Exhibit 10(g)
 
 
 
                                      2004
                        OMNIBUS STOCK AND INCENTIVE PLAN
                                       FOR
                             DENBURY RESOURCES INC.
 
 
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                                                    TABLE OF CONTENTS
 
 
1.   Purpose.................................................................1
2.   Definitions.............................................................1
     (a)      "Administrator"................................................1
     (b)      "Agreed Price".................................................1
     (c)      "Applicable Laws"..............................................1
     (d)      "Award"........................................................1
     (e)      "Board"........................................................1
     (f)      "Broker Assisted Exercise".....................................1
     (g)      "Cause"........................................................2
     (h)      "Change in Control"............................................2
     (i)      "Change in Control Price"......................................3
     (j)      "Code".........................................................3
     (k)      "Committee"....................................................3
     (l)      "Common Stock".................................................3
     (m)      "Company"......................................................3
     (n)      "Date of Grant"................................................3
     (o)      "Director".....................................................3
     (p)      "Disability"...................................................3
     (q)      "Effective Date"...............................................3
     (r)      "Eligible Person(s)"...........................................3
     (s)      "Employee(s)"..................................................4
     (t)      "Fair Market Value"............................................4
     (u)      "Holder".......................................................4
     (v)      "Incentive Stock Option".......................................4
     (w)      "Investment Committee".........................................4
     (x)      "Limited SAR"..................................................4
     (y)      "Non-Qualified Stock Option"...................................4
     (z)      "Option".......................................................4
     (aa)     "Option Price".................................................4
     (bb)     "Parent".......................................................4
     (cc)     "Performance Award"............................................4
     (dd)     "Performance Measures".........................................5
     (ee)     "Performance Period"...........................................5
     (ff)     "Plan".........................................................5
     (gg)     "Plan Year"....................................................5
     (hh)     "Reserved Shares"..............................................5
     (ii)     "Restriction(s)" "Restricted"..................................5
     (jj)     "Restricted Period"............................................5
     (kk)     "Restricted Shares"............................................5
     (ll)     "Restricted Share Award".......................................5
     (mm)     "Restricted Share Distributions"...............................5
     (nn)     "SAR"..........................................................5
     (oo)     "Share(s)".....................................................6
 
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     (pp)     "Spread".......................................................6
     (qq)     "Separation"...................................................6
     (rr)     "Subsidiary"...................................................6
     (ss)     "1933 Act".....................................................6
     (tt)     "1934 Act".....................................................6
     (uu)     "Vested".......................................................6
     (vv)     "10% Person"...................................................6
3.   Award of Reserved Shares................................................6
4.   Conditions for Grant of Awards..........................................7
5.   Grant of Options........................................................8
6.   Option Price............................................................8
7.   Exercise of Options.....................................................9
8.   Vesting of Options......................................................9
9.   Termination of Option Period...........................................10
10.  Acceleration...........................................................11
11.  Adjustment of Reserved Shares..........................................11
12.  Transferability of Awards..............................................13
13.  Issuance of Reserved Shares............................................13
14.  Administration of the Plan.............................................13
15.  Tax Withholding........................................................15
16.  Restricted Share Awards................................................15
17.  Performance Awards.....................................................16
18.  Stock Appreciation Rights and Limited Stock Appreciation Rights........17
19.  Section 83(b) Election.................................................20
20.  Interpretation.........................................................20
21.  Amendment and Discontinuation of the Plan..............................20
22.  Effective Date and Termination Date....................................21
 
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                    2004 OMNIBUS STOCK AND INCENTIVE PLAN FOR
 
                             DENBURY RESOURCES INC.
 
     1. Purpose. The purpose of this Plan is to advance the interests of Denbury
Resources  Inc.,  a Delaware  Corporation,  and  increase  shareholder  value by
providing additional incentives to attract,  retain and motivate those qualified
and  competent  employees  and  Directors,  upon whose  efforts and judgment its
success is largely dependent.
 
     2. Definitions.  As used herein, the following terms shall have the meaning
indicated:
 
     (a) "Administrator" shall mean the person(s) designated by the Committee to
carry out  nondiscretionary  administrative  duties with respect to the Plan and
Awards.
 
     (b) "Agreed  Price"  shall relate to the grant of an Award in the form of a
SAR or Limited  SAR, and shall mean the value  assigned to the Award's  Reserved
Shares  which  will  form the basis for  calculating  the  Spread on the date of
exercise  of the SAR or Limited  SAR,  which  assigned  value  shall be the Fair
Market Value of such Reserved Shares on the Date of Grant.
 
     (c) "Applicable Laws" means the requirements relating to the administration
of stock option plans under U.S. state corporate  laws,  U.S.  federal and state
securities  laws, and the Code;  and the similar laws of any foreign  country or
jurisdiction where Options are, or will be, granted.
 
     (d) "Award" shall mean either an Option,  a SAR, a Restricted  Share Award,
or a Performance  Award,  except that where it shall be  appropriate to identify
the specific  type of Award,  reference  shall be made to the  specific  type of
Award;  and provided,  further,  that  references to Award shall be deemed to be
references  to the  written  agreement  evidencing  such  Award,  and  provided,
finally,  without limitation,  that unless expressly provided to the contrary in
the terms of the Award, in the event of a conflict between the terms of the Plan
and the terms of an Award, the terms of the Plan are controlling.
 
     (e) "Board" shall mean the Board of Directors of the Parent.
 
     (f) "Broker  Assisted  Exercise"  shall mean a special sale and  remittance
procedure pursuant to which the Holder of an Option shall  concurrently  provide
irrevocable written  instructions to (a) an Administrator  designated  brokerage
firm ("Broker") to effect the immediate sale of the Reserved Shares and remit to
the  Administrator,  out of the sale proceeds  available on the settlement date,
sufficient  funds  to cover  the  aggregate  Option  Price  plus all  applicable
Federal,  state and local income and employment taxes required to be withheld by
the  Company,  and (b) the  Administrator  to deliver the  certificates  for the
Shares directly to such brokerage firm in order to complete the sale.
 
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     (g) "Cause"  shall mean either (i) a final,  nonappealable  conviction of a
Holder for commission of a felony  involving moral  turpitude,  or (ii) Holder's
willful gross  misconduct that causes  material  economic harm to the Company or
that brings substantial discredit to the Company's reputation.
 
     (h) "Change in Control"shall mean any one of the following:
 
          (1)  "Continuing  Directors"  no longer  constitute  a majority of the
     Board; the term  "Continuing  Director" means any individual who has served
     in such capacity for one year or more;
 
          (2) after the Effective  Date,  any person or group of persons  acting
     together  as an  entity  (other  than  the  Texas  Pacific  Group  and  its
     Affiliates)  become (i) the  beneficial  owners  (as  defined in Rule 13d-3
     under  the  Securities  Exchange  Act of  1934,  as  amended)  directly  or
     indirectly,  of shares of common stock representing thirty percent (30%) or
     more of the  voting  power of the  Company's  then  outstanding  securities
     entitled generally to vote for the election of the Company's Directors, and
     (ii) the largest  beneficial  owner directly or indirectly of the Company's
     then outstanding  securities entitled generally to vote for the election of
     the Company's Directors;
 
          (3) the merger or consolidation to which the Company is a party if (i)
     the stockholders of the Company  immediately prior to the effective date of
     such merger or consolidation have beneficial  ownership (as defined in Rule
     13d-3  under the  Exchange  Act) of less than  forty  percent  (40%) of the
     combined  voting  power  to  vote  for the  election  of  directors  of the
     surviving  corporation or other entity following the effective date of such
     merger  or  consolidation;  or  (ii)  fifty  percent  (50%)  or more of the
     individuals   constituting   the  members  the  Investment   Committee  are
     terminated due to the Change in Control; or
 
          (4) the sale of all or substantially all, of the assets of the Company
     or the liquidation or dissolution of the Company.
 
          (5) Notwithstanding the foregoing  provisions of this Section 2(h), if
     a Holder's  Separation is for a reason other than for Cause, and occurs not
     more than 90 days  prior to the date on which a Change in  Control  occurs,
     for purposes of Awards,  such termination  shall be deemed to have occurred
     immediately following a Change in Control.
 
          (6)  Notwithstanding   anything  herein  to  the  contrary,  under  no
     circumstances  will a change in the  constitution of the board of directors
     of any Subsidiary,  a change in the beneficial ownership of any Subsidiary,
 
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     the merger or consolidation of a Subsidiary with any other entity, the sale
     of  all  or  substantially  all of the  assets  of  any  Subsidiary  or the
     liquidation  or  dissolution  of any  Subsidiary  constitute  a "Change  in
     Control" under this Plan.
 
     (i)  "Change in  Control  Price"  shall mean the higher of (i) the  highest
price per  Share  paid in any  transaction  reported  on the NYSE or such  other
exchange or market as is the principal  trading market for the Common Stock,  or
(ii) the highest price per share paid in any bona fide transaction  related to a
Change in Control,  at any time during the 60 day period  immediately  preceding
such occurrence; with such occurrence date to be determined by the Committee.
 
     (j)  "Code"  shall  mean  the  Internal  Revenue  Code of  1986,  as now or
hereafter amended.
 
     (k)  "Committee"  shall  mean  the  Compensation  Committee  of the  Board,
provided, further, that in granting Performance Awards, Committee shall refer to
only those members of the  Compensation  Committee  who are "Outside  Directors"
within the meaning of Section 162(m) of the Code.
 
     (l) "Common  Stock" shall mean the common  stock,  $.001 par value,  of the
Parent.
 
     (m) "Company" shall mean, individually and collectively, the Parent and the
Subsidiaries,  except that when it shall be appropriate to refer only to Denbury
Resources Inc., the reference will be to "Parent".
 
     (n) "Date of Grant" shall mean the date on which the Committee takes formal
action to grant an Award,  provided  that it is followed,  as soon as reasonably
practicable, by written notice to the Eligible Person receiving the Award.
 
     (o) "Director" shall mean a member of the Board.
 
     (p) "Disability" shall mean a Holder's present incapacity resulting from an
injury or illness (either mental or physical)  which, in the reasonable  opinion
of the Administrator based on such medical evidence as it deems necessary,  will
result in death or can be expected to continue  for a period of at least  twelve
(12)  months and will  prevent the Holder from  performing  the normal  services
required of the Holder by the Company;  provided,  however, that such disability
did not result,  in whole or in part:  (i) from  chronic  alcoholism;  (ii) from
addiction  to  narcotics;  (ii) from a  felonious  undertaking;  or (iv) from an
intentional self-inflicted wound.
 
     (q) "Effective Date" shall mean May 12, 2004.
 
     (r)  "Eligible  Person(s)"  shall  mean  those  persons  or  entities,   as
applicable, who are Employees, or non-employee
         Directors.
 
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     (s) "Employee(s)" shall mean each person whose customary work schedule is a
minimum of thirty (30) hours per week,  and who is  designated as an employee on
the books of the Company.
 
     (t) "Fair  Market  Value" per Share on the date of  reference  shall be the
Closing Price on such date,  provided,  further,  that if the actual transaction
involving the Shares occurs at a time when the New York Stock Exchange is closed
for regular trading,  then it shall be the most recent Closing Price;  provided,
further,  that "Closing  Price" means the closing price of the Shares on the New
York Stock Exchange as reported in any newspaper of general circulation.
 
     (u)  "Holder"  shall  mean,  at each time of  reference,  each  person with
respect to whom an Award is in effect;  provided,  further,  that  following the
death of a Holder,  it shall  refer to the person who  succeeds to the rights of
such Holder.
 
     (v)  "Incentive  Stock  Option"  shall mean an Option that is an  incentive
stock option as defined in Section 422 of the Code.
 
     (w)  "Investment   Committee"   shall  mean  the  committee  of  that  name
established  by the Board,  who shall be solely  responsible  for  selecting its
members,  and whose members on the Effective  Date are Messrs.  Gareth  Roberts,
Ronald T. Evans, Mark Worthey and Phil Rykhoek.
 
     (x) "Limited SAR" shall mean a limited stock  appreciation right as defined
in Section 18 hereof.
 
     (y)  "Non-Qualified  Stock  Option"  shall  mean an  Option  that is not an
Incentive Stock Option.
 
     (z)  "Option"  (when  capitalized)  shall  mean the  grant of the  right to
purchase  Reserved Shares through the payment of the Option Price and taking the
form of either an Incentive Stock Option or a Non-Qualified Stock Option; except
that,  where it shall be  appropriate  to  identify a  specific  type of Option,
reference  shall be made to the  specific  type of  Option;  provided,  further,
without limitation, that a single Option may include both Incentive Stock Option
and Non-Qualified Stock Option provisions.
 
     (aa)  "Option  Price"  shall  mean the price per  Reserved  Share  which is
required  to be paid by the  Holder  in order to  exercise  his or her  right to
acquire the Reserved Share under the terms of the Option.
 
     (bb) "Parent" shall mean Denbury Resources Inc.
 
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     (cc) "Performance  Award" shall mean the award which is granted  contingent
upon the attainment of the performance objectives during the Performance Period,
all as described more fully in Section 17.
 
     (dd)  "Performance  Measures" shall mean one or more of the following:  (i)
earnings per share, (ii) return on average common equity,  (iii) pre-tax income,
(iv) pre-tax operating income, (v) net revenue,  (vi) net income,  (vii) profits
before  taxes,  (viii) book value per share,  (ix) changes in amounts of oil and
gas reserves,  (x) changes in production rates, (xi) net asset value,  (xii) net
asset value per share, (xiii) sales, (xiv) finding costs, or (xv) operating cost
reductions,  but shall not include  remaining in the employ of the Company for a
specified period of time.
 
     (ee)  "Performance  Period"  shall mean the period  described in Section 17
with respect to which the performance objectives relate.
 
 
     (ff)  "Plan"  shall mean this 2004  Omnibus  Stock and  Incentive  Plan for
Denbury Resources Inc.
 
 
     (gg) "Plan Year" shall mean the calendar year.
 
 
     (hh)  "Reserved  Shares" shall mean,  at each time of reference,  the total
number of Shares  described in Section 3 with respect to which the Committee may
grant an  Award,  all of which  Reserved  Shares  shall be held in the  Parent's
treasury or shall be made  available  from the Parent's  authorized and unissued
Shares.
 
 
     (ii) "Restriction(s)"  "Restricted" and similar shall mean the restrictions
applicable  to  Reserved  Shares  subject  to  an  Award  which   constitute  "a
substantial  risk of forfeiture"  of such Reserved  Shares within the meaning of
Section 83(a)(1) of the Code.
 
 
     (jj)  "Restricted  Period"  shall mean the period  during which  Restricted
Shares are subject to Restrictions.
 
 
     (kk)  "Restricted  Shares"  shall mean the  Reserved  Shares  granted to an
Eligible Person which are subject to Restrictions;  provided,  further, that the
Committee may, in its sole  discretion,  determine that the  Restrictions  which
otherwise would have been imposed have been fully satisfied on the Date of Grant
by reason of prior service  and/or other  considerations,  and thus provide that
such Restricted Shares shall be fully Vested on the Date of Grant.
 
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     (ll) "Restricted Share Award" shall mean the award of Restricted Shares.
 
     (mm)  "Restricted  Share  Distributions"  shall mean any  amounts,  whether
Shares,  cash or other  property  (other than  regular cash  dividends)  paid or
distributed by the Parent with respect to Restricted  Shares during a Restricted
Period.
 
     (nn) "Retirement Vesting Date" shall mean the first birthday of a Holder on
which that Holder has attained the later of (i) his 60th birthday,  and (ii) the
birthday  on which  that  Holder  attains  an age  equal to (x) 65 minus (y) the
number which  results from  multiplying  (A) fifty  percent (50%) times (B) that
Holder's  full years of  service  as an  Employee  on such  birthday,  with such
product of (A) and (B) rounded  down to the nearest  whole  number  before being
deducted from 65. For example only,  and without  limiting the generality of the
foregoing,  a Holder who has completed 70 months of service  (i.e., 5 full years
of  service)  as an Employee on his 62nd  birthday  will not have  attained  his
Retirement Vesting Date, whereas a Holder who has completed 72 months of service
(i.e.,  6 full years of service) as an Employee on his 62nd  birthday  will have
attained his Retirement Vesting Date.
 
     (oo) "SAR" shall mean a stock  appreciation  right as defined in Section 18
hereof.
 
     (pp) "Share(s)" shall mean a share or shares of Common Stock.
 
     (qq) "Spread"  shall mean the difference  between the Option Price,  or the
Agreed Price, as the case may be, of the Share(s) on the date of the Award,  and
the Fair Market Value of such Share(s) on the date of reference.
 
     (rr)  "Separation"  shall mean the date on which a Holder ceases to have an
employment  relationship  with the Company for any  reason,  including  death or
Disability;   and  provided,   further,  without  limitation,   such  employment
relationship will cease, in the case of a non-Employee Director, upon his or her
ceasing to be a  Director;  provided,  however,  that a  Separation  will not be
considered to have occurred while an Employee is on sick leave,  military leave,
or any other  leave of absence  approved by the  Company,  if the period of such
leave does not exceed 90 days, or, if longer, so long as the Employee's right to
redeployment with the Company is guaranteed either by statute or by contract.
 
     (ss) "Subsidiary" shall mean, where the Award is an Incentive Stock Option,
a "subsidiary  corporation",  whether now or hereafter  existing,  as defined in
Section 424(f) of the Code,  and on the case of any other Award,  shall mean any
entity which would be a subsidiary  corporation  as defined in Section 424(f) of
the  Code if it  were a  corporation.  Notwithstanding  the  foregoing,  Genesis
Energy, Inc. shall not be considered a Subsidiary for purposes of this Plan.
 
     (tt) "1933 Act" shall mean the Securities Act of 1933, as amended.
 
     (uu) "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
 
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     (vv)  "Vested"  and similar  terms  shall mean the number of Option  Shares
which have become  nonforfeitable  and the number of Restricted  Shares on which
the Restrictions have lapsed;  provided,  further, and without limitation,  that
the lapse of Restrictions  based on the attainment of performance  objectives is
also a Vesting event.
 
     (ww) "10%  Person"  shall mean a person who owns  directly  (or  indirectly
through attribution under Section 425(d) of the Code) at the Date of Grant of an
Incentive  Stock Option,  stock  possessing  more than 10% of the total combined
voting  power of all  classes of voting  stock (as defined in Section 424 of the
Code) of the Parent on the Date of Grant.
 
     3. Award of Reserved Shares.
 
     (a) As of the Effective Date,  2,500,000  Shares shall  automatically,  and
without further action,  become Reserved Shares.  Notwithstanding the foregoing,
not more than 1,375,000 Reserved Shares may be issued under the Plan as a result
of the Vesting of  Restricted  Stock or  Performance  Awards.  To the extent any
Award shall  terminate,  expire or be canceled,  the Reserved  Shares subject to
such  Award  (or with  respect  to which the Award is  measured),  shall  remain
Reserved Shares. Where an Award is settled on a basis other than the issuance of
Reserved  Shares,  the Reserved  Shares which  measured the amount of such Award
settlement shall be canceled and no longer considered Reserved Shares.
 
     (b) Notwithstanding  any provision in this Plan to the contrary,  no person
whose  compensation  may be subject to the  limitations on  deductibility  under
Section  162(m)  of the  Code  shall  be  eligible  for a grant  during a single
calendar  year of an Award with  respect to, or measured  by, more than  500,000
Reserved Shares. The limitation under this Section 3(b) shall be construed so as
to comply with the requirements of Section 162(m) of the Code.
 
     4. Conditions for Grant of Awards.
 
     (a) Without  limiting the  generality of the  provisions  hereof which deal
specifically  with each form of Award,  Awards shall only be granted to such one
or more Eligible Persons as shall be selected by the Committee.
 
     (b) In granting  Awards,  the Committee shall take into  consideration  the
contribution the Eligible Person has made or may be reasonably  expected to make
to the  success of the  Company and such other  factors as the  Committee  shall
determine.  The  Committee  shall also have the  authority  to consult  with and
receive  recommendations  from officers and other  personnel of the Company with
regard to these matters.  The Committee may from time to time in granting Awards
under the Plan prescribe such terms and conditions  concerning such Awards as it
deems  appropriate,   including,  without  limitation,   relating  an  Award  to
achievement of specific  goals  established by the Committee or to the continued
employment of the Eligible Person for a specified period of time,  provided that
such terms and conditions are not inconsistent with the provisions of this Plan.
 
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     (c) Incentive Stock Options may be granted only to Employees, and all other
Awards may be granted to any Eligible Person.
 
     (d) The Plan  shall not confer  upon any  Holder any right with  respect to
continuation of employment by the Company,  or any right to provide  services to
the  Company,  nor  shall it  interfere  in any way with his or her right or the
Company's right to terminate his or her employment at any time.
 
     (e) The Awards granted to Eligible  Persons shall be in addition to regular
salaries,  pension,  life  insurance or other benefits (if any) related to their
service to the Company,  and nothing herein shall be deemed to limit the ability
of the  Company  to enter  into any  other  compensation  arrangements  with any
Eligible Person.
 
     (f) The  Administrator  shall  determine  in each case  whether  periods of
military or government  service shall constitute a continuation of employment or
service for the purposes of this Plan or any Award.
 
     (g) Notwithstanding any provision hereof to the contrary,  each Award which
in whole or in part involves the issuance of Reserved Shares may provide for the
issuance of such Reserved  Shares for  consideration  consisting of cash or cash
equivalents,  or  such  other  consideration  as the  Committee  may  determine,
including (without limitation) as compensation for past services rendered.
 
     (h)  The  Committee  may  delegate  in  writing  to the  Administrator  the
authority to grant Awards to new  Employees of the Company,  provided  that such
authority  contains limits on the maximum amount or number of Awards (on both an
individual  basis and, if the Committee so  designates,  on an aggregate  basis)
that the Administrator may grant under such authority. Such authority shall also
designate the terms and conditions for these grants.
 
     5. Grant of Options.
 
     (a) The Committee may grant Options to Eligible  Persons from time to time,
alone,  in addition to, or in tandem with,  other Awards granted under the Plan.
An Option  granted  hereunder  shall be either an  Incentive  Stock  Option or a
Non-Qualified  Stock Option,  and shall clearly state whether it is (in whole or
in part) an Incentive  Stock Option or a Non-Qualified  Stock Option;  provided,
further,  that failure of an Option  designated as an Incentive  Stock Option to
qualify as an  Incentive  Stock  Option  will not affect its  validity,  and the
portion  which  does  not  qualify  as an  Incentive  Stock  Option  shall  be a
Non-Qualified Stock Option.
 
     (b) If both  Incentive  Stock Options and  Non-Qualified  Stock Options are
granted to a Holder, the right to exercise, to the full extent thereof,  Options
of either type shall not be contingent in whole or in part upon the exercise of,
or failure to exercise, Options of the other type.
 
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     (c) The aggregate Fair Market Value (determined as of the Date of Grant) of
the  Reserved  Shares  with  respect  to which  any  Incentive  Stock  Option is
exercisable  for the first time by a Holder  during any calendar  year under the
Plan and all such plans of the  Company  (as defined in Section 425 of the Code)
shall not exceed  $100,000;  provided,  further,  without  limitation,  that any
portion of an Option  designated as an Incentive Stock Option which exceeds such
$100,000 limit will,  notwithstanding  such  designation,  be a validly  granted
Non-Qualified Stock Option.
 
     (d) The  Committee  may at any time offer to buy out for a payment in cash,
an  Option  previously  granted,  based  on such  terms  and  conditions  as the
Committee shall establish and as communicated to the Holder by the Administrator
at the time that such offer is made.
 
     6. Option Price.
 
     (a) The Option Price shall be any price  determined by the Committee  which
is not less than one hundred  percent  (100%) of the Fair Market Value per Share
on the Date of Grant; provided,  however, that in the case of an Incentive Stock
Option  granted to a 10% Person the Option  Price shall not be less than 110% of
the Fair Market Value per Share on the Date of Grant.  The  Administrator  shall
determine the Fair Market Value per Share.
 
     (b) Unless further limited by the Committee in any Option, the Option Price
may be paid in cash, by certified or cashier's check, by wire transfer, by money
order, through a Broker Assisted Exercise,  with Shares (but with Shares only if
expressly permitted by the terms of the Option and only with Shares owned by the
Holder for at least 6 months prior to the exercise date), or by a combination of
the above; provided, however, that the Administrator may accept a personal check
in full or partial payment. If the Option Price is permitted to be, and is, paid
in whole or in part with Shares,  the value of the Shares  surrendered  shall be
the Shares' Fair Market Value on the date delivered to the Administrator.
 
     7. Exercise of Options.
 
     An Option shall be deemed exercised when (i) the Administrator has received
written notice of such exercise in accordance with the terms of the Option,  and
(ii) full payment of the aggregate  Option Price plus required  withholding  tax
amounts, if any, described in Section 15, of the Reserved Shares as to which the
Option is exercised has been made.  Separate stock  certificates shall be issued
by the Parent for any  Reserved  Shares  acquired as a result of  exercising  an
Incentive Stock Option and a Non-Qualified Stock Option.
 
     8. Vesting of Options.
 
     (a) Without  limitation,  each Option  shall Vest in whole or in part,  and
shall expire,  according to the terms of the Option.  Unless otherwise expressly
provided in an Option, each Option which is not an Annual Option as described in
Section 8(b) below, shall Vest, and Reserved Shares subject to such Option shall
become Vested  Option  Shares,  on the dates set forth in the following  Vesting
Schedule:
 
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          (1) 25% of the Reserved Shares on the first anniversary of the Date of
     Grant;
 
          (2) 25% of the Reserved  Shares on the second  anniversary of the Date
     of Grant;
 
          (3) 25% of the Reserved Shares on the third anniversary of the Date of
     Grant; and
 
          (4) 25% of the Reserved  Shares on the fourth  anniversary of the Date
     of Grant.
 
     (b) Except as otherwise  expressly provided in such Option, an Option which
is expressly  designated as an "Annual"  Option shall not Vest, and shall remain
100%  forfeitable,  until the fourth (4th) anniversary of its Date of Grant, and
on such fourth (4th)  anniversary  of its Date of Grant such Annual Option shall
become 100% Vested,  and all Reserved Shares subject to such Annual Option shall
become Vested Option Shares.
 
     (c) The Committee, in its sole discretion, may accelerate the date on which
all or any portion of an otherwise unvested Option shall Vest or restrictions on
Restricted Shares will lapse.
 
     9. Termination of Option Period.
 
     (a) Unless the terms of an Option expressly provide for a different date of
termination,  the  unexercised  portion  of an Option  shall  automatically  and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
 
          (1) on the 90th  day  following  Holder's  Separation  for any  reason
     except death, Disability or for Cause; or
 
          (2) immediately  upon Separation as a result,  in whole or in material
     part, of a discharge for Cause; or
 
          (3) on the first  anniversary  of a  Separation  by reason of death or
     Disability;
 
          (4) in the case of a 10% Person,  on the fifth (5th )  anniversary  of
     the Date of Grant; or
 
          (5) on the tenth (10th) anniversary of the Date of Grant.
 
     (b) Notwithstanding any provision of the Plan to the contrary, in the event
of the proposed  dissolution or liquidation of the Parent,  or in the event of a
proposed sale of all or substantially  all of the assets of the Company,  or the
proposed  merger of the Parent with or into another  corporation  (collectively,
 
                                       10
<PAGE>
 
the "Transaction"), unless otherwise expressly provided (by express reference to
this Section 9(b)) in the terms of an Option,  after the public  announcement of
the  Transaction,  the  Committee  may,  in  its  sole  discretion,  direct  the
Administrator to deliver a written notice ("Cancellation  Notice") to any Holder
of an Option,  canceling the unexercised  Vested portion  (including the portion
which  becomes  Vested by  reason  of  acceleration),  if any,  of such  Option,
effective  on the  date  specified  in the  Cancellation  Notice  ("Cancellation
Date").  Notwithstanding the forgoing,  the Cancellation Date may not be earlier
than  the  last  to  occur  of  (i)  the  15th  day  following  delivery  of the
Cancellation  Notice,  and (ii) the 60th day prior to the proposed  date for the
consummation of the  Transaction  ("Proposed  Date").  Without  limitation,  the
Cancellation  Notice will provide  that,  unless the Holder elects in writing to
waive,  in whole or in part, a  Conditional  Exercise,  that the exercise of the
Option will be a Conditional Exercise. A "Conditional  Exercise" shall mean that
in the event the  Transaction  does not occur  within  180 days of the  Proposed
Date, the exercising  Holder shall be refunded any amounts paid to exercise such
Holder's  Option,  such Option will be reissued,  and the purported  exercise of
such Option shall be null and void ab intitio.
 
     10. Acceleration.
 
     (a) Unless  otherwise  expressly  provided  in the Award,  in the event the
Holder's  Separation  is by reason of the Holder's  death,  or  Disability,  all
Awards  granted to the Holder  shall become fully  exercisable,  Vested,  or the
Restricted  Period  shall  terminate,  as the  case may be  (hereafter,  in this
Section 10, such Award shall be "accelerated").
 
     (b) Unless  otherwise  expressly  provided  in an Award,  in the event of a
Change in Control  (i) all  Awards  shall be  accelerated,  and (ii) in the sole
discretion of the  Committee,  the value of some or all Awards may be cashed out
on the basis of the  Change in  Control  Price,  at any time  during  the 60 day
period  immediately  preceding any bona fide transaction  related to a Change in
Control; provided,  further, that if a date prior to such occurrence is selected
for a cash out, any  subsequent  increase in the Change in Control Price will be
paid to each Holder on the date of such  occurrence,  or as soon  thereafter  as
reasonably possible.
 
     11. Adjustment of Reserved Shares.
 
     (a) If at any time  while the Plan is in effect or Awards  with  respect to
Reserved Shares are outstanding,  there shall be any increase or decrease in the
number of issued and  outstanding  Shares  through  the  declaration  of a stock
dividend  or  through  any  recapitalization  resulting  in  a  stock  split-up,
combination or exchange of Shares, then and in such event:
 
          (i)  appropriate  adjustment  shall be made in the  maximum  number of
     Reserved  Shares which may be granted under Section 3, and equitably in the
     Reserved  Shares  which are then  subject to each  Award,  so that the same
     proportion  of the  Parent's  issued and  outstanding  Common  Stock  shall
     continue to be subject to grant under Section 3, and to such Award, and
 
                                       11
<PAGE>
 
          (ii) in addition,  and without  limitation,  in the case of each Award
     (including,  without  limitation,  Options)  which  requires the payment of
     consideration  by the  Holder  in  order to  acquire  Reserved  Shares,  an
     appropriate  equitable  adjustment  shall  be  made  in  the  consideration
     (including,  without  limitation  the Option Price)  required to be paid to
     acquire the each Reserved Share, so that (i) the aggregate consideration to
     acquire all of the Reserved  Shares  subject to the Award  remains the same
     and, (ii) so far as possible, (and without disqualifying an Incentive Stock
     Option) the relative cost of acquiring  each Reserved Share subject to such
     Award remains the same.
 
All such determinations shall be made by the Board in its sole discretion.
 
     (b) The Committee may change,  or may direct the  Administrator  to change,
the terms of Options  outstanding  under this Plan,  with  respect to the Option
Price or the number of Reserved Shares subject to the Options, or both, when, in
the Committee's  judgment,  such adjustments  become  appropriate by reason of a
corporate transaction (as defined in Treasury Regulation ss. 1.425-1(a)(1)(ii));
provided,  however, that if by reason of such corporate transaction an Incentive
Stock Option is assumed or a new Incentive Stock Option is substituted therefor,
the Committee, or at the direction of the Committee, the Administrator, may only
change the terms of such Incentive  Stock Option such that (i) the excess of the
aggregate Fair Market Value of the Shares subject to the  substituted  Incentive
Stock  Option  immediately  after  the  substitution  or  assumption,  over  the
aggregate  Option Price of such Shares at such time, is not more than the excess
of the  aggregate  Fair  Market  Value of all  Reserved  Shares  subject  to the
Incentive Stock Option  immediately  before such substitution or assumption over
the aggregate  Option Price of such Reserved  Shares at such time,  and (ii) the
substituted  Incentive Stock Option, or the assumption of the original Incentive
Stock Option does not give the Holder additional  benefits which such Holder did
not have  under the  original  Incentive  Stock  Option.  Without  limiting  the
generality  of any  other  provisions  hereof,  including,  without  limitation,
Section 21, except to the minimum extent,  if any, required by Section 424(a) of
the Code with  respect to  Incentive  Stock  Options,  no change  made under the
authority  of this  Section  11(b) in the terms of an Option  shall  alter  such
Option's  material  provisions  in a way that makes such Option less valuable to
its Holder.
 
     (c) Except as  otherwise  expressly  provided  herein,  the issuance by the
Parent of shares of its capital stock of any class,  or  securities  convertible
into shares of capital stock of any class, either in connection with direct sale
for  adequate  consideration,  or upon the  exercise  of rights or  warrants  to
subscribe  therefor,  or upon  conversion of shares or obligations of the Parent
convertible  into such  shares or other  securities,  shall not  affect,  and no
adjustment  by reason  thereof  shall be made with respect to,  Reserved  Shares
subject to Awards granted under the Plan.
 
     (d) Without  limiting the  generality  of the  foregoing,  the existence of
outstanding  Awards with respect to Reserved Shares granted under the Plan shall
not affect in any manner the right or power of the Parent to make,  authorize or
 
                                       12
<PAGE>
 
consummate (1) any or all  adjustments,  recapitalizations,  reorganizations  or
other changes in the Parent's capital structure or its business;  (2) any merger
or consolidation of the Parent;  (3) any issue by the Parent of debt securities,
or preferred  or  preference  stock which would rank above the  Reserved  Shares
subject to outstanding Awards; (4) the dissolution or liquidation of the Parent;
(5) any  sale,  transfer  or  assignment  of all or any  part of the  assets  or
business of the Company;  or (6) any other corporate act or proceeding,  whether
of a similar character or otherwise.
 
     12.  Transferability  of Awards.  Each Award shall  provide that such Award
shall not be  transferable  by the Holder  otherwise than by will or the laws of
descent and distribution,  and that so long as an Holder lives, only such Holder
or his or her guardian or legal  representative shall have the right to exercise
such Incentive Stock Option.
 
     13.  Issuance of Reserved  Shares.  No Holder  shall be, or have any of the
rights or privileges of, the owner of Reserved Shares subject to an Award unless
and until certificates representing such Common Stock shall have been issued and
delivered to such Holder.  As a condition of any issuance of Common  Stock,  the
Administrator  may  obtain  such  agreements  or  undertakings,  if any,  as the
Administrator may deem necessary or advisable to assure compliance with any such
law or  regulation or  shareholder  agreement  including,  but not limited to, a
representation,  warranty or  agreement  to be bound by any legends that are, in
the opinion of the  Administrator,  necessary or  appropriate to comply with the
provisions of any securities law deemed by the Administrator to be applicable to
the  issuance  of the  Reserved  Shares  and which are  endorsed  upon the Share
certificates.
 
     Share certificates  issued to the Holder receiving such Reserved Shares who
is a party to any shareholders agreement, voting trust, or any similar agreement
shall  bear  the  legends  contained  in such  agreements.  Notwithstanding  any
provision  hereof to the  contrary,  no Reserved  Shares shall be required to be
issued  with  respect  to an  Award  unless  counsel  for the  Parent  shall  be
reasonably  satisfied that such issuance will be in compliance  with  applicable
federal or state securities laws.
 
     In no event shall the Company be required to sell or issue Reserved  Shares
under any Award if the sale or issuance  thereof would constitute a violation of
applicable  federal or state  securities law or regulation or a violation of any
other law or regulation of any governmental authority or any national securities
exchange. As a condition to any sale or issuance of Reserved Shares, the Company
may place legends on Reserved Shares,  issue stop transfer  orders,  and require
such  agreements or  undertakings as the Company may deem necessary or advisable
to assure compliance with any such law or regulation.
 
     Without limitation,  the Company shall use its best efforts to register the
Reserved Shares with the Securities and Exchange Commission under a Form S-8.
 
                                       13
<PAGE>
 
     14. Administration of the Plan.
 
     (a) The Plan shall be  administered  by the Committee  and,  except for the
powers reserved to the Board in Section 21 hereof,  the Committee shall have all
of the administrative powers under the Plan. Without limitation,  all members of
the Committee must be independent  Directors under  applicable  rules of the New
York Stock Exchange.
 
     (b) The Committee,  from time to time, may adopt rules and  regulations for
carrying out the purposes of the Plan and, without limitation,  may delegate all
of what, in its sole discretion, it determines to be primarily administrative or
ministerial  duties to the  Administrator.  The  determinations  under,  and the
interpretations  of, any  provision of the Plan or an Award by the Committee (or
the Administrator in the exercise of his administrative authority) shall, in all
cases, be in its sole discretion, and shall be final and conclusive.
 
     (c) Any and all determinations  and  interpretations of the Committee shall
be made  either (i) by a majority  vote of the  members  of the  Committee  at a
meeting  duly  called,  with at least 2 days  prior  notice,  or (ii)  without a
meeting, by the written approval of all members of the Committee.
 
     (d) No member of the Committee,  or the Administrator,  shall be liable for
any action taken or omitted to be taken by such member or by any other member of
the  Committee  or by the  Administrator  with  respect to the Plan,  and to the
extent of  liabilities  not otherwise  insured  under a policy  purchased by the
Company, the Company does hereby indemnify and agree to defend and save harmless
any  member  of the  Committee,  and  the  Administrator,  with  respect  to any
liabilities asserted or incurred in connection with the exercise and performance
of their powers and duties  hereunder,  unless such  liabilities  are judicially
determined to have arisen out of such person's  gross  negligence,  fraud or bad
faith. Such  indemnification  shall include  attorney's fees and all other costs
and expenses  reasonably incurred in defense of any action arising from such act
of commission or omission. Nothing herein shall be deemed to limit the Company's
ability to insure itself with respect to its obligations hereunder.
 
     (e) In particular, and without limitation, except for the authority granted
to the  Administrator  under  Section 4(h) to make  determinations  described in
subsections (i), (ii), and (iii) below while carrying out the general delegation
by the  Committee  with  respect  to the grant of Awards to new  Employees,  the
Committee shall have the sole authority, consistent with the terms of the Plan:
 
          (i) to determine  whether and to what extent  Awards are to be granted
     hereunder to one or more Eligible Persons;
 
          (ii) to determine the number of Reserved  Shares to be covered by each
     such Award granted hereunder;
 
                                       14
<PAGE>
 
          (iii) to  determine  the terms  and  conditions  of any Award  granted
     hereunder,  and to amend or waive any such terms and  conditions  except to
     the extent, if any, expressly prohibited by the Plan;
 
          (iv) to determine  whether and under what  circumstances an Option may
     be settled in Restricted Shares instead of Reserved Shares;
 
          (v) to determine whether, to what extent, and under what circumstances
     Awards  under  the Plan  are to be made,  and  operate,  on a tandem  basis
     vis-a-vis other Awards under the Plan; and
 
          (vi) to determine (or to delegate to the  Administrator  the authority
     to determine) whether to permit payment of tax withholding  requirements in
     Shares.
 
     (f) Without  limitation,  Committee (and the  Administrator in carrying out
his  responsibilities  under  Section  4(h)) shall have the  authority to adopt,
alter,  and repeal  any or all of its  rules,  guidelines,  and  practices  with
respect to the Plan,  and all questions of  interpretation,  with respect to the
Plan or any Award shall be decided by the Committee (or by the  Administrator in
carrying out his duties under  Section  4(h)),  whose  decision  shall be final,
conclusive and binding upon the Company and each other affected party.
 
     (g) Without limitation,  the Committee in its sole discretion may limit the
authority  granted,  or  previously  granted,  hereunder by the Committee to the
Administrator by notifying the Administrator in writing of such change.
 
     15. Tax Withholding. On or immediately prior to the date on which a payment
is made to a Holder  hereunder  or, if  earlier,  the date on which an amount is
required to be included in the income of the Holder as a result of an Award, the
Holder  shall be required to pay to the Company,  in cash,  or in Shares (but in
Shares only if expressly permitted in the Award, or by written  authorization of
the  Administrator,  and then only in the minimum amount required to satisfy the
minimum  withholding  requirements  with respect to such Award),  the amount (if
any) which the Company  reasonably  determines  to be necessary in order for the
Company to comply with applicable federal or state tax withholding requirements,
and the collection of employment taxes; provided,  further,  without limitation,
that the Administrator may require that such payment be made in cash.
 
     16. Restricted Share Awards.
 
     (a) The  Committee  may grant Awards of  Restricted  Shares to any Eligible
Person,  for no cash  consideration,  for such minimum  consideration  as may be
required by applicable law, or for such other  consideration as may be specified
in the grant.  The terms and conditions of Restricted  Shares shall be specified
in the Award.  The  Committee,  in its sole  discretion,  shall  determine  what
rights,  if any, the person to whom an Award of Restricted  Shares is made shall
have in the Restricted Shares during the Restriction Period and the Restrictions
 
                                       15
<PAGE>
 
applicable  to  the  particular  Award,  including  whether  the  holder  of the
Restricted  Shares  shall have the right to vote the  Restricted  Shares and the
extent,  if any, of Holder's right to receive  Restricted  Share  Distributions.
Unless otherwise  provided in the Restricted Share Award, upon the expiration of
Restrictions, the Restricted Shares shall cease to be Restricted Shares.
 
     (b) The  Restrictions  on  Restricted  Shares  shall lapse in whole,  or in
installments,   over  whatever  Restricted  Period  shall  be  selected  by  the
Committee.
 
     (c) Without  limitations,  the Committee may  accelerate  the date on which
Restrictions lapse with respect to any Restricted Shares.
 
     (d)  During  the  Restricted  Period,  the  certificates  representing  the
Restricted Shares, and any Restricted Share  Distributions,  shall be registered
in the Holder's name and bear a restrictive  legend disclosing the Restrictions,
the  existence of the Plan,  and the existence of such  Restricted  Share Award.
Such  certificates  shall be deposited by the Holder with the Company,  together
with stock powers or other  instruments of  assignment,  each endorsed in blank,
which  will  permit the  transfer  to the  Company of all or any  portion of the
Restricted Shares, and any assets constituting  Restricted Share  Distributions,
which shall be forfeited in accordance with the terms of such  Restricted  Share
Award.  Restricted Shares shall constitute  issued and outstanding  Common Stock
for all  corporate  purposes  and the Holder  shall have all rights,  powers and
privileges  of a holder of  unrestricted  Shares except those that are expressly
excluded under the terms of the Restricted  Share Award,  and Holder will not be
entitled to delivery of the stock certificates until all Restrictions shall have
terminated,  and the Company will retain custody of all related Restricted Share
Distributions  (which  will be  subject  to the same  Restrictions,  terms,  and
conditions  as the  related  Restricted  Shares)  until  the  conclusion  of the
Restricted Period with respect to the related  Restricted  Shares; and provided,
further,  that any Restricted Share  Distributions shall not bear interest or be
segregated  into a  separate  account  but shall  remain a general  asset of the
Company, subject to the claims of the Company's creditors,  until the conclusion
of the applicable  Restricted Period; and provided,  finally,  that any material
breach of any terms of the Restricted  Share Award, as reasonably  determined by
the  Administrator,  will  cause a  forfeiture  of both  Restricted  Shares  and
Restricted Share Distributions.
 
     17. Performance Awards.
 
     (a) Performance  Awards during a Plan Year may be granted only to the Chief
Executive  Officer and the four (4) highest paid employees as of the last day of
such Plan Year ("Covered  Employees"),  and shall in all events be  specifically
designated as Performance Awards.  Nothing herein shall be construed as limiting
the  Committee's  authority to grant other types of Awards to Eligible  Persons,
including Covered  Employees,  conditioned on the satisfaction of such criteria,
including those comprising the Performance  Measures,  as the Committee,  in its
sole discretion, may select.
 
     (b) Without limitation, the Committee's grant of Performance Awards may, in
its sole discretion, be made in Reserved Shares, or in cash, or in a combination
of Reserved  Shares and cash,  but the cash portion of such Award may not exceed
$500,000 in a Plan Year.
 
                                       16
<PAGE>
 
     (c) The  Committee  shall  select the  Performance  Measures  which will be
required  to be  satisfied  during the  Performance  Period in order to earn the
Performance  Award.  Such  Performance   Measures,   and  the  duration  of  any
Performance  Period,  may differ with respect to each Covered Employee,  or with
respect to separate Performance Awards issued to the same Covered Employee.  The
selected  Performance  Measures,  the  Performance  Period(s),   and  any  other
conditions to the Company's  obligation to pay a Performance  Award shall be set
forth in each Performance  Award on or before the first to occur of (i) the 90th
day of the selected  Performance  Period, (ii) the first date on which more than
25% of the Performance Period has elapsed,  and (iii) the first date, if any, on
which  satisfaction  of the  Performance  Measure(s) is no longer  substantially
uncertain.
 
     (d)  Performance   Awards  may  be  payable  in  a  single  payment  or  in
installments  but may not be paid in whole or in part prior to the date on which
the  Performance  Measures  are  attained,  except  that  such  payment  may  be
accelerated upon the death or Disability of the Covered Employee, or as a result
of a Change in Control,  it being  understood that if such  acceleration  events
occur prior to the attainment of the Performance Measures, the Performance Award
will not be exempt from Section 162(m) of the Code.
 
     (e) The  extent  to which any  applicable  performance  objective  has been
achieved  shall  be  conclusively  determined  by  the  Committee,  but  may  be
specifically delegated to the Administrator. Without limitation, where a Covered
Employee has  satisfied the  Performance  Measures with respect to a Performance
Award, if permitted under the terms of such Performance Award, the Committee, in
its  sole  discretion,   may  reduce  the  maximum  amount  payable  under  such
Performance Award.
 
     18. Stock Appreciation Rights and Limited Stock Appreciation Rights
 
     (a) The Committee  shall have  authority to grant (i) a SAR with respect to
Reserved Shares, including,  without limitation,  Reserved Shares covered by any
Option ("Related Option"),  or (ii) a Limited SAR with respect to all or some of
the Reserved  Shares covered by any Option,  or (iii) a SAR with respect to , or
as to some or all of, a Performance Award ("Related  Performance  Award"). A SAR
or Limited SAR granted with respect to a related  Option or Related  Performance
Award  must be granted  on the Date of Grant of such  Related  Option or Related
Performance Award.
 
     (b) For the purposes of this Section 18, the  following  definitions  shall
apply:
 
          (i) The term "Offer" shall mean any tender offer or exchange offer for
     thirty percent (30%) or more of the outstanding Common Stock of the Parent,
     other than one made by the Parent; provided that the corporation, person or
     other entity  making the Offer  acquires at least five percent (5%) of such
     Common Stock pursuant to such Offer.
 
                                       17
<PAGE>
 
          (ii) The term "Offer Price Per Share" shall mean the highest price per
     Share  paid in any Offer  which is in effect at any time  during the period
     beginning on the  sixtieth  (60th) day prior to the date on which a Limited
     SAR is  exercised  and  ending  on the date on  which  the  Limited  SAR is
     exercised.  Any  securities  or  properties  which are a part or all of the
     consideration  paid or to be paid for  Common  Stock in the Offer  shall be
     valued in  determining  the Offer  Price Per Share at the higher of (1) the
     valuation placed on such securities or properties by the person making such
     Offer, or (2) the valuation  placed on such securities or properties by the
     Administrator.
 
          (iii) The term  "Limited  SAR" shall mean a right  granted  under this
     Plan with respect to a Related Option or Related  Performance  Award,  that
     shall  entitle the Holder to an amount in cash equal to the Offer Spread in
     the event an Offer is made.
 
          (iv) The term "Offer Spread" shall mean,  with respect to each Limited
     SAR,  an amount  equal to the  product  of (1) the  excess of (A) the Offer
     Price Per Share immediately  preceding the date of exercise over (B) (x) if
     the Limited SAR is granted in tandem with an Option,  then the Option Price
     per Share of the Related  Option,  or (y) if the Limited SAR is issued with
     respect  to a  Performance  Award,  the  Agreed  Price  under  the  Related
     Performance  Award,  multiplied  by (2) the number of Reserved  Shares with
     respect to which such  Limited SAR is being  exercised;  provided,  however
     that with  respect to any Limited  SAR granted in tandem with an  Incentive
     Stock  Option,  in no event  shall  the  Offer  Spread  exceed  the  amount
     permitted  to be  treated as the Offer  Spread  under  applicable  Treasury
     Regulations or other legal authority without disqualifying the Option as an
     Incentive Stock Option.
 
          (v) The  term  "SAR"  shall  mean a right  granted  under  this  Plan,
     including,  without  limitation,  a right  granted in tandem with an Award,
     that shall entitle the Holder  thereof to an amount equal to the SAR Spread
     payable as described in Section 18(d).
 
          (vi) The term "SAR  Spread"  shall  mean with  respect  to each SAR an
     amount  equal to the product of (1) the excess of (A) the Fair Market Value
     per Share on the date of  exercise,  over (B) (x) if the SAR is  granted in
     tandem  with an Option,  then the Option  Price per  Reserved  Share of the
     Related  Option,  (y) if the SAR is  granted in tandem  with a  Performance
     Award, the Agreed Price under the Related  Performance Award, or (z) if the
     SAR is granted by itself with  respect to a  designated  number of Reserved
     Shares,  the Agreed Price  which,  without  limitation,  is the Fair Market
     Value of the Reserved  Shares on the Date of Grant, in each case multiplied
     by (2) the  number of  Reserved  Shares  with  respect to which such SAR is
     being exercised;  provided,  however, without limitation, that with respect
     to any SAR granted in tandem with an Incentive  Stock  Option,  in no event
     shall the SAR Spread  exceed the amount  permitted to be treated as the SAR
 
                                       18
<PAGE>
 
     Spread  under  applicable  Treasury  Regulations  or other legal  authority
     without disqualifying the Option as an Incentive Stock Option.
 
     (c) To exercise the SAR or Limited SAR, the Holder shall:
 
          (i) Give written notice thereof to the Company,  specifying the SAR or
     Limited SAR being  exercised and the number or Reserved Shares with respect
     to which such SAR or Limited SAR is being exercised, and
 
          (ii) If requested by the Company, deliver within a reasonable time the
     agreement  evidencing  the SAR or  Limited  SAR  being  exercised  and,  if
     applicable,  the Related Option  agreement,  or Related  Performance  Award
     agreement, to the Secretary of the Company who shall endorse or cause to be
     endorsed  thereon a notation of such exercise and return all  agreements to
     the Holder.
 
     (d) As soon as practicable  after the exercise of a SAR or Limited SAR, the
Company shall transfer to the Holder  Reserved Shares having a Fair Market Value
on the date the SAR or Limited SAR is exercised  equal to either the SAR Spread,
or the Offer Spread, as the case may be; provided, however, without limiting the
generality of Section 15, that the Company, in its sole discretion, may withhold
from such  transferred  Reserved  Shares any  amount  necessary  to satisfy  the
Company's  minimum  obligation  for  federal  and state  withholding  taxes with
respect to such exercise.
 
     (e) A SAR or Limited SAR may be exercised only if and to the extent that it
is  permitted  under  the  terms of the  Award  which,  in the case of a Related
Option,  shall be only when such  Related  Option is eligible  to be  exercised;
provided,  however,  a Limited  SAR may be  exercised  only  during  the  period
beginning on the first day  following  the date of  expiration  of the Offer and
ending on the thirtieth (30th) day following such date.
 
     (f) Upon the exercise or termination of a Related Option, or the payment or
termination of a Related  Performance Award, the SAR or Limited SAR with respect
to such Related Option or Related Performance Award likewise shall terminate.
 
     (g) A SAR or Limited SAR shall be transferable  (i) only to the extent,  if
any,  provided in the  agreement  evidencing  the SAR,  or (ii) if granted  with
respect to a Related Option, or Related  Performance  Award, only to the extent,
if any, that such Related Option, or Related Performance Award, is transferable,
and under the same conditions.
 
     (h) Each SAR or  Limited  SAR  shall be on such  terms and  conditions  not
inconsistent with this Plan as the Committee may determine.
 
     (i) The Holder  shall have no rights as a  stockholder  with respect to the
related Reserved Shares as a result of the grant of a SAR or Limited SAR.
 
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<PAGE>
 
     (j) With  respect to a Holder who, on the date of a proposed  exercise of a
SAR or  Limited  SAR,  is an  officer  (as  that  term is  used  in  Rule  16a-1
promulgated  under the 1934 Act or any similar rule which may subsequently be in
effect),  such  proposed  exercise  may only occur as  permitted  by Rule 16b-3,
including without  limitation  paragraph  (e)(3)(iii) (or any similar rule which
may subsequently be in effect promulgated  pursuant to Section 16(b) of the 1934
Act).
 
     19. Section 83(b) Election.
 
     If as a result of receiving an Award, a Holder receives  Restricted Shares,
then such Holder may elect under  Section 83(b) of the Code to include in his or
her gross income, for his or her taxable year in which the Restricted Shares are
transferred  to such  Holder,  the excess of the Fair Market  Value  (determined
without regard to any  Restriction  other than one which by its terms will never
lapse), of such Restricted Shares at the Date of Grant, over the amount (if any)
paid for the Restricted  Shares.  If the Holder makes the Section 83(b) election
described  above,  the Holder  shall (i) make such  election in a manner that is
satisfactory to the Administrator, (ii) provide the Administrator with a copy of
such  election,  (iii)  agree to  promptly  notify the  Company if any  Internal
Revenue  Service  or state  tax  agent,  on audit or  otherwise,  questions  the
validity or correctness  of such election or of the amount of income  reportable
on  account of such  election,  and (iv)  agree to pay the  withholding  amounts
described in Section 15.
 
     20. Vesting of Awards Upon Retirement.
 
     Unless  otherwise  expressly  provided  in the  Award or in the  Plan,  the
unvested  portion  of each  Award  granted  to a Holder  in the form of  Option
Shares,  SARs, Limited SARs or Restricted Shares and owned by that HOlder on the
date of that  Holder's  Separation  will vest 100% on the date of that  Holder's
Separation  if, and only if,  such  Separation  occurs on or after the date that
Holder attains their Retirement Vesting Date.
 
     21. Interpretation.
 
     (a) If any  provision  of the Plan is held  invalid  for any  reason,  such
holding shall not affect the remaining  provisions  hereof, but instead the Plan
shall be construed and enforced as if such  provision had never been included in
the Plan.
 
     (b) THIS PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
 
     (c) Headings contained in this Agreement are for convenience only and shall
in no manner be construed as part of this Plan.
 
     (d) Any reference to the masculine,  feminine,  or neuter gender shall be a
reference to such other gender as is appropriate.
 
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<PAGE>
 
     (e) Nothing  contained in this Plan shall  prevent the Board from  adopting
other or additional compensation  arrangements,  subject to shareholder approval
if such  approval is required;  and such  arrangements  may be either  generally
applicable or applicable only in specific cases.
 
     22. Amendment and  Discontinuation of the Plan. The Board, or the Committee
(subject to the prior written authorization of the Board), may from time to time
amend the Plan or any  Award;  provided,  however,  that  (except  to the extent
provided  in  Section  9(b)) no such  amendment  may,  without  approval  by the
shareholders of the Parent, (a) increase the number of Reserved Shares or change
the class of Eligible  Persons,  (b) permit the  granting of Awards which expire
beyond the maximum 10-year period described in Section 9(a)(5),  or (c) make any
change  for  which  applicable  law  or  regulatory   authority  (including  the
regulatory  authority  of the NYSE or any other  market or exchange on which the
Common  Stock  is  traded)  would  require  shareholder  approval  or for  which
shareholder  approval  would be  required  under  Section  162(m) of the Code to
secure complete  deductibility of all  compensation  paid as a result of Awards;
and provided,  further, that no amendment or suspension of the Plan or any Award
issued hereunder shall,  except as specifically  permitted in this Plan or under
the terms of such Award,  substantially  impair any Award previously  granted to
any Holder without the consent of such Holder.
 
     23. Effective Date and Termination  Date. The Plan shall be effective as of
its  Effective  Date,  and  shall  terminate  on the tenth  anniversary  of such
Effective Date;  provided,  further,  without limitation,  that unless otherwise
expressly  provided in an Award, the termination of the Plan shall not terminate
an Award which is outstanding on such date.
 
 
                                            DENBURY RESOURCES INC.
 
 
                                            By______________________________
 
 
 
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