Exhibit 10.14

CHENIERE ENERGY, INC.

AMENDED AND RESTATED

1997 STOCK OPTION PLAN

 

WHEREAS, the Board of Directors (the “Board”) of Cheniere Energy, Inc., a
Delaware corporation (the “Company”), adopted and approved the 1997 Stock Option
Plan (the “Original Plan”) on April 22, 1997. By unanimous written consent of
the Board, dated October 2, 1997, the Original Plan was amended and restated
effective as of April 22, 1997 and was duly approved by Stockholders on
November 5, 1997; and

 

WHEREAS, the Original Plan has heretofore been amended to increase the number of
shares authorized thereunder and to revise the definition of Fair Market Value;
and

 

WHEREAS, the Company desires to incorporate all of the prior amendments to the
Original Plan and the revisions made herein into a restatement of the Original
Plan (the Original Plan, as amended and restated hereby, the “Plan”);

 

NOW THEREFORE, the Original Plan is hereby amended and restated as follows.
Capitalized words not otherwise defined shall have the meanings set forth below
in Article II.

 

ARTICLE I

PURPOSE

 

The Plan is intended to advance the interests of the Company and its
stockholders and subsidiaries by attracting, retaining and motivating the
performance of selected directors, officers, consultants and employees of the
Company of high caliber and potential upon whose judgment, initiative and effort
the Company is largely dependent for the successful conduct of its business, and
to encourage and enable such directors, officers, consultants and employees to
acquire and retain a propriety interest in the Company by ownership of its
stock.

 

ARTICLE II

DEFINITIONS

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations thereunder (including Treasury Regulations sec.
1.162-27 and successor regulations thereunder).

 

“Committee means the compensation committee appointed by the Board or a
sub-committee appointed by the compensation committee to administer the Plan or,
if none, the Board; provided however, that with respect to any Award granted to
a Covered Employee which is intended to be “performance-based compensation” as
described in Section 162(m)(4)(c) of the Code, the Committee shall consist
solely of two or more “outside directors” as described in
Section 162(m)(4)(c)(i) of the Code.

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Notwithstanding the preceding paragraph, the term “Committee” as used in the
Plan with respect to any Nonqualified Stock Option for a Committee member shall
refer to the Board. In the case of a Nonqualified Stock Option for a Committee
member, the Board shall have all of the powers and responsibilities of the
Committee hereunder as to such Option, and any actions as to such Options may be
acted upon only by the Board (unless it otherwise designates in its discretion).
When the Board exercises its authority to act in the capacity as the Committee
hereunder with respect to a Nonqualified Stock Option for a Committee member, it
shall so designate with respect to any action that it undertakes in its capacity
as the Committee.

 

“Common Stock” means the Company’s common stock, $.003 par value per share.

 

“Covered Employee” means the Chief Executive Officer of the Company and each of
the four highest paid officers of the Company other than the Chief Executive
Officer as described in Section 162(m)(3) of the Code.

 

“Date of Grant” means the date on which an Option becomes effective in
accordance with Section 6.1 hereof.

 

“Effective Date” means April 22, 1997, the date the Plan was originally adopted
by the Board.

 

“Eligible Person” means any person who is a director, officer, consultant or
employee of the Company or any Subsidiary.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value or FMV Per Share” means the closing price of a share of the
Common Stock on the principal exchange or over-the-counter market on which such
shares are trading, if any, or as reported on any composite index which includes
such principal exchange, as of any given date. If shares of the Common Stock are
not listed or admitted to trading on any exchange, over-the-counter market or
any similar organization as of the determination date, the Fair Market Value or
FMV Per Share shall be determined by the Committee in good faith using any fair
and reasonable means selected in its discretion.

 

“Incentive Stock Option” means a stock option granted under the Plan that is
intended to meet the requirements of Section 422 of the Code.

 

“Insider” means an individual who is, on the relevant date, an officer or
director designated by the Board to file reports pursuant to Section 16 of the
Exchange Act, with the Securities and Exchange Commission or ten percent
(10%) beneficial owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.

 

“Nonqualified Stock Option” means a stock option granted under the Plan that is
not an Incentive Stock Option.

 

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“Option” means an Incentive Stock Option or a Nonqualified Stock option granted
under the Plan.

 

“Optionee” means an Eligible Person to whom an Option has been granted, which
Option has not expired, under the Plan.

 

“Option Price” means the price at which each share of Common Stock subject to an
Option may by purchased, determined in accordance with Section 6.2 hereof.

 

“Performance-Based Exception” means the performance-based exception from the tax
deductibility limitations of Section 162(m) of the Code.

 

“Stock Option Agreement” means an agreement between the Company and an Optionee
under which the Optionee may purchase Common Stock under the Plan.

 

“Subsidiary” means a subsidiary corporation of the Company, within the meaning
of Section 424(f) of the Code.

 

ARTICLE III

ELIGIBILITY

 

All Eligible Persons are eligible to receive a grant of an Option under the
Plan. The Committee shall, in its sole discretion, determine and designate from
time to time those Eligible Persons who are to be granted an Option.

 

ARTICLE IV

ADMINISTRATION

 

4.1 Committee Members. The Plan shall be administered by the Committee.

 

4.2 Committee Authority. Subject to the express provisions of the Plan, the
Committee shall have the authority, in its discretion, to determine the Eligible
Persons to whom an Option shall be granted, the time or times at which an Option
shall be granted, the number of shares of Common Stock subject to each Option,
the Option Price of the shares subject to each Option, and the time or times
when each Option shall become exercisable and the duration of the exercise
period.

 

Subject to the express provisions of the Plan, the Committee shall also have
discretionary authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the details and provisions of
each Stock Option Agreement, and to make all the determinations necessary or
advisable in the administration of the Plan. All such actions and determinations
by the Committee shall be conclusively binding for all purposes and upon all
persons. No Committee member shall be liable for any action or determination
made in good faith with respect to the Plan, any Option or any Stock Option
Agreement entered into hereunder.

 

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The Board or the Committee may, by a resolution adopted by the Board or the
Committee, authorize one or more officers of the Company to determine the
Eligible Persons to whom an Option shall be granted, the time or times at which
an Option shall be granted, the number of shares of Common Stock subject to each
Option, the Option Price of the shares subject to each Option, and the time or
times when each Option shall become exercisable and the duration of the exercise
period; provided, however, that the resolution so authorizing such officer or
officers shall specify the total aggregate number of Options such officer or
officers may award. The Board or the Committee may not authorize an officer to
designate himself or herself as a recipient of any Options.

 

4.3 Majority Rule. A majority of the members of the Committee (or, if less than
three, all of the members) shall constitute a quorum, and any action taken by a
majority present at a meeting at which a quorum is present or any action taken
without a meeting evidenced by a writing executed by a majority of the whole
Committee shall constitute the action of the Committee.

 

4.4 Company Assistance. The Company shall supply full and timely information to
the Committee on all matters relating to Eligible Persons, their employment or
other service to the Company, their death, disability or other termination of
service, and such other pertinent facts as the Committee may require. The
Company shall furnish the Committee with such clerical and other assistance as
is necessary in the performance of its duties.

 

ARTICLE V

SHARES OF STOCK SUBJECT TO PLAN

 

5.1 Number of Shares. Subject to adjustment pursuant to the provisions of
Section 5.2 hereof, the maximum number of shares of Common Stock which may be
issued and sold hereunder shall be 5,000,000 shares. Shares of Common Stock
issued and sold under the Plan may be either authorized but unissued shares or
Shares held in the Company’s treasury. Shares of Common Stock covered by an
Option that shall have been exercised shall not again be available for an option
grant. If an Option shall terminate for any reason (including, without
limitation, the cancellation of an Option pursuant to Section 6.6 hereof)
without being wholly exercised, the number of shares to which such Option
termination relates shall again be available for grant hereunder. Unless and
until the Committee determines that a particular Option granted to a Covered
Employee is not intended to comply with the Performance-Based Exception, the
following rules shall apply to grants of Options to Covered Employees:

 

(a) Subject to adjustment as provided in Section 5.2, the maximum aggregate
number of Options for shares of Common Stock that may be granted in any calendar
year to any Covered Employee shall be one million (1,000,000) shares.

 

(b) With respect to any Option granted to a Covered Employee that is canceled or
repriced, the number of shares of Common Stock subject to such Option shall
continue to count against the maximum number of shares that may be the subject
of Options granted to such Covered Employees under subsection (a) above and, in
this regard, such maximum shall be determined in accordance with Section 162(m)
of the Code.

 

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(c) The limitations of subsections (a) and (b) above shall be construed and
administered so as to comply with the Performance-Based Exception.

 

5.2 Antidilution. Subject to Article IX hereof, in the event of a reorganization
recapitalization, stock split, stock dividend, combination of shares, merger or
consolidation, or the sale, conveyance, or other transfer by the Company of all
or substantially all of its property, or any other change in the corporate
structure or shares of the Company, pursuant to any of which events the then
outstanding shares of Common Stock are split up or combined, or are changed
into, become exchangeable at the holder’s election for or entitle the holder
thereof to, other shares of stock, or in the case of any other transaction
described in Section 424(a) of the Code, the Committee may change the number and
kind of shares (including by substitution of shares of another corporation)
subject to the Options and/or the Option Price of such shares in the manner that
it shall deem to be equitable and appropriate. In no event may any such change
be made to an Incentive Stock Option which would constitute a “modification”
within the meaning of Section 424(h)(3) of the Code.

 

ARTICLE VI

OPTIONS

 

6.1 Grant of Option. An Option may be granted to any Eligible Person selected by
the Committee. The grant of an Option shall first be effective upon the date it
is approved by the Committee, except to the extent the Committee shall specify a
later date upon which the grant of an Option shall first be effective. Each
Option shall be designated, at the discretion of the Committee, as an Incentive
Stock Option or a Nonqualified Stock Option, provided that Incentive Stock
Options may only be granted to Eligible Persons who are considered employees of
the Company or any Subsidiary for purposes of Section 422 of the Code. The
Company and the Optionee shall execute a Stock Option Agreement which shall set
forth such terms and conditions of the Option as may be determined by the
Committee to be consistent with the Plan, and which may include additional
provisions and restrictions that are not inconsistent with the Plan.

 

6.2 Option Price. The Option Price shall be determined by the Committee;
provided, however, the Option Price of an Incentive Stock Option shall not be
less than 100 percent (100%) of the Fair Market Value of Common Stock on the
Date of Grant. To the extent that a Nonqualified Stock Option is intended to
qualify for the Performance-Based Exception, the Option Price shall not be less
than 100 percent (100%) of the Fair Market Value of Common Stock on the Date of
Grant.

 

No employee shall be eligible for the grant of any Incentive Stock Option who
owns, or would own immediately before the grant of such Incentive Stock Option,
directly or indirectly, stock possessing more than ten percent (10%) of the
total combined voting power of all classes

 

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of stock of the Company, or any parent or Subsidiary of the Company. This
restriction does not apply if, at the time such Incentive Stock Option is
granted, the Option Price is at least one hundred ten percent (110%) of the Fair
Market Value on the date of grant and the Incentive Stock Option by its terms is
not exercisable after the expiration of five (5) years from the Date of Grant.
For the purpose of the immediately preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply for the purpose of determining an
employee’s percentage ownership in the Company or any parent or Subsidiary. This
paragraph shall be construed consistent with the requirements of Section 422 of
the Code.

 

6.3 Vesting; Term of Option. Unless otherwise specified by the Committee in the
Stock Option Agreement for an Optionee, an option shall vest and become
exercisable in cumulative annual installments, each of which shall relate to one
quarter of the number of shares of Common Stock originally covered thereby
(adjusted in accordance with Section 5.2 hereof), on the second, third, fourth
and fifth anniversaries of the Date of Grant, respectively, provided that the
Optionee is an Eligible Person on such anniversary. Notwithstanding the
foregoing, the Committee, in its sole discretion, may accelerate the
exercisability to the extent provided in Article VIII hereof; provided, however,
that no Option may be accelerated or cash paid in lieu of shares if the
Committee determines that such action would cause the Optionee to be subject to
an excise tax under Section 409A of the Code. The period during which a vested
Option may be exercised shall be ten years from the Date of Grant, unless a
shorter exercise period is specified by the Committee in the Stock Option
Agreement for any Optionee.

 

6.4 Option Exercise; Withholding. An Option may be exercised in whole or in part
at any time, with respect to whole shares only, within the period permitted for
the exercise thereof, and shall be exercised by written notice of intent to
exercise the Option with respect to a specified number of shares delivered to
the Company at its principal office, and payment in full to the Company at said
office of the amount of the Option Price for the number of shares of the Common
Stock with respect to which the Option is then being exercised. Payment of the
Option Price shall be made (i) in cash or by cash equivalent, (ii) at the
discretion of the Committee, in Common Stock (not subject to limitations on
transfer) or (iii) at the discretion of the Committee, by a combination of such
cash and such Common Stock. In addition to and at the time or payment of the
Option Price, the Optionee shall pay to the Company in cash or, at the
discretion of the Committee, in Common Stock the full amount of all federal and
state withholding and other employment taxes applicable to the taxable income of
such Optionee resulting from such exercise.

 

6.5 Nontransferability of Option. No option shall be transferred by an Optionee
other than by (a) will or the laws of descent and distribution or (b) pursuant
to a domestic relations order. No transfer of an option by the Optionee by will
or by laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer. During the lifetime of
an Optionee, the Option shall be exercisable only by the Optionee, except that,
in the case of an Optionee who is legally incapacitated, the Option shall be
exercisable by his guardian or legal representative.

 

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6.6 Cancellation, Substitution and Amendment of Options. The Committee shall
have the authority to effect, at any time and from time to time, with the
consent of the affected Optionees, (i) the cancellation of any or all
outstanding Options and the grant in substitution therefor of new Options
covering the same or different numbers of shares of Common Stock and having an
Option Price which may be the same as or different than the Option Price of the
canceled Options or (ii) the amendment of the terms of any and all outstanding
Options provided, however, that the Committee shall have no discretion to
exchange, cancel or issue such Options if the exercise of such discretion would
cause such Options to be subject to Section 409A of the Code.

 

ARTICLE VII

INCENTIVE STOCK OPTIONS

 

7.1 Annual Limits. No Incentive Stock Option shall be granted to an Optionee as
a result of which the aggregate Fair Market Value (determined as of the Date of
Grant) of the stock with respect to which Incentive Stock Options are
exercisable for the first time in any calendar year under the Plan (and any
other stock option plans of the Company, any Subsidiary or any parent
corporation) would exceed $100,000, as determined in accordance with
Section 422(d) of the Code. This limitation shall be applied by taking Options
into account in the order in which granted.

 

Notwithstanding any contrary provision in the Plan, to the extent that the
aggregate Fair Market Value (determined as of the Date of Grant) of the shares
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by any Optionee during any single calendar year (under the
Plan and any other stock option plans of the Company and its Subsidiaries or
parent) exceeds the sum of $100,000, such Incentive Stock Option shall be
treated as a Nonqualified Stock Option and not as an Incentive Stock Option, but
all other terms and provisions of such Stock option shall remain unchanged. This
paragraph shall be applied by taking Incentive Stock Options into account in the
order in which they are granted.

 

7.2 Disqualifying Dispositions. If shares of Common Stock acquired by exercise
of an Incentive Stock Option are disposed of within two years following the Date
of Grant or one year following the transfer of such shares to the Optionee upon
exercise, the Optionee shall, within 10 days after such disposition, notify the
Company in writing of the date and terms of such disposition and provide such
other information regarding the disposition as the Committee may reasonably
require. With respect to any disqualifying disposition of shares of Common Stock
received by an Optionee pursuant to the exercise of an Incentive Stock Option,
the Company shall have the right to withhold from any salary, wages or other
compensation payable by the Company to the Optionee an amount sufficient to
satisfy federal, state and local tax withholding requirements attributable to
such disqualifying disposition.

 

7.3 Other Terms and Conditions. Any Incentive Stock Option granted hereunder
shall contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as are deemed necessary, or desirable by the Committee,
which terms, together with the terms of this Plan, shall be intended and
interpreted to cause such Incentive Stock Option to qualify as an “incentive
stock option” under Section 422 of the Code.

 

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ARTICLE VIII

TERMINATION OF SERVICE

 

8.1 Death. Except if otherwise provided in the Stock Option Agreement, if an
Optionee shall die at any time after the Date of Grant and while he is an
Eligible Person, the executor or administrator of the estate of the decedent, or
the person or persons to whom an Option shall have been validly transferred in
accordance with Section 6.5 hereof pursuant to will or the laws of descent and
distribution, shall have the right, during the period ending one year after the
date of the Optionee’s death (subject to Section 6.3 hereof concerning the
maximum term of an Option), to exercise the Optionee’s Option to the extent that
it was exercisable at the date of the Optionee’s death and shall not have been
previously exercised. The Committee may determine at or after the Date of Grant
to make any portion of the Optionee’s Option that is not exercisable at the date
of death immediately vested and exercisable. No Incentive Stock Option may be
exercised more than one year after the Optionee’s termination of employment due
to death.

 

8.2 Disability. Except if otherwise provided in the Stock Option Agreement, if
an Optionee’s employment or other service with the Company or any Subsidiary
shall be terminated as a result of his permanent and total disability (within
the meaning of Section 22(e)(3) of the Code) at any time after the Date of Grant
and while he is an Eligible Person, the Optionee (or in case of an Optionee who
is legally incapacitated, his guardian or legal representative) shall have the
right, during a period ending one year after the date of his termination due to
disability (subject to Section 6.3 hereof concerning the maximum term of an
Option), to exercise such Option to the extent that it was exercisable at the
date of such termination of employment or other service and shall not have been
exercised. The Committee may determine at or after grant to make any portion of
this Option that is not exercisable at the date of termination of employment or
other service due to disability immediately vested and exercisable. No Incentive
Stock Option may be exercised more than one year after the Optionee’s
termination of employment due to disability.

 

8.3 Termination for Cause. If an Optionee’s employment or other service with the
Company or any Subsidiary shall be terminated for cause, the Optionee’s right to
exercise any unexercised portion of this Option shall immediately terminate and
all rights thereunder shall cease. For purposes of this Section 8.3, termination
for “cause” shall include, but not be limited to, embezzlement or
misappropriation of funds, any acts of dishonesty resulting in conviction for a
felony, misconduct resulting in material injury to the Company or any
Subsidiary, significant activities harmful to the reputation of the Company or
any Subsidiary, a significant violation of Company or Subsidiary policy, willful
refusal to perform, or substantial disregard of, the duties property assigned to
the Optionee, or a significant violation of any contractual statutory or common
law duty of loyalty to the Company or any Subsidiary. The Committee shall have
the power to determine whether the Optionee has been terminated for cause and
the date upon which such termination for cause occurs. Any such determination
shall be final, conclusive and binding upon the Optionee.

 

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8.4 Other Termination of Service. Except if otherwise provided in the Stock
Option Agreement, if an Optionee’s employment or other service with the Company
or any Subsidiary shall be terminated for any reason other than death, permanent
and total disability or termination for cause, the Optionee shall have the
right, during the period ending 90 days after such termination (subject to
Section 6.3 hereof concerning the maximum term of an Option), to exercise such
Option to the extent that it was exercisable at the date of such termination and
shall not have been exercised. For purposes of this Section 8.4, an Optionee
shall not be considered to have terminated employment or other service with the
Company or any Subsidiary until the expiration of the period of any military,
sick leave or other bona fide leave of absence, up to a maximum period of 90
days (or such greater period during which the Optionee is guaranteed
reemployment either by statute or contact).

 

ARTICLE IX

CHANGE IN CONTROL

 

9.1 Change in Control. Upon a “change in control” of the Company (as defined in
Section 9.2), each outstanding Option, to the extent that it shall not otherwise
have become vested, shall become fully and immediately vested (without regard to
any otherwise applicable vesting requirement under Section 6.3 or in the Stock
Option Agreement) and an Optionee shall surrender his option and receive with
respect to each share of Common Stock issuable under such Option outstanding at
such time, a payment is cash equal to the excess of the Fair Mark Value of the
Common Stock at the time of the change in control over the Option Price of the
Common Stock; provided, however, that no such vesting and cash payment shall
occur if (i) the change in control has been approved by at least two-thirds of
the members of the Board who were serving as such immediately prior to such
transaction and (ii) provision has been made in connection with such transaction
for (a) the continuation of the Plan and/or the assumption of such Options by a
successor corporation (or a parent or subsidiary thereof) or (b) the
substitution for such Options of new options covering the stock of a successor
corporation (or a parent or subsidiary thereof), with appropriate adjustments as
to the number and kinds of shares and exercise prices. In the event of any such
continuation, assumption or substitution, the Plan and/or such Options shall
continue in the manner and under the terms so provided.

 

9.2 Definition. For purposes of Section 9.1 hereof, a “change in control” of the
Company shall mean:

 

(a) The acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of the total voting power of all of the Company’s
then outstanding securities entitled to vote generally in the election of
directors to the Board; provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a change in control;
(i) any acquisition by the Company or its parent or Subsidiaries, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or its parent or Subsidiaries, or (iii) any
acquisition consummated with the prior approval of the Board; or

 

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(b) During the period of two consecutive calendar years, individuals who at the
beginning of such period constitute the Board, and any new director(s) whose
(i) election by the Board or (ii) nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
should cease for any reason to constitute a majority of the Board; or

 

(c) The Company becomes a party to a merger, plan of reorganization,
consolidation or share exchange in which either (i) the Company will not be the
surviving corporation or (ii) the Company will be the surviving corporation and
any outstanding shares of the Company’s common stock will be converted into
shares of any other company (other than a reincorporation or the establishment
of a holding company involving no change of ownership of the Company) or other
securities, cash or other property (excluding payments made solely for
fractional shares); or

 

(d) The shareholders of the Company approve a merger, plan of reorganization,
consolidation or share exchange with any other corporation, and immediately
following such merger, plan of reorganization, consolidation or share exchange
the holders of the voting securities of the Company outstanding immediately
prior thereto hold securities representing fifty percent (50%) or less of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger, plan of reorganization,
consolidation or share exchange; provided, however, that notwithstanding the
foregoing, no change in control shall be deemed to have occurred if one-half
(1/2) or more of the members of the Board of the Company or such surviving
entity immediately after such merger, plan of reorganization, consolidation or
share exchange is comprised of persons who served as directors of the Company
immediately prior to such merger, plan of reorganization, consolidation or share
exchange or who are otherwise designees of the Company; or

 

(e) Upon approval by the Company’s stockholders of a complete liquidation and
dissolution of the Company or the sale or other disposition of all or
substantially all of the assets of the Company other than to a parent or
Subsidiary; or

 

(f) Any other event that a majority of the Board, in its sole discretion, shall
determine constitutes a change in control for purposes of Section 9.1.

 

Notwithstanding the occurrence of any of the foregoing events of this
Section 9.2 which would otherwise result in a change in control, the Board may
determine in its sole discretion, if it deems it to be in the best interest of
the Company, that an event or events otherwise constituting a change in control
shall not be considered a change in control. Such determination shall be
effective only if it is made by the Board as it is constituted prior to the
occurrence of an event that otherwise would be or probably would lead to a
change in control; or after such event if made by the Board a majority of which
is composed of directors who were members of the Board immediately prior to the
event that otherwise would be or probably would lead to a change in control.

 

9.3 Exchange of Options. The Committee may, in its discretion, permit any
Optionee to surrender outstanding Options in order to exercise or realize his
rights under other Options or in exchange for the grant of new Options, or
require holders of Options to surrender outstanding Options as a condition
precedent to the grant of new Options.

 

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ARTICLE X

STOCK CERTIFICATES

 

10.1 Issuance of Certificates. Subject to Section 10.2 hereof, the Company shall
issue a stock certificate in the name of the Optionee (or other person
exercising the option in accordance with the provisions of the Plan) for the
shares of Common Stock purchased by exercise of an option as soon as practicable
after due exercise and payment of the aggregate Option Price for such shares. A
separate stock certificate or separate stock certificates shall be issued for
any shares of Common Stock purchased pursuant to the exercise of an Option that
is an Incentive Stock Option, which certificate or certificates shall not
include any shares of Common Stock that were purchased pursuant to the exercise
of an Option that is a Nonqualified Stock Option.

 

10.2 Conditions. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock purchased upon the exercise of any Option
granted hereunder or any portion thereof prior to fulfillment of all of the
following conditions:

 

(a) The completion of any registration or other qualification of such shares,
under any federal or state law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
that the Committee shall in its sole discretion deem necessary or advisable;

 

(b) The obtaining of any approval or other clearance from any federal or state
governmental agency which the Committee shall in its sole discretion determine
to be necessary or advisable;

 

(c) The lapse of such reasonable period of time following the exercise of the
Option as the Committee from time to time may establish for reasons of
administrative convenience;

 

(d) Satisfaction by the Optionee of all applicable withholding taxes or other
withholding liabilities; and

 

(e) If required by the Committee, in its sole discretion, the receipt by the
Company from an Optionee of (i) a representation in writing that the shares of
Common Stock received upon exercise of an Option are being acquired for
investment and not with a view to distribution and (ii) such other
representations and warranties as are deemed necessary by counsel to the
Company.

 

10.3 Legends. The Company reserves the right to legend any certificate for
shares of Common Stock, conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations.

 

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ARTICLE XI

TERMINATION AND AMENDMENT

 

11.1 Termination and Amendment. The Plan shall terminate on April 22, 2007.
Notwithstanding the foregoing, the Board shall have complete power and authority
to terminate the Plan at an earlier date or to amend the Plan; provided,
however, the Board shall not, without the approval of the stockholders of the
Company within the time period required by applicable law, (a) increase the
maximum number of shares which may be issued under the Plan pursuant to
Section 5.1, (b) amend the requirements as to the class of employees eligible to
receive Options for Common Stock under the Plan, (c) extend the term of the
Plan, or (d) decrease the authority granted to the Committee under the Plan in
contravention of (i) Rule 16b-3 under the Exchange Act or (ii) Section 162(m) of
the Code to the extent that the Committee seeks compliance with Section 162(m).
No termination or amendment of the Plan shall adversely affect the rights of an
Optionee (or his permitted transferee) under a previously granted or transferred
Option without his written consent.

 

In addition, to the extent that the Committee determines that (a) the listing
for qualification requirements of any national securities exchange or quotation
system on which the Common Stock is then listed or quoted, or (b) the Code (or
regulations promulgated thereunder), require stockholder approval in order to
maintain compliance with such listing requirements or to maintain any favorable
tax advantages or qualifications, then the Plan shall not be amended in such
respect without obtaining the approval of the Company’s stockholders within the
prescribed time period.

 

With respect to insiders, transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the Exchange Act. Any
ambiguities or inconsistencies in the construction of any Stock Option Agreement
or the Plan shall be interpreted to give effect to such intention.

 

Unless otherwise determined by the Committee with respect to any particular
Option grant, it is intended that the Plan comply fully with and meet all the
requirements of Section 162(m) of the Code so that any Stock Options that are
granted to Covered Employees shall qualify for the Performance-Based Exception.
If any provision of the Plan or a Stock Option Agreement would not permit the
Plan or Stock Option to comply with the Performance-Based Exception as so
intended, such provision shall be construed or deemed amended to conform to the
requirements of the Performance-Based Exception to the extent permitted by
applicable law and deemed advisable by the Committee; provided, however, no such
construction or amendment shall have an adverse effect on the prior grant of any
Stock Option or on the economic value to an Optionee (or his permitted
transferee) of any outstanding Stock Option.

 

ARTICLE XII

MISCELLANEOUS

 

12.1 Employment or other Service. Nothing in the Plan, in the grant of any
Option or in any Stock Option Agreement shall confer upon any Eligible Person
the right to continue in the

 

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capacity in which he is employed by or otherwise provides services to the
Company or any Subsidiary. Notwithstanding anything contained in the Plan to the
contrary, unless otherwise provided in a Stock Option Agreement, no Option shall
be affected by any change of duties or position of the Optionee (including a
transfer to or from the Company or any Subsidiary), so long as such Optionee
continues to be an Eligible Person.

 

12.2 Rights as Shareholder. An Optionee or the permitted transferee of an option
shall have no rights as a shareholder with respect to any shares subject to such
Option prior to the purchase of such shares by exercise of such Option as
provided herein. Nothing contained herein or in the Stock Option Agreement
relating to any Option shall create an obligation on the part of the Company to
repurchase any shares of Common Stock purchased hereunder.

 

12.3 Compensation and Benefit Plans. The adoption of the Plan shall not affect
any other stock option or incentive or other compensation plans in effect for
the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company or any Subsidiary. The amount of any compensation deemed to be
received by an Optionee as a result of the exercise of an Option or the sale of
shares received upon such exercise shall not constitute compensation with
respect to which any other employee benefits of such Optionee are determined,
including, without limitation, benefits under any bonus, pension, profit
sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Board or the Committee or provided by the terms
of such plan.

 

12.4 Plan Binding on Successors. The Plan shall be binding upon the Company, its
successors and assigns, and the Optionee, his executor, administrator and
permitted transferees.

 

12.5 Construction and Interpretation. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

 

12.6 Severability. If any provision of the Plan or any Stock Option Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

 

12.7 Governing Law. The validity and construction of this Plan and of the Stock
Option Agreements shall be governed by the laws of the State of Texas, without
regard to its conflicts of law provisions.

 

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