
<PAGE>
 
                                                                    EXHIBIT 10.3


                         CAREER EDUCATION CORPORATION



                   1998 EMPLOYEE INCENTIVE COMPENSATION PLAN
<PAGE>
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
 
                                                                        Page
<C>                 <S>                                                 <C>
ARTICLE I      ESTABLISHMENT...........................................   1
     1.1       Purpose.................................................   1

ARTICLE II     DEFINITIONS.............................................   1
     2.1       "Affiliate".............................................   1
     2.2       "Agreement".............................................   1
     2.3       "Award".................................................   1
     2.4       "Beneficiary"...........................................   1
     2.5       "Board of Directors" or "Board".........................   2
     2.6       "Cash Incentive Award"..................................   2
     2.7       "Cause".................................................   2
     2.8       "Change in Control" and "Change in Control Price".......   2
     2.9       "Code" or "Internal Revenue Code".......................   2
     2.10      "Commission"............................................   2
     2.11      "Committee".............................................   2
     2.12      "Common Stock"..........................................   2
     2.13      "Company"...............................................   2
     2.14      "Covered Employee"......................................   3
     2.15      "Deferred Stock"........................................   3
     2.16      "Disability"............................................   3
     2.17      "Dividend Equivalent"...................................   3
     2.18      "Effective Date"........................................   3
     2.19      "Exchange Act"..........................................   3
     2.20      "Fair Market Value".....................................   3
     2.21      "Grant Date"............................................   4
     2.22      "Incentive Stock Option"................................   4
     2.23      "Initial Public Offering"...............................   4
     2.24      "Nasdaq"................................................   4
     2.25      "Non-Qualified Stock Option"............................   4
     2.26      "Option Period".........................................   4
     2.27      "Option Price"..........................................   4
     2.28      "Other Stock-Based Awards"..............................   4
     2.29      "Participant"...........................................   4
     2.30      "Performance Award".....................................   4
     2.31      "Plan"..................................................   4
     2.32      "Representative"........................................   4
     2.33      "Restricted Stock"......................................   5
     2.34      "Retirement"............................................   5
     2.35      "Rule 16b-3"............................................   5
     2.36      "Securities Act"........................................   5
     2.37      "Stock Appreciation Right"..............................   5
     2.38      "Stock Option" or "Option"..............................   5
     2.39      "Termination of Employment".............................   5
</TABLE>

                                       i
<PAGE>
 
<TABLE>
<CAPTION>
<C>       <S>                                                           <C>
     2.40      "Transfer"..............................................   5

ARTICLE III    ADMINISTRATION..........................................   6
     3.1       Committee Structure and Authority.......................   6

ARTICLE IV     STOCK SUBJECT TO PLAN...................................   8
     4.1       Number of Shares........................................   8
     4.2       Release of Shares.......................................   8
     4.3       Restrictions on Shares..................................   8
     4.4       Stockholder Rights......................................   8
     4.5       Reasonable Efforts To Register..........................   9
     4.6       Anti-Dilution...........................................   9

ARTICLE V      ELIGIBILITY.............................................   9
     5.1       Eligibility.............................................   9
     5.2       Per Person Award Limitations............................  10

ARTICLE VI     STOCK OPTIONS...........................................  10
     6.1       General.................................................  10
     6.2       Grant and Exercise......................................  10
     6.3       Terms and Conditions....................................  10
     6.4       Termination by Reason of Death..........................  12
     6.5       Termination by Reason of Disability.....................  12
     6.6       Other Termination.......................................  12
     6.7       Cashing Out of Option...................................  13

ARTICLE VII    STOCK APPRECIATION RIGHTS...............................  13
     7.1       General.................................................  13
     7.2       Grant...................................................  13
     7.3       Terms and Conditions....................................  13

ARTICLE VIII   RESTRICTED STOCK........................................  15
     8.1       General.................................................  15
     8.2       Awards and Certificates.................................  15
     8.3       Terms and Conditions....................................  15

ARTICLE IX     DEFERRED STOCK..........................................  16
     9.1       General.................................................  16
     9.2       Terms and Conditions....................................  17

ARTICLE X      OTHER AWARDS............................................  18
     10.1      Bonus Stock and Awards In Lieu of Obligations...........  18
     10.2      Dividend Equivalents....................................  18
     10.3      Other Stock-Based Awards................................  18
     10.4      Performance Awards......................................  18

</TABLE>


                                      ii
<PAGE>
 
<TABLE> 
<CAPTION> 
<C>       <S>                                                                           <C> 
ARTICLE XI     PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER
               THE PLAN.............................................................     21
     11.1      Limited Transfer During Offering.....................................     21
     11.2      Committee Discretion.................................................     21
     11.3      No Company Obligation................................................     21

ARTICLE XII    CHANGE IN CONTROL PROVISIONS.........................................     22
     12.1      Impact of Event......................................................     22
     12.2      Definition of Change in Control......................................     22
     12.3      Change in Control Price..............................................     23

ARTICLE XIII   MISCELLANEOUS........................................................     23
     13.1      Amendments and Termination...........................................     23
     13.2      Stand-Alone, Additional, Tandem, and Substitute Awards...............     24
     13.3      Form and Timing of Payment Under Awards; Deferrals...................     24
     13.4      Status of Awards Under Code Section 162(m)...........................     24
     13.5      Unfunded Status of Plan; Limits on Transferability...................     25
     13.6      General Provisions...................................................     25
     13.7      Mitigation of Excise Tax.............................................     26
     13.8      Rights with Respect to Continuance of Employment.....................     27
     13.9      Awards in Substitution for Awards Granted by Other Corporations......     27
     13.10     Procedure for Adoption...............................................     27
     13.11     Procedure for Withdrawal.............................................     27
     13.12     Delay................................................................     27
     13.13     Headings.............................................................     27
     13.14     Severability.........................................................     27
     13.15     Successors and Assigns...............................................     28
     13.16     Entire Agreement.....................................................     28
</TABLE> 
                                      iii
<PAGE>
 
                         CAREER EDUCATION CORPORATION
                   1998 EMPLOYEE INCENTIVE COMPENSATION PLAN


                                   ARTICLE I
                                   ---------

                                 ESTABLISHMENT
                                 -------------

     1.1  Purpose.

     The Career Education Corporation 1998 Employee Incentive Compensation Plan
is hereby established by Career Education Corporation. The purpose of the Plan
is to promote the overall financial objectives of the Company and its
stockholders by motivating those persons selected to participate in the Plan to
achieve long-term growth in stockholder equity in the Company and by retaining
the association of those individuals who are instrumental in achieving this
growth. At the time the Company is a publicly held corporation, if any, it is
intended that compensation awarded under the Plan qualifies for tax
deductibility under Section 162(m) of the Code to the extent deemed appropriate
by the Committee (as defined herein). The Plan and the grant of awards hereunder
are expressly conditioned upon the Plan's approval by the stockholders of the
Company. If such approval is not obtained, then this Plan and all Awards (as
defined herein) hereunder shall be null and void ab initio. The Plan is adopted,
subject to stockholder approval, effective as of the date the Commission (as
defined herein) declares effective the registration statement on Form S-1
relating to the Initial Public Offering (as defined herein).


                                  ARTICLE II
                                  ----------

                                  DEFINITIONS
                                  -----------

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

     2.1  "Affiliate" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.

     2.2  "Agreement" or "Award Agreement" means, individually or collectively,
any agreement entered into pursuant to the Plan pursuant to which an Award is
granted to a Participant.

     2.3  "Award" means any Option, Stock Appreciation Right, Restricted Stock,
Deferred Stock, Stock, Dividend Equivalent, Other Stock-Based Award, Performance
Award or Cash Incentive Award, together with any other right or interest granted
to a Participant under the Plan.

     2.4  "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in such Participant's most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death
<PAGE>
 
or to which Awards or other rights are transferred if and to the extent
permitted hereunder.  If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary means
the person, persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

     2.5  "Board of Directors" or "Board" means the Board of Directors of the
Company.

     2.6  "Cash Incentive Award" means a conditional right granted to a
Participant under Section 10.4(c) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified period.

     2.7  "Cause" shall mean, for purposes of whether and when a Participant has
incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or an Affiliate for "cause" as defined in such
agreement or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term "cause" or
a substantially equivalent term, then Cause shall mean (a) any act or omission
which the Company believes is of a criminal nature and the result of which the
Company believes is detrimental to the interests of the Company or an Affiliate,
(b) the material breach of a fiduciary duty owing to the Company, including,
without limitation, fraud or embezzlement or (c) conduct, or the omission of
conduct, on the part of the Participant which constitutes a material breach of
any statutory or common-law duty of loyalty to the Company or an Affiliate.

     2.8  "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 12.2 and 12.3, respectively.

     2.9  "Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.

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

     2.11 "Committee" means the Compensation Committee of the Board and/or such
other individuals designated by the Board to administer the Plan.

     2.12 "Common Stock" means the shares of the Company's Common Stock, $.01
par value, whether presently or hereafter issued, and any other stock or
security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the purpose
of the Plan.

     2.13 "Company" means Career Education Corporation, a Delaware corporation,
and includes any successor or assignee corporation or corporations into which
the Company may be merged, changed or consolidated; any corporation for whose
securities the securities of the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of the Company.

                                       2
<PAGE>
 
     2.14  "Covered Employee" means a Participant who is a "covered employee"
within the meaning of Section 162(m) of the Code.

     2.15  "Deferred Stock" means a right, granted to a Participant under
Section 9.1 hereof, to receive Common Stock, cash or a combination thereof at
the end of a specified deferral period.

     2.16  "Disability" means a mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self-inflicted injury or willfully self-
induced sickness; or (ii) an injury or disease contracted, suffered, or incurred
while participating in a felony criminal offense.  Determination of Disability
shall be made by the Committee.  Determination of Disability for purposes of
this Plan shall not be construed to be an admission of disability for any other
purpose.

     2.17  "Dividend Equivalent" means a right, granted to a Participant under
Section 10.2, to receive cash, Common Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Common Stock.

     2.18 "Effective Date" means the date the Commission declares effective the
registration statement on Form S-1 relating to the Initial Public Offering.

     2.19  "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

     2.20  "Fair Market Value" means the value determined on the basis of the
good faith determination of the Committee, without regard to whether the Common
Stock is restricted or represents a minority interest, pursuant to the
applicable method described below:

          (a)  if the Common Stock is listed on a national securities exchange
     or quoted on Nasdaq, the closing price of the Common Stock on the relevant
     date (or, if such date is not a business day or a day on which quotations
     are reported, then on the immediately preceding date on which quotations
     were reported), as reported by the principal national exchange on which
     such shares are traded (in the case of an exchange) or by Nasdaq, as the
     case may be;

          (b)  if the Common Stock is not listed on a national securities
     exchange or quoted on Nasdaq, but is actively traded in the over-the-
     counter market, the average of the closing bid and asked prices for the
     Common Stock on the relevant date (or, if such date is not a business day
     or a day on which quotations are reported, then on the immediately
     preceding date on which quotations were reported), or the most recent
     preceding date for which such quotations are reported; and

          (c)  if, on the relevant date, the Common Stock is not publicly traded
     or reported as described in (a) or (b), the fair market value determined in
     good faith by the Committee.

                                       3
<PAGE>
 
     2.21  "Grant Date" means the date as of which an Agreement is entered into
pursuant to the Plan.

     2.22  "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" which satisfies the requirements of
Section 422 of the Code.

     2.23  "Initial Public Offering" means the Company's initial public offering
of Common Stock under the Securities Act.

     2.24  "Nasdaq" means The Nasdaq Stock Market, including the Nasdaq National
Market.

     2.25  "Non-Qualified Stock Option" means an Option which is not an
Incentive Stock Option.

     2.26  "Option Period" means the period during which an Option shall be
exercisable in accordance with the related Agreement and Article VI.

     2.27  "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 6.3(b).

     2.28  "Other Stock-Based Awards" means Awards granted to a Participant
under Section 10.3 hereof.

     2.29  "Participant" means a person who satisfies the eligibility conditions
of Article V and with whom an Agreement has been entered into under the Plan,
and in the event a Representative is appointed for a Participant or another
person becomes a Representative, then the term "Participant" shall mean such
Representative. The term shall also include a trust for the benefit of the
Participant, the Participant's parents, spouse or descendants, or a custodian
under a uniform gifts to minors act or similar statute for the benefit of the
Participant's descendants, to the extent permitted by the Committee.
Notwithstanding the foregoing, the term "Termination of Employment" shall mean
the Termination of Employment of the person to whom the Award was originally
granted.

     2.30  "Performance Award" means a right, granted to a Participant under
Section 10.4 hereof, to receive Awards based upon performance criteria specified
by the Committee.

     2.31  "Plan" means the Career Education Corporation 1998 Stock Incentive
Compensation Plan, as herein set forth and as may be amended from time to time.

     2.32  "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred; provided that
only one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

                                       4
<PAGE>
 
     2.33  "Restricted Stock" means Common Stock granted to a Participant under
Section 8.1 hereof, that is subject to certain restrictions and to a risk of
forfeiture.

     2.34  "Retirement" means the Participant's Termination of Employment after
attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such a plan, or if
the Participant is not covered by such a plan, then age 65.

     2.35  "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Commission under
Section 16 of the Exchange Act.

     2.36  "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

     2.37  "Stock Appreciation Right" means a right granted under Article VII.

     2.38  "Stock Option" or "Option" means a right, granted to a Participant
under Section 6.1 hereof, to purchase Common Stock at a specified price during
specified time periods.

     2.39  "Termination of Employment" means the occurrence of any act or event
that actually or effectively causes or results in the person's ceasing, for
whatever reason, to be an officer, director or employee of, or consultant to,
the Company or of any subsidiary of the Company, or to be an officer, director
or employee of, or consultant to, any entity that provides services to the
Company or a subsidiary of the Company, including, without limitation, death,
Disability, dismissal, severance at the election of the Participant, Retirement,
or severance as a result of the discontinuance, liquidation, sale or transfer by
the Company or its subsidiaries of all businesses owned or operated by the
Company or its subsidiaries.  With respect to any person who is not an employee
with respect to the Company, an Agreement shall establish what act or event
shall constitute a Termination of Employment for purposes of the Plan.  A
transfer of employment from the Company to a subsidiary, or from a subsidiary to
the Company, will not be a Termination of Employment, unless expressly
determined by the Committee.  A Termination of Employment shall occur for an
employee who is employed by a subsidiary of the company if the subsidiary shall
cease to be a subsidiary and the Participant shall not immediately thereafter
become an employee of the Company or a subsidiary of the Company. 

     2.40  "Transfer" means any sale, gift, assignment, distribution,
conveyance, pledge, hypothecation, encumbrance or other transfer of title,
whether by operation of law or otherwise.

     In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.

                                       5
<PAGE>
 
                                  ARTICLE III
                                  -----------

                                ADMINISTRATION
                                --------------

     3.1  Committee Structure and Authority. The Plan shall be administered by a
committee (the "Committee") of the Board of Directors composed of no fewer than
two directors designated by the Board of Directors. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by all of
the members, shall be the acts of the Committee. A member of the Committee shall
not exercise any discretion respecting himself or herself under the Plan. The
Board shall have the authority to remove, replace or fill any vacancy of any
member of the Committee upon notice to the Committee and the affected member.
Any member of the Committee may resign upon notice to the Board. The Board may
select different Committees to administer Awards for different classes of
Participants. The Committee may allocate among one or more of its members, or
may delegate to one or more of its agents, such duties and responsibilities as
it determines.

     Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

          (a)  to select those persons to whom Awards may be granted from time
     to time;

          (b)  to determine whether and to what extent Awards are to be granted
     hereunder;

          (c)  to determine the number of shares of Common Stock to be covered
     by each Award granted hereunder;

          (d)  to determine the terms and conditions of any Award granted
     hereunder (including, but not limited to, any Option Price or Option
     Period, any exercise restriction or limitation or exercise acceleration,
     forfeiture or waiver, and any performance criteria);

          (e)  to adjust the terms and conditions, at any time or from time to
     time, of any Award, subject to the limitations of Section 13.1;

          (f)  to determine to what extent and under what circumstances Common
     Stock and other amounts payable with respect to an Award shall be deferred;

          (g)  to determine under what circumstances an Award may be settled in
     cash or Common Stock;

          (h)  to provide for the forms of Agreements to be utilized in
     connection with the Plan;

          (i)  to determine whether a Participant has a Disability or a
     Retirement;

                                       6
<PAGE>
 
          (j)  to determine what securities law requirements are applicable to
     the Plan, Awards and the issuance of shares of Common Stock under the Plan
     and to require of a Participant that appropriate action be taken with
     respect to such requirements;

          (k)  to cancel, with the consent of Participants or as otherwise
     provided in the Plan or an Agreement, outstanding Awards;

          (l)  to interpret and make final determinations with respect to the
     remaining number of shares of Common Stock available under this Plan;

          (m)  to require, as a condition of the exercise of an Award or the
     issuance or transfer of a certificate of Common Stock, the withholding from
     a Participant of such amount of any Federal, state or local taxes as may be
     necessary in order for the Company or any other employer to obtain a
     deduction or as may be otherwise required by law;

          (n)  to determine whether and under what circumstances a Participant
     has incurred a Termination of Employment;

          (o)  to determine whether the Company or any other person has a right
     or obligation to purchase Common Stock from a Participant and, if so, the
     terms and conditions on which such Common Stock is to be purchased;

          (p)  to determine the restrictions or limitations on the transfer of
     Common Stock;

          (q)  to determine whether an Award is to be adjusted, modified or
     purchased, or is to become fully exercisable, under the Plan or the terms
     of an Agreement;

          (r)  to determine the permissible methods of Award exercise and
     payment, including cashless exercise arrangements;

          (s)  to adopt, amend and rescind such rules and regulations as, in its
     opinion, may be advisable in the administration of the Plan; and

          (t)  to appoint and compensate agents, counsel, auditors or other
     specialists to aid it in the discharge of its duties.

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan.  The Committee's policies and
procedures may differ with respect to Awards granted at different times or to
different Participants.

     Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion and, in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term

                                       7
<PAGE>
 
of the Plan or an Agreement, at any time thereafter.  All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company and Participants.  No determination shall be
subject to de novo review if challenged in court.


                                  ARTICLE IV
                                  ----------

                             STOCK SUBJECT TO PLAN
                             ---------------------

     4.1  Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Awards under the Plan shall be 600,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares.

     4.2  Release of Shares. Subject to Section 6.3(f), if any shares of Common
Stock that are subject to any Award cease to be subject to an Award or are
forfeited, if any Award otherwise terminates without issuance of shares of
Common Stock being made to the Participant, or if any shares (whether or not
restricted) of Common Stock are received by the Company in connection with the
exercise of an Award, including the satisfaction of tax withholding, such
shares, in the discretion of the Committee, may again be available for
distribution in connection with Awards under the Plan.

     4.3  Restrictions on Shares. Shares of Common Stock issued as or in
conjunction with an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in an Agreement. The Company shall not
be required to issue or deliver any certificates for shares of Common Stock,
cash or other property prior to (i) the listing of such shares on any stock
exchange or Nasdaq (or other public market) on which the Common Stock may then
be listed (or regularly traded), (ii) the completion of any registration or
qualification of such shares under Federal or state law, or any ruling or
regulation of any government body which the Committee determines to be necessary
or advisable, and (iii) the satisfaction of any applicable withholding
obligation in order for the Company or an Affiliate to obtain a deduction with
respect to the exercise of an Award. The Company may cause any certificate for
any share of Common Stock to be delivered to be properly marked with a legend or
other notation reflecting the limitations on transfer of such Common Stock as
provided in this Plan or as the Committee may otherwise require. The Committee
may require any person exercising an Award to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of the shares of Common Stock in compliance with applicable
law or otherwise. Fractional shares shall not be delivered, but shall be rounded
to the next lower whole number of shares.

     4.4  Stockholder Rights. No person shall have any rights of a stockholder
as to shares of Common Stock subject to an Award until, after proper exercise of
the Award or other action required, such shares shall have been recorded on the
Company's official stockholder records as having been issued or transferred.
Upon exercise of an Award or any portion thereof, the Company will have thirty
(30) days in which to issue the shares, and the Participant will not be

                                       8
<PAGE>
 
treated as a stockholder for any purpose whatsoever prior to such issuance. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued or transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.

     4.5  Reasonable Efforts To Register. The Company will use its reasonable
efforts to register under the Securities Act the Common Stock delivered or
deliverable pursuant to Awards on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, when the Committee, in its sole discretion, shall deem such registration
appropriate. The Company will use its reasonable efforts to cause the
registration statement to become effective and to file such supplements and
amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the Award Period of the last Award outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Participants have disposed of all shares delivered pursuant to any
Award.

     4.6  Anti-Dilution. In the event, after the Effective Date, of any Company
stock dividend, stock split, combination or exchange of shares, recapitalization
or other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off,
split-off or distribution to Company stockholders other than a normal cash
dividend), sale by the Company of all or a substantial portion of its assets
(measured on either a stand-alone or consolidated basis), reorganization, rights
offering, partial or complete liquidation, or any other corporate transaction,
Company stock offering or event involving the Company and having an effect
similar to any of the foregoing, then the Committee shall adjust or substitute,
as the case may be, the number of shares of Common Stock available for Awards
under the Plan, the number of shares of Common Stock covered by outstanding
Awards, the exercise price per share of outstanding Awards, and performance
conditions and any other characteristics or terms of the Awards as the Committee
shall deem necessary or appropriate to reflect equitably the effects of such
changes to the Participants; provided, however, that the Committee may limit any
such adjustment so as to maintain the deductibility of the Awards under Section
162(m) and that any fractional shares resulting from such adjustment shall be
eliminated by rounding to the next lower whole number of shares with appropriate
payment for such fractional shares as shall reasonably be determined by the
Committee.

                                   ARTICLE V
                                   ---------

                                  ELIGIBILITY
                                  -----------

     5.1  Eligibility. Except as herein provided, the persons who shall be
eligible to participate in the Plan and be granted Awards shall be those persons
who are directors, officers, and employees of, and consultants to, the Company
or any subsidiary of the Company, who shall be in a position, in the opinion of
the Committee, to make contributions to the growth, management, protection and
success of the Company and its subsidiaries. Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be

                                       9
<PAGE>
 
granted Awards and shall determine the terms and conditions with respect
thereto. In making any such selection and in determining the form of the Award,
the Committee may give consideration to the person's functions and
responsibilities, the person's contributions to the Company and its
subsidiaries, the value of the individual's service to the Company and its
subsidiaries and such other factors deemed relevant by the Committee.

     5.2  Per Person Award Limitations. In each fiscal year during any part of
which this Plan is in effect, a Participant may not be granted Awards relating
to more than 100,000 shares of Common Stock, subject to adjustment as provided
in Section 4.6, under each of Articles VI, VII, VIII and IX and Sections 10.1,
10.2, 10.3 and 10.4(b). In addition, the maximum aggregate amount that may be
paid out as final Cash Incentive Awards or other cash Awards in any fiscal year
to any Participant shall be $1,000,000.


                                  ARTICLE VI
                                  ----------

                                 STOCK OPTIONS
                                 -------------

     6.1  General. The Committee shall have authority to grant Stock Options
under the Plan at any time or from time to time. Stock Options may be either
Incentive Stock Options or Non-Qualified Stock Options. An Option shall entitle
the Participant to receive shares of Common Stock upon exercise of such Option,
subject to the Participant's satisfaction in full of any conditions,
restrictions or limitations imposed in accordance with the Plan or an Option
Agreement (the terms and provisions of which may differ from other Agreements),
including, without limitation, payment of the Option Price.

     6.2  Grant and Exercise. The grant of a Stock Option shall occur as of the
date the Committee determines. Each Option granted under this Plan shall be
evidenced by an Agreement, in a form approved by the Committee, which shall
embody the terms and conditions of such Option and which shall be subject to the
express terms and conditions set forth in the Plan. Such Agreement shall become
effective upon execution by the Participant. To the extent that any Stock Option
is not designated as an Incentive Stock Option or, even if so designated, does
not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified
Stock Option. Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any Incentive
Stock Option under such Section 422.

     6.3  Terms and Conditions. Stock Options shall be subject to such terms and
conditions as shall be determined by the Committee, including the following:

          (a)  Option Period. The Option Period of each Stock Option shall be
     fixed by the Committee; provided that no Stock Option shall be exercisable
     more than ten (10) years after the date the Stock Option is granted. In the
     case of an Incentive Stock Option granted to an individual who owns more
     than ten percent (10%) of the combined voting power of all classes of stock
     of the Company, a corporation which is a parent corporation

                                      10
<PAGE>
 
     of the Company or any subsidiary of the Company (each as defined in Section
     424 of the Code), the Option Period shall not exceed five (5) years from
     the date of grant.  No Option which is intended to be an Incentive Stock
     Option shall be granted more than ten (10) years from the date the Plan is
     adopted by the Company or the date the Plan is approved by the stockholders
     of the Company, whichever is earlier.

          (b) Option Price.  The Option Price per share of the Common Stock
     purchasable under an Option shall be determined by the Committee in its
     sole and absolute discretion; provided, however, that in the case of an
     Incentive Stock Option granted to an individual who owns more than ten
     percent (10%) of the combined voting power of all classes of stock of the
     Company, a corporation which is a parent corporation of the Company or any
     subsidiary of the Company (each as defined in Section 424 of the Code), the
     Option Price per share shall not be less than one hundred ten percent
     (110%) of the Fair Market Value per share on the date the Option is
     granted.

          (c) Exercisability.  Subject to Section 12.1, Stock Options shall be
     exercisable at such time or times and subject to such terms and conditions
     as shall be determined by the Committee.  If the Committee provides that
     any Stock Option is exercisable only in installments, the Committee may at
     any time waive such installment exercise provisions, in whole or in part,
     and, subject to the foregoing, may at any time accelerate the
     exercisability of any Stock Option.  If the Committee intends that an
     Option be an Incentive Stock Option, the Committee may, in its discretion,
     provide that the aggregate Fair Market Value (determined at the date the
     Option is granted) of the Common Stock as to which such Incentive Stock
     Option which is exercisable for the first time during any calendar year
     shall not exceed $100,000.

          (d) Method of Exercise.  Subject to the provisions of this Article VI,
     a Participant may exercise Stock Options, in whole or in part, at any time
     during the Option Period by the Participant's giving to the Company written
     notice of exercise on a form provided by the Committee (if available)
     specifying the number of shares of Common Stock subject to the Stock Option
     to be purchased.  Such notice shall be accompanied by payment in full of
     the purchase price by cash or check or such other form of payment as the
     Company may accept.  If set forth in an Agreement or otherwise approved by
     the Committee, payment in full or in part may also be made (i) by
     delivering Common Stock already owned by the Participant having a total
     Fair Market Value on the date of such delivery equal to the Option Price;
     (ii) by the execution and delivery of a note or other evidence of
     indebtedness (and any security agreement thereunder) satisfactory to the
     Committee and permitted in accordance with Section 6.3(e); (iii) by the
     delivery of cash or the extension of credit by a broker-dealer to whom the
     Participant has submitted a notice of exercise or otherwise indicated an
     intent to exercise the Option (in accordance with Part 220, Chapter II,
     Title 12 of the Code of Federal Regulations, so-called "cashless"
     exercise); or (iv) by any combination of the foregoing.  In the case of an
     Incentive Stock Option, the right to make a payment in the form of already
     owned shares of Common Stock of the same class as the Common Stock subject
     to the Stock Option may be authorized only at the time the Stock Option is
     granted.  No shares of Common Stock shall be issued until full payment
     therefor, as determined by the Committee, has been made.

                                       11
<PAGE>
 
          (e) Company Loan or Guarantee. Upon the exercise of any Option and
     subject to the pertinent Agreement and the discretion of the Committee, the
     Company may at the request of the Participant:

               (i) lend to the Participant an amount equal to such portion of
          the Option Price as the Committee may determine; or

               (ii) guarantee a loan obtained by the Participant from a third-
          party for the purpose of tendering the Option Price.

     The terms and conditions of any loan or guarantee, including the term,
     interest rate and any security interest thereunder and whether the loan
     shall be with recourse, shall be determined by the Committee, except that
     no extension of credit or guarantee shall obligate the Company for an
     amount to exceed the lesser of the aggregate Fair Market Value per share of
     the Common Stock on the date of exercise, less the par value of the shares
     of Common Stock to be purchased upon the exercise of the Award, or the
     amount permitted under applicable laws or the regulations and rules of the
     Federal Reserve Board and any other governmental agency having
     jurisdiction.

          (f) Non-transferability of Options.  Except as provided herein or in
     an Agreement, no Stock Option or interest therein shall be transferable by
     the Participant other than by will or by the laws of descent and
     distribution, and all Stock Options shall be exercisable during the
     Participant's lifetime only by the Participant.

     6.4  Termination by Reason of Death.  Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of ninety
(90) days following the date of the appointment of a Representative (or such
other period or no period as the Committee may specify) or until the expiration
of the Option Period, whichever period is the shorter.

     6.5  Termination by Reason of Disability.  Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Stock Option
held by such Participant shall thereafter be fully exercisable by the
Participant for the period of ninety (90) days (or such other period or no
period as the Committee may specify) immediately following the date of such
Termination of Employment or until the expiration of the Option Period,
whichever period is shorter, and the Participant's death at any time following
such Termination of Employment due to Disability shall not affect the foregoing.
In the event of the Participant's Termination of Employment by reason of
Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.

     6.6  Other Termination.  Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
due to Retirement or if the Termination of Employment is involuntary on the part
of the Participant (but is not due to death or Disability or with Cause), any
Stock Option held by such Participant shall immediately

                                       12
<PAGE>
 
terminate, except that such Stock Option, to the extent then exercisable, may be
exercised for the a period of the ninety (90) days immediately following the
date of such Termination of Employment or until the expiration of the Option
Period, whichever is shorter.  Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
which is voluntary on the part of the Participant (and is not due to Retirement)
or if the Participant's Termination of Employment is for Cause, any Stock Option
held by such Participant shall terminate immediately, without any exercise
thereof.  The death or Disability of a Participant after a Termination of
Employment otherwise provided herein shall not extend the time permitted to
exercise an Option.

     6.7  Cashing Out of Option.  On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of any Stock Option
to be exercised by paying the Participant an amount, in cash or Common Stock,
equal to the excess of the Fair Market Value of the Common Stock that is subject
to the Option over the Option Price times the number of shares of Common Stock
subject to the Option on the effective date of such cash-out.


                                  ARTICLE VII
                                  -----------

                           STOCK APPRECIATION RIGHTS
                           -------------------------

     7.1  General.  The Committee shall have authority to grant Stock
Appreciation Rights under the Plan at any time or from time to time.  Subject to
the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).

     7.2  Grant.  Stock Appreciation Rights may be granted in conjunction with
all or part of any Stock Option granted under the Plan, in which case the
exercise of the Stock Appreciation Right shall require the cancellation of a
corresponding portion of the Stock Option, and the exercise of a Stock Option
shall result in the cancellation of a corresponding portion of the Stock
Appreciation Right.  In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant of such Stock Option.  In
the case of an Incentive Stock Option, such rights may be granted only at the
time of grant of such Stock Option.  A Stock Appreciation Right may also be
granted on a stand-alone basis.  Each Stock Appreciation Right granted under
this Plan shall be evidenced by an Agreement, which shall embody the terms and
conditions of such Stock Appreciation Right and which shall be subject to the
terms and conditions set forth in this Plan.

     7.3  Terms and Conditions.  Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:

          (a) Period and Exercise.  The term of a Stock Appreciation Right shall
     be established by the Committee.  If granted in conjunction with a Stock
     Option, the Stock Appreciation Right shall have a term which is the same as
     the Option Period and shall be exercisable only at such time or times and
     to the extent the related Stock Options

                                       13
<PAGE>
 
     would be exercisable in accordance with the provisions of Article VI.  A
     Stock Appreciation Right which is granted on a stand-alone basis shall be
     for such period and shall be exercisable at such times and to the extent
     provided in an Agreement.  Stock Appreciation Rights shall be exercised by
     the Participant's giving written notice of exercise on a form provided by
     the Committee (if available) to the Company specifying the portion of the
     Stock Appreciation Right to be exercised.

          (b) Amount.  Upon the exercise of a Stock Appreciation Right granted
     in conjunction with a Stock Option, a Participant shall be entitled to
     receive an amount in cash, shares of Common Stock or both as determined by
     the Committee or as otherwise permitted in an Agreement equal in value to
     the excess of the Fair Market Value per share of Common Stock over the
     Option Price per share of Common Stock specified in the related Agreement
     multiplied by the number of shares in respect of which the Stock
     Appreciation Right is exercised.  In the case of a Stock Appreciation Right
     granted on a stand-alone basis, the Agreement shall specify the value to be
     used in lieu of the Option Price per share of Common Stock.  The aggregate
     Fair Market Value per share of the Common Stock shall be determined as of
     the date of exercise of such Stock Appreciation Right.

          (c) Non-transferability of Stock Appreciation Rights.  Stock
     Appreciation Rights shall be transferable only when and to the extent that
     a Stock Option would be transferable under the Plan, unless otherwise
     provided in an Agreement.

          (d) Termination.  A Stock Appreciation Right shall terminate at such
     time as a Stock Option would terminate under the Plan, unless otherwise
     provided in an Agreement.

          (e) Effect on Shares Under the Plan.  Upon the exercise of a Stock
     Appreciation Right, the Stock Option or part thereof to which such Stock
     Appreciation Right is related shall be deemed to have been exercised for
     the purpose of the limitation set forth in Section 4.1 on the number of
     shares of Common Stock to be issued under the Plan, but only to the extent
     of the number of shares of Common Stock covered by the Stock Appreciation
     Right at the time of exercise based on the value of the Stock Appreciation
     Right at such time.
                           
          (f) Incentive Stock Option.  A Stock Appreciation Right granted in
     tandem with an Incentive Stock Option shall not be exercisable unless the
     Fair Market Value of the Common Stock on the date of exercise exceeds the
     Option Price.  In no event shall any amount paid pursuant to the Stock
     Appreciation Right exceed the difference between the Fair Market Value on
     the date of exercise and the Option Price.

                                       14
<PAGE>
 
                                 ARTICLE VIII
                                 ------------

                                RESTRICTED STOCK
                                ----------------

     8.1  General.  The Committee shall have authority to grant Restricted Stock
under the Plan at any time or from time to time, either alone or in addition to
other Awards granted under the Plan.  The Committee shall determine the persons
to whom and the time or times at which grants of Restricted Stock will be
awarded, the number of shares of Restricted Stock to be awarded to any
Participant, the time or times within which such Awards may be subject to
forfeiture and any other terms and conditions of the Awards.  Each Award shall
be confirmed by, and be subject to the terms of, an Agreement.  The Committee
may condition the grant of Restricted Stock upon the attainment of specified
performance goals by the Participant or by the Company or an Affiliate
(including a division or department of the Company or an Affiliate) for or
within which the Participant is primarily employed or upon such other factors or
criteria as the Committee shall determine.  The provisions of Restricted Stock
Awards need not be the same with respect to any Participant.

     8.2  Awards and Certificates.  Notwithstanding the limitations on issuance
of shares of Common Stock otherwise provided in the Plan, each Participant
receiving an Award of Restricted Stock shall be issued a certificate in respect
of such shares of Restricted Stock.  Such certificate shall be registered in the
name of such Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award as determined by
the Committee.  The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Award of Restricted Stock, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.

     8.3  Terms and Conditions.  Shares of Restricted Stock shall be subject to
the following terms and conditions:

          (a) Limitations on Transferability.  Subject to the provisions of the
     Plan and the Agreement, during a period set by the Committee commencing
     with the date of such Award (the "Restriction Period"), the Participant
     shall not be permitted to sell, assign, transfer, pledge or otherwise
     encumber any interest in shares of Restricted Stock.
                              
          (b) Rights.  Except as provided in Section 8.3(a), the Participant
     shall have, with respect to shares of Restricted Stock, all of the rights
     of a stockholder of the Company holding the class of Common Stock that is
     the subject of the Restricted Stock, including, if applicable, the right to
     vote the shares and the right to receive any cash dividends.  Unless
     otherwise determined by the Committee and subject to the Plan, cash
     dividends on the class of Common Stock that is the subject of the
     Restricted Stock shall be automatically deferred and reinvested in
     additional Restricted Stock, and dividends on the class of Common Stock
     that is the subject of the Restricted Stock payable in Common Stock shall
     be paid in the form of Restricted Stock of the same class as the Common
     Stock on which such dividends were paid.

                                       15
<PAGE>
 
          (c) Acceleration.  Based on service, performance by the Participant or
     by the Company or an Affiliate, including any division or department for
     which the Participant is employed, or such other factors or criteria as the
     Committee may determine, the Committee may provide for the lapse of
     restrictions in installments and may accelerate the vesting of all or any
     part of any Award and waive the restrictions for all or any part of such
     Award.

          (d) Forfeiture.  Unless otherwise provided in an Agreement or
     determined by the Committee, if the Participant incurs a Termination of
     Employment during the Restriction Period due to death or Disability, the
     restrictions shall lapse and the Participant shall be fully vested in the
     Restricted Stock.  Unless otherwise provided in an Agreement or determined
     by the Committee, upon a Participant's Termination of Employment for any
     reason during the Restriction Period other than death or Disability, all
     shares of Restricted Stock still subject to restriction shall be forfeited
     by the Participant, except the Committee shall have the discretion to waive
     in whole or in part any or all remaining restrictions with respect to any
     or all of such Participant's Restricted Stock.

          (e) Delivery.  If and when the Restriction Period expires without a
     prior forfeiture of the Restricted Stock subject to such Restriction
     Period, certificates for such shares shall be delivered to the Participant.

          (f) Election.  A Participant may elect to further defer receipt of the
     Restricted Stock for a specified period or until a specified event, subject
     in each case to the Committee's approval and to such terms as are
     determined by the Committee.  Subject to any exceptions adopted by the
     Committee, such election must be made one (1) year prior to completion of
     the Restriction Period.


                                   ARTICLE IX
                                   ----------

                                 DEFERRED STOCK
                                 --------------
                        
     9.1  General.  The Committee shall have authority to grant Deferred Stock
under the Plan at any time or from time to time, either alone or in addition to
other Awards granted under the Plan.  The Committee shall determine the persons
to whom and the time or times at which Deferred Stock will be awarded, the
number of shares of Deferred Stock to be awarded to any Participant, the
duration of the period (the "Deferral Period") prior to which the Common Stock
will be delivered, and the conditions under which receipt of the Common Stock
will be deferred and any other terms and conditions of the Awards.  Each Award
shall be confirmed by, and be subject to the terms of, an Agreement.  The
Committee may condition the grant of Deferred Stock upon the attainment of
specified performance goals by the Participant or by the Company or an
Affiliate, including a division or department of the Company or an Affiliate for
or within which the Participant is primarily employed, or upon such other
factors or criteria as the Committee shall determine.  The provisions of
Deferred Stock Awards need not be the same with respect to any Participant.

                                       16
<PAGE>
 
     9.2  Terms and Conditions.  Deferred Stock Awards shall be subject to the
following terms and conditions:

          (a) Limitations on Transferability.  Subject to the provisions of the
     Plan and the Agreement, Deferred Stock Awards, or any interest therein, may
     not be sold, assigned, transferred, pledged or otherwise encumbered during
     the Deferral Period.  At the expiration of the Deferral Period (or Elective
     Deferral Period as defined in Section 9.2(e), where applicable), the
     Committee may elect to deliver Common Stock, cash equal to the Fair Market
     Value of such Common Stock or a combination of cash and Common Stock to the
     Participant for the shares covered by the Deferred Stock Award.

          (b) Rights.  Unless otherwise determined by the Committee and subject
     to the Plan, cash dividends on the Common Stock that is the subject of the
     Deferred Stock Award shall be automatically deferred and reinvested in
     additional Deferred Stock, and dividends on the Common Stock that is the
     subject of the Deferred Stock Award payable in Common Stock shall be paid
     in the form of Deferred Stock of the same class as the Common Stock on
     which such dividends were paid.

          (c) Acceleration.  Based on service, performance by the Participant or
     by the Company or the Affiliate, including any division or department for
     which the Participant is employed, or such other factors or criteria as the
     Committee may determine, the Committee may provide for the lapse of
     deferral limitations in installments and may accelerate the vesting of all
     or any part of any Award and waive the deferral limitations for all or any
     part of such Award.

          (d) Forfeiture.  Unless otherwise provided in an Agreement or
     determined by the Committee, if the Participant incurs a Termination of
     Employment during the Deferral Period due to death or Disability, the
     restrictions shall lapse and the Participant shall be fully vested in the
     Deferred Stock.  Unless otherwise provided in an Agreement or determined by
     the Committee, upon a Participant's Termination of Employment for any
     reason during the Deferral Period other than death or Disability, the
     rights to the shares still covered by the Award shall be forfeited by the
     Participant, except the Committee shall have the discretion to waive in
     whole or in part any or all remaining deferral limitations with respect to
     any or all of such Participant's Deferred Stock.

          (e) Election.  A Participant may elect further to defer receipt of the
     Deferred Stock payable under an Award (or an installment of an Award) for a
     specified period or until a specified event (an "Elective Deferral
     Period"), subject in each case to the Committee's approval and to such
     terms as are determined by the Committee.  Subject to any exceptions
     adopted by the Committee, such election must be made at least one (1) year
     prior to completion of the Deferral Period for the Award (or of the
     applicable installment thereof).

                                       17
<PAGE>
 
                                 ARTICLE X
                                 ---------

                                OTHER AWARDS
                                ------------

     10.1 Bonus Stock and Awards In Lieu of Obligations.  The Committee is
authorized to grant Common Stock as a bonus, or to grant Common Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property
under other plans or compensatory arrangements. Common Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by the
Committee.

     10.2 Dividend Equivalents.  The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Common
Stock, other Awards, or other property equal in value to dividends paid with
respect to a specified number of shares of Common Stock.  Dividend Equivalents
may be awarded on a free-standing basis or in connection with another Award.
The Committee may provide that Dividend Equivalents will be paid or distributed
when accrued or will be deemed to have been reinvested in additional Common
Stock, Awards or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may specify.

     10.3 Other Stock-Based Awards.  The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Common Stock, purchase rights for Common Stock,
Awards with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, and Awards valued by reference to the
book value of Common Stock or the value of securities of or the performance of
specified subsidiaries.  The Committee shall determine the terms and conditions
of such Awards.  Common Stock delivered pursuant to an Award in the nature of a
purchase right granted under this Section 10.3 shall be purchased for such
consideration and paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Common Stock, other Awards, or other
property, as the Committee shall determine.  Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to
this Section 10.3.

     10.4 Performance Awards.

          (a) Performance Conditions.  The right of a Participant to exercise or
     receive a grant or settlement of any Award, and its timing, may be subject
     to performance conditions specified by the Committee.  The Committee may
     use business criteria and other measures of performance it deems
     appropriate in establishing any performance conditions, and may exercise
     its discretion to reduce or increase the amounts payable under any Award
     subject to performance conditions, except as limited under Sections 10.4(b)
     and 10.4(c) hereof in the case of a Performance Award intended to qualify
     under Code Section 162(m).

                                       18
<PAGE>
 
     (b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to a person the
Committee regards as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant
and/or settlement of such Performance Award shall be contingent upon achievement
of preestablished performance goals and other terms set forth in this Section
10.4(b).

          (i) Performance Goals Generally. The performance goals for any such
     Performance Awards shall consist of one or more business criteria and a
     targeted level or levels of performance with respect to such criteria, as
     specified by the Committee consistent with this Section 10.4(b).
     Performance goals shall be objective and shall otherwise meet the
     requirements of Code Section 162(m), including the requirement that the
     level or levels of performance targeted by the Committee result in the
     performance goals being "substantially uncertain."

          (ii) Business Criteria. One or more of the following business criteria
     for the Company, on a consolidated basis, and/or for specified subsidiaries
     or business units of the Company (except with respect to the total
     stockholder return and earnings per share criteria), shall be used
     exclusively by the Committee in establishing performance goals for such
     Performance Awards: (1) total stockholder return; (2) such total
     stockholder return as compared to total return (on a comparable basis) of a
     publicly available index, such as, but not limited to, the Standard &
     Poor's 500 or the Nasdaq-U.S. Index; (3) net revenue; (4) net income; (5)
     pre-tax income; (6) EBITDA (earnings before interest, taxes, depreciation
     and amortization); (7) EBITDA margin (EBITDA as a percentage of net
     revenue); (8) operating income; (9) operating margin (operating income as a
     percentage of net revenue); (10) earnings per share; (11) return on equity;
     (12) return on capital; and (13) return on investment. The foregoing
     business criteria shall also be exclusively used in establishing
     performance goals for Cash Incentive Awards granted under Section 10.4(c)
     hereof.

          (iii) Performance Period: Timing For Establishing Performance Goals.
     Achievement of performance goals in respect of such Performance Awards
     shall be measured over such periods as may be specified by the Committee.
     Performance goals shall be established on or before the dates that are
     required or permitted for "performance-based compensation" under Code
     Section 162(m).

          (iv) Settlement of Performance Awards; Other Terms. Settlement of such
     Performance Awards may be in cash or Common Stock, or other Awards, or
     other property, in the discretion of the Committee. The Committee may, in
     its discretion, reduce the amount of a settlement otherwise to be made in
     connection with such Performance Awards, but may not exercise discretion to
     increase any such amount payable in respect of a Performance Award subject
     to this Section 10.4(b). The Committee shall specify the circumstances in
     which such Performance Awards shall be forfeited or paid in the event of a
     Termination of Employment or a Change in Control prior to the end of a
     performance period or

                                       19
<PAGE>
 
     settlement of Performance Awards, and other terms relating to such
     Performance Awards.

     (c) Cash Incentive Awards Granted to Designated Covered Employees. The
Committee may grant Cash Incentive Awards to Participants including those
designated by the Committee as likely to be Covered Employees, which Awards
shall represent a conditional right to receive a payment in cash, unless
otherwise determined by the Committee, after the end of a specified fiscal year
or fiscal quarter or other period specified by the Committee, in accordance with
this Section 10.4(c).

          (i) Cash Incentive Award. The Cash Incentive Award for Participants
     the Committee regards as likely to be regarded as Covered Employees shall
     be based on achievement of a performance goal or goals based on one or more
     of the business criteria set forth in Section 10.4(b), and may be based on
     such criteria for any other Participant. The Committee may specify the
     amount of the individual Cash Incentive Award as a percentage of any such
     business criteria, a percentage thereof in excess of a threshold amount or
     another amount which need not bear a strictly mathematical relationship to
     such business criteria. The Committee may establish a Cash Incentive Award
     pool that includes Participants the Committee regards likely to be Covered
     Employees, which shall be an unfunded pool, for purposes of measuring
     Company performance in connection with Cash Incentive Awards. The amount of
     the Cash Incentive Award pool shall be based upon the achievement of a
     performance goal or goals based on one or more of the business criteria set
     forth in Section 10.4(b) hereof in the given performance period, as granted
     by the Committee. The Committee may specify the amount of the Cash
     Incentive Award pool as a percentage of any of such business criteria, a
     percentage thereof in excess of a threshold amount or another amount which
     need not bear a strictly mathematical relationship to such business
     criteria.

          (ii) Potential Cash Incentive Awards. Not later than the date required
     or permitted for "qualified performance-based compensation" under Code
     Section 162(m), the Committee shall determine the Participants who will
     potentially receive Cash Incentive Awards for the specified fiscal year,
     quarter or other period, either as individual Cash Incentive Awards or out
     of an Cash Incentive Award pool established by such date and the amount or
     method for determining the amount of the individual Cash Incentive Award or
     the amount of such Participant's portion of the Cash Incentive Award pool.

          (iii) Payout of Cash Incentive Awards. After the end of the specified
     fiscal year, quarter or other period, as the case may be, the Committee
     shall determine the amount, if any, of potential individual Cash Incentive
     Award payable to a Participant or of any Cash Incentive Award pool and the
     maximum amount of potential Cash Incentive Award payable to each
     Participant in any Cash Incentive Award pool. The Committee may, in its
     discretion, determine that the amount payable to any Participant as a final
     Cash Incentive Award shall be increased or reduced from the amount of his
     or her potential Cash Incentive Award, including a determination to make no
     final Award whatsoever, but may

                                       20
<PAGE>
 
     not exercise discretion to increase any such amount in the case of a Cash
     Incentive Award intended to qualify under Code Section 162(m). The
     Committee shall specify the circumstances in which a Cash Incentive Award
     shall be paid or forfeited in the event of Termination of Employment by the
     Participant or a Change in Control prior to the end of the period for
     measuring performance or the payout of such Cash Incentive Award, and other
     terms relating to such Cash Incentive Award in accordance with the Plan.
     Upon the completion of the measuring period and the determination of the
     right to payment and the amount, the Committee shall direct the Company to
     make payment.

          (d) Written Determinations. All determinations by the Committee as to
     the establishment of performance goals and the potential Performance Awards
     or Cash Incentive Awards related to such performance goals and as to the
     achievement of performance goals relating to such Awards, the amount of any
     Cash Incentive Award pool and the amount of final Cash Incentive Awards,
     shall be made in writing in the case of any Award intended to qualify under
     Code Section 162(m). The Committee may not delegate any responsibility
     relating to such Performance Awards or Cash Incentive Awards.


                                  ARTICLE XI
                                  ----------

            PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
            ------------------------------------------------------

     11.1 Limited Transfer During Offering. In the event there is an effective
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly as, or pursuant to an exercise of, any Award.

     11.2 Committee Discretion. The Committee may in its sole discretion include
in any Agreement an obligation that the Company purchase a Participant's shares
of Common Stock received upon the exercise of an Award (including the purchase
of any unexercised Awards which have not expired), or may obligate a Participant
to sell shares of Common Stock to the Company, upon such terms and conditions as
the Committee may determine and set forth in an Agreement. The provisions of
this Article XI shall be construed by the Committee in its sole discretion and
shall be subject to such other terms and conditions as the Committee may from
time to time determine. Notwithstanding any provision herein to the contrary,
the Company may upon determination by the Committee assign its right to purchase
shares of Common Stock under this Article XI, whereupon the assignee of such
right shall have all the rights, duties and obligations of the Company with
respect to purchase of the shares of Common Stock.

     11.3 No Company Obligation. None of the Company, an Affiliate or the
Committee shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of, any material information regarding the Company
or any Affiliate at any time prior to, upon or in connection

                                      21
<PAGE>
 
with receipt or the exercise of an Award or the Company's purchase of Common
Stock or an Award from such holder in accordance with the terms hereof.


                                  ARTICLE XII
                                  -----------

                         CHANGE IN CONTROL PROVISIONS
                         ----------------------------

     12.1 Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, unless otherwise provided in an Agreement, in the event of a
Change in Control (as defined in Section 12.2):

          (a) Any Stock Appreciation Rights and Stock Options outstanding as of
     the date such Change in Control and not then exercisable shall become fully
     exercisable to the full extent of the original grant;

          (b) The restrictions and deferral limitations applicable to any
     Restricted Stock, Deferred Stock or other Award shall lapse, and such
     Restricted Stock, Deferred Stock or other Award shall become free of all
     restrictions and become fully vested and transferable to the full extent of
     the original grant.

          (c) The performance goals and other conditions with respect to any
     outstanding Performance Award or Cash Incentive Award shall be deemed to
     have been satisfied in full, and such Award shall be fully distributable,
     if and to the extent provided by the Committee in the Agreement relating to
     such Award or otherwise, notwithstanding that the Award may not be fully
     deductible to the Company under Section 162(m) of the Code.

          (d) Notwithstanding any other provision of the Plan, unless the
     Committee shall provide otherwise in an Agreement, a Participant shall have
     the right, whether or not the Award is fully exercisable or may be
     otherwise realized by the Participant, by giving notice during the sixty
     (60) day period from and after a Change in Control to the Company, to elect
     to surrender all or part of a stock-based Award to the Company and to
     receive cash, within thirty (30) days of such notice, in an amount equal to
     the amount by which the "Change in Control Price" (as defined in Section
     12.3) per share of Common Stock on the date of such election shall exceed
     the amount which the Participant must pay to exercise the Award per share
     of Common Stock under the Award (the "Spread"), multiplied by the number of
     shares of Common Stock granted under the Award as to which the right
     granted under this Section 12.1 shall have been exercised.

     12.2 Definition of Change in Control. For purposes of this Plan, a "Change
in Control" shall be deemed to have occurred if (a) any corporation, person or
other entity (other than the Company, a majority-owned subsidiary of the Company
or any of its subsidiaries, or an employee benefit plan (or related trust)
sponsored or maintained by the Company), including a "group" as defined in
Section 13(d)(3) of the Exchange Act, becomes the beneficial owner of stock
representing more than twenty percent (20%) of the combined voting power of the
Company's

                                       22
<PAGE>
 
then outstanding securities; (b)(i) the stockholders of the Company approve a
definitive agreement to merge or consolidate the Company with or into another
corporation other than a majority-owned subsidiary of the Company, or to sell or
otherwise dispose of all or substantially all of the Company's assets, and (ii)
the persons who were the members of the Board of Directors of the Company prior
to such approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; (c) the stockholders of the
Company approve a plan of liquidation of the Company; or (d) within any period
of 24 consecutive months, persons who were members of the Board of Directors of
the Company immediately prior to such 24-month period, together with any persons
who were first elected as directors (other than as a result of any settlement of
a proxy or consent solicitation contest or any action taken to avoid such a
contest) during such 24-month period by or upon the recommendation of persons
who were members of the Board of Directors of the Company immediately prior to
such 24-month period and who constituted a majority of the Board of Directors of
the Company at the time of such election, cease to constitute a majority of the
Board.

     12.3 Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (a) the highest reported sales price of a share of
Common Stock in any transaction reported on the principal exchange on which such
shares are listed or on Nasdaq during the sixty (60) day period prior to and
including the date of a Change in Control or (b) if the Change in Control is the
result of a tender or exchange offer, merger, consolidation, liquidation or sale
of all or substantially all of the assets of the Company (in each case a
"Corporate Transaction"), the highest price per share of Common Stock paid in
such Corporate Transaction, except that, in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock Options, such price
shall be based only on the Fair Market Value of the Common Stock on the date any
such Incentive Stock Option or Stock Appreciation Right is exercised. To the
extent that the consideration paid in any such Corporate Transaction consists
all or in part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
discretion of the Committee.


                                 ARTICLE XIII
                                 ------------

                                 MISCELLANEOUS
                                 -------------

     13.1 Amendments and Termination. The Board may amend, alter or discontinue
the Plan at any time, but no amendment, alteration or discontinuation shall be
made which would impair the rights of a Participant under a Stock Option, Stock
Appreciation Right, Restricted Stock Award or Deferred Stock Award theretofore
granted without the Participant's consent. In addition, no such amendment shall
be made without the approval of the Company's stockholders to the extent such
approval is required by law or agreement.

     The Committee may amend the Plan at any time provided that (a) no amendment
shall impair the rights of any Participant under any Award theretofore granted
without the Participant's consent, and (b) any amendment shall be subject to the
approval or rejection of the Board.

                                      23
<PAGE>
 
     The Committee may amend the terms of any Award or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without the Participant's consent or reduce an Option
Price.

     Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval. Notwithstanding
anything in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interests accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interests accounting
shall be available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interests accounting.

     13.2  Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary.  Such additional, tandem, and substitute or exchange
Awards may be granted at any time.  If an Award is granted in substitution or
exchange for another Award or award, the Committee shall require the surrender
of such other Award or award in consideration for the grant of the new Award.
In addition, Awards may be granted in lieu of cash compensation, including in
lieu of cash amounts payable under other plans of the Company or any subsidiary.

     13.3  Form and Timing of Payment Under Awards; Deferrals.  Subject to the
terms of the Plan and any applicable Agreement, payments to be made by the
Company or an Affiliate upon the exercise of an Award or settlement of an Award
may be made in such forms as the Committee shall determine, including, without
limitation, cash, Common Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis.  The
settlement of any Award may be accelerated, and cash may be paid in lieu of
Common Stock in connection with such settlement, in the discretion of the
Committee or upon occurrence of one or more specified events (in addition to a
Change in Control).  Installment or deferred payments may be required by the
Committee (subject to Section 13.1 of the Plan) or permitted at the election of
the Participant.  Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the granting or crediting of Dividend Equivalents in respect of installment
or deferred payments denominated in Common Stock.

     13.4  Status of Awards Under Code Section 162(m).  It is the intent of the
Company that Awards granted to persons who are Covered Employees within the
meaning of Code Section 162(m) shall constitute "qualified performance-based
compensation" satisfying the requirements of Code Section 162(m).  Accordingly,
the provisions of the Plan shall be interpreted in a manner consistent with Code
Section 162(m).  If any provision of the Plan or any agreement relating to such
an Award does not comply or is inconsistent with the requirements

                                      24
<PAGE>
 
of Code Section 162(m), such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

     13.5  Unfunded Status of Plan; Limits on Transferability.  It is intended
that the Plan be 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.  Unless otherwise provided in this Plan or in an Agreement,
no Award shall be subject to the claims of Participant's creditors, and no Award
may be transferred, assigned, alienated or encumbered in any way other than by
will or the laws of descent and distribution or to a Representative upon the
death of the Participant.

     13.6  General Provisions.

          (a)  Representation.  The Committee may require each person purchasing
     or receiving shares 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 which the Committee deems appropriate to reflect any
     restrictions on transfer.

          (b)  No Additional Obligation.  Nothing contained in the Plan shall
     prevent the Company or an Affiliate from adopting other or additional
     compensation arrangements for its employees.

          (c)  Withholding.  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, the Participant shall pay to
     the Company (or other entity identified by the Committee), or make
     arrangements satisfactory to the Company or other entity identified by the
     Committee 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 required in order for the Company or an Affiliate to obtain a
     current deduction. If the Participant disposes of shares of Common Stock
     acquired pursuant to an Incentive Stock Option in any transaction
     considered to be a disqualifying transaction under the Code, the
     Participant must give written notice of such transfer and the Company shall
     have the right to deduct any taxes required by law to be withheld from any
     amounts otherwise payable to the Participant. Unless otherwise determined
     by the Committee, withholding obligations may be settled with Common Stock,
     including Common Stock that is part 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 Affiliates shall, to the extent permitted by law, have the right to
     deduct any such taxes from any payment otherwise due to the Participant.

          (d)  Reinvestment.  The reinvestment of dividends in additional
     Deferred or Restricted Stock at the time of any dividend payment shall be
     permissible only if sufficient shares of Common Stock are available under
     the Plan for such reinvestment (taking into account then outstanding
     Options and other Awards).

                                      25
<PAGE>
 
          (e)  Representation. The Committee shall establish such procedures as
     it deems appropriate for a Participant to designate a Representative to
     whom any amounts payable in the event of the Participant's death are to be
     paid.

          (f)  Controlling Law.  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 Illinois (other than its law respecting choice of law).
     The Plan shall be construed to comply with all applicable law and to avoid
     liability to the Company, an Affiliate or a Participant, including, without
     limitation, liability under Section 16(b) of the Exchange Act.

          (g)  Offset.  Any amounts owed to the Company or an Affiliate by the
     Participant of whatever nature may be offset by the Company from the value
     of any shares of Common Stock, cash or other thing of value under this Plan
     or an Agreement to be transferred to the Participant, and no shares of
     Common Stock, cash or other thing of value under this Plan or an Agreement
     shall be transferred unless and until all disputes between the Company and
     the Participant have been fully and finally resolved and the Participant
     has waived all claims to such against the Company or an Affiliate.

          (h)  Fail Safe.  With respect to persons subject to Section 16 of the
     Exchange Act, transactions under this Plan are intended to comply with all
     applicable conditions of Rule 16b-3, as applicable.  To the extent any
     action by the Committee fails to so comply, it shall be deemed null and
     void, to the extent permitted by law and deemed advisable by the Committee.

     13.7 Mitigation of Excise Tax. If any payment or right accruing to a
Participant under this Plan (without the application of this Section 13.7),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments"), would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under the Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after consultation
with the Participant, and such determination shall be conclusive and binding on
the Participant. The Participant shall cooperate in good faith with the
Committee in making such determination and providing the necessary information
for this purpose. The foregoing provisions of this Section 13.7 shall apply with
respect to any person only if, after reduction for any applicable Federal excise
tax imposed by Section 4999 of the Code and Federal income tax imposed by the
Code, the Total Payments accruing to such person would be less than the amount
of the Total Payments as reduced, if applicable, under the foregoing provisions
of the Plan and after reduction for only Federal income taxes. In addition, the
foregoing provisions of this Section 13.7 are not meant to be exclusive with
regard to any Participant, and the Company or an Affiliate may, pursuant to
employment, severance or other agreements, provide for additional payments to a
Participant due to a Participant's rights under an award constituting a
"parachute payment."

                                       26
<PAGE>
 
     13.8  Rights with Respect to Continuance of Employment. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract.

     13.9  Awards in Substitution for Awards Granted by Other Corporations.
Awards (including cash in respect of fractional shares) may be granted under the
Plan from time to time in substitution for awards held by employees, directors
or service providers of other corporations who are about to become officers,
directors or employees of the Company or an Affiliate as the result of a merger
or consolidation of the employing corporation with the Company or an Affiliate,
or the acquisition by the Company or an Affiliate of the assets of the employing
corporation, or the acquisition by the Company or Affiliate of the stock of the
employing corporation, as the result of which it becomes a designated employer
under the Plan. The terms and conditions of the Awards so granted may vary from
the terms and conditions set forth in this Plan at the time of such grant as the
Committee may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.

     13.10  Procedure for Adoption. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the board resolution.

     13.11  Procedure for Withdrawal.  Any Affiliate which has adopted the Plan
may, by resolution of the board of directors of such Affiliate, with the consent
of the Board of Directors and subject to such conditions as may be imposed by
the Board of Directors, terminate its adoption of the Plan.

     13.12 Delay.  The Company shall have the right to suspend or delay any time
period described in the Plan or an Agreement if the Committee shall determine
that the action may constitute a violation of any law or result in liability
under any law to the Company, an Affiliate or a stockholder of the Company until
such time as the action required or permitted shall not constitute a violation
of law or result in liability to the Company, an Affiliate or a stockholder of
the Company.

     13.13  Headings.  The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.

     13.14  Severability.  If any provision of this Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereby, and this Plan shall be construed as if
such invalid or unenforceable provision were omitted.

                                       27
<PAGE>
 
     13.15  Successors and Assigns.  This Plan shall inure to the benefit of and
be binding upon each successor and assign of the Company.  All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.

     13.16  Entire Agreement.  This Plan and the Agreements constitute the
entire agreement with respect to the subject matter hereof and thereof, provided
that in the event of any inconsistency between the Plan and any Agreement, the
terms and conditions of the Plan shall control.

                                       28
