
<PAGE>
                                                                 EXHIBIT 10.28
 
                                     1995

                               STOCK OPTION PLAN

                    FOR EXECUTIVE OFFICERS AND KEY EMPLOYEES

                                       OF

                          EVERGREEN MEDIA CORPORATION



          Evergreen Media Corporation, a corporation organized under the laws of
the State of Delaware, hereby adopts this 1995 Stock Option Plan for Executive
Officers and Key Employees of Evergreen Media Corporation.  The purposes of this
Plan are as follows:

          (1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its executive officers
and other key Employees who have been or will be given responsibility for the
management or administration of the Company's business affairs, by assisting
them to become owners of the Company's Class A Common Stock and thus to benefit
directly from its growth, development and financial success.

          (2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial employees considered essential to
the long-range success of the Company by providing and offering them an
opportunity to become owners of the Company's Class A Common Stock under
options, including options that are intended to qualify as "incentive stock
options" under Section 422 of the Code.

                                   ARTICLE I

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

          Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary.  The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.

Section 1.1 - Board
- -----------   -----

          "Board" shall mean the Board of Directors of the Company.

Section 1.2 - Code
- -----------   ----

          "Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
 
Section  1.3  -  Committee
- ------------     ---------

          "Committee" shall mean the Stock Option Committee of the Board,
appointed as provided in Section 6.1.

Section 1.4 - Company
- -----------   -------

          "Company" shall mean Evergreen Media Corporation, a Delaware
corporation.  In addition, "Company" shall mean any corporation assuming, or
issuing new employee stock options in substitution for, Incentive Stock Options,
outstanding under the Plan, in a transaction to which Section 424(a) of the Code
applies.

Section 1.5 - Director
- -----------   --------

          "Director" shall mean a member of the Board.

Section  1.6 - Employee
- ------------   --------

          "Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any corporation which is then a Parent Corporation
or a Subsidiary, whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.

Section 1.7 - Exchange Act
- -----------   ------------

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

Section 1.8 - Incentive Stock Option
- -----------   ----------------------

          "Incentive Stock Option" shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.

Section 1.9 - Non-Qualified Option
- -----------   --------------------

          "Non-Qualified Option" shall mean an Option which is not an Incentive
Stock Option and which is designated as a Non-Qualified Option by the Committee.

Section 1.10 -  Officer
- ------------    -------

          "Officer" shall mean an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such Rule may be amended in the future.

                                       2
<PAGE>
 
Section 1.11 - Option
- ------------   ------

          "Option" shall mean an option to purchase Class A Common Stock of the
Company, granted under the Plan.  "Options" includes both Incentive Stock
Options and Non-Qualified Options.

Section 1.12 - Optionee
- ------------   --------

          "Optionee" shall mean an Employee to whom an Option is granted under
the Plan.

Section 1.13 - Parent Corporation
- ------------   ------------------

          "Parent Corporation" shall mean any corporation in an unbroken chain
of corporations ending with the Company if each of the corporations other than
the Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

Section 1.14 - Plan
- ------------   ----

          "Plan" shall mean this Stock Option Plan for Executive Officers and
Key Employees of the Company.

Section 1.15 - Rule 16b-3
- ------------   ----------

          "Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.

Section 1.16 - Secretary
- ------------   ---------

          "Secretary" shall mean the Secretary of the Company.

Section 1.17 - Securities Act
- ------------   --------------

          "Securities Act" shall mean the Securities Act of 1933, as amended.

Section 1.18 - Subsidiary
- ------------   ----------

          "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

Section 1.19 - Termination of Employment
- ------------   -------------------------

          "Termination of Employment" shall mean the time when the employee-
employer relationship between the Optionee and the Company, a Parent Corporation
or a

                                       3
<PAGE>
 
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death or
retirement but excluding terminations where there is a simultaneous reemployment
by the Company, a Parent Corporation or a Subsidiary.  The Committee, in its
absolute discretion, shall determine the effect of all other matters and
questions relating to Termination of Employment, including, but not by way of
limitation, the question of whether a Termination of Employment resulted from a
discharge for good cause, and all questions of whether particular leaves of
absence constitute Terminations of Employment; provided, however, that, with
respect to Incentive Stock Options, a leave of absence shall constitute a
Termination of Employment if, and to the extent that, such leave of absence
interrupts employment for the Purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section.

                                   ARTICLE II

                             SHARES SUBJECT TO PLAN
                             ----------------------

Section 2.1 - Shares Subject to Plan
- -----------   ----------------------

          The shares of stock subject to Options shall be shares of the
Company's $0.01 par value Class A Common Stock.  The aggregate number of such
shares which may be issued upon exercise of Options shall not exceed 1,500,000.

Section 2.2 - Unexercised Options
- -----------   -------------------

          If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.l.

Section 2.3 - Changes in Company's Shares
- -----------   ---------------------------

          In the event that the outstanding shares of Class A Common Stock of
the Company are hereafter changed into or exchanged for a different number or
kind of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Committee in the number and kind of
shares for the purchase of which Options may be granted, including adjustments
of the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued on exercise of Options.

                                       4
<PAGE>
 
                                 ARTICLE III

                              GRANTING OF OPTIONS
                              -------------------

Section 3.1 - Eligibility
- -----------   -----------

          Any executive officer or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary shall be eligible
to be granted Options, except as provided in Section 3.2 and subject to the
limitations set forth in Section 3.3.

Section 3.2 - Qualification of Incentive Stock Options
- -----------   ----------------------------------------

          No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.

Section 3.3 - Granting of Options
- -----------   -------------------

                    (a) The Committee shall from time to time, in its absolute
discretion:

                        (i) Determine which Employees are executive officers or
              other key Employees and select from among the executive officers
              or other key Employees (including those to whom Options have been
              previously granted under the Plan) such of them as in its opinion
              should be granted Options; and

                       (ii) Determine the number of shares to be subject to such
              Options granted to such selected executive officers or other key
              Employees, and determine whether such Options are to be Incentive
              Stock Options or Non-Qualified Options; and

                      (iii)  Determine the terms and conditions of such Options,
              consistent with the Plan.

                    (b) Upon the selection of an executive officer or other
key Employee to be granted an Option, the Committee shall instruct the Secretary
to issue such Option and may impose such conditions on the grant of such Option
as it deems appropriate. Without limiting the generality of the preceding
sentence, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option to an Employee
that the Employee surrender for cancellation some or all of the unexercised
Options which have been previously granted to him. An Option the grant of which
is conditioned upon such surrender may have an option price lower (or higher)
than the option price of the surrendered Option, may cover the same (or a lesser
or greater) number of shares as the surrendered Option, may contain such other
terms as the Committee deems appropriate and shall be exercisable in accordance
with its terms, without regard to

                                       5
<PAGE>
 
the number of shares, price, option period or any other term or condition of the
surrendered Option.

                    (c) Notwithstanding any other provision of this Section 
3.3, the number of shares to be subject to Options granted to any single
executive officer or other key Employee under the Plan shall not exceed 300,000
shares in any given calendar year.

                                   ARTICLE IV

                                TERMS OF OPTIONS
                                ----------------

Section 4.1 - Option Agreement
- -----------   ----------------

          Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized Officer of the Company
and which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan.  Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as "incentive stock options" under Section 422
of the Code.

Section 4.2 - Option Price
- -----------   ------------

          (a) The price of the shares subject to each Option shall be set by the
Committee; provided, however, that (i) unless the Committee shall specifically
determine otherwise in its absolute discretion, the price per share shall not be
less than 100% of the fair market value of such shares on the date such Option
is granted and (ii) in the case of an Incentive Stock Option which is granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any Parent Corporation, the price per share shall be
not less than 110% of the fair market value of such shares on the date such
Option is granted.

          (b) For purposes of the Plan, the fair market value of a share of the
Company's Class A Common Stock as of a given date shall be: (i) the closing
price of a share of the Company's Class A Common Stock on the principal exchange
on which shares of the Company's Class A Common Stock are then trading, if any,
on the day previous to such date, or, if shares were not traded on the day
previous to such date, then on the next preceding trading day during which a
sale occurred; or (ii) if such Class A Common Stock is not traded on an exchange
but is quoted on Nasdaq or a successor quotation system, (1) the last sales
price (if the Company's Class A Common Stock is then listed as a National Market
Issue under the Nasdaq National Market System) or (2) the mean between the
closing representative bid and asked prices (in all other cases) for the
Company's Class A Common Stock on the day previous to such date as reported by
Nasdaq or such successor quotation system; or (iii) if such Class A Common Stock
is not publicly traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the mean between the closing bid and asked prices for the
Company's Class A Common Stock, on the day previous to such date, as

                                       6
<PAGE>
 
determined in good faith by the Committee; or (iv) if the Company's Class A
Common Stock is not publicly traded, the fair market value established by the
Committee acting in good faith; or (v) for Options granted in connection with a
change in control of the Company pursuant to an employment agreement providing
therefor, the average of the last sales price for the Company's Class A Common
Stock on the Nasdaq National Market (or other principal trading market for the
Class A Common Stock) for the 20 trading days preceding the first public
announcement by the Company of the potential consummation of an event
constituting a change in control as defined in such employment agreement.

Section 4.3 - Commencement of Exercisability
- -----------   ------------------------------

          (a) Except as the Committee may otherwise provide with respect to
Options granted to Employees who are not Officers, no Option may be exercised in
whole or in part during the six months after such Option is granted.

          (b) Subject to the provisions of Sections 4.3(a), 4.3(c) and 7.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the, Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.3(a), 4.3(c) and 7.3,
accelerate the time at which such Option or any portion thereof may be
exercised.

          (c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.

          (d) To the extent that the aggregate fair market value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company, any Subsidiary and any Parent
Corporation) exceeds $100,000, such options shall be taxed as Non-Qualified
Options.  The rule set forth in the preceding sentence shall be applied by
taking options into account in the order in which they were granted.  For
purposes of this Section 4.3(d), the fair market value of stock shall be
determined as of the time the option with respect to such stock is granted.

Section 4.4 - Expiration of Options
- -----------   ---------------------

          (a) No Option may be exercised to any extent by anyone after the
first to occur of the following events:

                    (i) The expiration of ten years from the date the Option was
          granted;

                    (ii) With respect to an Incentive Stock Option, in the case
          of an Optionee owning (within the meaning of Section 424(d) of the
          Code), at the time the Incentive Stock Option was granted, more than
          10% of the total

                                       7
<PAGE>
 
          combined voting power of all classes of stock of the Company, any
          Subsidiary or any Parent Corporation, the expiration of five years
          from the date the Incentive Stock Option was granted;

                    (iii)  With respect to an Incentive Stock Option, except in
          the case of any Optionee who is disabled (within the meaning of
          Section 22(e)(3) of the Code), the expiration of three months from the
          date of the Optionee's Termination of Employment for any reason other
          than such Optionee's death unless the Optionee dies within said three-
          month period;

                    (iv) With respect to an Incentive Stock Option, in the case
          of an Optionee who is disabled (within the meaning of Section 22(e)(3)
          of the Code), the expiration of one year from the date of the
          Optionee's Termination of Employment for any reason other than such
          Optionee's death unless the Optionee dies within said one-year period;
          or

                    (v) With respect to an Incentive Stock Option, the
          expiration of one year from the date of the Optionee's death.

          (b) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Committee may provide in the terms of individual Options that said Options
expire immediately upon a Termination of Employment for any reason.

Section 4.5 - Consideration
- -----------   -------------

          In consideration of the granting of an Option, the Optionee shall
agree, in the written Stock Option Agreement, to remain in the employ of the
Company, a Parent Corporation or a Subsidiary for a period of at least one year
after the Option is granted.  Nothing in this Plan or in any Stock Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
cause.

Section 4.6 - Adjustments in Outstanding Options
- -----------   ----------------------------------

          In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event.  Such adjustment in an
outstanding Option shall be made without

                                       8
<PAGE>
 
change in the total price applicable to the Option or the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any necessary corresponding
adjustment in Option price per share; provided, however, that, in the case of
Incentive Stock Options, each such adjustment shall be made in such manner as
not to constitute a "modification" within the meaning of Section 424(h)(3) of
the Code.  Any such adjustment made by the Committee shall be final and binding
upon all Optionees, the Company and all other interested persons.

Section 4.7 -  Merger, Consolidation, Acquisition, Liquidation or Dissolution
- -----------    --------------------------------------------------------------

          Notwithstanding the provisions of Section 4.6, in its absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide by the terms of any Option that such Option cannot be
exercised after one or more of the following events: the merger or consolidation
of the Company with or into another corporation, the acquisition (through sale,
lease or other transfer) by another corporation or person (other than the
principals of the Company and their related parties) of all or substantially all
of the Company's assets, 80% or more of the Company's then outstanding voting
stock or more than 50% of the voting power of all outstanding voting stock or
the liquidation or dissolution of the Company; and if the Committee so provides,
it may, in its absolute discretion and on such terms and conditions as it deems
appropriate, also provide, either by the terms of such Option or by a resolution
adopted prior to the occurrence of such merger, consolidation, acquisition,
liquidation or dissolution, that, for some period of time prior to such event,
such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Section 4.3(a), Section 4.3(b)
and/or any installment provisions of such Option.

                                   ARTICLE V

                              EXERCISE OF OPTIONS
                              -------------------

Section 5.1 - Person Eligible to Exercise
- -----------   ---------------------------

          During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him.  After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.

Section 5.2 - Partial Exercise
- -----------   ----------------

          At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Stock Option Agreement, such Option or portion
thereof may be exercised in whole or in part; provided, however, that the
Company shall not be required to issue fractional shares and the Committee may,
by the terms of the Option, require any partial exercise to be with respect to a
specified minimum number of shares.

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<PAGE>
 
Section 5.3 - Manner of Exercise
- -----------   ------------------

          An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:

          (a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option or portion
is exercised, such notice complying with all applicable rules established by the
Committee; and

          (b)  (i) Full payment (in cash or by check) for the shares with
      respect to which such Option or portion is thereby exercised;

              (ii) With the consent of the Committee, (A) shares of the
      Company's Class A Common Stock owned by the Optionee duly endorsed for
      transfer to the Company or (B) subject to the timing requirements of
      Section 5.4, shares of the Company's Class A Common Stock issuable to
      the Optionee upon exercise of the Option, with a fair market value (as
      determined under Section 4.2(b)) on the date of Option exercise equal
      to the aggregate Option price of the shares with respect to which such
      Option or portion is thereby exercised;

             (iii)  With the consent of the Committee, a full recourse
      promissory note bearing interest (at no less than such rate as shall then
      preclude the imputation of interest under the Code or any successor
      provision) and payable upon such terms as may be prescribed by the
      Committee. The Committee may also prescribe the form of such note and the
      security to be given for such note. No Option may, however, be exercised
      by delivery of a promissory note or by a loan from the Company when or
      where such loan or other extension of credit is prohibited by law; or

              (iv) With the consent of the Committee, any combination of
      the consideration provided in the foregoing subsections (i), (ii) and
      (iii); and

          (c) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; with the consent of the Committee,
(i) shares of the Company's Class A Common Stock owned by the Optionee duly
endorsed for transfer or (ii) subject to the timing requirements of Section 5.4,
shares of the Company's Class A Common Stock issuable to the Optionee upon
exercise of the Option, valued in accordance with Section 4.2(b) at the date of
Option exercise, may be used to make all or part of such payment;

          (d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable

                                       10
<PAGE>
 
provisions of the Securities Act and any other federal or state securities laws
or regulations.  The Committee may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars; and

          (e) In the event that the Option or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option
or portion thereof.

Section 5.4 - Certain Timing Requirements
- -----------   ---------------------------

          Shares of the Company's Class A Common Stock issuable to the Optionee
upon exercise of the Option may be used to satisfy the Option price or the tax
withholding consequences of such exercise only (i) during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statement of sales and earnings of the Company and ending on the
twelfth business day following such date or (ii) pursuant to an irrevocable
written election by the Optionee to use shares of the Company's Class A Common
Stock issuable to the Optionee upon exercise of the Option to pay all or part of
the Option price or the withholding taxes (subject to the approval of the
Committee) made at least six months prior to the payment of such Option price or
withholding taxes.

Section 5.5 - Conditions to Issuance of Stock Certificates
- -----------   --------------------------------------------

          The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company.  The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

          (a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;

          (b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable;

          (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;

          (d) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; and

                                       11
<PAGE>
 
          (e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may establish from time to time for reasons of
administrative convenience.

Section 5.6 - Rights as Shareholders
- -----------   ----------------------

          The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.

Section 5.7 - Transfer Restrictions
- -----------   ---------------------

          Unless otherwise approved in writing by the Committee, no shares
acquired upon exercise of any Option by any Officer may be sold, assigned,
pledged, encumbered or otherwise transferred until at least six months have
elapsed from (but excluding) the date that such Option was granted.  The
Committee, in its absolute discretion, may impose such other restrictions on the
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate.  Any such other restriction shall be set forth in the
respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares.  The Committee may require the Employee to give the
Company prompt notice of any disposition of shares of stock, acquired by
exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee.  The Committee may direct that the certificates evidencing shares
acquired by exercise of an Incentive Stock Option refer to such requirement to
give prompt notice of disposition.

                                   ARTICLE VI

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

Section 6.1 - Stock Option Committee
- -----------   ----------------------

          The Stock Option Committee shall consist of two or more Directors,
appointed by and holding office at the pleasure of the Board, each of whom is a
"disinterested person" as defined by Rule 16b-3.  Appointment of Committee
members shall be effective upon acceptance of appointment, and removal of
Committee members may be effected at any time by action of the Board.  Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee shall be filled by the Board.  At the pleasure of the
Board, the directors appointed to the Stock Option Committee may be the same
directors appointed to the Compensation Committee of the Board, in which case
the Compensation Committee shall discharge the functions of the Stock Option
Committee hereunder without there being any need for a separately constituted
Stock Option Committee.  In such event, all references herein to the Stock
Option Committee or the Committee shall be deemed to be references to the
Compensation Committee.

                                       12
<PAGE>
 
Section 6.2 - Duties and Powers of Committee
- -----------   ------------------------------

          It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions.  The Committee
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules.  Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock options"
within the meaning of Section 422 of the Code.  The Board shall have no right to
exercise any of the rights or duties of the Committee under the Plan.

Section 6.3 - Majority Rule
- -----------   -------------

          The Committee shall act by a majority of its members in  office.  The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.

Section 6.4 -  Compensation; Professional Assistance; Good Faith Actions
- -----------    ---------------------------------------------------------

          Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board.  All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company.  The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons.  The Committee, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees, the
Company and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination or interpretation.

                                  ARTICLE VII

                                OTHER PROVISIONS
                                ----------------

Section 7.1 - Options Not Transferable
- -----------   ------------------------

          No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment levy,
attachment, garnishment or any other legal or equitable proceedings (including
bankruptcy), and any attempted disposition thereof shall be null and void and of
no effect; provided, however, that nothing in this Section 7.1 shall prevent
transfers by will or by the applicable laws of descent and distribution.

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<PAGE>
 
Section 7.2 -  Amendment, Suspension or Termination of the Plan
- -----------    ------------------------------------------------

          The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Committee.
However, without approval of the Company's shareholders given within 12 months
before or after the action by the Committee, no action of the Committee may,
except as provided in Section 2.3, increase any limit imposed in Section 2.1 on
the maximum number of shares which may be issued on exercise of Options,
materially modify the eligibility requirements of Section 3.1, reduce the
minimum Option price requirements of Section 4.2(a) or extend the limit imposed
in this Section 7.2 on the period during which Options may be granted or amend
or modify the Plan in a manner requiring shareholder approval under Rule 16b-3.
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of the Option, impair any rights or obligations under any
Option theretofore granted.  No Option may be granted during any period of
suspension nor after termination of the Plan, and in no event may any Option be
granted under this Plan after the first to occur of the following events:

               (a) The expiration of ten years from the date the Plan is adopted
by the Board; or

               (b) The expiration of ten years from the date the Plan is
approved by the Company's shareholders under Section 7.3.

Section 7.3 - Approval of Plan by Shareholders
- -----------   --------------------------------

          This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
the Plan.  Options may be granted prior to such shareholder approval; provided,
however, that such Options shall not be exercisable prior to the time when the
Plan is approved by the shareholders; provided, further, that if such approval
has not been obtained at the end of said 12-month period, all Options previously
granted under the Plan shall thereupon be cancelled and become null and void.
The Company shall take such actions with respect to the Plan as may be necessary
to satisfy the requirements of Rule 16b-3(b).

Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans
- -----------   -------------------------------------------------------

          The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary.  Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including, but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.

                                       14
