Document:

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                                                                  EXHIBIT 10.35

                         CONFIDENTIAL LOCK-UP AGREEMENT

                                FEBRUARY 26, 2004

Continental Southern Resources, Inc.
111 Presidential Blvd.
Suite 158A
Bala Cynwyd, PA 19004

Attention: Board of Directors

Gentlemen:

         The undersigned understands and acknowledges that Continental Southern
Resources, Inc., a Nevada corporation (the "Company"), will be conducting a
private placement of shares of its common stock intended to raise gross proceeds
of at least $45,000,000 and that in order to complete the private placement, the
Company's placement agent has requested that certain holders of shares of
Company common stock agree not to sell, transfer or otherwise dispose of their
shares for a certain period of time, as more fully described below. The
undersigned acknowledges that completion of the private placement will be of
material benefit to the Company and to the undersigned as a beneficial owner of
the Company's common stock.

         In order to facilitate the private placement described above, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the undersigned hereby agrees to the restrictions set forth
below with respect to ___________________________ shares (the "Shares") of
Company common stock of which the undersigned is the sole record and beneficial
owner.

                  Commencing upon the closing (the "Closing") of the private
placement and terminating on the earlier of (i) one (1) year from the Closing or
(ii) the effective date of a registration statement filed with the Securities
and Exchange Commission to permit the public resale of the shares of common
stock issued in the private placement, the undersigned will not, without the
prior written approval of the Company, directly or indirectly (i) sell, assign,
exchange, transfer, encumber, pledge, distribute, appoint or otherwise transfer
or dispose of, or offer or contract to do any of the forgoing with respect to
(A) any of the Shares, (B) any securities convertible into or exchangeable or
exercisable for Company common stock, or (C) any interest in (including any
option to buy or sell) any of the Shares or securities convertible into or
exchangeable or exercisable for Company common stock, in whole or in part; or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any of the
Shares, whether any of the transactions described in clause (A), (B) or (C)
above is to be settled by delivery of Shares, in cash or otherwise (any such
transaction, whether or not for consideration, shall be referred to as a
"Transaction"); provided, however, that this "Lock-Up Agreement" shall not
restrict any transfer of any Shares or securities convertible into or
exchangeable or exercisable for Company common stock in a privately negotiated
transaction that is not executed on the OTCBB or any other market or exchange on
which the Company's common stock is then traded, to the Company or any of its
subsidiaries or to any of the undersigned's Related Persons (as defined below)
who agree in writing to be bound by the provisions of this Lock-Up Agreement.
The

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undersigned acknowledges and understands that the Company's prior approval may
require the concurrence of the Company's placement agent and the investors in
the private placement.

         As used in this Lock-Up Agreement, "Related Persons" means: (a) if the
undersigned is a natural person, (i) any Immediate Family Member of the
undersigned, (ii) any Estate of the undersigned or of any Immediate Family
Member of the undersigned, (iii) the trustee of any inter vivos or testamentary
trust of which all the beneficiaries are Immediate Family Members of the
undersigned, and (iv) any Entity the entire equity interest in which is owned by
any one or more of the undersigned and Immediate Family Members of the
undersigned; and (b) if the undersigned is an Entity, Estate or trust, (i) any
Person who owns an equity interest in the undersigned on the date hereof, (ii)
any Person who would be a Related Person under clause (a) of this definition of
a natural person who is an ultimate beneficial owner of the undersigned, or
(iii) any other Entity the entire equity interest in which is owned by any one
or more of the undersigned and Immediate Family Members of the undersigned.

         As used in this Lock-Up Agreement; (A) "Estate" means, as to any
natural person who has died or been adjudicated mentally incompetent by a court
of competent jurisdiction, (i) that person's estate or (ii) the administrator,
conservator, executor, guardian or representative of that person's estate; (B)
"Immediate Family Member" means, (i) if the undersigned is a natural person, any
child or grandchild (by blood or legal adoption) or spouse of the undersigned at
that time, or any child of the undersigned's spouse; and (ii) if the undersigned
is an Entity which has as an ultimate beneficial owner one or more natural
persons, any child or grandchild (by blood or legal adoption) or spouse at that
time (if not then an ultimate beneficial owner of the Entity), or any child of
the spouse, of the ultimate beneficial owner or owners of the Entity; (C)
"Entity" means any sole proprietorship, corporation, partnership of any kind
having a separate legal status, limited liability company, business trust,
unincorporated organization or association, mutual company, joint stock company
or joint venture; (D) "Person" means any natural person, Entity, estate, trust,
union or employee organization or Governmental Authority; and (E) "Governmental
Authority" means any national, state, county, municipal or other government,
domestic or foreign, or any agency, board, bureau, commission, court, department
or other instrumentality of any such government.

         Notwithstanding anything contained herein to the contrary, this Lock-Up
Agreement shall not prohibit the undersigned from engaging in a Transaction
involving up to __________ Shares commencing six (6) months after the Closing or
from engaging in a Transaction involving up to an additional __________ Shares
commencing nine (9) months after the Closing.

         The undersigned understands that the Company will take such steps as
may be necessary to enforce the foregoing provisions and restrict the sale or
transfer of the Shares as provided herein including, but not limited to,
notifying its transfer agent to place stop transfer instructions reflecting the
foregoing restrictions on the Company's stock transfer records, and the
undersigned hereby agrees to and authorize any such actions and acknowledge that
the Company is relying upon this Lock-Up Agreement in taking any such actions.

         The undersigned understands that certain of the information contained
herein may be regarded as material non-public information under Regulation FD
under the Securities Exchange Act of 1934, as amended, the improper use of which
would violate applicable United States securities laws. Accordingly, the
undersigned will not publish, disclose or disseminate the existence or contents
of this Lock-Up Agreement to any Person, and will maintain the

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confidentiality of the existence and contents of this Lock-Up Agreement. The
undersigned further understand that United States securities laws provide for
severe civil and criminal penalties for those persons trading securities while
in possession of material non-public information.

         This Lock-Up Agreement shall become effective upon the Closing.
Accordingly, in the event that the Closing does not occur, this Lock-Up
Agreement shall be null and void

         The terms and conditions of this Lock-Up Agreement shall inure to the
benefit of and be binding upon the respective successors, assigns, heirs and
personal representative of the undersigned.

         The undersigned represents that its signatory hereto has the full power
and authority to execute and deliver this Lock-Up Agreement on its behalf.

         This Lock-Up Agreement may be executed and delivered via facsimile

         Intending to be legally bound hereby, the undersigned has executed this
Lock-Up Agreement on and as of the date set forth above.

                                              Very truly yours,

                                              ---------------------------------
                                              Print Name of Entity

                                              By: _____________________________
                                              Name:
                                              Title:

                                              ---------------------------------

                                              ---------------------------------

                                              ---------------------------------
                                              Address<PAGE>
                                                                  EXHIBIT 10.36

                      CONTINENTAL SOUTHERN RESOURCES, INC.
                               2004 INCENTIVE PLAN

                          (EFFECTIVE FEBRUARY 26, 2004)

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                                TABLE OF CONTENTS

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                                                                                                               PAGE
<S>               <C>                                                                                          <C>
Section 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS..................................1
         1.1      Purpose.........................................................................................1
         1.2      Definitions.....................................................................................1
         1.3      Plan Administration.............................................................................7
         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.........................................................................11
         1.7      Participation..................................................................................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.............................................................................12
         2.3      Stock Option Exercises.........................................................................13
         2.4      Supplemental Payment on Exercise of Nonstatutory Stock Options
                  or Stock Appreciation Rights...................................................................15

Section 3. RESTRICTED STOCK......................................................................................15
         3.1      Award of Restricted Stock......................................................................15
         3.2      Restrictions...................................................................................16
         3.3      Delivery of Shares of Common Stock.............................................................17
         3.4      Supplemental Payment on Vesting of Restricted Stock............................................18

Section 4. OTHER STOCK-BASED AWARDS..............................................................................18
         4.1      Grant of Other Stock-Based Awards..............................................................18
         4.2      Other Stock-Based Award Terms..................................................................18
         4.3      Performance Awards.............................................................................19

Section 5. PROVISIONS RELATING TO PLAN PARTICIPATION.............................................................21
         5.1      Plan Conditions................................................................................21
         5.2      Transferability and Exercisability.............................................................22
         5.3      Rights as a Stockholder........................................................................23
         5.4      Listing and Registration of Shares of Common Stock.............................................23
         5.5      Change in Stock and Adjustments................................................................24
         5.6      Termination of Employment, Death, Disability and Retirement....................................27
         5.7      Change in Control..............................................................................28
         5.8      Exchange of Incentive Awards...................................................................29
         5.9      Financing......................................................................................30

Section 6. GENERAL...............................................................................................30
         6.1      Effective Date and Grant Period................................................................30
         6.2      Funding and Liability of Company...............................................................30
         6.3      Withholding Taxes..............................................................................30
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<S>               <C>                                                                                            <C>
         6.4      No Guarantee of Tax Consequences...............................................................31
         6.5      Designation of Beneficiary by Participant......................................................31
         6.6      Deferrals......................................................................................31
         6.7      Amendment and Termination......................................................................32
         6.8      Requirements of Law............................................................................32
         6.9      Rule 16b-3 Securities Law Compliance and Compliance with
                  Company Policies...............................................................................32
         6.10     Compliance with Code Section 162(m)............................................................33
         6.11     Successors.....................................................................................33
         6.12     Miscellaneous Provisions.......................................................................33
         6.13     Severability...................................................................................33
         6.14     Gender, Tense and Headings.....................................................................34
         6.15     Governing Law..................................................................................34
</TABLE>

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                      CONTINENTAL SOUTHERN RESOURCES, INC.
                               2004 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 Continental Southern Resources, Inc. (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 is established effective as of February 26, 2004 (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, the Chief
         Executive Officer 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. 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.

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               (c) CAUSE. Unless otherwise expressly provided in the Grantee's
         Incentive Agreement, 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. Unless otherwise expressly provided in the
         Grantee's Incentive Agreement, 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. Notwithstanding the
         foregoing, if the composition of the Board does not provide the Company
         the ability to establish a committee meeting the foregoing
         requirements, the Plan shall be administered by the full Board.

                  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 paragraphs, 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 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

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         (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, $.001 par
         value per share, and any class of common stock into which such common
         shares may hereafter be converted, reclassified or recapitalized.

               (h) COMPANY. Continental Southern Resources, Inc., a corporation
         organized under the laws of the State of Nevada, and any successor in
         interest thereto.

               (i) CONSULTANT. An independent agent, consultant, attorney, an
         individual who has agreed to become an Employee within the next six (6)
         months, or any other individual who is not an Outside Director or
         employee of the Company (or any Parent or Subsidiary) and who (i), in
         the opinion of the Committee, is in a position to contribute to the
         growth or financial success of the Company (or any Parent or
         Subsidiary), (ii) is a natural person and (iii) provides bona fide
         services to the Company (or any Parent or Subsidiary), which services
         are not in connection with the offer or sale of securities in a capital
         raising transaction, and do not directly or indirectly promote or
         maintain a market for the Company's securities.

               (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 ss. 1.162-27(c) (or its successor), during such
         period that the Company is a Publicly Held Corporation.

               (k) DISABILITY. Unless otherwise expressly provided in the
         Grantee's Incentive Agreement, 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 in Section 424(a) of the Code, or by
         a parent corporation or a

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         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
         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 or advisory services performed by a Consultant for the
         Company (or any Parent or Subsidiary) and (ii) membership on the Board
         by an Outside Director.

               (n) EQUITY OFFERING. The private placement of up to 25,000,000
         shares of Common Stock solely to accredited investors pursuant to an
         exemption from registration under Section 4(2) of the Securities Act of
         1933, as amended, and Rule 506 promulgated thereunder and that certain
         Company Confidential Private Placement Memorandum dated January 23,
         2004, as supplemented.

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

               (p) FAIR MARKET VALUE. Except as set forth below, 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
         closing sale price for a Share on the immediately preceding business
         day as quoted on the Nasdaq Stock Market, Inc. ("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.
         Notwithstanding the foregoing, the Fair Market Value of one share of
         Common Stock as of the grant date of any Incentive Award granted within
         30 days after the Equity Offering is consummated shall be the price
         paid per share of Common Stock by the investors in such Equity
         Offering.

                  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

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         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.

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

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

               (s) 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 5.1(a).

               (t) 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, Other Stock-Based Award
         or Performance Award.

               (u) 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.

               (v) 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.

               (w) 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.

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

               (y) 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.

               (z) 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.

               (aa) 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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               (bb) PERFORMANCE AWARD. An award granted by the Committee to the
         Grantee under Section 4.3.

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

               (dd) 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.

               (ee) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award
         that is a Performance Award under Section 4.3 representing a contingent
         right to receive cash or Shares of Common Stock (which may be
         Restricted Stock) at the end of a Performance Period and which, in the
         case of Performance Shares, is denominated in Common Stock, and in the
         case of Performance Units is denominated in cash values.

               (ff) PLAN. The Continental Southern Resources, Inc. 2004
         Incentive Plan as set forth herein and as it may be amended from time
         to time.

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

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

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

               (jj) 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.

               (kk) 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
         sixty-five (65) years, or such other age as may be designated by the
         Committee in the Employee's Incentive Agreement.

               (ll) SHARE. A share of the Common Stock.

               (mm) 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.

               (nn) STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an
         Incentive Stock Option granted to an

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         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.

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

               (pp) SUPPLEMENTAL PAYMENT. Any amount, as described in Sections
         2.4, 3.4 or 4.3, that is dedicated to payment of income taxes which are
         payable by the Grantee resulting from an Incentive Award.

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.

               (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 stockholders, 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.

               (d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the
         stockholder approval requirements of Section 6.7 if applicable, the
         Committee may, in its

                                       7

<PAGE>

         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 (INCLUDING SUCH INDEMNIFICATION FOR A
         PERSON'S OWN, SOLE, CONCURRENT OR JOINT NEGLIGENCE OR STRICT
         LIABILITY), EXCEPT FOR ANY SUCH ACT OR OMISSION CONSTITUTING WILLFUL
         MISCONDUCT OR GROSS NEGLIGENCE. SUCH PERSON SHALL BE INDEMNIFIED BY THE
         COMPANY FOR ALL AMOUNTS

                                       9

<PAGE>

         PAID BY HIM 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 that are granted wholly or partly in Common
Stock (including rights or Stock Options that may be exercised for or settled in
Common Stock) 6,200,000 Shares of Common Stock; of this amount 6,200,000 Shares
of Common Stock reserved under the Plan shall be available for Nonstatutory
Stock Options; 6,200,000 of the Shares of Common Stock reserved under the Plan
shall be available for grants of Incentive Stock Options; 3,100,000 Shares of
Common Stock shall be available for Restricted Stock; and 6,200,000 Shares of
Common Stock shall be available for each of the types of the stock based awards
individually under Section 4 including each of the Other Stock Based Awards
which are authorized under Section 4.1 including, without limitation, 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, the Company or 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 and the Performance Awards under Section 4.3. The number of Shares of
Common Stock that are the subject of Incentive Awards under this Plan, that are
forfeited or terminated, expire unexercised, withheld for tax withholding
requirements, 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:

                                       9

<PAGE>

               (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 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 five million dollars ($5,000,000).

               (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 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 Options;

               (b) Restricted Stock Awards; and

               (c) A payout of an Other Stock-Based Award or Performance Awards
         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 or Performance Awards
         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 or Restricted Stock purchase price
         as provided in the Incentive Agreement or as determined by the
         Compensation Committee in its sole discretion with previously acquired
         Shares or by withholding Shares that otherwise would be acquired on
         exercise or grant (i.e., the Share Pool shall be increased by the
         number of Shares turned in or withheld as payment of the Option Price
         or Restricted Stock purchase price).

                                       10

<PAGE>

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
         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 Option Price with respect to the
         Incentive Stock Option 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 that may be granted 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

                                       11

<PAGE>

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 a 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 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 and 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 Option Price with respect to each Stock
         Option shall be determined by the Committee; provided, however, that in
         the case of an Incentive Stock Option, the Option Price shall not be
         less than one hundred percent (100%) of the Fair Market Value per Share
         on the date the Incentive Stock Option is granted (110% for 10% or
         greater stockholders pursuant to Section 1.7(b)). 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 Option
         Price shall not be less than one hundred percent (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 for ISO grants; five (5) years for ISO grants to
         ten percent (10%) or greater stockholders pursuant to Section 1.7(b)).
         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.

                                       12

<PAGE>

               (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 were granted and shall be construed
         in 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, 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 shall be effected by the surrender
         of such Shares to the Company in good form for transfer and shall be
         valued at their Fair Market Value on the date when the Stock Option is
         exercised. Unless otherwise permitted by the Committee in its
         discretion, the Grantee shall not surrender, or attest to the ownership
         of, Shares in payment of the Option Price if such action would cause
         the Company to recognize compensation expense (or additional
         compensation expense) with respect to the Stock Option for financial
         reporting purposes.

                  The Committee, in its discretion, also may allow the Option
         Price to be paid with such other consideration as shall constitute
         lawful consideration for the issuance of Shares (including, without
         limitation, effecting a "cashless exercise" with a broker of the
         Option), subject to applicable securities law restrictions and tax
         withholdings, or by any

                                       13

<PAGE>

         other means which the Committee determines to be consistent with
         the Plan's purpose and applicable law. A "cashless exercise" of an
         Option is a procedure by which a broker provides the funds to the
         Grantee to effect an Option exercise, to the extent consented to by the
         Committee in its discretion. At the direction of the Grantee, the
         broker will either (i) sell all of the Shares received when the Option
         is exercised and pay the Grantee the proceeds of the sale (minus the
         Option Price, withholding taxes and any fees due to the broker) or (ii)
         sell enough of the Shares received upon exercise of the Option to cover
         the Option Price, withholding taxes and any fees due the broker and
         deliver to the Grantee (either directly or through the Company) a stock
         certificate for the remaining Shares. Dispositions to a broker
         effecting a cashless exercise are not exempt under Section 16 of the
         Exchange Act (if the Company is a Publicly Held Corporation). In no
         event will the Committee allow the Option Price to be paid with a form
         of consideration, including a loan or a "cashless exercise," if such
         form of consideration would violate the Sarbanes-Oxley Act of 2002 as
         determined by the Committee in its discretion.

                  The Committee, in its discretion, may also allow an Option to
         be exercised by a broker-dealer acting on behalf of the Grantee if (i)
         the broker-dealer has received from the Grantee a duly endorsed
         Incentive Agreement evidencing such Option and instructions signed by
         the Grantee requesting the Company to deliver the shares of Common
         Stock subject to such Option to the broker-dealer on behalf of the
         Grantee and specifying the account into which such shares should be
         deposited, (ii) adequate provision has been made with respect to the
         payment of any withholding taxes due upon such exercise, and (iii) the
         broker-dealer and the Grantee have otherwise complied with Section
         220.3(e)(4) of Regulation T, 12 CFR Part 220 (or its successor).

                  As soon as practicable after receipt of a written notification
         of exercise and full payment, the Company shall deliver, or cause to be
         delivered, 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 the Company or a stock transfer agent of
         the Company shall have deposited such certificates in the United States
         mail, addressed to Grantee or other appropriate recipient.

                  Subject to Section 5.2, during the lifetime of a Grantee, each
         Option granted to him shall be exercisable only by the Grantee (or his
         legal guardian in the event of his Disability) or by a broker-dealer
         acting on his behalf pursuant to a cashless exercise under the
         foregoing provisions of this Section 2.3(a).

               (b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
         impose such restrictions on any grant of Stock Options or 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, non-competition, and any
         other agreement between the Company and any of its securities holders
         or employees, (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

                                       14

<PAGE>

         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      SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS OR
         STOCK APPRECIATION RIGHTS.

         The Committee, either at the time of grant or as of the time of
exercise of any Nonstatutory Stock Option or stock appreciation right, may
provide in the Incentive Agreement for a Supplemental Payment by the Company to
the Grantee with respect to the exercise of any Nonstatutory Stock Option or
stock appreciation right. The Supplemental Payment shall be in the amount
specified by the Committee, which amount shall not exceed the amount necessary
to pay the federal and state income tax payable with respect to both the
exercise of the Nonstatutory Stock Option and/or stock appreciation right and
the receipt of the Supplemental Payment, assuming the holder is taxed at either
the maximum effective income tax rate applicable thereto or at a lower tax rate
as deemed appropriate by the Committee in its discretion. The Committee shall
have the discretion to grant Supplemental Payments that are payable solely in
cash or Supplemental Payments that are payable in cash, Common Stock, or a
combination of both, as determined by the Committee at the time of payment.

                                   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

                                       15

<PAGE>

         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
         (i) 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 or (ii) issued in "book entry" form or
         other means of evidencing uncertificated Shares, as determined by the
         Committee, until such time as the restrictions on 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

                                       16

<PAGE>

         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;
         provided, further, in lieu of issuing such a stock certificate, the
         Committee may arrange to make "book entries" or other means of
         evidencing uncertificated Shares of Restricted Stock. 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 Continental Southern
                  Resources, Inc. 2004 Incentive Plan and an Incentive Agreement
                  entered into between the registered owner of such shares and
                  Continental Southern Resources, Inc. A copy of the Plan and
                  Incentive Agreement are on file in the corporate offices of
                  Continental Southern Resources, Inc.

         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.

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.

                                       17

<PAGE>

3.4      Supplemental Payment on Vesting of Restricted Stock

         The Committee, either at the time of grant or vesting of Restricted
Stock, may provide for a Supplemental Payment by the Company to the holder in an
amount specified by the Committee, which amount shall not exceed the amount
necessary to pay the federal and state income tax payable with respect to both
the vesting of the Restricted Stock and receipt of the Supplemental Payment,
assuming the Grantee is taxed at either the maximum effective income tax rate
applicable thereto or at a lower tax rate as deemed appropriate by the Committee
in its discretion. The Committee shall have the discretion to grant Supplemental
Payments that are payable solely in cash or Supplemental Payments that are
payable in cash, Common Stock, or a combination of both, as determined by the
Committee at the time of payment.

                                   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. Types of Other Stock-Based Awards include, without limitation, 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, the Company or 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 fifty percent (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). To the extent that the Company is a Publically Held Corporation
         and that a stock appreciation right is intended

                                       18

<PAGE>

         to qualify for the Performance-Based Exception, the exercise price per
         share of Common Stock shall not be less than one hundred percent (100%)
         of Fair Market Value of a share of Common Stock on the date of the
         grant of the stock appreciation right.

               (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
         not 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, unless (and to the extent) otherwise as
         determined by the Committee and set forth in the Incentive Agreement.
         The Committee may also provide in the Incentive Agreement that the
         amounts of any dividends or dividend equivalent shall be deemed to have
         been reinvested in additional Shares of Common Stock.

4.3      Performance Awards

               (a) GRANT. During the period the Company is a Publicly Held
         Corporation, the Committee is authorized to grant Performance Awards to
         selected Grantees who are Employees or Consultants. Performance Awards
         may be by reference to Performance Shares or Performance Units. Each
         grant of Performance Awards shall he evidenced by an Incentive
         Agreement in such amounts and upon such terms as shall be determined by
         the Committee. The Committee may make grants of Performance Awards in
         such a manner that more than one Performance Period is in progress
         concurrently. For each Performance Period, the Committee shall
         establish the number of Performance Awards and their contingent values
         which may vary depending on the degree to which performance criteria
         established by the Committee are met.

               (b) PERFORMANCE CRITERIA. The Committee may establish performance
         goals applicable to Performance Awards based upon criteria in one or
         more of the following categories: (i) performance of the Company as a
         whole, (ii) performance of a segment of the Company's business, and
         (iii) individual performance. Performance criteria for the Company
         shall relate to the achievement of predetermined financial objectives
         for the Company and its Subsidiaries on a consolidated basis.
         Performance criteria for a segment of the Company's business shall
         relate to the achievement of financial and operating objectives of the
         segment for which the participant is accountable. Examples of
         performance criteria shall include (but are not limited to) pre-tax or
         after-tax profit levels, including: earnings per share, earnings before
         interest and taxes, earnings before interest,

                                       19

<PAGE>

         taxes, depreciation and amortization, net operating profits after
         tax, and net income; total stockholder return; return on assets,
         equity, capital or investment; cash flow and cash flow return on
         investment; economic value added and economic profit; growth in
         earnings per share; levels of operating expense and maintenance expense
         or measures of customer satisfaction and customer service as determined
         from time to time including the relative improvement therein.
         Individual performance criteria shall relate to a participants overall
         performance, taking into account, among other measures of performance,
         the attainment of individual goals and objectives. The performance
         goals may differ among participants.

               (c) MODIFICATION. If the Committee determines, in its discretion
         exercised in good faith, that the established performance measures or
         objectives are no longer suitable to the Company's objectives because
         of a change in the Company's business, operations, corporate structure,
         capital structure, or other conditions the Committee deems to be
         appropriate, the Committee may modify the performance measures and
         objectives to the extent it considers such modification to be
         necessary. The Committee shall not permit any such modification that
         would cause the Performance Awards to fail to qualify for the
         Performance-Based Exception, if applicable.

               (d) PAYMENT. The basis for payment of Performance Awards for a
         given Performance Period shall be the achievement of those performance
         objectives determined by the Committee at the beginning of the
         Performance Period as specified in the Grantee's Incentive Agreement.
         If minimum performance is not achieved for a Performance Period, no
         payment shall be made and all contingent rights shall cease. If minimum
         performance is achieved or exceeded, the number of Performance Awards
         may be based on the degree to which actual performance exceeded the
         pre-established minimum performance standards. The amount of payment
         shall be determined by multiplying the number of Performance Awards
         granted at the beginning of the Performance Period times the final
         Performance Award value. Payments shall be made, in the discretion of
         the Committee as specified in the Incentive Agreement.

               (e) SPECIAL RULE FOR COVERED EMPLOYEES. No later than the
         ninetieth (90th) day following the beginning of a Performance Period
         (or twenty-five percent (25%) of the Performance Period) the Committee
         shall establish performance goals as described in Section 4.3
         applicable to Performance Awards awarded to Covered Employees in such a
         manner as shall permit payments with respect thereto to qualify for the
         Performance-Based Exception, if applicable. If a Performance Award
         granted to a Covered Employee is intended to comply with the
         Performance-Based Exception, the Committee in establishing performance
         goals shall comply with Treasury Regulationss. l.162-27(e)(2) (or its
         successor). As soon as practicable following the Company's
         determination of the Company's financial results for any Performance
         Period, the Committee shall certify in writing: (i) whether the Company
         achieved its minimum performance for the objectives for the Performance
         Period, (ii) the extent to which the Company achieved its performance
         objectives for the Performance Period, (iii) any other terms that are
         material to the grant of Performance Awards, and (iv) the calculation
         of the payments, if any, to be paid to each Grantee for the Performance
         Period.

                                       20

<PAGE>

               (f) SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR
         PERFORMANCE SHARES. The Committee, either at the time of grant or at
         the time of vesting of Performance Units or Performance Shares, may
         provide for a Supplemental Payment by the Company to the Grantee in an
         amount specified by the Committee, which amount shall not exceed the
         amount necessary to pay the federal and state income tax payable with
         respect to both the vesting of such Performance Units or Performance
         Shares and receipt of the Supplemental Payment, assuming the Grantee is
         taxed at either the maximum effective income tax rate applicable
         thereto or at a lower tax rate as seemed appropriate by the Committee
         in its discretion. The Committee shall have the discretion to grant
         Supplemental Payments that are payable in cash, Common Stock, or a
         combination of both, as determined by the Committee at the time of
         payment.

                                   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 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.

                                       21

<PAGE>

               (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 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

                                       22

<PAGE>

         transferee. The termination of employment events of Section 5.6
         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. All determinations under
         this Section 5.2 shall be made by the Committee in its discretion.

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.

               (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

                                       23

<PAGE>

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 a registration
statement, 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 law 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 an equitable adjustment because
         it interferes with the intended operation of the Plan, then, if the
         Committee should so determine, in its absolute 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 Option Price or other 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, 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
         (which only applies in the event of a Change in Control), 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

                                       24

<PAGE>

         number of Shares outstanding, be proportionately increased and the
         Option Price or 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 Option Price or 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) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove
         expressly provided in this Section 5.5 and subject to Section 5.7 in
         the event of a Change in Control, 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
         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 Option Price 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.

               (e) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
         Notwithstanding any other provision of the Plan, the Committee, in its
         absolute 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. In addition,
         any Shares issued by the Company through the assumption or substitution
         of outstanding grants from an acquired company shall reduce the Shares
         available for grants under Section 1.4.

               (f) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Subject to the
         accelerated vesting and other provisions of Section 5.7 that apply in
         the event of a Change in Control, in the event of a Corporate Event
         (defined below), each Grantee shall be entitled to receive, in lieu of
         the number of Shares subject to Incentive Awards, such shares of
         capital stock or other securities or property as may be issuable or
         payable with respect to or in exchange for the number of Shares which
         Grantee would have received had he exercised the Incentive Award
         immediately prior to such Corporate Event, together with any
         adjustments (including, without limitation, adjustments to the Option

                                       25

<PAGE>

         Price and the number of Shares issuable on exercise of outstanding
         Stock Options). For this purpose, Shares of Restricted Stock shall be
         treated the same as unrestricted outstanding Shares of Common Stock. A
         "CORPORATE EVENT" means any of the following: (i) a dissolution or
         liquidation of the Company, (ii) a sale of all or substantially all of
         the Company's assets, or (iii) a merger, consolidation or combination
         involving the Company (other than a merger, consolidation or
         combination (A) in which the Company is the continuing or surviving
         corporation and (B) which does not result in the outstanding Shares
         being converted into or exchanged for different securities, cash or
         other property, or any combination thereof). The Committee shall take
         whatever other action it deems appropriate to preserve the rights of
         Grantees holding outstanding Incentive Awards.

                  Notwithstanding the previous paragraph of this Section 5.5(f),
         but subject to the accelerated vesting and other provisions of Section
         5.7 that apply in the event of a Change in Control, in the event of a
         Corporate Event (described in the previous paragraph), the Committee,
         in its discretion, shall have the right and power to:

               (i) cancel, effective immediately prior to the occurrence of the
         Corporate Event, each outstanding Incentive Award (whether or not then
         exercisable) and, in full consideration of such cancellation, pay to
         the Grantee an amount in cash equal to the excess of (A) the value, as
         determined by the Committee, of the property (including cash) received
         by the holders of Common Stock as a result of such Corporate Event over
         (B) the exercise price of such Incentive Award, if any; provided,
         however, this subsection (i) shall be inapplicable to an Incentive
         Award granted within six (6) months before the occurrence of the
         Corporate Event but only if the Grantee is an Insider and such
         disposition is not exempt under Rule 16b-3 (or other rules preventing
         liability of the Insider under Section 16(b) of the Exchange Act) and,
         in that event, the provisions hereof shall be applicable to such
         Incentive Award after the expiration of six (6) months from the date of
         grant; or

               (ii) provide for the exchange or substitution of each Incentive
         Award outstanding immediately prior to such Corporate Event (whether or
         not then exercisable) for another award with respect to the Common
         Stock or other property for which such Incentive Award is exchangeable
         and, incident thereto, make an equitable adjustment as determined by
         the Committee, in its discretion, in the Option Price or exercise price
         of the Incentive Award, if any, or in the number of Shares or amount of
         property (including cash) subject to the Incentive Award; or

               (iii) provide for assumption of the Plan and such outstanding
         Incentive Awards by the surviving entity or its parent.

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

                                       26

<PAGE>

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 (3)
         months in the case of an ISO). Unless otherwise expressly provided in
         his Incentive Agreement, a Grantee's Employment shall not be deemed to
         have been terminated if a Grantee who is an 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 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 (6) 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

                                       27

<PAGE>

                    (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 (1) 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 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 Inventive 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 one
         hundred percent (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.

                                       28

<PAGE>

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

               (a) the Company (A) shall not be the surviving entity in any
         merger, consolidation or other reorganization (or survives only as a
         subsidiary of an entity other than a previously wholly-owned subsidiary
         of the Company) or (B) is to be dissolved and liquidated, and as a
         result of or in connection with such transaction, the persons who were
         directors of the Company before such transaction shall cease to
         constitute a majority of the Board, or

               (b) any person or entity, including a "group" as contemplated by
         Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
         acquires or gains ownership or control (including, without limitation,
         power to vote) of 30% or more of the outstanding shares of the
         Company's voting stock (based upon voting power), and as a result of or
         in connection with such transaction, the persons who were directors of
         the Company before such transaction shall cease to constitute a
         majority of the Board, or

               (c) the Company sells all or substantially all of the assets of
         the Company to any other person or entity (other than a wholly-owned
         subsidiary of the Company) in a transaction that requires shareholder
         approval pursuant to applicable corporate law; or

               (d) 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 stockholders was approved by a vote of at
         least a majority of the directors then still in office, who either were
         directors at the beginning of the two (2) 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

               (e) 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.

                                       29

<PAGE>

5.9      Financing

         To the extent permitted by the Sarbanes-Oxley Act of 2002 or other
applicable law, 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 and the Board in their discretion.

                                   SECTION 6.

                                     GENERAL

6.1      EFFECTIVE DATE AND GRANT PERIOD

         This Plan is adopted by the Board effective as of the Effective Date
subject to the approval of the stockholders of the Company within twelve (12)
months from the Effective Date. 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.

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

                                       30

<PAGE>

         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 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 (2) years from the
         date of grant of such Option or (ii) one (1) year after the transfer of
         such shares to the Grantee, the Company shall have the right to
         withhold from any 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.

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.

                                       31

<PAGE>

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, 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 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. The Committee may refuse to issue or transfer any Shares or
other consideration under an Incentive Award if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or other
consideration might violate applicable laws. 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 AND COMPLIANCE WITH COMPANY
         POLICIES

         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. With respect to all Grantees, transactions under the
Plan are intended to comply with Securities Regulation BTR and the Company's
insider trading policies as revised from time to time or such other similar
Company policies, including but not limited to, policies relating to black out
periods. Any

                                       32

<PAGE>

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 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 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

                                       33
<PAGE>

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 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.

                            [SIGNATURE PAGE FOLLOWS]

                                       34

<PAGE>

         IN WITNESS WHEREOF, Continental Southern Resources, Inc. has caused
this Plan to be duly executed in its name and on its behalf by its duly
authorized officer.

                                      CONTINENTAL SOUTHERN RESOURCES, INC.

                                      By:  /s/ STEPHEN P. HARRINGTON
                                           ------------------------------------
                                      Name:   Stephen P. Harrington
                                              ---------------------------------
                                      Title:  President
                                              ---------------------------------

                                       35

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