any direct or indirect majority-owned subsidiary of the Company, then the Option shallautomatically terminate and be of no further force or effect as of the date Director ceasesto be a member of the Board;     (b) If Director shall die during the Option Period while a member of the Board (orduring the additional three-month period provided by Section 2(c) hereof), the Option may beexercised, to the extent that Director was entitled to exercise it at the date of Director’sdeath, only within one year after such death (but not beyond the Option Period), by theexecutor or administrator of the estate of Director or by the person or persons who shallhave acquired the Option directly from Director by bequest or inheritance; and     (c) If Director ceases to be a member of the Board for any reason (other than thecircumstances specified in paragraphs (a) and (b) of this Section 2) within the OptionPeriod, including the failure of the stockholders of the Company to reelect Director as adirector, the Option may be exercised, to the extent Director was able to do so at the dateof termination of the directorship, only within three months after such termination (but notbeyond the Option Period).     3. Agreement of Director. As consideration for the Company’s grant of the Option,Director agrees to continue to serve the Company as a director at the pleasure of the Company’sstockholders for a continuous period of one year from the Grant Date at the retainer rate and feeschedule, if any, in effect as of the date hereof or at such changed rate or schedule as theCompany from time to time may establish; provided, that nothing in this Agreement shall confer uponDirector any right to continue as a member of the Board.     4. Exercise of Option. Subject to the provisions of Section 2, the Option may beexercised, in whole or in part, by Director at any time or (with respect to partial exercises) fromtime to time during the Option Period and the method for exercising an Option shall be by thepersonal delivery to the Secretary of the Company of, or by the sending by United States registeredor certified mail, postage prepaid, addressed to the Company (to the attention of its Secretary),of, written notice signed by Director specifying the number of shares of Common Stock with respectto which such Option is being exercised. Such notice shall be accompanied by the full amount ofthe purchase price of such shares, in cash and/or by delivery of shares of Common Stock alreadyowned by Director having an aggregate Fair Market Value (determined as of the date of exercise)equal to the purchase price, including an actual or deemed multiple series of exchanges of suchshares. Any such notice shall be deemed to have been given on the date of receipt thereof (in thecase of personal delivery as above-stated) or on the date on which the same was deposited in aregularly maintained receptacle for the deposit of United States mail, addressed and sent asabove-stated. In addition to the foregoing, promptly after demand by the Company, Director shallpay to the Company an amount equal to applicable withholding taxes, if any, due in connection withsuch exercise. No shares of Common Stock shall be issued upon exercise of an Option until fullpayment therefor and for all applicable withholding taxes has been made, and Director shall havenone of the rights of a shareholder until shares of Common Stock are issued to Director.     5. Delivery of Certificates Upon Exercise of the Option. Delivery of a certificate orcertificates representing the purchased shares of Common Stock shall be made promptly after receiptof notice of exercise and payment of the purchase price and the amount of any withholding taxes tothe Company, if required, provided that the Company shall have such time as it reasonably deemsnecessary to qualify or register such shares under any law or governmental rule or regulation thatit deems desirable or necessary.     6. Adjustments Upon Changes in Common Stock. In the event that before delivery by theCompany of all the shares in respect of which the Option is granted, the Company shall haveeffected a Common Stock split or dividend payable in Common Stock, or the outstanding Common Stockof the Company shall have been combined into a smaller number of shares, the shares still subjectto the Option shall be increased or decreased to reflect proportionately the increase or decreasein the number of shares outstanding, and the purchase price per share shall be decreased orincreased so that the aggregate purchase price for all the then optioned shares shall remain thesame as immediately prior to such split, dividend or combination. In the event of areclassification of Common Stock not covered by the foregoing, or in the event of a liquidation,separation or reorganization, including a merger, consolidation or sale of assets, the Board shallmake such adjustments, if any, as it may deem appropriate in the number, purchase price and kind ofshares still subject to the Option.     If any “person,” as that term is defined in Section 3(a)(9) of the Securities Exchange Act of1934 (the “Exchange Act”) (other than the Company, any of its subsidiaries, any employee benefitplan of the Company or any of its subsidiaries, or any entity organized, appointed or establishedby the Company for or pursuant to the terms of such a plan), together with
 

 
all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the ExchangeAct) of such person, or any “Person” or “group” (as those terms are used in Sections 13(d) and14(d) of the Exchange Act), will become the “beneficial owner” or “beneficial owners” (as definedin Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of theCompany representing in the aggregate forty-nine percent (49%) or more of either the thenoutstanding shares of Common Stock of the Company or the voting power of the Company (a“Fundamental Change”), then immediately before and contingent upon the consummation of theFundamental Change, any portion of the Option which is not then vested and exercisable shall becomefully vested and exercisable, so that Director shall have an opportunity to exercise the Optionprior to and contingent upon the consummation of the Fundamental Change. The Company shall provideto Director at least 30 days’ notice of any pending Fundamental Change during which period Directormay elect to exercise the Option effective immediately before and contingent upon consummation ofsuch Fundamental Change.     7. Transferability. The Option evidenced hereby is not transferable otherwise than bywill or by the laws of descent and distribution or with the consent of the Board, and during thelifetime of Director is exercisable only by Director or his or her guardian or legal representativeor by transferees of the Director in such circumstance as the Board may approve.     8. Defined Terms. “Fair Market Value” of a share of Common Stock means, as of aparticular date, (i) if shares of Common Stock are listed on a national securities exchange, themean between the highest and lowest sales price per share of Common Stock on the consolidatedtransaction reporting system for the principal national securities exchange on which shares ofCommon Stock are listed on that date, or, if there shall have been no such sale so reported on thatdate, on the last preceding date on which such a sale was so reported, (ii) if the Common Stock isnot so listed, the mean between the closing bid and asked price on that date, or, if there are noquotations available for such date, on the last preceding date on which such quotations shall beavailable, as reported by the Nasdaq Stock Market, or, if not reported by the Nasdaq Stock Market,by Pink OTC Markets Inc. (or its successor, or if Pink OTC Markets Inc. or its successor does notthen exist, such over-the-counter quotation service as the Board shall determine), or (iii) ifshares of Common Stock are not publicly traded, the most recent value determined in good faith bythe Board using a “reasonable application of a reasonable valuation method” within the meaning ofTreasury Regulation Section 1.409A-1(b)(5)(iv)(B).     9. Applicable Law. All questions arising with respect to the provisions of thisAgreement shall be determined by application of the internal laws (and not the principles relatingto conflicts of laws) of the State of Texas except to the extent preempted by Federal law.     10. Entirety and Modification. This Agreement contains the entire agreement betweenthe parties hereto with respect to the subject matter hereof and supersedes any and all prioragreements, whether written or oral, between such parties relating to such subject matter. Nomodification, alteration, amendment or supplement to this Agreement shall be valid or effectiveunless the same is in writing and signed by the party against whom it is sought to be enforced.
 

 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first abovewritten.      The “Company”