Document:

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                                                                    EXHIBIT 10.4

                               ILEX ONCOLOGY, INC.

                             1995 STOCK OPTION PLAN

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                                TABLE OF CONTENTS

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<S>                                                                                          <C>
1.  PURPOSES OF THE PLAN...............................................................       1

2.  DEFINITIONS........................................................................       1

3.  SCOPE OF THE PLAN..................................................................       3

4.  ADMINISTRATION.....................................................................       3

5.  STOCK SUBJECT TO THE PROGRAM; ADJUSTMENTS UPON CHANGES IN CAPITALIZATION...........       4

6.  STOCK OPTIONS......................................................................       5

7.  GENERAL PROVISIONS.................................................................       9

8.  COMPLIANCE WITH OTHER LAWS AND REGULATIONS.........................................      10

9.  EFFECTIVE DATE.....................................................................      11

10. AMENDMENT OR TERMINATION OF PROGRAM................................................      11

11. APPLICABLE LAW.....................................................................      12
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                              AMENDED AND RESTATED
                               ILEX ONCOLOGY, INC.
                             1995 STOCK OPTION PLAN

1.       PURPOSES OF THE PLAN

         1.1.     The purposes of the ILEX Oncology, Inc. 1995 Stock Option Plan
are (a) to assist ILEX Oncology, Inc. in attracting and retaining in the employ
of the Company and any Subsidiaries individuals of outstanding competence, and
(b) to provide performance incentives for officers, executives, key employees of
and advisors and independent consultants to the Company and any Subsidiaries.

2.       DEFINITIONS

         Unless otherwise required by the context, the terms used in this Plan
shall have the meanings indicated in this Section 2. Except where context
indicates otherwise, the use of the masculine shall include the feminine, and
the use of the singular shall include the plural.

         "Beneficiary": As applied to a participant in the Plan, a person or
entity (including a trust or the estate of the participant) designated in
writing by the participant on such forms as the Committee may prescribe to whom
an Option may pass in the event of the death of the participant. If, at the
death of a participant, there shall not be any living person or entity in
existence so designated, the term "Beneficiary" shall mean the legal
representative of the participant's estate.

         "Board or Board of Directors": The Board of Directors of the Company.

         "Committee": The Option Committee of the Board of Directors or such
other committee as may be designated by the Board of Directors under Section 4.1
to administer the Plan.

         "Common Stock": The common stock of the Company, $.01 par value, or
such other class of shares or other securities as may be applicable in
accordance with Sections 5.1 and 5.2.

         "Company": ILEX Oncology, Inc., a Delaware corporation, its successors
and assigns.

         "Consultant": A non-employee director on the Company's Board of
Directors, or an advisor or independent consultant to the Company who, in the
opinion of the Committee, is in a position to make significant contributions to
the Company or a Subsidiary.

         "Incentive Stock Option": A form of stock option which, by specific
provision of the Internal Revenue Code of 1986, as amended, is not subject to
federal income tax at the time of its grant or exercise and is issuable only to
employees of the corporation granting the option or a parent or subsidiary of
such corporation.

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         "Key Employee": An employee of the Company or of a Subsidiary regularly
employed on a full-time basis, including an officer or director if he is such an
employee, who, in the opinion of the Committee, is in a position to make
significant contributions to the Company or a Subsidiary.

         "Market Value": As applied to a specific date and unless otherwise
specifically defined in the text of the Plan, (i) the closing sale price of the
Common Stock for such date as reported on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system (or, if no such sales were
reported for such date, on the next preceding date for which such sales were
reported), or (ii) if the price of Common Stock is not reported on the NASDAQ
system or any other national exchange, the fair market value as determined in
good faith by the Committee.

         "Option" or "Stock Option": An option to purchase shares of Common
Stock granted under Section 6.1.

         "Optionee": A Key Employee or Consultant who has received an Option or
Options under the Plan.

         "Permanent Disability": The permanent incapacity of a participant in
the Plan to perform the usual duties of his employment by reason of physical or
mental impairment. For this purpose, "Permanent Disability" shall be deemed to
exist if Optionee is unable by reason of material physical or mental impairment
to perform the duties of his regular position with the Company and is not
expected to recover from his disability within a period of six months from the
commencement of the disability. If at any time Optionee has claimed to be
permanently disabled, a physician acceptable to both Optionee and the Committee
(which acceptances shall not be unreasonably withheld) shall be retained by the
Committee and shall examine Optionee. Optionee shall cooperate fully with the
physician. If the physician determines that Optionee is permanently disabled,
the physician shall deliver to the Committee a certificate certifying both that
Optionee is permanently disabled and the date upon which the condition of
permanent disability commenced. The determination of the physician shall be
conclusive. For purposes of Options that are Incentive Stock Options, Permanent
Disability shall be interpreted in a manner that is consistent with Internal
Revenue Code Section 22(e)(3).

         "Plan": The ILEX Oncology, Inc. 1995 Stock Option Plan, as amended from
time to time.

         "Restricted Stock": Shares of Common Stock issued or transferred
subject to restrictions precluding a sale or other disposition for a period of
time (other than as specifically may be permitted) and requiring, as a condition
to retention, compliance with any other terms and conditions that may be imposed
by the Committee.

         "Retirement": The termination of a participant's employment with the
Company and its Subsidiaries due to and consistent with the retirement policies
of the Company and its Subsidiaries.

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         "Rule 16b-3": As applied on a specific date, Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934 as then in
effect or any other provision that may have replaced such Rule and be then in
effect.

         "Subsidiary": Any corporation or other form of business association of
which shares (or other ownership interests) having more than 50% of the voting
power are owned or controlled, directly or indirectly, by the Company.

         "Supplement": Rules of general application consistent with the Plan
adopted by the Committee as a supplement thereto for the administration or
implementation of the Plan or a portion thereof.

3.       SCOPE OF THE PLAN

         The Plan shall apply to the Company and to any Subsidiaries which have
not been specifically excluded by the Board of Directors.

4.       ADMINISTRATION

         4.1.     The Plan shall be administered by a committee of two or more
persons selected by the Board of Directors from its own membership who are not
employees of the Company, which shall be the Option Committee of the Board of
Directors unless another committee of the Board shall be designated by the
Board.

         4.2.     The Committee shall have full power to interpret and
administer the Plan and full authority to act in determining who shall be
participants in the Plan, the number of Options to be granted to each
participant, and the conditions, form, manner, time and terms of payment under
such Options. The interpretation by the Committee of the terms and provisions of
the Plan and the administration thereof, and all action taken by the Committee,
shall be final, binding and conclusive on the Company, its stockholders,
Subsidiaries, all participants and employees, and upon their respective
Beneficiaries, successors and assigns, and upon all other persons claiming under
or through any of them.

         4.3.     The Committee may adopt such rules, regulations and
Supplements, not inconsistent with the provisions of the Plan, as it deems
necessary (a) to determine participation in the Plan, the amount to be granted
to each participant and the conditions, form, manner, time and terms of payment
under such Options and (b) to administer the Plan, and may amend or revoke any
such rule, regulation or Supplement.

         4.4.     No member or former member of the Committee or of the
Company's Board of Directors shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted hereunder. To
the maximum extent permitted by applicable law, each member or former member of
the Committee or of the Company's Board of Directors shall be indemnified and
held harmless by the Company against any cost or expense (including reasonable
fees and expenses of counsel) or liability (including any sum paid in settlement
of a claim with the approval of the Company), arising out of any act or omission
to act in connection

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with the Plan, unless arising out of such member's or former member's own fraud
or bad faith. Such indemnification shall be in addition to any rights of
indemnification the members or former members may have as directors or under the
by-laws of the Company.

5.       STOCK SUBJECT TO THE PROGRAM; ADJUSTMENTS UPON CHANGES IN
         CAPITALIZATION

         5.1.     The aggregate number of shares of Common Stock which may be
issued or transferred under the Plan shall not exceed 1,800,000, subject to
Sections 5.2 and 6.2(l). Such shares may be authorized but unissued shares of
Common Stock, shares of treasury stock or shares purchased for the Plan under
Section 7.5.

         5.2.     The existence of outstanding Options 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 Common Stock or the rights of the Common Stock,
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 Common 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
Options under this Plan shall be appropriately adjusted in a manner as to
entitle an optionee to receive upon exercise of an Option, for the same
aggregate cash consideration, the same total number and class or classes of
shares as he would have received had he exercised his Option in full immediately
prior to the event requiring the adjustment; and (b) the number and class of
shares then reserved for issuance under this Plan shall be adjusted by
substituting for the total number and class of shares of stock then reserved for
the number and class or classes of shares of stock that would have been received
by the owner of an equal number of outstanding shares of Common Stock as the
result of the event requiring the adjustment.

         If the Company merges or consolidates with another corporation, whether
or not the Company is a surviving corporation, or if the Company is liquidated
or sells or otherwise disposes of substantially all its assets while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clause (c) below, after the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, each holder of an
outstanding Option shall be entitled, upon exercise of an Option, to receive, in
lieu of shares of Common Stock, the number and class or classes of shares of
stock or other securities or property to which the holder would have been
entitled if, immediately prior to the merger, consolidation, liquidation, sale
or other disposition, the holder had been the holder of record of a number of
shares of Common Stock equal to the number of shares as to which the Option may
be exercised.

         Except as expressly provided before in this Plan, 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

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subscribe for shares, 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 it shall be made with respect to, the number or price of shares of
Common Stock then subject to outstanding Options.

6.       STOCK OPTIONS

         6.1.     GRANTS OF OPTIONS.

         (a)      The form or forms of Options and the number of shares of
                  Common Stock to be made subject to such Options shall be
                  determined by the Committee. Any or all Options granted to Key
                  Employees under the Plan may be in the form of Incentive Stock
                  Options, as determined by the Committee. Incentive Stock
                  Options may be granted by the Committee in substitution for
                  any Stock Option heretofore or hereafter granted to Key
                  Employees under the Plan or under any prior stock option plans
                  of the Company, and such substitution shall not be deemed the
                  grant of a new or additional Option for any purpose under the
                  Plan or otherwise, to the extent permitted by applicable law.

         (b)      Subject to the adjustment provisions of Section 5.2, the
                  maximum number of shares of Common Stock which may be issued
                  or transferred to a participant subject to Stock Options in
                  any single year shall not exceed 100,000.

         (c)      Notwithstanding anything in the Plan to the contrary, the
                  aggregate Market Value (determined on the date the Option is
                  granted) of the Common Stock for which any Key Employee may be
                  granted Incentive Stock Options in the calendar year in which
                  such Options are first exercisable (under all plans of the
                  Company or any Subsidiary which provide for the granting of
                  Incentive Stock Options) shall not exceed $100,000.
                  Consultants may not be granted Incentive Stock Options.

         6.2.     OPTION PROVISIONS. Options shall be subject to the following
provisions:

         (a)      Options may be granted only to Key Employees and Consultants
                  selected by the Committee.

         (b)      The Option price per share of Common Stock shall be determined
                  by the Committee, but shall not be less than 100% of the
                  Market Value thereof on the date the Option is granted.

         (c)      The expiration date of each Option shall be established by the
                  Committee at the time the Option is granted, but such date
                  shall not be later than 10 years from the date the Option is
                  granted. Except as required with respect to Incentive Stock
                  Options under Section 422 of the Internal Revenue Code of
                  1986, as amended, the Committee may extend the term of an
                  Option which has a term of less than 10 years for a period
                  ending not later than 10 years from the date of the Option
                  grant and such extension shall not be deemed the grant of a
                  new or additional Option for any purpose under the Plan or
                  otherwise. The extension of the term of an

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                  Option shall be subject to the consent of the holder of the
                  Option and may be made at any time prior to the expiration of
                  the Option. Incentive Stock Options may not be granted more
                  than 10 years after the Plan is adopted by the stockholders of
                  the Company.

         (d)      Options may be exercised as to all or any portion of the
                  shares of Common Stock subject to the Option while the
                  original Optionee has a relationship with the Company which
                  confers eligibility to be granted Options, but not later than
                  the expiration date specified in such Option.

         (e)      Options granted to a Key Employee shall not be affected by any
                  change in the nature of the Key Employee's employment so long
                  as he continues to be employed by the Company or a Subsidiary.
                  Approved leaves of absence shall not be considered a
                  termination or interruption of full-time employment for any
                  purpose of the Plan.

         (f)      Each Option shall terminate if and when the Optionee shall
                  cease to be an employee of or advisor or consultant to the
                  Company or its Subsidiaries, except as follows (subject to the
                  provisions of the Internal Revenue Code and applicable
                  regulations of the U.S. Treasury Department concerning
                  Incentive Stock Options):

                  (i)      If an Optionee dies while an employee of the Company
                           or a Subsidiary, his Option may be exercised to the
                           extent that the Optionee could have done so at the
                           date of his death by his Beneficiary, at any time, or
                           from time to time, within one year after the date of
                           the Optionee's death but not later than the
                           expiration date specified in such Option.

                  (ii)     If an Optionee's employment by the Company or a
                           Subsidiary shall terminate because of Permanent
                           Disability, such employee may exercise his Option, to
                           the extent that he could have done so at the date of
                           his termination of employment, at any time, or from
                           time to time, within one year of such termination but
                           not later than the expiration date specified in such
                           Option.

                  (iii)    If an Optionee's employment by the Company or a
                           Subsidiary shall terminate due to Retirement, the
                           Optionee may exercise any Option to the extent that
                           he could have done so at the date of his termination
                           of employment, at any time, or from time to time,
                           within one year of such Retirement (three months in
                           the case of an Incentive Stock Option) but not later
                           than the expiration date specified in such Option.

                  (iv)     Except as provided in the following provisions of
                           this Section 6.2(f), if the Optionee's employment by
                           the Company or a Subsidiary shall terminate for any
                           reason other than death, Permanent Disability or
                           Retirement, he may exercise his Option, to the extent
                           that he could have done so at the

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                           date of his termination of employment, at any time,
                           or from time to time, within three months of the date
                           of termination of his employment but not later than
                           the expiration date specified in such Option.

                  (v)      Notwithstanding anything in the Plan to the contrary,
                           if an Optionee's employment is terminated for cause,
                           his ability to exercise such Option shall terminate
                           on the date of his termination of employment. For
                           this purpose, termination for "cause" shall include
                           termination for reason of (i) Optionee's conviction
                           for, or plea of nolo contendere to, a felony, (ii)
                           Optionee's commission of an act involving
                           self-dealing, fraud or personal profit materially
                           injurious to the Company or a Subsidiary, (iii)
                           Optionee's commission of an act of willful misconduct
                           or gross negligence in the conduct of his employment
                           duties to the Company or a Subsidiary, (iv) habitual
                           absenteeism or tardiness on the part of Optionee with
                           respect to his employment with the Company or a
                           Subsidiary, (v) Optionee's breach or violation of any
                           material internal policies or rules of the Company or
                           a Subsidiary concerning the purchase and sale of that
                           entity's common stock or other securities by
                           employees of the Company or a Subsidiary, and (vi)
                           Optionee's breach of any material provision of any
                           written employment agreement between Optionee and the
                           Company or a Subsidiary. The Committee shall
                           determine in its sole discretion whether a
                           termination was made for cause.

                  (vi)     Notwithstanding anything in the Plan to the contrary,
                           the Committee may at any time with the consent of a
                           majority of the disinterested directors of the
                           Company's Board of Directors terminate an Option if
                           it shall, in the reasonable exercise of its judgment,
                           find that the Optionee has disclosed without the
                           written consent of an authorized officer of the
                           Company, to any person not employed by or engaged to
                           render services to the Company or a Subsidiary, any
                           material confidential information of the Company or a
                           Subsidiary or has engaged in material competition
                           with the Company or any Subsidiary or in any
                           activities otherwise contrary to the best interests
                           of the Company or a Subsidiary. The right to exercise
                           the Option has been granted, and the compensation to
                           be realized in the event of exercise has been
                           provided, upon the express understanding that the
                           Optionee shall refrain from engaging in any
                           activities contrary to the best interests of the
                           Company.

         (g)      If any Optionee is not an employee of the Company or a
                  Subsidiary, but rather is a Consultant to the Company or a
                  Subsidiary, the following provisions shall apply as if the
                  Optionee were an employee of the Company or a Subsidiary:

                  (i)      Section 6.2(f)(i) shall apply if the Consultant
                           relationship terminates because of the Optionee's
                           death.

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                  (ii)     Section 6.2(f)(ii) shall apply if the Consultant
                           relationship terminates because of the Optionee's
                           Permanent Disability.

                  (iii)    Section 6.2(f)(iii) shall apply if the Consultant
                           relationship terminates because of the Optionee's
                           retirement.

                  (iv)     Section 6.2(f)(iv) shall apply if the Consultant
                           relationship terminates for any other reason than the
                           Optionee's death, Permanent Disability or retirement.

                  (v)      Notwithstanding paragraphs (f)(i) through (f)(iv),
                           above, Section 6.2(f)(v) shall apply if the
                           Consultant relationship is terminated by the Company
                           or a Subsidiary for cause.

                  (vi)     Section 6.2(f)(vi) shall apply as written.

         (h)      Subject to the provisions of Sections 6.2(c), (d), (e), (f)
                  and (g) and of the Option agreement pursuant to which an
                  Option is granted, Options may be exercised, in whole or in
                  part, at any time during the term of the Option.

         (i)      An Option shall be considered exercised under the Plan on the
                  date written notice is mailed (postage prepaid) or delivered
                  to the Secretary of the Company advising of the exercise of a
                  particular Option and transmitting payment of the Option price
                  for the shares involved, but this provision shall not preclude
                  exercise of an Option by any other proper legal method.

         (j)      Options are not transferable other than by will or by the laws
                  of descent and distribution, and during a participant's
                  lifetime are exercisable only by the Optionee or by his or her
                  guardian or legal representative.

         (k)      The Committee may place such conditions and restrictions on
                  the exercise of Options and on the transferability of shares
                  of Common Stock received upon exercise of an Option, in
                  addition to those contained herein, as it shall deem
                  appropriate and, without limiting the generality of the
                  foregoing, may provide in the Option grant that shares of
                  Common Stock issued or transferred upon exercise of the Option
                  shall be shares of Restricted Stock subject to forfeiture upon
                  failure to comply with such conditions and restrictions.

         (l)      Following the death of a participant, and upon the request of
                  the Beneficiary, the Company may at its election, (i) at any
                  time while the Option may be exercised, purchase the Option at
                  a price equal to the difference between the Market Value, on
                  the date such request is mailed (postage prepaid) or delivered
                  to the Secretary of the Company, of the shares of Common Stock
                  subject to exercise and the Option price of such shares of
                  Common Stock, or (ii) within thirty days following the
                  exercise of an Option, purchase the shares of Common Stock so
                  acquired at their Market Value on the date of exercise. The
                  number of shares of Common

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                  Stock purchased by the Company shall be considered issued and
                  transferred for purposes of Sections 5.1 and 6.2(c).

         (m)      No shares of Common Stock shall be issued or transferred upon
                  exercise of an Option until full payment therefor has been
                  made. Such payment shall be made in cash. A holder of an
                  Option shall have none of the rights of a stockholder until
                  shares of Common Stock are issued or transferred as the result
                  of the exercise of such Option. The proceeds received by the
                  Company from the sale of Common Stock pursuant to the Plan
                  shall be available for general corporate purposes.

7.       GENERAL PROVISIONS

         7.1.     Neither the adoption of the Plan nor its operation, nor any
booklet or other document describing or referring to the Plan, or any part
thereof, (a) shall confer upon any employee any right to continue in the employ
of the Company or any Subsidiary or shall in any way affect the right and power
of the Company or any Subsidiary to dismiss or otherwise terminate the
employment of any employee at any time for any reason with or without cause, or
(b) shall confer upon any advisor or consultant to the Company or any Subsidiary
any right to continue in such capacity or shall in any way affect the right of
the Company to terminate the advisory or consulting relationship at any time for
any reason with or without cause. If the Company or any Subsidiary shall
terminate the employment or advisory or consulting relationship of a participant
for any reason, whether or not for cause, neither the Company nor such
Subsidiary shall incur any liability to the participant due to the inability of
the participant by reason of such termination to exercise thereafter any Option,
to receive any grant under the Plan or to be eligible thereafter for any grant
under the Plan.

         7.2.     By accepting any benefits under the Plan, each participant and
each person claiming under or through him shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, all provisions of
the Plan and any action or decision under the Plan by the Company, the Board of
Directors or the Committee.

         7.3.     Appropriate provision shall be made for all taxes which the
Company requires to be withheld in connection with the exercise of Options,
under the laws of any governmental authority, whether Federal, state or local
and whether domestic or foreign. The Committee may in its discretion permit a
participant to elect at any time, but in no event later than six months prior to
the exercise of any Option, to have a portion of the shares subject to such
exercise withheld by the Company for the purpose of satisfying any tax
withholding under Federal, state or local tax laws.

         7.4.     No rights under the Plan shall be assignable, either
voluntarily (except as may specifically be permitted for gifts of Restricted
Stock), or involuntarily by way of encumbrance, pledge, attachment, levy or
charge of any nature (except as may be required by state or federal law).
Notwithstanding anything in the Plan to the contrary, a participant may
designate a Beneficiary to receive an Option in the event of the participant's
death.

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         7.5.     Nothing in the Plan shall require the Company or any
Subsidiary to segregate or set aside any funds or other property for the purpose
of paying Common Stock upon the exercise of Options. No participant, Beneficiary
or other person shall have any right, title or interest in any amount awarded
under the Plan prior to payment thereof, or in any property of the Company or
its Subsidiaries or affiliated corporations.

         7.6.     It is contemplated that the Company, although under no legal
obligation to do so, may from time to time purchase shares of Common Stock for
the purpose of paying an Option, or for the purpose of replacing shares issued
or transferred in payment of an Option. All shares so purchased shall, unless
and until transferred in payment of such Option, be at all times the property of
the Company available for any corporate purpose, and no participant or employee
or Beneficiary, individually or as a group, shall have any right, title or
interest in any shares of Common Stock so purchased.

         7.7.     Headings are given to the sections of the Plan solely as a
convenience to facilitate reference; neither such headings nor numbering or
paragraphing shall be deemed in any way material or relevant to the construction
of the Plan or any provision thereof.

         7.8.     The use of the masculine gender shall also include within its
meaning the feminine. The use of the singular shall include within its meaning
the plural and vice versa.

8.       COMPLIANCE WITH OTHER LAWS AND REGULATIONS

         The Plan, the grant and exercise of Options thereunder, and the
obligation of the Company to sell and deliver shares of Common Stock under such
Options, shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. If at any time the Committee shall determine in its discretion that
the listing, registration or qualification of the shares covered by the Plan
upon any national securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the sale or purchase of shares under
the Plan, no shares will be delivered unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Committee. If shares are not required to be registered, but are exempt from
registration, upon exercising all or any portion of an Option, the Company may
require each Optionee (or any person acting under Section 6.2(f)(i)), to
represent that the shares are being acquired for investment only and not with a
view to their sale or distribution, and to make such other representations
deemed appropriate by counsel to the Company. Stock certificates evidencing
unregistered shares acquired upon exercise of Options shall bear any legend
required by applicable state securities laws and a restrictive legend
substantially as follows:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
         UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
         TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION
         OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER WILL
         NOT REQUIRE REGISTRATION UNDER SUCH ACT OR UNDER THE
         SECURITIES LAWS OF ANY STATE.

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9.       EFFECTIVE DATE

         The Plan shall become effective if and when, but not until, it is
approved by the stockholders of the Company.

10.      AMENDMENT OR TERMINATION OF PROGRAM

         10.1.    The Board of Directors may at any time and from time to time
modify, revise or amend the Plan in such respects as the Board of Directors may
deem advisable in order that the Options granted hereunder may conform to any
changes in the law or in any other respect that the Board of Directors may deem
to be in the best interests of the Company; provided, however, that without
approval by the stockholders of the Company voting the proper percentage of its
voting power, no such amendment shall make any change in the Plan for which
stockholder approval is required in order to comply with (i) Rule 16b-3, (ii)
the Internal Revenue Code of 1986, as amended, or regulatory provisions dealing
with Incentive Stock Options, (iii) any rules for listed companies promulgated
by any national stock exchange on which the Company's Common Stock is traded or
(iv) any other applicable rule or law. All Options granted under the Plan shall
be subject to the terms and provisions of the Plan and any amendment,
modification or revision of the Plan shall be deemed to amend, modify or revise
all Options outstanding under the Plan at the time of the amendment,
modification or revision.

         10.2.    The Board of Directors may, by resolution adopted by a
majority of the entire Board of Directors, at any time terminate the Plan or any
portion thereof.

         10.3.    No amendment or termination of the Plan or any portion thereof
by the Board of Directors or the stockholders shall, without the consent of a
participant, adversely affect any award previously made or any Option or any
other rights previously granted to him.

11.      APPLICABLE LAW

         This Plan and all rights hereunder shall be governed, construed and
administered in accordance with the laws of the State of Texas.

                                       11<PAGE>

                                                                    EXHIBIT 10.7

                               ILEX ONCOLOGY, INC.

                      2000 EMPLOYEE STOCK COMPENSATION PLAN
                            (effective April 1, 2000)

<PAGE>

                               ILEX ONCOLOGY, INC.
                      2000 EMPLOYEE STOCK COMPENSATION PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             Section
                                                                                             -------
<S>                                                                                          <C>
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
ARTICLE III - ELIGIBILITY
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                                          <C>
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
</TABLE>

                                       ii
<PAGE>

                                    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
<PAGE>

                                   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
<PAGE>

                  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
<PAGE>

                  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
<PAGE>

                  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
<PAGE>

                                   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
<PAGE>

                                   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
<PAGE>

                  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
<PAGE>

                  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
<PAGE>

         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
<PAGE>

                                    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
<PAGE>

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
<PAGE>

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
<PAGE>

                                   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
<PAGE>

                                   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
<PAGE>

                                  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
<PAGE>

                                   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
<PAGE>

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
<PAGE>

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

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