Document:

Exhibit 10iii.5

 

MANAGEMENT

CONTINUITY AGREEMENT

 

This Management

Continuity Agreement (“Agreement”) is made and entered into as of December

31,  2002,

by and between Illini Corporation (“BHC”), a bank holding company organized

under the laws of Illinois, Illini Bank (“BANK), a bank organized under the

laws of Illinois (unless separately identified BHC and Bank are collectively

referred to hereafter as “Illini”), and George A. Rosenbaum  (“Officer”), 4001 Fielding

Drive, Springfield, Illinois.

 

WITNESSETH

 

WHEREAS, the Officer is seeking employment

with Illini as chief financial officer with the salary as set forth in this

Agreement;

 

WHEREAS, Illini wishes to attract and

retain highly qualified executives and to achieve this goal it is in the  best

interests of Illini to secure the continued services of the Officer regardless

of a change in control of Illini and to reward the Officer in accordance with

his contributions to Illini’s success;

 

WHEREAS, In order to provide the Officer a

measure of security with respect to his employment with Illini in the event of

a change in control of mini so that the Officer will be in a position to act

with respect to a possible change in control of Illini in the best interests of

Illini and its shareholders, without concern as to the Officer’s own financial

security, and in order to induce the Officer to remain in employment with

Illini, Illini and Officer are willing to agree that employment of the Officer

shall be terminable only for such reasons and upon such conditions as are

specifically set forth in the employment agreement between Illini and Officer;

 

WHEREAS, Illini is willing, in order to

compensate the Officer fairly for the Officer’s contribution to the prosperity

of Illini, and in order to induce the Officer to remain in employment with

Illini, to agree that Officer shall be compensated in accordance with the terms

and conditions herein; and

 

NOW, THEREFORE, Illini and Officer agree as

follows:

 

 

Section

1. EMPLOYMENT

 

(1.1) Term. Illini shall continue to employ

the Officer as its chief financial officer until December 31, 2005, (the

“Term”) unless terminated prior to the expiration of the Term pursuant to

Section 2.

 

(1.2) Compensation. As compensation for

services provided to Illini by the Officer pursuant to this Agreement, Illini

shall pay the Officer an annual base salary of $93,500.00, which salary may be

increased from time to time. The

 

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Officer shall also be

eligible to actively participate in any other compensation and benefit plans

generally available to executive employees of Illini of like grade and salary

including, but not limited to, retirement plans, group life, disability,

accidental death and dismemberment, travel and accident, and health and dental

insurance plans, incentive compensation plans, stock compensation plans,

deferred compensation plans, supplemental retirement plans, qualified and

non-qualified incentive stock option plans, and excess benefit plans, all as

described from time to time in Exhibit A which shall be updated at least

annually. Such other compensation and benefit plans are hereinafter referred to

collectively as the “Compensation and Benefits Plans”.

 

(1.3) Duties. Officer shall perform such

duties and functions as are assigned to him by the bylaws of Illini, as amended

or restated, by the Boards of Directors of Illini, or by a duly authorized

committee of the Boards of Directors of Illini. The duties of the Officer shall

be described in detail in Exhibit B to this Agreement which, if

necessary, shall be updated at least annually. In the event of an actual or

potential Change in Control (as defined in Section 2.9), the Officer shall

perform his duties and function in a manner that is consistent with the best

interest of Illini and its shareholders, without regard to the effect that the

potential or actual Change in Control may have on the officer personally.

 

(1.4) Duty Of Loyalty. The Officer shall

work full-time  for

Illini only, or for a subsidiary thereof, provided that:

 

(a)  He may also engage in charitable, civic and

other similar activities;

 

(b)  With the consent of the Board of Directors of

Illini, he may serve as a director of a business organization not competing

with Illini; and

 

(c) He may make

such investment and reinvestment in  business activities as shall not require a

substantial  portion of  his time.

 

(1.5) Duty Not To Disclose Confidential Information. The

Officer acknowledges that  his relationship  with Illini is one of  high

trust and confidence, and that he has access to Confidential Information (as

hereinafter defined) of  Illini. The Officer shall not directly or

indirectly, communicate, deliver, exhibit or provide Confidential Information

to any person, firm, partnership, corporation, organization or entity, except as

required in the normal course of the Officer’s duties.  The duties  contained

in  this

paragraph shall be binding upon the Officer during the time that he is employed

under this Agreement and following the termination of such employment. Such

duties will not apply to any such Confidential Information that is or becomes

in the public domain through no action on the part of the Officer, is generally

disclosed to third parities by Illini without restriction on such third

parties, or is approved for release by

 

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written authorization of

the Board of Directors of Illini. The term “Confidential Information” shall

mean any and all confidential, proprietary, or secret information relating to

Illini’s business, services, customers, business operations, or activities and

any and all trade secrets, products, methods of conducting business,

information, skills, knowledge, ideas, know-how or devices use in, developed

by, or pertaining to Illini’s business and not generally known, in whole or in

part, in any trade or industry in which Illini is engaged. The terms,

definitions, and provision of the Illinois Trade Secrets Act, 765 ILCS 1065/1

through 1065/9 are incorporated herein by reference and made a part hereof.

 

Section

2. TERMINATION

 

(2.1)

Termination of Agreement. Upon approval by the Board of

Directors of Illini Corporation, this Agreement shall upon its maturity on December

31, 2005 be extended from that date for one additional year and thereafter

upon approval by the Board of Directors of Illini shall be extended in

increments of one year upon each subsequent anniversary date unless Illini

terminates or Officer terminates in accordance with Section 2.2. In the event

of a termination by Illini or by the Officer all obligations hereunder shall

terminate except as specifically set forth in the Agreement.

 

(2.2)

Termination by Officer.

 

Voluntary

Termination. The officer may voluntarily terminate this Agreement by providing

thirty days notice to Illini, in which event Illini shall have no further

obligation to the Officer hereunder from the date of such termination except to

pay Officer earned but unpaid salary and benefits and to honor vested option

rights without imposing further condition or reduction thereof and the Officer

shall have no further obligation to Illini hereunder except the duty to not

disclose Confidential Information in accordance with Section 1.5 and the duty

to not engage in any way in competition with Illini for a period of one year.

 

Termination

By Retirement. In the event Officer retires from Illini,

Illini shall have no further obligation to the Officer, his heirs, or legatees

hereunder from the date of such termination, except to pay Officer or his heirs

or legatees earned but unpaid salary and benefits due under the Compensation

and Benefit Plans and to honor vested option rights without imposing further

condition or reduction thereof, and the heirs and legatees of the Officer shall

have no further obligation. For purposes of this Agreement, to retire means the

voluntary and permanent cessation of work by Officer with the intention to not

resume work of any type.

 

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Termination By Death.

In the event the Officer’s employment with Illini is terminated due to the

Officer’s death, Illini shall have no further obligation to the Officer, his

heirs, or legatees hereunder from the date of such termination, except to pay

his heirs or legatees earned but unpaid salary and benefits due under the

Compensation and Benefit Plans and to honor vested option rights without

imposing further condition or reduction thereof and the heirs and legatees of

the Officer shall have no further obligation.

 

Termination By Disability. In the event the

Officer’s employment with the Illini is terminated due to the Officer’s

Permanent Disability, Illini shall have no further obligation to the Officer

hereunder from the date of such termination except to pay at the direction of

Officer or person empowered by Officer to direct payment earned but unpaid

salary and benefits due under the Compensation and Benefit Plans and to honor

vested option rights without imposing further condition or reduction thereof

and Illini shall have no further obligation to Officer or person empowered by

Officer to direct payments due under the Agreement. For purposes of this

Agreement, the term “Permanent Disability” means a physical or mental condition

of the Officer which:

 

(a)  Has continued uninterrupted for six months;

 

(b)  Is expected to continue indefinitely; and

 

(c)  Is determined by Illini to render the Officer

incapable of adequately

 

performing his

duties under Section 1.3 of this Agreement.

 

In case of dispute in

applying “Permanent Disability” to a physical or mental condition of Officer,

the test of disability used by the United States Social Security Administration

for the same or similar purposes shall be the final standard for determining

the “Permanent Disability” of the Officer.

 

(2.3) Termination By Illini.

 

Termination Without Cause. Illini may

terminate this Agreement without cause prior to a period of time twelve months

before and twelve months after a Change of Control of Illini Corporation,

hereinafter known as the “Firm Term”, by providing thirty days notice to the

Officer. In such event, the Officer shall have no further obligation to Illini

hereunder, except the duty to not disclose Confidential Information in

accordance with Section 1.5, and Illini shall have no further obligation to the

Officer hereunder from the date of such termination except (i) to pay to the

Officer the salary payments described in Section 1.2, in the amount in effect

on the date of termination, for a period of twelve months from the date of

termination, (ii) to pay to the Officer that salary earned but unpaid prior to

date of termination, and any other benefits under the Compensation and Benefit

Plans without imposing further condition or

 

4

 

reduction, and (iii) to

pay to the Officer reasonable expenses of out placement within the financial

services industry during the twelve month period following the date of

termination; provided, however, out placement expenses shall be paid only upon

actually incurring such expense and Officer’s furnishing of evidence thereof to

Illini and shall not include moving or relocation expense; and provided,

however, that any benefit to be provided by a Compensation and Benefit Plan may

be provided by Illini through cash or equivalent value or through a

nonqualified arrangement if, in the judgment of Illini, permitting the Officer

to participate in such plan after the date of termination would adversely

affect the tax status of such plan, and if~ in the judgment of the Officer, any

proposed cash or equivalent value through a nonqualified arrangement would not

materially increase the tax liabilities of Officer under federal or state

income tax or estate tax laws.

 

Termination With Cause. Illini may

terminate this Agreement for Cause at any time. For purposes of this Agreement,

Cause shall mean;

 

(a)              An act of

insubordination by Officer that the Officer leaves uncorrected after written

notice of the act by Illini, or upon a second or repeated act of

insubordination;

 

(b)             Violation of federal

or state banking law or regulation resulting in a formal action against Officer

by any regulatory body or agency;

 

(c)              The Officer’s

willful and material breach of a provision of this Agreement after the Board of

Directors delivers a written demand to cure such breach, which specifically

identifies the manner in which the Board of Directors believes that the Officer

has willfully and materially breached his duties, or

 

(d)             The Officer willfully

engages in illegal conduct or gross misconduct that, in the opinion of the

Board of Directors, materially injures Illini.

 

For purposes of

determining whether “Cause” exists, no act or failure to act, on the Officer’s

part shall be considered “willful,” unless it is done, or omitted to be done,

by the Officer in bad faith or without reasonable belief by the Officer that his

action or omission was in the best interest of Illini. In the event of the

Officer’s termination for Cause, Illini will have no further obligation to the

Officer under the Agreement from the date of such termination.

 

Termination with cause

shall be approved by a majority of the Board of Directors of Illini

Corporation.

 

(2.4) Termination Related to Change in Control of Illini

Corporation. In the event there is a  Change in Control of Illini

Corporation, as defined in Section 2.6(a), during the Term, and:

 

5

 

(a)   Within the period commencing

twelve months prior to the date of a Change in Control and ending twelve

months following the date of the Change in Control (the “Firm Term”), the

Officer’s employment hereunder is terminated by Illini other than for Cause, as

defined in Section 2.3; or

 

(b)   Within the Firm Term, the

Officer resigns from his employment hereunder upon thirty days written notice

given to Illini within thirty days following a material change in the Officer’s

title, authorities or duties, in effect immediately prior to the Change in

Control, a reduction in the compensation or a reduction in benefits provided

pursuant to this Agreement or the Compensation and Benefit Plans below the

amount of compensation and benefits in effect immediately prior to the Change

in Control, or a change of the Officer’s principal place of employment without

his consent to a city more than 25 miles from Springfield, Illinois,

 

then the Officer shall

have no further obligation to Illini hereunder, except the duty not to disclose

Confidential Information in accordance with Section 1.5, and Illini shall have

no further obligation to the Officer hereunder from the date of termination

except (i) to pay to the Officer the salary payments described in Section 1.2,

in the amount in effect on the date of termination, for a period of twelve

months from the date of termination, (ii) to pay to the Officer any other

benefits due under the Compensation and Benefit Plans without imposing further

condition or reduction thereof, and (iii) to pay to the Officer reasonable

expenses of out placement within the financial institutions industry or

financial industry following the date of termination; provided, however, out

placement expenses shall be paid only upon actually incurring such expenses and

Officer’s furnishing of evidence thereof to Illini and shall not include moving

or relocation expenses and provided, however, that any benefit to be provided

by Illini through cash or equivalent values or through a nonqualified

arrangement or arrangements if, in the judgment of Illini, permitting the

Officer to participate in such plan after the date of termination would

adversely affect the tax status of such plan.

 

(2.5) Termination Related to a Change of Control of a

Subsidiary of Illini Corporation. In  the event there is a Change  in

Control of a subsidiary of Illini Corporation, as defined in  that

part of Section  2.6(b), then the Officer shall have no further obligation to

Illini hereunder, except the duty not to disclose Confidential Information in

accordance with Section 1.5, and Illini shall have no further obligation to the

Officer hereunder from the date of termination except (i) to pay to the Officer

the salary payments described in Section 1.2, in the amount

 

6

 

in effect on the date of

termination, for a period of twelve months from the date of termination, iii’)

to pay to the Officer any other benefits due under the Compensation and Benefit

Plans without imposing further condition or reduction thereof, and (iii) to pay

to the Officer reasonable expenses of out placement within the financial

institutions industry or financial industry following the date of termination;

provided, however, out placement expenses shall be paid only upon actually

incurring such expenses and Officer’s furnishing of evidence thereof to Illini

and shall not include moving or relocation expenses and provided, however, that

any benefit to be provided by Illini through cash or equivalent values or

through a nonqualified arrangement or arrangements if, in the judgment of

Illini, permitting the Officer to participate in such plan after the date of

termination would adversely affect the tax status of such plan.

 

(2.6) (a) Change in Control of Illini Corporation Defined. A

Change in Control of Illini Corporation  shall have occurred:

 

(a)  On the fifth day preceding the scheduled

expiration date of a tender offer by, or exchange offer by any corporation,

person, other entity or group (other than Illini Corporation or any of its

wholly owned subsidiaries), to acquire Voting Stock of Illini Corporation if:

 

(i)   After giving effect to such offer such

corporation, person, other entity, or group would own 50% or more of the Voting

Stock of  Illini

Corporation;

 

(ii)  There shall have been filed documents with the

Securities and Exchange Commission in connection therewith (or, if no such

filing is required, public evidence that the offer has already commenced); and

such corporation, person, other entity, or group has secured all required

regulatory approvals to own or control 50% or more of the Voting Stock of

Illini Corporation;

 

(b)  If the shareholders of Illini Corporation

approve a definitive agreement to merge or consolidate Illini Corporation with

or into another corporation in a transaction in which neither Illini

Corporation nor any of its wholly owned subsidiaries will be the  surviving

corporation, or to sell or otherwise dispose of all or substantially all of the

assets of Illini Corporation to any corporation, person, other entity, or group

(other than the Illini Corporation or any of its wholly owned subsidiaries),

and such definitive agreement is consummated;

 

(c)  If any corporation, person, other entity or

group (other than Illini Corporation or any of its wholly owned subsidiaries)

becomes the

 

7

 

Beneficial Owner

(as that term is defined in the Securities and Exchange Commission’s Rule 13d-3

under the Securities Exchange Act of 1934) of stock  representing 50% or more of

the Voting Stock of  Illini Corporation; or

 

(d)   If during any period of two

consecutive years Continuing Directors cease to comprise a majority of the

Board of Directors of Illini Corporation.

 

The term “Continuing

Director’ means:

 

(a)   Any member of the Board of

Directors of Illini Corporation at the

 

beginning of any

period of two consecutive years; and

 

(b)   Any  person who  subsequently

becomes a member of the Board of

 

Directors of

Illini Corporation, if:

 

(i)   Such person’s nomination for

election or election to the Board of Directors of Illini Corporation or  Illini

Corporation is recommended or approved by resolution of a majority of the

Continuing Directors; or

 

(ii)  Such person is included a

nominee in a  proxy statement of the Illini Corporation distributed when a

majority of the Board of Directors of Illini Corporation consists of Continuing

Directors.

 

“Voting Stock” shall mean

those shares of Illini Corporation entitled to vote generally in the election

of directors.

 

(b) Change in Control of

a Subsidiary of  Illini Corporation Defined. A Change of Control of a

subsidiary of Illini Corporation shall have occurred when a definitive

agreement to sell such subsidiary of Illini Corporation is approved by the Board

of Directors of  Illini Corporation that transfers more than fifty per cent

(50%) of the voting control of such subsidiary from  Illini Corporation to a  party

not owned or related directly or indirectly to Illini Corporation either twelve

months before or twelve months after the date of the definitive agreement.

 

(2.7) Termination of Related Offices. The

parties agree that in the event  Officer’s employment by Illini is

terminated for any reason, Officer will be  deemed to have immediately resigned from

all other positions or offices held with Illini, including any directorships

with  Illini,

or any subsidiaries thereof.

 

(2.8) Officer’s Costs of Enforcement. Illini

shall pay all expenses of the  Officer, including but not limited to

attorney’s fees, incurred in enforcing payments by Illini pursuant to this

Agreement. The obligation of Illini for the payment of expenses of the Officer,

including attorney’s fees, shall be limited to questions of whether a

particular payment is due the Officer and enforcing payment thereof by Illini.

 

8

 

(2.9) Vesting of Benefits. All options

granted to Officer shall vest fully upon termination of employment of  Officer

except for voluntary terminations by Officer, or terminations for cause by

Illini.

 

Section

3. MISCELLANEOUS

 

(3.1) Assignment of Officer’s Rights. The

Officer may not assign, pledge or otherwise transfer any of the benefits of

this Agreement either before or after termination of employment, and any

purported assignment, pledge or transfer of any payment to be made by Illini

hereunder shall be void and of no effect. No payment to be made to the Officer

hereunder shall be subject to the claims of creditors of the Officer.

 

(3.2) Agreements Binding on Successor. This

Agreement shall be binding and inure to the benefit of the parties hereto and

their respective successors, assigns, personal representatives, heirs, legatees

and beneficiaries.

 

(3.3) Notices. Any notice required or  desired

to be given under this Agreement shall be deemed given if in writing and sent

by  first

class mail to  the Officer or Illini, at  his or its address as set forth above, or

to such other address of  which either the Officer or Illini shall  notify

the other in

writing.

 

(3.4) Waiver of Breach. The waiver by

either party of a breach of any provision of this Agreement shall not operate

or be construed as a waiver of any subsequent breach by either the Officer or

Illini.

 

(3.5) Intellectual Property Rights. Officer  shall

have sole and exclusive rights over any intellectual property created by him

while employed under this Agreement, and shall not be subject to claims by

Illini of rights they may have under equity or statute arising from Officer’s

employment with Illini.

 

(3.6) Entire Agreement. This Agreement

contains the entire understanding of the parties and supersedes prior

agreements between Officer and Illini. It may be modified or amended only by an

agreement in writing signed by the party against whom enforcement of any change

or amendment is sought.

 

(3.6) Severability of Provisions. If for

any reason any paragraph, term or provision of this Agreement is held to be

invalid or unenforceable, all other valid provisions herein shall remain in

full force and effect and all paragraphs, terms and provisions of this

Agreement shall be deemed to be several in nature.

 

(3.7) Governing Law. This  Agreement

is made in, and shall be governed by, the laws of the State of Illinois.

 

IN WITNESS WHEREOF, the parties have

executed  this

Agreement as of the day and year first  set forth above.

 

9

 

	

  ILLINI

  CORPORATION

  	

  George

  A. Rosenbaum

  
	

   

  	

   

  
	

  By:

  	

  /s/

  Burnard McHone

  	

   

  	

  /s/

  George Rosenbaum

  	

   

  
	

  Its:

  	

  President

  	

   

  	

  Date:

  	

  3/7/03

  	

   

  
	

  Date:  March 7, 2003

  	

   

  
								

 

 

10

 

EXHIBIT A

 

DESCRIPTION

of COMPENSATION and BENEFITS

 

 

[Insert

listing of compensation and benefits.]

 

11

 

EXHIBIT

B

 

 

OFFICER

RESPONSIBILITIES and DUTIES

 

 

(Attach

Illini Human Resources job description.)

 

12Exhibit 10iii.6

 

ILLINI CORPORATION

DIRECTORS’ STOCK OPTION PLAN

 

 

SECTION I

 

This Directors’

Stock Option Plan for ILLINI CORPORATION is intended to advance the interests

of the Organization by providing members of the Board of Directors who have

responsibility for the direction and management of the Company and its

Subsidiaries with additional incentive to promote the success of the

Organization’s business, and by encouraging the Directors to remain on the

Board of the Organization.  The above

aims will be accomplished through the granting of certain stock options.

 

 

SECTION II

 

The items defined

below shall have the following meanings throughout the Plan:

 

 

2.1           “Board” means the Board of Directors

of Company or Bank.

 

2.2           “Company” means ILLINI CORPORATION,

an Illinois corporation.

 

2.3           “Directors “ means members elected to

the Board of Directors of the Company or the Subsidiaries, who have

responsibility for the direction and management of the Organization.

 

2.4           “Organization” means the Company and

the Subsidiaries.

 

2.5           “Optionee” means the person to whom

an option is granted.

 

2.6           “Plan” means the Directors’ Option

Plan as defined by the provisions hereof.

 

2.7           “Stock” means the voting common stock

of Company.

 

2.8           “Subsidiaries” means any subsidiary

bank or corporation owned or controlled by the Company, or one of the

Subsidiaries.

 

SECTION III

 

The Board shall

administer the Plan.  Subject to the

provisions of the Plan, the Board shall have the authority, in its sole and

absolute discretion, to:  (a) determine

the directors of the Organization to whom options shall be granted; (b)

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

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

less than the minimum specified in Section 6.1; (d) determine (subject to

Section 6.2) the duration of the exercise period for each option subject to the

vesting limitations of the

 

 

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

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

relating to it.  For purposes of acting

with respect to the Plan, a majority of the members of the Board shall

constitute a quorum and the acts of a majority of the members present at any

meeting at which a quorum is present, or acts approved in writing by a majority

of the members of the Board, shall be deemed the acts of the Board.  Members of the Board being considered for

options shall not vote on a resolution to determine whether he or she shall be

granted any option hereunder.

 

SECTION IV

 

4.1            Options shall be

granted only to Directors.

 

4.2            Options granted

under the Plan may be exercised in whole or in part throughout the duration of

the exercise period for each option set by the Board subject to the following

vesting requirements:

 

(a)   Twenty

percent of the shares of Common Stock which may be purchased pursuant to an

Option, shall be available for purchase on or after one (1) year from the date

of grant;

 

(b)   Twenty

percent of the shares of Common Stock which may be purchased pursuant to an

Option, shall be available for purchase on or after two (2) years from the date

of grant;

 

(c)   Twenty

percent of the shares of Common Stock which may be purchased pursuant to an

Option, shall be available for purchase on or after three (3) years from the

date of grant;

 

(d)   Twenty

percent of the shares of Common Stock which may be purchased pursuant to an

Option, shall be available for purchase on or after four (4) years from the

date of grant; and

 

(e)   Twenty percent

of the shares of Common Stock which may be purchased pursuant to an Option,

shall be available for purchase on or after five (5) years from the date of

grant.

 

In the event of

termination of membership on the Board of Directors for any reason other than

death, the shares of Common Stock which may be purchased pursuant to an Option

shall be limited to number of shares which are fully vested and available for

purchase under this Section 4.2 as of the date and time of termination of such

Board membership.  In the event of the

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

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

available for purchase.

 

4.3            In the event of a

“Change of Control” of the Company, as such term is defined under the

regulations of the Board of Governors of the Federal Reserve System, all shares

of

 

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Common Stock which may be purchased pursuant to an Option shall be

deemed fully vested and available for purchase.

 

SECTION V

 

5.1            The maximum number

of shares of Stock which may be issued pursuant to options granted hereunder

(subject to adjustment as provided in Section 5.3 hereof) shall be 7,500 shares

and, to the extent allowed by law, said number of shares will be reserved for

use upon the exercise of options which may be granted at any time and from time

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

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

unauthorized shares which may be authorized pursuant to powers of attorney

granted by shareholders of the Company. 

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

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

subjected to an option under the Plan.

 

5.2            In the event that

additional shares of Stock are issued pursuant to a stock split or a stock

dividend, the number of shares of Stock then covered by each outstanding option

granted hereunder shall be increased proportionally and the per share price of

such shares shall be decreased proportionally with no change in the total

purchase price of the shares then so covered. 

The number of shares of Stock reserved for the purpose of the Plan shall

also be increased proportionally.  In

the event that the shares of Stock of the Company from time to time issued and

outstanding are reduced by a combination of shares, the number of shares of

Stock then covered by each outstanding option granted hereunder shall be

reduced proportionally and the per share price shall be increased

proportionally with no change in the total price of the shares then so

covered.  The number of shares of Stock

reserved for the purposes of the Plan shall also be reduced

proportionally.  No fractional shares

shall be issued, and any fractional shares resulting from the computations

pursuant to this Section 5.2 shall be eliminated from the respective option.  No adjustment shall be made for dividends

(other than stock dividends) or the issuance to stockholders of rights to

subscribe for additional common stock or other securities.

 

SECTION VI

 

6.1            The option price

for each share of Stock covered by an option shall be an amount not less than 100%

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

 

6.2            All options issued

under the Plan shall be for such period as the Board shall determine, but for

not more than ten (10) years from the date of grant thereof.

 

6.3            The period of the

options, once granted, may be reduced only as provided for in Section 7 in

connection with the termination of Board membership of the Optionee.

 

6.4            Except as provided

in Section 7 hereof, no option may be exercised unless the Optionee is at the

time of such exercise a member of a Board of Directors of the Organization and

shall have been continuously such a member since the grant of the option.

 

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6.5            Each option granted

under the Plan shall be non-transferable and shall be exercisable only by the

Optionee to whom the option is granted. 

No option granted under the Plan or any of the rights and privileges

thereby conferred shall be transferred, assigned, pledged, or hypothecated in

any way (whether by operation of law or otherwise), and no such option, right,

or privilege shall be subject to execution, attachment, or similar

process.  Upon any attempt to so

transfer, assign, pledge, hypothecate, or otherwise dispose of the option or of

any right or privilege conferred thereby, contrary to the provisions hereof, or

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

privilege, the option and such rights and privileges shall immediately become

null and void.

 

SECTION VII

 

7.1            In the event of an

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

Optionee’s guardian or personal representative may exercise any Options

theretofore granted, which have vested and are not then expired, within three

(3) months after such termination; provided, however, in the case of

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

shall be extended to one year.

 

SECTION VIII

 

8.1            The exercise of any

option shall also be contingent upon receipt by the Company of cash or

cashier’s check to its order, in an amount equal to the full option price of

the shares being purchased.

 

8.2            No Optionee or his

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

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

until appropriate documents evidencing such shares are issued under the

provisions of the Plan.  Adjustment

shall be made, however, for dividends for which the record date is after the

date the option is exercised but prior to the date such evidence of such shares

is issued.

 

8.3            Each option shall

be subject to the condition that if at any time the Board shall determine, in

its discretion, that the listing, registration, or qualification of the shares

covered thereby upon any securities exchange or under any state or federal law

or that the consent or approval of any governmental regulatory body is

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

purchase of shares under such option, such shares will not be issued unless and

until such listing, registration, qualification, consent, or approval shall

have been effected or obtained free of any conditions not acceptable to the

Board.

 

8.4            Exercise of an

option shall result in a decrease in the number of shares of Stock which

thereafter may be available under the Plan by the number of shares as to which

the option is exercised.

 

4

 

SECTION IX

 

No option shall be granted pursuant to the Plan after ten (10) years

from the date the Plan is adopted by the majority of the outstanding shares of

each class of Company stock.

 

SECTION X

 

The Board may at

any time terminate the Plan, and at any time and from time to time modify and

amend the Plan in any respect; provided, however, that no such amendment

shall:  (a)increase (except in

accordance with Section 5.2) the maximum number of shares for which options may

be granted under the Plan either in the aggregate or to any individual

Optionee; or (b) reduce (except in accordance with Section 5.2) the minimum

option prices which may be established under the Plan; or (c) extend the

maximum periods provided for in Sections 6.2 and 10, respectively, during which

options may be exercised or granted; or (d) change the provisions relating to

the determination of employees to whom options shall be granted and the number

of shares to be covered by such options; or (e) change the provisions relating

to adjustments to be made upon changes in capitalization.  The termination or any modification or

amendment of the Plan shall not, without the consent of an Optionee, affect his

or her rights under an option theretofore granted to such Optionee.

 

SECTION XI

 

The Plan shall not affect the provisions of any qualified or non-qualified

stock options granted to any director or employee of the Organization under any

other plan relating to stock options; nor shall it affect any of the rights of

any employee or the Organization to whom such a non-qualified stock option was

granted.

 

SECTION XII

 

This Plan shall become effective on the later of the date of its

adoption by the Board or its approval by the vote of the holders of a majority

of the outstanding shares of each class of the Company’s stock.  This Plan shall not become effective unless

such shareholder approval shall be obtained within twelve (12) months before or

after the adoption of the Plan by the Board.

 

5

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