Exhibit 10.1

U.S. RESTAURANT PROPERTIES, INC.

FLEXIBLE INCENTIVE PLAN

SECTION 1. PURPOSE OF THIS PLAN

The purposes of the U.S. Restaurant Properties, Inc. Flexible Incentive Plan are
to (i) promote the interests of U.S. Restaurant Properties, Inc. (the “Company”)
and its stockholders by enabling the Company and each of its Subsidiaries (as
hereinafter defined) to (A) attract, motivate and retain their respective
employees and non-employee Directors (as hereinafter defined) by offering such
employees and Non-Employee Directors performance based stock incentives and
other equity interests in the Company and other incentive awards and
(B) compensate Consultants (as hereinafter defined) by offering such Consultants
performance based stock incentives and other equity interests in the Company and
other incentive awards that recognize the creation of value for the stockholders
of the Company and (ii) promote the Company’s long-term growth and success. To
achieve these purposes, eligible Persons may receive Stock Options, Restricted
Stock, Performance Awards and any other Awards (as such terms are hereinafter
defined), or any combination thereof.

SECTION 2. DEFINITIONS

As used in this Plan, the following terms shall have the meanings set forth
below unless the context otherwise requires:

2.1. “Award” shall mean the grant of a Stock Option, Restricted Stock, a
Performance Award, a Dividend Equivalent or any other grant of incentive
compensation pursuant to this Plan.

2.2. “Book Value” shall mean the excess of the value of the assets of an entity
over the liabilities of such entity (determined in accordance with United States
generally accepted accounting principles, consistently applied).

2.3. “Board” shall mean the Board of Directors of the Company, as the same may
be constituted from time to time.

2.4. “Cause” shall mean termination of a Participant’s employment with the
Company or a Subsidiary upon the occurrence of one or more of the following
events:

(a) The Participant’s failure to substantially perform such Participant’s duties
with the Company or any Subsidiary as determined by the Committee or the Board
following receipt by the Participant of written notice of such failure and the
Participant’s failure to remedy such failure within thirty (30) days after
receipt of such notice (other than a failure resulting from the Participant’s
incapacity during physical or mental illness);

(b) The Participant’s willful failure or refusal to perform specific directives
of the Board, which directives are consistent with the scope and nature of the
Participant’s duties and responsibilities, and which are not remedied by the
Participant within thirty (30) days after being notified in writing of such
Participant’s failure by the Board;

(c) The Participant’s conviction of a felony; or

(d) A breach of the Participant’s fiduciary duty to the Company or any
Subsidiary or willful violation in the course of performing the Participant’s
duties for the Company or any Subsidiary of any law, rule or regulation (other
than traffic violations or other minor offenses). No act or failure to act on
the Participant’s part shall be considered willful unless done or omitted to be
done in bad faith and without reasonable belief that the action or omission was
in the best interest of the Company;

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provided, however, that for each employee of the Company who has entered into an
employment agreement with the Company, “cause” shall have the meaning provided
in such employment agreement.

2.5. “Change in Control” shall mean, after the Effective Date, (i) a Corporate
Transaction is consummated, other than a Corporate Transaction that would result
in substantially all of the holders of voting securities of the Company
outstanding immediately prior thereto owning (directly or indirectly and in
substantially the same proportions relative to each other) not less than fifty
percent (50%) of the combined voting power of the voting securities of the
issuing/surviving/resulting entity outstanding immediately after such Corporate
Transaction or (ii) an agreement for the sale or other disposition of all or
substantially all of the Company’s assets (evaluated on a consolidated basis,
without regard to whether the sale or disposition is effected via a sale or
disposition of assets of the Company, the sale or disposition of the securities
of one or more Subsidiaries or the sale or disposition of the assets of one or
more Subsidiaries) is consummated.

2.6. “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time (or any successor to such legislation).

2.7. “Committee” shall mean the Compensation Committee of the Board as such
Compensation Committee may be constituted from time to time; provided, however,
membership on the Committee shall be limited to Non Employee Directors; and
provided further, the Committee will consist of not less than two
(2) Directors. All members of the Committee will serve at the pleasure of the
Board.

2.8. “Common Stock” shall mean the Common Stock, par value $0.001 per share, of
the Company.

2.9. “Company” shall have the meaning set forth in Section 1 of this Plan.

2.10. “Consultant” shall mean any Person who or which is engaged by the Company
or any Subsidiary to render consulting services.

2.11. “Corporate Transaction” shall mean any recapitalization (other than a
transaction contemplated by Section 13(a) of this Plan) merger, consolidation or
conversion involving the Company or any exchange of securities involving the
Common Stock (other than a transaction contemplated by Section 13(a) of this
Plan), provided that a primary issuance of shares of Common Stock shall not be
deemed to be a “Corporate Transaction.”

2.12. “Designated Beneficiary” shall mean the beneficiary designated by a
Participant, in a manner authorized by the Committee or the Board, to exercise
the rights of such Participant in the event of such Participant’s death. In the
absence of an effective designation by a Participant, the Designated Beneficiary
shall be such Participant’s estate.

2.13. “Director” shall mean any member of the Board.

2.14. “Disability” shall mean permanent and total inability to engage in any
substantial gainful activity, even with reasonable accommodation, by reason of
any medically determinable physical or mental impairment which has lasted or can
reasonably be expected to last without material interruption for a period of not
less than twelve (12) months, as determined in the sole discretion of the
Committee or the Board.

2.15. “Dividend Equivalent” shall mean an award granted pursuant to Section 8 of
this Plan of a right to receive certain payments with respect to Shares.

2.16. “Effective Date” shall mean December 18, 1997.

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2.17. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time (or any successor to such legislation).

2.18. “Fair Market Value” shall mean with respect to the Shares, as of any date,
the value established by the Board. Fair market value shall be determined
without regard to any restriction other than a restriction which, by its terms,
will never lapse.

2.19. “Incentive Stock Option” shall mean any option to purchase Shares awarded
pursuant to this Plan which qualifies as an “Incentive Stock Option” pursuant to
Section 422 of the Code.

2.20. “Non Employee Director” shall have the meaning set forth in Rule 16b 3 (or
any successor to such rule) promulgated under the Exchange Act) who are also
“outside directors,” as required pursuant to Section 162(m) of the Code and such
Treasury regulations as may be promulgated thereunder.

2.21. “Non Qualified Stock Option” shall mean any option to purchase Shares
awarded pursuant to this Plan that does not qualify as an Incentive Stock Option
(including, without limitation, any option to purchase Shares originally
designated as or intended to qualify as an Incentive Stock Option) but which
does not (for whatever reason) qualify as an Incentive Stock Option.

2.22. “Non Share Method” shall have the meaning set forth in Section 6.6(c) of
this Plan.

2.23. “Optionee” shall mean any Participant who has been granted and holds a
Stock Option awarded pursuant to this Plan.

2.24. “Participant” shall mean any Person who has been granted and holds an
Award granted pursuant to this Plan.

2.25. “Performance Award” shall mean any Award granted pursuant to this Plan of
Shares, rights based upon, payable in or otherwise related to Shares (including
Restricted Stock) or cash, as the Committee or Board may determine, at the end
of a specified performance period established by the Committee or Board and may
include, without limitation, Performance Shares or Performance Units.

2.26. “Performance Shares” shall have the meaning set forth in Section 9.1 of
this Plan.

2.27. “Performance Units” shall have the meaning set forth in Section 9.1 of
this Plan.

2.28. “Permitted Modification” shall be deemed to be any modification of an
Award which is made in connection with a Corporate Transaction and which
provides in connection with a Stock Option, that subsequent to the consummation
of the Corporate Transaction (i) the exercise price of such Stock Option will be
proportionately adjusted to reflect the exchange ratio applicable to the
particular Corporate Transaction and/or (ii) the nature and amount of
consideration to be received upon exercise of the Stock Option will be the same
(on a per share basis) as was received by Persons who were holders of shares of
Common Stock immediately prior to the consummation of the Corporate Transaction.

2.29. “Person” shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization or any other form of business organization.

2.30. “Plan” shall mean this U.S. Restaurant Properties, Inc. Flexible Incentive
Plan as it may be amended from time to time.

2.31. “Reload Option” shall mean a Stock Option as defined in Section 6.6(b) of
this Plan.

2.32. “Reorganization” shall mean any stock split, stock dividend, reverse stock
split, combination of Shares or any other similar increase or decrease in the
number of Shares issued and outstanding.

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2.33. “Restricted Stock” shall mean any Shares granted pursuant to this Plan
that are subject to restrictions or substantial risk of forfeiture.

2.34. “Retirement” shall mean termination of employment of an employee of the
Company or any Subsidiary, other than discharge for Cause, after age 65 or on or
before age 65 if pursuant to the terms of any retirement plan maintained by the
Company or any Subsidiary in which such employee participates.

2.35. “Securities Act” shall mean the Securities Act of 1933, as amended from
time to time (or any successor to such legislation).

2.36. “Share Retention Method” shall have the meaning set forth in
Section 6.6(c) of this Plan.

2.37. “Shares” shall mean shares of the Common Stock and any shares of capital
stock or other securities hereafter issued or issuable upon, in respect of or in
substitution or exchange for shares of Common Stock.

2.38. “Stock Option” shall mean any Incentive Stock Option or Non Qualified
Stock Option.

2.39. “Subsidiary” shall mean a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.

2.40. “Transactional Consideration” shall have the meaning set forth in
Section 13(b) of this Plan.

SECTION 3. ADMINISTRATION OF THIS PLAN

3.1. Committee/Board. This Plan shall be administered and interpreted by the
Committee and/or the Board.

3.2. Awards. (a) Subject to the provisions of this Plan and directions from the
Board, the Committee is authorized to:

(i) determine the Persons to whom Awards are to be granted;

(ii) determine the types and combinations of Awards to be granted; the number of
Shares to be covered by an Award; the exercise price of an Award; the time or
times when an Award shall be granted and may be exercised; the terms,
performance criteria or other conditions, vesting periods or any restrictions
for an Award; any restrictions on Shares acquired pursuant to the exercise of an
Award; and any other terms and conditions of an Award;

(iii) interpret the provisions of this Plan;

(iv) prescribe, amend and rescind rules and regulations relating to this Plan;

(v) determine whether, to what extent and under what circumstances to provide
loans from the Company to Participants to exercise Awards granted pursuant to
this Plan, and the terms and conditions of such loans;

(vi) rely upon employees of the Company for such clerical and recordkeeping
duties as may be necessary in connection with the administration of this Plan;

(vii) accelerate or defer (with the consent of the Participant) the vesting of
any rights pursuant to an Award; and

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(viii) make all other determinations and take all other actions necessary or
advisable for the administration of this Plan.

(b) Without limiting the Board’s right to amend this Plan pursuant to Section 13
of the Plan, the Board may take all actions authorized by Section 3.2(a) of this
Plan, including, without limitation, granting such Awards pursuant to this Plan
as the Board may deem necessary or appropriate.

3.3. Procedures.

(a) Proceedings by the Board with respect to this Plan will be conducted in
accordance with the articles of incorporation and bylaws of the Company.

(b) A majority of the Committee members shall constitute a quorum for action by
the Committee. All determinations of the Committee shall be made by not less
than a majority of its members.

(c) All questions of interpretation and application of this Plan or pertaining
to any question of fact or Award granted hereunder will be decided by the
Committee or the Board, whose decision will be final, conclusive and binding
upon the Company and each other affected party.

SECTION 4. SHARES SUBJECT TO PLAN

4.1. Limitations. The maximum number of Shares that may be issued with respect
to Awards granted pursuant to this Plan at any time shall be an amount equal to
4.9% of the Company’s issued and outstanding shares of Common Stock at such
time; provided, however, that the maximum number of Shares issuable pursuant to
Incentive Stock Options granted under the Plan shall be 575,000. The Shares
issued pursuant to this Plan may be authorized but unissued Shares, or may be
issued Shares which have been reacquired by the Company.

4.2. Changes. To the extent that any Award granted pursuant to this Plan shall
be forfeited, shall expire or shall be cancelled, in whole or in part, then the
number of Shares covered by the Award so forfeited, expired or cancelled may
again be awarded pursuant to the provisions of this Plan. In the event that
Shares are delivered to the Company in full or partial payment of the exercise
price for the exercise of a Stock Option, the number of Shares available for
future Awards granted pursuant to this Plan shall be reduced only by the net
number of Shares issued upon the exercise of the Stock Option. Awards that may
be satisfied either by the issuance of Shares or by cash or other consideration
shall, until the form of consideration to be paid is finally determined, be
counted against the maximum number of Shares that may be issued pursuant to this
Plan.

SECTION 5. ELIGIBILITY

Eligibility for participation in this Plan shall be confined to those
individuals who are employed by the Company or a Subsidiary and such Consultants
and non-employee Directors as may be designated by the Committee or the
Board. In making any determination as to Persons to whom Awards shall be
granted, the type of Award and/or the number of Shares to be covered by the
Award, the Committee or the Board shall consider the position and
responsibilities of the Person, the importance of the Person to the Company, the
duties of the Person, the past, present and potential contributions of the
Person to the growth and success of the Company and such other factors as the
Committee or the Board may deem relevant in connection with accomplishing the
purposes of this Plan.

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SECTION 6. STOCK OPTIONS

6.1. Grants. The Committee or the Board may grant Stock Options alone or in
addition to other Awards granted pursuant to this Plan to any eligible
Person. Each Person so selected shall be offered a Stock Option to purchase the
number of Shares determined by the Committee or the Board. The Committee or the
Board shall specify whether such Stock Option is an Incentive Stock Option or a
Non Qualified Stock Option and any other terms or conditions relating to such
Award; provided, however only employees of the Company or a Subsidiary may be
granted Incentive Stock Options. To the extent that any Stock Option designated
as an Incentive Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions, the failure of the stockholders of the
Company to authorize the issuance of Incentive Stock Options, the time or manner
of its exercise or otherwise), such Stock Option or the portion thereof which
does not qualify shall be deemed to constitute a Non Qualified Stock
Option. Each Person to be granted a Stock Option shall enter into a written
agreement with the Company, in such form as the Committee or the Board may
prescribe, setting forth the terms and conditions (including, without
limitation, the exercise price and vesting schedule) of the Stock Option. At any
time and from time to time, the Optionee and the Committee or the Board may
agree to modify an option agreement in such respects as they may deem
appropriate, including, without limitation, the conversion of an Incentive Stock
Option into a Non Qualified Stock Option. The Committee or the Board may require
that an Optionee meet certain conditions before the Stock Option or a portion
thereof may vest or be exercised, as, for example, that the Optionee remain in
the employ of the Company or a Subsidiary for a stated period or periods of
time.

6.2. Incentive Stock Options Limitations.

(a) In no event shall any individual be granted Incentive Stock Options to the
extent that the Shares covered by any Incentive Stock Options (and any incentive
stock options granted pursuant to any other plans of the Company or its
Subsidiaries) that may be exercised for the first time by such individual in any
calendar year have an aggregate Fair Market Value in excess of $100,000. For
this purpose, the Fair Market Value of the Shares shall be determined as of the
date(s) on which the Incentive Stock Options are granted. It is intended that
the limitation on Incentive Stock Options provided in this Section 6.2(a) be the
maximum limitation on Stock Options which may be considered Incentive Stock
Options pursuant to the Code.

(b) The option exercise price of an Incentive Stock Option shall not be less
than one hundred percent (100%) of the Fair Market Value of the Shares subject
to such Incentive Stock Option on the date of the grant of such Incentive Stock
Option.

(c) Notwithstanding anything herein to the contrary, in no event shall any
employee owning more than ten percent (10%) of the total combined voting power
of the Company or any Subsidiary be granted an Incentive Stock Option unless the
option exercise price of such Incentive Stock Option shall be at least one
hundred ten percent (110%) of the Fair Market Value of the Shares subject to
such Incentive Stock Option on the date of the grant of such Incentive Stock
Option.

(d) In no event shall any individual be granted an Incentive Stock Option after
the expiration of ten (10) years from the date this Plan is adopted or is
approved by the stockholders of the Company (if stockholder approval is required
by Section 422 of the Code).

(e) To the extent stockholder approval of this Plan is required by Section 422
of the Code, no individual shall be granted an Incentive Stock Option unless
this Plan is approved by the stockholders of the Company within twelve
(12) months before or after the date this Plan is initially adopted. In the
event this Plan is amended to increase the number of Shares subject to issuance
upon the exercise of Incentive Stock Options or to change the class of employees
eligible to receive Incentive Stock Options, no individual shall be granted an
Incentive Stock Option unless such amendment is approved by the stockholders of
the Company within twelve (12) months before or after such amendment.

(f) No Incentive Stock Option shall be granted to any employee owning more than
ten percent (10%) of the total combined voting power of the Company or any
Subsidiary unless the term of such Incentive Stock Option is equal to or less
than five (5) years measured from the date on which such Incentive Stock Option
is granted.

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6.3. Option Term. The term of a Stock Option shall be for such period of time
from the date of its grant as may be determined by the Committee or the Board;
provided, however, that no Incentive Stock Option shall be exercisable later
than ten (10) years from the date of its grant.

6.4. Time of Exercise. No Stock Option may be exercised unless it is exercised
prior to the expiration of its stated term and, in connection with options
granted to employees of the Company or its Subsidiaries, at the time of such
exercise, the Optionee is, and has been continuously since the date of grant of
such Stock Option, employed by the Company or a Subsidiary, except that:

(a) A Stock Option may, to the extent vested as of the date the Optionee ceases
to be an employee of the Company or a Subsidiary, be exercised during the three
month period immediately following the date the Optionee ceases (for any reason
other than death, Disability or termination for Cause) to be an employee of the
Company or a Subsidiary (or within such other period as may be specified in the
applicable option agreement), provided that, if the Stock Option has been
designated as an Incentive Stock Option and the option agreement provides for a
longer exercise period, the exercise of such Stock Option after such three month
period shall be treated as the exercise of a Non Qualified Stock Option;

(b) If the Optionee dies while in the employ of the Company or a Subsidiary, or
within three months after the Optionee ceases (for any reason other than
termination for Cause) to be such an employee (or within such other period as
may be specified in the applicable option agreement), a Stock Option may, to the
extent vested as of the date of the Optionee’s death, be exercised by the
Optionee’s Designated Beneficiary during the one year period immediately
following the date of the Optionee’s death (or within such other period as may
be specified in the applicable option agreement); provided that, if the Stock
Option has been designated as an Incentive Stock Option and the option agreement
provides for a longer exercise period, the exercise of such Stock Option after
such one year period shall be treated as the exercise of a Non Qualified Stock
Option;

(c) If the Optionee ceases to be an employee of the Company or a Subsidiary by
reason of the Optionee’s Disability, a Stock Option, to the extent vested as of
the date the Optionee ceases to be an employee of the Company or a Subsidiary,
may be exercised during the one year period immediately following the date on
which the Disability is determined to exist (or within such other period as may
be specified in the applicable option agreement); provided that, if the Stock
Option has been designated as an Incentive Stock Option and the option agreement
provides for a longer exercise period, the exercise of such Stock Option after
such one year period shall be treated as the exercise of a Non Qualified Stock
Option; and

(d) If the Optionee’s employment is terminated for Cause, all Stock Options held
by such Optionee shall simultaneously terminate and will no longer be
exercisable.

Nothing contained in this Section 6.4 will be deemed to extend the term of a
Stock Option or to revive any Stock Option which has previously lapsed or been
cancelled, terminated or surrendered. Stock Options granted under this Plan to
Consultants or Non Employee Directors will contain such terms and conditions
with respect to the death or disability of a Consultant or Non Employee Director
or termination of a Consultant’s or non employee Director’s relationship with
the Company as the Committee or the Board deems necessary or appropriate. Such
terms and conditions will be set forth in the option agreements evidencing the
grant of such Stock Options.

6.5. Vesting of Stock Options.

(a) Each Stock Option granted pursuant to this Plan may only be exercised to the
extent that the Optionee is vested in such Stock Option. Each Stock Option shall
vest separately

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in accordance with the option vesting schedule determined by the Committee or
the Board, which will be incorporated in the option agreement entered into
between the Company and such Optionee. The option vesting schedule may be
accelerated if, in the sole discretion of the Committee or the Board, the
acceleration of the option vesting schedule would be in the best interests the
Company.

(b) In the event of the dissolution or liquidation of the Company, each Stock
Option granted pursuant to this Plan shall terminate as of a date to be fixed by
the Committee or Board; provided, however, that not less than thirty (30) days’
prior written notice of the date so fixed shall be given to each
Optionee. During such period all Stock Options which have not previously been
terminated, exercised or surrendered will (subject to the provisions of Sections
6.3 and 6.4 of the Plan) fully vest and become exercisable, notwithstanding the
vesting schedule set forth in the option agreement evidencing the grant of such
Stock Option. Upon the date fixed by the Committee or the Board, any unexercised
Stock Options shall terminate and be of no further effect.

(c) Upon the occurrence of a Change in Control, all Stock Options and any
associated Stock Appreciation Rights shall become fully vested and immediately
exercisable.

6.6. Manner of Exercise of Stock Options.

(a) Except as otherwise provided in this Plan, Stock Options may be exercised as
to Shares only in amounts and at intervals of time specified in the written
option agreement between the Company and the Optionee. Each exercise of a Stock
Option, or any part thereof, shall be evidenced by a written notice delivered by
the Optionee to the Company. Except as set forth in Section 6.6(c) of this Plan,
the purchase price of the Shares as to which a Stock Option shall be exercised
shall be paid in full at the time of exercise, and may be paid to the Company
either:

(i) in cash (including check, bank draft or money order); or

(ii) by other consideration deemed acceptable by the Committee or the Board in
its sole discretion.

(b) If an Optionee delivers Shares (including Shares of Restricted Stock)
already owned by the Optionee in full or partial payment of the exercise price
for any Stock Option, or if the Optionee elects to have the Company retain that
number of Shares out of the Shares being acquired through the exercise of the
Stock Option having a Fair Market Value equal to the exercise price of the Stock
Option being exercised, the Committee or the Board may, in its sole discretion,
authorize the grant of a new Stock Option (a “Reload Option”) for that number of
Shares equal to the number of already owned Shares surrendered (including Shares
of Restricted Stock) or newly acquired Shares being retained by the Company in
payment of the option exercise price of the underlying Stock Option being
exercised. The grant of a Reload Option will become effective upon the exercise
of the underlying Stock Option. The option exercise price of the Reload Option
shall be the Fair Market Value of a Share on the effective date of the grant of
the Reload Option. Each Reload Option shall be exercisable no later than the
time when the underlying stock option being exercised could be last exercised.
The Committee or the Board may also specify additional terms, conditions and
restrictions for the Reload Option and the Shares to be acquired upon the
exercise thereof.

(c) Either the (i) purchase price of the Shares as to which a Stock Option shall
be exercised or (ii) amount, as determined by the Committee or the Board, of any
federal, state or local tax required to be withheld by the Company due to the
exercise of a Stock Option may, subject to the authorization of the Committee or
the Board, be satisfied, at the election of the Optionee, either (A) by payment
by the Optionee to the Company of the amount of such withholding obligation in
cash or other consideration acceptable to the Committee or the Board in its sole
discretion (the “Non Share Method”) or (B) through either the retention by the
Company

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of a number of Shares out of the Shares being acquired through the exercise of
the Stock Option or the delivery of already owned Shares having a Fair Market
Value equal to the amount of the withholding obligation (the “Share Retention
Method”). If an Optionee elects to use the Share Retention Method in full or
partial satisfaction of any tax liability resulting from the exercise of a Stock
Option, the Committee or the Board may authorize the grant of a Reload Option
for that number of Shares as shall equal the number of Shares used to satisfy
the tax liabilities of the Optionee arising out of the exercise of such Stock
Option. Such Reload Option will be granted at the price and on the terms set
forth in Section 6.6(b) of this Plan. The cash payment or an amount equal to the
Fair Market Value of the Shares so withheld, as the case may be, shall be
remitted by the Company to the appropriate taxing authorities.

(d) An Optionee shall not have any of the rights of a stockholder of the Company
with respect to the Shares subject to a Stock Option except to the extent that
such Stock Option is exercised and one or more certificates representing such
Shares shall have been delivered to the Optionee.

SECTION 7. RESTRICTED STOCK

7.1. Grants. The Committee or the Board may grant Awards of Restricted Stock to
any Consultant, Non-Employee Director or employee of the Company or a Subsidiary
for such minimum consideration, if any, as may be required by applicable law or
such greater consideration as may be determined by the Committee or the Board,
in its sole discretion. The terms and conditions of the Restricted Stock shall
be specified by the grant agreement. The Committee or the Board, in its sole
discretion, may specify any particular rights which the Participant to whom a
grant of Restricted Stock is made shall have in the Restricted Stock during the
restriction period and the restrictions applicable to the particular Award, the
vesting schedule (which may be based on service, performance or other factors)
and rights to acceleration of vesting (including, without limitation, whether
non vested Shares are forfeited or vested upon termination of
employment). Further, the Committee or the Board may grant performance based
Awards consisting of Restricted Stock by conditioning the grant, or vesting or
such other factors, such as the release, expiration or lapse of restrictions
upon any such Award (including the acceleration of any such conditions or terms)
of such Restricted Stock upon the attainment of specified performance goals or
such other factors as the Committee or the Board may determine. The Committee or
the Board shall also determine when the restrictions shall lapse or expire and
the conditions, if any, pursuant to which the Restricted Stock will be forfeited
or sold back to the Company. Each Award of Restricted Stock may have different
restrictions and conditions. Unless otherwise set forth in the grant agreement,
Restricted Stock may not be sold, pledged, encumbered or otherwise disposed of
by the recipient until the restrictions specified in the Award expire. Awards of
Restricted Stock are subject to acceleration of vesting, termination of
restrictions and termination in the same manner as Stock Options pursuant to
Sections 6.4 and 6.5 of this Plan.

7.2. Awards and Certificates. Any Restricted Stock issued hereunder may be
evidenced in such manner as the Committee or the Board, in its sole discretion,
shall deem appropriate including, without limitation, book entry registration or
issuance of a stock certificate or certificates. In the event any stock
certificate is issued in respect of Shares of Restricted Stock, such certificate
shall bear an appropriate legend with respect to the restrictions applicable to
such Award. The Company may retain, at its option, the physical custody of any
stock certificate representing any awards of Restricted Stock during the
restriction period or require that the certificates evidencing Restricted Stock
be placed in escrow or trust, along with a stock power endorsed in blank, until
all restrictions are removed or expire.

SECTION 8. DIVIDEND EQUIVALENTS

8.1. Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants, which will entitle such Participant to
receive, on a current or deferred basis and subject to such conditions as may be
imposed by the Committee, cash payments from the Company in the same amounts (or
such lesser fraction of such amounts as may be specifically set forth in the
Dividend Equivalent agreement evidencing such award) that the holder of record
of such number of Shares would be

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entitled to receive as cash dividends on such Shares (unless otherwise limited
in such agreement). Dividend Equivalent agreements will specify the expiration
date of such Dividend Equivalents, the number of Shares to which they relate,
and such other conditions as the Committee may impose.

8.2. Payments. The right to a cash payment in respect of a Dividend Equivalent
will apply to all dividends the record date for which occurs at any time during
the period commencing on the date the Dividend Equivalent is granted and ending
on the date such Dividend Equivalent expires or is terminated, whichever occurs
first.

8.3. Related Dividend Equivalents. If a Dividend Equivalent is granted in
conjunction with the grant of a Stock Option, the applicable Dividend Equivalent
agreement will provide that the grantee is entitled to receive from the Company
cash payments, on a current or deferred basis, in the same amounts (or such
lesser fraction of such amounts as may be specifically set forth in the Dividend
Equivalent agreement) that the holder of record of a number of Shares equal to
the number of Shares covered by such Stock Option would be entitled to receive
as dividends on such Shares unless otherwise limited in the Dividend Equivalent
agreement. Such right to a cash payment will apply to, and such Dividend
Equivalent will remain outstanding in respect of, all cash dividends the record
date for which occurs at any time during the period commencing on the date the
related Stock Option is granted and ending on the date that such Stock Option is
exercised, expires or terminates, whichever occurs first.

SECTION 9. PERFORMANCE AWARDS

9.1. Grants. A Performance Award may consist of either or both, as the Committee
or the Board may determine, of (i) the right to receive Shares or Restricted
Stock, or any combination thereof as the Committee or the Board may determine
(“Performance Shares”), or (ii) the right to receive a fixed dollar amount
payable in Shares, Restricted Stock, cash or any combination thereof, as the
Committee or the Board may determine (“Performance Units”). The Committee or the
Board may grant Performance Awards to any eligible Consultant, non-employee
Director or employee of the Company or a Subsidiary, for such minimum
consideration, if any, as may be required by applicable law or such greater
consideration as may be determined by the Committee or the Board, in its sole
discretion. The terms and conditions of Performance Awards shall be specified at
the time of the grant and may include provisions establishing the performance
period, the performance criteria to be achieved during a performance period, the
criteria used to determine vesting (including the acceleration thereof), whether
Performance Awards are forfeited or vest upon termination of employment during a
performance period and the maximum or minimum settlement values. Each
Performance Award shall have its own terms and conditions, which shall be
determined in the sole discretion of the Committee or the Board. If the
Committee or the Board determines, in its sole discretion, that the established
performance measures or objectives are no longer suitable because of a change in
the Company’s business, operations, corporate structure or for other reasons
that the Committee or the Board deems satisfactory, the Committee or the Board
may modify the performance measures or objectives and/or the performance
period. Awards of Performance Shares and/or Performance Units are subject to
acceleration of vesting, termination of restrictions and termination in the same
manner as Stock Options pursuant to Sections 6.4 and 6.5 of this Plan.

9.2. Terms and Conditions. Performance Awards may be valued by reference to the
Fair Market Value of a Share or according to any other formula or method deemed
appropriate by the Committee or the Board, in its sole discretion, including,
but not limited to, achievement of specific financial, production, sales, cost
or earnings performance objectives that the Committee or the Board believes to
be relevant or the Company’s performance or the performance of the Common Stock
measured against the performance of the market, the Company’s industry segment
or its direct competitors. Performance Awards may also be conditioned upon the
applicable Participant remaining in the employ of the Company or one of its
Subsidiaries for a specified period. Performance Awards may be paid in cash,
Shares (including Restricted Stock) or other consideration, or any combination
thereof. Performance Awards may be payable in a single payment or in
installments and may be payable at a specified date or dates or upon attaining
the performance objective or objectives, all at the sole discretion of the
Committee or the Board. The extent to which any applicable performance objective
has been achieved shall be conclusively determined by the Committee or the Board
in its sole discretion.

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SECTION 10. STOCK PURCHASE PLAN

10.1. Grant of Stock Purchase Rights. The term “Stock Purchase Right” means the
right to purchase shares of Common Stock and to pay for all or a portion of the
purchase price for such shares through a loan made by the Company to a
Participant (a “Purchase Loan”) as set forth in this Section 10.

10.2. Terms of Purchase Loans.

(a) Each Purchase Loan shall be evidenced by a promissory note. The term of the
Purchase Loan shall be a period not to exceed ten years, as determined by the
Committee, and the proceeds of the Purchase Loan shall be used exclusively by
the Participant for purchase of shares of Common Stock at a purchase price equal
to the Fair Market Value on the date of the Stock Purchase Right.

(b) A Purchase Loan shall bear interest at whatever rate the Committee shall
determine (not less than the then existing prime rate as announced by the
Company’s lender under the Company’s credit facility but not in excess of the
maximum rate permissible under applicable law), payable in a manner and at such
times as the Committee shall determine. Those terms and provisions as the
Committee shall determine shall be incorporated into the promissory note
evidencing the Purchase Loan.

10.3. Security for Loans.

(a) Purchase Loans granted to Participants shall be secured by a pledge of the
shares of Common Stock acquired pursuant to the Stock Purchase Right. Such
pledge shall be evidenced by a pledge agreement (the “Pledge Agreement”)
containing such terms and conditions as the Committee shall determine. The
certificates for the shares of Common Stock purchased by a Participant pursuant
to a Stock Purchase Right shall be issued in the Participant’s name, but shall
be held by the Company as security for repayment of the Participant’s Purchase
Loan together with a stock power executed in blank by the Participant (the
execution and delivery of which by the Participant shall be a condition to the
issuance of the Stock Purchase Right). The Participant shall be entitled to
exercise all rights applicable to such shares of Common Stock, including, but
not limited to, the right to vote such shares of Common Stock and the right to
receive dividends and other distributions made with respect to such shares of
Common Stock.

(b) The Company shall release and deliver to each Participant certificates for
the shares of Common Stock purchased by the Participant under the Stock Purchase
Right and then held by the Company, provided the Participant has paid or
otherwise satisfied in full the balance of the Purchase Loan and any accrued but
unpaid interest thereon. In the event the balance of the Purchase Loan is not
repaid, forgiven or otherwise satisfied within ninety (90) days after (i) the
date repayment of the Purchase Loan is due (whether in accordance with its term,
by reason of acceleration or otherwise), or (ii) such longer time as the
Committee, in its discretion, shall provide for repayment or satisfaction, the
Company shall retain those shares of Common Stock then held by the Company in
accordance with the Pledge Agreement.

10.4. Restrictions on Transfer. No Stock Purchase Right or shares of Common
Stock purchased through such Right and pledged to the Company as collateral
security for the Participant’s Purchase Loan and accrued but unpaid interest
thereon may be otherwise pledged, sold, assigned or transferred (other than by
will or by the laws of descent and distribution).

SECTION 11. OTHER AWARDS

The Committee or the Board may grant to any eligible Consultant, non-employee
Director or employee of the Company or a Subsidiary other forms of Awards based
upon, payable in or otherwise related to, in whole or in part, Shares, if the
Committee or the Board, in its sole discretion, determines that

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such other form of Award is consistent with the purposes of this Plan. The terms
and conditions of such other form of Award shall be specified in a written
agreement which sets forth the terms and conditions of such Award, including,
but not limited to, the price, if any, and the vesting schedule, if any, of such
Award. Such Awards may be granted for such minimum consideration, if any, as may
be required by applicable law or for such other greater consideration as may be
determined by the Committee or the Board, in its sole discretion.

SECTION 12. COMPLIANCE WITH SECURITIES AND OTHER LAWS

As a condition to the issuance or transfer of any Award or any security issuable
in connection with such Award, the Company may require an opinion of counsel,
satisfactory to the Company, to the effect that (a) such issuance and/or
transfer will not be in violation of the Securities Act or any other applicable
securities laws and (b) such issuance and/or transfer will not be in violation
of the rules and regulations of any securities exchange or automated quotation
system on which the Common Stock is listed or admitted to trading. Further, the
Company may refrain from issuing, delivering or transferring any Award or any
security issuable in connection with such Award until the Committee or the Board
has determined that such issuance, delivery or transfer will not violate such
securities laws or rules and regulations and that the recipient has tendered to
the Company any federal, state or local tax owed as a result of such issuance,
delivery or transfer, when the Company has a legal liability to satisfy such
tax. The Company shall not be liable for damages due to delay in the issuance,
delivery or transfer of any Award or any security issuable in connection with
such Award or any agreement, instrument or certificate evidencing such Award or
security for any reason whatsoever, including, but not limited to, a delay
caused by the listing requirements of any securities exchange or automated
quotation system or any registration requirements under the Securities Act, the
Exchange Act, or under any other state or federal law, rule or regulation. The
Company is under no obligation to take any action or incur any expense to
register or qualify the issuance, delivery or transfer of any Award or any
security issuable in connection with such Award under applicable securities laws
or to perfect any exemption from such registration or qualification or to list
any security on any securities exchange or automated quotation
system. Furthermore, the Company will have no liability to any person for
refusing to issue, deliver or transfer any Award or any security issuable in
connection with such Award if such refusal is based upon the foregoing
provisions of this Section 12. As a condition to any issuance, delivery or
transfer of any Award or any security issuable in connection with such Award,
the Company may place legends on any agreement, instrument or certificate
evidencing such Award or security, issue stop transfer orders with respect
thereto and require such agreements or undertakings as the Company may deem
necessary or advisable to assure compliance with applicable laws or regulations,
including, if the Company or its counsel deems it appropriate, representations
from the recipient of such Award or security to the effect that such recipient
is acquiring such Award or security solely for investment and not with a view to
distribution and that no distribution of the Award or the security will be made
unless registered pursuant to applicable federal and state securities laws, or
in the opinion of counsel to the Company, such registration is unnecessary.

SECTION 13. ADJUSTMENTS UPON THE OCCURRENCE OF A REORGANIZATION OR CORPORATE
TRANSACTION

13.1. Reorganization. In the event of a Reorganization, the number of Shares
subject to this Plan and to each outstanding Award, and the exercise price of
each Award which is based upon Shares, shall (to the extent deemed appropriate
by the Committee or the Board) be proportionately adjusted (as determined by the
Committee or the Board in its sole discretion) to account for any increase or
decrease in the number of issued and outstanding Shares of the Company resulting
from such Reorganization.

13.2. Corporate Transaction with the Company as Survivor. If a Corporate
Transaction is consummated and immediately following the consummation of such
Corporate Transaction the Persons who were holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction do not
receive any securities or other property (hereinafter collectively referred to
as “Transactional Consideration”) as a result of such Corporate Transaction and
substantially all of such Persons continue to hold the shares of Common Stock
held by them immediately prior to the consummation of such Corporate Transaction
(in substantially the same proportions relative to each other),

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the Awards will remain outstanding and will (subject to the provisions of
Sections 6.1, 6.5(c), 7.1 and 9.1 of this Plan) continue in full force and
effect in accordance with its terms (without any modification) following the
consummation of the Corporate Transaction.

13.3. Corporate Transaction with Company Being Acquired. If a Corporate
Transaction is consummated and immediately following the consummation of such
Corporate Transaction the Persons who were holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction do receive
Transactional Consideration as a result of such Corporate Transaction or
substantially all of such Persons do not continue to hold the shares of Common
Stock held by them immediately prior to the consummation of such Corporate
Transaction (in substantially the same proportions relative to each other), the
terms and conditions of the Awards will be modified as follows:

(i) If the documentation pursuant to which a Corporate Transaction will be
consummated provides for the assumption (by the entity issuing Transactional
Consideration to the Persons who were the holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction) of the
Awards granted pursuant to this Plan without any modification or amendment
(other than Permitted Modifications and the modifications contemplated by
Sections 6.1, 6.5(c), 7.1 and 9.1 of this Plan), such Awards will remain
outstanding and will continue in full force and effect in accordance with its
terms following the consummation of such Corporate Transaction (subject to such
Permitted Modifications and the provisions of Sections 6.1, 6.5(c), 7.1 and 9.1
of the Plan).

(ii) If the documentation pursuant to which a Corporate Transaction will be
consummated does not provide for the assumption by the entity issuing
Transactional Consideration to the Persons who were the holders of shares of
Common Stock immediately prior to the consummation of such Corporate Transaction
of the Awards granted pursuant to this Plan without any modification or
amendment (other than Permitted Modifications), all vesting restrictions
(performance based or otherwise) applicable to Awards which will not be so
assumed will accelerate and the holders of such Awards may (subject to the
expiration of the term of such Awards) exercise/receive the benefits of such
Awards without regard to such vesting restrictions during the ten (10) day
period immediately preceding the consummation of such Corporate Transaction. For
purposes of the immediately preceding sentence, all performance based goals will
be deemed to have been satisfied in full. The Company will provide each
Participant holding Awards which will not be so assumed with reasonable notice
of the termination of such vesting restrictions and the impending termination of
such Awards. Upon the consummation of such a Corporate Transaction, all
unexercised Awards which are not to be so assumed will automatically terminate
and cease to be outstanding.

Nothing contained in this Section 13 will be deemed to extend the term of an
Award or to revive any Award which has previously lapsed or been cancelled,
terminated or surrendered.

SECTION 14. AMENDMENT OR TERMINATION OF THIS PLAN

14.1. Amendment of This Plan. Notwithstanding anything contained in this Plan to
the contrary, all provisions of this Plan (including, without limitation, the
maximum number of Shares that may be issued with respect to Awards to be granted
pursuant to this Plan) may at any time or from time to time be modified or
amended by the Board; provided, however, that no Award at any time outstanding
pursuant to this Plan may be modified, impaired or cancelled adversely to the
holder of the Award without the consent of such holder.

14.2. Termination of This Plan. The Board may suspend or terminate this Plan at
any time, and such suspension or termination may be retroactive or
prospective. Termination of this Plan shall not impair or affect any Award
previously granted hereunder and the rights of the holder of the Award shall
remain in effect until the Award has been exercised in its entirety or has
expired or otherwise has been terminated by the terms of such Award.

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SECTION 15. AMENDMENTS AND ADJUSTMENTS TO AWARDS

The Committee or the Board may amend, modify or terminate any outstanding Award
with the Participant’s consent at any time prior to payment or exercise in any
manner not inconsistent with the terms of this Plan, including, without
limitation, (a) to change the date or dates as of which and/or the terms and
conditions pursuant to which (i) a Stock Option becomes exercisable or (ii) a
Performance Award is deemed earned, (b) to amend the terms of any outstanding
Award to provide an exercise price per share which is higher or lower than the
then current exercise price per share of such outstanding Award or (c) to cancel
an Award and grant a new Award in substitution therefor under such different
terms and conditions as the Committee or the Board determines in its sole
discretion to be appropriate including, but not limited to, having an exercise
price per share which may be higher or lower than the exercise price per share
of the cancelled Award. The Committee or the Board may also make adjustments in
the terms and conditions of, and the criteria included in agreements evidencing
Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 13 of this Plan) affecting the
Company, or the financial statements of the Company or any Subsidiary, or of
changes in applicable laws, regulations or accounting principles, whenever the
Committee or the Board determines that such adjustments are appropriate to
prevent reduction or enlargement of the benefits or potential benefits intended
to be made available pursuant to this Plan. Any provision of this Plan or any
agreement regarding an Award to the contrary notwithstanding, the Committee or
the Board may cause any Award granted to be cancelled in consideration of a cash
payment or alternative Award made to the holder of such cancelled Award equal in
value to the Fair Market Value of such cancelled Award. The determinations of
value pursuant to this Section 15 shall be made by the Committee or the Board in
its sole discretion.

SECTION 16. GENERAL PROVISIONS

16.1. No Limit on Other Compensation Arrangements. Nothing contained in this
Plan shall prevent the Company from adopting or continuing in effect other
compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.

16.2. No Right to Employment or Continuation of Relationship. Nothing in this
Plan or in any Award, nor the grant of any Award, shall confer upon or be
construed as giving any Participant any right to remain in the employ of the
Company or a Subsidiary or to continue as a Consultant or Non-Employee
Director. Further, the Company or a Subsidiary may at any time dismiss a
Participant from employment or terminate the relationship of any Consultant or
non-employee Director with the Company or any Subsidiary, free from any
liability or any claim pursuant to this Plan, unless otherwise expressly
provided in this Plan or in any agreement evidencing an Award made under this
Plan. No Consultant, Non-Employee Director or employee of the Company or any
Subsidiary shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of any Consultant, Non-Employee Director
or employee of the Company or any Subsidiary or of any Participants.

16.3. GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND EFFECT OF THIS PLAN AND ANY
RULES AND REGULATIONS RELATING TO THIS PLAN SHALL BE DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

16.4. Severability. If any provision of this Plan or any Award is or becomes or
is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to
any individual or Award, or would disqualify this Plan or any Award under any
law deemed applicable by the Committee or the Board, such provision shall be
construed or deemed amended to conform to applicable law, or if it cannot be
construed or deemed amended without, in the sole determination of the Committee
or the Board, materially altering the intent of this Plan or the Award, such
provision shall be stricken as to such jurisdiction, individual or Award and the
remainder of this Plan and any such Award shall remain in full force and effect.

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16.5. No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to this Plan or any Award, and the Committee or the Board shall
determine, in its sole discretion, whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be cancelled,
terminated or otherwise eliminated.

16.6. Headings. Headings are given to the Sections and Subsections of this Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
this Plan or any provision thereof.

16.7. Effective Date. The provisions of this Plan that relate to the grant of
Incentive Stock Options shall be effective as of the date of the approval of
this Plan by the stockholders of the Company.

16.8. Transferability of Awards. Awards shall not be transferable otherwise than
by will or the laws of descent and distribution without the written consent of
the Committee or the Board (which may be granted or withheld at the sole
discretion of the Committee or the Board). Awards may be exercised, during the
lifetime of the holder, only by the holder. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of an Award contrary to the
provisions hereof, or the levy of any execution, attachment or similar process
upon an Award shall be null and void and without effect.

16.9. Rights of Participants. Except as hereinbefore expressly provided in this
Plan, any Person to whom an Award is granted shall have no rights by reason of
any subdivision or consolidation of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, reorganization,
merger or consolidation or spinoff of assets or stock of another corporation,
and any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
exercise price of Shares subject to an Award.

16.10. No Limitation Upon the Rights of the Company. The grant of an Award
pursuant to this Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, or changes of its capital or
business structure; to merge, convert or consolidate; to dissolve or liquidate;
or sell or transfer all or any part of its business or assets.

16.11. Date of Grant of an Award. Except as noted in this Section 16.11, the
granting of an Award shall take place only upon the execution and delivery by
the Company and the Participant of a written agreement and neither any other
action taken by the Committee or the Board nor anything contained in this Plan
or in any resolution adopted or to be adopted by the Committee, the Board or the
stockholders of the Company shall constitute the granting of an Award pursuant
to this Plan. Solely, for purposes of determining the Fair Market Value of the
Shares subject to an Award, such Award will be deemed to have been granted as of
the date specified by the Committee or the Board notwithstanding any delay which
may elapse in executing and delivering the applicable agreement.

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Amendment No. 1 to Flexible Incentive Plan

Approved by the Stockholders of the Company on June 2, 1999

Section 4.1 of the Plan is hereby amended to read in its entirety as follows:

4.1 Limitations. The maximum number of Shares that may be issued with respect to
Awards granted pursuant to this Plan at any time shall be an amount equal to
4.9% of the Company’s issued and outstanding shares of Common Stock at such
time, plus 500,000 Shares; provided, however, that the maximum number of Shares
issuable pursuant to Incentive Stock Options granted under the Plan shall be
1,000,000. The Shares issued pursuant to this Plan may be authorized but
unissued Shares, or may be issued Shares which have been reacquired by the
Company.

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Amendment No. 2 to the Flexible Incentive Plan

Approved by the Company’s Board of Directors on March 14, 2006

The Flexible Incentive Plan is hereby amended by adding the following
Section 16.12:

Section 16.12. Unless previously terminated, the Plan will terminate ten
(10) years after the date the Plan was approved by the stockholders, except that
Awards that are granted under the Plan before its termination will continue to
be administered under the terms of the Plan until the Awards terminate, are
exercised, or fully vest and are settled, as is consistent with the terms of
such Awards.