Exhibit 10.1

KEY ENERGY SERVICES, INC.

2006 PHANTOM SHARE PLAN

1.                                      PURPOSE; ELIGIBILITY.

1.1                                 GENERAL PURPOSE.  THE NAME OF THIS PLAN IS
THE KEY ENERGY SERVICES, INC. 2006 PHANTOM SHARE PLAN (THE “PLAN”).  THE PURPOSE
OF THE PLAN IS TO ENABLE KEY ENERGY SERVICES, INC., A MARYLAND CORPORATION (THE
“COMPANY”), AND ANY AFFILIATE TO OBTAIN AND RETAIN THE SERVICES OF THE TYPES OF
EMPLOYEES, WHO WILL CONTRIBUTE TO THE LONG RANGE SUCCESS OF THE COMPANY AND ITS
AFFILIATES AND TO PROVIDE INCENTIVES THAT ARE LINKED DIRECTLY TO INCREASES IN
SHARE VALUE WHICH WILL INURE TO THE BENEFIT OF ALL STOCKHOLDERS OF THE COMPANY.

1.2                                 ELIGIBLE AWARD RECIPIENTS.  THE PERSONS
ELIGIBLE TO RECEIVE AWARDS ARE EMPLOYEES AND ANY SUCH PARTIES WHO ARE REASONABLY
EXPECTED TO BECOME EMPLOYEES AFTER THE RECEIPT OF AWARDS.

1.3                                 AVAILABLE AWARDS.  PHANTOM SHARE AWARDS ARE
AVAILABLE UNDER THE PLAN.

2.                                      DEFINITIONS.

2.1                                 “ADMINISTRATOR” MEANS THE BOARD OR THE
COMMITTEE APPOINTED BY THE BOARD IN ACCORDANCE WITH SECTION 3.5.

2.2                                 “AWARD” MEANS AN AWARD OF PHANTOM SHARES.

2.3                                 “AWARD AGREEMENT” MEANS A WRITTEN AGREEMENT
BETWEEN THE COMPANY AND A HOLDER OF AN AWARD EVIDENCING THE TERMS AND CONDITIONS
OF AN INDIVIDUAL AWARD GRANT.  EACH AWARD AGREEMENT SHALL BE SUBJECT TO THE
TERMS AND CONDITIONS OF THE PLAN.

2.4                                 “BENEFICIAL OWNER” HAS THE MEANING ASSIGNED
TO SUCH TERM IN RULE 13D-3 AND RULE 13D-5 UNDER THE EXCHANGE ACT, EXCEPT THAT IN
CALCULATING THE BENEFICIAL OWNERSHIP OF ANY PARTICULAR “PERSON” (AS THAT TERM IS
USED IN SECTION 13(D)(3) OF THE EXCHANGE ACT), SUCH “PERSON” SHALL BE DEEMED TO
HAVE BENEFICIAL OWNERSHIP OF ALL SECURITIES THAT SUCH “PERSON” HAS THE RIGHT TO
ACQUIRE BY CONVERSION OR EXERCISE OF OTHER SECURITIES, WHETHER SUCH RIGHT IS
CURRENTLY EXERCISABLE OR IS EXERCISABLE ONLY AFTER THE PASSAGE OF TIME.  THE
TERMS “BENEFICIALLY OWNS” AND “BENEFICIALLY OWNED” HAVE A CORRESPONDING MEANING.

2.5                                 “BOARD” MEANS THE BOARD OF DIRECTORS OF THE
COMPANY.

2.6                                 “CAUSE” MEANS (1) CONVICTION OF, OR PLEA OF
GUILTY OR NO CONTEST TO, A MISDEMEANOR INVOLVING MORAL TURPITUDE OR A FELONY,
(2) ENGAGING IN AN ACT OF FRAUD AGAINST THE COMPANY OR ANY OF ITS AFFILIATES,
(3) ENGAGING IN THEFT, EMBEZZLEMENT OR OTHER MISAPPROPRIATION OF ANY FUNDS OR
PROPERTY OF THE COMPANY OR ANY OF ITS AFFILIATES, INCLUDING CONDUCT WHICH IS
MATERIALLY INJURIOUS (MONETARILY OR OTHERWISE) TO THE COMPANY OR ANY OF ITS
AFFILIATES (E.G., MISUSE OF THE COMPANY’S OR AN AFFILIATE’S FUNDS OR OTHER
PROPERTY), (4) WILLFULLY AND CONTINUALLY FAILING TO PERFORM THE MATERIAL DUTIES
ASSIGNED TO SUCH PARTICIPANT, (5) KNOWINGLY ENGAGING IN ANY DIRECT, MATERIAL
CONFLICT OF INTEREST WITH THE COMPANY OR ITS AFFILIATES WITHOUT COMPLIANCE WITH
THE EXISTING CONFLICT OF INTEREST POLICY, IF ANY, (6) KNOWINGLY ENGAGING,
WITHOUT THE WRITTEN APPROVAL

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OF THE BOARD, IN ANY ACTIVITY WHICH COMPETES WITH THE BUSINESS OF THE COMPANY OR
ITS AFFILIATES OR WHICH WOULD RESULT IN A MATERIAL INJURY TO THE BUSINESS,
REPUTATION OR GOODWILL OF THE COMPANY OR AN AFFILIATE, (7) WITHOUT
AUTHORIZATION, DISCLOSURE OF TRADE SECRETS OR PROPRIETARY INFORMATION OF THE
COMPANY, ITS AFFILIATES, OR A THIRD PARTY WHO HAS ENTRUSTED SUCH INFORMATION TO
THE COMPANY OR ANY OF ITS AFFILIATES, (8) KNOWINGLY AND INTENTIONALLY ENGAGING
IN ANY ACTIVITY WHICH WOULD CONSTITUTE A MATERIAL VIOLATION OF THE PROVISIONS OF
THE COMPANY’S POLICIES AND PROCEDURES, THEN IN EFFECT; OR (9) ENGAGING IN ANY
ACT DEFINED AS “CAUSE” IN A PARTICIPANT’S EMPLOYMENT AGREEMENT.

2.7                                 “CHANGE IN CONTROL” MEANS:

(1) a merger of the Company with another entity, a consolidation involving the
Company, or the sale of all or substantially all of the assets of the Company to
another entity if, in any such case, the holders of equity securities of the
Company immediately prior to such transaction or event do not beneficially own
immediately after such transaction or event equity securities of the resulting
entity entitled to 50% or more of the votes then eligible to be cast in the
election of directors generally (or comparable governing body) of the resulting
entity in substantially the same proportions that they owned the equity
securities of the Company immediately prior to such transaction or event; (2)
the dissolution or liquidation of the Company; (3) when any person or entity,
including a “group” as contemplated by Section 13(d)(3) of the Exchange Act,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the combined voting power of the outstanding
securities of the Company; or (4) as a result of or in connection with a
contested election of directors, the persons who were members of the Board
immediately before such election shall cease to constitute a majority of the
Board.  For purposes of the preceding sentence, (i) “resulting entity” in the
context of a transaction or event that is a merger, consolidation or sale of all
or substantially all assets shall mean the surviving entity (or acquiring entity
in the case of an asset sale) unless the surviving entity (or acquiring entity
in the case of an asset sale) is a subsidiary of another entity and the holders
of common stock of the Company receive capital stock of such other entity in
such transaction or event, in which event the resulting entity shall be such
other entity, and (ii) subsequent to the consummation of a merger or
consolidation that does not constitute a Change in Control, the term “Company”
shall refer to the resulting entity and the term “Board” shall refer to the
board of directors (or comparable governing body) of the resulting entity.

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2.8                                 “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS IT MAY BE AMENDED FROM TIME TO TIME, AND ANY GUIDANCE AND/OR
REGULATIONS PROMULGATED THEREUNDER.

2.9                                 “COMMITTEE” MEANS A COMMITTEE OF ONE OR MORE
MEMBERS OF THE BOARD APPOINTED BY THE BOARD TO ADMINISTER THE PLAN IN ACCORDANCE
WITH SECTION 3.5.

2.10                           “COMMON STOCK” MEANS THE COMMON STOCK, $0.10 PAR
VALUE PER SHARE, OF THE COMPANY.

2.11                           “COMPANY” MEANS KEY ENERGY SERVICES, INC. A
MARYLAND CORPORATION.

2.12                           “CONTINUOUS SERVICE” MEANS THAT THE PARTICIPANT’S
SERVICE WITH THE COMPANY ITS APPLICABLE PREDECESSORS AND ITS AFFILIATES, IS NOT
INTERRUPTED FOR A PERIOD OF MORE THAN 90 DAYS OR TERMINATED.  THE ADMINISTRATOR
OR ITS DELEGATE, IN ITS SOLE DISCRETION, MAY DETERMINE WHETHER CONTINUOUS
SERVICE SHALL BE CONSIDERED INTERRUPTED IN THE CASE OF ANY LEAVE OF ABSENCE
APPROVED BY THAT PARTY, INCLUDING SICK LEAVE, MILITARY LEAVE OR ANY OTHER
PERSONAL OR FAMILY LEAVE OF ABSENCE.

2.13                           “DATE OF GRANT” MEANS THE DATE ON WHICH THE
ADMINISTRATOR ADOPTS A RESOLUTION, OR TAKES OTHER APPROPRIATE ACTION, EXPRESSLY
GRANTING AN AWARD TO A PARTICIPANT THAT SPECIFIES THE KEY TERMS AND CONDITIONS
OF THE AWARD AND FROM WHICH THE PARTICIPANT BEGINS TO BENEFIT FROM OR BE
ADVERSELY AFFECTED BY SUBSEQUENT CHANGES IN THE FAIR MARKET VALUE OF THE COMMON
STOCK OR, IF A LATER DATE IS SET FORTH IN SUCH RESOLUTION, THEN SUCH DATE AS IS
SET FORTH IN SUCH RESOLUTION.

2.14                           “DIRECTOR” MEANS A MEMBER OF THE BOARD.

2.15                           “DISABILITY” MEANS A PARTICIPANT’S INABILITY TO
ENGAGE IN ANY SUBSTANTIAL GAINFUL ACTIVITY BY REASON OF ANY MEDICALLY
DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT WHICH CAN BE EXPECTED TO RESULT IN
DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN TWELVE
(12) MONTHS; OR (II) RESULTS FROM A MEDICALLY DETERMINABLE PHYSICAL OR MENTAL
IMPAIRMENT WHICH CAN BE EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST
FOR A CONTINUOUS PERIOD OF NOT LESS THAN TWELVE (12) MONTHS, AND CAUSES SUCH
PARTICIPANT TO RECEIVE INCOME REPLACEMENT BENEFITS FOR A PERIOD OF NOT LESS THAN
THREE (3) MONTHS UNDER AN ACCIDENT AND HEALTH PLAN COVERING THE COMPANY’S
EMPLOYEES.

2.16                           “EFFECTIVE DATE” SHALL MEAN THE DATE OF COMMITTEE
ADOPTION OF THE PLAN.

2.17                           “EMPLOYEE” MEANS ANY PERSON EMPLOYED BY THE
COMPANY OR AN AFFILIATE.  MERE SERVICE AS A DIRECTOR OR PAYMENT OF A DIRECTOR’S
FEE BY THE COMPANY OR AN AFFILIATE SHALL NOT BE SUFFICIENT TO CONSTITUTE
“EMPLOYMENT” BY THE COMPANY OR AN AFFILIATE.

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2.18                           “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

2.19                           “FAIR MARKET VALUE” MEANS, AS OF ANY DATE, THE
VALUE OF THE COMMON STOCK AS DETERMINED BELOW.  THE FAIR MARKET VALUE ON ANY
DATE ON WHICH THE COMPANY’S SHARES OF COMMON STOCK ARE REGISTERED UNDER SECTION
12 OF THE EXCHANGE ACT AND LISTED ON THE NEW YORK STOCK EXCHANGE SHALL BE THE
CLOSING PRICE OF A SHARE OF COMMON STOCK ON THE NEW YORK STOCK EXCHANGE ON SUCH
DATE, AND THEREAFTER (A) IF THE COMMON STOCK IS ADMITTED TO QUOTATION ON THE
OVER THE COUNTER MARKET OR ANY INTERDEALER QUOTATION SYSTEM, THE FAIR MARKET
VALUE ON ANY GIVEN DATE SHALL NOT BE LESS THAN THE AVERAGE OF THE HIGHEST BID
AND LOWEST ASKED PRICES OF THE COMMON STOCK REPORTED FOR SUCH DATE OR, IF NO BID
AND ASKED PRICES WERE REPORTED FOR SUCH DATE, FOR THE LAST DAY PRECEDING SUCH
DATE FOR WHICH SUCH PRICES WERE REPORTED, OR (B) IN THE ABSENCE OF AN
ESTABLISHED MARKET FOR THE COMMON STOCK, THE FAIR MARKET VALUE DETERMINED IN
GOOD FAITH BY THE ADMINISTRATOR AND SUCH DETERMINATION SHALL BE CONCLUSIVE AND
BINDING ON ALL PERSONS.

2.20                           “INCUMBENT DIRECTORS” MEANS INDIVIDUALS WHO, ON
THE EFFECTIVE DATE, CONSTITUTE THE BOARD, PROVIDED THAT ANY INDIVIDUAL BECOMING
A DIRECTOR SUBSEQUENT TO THE EFFECTIVE DATE WHOSE ELECTION OR NOMINATION FOR
ELECTION TO THE BOARD WAS APPROVED BY A VOTE OF AT LEAST TWO-THIRDS OF THE
INCUMBENT DIRECTORS THEN ON THE BOARD (EITHER BY A SPECIFIC VOTE OR BY APPROVAL
OF THE PROXY STATEMENT OF THE COMPANY IN WHICH SUCH PERSON IS NAMED AS A NOMINEE
FOR DIRECTOR WITHOUT OBJECTION TO SUCH NOMINATION) SHALL BE AN INCUMBENT
DIRECTOR.  NO INDIVIDUAL INITIALLY ELECTED OR NOMINATED AS A DIRECTOR AS A
RESULT OF AN ACTUAL OR THREATENED ELECTION CONTEST WITH RESPECT TO DIRECTORS OR
AS A RESULT OF ANY OTHER ACTUAL OR THREATENED SOLICITATION OF PROXIES BY OR ON
BEHALF OF ANY PERSON OTHER THAN THE BOARD SHALL BE AN INCUMBENT DIRECTOR.

2.21                           “NON-EMPLOYEE DIRECTOR” MEANS A DIRECTOR WHO IS A
“NON-EMPLOYEE DIRECTOR” WITHIN THE MEANING OF RULE 16B-3.

2.22                           “OFFICER” MEANS A PERSON WHO IS AN OFFICER OF THE
COMPANY WITHIN THE MEANING OF SECTION 16 OF THE EXCHANGE ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.

2.23                           “PARTICIPANT” MEANS A PERSON TO WHOM AN AWARD IS
GRANTED PURSUANT TO THE PLAN OR, IF APPLICABLE, SUCH OTHER PERSON WHO HOLDS AN
OUTSTANDING AWARD.

2.24                           “PLAN” MEANS THIS KEY ENERGY SERVICES, INC. 2006
PHANTOM SHARES PLAN.

2.25                           “RESTRICTED PERIOD” HAS THE MEANING SET FORTH IN
SECTION 7.1(A).

2.26                           “PHANTOM SHARE” MEANS A NOTATIONAL UNIT WITH THE
VALUE OF ONE SHARE OF COMMON STOCK ON ANY GIVEN DATE AND ANY OTHER SECURITIES
INTO WHICH SUCH SHARE IS CHANGED OR FOR WHICH SUCH SHARE IS EXCHANGED (“SHARE”).

2.27                           “RULE 16B-3” MEANS RULE 16B-3 PROMULGATED UNDER
THE EXCHANGE ACT OR ANY SUCCESSOR TO RULE 16B-3, AS IN EFFECT FROM TIME TO TIME.

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3.                                      ADMINISTRATION.

3.1                                 ADMINISTRATION BY BOARD.  THE PLAN SHALL BE
ADMINISTERED BY THE BOARD UNLESS AND UNTIL THE BOARD DELEGATES ADMINISTRATION TO
A COMMITTEE, AS PROVIDED IN SECTION 3.5.

3.2                                 POWERS OF ADMINISTRATOR.  THE ADMINISTRATOR
SHALL HAVE THE POWER AND AUTHORITY TO SELECT AND GRANT TO PARTICIPANTS AWARDS
PURSUANT TO THE TERMS OF THE PLAN.

3.3                                 SPECIFIC POWERS.  IN PARTICULAR, THE
ADMINISTRATOR SHALL HAVE THE AUTHORITY: (A) TO CONSTRUE AND INTERPRET THE PLAN
AND APPLY ITS PROVISIONS; (B) TO PROMULGATE, AMEND, AND RESCIND RULES AND
REGULATIONS RELATING TO THE ADMINISTRATION OF THE PLAN; (C) TO AUTHORIZE ANY
PERSON TO EXECUTE, ON BEHALF OF THE COMPANY, ANY INSTRUMENT REQUIRED TO CARRY
OUT THE PURPOSES OF THE PLAN; (D) TO DELEGATE ITS AUTHORITY TO ONE OR MORE
OFFICERS OF THE COMPANY WITH RESPECT TO AWARDS THAT DO NOT INVOLVE “INSIDERS”
WITHIN THE MEANING OF SECTION 16 OF THE EXCHANGE ACT; (E) TO DETERMINE WHEN
AWARDS ARE TO BE GRANTED UNDER THE PLAN AND THE APPLICABLE DATE OF GRANT;
(F) FROM TIME TO TIME TO SELECT, SUBJECT TO THE LIMITATIONS SET FORTH IN THIS
PLAN, THOSE PARTICIPANTS TO WHOM AWARDS SHALL BE GRANTED; (G) TO DETERMINE THE
NUMBER OF PHANTOM SHARES TO BE COVERED BY EACH AWARD; (I) TO PRESCRIBE THE TERMS
AND CONDITIONS OF EACH AWARD; (J) TO AMEND ANY OUTSTANDING AWARDS; PROVIDED,
HOWEVER, THAT IF ANY SUCH AMENDMENT IMPAIRS A PARTICIPANT’S RIGHTS OR INCREASES
A PARTICIPANT’S OBLIGATIONS UNDER HIS OR HER AWARD OR CREATES OR INCREASES A
PARTICIPANT’S FEDERAL INCOME TAX LIABILITY WITH RESPECT TO AN AWARD, SUCH
AMENDMENT SHALL ALSO BE SUBJECT TO THE PARTICIPANT’S CONSENT; (K) TO DETERMINE
THE DURATION AND PURPOSE OF LEAVES OF ABSENCES WHICH MAY BE GRANTED TO A
PARTICIPANT WITHOUT CONSTITUTING TERMINATION OF HIS OR HER EMPLOYMENT FOR
PURPOSES OF THE PLAN, WHICH PERIODS SHALL BE NO SHORTER THAN THE PERIODS
GENERALLY APPLICABLE TO EMPLOYEES UNDER THE COMPANY’S EMPLOYMENT POLICIES; (L)
TO MAKE DECISIONS WITH RESPECT TO OUTSTANDING AWARDS THAT MAY BECOME NECESSARY
UPON A CHANGE IN CORPORATE CONTROL OR AN EVENT THAT TRIGGERS ANTI-DILUTION
ADJUSTMENTS; AND (M) TO EXERCISE DISCRETION TO MAKE ANY AND ALL OTHER
DETERMINATIONS WHICH IT DETERMINES TO BE NECESSARY OR ADVISABLE FOR
ADMINISTRATION OF THE PLAN.

3.4                                 DECISIONS FINAL.  ALL DECISIONS MADE BY THE
ADMINISTRATOR PURSUANT TO THE PROVISIONS OF THE PLAN SHALL BE FINAL AND BINDING
ON THE COMPANY AND THE PARTICIPANTS, UNLESS SUCH DECISIONS ARE DETERMINED BY A
COURT HAVING JURISDICTION TO BE ARBITRARY AND CAPRICIOUS.

3.5                                 THE COMMITTEE.

(A)                                  GENERAL.  THE BOARD MAY DELEGATE
ADMINISTRATION OF THE PLAN TO A COMMITTEE OR COMMITTEES OF ONE OR MORE MEMBERS
OF THE BOARD, AND THE TERM “COMMITTEE” SHALL APPLY TO ANY PERSON OR PERSONS TO
WHOM SUCH AUTHORITY HAS BEEN DELEGATED.  IF ADMINISTRATION IS DELEGATED TO A
COMMITTEE, THE COMMITTEE SHALL HAVE, IN CONNECTION WITH THE ADMINISTRATION OF
THE PLAN, THE POWERS THERETOFORE POSSESSED BY THE BOARD, INCLUDING THE POWER TO
DELEGATE TO A SUBCOMMITTEE ANY OF THE ADMINISTRATIVE POWERS THE COMMITTEE IS
AUTHORIZED TO EXERCISE (AND REFERENCES IN THIS PLAN TO THE BOARD OR THE
ADMINISTRATOR SHALL THEREAFTER BE TO THE COMMITTEE OR SUBCOMMITTEE), SUBJECT,
HOWEVER, TO SUCH RESOLUTIONS, NOT INCONSISTENT WITH THE PROVISIONS OF THE PLAN,
AS MAY BE ADOPTED FROM TIME TO TIME BY THE BOARD.  THE BOARD MAY ABOLISH THE
COMMITTEE AT ANY TIME AND REVEST IN THE BOARD THE ADMINISTRATION OF THE PLAN. 
THE MEMBERS OF THE COMMITTEE SHALL BE APPOINTED BY AND SERVE AT THE PLEASURE OF
THE BOARD.  FROM

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TIME TO TIME, THE BOARD MAY INCREASE OR DECREASE THE SIZE OF THE COMMITTEE, ADD
ADDITIONAL MEMBERS TO, REMOVE MEMBERS (WITH OR WITHOUT CAUSE) FROM, APPOINT NEW
MEMBERS IN SUBSTITUTION THEREFOR, AND FILL VACANCIES, HOWEVER CAUSED, IN THE
COMMITTEE.  THE COMMITTEE SHALL ACT PURSUANT TO A VOTE OF THE MAJORITY OF ITS
MEMBERS OR, IN THE CASE OF A COMMITTEE COMPOSED OF ONLY TWO MEMBERS, THE
UNANIMOUS CONSENT OF ITS MEMBERS, WHETHER PRESENT OR NOT, OR BY THE WRITTEN
CONSENT OF THE MAJORITY OF ITS MEMBERS AND MINUTES SHALL BE KEPT OF ALL OF ITS
MEETINGS AND COPIES THEREOF SHALL BE PROVIDED TO THE BOARD.  SUBJECT TO THE
LIMITATIONS PRESCRIBED BY THE PLAN AND THE BOARD, THE COMMITTEE MAY ESTABLISH
AND FOLLOW SUCH RULES AND REGULATIONS FOR THE CONDUCT OF ITS BUSINESS AS IT MAY
DETERMINE TO BE ADVISABLE.

(B)                                 COMMITTEE COMPOSITION WHEN COMMON STOCK IS
REGISTERED.  AT ANY SUCH TIME AS THE COMMON STOCK IS REQUIRED TO BE REGISTERED
UNDER SECTION 12 OF THE EXCHANGE ACT, THE BOARD SHALL HAVE DISCRETION TO
DETERMINE WHETHER OR NOT IT INTENDS TO COMPLY WITH THE EXEMPTION REQUIREMENTS OF
RULE 16B-3.  HOWEVER, IF THE BOARD INTENDS TO SATISFY SUCH EXEMPTION
REQUIREMENTS, WITH RESPECT TO ANY INSIDER SUBJECT TO SECTION 16 OF THE EXCHANGE
ACT, THE COMMITTEE SHALL BE A COMPENSATION COMMITTEE OF THE BOARD THAT AT ALL
TIMES CONSISTS SOLELY OF TWO OR MORE NON-EMPLOYEE DIRECTORS.  WITHIN THE SCOPE
OF SUCH AUTHORITY, THE BOARD OR THE COMMITTEE MAY DELEGATE TO A COMMITTEE OF ONE
OR MORE MEMBERS OF THE BOARD WHO ARE NOT NON-EMPLOYEE DIRECTORS THE AUTHORITY TO
GRANT AWARDS TO ELIGIBLE PERSONS WHO ARE NOT THEN SUBJECT TO SECTION 16 OF THE
EXCHANGE ACT.

3.6                                 INDEMNIFICATION.  IN ADDITION TO SUCH OTHER
RIGHTS OF INDEMNIFICATION AS THEY MAY HAVE AS DIRECTORS OR MEMBERS OF THE
COMMITTEE, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE ADMINISTRATOR SHALL
BE INDEMNIFIED BY THE COMPANY AGAINST THE REASONABLE EXPENSES, INCLUDING
ATTORNEY’S FEES, ACTUALLY INCURRED IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING OR IN CONNECTION WITH ANY APPEAL THEREIN, TO WHICH THE ADMINISTRATOR
MAY BE PARTY BY REASON OF ANY ACTION TAKEN OR FAILURE TO ACT UNDER OR IN
CONNECTION WITH THE PLAN OR ANY OPTION GRANTED UNDER THE PLAN, AND AGAINST ALL
AMOUNTS PAID BY THE ADMINISTRATOR IN SETTLEMENT THEREOF (PROVIDED, HOWEVER, THAT
THE SETTLEMENT HAS BEEN APPROVED BY THE COMPANY, WHICH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD) OR PAID BY THE ADMINISTRATOR IN SATISFACTION OF A
JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING, EXCEPT IN RELATION TO MATTERS
AS TO WHICH IT SHALL BE ADJUDGED IN SUCH ACTION, SUIT OR PROCEEDING THAT SUCH
ADMINISTRATOR DID NOT ACT IN GOOD FAITH AND IN A MANNER WHICH SUCH PERSON
REASONABLY BELIEVED TO BE IN THE BEST INTERESTS OF THE COMPANY, AND IN THE CASE
OF A CRIMINAL PROCEEDING, HAD NO REASON TO BELIEVE THAT THE CONDUCT COMPLAINED
OF WAS UNLAWFUL; PROVIDED, HOWEVER, THAT WITHIN 60 DAYS AFTER INSTITUTION OF ANY
SUCH ACTION, SUIT OR PROCEEDING, SUCH ADMINISTRATOR SHALL, IN WRITING, OFFER THE
COMPANY THE OPPORTUNITY AT ITS OWN EXPENSE TO HANDLE AND DEFEND SUCH ACTION,
SUIT OR PROCEEDING.

4.                                      SHARES SUBJECT TO THE PLAN.

Subject to adjustment in accordance with Section 8, the total number of Phantom
Shares that may be granted under the Plan shall not exceed 495,500.

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5.                                      ELIGIBILITY.

Awards may be granted to Employees and those individuals whom the Administrator
determines are reasonably expected to become Employees following the Date of
Grant.

6.                                      AWARD TERMS

6.1                                 GENERAL.  THE TERMS AND CONDITIONS OF A
GRANT OF PHANTOM SHARES SHALL BE REFLECTED IN AN AWARD AGREEMENT.  NO SHARES OF
COMMON STOCK SHALL BE ISSUED AT THE TIME A PHANTOM SHARE IS GRANTED OR VESTED,
AND THE COMPANY WILL NOT BE REQUIRED TO SET ASIDE A FUND FOR THE PAYMENT OF ANY
SUCH AWARD.  UNLESS OTHERWISE DETERMINED AT THE TIME OF GRANT, EACH PHANTOM
SHARE (REPRESENTING ONE SHARE OF COMMON STOCK) MAY BE CREDITED WITH CASH AND THE
CASH VALUE OF STOCK DIVIDENDS PAID BY THE COMPANY IN RESPECT OF ONE SHARE OF
COMMON STOCK (“DIVIDEND EQUIVALENTS”).  THE CASH VALUE ATTRIBUTABLE TO DIVIDEND
EQUIVALENT RIGHTS WILL BE CONVERTED INTO PHANTOM SHARES BASED ON THE FAIR MARKET
VALUE OF A SHARE OF COMMON STOCK ON THE DATE SUCH DIVIDEND IS PAID (PROVIDED
THAT NO FRACTIONAL PHANTOM SHARES SHALL BE GRANTED).  THE CASH VALUE OF ANY CASH
DIVIDENDS OR DISTRIBUTIONS REMAINING IN RESPECT OF A FRACTIONAL PHANTOM SHARE
SHALL BE ADDED TO ANY SUBSEQUENT CASH DIVIDENDS OR DISTRIBUTIONS AND CONVERTED
INTO ADDITIONAL PHANTOM SHARES.

6.2                                 RESTRICTIONS.  PHANTOM SHARES AWARDED TO ANY
PARTICIPANT SHALL BE SUBJECT TO (A) FORFEITURE UNTIL THE PHANTOM SHARES HAVE
VESTED, AND TO THE EXTENT SUCH PHANTOM SHARES ARE FORFEITED, ALL RIGHTS OF THE
PARTICIPANT TO SUCH PHANTOM SHARES SHALL TERMINATE WITHOUT FURTHER OBLIGATION ON
THE PART OF THE COMPANY, AND (B) SUCH OTHER TERMS AND CONDITIONS AS MAY BE SET
FORTH IN THE APPLICABLE AWARD AGREEMENT.  THE ADMINISTRATOR SHALL HAVE THE
AUTHORITY TO ACCELERATE SOME OR ALL OF THE VESTING OF THE PHANTOM SHARES
WHENEVER IT MAY DETERMINE THAT, BY REASON OF CHANGES IN APPLICABLE LAWS OR OTHER
CHANGES IN CIRCUMSTANCES ARISING AFTER THE DATE OF THE PHANTOM SHARES ARE
GRANTED, SUCH ACTION IS APPROPRIATE.

6.3                                 VESTING SCHEDULE.  THE FOLLOWING CONDITIONS
SHALL APPLY TO ALL AWARDS UNLESS OTHERWISE SET FORTH IN THE APPLICABLE AWARD
AGREEMENT.

(A)                                  EXCEPT AS SET FORTH IN THIS SECTION 6.3,
AND SUBJECT TO THE PARTICIPANT’S CONTINUOUS SERVICE, EACH AWARD SHALL VEST [25%]
A YEAR ON EACH ANNIVERSARY OF THE DATE OF GRANT UNLESS OTHERWISE SET FORTH IN
THIS SECTION 6.3.

(B)                                 IF (I) A PARTICIPANT TERMINATES HIS OR HER
CONTINUOUS SERVICE FOR ANY REASON, OR (II) THE COMPANY TERMINATES A
PARTICIPANT’S CONTINUOUS SERVICE DUE TO CAUSE, ALL UNVESTED PHANTOM SHARES SHALL
BE IMMEDIATELY FORFEITED WITHOUT ANY PAYMENT TO THE PARTICIPANT.

(C)                                  IF (I) THE COMPANY TERMINATES A PARTICIPANT
WITHOUT CAUSE, OR (II) THE PARTICIPANT ATTAINS AGE 65 AND COMPLETES TEN YEARS OF
CONTINUOUS SERVICE, OR (III) A PARTICIPANT’S CONTINUOUS SERVICE TERMINATES DUE
TO DEATH OR DISABILITY, ALL NONVESTED PHANTOM SHARES SHALL VEST IMMEDIATELY.

(D)                                 UPON A CHANGE IN CONTROL, ALL OUTSTANDING
UNVESTED PHANTOM SHARES SHALL VEST.

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6.4                                 SETTLEMENT OF PHANTOM SHARES.  WITHIN TWENTY
BUSINESS DAYS OF THE VESTING DATE OF ANY OUTSTANDING PHANTOM SHARES, THE COMPANY
SHALL DELIVER TO THE PARTICIPANT, OR HIS OR HER BENEFICIARY, WITHOUT CHARGE, A
PAYMENT IN CASH EQUAL TO THE VALUE OF THE VESTED PHANTOM SHARES.

7.                                      MISCELLANEOUS.

7.1                                 ACCELERATION OF EXERCISABILITY AND VESTING. 
THE ADMINISTRATOR SHALL HAVE THE POWER TO ACCELERATE THE TIME AT WHICH AN AWARD
OR ANY PART THEREOF WILL VEST.

7.2                                 STOCKHOLDER RIGHTS.  NO PARTICIPANT SHALL BE
DEEMED TO BE THE HOLDER OF, OR TO HAVE ANY OF THE RIGHTS OF A HOLDER WITH
RESPECT TO, ANY SHARES OF COMMON STOCK DUE TO HIS OR HER RECEIPT OR VESTING OF
AN AWARD UNDER THIS PLAN.

7.3                                 NO EMPLOYMENT OR OTHER SERVICE RIGHTS. 
NOTHING IN THE PLAN OR ANY INSTRUMENT EXECUTED OR AWARD GRANTED PURSUANT TO THIS
PLAN SHALL CONFER UPON ANY PARTICIPANT ANY RIGHT TO CONTINUE TO SERVE THE
COMPANY OR AN AFFILIATE IN THE CAPACITY IN EFFECT AT THE TIME THE AWARD WAS
GRANTED OR SHALL AFFECT THE RIGHT OF THE COMPANY OR AN AFFILIATE TO
TERMINATE THE EMPLOYMENT OF AN EMPLOYEE WITH OR WITHOUT NOTICE AND WITH OR
WITHOUT CAUSE.

7.4                                 TRANSFER, APPROVED LEAVE OF ABSENCE.  FOR
PURPOSES OF THE PLAN, NO TERMINATION OF CONTINUOUS SERVICE BY AN EMPLOYEE SHALL
BE DEEMED TO RESULT FROM EITHER (A) A TRANSFER TO THE EMPLOYMENT OF THE COMPANY
FROM AN AFFILIATE OR FROM THE COMPANY TO AN AFFILIATE, OR FROM ONE AFFILIATE TO
ANOTHER; OR (B) AN APPROVED LEAVE OF ABSENCE FOR MILITARY SERVICE OR SICKNESS,
OR FOR ANY OTHER PURPOSE APPROVED BY THE COMPANY, IF THE EMPLOYEE’S RIGHT TO
RE-EMPLOYMENT IS GUARANTEED EITHER BY A STATUTE OR BY CONTRACT OR UNDER THE
POLICY PURSUANT TO WHICH THE LEAVE OF ABSENCE WAS GRANTED OR IF THE
ADMINISTRATOR OTHERWISE SO PROVIDES IN WRITING.

7.5                                 WITHHOLDING OBLIGATIONS.  THE COMPANY SHALL
BE ENTITLED TO WITHHOLD AND/OR DEDUCT ANY AND ALL AMOUNTS REQUIRED TO BE
WITHHELD FROM ANY PAYMENT HEREUNDER TO FULFILL ITS WITHHOLDING OBLIGATIONS.

8.                                      ADJUSTMENTS UPON CHANGES IN STOCK.

Awards granted under the Plan and any Award Agreements and the maximum number of
Phantom Shares which may be subject to all Awards will be equitably adjusted or
substituted to the extent necessary to preserve their economic intent in the
event of changes in the outstanding Common Stock or in the capital structure of
the Company by reason of stock or extraordinary cash dividends, stock splits,
reverse stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award. The Company
shall give each Participant notice of an adjustment hereunder.

9.                                      AMENDMENT OF THE PLAN AND AWARDS.

9.1                                 AMENDMENT OF PLAN.  THE BOARD AT ANY TIME,
AND FROM TIME TO TIME, MAY AMEND OR TERMINATE THE PLAN.

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9.2                                 CONTEMPLATED AMENDMENTS.  IT IS EXPRESSLY
CONTEMPLATED THAT THE BOARD MAY AMEND THE PLAN IN ANY RESPECT THE BOARD DEEMS
NECESSARY OR ADVISABLE TO PROVIDE ELIGIBLE EMPLOYEES WITH THE MAXIMUM BENEFITS
PROVIDED OR TO BE PROVIDED UNDER THE PROVISIONS OF THE CODE AND THE REGULATIONS
PROMULGATED THEREUNDER RELATING TO THE NONQUALIFIED DEFERRED COMPENSATION
PROVISIONS OF SECTION 409A OF THE CODE AND/OR TO BRING THE PLAN AND/OR AWARDS
GRANTED UNDER IT INTO COMPLIANCE THEREWITH.

9.3                                 NO IMPAIRMENT OF RIGHTS.  RIGHTS UNDER ANY
AWARD GRANTED BEFORE AMENDMENT OF THE PLAN SHALL NOT BE IMPAIRED BY ANY
AMENDMENT OF THE PLAN UNLESS (A) THE COMPANY REQUESTS THE CONSENT OF THE
PARTICIPANT AND (B) THE PARTICIPANT CONSENTS IN WRITING.

9.4                                 AMENDMENT OF AWARDS.  THE ADMINISTRATOR AT
ANY TIME, AND FROM TIME TO TIME, MAY AMEND THE TERMS OF ANY ONE OR MORE AWARDS;
PROVIDED, HOWEVER, THAT THE ADMINISTRATOR MAY NOT EFFECT ANY AMENDMENT WHICH
WOULD OTHERWISE CONSTITUTE AN IMPAIRMENT OF THE RIGHTS UNDER ANY AWARD UNLESS
(A) THE COMPANY REQUESTS THE CONSENT OF THE PARTICIPANT AND (B) THE PARTICIPANT
CONSENTS IN WRITING.

10.                               GENERAL PROVISIONS.

10.1                           OTHER COMPENSATION ARRANGEMENTS.  NOTHING
CONTAINED IN THIS PLAN SHALL PREVENT THE BOARD FROM ADOPTING OTHER OR ADDITIONAL
COMPENSATION ARRANGEMENTS, SUBJECT TO STOCKHOLDER APPROVAL IF SUCH APPROVAL IS
REQUIRED; AND SUCH ARRANGEMENTS MAY BE EITHER GENERALLY APPLICABLE OR APPLICABLE
ONLY IN SPECIFIC CASES.   THE PLAN IS INTENDED TO CONSTITUTE AN “UNFUNDED” PLAN
FOR INCENTIVE COMPENSATION AND NOTHING CONTAINED IN THE PLAN SHALL GIVE ANY
PARTICIPANT ANY RIGHTS THAT ARE GREATER THAN THOSE OF A GENERAL UNSECURED
CREDITOR OF THE COMPANY.

10.2                           OTHER PROVISIONS.  THE AWARD AGREEMENTS
AUTHORIZED UNDER THE PLAN MAY CONTAIN SUCH OTHER PROVISIONS NOT INCONSISTENT
WITH THIS PLAN, INCLUDING, WITHOUT LIMITATION, RESTRICTIONS UPON THE EXERCISE OF
THE AWARDS, AS THE ADMINISTRATOR MAY DEEM ADVISABLE.

10.3                           SECTION 16.  IT IS THE INTENT OF THE COMPANY THAT
THE PLAN SATISFY, AND BE INTERPRETED IN A MANNER THAT SATISFIES, THE APPLICABLE
REQUIREMENTS OF RULE 16B-3 AS PROMULGATED UNDER SECTION 16 OF THE EXCHANGE ACT
SO THAT PARTICIPANTS WILL BE ENTITLED TO THE BENEFIT OF RULE 16B-3, OR ANY OTHER
RULE PROMULGATED UNDER SECTION 16 OF THE EXCHANGE ACT, AND WILL NOT BE SUBJECT
TO SHORT-SWING LIABILITY UNDER SECTION 16 OF THE EXCHANGE ACT.  ACCORDINGLY, IF
THE OPERATION OF ANY PROVISION OF THE PLAN WOULD CONFLICT WITH THE INTENT
EXPRESSED IN THIS SECTION 10.3, SUCH PROVISION TO THE EXTENT POSSIBLE SHALL BE
INTERPRETED AND/OR DEEMED AMENDED SO AS TO AVOID SUCH CONFLICT.

11.                               EFFECTIVE DATE OF PLAN.

The Plan shall become effective as of the Effective Date.

12.                               TERMINATION OR SUSPENSION OF THE PLAN.

The Plan shall terminate automatically on the day before the 10th anniversary of
the Effective Date.  No Award shall be granted pursuant to the Plan after such
date, but Awards

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theretofore granted may extend beyond that date.  The Board may suspend or
terminate the Plan at any earlier date.

13.                               CHOICE OF LAW AND FORUM.

The validity, performance and construction of this Plan shall be governed by the
laws of the State of Texas.  The parties hereto consent to the exclusive
jurisdiction of the courts of Harris County, Texas.  Any claim arising out of or
related to this Agreement must be brought no later than six months after it has
accrued.

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