Document:

<PAGE>   1
                                                                    EXHIBIT 10.4

                                    FORM OF
                           ENCORE ACQUISITION COMPANY

                            2000 INCENTIVE STOCK PLAN

SECTION 1. Purpose; Definitions.

         The purpose of the Plan is to attract, motivate and retain selected
employees of the Company and to provide the Company with the ability to provide
incentives more directly linked to the profitability of the Company's businesses
and increases in shareholder value.

         For purposes of the Plan, the following terms are defined as set forth
below:

                  a. "Awards" mean grants under this Plan of Stock Options or
         Restricted Stock.

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

                  c. "Code" means the Internal Revenue Code of 1986, as amended
         from time to time, and any successor thereto.

                  d. "Commission" means the Securities and Exchange Commission
         or any successor agency.

                  e. "Committee" means the Compensation Committee of the Board
         or a subcommittee thereof, any successor thereto or such other
         committee or subcommittee as may be designated by the Board to
         administer the Plan.

                  f. "Common Stock" or "Stock" means the $.01 par value Common
         Stock of the Company.

                  g. "Company" means Encore Acquisition Company, a corporation
         organized under the laws of the State of Delaware, and its
         subsidiaries.

                  h. "Exercise Period" means the 60-day period from and after a
         Change in Control.

                  i. "Exchange Act" means the Securities Exchange Act of 1934,
         as amended from time to time, and any successor thereto.

                  j. "Fair Market Value" means, as of any given date, the
         closing sale price of the Common Stock for such date on The New York
         Stock Exchange or, if no such sale price of Common Stock is reported on
         such date, the fair market value of the Common Stock as determined by
         the Committee in good faith. Under no circumstances shall the Fair
         Market Value be less than the par value of the Common Stock.

                  k. "Incentive Stock Option" means any Stock Option that
         complies with Section 422 of the Code.

<PAGE>   2

                  l. "Nonqualified Stock Option" means any Stock Option that is
         not an Incentive Stock Option.

                  m. "Plan" means this 2000 Incentive Stock Plan, as amended
         from time to time.

                  n. "Restricted Period" means the period during which an Award
         may not be sold, assigned, transferred, pledged or otherwise
         encumbered.

                  o. "Restricted Stock" means an Award of shares of Common Stock
         pursuant to Section 5(c).

                  p. "Spread Value" means, with respect to a share of Common
         Stock subject to an Award, an amount equal to the excess of the Fair
         Market Value, on the date such value is determined, over the Award's
         exercise or grant price, if any.

                  q. "Stock Option" means an option granted pursuant to Section
         5(a).

         In addition, the terms "Business Combination," "Change in Control,"
"Change in Control Price," "Incumbent Board," "Outstanding Company Stock,"
"Outstanding Company Voting Securities" and "Person" have the meanings set forth
in Section 6.

SECTION 2. Administration.

         The Plan shall be administered by the Committee, which shall have the
power to interpret the Plan and to adopt such rules and guidelines for carrying
out the Plan as it may deem appropriate. The Committee shall have the authority
to adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with the laws, regulations, compensation practices and tax
and accounting principles of the countries in which the Company, a subsidiary or
an affiliate may operate to assure the viability of the benefits of Awards made
to individuals employed in such countries and to meet the objectives of the
Plan.

         Subject to the terms of the Plan, the Committee shall have the
authority to determine those employees eligible to receive Awards and the
amount, type and terms of each Award.

         The Committee may delegate its authority and power under the Plan to
one or more officers of the Company, subject to guidelines prescribed by the
Committee and approved by the Board, with respect to participants who are not
subject to Section 16 of the Exchange Act.

         Any determination made by the Committee or pursuant to delegated
authority in accordance with the provisions of the Plan with respect to any
Award shall be made in the sole discretion of the Committee or such delegate,
and all decisions made by the Committee or any appropriately designated officer
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Plan participants.

                                       2
<PAGE>   3

SECTION 3. Eligibility.

         All directors and all full time regular employees of the Company and
its subsidiaries and affiliates are eligible to be granted Awards under the
Plan.

SECTION 4. Common Stock Subject to Plan.

         The total number of shares of Common Stock reserved and available for
distribution pursuant to the Plan shall be ___________ shares, and the maximum
number of shares that can be issued to any participant is ____________ shares.
If any Award is exercised, cashed out, or terminates or expires without a
payment being made to the participant in the form of Common Stock, the shares
subject to such Award, if any, shall again be available for distribution in
connection with Awards under the Plan. Any shares of Common Stock that are used
by a participant as full or partial payment of withholding or other taxes or as
payment for the exercise or conversion price of an Award shall be available for
distribution in connection with Awards under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, split-up, or other change in
corporate structure affecting the Common Stock after adoption of the Plan by the
Board, the Board is authorized to make substitutions or adjustments in the
aggregate number and kind of shares reserved and available for issuance under
the Plan, in the number, kind and price of shares subject to outstanding Awards
and in the Award limits set forth in Section 5; provided, however, that any such
substitutions or adjustments shall be, to the extent deemed appropriate by the
Board, consistent with the treatment of shares of Common Stock not subject to
the Plan, and that the number of shares subject to any Award shall always be a
whole number.

SECTION 5. Awards.

         The types of Awards that may be granted under the Plan are set forth
below. Awards may be granted singly, in combination, or in tandem with other
Awards. Each Award will be set forth in a separate agreement with the person
receiving the Award and will indicate the type, terms and conditions of the
Award.

         (a) Stock Options. (i) A Stock Option represents the right to purchase
a share of Stock at a predetermined grant price. Stock Options granted under
this Plan may be in the form of Incentive Stock Options or Nonqualified Stock
Options, as specified in the Award agreement. The terms of each Stock Option
shall be set forth in the Award agreement. Subject to the applicable Award
agreement, Stock Options may be exercised, in whole or in part, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept (including a copy of instructions to a broker or bank acceptable to the
Company to deliver promptly to the Company an amount of sale or loan proceeds
sufficient to pay the purchase price). As determined by the Committee, payment
in full or in part may also be made in the form of Common Stock already owned by
the optionee valued at the Fair Market Value on the date the Stock Option is
exercised; provided, however, that such Common Stock shall not have been
acquired within the preceding six months

                                       3
<PAGE>   4

upon the exercise of a Stock Option Award granted under the Plan or any other
plan maintained at any time by the Company or any subsidiary.

         (ii) Incentive Stock Options will be designed to comply with the
provisions of the Code and will be subject to certain restrictions contained in
the Code. Among such restrictions, Incentive Stock Options must have an exercise
price not less than the Fair Market Value of a share of Common Stock on the date
of grant, must expire within a specified period of time following the optionee's
termination of employment, and must be exercised within ten years after the date
of grant; but may be subsequently modified to disqualify them from treatment as
Incentive Stock Options. In the case of an Incentive Stock Option granted to an
individual who owns (or is deemed to own) at least 10% of the total combined
voting power of all classes of stock of the Company, the exercise price must be
at least 110% of the Fair Market Value of a share of Common Stock on the date of
grant and the Incentive Stock Option must expire no later than the fifth
anniversary of the date of its grant. The aggregate Fair Market Value
(determined at the time the option was granted) of the Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by a
participant during any calendar year shall not exceed $100,000 (or such other
limit as may be required by the Code).

         (iii) Nonqualified Stock Options will provide for the right to purchase
Common Stock at a specified price which, except with respect to Nonqualified
Stock Options intended to qualify as performance-based compensation under
Section 162(m) of the Code, may be less than Fair Market Value on the date of
grant (but not less than 85% of fair market value) and usually will become
exercisable (in the discretion of the Committee) in one or more installments
after the grant date.

         (b) Restricted Stock. Shares of Restricted Stock are shares of Common
Stock that are Awarded to a participant and that during the Restricted Period
may be forfeitable to the Company upon such conditions as may be set forth in
the applicable Award agreement (including, without limitation, a specified
period of employment or the satisfaction of pre-established performance goals,
when granted to executive officers). The Compensation Committee may grant Awards
of Restricted Stock to such persons, in such amounts and subject to such terms
and conditions as the Committee may determine in its sole discretion; provided,
however that shares of Restricted Stock granted to executive officers may only
vest upon the attainment of performance goals pre-established by the Committee
based on one or more of the following criteria; return on equity; pre-tax or
after tax income; reserve levels; revenues; return on assets; increases in
EBITDA: share price; increase in equity; debt reduction; or such other criteria
as the Company's stockholders may approve. Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered during the Restricted
Period. Except as provided in this subsection (b) and in the applicable Award
agreement, a participant shall have all the rights of a holder of Common Stock,
including the rights to receive dividends and to vote during the Restricted
Period. Dividends with respect to Restricted Stock that are payable in Common
Stock shall be paid in the form of Restricted Stock.

SECTION 6. Change in Control Provisions.

         (a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control, unless the Committee
otherwise determines prior to such change in Control:

                                       4
<PAGE>   5

                  (i) All Stock Options outstanding as of the date such Change
         in Control occurs shall become fully vested and exercisable.

                  (ii) The restrictions and other conditions applicable to any
         Restricted Stock, including vesting requirements, shall lapse, and such
         Awards shall become free of all restrictions and fully vested.

                  (iii) The value of all outstanding Stock Options and
         Restricted Stock shall, unless otherwise determined by the Committee at
         or after grant, be cashed out on the basis of the "Change in Control
         Price," as defined in Section 6(c), as of the date such Change in
         Control occurs or such other date as the Committee may determine prior
         to the Change in Control.

         (b) Definition of Change in Control. A "Change in Control" means the
happening of any of the following events:

                  (i) The acquisition by any individual, entity or group (within
         the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
         "Person")) of beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of 40% or more of either (A) the
         then outstanding shares of Common Stock (the "Outstanding Company
         Common Stock") or (B) the combined voting power of the then outstanding
         voting securities of the Company entitled to vote generally in the
         election of directors (the "Outstanding Company Voting Securities");
         provided, however, that the following acquisitions shall not constitute
         a Change in Control: (1) any acquisition directly from the Company, (2)
         any acquisition by the Company, (3) any acquisition by any employee
         benefit plan (or related trust) sponsored or maintained by the Company
         or any corporation controlled by the Company or (4) any acquisition by
         any corporation pursuant to a transaction described in clauses (A), (B)
         and (C) of paragraph (iii) of this Section 6(b) [or (5) any acquisition
         by a Person that owns on the date this Plan is adopted by the Board of
         Directors more than 20% of the outstanding capital stock of the Company
         at such date]; or

                  (ii) Individuals who, as of the effective date of the Plan,
         constitute the Board (the "Incumbent Board") cease for any reason to
         constitute at least a majority of the Board; provided, however, that
         any individual becoming a director subsequent to such effective date
         whose election, or nomination for election by the stockholders of the
         Company, was approved by a vote of at least a majority of the directors
         then comprising the Incumbent Board shall be considered as though such
         individual were a member of the Incumbent Board, but excluding, for
         this purpose, any such individual whose initial assumption of office
         occurs as a result of an actual or threatened election contest with
         respect to the election or removal of directors or other actual or
         threatened solicitation of proxies or consents by or on behalf of a
         Person other than the Board; or

                  (iii) Approval by the stockholders of the Company of a
         reorganization, merger, share exchange or consolidation (a "Business
         Combination"), unless, in each case following such Business
         Combination, (A) all or substantially all of the individuals and
         entities who were the beneficial owners, respectively, of the
         Outstanding Company

                                       5
<PAGE>   6

         Common Stock and Outstanding Company Voting Securities immediately
         prior to such Business Combination beneficially own, directly or
         indirectly, more than 60% of, respectively, the then outstanding shares
         of common stock and the combined voting power of the then outstanding
         voting securities entitled to vote generally in the election of
         directors, as the case may be, of the corporation resulting from such
         Business Combination (including, without limitation, a corporation that
         as a result of such transaction owns the Company through one or more
         subsidiaries) in substantially the same proportions as their ownership,
         immediately prior to such Business Combination of the Outstanding
         Company Common Stock and Outstanding Company Voting Securities, as the
         case may be, (B) no Person (excluding any employee benefit plan (or
         related trust) of the Company or such corporation resulting from such
         Business Combination) beneficially owns, directly or indirectly, 40% or
         more of, respectively, the then outstanding shares of common stock of
         the corporation resulting from such Business Combination or the
         combined voting power of the then outstanding voting securities of such
         corporation except to the extent that such Person owned 40% or more of
         the Outstanding Company Common Stock or Outstanding Company Voting
         Securities prior to the Business Combination and (C) at least a
         majority of the members of the board of directors of the corporation
         resulting from such Business Combination were members of the Incumbent
         Board at the time of the execution of the initial agreement, or of the
         action of the Board, providing for such Business Combination; or

                  (iv) Approval by the stockholders of the Company of (A) a
         complete liquidation or dissolution of the Company or (B) the sale or
         other disposition of all or substantially all of the assets of the
         Company, other than to a corporation with respect to which, following
         such sale or other disposition, (1) more than 60% of, respectively, the
         then outstanding shares of common stock of such corporation and the
         combined voting power of the then outstanding voting securities of such
         corporation entitled to vote generally in the election of directors is
         then beneficially owned, directly or indirectly, by all or
         substantially all of the individuals and entities who were the
         beneficial owners, respectively, of the Outstanding Company Common
         Stock and Outstanding Company Voting Securities immediately prior to
         such sale or other disposition in substantially the same proportion as
         their ownership, immediately prior to such sale or other disposition,
         of the Outstanding Company Common Stock and Outstanding Company Voting
         Securities, as the case may be, (2) less than 40% of, respectively, the
         then outstanding shares of common stock of such corporation and the
         combined voting power of the then outstanding voting securities of such
         corporation entitled to vote generally in the election of directors is
         then beneficially owned, directly or indirectly, by any Person
         (excluding any employee benefit plan (or related trust) of the Company
         or such corporation), except to the extent that such Person owned 40%
         or more of the Outstanding Company Common Stock or Outstanding Company
         Voting Securities prior to the sale or disposition and (3) at least a
         majority of the members of the board of directors of such corporation
         were members of the Incumbent Board at the time of the execution of the
         initial agreement, or of the action of the Board, providing for such
         sale or other disposition of assets of the Company or were elected,
         appointed or nominated by the Board.

         (c) Change in Control Price. "Change in Control Price" means the
highest closing price per share paid for the purchase of Common Stock on the New
York Stock Exchange at any time during the preceding 60-day period ending on the
date the Change in Control occurs, except that,

                                       6
<PAGE>   7

in the case of Incentive Stock Options, such price shall be based only on
transactions reported for the date on which such Incentive Stock Options are
cashed out.

         (d) Notwithstanding any other provision of this Plan, upon a Change in
Control, unless the Committee shall determine otherwise at grant, an Award
recipient shall have the right, by giving notice to the Company within the
Exercise Period, to elect to surrender all or part of the Stock Option to the
Company and to receive in cash, within 30 days of such notice, an amount equal
to the amount by which the "Change in Control Price" on the date of such notice
shall exceed the exercise or grant price under such Award, multiplied by the
number of shares of Stock as to which the right granted under this Section 6
shall have been exercised.

         (e) Notwithstanding the foregoing, if any right granted pursuant to
this Section 6 would make a Change in Control transaction ineligible for pooling
of interests accounting under generally accepted accounting principles that but
for this Section 6 would otherwise be eligible for such accounting treatment,
the Committee shall have the ability to substitute the cash payable pursuant to
this Section 6 with Common Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.

SECTION 7. Plan Amendment and Termination.

         The Board may amend or terminate the Plan at any time, provided that no
such amendment shall be made without stockholder approval if such approval is
required under applicable law, or if such amendment would: (i) decrease the
grant or exercise price of any Stock Option to less than the minimum price set
forth herein on the date of grant; or (ii) increase the total number of shares
of Common Stock that may be distributed under the Plan.

         Except as set forth in any Award agreement, no amendment or termination
of the Plan may materially and adversely affect any outstanding Award under the
Plan without the Award recipient's consent.

SECTION 8. Transferability.

         No Award shall be transferable or assignable, or payable to or
exercisable by, anyone other than the participant to whom it was granted, except
(i) by law, will or the laws of descent and distribution, (ii) as a result of
the disability of a participant or (iii) that the Committee may permit transfers
of Awards by gift or otherwise to a member of a participant's immediate family
and/or trusts whose beneficiaries are members of the participant's immediate
family, or to such other persons or entities as may be approved by the
Committee. Notwithstanding the foregoing, in no event shall Incentive Stock
Options be transferable or assignable other than by will or by the laws of
descent and distribution.

SECTION 9. Award Agreements.

         Each Award under the Plan shall be evidenced by a written agreement
that sets forth the terms, conditions, and limitations for each Award. Such
terms may include, but are not limited to, the term of the Award, vesting and
forfeiture provisions, and the provisions applicable in the event the
recipient's employment terminates. The Committee may amend an Award Agreement,

                                       7
<PAGE>   8

provided that no such amendment may materially and adversely affect an Award
without the Award recipient's consent.

SECTION 10. Effective Date; Term.

         The Plan shall become effective as of the date of its adoption by the
Board, ____________, 2000, subject to the approval by the holders of a majority
of the shares of common stock then outstanding. Except as otherwise provided by
the Board, no Awards shall be granted after _____________, 20__, but any Awards
granted theretofore may extend beyond that date.

SECTION 11. General Provisions.

         (a) The Committee may require each person acquiring shares of Common
Stock pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend that the
Committee deems appropriate to reflect any restrictions on transfer.

         All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Common Stock
is then listed, and any applicable Federal, state or foreign securities law, and
the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.

         (b) It is presently intended that the Plan constitute an "unfunded"
plan for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that,
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

         (c) Nothing contained in this Plan shall prevent the Company, a
subsidiary, or an affiliate from adopting other or additional compensation
arrangements for its employees.

         (d) The adoption of the Plan shall not confer upon any employee any
right to continued employment nor shall it interfere in any way with the right
of the Company, a subsidiary, or an affiliate to terminate the employment of any
employee at any time.

         (e) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local, or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Committee, withholding obligations arising from an Award may be settled with
Common Stock, including Common Stock that is part of, or is received upon
exercise or conversion of, the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company and its subsidiaries and
affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any

                                       8
<PAGE>   9

payment otherwise due to the participant. The Committee may establish such
procedures as it deems appropriate, including the making of irrevocable
elections, for the settling of withholding obligations with Common Stock.

         (f) On receipt of written notice of exercise, the Committee may elect
to cash out all or a portion of the shares of Common Stock for which a Stock
Option is being exercised by paying the optionee an amount, in cash or Common
Stock, equal to the Spread Value of such shares on the date such notice of
exercise is received.

         (g) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.

         (h) If any provision of the Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of the Plan,
and the Plan shall be enforced and construed as if such provision had not been
included.

                                       9<PAGE>   1

                                                                    EXHIBIT 10.1

                         [B-III CAPITAL, LLC LETTERHEAD]

ROBERT M. BROWN, III
PRESIDENT

October 20, 2000

Steven B. Dempsey
President
PetQuarters, Inc.
Post Office Box 410
Lonoke, AR 72086

Dear Steve,

In addition to the Services Agreement between B-III Capital, LLC ("B-III") and
Pet Quarters, Inc. ("Pet Quarters" or the "Company") dated as of November 8,
1999, as amended ("Services Agreement"), which remains in full force and effect,
we have agreed that B-III will receive the following for any transaction which
brings new capital into Pet Quarters through the sale of shares under the
Company's existing Equity Line of Credit Agreement and the related resale of
shares to an investor introduced by B-III to Pet Quarters:

         1.   Cash in an amount equal to four percent (4%) of the gross price at
              which Pet Quarters sells such shares, less any retainer fees paid
              to B-III and not previously credited against success fees, payable
              on B-III's instructions from proceeds of such sale.

         2.   Warrants issued by Pet Quarters to B-III or its designee to
              purchase up to 7,500 shares of Pet Quarters' common stock at a
              price of $.50 per share, subject to adjustment as set forth in the
              warrants, for each $100,000 of shares sold by Pet Quarters. Such
              warrants shall be exercisable during the period of five years
              subsequent to the date of its issuance, may be exercised on a
              "cashless" basis, and shall be in the form attached hereto.

All provisions of the Services Agreement other than "Warrants" and "Success
Fees" shall apply equally to this letter agreement.

<PAGE>   2

Sincerely,

B-III Capital LLC

By
  ------------------------
  Robert M. Brown, III
  President

Accepted and agreed as of the 20th day of October, 2000:

Pet Quarters, Inc.

By
  ------------------------
  Steven B. Dempsey
  President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}]]