealing, removing or permitting to
       be  concealed  or  removed,  any  part of its property with the intent to
       hinder  or  defraud  any  of  its  creditors;  (f)  any Party's making or
       suffering  any  Transfer of any of its property, which Transfer is deemed
       fraudulent  under  the  law  of  any  applicable  jurisdiction;  (g)  the
       revocation  or  early  termination  of  any Party's obligations under any
       Agreement  with  or to the Bank (including, but not limited to any of the
       Liabilities)  or  the  validity,  binding effect or enforceability of any
       such  obligations  being  challenged or questioned, whether or not by the
       institution  of proceedings. (4) ADVERSE CHANGES. (a) the occurrence of a
       Material adverse change in any Party's financial condition; (b) the death
       or  incompetence  (if  a  person) or the dissolution or liquidation (if a
       corporation,  partnership  or  other entity) of any Party or such Party's
       failure to be and remain in good standing and qualified to do business in
       each  jurisdiction  Material to such Party; (c) any Material Default with
       respect to any Material Agreement other than with or to the Bank; (d) any
       Default  pursuant  to  which any Person shall have the power to effect an
       Acceleration  of  any  Material  Debt;  (e) any Acceleration or demand of
       payment  with  respect  to  any  Material  Debt; (f) any Party's becoming
       insolvent,  as  defined  in  the  Uniform Commercial Code; (g) the Bank's
       believing  in  good  faith  that  the  prospect  of payment of any of the
       Liabilities or of performance of any other obligation of any Party to the
       Bank  is  impaired;  (h) the Material suspension of any Party's business;
       (i)  any  Party's  Material  failure  to  pay  any  tax when due; (j) the
       expulsion  of any Party from any exchange or self-regulatory organization
       or any loss, suspension, nonrenewal or invalidity of any Party's Material
       license, permit, franchise, patent, copyright, trademark or the like; (k)
       the  occurrence of any event which gives any Person the right to assert a
       lien,  levy  or  right  of  forfeiture  against  any Material part of any
       Party's  property; (l) Borrower's failure to give the Bank notice, within
       10  Business  Days  after  Borrower  had  notice  or  knowledge,  of  the
       occurrence  of any event which, with the giving of notice and/or lapse of
       time, would constitute an Event of Default. (5) BUSINESS CHANGES. (a) any
       change in Control of any Party; (b) any merger or consolidation involving
       any Party; (c) any Party's sale or other Transfer or substantially all of
       its  property; (d) any bulk sale by any Party; (e) any Material change in
       the  nature  or structure of any Party's business. (6) EXCHANGE CONTROLS.
       (a)  Any  Party's failure to obtain any Exchange Control Permit deemed by
       the  Bank  to  be necessary or appropriate; (b) the failure to obtain the
       renewal of any such Exchange Control Permit at least 30 days prior to its
       expiration.

E.     REMEDIES: (1) ACCELERATION AT BANK'S OPTION. Upon any failure to pay this
       Note in full on demand (if payable on demand) or (if this Note is payable
       other  than  on  demand)  upon  the  occurrence  of  any  Event

                                       2

       of  Default  other  than  any  Debtor  Relief  Action,  then  any and all
       Liabilities,  not  then  due,  shall,  at  the  Bank's  option,  become
       immediately  due  and  payable without notice, which Borrower waives. (2)
       AUTOMATIC  ACCELERATION. Upon the occurrence of any Debtor Relief Action,
       then,  whether  or not any of the Liabilities are payable upon demand and
       notwithstanding paragraph F, any and all Liabilities, not then due, shall
       automatically  become  immediately  due  and  payable  without  notice or
       demand,  which  Borrower  waives. (3) Additional Remedies. The Bank shall
       have  all  rights  and  remedies  available  to  it  under any applicable
       Agreement  or  Law.

F.     WAIVER OF PROTEST, ETC.: Notice, presentment, protest, notice of dishonor
       and  except  for  such  of  the Liabilities as are payable on demand, but
       subject  to  subparagraph E(2) demand for payment are hereby waived as to
       all  of  the  Liabilities.

G.     PAYMENT:  (1)  MANNER.  Any  payment  by other than immediately available
       funds  shall  be subject to collection, interest shall continue to accrue
       until  the  funds  by which payment is made are available to the Bank. If
       and  to the extent any payment of any of the Liabilities is not made when
       due,  the  Bank  is  authorized  in  its  discretion to effect payment by
       charging  any amount so due against any Account of Borrower with the Bank
       without  notice,  except  as  may be required by law, whether or not such
       charge creates an overdraft. (2) Application. Any payment received by the
       Bank  (including  a  deemed  payment  under  paragraph A, a set-off under
       paragraph  C or a charge against an Account under this paragraph G) shall
       be  applied  to  pay any obligation of indemnification (including but not
       limited to under paragraph B) and to pay any other Liabilities (including
       interest  thereon  and  the  principal thereof) in such order as the Bank
       shall  elect  in  its discretion. Borrower will continue to be liable for
       any  deficiency.  (3)  PREPAYMENT.  Borrower shall be entitled to pay any
       outstanding  principal  amount  or  installment  under  this  Note on any
       Business  Day  prior  to  the  applicable  Payment Date without the prior
       consent  of the Bank provided that (a) any such payment shall be together
       with  payment of all Liabilities then due and all interest accrued on the
       Prepaid  Principal to the date of such payment, and (b) if the Applicable
       Rate with respect to such Prepaid Principal is not a Variable Prime-Based
       Rate,  any such payment shall be on not less than 5 Business Day's notice
       to  the  Bank and shall be accompanied by any amount required pursuant to
       subparagraph  B(4). Any such payment shall, unless otherwise consented to
       by  the  Bank,  be  applied  pro  rata  to the last outstanding principal
       amount(s) to become due under this Note in inverse order of maturity. (4)
       NON-BUSINESS DAYS. If any payment of any of the Liabilities is due on any
       day  that is not a Business Day, it shall be payable on the next Business
       Day.  The  additional  day(s)  shall  be  included  in the compilation of
       interest. (5) EXTENSION AT BANK'S OPTION. The Bank shall have the option,
       which  may  be  exercise  one  or more times by notice(s) to Borrower, to
       extend  the  date on which any amount is payable hereunder to one or more
       subsequent  date(s)  set  forth  in  such  notice(s).

H.     PARTIES;  NO  TRANSFER  BY BORROWER: If Borrower is more than one Person,
       all  of  them  shall  be jointly and severally liable under the Note. The
       obligations  under  this  Note  shall  continue  in force and shall apply
       notwithstanding any change in the membership of any partnership executing
       this  Note,  whether  arising from the death or retirement of one or more
       partners or the accession of one or more new partners. Without the Bank's
       written consent, Borrower shall have no right to make any Transfer of any
       of the Liabilities, any such purported Transfer shall be void. Subject to
       the foregoing, the provisions of this Note shall be binding on Borrower's
       executors,  administrators,  successors  and  assigns.

I.     BANK  TRANSFERS:  (1) TRANSFERABILITY. Without limiting the Bank's rights
       hereunder,  the  Bank  may  make a Transfer of all or any part of (a) any
       obligation  of  Borrower to the Bank (including but not limited to any of
       the  Liabilities);  (b)  any  obligation of any other Party in connection
       with any of the Liabilities; (c) any Agreement of any Party in connection
       with  any  of  the  Liabilities;  (d)  any  collateral, mortgage, lien or
       security  interest, however denominated, securing any of the Liabilities;
       and/or (e) the Bank's rights and, if any, obligations with respect to any
       of  the  foregoing.  (2)  EXTENT OF TRANSFER. In the event the Bank shall
       make  any  Transfer  of any of the foregoing items ("Transferred Items"),
       then  - to the extent provided by the Bank with respect to such Transfer,
       the  Transferee shall have the rights, powers, privileges and remedies of
       the  Bank.  The Bank shall thereafter, to the extent of such Transfer, be
       forever  relieved  and  fully  discharged  from  all  liability  or
       responsibility,  if  any,  that  it  may  have to any Person with respect
       thereto,  except  for  claims,  if  any,  arising  prior  to or upon such
       Transfer. The Bank shall retain all its rights and powers with respect to
       any  Transferred  items  to  the  extent  that it has not made a Transfer
       thereof.  Without  limiting  the  foregoing,  to  the  extent of any such
       Transfer,  paragraph  B  (indemnification)  shall  apply  to  any  Taxes,
       Regulatory Costs, Costs and Expenses and Prepayment Costs of, or incurred
       by,  any Transferee, and paragraphs C (Set-Off) and G(1) (Payment-Manner)
       shall  apply  to  any  Account  of  Borrower  with  any  Transferee.  (3)
       DISCLOSURES.  The  Bank  is  authorized to disclose to any prospective or
       actual Transferee any information that the Bank may have or acquire about
       Borrower and any information about any other Person submitted to the Bank
       by  or  on behalf of Borrower. (4) NEGOTIABILITY DEFENSES WAIVED. IF THIS
       NOTE IS NOT A NEGOTIABLE INSTRUMENT, BORROWER WAIVES ALL DEFENSES (EXCEPT
       SUCH  DEFENSES  AS  MAY  BE  ASSERTED AGAINST A HOLDER IN DUE COURSE OF A
       NEGOTIABLE  INSTRUMENT)  WHICH  BORROWER  MAY HAVE OR ACQUIRE AGAINST ANY
       TRANSFEREE  WHO  TAKES  THIS NOTE, OR ANY COMPLETE OR PARTIAL INTEREST IN
       IT, FOR VALUE, IN GOOD FAITH AND WITHOUT NOTICE THAT IT IS OVERDUE OR HAS
       BEEN  DISHONORED  OR OF ANY DEFENSE AGAINST OR CLAIM TO IT ON THE PART OF
       ANY  PERSON.

J.     NO  ORAL  CHANGES;  NO WAIVER BY THE BANK; PARTIAL UNENFORCEABILITY. This
       Note  may  not  be changed orally. Neither a waiver by the Bank of any of
       its  options, powers or rights in one or more instances, nor any delay on
       the part of the Bank in exercising any of them, nor any partial or single
       exercise  thereof,  shall  constitute  a  waiver  thereof  in  any  other
       instance.  Any  provision of this Note which is prohibited, unenforceable
       or  not authorized in any jurisdiction shall, as to such jurisdiction, be
       ineffective  to  the  extent  of  such  prohibition,  unenforceability or
       non-authorization,  without  invalidating the remaining provisions of the
       Note  in  that  or  any  other  jurisdiction  and  without  affecting the
       validity,  enforceability  or  legality  of  such  provision in any other
       jurisdiction.

K.     DISPUTES  AND LITIGATION: (1) GOVERNING LAW. This Note and the rights and
       obligations  of  the Bank and Borrower hereunder shall be governed by the
       internal  laws of the State of New York without giving effect to conflict
       of  laws  principles.  (2)  JURISDICTION,  VENUES AND SERVICE OF PROCESS.
       Borrower  submits  to  the  nonexclusive  jurisdiction of the federal and
       state  courts in the State of New York in New York County with respect to
       any  dispute  that  may be made on Borrower by personal deliver at, or by
       mail addressed to, any address to which the Bank is authorized to address
       notices  to  Borrower. (3) WAIVER OF DEFENSES, SETOFFS, COUNTERCLAIMS AND
       CERTAIN  DAMAGES. Borrower waives the right to assert any defense, setoff
       or counterclaim in any proceeding relating in any way to this Note or any
       transaction  contemplated  hereby.  The Bank shall not have any liability
       for  negligence,

                                       3

       except  solely  to  the  extent required by law and not disclaimable, and
       except  for its own gross negligence or willful misconduct. In any event,
       the  Bank  shall not have any liability for any special, consequential or
       punitive  damages.  (4)  SOVEREIGN IMMUNITY. Borrower irrevocably waives,
       with  respect  to itself and its property, any sovereign immunity that it
       may have or hereafter acquire, including but not limited to immunity from
       the  jurisdiction  of  any court, from any legal process, from attachment
       prior to judgment, from attachment in aid of execution, from execution or
       otherwise.

L.     NOTICE.  Any notice in connection with any of the Liabilities shall be in
       writing  and  may be delivered personally or by cable, telex, telecopy or
       other  electronic  means  of  communication, or by certified mail, return
       receipt  requested,  addressed  (a) to Borrower as set forth herein or to
       any  other  address  that the Bank believes to be Borrower's address, and
       (b)  to  the Bank at Bank Hapoalim B.M., 1177 Avenue of the Americas, New
       York,  New York 10036, Attention Legal Department. Any such notices shall
       be  addressed  to  such other address(es) as may be designated in writing
       hereafter.  All  such  notices  shall  be  deemed  given  when  delivered
       personally  or  electronically or when mailed, except notice of change of
       address,  which  shall  be  deemed  to  have  been  given  when received.

M.     DEFINITIONS.  The  following  definitions  apply  in  this  Note:  (1)
       ACCELERATION. Any acceleration of payment of requirement of prepayment of
       any  Debt,  or  any  Debt's  becoming  due  and  payable  prior to stated
       maturity.  (2)  ACCOUNT:  (a) the balance of any account of Borrower with
       any  Person,  (b) any claim of Borrower against any Person and/or (c) any
       property  in  the possession or custody of, or in transit to, any Person,
       whether  for  safekeeping,  collection,  pledge or otherwise, as to which
       Borrower  has any right, power or interest, in each case whether existing
       now  or  hereafter,  in  any  jurisdiction  worldwide, and whether or not
       disconnected  in  the  same  currency  as  any  of  the  Liabilities. (3)
       AGREEMENT. Any agreement or instrument (including but not limited to this
       Note),  no  matter  when  made, under which any Party is obligated to any
       Person. (4) APPLICABLE RATE. Whichever of the Loan Rate or Increased Rate
       is the applicable interest rate at any time. (5) BANK: Bank Hapoalim B.M.
       (6) BORROWER. The Person(s) executing this Note at paragraph 9 or any one
       or  more  of  them.  "Borrower"  may  refer  to  one or more Persons. (7)
       BUSINESS  DAY.  Any  day  on  which both (a) banks are regularly open for
       business  in  New  York  City  and  (b)  the  Office is open for ordinary
       business  in  the  Bank's  discretion,  the  Office  may be closed on any
       Saturday,  Sunday,  legal  holiday  or  other day on which it is lawfully
       permitted  to close. (8) CONTROL. The power, alone or in conjunction with
       others, directly or indirectly, through voting securities, by contract or
       otherwise,  to direct or cause the direction of a Person's management and
       policies.  (9)  COSTS  AND  EXPENSES.  Any  and  all reasonable costs and
       expenses (including but not limited to attorneys' fees and disbursements)
       incurred  in  connection  with  the  Borrower  and/or  the  Liabilities,
       including  but  not limited to those for (a) any action taken, whether or
       not  by  litigation,  to  collect, or to protect rights or interests with
       respect  to,  or  to  preserve  any  collateral  securing,  any  of  the
       Liabilities;  (b)  compliance  with  any  legal  process  or any order or
       directive  of  any  Governmental Authority with respect to any party; (c)
       any  litigation or administrative proceeding relating to any Party and/or
       (d)  any amendment, modification, extension or waiver with respect to any
       of  the  Liabilities.  (10)  DEBT. Any Party's obligation of any sort (in
       whole  or  in  part  for  the payment of money to any Person, whether (a)
       absolute  or  contingent, (b) secured or unsecured, (c) joint, several or
       independent,  (d) nor or hereafter existing, or (e) due or to become due.
       (11)  DEBTOR  RELIEF  ACTION.  The  commencement  by any Party or (unless
       dismissed  or  terminated  within  30  days)  against  any  Party  of any
       proceeding  under  any  law  of  any  jurisdiction  (domestic or foreign)
       relating  to  bankruptcy,  reorganization,  insolvency,  arrangement,
       composition,  receivership, liquidation, dissolution, moratorium or other
       relief  of  financially distressed debtors, or the making by any Party of
       any  assignment  for  the benefit of creditors. (12) DEFAULT. Any breach,
       default  or  event  of  default under, or any failure to comply with, any
       provision of any Agreement. (13) EVENT OF DEFAULT. Any event set forth in
       paragraph  D.  (14) EXCHANGE CONTROL PERMIT. Any permit or license issued
       by  a  Governmental  Authority  outside the United States under which any
       Party  is  permitted  (a)  to incur and pay any of the Liabilities in the
       United  States  in any currency(ies) in which denominated or (b) to enter
       into,  incur  and,  or  perform  any  other obligation or Agreement. (15)
       GOVERNMENTAL  AUTHORITY.  Any  domestic or foreign, national or local (a)
       government,  (b) governmental, quasi-governmental or regulatory agency or
       authority,  (c)  court  or  (d) central bank or other monetary authority.
       (16) INCREASED RATE. (a) If the Loan Rate is a Variable Prime-Based Rate,
       the  Increased  Rate  with  respect  to  the entire outstanding principal
       balance  shall be the Loan Rate plus 2% per year; (b) if the Loan Rate is
       not  a  Variable Prime-Based Rate, the Increased Rate with respect to any
       amount of principal or installment shall be (i) the Loan Rate plus 2% per
       year prior to the applicable Payment Date and (ii) the Prime Rate plus 4%
       per  year  on or subsequent to the applicable Payment Date. (17) LAW. Any
       treaty,  law,  regulation,  rule,  Judgment,  order,  decree,  guideline,
       interpretation or request (whether or not having the force of law) issued
       by  any  Governmental Authority. (18) LIABILITIES. (a) any and all of the
       Debt  evidenced  by this Note, and any and all other Debt of Borrower to,
       or  held or to be held by, the Bank in any jurisdiction worldwide for its
       own  account  or as agent for another or others, whether created directly
       or  acquired by Transfer or otherwise, and (b) any and all obligations of
       any  other  Party  with  respect to any of such Debt. (19) LOAN RATE. The
       interest  rate  determined  under paragraph 2. (20) MATERIAL. Material to
       the  business  or  financial  condition of any Party on a consolidated or
       consolidating basis. (21) OFFICE. The Bank's office at 1177 Avenue of the
       Americas,  New  York, New York 10036, or such other place as the Bank may
       specify  by  notice.  (22) PARTY. (a) borrower; (b) any maker co-maker or
       endorser  or  any  Agreement  evidencing  or  any  guarantor  surety,
       accommodation  party  or  indemnitor  with respect to, or any Person that
       provides  any  collateral  as  security  for, or any Person that issues a
       subordination,  comfort  letter,  standby  letter  of  credit, repurchase
       agreement, put agreement, option, other Agreement or other credit support
       with respect to any of the Liabilities; (c) if any Party is a partnership
       or  joint  venture,  any general partner or joint venturer in such Party,
       and  (d)  any  Person (i) that is under the Control of any Party and (ii)
       whose  business  or  financial  condition is Material to such Party. (23)
       PAYMENT  DATE. Any Business Day on which any part of the principal or any
       installment  of  this Note becomes due and payable under paragraph 1 (and
       not on account of an Acceleration). (24) PERSON. Any person, partnership,
       joint  venture,  company,  corporation,  uncorporated  organization  or
       association,  trust, estate, Governmental Authority, or any other entity.
       (25)  PREPAID  PRINCIPAL.  Any  amount of principal or any installment of
       this  Note  which  Borrower pays prior to the applicable Payment Date for
       such  amount.  (26)  PREPAYMENT  COSTS.  All  losses,  costs and expenses
       incurred as a result of receiving Prepaid Principal and of reinvesting it
       at  rate(s)  which  may  be  less  than  the  Applicable  Rate

                                       4

       for such Prepaid Principal. (27) PRIME RATE. The Bank's New York Branch's
       stated  Prime  Rate  as  reflected in the books and records as such Prime
       Rate  may change from time to time. The Bank's determination of its Prime
       Rate  shall  be  conclusive and final. The Prime Rate is a reference rate
       and  not  necessarily  the lowest interest rate charged by the Bank. (28)
       REGULATORY  COSTS.  Any  and all costs and expenses of complying with any
       Law,  including  but  not  limited to with respect to (a) any reserves or
       special  deposits maintained for or with, or pledges to, any Governmental
       Authority,  or (b) any capital, capital equivalency ledger account, ratio
       of  assets  to  liabilities,  risk-based  capital assessment or any other
       capital  substitute,  risk-based  or  otherwise.  (29) Taxes. Any and all
       present  and  future  taxes,  levies,  imposts,  deductions,  charges and
       withholdings  in  any  jurisdiction  worldwide,  and all liabilities with
       respect  thereto,  which  are imposed with respect to this Note or to any
       amount  payable  under this Note, excluding taxes determined on the basis
       of  the  net  income of a Person or of any of its offices. (30) TRANSFER.
       Any  negotiation,  assignment,  participation,  conveyance,  grant  of  a
       security  interest,  lease,  delegation,  or any other direct or indirect
       transfer  of  a complete or partial, legal, beneficial, economic or other
       interest or obligation. (31) TRANSFEREE. Any Person to whom a Transfer is
       made. (32) TRANSFERRED ITEMS. Items defined in paragraph I. (33) TREASURY
       OBLIGATIONS.  A  note,  bill or bond issued by the United States Treasury
       Department  as  a  full faith and credit general obligation of the United
       States.  (34)  VARIABLE  PRIME-BASED  RATE.  Any Applicable Rate which is
       determined  based  on  the  Prime  Rate.  Any  such  rate  shall  change
       automatically  when  and  as  the  Prime  Rate  changes.

                                       5

                     Multiple-Loan  Rider  to  Promissory  Note

                               (Libor-Based  Rate)

This  Rider  is  referred  to in paragraph 2(c) of, and constitutes a part of, a
note  of  Borrower  to  the  Bank  dated  March  16,  2000.

===============================================================================

SPECIFIC  TERMS

(a)  Margin:  1.00%  per  year

(b)  Interest  Period:  (__)  _________  days  [x]  1,  2 or 3 months and [x] as
                       agreed  from  time  to  time

(c)  Minimum  Draw  Amount:  U.S.  $500,000.00              [  ]  None
                                ----------------

(d)  Minimum  Multiple  Amount:  U.S.  $                     [  ]  None
                                    ------------

===============================================================================

Borrower  agrees  to  the  above  Specific  Terms  and  to  all of the Terms and
Conditioning  set  forth  below.

Print  Borrower's  Name:    Level  8  Systems,  Inc.
                        ------------------------------------------------------

(Signature) By: /s/ Steven Dmiszewicki       (Signature) By: /s/ Dennis McKinnie
               ------------------------
---------------------
Print  Name  and :  Steven Dmiszewicki,        Print Name and : Dennis McKinnie,
         title    President                    title   SVP

TERMS  AND  CONDITIONS

Certain  capitalized  terms  are  defined  in  paragraph  4.

1.     Advances.  Borrower  may  receive  a  Loan  in  any principal amount upon
       Borrower's  request to the Bank and the Bank's agreement thereto, subject
       to  all  of  the  following  conditions:

       (a)    Agreement of the Bank and Borrower. Subject to subparagraphs 1(b),
              1(c)  and 2(b), the Bank and Borrower shall have agreed, not later
              than  the  Determination  Time,  with  respect  to  the Loan's (i)
              principal  amount, (ii) LIBOR-Base Rate and (iii) Interest Period;
              provided,  however,  that  if  the  Bank  determines  that by such
              Determination  Time,  Borrower  has failed or declined to agree on
              the  LIBOR-Based  Rate and/or Interest Period with respect to such
              Outstanding  Principal  Amount,  then interest on such Outstanding
              Principal  Amount shall accrue at the LIBOR-Based Rate without the
              agreement  of  Borrower,  and  the Interest Period shall be of the
              same  duration  as

              the  Interest  Period  just ended with respect to such Outstanding
              Principal  Amount  or, if there was no such prior Interest Period,
              one  month.

       (b)    Applicable  limitations. (i) The applicable Payment Date shall not
              be  later  than  the  Due  Date; (ii) the total of the Outstanding
              Principal  Amounts  of  all  Loans  shall not exceed the principal
              amount  set  forth  in the Note; (iii) the principal amount of any
              single Loan request shall be not less than any Minimum Draw Amount
              set  forth  under Specific Terms; and (iv) the principal amount of
              any  single  Loan  request  shall  be  an integral multiple of any
              Minimum  Multiple  Amount  set  forth  under  Specific  Terms.

       (c)    Borrower's  request  and  agreement. Borrower's request for a Loan
              and  Borrower's  agreement  to  the  terms  thereof  shall  be
              communicated  to  the  Bank in any form that is acceptable in each
              instance  to  the  Bank  in its sole discretion, which may include
              telephone,  telex,  telecopy  or  a  writing executed by Borrower.
              Borrower  shall  have  provided  the  Bank  with  documentation,
              satisfactory  in  form  and  substance  to  the  Bank  in its sole
              discretion,  confirming the authority of the person(s) agreeing to
              such  terms  on  behalf  of  Borrower.

2.     Payment of Principal and Interest. Subject to the other provisions of the
       Note:

       (a)    Obligation  and  Time  of  Repayment.  Each  Outstanding Principal
              Amount  shall  be  due and payable at the applicable Payment Date.

       (b)    Loan  Rate.  Interest  on  any  Outstanding Principal Amount shall
              accrue  at  the  LIBOR-Based  Rate; provided, however, that if the
              Bank  determines  (i) that by the Determination Time (A) by reason
              of  circumstances affecting the London Interbank Market generally,
              adequate  and  fair  means  do  not  exist  for  ascertaining  an
              applicable LIBOR rate or it is impractical for the Bank to fund or
              continue  to  fund  the  Outstanding  Principal  Amount during the
              applicable  Interest  Period,  or  (B)  quotes for funds in United
              States  Dollars  in  sufficient amounts comparable to the relevant
              Outstanding  Principal  Amount  and  for  the  duration  of  the
              applicable  Interest  Period would not be available to the Bank in
              the  London  Interbank  Market,  or (C) quotes for funds in United
              States  Dollars in the London Interbank Market will not accurately
              reflect  the  cost  to the Bank of making a Loan or of funding the
              relevant  Outstanding  Principal  Amount  during  the  applicable
              Interest Period, or (ii) that at any time the making or funding of
              loans,  or  charging of interest at rates, based on LIBOR shall be
              unlawful  or  unenforceable  for  any reason, then as long as such
              circumstance(s)  shall  continue,  interest  on  the  relevant
              Outstanding  Principal  Amount shall accrue at the Alternate Rate.

       (c)    Payment and Calculation of Interest. Interest shall be payable (i)
              at  each  Payment  Date  or  (whenever  the  Applicable  Rate is a
              variable Prime-Based Rate) monthly, (ii) at the Due Date and (iii)
              at  any time that any Outstanding Principal Amount or part thereof
              is  paid.  Interest  shall be calculated as set forth in the Note.

3.     Bank's  Conclusive  Determinations and Schedule. The Bank's determination
       with  respect  to  any  matter  hereunder  shall be conclusive, final and
       binding  on  Borrower,  absent  manifest

                                       2

       error.  The  Bank  shall  from time to time record the date and amount of
       each Loan, the Applicable Rate, each date on which any part of principal,
       interest or any other amount shall be due and payable, and the amount and
       date  of  each  payment  of principal, interest or any other amount, on a
       schedule,  which  in the Bank's discretion may be computer-generated, and
       which  is incorporated in, and is a part of, the Note and this Rider (the
       "Schedule").  The  Schedule  shall  be conclusive, final and binding upon
       Borrower,  absent  manifest error; provided, however, that the failure of
       the  Bank  to  record  any  of the foregoing shall not limit or otherwise
       affect  the  obligation  of  Borrower to pay all amounts owed to the Bank
       under  the  Note.  Without  limiting the foregoing, Borrower acknowledges
       that  the  Interest  Period  and  the Applicable Rate with respect to any
       Outstanding Principal Amount are subject to the Bank's consent ordinarily
       negotiated  between  Borrower  and  the  Bank  by telephone, and Borrower
       agrees  that  in  the  event of any dispute as to any of the terms of any
       Loan, the determination of the Bank and its respective entry with respect
       thereto  on  its  books  and  records  and/or  on  the  Schedule shall be
       conclusive,  final  and  binding  on  Borrower,  absent  manifest  error.

4.     Definitions.  Each  capitalized  term  not  defined herein shall have the
       meaning  ascribed thereto in the Note. The following definitions apply in
       this  Rider  and  in  the  Note,  and  shall  prevail  over any different
       definitions  in  the  Note.

       (a)    Alternate  Rate:  an annual Variable Prime-Based Rate equal to the
              Prime  Rate  plus  the  Margin.

       (b)    Applicable  Rate:  whichever of the Loan Rate or Increased Rate is
              the  applicable  interest  rate  at  any  time with respect to any
              Outstanding  Principal  Amount.

       (c)    Determination  Time:  12:00  noon (or any later time determined by
              the Bank in its sole discretion), New York City time, of a Working
              Day  that  is  three  Working  Days prior to the date of the Loan.

       (d)    Due  Date: the date set forth in paragraph 1(b) of the Note or, if
              the  Bank has extended such date pursuant to paragraph G(5) of the
              Note  or  by  an  agreement  with  Borrower,  such  extended date.

       (e)    Interest  Period:  any  term  of  1  day,  1 week, 1 to 6, 9 or 12
              months, or such other term as may be acceptable to the Bank in its
              discretion,  as set forth above under Specific Terms or, if not so
              set forth, as selected or agreed to by the Bank in its discretion.
              A  term  shall  not  be considered as "Interest Period" during any
              period  that  the  Applicable Rate is a Variable Prime-Based Rate.
              Each  Interest Period shall commence immediately at the end of the
              preceding  Interest  Period,  if  any;  if  there  had  been  no
              immediately  preceding  Interest  Period  with  respect  to  any
              Outstanding  Principal  Amount, the Interest Period shall commence
              on  the  first  Business  Day  on  which  (i) such amount shall be
              outstanding  and  (ii)  the  Applicable  Rate  is  not  a Variable
              Prime-Based  Rate.  If any Interest Period would otherwise come to
              an  end on a day which is not a Working Day, its termination shall
              be postponed to the next day that is a Working Day unless it would
              thereby  terminate  in  the  next  calendar  month.  In  such

                                       3

              case,  such  Interest  Period  shall  terminate on the immediately
              preceding  Working  Day.

       (f)    LIBOR: the rate or rates established by the New York Branch of the
              Bank  two  Working Days prior to the date of the Loan, by applying
              the  following:  (i)  the  British  Bankers  Association  ("BBA")
              Interest  Settlement Rates for U.S. Dollars, as defined in the BBA
              official  definitions and reflected on the Telerate BBA pages, for
              the  applicable  amounts and interest periods, which rates reflect
              the  offered  rates  at  which  deposits are being quoted to prime
              banks  in  the  London  Interbank Market at 11:00 A.M. London Time
              calculated  as  set forth in said BBA official definition; or (ii)
              such other recognized source of London Eurodollar deposit rates as
              the  Bank  may  determine  from  time-to-time.  In  the  event the
              applicable BBA page or pages shall be replaced by another Telerate
              page  or  other  Telerate  pages  for  quoting London Eurocurrency
              rates,  then  rates quoted on said replacement page or pages shall
              be  applied. If the Bank determines that London Eurocurrency rates
              are  no  longer  being  quoted (temporarily or permanently) on any
              Telerate  pages  or  that  Telerate  is  no  longer  functioning
              (temporarily  or  permanently) in substantially the same manner as
              on  the  date hereof, then the Bank shall notify the Borrower of a
              substitute,  publicly available reference for the determination of
              LIBOR.  If  the  Bank determines in its sole discretion that LIBOR
              cannot  be  determined or does not represent its effective cost of
              maintaining  Loans  under this Note, then interest shall accrue at
              the  effective  cost  to  the  Bank  to  maintain  the  Loans  (as
              determined  by  the  Bank  in  its  sole  discretion).

       (g)    LIBOR-Based  Rate:  an annual rate equal to LIBOR plus the Margin,
              as  determined  by  the  Bank.

       (h)    Loan:  (i) any loan advanced by the Bank to the Borrower under the
              Note;  (ii)  any  rollover  by  the  Bank of any such loan that is
              otherwise  due  and  payable  or  (iii)  any  conversion  of  the
              Applicable  Rate  for any Outstanding Principal Amount from a rate
              that  is  a  Variable Prime-Based Rate to one that is not, or vice
              versa.

       (i)    Loan  Rate:  the  interest rate determined under subparagraph 1(a)
              and/or  2(b).

       (j)    Margin: as set forth under Specific Terms or, if not so set forth,
              2%  per  year.

       (k)    Note:  the  note  of which this Rider is a part (including any and
              all  riders  and  amendments  to  the  Note).

       (l)    Outstanding  Principal Amount: the outstanding principal amount of
              each  Loan.

       (m)    Payment  Date:  the  last  Business Day of the applicable Interest
              Period  or,  if the applicable Loan Rate is a Variable Prime-Based
              Rate,  the  Due  Date.

       (n)    Working  Day: a Business Day on which banks are regularly open for
              business  in  London.

                                       4EXHIBIT 10.6

                          2000 STOCK COMPENSATION PLAN
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC.

                          2000 STOCK COMPENSATION PLAN

         1. Purpose of the Plan. The Plan shall be known as the Guaranty Federal
            -------------------
Bancshares,  Inc.  ("Company") 2000 Stock  Compensation  Plan (the "Plan").  The
purpose of the Plan is to attract and retain  qualified  personnel for positions
of substantial  responsibility and to provide additional  incentive to officers,
directors  first elected or appointed  after July 22, 1998,  employees and other
persons  providing  services to the Company,  or any present or future parent or
subsidiary  of the Company to promote the success of the  business.  The Plan is
intended to provide  for the grant of Stock  Options  that do not qualify  under
Section 422 of the Internal  Revenue  Code of 1986,  as amended (the "Code") and
Shares of Common Stock of the Company granted as Stock Awards.

          2. Definitions. The following words and phrases when used in this Plan
             -----------
with an initial capital letter,  unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever  appropriate,  the masculine
pronoun  shall include the feminine  pronoun and the singular  shall include the
plural.

                  (a) "Award" means the grant by the Committee of Stock Options,
Stock Awards, or any combination thereof as provided in the Plan.

                  (b) "Board"  shall mean the Board of Directors of the Company,
or any successor or parent corporation thereto.

                  (c) "Change in Control"  shall mean: (i) the sale of all, or a
material   portion,   of  the  assets  of  the  Company;   (ii)  the  merger  or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company,  as otherwise defined or determined by
the Office of Thrift  Supervision or regulations  promulgated by it; or (iv) the
acquisition,  directly or indirectly,  of the beneficial  ownership  (within the
meaning of that term as it is used in Section 13(d) of the  Securities  Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person,  trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-  qualified  employee  stock  benefit  plan  which is  exempt  from the
approval  requirements,  set forth under 12 C.F.R.  ss.574.3(c)(1)(vi) as now in
effect or as may hereafter be amended. The term "person" refers to an individual
or  a  corporation,   partnership,  trust,  association,  joint  venture,  pool,
syndicate, sole proprietorship, unincorporated organization or any other form of
entity not  specifically  listed  herein.  The  decision of the  Committee as to
whether a Change in Control has occurred shall be conclusive and binding.

                  (d) "Code" shall  mean  the  Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.

                  (e) "Committee" shall mean the Board or the Stock Compensation
Committee appointed by the Board in accordance with Section 5(a) of the Plan.

                                        1

<PAGE>

                   (f)  "Common  Stock"  shall  mean  the  common  stock  of the
Company, or any successor or parent corporation thereto.

                   (g)  "Continuous  Employment"  or  "Continuous  Status  as an
Employee"  shall  mean  the  absence  of  any  interruption  or  termination  of
employment with the Company or any present or future Parent or Subsidiary of the
Company.  Employment  shall not be  considered  interrupted  in the case of sick
leave,  military leave or any other leave of absence  approved by the Company or
in the case of transfers  between payroll  locations,  of the Company or between
the Company, its Parent, its Subsidiaries or a successor.

                   (h) "Company" shall mean Guaranty Federal  Bancshares,  Inc.,
the parent corporation of the Savings Bank, or any successor or Parent thereof.

                   (i)  "Director"  shall  mean a  member  of the  Board  of the
Company, or any successor or parent corporation thereto.

                   (j)  "Director  Emeritus"  shall  mean a person  serving as a
director emeritus,  advisory  director,  consulting  director,  or other similar
position as may be  appointed  by the Board of  Directors of the Savings Bank or
the Company from time to time.

                   (k)  "Disability"  means any  physical  or mental  impairment
which  renders the  Participant  incapable of  continuing  in the  employment or
service  of the  Savings  Bank or the  Parent in his then  current  capacity  as
determined by the Committee.

                   (l) "Effective Date" shall mean the date of Board adoption of
the Plan.

                   (m) "Employee"  shall mean any person employed by the Company
or any present or future Parent or Subsidiary of the Company.

                   (n) "Fair Market  Value" shall mean:  (i) if the Common Stock
is traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such  Common  Stock on such  date or,  if there is no bid and ask  price on said
date,  then on the  immediately  prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith;  or (ii) if the Common Stock
is listed on a national  securities  exchange,  then the Fair  Market  Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date,  then the Fair Market  Value shall be not less than the mean  between
the last bid and ask price on such date.

                   (o)  "Stock  Option"  or  "Option"  shall  mean an  option to
purchase  Shares  granted  pursuant to the Plan which  option is not intended to
qualify under  Section 422 of the Code  providing the holder of such Option with
the right to purchase Common Stock.

                   (p)  "Optioned  Stock" shall mean stock  subject to an Option
granted pursuant to the Plan.

                   (q)  "Optionee"  shall mean any person who receives an Option
pursuant to the Plan.

                                        2

<PAGE>

                   (r)  "Parent"  shall mean any  present or future  corporation
which would be a "parent  corporation"  as defined in Sections 424(e) and (g) of
the Code.

                   (s)  "Participant"   means  any  Director  first  elected  or
appointed after July 22, 1998,  officer or Employee of the Company or any Parent
or  Subsidiary  of the  Company or any other  person  providing a service to the
Company  who is  selected by the  Committee  to receive an Award,  or who by the
express terms of the Plan is granted an Award.

                   (t) "Plan" shall mean the Guaranty Federal  Bancshares,  Inc.
2000 Stock Compensation Plan.

                   (u)  "Retirement"  shall mean  termination  of service in all
capacities as an Employee,  Director and Director Emeritus following  attainment
of not less than age 55 and  completion of not less than ten years of Service to
the Company or the  Savings  Bank.  Service to the  Company or the Savings  Bank
rendered  prior  to the  Effective  Date  shall  be  recognized  in  determining
eligibility to meet the requirements of Retirement under the Plan.

                   (v)  "Savings  Bank" or "Bank"  shall mean  Guaranty  Federal
Savings Bank, or any successor corporation thereto.

                   (w) "Share" shall mean one share of the Common Stock.

                   (x) "Stock  Award"  means an Award  granted to a  Participant
pursuant to Section 12 of the Plan.

                   (y) "Subsidiary" shall mean any present or future corporation
which  constitutes a "subsidiary  corporation" as defined in Sections 424(f) and
(g) of the Code.

          3. Shares  Subject to the Plan.  Except as  otherwise  required by the
             ---------------------------
provisions of Section 10 hereof,  the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed  *25,000  Shares.
The maximum  number of Shares  reserved  hereby for Stock  Awards is 7,125.  The
maximum number of Shares reserved  hereby for purchase  pursuant to the exercise
of Options granted under the Plan is the difference between (i) 25,000, and (ii)
the number of Shares granted pursuant to Stock Awards. Such Shares may either be
from authorized but unissued  shares or shares  purchased in the market for Plan
purposes.

         If an Award shall expire, become unexercisable, or be forfeited for any
reason  prior to its  exercise,  new Awards  may be granted  under the Plan with
respect to the number of Shares as to which such expiration has occurred.

         4.       Six Month Holding Period.  Subject to vesting requirements, if
                  ------------------------
applicable,  except  in the  event of death or  disability  of the  Optionee,  a
minimum of six months must elapse between the date of the

--------
     * Not to exceed 1% of shares outstanding as of date of Board adoption.

                                        3

<PAGE>

grant of an Option and the date of the sale of the Common Stock received through
the exercise of such Option.

          5.      Administration of the Plan.
                  --------------------------

                  (a)   Composition  of  the   Committee.   The  Plan  shall  be
administered by the Board of Directors of the Company or a Committee which shall
consist of not less than two Directors of the Company appointed by the Board and
serving at the pleasure of the Board.  All persons  designated as members of the
Committee shall meet the  requirements of a "Non-Employee  Director"  within the
meaning of Rule 16b-3 under the Securities  Exchange Act of 1934, as amended, as
found at 17 CFR ss.240.16b-3.

                  (b) Powers of the Committee.  The Committee is authorized (but
only to the extent not  contrary  to the  express  provisions  of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind  rules and  regulations  relating to the Plan, to determine the form and
content of Awards to be issued  under the Plan and to make other  determinations
necessary or advisable for the  administration  of the Plan,  and shall have and
may  exercise  such other power and  authority  as may be delegated to it by the
Board from time to time. A majority of the entire  Committee shall  constitute a
quorum and the action of a majority  of the  members  present at any  meeting at
which a quorum is present  shall be deemed the  action of the  Committee.  In no
event may the Committee  revoke  outstanding  Awards  without the consent of the
Participant.

                  The President of the Company and such other  officers as shall
be  designated  by the  Committee  are  hereby  authorized  to  execute  written
agreements  evidencing  Awards on behalf of the  Company and to cause them to be
delivered to the  Participants.  For Awards of Stock  Options,  such  agreements
shall set forth the Option exercise price,  the number of shares of Common Stock
subject to such Option,  the  expiration  date of such  Options,  and such other
terms and restrictions  applicable to such Award as are determined in accordance
with the Plan or the actions of the Committee.

                   (c)   Effect  of   Committee's   Decision.   All   decisions,
determinations  and   interpretations  of  the  Committee  shall  be  final  and
conclusive on all persons affected thereby.

          6.  Eligibility  for  Awards.  The  Committee  shall from time to time
              ------------------------
determine the officers,  Directors, and employees and other persons who shall be
granted  Awards under the Plan,  the number of Awards to be granted to each such
Participant.  In selecting  Participants and in determining the number of Shares
of Common  Stock to be  granted  to each such  Participant,  the  Committee  may
consider the nature of the prior and  anticipated  future  services  rendered by
each  such   Participant,   each  such   Participant's   current  and  potential
contribution  to the Company and such other factors as the Committee may, in its
sole discretion, deem relevant. Participants who have been granted an Award may,
if otherwise eligible, be granted additional Awards.

          7. Term of the Plan.  The Plan shall  continue in effect for a term of
             ----------------
ten (10) years from the Effective  Date,  unless sooner  terminated  pursuant to
Section 14  hereof.  No Option  shall be  granted  under the Plan after ten (10)
years from the Effective Date.

          8.      Terms and Conditions of Stock Options.  Stock Options  may  be
                  -------------------------------------
granted  by the  Committee  from  time  to time in its  sole  discretion  and in
accordance with the Plan.  Stock Options  granted  pursuant to the Plan shall be
evidenced by an instrument in such form as the Committee shall from time

                                        4

<PAGE>

to time  approve.  Each Stock Option  granted  pursuant to the Plan shall comply
with, and be subject to, the following terms and conditions:

                  (a)  Option  Price.  The price per Share at which  each  Stock
Option granted by the Committee under the Plan may be exercised shall not, as to
any  particular  Stock Option,  be less than the Fair Market Value of the Common
Stock on the date that such Stock Option is granted.

                  (b)  Payment.  Full  payment  for each  Share of Common  Stock
purchased  upon the exercise of any Stock Option granted under the Plan shall be
made at the time of exercise of each such Stock Option and shall be paid in cash
(in United States  Dollars),  Common Stock or a  combination  of cash and Common
Stock.  Common Stock  utilized in full or partial  payment of the exercise price
shall be valued at the Fair Market  Value at the date of  exercise.  The Company
shall  accept  full or  partial  payment  in  Common  Stock  only to the  extent
permitted  by  applicable  law. No Shares of Common  Stock shall be issued until
full payment has been received by the Company, and no Optionee shall have any of
the rights of a  stockholder  of the Company  until  Shares of Common  Stock are
issued to the Optionee.

                  (c) Term of Stock Option.  The term of  exercisability of each
Stock Option granted  pursuant to the Plan shall be not more than ten (10) years
from the date each such Stock Option is granted.

                  (d)  Exercise  Generally.  Except  as  otherwise  provided  by
Section 9 of the Plan or by action of the  Committee at the time of the grant of
a Stock Option,  Stock Options granted will be first  exercisable at the rate of
20% on the one year anniversary of the date of grant and 20% annually thereafter
during such  periods of service as an Employee,  Director or Director  Emeritus.
The Committee may impose additional conditions upon the right of any Optionee to
exercise any Stock Option granted  hereunder which is not inconsistent  with the
terms of the Plan.

                  (e) Cashless  Exercise.  Subject to vesting  requirements,  if
applicable,  an Optionee who has held a Stock Option for at least six months may
engage in the "cashless  exercise" of the Option.  Upon a cashless exercise,  an
Optionee  shall give the Company  written  notice of the  exercise of the Option
together with an order to a registered  broker-dealer or equivalent third party,
to sell part or all of the Optioned  Stock and to deliver enough of the proceeds
to the Company to pay the Option  exercise price and any applicable  withholding
taxes.  If the Optionee  does not sell the Optioned  Stock  through a registered
broker-dealer  or  equivalent  third  party,  the  Optionee can give the Company
written  notice of the  exercise of the Option and the third party  purchaser of
the  Optioned  Stock  shall pay the Option  exercise  price plus any  applicable
withholding taxes to the Company.

                  (f)  Transferability.  A Stock Option granted  pursuant to the
Plan shall be exercised  during an  Optionee's  lifetime only by the Optionee to
whom it was granted and shall not be assignable or  transferable  otherwise than
by will or by the laws of descent and distribution.

         9.   Effect of Termination of Service, Disability, Death and Retirement
              ------------------------------------------------------------------
 on Stock Options.
-----------------

                  (a) Termination of Service.  Except as may be specified by the
Committee  at the time of grant of an Option,  in the event that any  Optionee's
service with the Company shall terminate for any reason,  other than Disability,
death or Retirement,  all of any such Optionee's  Stock Options,  and all of any
such  Optionee's  rights to purchase or receive  Shares of Common Stock pursuant
thereto,  shall  automatically  terminate on (A) the earlier of (i) or (ii): (i)
the respective expiration dates of any such Stock

                                        5

<PAGE>

Options, or (ii) the expiration of not more than three (3) months after the date
of such  termination  of service;  or (B) at such later date as is determined by
the  Committee at the time of the grant of such Award based upon the  Optionee's
continuing  status as a Director or Director Emeritus of the Savings Bank or the
Company,  but only if, and to the extent  that,  the  Optionee  was  entitled to
exercise any such Stock Options at the date of such  termination of service.  In
the event  that a  Subsidiary  ceases to be a  Subsidiary  of the  Company,  the
employment of all of its employees who are not immediately  thereafter employees
of the Company  shall be deemed to terminate  upon the date such  Subsidiary  so
ceases to be a Subsidiary of the Company.

                  (b)  Disability or  Retirement.  Except as may be specified by
the  Committee  at the  time of  grant  of an  Option,  in the  event  that  any
Optionee's  service  with the  Company  shall  terminate  as the  result  of the
Disability or Retirement of such  Optionee,  all such Stock Options shall become
immediately  100%  exercisable  and such Optionee may exercise any Stock Options
granted to the Optionee pursuant to the Plan at any time prior to the respective
expiration dates of any such Stock Options.

                  (c) Death.  Except as may be specified by the Committee at the
time of grant of an Option, in the event of the death of an Optionee,  any Stock
Options granted to such Optionee shall become  immediately  100% exercisable and
may be  exercised by the person or persons to whom the  Optionee's  rights under
any such Stock  Options pass by will or by the laws of descent and  distribution
(including the  Optionee's  estate during the period of  administration)  at any
time prior to the respective expiration dates of any such Stock Options.

                  (d) Stock  Options  Deemed  Exercisable.  For purposes of this
Section,  any Stock Option held by any Optionee shall be considered  exercisable
at the date of  termination  of service if any such Stock Option would have been
exercisable  at such  date of  termination  of  service  without  regard  to the
Disability or death of the Participant.

                  (e)  Termination of Stock Options.  Except as may be specified
by the Committee at the time of grant of an Option, to the extent that any Stock
Option  granted  under the Plan to any Optionee  whose  service with the Company
terminates shall not have been exercised within the applicable  period set forth
in this Section,  any such Stock  Option,  and all rights to purchase or receive
Shares of Common Stock pursuant thereto,  as the case may be, shall terminate on
the last day of the applicable period.

         10.      Recapitalization, Merger, Consolidation, Change in Control and
                  --------------------------------------------------------------
 Other Transactions.
-------------------

                  (a)  Adjustment.   Subject  to  any  required  action  by  the
stockholders of the Company,  within the sole  discretion of the Committee,  the
aggregate  number of Shares of Common  Stock for which  Options  may be  granted
hereunder,  the number of Shares of Common  Stock  covered  by each  outstanding
Option, the number of Shares subject to Stock Awards, and the exercise price per
Share of Common Stock of each such Option, shall all be proportionately adjusted
for any increase or decrease in the number of issued and  outstanding  Shares of
Common Stock resulting from a subdivision or consolidation of Shares (whether by
reason of merger, consolidation,  recapitalization,  reclassification, split-up,
combination  of shares,  or otherwise)  or the payment of a stock  dividend (but
only on the Common  Stock) or any other  increase  or  decrease in the number of
such  Shares  of Common  Stock  effected  without  the  receipt  or  payment  of
consideration   by  the  Company   (other   than   Shares  held  by   dissenting
stockholders).

                                        6

<PAGE>

                  (b) Change in Control.  All  outstanding  Awards  shall become
immediately  exercisable in the event of a Change in Control of the Company,  as
determined  by the  Committee.  In the  event of such a Change in  Control,  the
Committee  and the Board of  Directors  will  take one or more of the  following
actions to be effective as of the date of such Change in Control:

                  (i) provide that such Options shall be assumed,  or equivalent
options  shall  be  substituted,  ("Substitute  Options")  by the  acquiring  or
succeeding  corporation (or an affiliate thereof),  provided that: the shares of
stock  issuable upon the exercise of such  Substitute  Options shall  constitute
securities registered in accordance with the Securities Act of 1933, as amended,
("1933  Act") or such  securities  shall be  exempt  from such  registration  in
accordance  with  Sections  3(a)(2) or  3(a)(5) of the 1933 Act,  (collectively,
"Registered Securities"), or in the alternative, if the securities issuable upon
the  exercise  of  such  Substitute  Options  shall  not  constitute  Registered
Securities,  then the Optionee will receive upon  consummation  of the Change in
Control  transaction  a cash  payment for each Option  surrendered  equal to the
difference between (1) the Fair Market Value of the consideration to be received
for each share of Common  Stock in the Change in Control  transaction  times the
number of shares of Common Stock subject to such  surrendered  Options,  and (2)
the aggregate exercise price of all such surrendered Options, or

                  (ii) in the  event of a  transaction  under the terms of which
the holders of the Common Stock of the Company  will  receive upon  consummation
thereof a cash  payment  (the  "Merger  Price")  for each share of Common  Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees  equal to the  difference  between (A) the Merger Price
times the number of Shares of Common Stock  subject to such Options held by each
Optionee (to the extent then  exercisable  at prices not in excess of the Merger
Price) and (B) the aggregate  exercise price of all such surrendered  Options in
exchange for such surrendered Options.

                  (c)  Extraordinary   Corporate  Action.   Notwithstanding  any
provisions  of the Plan to the contrary,  subject to any required  action by the
stockholders   of  the  Company,   in  the  event  of  any  Change  in  Control,
recapitalization,   merger,   consolidation,   exchange  of  Shares,   spin-off,
reorganization,   tender  offer,   partial  or  complete  liquidation  or  other
extraordinary  corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:

                            (i)   appropriately adjust the number of  Shares  of
Common Stock  subject to each  Option,  the Option  exercise  price per Share of
Common Stock, and the  consideration to be given or received by the Company upon
the exercise of any outstanding Option;

                           (ii)   cancel any or all previously granted  Options,
provided that  appropriate  consideration  is paid to the Optionee in connection
therewith; and/or

                           (iii)  make such other adjustments in connection with
the Plan as the Committee, in its sole discretion,  deems necessary,  desirable,
appropriate or advisable.

                  (d)      Acceleration.  The Committee shall at all times  have
the power to accelerate  the exercise date of Options  previously  granted under
the Plan.

         Except as expressly  provided in Sections  10(a) and 10(b)  hereof,  no
Optionee  shall have any rights by reason of the occurrence of any of the events
described in this Section 10.

                                        7

<PAGE>

         11. Time of Granting Options.  The date of grant of an Option under the
             ------------------------
Plan  shall,  for all  purposes,  be the date on which the  Committee  makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each  individual  to whom an Option is so granted  within a  reasonable
time after the date of such grant in a form determined by the Committee.

         12. Stock Awards. The Committee may make grants of Stock Awards,  which
             ------------
shall  consist  of the grant of some  number of  Shares  of Common  Stock,  to a
Participant  upon such terms and  conditions  as it may  determine to the extent
such terms and conditions are consistent with the following provisions:

                  (a) Grants of the Stock Awards.  Stock Awards may only be made
in whole  shares of Common  Stock.  Stock Awards may only be granted from Shares
reserved  under the Plan and  available for award at the time the Stock Award is
made to the Participant.

                  (b) Terms of the Stock Awards.  The Committee  shall determine
the dates on which  Stock  Awards  granted to a  Participant  shall vest and any
terms or  conditions  which must be satisfied  prior to the vesting of any Stock
Award or portion  thereof.  Any such terms or conditions  shall be determined by
the  Committee  as of the date of grant.  As  promptly  as  practicable  after a
determination  is made that a Stock  Award is to be made,  the  Committee  shall
notify the Participant in writing of the grant of the Stock Award, the number of
Shares  covered by the Stock Award,  and the terms upon which the Shares subject
to the Stock  Award may be  earned.  The date on which the  Committee  makes its
award  determination or the date the Committee so notifies the Participant shall
be  considered  the date of grant  of the  Stock  Awards  as  determined  by the
Committee. The Committee shall maintain records as to all grants of Stock Awards
under the  Plan.  Except as  otherwise  provided  by the terms of the Plan or by
action of the Committee at the time of the grant of the Stock Awards,  the Stock
Awards will be first  exercisable at the rate of 20% on the one year anniversary
of the date of grant and 20% annually  thereafter during such periods of service
as an Employee, Director or Director Emeritus.

                  (c)  Termination  of Employment or Service  (General).  Unless
otherwise  determined by the Committee,  upon the termination of a Participant's
employment or service for any reason other than Retirement, Disability or death,
a Change in Control,  or  Termination  for Cause,  any Stock Awards in which the
Participant  has not  become  vested  as the date of such  termination  shall be
forfeited and any rights the  Participant  had to such Stock Awards shall become
null and void.

                  (d) Termination of Employment or Service (Retirement).  Unless
otherwise  determined  by  the  Committee,  in  the  event  of  a  Participant's
Retirement,  any Stock Awards in which the  Participant has not become vested as
of  the  date  of   Retirement   shall   immediately   become  100%  earned  and
non-forfeitable  as of  the  Participant's  date  of  Retirement  and  shall  be
distributed as soon as practicable thereafter.

                  (e)  Termination  of  Employment  or  Service  (Disability  or
Death).  Unless  otherwise  determined  by  the  Committee,  in the  event  of a
termination  of the  Participant's  service  due to  Disability  or  death,  all
unvested Stock Awards held by such  Participant  shall  immediately  become 100%
earned  and non-  forfeitable  as of the date of such  termination  and shall be
distributed as soon as practicable thereafter.

                   (f) Change in Control.  Unless  otherwise  determined  by the
Committee,  in the event of a Change in Control,  any Stock  Awards in which the
Participant has not become vested as of the date of

                                        8

<PAGE>

such Change in Control shall become immediately 100% earned and  non-forfeitable
on the date of the Change in Control and shall be distributed to the Participant
as soon as practicable thereafter.

                  (g)  Termination  of  Employment or Service  (Termination  for
Cause).  In the event of the  Participant's  Termination  for  Cause,  all Stock
Awards in which the  Participant  had not become vested as of the effective date
of such Termination for Cause shall be forfeited and any rights such Participant
had to such unvested  Stock Awards shall become null and void.  Termination  for
Cause is defined at 12 C.F.R.  563.39(b)(l)  and shall be determined  within the
sole discretion of the Board.

                  (h) Maximum Individual Award. No individual  Employee shall be
granted an amount of Stock Awards which exceeds 25% of all Stock Awards eligible
to be  granted  under  Section 3 of the Plan.  In no event  shall  Stock  Awards
granted to  non-employee  Directors in the aggregate under this Plan exceed more
than 25% of the total number of Shares  authorized  for delivery under Section 3
of the Plan.

                  (i) Issuance of Certificates. As soon as practicable after the
date of grant with respect to shares of Common Stock  pursuant to a Stock Award,
the Company shall cause to be issued a stock certificate, registered in the name
of the Participant to whom such Stock Award was granted, evidencing such Shares;
provided, that the Company shall not cause such a stock certificate to be issued
unless it has received a stock power duly endorsed in blank with respect to such
Shares. Each such stock certificate shall bear the following legend:

                  "The  transferability  of this  certificate  and the shares of
                  stock  represented  hereby are  subject  to the  restrictions,
                  terms and  conditions  (including  forfeiture  provisions  and
                  restrictions  against  transfer)  contained  in  the  Guaranty
                  Federal  Bancshares,  Inc.  2000 Stock  Compensation  Plan and
                  award agreement  entered into between the registered  owner of
                  such shares and Guaranty  Federal  Bancshares,  Inc. A copy of
                  the Plan  and  award  agreement  is on file in the  office  of
                  Guaranty  Federal  Bancshares,  Inc.,  located  at  1341  West
                  Battlefield, Springfield, Missouri 65807.

         Such legend shall not be removed until the  Participant  becomes vested
in such Shares pursuant to the terms of the Plan and award agreement.

                  (j)   Non-Transferability.   A  Stock   Award   shall  not  be
transferable by a Participant, and during the lifetime of the Participant, Stock
Awards may only be earned by and paid to the  Participant  who was  notified  in
writing  of the Stock  Award by the  Committee  pursuant  to Section  12(b).  No
Participant or beneficiary shall have any right in or claim to any assets of the
Plan, nor shall the Company be subject to any claim for benefits hereunder.

                  (k) Payment of Dividends.  A Participant or beneficiary  shall
also be entitled  to receive,  with  respect to each such Share  distributed,  a
payment  equal to any cash  dividends  and the number of Shares of Common  Stock
equal to any stock  dividends,  declared and paid with respect to a Share of the
Common Stock if the record date for determining shareholders entitled to receive
such  dividends  falls between the date the relevant Stock Award was granted and
the date the relevant  Stock Award or installment  thereof is issued.  Such cash
dividend  amounts shall be held in arrears and distributed to such  Participant,
less applicable income tax withholding, upon the earning of the applicable Stock
Award.

                                        9

<PAGE>

                   (l)  Voting  of Stock  Awards.  After a Stock  Award has been
granted and such Stock Award has been  issued in the form of Common  Stock,  but
for which the Shares  covered by such Stock  Award have not yet been  vested and
earned  to the  Participant  pursuant  to the  Plan,  the  Participant  shall be
entitled  to vote such  Shares  of Common  Stock  which the Stock  Awards  cover
subject to the rules and procedures adopted by the Committee for this purpose.

                   (m) Form of Distribution. All Stock Awards, together with any
Shares representing stock dividends,  shall be distributed in the form of Common
Stock.  One share of Common  Stock shall be given for each Stock  Award  earned.
Payments  representing  cash dividends  (and earnings  thereon) shall be made in
cash. Notwithstanding anything within the Plan to the contrary, upon a Change in
Control  whereby  substantially  all of the Common Stock of the Company shall be
acquired for cash, all Stock Awards, together with any Shares representing stock
dividends  associated with Stock Awards, shall be, at the sole discretion of the
Committee, distributed as of the effective date of such Change in Control, or as
soon as administratively  feasible thereafter,  in the form of cash equal to the
consideration  received in exchange  for such Common Stock  represented  by such
Stock Awards.

                   (n)   Regulatory   Exceptions.   No  Stock  Awards  shall  be
distributed, however, unless and until all of the requirements of all applicable
law and  regulations  shall have been fully  complied with, as determined by the
Committee.

         13.  Modification  of Options.  At any time and from time to time,  the
              ------------------------
Board may  authorize  the  Committee to direct the  execution  of an  instrument
providing  for the  modification  of any  outstanding  Option,  provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit  which could not be conferred on the Optionee by the grant of a
new  Option  at such  time,  or shall not  materially  decrease  the  Optionee's
benefits  under the Option  without  the  consent  of the holder of the  Option,
except as otherwise permitted under Section 14 hereof.

         14.      Amendment and Termination of the Plan.
                  -------------------------------------

                   (a)  Action by the  Board.  The Board may  alter,  suspend or
discontinue the Plan at any time within its sole discretion.

                   (b)  Change  in  Applicable  Law.  Notwithstanding  any other
provision  contained  in the Plan,  in the event of a change in any  federal  or
state law,  rule or  regulation  which would make the exercise of all or part of
any previously  granted  Option  unlawful or subject the Company to any penalty,
the Committee may restrict any such exercise without the consent of the Optionee
or other holder thereof in order to comply with any such law, rule or regulation
or to avoid any such penalty.

         15.      Conditions  Upon  Issuance  of  Shares;  Limitations on Option
         -----------------------------------------------------------------------
Exercise; Cancellation of Option Rights.
----------------------------------------

         (a) Shares shall not be issued with respect to any Option granted under
the Plan unless the  issuance  and delivery of such Shares shall comply with all
relevant  provisions of  applicable  law,  including,  without  limitation,  the
Securities  Act of 1933,  as  amended,  the  rules and  regulations  promulgated
thereunder,  any applicable  state  securities laws and the  requirements of any
stock exchange upon which the Shares may then be listed.

                                       10

<PAGE>

         (b)  The   inability   of  the   Company   to  obtain   any   necessary
authorizations,  approvals or letters of non-objection  from any regulatory body
or  authority  deemed by the  Company's  counsel to be  necessary  to the lawful
issuance and sale of any Shares issuable  hereunder shall relieve the Company of
any liability with respect to the non-issuance or sale of such Shares.

         (c) As a  condition  to the  exercise  of an Option,  the  Company  may
require  the  person  exercising  the  Option to make such  representations  and
warranties as may be necessary to assure the  availability  of an exemption from
the registration requirements of federal or state securities law.

         (d)  Notwithstanding   anything  herein  to  the  contrary,   upon  the
termination  of  employment  or service  of an  Optionee  by the  Company or its
Subsidiaries  for "cause" as defined at 12 C.F.R.  563.39(b)(1) as determined by
the Board of  Directors,  all Options  held by such  Optionee  shall cease to be
exercisable as of the date of such termination of employment or service.

         (e) Upon the  exercise of an Option by an Optionee  (or the  Optionee's
personal  representative),  the Committee,  in its sole and absolute discretion,
may make a cash  payment to the  Optionee,  in whole or in part,  in lieu of the
delivery  of Shares of Common  Stock.  Such cash  payment  to be paid in lieu of
delivery  of Common  Stock  shall be equal to the  difference  between  the Fair
Market  Value of the  Common  Stock on the date of the Option  exercise  and the
exercise  price per share of the Option.  Such cash payment shall be in exchange
for the cancellation of such Option.  Such cash payment shall not be made in the
event that such  transaction  would  result in  liability to the Optionee or the
Company under Section 16(b) of the Securities  Exchange Act of 1934, as amended,
and regulations promulgated thereunder.

         16.    Reservation of Shares.  During the term of the Plan, the Company
                ---------------------
will  reserve and keep  available a number of Shares  sufficient  to satisfy the
requirements of the Plan.

         17.    Unsecured Obligation.  No Participant under the Plan shall  have
                --------------------
any  interest in any fund or special  asset of the Company by reason of the Plan
or the grant of any  Option  under the Plan.  No trust  fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.

         18.  Withholding  Tax. The Company  shall have the right to deduct from
              ----------------
all amounts paid in cash with respect to the cashless  exercise of Options under
the Plan any taxes  required  by law to be  withheld  with  respect to such cash
payments.  Where a  Participant  or other  person is entitled to receive  Shares
pursuant to the  exercise  of an Option or the  receipt of Shares  pursuant to a
Stock Award, the Company shall have the right to require the Participant or such
other  person to pay the  Company  the amount of any taxes  which the Company is
required  to withhold  with  respect to such  Shares,  or, in lieu  thereof,  to
retain,  or to sell without notice, a number of such Shares  sufficient to cover
the amount required to be withheld.

         19. No Employment  Rights. No Director,  Employee or other person shall
             ---------------------
have a right to be selected as a  Participant  under the Plan.  Neither the Plan
nor any action  taken by the  Committee in  administration  of the Plan shall be
construed  as giving  any person any rights of  employment  or  retention  as an
Employee,  Director or in any other capacity with the Company,  the Savings Bank
or other Subsidiaries.

                                       11

<PAGE>

         20.      Governing Law.  The Plan shall be governed by and construed in
                  -------------
accordance  with the laws of the State of  Missouri,  except to the extent  that
federal law shall be deemed to apply.

                                       12

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