Sample Business Contracts

1998 Key Employee Stock Option Plan - The Men's Wearhouse Inc.

THE MEN'S WEARHOUSE, INC.

1998 KEY EMPLOYEE STOCK OPTION PLAN
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THE MEN'S WEARHOUSE, INC.

1998 KEY EMPLOYEE STOCK OPTION PLAN

TABLE OF CONTENTS

Section
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ARTICLE I - PLAN

Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Effective Date of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2

ARTICLE II - DEFINITIONS

Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Optionee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Retire or Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14

ARTICLE III - ELIGIBILITY

ARTICLE IV - GENERAL PROVISIONS RELATING TO ALL OPTIONS

Authority to Grant Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Dedicated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Changes in the Company's Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
No Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
Written Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8

ARTICLE V - VARIABLE PROVISIONS RELATING TO SPECIFIC OPTIONS

Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Duration of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Amount Exercisable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Exercise of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Substitution Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5

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ARTICLE VI - ADMINISTRATION

ARTICLE VII - AMENDMENT OR TERMINATION OF PLAN

ARTICLE VIII - MISCELLANEOUS

No Employment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2
Indemnification of the Committee and the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 8.3
Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
Other Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6
Other Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
Arbitration of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9

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ARTICLE I

PLAN

1.1 PURPOSE. This 1998 Key Employee Stock Option Plan (the
"Plan") of The Men's Wearhouse, Inc. (the "Company") is a plan for key
employees of the Company and its Affiliates and is intended to advance the best
interests of the Company, its Affiliates, and its stockholders by providing
those persons who are not executive officers but have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
the employ of the Company or any of its Affiliates.

1.2 EFFECTIVE DATE OF PLAN. This Plan is effective February 15,
1998.

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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 this 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, or any entity that is affiliated with the Company within the
meaning of Section 414 of the Code. The term "parent corporation" shall mean
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" shall mean any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Option, 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.

2.2 "BOARD OF DIRECTORS" means the board of directors of the
Company.

2.3 "CODE" means the Internal Revenue Code of 1986, as amended.

2.4 "COMMITTEE" means the committee designated by the Board of
Directors.

2.5 "COMPANY" means The Men's Wearhouse, Inc., a Texas
corporation.

2.6 "DISABILITY" means a mental or physical disability which, in
the opinion of a physician selected by the Committee, shall prevent the
Employee from earning a reasonable livelihood with the Company or any Affiliate
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 Employee 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; and (c) did not
result from an injury incurred while a member of the Armed Forces of the United
States for which the Employee receives a military pension.

2.7 "EMPLOYEE" means a person employed by the Company or any
Affiliate.

2.8 "FAIR MARKET VALUE" of the stock as of any particular date
means, if the stock is traded on a stock exchange, the closing sale price of
the stock on that date as reported on the principal securities exchange on
which the stock is traded, if the stock is traded in the over-the-counter
market, the average between the high bid and low asked price on that date as
reported in such over-the-counter market, provided that (a) if the stock is not
so traded, (b) if no closing price or bid and asked prices for the stock was so
reported on that date or (c) if, in the discretion of the Committee, another
means of determining fair market value of a share of stock at such date shall
be

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necessary or advisable, the Committee may provide for another means for
determining such fair market value.

2.9 "OPTION" means a nonqualified option granted under this Plan
to purchase shares of Stock.

2.10 "OPTION AGREEMENT" means the written agreement which sets out
the terms of an Option.

2.11 "OPTIONEE" means a person who is granted an Option under this
Plan.

2.12 "PLAN" means The Men's Wearhouse, Inc. 1998 Key Employee Stock
Option Plan, as set out in this document and as it may be amended from time to
time.

2.13 "RETIRE" or "RETIREMENT" means retirement in accordance with
the terms of a retirement plan that is qualified under Section 401(a) of the
Code and maintained by the Company or an Affiliate in which the Employee is a
participant.

2.14 "STOCK" means the common stock of the Company, $.01 par value
(or such other par value as may be designated by act of the Company's
stockholders).

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ARTICLE III

ELIGIBILITY

The individuals who shall be eligible to receive Options shall be
those key Employees, who are not executive officers of the Company or an
Affiliate, as the Committee shall determine from time to time.

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ARTICLE IV

GENERAL PROVISIONS RELATING TO OPTIONS

4.1 AUTHORITY TO GRANT OPTIONS. The Committee may grant Options
to those individuals as it shall from time to time determine under the terms
and conditions of this Plan. The number of shares of Stock to be covered by
any Option shall be determined by the Committee.

4.2 DEDICATED SHARES. The total number of shares of Stock with
respect to which Options may be granted under the Plan shall be 500,000 shares.
The shares may be treasury shares or authorized but unissued 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 Option
expires or terminates for any reason or any Option is surrendered, the shares
of Stock allocable to the unexercised portion of that Option may again be
subject to an Option under the Plan.

4.3 NON-TRANSFERABILITY. Except as expressly provided otherwise
in an Optionee's Option Agreement, 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 the Optionee's lifetime, only by him.

4.4 REQUIREMENTS OF LAW. The Company shall not be required to
sell or issue any Stock under any Option if issuing that Stock would constitute
or result in a violation by the Optionee 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, 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 Option 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 this
Plan pursuant to applicable securities laws of any country or any political
subdivision. In the event the Stock issuable on exercise of an Option 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 and the issuance
of shares thereunder, to comply with any law or regulation of any governmental
authority.

4.5 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
affect the Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any

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part of the 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 adjustment, the payment of a Stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, without
receiving consideration therefor in money, services, or property, then (a) the
number, class and per share price of shares of Stock subject to outstanding
Options hereunder shall be appropriately adjusted in such 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 he would have held after such adjustment if he had 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 the Plan shall be
adjusted by substituting for the total number and class of shares of Stock then
received, 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 Stock as
the result of the event requiring the adjustment.

After the merger of one or more corporations into the Company, after
any consolidation of the Company and one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which
the Company shall be the surviving corporation, each Optionee, at no additional
cost, shall be entitled to receive, upon any exercise of his Option, in lieu of
the number of shares as to which the Option shall then be so exercised, the
number and class of shares of Stock or other securities to which the Optionee
would have been entitled pursuant to the terms of the agreement of merger or
consolidation if at the time of such merger or consolidation such Optionee had
been a holder of record of a number of shares of Stock equal to the number of
shares as to which the Option shall then be so exercised. Comparable rights
shall accrue to each Optionee in the event of successive mergers or
consolidations of the character described above.

After a merger of the Company into one or more corporations, after a
consolidation of the Company and one or more corporations, or after any other
corporate transaction described in Section 424(a) of the Code in which the
Company is not the surviving corporation, each Optionee shall, at no additional
cost, be entitled to have his then existing Option assumed or have a new Option
substituted for the existing Option by the surviving corporation to the
transaction which is then employing him, or a parent or subsidiary of such
corporation, on a basis where the excess of the aggregate Fair Market Value of
the shares subject to the Option immediately after the substitution or
assumption over the aggregate Option Price of such Option is equal to the
excess of the aggregate Fair Market Value of all shares subject to the Option
immediately before such substitution or assumption over the aggregate Option
Price of such shares.

If a corporate transaction described in Section 424(a) of the Code
that involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall
be canceled by the Board of Directors as of the effective date of any such
corporate transaction but before that date each Optionee shall be provided with
a notice of such cancellation and shall have the

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right to exercise such Option in full (without regard to any vesting
limitations set forth in, or imposed pursuant to, preceding provisions of this
Plan or the Option Agreement) to the extent it is then still unexercised during
a 30-day period preceding the effective date of such corporate transaction.

Except as hereinbefore expressly provided, 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 therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Stock then
subject to outstanding Options.

4.6 NO RIGHTS AS STOCKHOLDER. No Optionee 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.

4.7 WRITTEN AGREEMENT. Each Option shall be embodied in a written
Option Agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Optionee and by a member of the Committee on
behalf of the Committee and the Company. Each Option Agreement shall state
that the Option embodied therein is not intended to satisfy the requirements of
section 422 of the Code. The Option Agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms of this Plan.

4.8 FORFEITURE FOR CAUSE. Notwithstanding any other provision of
this Plan, if the Committee finds by a majority vote, that the Optionee, before
or after termination of his employment with the Company or any Affiliate (a)
committed a fraud, embezzlement, theft, felony or an act of dishonesty in the
course of his employment by the Company which conduct damaged the Company or
(b) disclosed trade secrets of the Company, then any outstanding Options which
have not been exercised by the individual and any Options which have not yet
vested will be forfeited. The decision of the Committee as to the cause of an
Optionee discharge, the damage done to the Company and the extent of the
individual's competitive activity will be final. No decision of the Committee,
however, will affect the finality of the discharge of the individual by the
Company or Affiliate.

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ARTICLE V

VARIABLE PROVISIONS RELATING TO SPECIFIC OPTIONS

5.1 OPTION PRICE. The price at which Stock may be purchased under
an Option ("Option Price") shall be specified in an Optionee's Option
Agreement.

5.2 DURATION OF OPTIONS. No Option shall be exercisable after
expiration of 10 years from the date the Option is granted; and the Committee
in its discretion may provide that such Option shall be exercisable throughout
such 10-year period or during any lesser period of time commencing on or after
the date of grant of such Option and ending upon or before the expiration of
such 10-year period. In its discretion, the Company may also include in the
Option Agreement such terms and conditions upon which the Option may cease to
be exercisable either in whole or in part. An Option may terminate prior to
the normal expiration date as specified below.

(a) General Rule for Severance of Employment. Except as
may be otherwise expressly provided herein, all Options shall
terminate on the earlier of the date of the expiration of the Option
or one day less than one month after the date of the severance of the
employment relationship between the Company and all Affiliates and the
Optionee, whether with or without cause, for any reason other than the
death, Disability or, Retirement of the Optionee, during which period
the Optionee shall be entitled to exercise the Option in respect of
the number of shares that the Optionee would have been entitled to
purchase had the Optionee exercised the Option on the date of such
severance of employment. Whether authorized leave of absence, or
absence on military or government service, shall constitute severance
of the employment relationship between the Company and all Affiliates
and the Optionee, shall be determined by the Committee at the time
thereof.

(b) Disability, Death, or Retirement of an Optionee. In
the event of the severance because of the Disability of the holder of
any Option while in the employ of the Company and before the date of
expiration of such Option, such Option shall terminate on the earlier
of such date of expiration or one year following the date of such
severance because of Disability, during which period the Optionee
shall be entitled to exercise the Option in respect to the number of
shares that the Optionee would have been entitled to purchase had the
Optionee exercised the Option on the date of such severance because of
permanent Disability under the then established rules of the Company
or as determined by the Committee. In the event of the death of the
holder of any Option while in the employ of the Company and before the
date of expiration of such Option, such Option shall terminate on the
earlier of such date of expiration or one year following the date of
death. After the death of the Optionee, his executors, administrators
or any person or 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 termination of the Option to exercise the
Option, in respect to the number of shares that the Optionee

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would have been entitled to exercise if he had exercised the Option on
the day of his death while in employment. In addition, in the event
of the holder of any Option shall be retired in good standing from the
employ of the Company for reasons of age under the then-established
rules of the Company before the date of expiration of such Option,
such Option shall terminate on the earlier of such date of expiration
or one year following the date of such retirement, and, if such
Optionee should die within the one-year period, any rights he may have
had to exercise the Option shall be exercisable by his executor or
administrator or the person or persons to whom the Option shall have
been transferred by his will or laws of descent or distribution, as
appropriate, for the remainder of the one-year period.

Notwithstanding the foregoing provisions of this Section, the
Committee may provide for a different Option termination date in the Option
Agreement with respect to any Option.

5.3 AMOUNT EXERCISABLE. Each Option may be exercised from time to
time, in whole or in part, in the manner and subject to the conditions the
Committee, in its sole discretion, may provide in the Option Agreement, as long
as the Option is valid and outstanding. The usual form of agreement granting
an Option shall, subject to any limitation on exercise contained in the
Agreement which is not inconsistent with this Plan, contain the following terms
of exercise:

(a) No Option granted under this Plan may be exercised
until an Optionee has completed one year of continuous employment with
the Company or any Affiliate following the date of grant;

(b) Beginning on the day after the first anniversary of
the date of grant, an Option may be exercised up to 1/3 of the shares
subject to the Option;

(c) After the expiration of each succeeding anniversary
date of the date of grant, the Option may be exercised up to an
additional 1/3 of the shares subject to the Option, so that after the
expiration of the third anniversary of the date of grant, the Option
shall be exercisable in full; and

(d) 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 the grant.

However, the Committee, in its discretion, may change the terms of
exercise so that any Option may be exercised so long as it is valid and
outstanding from time to time in part or as a whole in such manner and subject
to such conditions as it may set. In addition, the Committee, in its
discretion, may accelerate the time in which any outstanding Option may be
exercised. But, in no event shall any Option be exercisable after the tenth
anniversary of the date of the grant.

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5.4 EXERCISE OF OPTIONS. Each Option shall be exercised by the
delivery of written notice to the Committee stating (a) that such Optionee
wishes to exercise such Option on the date such notice is so delivered, (b) the
number of shares of Stock with respect to which the Option is to be exercised
and (c) the address to which the certificate representing such shares of Stock
should be mailed. In order to be effective, such written notice shall be
accompanied by (a) payment of the Option Price of such shares of stock and (b)
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 (a) cashier's check drawn on a national banking association
and payable to the order of the Company in United States dollars or (b) any
other form of payment which is acceptable to the Committee.

If, at the time of receipt by the Company of such written notice, (a)
the Company has unrestricted surplus in an amount not less than the Option
Price of such shares of Stock, (b) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred stock of the Company have been fully paid, (c) 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, does not require
any vote or consent of any stockholder of the Company and does not violate the
terms of any agreement to which the Company is a party or by which it is bound
and (d) there shall have been adopted, and there shall be in full force and
effect, a resolution of the Board of Directors of the Company authorizing the
acquisition by the Company of its own shares of Stock for such purpose, that
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, and (y) if the Option Price of the shares of
Stock with respect to which such Option is 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. Notwithstanding the provisions of the
immediately preceding sentence, the Committee, 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 Committee to
accept such shares of stock. 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 receipt by the Company of (a) such
written notification from the Optionee, (b) payment, in the form required by
the foregoing provisions of this Section 5.4, of an amount of money necessary
to satisfy any withholding tax liability that may result from the exercise of
such Option, the Company shall deliver to the Optionee certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Optionee's name. Delivery of the shares shall be deemed effected for all
purposes when a stock transfer agent of the Company shall have deposited the
certificates in the United States mail, addressed to the Optionee, at the
address specified by the Optionee.

At any time when an Optionee is required to pay to the Company an
amount to be withheld under applicable income tax laws in connection with a
distribution of Stock upon the exercise of an Option, the Optionee may satisfy
this obligation in whole or in part by electing, at the time of exercise, to
have the Company withhold from the distribution of shares otherwise issuable
upon exercise of the Option a number of shares of Stock having value equal to
the amount required to be withheld. The value of the shares to be withheld
shall be based on the Fair Market Value of the Stock on the date of the
exercise.

5.5 SUBSTITUTION OPTIONS. Options may be granted under this 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 this 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.

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ARTICLE VI

ADMINISTRATION

This Plan shall be administered by the Committee. All questions of
interpretation and application of this Plan and Options 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 this 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 Options will be made,

(b) determine the number of shares and the purchase price
of Stock covered in each Option, subject to the terms of the Plan,

(d) accelerate the time at which any outstanding Option
may be exercised,

(e) define the effect, if any, on an Option of the death,
Disability, or Retirement of the Optionee,

(f) prescribe, amend and rescind rules and regulations
relating to administration of this Plan, and

(g) make all other determinations and take all other
actions deemed necessary, appropriate, or advisable for the proper
administration of this 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 this 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 VII

AMENDMENT 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 discretion.

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ARTICLE VIII

MISCELLANEOUS

8.1 NO EMPLOYMENT OBLIGATION. The granting of any Option 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 any
Optionee. 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 has been granted to him.

8.2 TAX WITHHOLDING. The Company or any Affiliate shall be
entitled to deduct from other compensation payable to each Optionee any sums
required by federal, state, or local tax law to be withheld with respect to the
grant or exercise of an Option. In the alternative, the Company may require
the Optionee (or other person exercising the Option) to pay the sum directly to
the Company or an Affiliate. If the Optionee (or other person exercising the
Option) is required to pay the sum directly, payment in cash or by check of
such sums for taxes shall be made on the date of exercise. The Company shall
have no obligation upon exercise of any Option until payment has been received,
unless withholding (or offset against a cash payment) as of or prior to the
date of exercise is sufficient to cover all sums due with respect to that
exercise. The Company and its Affiliates shall not be obligated to advise an
Optionee of the existence of the tax or the amount which the Company or
Affiliate will be required to withhold.

8.3 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 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
of 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 or 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 or the
Board of Directors 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

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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.

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

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

8.6 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 this Plan preclude the
Company from establishing any other forms of incentive or other compensation
for Employees of the Company or any Affiliate.

8.7 OTHER OPTIONS. The grant of an Option shall not confer upon
an Optionee the right to receive any future or other Options under this Plan,
whether or not Options may be granted to similarly situated Optionees, or the
right to receive future Options upon the same terms or conditions as previously
granted.

8.8 ARBITRATION OF DISPUTES. Any controversy arising out of or
relating to the Plan or an Option Agreement shall be resolved by arbitration
conducted in accordance with the terms of the Plan. No arbitration proceedings
may be commenced unless the issue has previously been submitted to the
Committee and the Committee has had at least 30 days to consider and act on the
issue. Nothing in this Section 8.8 shall be construed to, in any way, limit
the scope and effect of Article 6. In any arbitration proceeding full effect
shall be given to the rights, powers, and authorities of the Committee under
the provisions of the Plan. The arbitration shall be final and binding on the
parties.

8.9 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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