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                                                                    EXHIBIT 10.1


                               CONTOUR ENERGY CO.

                     2001 STOCK OPTION AND STOCK AWARD PLAN
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                               CONTOUR ENERGY CO.

                     2001 STOCK OPTION AND STOCK AWARD PLAN

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                              PAGE
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<S>                                                           <C>
ARTICLE I -- PLAN...........................................   1
  1.1   Purpose.............................................   1
  1.2   Term of Plan........................................   1
ARTICLE II -- DEFINITIONS...................................   1
  2.1   Affiliate...........................................   1
  2.2   Award...............................................   1
  2.3   Board...............................................   1
  2.4   Change of Control...................................   1
  2.5   Code................................................   1
  2.6   Committee...........................................   1
  2.7   Company.............................................   2
  2.8   Disability..........................................   2
  2.9   Employee............................................   2
  2.10  Exchange Act........................................   2
  2.11  Fair Market Value...................................   2
  2.12  Holder..............................................   2
  2.13  Incentive Option....................................   2
  2.14  Mature Shares.......................................   2
  2.15  Nonqualified Option.................................   2
  2.16  Option..............................................   2
  2.17  Option Agreement....................................   2
  2.18  Plan................................................   2
  2.19  Restricted Stock....................................   2
  2.20  Restricted Stock Agreement..........................   2
  2.21  Restricted Stock Award..............................   2
  2.22  Retirement..........................................   2
  2.23  Stock...............................................   2
  2.24  Ten Percent Stockholder.............................   3
ARTICLE III -- ELIGIBILITY..................................   3
ARTICLE IV -- GENERAL PROVISIONS RELATING TO AWARDS.........   3
  4.1   Authority to Grant Awards...........................   3
  4.2   Dedicated Shares; Maximum Awards....................   3
  4.3   Non-Transferability.................................   3
  4.4   Requirements of Law.................................   3
  4.5   Recapitalization or Reorganization of the Company...   4
  4.6   Election Under Section 83(b) of the Code............   5
ARTICLE V -- OPTIONS........................................   6
  5.1   Type of Option......................................   6
  5.2   Exercise Price......................................   6
  5.3   Duration of Options.................................   6
  5.4   Amount Exercisable..................................   7
  5.5   Exercise of Options.................................   7
  5.6   Substitution Options................................   8
  5.7   No Rights as Stockholder............................   8
</Table>

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<Table>
<Caption>
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ARTICLE VI -- RESTRICTED STOCK AWARDS.......................   8
  6.1   Restricted Stock Awards.............................   8
  6.2   Holder's Rights as Stockholder......................   8
ARTICLE VII -- ADMINISTRATION...............................   8
ARTICLE VIII -- AMENDMENT OR TERMINATION OF PLAN............   9
ARTICLE IX -- MISCELLANEOUS.................................   9
  9.1   No Establishment of a Trust Fund....................   9
  9.2   No Employment or Affiliation Obligation.............   9
  9.3   Forfeiture..........................................   9
  9.4   Tax Withholding.....................................  10
  9.5   Written Agreement...................................  10
  9.6   Indemnification of the Committee....................  10
  9.7   Gender..............................................  11
  9.8   Headings............................................  11
  9.9   Other Compensation Plans............................  11
  9.10  Other Options or Awards.............................  11
  9.11  Governing Law.......................................  11
</Table>

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                                   ARTICLE I

                                      PLAN

     1.1  Purpose.  The Plan is intended to advance the best interests of the
Company and its stockholders by providing those persons who have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
their employment or affiliation with the Company or any of its Affiliates.

     1.2  Term of Plan.  The Plan is effective on March 22, 2001, if within one
year of that date it shall have been approved by the vote of the stockholders of
the Company, voting in accordance with the provisions of the Company's corporate
charter and by-laws and applicable state law. No Award shall be granted under
the Plan after March 21, 2008. The Plan shall remain in effect until all Awards
under the Plan have been satisfied or expired.

                                   ARTICLE II

                                  DEFINITIONS

     The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout the Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower or different
meaning.

     2.1  "Affiliate" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

     2.2  "Award" means any Incentive Option, Nonqualified Option or Restricted
Stock Award granted under the Plan.

     2.3  "Board" means the board of directors of the Company.

     2.4  "Change of Control" means if (i) the Company is merged or consolidated
with another corporation and as a result of such merger or consolidation less
than 50% of the outstanding voting securities of the surviving or resulting
corporation are owned in the aggregate by the former shareholders of the
Company; (ii) the Company sells all or substantially all of its assets to
another corporation, which is not a wholly-owned subsidiary of the Company;
(iii) any person or group within the meaning of the Exchange Act acquires
(together with voting securities of the Company held by such person or group)
30% or more of the outstanding voting securities of the Company (whether
directly, indirectly, beneficially or of record) pursuant to any transaction or
combination of transactions; (iv) there is a change of control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirements; or (v) the
individuals who, at the beginning of any period of twelve consecutive months,
constituted the Board of Directors cease, for any reason, to constitute at least
a majority thereof, unless the nomination for election or election by the
Company's shareholders of each new director of the Company was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved.

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

     2.6  "Committee" means a committee of at least two persons appointed by the
Board.
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     2.7  "Company" means Contour Energy Co., a Delaware corporation.

     2.8  "Disability" means a medically determinable mental or physical
impairment which, in the opinion of a physician selected by the Committee, shall
prevent the Holder from engaging in any substantial gainful activity and which
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Holder was engaged in, or did not
result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; (c) did not result from an
injury incurred while a member of the Armed Forces of the United States for
which the Holder receives a military pension; and (d) did not result from an
intentionally self-inflicted injury. Notwithstanding the foregoing, the
Committee may provide for a different definition of "Disability" in a Holder's
Restricted Stock Agreement or Option Agreement relating to a Nonqualified
Option.

     2.9  "Employee" means a person employed by the Company or any Affiliate as
a common law employee.

     2.10  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     2.11  "Fair Market Value" of the Stock as of any date means (a) the average
of the high and low sale prices of the Stock on that date on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the average of the high and low sale prices of
the Stock on that date as reported on the NASDAQ National Market System; or (c)
if the Stock is not listed on a securities exchange or the NASDAQ National
Market System, the average of the best ask and best bid quotations for the Stock
on that date as reported by The Nasdaq Stock Market, Inc. on the OTC Bulletin
Board; or (d) if none of the foregoing is applicable, an amount at the election
of the Committee equal to (x) the average between the closing bid and ask prices
per share of stock on the last preceding date on which those prices were
reported, or (y) that amount as determined by the Committee.

     2.12  "Holder" means a person who has been granted an Award or any person
who is entitled to payment under an Award in accordance with the terms of the
Plan.

     2.13  "Incentive Option" means an Option granted under the Plan which is
designated as an "Incentive Option" and satisfies the requirements of section
422 of the Code.

     2.14  "Mature Shares" means shares of Stock that the Holder has held for at
least six months.

     2.15  "Nonqualified Option" means an Option granted under the Plan other
than an Incentive Option.

     2.16  "Option" means either an Incentive Option or a Nonqualified Option
granted under the Plan to purchase shares of Stock.

     2.17  "Option Agreement" means the written agreement which sets out the
terms of an Option.

     2.18  "Plan" means the Contour Energy Co. 2001 Stock Option and Stock Award
Plan, as set forth in this document and as it may be amended from time to time.

     2.19  "Restricted Stock" means stock awarded or purchased under the Plan
pursuant to a Restricted Stock Agreement.

     2.20  "Restricted Stock Agreement" means the written agreement which sets
out the terms of a Restricted Stock Award.

     2.21  "Restricted Stock Award" means an Award of Restricted Stock.

     2.22  "Retirement" means the termination of an Employee's employment
relationship with the Company and all Affiliates after attaining the age of 65.

     2.23  "Stock" means the common stock of the Company, $.10 par value per
share, or, in the event that the outstanding shares of common stock are later
changed into or exchanged for a different class of stock or securities of the
Company or another corporation, that other stock or security.

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     2.24  "Ten Percent Stockholder" means an individual who, at the time the
Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock or series of the Company or of any
Affiliate. An individual shall be considered as owning the stock owned, directly
or indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust, shall be
considered as being owned proportionately by or for its stockholders, partners
or beneficiaries.

                                  ARTICLE III

                                  ELIGIBILITY

     The individuals who shall be eligible to receive Incentive Options shall be
those key Employees of the Company or any of its Affiliates as the Committee
shall determine from time to time. The individuals who shall be eligible to
receive Awards other than Incentive Options shall be those persons, including
Employees, consultants, advisors and directors, who have substantial
responsibility for the management and growth of the Company or any of its
Affiliates as the Committee shall determine from time to time.

                                   ARTICLE IV

                     GENERAL PROVISIONS RELATING TO AWARDS

     4.1  Authority to Grant Awards.  The Committee may grant Awards to those
key Employees of the Company or any of its Affiliates and other eligible persons
as it shall from time to time determine, under the terms and conditions of the
Plan. Subject only to any applicable limitations set out in the Plan, the number
of shares of Stock to be covered by any Award to be granted to any person shall
be as determined by the Committee.

     4.2  Dedicated Shares; Maximum Awards.  The maximum number of shares of
Stock with respect to which Awards may be granted under the Plan is 1,100,000.
Such shares of Stock may be treasury shares or authorized but unissued shares.
The maximum number of shares of Stock with respect to which Options may be
granted under the Plan is 1,100,000 shares. The maximum number of shares of
Stock with respect to which Restricted Stock Awards may be granted under the
Plan is 500,000 shares. The maximum number of shares with respect to which
Options may be granted to any person under the Plan during any calendar year is
500,000 shares. If a Holder's Option is cancelled, the cancelled Option
continues to be counted against the maximum number of shares of Stock for which
Options may be granted to the Holder under the Plan. The number of shares stated
in this Section 4.2 shall be subject to adjustment in accordance with the
provisions of Section 4.5. If any outstanding Award expires or terminates for
any reason or any Award is surrendered, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an Award under the
Plan.

     4.3  Non-Transferability.  Incentive Options shall not be transferable by
the Employee other than by will or under the laws of descent and distribution,
and shall be exercisable, during the Employee's lifetime, only by him. Except as
specified in the applicable Award agreements or in domestic relations court
orders, Awards other than Incentive Options shall not be transferable by the
Holder other than by will or under the laws of descent and distribution, and
shall be exercisable, during the Holder's lifetime, only by him. In the
discretion of the Committee, any attempt to transfer an Award other than under
the terms of the Plan and the applicable Award agreement may terminate the
Award.

     4.4  Requirements of Law.  The Company shall not be required to sell or
issue any Stock under any Award if issuing that Stock would constitute or result
in a violation by the Holder or the Company of any provision of any law, statute
or regulation of any governmental authority. Specifically, in connection with
any applicable statute or regulation relating to the registration of securities,
upon exercise of any Option or pursuant to any other Award, the Company shall
not be required to issue any Stock unless the Committee has received evidence
satisfactory to it to the effect that the Holder of that Award will not transfer
the Stock except in accordance with applicable law, including receipt of an
opinion of counsel satisfactory to the

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Company to the effect that any proposed transfer complies with applicable law.
The determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by the Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to any other Award is not registered, the Company may imprint
on the certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.

     4.5  Changes in the Company's Capital Structure.  (a) The existence of
outstanding Awards shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stock ahead of or affecting
the Stock or its rights, the dissolution or liquidation of the Company, 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.

     (b) If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of Stock outstanding, without receiving
compensation for it in money, services or property, then (i) the number, class
or series and per share price of shares of Stock subject to outstanding Options
under this Plan shall be appropriately adjusted in such a manner as to entitle a
Holder to receive upon exercise of an Option, for the same aggregate cash
consideration, the equivalent total number and class or series of shares he
would have received had he exercised his Option in full immediately prior to the
event requiring the adjustment, and (ii) the number and class or series of
shares of Stock then reserved to be issued under the Plan shall be adjusted by
substituting for the total number and class or series of shares of Stock then
reserved, that number and class or series of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class or series of Stock as the result of the event requiring the adjustment.

     (c) If while unexercised Options remain outstanding under the Plan (i) the
Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an
entity that was wholly-owned by the Company immediately prior to such merger,
consolidation or other reorganization), (ii) the Company sells, leases or
exchanges or agrees to sell, lease or exchange all or substantially all of its
assets to any other person or entity (other than an entity wholly-owned by the
Company), (iii) the Company is to be dissolved or (iv) the Company is a party to
any other corporate transaction (as defined under section 424(a) of the Code and
applicable Department of Treasury Regulations) that is not described in clauses
(i), (ii) or (iii) of this sentence (each such event is referred to herein as a
"Corporate Change"), then, except as otherwise provided in an Option Agreement,
Section 5.4 or as a result of the Board's effectuation of one or more of the
alternatives described below, there shall be no acceleration of the time at
which any Option then outstanding may be exercised, and no later than ten days
after the approval by the stockholders of the Company of such Corporate Change,
the Board, acting in its sole and absolute discretion without the consent or
approval of any Holder, shall act to effect one or more of the following
alternatives, which may vary among individual Holders and which may vary among
Options held by any individual Holder:

          (A) accelerate the time at which some or all of the Options then
     outstanding may be exercised so that such Options may be exercised in full
     for a limited period of time on or before a specified date (before or after
     such Corporate Change) fixed by the Board, after which specified date all
     such Options that remain unexercised and all rights of Holders thereunder
     shall terminate;

          (B) require the mandatory surrender to the Company by all or selected
     Holders of some or all of the then outstanding Options held by such Holders
     (irrespective of whether such Options are then exercisable under the
     provisions of this Plan or the Option Agreements evidencing such Options)
     as of a date, before or after such Corporate Change, specified by the
     Board, in which event the Board shall

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     thereupon cancel such Options and the Company shall pay to each such Holder
     an amount of cash per share equal to the excess, if any, of the per share
     price offered to stockholders of the Company in connection with such
     Corporate Change over the exercise prices under such Options for such
     shares;

          (C) with respect to all or selected Holders, have some or all of their
     then outstanding Options (whether vested or unvested) assumed or have a new
     Option substituted for some or all of their then outstanding Options
     (whether vested or unvested) by an entity which is a party to the
     transaction resulting in such Corporate Change and which is then employing
     him, or a parent or subsidiary of such entity, provided that (1) such
     assumption or substitution is on a basis where the excess of the aggregate
     fair market value of the shares subject to the Option immediately after the
     assumption or substitution over the aggregate exercise price of such shares
     is equal to the excess of the aggregate fair market value of all shares
     subject to the Option immediately before such assumption or substitution
     over the aggregate exercise price of such shares, and (2) the assumed
     rights under such existing Option or the substituted rights under such new
     Option as the case may be will have the same terms and conditions as the
     rights under the existing Option assumed or substituted for, as the case
     may be;

          (D) provide that the number and class or series of shares of Stock
     covered by an Option (whether vested or unvested) theretofore granted shall
     be adjusted so that such Option when exercised shall thereafter cover the
     number and class or series of shares of stock or other securities or
     property (including, without limitation, cash) to which the Holder would
     have been entitled pursuant to the terms of the agreement or plan relating
     to such Corporate Change if, immediately prior to such Corporate Change,
     the Holder had been the holder of record of the number of shares of Stock
     then covered by such Option; or

          (E) make such adjustments to Options then outstanding as the Board
     deems appropriate to reflect such Corporate Change (provided, however, that
     the Board may determine in its sole and absolute discretion that no such
     adjustment is necessary).

     In effecting one or more of alternatives (C), (D) or (E) above, and except
as otherwise may be provided in an Option Agreement, the Board, in its sole and
absolute discretion and without the consent or approval of any Holder, may
accelerate the time at which some or all Options then outstanding may be
exercised.

     (d) In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Option and not otherwise provided for by this Section 4.5,
any outstanding Options and any agreements evidencing such Options shall be
subject to adjustment by the Board in its sole and absolute discretion as to the
number and price of shares of stock or other consideration subject to such
Options. In the event of any such change in the outstanding Stock, the aggregate
number of shares available under this Plan may be appropriately adjusted by the
Board, whose determination shall be conclusive.

     (e) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Holder shall be entitled to have his
Restricted Stock appropriately adjusted based on the manner the Stock was
adjusted under the terms of the agreement of merger or consolidation.

     (f) The issue by the Company of shares of stock of any class or series, or
securities convertible into shares of stock of any class or series, for cash or
property, or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe for them, or upon conversion of shares or
obligations of the Company convertible into shares or other securities, shall
not affect, and no adjustment by reason of such issuance shall be made with
respect to, the number, class or series, or price of shares of Stock then
subject to outstanding Options or Restricted Stock Awards.

     4.6  Election Under Section 83(b) of the Code.  No Holder shall exercise
the election permitted under section 83(b) of the Code with respect to any Award
without the written approval of the Chief Financial Officer of the Company. Any
Holder who makes an election under section 83(b) of the Code with respect to

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any Award without the written approval of the Chief Financial Officer of the
Company may, in the discretion of the Committee, forfeit any or all Awards
granted to him under the Plan.

                                   ARTICLE V

                                    OPTIONS

     5.1  Type of Option.  The Committee shall specify in an Option Agreement
whether a given Option is an Incentive Option or a Nonqualified Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value (determined as of the time an Incentive Option is granted) of the Stock
with respect to which incentive stock options first become exercisable by an
Employee during any calendar year (under the Plan and any other incentive stock
option plan(s) of the Company or any Affiliate) exceeds $100,000, the Incentive
Option shall be treated as a Nonqualified Option. In making this determination,
incentive stock options shall be taken into account in the order in which they
were granted.

     5.2  Exercise Price.  The price at which Stock may be purchased under an
Incentive Option shall not be less than 100% of the Fair Market Value of the
shares of Stock on the date the Option is granted. In the case of any Ten
Percent Stockholder, the price at which shares of Stock may be purchased under
an Incentive Option shall not be less than 110% of the Fair Market Value of the
Stock on the date the Incentive Option is granted. The price at which Stock may
be purchased under a Nonqualified Option shall be such price that the Committee,
in its discretion, shall determine.

     5.3  Duration of Options.  An Option shall not be exercisable after the
earlier of (i) the term of the Option specified in the Option Agreement (which
shall not exceed five years from the date the Option is granted in the case of
an Incentive Option granted to a Ten Percent Stockholder, or seven years from
the date the Option is granted in the case of any other Option), or (ii) the
period of time specified herein that follows the Holder's Retirement,
Disability, death or other severance of the employment or affiliation
relationship between the Holder and the Company and all Affiliates. Unless the
Holder's Option Agreement specifies otherwise, an Option shall not continue to
vest after the severance of the employment or affiliation relationship between
the Company and all Affiliates.

          (a) General Term of Option.  Unless the Option Agreement specifies a
     shorter term, an Option shall expire on the seventh anniversary of the date
     the Option is granted. Notwithstanding the foregoing, unless the Option
     Agreement specifies a shorter term, in the case of an Incentive Option
     granted to a Ten Percent Stockholder, the Option shall expire on the fifth
     anniversary of the date the Option is granted.

          (b) Early Termination of Option Due to Severance of Employment or
     Affiliation Relationship (Other Than for Death, Disability or
     Retirement).  Except as may be otherwise expressly provided in an Option
     Agreement, an Option shall terminate on the earlier of the date of the
     expiration of the general term of the Option or one day less than three
     months after the date of the termination of the employment or affiliation
     relationship between the Holder and the Company and all Affiliates for any
     reason other than the death, Disability or Retirement of the Holder, during
     which period the Holder shall be entitled to exercise the Option in respect
     of the number of shares that the Holder would have been entitled to
     purchase had the Holder exercised the Option on the date of such
     termination of employment or affiliation. Whether authorized leave of
     absence, or absence on military or government service, shall constitute a
     termination of the employment or affiliation relationship between the
     Holder and the Company and all Affiliates shall be determined by the
     Committee at the time thereof.

          (c) Early Termination of Option Due to Death.  Unless the Option
     Agreement specifies otherwise, in the event of the severance of the
     employment or affiliation relationship between the Holder and the Company
     and all Affiliates due to death before the date of expiration of the
     general term of the Option, the Holder's Option shall terminate on the
     earlier of the date of expiration of the general term of the Option or the
     first anniversary of the Holder's death.

          (d) Early Termination of Option Due to Disability.  Unless the Option
     Agreement specifies otherwise, in the event of the severance of the
     employment or affiliation relationship between the Holder

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     and the Company and all Affiliates due to Disability before the date of the
     expiration of the general term of the Option, the Option shall terminate on
     the earlier of the expiration of the general term of the Option or the
     first anniversary of the termination of the employment or affiliation
     relationship between the Holder and the Company and all Affiliates
     terminates due to Disability.

          (e) Early Termination of Option Due to Retirement.  Unless the Option
     Agreement specifies otherwise, if the Holder is an Employee and the
     employment relationship between the Holder and the Company and all
     Affiliates terminates by reason of Retirement, the Holder's Option shall
     terminate on the earlier of the expiration of the general term of the
     Option or one day less than three months after the date of the Holder's
     termination of employment due to Retirement.

     After the death of the Holder, the Holder's executors, administrators or
any person or persons to whom the Holder's Option may be transferred by will or
by the laws of descent and distribution, shall have the right, at any time prior
to the termination of the Option to exercise the Option, in respect to the
number of shares that the Holder would have been entitled to exercise if the
Holder exercised the Option prior to his death.

     5.4  Amount Exercisable.  Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Option
Agreement in its sole discretion. Notwithstanding any other provision of the
Plan or an Option Agreement, an Option will be exercisable in full upon the
occurrence of a Change of Control.

     5.5  Exercise of Options.  Each Option shall be exercised by the delivery
of written notice to the Committee setting forth the number of shares of Stock
with respect to which the Option is to be exercised, together with: (a) cash,
certified check, bank draft or postal or express money order payable to the
order of the Company for an amount equal to the exercise price under the Option,
(b) Mature Shares with a Fair Market Value on the date of exercise equal to the
exercise price under the Option, (c) an election to make a cashless exercise
through a registered broker-dealer (if approved in advance by the Committee) or
(d) except as specified below, any other form of payment which is acceptable to
the Committee, and specifying the address to which the certificates for the
shares are to be mailed. As promptly as practicable after receipt of written
notification and payment, the Company shall deliver to the Holder certificates
for the number of shares with respect to which the Option has been exercised,
issued in the Holder's name. If Mature Shares are used for payment by the
Holder, the aggregate Fair Market Value of the shares of Stock tendered must be
equal to or less than the aggregate exercise price of the shares being purchased
upon exercise of the Option, and any difference must be paid by cash, certified
check, bank draft or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Holder, at the address specified by the
Holder.

     Whenever an Option is exercised by exchanging Mature Shares owned by the
Holder, the Holder shall deliver to the Company certificates registered in the
name of the Holder representing a number of shares of Stock legally and
beneficially owned by the Holder, free of all liens, claims and encumbrances of
every kind, accompanied by stock powers duly endorsed in blank by the record
holder of the shares represented by the certificates (with signature guaranteed
by a commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition.

     The Committee may permit a Holder to elect to pay the exercise price upon
exercise of an Option by authorizing a third-party broker to sell all or a
portion of the shares of Stock acquired upon exercise of the Option and remit to
the Company a sufficient portion of the sale proceeds to pay the exercise price
and any applicable tax withholding resulting from such exercise.

     The Committee shall not permit a Holder to pay his exercise price upon the
exercise of an Option by having the Company reduce the number of shares of Stock
that will be delivered to the Holder pursuant to the exercise of the Option. In
addition, the Committee shall not permit a Holder to pay his exercise price upon
the exercise of an Option by using shares of Stock other than Mature Shares.
                                        7
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     An Option may not be exercised for a fraction of a share of Stock.

     5.6  Substitution Options.  Options may be granted under the Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in the Plan to the extent the Committee, at the time of grant, may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.

     5.7  No Rights as Stockholder.  No Holder shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.

                                   ARTICLE VI

                            RESTRICTED STOCK AWARDS

     6.1  Restricted Stock Awards.  The Committee may make Awards of Restricted
Stock to eligible persons selected by it. The amount of, the vesting and the
transferability restrictions applicable to, any Restricted Stock Award shall be
determined by the Committee in its sole discretion. If the Committee imposes
vesting or transferability restrictions on a Holder's rights with respect to
shares of Restricted Stock, the Committee may issue such instructions to the
Company's stock transfer agent in connection therewith as it deems appropriate.
The Committee may also cause the certificate for shares issued pursuant to a
Restricted Stock Award to be imprinted with any legend which counsel for the
Company considers advisable with respect to the restrictions.

     Each Restricted Stock Award shall be evidenced by a Restricted Stock Award
Agreement that contains any vesting, transferability restrictions and other
provisions not inconsistent with the Plan as the Committee may specify.

     6.2  Holder's Rights as Stockholder.  Subject to the terms and conditions
of the Plan, each Holder receiving a certificate for Restricted Stock shall have
all the rights of a stockholder with respect to the shares of Stock included in
the Stock Award during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the right to vote
such shares, if unrestricted shares of the same class have the right to vote.
Dividends paid with respect to shares of Restricted Stock in cash or property
other than stock in the Company or rights to acquire stock in the Company shall
be paid to the Holder currently. Dividends paid in stock in the Company or
rights to acquire stock in the Company shall be added to and become a part of
the Restricted Stock.

                                  ARTICLE VII

                                 ADMINISTRATION

     The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. The Plan shall be
administered in such a manner as to permit the Options which are designated to
be Incentive Options to

                                        8
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qualify as Incentive Options. In carrying out its authority under the Plan, the
Committee shall have full and final authority and discretion, including but not
limited to the following rights, powers and authorities, to:

          (a) determine the persons to whom and the time or times at which
     Awards will be made;

          (b) determine the number of shares and the exercise price of Stock
     covered in each Award, subject to the terms of the Plan;

          (c) determine the terms, provisions and conditions of each Award,
     which need not be identical;

          (d) accelerate the time at which any outstanding Option may be
     exercised, or Restricted Stock Award will vest;

          (e) define the effect, if any, on an Award of the death, disability,
     retirement or termination of employment or affiliation relationship between
     the Holder and the Company and Affiliates;

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

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

The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.

                                  ARTICLE VIII

                        AMENDMENT OR TERMINATION OF PLAN

     The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that to the extent required to
maintain the status of any Incentive Option under the Code, no amendment that
would change the aggregate number of shares of Stock which may be issued under
Incentive Options, or change the class of Employees eligible to receive
Incentive Options shall be made without the approval of the Company's
stockholders. Subject to the preceding sentence, the Board shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under the Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.

                                   ARTICLE IX

                                 MISCELLANEOUS

     9.1  No Establishment of a Trust Fund.  No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any Holder
under the Plan. All Holders shall at all times rely solely upon the general
credit of the Company for the payment of any benefit which becomes payable under
the Plan.

     9.2  No Employment or Affiliation Obligation.  The granting of any Option
or Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue to
employ, or utilize the services of, any Holder. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or
affected by reason of the fact that an Option or Award has been granted to him.

     9.3  Forfeiture.  Notwithstanding any other provisions of the Plan, if the
Committee finds by a majority vote after full consideration of the facts that
the Holder, before or after termination of his employment or affiliation
relationship with the Company or an Affiliate for any reason committed or
engaged in willful misconduct, gross negligence, a breach of fiduciary duty,
fraud, embezzlement, theft, a felony, a crime

                                        9
<PAGE>   13

involving moral turpitude or proven dishonesty in the course of his employment
by the Company or an Affiliate, which conduct damaged the Company or Affiliate,
the Holder shall forfeit all outstanding Options and all outstanding Awards, and
all exercised Options if the Company has not yet delivered a stock certificate
to the Holder with respect thereto.

     The decision of the Committee as to the cause of the Holder's discharge,
the damage done to the Company or an Affiliate shall be final. No decision of
the Committee, however, shall affect the finality of the discharge of the Holder
by the Company or an Affiliate in any manner.

     9.4  Tax Withholding.  The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Holder any sums required by
federal, state or local tax law to be withheld with respect to the grant or
exercise of an Option, or lapse of restrictions on Restricted Stock. In the
alternative, the Company may require the Holder of an Award to pay such sums for
taxes directly to the Company or any Affiliate in cash or by check within ten
days after the date of exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the
number of shares of Stock issued to the Holder upon his exercise of an Option to
satisfy the tax withholding obligations of the Company or an Affiliate; provided
that the Fair Market Value of the shares held back shall not exceed the
Company's or the Affiliate's minimum statutory withholding tax obligations. The
Committee may, in its discretion, permit a Holder to satisfy any tax withholding
obligations arising upon the vesting of Restricted Stock by delivering to the
Holder of the Restricted Stock Award a reduced number of shares of Stock in the
manner specified herein. If permitted by the Committee and acceptable to the
Holder, at the time of vesting of shares of Restricted Stock, the Company shall
(i) calculate the amount of the Company's or an Affiliate's minimum statutory
tax withholding obligation on the assumption that all such vested shares of
Restricted Stock are made available for delivery, (ii) reduce the number of such
shares made available for delivery so that the Fair Market Value of the shares
withheld on the vesting date approximates the amount of tax the Company or an
Affiliate is obliged to withhold and (iii) in lieu of the withheld shares, remit
cash to the United States Treasury and other applicable governmental
authorities, on behalf of the Holder, in the amount of the withholding tax due.
The Company shall withhold only whole shares of Stock to satisfy its withholding
obligation. Where the Fair Market Value of the withheld shares does not equal
the Company's withholding tax obligation, the Company shall withhold shares with
a Fair Market Value slightly less than the amount of its withholding obligation
and the Holder of the Restricted Stock Award must satisfy the remaining
withholding obligation in some other manner permitted under this Section 9.4.
The withheld shares of Restricted Stock not made available for delivery by the
Company shall be retained as treasury stock or will be cancelled and, in either
case, the Holder's right, title and interest in such Restricted Stock shall
terminate. The Company shall have no obligation upon exercise of any Option or
lapse of restrictions on Restricted Stock until the Company or an Affiliate has
received payment sufficient to cover all tax withholding amounts due with
respect to that exercise. Neither the Company nor any Affiliate shall be
obligated to advise a Holder of the existence of the tax or the amount which it
will be required to withhold.

     9.5  Written Agreement.  Each Award shall be embodied in a written
agreement which shall be subject to the terms and conditions of the Plan and
shall be signed by the Holder and by a member of the Committee on behalf of the
Committee and the Company or an executive officer of the Company, other than the
Holder, on behalf of the Company. The agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms of the Plan.

     9.6  Indemnification of the Committee.  The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company for, all expenses (including attorney's fees, the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his being or
having been a member of the Committee, whether or not he continues to be a
member of the Committee at the time of incurring the expenses, including,
without limitation, matters as to which he shall be finally adjudged in any
action, suit or proceeding to have been found to have been negligent in the
performance of his duty as a member of the Committee. However, this indemnity
shall not include any expenses incurred by any member of the
                                        10
<PAGE>   14

Committee in respect of matters as to which he shall be finally adjudged in any
action, suit or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as a member of the Committee. In
addition, no right of indemnification under the Plan shall be available to or
enforceable by any member of the Committee unless, within 60 days after
institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and shall be in
addition to all other rights to which a member of the Committee may be entitled
as a matter of law, contract or otherwise.

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

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

     9.9  Other Compensation Plans.  The adoption of the Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive compensation arrangements for
Employees.

     9.10  Other Options or Awards.  The grant of an Award shall not confer upon
the Holder the right to receive any future or other Awards under the Plan,
whether or not Awards may be granted to similarly situated Holders, or the right
to receive future Awards upon the same terms or conditions as previously
granted.

     9.11  Governing Law.  The provisions of the Plan shall be construed,
administered and governed under the laws of the State of Texas.

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