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                                                                    EXHIBIT 10.1





                           BEVERLY ENTERPRISES, INC.
                         1996 LONG-TERM INCENTIVE PLAN


SECTION 1.  PURPOSE

Beverly Enterprises, Inc.  (hereinafter referred to as the "Company"), a
Delaware corporation, hereby establishes the Beverly Enterprises, Inc. 1996
Long-Term Incentive Plan (the "Plan") to promote the interests of the Company
and its stockholders through the (i) attraction and retention of executive
officers and other key employees essential to the success of the Company; (ii)
motivation of executive officers and other key employees using
performance-related incentives linked to longer-range performance goals and the
interests of Company stockholders; and (iii) enabling of such employees to
share in the long-term growth and success of the Company.  The Plan permits the
grant of Nonqualified Stock Options, Incentive Stock Options (intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended),
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Bonus Stock, and any other Stock Unit
Awards or stock-based forms of awards as the Committee may determine under its
sole and complete discretion at the time of grant.

SECTION 2.  DEFINITIONS

Except as otherwise defined in the Plan, the following terms shall have the
meanings set forth below:

2.1         "Affiliate" shall have the meaning ascribed to such term in Rule
            12b-2 under the Exchange Act.

2.2         "Agreement" means a written agreement implementing the grant of
            each Award signed by an authorized officer of the Company and by
            the Participant.

2.3         "Award" means individually or collectively, a grant under this Plan
            of any one of Nonqualified Stock Options, Incentive Stock Options,
            Stock Appreciation Rights, Restricted Stock, Restricted Stock
            Units, Performance Units, Performance Shares, Bonus Stock or Other
            Stock Unit Awards.

2.4         "Award Date" or "Grant Date" means the date on which an Award is
            made by the Committee under this Plan.

2.5         "Beneficial Owner" shall have the meaning ascribed to such term in
            Rule 13d-3 under the Exchange Act.






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

2.7         "Bonus Stock" means an Award granted pursuant to Section 10 of the
            Plan expressed as a Share which may or may not be subject to
            restrictions.
            
2.8         "Cashless Exercise" means the exercise of an Option by the
            Participant through the use of a brokerage firm to make payment to
            the Company of the Exercise Price either from the proceeds of a
            loan to the Participant from the brokerage firm or from the
            proceeds of the sale of Stock issued pursuant to the exercise of
            the Option, and upon receipt of such payment, the Company delivers
            the exercised Shares to the brokerage firm.
            
2.9         "Change in Control" shall be deemed to have occurred if the
            conditions set forth in any one of the following paragraphs shall
            have been satisfied:

            (a)   Any person, corporation or other entity or group, including
                  any "group" as defined in Section 13 (d) (3) of the Exchange
                  Act, becomes the beneficial owner of Shares having 30% or
                  more of the total number of votes that may be cast for the
                  election of directors of the Company; or

            (b)   As the result of, or in connection with, any tender or
                  exchange offer, merger or other business combination, sale of
                  assets or contested election, or any combination of the
                  foregoing (a "Transaction"), the persons who were directors
                  of the Company before the Transaction shall cease to
                  constitute a majority of the Board of Directors of the
                  Company or any successor to the Company or its assets; or

            (c)   If at any time, (i) the Company shall consolidate with, or
                  merge with, any other Person and the Company shall not be the
                  continuing or surviving corporation, (ii) any Person shall
                  consolidate with, or merge with, the Company, and the Company
                  shall be the continuing or surviving corporation and in
                  connection therewith, all or part of the outstanding Stock
                  shall be changed into or exchanged for stock or other
                  securities of any other Person or cash or any other property,
                  (iii) the Company shall be a party to a statutory share
                  exchange with any other Person after which the Company is a
                  Subsidiary of any other Person, or (iv) the Company shall
                  sell or otherwise transfer 50% or more of the assets or
                  earnings power of the Company and its Subsidiaries (taken as
                  a whole) to any Person or Persons.

2.10        "Code" means the Internal Revenue Code of 1986, as amended from
            time to time.

2.11        "Committee" means the Compensation Committee of the Board which
            will administer the Plan pursuant to Section 3 herein, provided
            however, any member who is not both a "disinterested director"
            within the meaning of Rule 16b-3 and an "outside director" within
            the meaning of Section 162(m) shall not serve as a Committee member
            for the purpose of this Plan unless there would otherwise be less
            than two members of the Committee.






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2.12        "Common Stock" or "Stock" means the Common Stock of the Company,
            with a par value of $.10 per share, or such other security or right
            or instrument into which such Common Stock may be changed or
            converted in the future.

2.13        "Company" means Beverly Enterprises, Inc., including all Affiliates
            and wholly owned Subsidiaries, or any successor thereto.

2.14        "Covered Participant" means a Participant who is a "covered
            employee" as defined in Section 162 (m) (3) of the Code, and the
            regulations promulgated thereunder, or who the Committee believes
            will be such a covered employee for a Performance Period.

2.15        "Department" means the Compensation and Benefits Department of the
            Company.

2.16        "Designated Beneficiary" means the beneficiary designated by the
            Participant, pursuant to procedures established by the Department,
            to receive amounts due to the Participant in the event of the
            Participant's death. If the Participant does not make an effective
            designation, then the Designated Beneficiary will be deemed to be
            the Participant's estate.

2.17        "Disability" means (i) the mental or physical disability, either
            occupational or non-occupational in origin, of the Participant
            defined as "Total Disability" in the Disability Plan of the Company
            currently in effect and as amended from time to time; or (ii) a
            determination by the Committee of "Total Disability" based on
            medical evidence that precludes the Participant from engaging in
            any occupation or employment for wage or profit for at least twelve
            months and appears to be permanent.

2.18        "Divestiture" means the sale of, out sourcing of, or closing by,
            the Company of the business operations in which the Participant is
            employed, or the elimination of the Participant's position at the
            Company's discretion.

2.19        "Early Retirement" means retirement of a Participant from
            employment with the Company after age 55, but prior to age 65, as
            approved by the Committee.

2.20        "Exchange Act" means the Securities Exchange Act of 1934, as
            amended.

2.21        "Exercise Price" means the price per share determined on the Grant
            Date by the Committee, provided that except as set forth in Section
            6.2, the Exercise Price shall not be less than 100% of Fair Market
            Value on the Grant Date.

2.22        "Executive Officer" means any employee designated by the Company as
            an officer or any employee covered by Rule 16b-3 of the Exchange
            Act.

2.23        "Fair Market Value" means, on any given date, the closing price of
            Stock as reported on the New York Stock Exchange composite tape on
            such day or, if no Shares were traded on the New York Stock
            Exchange on such day, then on the next preceding day that Stock was
            traded on such exchange, all as reported by such source as the
            Committee may select.






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2.24        "Full-time Employee" means an employee designated by the Company's
            Department as being a "permanent, full-time employee" who is
            eligible for all plans and programs of the Company set forth for
            such employees. This designation excludes all part-time, temporary,
            or contract employees or consultants to the Company.

2.25        "Incentive Stock Option" or "ISO" means an option to purchase
            Stock, granted under Section 6 herein, which is designated as an
            incentive stock option and is intended to meet the requirements of
            Section 422 of the Code.

2.26        "Key Employee" means an officer or other key employee of the
            Company or its Subsidiaries, who, in the opinion of the Committee,
            can contribute significantly to the growth and profitability of, or
            perform services of major importance to, the Company and its
            Subsidiaries.

2.27        "Nonqualified Stock Option" or "NQSO" means an option to purchase
            Stock, granted under Article 6 herein, which is not intended to be
            an Incentive Stock Option.

2.28        "Normal Retirement" means the retirement of any Participant at age
            65 or at some earlier date if approved by the Committee.

2.29        "Option" means an Incentive Stock Option or a Nonqualified Stock
            Option.

2.30        "Other Stock Unit Award" means awards, granted pursuant to Section
            11 herein, of Stock or other securities that are valued in whole or
            in part by reference to, or are otherwise based on, Shares or other
            securities of the Company.

2.31        "Participant" means a Key Employee who has been granted an Award
            under the Plan.

2.32        "Performance Criteria" or "Performance Goals" or "Performance
            Measures" mean the objectives established by the Committee for a
            Performance Period, for the purpose of determining when an Award
            subject to such objectives are earned which shall consist of any
            one or more of the following business or financial goals of the
            Company: absolute or relative increases in total stockholder
            return, economic value added, return on capital employed, revenues,
            sales, net income, earnings per share, return on equity, cash flow,
            operating margin, or net worth of the Company, any of its
            subsidiaries, divisions or other areas of the Company.

2.33        "Performance Award" means a performance-based Award, which may be
            in the form of either Performance Shares or Performance Units.

2.34        "Performance Period" means the time period designated by the
            Committee during which performance goals must be met.

2.35        "Performance Share" means an Award, designated as a Performance
            Share, granted to a Participant pursuant to Section 9 herein, the
            value of which is determined, in whole






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            or in part, by the value of Stock in a manner deemed appropriate by
            the Committee and described in the Agreement.

2.36        "Performance Unit" means an Award, designated as a Performance
            Unit, granted to a Participant pursuant to Section 9 herein, the
            value of which is determined, in whole or in part, by the
            attainment of pre-established performance goals relating to
            Company financial or operating performance as deemed appropriate by
            the Committee and described in the Agreement.

2.37        "Period of Restriction" means the period during which the transfer
            of Shares of Restricted Stock is restricted, pursuant to Section 8
            herein.

2.38        "Person" shall have the meaning ascribed to such term in Section 3
            (a) (9) of the Exchange Act and used in Sections 13 (d) and 14 (d)
            thereof, including a "group" as defined in Section 13 (d).

2.39        "Plan" means the Beverly Enterprises, Inc. 1996 Long-Term Incentive
            Plan as herein described and as hereafter from time to time
            amended.

2.40        "Restricted Stock" means an Award of Stock granted to a Participant
            pursuant to Section 8 herein.

2.41        "Restricted Stock Unit" means a fixed or variable dollar
            denominated right to acquire Stock, which may or may not be subject
            to restrictions, contingently awarded under Section 8 of the Plan.

2.42        "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
            Act as adopted in Exchange Act Release No. 34-29131 (April 26,
            1991), or any successor rule as amended from time to time.

2.43        "Section 16" means Section 16 of the Exchange Act, or any successor
            section under the Exchange Act, and as amended from time to time
            and as interpreted by regulations and rules promulgated thereunder
            from time to time.

2.44        "Section 162(m)" means Section 162(m) of the Code, or any successor
            section under the Code, as amended from time to time and as
            interpreted by final or proposed regulations promulgated thereunder
            from time to time.

2.45        "Securities Act" means the Securities Act of 1933 and the rules and
            regulations promulgated thereunder, or any successor law, as
            amended from time to time.

2.46        "Shares" means shares of the Common Stock of the Company.

2.47        "Stock Appreciation Right" means the right to receive an amount
            equal to the excess of the Fair Market Value of a share of Stock
            (as determined on the date of exercise) over the Exercise Price of
            a related Option or the Fair Market Value of the Stock on the Date
            of Grant of the Stock Appreciation Right.






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2.48        "Subsidiary" means a corporation in which the Company owns, either
            directly or through one or more of its Subsidiaries, at least 50%
            of the total combined voting power of all classes of stock.



SECTION 3.  ADMINISTRATION

3.1  The Committee.  The Plan shall be administered and interpreted by the
Committee which shall have full authority and all powers necessary or desirable
for such administration. The express grant in this Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee. In its sole and complete discretion the Committee may adopt,
alter, suspend or repeal any such administrative rules, regulations,
guidelines, and practices governing the operation of the Plan as it shall from
time to time deem advisable. In addition to any other powers and, subject to
the provisions of the Plan, the Committee shall have the following specific
powers: (i) to determine the terms and conditions upon which the Awards may be
made and exercised; (ii) to determine all terms and provisions of each
Agreement, which need not be identical for types of awards nor for the same
type of award to different participants; (iii) to construe and interpret the
Agreements and the Plan; (iv) to establish, amend, or waive rules or
regulations for the Plan's administration; (v) to accelerate the exercisability
of any Award, the length of a Performance Period or the termination of any
Period of Restriction; and (vi) to make all other determinations and take all
other actions necessary or advisable for the administration of the Plan. The
Committee may take action by a meeting in person, by unanimous written consent,
or by meeting with the assistance of communications equipment which allows all
Committee members participating in the meeting to communicate in either oral or
written form. The Committee may seek the assistance or advice of any persons it
deems necessary to the proper administration of the Plan.

3.2  Selection of Participants.  The Committee shall have sole and complete
discretion in determining those Key Employees who shall participate in the
Plan.  The Committee may request recommendations for individual awards from the
Chief Executive Officer of the Company and may delegate to the Chief Executive
Officer of the Company the authority to make Awards to Participants who are not
Executive Officers of the Company or Covered Participants, subject to a fixed
maximum Award amount for such a group and a maximum Award amount for any one
Participant, as determined by the Committee.  Awards made to the Executive
Officers or Covered Participants shall be determined by the Committee.

3.3  Committee Decisions.  All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive,
and binding upon all persons, including the Company, its stockholders,
employees, Participants, and Designated Beneficiaries, except when the terms of
any sale or award of shares of Stock or any grant of rights or Options under
the Plan are required by law or by the Articles of Incorporation or Bylaws of
the Company to be approved by the Company's Board of Directors or stockholders
prior to any such sale, award or grant.

3.4  Rule 16b-3 Requirements.  Notwithstanding any other provision of the Plan,
the Committee may impose such conditions on any Award, and the Board may amend
the Plan in any such respects, as may be required to satisfy the requirements
of Rule 16b-3 or Section 162(m).






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3.5 Indemnification of Committee.  In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against
reasonable expenses incurred from their administration of the Plan.  Such
reasonable expenses include, but are not limited to, attorneys' fees, actually
and reasonably incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Award granted or made hereunder, and against
all reasonable amounts paid by them in settlement thereof or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, if such
members acted in good faith and in a manner which they believed to be in, and
not opposed to, the best interests of the Company and its Subsidiaries.

SECTION 4.  ELIGIBILITY

The Committee in its sole and complete discretion shall determine the Key
Employees, including officers, who shall be eligible for participation under
the Plan, subject to the following limitations:  (i) no non-Employee director
of the Company shall be eligible to participate under the Plan; (ii) no member
of the Committee shall be eligible to participate under the Plan; (iii) no
person owning, directly or indirectly, more than 5% of the total combined
voting power of all classes of stock of the Company shall be eligible to
participate under the Plan; and (iv) only Full-Time Employees shall be eligible
to participate under the Plan.

SECTION 5.  SHARES SUBJECT TO THE PLAN

5.1 Number of Shares.  Subject to adjustment as provided in Section 5.4 herein
and except as limited below,  the maximum aggregate number of Shares that may
be issued pursuant to Awards made under the Plan shall not exceed 4,000,000
Shares which may be in any combination of Options, Stock Appreciation Rights;
Restricted Stock, Restricted Stock Units, Performance Shares,  Performance
Units, Bonus Stock, or Other Stock Unit Awards.  No more than 2,000,000 Shares
may be issued pursuant to Awards of Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, Bonus Stock or Other Stock Unit Awards.
Shares of Common Stock may be available from the authorized, but unissued
Shares or Shares acquired by the Company, including Shares purchased in the
open market.  Except as provided in Sections 5.2 and 5.3 herein, the issuance
of Shares in connection with the exercise of, or as other payment for, Awards
under the Plan shall reduce the number of Shares available for future Awards
under the Plan.

5.2 Lapsed Awards of Forfeited Shares.  Except as provided below, in the event
that (i) any Option or other Award granted under the Plan terminates, expires,
or lapses for any reason other than exercise of the Award, or (ii) if Shares
issued pursuant to the Awards are canceled or forfeited for any reason,  such
Shares subject to such Award shall thereafter be again available for grant of
an Award under the Plan.  Notwithstanding the above, with respect to Covered
Participants,  Options may not be granted that exceed the maximum number of
Shares for which Options may be issued to the Participants hereunder and
cancelled  or forfeited Shares shall continue to be counted against the maximum
aggregate number of Shares that may be granted pursuant to Awards.

5.3 Delivery of Shares as Payment.  In the event a Participant pays for any
Option or other Award granted under the Plan through the delivery of previously
acquired Shares the number of Shares






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available for Awards under the Plan shall be increased by the number of shares
surrendered by the Participant.

5.4 Capital Adjustments.  The number and class of Shares subject to each
outstanding Award, the Exercise Price and the aggregate number, type and class
of Shares for which Awards thereafter may be made shall be subject to
adjustment, if any, as the Committee deems appropriate, based on the occurrence
of a number of specified and non-specified events.  Such specified events are
discussed in this Section 5.4, but such discussion is not intended to provide
an exhaustive list of such events which may necessitate such adjustments.

(a) If the outstanding Shares are increased, decreased or exchanged through
    merger, consolidation, sale of all or substantially all of the property of
    the Company, reorganization, recapitalization, reclassification, stock
    dividend, stock split or other distribution in respect to such Shares, for
    a different number of Shares or type of securities, or if additional Shares
    or new or different Shares or other securities are distributed with respect
    to such Shares, an appropriate and proportionate adjustment shall be made
    in: (i) the maximum number of shares of Stock available for the Plan as
    provided in Section 5.1 herein, (ii) the type of shares or other securities
    available for the Plan, (iii) the number of shares subject to any then
    outstanding Awards under the Plan, and (iv) the price (including Exercise
    Price) for each share (or other kind of shares or securities) subject to
    then outstanding Awards, but without change in the aggregate purchase price
    as to which such Options remain exercisable or Restricted Stock releasable.

(b) In the event other events not specified above in this Section 5.4, such as
    any extraordinary cash dividend, split-up, spin-off, combination, exchange
    of shares, warrants or rights offering to purchase Common Stock, or other
    similar corporate event, affect the Common Stock such that an adjustment is
    necessary to maintain the benefits or potential benefits intended to be
    provided under this Plan, then the Committee in its discretion may make
    adjustments to any or all of (i) the number and type of shares which
    thereafter may be optioned and sold or awarded or made subject to Stock
    Appreciation Rights under the Plan, (ii) the Exercise Price of any Award
    made under the Plan thereafter, and (iii) the number and Exercise Price of
    each Share (or other kind of shares or securities) subject to then
    outstanding awards, but without change in the aggregate purchase price as
    to which such Options remain exercisable or Restricted Stock releasable.

(c) Any adjustment made by the Committee pursuant to the provisions of this
    Section 5.4 subject to approval by the Board of Directors, shall be final,
    binding and conclusive.  A notice of such adjustment, including
    identification of the event causing such an adjustment, the calculation
    method of such adjustment, and the change in price and the number of Shares
    or securities, cash or property purchasable subject to each Award shall be
    sent to each Participant. No fractional interests shall be issued under the
    Plan based on such adjustments.

SECTION 6.  STOCK OPTIONS

6.1 Grant of Stock Options.  Subject to the terms and provisions of the Plan
and applicable law, the Committee, at any time and from time to time, may grant
Options to Key Employees as it shall determine.  The Committee shall have sole
and complete discretion in determining the type of






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Option granted, the Exercise Price, the duration of the Option, the number of
Shares to which an Option pertains, any conditions imposed upon the
exercisability of the Options, the conditions under which the Option may be
terminated and any such other provisions as may be warranted to comply with the
law or rules of any securities trading system or stock exchange.  Each Option
grant shall have such specified terms and conditions detailed in an Agreement.
The Agreement shall specify whether the Option is intended to be an Incentive
Stock Option within the meaning of Section 422 of the Code, or a Nonqualified
Stock Option not intended to be within the provisions of Section 422 of the
Code.

6.2 Exercise Price.  The Exercise Price per Share covered by an Option shall be
determined at the time of grant by the Committee, subject to the limitation
that the Exercise Price shall not be less than 100% of Fair Market Value on the
Grant Date.  However, Options issued upon assumption of an acquired company's
options may be issued at an Exercise Price less than 100% of the Fair Market
Value.

6.3 Exercisability.  Options granted under the Plan shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee
shall determine, which will be specified in the Agreement and need not be the
same for each Participant.  However, for Participants subject to Section 16, no
Option granted under the Plan may be exercisable until the expiration of at
least six months after the Grant Date (except that such limitations shall not
apply in the case of death or Disability of the Participant, or a Change in
Control of the Company), nor after the expiration of ten years from the Grant
Date.

6.4 Method of Exercise.  Options shall be exercised by the delivery of a
written notice from the Participant to the Company in the form prescribed by
the Committee setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment of the Exercise Price
for the Shares.   The Exercise Price shall be payable to the Company in full in
cash, or its equivalent, or by delivery of Shares (not subject to any security
interest or pledge) valued at Fair Market Value at the time of exercise or by a
combination of the foregoing.  In addition, at the request of the Participant,
and subject to applicable laws and regulations, the Company may (but shall not
be required to) cooperate in a Cashless Exercise of the Option.  As soon as
practicable, after receipt of written notice and payment, the Company shall
deliver to the Participant, stock certificates in an appropriate amount based
upon the number of Shares with respect to which the option is exercised, issued
in the Participant's name.

SECTION 7.  STOCK APPRECIATION RIGHTS

7.1 Grant of Stock Appreciation Rights.  Subject to the terms and provisions of
the Plan and applicable law, the Committee, at any time and from time to time,
may grant freestanding Stock Appreciation Rights, Stock Appreciation Rights in
tandem with an Option, or Stock Appreciation Rights in addition to an Option.
Stock Appreciation Rights granted in tandem with an Option or in addition to an
Option may be granted at the time of the Option or at a later time.  For
Participants subject to Section 16, no Stock Appreciation Rights granted under
the Plan may be exercisable until the expiration of at least six months after
the Grant Date (except that such limitations shall not apply in the case of
death or disability of the Participant, or a Change in Control of the Company),
nor after the expiration of ten years from the Grant Date.






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7.2 Exercise Price.  The Exercise Price of each Stock Appreciation Right shall
be determined on the grant date by the Committee, subject to the limitation
that the Exercise Price shall not be less than 100% of Fair Market Value on the
Grant Date.

7.3 Exercise.  The Participant is entitled to receive an amount equal to its
excess of the Fair Market Value over the Exercise Price thereof on the date of
exercise of the Stock Appreciation Right.  However, for administrative
purposes, the Committee may determine that, with respect to any Stock
Appreciation Right that is not related to an Incentive Stock Option and that
can only be exercised for cash during limited periods of time in order to
satisfy the conditions of Rule 16b-3, the exercise of such Stock Appreciation
Right for cash during such limited period shall be deemed to occur for all
purposes hereunder on the day during such limited period on which the Fair
Market Value is the highest.  The Committee may alter such determination at any
time and such change may govern the exercise of Stock Appreciation Rights
granted prior to such determination as well as Stock Appreciation Rights
granted thereafter.

7.4 Payment.  Payment upon exercise of the Stock Appreciation Right shall be
made in the form of cash, Shares or a combination thereof, as determined in the
sole and complete discretion of the Committee.  However, if any payment in the
form of Shares results in a fractional share, such payment for the fractional
share shall be made in cash.

SECTION 8.   RESTRICTED STOCK AND RESTRICTED STOCK UNITS

8.1 Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan and applicable law, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock and Restricted Stock Units under the Plan to
such Participants, and in such amounts and for such duration of the Period of
Restriction and/or conditions of removal of restrictions as it shall determine.
Participants receiving Restricted Stock and Restricted Stock Units are not
required to pay the Company therefor (except for applicable tax withholding).

8.2 Restricted Stock Agreement.  Each Restricted Stock and Restricted Stock
Unit grant shall be evidenced by an Agreement that shall specify the Period of
Restriction; the conditions which must be satisfied prior to removal of the
restriction; the number of Shares of Restricted Stock granted; and such other
provisions as the Committee shall determine.  The Committee may specify, but is
not limited to, the following types of restrictions in the Agreement: (i)
restrictions on acceleration or achievement of terms of vesting based on any
business or financial goals of the Company, including:  absolute or relative
increases in total stockholder return, economic value added, return on capital
employed, revenues, sales, net income, earnings per share, return on equity,
cash flow, operating margin or net worth of the Company, any of its
Subsidiaries, divisions or other areas of the Company; and (ii) any other
further restrictions that may be advisable under the law, including
requirements set forth by the Exchange Act, the Securities Act, any securities
trading system or stock exchange upon which such Shares under are listed.

8.3 Nontransferability.  Except as provided in this Section 8 and subject to
applicable law, the Shares of Restricted Stock or Restricted Stock Units
granted under the Plan may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the termination of the applicable
Period of Restriction or upon earlier satisfaction of other conditions as
specified by the Committee in its sole discretion and set forth in the
Agreement.  All rights with respect to the






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Restricted Stock and Restricted Stock Units granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such Participant
or his or her guardian or legal representative.

8.4 Removal of Restrictions.  Except as otherwise noted in this Section 8,
Restricted Stock and Restricted Stock Units covered by each Award shall be
provided to and become freely transferable by the Participant after the last
day of the Period of Restriction and/or upon the satisfaction of other
conditions as determined by the Committee.  Except as specifically provided in
this Section 8, the Committee shall have no authority to reduce or remove the
restrictions or to reduce or remove the Period of Restriction without the
express consent of the stockholders of the Company.   Except where
performance-based conditions or restrictions are placed on the grant, or except
in the event of the death or disability of the Participant, or a Change in
Control of the Company,  the minimum Period of Restriction shall be three (3)
years, which Period of Restriction would permit the removal of restrictions on
no more than one-third (1/3) of the Restricted Stock or Restricted Stock Units
at the end of the first year following the Grant Date, and the removal of the
restrictions on an additional one-third (1/3) at the end of each subsequent
year.  Except in the event of the death or disability of the Participant, or a
Change in Control of the Company, no restrictions may be removed from
Restricted Stock or Restricted Stock Units during the first year following the
Grant Date.  If there are performance-based conditions placed on the grant of
Restricted Stock or Restricted Stock Units the total Period of Restriction
shall be no less than one (1) year from the Grant Date.

8.5 Voting Rights.  During the Period of Restriction, Participants in whose
name Restricted Stock is granted under the Plan may exercise full voting rights
with respect to those Shares.

8.6 Dividends and Other Distributions.  During the Period of Restriction,
Participants in whose name Restricted Stock is granted shall be entitled to
receive all dividends and other distributions paid with respect to those
Shares.  If any such dividends or distributions are paid in Shares, the Shares
shall be subject to the same restrictions on transferability as the Restricted
Stock with respect to which they were distributed.

SECTION 9.  PERFORMANCE AWARDS

9.1 Grant of Performance Awards.  Subject to the terms and provisions of the
Plan and applicable law, the Committee at any time and from time to time may
grant Performance Awards in the form of either Performance Units or Performance
Shares to Participants subject to the Performance Goals and Performance Period
as it shall determine.  The Committee shall have complete discretion in
determining the number and value of Performance Units or Performance Shares
granted to each Participant.  Participants receiving Performance Awards are not
required to pay the Company therefor (except for applicable tax withholding)
other than the rendering of services.

9.2 Value of Performance Awards.  The Committee shall determine the number and
value of Performance Units or Performance Shares granted to each Participant as
a Performance Award.  The Committee shall set Performance Goals in its
discretion for each Participant who is granted a Performance Award.  The extent
to which such Performance Goals are met will determine the value of the
Performance Unit or Performance Share to the Participant.  Such Performance
Goals may be particular to a Participant, may relate to the performance of the
Subsidiary which employs






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<PAGE>   12

him or her, may be based on the division which employs him or her, may be based
on the performance of the Company generally, or a combination of the foregoing.
The Performance Goals may be based on achievement of balance sheet or income
statement objectives, or any other objectives established by the Committee.
The Performance Goals may be absolute in their terms or measured against or in
relationship to other companies comparably, similarly or otherwise situated.
The terms and conditions of each Performance Award will be set forth in an
Agreement.

9.3 Settlement of Performance Awards.  After a Performance Period has ended,
the holder of a Performance Unit or Performance Share shall be entitled to
receive the value thereof based on the degree to which the Performance Goals
established by the Committee and set forth in the Agreement have been
satisfied.

9.4 Form of Payment.  Payment of the amount to which a Participant shall be
entitled upon the settlement of a Performance Award shall be made in cash,
Stock, or a combination thereof as determined by the Committee.  Payment may be
made as prescribed by the Committee.

SECTION 10.  BONUS STOCK

Subject to the terms and provisions of the Plan and applicable law, the
Committee, at any time and from time to time, may award Shares of Bonus Stock
to Participants without cash consideration.  The Committee shall determine and
indicate in the related Agreement whether such Shares of Bonus Stock shall be
unincumbered of any restrictions (other than those advisable to comply with
law) or shall be subject to restrictions and limitations similar to those
referred to in Section 9.  In the event the Committee assigns any restrictions
on the Shares of Bonus Stock then such Shares shall be subject to at least the
following restrictions:

    (a)      No Shares of Bonus Stock may be sold, transferred, pledged,
             assigned or otherwise alienated or hypothecated if such Shares are
             subject to restrictions which have not lapsed or have not been
             vested.

    (b)      If any condition of vesting of the Shares of Bonus Stock are not
             met, all such Shares subject to such vesting shall be delivered to
             the Company and cancelled (in a manner determined by the
             Committee) within 60 days of the failure to meet such conditions
             without any payment from the Company.

SECTION 11.  OTHER STOCK UNIT AWARDS

11.1 Grant of Other Stock Unit Awards.  Subject to the terms and provisions of
the Plan and applicable law, the Committee, at any time and from time to time,
may issue to Participants, either alone or in addition to other Awards made
under the Plan, Other Stock Unit Awards which may be in the form of Common
Stock or other securities.  The value of each such Award shall be based, in
whole or in part, on the value of the underlying Common Stock or other
securities.  The Committee, in its sole and complete discretion, may determine
that an Award, either in the form of a Other Stock Unit Award under this
Section 11 or as an Award granted pursuant to Sections 6 through 10, may
provide to the Participant (i) dividends or dividend equivalents (payable on a
current or deferred basis) and (ii) cash payments in lieu of or in addition to
an Award. Subject to the provisions of the Plan, the Committee in its sole and
complete discretion, shall determine the






                                      12
<PAGE>   13

terms, restrictions, conditions, vesting requirements, and payment rules (all
of which are sometimes hereinafter collectively referred to as "Rules") of the
Award.  The Agreement shall specify the Rules of each Award as determined by
the Committee.   However, each Other Stock Unit Award need not be subject to
identical Rules.

11.2  Rules.   The Committee, in its sole and complete discretion, may grant an
Other Stock Unit Award subject to the following Rules:

      (a)   Common Stock or other securities issued pursuant to Other Stock
            Unit Awards may not be sold, transferred, pledged, assigned or
            otherwise alienated or hypothecated by a Participant until the
            expiration of at least six months from the Award Date, except that
            such limitation shall not apply in the case of death or disability
            of the Participant or a Change in Control of the Company. For
            Participants subject to Section 16 and to the extent Other Stock
            Unit Awards are deemed to be derivative securities within the
            meaning of Rule 16b-3 a Participant's rights with respect to such
            Awards shall not: (i) vest or be exercisable until the expiration
            of at least six months from the Award Date, nor (ii) be sold,
            transferred, pledged, assigned, or otherwise alienated or
            hypothecated, otherwise than by will or by laws of descent and
            distribution. All rights with respect to such Other Stock Unit
            Awards granted to a Participant shall be exercisable during his or
            her lifetime only by such Participant or his or her guardian or
            legal representative.

      (b)   Other Stock Unit Awards may require the payment of cash
            consideration by the Participant upon receipt of the Award or
            provide that the Award, and any Common Stock or other securities
            issued in conjunction with the Award be delivered without the
            payment of cash consideration.

      (c)   The Committee, in its sole and complete discretion, may establish
            certain Performance Criteria that may relate in whole or in part to
            receipt of the Other Stock Unit Awards.

      (d)   Other Stock Unit Awards may be subject to a deferred payment
            schedule and/or vesting over a specified employment period.

      (e)   The Committee, in its sole and complete discretion, as a result of
            certain circumstances, may waive or otherwise remove, in whole or
            in part, any restriction or condition imposed on an Other Stock
            Unit Award at the time of grant.

SECTION 12.  SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS

Awards subject to Performance Criteria paid to Covered Participants under this
Plan shall be governed by the conditions of this Section 12 in addition to the
requirements of Sections 8, 9, 10 and 11 above.  Should conditions set forth
under this Section 12 conflict with the requirements of Sections 8, 9, 10 and
11, the conditions of this Section 12 shall prevail.

      (a)   All Performance Measures relating to Covered Participants for a
            relevant Performance Period shall be established by the Committee
            in writing prior to the beginning of the Performance Period, or by
            such other later date for the Performance Period as may be
            permitted under Section 162(m). Performance Measures may include
            alternative and






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<PAGE>   14

            multiple Performance Measures and may be based on one or more
            business criteria. In establishing Performance Measures, the
            Committee shall consider one or more of the following business or
            financial goals of the Company: absolute or relative increases in
            total stockholder return, economic value added, return on capital
            employed, revenues, sales, net income, earnings per share, return
            on equity, cash flow, operating margin or net worth of the Company,
            any of its Subsidiaries, divisions, or other areas of the Company.

      (b)   The Performance Measures must be substantially uncertain of
            attainment at the time established, must be objective and must
            satisfy third party "objectivity" standards under Section 162(m).

      (c)   The Performance Measures shall not allow for any discretion by the
            Committee as to an increase in any Award, but discretion to lower
            an Award is permissible.

      (d)   The Award and payment of any Award under this Plan to a Covered
            Participant with respect to a relevant Performance Period shall be
            contingent upon the attainment of the Performance Measures that are
            applicable to such Covered Participant. The Committee shall certify
            in writing prior to payment of any such Award that such applicable
            Performance Measures relating to the Award are satisfied. Approved
            minutes of the Committee may be used for this purpose.

      (e)   The maximum Award that may be paid to any Covered Participant under
            the Plan pursuant to Sections 8, 9, 10 and 11 for any Performance
            Period is the lessor of $1 Million or 100 percent of the Covered
            Participant's base salary as of the first day of that Performance
            Period. The maximum number of Shares subject to Options Stock
            Appreciation Rights or Restricted Stock granted to any Covered
            Participant for any fiscal year shall be 300,000.

      (f)   All Awards to Covered Participants under this Plan shall be further
            subject to such other conditions, restrictions, and requirements as
            the Committee may determine to be necessary to carry out the
            purpose of this Section 12.

SECTION 13.  GENERAL PROVISIONS

13.1 Plan Term.  The Plan was adopted on April 11, 1996 by the Board.  Subject
to stockholder approval, the Plan shall be effective on July 1, 1996; however,
no Stock, rights or Options may be sold, awarded or granted under the Plan
until the Company is in receipt of a  Registration Statement under the
Securities Act covering the Shares to be issued under the Plan.  Any Stock,
right, or Options granted under this Plan prior to stockholder approval of the
Plan, shall be granted subject to such approval.

The Plan terminates December 31, 2006; however, all Awards made prior to, and
outstanding on such date, shall remain valid in accordance with their terms and
conditions.

13.2 Withholding. The Company shall have the right to deduct or withhold, or
require a Participant to remit to the Company, any taxes required by law to be
withheld from Awards. In the event an






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<PAGE>   15

Award is paid in the form of Common Stock, the Committee may require the
Participant to remit to the Company the amount of any taxes required to be
withheld from such payment in Common Stock, or, in lieu thereof, the Company
may withhold (or the Participant may be provided the opportunity to elect to
tender) the number of shares of Common Stock equal in Fair Market Value to the
amount required to be withheld.

13.3 Awards.  Each Award  shall be evidenced in a corresponding Agreement
provided in writing to the Participant, which shall specify the terms,
conditions and any Rules applicable to the Award, including but not limited to
the effect of a Change in Control, or death, Disability, Divestiture, Early
Retirement, Normal Retirement or other termination of employment of the
Participant on the Award.

13.4 Nontransferability.  No Award may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, except by will or the laws of descent
and distribution or, except in the case of an ISO, by a qualified domestic
relations order.  Further, no lien, obligation, or liability of the Participant
may be assigned to any right or interest of any Participant in an Award.

13.5 No Right to Employment.  No granting of an Award shall be construed as a
right to employment with the Company.

13.6 Rights as Stockholder.  Subject to the Award provisions, no Participant or
Designated Beneficiary shall be deemed a stockholder of the Company nor have
any rights as such with respect to any Shares to be provided under the Plan
until he or she has become the holder of such Shares.  Notwithstanding the
aforementioned, with respect to Stock granted as Restricted Stock, Bonus Stock
or Other Stock Unit Awards  under this Plan, the Participant or Designated
Beneficiary of such Award shall be deemed the owner of such Shares provided
herein.  As such, unless contrary to the provisions herein or in any such
related Agreement, such stockholder shall be entitled to full voting, dividend
and distribution rights as provided any other Company stockholder for as long
as the Participant continues to be deemed the owner of such stock.

13.7 Construction of the Plan.  The Plan, and its rules, rights, agreements and
regulations, shall be governed, construed, interpreted and administered solely
in accordance with the laws of the state of Delaware.   In the event any
provision of the Plan shall be held invalid, illegal or unenforceable, in whole
or in part, for any reason, such determination shall not affect the validity,
legality or enforceability of any remaining provision, portion of provision or
Plan overall, which shall remain in full force and effect as if the Plan had
been absent the invalid, illegal or unenforceable provision or portion thereof.

13.8 Amendment of Plan.  The Committee or Board of Directors may amend,
suspend, or terminate the Plan or any portion thereof at any time, provided
such amendment is made with stockholder approval if such approval is necessary
to comply with any tax or regulatory requirement, including for these purposes
any approval which is a requirement for exemptive relief under Section 16(b) of
the Exchange Act or which is a requirement for  the performance-based
compensation exception under Section 162(m).    The Committee in its discretion
may amend the Plan so as to conform with local rules and regulations subject to
any provisions to the contrary specified herein.

13.9 Amendment of Award.  In its sole and complete discretion, the Committee
may at any time amend any Award for the following reasons: (i) additions and/or
changes to the Code, any federal






                                      15
<PAGE>   16

or state securities law, or other law or regulations applicable to the Award,
made prior to the Date of Grant, and such additions and/or changes have some
effect on the Award; or (ii) any other event not described in clause (i) occurs
and the Participant gives his or her consent to such amendment, provided
however, except for capital adjustments described in Section 5.4, the Committee
may not reduce the Exercise Price of an Award.

13.10 Exemption from Computation of Compensation for Other Purposes.  By
acceptance of an applicable Award, subject to the conditions of such Award,
each Participant shall be considered in agreement that all Shares sold or
awarded and all Options granted under this Plan shall be considered special
incentive compensation and will be exempt from inclusion as "wages" or "salary"
in pension, retirement, life insurance, and other employee benefits
arrangements of the Company, except as determined otherwise by the Company.  In
addition, each Designated Beneficiary of a deceased Participant shall be in
agreement that all such Awards will be exempt from inclusion in "wages" or
"salary" for purposes of calculating benefits of any life insurance coverage
sponsored by the Company.

13.11 Legend.  In its sole and complete discretion, the Committee may elect to
legend certificates representing Shares sold or awarded under the Plan, to make
appropriate references to the restrictions imposed on such shares.

13.12 Certain Participants.  All Agreements for Participants subject to Section
16(b) of the Exchange Act shall be deemed to include any such additional terms,
conditions, limitations and provisions as Rule 16b-3 requires, unless the
Committee in its discretion determines that any such Award should not be
governed by Rule 16b-3.  All performance-based Awards shall be deemed to
include any such additional terms, conditions, limitations and provisions as
are necessary to comply with the performance-based compensation exemption of
Section 162(m) unless the Committee in its discretion determines that any such
Award to a Covered Participant is not intended to qualify for the exemption
for performance-based compensation under Section 162(m).

13.13 Change in Control. In the event of a Change in Control, the Committee is
permitted to accelerate the payment or vesting and release any restrictions on
any Awards.





                                      16
