Document:

EXHIBIT 10.38

                 2000 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
                                       OF
                           TELSCAPE INTERNATIONAL, INC

                          (Effective January 31, 2000)

1.    PURPOSE OF THE PLAN.

      This Nonemployee Director Stock Option Plan (the "PLAN") is intended as an
incentive to retain as independent directors on the Board of Directors of
Telscape International, Inc. (the "COMPANY"), persons of training, experience
and ability, to attract new directors whose services are considered unusually
valuable, to encourage the sense of proprietorship of such persons, and to
stimulate the active interest of such persons in the development and financial
success of the Company. It is further intended that the options issued pursuant
to this Plan NOT qualify as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "CODE").

2.    SHAREHOLDER APPROVAL.

      All Options granted under this Plan are subject to, and may not be
exercised before, the approval of the Plan by the affirmative votes of the
holders of a majority of the outstanding shares of the Company entitled to vote
thereon; and, FURTHER PROVIDED, that if such shareholder approval is not
forthcoming within one year of the date of adoption of this Plan, all Options
previously granted shall be void.

3.    DESIGNATION OF PARTICIPANTS; GRANT OF OPTIONS.

      Each Director of the Company ("DIRECTOR") who is not otherwise an employee
of the Company or of any Parent or Subsidiary ("OPTIONEE") shall be granted
Options as described hereunder. Provided there are then sufficient shares of
Stock available for grant hereunder, each Optionee shall automatically be
granted Options to purchase 100,000 shares (subject to adjustment as provided in
Paragraph 9) of the Company's common stock, $.00001 par value per share
("STOCK") on the date the Director becomes a Director of the Company. Such
grants shall vest in equal installments on each of four anniversaries of the
grant date thereof if the Optionee has served as director of the Company for the
entire preceding fiscal year.

4.    STOCK RESERVED FOR THE PLAN.

      Subject to adjustment as provided in Paragraph 9 hereof, a total of
500,000 shares of Stock of the Company shall be subject to the Plan. The shares
of Stock subject to the Plan shall consist of unissued shares or previously
issued shares reacquired and held by the Company, or any Parent or Subsidiary of
the Company, and such amount of shares shall be and is hereby reserved for sale
for such purpose. Any of such shares which may remain unsold and which are not
subject to outstanding Options at the termination of the Plan shall cease to be
reserved for the purpose of the Plan, but until termination of the Plan the
Company shall at all times reserve a sufficient number of shares to meet the
requirements of the Plan. Should any Option expire or be canceled prior to its
exercise in full, the shares theretofore subject to such Option, to the extent
it had not been exercised, may again be subjected to an Option under the Plan.
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5.    OPTION PRICE.

      (a) The purchase price of each share of Stock subject to an Option under
this Plan shall be 100% of the fair market value of such share on the date the
Option is granted.

      (b) The fair market value of a share on a particular date shall be deemed
to be (i) in the event the Stock is listed on the New York Stock Exchange, the
mean between the highest and lowest sales prices per share of the Stock on the
New York Stock Exchange (Composite Tape) on the date, or, if there shall have
been no sale on that date, on the last preceding date on which such a sale or
sales were so reported (the "SALE DATE"), or (ii) if the Stock is traded in the
over-the-counter market, the mean between the highest closing bid and lowest
closing asked price for the Stock as reported by the National Association of
Securities Dealers NASDAQ System on the Sale Date, or if not reported by such
System the mean between the closing bid and asked price on the Sale Date as
quoted by such quotation source as shall be designated by the Committee.

6.    OPTION PERIOD.

      Options granted under this Plan shall terminate and be of no force and
effect with respect to any shares not previously taken up by the Optionee upon
the earliest to occur of the following: (a) the expiration of ten (10) years
from the date of granting of each Option; (b) one year after the Optionee ceases
to be a Director by reason of death or disability of the Optionee; or (c) three
months after the Optionee ceases to be a Director for any reason other than
death or disability.

7.    EXERCISE OF OPTIONS.

      (a) The Options granted hereunder shall not be exercisable by the Optionee
until the completion of one (1) year of service as a Director following the date
of grant of such Option. Once available for purchase in accordance with the
foregoing, unpurchased shares shall remain subject to purchase until the Option
terminates in accordance with Paragraph 6 hereof.

      (b) Options may be exercised solely by the Optionee during his lifetime
or, after his death, by the person or persons entitled thereto under his will or
the laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder.

      (c) In the event of cessation of service as a Director for any reason
other than death or disability, Options may be exercised only with respect to
the number of shares vested and purchasable at the time of such cessation.

      (d) In the event or of the death or disability of the an Optionee while in
service as a Director and while Options granted hereunder to such Optionee are
still in force and unexpired under the terms of Paragraph 6 hereof, any unvested
installments of the Options shall be accelerated. Such acceleration shall be
effective as of the date of such Optionee's death or disability. The Options
outstanding in the name of a deceased Optionee shall thereupon be exercisable in
full without regard to any installment vesting provisions.

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      (e) The purchase price of the shares as to which an option is exercised
shall be paid in full at the time of the exercises. Such purchase price shall be
payable in cash, or at the option of the holder of such Option, in Stock
theretofore owned by such holder (or any combination of cash and such Stock).
For purposes of determining the amount, if any, of the purchase price satisfied
by payment in Stock, such Stock shall be valued at its fair market value on the
date of exercise in accordance with subparagraph (b) of Paragraph 5. Any Stock
delivered in satisfaction of all or a portion of the purchase price shall be
appropriately endorsed for transfer and assignment to the Company. No holder of
an Option shall be, or have any of the rights or privileges of, a shareholder of
the Company in respect of any shares purchasable upon the exercise of any part
of an option unless and until certificates representing such shares shall have
been issued by the Company to such holders.

8.    ASSIGNABILITY.

      No Option shall be assignable or otherwise transferable except by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder.

9.    CAPITAL CHANGE OF THE COMPANY; CERTAIN CORPORATE TRANSACTIONS.

      (a) The existence of this Plan and Options granted hereunder shall not
affect in any way the right or power of the Company or its shareholders 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 stocks ahead of or affecting the Company's Stock or the rights
thereof, or the dissolution or liquidation or the Company, or any sale or
transfer of all or any part or its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

      (b) The shares with respect to which Options may be granted hereunder are
shares of the Stock of the Company as presently constituted. If, and whenever,
prior to the delivery by the Company of all of the shares of the Stock which are
subject to Options granted hereunder, the Company shall effect a subdivision or
consolidation or shares or other capital readjustment, the payment of a stock
dividend, a stock split, combination of shares or recapitalization or other
increase or reduction or the number of shares or the Stock outstanding without
receiving compensation therefor in money, services or property, the number of
shares of Stock available under the Plan and the number of shares of Stock with
respect to which Options granted hereunder may thereafter be exercised shall (i)
in the event of an increase in the number of outstanding shares, be
proportionately increased and the cash consideration payable per share shall be
proportionately reduced; and (ii) in the event of a reduction in the number of
outstanding shares, be proportionately reduced, and the cash consideration
payable per share shall be proportionately increased.

      (c) If the Company is reorganized, or merged or consolidated or party to a
plan of exchange with another corporation pursuant to which reorganization,
merger, consolidation, or plan of exchange, stockholders of the Company receive
any shares of Stock or other securities or if the Company shall distribute
("SPIN OFF") securities of another corporation or entity to its shareholders,

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there shall be substituted for the shares subject to the unexercised portions of
outstanding Options an appropriate number of shares of (i) each class of stock
or other securities which were distributed to the shareholders of the Company in
respect of such shares in the case of a reorganization, merger, consolidation,
or plan of exchange, or (ii) in the case of a Spin Off, the securities
distributed to shareholders of the Company together with shares of Stock;
provided, however, that all such Options may be canceled by the Company as of
the effective date of (x) a reorganization, merger, consolidation, plan of
exchange or Spin Off or (v) any dissolution or liquidation of the Company, by
giving notice to each holder thereof or his personal representative of its
intention to do so and by permitting the purchase for a period of approximately
thirty days during the sixty days next preceding such effective date of all of
the shares subject to such outstanding Options, without regard to the
installment provisions set forth in the option agreement.

      (d) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock or
any class, or cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Stock subject to Options
granted hereunder.

10.   TAXES.

      The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
Options granted under the Plan.

11.   EFFECTIVE DATE OF PLAN.

      The Plan shall be effective as of January 31, 2000. This Plan and any
options granted pursuant hereto shall be subject to the approval of the
stockholders of the Company in accordance with the provisions of Rule 16b-3 and
the applicable rules and regulations of the National Securities Dealers
Association, Inc., or any national exchange which are applicable to the Stock of
the Company.

12.   AMENDMENTS OR TERMINATION.

      The Board of Directors may amend, alter or discontinue the Plan, except
that no amendment or alteration shall be made which would impair the rights of
any Optionee under any Option theretofore granted, without his consent, and
except that no amendment or alteration shall be made which, without the approval
of the shareholders, would:

            (a) Increase the total number of shares reserved for the purposes of
      the Plan, except as is provided in Paragraph 9 of the Plan, or decrease
      the option price provided for in Paragraph 5, or change the designation of
      the class or persons eligible to participate in the Plan as provided in
      Paragraph 3; or

            (b) Increase or decrease the number of shares subject to Option or
      the schedule of grants provided for in Paragraph 3; or

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            (c) Extend the option period provided for in Paragraph 6; or

            (d) Materially increase the benefits accruing to Optionee under the
                Plan;

and; provided further, that provisions hereof relating to the amount of
securities to be awarded, the exercise price of Options awarded hereunder, the
timing of awards of Options and the exercise thereof or any formula incorporated
herein which relates to any of the foregoing shall not be amended more than once
every six months, other than to comport with changes in the Code or the Employee
Retirement Income Security Act, or the rules thereunder.

13.   GOVERNMENT REGULATIONS.

      The Plan, and the granting and exercise of Options thereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.

                                       5EXHIBIT 10.39

                          TELSCAPE INTERNATIONAL, INC.
                            2000 PAY FOR PERFORMANCE
                                STOCK OPTION PLAN

   1. PURPOSE OF THE PLAN. The purposes of this Stock Option Plan are to attract
and retain the best available personnel for positions at the Company, to provide
additional incentive to such individuals, to reward such individuals for
exemplary service and to promote the success of the Company's business by
aligning employee financial interests with attainment of performance goals.
Options granted hereunder may be either Incentive Stock Options or Nonqualified
Stock Options, at the discretion of the Board and as reflected in the terms of
the written option agreement.

   2. DEFINITIONS.  As used herein, the following definitions shall apply:

   (a) "BOARD" shall mean the Committee, if the Committee has been appointed, or
the Board of Directors of the Company, if the Committee has not been appointed.

   (b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

   (c) "COMMITTEE" shall mean the Compensation Committee appointed by the Board
of Directors in accordance with Section 4(a) of the Plan, if one is appointed.

   (d) "COMMON SHARES" shall mean the $.00001 par value per share common capital
stock of the Company.

   (e) "COMPANY" shall mean Telscape International, Inc., a Texas corporation,
and any successor thereto.

   (f) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of any leave of absence
authorized in writing by the Company prior to its commencement.

   (g) "EMPLOYEE" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
Notwithstanding the foregoing, for purposes of any Incentive Stock Option
granted hereunder, "Employee" includes only employees within the meaning of
Section 422 of the Code.

   (h) "INCENTIVE STOCK OPTION" shall mean any option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

   (i) "NONQUALIFIED STOCK OPTION" shall mean an option not intended to qualify
as an Incentive Stock Option.

   (j) "OPTION" shall mean a stock option granted pursuant to the Plan and
represented by a written option agreement.

   (k) "OPTIONED SHARES" shall mean the Common Shares subject to an Option.
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   (l) "OPTIONEE" shall mean an Employee who receives an Option.

   (m) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

   (n) "PLAN" shall mean this Telscape International, Inc. 2000 Pay for
Performance Stock Option Plan, including any amendments hereto.

   (o) "SHARE" shall mean one Common Share, as adjusted in accordance with
Section 11 of the Plan.

   (p) "SUBSIDIARY" shall mean (i) in the case of an Incentive Stock Option, a
"subsidiary corporation," whether now or hereafter existing, as defined in
Section 424(f) of the Code, and (ii) in the case of a Nonqualified Stock Option,
in addition to a subsidiary corporation as defined in (i), a limited liability
company, partnership or other entity in which the Company controls fifty percent
(50%) or more of the voting power or equity interests.

   3. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 1,500,000 Common Shares. The Shares may be authorized, but
unissued, or reacquired Common Shares. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan.

   4. ADMINISTRATION OF THE PLAN.

   (a) PROCEDURE. The Plan shall be administered by the Board of Directors of
the Company.

      (i) The Board of Directors may appoint a Compensation Committee consisting
of not less than two members of the Board of Directors to administer the Plan on
behalf of the Board of Directors, subject to such terms and conditions as the
Board of Directors may prescribe. Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors.

      (ii) From time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, or fill
vacancies however caused.

   (b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the Board
shall have the authority, in its discretion (i) to grant Incentive Stock Options
or Nonqualified Stock Options; (ii) to determine, in accordance with Section
8(b) of the Plan, the fair market value of the Shares; (iii) to determine, in
accordance with Section 8(a) of the Plan, the exercise price per Share of
Options to be granted; (iv) to determine the Employees to whom, and the time or
times at which, Options shall be granted and the number of Shares to be
represented by each Option; (v) to interpret the Plan; (vi) to prescribe, amend,
and rescind rules and regulations relating to the Plan; (vii) to determine the
terms and provisions of each Option granted (which need not be identical and may
include, as conditions to exercise (as well as, in the case of Nonqualified
Stock Options, conditions to grant), vesting, forfeiture, performance criteria,
noncompete and such other restrictions, provisions and conditions as the Board
may determine) and, with the consent of the holder thereof, modify or amend

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each Option; (viii) to reduce the exercise price per share of outstanding and
unexercised Options; (ix) to accelerate or defer (with the consent of the
Optionee) the exercise date of any Option; (x) to authorize any person to
execute on behalf of the Company any instrument required to effectuate the grant
of an Option previously granted by the Board; and (xi) to make all other
determinations deemed necessary or advisable for the administration of the Plan.

   (c) EFFECT OF BOARD'S DECISION. All decisions, determinations, and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

   5. ELIGIBILITY.

   (a) EMPLOYEES. Options may be granted only to Employees.

   (b) TYPE OF OPTION. Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonqualified Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
fair market value of the stock with respect to which options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company and any Parent or
Subsidiary of the Company) exceeds $100,000, such options shall be treated as
Nonqualified Stock Options.

   (c) ORDERING AND TIMING. For purposes of Section 5(b), options shall be taken
into account in the order in which they were granted, and the fair market value
of stock shall be determined as of the time the option with respect to such
stock is granted.

   (d) NO DEEMED EMPLOYMENT RIGHTS. Nothing in the Plan or any Option granted
hereunder shall confer upon any Optionee any right with respect to continuation
of employment with the Company, nor shall it interfere in any way with the
Optionee's right or the Company's right to terminate the employment relationship
at any time, with or without cause.

   6. TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect until January 31, 2010, unless sooner
terminated under Section 14 of the Plan.

   7. TERM OF OPTION. The term of each Option shall be no more than ten (10)
years from the date of grant. However, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns Shares
representing more than ten percent (10%) of the voting power of all classes of
shares of the Company or any Parent or Subsidiary, the term of the Option shall
be no more than five (5) years from the date of grant.

   8. EXERCISE PRICE AND CONSIDERATION.

   (a) EXERCISE PRICE. The per Share exercise price under each Option shall be
such price as is determined by the Board, subject to the following:

      (i)   In the case of an Incentive Stock Option:

            (A) granted to an Employee who, at the time of the grant of the
Incentive Stock Option, owns shares representing more than ten percent (10%) of
the voting power of all classes of

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shares of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the fair market value
per Share on the date of grant.

            (B) granted to any other Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the fair market value per
Share on the date of grant.

      (ii) In the case of a Nonqualified Stock Option, the per Share exercise
price may be less than, equal to, or greater than the fair market value per
Share on the date of grant, as determined by the Board in its discretion.

   (b) FAIR MARKET VALUE. The fair market value per Share shall be determined by
the Board in its discretion and, in the case of an Incentive Stock Option, in
accordance with Section 422 of the Code.

   (c) TYPE OF CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board at the time of grant and may consist, without
limitation, of cash, check, promissory note or "cashless exercise" based on the
equity buildup in the Option.

   (d) WITHHOLDING. Prior to issuance of the Shares upon exercise of an Option,
the Optionee shall pay any federal, state, and local withholding obligations of
the Company, if applicable.

   9. EXERCISE OF OPTION.

   (a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board at the time of grant, and as shall not violate the terms
of the Plan. An Option may not be exercised for a fraction of a Share. An Option
shall be deemed to be exercised when written notice of such exercise has been
given to the Company and all other events have occurred for exercise, all in
accordance with the terms of the Option. Payment for the Shares upon exercise of
the Option may consist of any consideration and method of payment allowable
under Section 8(c) of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the share certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Shares, notwithstanding the prior exercise of the
Option. The Company shall issue (or cause to be issued) such share certificate
promptly upon payment in full for the Shares pursuant to the terms of the
Option. In the event that the exercise of an Option is treated in part as the
exercise of an Incentive Stock Option and in part as the exercise of a
Nonqualified Stock Option pursuant to Section 5(b), the Company shall issue a
share certificate evidencing the Shares treated as acquired upon the exercise of
an Incentive Stock Option and a separate share certificate evidencing the Shares
treated as acquired upon the exercise of a Nonqualified Stock Option, and shall
identify each such certificate accordingly in its share transfer records. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the share certificate is issued, except as provided in
Section 11 of the Plan. Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

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   (b) TERMINATION OF STATUS AS EMPLOYEE. In the event of termination of an
Optionee's Continuous Status as an Employee, such Optionee may exercise Options
to the extent exercisable on the date of termination. In the case of an
Incentive Stock Option (and unless specified otherwise in the Option Agreement
in the case of a Nonqualified Stock Option), such exercise must occur within
three (3) months (or such shorter time as may be specified in the grant) after
the date of such termination (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement). To the extent
that the Optionee was not entitled to exercise the Option at the date of
termination, or does not exercise the Option within the time specified herein or
therein (whichever first occurs), the Option shall terminate.

   (c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 9(b)
above, in the event of termination of an Optionee's Continuous Status as an
Employee as a result of total and permanent disability (i.e., the inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
twelve (12) months), the Optionee may exercise the Option, but only to the
extent of the right to exercise that had accrued as of the date of termination.
In the case of an Incentive Stock Option (and unless specified otherwise in the
Option Agreement in the case of a Nonqualified Stock Option), such exercise must
occur within twelve (12) months (or such shorter time as is specified in the
grant) from the date on which the Employee ceased working as a result of the
total and permanent disability (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement). To
the extent that the Optionee was not entitled to exercise such Option within the
time specified herein or therein (whichever first occurs), the Option shall
terminate.

   (d) DEATH OF OPTIONEE. Notwithstanding the provisions of Section 9(b) above,
in the event of the death of an Optionee --

      (i) who is at the time of death an Employee of the Company, the Option may
be exercised, at any time within six (6) months following the date of death (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued as of the date of death; or

      (ii) whose Option has not yet expired but whose Continuous Status as an
Employee terminated prior to the date of death, the Option may be exercised, at
any time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of termination.

   (e) EXTENSION OF EXERCISE DATES. Notwithstanding subsections (b), (c), and
(d) above, the Board shall have the authority to extend the expiration date of
any outstanding option in circumstances in which it deems such action to be
appropriate (provided that no such extension shall extend the term of an Option
beyond the date on which the Option would have expired if no termination of the
Employee's Continuous Status as an Employee had occurred).

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   10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee; provided, however, that the
Board may permit further transferability, on a general or specific basis, and
may impose conditions and limitations on any permitted transferability.

   11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, SALE OR MERGER. Subject to
any required action by the shareholders of the Company, the number of Shares
covered by each outstanding Option, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per Share covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination, or reclassification of the Shares, or any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding, and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of any
class, or securities convertible into shares of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Option. In the event of the proposed dissolution or
liquidation of the Company, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise an Option as to all or any part of the Optioned
Shares, including Shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless such successor corporation does not agree to
assume the Option or to substitute an equivalent Option, in which case the Board
shall, to the extent required by law or otherwise as determined by the Board, in
lieu of such assumption or substitution, provide for the Optionee to have the
right to exercise the Option as to all of the Optioned Shares, including Shares
as to which the Option would not otherwise be exercisable. If the Board makes an
Option fully exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option will terminate upon the expiration of such period.

   12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Company completes the corporate action
relating to the grant of an Option and all conditions to the grant have been
satisfied, provided that conditions to the exercise of an Option shall not defer
the date of grant. Notice of a grant shall be given to each Employee to whom an
Option is so granted within a reasonable time after the determination has been
made.

   13. SUBSTITUTIONS AND ASSUMPTIONS. The Board shall have the right to
substitute or assume Options in connection with mergers, reorganizations,
separations, or other transactions to which Section 424(a) of the Code applies,
provided such substitutions and assumptions are permitted by Section 424 of the
Code and the regulations promulgated thereunder. The number of Shares reserved

                                       6
<PAGE>
pursuant to Section 3 may be increased by the corresponding number of Options
assumed and, in the case of a substitution, by the net increase in the number of
Shares subject to Options before and after the substitution.

   14. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable
(including, but not limited to, amendments which the Board deems appropriate to
enhance the Company's ability to claim deductions related to stock option
exercises); provided, however, that any increase in the number of Shares subject
to the Plan, other than in connection with an adjustment under Section 11 of the
Plan, shall require approval of or ratification by the shareholders of the
Company.

   (a) EMPLOYEES IN FOREIGN COUNTRIES. The Board shall have the authority to
adopt such modifications, procedures, and subplans as may be necessary or
desirable to comply with provisions of the laws of foreign countries in which
the Company or its Parent or Subsidiaries may operate to assure the viability of
the benefits from Options granted to Employees employed in such countries and to
meet the objectives of the Plan.

   (b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination of
the Plan shall not affect Options already granted and such Options shall remain
in full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.

   15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, any applicable state securities laws, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

   16. RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

   17. SHAREHOLDER APPROVAL. The Plan, as amended, is subject to approval by the
shareholders of the Company and shall become effective on the date of such
approval.

   18. GOVERNING LAW. The validity, construction, interpretation and effect of
this Plan shall exclusively be governed by and determined in accordance with the
laws of the State of Texas, except to the extent preempted by federal law.

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