Document:

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                                                                    EXHIBIT 10.1

                           FORM OF PURCHASE AGREEMENT

October 20, 2006

Lexicon Genetics Incorporated
8800 Technology Forest Place
The Woodlands, Texas 77381

Ladies and Gentlemen:

     The undersigned (the "Investor"), hereby confirms its agreement with you as
follows:

     1. This Purchase Agreement (the "Agreement") is made as of October 20, 2006
between Lexicon Genetics Incorporated, a Delaware corporation (the "Company"),
and the Investor.

     2. The Company and the Investor agree that the Investor will purchase from
the Company, severally and not jointly with the other investors, and the
Company will issue and sell to the Investor [_____] shares (the "Shares") of
common stock, par value $0.001 per share (the "Common Stock"), of the Company,
for a purchase price of $3.78 per share. The Investor acknowledges that the
offering of the Shares is not a firm commitment underwriting.

     3. The completion of the purchase and sale of the Shares (the "Closing")
shall occur on the date that the conditions for closing set forth in the
Placement Agency Agreement dated the date hereof by and among the Company, Banc
of America Securities LLC and Lazard Capital Markets LLC have been satisfied or
waived by the appropriate party or on such later date as the parties shall agree
in writing (the "time of purchase"). At the Closing, the Company shall deliver
to the Investor [, using customary book-entry procedures, the number of Shares
as set forth above in Section 2, and the Investor shall deliver, or cause to be
delivered, to the Company a Federal Funds wire transfer of immediately available
funds in the full amount of the purchase price for the Shares being purchased,
such wire transfer to be made to the Company pursuant to instructions provided
to the Investor with this Agreement.] [the number of Shares as set forth above
in Section 2 by delivery versus payment ("DVP") through DTC (i.e., the Company
shall deliver the Shares registered in the Investor's name and address as set
forth below and released by the Company's transfer agent to the Investor at the
time of purchase directly to the account(s) at BAS identified by the Investor
and simultaneously therewith payment shall be made from such account(s) to the
Company through DTC). No later than one business day after the execution of this
Agreement by the Investor and the Company, the Investor shall: (i) notify BAS of
the account or accounts at BAS to be credited with the Shares being purchased by
such Investor, and (ii) confirm that the account or accounts at BAS to be
credited with the Shares being purchased by the Investor have a minimum balance
equal to the aggregate purchase price for the Shares being purchased by the
Investor.] The Company also shall deliver to the Investor and file

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with the Securities and Exchange Commission (the "Commission") a prospectus
supplement (the "Supplement") with respect to the Registration Statement (as
defined below) reflecting the offering of the Shares in conformity with the
Securities Act (as defined below), including Rule 424(b) thereunder.

     4. The Company hereby makes the following representations, warranties and
covenants to the Investor:

     (a) The Company is agreeing to issue and sell simultaneously herewith
pursuant to the Registration Statement no less than an aggregate of 10,582,001
shares of Common Stock to purchase shares of common stock pursuant to this
Agreement and substantially identical agreements with other investors.

     (b) The Company is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the State of Delaware,
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. The Company is not in
violation of any of the provisions of its certificate of incorporation, bylaws
or other organizational or charter documents, except where such violation would
not, individually or in the aggregate, have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company or materially impair the Company's ability to perform its obligations
under the Agreement (a "Material Adverse Effect").

     (c) The Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereunder have been duly authorized by all necessary action on the
part of the Company and no further consent or action is required by the Company,
its Board of Directors or its stockholders. This Agreement has been (or upon
delivery will be) duly executed by the Company and, when delivered in accordance
with the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by any bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar law affecting the enforcement of
creditors' rights generally or by general principles of equity.

     (d) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not and will not (i) conflict with or violate any provision of the
Company's certificate of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any property or asset
of the Company is bound or affected, in each case only to the extent material to
the Company, or (iii) result in a violation of any law, rule, regulation, order,

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judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations) and the rules and regulations of any
self-regulatory organization to which the Company or its securities are subject,
or by which any property or asset of the Company is bound or affected; except in
each case, such as would not, individually or in the aggregate, have a Material
Adverse Effect.

     (e) The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement, other than (i) the
required filing of the Supplement, (ii) applicable state securities law filings,
(iii) the required filings with the Nasdaq Global Market, and (iv) in all other
cases, where the failure to obtain such consent, waiver, authorization or order,
or to give such notice or make such filing or registration would not,
individually or in the aggregate, have a Material Adverse Effect (clauses (i),
(ii), and (iii) collectively referred to as the "Required Approvals"). For
purposes of this Agreement, "Person" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

     (f) The Shares are duly authorized and, when issued, delivered and paid for
in accordance with the terms hereof, will be duly and validly issued, fully paid
and nonassessable, free and clear of all liens, encumbrances and rights of first
refusal ("Liens"). The Company has reserved a sufficient number of duly
authorized shares of Common Stock to issue all of the Shares. At the Closing,
the Shares shall have been listed for quotation on the Nasdaq Global Market. For
a period of one (1) year from the date hereof, the Company shall take such
reasonable actions necessary to maintain the Common Stock's authorization for
quotation on the Nasdaq Global Market.

     (g) The Company's Registration Statement on Form S-3 (No. 333-122214)
(including all information or documents incorporated by reference therein or
contained in the Supplement, the "Registration Statement") was declared
effective by the Commission on February 4, 2005. The Registration Statement is
effective on the date hereof and the Company has not received notice that the
Commission has issued or intends to issue a stop order with respect to the
Registration Statement or that the Commission otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened to do so. The "Plan of Distribution"
section in the Registration Statement describes the issuance and sale of the
Shares. The Registration Statement, as of the time it was declared effective,
and any amendments or supplements thereto with specific reference to the offer
and/or sale of the Shares pursuant to this Agreement, and any related prospectus
included therein, including (i) the basic prospectus included in the
Registration Statement on the date hereof and all documents incorporated therein
by reference (together with the price and amount of Shares sold as described in
paragraphs 2 and 4(a) hereof, the "Disclosure Package") and (ii) the Supplement
to be filed covering the transactions contemplated hereby, complied in all
material respects with the requirements of the Securities Act (as defined below)
and

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the Exchange Act (as defined below) and the rules and regulations of the
Commission promulgated thereunder, as applicable, and none of such Registration
Statement, the Disclosure Package or any such Supplement (taking into account
the documents incorporated by reference therein) contains or, at the time of
filing contained any untrue statement of material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The offering, sale and issuance of the Shares to the Investor are
registered under the Securities Act by the Registration Statement, and all of
the Shares upon issuance to the Investor in accordance with this Agreement and
the Registration Statement will vest the Investor with good and marketable title
to such Shares and no action taken or omitted to be taken by the Company shall
cause such Shares not to be freely transferable and tradable by the Investor
without restriction. The Shares are being issued as described in the
Registration Statement.

     (h) The Company has not, in the twelve (12) months preceding the date
hereof, received notice from the Nasdaq Global Market to the effect that the
Company is not in compliance with the listing or maintenance requirements
thereof. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in material compliance with the listing and
maintenance requirements for continued trading of the Common Stock on the Nasdaq
Global Market. The issuance and sale of the Shares hereunder complies in all
material respects with the rules and regulations of the Nasdaq Global Market.

     (i) The Company understands and confirms that the Investor will rely on the
representations set forth in this Section 4 in effecting the transactions
contemplated hereby. All disclosure provided to the Investor regarding the
Company, its business and the transactions contemplated hereby, including the
Registration Statement, the Disclosure Package and the Supplement (taking into
account the documents incorporated by reference therein), furnished by or on
behalf of the Company are true and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The parties
acknowledge and agree that the parties do not make and have not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Agreement.

     (j) The Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
(2) years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC Reports" and, together with this
Agreement, the "Disclosure Materials") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, as subsequently amended, when filed,

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contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports,
as subsequently amended, comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in all material respects in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, year-end audit
adjustments.

     (k) Since the date of the Company's latest audited financial statements
included in the SEC Reports and except as disclosed in the SEC Reports, the
Registration Statement or the Disclosure Package, (i) there has been no event,
occurrence or development that, individually or in the aggregate, has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders other than scheduled dividends on the Company's
preferred stock or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) the Company has not issued any
equity securities to any officer or director, except pursuant to existing
Company stock option and employee plans.

     (l) The Company (i) is not in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company), nor has the Company received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is not in violation of any
order of any court, arbitrator or governmental body, or (iii) is not now nor has
ever been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as would not, individually or in the aggregate, have a Material
Adverse Effect.

     (m) The Company possesses all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the

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failure to possess such certificates, authorizations or permits would not,
individually or in the aggregate, have a Material Adverse Effect ("Material
Permits"), and the Company has not received any notice of proceedings relating
to the revocation or modification of any Material Permit.

     (n) Except as disclosed in the SEC Reports, the Registration Statement or
the Disclosure Package, the Company has good and marketable title in fee simple
to all real property owned by it that is material to the business of the Company
and good and marketable title in all personal property owned by it that is
material to the business of the Company, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company. Any real property and facilities held under lease
by the Company are held by it under valid, subsisting and enforceable leases of
which the Company is in material compliance.

     (o) The Company has, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights (collectively, the "Intellectual
Property Rights") that are necessary or material for use in connection with its
respective business as described in the SEC Reports, the Registration Statement
and the Disclosure Package and which the failure to so have would, individually
or in the aggregate, have a Material Adverse Effect. The Company has not
received a written notice that the Intellectual Property Rights used by the
Company violates or infringes upon the rights of any Person, except as would
not, individually or in the aggregate, have a Material Adverse Effect. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights, except as would not, individually or in the
aggregate, have a Material Adverse Effect.

     (p) The Company is insured by insurers the Company reasonably considers to
be of recognized financial responsibility against such losses and risks and in
such amounts as are generally deemed prudent and customary in the businesses in
which the Company is engaged. The Company has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.

     (q) Except as set forth in SEC Reports, the Registration Statement and the
Disclosure Package, none of the officers or directors of the Company is
presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner, in
each case in excess of $60,000.

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     (r) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

     (s) The Company shall not and shall cause each Person acting on behalf of
the Company not to divulge to the Investor any information that it believes to
be material, nonpublic information unless the Investor has agreed in writing to
receive such information prior to such divulgence; provided, that the Company or
Persons acting on behalf of the Company may divulge to the Investor material,
nonpublic information if such information is subsequently disclosed by the
Company in the manner described in Section 4(t).

     (t) The Company shall (i) before the Nasdaq Global Market opens on the next
trading day after the date hereof, issue a press release, disclosing all
material aspects of the transactions contemplated hereby and (ii) make such
other filings and notices in the manner and time required by the Commission. The
Company shall not identify the Investor by name in any press release or public
filing, or otherwise publicly disclose the Investor's name, without the
Investor's prior, written consent, unless the Company is advised in writing by
its counsel that disclosure of the Investor's name is required by law, in which
case the Company shall promptly notify the Investor of such disclosure.

     5. The Investor hereby makes the following representations, warranties and
covenants to the Company:

     (a) The Investor, either alone or together with its representatives has
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective
investment in the Shares, and has so evaluated the merits and risks of such
investment. The Investor is able to bear the economic risk of an investment in
the Shares and, at the present time, is able to afford a complete loss of such
investment.

     (b) The Investor acknowledges that it has had the opportunity to review the
Disclosure Materials, the Registration Statement and the Disclosure Package.
Neither any such review nor any other investigation conducted by or on behalf of
the Investor or its representatives or counsel shall modify, amend or affect the
Investor's right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company's representations and warranties contained
in this Agreement.

     (c) The Investor understands that nothing in this Agreement or any other
materials presented by or on behalf of the Company to the Investor in connection
with the purchase of the Shares constitutes legal, tax or investment advice. The
Investor has

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consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of the
Shares.

     (d) The Investor represents that, except as set forth below, (a) it has had
no position, office or other material relationship within the past three years
with the Company or any of its affiliates and (b) it has no direct affiliation
or association with any NASD member. Exceptions:

________________________________________________________________________________
   (If no exceptions, write "none." If left blank, response will be deemed to
                                   be "none.")

     (e) The Investor shall not issue any press release or make any other public
announcement relating to this Agreement unless (i) the content thereof is
mutually agreed to by the Company and the Investor, or (ii) the Investor is
advised by its counsel (including internal counsel) that such press release or
public announcement is required by law.

     6. Subject to the provisions of this Section 6, the Company will indemnify
and hold the Investors and their directors, officers, shareholders, partners,
members, employees and agents (each, an "Investor Party") harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation that any such Investor
Party may suffer or incur (the "Indemnified Liabilities") as a result of or
relating to any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement (which shall survive the
Closing). The Company shall not be liable to any Investor under this provision
in respect of any Indemnified Liability if such liability arises out of any
misrepresentation by the Investor in Section 5 of this Agreement or actions
taken by such Investor in violation or contravention of this Agreement. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. If any action shall be brought against any Investor Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Investor Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing. Any Investor Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (other than local counsel), reasonably approved by the
Company), but the fees and expenses of such counsel shall be at the expense of
such Investor Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Investor Party. The Company will not be
liable to any Investor

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Party under this Section 6 for any settlement by a Investor Party effected
without the Company's prior written consent, which shall not be unreasonably
withheld or delayed.

     7. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York, without giving effect to the
principles of conflicts of law.

     8. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature were the original thereof.

     Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.

Name of Investor:
                  -------------------

By:
    ---------------------------------
Print Name:
            -------------------------
Title:
       ------------------------------
Address:
         ----------------------------

         ----------------------------
Tax ID No.:
            -------------------------
Contact Name:
              -----------------------
Telephone:
           --------------------------

Name in which book-entry should be made (if different):

-------------------------------------

AGREED AND ACCEPTED:
Lexicon Genetics Incorporated,
a Delaware corporation

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------exv4w1

 

Exhibit 4.1

ENCORE WIRE CORPORATION

1999 Stock Option Plan

     Section 1. Purpose. It is the purpose of the Plan to promote the interests of the
Company and its stockholders by attracting, retaining and stimulating the performance of selected
Employees of the Company and its Affiliates and giving such Employees the opportunity to acquire a
proprietary interest in the Company and an increased personal interest in its continued success and
progress.

     Section 2. Definitions. As used herein the following terms have the following
meanings:

     (a) “Affiliate” means any parent or subsidiary corporation of the Company within the meaning
of Section 424(e) and (f) of the Code. (A corporation includes any business entity that elects to
be classified as an association for federal tax purposes or that otherwise is a corporation for
federal tax purposes.)

     (b) “Board” means the Board of Directors of the Company.

     (c) “Code” means the Internal Revenue Code of 1986, as amended.

     (d) “Committee” means the Compensation Committee of the Board, each member of which shall be a
‘non-employee director’ within the meaning of Rule 16B-3 under the Securities Exchange Act of 1934,
as amended, and an ‘outside director’ within the meaning of Treasury Regulation Section
1.162-27(e)(3) interpreting Section 162(m) of the Code.

     (e) “Common Stock” means the $.01 par value Common Stock of the Company.

     (f) “Company” means Encore Wire Corporation, a Delaware corporation.

     (g) “Employee” means any regular salaried officer or employee of the Company or an Affiliate,
including such officers or employees who are also members of the Board.

     (h) “Fair Market Value” means the closing sales price of the Common Stock on the date in
question (or if there is no reported sale on such date, then on the last preceding date on which a
report of sale occurred) as reported on the National Association of Securities Dealers Automated
Quotation System (“NASDAQ”), or on any national securities exchange on which the Common Stock is
then traded; or if the Common Stock is not listed or admitted to trading on any such exchange and
is not listed as a national market security on NASDAQ, but is quoted on NASDAQ (or any similar
system), “Fair Market Value” shall mean the average of the closing high bid and low ask prices of
the Common Stock on such system on the date in question.

     (i) “Options” means any option to purchase shares of Common Stock granted pursuant to the
provisions of the Plan.

     (j) “Optionee” means an Employee who has been granted an Option under the Plan.

     (k) “Plan” means this Encore Wire Corporation 1999 Stock Option Plan, as amended February 20,
2006.

     Section 3. Number of Shares. Options may be granted by the Company from time to time
under the Plan to purchase an aggregate of 1,200,000 shares of the authorized Common Stock. If any
Option expires or terminates for any reason without having been exercised in full, the unpurchased
shares subject to such expired or terminated Option shall be available for purposes of the Plan.
The maximum number of shares of Common Stock for which options may be granted under the Plan to any
one Employee during a calendar year is 100,000.

     Section 4. Administration of the Plan.

 

 

     (a) The Plan shall be administered by the Committee. Each member of the Committee shall be
appointed by the Board. The Board shall have the sole continuing authority to appoint members of
the Committee, both in substitution for members previously appointed and to fill vacancies.

     (b) The Committee shall have full authority subject to the express provisions of the Plan to
interpret the Plan, to provide, modify and rescind rules and regulations relating to it, to
determine the terms and provisions of each Option and the form of each option agreement evidencing
an Option granted under the Plan, including the authority to place restrictions on the shares of
Common Stock to be purchased pursuant to an Option, and to make all other determinations and
perform such actions as the Committee deems necessary or advisable to administer the Plan. In
addition, the Committee shall have full authority, subject to the express provisions of the Plan,
to determine the Employees to whom Options shall be granted, the time or date of grant of each such
Option, the number of shares subject thereto, and the price at which such shares may be purchased.
In making such determinations, the Committee may take into account the nature of the services
rendered by the Employee, his present and potential contributions to the success of the Company’s
business and such other facts as the Committee in its discretion shall deem appropriate to carry
out the purposes of the Plan.

     (c) Notwithstanding the authority hereby delegated to the Committee to grant Options to
Employees under the Plan, the Board also shall have full authority, subject to the express
provisions of the Plan, to grant options to Employees under the Plan, to interpret the Plan, to
provide, modify and rescind rules and regulations relating to it, to determine the terms and
provisions of Options granted to Employees under the Plan and the form of option agreements
evidencing Options granted under the Plan and to make all other determinations and perform such
actions as the Board deems necessary or advisable to administer the Plan; provided, however, that
the Board shall not grant any Option to any officer (as defined in Rule 16B-3) of the Company or to
any Employee who is also a member of the Board or to any “covered employee” within the meaning of
Section 162(m) of the Code, except upon, and strictly in accordance with, a recommendation of the
Committee regarding the number of shares covered by, and the recipient, timing, exercise price and
other terms of, such Option.

     (d) No member of the Committee shall be eligible to receive an Option.

     Section 5. Grant of Options. At any time and from time to time during the duration of
the Plan and subject to the express provisions thereof, Options may be granted by the Committee to
any Employee for such number of shares of Common Stock as the Committee in its discretion shall
deem to be in the best interest of the Company and which will serve to further the purposes of the
Plan. The Committee, in its discretion, may designate any Option so granted as an incentive stock
option intended to qualify under Section 422 of the Code. To the extent that the aggregate Fair
Market Value (determined at the time the respective Incentive Stock Option is granted) of Common
Stock with respect to which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of the Company and its
Affiliates exceeds $100,000, such excess Incentive Stock Options shall be treated as options which
do not constitute Incentive Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, which of an optionee’s Incentive Stock Options will not
constitute Incentive Stock Options because of such limitation and shall notify the optionee of such
determination as soon as practicable after such determination.

     Section 6. Option Price. The purchase price per share of Common Stock under each
Option shall be determined by the Committee but in no event shall be less than 100% of the Fair
Market Value per share of Common Stock at the time the Option is granted; provided, however, that
the purchase price per share of Common Stock under any incentive stock option granted to an
Optionee who, at the time such incentive stock option is granted, owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or any Affiliate
shall be at least 110% of the Fair Market Value per share of Common Stock at the date of grant.
Upon exercise of an Option, the purchase price shall be paid in full in cash, or if to the extent
provided for under the option agreement for such Option, in cash and or by delivery of shares of
Common Stock already owned by the Optionee, held for at least six months free of any restriction,
and having an aggregate Fair Market Value equal to the purchase price. The proceeds of such sale
shall constitute general funds of the Company. Upon exercise of an Option, the Optionee will be
required to pay to the Company the amount of any federal, state or local taxes required by law to
be withheld in connection with such exercise.

     Section 7. Option Period and Terms of Exercise of Options. Except as otherwise
provided for herein, each Option granted under the Plan shall be exercisable during such period
commencing on or after the expiration of one

 

 

year from the date of the grant of such Option as the
Committee shall determine; provided that the otherwise unexpired portion of any Option shall expire
and become null and void no later than upon the first to occur of (i) the expiration of ten years
from the date such Option was granted, (ii) the expiration of three months from the date of the
termination of the Optionee’s employment with the Company or an Affiliate for any reason other than
death or disability, or (ii) the expiration of one year from the date of the termination of the
Optionee’s employment with the Company or an Affiliate by reason of death or disability. Anything
herein to the contrary notwithstanding the otherwise unexpired portion of any Option granted
hereunder shall expire and become null and void immediately upon Optionee’s termination of
employment with the Company or an Affiliate by reason of such Optionee’s fraud, dishonesty or
performance of other acts detrimental to the Company or an Affiliate. Any incentive stock option
granted to an Optionee who, at the time such incentive stock option is granted, owns stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company
or any Affiliate shall not be exercisable after the expiration of five years from the date of its
grant. Under the provisions of any option agreement evidencing an Option, the Committee may limit
the number of shares purchasable thereunder in any period or periods of time during which the
Option is exercisable and may impose such other terms and conditions upon the exercise of an Option
as are not inconsistent with the terms of this Plan; provided, however, that the Committee, in its
discretion, may accelerate the exercise date of any Option to any date following the date of grant.

     Section 8. Nontransferability of Options. An Option granted under the Plan shall be
transferable by the Optionee only by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionee only by the Optionee.

     Section 9. Termination of Employment. Transfers of employment between the Company and
any of its Affiliates shall not be considered to be a termination of employment for the purposes of
this Plan. Nothing in the Plan or in any option agreement evidencing an Option granted under the
Plan shall confer upon any Optionee any right to continue in the employ of the Company or any
Affiliate or in any way interfere with the right of the Company or any Affiliate to terminate the
employment of the Optionee at any time, with or without cause.

     Section 10. Adjustments Upon Changes in Common Stock. In the event the Company shall
effect a split of the Common Stock or dividend payable in Common Stock, or in the event the
outstanding Common Stock shall be combined into a smaller number of shares, the maximum number of
shares as to which Options may be granted under the Plan and the maximum number of shares as to
which an Option or Options may be granted to any one Optionee during a calendar year shall be
decreased or increased proportionately. In the event that before delivery by the Company of all of
the shares of Common Stock in respect of which any Option has been granted under the Plan, the
Company shall have effected such a split, dividend or combination, the shares still subject to such
Option shall be increased or decreased proportionately and the purchase price per share shall be
decreased or increased proportionately so that the aggregate purchase price for all of the then
optioned shares shall remain the same as immediately prior to such split, dividend or combination.

     In the event of a reclassification of Common Stock not covered by the foregoing, or in the
event of a liquidation or reorganization (including a merger, consolidation, spinoff or sale of
assets) of the Company or an Affiliate, the Committee shall make such adjustments, if any, as it
may deem appropriate in the number, purchase price and kind of shares covered by the unexercised
portions of Options theretofore granted under the Plan. The provisions of this Section shall only
be applicable if, and only to the extent that, the application thereof does not conflict with any
valid governmental statute, regulation or rule.

     Section 11. Amendment and Termination of the Plan. Subject to the right of the Board
to terminate the plan prior thereto, the Plan shall terminate at the expiration of ten years from
June 28, 1999, the date of adoption of the Plan by the Board. No Options may be granted after
termination of the Plan. The Board may alter or amend the plan but may not without the approval of
the stockholders of the Company make any alteration or amendment thereof which operates (i) to
abolish the Committee, change the qualifications of its members or withdraw the administration of
the Plan from its supervision, (ii) to increase the total number of shares of Common Stock for
which options may be granted under the Plan (other than as provided in Section 10 hereof), (iii) to
increase the maximum number of shares of Common Stock for which options may be granted under the
Plan (other than as provided in Section 10 hereof) to any one Employee during a calendar year, (iv)
to extend the term of the Plan or the maximum exercise period provided in Section 7 hereof, (v) to
decrease the minimum purchase price provided in Section 6 hereof (other than as provided in Section
10 hereof), or (vi) to materially modify the requirements as to eligibility for participation in
the Plan.

 

 

     No termination or amendment of the Plan shall adversely affect the rights of an Optionee under
an Option, except with the consent of such Optionee.

     Section 12. Requirements of Law. The granting of Options and the issuance of Common
Stock upon the exercise of an Option shall be subject to all applicable laws, rules and regulations
and to such approval by governmental agencies as may be required.

     Section 13. Effective Date of the Plan. The Plan shall become effective, as of the
date of its adoption by the Board, when it has been duly approved by the unanimous written consent
of the holders of the shares of Common Stock in accordance with applicable law within twelve months
after the date of adoption of the Plan by the Board. If the Plan is not so approved, the Plan
shall terminate and any Option granted hereunder shall be null and void.

     Section 14. Gender. Words of any gender used in the Plan shall be construed to
include any other gender, unless the context requires otherwise.

February 20, 2006

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