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EXHIBIT 10.7
ENVIRONMENTAL SAFEGUARDS, INC.
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Environmental Safeguards, Inc.
1998 Stock Option Plan ("the Plan") is to promote the financial
interests of the Company, its subsidiaries and its shareholders by
providing incentives in the form of stock options to key employees and
directors who contribute materially to the success and profitability of
the Company. The grants will recognize and reward outstanding
individual performances and contributions and will give such persons a
proprietary interest in the Company, thus enhancing their personal
interest in the Company's continued success and progress. This Plan
will also assist the Company and its subsidiaries in attracting,
retaining and motivating key employees and directors. The options
granted under this Plan may be either Incentive Stock Options, as that
term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended, or Nonqualified options taxed under Section 83 of the Internal
Revenue Code of 1986, as amended.
RULE 16B-3 PLAN. The Company is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
therefore the Plan is intended to comply with all applicable conditions of Rule
16b-3 (and all subsequent revisions thereof) promulgated under the Exchange Act.
To the extent any provision of the Plan or action by the Committee or the Board
of Directors or Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee. In
addition, the Committee or the Board of Directors may amend the Plan from time
to time as it deems necessary in order to meet the requirements of any
amendments to Rule 16b-3 without the consent of the shareholders of the Company.
EFFECTIVE DATE OF PLAN. The effective date of this Plan shall be
December 9, 1998 (the "Effective Date"). The Board of Directors shall, within
one year of the Effective Date, submit the Plan for approval to the shareholders
of the Company. The plan shall be approved by at least a majority of
shareholders voting in person or by proxy at a duly held shareholders' meeting,
or if the provisions of the corporate charter, by-laws or applicable state law
prescribes a greater degree of shareholder approval for this action, the
approval by the holders of that percentage, at a duly held meeting of
shareholders. No Incentive Option or Nonqualified Stock Option shall be granted
pursuant to the Plan ten years after the Effective Date. In the event that the
Plan is not approved by the shareholder's of the Company, the Plan shall be
deemed to be a non-qualified stock option plan.
2. DEFINITIONS. The following definitions shall apply to this
Plan:
(a) "Affiliate" means any parent corporation and any subsidiary
corporation. The term
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"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% 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% or
more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
(b) "Agreement" means, individually or collectively, any agreement
entered into pursuant to the Plan pursuant to which Options
are granted to a participant.
(c) "Award" means each of the following granted under this Plan:
Incentive Stock Options or Nonqualified Stock Options.
(d) "Board" means the board of directors of the Company.
(e) "Cause" shall mean, for purposes of whether and when a
participant has incurred a Termination of Employment for
Cause: (i) any act or omission which permits the Company to
terminate the written agreement or arrangement between the
participant and the Company or a Subsidiary or Parent for
Cause as defined in such agreement or arrangement; or (ii) in
the event there is no such agreement or arrangement or the
agreement or arrangement does not define the term "cause,"
then Cause shall mean an act or acts of dishonesty by the
participant resulting or intending to result directly or
indirectly in gain to or personal enrichment of the
participant at the Company's expense and/or gross negligence
or willful misconduct on the part of the participant.
(f) "Change in Control" means, for purposes of this Plans
i. there shall be consummated (i) any consolidation or
merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to
which shares of the Company's common stock would be
converted into cash, securities or other property,
other than a merger of the Company in which the
holders of the Company's common stock immediately
prior to the merger have substantially the same
proportionate ownership of common stock of the
surviving corporation immediately after the merger;
or (ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related
transactions) of all or substantially all of the
assets of the Company; or
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ii. the shareholders of the Company shall approve any
plan or proposal for the liquidation or dissolution
of the Company; or
(g) "Code" means the Internal Revenue Code of 1986, as amended,
final Treasury Regulations thereunder and any subsequent
Internal Revenue Code.
(h) "Committee" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of
Directors. The Committee shall be comprised solely of at least
two members who are both Disinterested Persons and Outside
Directors.
(i) "Common Stock" means the Common Stock, par value per share of
the Company whether presently or hereafter issued, or such
other class of shares or securities as to which the Plan may
be applicable, pursuant to Section 11 herein.
(j) "Company" means Environmental Safeguards, Inc., a Nevada
Corporation and includes any successor or assignee company
corporations into which the Company may be merged, changed or
consolidated; any company for whose securities the securities
of the Company shall be exchanged; and any assignee of or
successor to substantially all of the assets of the Company.
(l) "Continuous Service" means the absence of any interruption or
termination of employment with or service to the Company or
any Parent or Subsidiary of the Company that now exists or
hereafter is organized or acquired by or acquires the Company.
Continuous Service shall not be considered interrupted in the
case of sick leave, military leave, or any other bona fide
leave of absence of less than ninety (90) days (unless the
participants right to reemployment is guaranteed by statute or
by contract) or in the case of transfers between locations of
the Company or between the Company, its Parent, its
Subsidiaries or its successors
(m) "Date of Grant" means the date on which the Committee grants
an Option.
(n) "Director" means any member of the Board of Directors of the
Company or any Parent or subsidiary of the Company that now
exists or hereafter is organized or acquired by or acquires
the Company.
(o) "Non Employee Director" means a "Non Employee Director" as
that term is defined in Rule 16b-3 under the Exchange Act.
(p) "Eligible Persons" shall mean, with respect to the Plan, those
persons who, at the time that an Award is granted, are
(i)officers, directors or employees of the Company or
Affiliate or (ii) consultants or subcontractors of the Company
or affiliate.
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(q) "Employee" means any person employed on an hourly or salaried
basis by the Company or any Parent or Subsidiary of the
Company that now exists or hereafter is organized or acquired
by or acquires the Company.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder.
(s) "Fair Market Value" means (i) if the Common Stock is not
listed or admitted to trade on a national securities exchange
and if bid and ask prices for the Common Stock are not
furnished through NASDAQ or a similar organization, the value
established by the Committee, in its sole discretion, for
purposes of the Plan; (ii) if the Common Stock is listed or
admitted to trade on a national securities exchange or a
national market system, the closing price of the Common Stock,
as published in the Wall Street Journal, so listed or admitted
to trade on such date or, if there is no trading of the Common
Stock on such date, then the closing price of the Common Stock
on the next preceding day on which there was trading in such
shares; or (iii) if the Common Stock is not listed or admitted
to trade on a national securities exchange or a national
market system, the mean between the bid and ask price for the
Common Stock on such date, as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or a
similar organization if NASDAQ is no longer reporting such
information. If trading in the stock or a price quotation does
not occur on the Date of Grant, the next preceding date on
which the stock was traded or a price was quoted will
determine the fair market value.
(t) "Incentive Stock Option" means a stock option, granted
pursuant to either this Plan or any other plan of the Company,
that satisfies the requirements of Section 422 of the Code and
that entitles the Optionee to purchase stock of the Company or
in a corporation that at the time of grant of the option was a
Parent or subsidiary of the Company or a predecessor company
of any such company.
(u) "Nonqualified Stock Option" means an Option to purchase Common
Stock in the Company granted under the Plan other than an
Incentive Stock Option within the meaning of Section 422 of
the Code.
(v) "Option" means a stock option granted pursuant to the Plan.
(w) "Option Period" means the period beginning on the Date of
Grant and ending on the day prior to the tenth anniversary of
the Date of Grant or such shorter termination date as set by
the Committee.
(x) "Optionee" means an Employee (or Director or subcontractor)
who receives an Option.
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(y) "Parent" means any corporation which owns 50% or more of the
voting securities of the Company.
(z) "Plan" means this Stock Option Plan as may be amended from
time to time.
(aa) "Share" means the Common Stock, as adjusted in accordance with
Paragraph 11 of the Plan.
(bb) "Ten Percent Shareholder" means an individual who, at the time
the Option is granted, owns Stock possessing more than 10% 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 shareholders, partners, or
beneficiaries.
(cc) "Termination" or "Termination of Employment" means the
occurrence of any act or event whether pursuant to an
employment agreement or otherwise that actually or effectively
causes or results in the person's ceasing, for whatever
reason, to be an officer or employee of the Company or of any
Subsidiary or Parent including, without limitation, death,
disability, dismissal, severance at the election of the
participant, retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company
or its Subsidiaries or Parent of all businesses owned or
operated by the Company or its Subsidiaries. A Termination of
Employment shall occur to an employee who is employed by an
Subsidiary if the Subsidiary shall cease to be a Subsidiary
and the participant shall not immediately thereafter become an
employee of the Company or a Subsidiary.
(dd) "Subsidiary" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the
Company at any time during the existence of this Plan.
In addition, certain other terms used in this Plan shall have the
definitions given to them in the first place in which they are used.
3. ADMINISTRATION.
a. This Plan will be administered by the Committee. A majority of
the full Committee constitutes a quorum for purposes of
administering the Plan, and all determinations of the
Committee shall be made by a majority of the members present
at a meeting at which a quorum is present or by the unanimous
written consent of the Committee.
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b. If no Committee has been appointed, members of the Board may
vote on any matters affecting the administration of the Plan
or the grant of any Option pursuant to the Plan, except that
no such member shall act on the granting of an Option to
himself, but such member may be counted in determining the
existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting of Options to
him.
c. Subject to the terms of this Plan, the Committee has the sole
and exclusive power to:
i. select the participants in this Plan;
ii. establish the terms of the Options granted to each
participant which may not be the same in each case;
iii. determine the total number of options to grant to an
Optionee, which may not be the same in each case;
iv. fix the Option period for any Option granted which may
not be the same in each case; and
v. make all other determinations necessary or advisable
under the Plan.
vi. determine the minimum number of shares with respect to
which Options may be exercised in part at any time.
vii. The Committee has the sole and absolute discretion to
determine whether the performance of an eligible
Employee warrants an award under this Plan, and to
determine the amount of the award.
viii. The Committee has full and exclusive power to construe
and interpret this Plan, to prescribe and rescind rules
and regulations relating to this Plan, and take all
actions necessary or advisable for the Plan's
administration. Any such determination made by the
Committee will be final and binding on all persons.
d. A member of the Committee will not be liable for performing
any act or making any determination in good faith.
4. SHARES SUBJECT TO OPTION. Subject to the provisions of Paragraph
11 of the Plan, the maximum aggregate number of Shares that may be
optioned and sold under the Plan shall be 800,000. Such shares may be
authorized but unissued, or may be treasury shares. If
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an Option shall expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject
to the Option shall, unless the Plan has then terminated, be available
for other Options under the Plan.
a. Eligible Persons. Every Eligible Person, as the Committee in
its sole discretion designates, is eligible to participate in
this Plan. Directors who are not employees of the Company or
any subsidiary or Parent shall only be eligible to receive
Incentive Stock Options if and as permitted be applicable law
and regulations. The Committee's award of an Option to a
participant in any year does not require the Committee to
award an Option to that participant in any other year.
Furthermore, the Committee may award different Options to
different participants. The Committee may consider such
factors as it deems pertinent in selecting participants and in
determining the amount of their Option, including, without
limitation;
(i) the financial condition of the Company or its Subsidiaries;
(ii) expected profits for the current or future years;
(iii) the contributions of a prospective participant to the
profitability and success of the Company or its Subsidiaries;
and
(iv) the adequacy of the prospective participant's other
compensation.
Participants may include persons to whom stock, stock options, or
other benefits previously were granted under this or another plan of
the Company or any Subsidiary, whether or not the previously granted
benefits have been fully exercised.
b. No Right of Employment. An Optionee's right, if any, to
continue to serve the Company and its Subsidiaries as an
Employee will not be enlarged or otherwise affected by his
designation as a participant under this Plan, and such
designation will not in any way restrict the right of the
Company or any Subsidiary, as the case may be, to terminate at
any time the employment of any
5. REQUIREMENTS OF OPTION GRANTS. Each Option granted under this Plan
shall satisfy the following requirements.
a. Written Option. An Option shall be evidenced by a written
Agreement, a sample of which is attached hereto as Exhibit A,
specifying (i) the number of Shares that may be purchased by
its exercise, (ii) the intent of the Committee as to whether
the Option is be an Incentive Stock Option or a Non-qualified
Stock Option, (iii) the Option period for any Option granted.
and (iv) such
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terms and conditions consistent with the Plan as the Committee
shall determine, all of which may differ between various
Optionees and various Agreements.
b. Duration of Option. Each Option may be exercised only during
the Option Period designated for the Option by the Committee.
At the end of the Option Period the Option shall expire.
c. Option Exercisability. The Committee, on the grant of an
Option, each Option shall be exercisable only in accordance
with its terms.
d. Acceleration of Vesting. Subject to the provisions of Section
5(b), the Committee may, it its sole discretion, provide for
the exercise of Options either as to an increased percentage
of shares per year or as to all remaining shares. Such
acceleration of vesting may be declared by the Committee at
any time before the end of the Option Period, including, if
applicable, after termination of the Optionee's Continuous
Service by reason of death, disability, retirement or
termination of employment.
e. Option Price. Except as provided in Section 6(a) the Option
price of each Share subject to the Option shall equal the Fair
Market Value of the Share on the Option's Date of Grant.
f. Termination of Employment. Any Option which has not vested at
the time the Optionee ceases Continuous Service for any reason
other than death, disability or retirement shall terminate
upon the last day that the Optionee is employed by the
Company. Incentive Stock Options must be exercised within
three months of cessation of Continuous Service for reasons
other death, disability or retirement in order to qualify for
Incentive Stock Option tax treatment. Nonqualified Options may
be exercised any time during the Option Period regardless of
employment status.
g. Death. In the case of death of the Optionee, the beneficiaries
designated by the Optionee shall have one year from the
Optionee's demise or to the end of the Option Period,
whichever is earlier, to exercise the Option, provided,
however, the Option may be exercised only for the number of
Shares for which it could have been exercised at the time the
Optionee died, subject to any adjustment under Sections 5(d)
and 11.
h. Retirement. Any Option which has not vested at the time the
Optionee ceases Continuous Service due to retirement shall
terminate upon the last day that the Optionee is employed by
the Company. Upon retirement Incentive Stock Options must be
exercised within three months of cessation of Continuous
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Service in order to qualify for Incentive Stock Option tax
treatment. Nonqualified Options may be exercised any time
during the Option Period regardless of employment status
i. Disability. In the event of termination of Continuous Service
due to total and permanent disability (within the meaning of
Section 422 of the Code), the Option shall lapse at the
earlier of the end of the Option Period or twelve months after
the date of such termination, provided, however, the Option
can be exercised at the time the Optionee became disabled,
subject to any adjustment under Sections 5(d) and 11.
6. INCENTIVE STOCK OPTIONS. Any Options intended to qualify as an
Incentive Stock Option shall satisfy the following requirements in
addition to the other requirements of the Plan:
a. Ten Percent Shareholders. An Option intended to qualify as an
Incentive Stock Option granted to an individual who, on the
Date of Grant, owns stock possessing more than ten (10)
percent of the total combined voting power of all classes of
stock of either the Company or any Parent or Subsidiary, shall
be granted at a price of 110 percent of Fair Market Value on
the Date of Grant and shall be exercised only during the
five-year period immediately following the Date of Grant. In
calculating stock ownership of any person, the attribution
rules of Section 425(d) of the Code will apply. Furthermore,
in calculating stock ownership, any stock that the individual
may purchase under outstanding options will not be considered.
b. Limitation on Incentive Stock Options The aggregate Fair
Market Value, determined on the date of Grant, of stock in the
Company exercisable for the first time by any Optionee during
any calendar year, under the Plan and all other plans of the
Company or its Parent or Subsidiaries (within the meaning of
Subsection (d) of Section 422 of the Code) in any calendar
year shall not exceed $100,000.00.
c. Exercise of Incentive Stock Options. No disposition of the
shares underlying an Incentive Stock Option may be made within
two years from the Date of Grant nor within one year after the
exercise of such incentive Stock Option.
d. Approval of Plan. No Option shall qualify as an Incentive
Stock Option unless this Plan is approved by the shareholders
within one year of the Plan's adoption by the Board.
7. NONQUALIFIED AND INCENTIVE STOCK OPTIONS. Any Option not intended to
qualify as an Incentive Stock Option shall be a Nonqualified Stock
Option. Nonqualified Stock
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Options shall satisfy each of the requirements of Section 5 of the
Plan. An Option intended to qualify as an Incentive Stock Option, but
which does not meet all the requirements of an Incentive Stock Option
shall be treated as a Nonqualified Stock Option.
8. METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
exercised when the person entitled to exercise the Option (i) delivers
written notice to the President of the Company of the decision to
exercise, (ii) concurrently tenders to the Company full payment for the
Shares to be purchased pursuant to the exercise, and (iii) complies
with such other reasonable requirements as the Committee establishes
pursuant to Section 3 of the Plan. During the lifetime of the Employee
to whom an Option is granted, such Option may be exercised only by him.
Payment for Shares with respect to which an Option is exercised may be
in cash, or by certified check, or wholly or partially in the form of
Common Stock of the Company having a fair market value equal to the
Option Price. No person will have the rights of a shareholder with
respect to Shares subject to an Option granted under this Plan until a
certificate or certificates for the Shares have been delivered to him.
An Option granted under this Plan may be exercised in increments of not
less than 10% of the full number of Shares as to which it can be exercised. A
partial exercise of an Option will not effect the holder's right to exercise the
Option from time to time in accordance with this Plan as to the remaining Shares
subject to the Option.
9. TAXES. COMPLIANCE WITH LAW: APPROVAL OF REGULATORY BODIES. The Company,
if necessary or desirable, may pay or withhold the amount of any tax
attributable to any Shares deliverable or amounts payable under this
Plan, and the Company may defer making delivery or payment until it is
indemnified to its satisfaction for the tax. Options are exercisable,
and Shares can be delivered and payments made under this Plan, only in
compliance with all applicable federal and state laws and regulations,
including, without limitation, state and federal securities laws, and
the rules of all stock exchanges on which the Company's stock is listed
at any time. An Option is exercisable only if either (i) a registration
statement pertaining to the Shares to be issued upon exercise of the
Option has been flied with and declared effective by the Securities and
Exchange Commission and remains effective on the date of exercise, or
(ii) an exemption from the registration requirements of applicable
securities laws is available. This plan does not require the Company,
however, to file such registration statement or to assure the
availability of such exemptions. Any certificate issued to evidence
Shares issued under the Plan may bear such legends and statements, and
shall be subject to such transfer restrictions, as the Committee deems
advisable to assure compliance with federal and state laws and
regulations and with the requirements of this Section 9 of the Plan. No
Option may be exercised, and no Shares may be issued under this Plan,
until the Company has obtained the consent or approval of every
regulatory body, federal or state, having jurisdiction over such matter
as the Committee deems advisable.
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Each Person who acquires the right to exercise an Option by bequest or
inheritance may be required by the Committee to furnish reasonable evidence of
ownership of the Option as a condition to his exercise of the Option. In
addition, the Committee may require such consents and release of taxing
authorities as the Committee deems advisable.
10. ASSIGNABILITY. An Option granted under this Plan is not transferable
except by will or the laws of descent and distribution. The Option may
be exercised only by the Optionee during the life of the Optionee. More
particularly, but without limitation of the foregoing, the Option may
be not be assigned or transferred except as provided above and shall
not be assignable by operation of law and shall not be subject to
execution, attachment or similar process. Any attempted assignment,
transfer or distribution contrary to the provisions hereof shall be
null and void and without effect.
11. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or
exchange of shares, stock split, stock dividend, rights offering, or
other expansion or contraction of the Common Stock of the Company
occurs, the number and class of Shares for which Options are authorized
to be granted under this Plan, the number and class of Shares then
subject to Options previously granted under this Plan, and the price
per Share payable upon exercise of each Option outstanding under this
Plan shall be equitably adjusted by the Committee to reflect such
changes. To the extent deemed equitable and appropriate by the
Committee or the Board, subject to any required action by shareholders,
in any merger, consolidation, reorganization, liquidation or
dissolution, any Option granted under the Plan shall pertain to the
securities and other property to which a holder of the number of Shares
of stock covered by the Option would have been entitled to receive in
connection with such event.
12. ACCELERATIONS OF OPTIONS UPON CHANGE IN CONTROL. In the event that a
Change of Control has occurred with respect to the Company, any and all
Options will become fully vested and immediately exercisable with such
acceleration to occur without the requirement of any further act by
either the Company or the participant, subject to Section 9 hereof.
13. LIABILITY OF THE COMPANY. The Company, its Parent and any Subsidiary
that is in existence or hereafter comes into existence shall not be
liable to any person for any tax consequences expected but not realized
by an Optionee or other person due to the exercise of an Option.
14. EXPENSES OF PLAN. The Company shall bear the expenses of administering
the Plan.
15. DURATION OF PLAN. Options may be granted under his Plan only within 10
years from the effective date of the Plan.
16. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN. The Board of Directors
of the Company may amend, terminate or suspend this Plan at any time,
in its sole and absolute
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discretion; provided, however, that to the extent required to qualify
this Plan under Rule 16b-3 promulgated under Section 16 of the Exchange
Act, no amendment that would (a) materially increase the number of
shares of Stock that may be issued under this Plan, (b) materially
modify the requirements as to eligibility for participation in this
Plan, or (c) otherwise materially increase the benefits accruing to
participants under this Plan, shall be made without the approval of the
Company's shareholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code,
no amendment that would (a) change the aggregate number of shares of
Stock which may be issued under Incentive Options, (b) change the class
of employees eligible to receive Incentive Options, or (c) decrease the
Option price for Incentive Options below the Fair Market Value of the
Stock at the time it is granted, shall be made without the approval of
the Company's shareholders. Subject to the preceding sentence, the
Board of Directors 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 this 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. Notwithstanding the foregoing, no amendment, suspension or
termination of the Plan shall act to impair or extinguish rights in
Options already granted at the date of such amendment, suspension or
termination.
17. FORFEITURE. Notwithstanding any other provisions of this Plan, if the
Committee finds by a majority vote after full consideration of the facts that an
Eligible Person, before or after termination of his employment 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, shareholder, owner,
or otherwise, in any commercial endeavor anywhere which is competitive with the
business of the Company or an Affiliate without the written consent of the
Company or Affiliate, the Eligible Person shall forfeit all outstanding Options,
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 Eligible Person'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 an Employee's
discharge, the damage done to the Company or an Affiliate, and the extent of an
Eligible Person's competitive activity shall be final. No decision of the
Committee, however, shall affect the finality of the discharge of the Employee
by the Company or an Affiliate in any manner.
18. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
respect to administration of this Plan, the Company shall indemnify each present
and future member of the
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Committee and the Board of Directors against, and each member of the Committee
and the Board of Directors 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 of Directors, whether
or not he continues to be a member of the Committee and/or the Board of
Directors 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 of Directors. However, this
indemnity shall not include any expenses incurred by any member of the Committee
and/or the Board of Directors in respect of 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 of Directors. In addition, no right of
indemnification under this Plan shall be available to or enforceable by any
member of the Committee and the Board of Directors unless, within 60 days after
institution of any action, suit or proceeding, he shall have offered the Company
the opportunity to handle and defend same at its own expense. The failure to
notify the Company within 60 days shall only affect a Director or committee
member's right to indemnification if said failure to notify results in an
impairment of the Company's rights or is detrimental to the Company. This right
of indemnification shall inure to the benefit of the heirs, executors or
administrators of each member of the Committee and the Board of Directors and
shall be in addition to all other rights to which a member of the Committee and
the Board of Directors may be entitled as a matter of law, contract, or
otherwise.
19. GENDER. If the context requires, words of one gender when used in this
Plan shall include the others and words used in the singular or plural shall
include the other.
20. 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.
21. OTHER COMPENSATION PLANS. The adoption of this 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.
22. OTHER OPTIONS OR AWARDS. The grant of an Option or Awards shall not
confer upon the Eligible Person the right to receive any future or other Options
or Awards under this Plan, whether or not Options or Awards may be granted to
similarly situated Eligible Persons, or the right to receive future Options or
Awards upon the same terms or conditions as previously granted.
23. GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
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