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                                                                   EXHIBIT 10.71


                         TEXAS BIOTECHNOLOGY CORPORATION
                            1999 STOCK INCENTIVE PLAN


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                                TABLE OF CONTENTS
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SECTION 1.  General Provisions Relating To Plan Governance, Coverage And Benefits.......................1
         1.1        Purpose.............................................................................1
         1.2        Definitions.........................................................................1
                    (a)      Authorized Officer.........................................................1
                    (b)      Board......................................................................2
                    (c)      Cause......................................................................2
                    (d)      Change in Control..........................................................2
                    (e)      Code.......................................................................2
                    (f)      Committee..................................................................2
                    (g)      Common Stock...............................................................3
                    (h)      Company....................................................................3
                    (i)      Consultant.................................................................3
                    (j)      Covered Employee...........................................................3
                    (k)      Disability.................................................................3
                    (l)      Employee...................................................................3
                    (m)      Employment.................................................................3
                    (n)      Exchange Act...............................................................4
                    (o)      Fair Market Value..........................................................4
                    (p)      Grantee....................................................................5
                    (q)      Immediate Family...........................................................5
                    (r)      Incentive Agreement........................................................5
                    (s)      Incentive Award............................................................5
                    (t)      Incentive Stock Option.....................................................5
                    (u)      Insider....................................................................5
                    (v)      Nonstatutory Stock Option..................................................5
                    (w)      Option Price...............................................................5
                    (x)      Other Stock-Based Award....................................................5
                    (y)      Outside Director...........................................................5
                    (z)      Parent.....................................................................5
                    (aa)     Performance-Based Exception................................................6
                    (bb)     Performance Period.........................................................6
                    (cc)     Plan.......................................................................6
                    (dd)     Publicly Held Corporation..................................................6
                    (ee)     Restricted Stock...........................................................6
                    (ff)     Restricted Stock Award.....................................................6
                    (gg)     Restriction Period.........................................................6
                    (hh)     Retirement.................................................................6
                    (ii)     Share......................................................................6
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                    (jj)     Share Pool.................................................................6
                    (kk)     Stock Option or Option.....................................................6
                    (ll)     Subsidiary.................................................................7
         1.3        Plan Administration.................................................................7
                    (a)      Authority of the Committee.................................................7
                    (b)      Meetings...................................................................7
                    (c)      Decisions Binding..........................................................7
                    (d)      Modification of Outstanding Incentive Awards...............................8
                    (e)      Delegation of Authority....................................................8
                    (f)      Expenses of Committee......................................................8
                    (g)      Surrender of Previous Incentive Awards.....................................8
                    (h)      Indemnification............................................................8
         1.4        Shares of Common Stock Available for Incentive Awards...............................9
         1.5        Share Pool Adjustments for Awards and Payouts......................................10
         1.6        Common Stock Available.  ..........................................................10
         1.7        Participation......................................................................10
                    (a)      Eligibility...............................................................10
                    (b)      Incentive Stock Option Eligibility........................................11
         1.8        Types of Incentive Awards..........................................................11

SECTION 2. STOCK OPTIONS...............................................................................11
         2.1        Grant of Stock Options.............................................................11
         2.2        Stock Option Terms.................................................................11
                    (a)      Written Agreement.........................................................11
                    (b)      Number of Shares..........................................................12
                    (c)      Exercise Price............................................................12
                    (d)      Term......................................................................12
                    (e)      Exercise..................................................................12
                    (f)      $100,000 Annual Limit on Incentive Stock Options..........................12
         2.3        Stock Option Exercises.............................................................13
                    (a)      Method of Exercise and Payment............................................13
                    (b)      Restrictions on Share Transferability.....................................14
                    (c)      Notification of Disqualifying Disposition of Shares from Incentive
                             Stock Options.............................................................14
                    (d)      Proceeds of Option Exercise...............................................14
         2.4        Reload Options.....................................................................14

SECTION 3. RESTRICTED STOCK............................................................................15
         3.1        Award of Restricted Stock..........................................................15
                    (a)      Grant.....................................................................15
                    (b)      Immediate Transfer Without Immediate Delivery of
                             Restricted Stock..........................................................15
         3.2        Restrictions.......................................................................16
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                    (a)      Forfeiture of Restricted Stock............................................16
                    (b)      Issuance of Certificates..................................................16
                    (c)      Removal of Restrictions...................................................16
         3.3        Delivery of Shares of Common Stock.................................................17

SECTION 4. OTHER STOCK-BASED AWARDS....................................................................17
         4.1        Grant of Other Stock-Based Awards..................................................17
         4.2        Other Stock-Based Award Terms......................................................17
                    (a)      Written Agreement.........................................................17
                    (b)      Purchase Price............................................................17
                    (c)      Performance Criteria and Other Terms......................................18
                    (d)      Payment...................................................................18
                    (e)      Dividends.................................................................18

SECTION 5. PROVISIONS RELATING TO PLAN PARTICIPATION...................................................18
         5.1        Plan Conditions....................................................................18
                    (a)      Incentive Agreement.......................................................18
                    (b)      No Right to Employment....................................................19
                    (c)      Securities Requirements...................................................19
         5.2        Transferability and Exercisability.................................................19
         5.3        Rights as a Stockholder............................................................20
                    (a)      No Stockholder Rights.....................................................20
                    (b)      Representation of Ownership...............................................21
         5.4        Listing and Registration of Shares of Common Stock.................................21
         5.5        Change in Stock and Adjustments....................................................21
                    (a)      Changes in Law or Circumstances...........................................21
                    (b)      Exercise of Corporate Powers..............................................21
                    (c)      Recapitalization of the Company...........................................22
                    (d)      Reorganization of the Company.............................................22
                    (e)      Issue of Common Stock by the Company......................................22
                    (f)      Acquisition of the Company................................................23
                    (g)      Assumption under the Plan of Outstanding Stock Options....................23
                    (h)      Assumption of Incentive Awards by a Successor.............................24
         5.6        Termination of Employment, Death, Disability and Retirement........................24
                    (a)      Termination of Employment.................................................24
                    (b)      Termination of Employment for Cause.......................................25
                    (c)      Retirement................................................................25
                    (d)      Disability or Death.......................................................25
                    (e)      Continuation..............................................................26
         5.7        Change in Control..................................................................26
         5.8        Exchange of Incentive Awards.......................................................28
         5.9        Financing..........................................................................28
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SECTION 6. GENERAL.....................................................................................28
         6.1        Effective Date and Grant Period....................................................28
         6.2        Funding and Liability of Company...................................................29
         6.3        Withholding Taxes..................................................................29
                    (a)      Tax Withholding...........................................................29
                    (b)      Share Withholding.........................................................29
                    (c)      Incentive Stock Options...................................................29
                    (d)      Loans.....................................................................30
         6.4        No Guarantee of Tax Consequences...................................................30
         6.5        Designation of Beneficiary by Participant..........................................30
         6.6        Deferrals..........................................................................30
         6.7        Amendment and Termination..........................................................30
         6.8        Requirements of Law................................................................31
         6.9        Rule 16b-3 Securities Law Compliance...............................................31
         6.10       Compliance with Code Section 162(m)................................................31
         6.11       Successors.........................................................................32
         6.12       Miscellaneous Provisions...........................................................32
         6.13       Severability.......................................................................32
         6.14       Gender, Tense and Headings.........................................................32
         6.15       Governing Law......................................................................33
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                         TEXAS BIOTECHNOLOGY CORPORATION
                            1999 STOCK INCENTIVE PLAN



                                   SECTION 1.

                         GENERAL PROVISIONS RELATING TO
                     PLAN GOVERNANCE, COVERAGE AND BENEFITS

1.1      PURPOSE

         The purpose of the Plan is to foster and promote the long-term
financial success of Texas Biotechnology Corporation (the "Company") and its
Subsidiaries and to increase stockholder value by: (a) encouraging the
commitment of selected key Employees, Consultants and Outside Directors, (b)
motivating superior performance of key Employees, Consultants and Outside
Directors by means of long-term performance related incentives, (c) encouraging
and providing key Employees, Consultants and Outside Directors with a program
for obtaining ownership interests in the Company which link and align their
personal interests to those of the Company's stockholders, (d) attracting and
retaining key Employees, Consultants and Outside Directors by providing
competitive incentive compensation opportunities, and (e) enabling key
Employees, Consultants and Outside Directors to share in the long-term growth
and success of the Company.

         The Plan provides for payment of various forms of incentive
compensation and it is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended (ERISA). The Plan shall be
interpreted, construed and administered consistent with its status as a plan
that is not subject to ERISA.

         Subject to approval by the Company's stockholders pursuant to Section
6.1, the Plan shall become effective as of March 2, 1999 (the "EFFECTIVE DATE").
The Plan shall commence on the Effective Date, and shall remain in effect,
subject to the right of the Board to amend or terminate the Plan at any time
pursuant to Section 6.7, until all Shares subject to the Plan have been
purchased or acquired according to its provisions. However, in no event may an
Incentive Award be granted under the Plan after the expiration of ten (10) years
from the Effective Date.

1.2      DEFINITIONS

         The following terms shall have the meanings set forth below:

                   (a) AUTHORIZED OFFICER. The Chairman of the Board or the
         Chief Executive Officer of the Company or any other senior officer of
         the Company to whom either of them delegate the authority to execute
         any Incentive Agreement for and on behalf of the Company.


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         No officer or director shall be an Authorized Officer with respect to
         any Incentive Agreement for himself.

                  (b) BOARD. The Board of Directors of the Company.

                  (c) CAUSE. When used in connection with the termination of a
         Grantee's Employment, shall mean the termination of the Grantee's
         Employment by the Company by reason of (i) the conviction of the
         Grantee by a court of competent jurisdiction as to which no further
         appeal can be taken of a crime involving moral turpitude or a felony;
         (ii) the proven commission by the Grantee of an act of fraud upon the
         Company; (iii) the willful and proven misappropriation of any funds or
         property of the Company by the Grantee; (iv) the willful, continued and
         unreasonable failure by the Grantee to perform the material duties
         assigned to him; (v) the knowing engagement by the Grantee in any
         direct, material conflict of interest with the Company without
         compliance with the Company's conflict of interest policy, if any, then
         in effect; or (vi) the knowing engagement by the Grantee, without the
         written approval of the Board, in any activity which competes with the
         business of the Company or which would result in a material injury to
         the business, reputation or goodwill of the Company.

                  (d) CHANGE IN CONTROL. Any of the events described in and
         subject to Section 5.7.

                  (e) CODE. The Internal Revenue Code of 1986, as amended, and
         the regulations and other authority promulgated thereunder by the
         appropriate governmental authority. References herein to any provision
         of the Code shall refer to any successor provision thereto.

                  (f) COMMITTEE. A committee appointed by the Board consisting
         of not less than two directors as appointed by the Board to administer
         the Plan. During such period that the Company is a Publicly Held
         Corporation, the Plan shall be administered by a committee appointed by
         the Board consisting of not less than two directors who fulfill the
         "non-employee director" requirements of Rule 16b-3 under the Exchange
         Act and the "outside director" requirements of Section 162(m) of the
         Code. In either case, the Committee may be the Compensation Committee
         of the Board, or any subcommittee of the Compensation Committee,
         provided that the members of the Committee satisfy the requirements of
         the previous provisions of this paragraph. The Board shall have the
         power to fill vacancies on the Committee arising by resignation, death,
         removal or otherwise. The Board, in its sole discretion, may bifurcate
         the powers and duties of the Committee among one or more separate
         committees, or retain all powers and duties of the Committee in a
         single Committee. The members of the Committee shall serve at the
         discretion of the Board.

                  Notwithstanding the preceding paragraph, the term "Committee"
         as used in the Plan with respect to any Incentive Award for an Outside
         Director shall refer to the entire Board. In the case of an Incentive
         Award for an Outside Director, the Board shall have all the


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         powers and responsibilities of the Committee hereunder as to such
         Incentive Award, and any actions as to such Incentive Award may be
         acted upon only by the Board (unless it otherwise designates in its
         discretion). When the Board exercises its authority to act in the
         capacity as the Committee hereunder with respect to an Incentive Award
         for an Outside Director, it shall so designate with respect to any
         action that it undertakes in its capacity as the Committee.

                  (g) COMMON STOCK. The common stock of the Company, $.005 par
         value per share, and any class of common stock into which such common
         shares may hereafter be converted, reclassified or recapitalized.

                  (h) COMPANY. Texas Biotechnology Corporation, a corporation
         organized under the laws of the State of Delaware, and any successor in
         interest thereto.

                  (i) CONSULTANT. An independent agent, consultant, attorney, an
         individual who has agreed to become an Employee, or any other
         individual who is not an Outside Director or employee of the Company
         (or any Parent or Subsidiary) and who, in the opinion of the Committee,
         is in a position to contribute materially to the growth or financial
         success of the Company (or any Parent or Subsidiary).

                  (j) COVERED EMPLOYEE. A named executive officer who is one of
         the group of covered employees, as defined in Section 162(m) of the
         Code and Treasury Regulation Section 1.162-27(c) (or its successor),
         during such period that the Company is a Publicly Held Corporation.

                  (k) DISABILITY. As determined by the Committee in its
         discretion exercised in good faith, a physical or mental condition of
         the Employee that would entitle him to payment of disability income
         payments under the Company's long term disability insurance policy or
         plan for employees, as then effective, if any; or in the event that the
         Grantee is not covered, for whatever reason, under the Company's
         long-term disability insurance policy or plan, "Disability" means a
         permanent and total disability as defined in Section 22(e)(3) of the
         Code. A determination of Disability may be made by a physician selected
         or approved by the Committee and, in this respect, the Grantee shall
         submit to an examination by such physician upon request.

                  (l) EMPLOYEE. Any employee of the Company (or any Parent or
         Subsidiary) within the meaning of Section 3401(c) of the Code who, in
         the opinion of the Committee, is in a position to contribute to the
         growth, development and financial success of the Company (or any Parent
         or Subsidiary), including, without limitation, officers who are members
         of the Board.

                  (m) EMPLOYMENT. Employment by the Company (or any Parent or
         Subsidiary), or by any corporation issuing or assuming an Incentive
         Award in any transaction described

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         in Section 424(a) of the Code, or by a parent corporation or a
         subsidiary corporation of such corporation issuing or assuming such
         Incentive Award, as the parent-subsidiary relationship shall be
         determined at the time of the corporate action described in Section
         424(a) of the Code. In this regard, neither the transfer of a Grantee
         from Employment by the Company to Employment by any Parent or
         Subsidiary, nor the transfer of a Grantee from Employment by any Parent
         or Subsidiary to Employment by the Company, shall be deemed to be a
         termination of Employment of the Grantee. Moreover, the Employment of a
         Grantee shall not be deemed to have been terminated because of an
         approved leave of absence from active Employment on account of
         temporary illness, authorized vacation or granted for reasons of
         professional advancement, education, health, or government service, or
         during military leave for any period (if the Grantee returns to active
         Employment within 90 days after the termination of military leave), or
         during any period required to be treated as a leave of absence by
         virtue of any applicable statute, Company personnel policy or
         agreement. Whether an authorized leave of absence shall constitute
         termination of Employment hereunder shall be determined by the
         Committee in its discretion.

                  Unless otherwise provided in the Incentive Agreement, the term
         "Employment" for purposes of the Plan is also defined to include (i)
         compensatory services performed by a Consultant for the Company (or any
         Parent or Subsidiary) and (ii) membership on the Board by an Outside
         Director.

                  (n) EXCHANGE ACT. The Securities Exchange Act of 1934, as
         amended.

                  (o) FAIR MARKET VALUE. The Fair Market Value of one share of
         Common Stock on the date in question is deemed to be (i) the closing
         sales price on the immediately preceding business day of a share of
         Common Stock as reported on the consolidated reporting system for the
         securities exchange(s) on which Shares are then listed or admitted to
         trading (as reported in the Wall Street Journal or other reputable
         source), or (ii) if not so reported, the average of the closing bid and
         asked prices for a Share on the immediately preceding business day as
         quoted on the National Association of Securities Dealers Automated
         Quotation System ("NASDAQ"), or (iii) if not quoted on NASDAQ, the
         average of the closing bid and asked prices for a Share as quoted by
         the National Quotation Bureau's "Pink Sheets" or the National
         Association of Securities Dealers' OTC Bulletin Board System. If there
         was no public trade of Common Stock on the date in question, Fair
         Market Value shall be determined by reference to the last preceding
         date on which such a trade was so reported.

                  If the Company is not a Publicly Held Corporation at the time
         a determination of the Fair Market Value of the Common Stock is
         required to be made hereunder, the determination of Fair Market Value
         for purposes of the Plan shall be made by the Committee in its
         discretion exercised in good faith. In this respect, the Committee may
         rely on such financial data, valuations, experts, and other sources, in
         its discretion, as it deems advisable under the circumstances.

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                  (p) GRANTEE. Any Employee, Consultant or Outside Director who
         is granted an Incentive Award under the Plan.

                  (q) IMMEDIATE FAMILY. With respect to a Grantee, the Grantee's
         spouse, children or grandchildren (including legally adopted and step
         children and grandchildren)

                  (r) INCENTIVE AGREEMENT. The written agreement entered into
         between the Company and the Grantee setting forth the terms and
         conditions pursuant to which an Incentive Award is granted under the
         Plan, as such agreement is further defined in Section 6.1(a).

                  (s) INCENTIVE AWARD. A grant of an award under the Plan to a
         Grantee, including any Nonstatutory Stock Option, Incentive Stock
         Option, Reload Option, Restricted Stock Award, or Other Stock-Based
         Award.

                  (t) INCENTIVE STOCK OPTION OR ISO. A Stock Option granted by
         the Committee to an Employee under Section 2 which is designated by the
         Committee as an Incentive Stock Option and intended to qualify as an
         Incentive Stock Option under Section 422 of the Code.

                  (u) INSIDER. An individual who is, on the relevant date, an
         officer, director or ten percent (10%) beneficial owner of any class of
         the Company's equity securities that is registered pursuant to Section
         12 of the Exchange Act, all as defined under Section 16 of the Exchange
         Act.

                  (v) NONSTATUTORY STOCK OPTION. A Stock Option granted by the
         Committee to a Grantee under Section 2 that is not designated by the
         Committee as an Incentive Stock Option.

                  (w) OPTION PRICE. The exercise price at which a Share may be
         purchased by the Grantee of a Stock Option.

                  (x) OTHER STOCK-BASED AWARD. An award granted by the Committee
         to a Grantee under Section 4.1 that is valued in whole or in part by
         reference to, or is otherwise based upon, Common Stock.

                  (y) OUTSIDE DIRECTOR. A member of the Board who is not, at the
         time of grant of an Incentive Award, an employee of the Company or any
         Parent or Subsidiary.

                  (z) PARENT. Any corporation (whether now or hereafter
         existing) which constitutes a "parent" of the Company, as defined in
         Section 424(e) of the Code.


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                  (aa) PERFORMANCE-BASED EXCEPTION. The performance-based
         exception from the tax deductibility limitations of Section 162(m) of
         the Code, as prescribed in Code Section 162(m) and Treasury Regulation
         Section 1.162-27(e) (or its successor), which is applicable during such
         period that the Company is a Publicly Held Corporation.

                  (bb) PERFORMANCE PERIOD. A period of time, as may be
         determined in the discretion of the Committee and set out in the
         Incentive Agreement, over which performance is measured for the purpose
         of determining a Grantee's right to and the payment value of an
         Incentive Award.

                  (cc) PLAN. The Texas Biotechnology Corporation 1999 Stock
         Incentive Plan as set forth herein and as it may be amended from time
         to time.

                  (dd) PUBLICLY HELD CORPORATION. A corporation issuing any
         class of common equity securities required to be registered under
         Section 12 of the Exchange Act.

                  (ee) RESTRICTED STOCK. Shares of Common Stock issued or
         transferred to a Grantee pursuant to Section 3.

                  (ff) RESTRICTED STOCK AWARD. An authorization by the Committee
         to issue or transfer Restricted Stock to a Grantee.

                  (gg) RESTRICTION PERIOD. The period of time determined by the
         Committee and set forth in the Incentive Agreement during which the
         transfer of Restricted Stock by the Grantee is restricted.

                  (hh) RETIREMENT. The voluntary termination of Employment from
         the Company or any Parent or Subsidiary constituting retirement for age
         on any date after the Employee attains the normal retirement age of 65
         years, or such other age as may be designated by the Committee in the
         Employee's Incentive Agreement.

                  (ii) SHARE. A share of the Common Stock of the Company.

                  (jj) SHARE POOL. The number of shares authorized for issuance
         under Section 1.4, as adjusted for awards and payouts under Section 1.5
         and as adjusted for changes in corporate capitalization under Section
         5.5.

                  (kk) STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an
         Incentive Stock Option granted to an Employee or (ii) a Nonstatutory
         Stock Option granted to an Employee, Consultant or Outside Director,
         whereunder such stock option the Grantee has the right to purchase
         Shares of Common Stock. In accordance with Section 422 of the Code,
         only an Employee may be granted an Incentive Stock Option.


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                   (ll) SUBSIDIARY. Any corporation (whether now or hereafter
         existing) which constitutes a "subsidiary" of the Company, as defined
         in Section 424(f) of the Code.

1.3      PLAN ADMINISTRATION

                  (a) AUTHORITY OF THE COMMITTEE. Except as may be limited by
         law and subject to the provisions herein, the Committee shall have full
         power to (i) select Grantees who shall participate in the Plan; (ii)
         determine the sizes, duration and types of Incentive Awards; (iii)
         determine the terms and conditions of Incentive Awards and Incentive
         Agreements; (iv) determine whether any Shares subject to Incentive
         Awards will be subject to any restrictions on transfer; (v) construe
         and interpret the Plan and any Incentive Agreement or other agreement
         entered into under the Plan; and (vi) establish, amend, or waive rules
         for the Plan's administration. Further, the Committee shall make all
         other determinations which may be necessary or advisable for the
         administration of the Plan including, without limitation, correcting
         any defect, supplying any omission or reconciling any inconsistency in
         the Plan or any Incentive Agreement. The determinations of the
         Committee shall be final and binding.

                  The Committee may grant an Incentive Award to an individual
         who it expects to become an Employee within the next six months, with
         such Incentive Award being subject to such individual actually becoming
         an Employee within such time period, and subject to such other terms
         and conditions as may be established by the Committee in its
         discretion.

                  (b) MEETINGS. The Committee shall designate a chairman from
         among its members who shall preside at all of its meetings, and shall
         designate a secretary, without regard to whether that person is a
         member of the Committee, who shall keep the minutes of the proceedings
         and all records, documents, and data pertaining to its administration
         of the Plan. Meetings shall be held at such times and places as shall
         be determined by the Committee and the Committee may hold telephonic
         meetings. The Committee may take any action otherwise proper under the
         Plan by the affirmative vote, taken with or without a meeting, of a
         majority of its members. The Committee may authorize any one or more of
         their members or any officer of the Company to execute and deliver
         documents on behalf of the Committee.

                  (c) DECISIONS BINDING. All determinations and decisions made
         by the Committee shall be made in its discretion pursuant to the
         provisions of the Plan, and shall be final, conclusive and binding on
         all persons including the Company, its shareholders, Employees,
         Grantees, and their estates and beneficiaries. The Committee's
         decisions and determinations with respect to any Incentive Award need
         not be uniform and may be made selectively among Incentive Awards and
         Grantees, whether or not such Incentive Awards are similar or such
         Grantees are similarly situated.


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                   (d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to
         the stockholder approval requirements of Section 6.7 if applicable, the
         Committee may, in its discretion, provide for the extension of the
         exercisability of an Incentive Award, accelerate the vesting or
         exercisability of an Incentive Award, eliminate or make less
         restrictive any restrictions contained in an Incentive Award, waive any
         restriction or other provisions of an Incentive Award, or otherwise
         amend or modify an Incentive Award in any manner that is either (i) not
         adverse to the Grantee to whom such Incentive Award was granted or (ii)
         consented to by such Grantee. With respect to an Incentive Award that
         is an incentive stock option (as described in Section 422 of the Code),
         no adjustment to such option shall be made to the extent constituting a
         "modification" within the meaning of Section 424(h)(3) of the Code
         unless otherwise agreed to by the optionee in writing.

                  (e) DELEGATION OF AUTHORITY. The Committee may delegate to
         designated officers or other employees of the Company any of its duties
         under this Plan pursuant to such conditions or limitations as the
         Committee may establish from time to time; provided, however, while the
         Company is a Publicly Held Corporation, the Committee may not delegate
         to any person the authority to (i) grant Incentive Awards, or (ii) take
         any action which would contravene the requirements of Rule 16b-3 under
         the Exchange Act or the Performance-Based Exception under Section
         162(m) of the Code.

                  (f) EXPENSES OF COMMITTEE. The Committee may employ legal
         counsel, including, without limitation, independent legal counsel and
         counsel regularly employed by the Company, and other agents as the
         Committee may deem appropriate for the administration of the Plan. The
         Committee may rely upon any opinion or computation received from any
         such counsel or agent. All expenses incurred by the Committee in
         interpreting and administering the Plan, including, without limitation,
         meeting expenses and professional fees, shall be paid by the Company.

                  (g) SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may,
         in its absolute discretion, grant Incentive Awards to Grantees on the
         condition that such Grantees surrender to the Committee for
         cancellation such other Incentive Awards (including, without
         limitation, Incentive Awards with higher exercise prices) as the
         Committee directs. Incentive Awards granted on the condition precedent
         of surrender of outstanding Incentive Awards shall not count against
         the limits set forth in Section 1.4 until such time as such previous
         Incentive Awards are surrendered and canceled.

                   (h) INDEMNIFICATION. Each person who is or was a member of
         the Committee, or of the Board, shall be indemnified by the Company
         against and from any damage, loss, liability, cost and expense that may
         be imposed upon or reasonably incurred by him in connection with or
         resulting from any claim, action, suit, or proceeding to which he may
         be a party or in which he may be involved by reason of any action taken
         or failure to act under the Plan, EXCEPT FOR ANY SUCH ACT OR OMISSION
         CONSTITUTING WILLFUL MISCONDUCT OR GROSS negligence. Such person shall
         be indemnified by the Company for all amounts paid by him in settlement
         thereof, with the Company's approval, or paid by him 


                                      A-8
<PAGE>   14
         in settlement thereof, with the Company's approval, or paid by him in
         satisfaction of any judgment in any such action, suit, or proceeding
         against him, provided he shall give the Company an opportunity, at its
         own expense, to handle and defend the same before he undertakes to
         handle and defend it on his own behalf. The foregoing right of
         indemnification shall not be exclusive of any other rights of
         indemnification to which such persons may be entitled under the
         Company's Articles of Incorporation or Bylaws, as a matter of law, or
         otherwise, or any power that the Company may have to indemnify them or
         hold them harmless.

1.4      SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS

         Subject to adjustment under Section 5.5, there shall be available for
Incentive Awards under the Plan granted wholly or partly in Common Stock
(including rights or Stock Options that may be exercised for or settled in
Common Stock) One Million (1,000,000) Shares of Common Stock. One Million
(1,000,000) of the Shares reserved under the Plan shall be available for grants
of Incentive Stock Options. The number of Shares of Common Stock that are the
subject of Incentive Awards under this Plan, that are forfeited or terminated,
expire unexercised, are settled in cash in lieu of Common Stock or in a manner
such that all or some of the Shares covered by an Incentive Award are not issued
to a Grantee or are exchanged for Incentive Awards that do not involve Common
Stock, shall again immediately become available for Incentive Awards hereunder.
The Committee may from time to time adopt and observe such procedures concerning
the counting of Shares against the Plan maximum as it may deem appropriate. The
Board and the appropriate officers of the Company shall from time to time take
whatever actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
Shares are available for issuance pursuant to Incentive Awards.

         During such period that the Company is a Publicly Held Corporation,
then unless and until the Committee determines that a particular Incentive Award
granted to a Covered Employee is not intended to comply with the
Performance-Based Exception, the following rules shall apply to grants of
Incentive Awards to Covered Employees:

                  (a) Subject to adjustment as provided in Section 5.5, the
         maximum aggregate number of Shares of Common Stock (including Stock
         Options, Restricted Stock, or Other Stock-Based Awards paid out in
         Shares) that may be granted or that may vest, as applicable, in any
         calendar year pursuant to any Incentive Award held by any individual
         Covered Employee shall be 1,000,000 Shares.

                  (b) The maximum aggregate cash payout (including Other
         Stock-Based Awards paid out in cash) with respect to Incentive Awards
         granted in any calendar year which may be made to any Covered Employee
         shall be Ten Million dollars ($10,000,000).

                  (c) With respect to any Stock Option granted to a Covered
         Employee that is canceled or repriced, the number of Shares subject to
         such Stock Option shall continue to 

                                      A-9
<PAGE>   15
         count against the maximum number of Shares that may be the subject of
         Stock Options granted to such Covered Employee hereunder and, in this
         regard, such maximum number shall be determined in accordance with
         Section 162(m) of the Code.

                  (d) The limitations of subsections (a), (b) and (c) above
         shall be construed and administered so as to comply with the
         Performance-Based Exception.

1.5      SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.

         The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:

                  (a)      Stock Option;

                  (b)      Restricted Stock; and

                  (c)      A payout of an Other Stock-Based Award in Shares.

         The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:

                  (a)      A payout of an Other Stock-Based Award in the form of
         cash;

                  (b)      A cancellation, termination, expiration, forfeiture, 
         or lapse for any reason of any Shares subject to an Incentive Award; 
         and

                  (c)      Payment of an Option Price with previously acquired
         Shares or by withholding Shares that otherwise would be acquired on
         exercise (i.e., the Share Pool shall be increased by the number of
         Shares turned in or withheld as payment of the Option Price).

1.6      COMMON STOCK AVAILABLE.

         The Common Stock available for issuance or transfer under the Plan
shall be made available from Shares now or hereafter (a) held in the treasury of
the Company, (b) authorized but unissued shares, or (c) shares to be purchased
or acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.

1.7      PARTICIPATION

                   (a) ELIGIBILITY. The Committee shall from time to time
         designate those Employees, Consultants and/or Outside Directors, if
         any, to be granted Incentive Awards under the Plan, the type of
         Incentive Awards granted, the number of Shares or Stock Options, as the
         case may be, which shall be granted to each such person, and any other
         terms or 


                                      A-10
<PAGE>   16


         conditions relating to the Incentive Awards as it may deem appropriate
         to the extent not inconsistent with the provisions of the Plan. A
         Grantee who has been granted an Incentive Award may, if otherwise
         eligible, be granted additional Incentive Awards at any time.

                  (b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or
         Outside Director shall be eligible for the grant of any Incentive Stock
         Option. In addition, no Employee shall be eligible for the grant of any
         Incentive Stock Option who owns or would own immediately before the
         grant of such Incentive Stock Option, directly or indirectly, stock
         possessing more than ten percent (10%) of the total combined voting
         power of all classes of stock of the Company, or any Parent or
         Subsidiary. This restriction does not apply if, at the time such
         Incentive Stock Option is granted, the Incentive Stock Option exercise
         price is at least one hundred and ten percent (110%) of the Fair Market
         Value on the date of grant and the Incentive Stock Option by its terms
         is not exercisable after the expiration of five (5) years from the date
         of grant. For the purpose of the immediately preceding sentence, the
         attribution rules of Section 424(d) of the Code shall apply for the
         purpose of determining an Employee's percentage ownership in the
         Company or any Parent or Subsidiary. This paragraph shall be construed
         consistent with the requirements of Section 422 of the Code.

1.8      TYPES OF INCENTIVE AWARDS

         The types of Incentive Awards under the Plan are Stock Options as
described in Section 2, Restricted Stock as described in Section 3, Other
Stock-Based Awards as described in Section 4, or any combination of the
foregoing.


                                   SECTION 2.

                                  STOCK OPTIONS

2.1      GRANT OF STOCK OPTIONS

         The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.

2.2      STOCK OPTION TERMS

                   (a) WRITTEN AGREEMENT. Each grant of an Stock Option shall be
         evidenced by a written Incentive Agreement. Among its other provisions,
         each Incentive Agreement shall set forth the extent to which the
         Grantee shall have the right to exercise the Stock Option 


                                      A-11
<PAGE>   17


         following termination of the Grantee's Employment. Such provisions
         shall be determined in the discretion of the Committee, shall be
         included in the Grantee's Incentive Agreement, need not be uniform
         among all Stock Options issued pursuant to the Plan.

                  (b) NUMBER OF SHARES. Each Stock Option shall specify the
         number of Shares of Common Stock to which it pertains.

                  (c) EXERCISE PRICE. The exercise price per Share of Common
         Stock under each Stock Option shall be determined by the Committee;
         provided, however, that in the case of an Incentive Stock Option, such
         exercise price shall not be less than 100% of the Fair Market Value per
         Share on the date the Incentive Stock Option is granted. To the extent
         that the Company is a Publicly Held Corporation and the Stock Option is
         intended to qualify for the Performance-Based Exception, the exercise
         price shall not be less than 100% of the Fair Market Value per Share on
         the date the Stock Option is granted. Each Stock Option shall specify
         the method of exercise which shall be consistent with the requirements
         of Section 2.3(a).

                  (d) TERM. In the Incentive Agreement, the Committee shall fix
         the term of each Stock Option which shall be not more than ten (10)
         years from the date of grant. In the event no term is fixed, such term
         shall be ten (10) years from the date of grant.

                  (e) EXERCISE. The Committee shall determine the time or times
         at which a Stock Option may be exercised in whole or in part. Each
         Stock Option may specify the required period of continuous Employment
         and/or the performance objectives to be achieved before the Stock
         Option or portion thereof will become exercisable. Each Stock Option,
         the exercise of which, or the timing of the exercise of which, is
         dependent, in whole or in part, on the achievement of designated
         performance objectives, may specify a minimum level of achievement in
         respect of the specified performance objectives below which no Stock
         Options will be exercisable and a method for determining the number of
         Stock Options that will be exercisable if performance is at or above
         such minimum but short of full achievement of the performance
         objectives. All such terms and conditions shall be set forth in the
         Incentive Agreement.

                   (f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.
         Notwithstanding any contrary provision in the Plan, to the extent that
         the aggregate Fair Market Value (determined as of the time the
         Incentive Stock Option is granted) of the Shares of Common Stock with
         respect to which Incentive Stock Options are exercisable for the first
         time by any Grantee during any single calendar year (under the Plan and
         any other stock option plans of the Company and its Subsidiaries or
         Parent) exceeds the sum of $100,000, such Incentive Stock Option shall
         be treated as a Nonstatutory Stock Option to the extent in excess of
         the $100,000 limit, and not an Incentive Stock Option, but all other
         terms and provisions of such Stock Option shall remain unchanged. This
         paragraph shall be applied by taking Incentive Stock Options into
         account in the order in which they are granted and shall be construed
         in 


                                      A-12
<PAGE>   18


         accordance with Section 422(d) of the Code. In the absence of such
         regulations or other authority, or if such regulations or other
         authority require or permit a designation of the Options which shall
         cease to constitute Incentive Stock Options, then such Incentive Stock
         Options, only to the extent of such excess and in the order in which
         they were granted, shall automatically be deemed to be Nonstatutory
         Stock Options but all other terms and conditions of such Incentive
         Stock Options, and the corresponding Incentive Agreement, shall remain
         unchanged.

2.3      STOCK OPTION EXERCISES

                  (a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be
         exercised by the delivery of a signed written notice of exercise to the
         Company as of a date set by the Company in advance of the effective
         date of the proposed exercise. The notice shall set forth the number of
         Shares with respect to which the Option is to be exercised, accompanied
         by full payment for the Shares.

                  The Option Price upon exercise of any Stock Option shall be
         payable to the Company in full either: (i) in cash or its equivalent,
         or (ii) subject to prior approval by the Committee in its discretion,
         by tendering previously acquired Shares having an aggregate Fair Market
         Value at the time of exercise equal to the total Option Price (provided
         that the Shares which are tendered must have been held by the Grantee
         for at least six (6) months prior to their tender to satisfy the Option
         Price), or (iii) subject to prior approval by the Committee in its
         discretion, by withholding Shares which otherwise would be acquired on
         exercise having an aggregate Fair Market Value at the time of exercise
         equal to the total Option Price, or (iv) subject to prior approval by
         the Committee in its discretion, by a combination of (i), (ii), and
         (iii) above. Any payment in Shares of Common Stock shall be effected by
         the delivery of such Shares to the Secretary of the Company, duly
         endorsed in blank or accompanied by stock powers duly executed in
         blank, together with any other documents as the Secretary shall require
         from time to time.

                  The Committee, in its discretion, also may allow (i) "cashless
         exercise" as permitted under Federal Reserve Board's Regulation T, 12
         CFR Part 220 (or its successor), and subject to applicable securities
         law restrictions and tax withholdings, or (ii) by any other means which
         the Committee, in its discretion, determines to be consistent with the
         Plan's purpose and applicable law.

                  As soon as practicable after receipt of a written notification
         of exercise and full payment, the Company shall deliver to or on behalf
         of the Grantee, in the name of the Grantee or other appropriate
         recipient, Share certificates for the number of Shares purchased under
         the Stock Option. Such delivery shall be effected for all purposes when
         a stock transfer agent of the Company shall have deposited such
         certificates in the United States mail, addressed to Grantee or other
         appropriate recipient.


                                      A-13
<PAGE>   19


                  (b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
         impose such restrictions on any Shares acquired pursuant to the
         exercise of a Stock Option as it may deem advisable, including, without
         limitation, restrictions under (i) any buy/sell agreement or right of
         first refusal, (ii) any applicable federal securities laws, (iii) the
         requirements of any stock exchange or market upon which such Shares are
         then listed and/or traded, or (iv) any blue sky or state securities law
         applicable to such Shares. Any certificate issued to evidence Shares
         issued upon the exercise of an Incentive Award may bear such legends
         and statements as the Committee shall deem advisable to assure
         compliance with federal and state laws and regulations.

                  Any Grantee or other person exercising an Incentive Award may
         be required by the Committee to give a written representation that the
         Incentive Award and the Shares subject to the Incentive Award will be
         acquired for investment and not with a view to public distribution;
         provided, however, that the Committee, in its sole discretion, may
         release any person receiving an Incentive Award from any such
         representations either prior to or subsequent to the exercise of the
         Incentive Award.

                  (c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM
         INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the
         Plan, a Grantee who disposes of Shares of Common Stock acquired upon
         the exercise of an Incentive Stock Option by a sale or exchange either
         (i) within two (2) years after the date of the grant of the Incentive
         Stock Option under which the Shares were acquired or (ii) within one
         (1) year after the transfer of such Shares to him pursuant to exercise,
         shall promptly notify the Company of such disposition, the amount
         realized and his adjusted basis in such Shares.

                  (d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the
         Company from the sale of Shares pursuant to Stock Options exercised
         under the Plan shall be used for general corporate purposes.

2.4      RELOAD OPTIONS

         At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options under the Plan that permit the
Grantee to purchase an additional number of Shares equal to the number of
previously owned Shares surrendered by the Grantee to pay all or a portion of
the Option Price upon exercise of his Stock Options. The terms and conditions of
such replacement Stock Options shall be set forth in the Incentive Agreement.


                                      A-14
<PAGE>   20


                                   SECTION 3.

                                RESTRICTED STOCK

3.1      AWARD OF RESTRICTED STOCK

                  (a) GRANT. In consideration of the performance of Employment
         by any Grantee who is an Employee, Consultant or Outside Director,
         Shares of Restricted Stock may be awarded under the Plan by the
         Committee with such restrictions during the Restriction Period as the
         Committee may designate in its discretion, any of which restrictions
         may differ with respect to each particular Grantee. Restricted Stock
         shall be awarded for no additional consideration or such additional
         consideration as the Committee may determine, which consideration may
         be less than, equal to or more than the Fair Market Value of the shares
         of Restricted Stock on the grant date. The terms and conditions of each
         grant of Restricted Stock shall be evidenced by an Incentive Agreement.

                  (b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF
         RESTRICTED STOCK. Unless otherwise specified in the Grantee's Incentive
         Agreement, each Restricted Stock Award shall constitute an immediate
         transfer of the record and beneficial ownership of the Shares of
         Restricted Stock to the Grantee in consideration of the performance of
         services as an Employee, Consultant or Outside Director, as applicable,
         entitling such Grantee to all voting and other ownership rights in such
         Shares.

                  As specified in the Incentive Agreement, a Restricted Stock
         Award may limit the Grantee's dividend rights during the Restriction
         Period in which the shares of Restricted Stock are subject to a
         "substantial risk of forfeiture" (within the meaning given to such term
         under Code Section 83) and restrictions on transfer. In the Incentive
         Agreement, the Committee may apply any restrictions to the dividends
         that the Committee deems appropriate. Without limiting the generality
         of the preceding sentence, if the grant or vesting of Shares of
         Restricted Stock granted to a Covered Employee, if applicable, is
         designed to comply with the requirements of the Performance-Based
         Exception, the Committee may apply any restrictions it deems
         appropriate to the payment of dividends declared with respect to such
         Shares of Restricted Stock, such that the dividends and/or the Shares
         of Restricted Stock maintain eligibility for the Performance-Based
         Exception. In the event that any dividend constitutes a derivative
         security or an equity security pursuant to the rules under Section 16
         of the Exchange Act, if applicable, such dividend shall be subject to a
         vesting period equal to the remaining vesting period of the Shares of
         Restricted Stock with respect to which the dividend is paid.

                  Shares awarded pursuant to a grant of Restricted Stock may be
         issued in the name of the Grantee and held, together with a stock power
         endorsed in blank, by the Committee or Company (or their delegates) or
         in trust or in escrow pursuant to an agreement satisfactory to the
         Committee, as determined by the Committee, until such time as the
         restrictions on


                                      A-15
<PAGE>   21


         transfer have expired. All such terms and conditions shall be set forth
         in the particular Grantee's Incentive Agreement. The Company or
         Committee (or their delegates) shall issue to the Grantee a receipt
         evidencing the certificates held by it which are registered in the name
         of the Grantee.

3.2      RESTRICTIONS

                  (a) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded
         to a Grantee may be subject to the following restrictions until the
         expiration of the Restriction Period: (i) a restriction that
         constitutes a "substantial risk of forfeiture" (as defined in Code
         Section 83), or a restriction on transferability; (ii) unless otherwise
         specified by the Committee in the Incentive Agreement, the Restricted
         Stock that is subject to restrictions which are not satisfied shall be
         forfeited and all rights of the Grantee to such Shares shall terminate;
         and (iii) any other restrictions that the Committee determines in
         advance are appropriate, including, without limitation, rights of
         repurchase or first refusal in the Company or provisions subjecting the
         Restricted Stock to a continuing substantial risk of forfeiture in the
         hands of any transferee. Any such restrictions shall be set forth in
         the particular Grantee's Incentive Agreement.

                  (b) ISSUANCE OF CERTIFICATES. Reasonably promptly after the
         date of grant with respect to Shares of Restricted Stock, the Company
         shall cause to be issued a stock certificate, registered in the name of
         the Grantee to whom such Shares of Restricted Stock were granted,
         evidencing such Shares; provided, however, that the Company shall not
         cause to be issued such a stock certificate unless it has received a
         stock power duly endorsed in blank with respect to such Shares. Each
         such stock certificate shall bear the following legend or any other
         legend approved by the Company:

                  The transferability of this certificate and the shares of
                  stock represented hereby are subject to the restrictions,
                  terms and conditions (including forfeiture and restrictions
                  against transfer) contained in the Texas Biotechnology
                  Corporation 1999 Stock Incentive Plan and an Incentive
                  Agreement entered into between the registered owner of such
                  shares and Texas Biotechnology Corporation. A copy of the Plan
                  and Incentive Agreement are on file in the corporate offices
                  of Texas Biotechnology Corporation.

         Such legend shall not be removed from the certificate evidencing such
         Shares of Restricted Stock until such Shares vest pursuant to the terms
         of the Incentive Agreement.

                  (c) REMOVAL OF RESTRICTIONS. The Committee, in its discretion,
         shall have the authority to remove any or all of the restrictions on
         the Restricted Stock if it determines that, by reason of a change in
         applicable law or another change in circumstance arising after the
         grant date of the Restricted Stock, such action is appropriate.

                                      A-16
<PAGE>   22


3.3      DELIVERY OF SHARES OF COMMON STOCK

         Subject to withholding taxes under Section 6.3 and to the terms of the
Incentive Agreement, a stock certificate evidencing the Shares of Restricted
Stock with respect to which the restrictions in the Incentive Agreement have
been satisfied shall be delivered to the Grantee or other appropriate recipient
free of restrictions. Such delivery shall be effected for all purposes when the
Company shall have deposited such certificate in the United States mail,
addressed to the Grantee or other appropriate recipient.


                                   SECTION 4.

                            OTHER STOCK-BASED AWARDS

4.1      GRANT OF OTHER STOCK-BASED AWARDS

         Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation, Deferred
Stock, purchase rights, Shares of Common Stock awarded which are not subject to
any restrictions or conditions, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
value of securities of or the performance of a specified Subsidiary, division or
department, and settlement in cancellation of rights of any person with a vested
interest in any other plan, fund, program or arrangement that is or was
sponsored, maintained or participated in by the Company or any Parent or
Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards
may be awarded either alone or in addition to or in tandem with any other
Incentive Awards.

4.2      OTHER STOCK-BASED AWARD TERMS

                  (a) WRITTEN AGREEMENT. The terms and conditions of each grant
         of an Other Stock-Based Award shall be evidenced by an Incentive
         Agreement.

                  (b) PURCHASE PRICE. Except to the extent that an Other
         Stock-Based Award is granted in substitution for an outstanding
         Incentive Award or is delivered upon exercise of a Stock Option, the
         amount of consideration required to be received by the Company shall be
         either (i) no consideration other than services actually rendered (in
         the case of authorized and unissued shares) or to be rendered, or (ii)
         in the case of an Other Stock-Based Award in the nature of a purchase
         right, consideration (other than services rendered or to be rendered)
         at least equal to 50% of the Fair Market Value of the Shares covered by
         such grant on the date of grant (or such percentage higher than 50%
         that is required by any applicable tax or securities law).


                                      A-17
<PAGE>   23


                  (c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion,
         the Committee may specify such criteria, periods or goals for vesting
         in Other Stock-Based Awards and payment thereof to the Grantee as it
         shall determine; and the extent to which such criteria, periods or
         goals have been met shall be determined by the Committee. All terms and
         conditions of Other Stock-Based Awards shall be determined by the
         Committee and set forth in the Incentive Agreement.

                  (d) PAYMENT. Other Stock-Based Awards may be paid in Shares of
         Common Stock or other consideration related to such Shares, in a single
         payment or in installments on such dates as determined by the
         Committee, all as specified in the Incentive Agreement.

                  (e) DIVIDENDS. The Grantee of an Other Stock-Based Award shall
         be entitled to receive, currently or on a deferred basis, dividends or
         dividend equivalents with respect to the number of Shares covered by
         the Other Stock-Based Award, as determined by the Committee and set
         forth in the Incentive Agreement. The Committee may also provide in the
         Incentive Agreement that such amounts (if any) shall be deemed to have
         been reinvested in additional Shares of Common Stock.

                                   SECTION 5.

                    PROVISIONS RELATING TO PLAN PARTICIPATION

5.1      PLAN CONDITIONS

                   (a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive
         Award is granted shall be required to enter into an Incentive Agreement
         with the Company, in such a form as is provided by the Committee. The
         Incentive Agreement shall contain specific terms as determined by the
         Committee, in its discretion, with respect to the Grantee's particular
         Incentive Award. Such terms need not be uniform among all Grantees or
         any similarly-situated Grantees. The Incentive Agreement may include,
         without limitation, vesting, forfeiture and other provisions particular
         to the particular Grantee's Incentive Award, as well as, for example,
         provisions to the effect that the Grantee (i) shall not disclose any
         confidential information acquired during Employment with the Company,
         (ii) shall abide by all the terms and conditions of the Plan and such
         other terms and conditions as may be imposed by the Committee, (iii)
         shall not interfere with the employment or other service of any
         employee, (iv) shall not compete with the Company or become involved in
         a conflict of interest with the interests of the Company, (v) shall
         forfeit an Incentive Award if terminated for Cause, (vi) shall not be
         permitted to make an election under Section 83(b) of the Code when
         applicable, and (vii) shall be subject to any other agreement between
         the Grantee and the Company regarding Shares that may be acquired under
         an Incentive Award including, without limitation, an agreement
         restricting the transferability of Shares by Grantee. An Incentive
         Agreement shall include such terms and conditions as are determined by
         the 


                                      A-18
<PAGE>   24

         Committee, in its discretion, to be appropriate with respect to any
         individual Grantee. The Incentive Agreement shall be signed by the
         Grantee to whom the Incentive Award is made and by an Authorized
         Officer.

                  (b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any
         instrument executed pursuant to the Plan shall create any Employment
         rights (including without limitation, rights to continued Employment)
         in any Grantee or affect the right of the Company to terminate the
         Employment of any Grantee at any time without regard to the existence
         of the Plan.

                  (c) SECURITIES REQUIREMENTS. The Company shall be under no
         obligation to effect the registration pursuant to the Securities Act of
         1933 of any Shares of Common Stock to be issued hereunder or to effect
         similar compliance under any state laws. Notwithstanding anything
         herein to the contrary, the Company shall not be obligated to cause to
         be issued or delivered any certificates evidencing Shares pursuant to
         the Plan unless and until the Company is advised by its counsel that
         the issuance and delivery of such certificates is in compliance with
         all applicable laws, regulations of governmental authorities, and the
         requirements of any securities exchange on which Shares are traded. The
         Committee may require, as a condition of the issuance and delivery of
         certificates evidencing Shares of Common Stock pursuant to the terms
         hereof, that the recipient of such Shares make such covenants,
         agreements and representations, and that such certificates bear such
         legends, as the Committee, in its discretion, deems necessary or
         desirable.

                  If the Shares issuable on exercise of an Incentive Award are
         not registered under the Securities Act of 1933, the Company may
         imprint on the certificate for such Shares the following legend or any
         other legend which counsel for the Company considers necessary or
         advisable to comply with the Securities Act of 1933:

                  THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
                  SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
                  TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY
                  THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE
                  CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE
                  CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE
                  OR TRANSFER.

5.2      TRANSFERABILITY AND EXERCISABILITY

                  Incentive Awards granted under the Plan shall not be
         transferable or assignable other than: (a) by will or the laws of
         descent and distribution or (b) pursuant to a qualified domestic
         relations order (as defined by Section 414(p) of the Code); provided,
         however, only with respect to Incentive Awards of Nonstatutory Stock
         Options, the Committee may, in its 


                                      A-19
<PAGE>   25


         discretion, authorize all or a portion of the Nonstatutory Stock
         Options to be granted on terms which permit transfer by the Grantee to
         (i) the members of the Grantee's Immediate Family, (ii) a trust or
         trusts for the exclusive benefit of such Immediate Family, or (iii) a
         partnership in which such members of such Immediate Family are the only
         partners, provided that (A) there may be no consideration for any such
         transfer, (B) the Incentive Agreement pursuant to which such
         Nonstatutory Stock Options are granted must be approved by the
         Committee, and must expressly provide for transferability in a manner
         consistent with this Section 5.2, and (C) subsequent transfers of
         transferred Options shall be prohibited except in accordance with
         clauses (a) and (b) (above) of this sentence. Following any permitted
         transfer, any Incentive Award shall continue to be subject to the same
         terms and conditions as were applicable immediately prior to transfer,
         provided that the term "Grantee" shall be deemed to refer to the
         transferee. The events of termination of employment of Section 5.6
         hereof and in the Incentive Agreement shall continue to be applied with
         respect to the original Grantee, and the Incentive Award shall be
         exercisable by the transferee only to the extent, and for the periods,
         specified in the Incentive Agreement.

                  Except as may otherwise be permitted under the Code, in the
         event of a permitted transfer of a Nonstatutory Stock Option hereunder,
         the original Grantee shall remain subject to withholding taxes upon
         exercise. In addition, the Company shall have no obligation to provide
         any notices to a transferee including, for example, of the termination
         of an Incentive Award following the original Grantee's termination of
         employment.

                  In the event that a Grantee terminates employment with the
         Company to assume a position with a governmental, charitable,
         educational or other nonprofit institution, the Committee may, in its
         discretion, subsequently authorize a third party, including but not
         limited to a "blind" trust, to act on behalf of and for the benefit of
         such Grantee regarding any outstanding Incentive Awards held by the
         Grantee subsequent to such termination of employment. If so permitted
         by the Committee, a Grantee may designate a beneficiary or
         beneficiaries to exercise the rights of the Grantee and receive any
         distribution under the Plan upon the death of the Grantee.

                  No transfer by will or by the laws of descent and distribution
         shall be effective to bind the Company unless the Committee has been
         furnished with a copy of the deceased Grantee's enforceable will or
         such other evidence as the Committee deems necessary to establish the
         validity of the transfer. Any attempted transfer in violation of this
         Section 5.2 shall be void and ineffective.

5.3      RIGHTS AS A STOCKHOLDER

                  (a) NO STOCKHOLDER RIGHTS. Except as otherwise provided in
         Section 3.1(b) for grants of Restricted Stock, a Grantee of an
         Incentive Award (or a permitted transferee of such Grantee) shall have
         no rights as a stockholder with respect to any Shares of Common Stock
         until the issuance of a stock certificate for such Shares.


                                      A-20
<PAGE>   26


                  (b) REPRESENTATION OF OWNERSHIP. In the case of the exercise
         of an Incentive Award by a person or estate acquiring the right to
         exercise such Incentive Award by reason of the death or Disability of a
         Grantee, the Committee may require reasonable evidence as to the
         ownership of such Incentive Award or the authority of such person and
         may require such consents and releases of taxing authorities as the
         Committee may deem advisable.

5.4      LISTING AND REGISTRATION OF SHARES OF COMMON STOCK

         The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.

5.5      CHANGE IN STOCK AND ADJUSTMENTS

                  (a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to Section 5.7
         (which only applies in the event of a Change in Control), in the event
         of any change in applicable laws or any change in circumstances which
         results in or would result in any dilution of the rights granted under
         the Plan, or which otherwise warrants equitable adjustment because it
         interferes with the intended operation of the Plan, then, if the
         Committee should determine, in its discretion, that such change
         equitably requires an adjustment in the number or kind of shares of
         stock or other securities or property theretofore subject, or which may
         become subject, to issuance or transfer under the Plan or in the terms
         and conditions of outstanding Incentive Awards, such adjustment shall
         be made in accordance with such determination. Such adjustments may
         include changes with respect to (i) the aggregate number of Shares that
         may be issued under the Plan, (ii) the number of Shares subject to
         Incentive Awards, and (iii) the price per Share for outstanding
         Incentive Awards. Any adjustment under this paragraph of an outstanding
         Incentive Stock Option shall be made only to the extent not
         constituting a "modification" within the meaning of Section 424(h)(3)
         of the Code unless otherwise agreed to by the Grantee in writing. The
         Committee shall give notice to each applicable Grantee of such
         adjustment which shall be effective and binding.

                   (b) EXERCISE OF CORPORATE POWERS. The existence of the Plan
         or outstanding Incentive Awards hereunder shall not affect in any way
         the right or power of the Company or its stockholders to make or
         authorize any or all adjustments, recapitalization,


                                      A-21
<PAGE>   27

         reorganization or other changes in the Company's capital structure or
         its business or any merger or consolidation of the Company, or any
         issue of bonds, debentures, preferred or prior preference stocks ahead
         of or affecting the Common Stock or the rights thereof, or the
         dissolution or liquidation of the Company, or any sale or transfer of
         all or any part of its assets or business, or any other corporate act
         or proceeding whether of a similar character or otherwise.

                  (c) RECAPITALIZATION OF THE COMPANY. Subject to Section 5.7,
         if while there are Incentive Awards outstanding, the Company shall
         effect any subdivision or consolidation of Shares of Common Stock or
         other capital readjustment, the payment of a stock dividend, stock
         split, combination of Shares, recapitalization or other increase or
         reduction in the number of Shares outstanding, without receiving
         compensation therefor in money, services or property, then the number
         of Shares available under the Plan and the number of Incentive Awards
         which may thereafter be exercised shall (i) in the event of an increase
         in the number of Shares outstanding, be proportionately increased and
         the Fair Market Value of the Incentive Awards awarded shall be
         proportionately reduced; and (ii) in the event of a reduction in the
         number of Shares outstanding, be proportionately reduced, and the Fair
         Market Value of the Incentive Awards awarded shall be proportionately
         increased. The Committee shall take such action and whatever other
         action it deems appropriate, in its discretion, so that the value of
         each outstanding Incentive Award to the Grantee shall not be adversely
         affected by a corporate event described in this subsection (c).

                  (d) REORGANIZATION OF THE COMPANY. Subject to Section 5.7, if
         the Company is reorganized, merged or consolidated, or is a party to a
         plan of exchange with another corporation, pursuant to which
         reorganization, merger, consolidation or exchange, stockholders of the
         Company receive any Shares of Common Stock or other securities or
         property, or if the Company should distribute securities of another
         corporation to its stockholders, each Grantee shall be entitled to
         receive, in lieu of the number of unexercised Incentive Awards
         previously awarded, the number of Stock Options, Restricted Stock
         shares, or Other Stock-Based Awards, with a corresponding adjustment to
         the Fair Market Value of said Incentive Awards, to which he would have
         been entitled if, immediately prior to such corporate action, such
         Grantee had been the holder of record of a number of Shares equal to
         the number of the outstanding Incentive Awards payable in Shares that
         were previously awarded to him. For this purpose, Shares of Restricted
         Stock shall be treated the same as unrestricted outstanding Shares of
         Common Stock. In this regard, the Committee shall take whatever other
         action it deems appropriate to preserve the rights of Grantees holding
         outstanding Incentive Awards.

                   (e) ISSUE OF COMMON STOCK BY THE COMPANY. Except as
         hereinabove expressly provided in this Section 5.5 and subject to
         Section 5.7, the issue by the Company of shares of stock of any class,
         or securities convertible into shares of stock of any class, for cash
         or property, or for labor or services, either upon direct sale or upon
         the exercise of rights or warrants to subscribe therefor, or upon any
         conversion of shares or obligations of the


                                      A-22
<PAGE>   28


         Company convertible into such shares or other securities, shall not
         affect, and no adjustment by reason thereof shall be made with respect
         to, the number of, or Fair Market Value of, any Incentive Awards then
         outstanding under previously granted Incentive Awards; provided,
         however, in such event, outstanding Shares of Restricted Stock shall be
         treated the same as outstanding unrestricted Shares of Common Stock.

                  (f) ACQUISITION OF THE COMPANY. Subject to Section 5.7, in the
         case of any sale of assets, merger, consolidation or combination of the
         Company with or into another corporation other than a transaction in
         which the Company is the continuing or surviving corporation and which
         does not result in the outstanding Shares being converted into or
         exchanged for different securities, cash or other property, or any
         combination thereof (an "Acquisition"), in the discretion of the
         Committee, any Grantee who holds an outstanding Incentive Award shall
         have the right (subject to any limitation applicable to the particular
         Incentive Award under the Plan) to receive upon exercise thereof the
         Acquisition Consideration (as defined below) receivable upon the
         Acquisition by a holder of the number of Shares which would have been
         obtained upon exercise of the Incentive Award immediately prior to the
         Acquisition. The term "Acquisition Consideration" shall mean the kind
         and amount of shares of the surviving or new corporation, cash,
         securities, evidence of indebtedness, other property or any combination
         thereof receivable in respect of one Share upon consummation of an
         Acquisition. The Committee, in its discretion, shall have the authority
         to take whatever action it deems appropriate to effectuate the
         provisions of this subsection (f).

                  (g) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
         Notwithstanding any other provision of the Plan, the Committee, in its
         discretion, may authorize the assumption and continuation under the
         Plan of outstanding and unexercised stock options or other types of
         stock-based incentive awards that were granted under a stock option
         plan (or other type of stock incentive plan or agreement) that is or
         was maintained by a corporation or other entity that was merged into,
         consolidated with, or whose stock or assets were acquired by, the
         Company as the surviving corporation. Any such action shall be upon
         such terms and conditions as the Committee, in its discretion, may deem
         appropriate, including provisions to preserve the holder's rights under
         the previously granted and unexercised stock option or other
         stock-based incentive award, such as, for example, retaining an
         existing exercise price under an outstanding stock option. Any such
         assumption and continuation of any such previously granted and
         unexercised incentive award shall be treated as an outstanding
         Incentive Award under the Plan and shall thus count against the number
         of Shares reserved for issuance pursuant to Section 1.4. With respect
         to an incentive stock option (as described in Section 422 of the Code)
         subject to this subsection (g), no adjustment to such option shall be
         made to the extent constituting a "modification" within the meaning of
         Section 424(h)(3) of the Code unless otherwise agreed to by the
         optionee in writing.


                                      A-23
<PAGE>   29


                   (h) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Subject to
         Section 5.7, notwithstanding any other provision hereof, in the event
         of a dissolution or liquidation of the Company, a sale of all or
         substantially all of the Company's assets, a merger or consolidation
         involving the Company in which the Company is not the surviving
         corporation, or a merger or consolidation involving the Company in
         which the Company is the surviving corporation but the holders of
         Shares of Common Stock receive securities of another corporation and/or
         other property, including cash, the Committee shall, in its discretion,
         have the right and power to:

                           (i) cancel, effective immediately prior to the
                  occurrence of such corporate event, each outstanding Incentive
                  Award (whether or not then exercisable), and, in full
                  consideration of such cancellation, pay to the Grantee to whom
                  such Incentive Award was granted an amount in cash equal to
                  the excess of (A) the highest value, as determined by the
                  Committee, in its discretion, of the property (including cash)
                  received by the holder of a Share of Common Stock as a result
                  of such event over (B) the exercise price of such Incentive
                  Award, if any; or

                           (ii) (A) provide for the exchange of each Incentive
                  Award outstanding immediately prior to such corporate event
                  (whether or not then exercisable) for an award on some or all
                  of the property for which such Incentive Award is exchanged
                  and, incident thereto, make an equitable adjustment as
                  determined by the Committee, in its discretion, in the
                  exercise price of the award, if any, or the number of shares
                  or amount of property (including cash) subject to the
                  Incentive Award or (B) provide for a cash settlement payment
                  to the Grantee in consideration for the exchange or
                  cancellation of the Incentive Award hereunder.

         The Committee, in its discretion, shall have the authority to take
         whatever action it deems appropriate to effectuate the provisions of
         this subsection (h).

5.6      TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT

                   (a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly
         provided in the Grantee's Incentive Agreement, if the Grantee's
         Employment is terminated for any reason other than due to his death,
         Disability, Retirement or for Cause, any non-vested portion of any
         Stock Option or other applicable Incentive Award at the time of such
         termination shall automatically expire and terminate and no further
         vesting shall occur after the termination date. In such event, except
         as otherwise expressly provided in his Incentive Agreement, the Grantee
         shall be entitled to exercise his rights only with respect to the
         portion of the Incentive Award that was vested as of the termination
         date for a period that shall end on the earlier of (i) the expiration
         date set forth in the Incentive Agreement with respect to the vested
         portion of such Incentive Award or (ii) the date that occurs ninety
         (90) calendar days after his termination date (not to exceed three
         months in the case of an ISO). Unless otherwise expressly provided in
         his Incentive Agreement, a Grantee's Employment shall not 


                                      A-24
<PAGE>   30


         be deemed to have been terminated if a Grantee/Employee becomes a
         Consultant or Outside Director immediately upon his termination of
         employment with the Company, or if a Grantee's status otherwise changes
         between or among Employee, Consultant or Outside Director without a gap
         in service for the Company in any such capacity. All determinations
         regarding whether and when there has been a termination of Employment
         shall be made by the Committee.

                  (b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise
         expressly provided in the Grantee's Incentive Agreement, in the event
         of the termination of a Grantee's Employment for Cause, all vested and
         non-vested Stock Options and other Incentive Awards granted to such
         Grantee shall immediately expire, and shall not be exercisable to any
         extent, as of 12:01 a.m. (CST) on the date of such termination of
         Employment.

                  (c) RETIREMENT. Unless otherwise expressly provided in the
         Grantee's Incentive Agreement, upon the Retirement of any Employee who
         is a Grantee:

                           (i) any non-vested portion of any outstanding Option
                  or other Incentive Award shall immediately terminate and no
                  further vesting shall occur; and

                           (ii) any vested Option or other Incentive Award shall
                  expire on the earlier of (A) the expiration date set forth in
                  the Incentive Agreement for such Incentive Award; or (B) the
                  expiration of (1) six months after the date of Retirement in
                  the case of any Incentive Award other than an Incentive Stock
                  Option, or (2) three (3) months after termination of
                  employment in the case of an Incentive Stock Option.

                  (d) DISABILITY OR DEATH. Unless otherwise expressly provided
         in the Grantee's Incentive Agreement, upon termination of Employment as
         a result of the Grantee's Disability or death:

                           (i) any nonvested portion of any outstanding Option
                  or other applicable Incentive Award shall immediately
                  terminate upon termination of Employment and no further
                  vesting shall occur; and

                           (ii) any vested Incentive Award shall expire on the
                  earlier of either (A) the expiration date set forth in the
                  Incentive Agreement or (B) the one year anniversary date of
                  the Grantee's termination of Employment date.

                  In the case of any vested Incentive Stock Option held by an
         Employee following termination of Employment, notwithstanding the
         definition of "Disability" in Section 1.2, whether the Employee has
         incurred a "Disability" for purposes of determining the length of the
         Option exercise period following termination of Employment under this
         paragraph (d) shall be determined by reference to Section 22(e)(3) of
         the Code to the extent required by


                                      A-25
<PAGE>   31


         Section 422(c)(6) of the Code. The Committee shall determine whether a
         Disability for purposes of this subsection (d) has occurred.

                  (e) CONTINUATION. Subject to the conditions and limitations of
         the Plan and applicable law and regulation in the event that a Grantee
         ceases to be an Employee, Outside Director or Consultant, as
         applicable, for whatever reason, the Committee and Grantee may mutually
         agree with respect to any outstanding Option or other Incentive Award
         then held by the Grantee (i) for an acceleration or other adjustment in
         any vesting schedule applicable to the Incentive Award, (ii) for a
         continuation of the exercise period following termination for a longer
         period than is otherwise provided under such Incentive Award, or (iii)
         to any other change in the terms and conditions of the Incentive Award.
         In the event of any such change to an outstanding Incentive Award, a
         written amendment to the Grantee's Incentive Agreement shall be
         required.

5.7      CHANGE IN CONTROL

         Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below) the following actions shall automatically
occur as of the day immediately preceding the Change in Control date unless
expressly provided otherwise in the Grantee's Incentive Agreement:

                  (a) all of the Stock Options then outstanding shall become
         100% vested and immediately and fully exercisable;

                  (b) all of the restrictions and conditions of any Restricted
         Stock and any Other Stock-Based Awards then outstanding shall be deemed
         satisfied, and the Restriction Period with respect thereto shall be
         deemed to have expired; and

                  (c) all of the Other Stock-Based Awards shall become fully
         vested, deemed earned in full, and promptly paid within thirty (30)
         days to the affected Grantees without regard to payment schedules and
         notwithstanding that the applicable performance cycle, retention cycle
         or other restrictions and conditions have not been completed or
         satisfied.

         Notwithstanding any other provision of the Plan, unless otherwise
expressly provided in the Grantee's Incentive Agreement, the provisions of this
Section 5.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Awards subject,
however, to the last paragraph of this Section 5.7.

         For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company
shall be deemed to occur if:


                                      A-26
<PAGE>   32


                   (a) There is an acquisition by a "person" as such term is
         used in Sections 13(d) and 14(d) of the Exchange Act (a "PERSON") of
         beneficial ownership (within the meaning of Rule 13d-3 promulgated
         under the Exchange Act) of twenty percent (20%) or more of the total
         voting power of all the Company's then outstanding securities entitled
         to vote generally in the election of directors to the Board; provided,
         however, that for purposes of this subsection (a), the following
         acquisitions shall not constitute a Change in Control: (i) any
         acquisition by the Company or its Parent or Subsidiaries, (ii) any
         acquisition by any employee benefit plan (or related trust) sponsored
         or maintained by the Company or its Parent or Subsidiaries, or (iii)
         any acquisition consummated with the prior approval of the Board; or

                  (b) During a period of two consecutive calendar years,
         individuals who at the beginning of such period constitute the Board,
         and any new director(s) whose election by the Board or nomination for
         election by the Company's shareholders 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 the two-year period or whose election or
         nomination for election was previously so approved, cease for any
         reason to constitute a majority of the Board; or

                  (c) The Company becomes a party to a merger, plan of
         reorganization, consolidation or share exchange in which either (i) the
         Company will not be the surviving corporation or (ii) the Company will
         be the surviving corporation and any outstanding shares of the
         Company's common stock will be converted into shares of any other
         company (other than a reincorporation or the establishment of a holding
         company involving no change of ownership of the Company) or other
         securities, cash or other property (excluding payments made solely for
         fractional shares); or

                  (d) The shareholders of the Company approve a merger, plan of
         reorganization, consolidation or share exchange with any other
         corporation, and immediately following such merger, plan of
         reorganization, consolidation or share exchange the holders of the
         voting securities of the Company outstanding immediately prior thereto
         hold securities representing fifty percent (50%) or less of the
         combined voting power of the voting securities of the Company or such
         surviving entity outstanding immediately after such merger, plan of
         reorganization, consolidation or share exchange; provided, however,
         that notwithstanding the foregoing, no Change in Control shall be
         deemed to have occurred if one-half (1/2) or more of the members of the
         Board of the Company or such surviving entity immediately after such
         merger, plan of reorganization, consolidation or share exchange is
         comprised of persons who served as directors of the Company immediately
         prior to such merger, plan of reorganization, consolidation or share
         exchange or who are otherwise designees of the Company; or

                  (e) Upon approval by the Company's stockholders of a complete
         liquidation and dissolution of the Company or the sale or other
         disposition of all or substantially all of the assets of the Company
         other than to a Parent or Subsidiary; or


                                      A-27
<PAGE>   33


                  (f) Any other event that a majority of the Board, in its sole
         discretion, shall determine constitutes a Change in Control hereunder.

         Notwithstanding the occurrence of any of the foregoing events of this
Section 5.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be deemed a Change in Control hereunder. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be a Change in Control, or after such event if made by the
Board a majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be or probably would lead to
a Change in Control.

5.8      EXCHANGE OF INCENTIVE AWARDS

         The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.

5.9      FINANCING

         The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.

                                   SECTION 6.

                                     GENERAL

6.1      EFFECTIVE DATE AND GRANT PERIOD

         This Plan is adopted by the Board effective as of March 2, 1999 (the
"EFFECTIVE DATE") subject to the approval of the stockholders of the Company by
March 1, 2000. Incentive Awards may be granted under the Plan at any time prior
to receipt of such stockholder approval; provided, however, if the requisite
stockholder approval is not obtained within the permissible time frame, then the
Plan and any Incentive Awards granted hereunder shall automatically become null
and void and of no force or effect. Unless sooner terminated by the Board
pursuant to Section 6.7, no Incentive Award shall be granted under the Plan
after ten (10) years from the Effective Date.


                                      A-28
<PAGE>   34


6.2      FUNDING AND LIABILITY OF COMPANY

         No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.

6.3      WITHHOLDING TAXES

                  (a) TAX WITHHOLDING. The Company shall have the power and the
         right to deduct or withhold, or require a Grantee to remit to the
         Company, an amount sufficient to satisfy federal, state, and local
         taxes, domestic or foreign, required by law or regulation to be
         withheld with respect to any taxable event arising as a result of the
         Plan or an Incentive Award hereunder.

                  (b) SHARE WITHHOLDING. With respect to tax withholding
         required upon the exercise of Stock Options, upon the lapse of
         restrictions on Restricted Stock, or upon any other taxable event
         arising as a result of any Incentive Awards, Grantees may elect,
         subject to the approval of the Committee in its discretion, to satisfy
         the withholding requirement, in whole or in part, by having the Company
         withhold Shares having a Fair Market Value on the date the tax is to be
         determined equal to the minimum statutory total tax which could be
         imposed on the transaction. All such elections shall be made in
         writing, signed by the Grantee, and shall be subject to any
         restrictions or limitations that the Committee, in its discretion,
         deems appropriate. Any fraction of a Share required to satisfy such
         obligation shall be disregarded and the amount due shall instead be
         paid in cash by the Grantee.

                   (c) INCENTIVE STOCK OPTIONS. With respect to Shares received
         by a Grantee pursuant to the exercise of an Incentive Stock Option, if
         such Grantee disposes of any such Shares within (i) two years from the
         date of grant of such Option or (ii) one year after the transfer of
         such shares to the Grantee, the Company shall have the right to
         withhold from any 


                                      A-29

<PAGE>   35

         salary, wages or other compensation payable by the Company to the
         Grantee an amount sufficient to satisfy federal, state and local tax
         withholding requirements attributable to such disqualifying
         disposition.

                  (d) LOANS. The Committee may provide for loans, on either a
         short term or demand basis, from the Company to a Grantee who is an
         Employee or Consultant to permit the payment of taxes required by law.

6.4      NO GUARANTEE OF TAX CONSEQUENCES

         Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.

6.5      DESIGNATION OF BENEFICIARY BY PARTICIPANT

         Each Grantee may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Grantee in writing with
the Committee during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.

6.6      DEFERRALS

         The Committee may permit a Grantee to defer such Grantee's receipt of
the payment of cash or the delivery of Shares that would, otherwise be due to
such Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Other Stock-Based Awards. If any such deferral election is permitted, the
Committee shall, in its discretion, establish rules and procedures for such
payment deferrals to the extent consistent with the Code.

6.7      AMENDMENT AND TERMINATION

         The Board shall have complete power and authority to terminate or amend
the Plan at any time; provided, however, if the Company is a Publicly Held
Corporation, the Board shall not, without the approval of the stockholders of
the Company within the time period required by applicable law, (a) except as
provided in Section 5.5, increase the maximum number of Shares which may be
issued under the Plan pursuant to Section 1.4, (b) amend the requirements as to
the class of Employees eligible to purchase Common Stock under the Plan, (c) to
the extent applicable, increase the maximum limits on Incentive Awards to
Covered Employees as set for compliance with the Performance-Based Exception,
(d) extend the term of the Plan, or (e) to the extent applicable,


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decrease the authority granted to the Committee under the Plan in contravention
of Rule 16b-3 under the Exchange Act.

         No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.

         In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company's
stockholders.

6.8      REQUIREMENTS OF LAW

         The granting of Incentive Awards and the issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Certificates evidencing shares of Common Stock delivered under
this Plan (to the extent that such shares are so evidenced) may be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules and regulations of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation, and
any applicable federal or state securities law, if applicable. The Committee may
cause a legend or legends to be placed upon such certificates (if any) to make
appropriate reference to such restrictions.

6.9      RULE 16B-3 SECURITIES LAW COMPLIANCE

         With respect to Insiders to the extent applicable, transactions under
the Plan are intended to comply with all applicable conditions of Rule 16b-3
under the Exchange Act. Any ambiguities or inconsistencies in the construction
of an Incentive Award or the Plan shall be interpreted to give effect to such
intention. However, to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.

6.10     COMPLIANCE WITH CODE SECTION 162(M)

         While the Company is a Publicly Held Corporation, unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan shall comply fully with the applicable requirements so
that any Incentive Awards subject to Section 162(m) that are granted to Covered
Employees shall qualify for the Performance-Based Exception. If any provision of
the Plan or an Incentive Agreement would disqualify the Plan or would not
otherwise 


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<PAGE>   37

permit the Plan or Incentive Award to comply with the Performance-Based
Exception as so intended, such provision shall be construed or deemed to be
amended to conform to the requirements of the Performance-Based Exception to the
extent permitted by applicable law and deemed advisable by the Committee;
provided, however, no such construction or amendment shall have any adverse
effect on the prior grant of an Incentive Award, or the economic value to a
Grantee of any outstanding Incentive Award, unless consented to in writing by
the Grantee.

6.11     SUCCESSORS

         All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

6.12     MISCELLANEOUS PROVISIONS

                  (a) No Employee, Consultant, Outside Director, or other person
         shall have any claim or right to be granted an Incentive Award under
         the Plan. Neither the Plan, nor any action taken hereunder, shall be
         construed as giving any Employee, Consultant, or Outside Director any
         right to be retained in the Employment or other service of the Company
         or any Parent or Subsidiary.

                  (b) No Shares of Common Stock shall be issued hereunder unless
         counsel for the Company is then reasonably satisfied that such issuance
         will be in compliance with federal and state securities laws, if
         applicable.

                  (c) The expenses of the Plan shall be borne by the Company.

                  (d) By accepting any Incentive Award, each Grantee and each
         person claiming by or through him shall be deemed to have indicated his
         acceptance of the Plan.

6.13     SEVERABILITY

         In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.


6.14     GENDER, TENSE AND HEADINGS

         Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings


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as used herein are inserted solely for convenience and reference and constitute
no part of the interpretation or construction of the Plan.

6.15     GOVERNING LAW

         The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Texas without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.


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