EXHIBIT 10.8

                            MONTEREY RESOURCES, INC.
                     1996 INCENTIVE STOCK COMPENSATION PLAN
                           FOR NONEXECUTIVE EMPLOYEES

                              STATEMENT OF PURPOSE

         The purpose of the Monterey Resources, Inc. 1996 Incentive Stock
Compensation Plan For Nonexecutive Employees (the "Plan") is to encourage
superior performance by employees, by allowing the Board of Directors of
Monterey Resources, Inc. ("MRI") to award several forms of incentive
compensation to employees of the Company.  By providing incentive compensation
commensurate and competitive with that provided by other companies, the Plan
should also assist MRI in attracting and retaining the services of qualified
and capable employees.

         In order to further the identity of interest of employees with the
stockholders of MRI, all of the forms of compensation under the Plan relate to
MRI Common Stock.  Employees' success in enhancing stockholder value will
translate directly into an enhanced benefit for the employee.

         Notwithstanding anything in the Plan or any Award agreement to the
contrary, no Award shall become exercisable or payable (even if vested) prior
to the first anniversary of the date the Company is spunoff by Santa Fe Energy
Resources, Inc. (or during such additional period, if any, as may be
recommended by counsel to the Company as necessary or helpful to the tax-free
status of the spinoff); provided, however, the foregoing restriction shall not
apply to a Participant whose employment terminates due to death or Disability
and such restriction shall also lapse upon a Change in Control.

I.       DEFINITIONS

         Unless the context indicates otherwise, the following terms have the
         meanings set forth below:

                 "Acceleration Date" means the earliest date on which any of
         the following events shall first have occurred: (i) the acquisition
         described in clause (a) of the definition of "Change in Control"
         contained in this Section I, (ii) the change in the composition of the
         Board of Directors described in clause (b) of such definition or (iii)
         the stockholder approval or adoption described in clause (c) or (d) of
         such definition.

                 "Award" means a grant of Options, Restricted Stock, Phantom
         Units, Bonus Stock or Stock Appreciation Rights pursuant to the Plan.

                 "Board" means the Board of Directors of MRI.
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                 "Bonus Stock" means Common Stock, which is not subject to a
         Restricted Period, awarded by the Committee pursuant to the Plan.

                 "Cause" means (a) the willful and continued failure by the
         Participant to substantially perform his duties with the Company
         (other than any such failure resulting from his incapacity due to
         physical or mental illness), or (b) the willful engaging by the
         Participant in conduct which is demonstrably and materially injurious
         to the Company, monetarily or otherwise.  For purposes of this
         definition, no act, or failure to act, shall be deemed "willful"
         unless done, or omitted to be done, by the Participant not in good
         faith and without reasonable belief that his action or omission was in
         the best interest of the Company.

                 A "Change in Control" shall be deemed to have occurred if:

                 (a)      any "person," as such term is used in Section 13(d)
                          and 14(d) of the Securities Exchange Act of 1934, as
                          amended (the "Exchange Act"), other than any trustee
                          or other fiduciary holding securities under an
                          employee benefit plan of Santa Fe Energy Resources,
                          Inc. ("SFER") or any affiliate thereof, or any
                          company owned, directly or indirectly, by the
                          stockholders of SFER in substantially the same
                          proportions as their ownership of stock of SFER), is
                          or becomes the "beneficial owner" (as defined in Rule
                          13d-3 under the Exchange Act), directly or
                          indirectly, of securities of SFER representing 25% or
                          more of the combined voting power of SFER's then
                          outstanding securities;

                 (b)      during any period of two consecutive years (not
                          including any period prior to the effective date of
                          this provision), individuals who at the beginning of
                          such period constitute the Board of Directors of
                          SFER, and any new director (other than a director
                          designated by a person who has entered into an
                          agreement with SFER to effect a transaction described
                          in clause (a), (c) or (d) of this definition) whose
                          election by the Board of Directors of SFER or
                          nomination for election by SFER's stockholders was
                          approved by a vote of at least two-thirds (2/3) of
                          the directors then still in office who either were
                          directors at the beginning of the period or whose
                          election or nomination for election was previously so
                          approved, cease for any reason to constitute at least
                          a majority thereof;

                 (c)      the stockholders of SFER approve a merger or
                          consolidation of SFER with any other company other
                          than (i) a merger or consolidation which would result
                          in the voting securities of SFER outstanding
                          immediately prior thereto continuing to represent
                          (either by remaining outstanding or by being
                          converted into voting securities of the surviving
                          entity) more than 65% of the combined voting power of
                          the voting securities of SFER (or such surviving
                          entity) outstanding immediately after such merger or
                          consolidation, or (ii) a





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                          merger or consolidation effected to implement a
                          recapitalization of SFER (or similar transaction) in
                          which no "person" (as hereinabove defined) acquires
                          more than 25% of the combined voting power of SFER's
                          then outstanding securities; or

                 (d)      the stockholders of SFER adopt a plan of complete
                          liquidation of SFER or approve an agreement for the
                          sale or disposition by SFER of all or substantially
                          all of SFER's assets.  For purposes of this clause
                          (d), the term "the sale or disposition by SFER of all
                          or substantially all of SFER's assets" shall mean a
                          sale or other disposition transaction or series of
                          related transactions involving assets of SFER or of
                          any direct or indirect subsidiary of SFER (including
                          the stock of any direct or indirect subsidiary of
                          SFER) in which the value of the assets or stock being
                          sold or otherwise disposed of (as measured by the
                          purchase price being paid therefor or by such other
                          method as the Board of Directors of SFER determines
                          is appropriate in a case where there is no readily
                          ascertainable purchase price) constitutes more than
                          two-thirds of the fair market value of SFER (as
                          hereinafter defined).  For purposes of the preceding
                          sentence, the "fair market value of SFER" shall be
                          the aggregate market value of the outstanding shares
                          of common stock of SFER (on a fully diluted basis)
                          plus the aggregate market value of SFER's other
                          outstanding equity securities.  The aggregate market
                          value of the shares of common stock of SFER shall be
                          determined by multiplying the number of shares of
                          SFER's common stock (on a fully diluted basis)
                          outstanding on the date of the execution and delivery
                          of a definitive agreement with respect to the
                          transaction or series of related transactions (the
                          "Transaction Date") by the average closing price of
                          the shares of common stock of SFER for the ten
                          trading days immediately preceding the Transaction
                          Date.  The aggregate market value of any other equity
                          securities of SFER shall be determined in a manner
                          similar to that prescribed in the immediately
                          preceding sentence for determining the aggregate
                          market value of the shares of common stock of SFER or
                          by such other method as the Board shall determine is
                          appropriate.

                 (e)      If SFER ceases to own 80% of the combined voting
                          power of the then outstanding voting securities of
                          the Company, the term "Company" shall be substituted
                          for SFER as used in this definition of "Change in
                          Control" and all other appropriate places; provided,
                          however, as long as SFER owns 35% or more of the
                          combined voting power of the voting securities of the
                          Company, the above "Change in Control" definition
                          shall be applied separately with respect to SFER and
                          with respect to the Company as substituted for SFER
                          in the definition, and a Change in Control with
                          respect to either SFER or the Company in such
                          situation shall be a Change in Control for purposes
                          of this Plan.  Notwithstanding anything herein to the
                          contrary, a distribution by





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                          SFER to its stockholders of its interest in such
                          voting securities of the Company shall not constitute
                          a Change in Control.

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

                 "Committee" means the Compensation and Benefits Committee of
         the Board.

                 "Common Stock" means the common stock, $0.01 par value, of MRI.

                 "Company" means collectively MRI, its parent and all companies
         in which MRI owns, directly or indirectly, more than 50% of the voting
         stock.

                 "Disability" means the inability of a Participant to continue
         to perform the duties of his or her employment with the Company as
         determined by the Committee.

                 "Fair Market Value" means the average of high and low (or bid
         and ask, if applicable) price per share of the Common Stock on the
         applicable date (or if there are no transactions on that date, the
         last preceding date on which there were transactions) in the principal
         market in which the Common Stock is traded, as reported in The Wall
         Street Journal, or the fair market value per share as determined by
         the Committee, in good faith, using any fair and reasonable means for
         this purpose.

                 "Grant Date" as used with respect to a particular Award means
         the date as of which such Award is granted pursuant to the Plan.

                 "Option" means an option to purchase shares of Common Stock
         granted by the Committee pursuant to the Plan, which shall be a
         "Non-Qualified Stock Option."

                 "Limited Right" means a Stock Appreciation Right that is
         exercisable only as set forth in Section XIV of the Plan.

                 "Non-Qualified Stock Option" means an Option granted pursuant
         to the Plan, which is not an Incentive Stock Option within the meaning
         of Code Section 422.

                 "Participant" means any eligible employee of the Company who
         has an Award outstanding under the Plan.

                 "Phantom Unit" means a right to receive upon the achievement
         of specified performance goals a payment from the Company in an amount
         equal to a specified percentage of the Fair Market Value of a share of
         Common Stock on the date on which such right becomes payable.





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                 "Plan" means the Monterey Resources, Inc. 1996 Incentive Stock
         Compensation Plan For Nonexecutive Employees as set forth herein and
         as may be amended from time to time.

                 "Related LSAR Option" means an Option outstanding under the
         Plan with respect to which a Limited Right is granted pursuant to
         Section XIV.

                 "Restricted Period" means the period of time for which
         Restricted Stock and/or Phantom Units are subject to forfeiture
         pursuant to the Plan or during which Options and Stock Appreciation
         Rights are not exercisable.

                 "Restricted Stock" means Common Stock subject to a Restricted
         Period which is granted pursuant to the Plan.

                 "Retirement" means an Employee's leaving the employment of the
         Company, other than for Cause, after attaining age 55 and completing
         five years of service with the Company.

                 "Stock Appreciation Right" means the right, granted by the
         Committee pursuant to the Plan, to receive a payment equal to the
         increase in the Fair Market Value of a share of Common Stock
         subsequent to the Grant Date of such Award.

II.      SHARES SUBJECT TO AWARDS UNDER THE PLAN

         Subject to the adjustment as provided in the Plan, the maximum number
         of shares of Common Stock with respect to which Options, Restricted
         Stock, Bonus Stock, Phantom Units and Stock Appreciation Rights may be
         granted under the Plan in any year is 500,000.  The Common Stock
         issued under the Plan may be either previously authorized but unissued
         shares or treasury shares acquired by MRI.

III.     ADMINISTRATION OF THE PLAN

         The Plan shall be administered by the Committee.  The members of the
         Committee shall not be eligible to participate in the Plan.  The
         Committee shall select from time to time those employees to be granted
         Awards under the Plan.  The Committee shall also determine the terms
         and provisions of Awards, which need not be identical.  The Committee
         shall grant all Awards.  The Committee shall construe the Plan,
         prescribe and rescind rules and regulations relating to the Plan and
         make all other determinations deemed necessary or advisable for the
         administration of the Plan, subject to the limitations of Section XX.

IV.      ELIGIBILITY

         Subject to the discretion of the Committee, all employees of the
         Company who have responsibility for the growth and profitability of
         the Company, but excluding any employee who is subject to the
         provisions of Section 16 of the Securities Exchange Act of 1934, as





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         amended, as determined by the Committee, are eligible to receive
         Awards under the Plan ("Eligible Employees").

V.       OPTIONS

         The Committee may, from time to time and subject to the provisions of
         the Plan, grant Awards of Options to Eligible Employees of the Company
         to purchase shares of Common Stock.  The Committee may grant
         replacement or substitution options (or Stock Appreciation Rights) to
         affected employees in conjunction with any Company merger,
         consolidation, purchase or acquisition of property or stock, spinoff
         or other distribution of stock or property, reorganization, or partial
         or complete liquidation, on such terms as the Committee deems
         equitable.  Any Options granted shall be designated as Non-Qualified
         Stock Options.

         The purchase price of the Common Stock subject to any Options shall be
         determined by the Committee, but, except with respect to a replacement
         Option, may not be less than the Fair Market Value of the Common Stock
         on the Grant Date.  Such price shall be subject to adjustment as
         provided in Section XIII of the Plan.

         The Committee may include in each agreement evidencing the Option
         grant a provision stating that the Option granted therein may not be
         exercised in whole or in part for such period(s) of time specified in
         such agreement, and may further limit the exercisability of the Option
         in such manner as the Committee deems appropriate, including, without
         limitation, the achievement of performance goals.  The Committee may,
         in its discretion, at any time and from time-to-time accelerate the
         exercisability of all or part of any Option.

         The period of any Option, which is the time period during which the
         Option may be exercised, shall be determined by the Committee and
         shall not extend more than ten years after the Grant Date.

         Options shall not be transferable other than by will or the laws of
         descent and distribution and during the Participant's lifetime shall
         be exercisable only by the Participant.

         Termination for Cause, as defined in Section I, shall result in
         forfeiture of all outstanding Options.  Termination by the Company for
         any reason other than Cause (including terminations pursuant to formal
         severance programs sponsored by the Company or an affiliate), or
         terminations by reason of death, Disability or Retirement, shall
         result in a lapse of all or a proportion of the Restricted Period
         applicable to any outstanding Award as set forth In Section XI.

         A person electing to exercise an Option shall give written notice of
         such election to the Company in such form as the Committee may
         require.  Upon exercise of an Option, the full option purchase price
         for the shares with respect to which the Option is being exercised
         shall be payable to the Company (i) in cash or by check payable and
         acceptable to the Company





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         or (ii) subject to the approval of the Committee, (a) by tendering to
         the Company shares of Common Stock owned by such person having an
         aggregate Fair Market Value as of the date of exercise and tender that
         is not greater than the full option purchase price for the shares with
         respect to which the Option is being exercised and by paying any
         remaining amount of the option purchase price as provided in (i) above
         (provided that the Committee may, upon confirming that such person
         owns the number of additional shares being tendered, authorize the
         issuance of a new certificate for the number of shares being acquired
         pursuant to the exercise of the Option less the number of shares being
         tendered upon the exercise and return to such person (or not require
         surrender of) the certificate for the shares being tendered upon the
         exercise) or (b) by such person delivering to the Company a properly
         executed exercise notice together with irrevocable instructions to a
         broker to promptly deliver to the Company cash or a check payable and
         acceptable to the Company to pay the option purchase price; provided
         that in the event such person chooses to pay the option purchase price
         as provided in (ii)(b) above, such person and the broker shall comply
         with such procedures and enter into such agreements of indemnity and
         other agreements as the Committee shall prescribe as a condition of
         such payment procedure.  Payment instruments will be received subject
         to collection.

         Notwithstanding any other provision in the Plan, if a Change In
         Control occurs while unexercised Options, and Stock Appreciation
         Rights relating thereto, remain outstanding under the Plan, then from
         and after the Acceleration Date, all Options and Stock Appreciation
         Rights shall be exercisable in full, whether or not otherwise
         exercisable.

VI.      BONUS STOCK

         The Committee may, from time to time and subject to the provision of
         the Plan, grant Awards of Bonus Stock to Eligible Employees of the
         Company.  In addition, the Committee shall have the authority to pay
         in shares of Common Stock all or any portion of the cash amounts
         payable under any other compensation program of the Company.

VII.     RESTRICTED STOCK

         The Committee may, from time to time and subject to the provisions of
         the Plan, grant Awards of Restricted Stock to Eligible Employees of
         the Company.

         Each certificate representing Restricted Stock awarded under the Plan
         shall be registered in the name of the Participant and, during the
         Restricted Period, shall be left on deposit with the Company with a
         stock power endorsed in blank.  Participants shall have the right to
         receive dividends paid on their Restricted Stock and to vote such
         shares.  Restricted Stock may not be sold, pledged, assigned,
         transferred or encumbered during the Restricted Period other than by
         will or the laws of descent and distribution.





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<PAGE>   
         Termination for Cause, as defined in Section I, shall result in
         forfeiture of all outstanding Restricted Stock.  Termination by the
         Company for any reason other than Cause (including terminations
         pursuant to formal severance programs sponsored by the Company or an
         affiliate), or termination by reason of death, Disability or
         Retirement, shall result in a lapse on all or a portion of the
         Restricted Period applicable to any outstanding Award as set forth in
         Section XI.

         Notwithstanding any other provisions in the Plan, if a Change in
         Control occurs while any shares of Restricted Stock remain subject to
         restrictions relating thereto, then from and after the Acceleration
         Date, (1) all such restrictions and all Restricted Periods shall lapse
         and (2) no later than the fifth day following the Acceleration Date,
         any Restricted Stock theretofore granted a Participant shall be
         delivered to the Participant.

VIII.    STOCK APPRECIATION RIGHTS

         The Committee may, from time to time and subject to the provisions of
         the Plan, grant Awards of Stock Appreciation Rights to Eligible
         Employees of the Company subject to the limitation in Section II.  An
         Award of Stock Appreciation Rights, in the Committee's discretion, may
         or may not be made in tandem with the grant of an Option, and need not
         be granted at the same time as the Option grant to be made in tandem
         with the Option grant.

         The period of any Stock Appreciation Right, which is the time period
         during which the Stock Appreciation Right may be exercised, shall be
         determined by the Committee and shall not extend more than ten years
         after the Grant Date or, if in tandem with an Option, the period of
         such Option.

         Stock Appreciation Rights shall not be transferable other than by will
         or the laws of descent and distribution and during the Participant's
         lifetime shall be exercisable only by the Participant.

         Termination for Cause, as defined in Section I, shall result in
         forfeiture of all outstanding Stock Appreciation Rights.  Termination
         by the Company for any reason other than Cause (including terminations
         pursuant to formal severance programs sponsored by the Company or an
         affiliated company), or termination by reason of death, Disability or
         Retirement, shall result in a lapse on all or a portion of the
         Restricted Period applicable to any outstanding Award as set forth in
         Section XI.

         Subject to any restrictions or conditions imposed by the Committee,
         upon the exercise of a Stock Appreciation Right, the Company shall pay
         the amount, if any, by which the Fair Market Value of a share of
         Common Stock on the date of exercise exceeds the Fair Market Value of
         a share of Common Stock on the Grant Date.  The amount payable by the
         Company upon the exercise of a Stock Appreciation Right may be paid in
         cash or in shares of Common





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         Stock or in any combination thereof as the Committee, in its sole
         discretion, shall determine, but no fractional shares shall be
         issuable pursuant to any Stock Appreciation Right.

         A person electing to exercise a Stock Appreciation Right shall give
         written notice of such election to the Company in such form as the
         Committee may require.  The exercise of Stock Appreciation Rights or
         Options granted in tandem will result in an equal reduction in the
         number of corresponding Options or Stock Appreciation Rights which
         were granted in tandem with such Stock Appreciation Rights and
         Options.

         The Change in Control provisions in Section V, concerning Options and
         Stock Appreciation Rights granted in tandem with an Option, shall also
         apply to Stock Appreciation Rights that are not granted in tandem with
         Options.

IX.      PHANTOM UNITS

         The Committee may, from time to time and subject to the provisions of
         the Plan, grant Awards of Phantom Units to Eligible Employees of the
         Company.  Phantom Units may not be sold, pledged, assigned,
         transferred or encumbered during the Restricted Period, other than by
         will or the laws of descent and distribution.

         The Committee shall, at the time Phantom Units are granted, designate
         certain goals for the performance of the Company and the Restricted
         Period over which the goals must be achieved.  Such designated goals
         must be achieved in order for a Participant to receive the full value
         of the Phantom Units at the designated time.  To the extent earned in
         accordance with this Section and the grant of such Award, all such
         Phantom Units must be paid as soon as practicable following the end of
         the Restricted Period in cash or in shares of Common Stock or in any
         combination thereof as the Committee, in its sole discretion shall
         determine, but no fractional shares shall be issuable pursuant to any
         Phantom Unit.

         At the discretion of the Committee, Phantom Units may at any time be
         converted into Non-Qualified Stock Options, Bonus Stock or shares of
         Restricted Stock or any combination thereof having a value, as
         determined in the good faith judgment of the Committee, substantially
         equal to the value of the Phantom Units so converted.

         Termination for Cause, as defined in Section I, shall result in
         forfeiture of all outstanding Phantom Units.  Termination by the
         Company for any reason other than Cause (including terminations
         pursuant to formal severance programs sponsored by the Company or an
         affiliate), or termination by reason of death, Disability or
         Retirement, shall result in a lapse on all or a proportion of the
         Restricted Period applicable to any outstanding Award as set forth in
         Section XI.

         Notwithstanding any other provisions in the Plan, if a Change in
         Control occurs while any Phantom Units remain outstanding, then from
         and after the Acceleration Date, (1) all





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         designated goals shall be deemed to have been met and (2) no later
         than the fifth day following the Acceleration Date, the full value of
         all such Phantom Units shall be paid to the Participant in cash.

X.       CONTINUED EMPLOYMENT

         Participation in the Plan shall confer no rights to continued
         employment with the Company, nor shall it restrict the rights of the
         Company to terminate a Participant's employment relationship at any
         time.

XI.      TERMINATION OF EMPLOYMENT

         In the event of a Participant's termination of employment with the
         Company by reason of death, the Restricted Period shall lapse on all
         of the Participant's outstanding Awards.

         In the event of a Participant's termination of employment with the
         Company by reason of Disability, Retirement or by the Company for any
         reason other than Cause, a portion of all of the Participant's
         outstanding Awards shall be immediately forfeited to the extent not
         then otherwise vested.  The portion of an Award forfeited shall be a
         fraction, the denominator of which is the total number of months of
         any Restricted Period (determined at date of grant) applicable to the
         Award (rounded up to the nearest whole month) and the numerator of
         which is the number of months of such Restricted Period remaining
         (rounded up to the nearest whole month) as of the termination of
         employment.

         Unless the Committee directs the acceleration of the payment of that
         portion of an Award of Phantom Units or Restricted Stock that is not
         automatically forfeited as provided above upon the Participant's
         termination of employment, such Phantom Units and Restricted Stock
         shall be payable or issued, as the case may be, at the end of the
         Restricted Period applicable to such Awards, but only to the extent
         otherwise payable pursuant to the Award Agreement evidencing such
         Phantom Units or Restricted Stock, e.g., the goals, if any, for such
         Award are achieved.  Any such Awards not payable or earned at the end
         of such Restricted Period, as provided above, shall be forfeited at
         such time.

         Phantom Units and Restricted Stock upon which the Restricted Period
         lapse as provided above shall be paid or issued to the Participant or,
         in the case of death prior to such payment or issuance, to the
         Participant's designated beneficiary, or in the absence of such
         designation, to the person to whom the Participant's rights pass by
         will or the laws of descent and distribution.

         Options and Stock Appreciation Rights which are or become exercisable
         at the time of a Participant's termination of employment with the
         Company (i) by reason of Disability or Retirement or by the Company
         for any reason other than Cause, may be exercised by the Participant
         within three years following such termination of employment and (ii)
         for any





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         reason other than Cause, death or a reason specified in (i), may be
         exercised by the Participant within three months following such
         termination, but, in either event, not after the expiration of the
         period of the Option or Stock Appreciation Right.  Options and Stock
         Appreciation Rights which are or become exercisable at the time of a
         Participant's termination of employment with the Company by reason of
         death, may be exercised by the Participant's designated beneficiary,
         or in the absence of such designation, by the person to whom the
         Participant's rights pass by will or the laws of descent and
         distribution at any time within three years after the Participant's
         death but not after the expiration of the period of the Option or
         Stock Appreciation Right.  Options and Stock Appreciation Rights that
         do not become exercisable as provided above, or that are not otherwise
         vested, shall be immediately forfeited on termination.

         In the event of a Participant's termination of employment with the
         Company for any reason other than as provided above, all Awards not
         otherwise vested or earned as of the date of such termination of
         employment shall be immediately forfeited on termination.

         Notwithstanding the foregoing however, the Committee may determine
         that termination of employment by reasons of any other special
         circumstances not set forth above shall not terminate an Award or a
         portion thereof.

XII.     AWARD AGREEMENT

         Each employee granted an Award pursuant to the Plan shall sign an
         Award Agreement which signifies the offer of the Award by the Company
         and the acceptance of the Award by the employee in accordance with the
         terms of the Award and the provisions of the Plan.  Each Award
         Agreement shall reflect the terms and conditions of the Award.

XIII.    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

         In the event of a change in the capitalization of SFER due to a stock
         split, stock dividend, recapitalization, merger, consolidation,
         combination or similar event, the aggregate shares subject to the Plan
         and the terms of any existing Awards shall be adjusted by the
         Committee to reflect such change.

XIV.     PARACHUTE TAX PROVISION

         To the extent that the acceleration of vesting or any payment,
         distribution or issuance made to a participant under the Plan (a
         "Benefit") would be subject to a golden parachute excise tax under
         Section 4999(a) of the Code (a "Parachute Tax") such acceleration of
         the Participant's Awards shall be reduced to the extent necessary so
         that no portion thereof shall be subject to the Parachute Tax, but
         only if, by reason of such reduction, the Participant's net after tax
         benefit shall exceed the net after tax benefit if such reduction were
         not made.  The Participant may direct which Awards shall not be
         accelerated for this purpose.





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XV.      EMPLOYEE'S AGREEMENT

         If, at the time of the exercise of any Option or Stock Appreciation
         Right or Award of Restricted Stock or Bonus Stock, in the opinion of
         counsel for the Company, it is necessary or desirable, in order to
         comply with any then applicable laws or regulations relating to the
         sale of securities, for the individual exercising the Option or Stock
         Appreciation Right or receiving the Restricted Stock or Bonus Stock to
         agree to hold any shares issued to the individual for investment and
         without intention to resell or distribute the same and for the
         individual to agree to dispose of such shares only in compliance with
         such laws and regulations, the individual will, upon the request of
         the Company, execute and deliver to the Company a further agreement to
         such effect.

XVI.     WITHHOLDING FOR TAXES

         Any cash payment under the Plan shall be reduced by any amounts
         required to be withheld or paid with respect thereto under all present
         or future federal, state and local taxes and other laws and
         regulations that may be in effect as of the date of each such payment
         ("Tax Amounts").  Any issuance of Common Stock pursuant to the
         exercise of an Option or other distribution of Common Stock under the
         Plan shall not be made until appropriate arrangements have been made
         for the payment of any amounts that may be required to be withheld or
         paid with respect thereto.  Such arrangements may, at the discretion
         of the Committee, include allowing the Participant to tender to the
         Company shares of Common Stock owned by the Participant, or to request
         the Company to withhold a portion of the shares of Common Stock being
         acquired pursuant to the exercise or otherwise distributed to the
         Participant, which have a Fair Market Value per share as of the date
         of such Award exercise, tender or withholding that is not greater than
         the sum of all Tax Amounts, together with payment of any remaining
         portion of all Tax Amounts in cash or by check payable and acceptable
         to the Company.

XVII.    DESIGNATION OF BENEFICIARY

         Each Participant to whom an Award has been made under this Plan may
         designate a beneficiary or beneficiaries (which beneficiary may be an
         entity other than a natural person) to exercise any rights or receive
         any payment that under the terms of such Award may become exercisable
         or payable on or after the Participant's death.  At any time, and from
         time to time, any such designation may be changed or canceled by the
         Participant without the consent of any such beneficiary.  Any such
         designation, change or cancellation must be on a form provided for
         that purpose by the Committee and shall not be effective until
         received by the Committee.  If no beneficiary has been named by a
         deceased Participant, or the designated beneficiaries have predeceased
         the Participant, the beneficiary shall be the Participant's estate.
         If a Participant designates more than one beneficiary, any such
         exercise or payment under this Plan shall be made in equal shares
         unless the Participant has





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<PAGE>   
         designated otherwise, in which case the exercise or payment shall be
         made in the shares designated by the Participant.

XVIII.   PREEMPTION BY APPLICABLE LAWS AND REGULATIONS

         Anything in the Plan or any agreement entered into pursuant to the
         Plan to the contrary notwithstanding, if, at any time specified herein
         or therein for the making of any determination, the issuance or other
         distribution of shares of Common Stock, the payment of consideration
         to an employee as a result of the exercise of any Stock Appreciation
         Right or Limited Right, or the payment of any Phantom Units, as the
         case may be, any law, regulation or requirement of any governmental
         authority having jurisdiction in the premises shall require either the
         Company or the Participant (or the Participant's beneficiary), as the
         case may be, to take any action in connection with any such
         determination, the shares then to be issued or distributed, or such
         payment, the issue or distribution of such shares or the making of
         such determination or payment, as the case may be, shall be deferred
         until such action shall have been taken.

XIX.     EFFECTIVE DATE AND DURATION OF PLAN

         This Plan shall become effective upon its approval by the Board of MRI
         and shall continue until terminated by the Board.

XX.      TERMINATION AND AMENDMENT

         The Board may suspend, terminate, modify or amend the Plan at any time
         or times; however, no suspension, termination, modification or
         amendment of the Plan may terminate a Participant's existing Award or
         materially adversely affect a Participant's rights under such Award.

XXI.     MISCELLANEOUS

         (a)     Nothing contained in the Plan shall be construed as conferring
         upon any employee the right to continue in the employ of the Company.

         (b)     An employee shall have no rights as a stockholder with respect
         to shares covered by such employee's Option, Stock Appreciation Rights
         or Restricted Stock award until the date of the issuance of shares to
         the employee pursuant thereto.  No adjustment will be made for
         dividends or other distributions or rights for which the record date
         is prior to the date of such issuance.  An employee shall have no
         rights as a stockholder with respect to any award of Phantom Units
         under the Plan.

         (c)     Nothing contained in the Plan shall be construed as giving any
         employee, such employee's beneficiaries or any other person any equity
         or other interest of any kind in any





                                      -13-
<PAGE>   
         assets of the Company or creating a trust of any kind or a fiduciary
         relationship of any kind between the Company and any such person.

         (d)     Nothing contained in the Plan shall be construed to prevent
         the Company from taking any corporate action that is deemed by the
         Company to be appropriate or in its best interest, whether or not such
         action would have an adverse effect on the Plan or any award made
         under the Plan.  No employee, beneficiary or other person shall have
         any claim against the Company as a result of any such action.

         (e)     Neither an employee nor an employee's beneficiary shall have
         the power or right to sell, exchange, pledge, transfer, assign or
         otherwise encumber or dispose of such employee's or beneficiary's
         interest arising under the Plan or in any Award received under the
         Plan; nor shall such interest be subject to seizure for the payment of
         an employee's or beneficiary's debts, judgments, alimony, or separate
         maintenance or be transferable by operation of law in the event of an
         employee's or beneficiary's bankruptcy or insolvency and to the extent
         any such interest arising under the Plan or Award received under the
         Plan is awarded to a spouse pursuant to any divorce proceeding, such
         interest shall be deemed to be terminated and forfeited
         notwithstanding any vesting provisions or other terms herein or in the
         agreement evidencing such award.

         (f)     All rights and obligations under the Plan shall be governed
         by, and the Plan shall be construed in accordance with, the laws of
         the State of Delaware without regard to the principles of conflicts of
         laws.  Titles and headings to Sections herein are for purposes of
         reference only, and shall in no way limit, define or otherwise affect
         the meaning or interpretation of any provisions of the Plan.


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