exv4w7



 





EXHIBIT 4.7




ILEX ONCOLOGY, INC.



2000 EMPLOYEE STOCK COMPENSATION PLAN

(effective April 1, 2000)













 






     ILEX ONCOLOGY, INC.

2000 EMPLOYEE STOCK COMPENSATION PLAN



TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Section

	ARTICLE I — PLAN
	 	 	 	 
	Purpose
	 	 	1.1	 
	Term of Plan
	 	 	1.2	 
	ARTICLE II — DEFINITIONS
	 	 	 	 
	Affiliate
	 	 	2.1	 
	Award
	 	 	2.2	 
	Award Agreement
	 	 	2.3	 
	Board
	 	 	2.4	 
	Change of Control
	 	 	2.5	 
	Code
	 	 	2.6	 
	Committee
	 	 	2.7	 
	Company
	 	 	2.8	 
	Corporate Change
	 	 	2.9	 
	Disability
	 	 	2.10	 
	Employee
	 	 	2.11	 
	Exchange Act
	 	 	2.12	 
	Fair Market Value
	 	 	2.13	 
	Holder
	 	 	2.14	 
	Incentive Option
	 	 	2.15	 
	Mature Shares
	 	 	2.16	 
	Non-Employee Director
	 	 	2.17	 
	Nonqualified Option
	 	 	2.18	 
	Option
	 	 	2.19	 
	Option Agreement
	 	 	2.20	 
	Outside Director
	 	 	2.21	 
	Plan
	 	 	2.22	 
	Restricted Stock
	 	 	2.23	 
	Restricted Stock Agreement
	 	 	2.24	 
	Restricted Stock Award
	 	 	2.25	 
	Retirement
	 	 	2.26	 
	Stock
	 	 	2.27	 
	Ten Percent Stockholder
	 	 	2.28	 
	Voting Stock
	 	 	2.29	 







i









 





	 	 	 	 	 
	ARTICLE III — ELIGIBILITY
	 	 	 	 
	ARTICLE IV — GENERAL PROVISIONS RELATING TO AWARDS
	 	 	 	 
	Authority to Grant Awards
	 	 	4.1	 
	Dedicated Shares; Maximum Awards
	 	 	4.2	 
	Non-Transferability
	 	 	4.3	 
	Requirements of Law
	 	 	4.4	 
	Recapitalization or Reorganization of the Company
	 	 	4.5	 
	Election Under Section 83(b) of the Code
	 	 	4.6	 
	ARTICLE V — OPTIONS
	 	 	 	 
	Type of Option
	 	 	5.1	 
	Exercise Price
	 	 	5.2	 
	Duration of Options
	 	 	5.3	 
	Amount Exercisable
	 	 	5.4	 
	Exercise of Options
	 	 	5.5	 
	Exercise on Termination of Employment
	 	 	5.6	 
	Substitution Options
	 	 	5.7	 
	No Rights as Stockholder
	 	 	5.8	 
	ARTICLE VI — RESTRICTED STOCK AWARDS
	 	 	 	 
	Restricted Stock Awards
	 	 	6.1	 
	Holder’s Rights as Stockholder
	 	 	6.2	 
	ARTICLE VII — ADMINISTRATION
	 	 	 	 
	ARTICLE VIII — AMENDMENT OR TERMINATION OF PLAN
	 	 	 	 
	ARTICLE IX — MISCELLANEOUS
	 	 	 	 
	No Establishment of a Trust Fund
	 	 	9.1	 
	No Employment or Affiliation Obligation
	 	 	9.2	 
	Forfeiture
	 	 	9.3	 
	Tax Withholding
	 	 	9.4	 
	Written Agreement
	 	 	9.5	 
	Indemnification of the Committee and the Board
	 	 	9.6	 
	Gender
	 	 	9.7	 
	Headings
	 	 	9.8	 
	Other Compensation Plans
	 	 	9.9	 
	Other Options or Awards
	 	 	9.10	 
	Governing Law
	 	 	9.11	 







ii









 





ARTICLE I




PLAN




     1.1 Purpose. The Plan is intended to advance the best interests of the Company
and its stockholders by providing those persons who have responsibility for the
management and growth of the Company and its Affiliates or other persons who
provide services to the Company or any of its Affiliates with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue to serve the Company or
any of its Affiliates.



     1.2 Term of Plan. The Plan is effective April 1, 2000. If within one year of
that date it has not been approved by at least a majority vote of stockholders
voting in person or by proxy at a duly held stockholders’ meeting, or if the
provisions of the corporate charter, by-laws or applicable state law prescribes
a greater degree of stockholder approval for this action, the approval by the
holders of that percentage, at a duly held meeting of stockholders, then any
options granted as Incentive Options shall instead be treated as Nonqualified
Options. No Award shall be granted under the Plan after March 31, 2010. The
Plan shall remain in effect until all Awards under the Plan have been satisfied
or expired.



1









 





ARTICLE II




DEFINITIONS




     The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout the Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.



     2.1 “Affiliate” means any parent corporation and any subsidiary corporation.
The term “parent corporation” means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time of
the action or transaction, each of the corporations other than the Company owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain. The term
“subsidiary corporation” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
the action or transaction, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.



     2.2 “Award” means any Incentive Option, Nonqualified Option, or Restricted
Stock Award granted under the Plan.



     2.3 “Award Agreement” has the meaning ascribed to it in Section 9.5.



     2.4 “Board” means the board of directors of the Company.



     2.5 “Change of Control” means the occurrence of any of the following after the
date on which the applicable Award is granted:



     (i) the consummation of:




          (x) a merger, consolidation or reorganization of the
Company with or into any other person if as a result of such
merger, consolidation or reorganization, 50 percent or less
of the combined voting power of the then-outstanding
securities of the continuing or surviving entity immediately
after such merger, consolidation or reorganization are held
in the aggregate by the holders of Voting Stock immediately
prior to such merger, consolidation or reorganization;




          (y) any sale, lease, exchange or other transfer of all
or substantially all the assets of the Company and its
consolidated subsidiaries to any other person if as a result
of such sale, lease, exchange or other transfer, 50 percent
or less of the combined voting power of the then-outstanding
securities of such other person immediately after such sale, lease,



2









 






exchange or other
transfer are held in the aggregate by the holders of Voting
Stock immediately prior to such sale, lease, exchange or
other transfer; or




          (z) the stockholders of the Company approve the
dissolution of the Company.




          A transaction shall not constitute a Change in Control
if its sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be
owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such
transaction.



     2.6 “Code” means the Internal Revenue Code of 1986, as amended.



     2.7 “Committee” means a committee of at least two persons appointed by the
Board. The Committee shall be comprised solely of persons who are both
Non-Employee Directors and Outside Directors.



     2.8 “Company” means ILEX Oncology, Inc, a Delaware corporation.



     2.9 “Corporate Change” shall have the meaning ascribed to it in Section 4.5.



     2.10 “Disability” means a medically determinable mental or physical impairment
which, in the opinion of a physician selected by the Committee, shall prevent
the Holder from engaging in any substantial gainful activity and which can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Holder was engaged in, or did not
result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; (c) did not result from an
injury incurred while a member of the Armed Forces of the United States for
which the Holder receives a military pension; and (d) did not result from an
intentionally self-inflicted injury.



     2.11 “Employee” means a person employed by the Company or any Affiliate.



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



     2.13 “Fair Market Value” of the Stock as of any date means (a) the closing sale
price for a share of the Stock on that date (or, if there was no sale on such
date, the next preceding date on which there was such a sale) on the principal
securities exchange or inter-dealer quotation market on which the Stock is
listed; or (b) if the Stock is not listed on a securities exchange, an amount
as determined by the Committee in its sole discretion.



3









 





     2.14 “Holder” means a person who has been granted an Award, or any person who
is entitled to payment under an Award in accordance with the terms of the Plan.



     2.15 “Incentive Option” means an Option granted under the Plan which is
designated as an “Incentive Option” and satisfies the requirements of section
422 of the Code.



     2.16 “Mature Shares” means shares of Stock that the Holder has held for at
least six months.



     2.17 “Non-Employee Director” means a “non-employee director” as defined in Rule
16b-3 of the Exchange Act.



     2.18 “Nonqualified Option” means an Option granted under the Plan other than an
Incentive Option.



     2.19 “Option” means either an Incentive Option or a Nonqualified Option granted
under the Plan to purchase shares of Stock.



     2.20 “Option Agreement” means the written agreement which sets out the terms of
an Option.



     2.21 “Outside Director”means a member of the Board serving on the Committee who
is not a current Employee of the Company, is not a former Employee of the
Company who receives compensation for prior services (other than benefits under
a tax qualified retirement plan) during the taxable year, has not been an
officer of the Company and does not receive remuneration from the Company
either directly or indirectly, in any capacity other than as a Director.



     2.22 “Plan” means the ILEX Oncology, Inc. 2000 Employee Stock Compensation
Plan, as set forth in this document and as it may be amended from time to time.



     2.23 “Restricted Stock” means stock awarded or purchased under the Plan
pursuant to a Restricted Stock Agreement.



     2.24 “Restricted Stock Agreement” means the written agreement which sets out
the terms of a Restricted Stock Award.



     2.25 “Restricted Stock Award” means an Award of Restricted Stock.



     2.26 “Retirement” means the termination of an Employee’s employment
relationship with the Company and all Affiliates after completing at least five
years of service and attaining the age of 65.



4









 





     2.27 “Stock” means the common stock of the Company, $0.01 par value or, in the
event that the outstanding shares of common stock are later changed into or
exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.



     2.28 “Ten Percent Stockholder” means an individual who, at the time the Option
is granted, owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company or of any Affiliate. An
individual shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.



     2.29 “Voting Stock” means shares of capital stock of the Company the holders of
which are entitled to vote for the election of directors, but excluding shares
entitled to so vote only upon the occurrence of a contingency unless that
contingency shall have occurred.



5









 





ARTICLE III




ELIGIBILITY




     The individuals who shall be eligible to receive Incentive Options shall
be those key employees of the Company or any of its Affiliates as the Committee
shall determine from time to time. The individuals who shall be eligible to
receive Awards other than Incentive Options shall be those persons, including
employees, consultants, advisors, directors and other persons, who have
responsibility for the management and growth of the Company or any of its
Affiliates or other persons providing services to the Company or any of its
Affiliates as the Committee shall determine from time to time. The Board may
designate one or more individuals who shall not be eligible to receive any
Award under the Plan or under other similar plans of the Company.



6









 





ARTICLE IV




GENERAL PROVISIONS RELATING TO AWARDS




     4.1 Authority to Grant Awards. The Committee may grant to those Employees of
the Company or any of its Affiliates and other eligible persons as it shall
from time to time determine, Awards under the terms and conditions of the Plan.
Subject only to any applicable limitations set out in the Plan, the number of
shares of Stock to be covered by any Award to be granted to any person shall be
as determined by the Committee. In addition, pursuant to direction from the
Board of Directors, the Committee may also establish local country plans as
subplans to this Plan, each of which shall be attached as an appendix hereto.
In establishing such a plan, the Committee shall take any action, before or
after an Award is made, which it deems advisable to obtain or comply with any
necessary local government regulatory exemptions or approvals; provided, that
the Board of Directors may not take any action hereunder which would violate
any securities law of any governing country. Provided further, that no such
action shall constitute any change in the aggregate number of shares of Stock
which may be issued under Awards under this Plan, nor shall any such action
expand the Employees (or class of Employees) otherwise eligible to receive
Awards hereunder, nor in any way cause Incentive Options granted hereunder to
cease to qualify as incentive options. In the event of a conflict between the
terms of the Plan and the terms of any local country plan, the terms of the
Plan shall control.



     4.2 Dedicated Shares; Maximum Awards. The total number of shares of Stock with
respect to which Awards may be granted under the Plan is 4,250,000. The shares
of Stock may be treasury shares or authorized but unissued shares. The total
number of shares of Stock with respect to which Incentive Options may be
granted under the Plan is 4,250,000 shares. The total number of shares of
Stock with respect to which Restricted Stock Awards may be granted under the
Plan is 4,250,000 shares. The maximum number of shares subject to Options
which may be issued to any person under the Plan during any calendar year is
200,000 shares. The maximum number of shares subject to Restricted Stock
Awards which may be granted to any person under the Plan during any calendar
year is 200,000 shares. The number of shares stated in this Section 4.2 shall
be subject to adjustment in accordance with the provisions of Section 4.5.



     If any outstanding Award expires or terminates for any reason or any Award
is surrendered or canceled, the shares of Stock allocable to the unexercised
portion of that Award may again be subject to an Award under the Plan.



     4.3 Non-Transferability. Incentive Options shall not be transferable by the
Employee other than by will or under the laws of descent and distribution, and
shall be exercisable, during the Employee’s lifetime, only by him. Except as
specified in the applicable Award agreements or in domestic relations court
orders, other Awards shall not be transferable by the Holder other than by will
or under the laws of descent and distribution, and shall be exercisable, during
the Holder’s lifetime, only by him. In the discretion of the Committee, any attempt to transfer an Award other than under
the terms of the Plan and the applicable Award agreement may terminate the
Award.


7









 





     4.4 Requirements of Law. The Company shall not be required to sell or issue
any Stock under any Award if issuing that Stock would constitute or result in a
violation by the Holder or the Company of any provision of any law, statute, or
regulation of any governmental authority. Specifically, in connection with any
applicable statute or regulation relating to the registration of securities,
upon exercise of any Option or pursuant to any other Award, the Company shall
not be required to issue any Stock unless the Committee has received evidence
satisfactory to it to the effect that the Holder of that Award will not
transfer the Stock except in accordance with applicable law, including receipt
of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the
Committee on this matter shall be final, binding and conclusive. The Company
may, but shall in no event be obligated to, register any Stock covered by the
Plan pursuant to applicable securities laws. In the event the Stock issuable
on exercise of an Option or pursuant to any other Award is not registered, the
Company may imprint on the certificate evidencing the Stock any legend that
counsel for the Company considers necessary or advisable to comply with
applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an Option or vesting under
an Award, or the issuance of shares pursuant thereto, to comply with any law or
regulation of any governmental authority.



     4.5 Recapitalization or Reorganization of the Company.



     The existence of outstanding Awards shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or its rights, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.



     If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Awards under this Plan shall be appropriately adjusted in such a manner as to
entitle a Holder to receive upon exercise of an Award, for the same aggregate
cash consideration, the equivalent total number and class of shares he would
have received had he exercised his Award in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares of Stock then
reserved to be issued under the Plan shall be adjusted by substituting for the
total number and class of shares of Stock then reserved, that number and class
of shares of Stock that would have been received by the owner of an equal
number of outstanding shares of each class of Stock as the result of the event requiring the adjustment. Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive.



8







 





     If while unexercised Awards remain outstanding under the Plan (i) the
Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an
entity that was wholly-owned by the Company immediately prior to such merger,
consolidation or other reorganization), (ii) the Company sells, leases or
exchanges or agrees to sell, lease or exchange all or substantially all of its
assets to any other person or entity (other than an entity wholly-owned by the
Company), or (iii) the Company is to be dissolved and liquidated (each such
event is referred to herein as a “Corporate Change”), then (x) except as
otherwise provided in an Award Agreement or as a result of the Board of
Directors’ effectuation of one or more of the alternatives described below,
there shall be no acceleration of the time at which any Award then outstanding
may be exercised, and (y) no later than ten days after the approval by the
stockholders of the Company of such Corporate Change, the Committee, acting in
its sole and absolute discretion without the consent or approval of any Holder,
shall act to effect one or more of the following alternatives, which may vary
among individual Holders and which may vary among Awards held by any individual
Holder:




          (1) accelerate the time at which some or all of the Awards
then outstanding may be exercised so that such Awards may be
exercised in full for a limited period of time on or before a
specified date (before or after such Corporate Change) fixed by
the Committee, after which specified date all such Awards that
remain unexercised and all rights of Holders thereunder shall
terminate,




          (2) require the mandatory surrender to the Company by all or
selected Holders of some or all of the then outstanding Awards
held by such Holders (irrespective of whether such Awards are then
exercisable under the provisions of this Plan or the Award
Agreements evidencing such Awards) as of a date, before or after
such Corporate Change, specified by the Committee, in which event
the Committee shall thereupon cancel such Awards and the Company
shall pay to each such Holder an amount of cash per share equal to
the excess, if any, of the per share price offered to stockholders
of the Company in connection with such Corporate Change over the
exercise price(s) under such Awards for such shares,




          (3) with respect to all or selected Holders, have some or all
of their then outstanding Awards (whether vested or unvested)
assumed or have a new Award substituted for some or all of their
then outstanding Awards (whether vested or unvested) by an entity
which is a party to the transaction resulting in such Corporate
Change,




          (4) provide that the number and class of shares of Stock
covered by an Award (whether vested or unvested) theretofore
granted shall be adjusted so that such Award shall thereafter
cover the number and class of shares of stock or other securities
or property (including, without limitation, cash) to which the Holder
would have been entitled pursuant to the terms of the agreement
and/or plan relating to such Corporate Change if, immediately
prior to such Corporate Change, the Holder had



9









 






 been the holder of
record of the number of shares of Stock then covered by such
Award, or



     (5) make any adjustments to Awards then outstanding as the
Committee deems appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its sole
and absolute discretion that no such adjustment is necessary).




          In effecting one or more of alternatives (3), (4) or (5)
above, and except as otherwise may be provided in an Award
Agreement, the Committee, in its sole and absolute discretion and
without the consent or approval of any Holder, may accelerate the
time at which some or all Awards then outstanding may be
exercised.



     In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Section 4.5,
any outstanding Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee in its sole and absolute discretion as
to the number and price of shares of stock or other consideration subject to
such Awards. In the event of any such change in the outstanding Stock, the
aggregate number of shares available under this Plan may be appropriately
adjusted by the Committee, whose determination shall be conclusive.



     The issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of rights or
warrants to subscribe for them, or upon conversion of shares or obligations of
the Company convertible into shares or other securities, shall not affect, and
no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Awards.



     4.6 Election Under Section 83(b) of the Code. No Holder shall exercise the
election permitted under section 83(b) of the Code without written approval of
the Committee. Any Holder doing so may, in the discretion of the Committee,
forfeit any or all Awards issued to him under the Plan.



10









 





ARTICLE V




OPTIONS




     5.1 Type of Option. The Committee shall specify in an Option Agreement whether
a given Option is an Incentive Option or a Nonqualified Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value (determined as of the time an Incentive Option is granted) of the Stock
with respect to which incentive stock options first become exercisable by an
Employee during any calendar year (under the Plan and any other incentive stock
option plan(s) of the Company or any Affiliate) exceeds $100,000.00, the
Incentive Option shall be treated as a Nonqualified Option. In making this
determination, incentive stock options shall be taken into account in the order
in which they were granted.



     5.2 Exercise Price. The price at which Stock may be purchased under an
Incentive Option shall not be less than 100 percent of the Fair Market Value of
the shares of Stock on the date the Option is granted. In its discretion, the
Committee may provide that the price at which shares of Stock may be purchased
under an Option shall be more than the minimum price specified above. In the
case of any Ten Percent Stockholder, the price at which shares of Stock may be
purchased under an Incentive Option shall not be less than 110 percent of the
Fair Market Value of the Stock on the date the Incentive Option is granted.
The price at which Stock may be purchased under a Nonqualified Option shall be
specified in an Optionee’s Option Agreement, and may be more or less than 100%
of the Fair Market Value of the shares of Stock on the date the Option is
granted.



     5.3 Duration of Options. The Option Agreement shall specify the term of the
Option; provided that no Option shall be exercisable after the expiration of
ten years from the date the Option is granted. In the case of a Ten Percent
Stockholder, no Incentive Option shall be exercisable after the expiration of
five years from the date the Incentive Option is granted.



     5.4 Amount Exercisable. Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Option
Agreement in its sole discretion. Unless the Option Agreement expressly
specifies otherwise, an Option shall not continue to vest after the Optionee’s
severance of employment or affiliation relationship with the Company and all
Affiliates for any reason. If specified in the Option Agreement, an Option
will be exercisable in full upon the occurrence of a Change of Control.
Otherwise, a Change of Control shall not effect the exercisability of the
Option.



     5.5 Exercise of Options. Each Option shall be exercised by the delivery of
notice to the Committee setting forth the number of shares of Stock with
respect to which the Option is to be exercised, together with cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company for an amount equal to the exercise price under the Option, and/or any
other form of payment which is acceptable to the Committee, and specifying the
address to which the certificates for the shares are to be mailed. Such notice
to the Committee shall either be by written notice, or if permitted by
the Committee and communicated to the Holder,



11









 





communicated electronically. As promptly as practicable after receipt of appropriate notification and payment,
the Company shall deliver to the Holder certificates for the number of shares
with respect to which the Option has been exercised, issued in the Holder’s
name.



     The Committee may, in its sole discretion, permit a Holder to elect to pay
the exercise price upon exercise of an Option by authorizing a third-party
broker to sell all or a portion of the shares of Stock acquired upon exercise
of the Option and remit to the Company a sufficient portion of the sale
proceeds to pay the exercise price and any applicable tax withholding resulting
from such exercise.



     An Option may not be exercised for a fraction of a share of Stock.



     5.6 Exercise on Termination of Employment.



     (a) Termination of Employment Other Than As a Result of Retirement, Death
or Disability. Unless it is expressly provided otherwise in the Option
Agreement, an Option shall terminate one day less than three months after the
severance of employment or affiliation relationship between the Holder and the
Company and all Affiliates for any reason, with or without cause, other than
Retirement, death or Disability. Whether authorized leave of absence or
absence on military or government service shall constitute severance of the
employment of an Employee shall be determined by the Committee at that time.



     (b) Retirement. Unless it is expressly provided otherwise in the Option
Agreement, an Option shall terminate one day less than one year after the
Retirement of the Holder.



     (c) Death. After the death of the Holder, his executors, administrators
or any persons to whom his Option may be transferred by will or by the laws of
descent and distribution shall have the right, at any time prior to the earlier
of the Option’s expiration or one day less than one year after the death of the
Holder, to exercise it, to the extent to which he was entitled to exercise it
immediately prior to his death, unless it is expressly provided otherwise in
the Option Agreement.



     (d) Disability. If, before the expiration of an Option, the Holder shall
be severed from the employ of or affiliation with the Company and all
Affiliates due to Disability, the Option shall terminate on the earlier of the
Option’s expiration date or one day less than one year after the date of his
severance due to Disability, unless it is expressly provided otherwise in the
Option Agreement. In the event that the Holder shall be severed from the
employ of or affiliation with the Company and all Affiliates for Disability,
the Holder shall have the right prior to the termination of the Option to
exercise the Option, to the extent to which he was entitled to exercise it
immediately prior to his severance of employment or affiliation due to
Disability, unless it is expressly provided otherwise in the Option Agreement.



     (e) Employment With an Entity in a Section 424(a) Transaction. In
determining the employment relationship between the Company and or any
Affiliate and an Employee,



12









 




employment by a corporation issuing or assuming a stock option in a transaction to which
section 424(a) of the Code applies shall be considered employment by the
Company or an Affiliate.




     5.7 Substitution Options. Options may be granted under the Plan from time to
time in substitution for stock options held by employees of other corporations
who are about to become employees of or affiliated with the Company or any
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the
Company or any Affiliate of the assets of the employing corporation, or the
acquisition by the Company or any Affiliate of stock of the employing
corporation as the result of which it becomes an Affiliate of the Company. The
terms and conditions of the substitute Options granted may vary from the terms
and conditions set out in the Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.



     5.8 No Rights as Stockholder. No Holder shall have any rights as a stockholder
with respect to Stock covered by his Option until the date a stock certificate
is issued for the Stock.



13









 





ARTICLE VI




RESTRICTED STOCK AWARDS




     6.1 Restricted Stock Awards. The Committee may make Awards of Restricted Stock
to eligible persons selected by it. The amount of, the vesting and the
transferability restrictions applicable to, any Restricted Stock Award shall be
determined by the Committee in its sole discretion. If the Committee imposes
vesting or transferability restrictions on a Holder’s rights with respect to
shares of Restricted Stock, the Committee may issue such instructions to the
Company’s stock transfer agent in connection therewith as it deems appropriate.
The Committee may also cause the certificate for shares issued pursuant to a
Restricted Stock Award to be imprinted with any legend which counsel for the
Company considers advisable with respect to the restrictions.



     Each Restricted Stock Award shall be evidenced by a Restricted Stock Award
Agreement that contains any vesting, transferability restrictions and other
provisions not inconsistent with the Plan as the Committee may specify.



     6.2 Holder’s Rights as Stockholder.



     (a) From the date a Restricted Stock Award is granted, the Holder shall
have the right to receive all cash dividends or other distributions paid or
made with respect to the shares of Stock subject to the Award.



     (b) Commencing on the date of the transfer of shares of Restricted Stock
to a Holder on the books of the Company pursuant to an Award, the Holder shall
have the right to vote the shares subject to the Award.



14









 





ARTICLE VII




ADMINISTRATION




     The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made
by a majority of its members. Any decision or determination reduced to writing
and signed by a majority of the members shall be as effective as if it had been
made by a majority vote at a meeting properly called and held. In carrying
out its authority under the Plan, the Committee shall have full and final
authority and discretion, including but not limited to the following rights,
powers and authorities, to:




          (a) determine the persons to whom and the time or times at
which Awards will be made,




          (b) determine the number of shares and the exercise price of
Stock covered in each Award, subject to the terms of the Plan,




          (c) determine the terms, provisions and conditions of each
Award, which need not be identical,




          (d) accelerate the time at which any outstanding Option may
be exercised, or Restricted Stock Award will vest,




          (e) define the effect, if any, on an Award of the death,
disability, retirement, or termination of employment or
affiliation relationship between the Holder and the Company and
Affiliates,




          (f) prescribe, amend and rescind rules and regulations
relating to administration of the Plan, and




          (g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper
administration of the Plan.


The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.




15









 








ARTICLE VIII




AMENDMENT OR TERMINATION OF PLAN




     The Board may amend, terminate or suspend the Plan at any time, in its
sole and absolute discretion. The Board shall have the power to make any
changes in the Plan and in the regulations and administrative provisions under
it or in any outstanding Incentive Option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any
Incentive Option granted under the Plan to continue to qualify as an incentive
stock option or such other stock option as may be defined under the Code so as
to receive preferential federal income tax treatment.



16









 





ARTICLE IX




MISCELLANEOUS




     9.1 No Establishment of a Trust Fund. No property shall be set aside nor shall
a trust fund of any kind be established to secure the rights of any Holder
under the Plan. All Holders shall at all times rely solely upon the general
credit of the Company for the payment of any benefit which becomes payable
under the Plan.



     9.2 No Employment or Affiliation Obligation. The granting of any Option or
Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue
to employ, or utilize the services of, any Holder. The right of the Company or
any Affiliate to terminate the employment of any person shall not be diminished
or affected by reason of the fact that an Option or Award has been granted to
him.



     9.3 Forfeiture. Notwithstanding any other provisions of the Plan, if the
Committee finds by a majority vote after full consideration of the facts that
the Holder, before or after termination of his employment or affiliation
relationship with the Company or an Affiliate for any reason (a) committed or
engaged in fraud, embezzlement, theft, commission of a felony, or proven
dishonesty in the course of his employment by the Company or an Affiliate,
which conduct damaged the Company or Affiliate, or disclosed trade secrets of
the Company or an Affiliate, or (b) participated, engaged in or had a material,
financial or other interest, whether as an employee, officer, director,
consultant, contractor, stockholder, owner, or otherwise, in any commercial
endeavor in the United States which is competitive with the business of the
Company or an Affiliate without the written consent of the Company or
Affiliate, the Holder shall forfeit all outstanding Options and all outstanding
Awards, and including all exercised Options and other situations pursuant to
which the Company has not yet delivered a stock certificate. Clause (b) shall
not be deemed to have been violated solely by reason of the Holder’s ownership
of stock or securities of any publicly owned corporation, if that ownership
does not result in effective control of the corporation.



     The decision of the Committee as to the cause of the Holder’s discharge,
the damage done to the Company or an Affiliate, and the extent of the Holder’s
competitive activity shall be final. No decision of the Committee, however,
shall affect the finality of the discharge of the Holder by the Company or an
Affiliate in any manner.



     9.4 Tax Withholding. The Company or any Affiliate shall be entitled to deduct
from other compensation payable to each Holder any sums required by federal,
state, or local tax law to be withheld with respect to the grant or exercise of
an Option, or lapse of restrictions on Restricted Stock. In the alternative,
the Company may require the Holder of an Award to pay such sums for taxes
directly to the Company or any Affiliate in cash or by check within ten days
after the date of exercise or lapse of restrictions. In the discretion of the
Committee, a Holder may use shares of Stock received by the Holder upon the
exercise of a Nonqualified Option to satisfy any required tax



17









 





withholding obligations of the Company or an Affiliate that result from the exercise. The Committee may, in
its discretion, permit a Holder to satisfy any tax withholding obligations
arising upon the vesting of Restricted Stock by delivering to the Holder of the
Restricted Stock Award a reduced number of shares of Stock in the manner
specified herein. If permitted by the Committee and acceptable to the Holder,
at the time of vesting of shares of Restricted Stock, the Company shall (i)
calculate the amount of withholding tax due on the assumption that all such
vested shares of Restricted Stock are made available for delivery, (ii) reduce
the number of such shares made available for delivery so that the Fair Market
Value of the shares withheld on the vesting date approximates the amount of tax
the Company is obliged to withhold and (iii) in lieu of the withheld shares,
remit cash to the United States Treasury and other applicable governmental
authorities, on behalf of the Holder, in the amount of the withholding tax due.
The Company shall withhold only whole shares of Stock to satisfy its
withholding obligation. Where the Fair Market Value of the withheld shares
does not equal the Company’s withholding tax obligation, the Company shall
withhold shares with a Fair Market Value slightly in excess of the amount of
its withholding obligation and shall remit the excess cash to the Holder of the
Restricted Stock Award with the shares of Stock made available for delivery.
The withheld shares of Restricted Stock not made available for delivery by the
Company shall be retained as treasury stock or will be cancelled and, in either
case, the Holder’s right, title and interest in such Restricted Stock shall
terminate. The Company shall have no obligation upon exercise of any Option or
lapse of restrictions on Restricted Stock until the Company or an Affiliate has
received payment sufficient to cover all tax withholding amounts due with
respect to that exercise. Neither the Company nor any Affiliate shall be
obligated to advise a Holder of the existence of the tax or the amount which it
will be required to withhold.



     9.5 Written Agreement. Each Award shall be embodied in a written agreement
(“Award Agreement”) which shall be subject to the terms and conditions of the
Plan and shall be accepted by the Holder either electronically or by signature
as established by the Committee and communicated to the Holder from time to
time. The agreement may contain any other provisions that the Committee in its
discretion shall deem advisable which are not inconsistent with the terms of
the Plan.



     9.6 Indemnification of the Committee and the Board. With respect to
administration of the Plan, the Company shall indemnify each present and future
member of the Committee and the Board against, and each member of the Committee
and the Board shall be entitled without further act on his part to indemnity
from the Company for, all expenses (including attorney’s fees, the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by reason of his being
or having been a member of the Committee and/or the Board, whether or not he
continues to be a member of the Committee and/or the Board at the time of
incurring the expenses — including, without limitation, matters as to which he
shall be finally adjudged in any action, suit or proceeding to have been found
to have been negligent in the performance of his duty as a member of the
Committee or the Board. However, this indemnity shall not include any expenses
incurred by any member of the Committee and/or the Board in respect of



18









 





matters as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance
of his duty as a member of the Committee and the Board. In
addition, no right of indemnification under the Plan shall be available to or
enforceable by any member of the Committee and the Board unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each member of the Committee and the
Board and shall be in addition to all other rights to which a member of the
Committee and the Board may be entitled as a matter of law, contract, or
otherwise.



     9.7 Gender. If the context requires, words of one gender when used in the Plan
shall include the other and words used in the singular or plural shall include
the other.



     9.8 Headings. Headings of Articles and Sections are included for convenience
of reference only and do not constitute part of the Plan and shall not be used
in construing the terms of the Plan.



     9.9 Other Compensation Plans. The adoption of the Plan shall not affect any
other stock option, incentive or other compensation or benefit plans in effect
for the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
of the Company or any Affiliate.



     9.10 Other Options or Awards. The grant of an Award shall not confer upon the
Holder the right to receive any future or other Awards under the Plan, whether
or not Awards may be granted to similarly situated Holders, or the right to
receive future Awards upon the same terms or conditions as previously granted.



     9.11 Governing Law. The provisions of the Plan shall be construed,
administered, and governed under the laws of the State of Texas.




19