<PAGE>
                                                                      EXHIBIT 10

                               ASCENT ENERGY INC.
                            2002 STOCK INCENTIVE PLAN


         1. Purpose. The purpose of the Ascent Energy Inc. 2002 Stock Incentive
Plan (the "Plan") is to enhance the ability of Ascent Energy Inc. (the
"Company") and its Subsidiaries to attract and retain officers, employees,
directors and consultants of outstanding ability and to provide selected
officers, employees, directors and consultants with an interest in the Company
parallel to that of the Company's shareholders. The term "Company" as used in
this Plan with reference to employment shall include the Company and its
Subsidiaries, as appropriate.

         2. Definitions.

                  (a) "Award" shall mean an award determined in accordance with
the terms of the Plan.

                  (b) "Board" shall mean the Board of Directors of the Company.

                  (c) "Cause" shall mean (i) if a Participant is party to an
employment agreement or similar agreement with the Company and such agreement
includes a definition of Cause, the definition contained therein or (ii) if no
such employment or similar agreement exists, it shall mean (A) the Participant's
failure to perform the duties reasonably assigned to him or her by the Company,
(B) a good faith finding by the Company of the Participant's dishonesty, gross
negligence or misconduct, (C) a material breach by the Participant of any
written Company employment policies or rules or (D) the Participant's conviction
for, or his or her plea of guilty or nolo contendere to, a felony or for any
other crime which involves fraud, dishonesty or moral turpitude.

                  (d) "Change in Control" of the Company means the occurrence of
one of the following events:

                  (i) individuals who, on the Effective Date, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the Effective Date whose election or nomination for election 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; provided, however, that no
individual initially elected or nominated as a director of the Company 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;

                  (ii) any "person" (as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the
Effective Date, a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the



<PAGE>

Company representing 35% or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of the Board (the
"Company Voting Securities"); provided, however, that an event described in this
paragraph (ii) shall not be deemed to be a Change in Control if any of following
becomes such a beneficial owner: (A) the Company or any majority-owned
subsidiary (provided, that this exclusion applies solely to the ownership levels
of the Company or the majority-owned subsidiary), (B) any tax-qualified,
broad-based employee benefit plan sponsored or maintained by the Company or any
majority-owned subsidiary, (C) any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) any shareholder of record as of
January 1, 2002, that owns five per cent (5%) or more of the Company's Voting
Securities or (E) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (iii));

                  (iii) the consummation of a merger, consolidation, statutory
share exchange, reorganization, sale or disposition of all or substantially all
the assets of the Company, or similar form of corporate transaction involving
the Company or any of its Subsidiaries (a "Business Combination"), unless
immediately following such Business Combination: (A) 50% or more of the total
voting power of (x) the corporation resulting from such Business Combination
(the "Surviving Corporation"), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors of the Surviving Corporation (the
"Parent Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof immediately prior to
the Business Combination, (B) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or indirectly,
of 35% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or

                  (iv) stockholder approval of a liquidation or dissolution of
the Company, unless the voting common equity interests of an ongoing entity
(other than a liquidating trust) are beneficially owned, directly or indirectly,
by the Company's shareholders in substantially the same proportions as such
shareholders owned the Company's outstanding voting common equity interests
immediately prior to such liquidation and such ongoing entity assumes all
existing obligations of the Company under this Plan.

Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 35% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that,


                                       2
<PAGE>

if after such acquisition by the Company such person becomes the beneficial
owner of Company Voting Securities that increases the percentage of outstanding
Company Voting Securities beneficially owned by such person, a Change in Control
of the Company shall then occur.

                  (e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                  (f) "Committee" shall mean a committee of at least two members
of the Board appointed by the Board to administer the Plan and to perform the
functions set forth herein, all of whom qualify as "non-employee directors"
within the meaning of Rule 16b-3 as promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and "outside
directors" within the meaning of Section 162(m) of the Code; provided, however,
that, to the extent Awards are not intended to be "performance based" under
Section 162(m) of the Code, the Committee members are not required to qualify as
"outside directors"; and further provided, to the extent that the Company is not
subject to the Exchange Act, or the persons to whom Awards are granted are not
"insiders" under the Exchange Act, Committee members are not required to be
"non-employee directors."

                  (g) "Common Stock" shall mean the common stock of the Company.

                  (h) "Continuous Service" means service of a Participant as an
employee, director or consultant with the Company or a Subsidiary that has not
been interrupted or terminated. The Participant's Continuous Service shall not
be deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or a Subsidiary as an employee,
director or consultant or a change in the entity for which the Participant
renders such service; provided, that, there is no interruption or termination of
the Participant's Continuous Service other than an approved leave of absence.
The Committee, in its sole discretion, may determine whether Continuous Service
shall be considered interrupted.

                  (i) "Disability" shall have the same meaning as provided in
any long-term disability plan maintained by the Company or any Subsidiary in
which a Participant then participates (the "LTD Plans"); provided, that, if no
such plan exists, it shall have the meaning set forth in Section 22(e)(3) of the
Code.

                  (j) "Fair Market Value" per share as of a particular date
shall mean, unless otherwise determined by the Board, the last reported sale
price (on the day immediately preceding such date) of the Common Stock on the
New York Stock Exchange (or any other exchange or national market system upon
which price quotations for the Company's Common Stock is regularly available);
provided, however, that if the Common Stock is not publicly traded, Fair Market
Value shall mean, as of any date, the Fair Market Value on such date as
determined in good faith by the Board in its sole discretion.

                  (k) "Immediate Family Member" shall mean, except as otherwise
determined by the Committee, a Participant's children, stepchildren,
grandchildren, parents, stepparents, grandparents, spouse, siblings, in-laws and
persons related by reason of legal adoption.



                                       3
<PAGE>

                  (l) "Incentive Stock Option" shall mean a stock option which
is intended to meet the requirements of Section 422 of the Code.

                  (m) "Nonqualified Stock Option" shall mean a stock option
which is not intended to be an Incentive Stock Option.

                  (n) "Option" shall mean either an Incentive Stock Option or a
Nonqualified Stock Option.

                  (o) "Participant" shall mean an officer, employee, director or
consultant of the Company or its Subsidiaries who is selected to participate in
the Plan in accordance with Section 5.

                  (p) "Restricted Period" shall mean the period for which
restrictions are in effect on shares of Restricted Stock or other restricted
Awards pursuant to Section 8 hereof and as set forth in the applicable
Agreement.

                  (q) "Restricted Stock" shall mean shares of Common Stock that
are subject to restrictions as set forth in Section 8 hereof.

                  (r) "Subsidiary" shall mean any subsidiary of the Company
selected by the Board; provided, that, with respect to Incentive Stock Options,
it shall mean any subsidiary of the Company that is a corporation and which at
the time qualifies as a "subsidiary corporation" within the meaning of Section
424(f) of the Code.

                  (s) "Ten-Percent Shareholder" shall mean an individual who is
an employee who owns (within the meaning of Section 422(b)(6) of the Code) stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company and its Subsidiaries.

         3. Shares Subject to the Plan. Subject to adjustment in accordance with
Section 15, the total number of shares of Common Stock which shall be available
for the grant of Awards under the Plan shall not exceed 1,500,000 shares of
Common Stock, all of which may be granted pursuant to Options; provided, that,
for purposes of this limitation, any Common Stock subject to an Option which is
canceled or expired without exercise shall again become available for Award
under the Plan. Any shares forfeited in accordance with the provisions of the
Plan and the terms and conditions of the applicable Award, shall again be
available for subsequent Awards under the Plan. In addition, any shares of
Common Stock tendered and/or withheld for the payment of all or a part of an
Award or any applicable withholding taxes shall again become available for the
grant of an Award under the Plan other than for the grant of Incentive Stock
Options. Subject to adjustment in accordance with Section 15, no employee shall
be granted, during any calendar year, Options to purchase more than 500,000
shares of Common Stock. Subject to adjustment in accordance with Section 15, no
Participant shall be granted an award of restricted stock on more than 500,000
shares of Common Stock in any calendar year. Common Stock available for issue or
distribution under the Plan shall be authorized and unissued shares or shares
reacquired by the Company in any manner.



                                       4
<PAGE>

         4. Administration.

                  (a) The Plan shall be administered by the Committee. All
references to the Committee hereinafter shall mean the Board if no such
Committee has been appointed.

                  (b) The Committee shall (i) approve the selection of
Participants, (ii) determine the type of Awards to be made to Participants,
(iii) determine the number of shares of Common Stock subject to Awards, (iv)
determine the terms and conditions of any Award granted hereunder (including,
but not limited to, any restriction and forfeiture conditions on such Award) and
(v) have the authority to interpret the Plan, to establish, amend, and rescind
any rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements entered into hereunder, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry it into effect.

                  (c) Any action of the Committee shall be final, conclusive and
binding on all persons, including the Company and its Subsidiaries and
shareholders, Participants and persons claiming rights from or through a
Participant.

                  (d) The Committee may delegate to officers or employees of the
Company or any Subsidiary, and to service providers, the authority, subject to
such terms as the Committee shall determine, to perform administrative functions
with respect to the Plan and Award agreements.

                  (e) Members of the Committee and any officer or employee of
the Company or any Subsidiary acting at the direction of, or on behalf of, the
Committee shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified by the Company with respect to any such
action or determination.

         5. Eligibility. Individuals eligible to receive Awards under the Plan
shall be the offices, employees, directors and consultants of the Company and
its Subsidiaries selected by the Committee; provided, that, only -------- ----
employees of the Company and its Subsidiaries may be granted Incentive Stock
Options.

         6. Awards. Awards under the Plan may consist of Options, Restricted
Stock, Restricted Stock units or other Awards based on the value of the Common
Stock. Incentive Stock Options may only be granted to employees of the Company
and its Subsidiaries. Awards shall be subject to the terms and conditions of the
Plan and shall be evidenced by an agreement containing such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall deem desirable.

         7. Options. Options may be granted under the Plan in such form as the
Committee may from time to time approve pursuant to terms set forth in an Option
agreement.

                  (a) Types of Options. Each Option agreement shall state
whether or not the Option will be treated as an Incentive Stock Option or
Nonqualified Stock Option.


                                       5
<PAGE>

                  (b) Option Price. The purchase price per share of the Common
Stock purchasable under an Option shall be determined by the Committee;
provided, however, the exercise price for Incentive Stock Options will be not
less than 100% of the Fair Market Value of the Common Stock on the date of the
grant, and in the case of Incentive Stock Options granted to a Ten-Percent
Shareholder, the price per share specified in the agreement relating to such
Option shall not be less than 110% of the Fair Market Value per share of the
Common Stock on the date of grant.

                  (c) Option Period. The term of each Option shall be fixed by
the Committee, but no Option shall be exercisable after the expiration of ten
(10) years from the date the Option is granted; provided, that, in the case of
Incentive Stock Options granted to a Ten-Percent Shareholder, the term of such
Option shall not exceed five (5) years from the date of grant.

                  (d) Exercisability. Each Option shall vest and become
exercisable at a rate determined by the Committee on the date of grant.

                  (e) Method of Exercise. Options may be exercised, in whole or
in part, by giving notice of exercise to the Company (in the form required by
the Company), specifying the number of shares of Common Stock to be purchased.
Such notice shall be accompanied by the payment in full of the Option exercise
price. The exercise price of the Option may be paid by (i) cash, certified check
or bank check, (ii) surrender of common stock held by the Optionee for at least
six (6) months prior to exercise (or such longer or shorter period as may be
required to avoid a charge to earnings for financial accounting purposes) or the
attestation of ownership of such shares, in either case, if so permitted by the
Company, (iii) if established by the Company, through a "same day sale"
commitment from optionee and a broker-dealer selected by the Company that is a
member of the National Association of Securities Dealers (an "NASD Dealer")
whereby the optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased sufficient to pay for the total exercise
price and whereby the NASD Dealer irrevocably commits upon receipt of such
shares to forward the total exercise price directly to the Company, (iv) through
additional methods prescribed by the Committee, including, without limitation,
loans, installment payments and/or guarantees, all under such terms and
conditions as deemed appropriate by the Committee in its discretion, or (v) by
any combination of the foregoing, and, in all instances, to the extent permitted
by applicable law. A Participant's subsequent transfer or disposition of any
Common Stock acquired upon exercise of an Option shall be subject to any Federal
and state laws then applicable, specifically securities law, and the terms and
conditions of this Plan.

                  (f) Effect of a Termination of Continuous Service. The
agreement evidencing the grant of each Option shall set forth the terms and
conditions applicable to such Option or upon a termination or change in the
status of the Continuous Service of the Participant by the Company or
Subsidiary.

                  (g) Incentive Stock Options. An Option shall be treated as an
Incentive Stock Option only to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Common Stock
with respect to which all Incentive Stock Options held by such Participant
(under the Plan and all other plans of the



                                       6
<PAGE>

Company and its "parent corporation" (as such term is defined in Section 424(e)
of the Code) or Subsidiaries), become exercisable for the first time during any
calendar year does not exceed $100,000. This limitation shall be applied by
taking Options into account in the order in which they were granted. To the
extent this limitation is exceeded, an Option shall be treated as a Nonqualified
Stock Option regardless of its designation as an Incentive Stock Option. Upon
the sale or other disposition of shares acquired pursuant to the exercise of an
Incentive Stock Option (other than a transfer to a trustee, receiver, or other
fiduciary in any insolvency proceeding, as described in Section 422(c)(3) of the
Code) prior to the later of (i) the second anniversary of the date on which the
Incentive Stock Option was granted, or (ii) the first anniversary of the date on
which the shares were acquired, the Participant shall notify the Company and
make appropriate arrangements with the Company for any taxes which the Company
is obligated to collect (if any) in connection with any disposition of shares
acquired pursuant to the exercise of an Incentive Stock Option, including any
Federal, state or local withholding taxes.

         8. Restricted Stock and Restricted Stock Units. The Committee may from
time to time award Restricted Stock under the Plan to Eligible Individuals.
Restricted Stock may not be sold, assigned, transferred or otherwise disposed
of, or pledged or hypothecated as collateral for a loan or as security for the
performance of any obligation or for any other purpose, for such period (the
"Restricted Period") as the Committee shall determine. The Committee may define
the Restricted Period in terms of the passage of time or in any other manner it
deems appropriate. The Committee may alter or waive at any time any term or
condition of Restricted Stock that is not mandatory under the Plan.

                  (a) Terms of Restricted Stock Agreements. All Awards of
Restricted Stock shall be evidenced by an agreement that shall be in such form
(which need not be the same for each Participant) as the Committee shall from
time to time approve. The offer of Restricted Stock shall be accepted by the
Participant's execution and delivery of the Restricted Stock Agreement within
the time period established by the Committee. If the executed Restricted Stock
Agreement is not returned to the Company (along with full payment if any payment
is required) within the time period established by the Committee, then the Award
offer shall terminate, unless otherwise determined by the Committee.

                  (b) Termination of Continuous Service. Unless otherwise
determined by the Committee, upon termination of a Participant's Continuous
Service for any reason prior to the end of the Restricted Period, the Restricted
Stock shall be forfeited and the Participant shall have no right with respect to
the Award.

                  (c) Rights of Shareholder. Except as restricted under the
terms of the Plan and any Agreement, any Participant awarded Restricted Stock
shall have all the rights of a shareholder.

                  (d) Share Certificate. If a share certificate is issued in
respect of Restricted Stock, the certificate shall be registered in the name of
the Participant, but shall be held by the Company for the account of the
Participant until the end of the Restricted Period.

                  (e) Other Restricted Awards. The Committee may also award
Restricted Stock in the form of Restricted Stock units having a value equal to
an identical number of shares



                                       7
<PAGE>

of Common Stock. Payment of Restricted Stock units shall be made in shares of
Common Stock or in cash or in a combination thereof (based upon the Fair Market
Value of the Common Stock on the day the Restricted Period expires), all as
determined by the Committee in its sole discretion.

         9. Other Awards. Subject to such performance and employment conditions
as the Committee may determine, awards of Common Stock or awards based on the
value of the Common Stock may be granted either alone or in addition to other
Awards granted under the Plan. Any Awards under this Section 9 and any Common
Stock covered by any such Award may be forfeited to the extent so provided in
the Award agreement, as determined by the Committee. Payment of Common Stock
awards made under this Section 12 which are based on the value of Common Stock
may be made in Common Stock or in cash or in a combination thereof (based upon
the Fair Market Value of the Common Stock on the date of payment), all as
determined by the Committee in its sole discretion.

         10. Special Provisions.

                  (a) Change in Control. Upon the occurrence of a Change in
Control, all Options shall automatically become vested and exercisable in full
and all restrictions on any restricted Common Stock, restricted Common Stock
units, or other Awards granted hereunder shall automatically lapse. The
Committee may, in its discretion, include such further provisions and
limitations in any agreement documenting such Awards as it may deem equitable
and in the best interests of the Company.

                  (b) Forfeiture. Notwithstanding anything in the Plan to the
contrary and unless otherwise specifically provided in an Award agreement, in
the event of a serious breach of conduct by a Participant or former Participant
(including, without limitation, any conduct prejudicial to or in conflict with
the Company or any Subsidiary, the Committee may (i) cancel any outstanding
Award granted to such Participant or former Participant, in whole or in part,
whether or not vested, and/or (ii) if such conduct or activity occurs within one
(1) year following the exercise or payment of an Award, require such Participant
or former Participant to repay to the Company any gain realized or payment
received upon the exercise or payment of such Award (with such gain or payment
valued as of the date of exercise or payment). Such cancellation or repayment
obligation shall be effective as of the date specified by the Committee. Any
repayment obligation may be satisfied in shares of Common Stock or cash or a
combination thereof (based upon the Fair Market Value of the shares of Common
Stock on the date of payment), and the Committee may provide for an offset to
any future payments owed by the Company or any Subsidiary to the Participant or
former Participant if necessary to satisfy the repayment obligation. The
determination of whether a Participant or former Participant has engaged in a
serious breach of conduct or any activity in competition with any of the
businesses of the Company or any Subsidiary shall be determined by the Committee
in good faith and in its sole discretion.

         11. Withholding. Upon (a) disposition of shares of Common Stock
acquired pursuant to the exercise of an Incentive Stock Option granted pursuant
to the Plan within two years of the grant of the Incentive Stock Option or
within one year after exercise of the Incentive Stock Option, or (b) exercise of
a Nonqualified Stock Option (or an Incentive Stock Option


                                       8
<PAGE>

treated as a Nonqualified Stock Option), or payment of any other Award under the
Plan, or (c) under any other circumstances determined by the Committee in its
sole discretion, the Company shall have the right to require any Participant,
and such Participant by accepting the Awards granted under the Plan agrees, to
pay to the Company the amount of any taxes which the Company shall be required
to withhold with respect thereto. In the event of clauses (a), (b) or (c), with
the consent of the Committee, at its sole discretion, such Participant may elect
to pay to the Company an amount equal to the amount of the taxes which the
Company shall be required to withhold by delivering to the Company shares of
Common Stock having a Fair Market Value equal to the amount of the withholding
tax obligation as determined by the Company; provided, however, that no shares
of Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law. Such shares so delivered to satisfy the minimum
withholding obligation may be either shares withheld by the Company upon the
exercise of the Option or other shares. At the Committee's sole discretion, a
Participant may elect to have additional taxes withheld and satisfy such
withholding with cash or shares of Common Stock held for at least six (6) months
prior to exercise, if, in the opinion of the Company's outside accountants,
doing so, would not result in a charge against earnings. In addition, at the
Committee's sole discretion, a Participant may satisfy such withholding
obligation by executing a promissory note fully secured by the Common Stock.

         12. Nontransferability, Beneficiaries. Unless otherwise determined by
the Committee with respect to the transferability of Nonqualified Stock Options
by a Participant to his or her Immediate Family Members (or to trusts or
partnerships or limited liability companies established for such family
members), no Award shall be assignable or transferable by the Participant,
otherwise than by will or the laws of descent and distribution or pursuant to a
beneficiary designation, and Options shall be exercisable, during the
Participant's lifetime, only by the Participant (or by the Participant's legal
representatives in the event of the Participant's incapacity). Each Participant
may designate a beneficiary to exercise any Option held by the Participant at
the time of the Participant's death or to be assigned any other Award
outstanding at the time of the Participant's death. If no beneficiary has been
named by a deceased Participant, any Award held by the Participant at the time
of death shall be transferred as provided in his or her will or by the laws of
descent and distribution. Except in the case of the holder's incapacity, an
Option may only be exercised by the holder thereof.

         13. No Right to Continuous Service. Nothing contained in the Plan or in
any Award under the Plan shall confer upon any Participant any right with
respect to the continuation of service with the Company or any of its
Subsidiaries, or interfere in any way with the right of the Company or its
Subsidiaries to terminate his or her Continuous Service at any time. Nothing
contained in the Plan shall confer upon any Participant or other person any
claim or right to any Award under the Plan.

         14. Governmental Compliance. Each Award under the Plan shall be subject
to the requirement that if at any time the Committee shall determine that the
listing, registration or qualification of any shares issuable or deliverable
thereunder upon any securities exchange or under any Federal or state law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition thereof, or in connection therewith, no such grant or
award may be exercised or shares issued or delivered unless such listing,
registration,


                                       9
<PAGE>

qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.

         15. Adjustments; Corporate Events.

                  (a) In the event of any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event (an "Event"), and in
the Committee's opinion, such event affects the Common Stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Award, then the Committee
shall, in such manner as it may deem equitable, including, without limitation,
adjust any or all of the following: (i) the number and kind of shares of Common
Stock (or other securities or property) with respect to which Awards may be
granted or awarded; (ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Awards; and (iii) the grant or
exercise price with respect to any Award. The Committee determination under this
Section 15(a) shall be final, binding and conclusive.

                  (b) Upon the occurrence of an Event in which outstanding
Awards are not to be assumed or otherwise continued following such an Event, the
Committee may, in its discretion, terminate any outstanding Award without a
Participant's consent and (i) provide for either the purchase of any such Award
for an amount of cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Participant's rights had such Award
been currently exercisable or payable or fully vested or the replacement of such
Award with other rights or property selected by the Committee in its sole
discretion and/or (ii) provide that such Award shall be exercisable (whether or
not vested) as to all shares covered thereby for at least thirty (30) days prior
to such Event.

                  (c) The existence of the Plan, the Award agreement and the
Awards granted hereunder shall not affect or restrict in any way the right or
power of the Company or the shareholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

         16. Award Agreement. Each Award under the Plan shall be evidenced by an
agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in the Plan.


                                       10
<PAGE>

         17. Amendment. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that (a) no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable law, regulation or stock exchange rule and (b) except as provided in
Section 15, no amendment shall be made that would adversely affect the rights of
a Participant under an Award theretofore granted, without such Participant's
written consent.

         18. General Provisions.

                  (a) The Committee may require each Participant purchasing or
acquiring shares pursuant to an Award under the Plan to represent to and agree
with the Company in writing that such Participant is acquiring the shares for
investment and without a view to distribution thereof.

                  (b) All certificates for Common Stock delivered under the Plan
pursuant to any Award shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any applicable Federal
or state securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
If the Committee determines that the issuance of Common Stock hereunder is not
in compliance with, or subject to an exemption from, any applicable Federal or
state securities laws, such shares shall not be issued until such time as the
Committee determines that the issuance is permissible.

                  (c) As long as the Company is subject to Section 16 of the
Exchange Act, 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 18(c), such provision to the extent possible shall be interpreted and/or
deemed amended so as to avoid such conflict.

                  (d) Except as otherwise provided by the Committee in the
applicable Award agreement, a Participant shall have no rights as a shareholder
with respect to any shares of Common Stocks subject to an Award until a
certificate or certificates evidencing shares of Common Stock shall have been
issued to the Participant and, subject to Section 15, no adjustment shall be
made for dividends or distributions or other rights in respect of any share for
which the record date is prior to the date on which Participant shall become the
holder of record thereof.

                  (e) The law of the State of Texas shall apply to all Awards
and interpretations under the Plan regardless of the effect of such state's
conflict of laws principles.

                  (f) Where the context requires, words in any gender shall
include any other gender.


                                       11
<PAGE>

                  (g) Headings of Sections are inserted for convenience and
reference; they do not constitute any part of this plan.

         19. Expiration of the Plan. Subject to earlier termination pursuant to
Section 17, the Plan shall have a term of 10 years from its Effective Date.

         20. Effective Date; Approval of Shareholders. The Plan is effective as
of the date it is approved by the affirmative vote of the holders of a majority
of the securities of the Company present, or represented, and entitled to vote
at a meeting of stockholders duly held in accordance with the applicable laws of
the State of Texas within twelve (12) months of the approval of the Plan by the
Board (the "Effective Date").



                                       12