Document:

exv4w6

 

EXHIBIT 4.6

SECOND AMENDED AND RESTATED

ILEX ONCOLOGY, INC.

1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

     1. Purpose. This 1996 Non-Employee Director Stock Option Plan (the
“Plan”) of ILEX Oncology, Inc., a Delaware corporation (the “Company”), is
adopted for the benefit of the directors of the Company who at the time of
their service are not employees or consultants of the Company or any of its
subsidiaries (“Non-Employee Directors”), and is intended to advance the
interests of the Company by providing the Non-Employee Directors with
additional incentive to serve the Company by increasing their proprietary
interest in the success of the Company.

     2. Administration. The Plan shall be administered by the Board of
Directors of the Company (the “Board”). For the purposes of the Plan, a
majority of the members of the Board shall constitute a quorum for the
transaction of business, and the vote of a majority of those members present at
any meeting shall decide any question brought before that meeting. In
addition, the Board may take any action otherwise proper under the Plan by the
affirmative vote, taken without a meeting, of a majority of its members. No
member of the Board shall be liable for any act or omission of any other member
of the Board or for any act or omission on his own part, including but not
limited to the exercise of any power or discretion given to him under the Plan,
except those resulting from his own gross negligence or willful misconduct.
Except as otherwise expressly provided for herein, all questions of
interpretation and application of the Plan, or as to options granted hereunder
(the “Options”), shall be subject to the determination, which shall be final
and binding, of a majority of the whole Board.

     3. Option Shares. The stock subject to the Options and other provisions
of the Plan shall be shares of the Company’s Common Stock, $.01 par value (or
such other par value as may be designated by act of the Company’s stockholders)
(the “Common Stock”). The total amount of the Common Stock with respect to
which Options may be granted shall not exceed in the aggregate 225,000 shares;
provided, that the class and aggregate number of shares which may be subject to
the Options granted hereunder shall be subject to adjustment in accordance with
the provisions of Paragraph 12 hereof. Such shares may be treasury shares or
authorized but unissued shares.

     In the event that any outstanding Option for any reason shall expire or
terminate by reason of the death of the optionee or the fact that the optionee
ceases to be a director, the surrender of any such Option, or any other cause,
the shares of Common Stock allocable to the unexercised portion of such Option
may again be subject to an Option under the Plan.

     4. Grant of Options. Subject to the provisions of Paragraph 16 and the
availability under the Plan of a sufficient number of shares of Common Stock
that may be issuable upon the exercise of outstanding Options, there shall be
granted to each Non-Employee Director as of the date he is first elected as a
director of the Company, an Option to purchase 17,500 shares of Common Stock at
a purchase price per share of Common Stock (the “Option Price”) equal to the
fair market value of the Common Stock as defined in Paragraph 7 hereof as of
the date of grant. In addition to the Options automatically granted under this
Section 4 of the Plan, the Board may grant Options at any time during the term
of the Plan to any Non-Employee Director, subject only to the applicable
limitations set forth in this Plan and applicable law.

 

 

No Option shall be granted pursuant to the Plan after October 18, 2006.

     5. Duration of Options. Each Option granted under the Plan shall be
exercisable for a term of ten years from the date of grant, subject to earlier
termination as provided in Paragraph 9 hereof.

     6. Amount Exercisable. Unless otherwise determined by the Board, all
Options granted pursuant to the Plan shall vest and become exercisable as
follows:

	 	(a)	 	Beginning on the last day of the calendar month following the
calendar month of the date of grant, an Option may be exercised for
up to one-forty-eighth of the shares subject to the Option;
	 
	 	(b)	 	On the last day of each succeeding calendar month, the Option
may be exercised for up to an additional one-forty-eighth of the shares subject to the Option, so that after the expiration of the
last day of the forty-eighth calendar month following the calendar
month of grant, the Option shall be exercisable in full; and
	 
	 	(c)	 	To the extent not exercised, installments shall be cumulative
and may be exercised in whole or in part until the Option expires on
the tenth anniversary of the date of grant.

     Notwithstanding anything to the contrary in the Plan, this Option will
become exercisable in full upon a “change in control.” For purposes of this
Section, a “change in control” shall arise if, at any time while the Optionee
is a member of the Company’s Board of Directors any one or more of the
following events occurs:

          (i) The Company is merged, consolidated or reorganized into or
with another corporation, or other entity and, as a result thereof,
less than 50% of the outstanding stock or other capital interests
of the surviving, resulting or acquiring corporation, person, or
other entity is owned, in the aggregate, by the stockholder or
stockholders of the Company immediately prior to such merger,
consolidation or reorganization; or

          (ii) The Company sells all or substantially all of its
business or assets (or both) to any other corporation, person, or
other entity, less than 50% of the outstanding, voting stock or
other capital interests of which are owned, in the aggregate, by
the stockholders of the Company, directly or indirectly,
immediately prior to or after such sale.

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     7. Exercise of Options. An optionee may exercise such optionee’s Option
by delivering to the Company a written notice stating (i) that such optionee
wishes to exercise such Option on the date such notice is so delivered, (ii)
the number of shares of stock with respect to which such Option is to be
exercised, (iii) the address to which the certificate representing such shares
of stock should be mailed, and (iv) the social security number of such
optionee. In order to be effective, such written notice shall be accompanied
by (i) payment of the Option Price of such shares of stock and (ii) if
applicable, payment of an amount of money necessary to satisfy any withholding
tax liability that may result from the exercise of such Option. Each such
payment shall be made by cashier’s check drawn on a national banking
association and payable to the order of the Company in United States dollars.

     If, at the time of receipt by the Company of such written notice, (i) the
Company has unrestricted surplus in an amount not less than the Option Price of
such shares of stock, (ii) all accrued cumulative preferential dividends and
other current preferential dividends on all outstanding shares of preferred
stock of the Company have been fully paid and (iii) the acquisition by the
Company of its own shares of stock for the purpose of enabling such optionee to
exercise such Option is otherwise permitted by applicable law and without any
vote or consent of any stockholder of the Company, then such optionee may
deliver to the Company, in payment of the Option Price of the shares of stock
with respect to which such Option is exercised, (x) certificates registered in
the name of such optionee that represent a number of shares of stock legally
and beneficially owned by such optionee (free of all liens, claims and
encumbrances of every kind) and having a fair market value on the date of
receipt by the Company of such written notice that is not greater than the
Option Price of the shares of stock with respect to which such Option is to be
exercised, such certificates to be accompanied by stock powers duly endorsed in
blank by the record holder of the shares of stock represented by such
certificates, with the signature of such record holder guaranteed by a national
banking association (or, in lieu of such certificates, other arrangements for
the transfer of such shares to the Company which are satisfactory to the
Company) and (y) if the Option Price of the shares of stock with respect to
which such Options are to be exercised exceeds such fair market value, a
cashier’s check drawn on a national banking association and payable to the
order of the Company in an amount, in United States dollars, equal to the
amount of such excess plus the amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Notwithstanding the provisions of the immediately preceding sentence, the
Board, in its sole discretion, may refuse to accept shares of stock in payment
of the Option Price of the shares of stock with respect to which such Option is
to be exercised and, in that event, any certificates representing shares of
stock that were received by the Company with such written notice shall be
returned to such optionee, together with notice by the Company to such optionee
of the refusal of the Board to accept such shares of stock. The Company may,
at its option and upon approval by the Board of Directors of the Company,
retain shares of Common Stock which would otherwise be issued upon exercise of
an Option to satisfy any withholding tax liability that may result from the
exercise of such Option, which shares shall be valued for such purpose at their
then fair market value. If, at the expiration of seven business days after the
delivery to such optionee of such written notice from the Company, such
optionee shall not have delivered to the Company a cashier’s check drawn on a
national banking association and payable to the order of the Company in an
amount, in United States dollars, equal to the Option Price of the shares of
stock with respect to which such Option is to be exercised, such written notice
from the optionee to the Company shall be ineffective to exercise such Option.

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     As promptly as practicable after the receipt by the Company of (i) such
written notice from the optionee, (ii) payment, in the form required by the
foregoing provisions of this Paragraph 7, of the Option Price of the shares of
stock with respect to which such Option is to be exercised, and (iii) payment,
if required, in the form required by the foregoing provisions of this Paragraph
7, of an amount necessary to satisfy any withholding tax liability that may
result from the exercise of such Option, a certificate representing the number
of shares of stock with respect to which such Option has been so exercised,
reduced, to the extent applicable by the number of shares retained by the
Company to pay any required withholding tax, such certificate to be registered
in the name of such optionee, provided that such delivery shall be considered
to have been made when such certificate shall have been mailed, postage
prepaid, to such optionee at the address specified for such purpose in such
written notice from the optionee to the Company.

     For purposes of this Paragraph 7, the “fair market value” of a share of
stock as of any particular date shall mean the closing sale price of a share of
Common Stock on that date as reported by the principal national securities
exchange on which the Common Stock is listed if the Common Stock is then listed
on a national securities exchange, or if the Common Stock is not so listed, the
closing sale price of a share of Common Stock on that date and reported in the
National Association of Securities Dealers Automated Quotation system (the
“NASDAQ System”); provided that if no such closing price or quotes are so
reported on that date or if in the discretion of the Board another means of
determining the fair market value of a share of stock at such date shall be
necessary or advisable, the Board may provide for another means for determining
such fair market value, including a determination in good faith by the Board of
the fair market value as of the date of grant.

     8. Transferability of Options. Options shall not be transferable by the
optionee otherwise than by will or under the laws of descent and distribution,
and shall be exercisable, during his lifetime, only by him.

     9. Termination. Except as may be otherwise expressly provided herein,
each Option, to the extent it shall not previously have been exercised, shall
terminate on the earlier of the following:

	 	(a)	 	On the last day within the three month period commencing on
the date on which the optionee ceases to be a member of the
Company’s Board of Directors, for any reason other than the death,
disability or retirement of the optionee, during which period the
optionee shall be entitled to exercise all Options fully vested as
described in Paragraph 6 by the optionee on the date on which the
optionee ceased be a member of the Company’s Board of Directors;
	 
	 	(b)	 	On the last day within the one year period commencing on the
date on which the optionee ceases to be a member of the Company’s
Board of Directors because of permanent disability, during which
period the optionee shall be entitled to exercise all Options fully
vested as described in Paragraph 6 by the optionee on the date on
which the optionee ceased to be a member of the Company’s Board of
Directors because of such disability;
	 
	 	(c)	 	On the last day within the one year period commencing on the
date of the optionee’s death while serving as a member of the
Company’s Board of Directors, during which

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	 	 	 	period the executor or
administrator of the optionee’s estate or the person or persons to whom the optionee’s Option shall have been transferred by will
or the laws of descent or distribution, shall be entitled to
exercise all Options in respect of the number of shares that the
optionee would have been entitled to purchase had the optionee
exercised such Options on the date of his death;
	 
	 	(d)	 	On the last day within the one year period commencing on the
date an optionee retires from the Board of Directors of the Company
in accordance with the Company’s retirement policy, during which
period the optionee, or the executor or administrator of the
optionee’s estate or the person or persons to whom such Option shall
have been transferred by the will or the laws of descent or
distribution in the event of the optionee’s death within such one
year period, as the case may be, shall be entitled to exercise all
Options in respect of the number of shares that the optionee would
have been entitled to purchase had the optionee exercised such
Options on the date of such retirement; and
	 
	 	(e)	 	Ten years after the date of grant of such Option.

     10. Requirements of Law. The Company shall not be required to sell or
issue any shares under any Option if the issuance of such shares shall
constitute a violation by the optionee or the Company of any provisions of any
law or regulation of any governmental authority. Each Option granted under the
Plan shall be subject to the requirements that, if at any time the Board of
Directors of the Company or the Board shall determine that the listing,
registration or qualification of the shares subject thereto upon any securities
exchange or under any state or federal law of the United States or of any other
country or governmental subdivision thereof, or the consent or approval of any
governmental regulatory body, or investment or other representations, are
necessary or desirable in connection with the issue or purchase of shares
subject thereto, no such Option may be exercised in whole or in part unless
such listing, registration, qualification, consent, approval or representation
shall have been effected or obtained free of any conditions not acceptable to
the Board of Directors. If required at any time by the Board of Directors or
the Board, an Option may not be exercised until the optionee has delivered an
investment letter to the Company. In addition, specifically in connection with
the Securities Act of 1933 (as now in effect or hereafter amended), upon
exercise of any Option, the Company shall not be required to issue the
underlying shares unless the Board has received evidence satisfactory to it to
the effect that the holder of such Option will not transfer such shares except
pursuant to a registration statement in effect under such Act or unless an
opinion of counsel satisfactory to the Company has been received by the Board
to the effect that such registration is not required. Any determination in
this connection by the Board shall be final, binding and conclusive. In the
event the shares issuable on exercise of an Option are not registered under the
Securities Act of 1933, the Company may imprint on the certificate for such
shares the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of 1933:

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   “The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the
securities laws of any state and may not be sold or transferred
except upon such registration or upon receipt by the Corporation
of an opinion of counsel satisfactory, in form and substance to
the Corporation, that registration is not required for such sale
or transfer.”

The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) and, in the event any shares are so registered, the Company
may remove any legend on certificates representing such shares. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or the issuance of shares pursuant thereto to comply
with any law or regulation of any governmental authority.

     11. No Rights as Stockholder. No optionee shall have rights as a
stockholder with respect to shares covered by his Option until the date of
issuance of a stock certificate for such shares; and, except as otherwise
provided in Paragraph 12 hereof, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date of issuance of
such certificate.

     12. Changes in the Company’s Capital Structure. 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

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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 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.

     13. Amendment or Termination of Plan. 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 of the Securities Exchange Act of 1934, as amended,
(ii) any rules for listed companies promulgated by any national stock exchange
on which the Company’s Common Stock is traded or (iii) 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.

     14. Written Agreement. Each Option granted hereunder shall be embodied in
a written option agreement, which shall be subject to the terms and conditions
prescribed above, and shall be signed by the optionee and by the appropriate
officer of the Company for and in the name and on behalf of the Company. Such
an option agreement shall contain such other provisions as the Board in its
discretion shall deem advisable.

     15. Indemnification of Board. The Company shall indemnify each present
and future member of the Board against, and each member of the Board shall be
entitled without further act on his part to indemnity from the Company for, all
expenses (including 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 Board,
whether or not he continues to be such member of the Board at the time of
incurring such expenses; provided, however, that such indemnity shall not
include any expenses incurred by any such member of the Board (a) in respect of
matters as to which he shall be finally adjudged in any such action, suit or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his duty as such member of the Board, or (b) in respect of any
matter in which any settlement is effected, to an amount in excess of the
amount approved by the Company on the advice of its legal counsel; and provided
further, that no right of indemnification under the provisions set forth herein
shall be available to or enforceable by any such member of the Board unless,
within sixty (60) days after institution of any such action, suit or
proceeding, he shall have offered the Company, in writing, the opportunity to
handle and defend same at its own expense. The foregoing right of
indemnification shall inure to the benefit of the heirs, executors or

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administrators of each such member of the Board and shall be in addition
to all other rights to which such member of the Board may be entitled to as a
matter of law, contract, or otherwise. Nothing in this Section 15 shall be
construed to limit or otherwise affect any right to indemnification, or payment
of expense, or any provisions limiting the liability of any officer or director
of the Company or any member of the Board, provided by law, the Certificate of
Incorporation of the Company or otherwise.

     16. Effective Date of Plan. This Plan shall be deemed to have been
adopted and effective on October 18, 1996; provided, however, that if the
Company has not completed an underwritten public offering of its Common Stock
on or before April 30, 1997, this Plan and all Options granted hereunder shall
automatically terminate.

8exv4w7

 

EXHIBIT 4.7

ILEX ONCOLOGY, INC.

2000 EMPLOYEE STOCK COMPENSATION PLAN

(effective April 1, 2000)

 

     ILEX ONCOLOGY, INC.

2000 EMPLOYEE STOCK COMPENSATION PLAN

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Section

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

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

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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.

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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,

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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.

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     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.

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     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.

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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.

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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.

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

     4.5 Recapitalization or Reorganization of the Company.

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

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

8

 

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

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

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

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

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

9

 

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

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

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

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

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

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

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ARTICLE V

OPTIONS

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

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

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

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

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

11

 

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

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

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

     5.6 Exercise on Termination of Employment.

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

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

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

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

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

12

 

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

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

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

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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.

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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.

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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.

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ARTICLE IX

MISCELLANEOUS

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

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

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

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

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

17

 

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

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

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

18

 

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

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

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

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

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

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

19

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