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                                                                     Exhibit 4.1

                             RADIOSHACK CORPORATION
                            2001 INCENTIVE STOCK PLAN
                              (includes Directors)

         1.    Purpose.
               -------

The purpose of this Plan is to strengthen RadioShack Corporation (the "Company")
by providing an incentive to its Eligible Employees (as hereinafter defined),
and directors and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to, Eligible Employees of the Company
and its subsidiaries and to Eligible Directors (as defined below), an added
long-term incentive for high levels of performance and unusual efforts through
the grant of Incentive Stock Options and Nonqualified Stock Options (as each
term is defined below).

         2.    Definitions.
               -----------

         For purposes of the Plan:

         2.1   "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.

         2.2   "Agreement" means the written agreement between the Company and
an Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.

         2.3   "Board"  means the Board of Directors of the Company.

         2.4   "Cause"  means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.

         2.5   "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.

         2.6   A "Change in Control" shall mean the occurrence during the term
of the Plan and during the term of any Option issued under the Plan of:

               (a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities ") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act ")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A

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"Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Subsidiary"), (ii) the Company
or its Subsidiaries, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);

          (b) The individuals who, as of May 18, 2001, are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least two-thirds
of the Board; provided, however, that if the election, or nomination for
election by the Company's stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or

          (c) Approval by stockholders of the Company of:

                  (i)   A merger, consolidation or reorganization involving the
Company, unless

                          (A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
sixty percent (60%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,

                          (B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving Corporation,

                          (C) no Person other than the Company, any Subsidiary,
any employee benefit plan (or any trust forming a part thereof) maintained by
the Company, the Surviving Corporation, or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of fifteen percent (15%) or more of the then outstanding Voting
Securities has Beneficial Ownership of fifteen percent (15%) or more of the
combined voting power of the Surviving Corporation's then outstanding voting
securities, and

                          (D) A transaction described in clauses (A) through (C)
shall herein be referred to as a "Non-Control Transaction ";

                  (ii)  A complete liquidation or dissolution of the Company; or

                  (iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities outstanding, increases the proportional number

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of shares Beneficially Owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

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

         2.8   "Committee" means a committee of the Board consisting of at least
two (2) members, all of who are Disinterested Directors, appointed by the Board
to administer the Plan and to perform the functions set forth herein.

         2.9   "Company" means RadioShack Corporation, a Delaware Corporation.

         2.10  "Director Option" means an Option granted pursuant to Section 5.

         2.11  "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Optionee from
performing the customary duties of his or her regular job with the Company.

         2.12  "Disinterested Director" means a director of the Company who is
both a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act, and a "Outside Director" within the meaning of Section 162(m) of
the Code.

         2.13  "Division" means any of the operating units or divisions of the
Company.

         2.14  "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the Committee
as eligible to receive Options subject to the conditions set forth herein.

         2.15  "Eligible Director" means a director of the Company who is not an
employee at the time of grant of the Company or any Subsidiary.

         2.16  "Employee Option" means an Option granted pursuant to Section 6.

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

         2.18  "Fair Market Value" on any date means the average of the high and
low sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.

         2.19  "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.

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         2.20   "Nonqualified Stock Option"  means an Option which is not an
Incentive Stock Option.

         2.21   "Option" means an Employee Option, a Director Option, or either
or both of them.

         2.22   "Optionee" means a person to whom an Option has been granted
under the Plan.

         2.23   "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.

         2.24   "Plan or 2001 ISP" means the RadioShack Corporation 2001
Incentive Stock Plan.

         2.25   "Retirement" means a Director must have attained sixty (60)
years of age and served as a Director for sixty (60) consecutive months
preceding his or her resignation or retirement as a Director.

         2.26   "Shares" means the common stock, par value $1.00 per share, of
the Company.

         2.27   "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.

         2.28   "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.

         2.29   "Ten-Percent Stockholder" means an Eligible Employee, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.

         3.     Administration.
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         3.1    The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.

         3.2    Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:

                (a) determine those individuals to whom Employee Options shall
be granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and

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                (b) grant Shares to Eligible Employees, that are the subject of
Options upon such terms and conditions as may be determined by the Committee in
its sole and absolute discretion.

         3.3    Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:

                (a) to construe and interpret the Plan and the Options granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and all other
persons having any interest therein;

                (b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee on an individual basis without constituting
a termination of employment or service for purposes of the Plan;

                (c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and

                (d) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.

         3.4    During any calendar year no Eligible Employee may be granted
Options in the aggregate in respect of more than 500,000 Shares.

         4.     Stock Subject to the Plan.
                -------------------------

         4.1    The maximum number of Shares that may be made the subject of
Options granted under the Plan is 9,200,000 Shares. Upon a Change in
Capitalization the maximum number of Shares shall be adjusted in number and kind
pursuant to Section 9. The Company shall reserve for the purposes of the Plan,
out of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined by
the Board.

         4.2    Upon the granting of an Option, the number of Shares available
under Section 4.1 for the granting of further Options shall be reduced by the
number of Shares in respect of which the Option is granted.

         4.3    Whenever any outstanding Option or portion thereof expires, is
canceled or is otherwise terminated for any reason without having been exercised
or payment having been made in respect of the entire Option, the Shares
allocable to the expired, canceled or otherwise terminated portion of the Option
may again be the subject of Options granted hereunder.

         5.     Director Plans.
                --------------

                5A.    Option Grants to Eligible Directors.
                       -----------------------------------

                5A.1   Annual Grant. Subject to the provisions of Section 5C.1
                       ------------
hereof, Director Options shall be granted to each Eligible Director on the first
trading day of September of each year the Plan is in effect. Each Director
Option granted shall be in respect of 16,000 Shares. The purchase price of each
Director Option shall be as provided in Section 5A.3 and such Options shall be

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evidenced by an Agreement containing such other terms and conditions not
inconsistent with the provisions of this Plan as determined by the Board;
provided, however, that such terms shall not vary the timing of awards of
Director Options, including provisions dealing with forfeiture or termination of
such Director Options, and further such terms may not provide for a modification
of a Director Option and the grant of a new Director Option in substitution for
them which results in a Purchase Price (as defined in Section 5A.3 hereof) that
is lower than the Purchase Price of the originally issued Director Option until
authorized by the stockholders of the Corporation.

          5A.2   One Time Grant. Subject to the provisions of Section 5C.1
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hereof, each newly appointed or elected Eligible Director who has not previously
received a one-time grant under the Company's 1993 Incentive Stock Plan, 1997
Incentive Stock Plan, 1999 Incentive Stock Plan or hereunder, shall be granted
an option on the date the Eligible Director attends his or her first Company
Board meeting. Each Director Option granted under this Section shall be in
respect of 20,000 Shares. The Purchase Price of each Director Option shall be as
provided in Section 5A.3 and such Options shall be evidenced by an Agreement
containing such other terms and conditions not inconsistent with the provisions
of this Plan as determined by the Board; provided, however, that such terms
shall not vary the timing of awards of Director Options, including provisions
dealing with forfeiture or termination of such Director Options.

          5A.3   Purchase Price. The "Purchase Price" for Shares under each
                 --------------
Director Option shall be equal to 100% of the Fair Market Value of such Shares
on the date of grant.

          5A.4   Vesting. Subject to Section 7.4, each Director Option shall
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become exercisable with respect to one third (1/3) of the Shares effective as of
each of the first, second and third annual anniversaries of the grant date;
provided, however, that the Optionee continues to serve as a Director as of such
dates. Notwithstanding the foregoing, if a Director's service terminates by
reason of his death, Disability or Retirement, all Director Options then held by
the Director shall be fully vested.

          5A.5   Duration. Each Director Option shall terminate on the date
                 --------
which is the tenth annual anniversary of the grant date, unless terminated
earlier as follows:

                 (a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may, for
a period of three (3) months after such termination, exercise his or her Option
to the extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.

                 (b) If an Optionee's service as a Director terminates by reason
of the Optionee's Retirement or by resignation or removal from the Board due to
Disability, the Optionee may, for a period of three (3) years after such
termination, exercise his or her Option after which time the Option shall
automatically terminate in full.

                 (c) If an Optionee's service as a Director terminates for
Cause, the Option granted to the Optionee hereunder shall immediately terminate
in full and no rights thereunder may be exercised.

                 (d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) of
this Section 5A.5, or within three (3) years after termination of service as a
Director as described in clause (b) of this Section 5A.5, the Option granted to
the Optionee may be exercised at any time within 12 months after the Optionee's
death by the person or persons to whom such rights under the Option shall pass
by will, or by the laws of descent or distribution, after which time the Option
shall terminate in full.

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          5B.   Stock Purchase for Director Retainer and/or Meeting Fees.
                --------------------------------------------------------

          5B.1  Election to Participate.
                -----------------------

                (a) Initial Year Election. Each Eligible Director may
                    ---------------------
participate in this Section 5B by filing an election to participate with the
Company Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to either or both of the Eligible Director's meeting fees or annual
retainer payable to him or her under the Eligible Director compensation plan in
respect of each calendar month commencing with the first calendar month
commencing after the receipt of the Initial Year Election by the Company
Secretary and ending the subsequent May 31. An Eligible Director may, pursuant
to an Initial Year Election, participate in this Section 5B only at either a 50%
or 100% level and may not change his or her level of participation except as
provided in Section 5B.1 (b) below.

                (b) Annual Election. Each Eligible Director may, prior to May 1
                    ---------------
of any year, elect to participate (or cease to participate ) or change his or
her level of participation in this Section 5B (an "Annual Election"). An Annual
Election shall become effective with respect to either or both of the Eligible
Director's meeting fees or annual retainer payable to him or her under the
Eligible Director compensation plan in respect of the year commencing on June 1
next subsequent to the receipt of the Annual Election by the Company Secretary
and shall continue for subsequent years unless changed pursuant to this Section
5B.1 (b). An Eligible Director may, pursuant to an Annual Election, participate
in this Section 5B only at either a 50% or 100% level and may not change his or
her level of participation except as provided in this Section 5B.1(b).

          5B.2  Payment in Stock.
                ----------------

                (a) For the period commencing on the effective date of an
Eligible Director's Initial Year Election through the next subsequent May 31,
(i) Shares will be issued to each Eligible Director participating at the 100%
level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Eligible Director's annual retainer
divided by twelve (12), then multiplied by the number of calendar months from
the effective date of the Initial Year Election through the subsequent May 31;
and (ii) Shares will be issued to each Eligible Director participating at the
50% level according to the calculation in clause (i) of this Section 5B.2 (a)
but reduced by one-half. Shares will be issued as of the effective date of the
Initial Year Election.

                (b) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair Market Value (as of the first
trading day immediately preceding the date of issuance) equal to the Eligible
Director's annual retainer; and (ii) Shares will be issued to each Eligible
Director participating in this Section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(b) but reduced by one-half.
Shares will be issued as of June 1.

                (c) For the period commencing on the effective date of an
Eligible Director's Initial Year Election through the next subsequent May 31,
(i) Shares will be issued to each Eligible Director participating at the 100%
level having a Fair Market Value (as of the date of the meeting or if not a
trading day then the first trading day immediately preceding the date of the
meeting) equal to the Eligible Director's fee for attending the meeting; and
(ii) Shares will be issued to each Eligible Director participating at the 50%
level according to the calculation in clause (i) of this Section 5B.2 (c) but
reduced by one-half. Shares will be issued as soon as practicable after the date
of each such meeting.

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              (d) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair Market Value (as of the date of
the meeting or if not a trading day then the first trading day immediately
preceding the date of the meeting) equal to the Eligible Director's fee for
attending the meeting; and (ii) Shares will be issued to each Eligible Director
participating in this Section 5B at the 50% level according to the calculation
in clause (i) of this Section 5B.2(d) but reduced by one-half. Shares will be
issued as soon as practicable after the date of each such meeting.

              (e) The issuance of Shares to an Eligible Director participating
in this Section 5B shall represent payment in advance of, and shall be in lieu
of, 50% or 100%, as applicable, of the Eligible Director's annual retainer for
the period in respect of which the Initial Year Election or the Annual Election
is in effect.

              (f) The issuance of Shares to an Eligible Director participating
in this Section 5B shall represent payment of, and shall be in lieu of, 50% or
100%, as applicable, of the Eligible Director's meeting fees for each meeting
attended in respect of which the Initial Year Election or the Annual Election is
in effect.

         5B.3 Distribution. Shares will be distributed to the Eligible Director
              ------------
as soon as practicable after issuance. No fractional Share will be issued to any
Eligible Director. Any amount not used for the acquisition of a Share will be
paid to the Eligible Director in cash.

         5C.1 No Duplication. Notwithstanding any provision in this Plan to the
              --------------
contrary, no Director Option shall be granted to any Eligible Director pursuant
to Section 5A, of this Plan on any day if such Director is granted a Director
Option pursuant to Section 5A. of the Company's 1993 Incentive Stock Plan, 1997
Incentive Stock Plan or 1999 Incentive Stock Plan on such day. In addition, no
Shares shall be issued pursuant to Section 5B. of this Plan in respect of an
Eligible Director's meeting or retainer fees if Shares are or will be issued
pursuant to Section 5B. of the Company's 1993 Incentive Stock Plan, 1997
Incentive Stock Plan or 1999 Incentive Stock Plan in respect of such meeting or
retainer fees.

     6.  Option Grants for Eligible Employees.
         ------------------------------------

     6.1 Authority of Committee. Subject to the provisions of the Plan, the
         ----------------------
Committee shall have full and final authority to select those Eligible Employees
who will receive Options (each an "Employee Option"), the terms and conditions
of which shall be set forth in an Agreement; provided, however, that no person
                                             --------  -------
shall receive any Incentive Stock Options unless he or she is an employee of the
Company, a Parent or a Subsidiary at the time the Incentive Stock Option is
granted.

     6.2 Purchase Price. The purchase price or the manner in which the purchase
         --------------
price is to be determined for Shares under each Employee Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
                                                            --------  -------
that the purchase price per Share under each Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a Share on the date the Incentive
Stock Option is granted (110% in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder) and the purchase price per Share under each
Nonqualified Stock Option shall not be less than the Fair Market Value of a
Share on the date the Nonqualified Stock Option is granted.

     6.3 Maximum Duration. Employee Options granted hereunder shall be for such
         ----------------
term as the Committee shall determine, provided that an Incentive Stock Option
shall not be exercisable after the expiration of ten (10) years from the date it
is granted (five (5) years in the case of an

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Incentive Stock Option granted to a Ten-Percent Stockholder) and a Nonqualified
Stock Option shall not be exercisable after the expiration of ten (10) years
from the date it is granted. The Committee may, subsequent to the granting of
any Employee Option, extend the term thereof but in no event shall the term as
so extended exceed the maximum term provided for in the preceding sentence.

     6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option shall
         -------
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.

     6.5 Modification or Substitution. The Committee may, in its discretion,
         ----------------------------
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, (i) no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent, and (ii) no modification or
surrender of an outstanding option and the grant of new Options in substitution
for them which results in a purchase price (as defined in Section 6.2 hereof)
that is lower than the purchase price of the originally issued Option shall be
effective until authorized by the stockholders of the Corporation.

     7.  Terms and Conditions Applicable to All Options.
         ----------------------------------------------

     7.1 Transferability. Unless otherwise provided by the Committee, no Option
         ---------------
granted hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.

     7.2 Method of Exercise. The exercise of an Option shall be made only by a
         ------------------
written notice delivered in person, by facsimile, electronic means, or by mail
to such person, entity and location as may be designated by the Corporate
Secretary of the Company, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in full upon such
exercise by any one or a combination of the following: (i) cash or (ii)
transferring Shares to the Company upon such terms and conditions as determined
by the Committee. Notwithstanding the foregoing, the Committee shall have
discretion to determine at the time of grant of each Employee Option or at any
later date (up to and including the date of exercise) the form of payment
acceptable in respect of the exercise of such Employee Option. The written
notice pursuant to this Section 7.2 may also provide instructions from the
Optionee to the Company that upon receipt of the purchase price in cash from the
Optionee's broker or dealer, that has been approved by the Company, designated
as such on the written notice, in payment for any Shares purchased pursuant to
the exercise of an Option, the Company shall issue such Shares directly to the
designated broker or dealer that has been approved by the Company. Any Shares
transferred to the Company as payment of the purchase price under an Option
shall be valued at their Fair Market Value on the day preceding the date of
exercise of such Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.

                                       9

<PAGE>

     7.3 Rights of Optionees. No Optionee shall be deemed for any purpose to be
         -------------------
the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee or his designated broker or
dealer that has been approved by the Company and (iii) the Optionee's name or
the name of his designated broker or dealer that has been approved by the
Company shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.

     7.4 Effect of Change in Control. Notwithstanding anything contained in the
         ---------------------------
Plan to the contrary, unless an Agreement evidencing an Option provides
otherwise, in the event of a Change in Control the Option shall become
immediately and fully exercisable. In addition, an Agreement evidencing an
Option may provide that the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option or
portion of the Option to the extent not yet exercised and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if any, of
(x) (A) in the case of a Nonqualified Stock Option, the greater of (1) the Fair
Market Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Option or portion thereof surrendered or (B)
in the case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or portion
thereof surrendered, over (y) the aggregate purchase price for such Shares under
the Option or portion thereof surrendered. In the event an Optionee's employment
with, or service as a Director of, the Company terminates following a Change in
Control, each Option held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain exercisable for
a period ending not before the earlier of (A) the first annual anniversary of
the termination of the Optionee's employment or service or (B) the expiration of
the stated term of the Option.

     8.  Effect of a Termination of Employment. The Agreement evidencing the
         -------------------------------------
grant of each Employee Option shall set forth the terms and conditions
applicable to such Employee Option upon a termination or change in the status of
the employment of the Optionee by the Company, a Subsidiary or a Division
(including a termination or change by reason of the sale of a Subsidiary or a
Division), as the Committee may, in its discretion, determine at the time the
Employee Option is granted or thereafter.

     9.  Adjustment Upon Change in Capitalization.
         ----------------------------------------

         (a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the (i) maximum
number and class of Shares or other stock or securities with respect to which
Options may be granted under this Plan; (ii) the number and class of Shares or
other stock or securities which are subject to Director Options issuable under
Section 5; (iii) the number and class of Shares or other stock or securities
which are subject to outstanding Options granted under this Plan, and the
purchase price therefor, if applicable; and (iv) the maximum number and class of
Shares or other stock or securities with respect to which Options may be granted
to any Eligible Employee.

         (b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.

         (c) Any stock adjustment in the Shares or other stock or securities
subject to outstanding Director Options (including any adjustments in the
purchase price) shall be made only

                                       10

<PAGE>

to the extent necessary to maintain the proportionate interest of the Optionee
and preserve, without exceeding, the value of such Director Option.

                  (d) If, by reason of a Change in Capitalization, an Optionee
shall be entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new additional or different shares
shall thereupon be subject to all of the conditions, restrictions and
performance criteria which were applicable to the Shares subject to the Option
prior to such Change in Capitalization.

         10. Effect of Certain Transactions. Subject to Section 7.4, in the
             ------------------------------
event of (i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), this Plan and the Options issued
hereunder shall continue in effect in accordance with their respective terms and
each Optionee shall be entitled to receive in respect of each Share subject to
any outstanding Options upon exercise of any Option, the same number and kind of
stock, securities, cash, property, or other consideration that each holder of a
Share was entitled to receive immediately prior to the Transaction in respect of
a Share.

         11. Termination and Amendment of the Plan. The Plan shall terminate May
             -------------------------------------
31, 2011 and no Option may be granted thereafter. The Board may sooner terminate
the Plan and the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:

             (a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options therefore granted under the Plan,
except with the consent of the Optionee, nor shall any amendment, modification,
suspension or termination deprive any Optionee of any Shares which he or she may
have acquired through or as a result of the Plan;

             (b) To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law and regulations;

             (c) The provisions of Section 5 shall not be amended more often
than once every six (6) months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder; and

             (d) Unless theretofore approved by the stockholders of the Company,
no amendment or modification of the Plan shall provide for: (i) the purchase
price per Share of an Option to be less than 100% of the Fair Market Value of a
Share on the date the Option was granted; (ii) the provision for the awards of
restricted stock, stock appreciation rights or performance awards; or (iii)
subject to Section 9. of the Plan, an increase the number of Shares subject to
Option grants under the Plan.

         12. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
             ---------------------------
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangements or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.

         13. Limitation of Liability. As illustrative of the limitations of
             -----------------------
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:

             (i) give any person any right to be granted an Option other than at
the sole discretion of the Committee;


                                       11

<PAGE>

          (ii)  give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;

          (iii) limit in any way the right of the Company or any Subsidiary to
terminate the employment of any person at any time; or

          (iv)  be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.

     14.  Regulations and Other Approvals; Governing Law.
          ----------------------------------------------

     14.1 Except as to matters of federal law, this Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Texas without giving effect to conflict of laws
principles.

     14.2 The obligation of the Company to sell or deliver Shares with respect
to Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

     14.3 The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and Section 162 (m) of the Code, and the Committee shall interpret
and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule and Section
162(m) of the Code shall be inoperative and shall not affect the validity of the
Plan.

     14.4 The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Employees granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.

     14.5 Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option, no Options shall be
granted, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.

     14.6 Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately legended to reflect their status as restricted
securities as aforesaid.

                                       12

<PAGE>

     15.  Pooling Transactions. Notwithstanding anything contained in the Plan
          --------------------
or any Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a pooling transaction under the Code, the Committee
shall take such actions, if any, as are specifically recommended by an
independent accounting firm retained by the Company to the extent reasonably
necessary to assure that the pooling transaction will qualify as such, including
but not limited to (i) deferring the vesting, exercise, payment, settlement or
lapsing of restrictions with respect to any Option, (ii) providing that the
payment or settlement in respect of any Option be made in the form of cash,
Shares or securities of a successor or acquirer of the Company, or a combination
of the foregoing, and (iii) providing for the extension of the term of any
Option to the extent necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option.

     16.  Miscellaneous.
          -------------

     16.1 Multiple Agreements. The terms of each Option may differ from other
          -------------------
Options granted under this Plan at the same time, or at some other time. The
Committee may also grant more than one Option to a given Eligible Employee
during the term of this Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Eligible Employee.

     16.2 Withholding of Taxes.
          --------------------

          (a) The Company shall have the right to deduct from any distribution
of cash to any Director or Optionee, an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to the receipt of any retainer fee or
Option. If a Director or Optionee is to experience a taxable event in connection
with the receipt of Shares pursuant to a payment in stock or Option exercise (a
"Taxable Event"), the Director or Optionee shall pay the Withholding Taxes to
the Company prior to the issuance, or release from escrow, of such Shares. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Director or Optionee may make a written election (the "Tax Election"), which may
be accepted or rejected in the discretion of the Committee or Company Secretary,
as applicable, to have withheld a portion of the Shares then issuable to him or
her having an aggregate Fair Market Value, on the date preceding the date of
such issuance, equal to the Withholding Taxes. The Committee may, by the
adoption of rules or otherwise, (i) modify the provisions of this Section 16.2
(other than as regards Director Options) or impose such other restrictions or
limitations on Tax Elections as may be necessary to ensure that the Tax
Elections will be exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute exempt transactions
under Section 16(b) of the Exchange Act.

          (b) If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Secretary of the Company at the
Company's principal executive office.

          (c) The Committee shall have the authority, at the time of grant of an
Employee Option under the Plan or at any time thereafter, to award tax bonuses
to designated Optionees, to be paid upon their exercise of Employee Options
granted hereunder. The amount of any such payments shall be determined by the
Committee. The Committee shall have full authority in its absolute discretion to
determine the amount of any such tax bonus and the terms and conditions
affecting the vesting and payment thereof.

                                       13

<PAGE>

     17. Effective Date. The effective date of the Plan shall be June 1, 2001,
         --------------
after the date of its adoption by the Board, and the approval by the affirmative
vote of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at the meeting of stockholders duly held in
accordance with the applicable laws of the State of Delaware on May 17, 2001.

                                       14