<PAGE>

          COTELLIGENT 1998 LONG-TERM INCENTIVE PLAN -- EXHIBIT 10.13
          ----------------------------------------------------------

                            COTELLIGENT GROUP, INC.

                         1998 LONG-TERM INCENTIVE PLAN


     1.  Purpose.  The purpose of this 1998 Long-Term Incentive Plan (the
         -------
"Plan") of Cotelligent Group, Inc., a Delaware corporation (the "Company"), is
to advance the interests of the Company and its stockholders by providing a
means to attract, retain and reward directors, officers and other key employees
and consultants of and service providers to the Company and its subsidiaries and
to enable such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between such persons
and the Company's stockholders.

     2.  Definitions.  The definitions of awards under the Plan, including
         -----------
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents and Other
Stock-Based Awards are set forth in Section 6 of the Plan.  Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards."  For purposes of the Plan, the following additional
terms shall be defined as set forth below:

     (a) "Award Agreement" means any written agreement, contract, notice or
other instrument or document evidencing an Award.

     (b) "Beneficiary" shall mean the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

     (c) "Board" means the Board of Directors of the Company.

     (d) A "Change in Control" shall be deemed to have occurred if:

         (i)   any person, other than the Company or an employee benefit plan of
         the Company, acquires directly or indirectly the Beneficial Ownership
         (as defined in Section 13(d) of the Securities Exchange Act of 1934, as
         amended) of any voting security of the Company and immediately after
         such acquisition such Person is, directly or indirectly, the Beneficial
         Owner of voting securities representing 50 percent or more of the total
         voting power of all of the then-outstanding voting securities of the
         Company;

         (ii)  the individuals (A) who, as of the effective date of the Plan,
         constitute the Board (the "Original Directors") or (B) who thereafter
         are elected to the Board and whose election, or nomination for
         election, to the Board was approved by a vote of at least two-thirds
         (2/3) of the Original Directors then still in office (such directors
         becoming "Additional Original Directors" immediately following their
         election) or (C) who are elected to the Board and whose election, or
         nomination for election, to the Board was approved by a vote of at
         least two-thirds (2/3) of the Original Directors and Additional
         Original Directors then still in office (such directors also becoming
         "Additional Original Directors" immediately following their election)
         (such individuals being the "Continuing Directors"), cease for any
         reason to constitute a majority of the members of the Board;

         (iii) the stockholders of the Company shall approve a merger,
         consolidation, recapitalization, or reorganization of the Company, a
         reverse stock split of outstanding voting securities, or consummation
         of any such transaction if stockholder approval is not sought or
         obtained, other than

                                       1
<PAGE>

         any such transaction which would result in at least 75 percent of the
         total voting power represented by the voting securities of the
         surviving entity outstanding immediately after such transaction being
         Beneficially Owned by at least 75 percent of the holders of outstanding
         voting securities of the Company immediately prior to the transaction,
         with the voting power of each such continuing holder relative to other
         such continuing holders not substantially altered in the transaction;
         or

         (iv)  the stockholders of the Company shall approve a plan of
         complete liquidation of the Company or an agreement for the sale or
         disposition by the Company of all or a substantial portion of the
         Company's assets (i.e., 50 percent or more of the total assets of the
         Company).

     (e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.

     (f) "Committee"  means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan.

     (g) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.  References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.

     (h) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked prices
per share of the Stock on such date (or, if there was no trading or quotation in
the Stock on such date, on the next preceding date on which there was trading or
quotation) as provided by one of such organizations.

     (j) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.

     (k) "Non-Employee Director" shall mean a member of the Board who is not
otherwise an employee of the Company or any subsidiary.

     (l) "Participant" means a person who, at a time when eligible under Section
5 hereof, has been granted an Award under the Plan.

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

     (n) "Stock" means the Common Stock, $.01 par value, of the Company and such
other securities as may be substituted for Stock or such other securities
pursuant to Section 4.

     3.  Administration.
         --------------

     (a) Authority of the Committee.  The Plan shall be administered by the
         --------------------------
Committee.  The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

         (i)    to select persons to whom Awards may be granted;

                                       2
<PAGE>

          (ii)   to determine the type or types of Awards to be granted to each
          such person;

          (iii)  to determine the number of Awards to be granted, the number of
          shares of Stock to which an Award will relate, the terms and
          conditions of any Award granted under the Plan (including, but not
          limited to, any exercise price, grant price or purchase price, any
          restriction or condition, any schedule for lapse of restrictions or
          conditions relating to transferability or forfeiture, exercisability
          or settlement of an Award, and waivers or accelerations thereof,
          performance conditions relating to an Award (including performance
          conditions relating to Awards not intended to be governed by Section
          7(f) and waivers and modifications thereof), based in each case on
          such considerations as the Committee shall determine), and all other
          matters to be determined in connection with an Award;

          (iv)   to determine whether, to what extent and under what
          circumstances an Award may be settled, or the exercise price of an
          Award may be paid, in cash, Stock, other Awards, or other property, or
          an Award may be canceled, forfeited, or surrendered;

          (v)    to determine whether, to what extent and under what
          circumstances cash, Stock, other Awards or other property payable with
          respect to an Award will be deferred either automatically, at the
          election of the Committee or at the election of the Participant;

          (vi)   to prescribe the form of each Award Agreement, which need not
          be identical for each Participant;

          (vii)  to adopt, amend, suspend, waive and rescind such rules and
          regulations and appoint such agents as the Committee may deem
          necessary or advisable to administer the Plan;

          (viii) to correct any defect or supply any omission or reconcile any
          inconsistency in the Plan and to construe and interpret the Plan and
          any Award, rules and regulations, Award Agreement or other instrument
          hereunder; and

          (ix)   to make all other decisions and determinations as may be
          required under the terms of the Plan or as the Committee may deem
          necessary or advisable for the administration of the Plan.

Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including without limitation for the purpose of
ensuring that transactions under the Plan by Participants who are then subject
to Section 16 of the Exchange Act in respect of the Company are exempt under
Rule 16b-3. In any case in which the Board is performing a function of the
Committee under the Plan, each reference to the Committee herein shall be deemed
to refer to the Board.

     (b) Manner of Exercise of Committee Authority.  Any action of the Committee
         -----------------------------------------
with respect to the Plan shall be final, conclusive and binding on all persons,
including the Company, subsidiaries of the Company, Participants, any person
claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action.  If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
by modified by the Committee (subject to Section 8(e)).  The express grant of
any specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee.  Except as provided under Section 7(f), the Committee may delegate to
officers or managers of the Company or any subsidiary of the Company the
authority, subject to such terms as the Committee shall determine, to perform
such functions as the Committee may determine, to the extent permitted under
applicable law.

     (c) Limitation of Liability.  Each member of the Committee shall be
         -----------------------
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any

                                       3
<PAGE>

subsidiary, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan.  No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.

                                       4
<PAGE>

     4.  Stock Subject to Plan.
         ---------------------

     (a) Amount of Stock Reserved.  The total amount of Stock that may be
         ------------------------
subject to outstanding Awards under the Plan as well as awards outstanding under
the Company's 1995 Long-Term Incentive Plan, determined immediately after the
grant of any Award, shall not exceed 18% of the total number of shares of Stock
outstanding at the effective time of such grant.  Notwithstanding the foregoing,
the number of shares that may be delivered upon the exercise of ISOs shall not
exceed 500,000, and the number of shares that may be delivered as Restricted
Stock and Deferred Stock (other than pursuant to an Award granted under Section
7(f)) shall not in the aggregate exceed 500,000, provided, however, that shares
subject to ISOs, Restricted Stock or Deferred Stock Awards shall not be deemed
delivered if such Awards are forfeited, expire or otherwise terminate without
delivery of shares to the Participant.  If an Award valued by reference to Stock
may only be settled in cash, the number of shares to which such Award relates
shall be deemed to be Stock subject to such Award for purposes of this Section
4(a).  Any shares of Stock delivered pursuant to an Award may consist, in whole
or in part, of authorized and unissued shares, treasury shares or shares
acquired in the market for a Participant's Account.

     (b) Annual Per-Participant Limitations.  During any calendar year, no
         ----------------------------------
Participant may be granted Awards that may be settled by delivery of more than
750,000 shares of Stock, subject to adjustment as provided in Section 4(c). In
addition, with respect to Awards that may be settled in cash (in whole or in
part), no Participant may be paid during any calendar year cash amounts relating
to such Awards that exceed the greater of the Fair Market Value of the number of
shares of Stock set forth in the preceding sentence at the date of grant or the
date of settlement of Award. This provision sets forth two separate limitations,
so that Awards that may be settled solely by delivery of Stock will not operate
to reduce the amount of cash-only Awards, and vice versa; nevertheless, Awards
that may be settled in Stock or cash must not exceed either limitation.

     (c) Adjustments.  In the event that the Committee shall determine that any
         -----------
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Section 4(a), including shares reserved for ISOs, Restricted Stock and
Deferred Stock, (ii) the number and kind of shares of Stock specified in the
Annual Per-Participant Limitations under Section 4(b), (iii) the number and kind
of shares of outstanding Restricted Stock or other outstanding Award in
connection with which shares have been issued, (iv) the number and kind of
shares that may be issued in respect of other outstanding Awards, (v) the number
and kind of shares subject to Options to be granted pursuant to Section 6(i),
and (vi) the exercise price, grant price or purchase price relating to any
Award. (or, if deemed appropriate, the Committee may make provision for a cash
payment with respect to any outstanding Award). In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including, without limitation, cancellation of unexercised
or outstanding Awards, or substitution of Awards using stock of a successor or
other entity) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence and events
constituting a Change in Control) affecting the Company or any subsidiary or the
financial statements of the Company or any subsidiary, or in response to changes
in applicable laws, regulations, or accounting principles.

     5.  Eligibility.  Directors, executive officers and other employees of the
         -----------
Company and its subsidiaries, and persons who provide consulting or other
services to the Company deemed by the Committee to be of substantial value to
the Company, are eligible to be granted Awards under the Plan.  In addition,
persons who have been offered employment by the Company or its subsidiaries, and
persons employed by an entity that the Committee reasonably expects to become a
subsidiary of the Company, are eligible to be granted an Award under the Plan.

     6.  Specific Terms of Awards.
         ------------------------

                                       5
<PAGE>

     (a) General.  Awards may be granted on the terms and conditions set forth
         -------
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of employment or service of the
Participant. Except as provided in Section 6(f), 6(h), or 7(a), or to the extent
required to comply with requirements of applicable law, only services may be
required as consideration for the grant (but not the exercise) of any Award.

     (b) Options.  The Committee is authorized to grant Options (including
         -------
"reload" options automatically granted to offset specified exercises of Options)
on the following terms and conditions ("Options"):

         (i)   Exercise Price.  The exercise price per share of Stock
               --------------
         purchasable under an Option shall be determined by the Committee;
         provided, however, that, except as provided in Section 7(a), such
         exercise price shall be not less than the Fair Market Value of a share
         on the date of grant of such Option.

         (ii)  Time and Method of Exercise.  The Committee shall determine the
               ---------------------------
         time or times at which an Option may be exercised in whole or in part,
         the methods by which such exercise price may be paid or deemed to be
         paid, the form of such payment, including, without limitation, cash,
         Stock, other Awards or awards granted under other Company plans or
         other property (including notes or other contractual obligations of
         Participants to make payment on a deferred basis, such as through
         "cashless exercise" arrangements, to the extent permitted by applicable
         law), and the methods by which Stock will be delivered or deemed to be
         delivered to Participants.

         (iii) ISOs.  The terms of any ISO granted under the Plan shall comply
               ----
         in all respects with the provisions of Section 422 of the Code,
         including but not limited to the requirement that no ISO shall be
         granted with an exercise price less than 100% (110% for an individual
         described in Section 422(b)(6) of the Code) of the Fair Market Value of
         a share of Stock on the date of grant and granted no more than ten
         years after the effective date of the Plan.  Anything in the Plan to
         the contrary notwithstanding, no term of the Plan relating to ISOs
         shall be interpreted, amended, or altered, nor shall any discretion or
         authority granted under the Plan be exercised, so as to disqualify
         either the Plan or any ISO under Section 422 of the Code, unless
         requested by the affected Participant.

         (iv)  Termination of Employment.  Unless otherwise determined by the
               -------------------------
         Committee, upon termination of a Participant's employment with the
         Company and its subsidiaries, such Participant may exercise any Options
         during the three-month period following such termination of employment,
         but only to the extent such Option was exercisable as of such
         termination of employment. Notwithstanding the foregoing, if the
         Committee determines that such termination is for cause, all Options
         held by the Participant shall terminate as of the termination of
         employment.

     (c) Stock Appreciation Rights.  The Committee is authorized to grant SARs
         -------------------------
on the following terms and conditions ("SARs"):

         (i)   Right to Payment.  An SAR shall confer on the Participant to whom
               ----------------
         it is granted a right to receive, upon exercise thereof, the excess of
         (A) the Fair Market Value of one share of Stock on the date of exercise
         (or, if the Committee shall so determine in the case of any such right
         other than one related to an ISO, the Fair Market Value of one share at
         any time during a specified period before or after the date of
         exercise), over (B) the grant price of the SAR as determined by the
         Committee as of the date of grant of the SAR, which, except as provided
         in Section 7(a), shall be not less than the Fair Market Value of one
         share of Stock on the date of grant.

         (ii)  Other Terms.  The Committee shall determine the time or times at
               -----------
         which an SAR may be exercised in whole or in part, the method of
         exercise, method of settlement, form of consideration

                                       6
<PAGE>

         payable in settlement, method by which Stock will be delivered or
         deemed to be delivered to Participants, whether or not an SAR shall be
         in tandem with any other Award, and any other terms and conditions of
         any SAR. Limited SARs that may only be exercised upon the occurrence of
         a Change in Control may be granted on such terms, not inconsistent with
         this Section 6(c), as the Committee may determine. Limited SARs may be
         either freestanding or in tandem with other Awards.

     (d) Restricted Stock.  The Committee is authorized to grant Restricted
         ----------------
Stock on the following terms and conditions ("Restricted Stock"):

         (i)   Grant and Restrictions.  Restricted Stock shall be subject to
               ----------------------
         such restrictions on transferability and other restrictions, if any, as
         the Committee may impose, which restrictions may lapse separately or in
         combination at such times, under such circumstances, in such
         installments, or otherwise, as the Committee may determine. Except to
         the extent restricted under the terms of the Plan and any Award
         Agreement relating to the Restricted Stock, a Participant granted
         Restricted Stock shall have all of the rights of a stockholder
         including, without limitation, the right to vote Restricted Stock or
         the right to receive dividends thereon.

         (ii)  Forfeiture.  Except as otherwise determined by the Committee,
               ----------
         upon termination of employment or service (as determined under criteria
         established by the Committee) during the applicable restriction period,
         Restricted Stock that is at that time subject to restrictions shall be
         forfeited and reacquired by the Company; provided, however, that the
                                                  -----------------
         Committee may provide, by rule or regulation or in any Award Agreement,
         or may determine in any individual case, that restrictions or
         forfeiture conditions relating to Restricted Stock will be waived in
         whole or in part in the event of termination resulting from specified
         causes.

         (iii) Certificates for Stock.  Restricted Stock granted under the
               ----------------------
         Plan may be evidenced in such manner as the Committee shall determine.
         If certificates representing Restricted Stock are registered in the
         name of the Participant, such certificates may bear an appropriate
         legend referring to the terms, conditions, and restrictions applicable
         to such Restricted Stock, the Company may retain physical possession of
         the certificate, and the Participant shall have delivered a stock power
         to the Company, endorsed in blank, relating to the Restricted Stock.

         (iv)  Dividends.  Dividends paid on Restricted Stock shall be either
               ---------
         paid at the dividend payment date in cash or in shares of unrestricted
         Stock having a Fair Market Value equal to the amount of such dividends,
         or the payment of such dividends shall be deferred and/or the amount or
         value thereof automatically reinvested in additional Restricted Stock,
         other Awards, or other investment vehicles, as the Committee shall
         determine or permit the Participant to elect. Stock distributed in
         connection with a Stock split or Stock dividend, and other property
         distributed as a dividend, shall be subject to restrictions and a risk
         of forfeiture to the same extent as the Restricted Stock with respect
         to which such Stock or other property has been distributed, unless
         otherwise determined by the Committee.

     (e) Deferred Stock.  The Committee is authorized to grant Deferred Stock
         --------------
subject to the following terms and conditions ("Deferred Stock"):

         (i) Award and Restrictions.  Delivery of Stock will occur upon
             ----------------------
         expiration of the deferral period specified for an Award of Deferred
         Stock by the Committee (or, if permitted by the Committee, as elected
         by the Participant). In addition, Deferred Stock shall be subject to
         such restrictions as the Committee may impose, if any, which
         restrictions may lapse at the expiration of the deferral period or at
         earlier specified times, separately or in combination, in installments
         or otherwise, as the Committee may determine.

                                       7
<PAGE>

          (ii) Forfeiture.  Except as otherwise determined by the Committee,
               ----------
          upon termination of employment or service (as determined under
          criteria established by the Committee) during the applicable deferral
          period or portion thereof to which forfeiture conditions apply (as
          provided in the Award Agreement evidencing the Deferred Stock), all
          Deferred Stock that is at that time subject to such forfeiture
          conditions shall be forfeited; provided, however, that the Committee
                                         -----------------
          may provide, by rule or regulation or in any Award Agreement, or may
          determine in any individual case, that restrictions or forfeiture
          conditions relating to Deferred Stock will be waived in whole or in
          part in the event of termination resulting from specified causes.

     (f)  Bonus Stock and Awards in Lieu of Cash Obligations.  The Committee is
          --------------------------------------------------
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash under other plans or compensatory
arrangements.

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

     (h)  Other Stock-Based Awards.  The Committee is authorized, subject to
          ------------------------
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock issued
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards, or other property, as the Committee shall determine. Cash awards,
as an element of or supplement to any other Award under the Plan, may be granted
pursuant to this Section 6(h).

     (i)  Non-Employee Directors Options.
          ------------------------------

          (1)  On the date of each of the Company's annual meetings, each person
          who is a Non-Employee Director or a nominee who is elected to the
          Board at such annual meeting and becomes a Non-Employee Director, on
          the date of such annual meeting shall receive, without the exercise of
          the discretion of any person, a non-qualified stock option under the
          Plan relating to the purchase of 5,000 shares of Stock.  In the event
          that there are not sufficient shares available under this Plan to
          allow for the grant to each Non-Employee Director of an Option for the
          number of shares provided herein, each Non-Employee Director shall
          receive an Option for his pro rata share of the total number of shares
          of Stock available under the Plan.

          (2)  The exercise price of each share of Stock subject to an Option
          granted to a Non-Employee Director shall equal the Fair Market Value
          of a share of Stock on the date such Option is granted.  Payment of
          the exercise price for the shares being purchased shall be made in
          cash.

          (3)  Each Option granted to a Non-Employee Director be immediately
          exercisable, and shall have a term of ten years from such date.  Upon
          a Non-Employee Director's cessation of service as a Non-

                                       8
<PAGE>

          Employee Director, the Option, to the extent it was exercisable upon
          such cessation, shall remain exercisable for a period of one year.

     7.   Certain Provisions Applicable to Awards.
          ---------------------------------------

     (a)  Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards
          ------------------------------------------------------
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with or in substitution for any other
Award granted under the Plan or any award granted under any other plan of the
Company, any subsidiary or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Awards granted in addition to or in tandem with other
Awards or awards may be granted either as of the same time as or a different
time from the grant of such other Awards or awards.

     (b)  Term of Awards.  The term of each Award shall be for such period as
          --------------
may be determined by the Committee; provided, however, that in no event shall
                                    -----------------
the term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).

     (c)  Form of Payment Under Awards.  Subject to the terms of the Plan and
          ----------------------------
any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments or on a deferred basis. Such payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments denominated
in Stock.

     (d)  Rule 16b-3 Compliance.
          ---------------------

          (i) Six-Month Holding Period.  Unless a Participant could otherwise
              ------------------------
          dispose of equity securities, including derivative securities,
          acquired under the Plan without incurring liability under Section
          16(b) of the Exchange Act, equity securities acquired under the Plan
          must be held for a period of six months following the date of such
          acquisition, provided that this condition shall be satisfied with
          respect to a derivative security if at least six months elapse from
          the date of acquisition of the derivative security to the date of
          disposition of the derivative security (other than upon exercise or
          conversion) or its underlying equity security.

          (ii) Other Compliance Provisions.  With respect to a Participant who
               ---------------------------
          is then subject to Section 16 of the Exchange Act in respect of the
          Company, the Committee shall implement transactions under the Plan and
          administer the Plan in a manner that will ensure that each transaction
          by such a Participant is exempt from liability under Rule 16b-3,
          except that such a Participant may be permitted to engage in a non-
          exempt transaction under the Plan if written notice has been given to
          the Participant regarding the non-exempt nature of such transaction.
          The Committee may authorize the Company to repurchase any Award or
          shares of Stock resulting from any Award in order to prevent a
          Participant who is subject to Section 16 of the Exchange Act from
          incurring liability under Section 16(b). Unless otherwise specified by
          the Participant, equity securities, including derivative securities,
          acquired under the Plan which are disposed of by a Participant shall
          be deemed to be disposed of in the order acquired by the Participant.

     (e)  Loan Provisions. With the consent of the Committee, and subject at all
          ---------------
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a loan
or loans to a Participant with respect to the exercise of any Option or other
payment in connection with any Award, including the payment by a Participant of
any or all federal, state or local income or other taxes due in connection with
any Award. Subject to such

                                       9
<PAGE>

limitations, the Committee shall have full authority to decide whether to make a
loan or loans hereunder and to determine the amount, terms and provisions of any
such loan or loans, including the interest rate to be charged in respect of any
such loan or loans, whether the loan or loans are to be with or without recourse
against the borrower, the terms on which the loan is to be repaid and
conditions, if any, under which the loan or loans may be forgiven.

     (f)  Performance-Based Awards.  The Committee may, in its discretion,
          ------------------------
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified performance-
based compensation" within the meaning of Code Section 162(m) and regulations
thereunder. The performance objectives for an Award subject to this Section 7(f)
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the Committee but
subject to this Section 7(f). Performance objectives shall be objective and
shall otherwise meet the requirements of Section 162(m)(4)(C) of the Code.
Business criteria used by the Committee in establishing performance objectives
for Awards subject to this Section 7(f) shall be selected from among the
following:

          (1)  Annual return on capital;

          (2)  Annual earnings or earnings per share;

          (3)  Annual cash flow provided by operations;

          (4)  Changes in annual revenues; and/or

          (5)  Strategic business criteria, consisting of one or more objectives
               based on meeting specified revenue, market penetration,
               geographic business expansion goals, cost targets, and goals
               relating to acquisitions or divestitures.

The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. Achievement of performance objectives
with respect to such Awards shall be measured over a period of not less than one
year nor more than five years, as the Committee may specify. Performance
objectives may differ for such Awards to different Participants. The Committee
shall specify the weighting to be given to each performance objective for
purposes of determining the final amount payable with respect to any such Award.
The Committee may, in its discretion, reduce the amount of a payout otherwise to
be made in connection with an Award subject to this Section 7(f), but may not
exercise discretion to increase such amount, and the Committee may consider
other performance criteria in exercising such discretion. All determinations by
the Committee as to the achievement of performance objectives shall be in
writing. The Committee may not delegate any responsibility with respect to an
Award subject to this Section 7(f).

     (g)  Acceleration upon a Change of Control.   Notwithstanding anything
          -------------------------------------
contained herein to the contrary, unless otherwise provided by the Committee in
an Award Agreement, all conditions and/or restrictions relating to the continued
performance of services and/or the achievement of performance objectives with
respect to the exercisability or full enjoyment of an Award shall immediately
lapse upon a Change in Control.

     8.   General Provisions.
          ------------------

     (a)  Compliance With Laws and Obligations.  The Company shall not be
          ------------------------------------
obligated to issue or deliver Stock in connection with any Award or take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing shares of
Stock issued under the Plan will be subject to such stop-transfer orders

                                       10
<PAGE>

and other restrictions as may be applicable under such laws, regulations and
other obligations of the Company, including any requirement that a legend or
legends be placed thereon.

     (b) Limitations on Transferability.  Awards and other rights under the Plan
         ------------------------------
will not be transferable by a Participant except by will or the laws of descent
and distribution or to a Beneficiary in the event of the Participant's death,
shall not be pledged, mortgaged, hypothecated or otherwise encumbered, or
otherwise subject to the claims of creditors, and, in the case of ISOs and SARs
in tandem therewith, shall be exercisable during the lifetime of a Participant
only by such Participant or his guardian or legal representative; provided,
                                                                  ---------
however, that such Awards and other rights (other than ISOs and SARs in tandem
-------
therewith) may be transferred to one or more transferees during the lifetime of
the Participant to the extent and on such terms as then may be permitted by the
Committee.

     (c) No Right to Continued Employment or Service.  Neither the Plan nor any
         -------------------------------------------
action taken hereunder shall be construed as giving any employee or other person
the right to be retained in the employ or service of the Company or any of its
subsidiaries, nor shall it interfere in any way with the right of the Company or
any of its subsidiaries to terminate any employee's employment or other person's
service at any time.

     (d) Taxes.  The Company and any subsidiary is authorized to withhold from
         -----
any Award granted or to be settled, any delivery of Stock in connection with an
Award, any other payment relating to an Award or any payroll or other payment to
a Participant amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award.  This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.

     (e) Changes to the Plan and Awards.  The Board may amend, alter, suspend,
         ------------------------------
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such action shall be subject to the approval of the Company's stockholders
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided, however, that,
                                                  -----------------
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to him
(as such rights are set forth in the Plan and the Award Agreement).  The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement
relating thereto; provided, however, that, without the consent of an affected
                  -----------------
Participant, no such action may materially impair the rights of such Participant
under such Award (as such rights are set forth in the Plan and the Award
Agreement).  Notwithstanding the foregoing, the Board or the Committee may take
any action (including actions affecting or terminating outstanding Awards) to
the extent necessary for a business combination in which the Company is a party
to be accounted for under the pooling-of-interests method of accounting under
Accounting Principles Board Opinion No. 16 (or any successor thereto).

     (f) No Rights to Awards; No Stockholder Rights.  No Participant or employee
         ------------------------------------------
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants and employees.  No Award
shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Stock is duly issued or transferred and delivered to
the Participant in accordance with the terms of the Award or, in the case of an
Option, the Option is duly exercised.

     (g) Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to
         ---------------------------------------------
constitute an "unfunded" plan for incentive and deferred compensation.  With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
-----------------
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or

                                       11
<PAGE>

other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.

     (h) Nonexclusivity of the Plan.  Neither the adoption of the Plan by the
         --------------------------
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.

     (i) No Fractional Shares.  No fractional shares of Stock shall be issued or
         --------------------
delivered pursuant to the Plan or any Award.  The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

     (j) Compliance with Code Section 162(m).  It is the intent of the Company
         -----------------------------------
that employee Options, SARs and other Awards designated as Awards subject to
Section 7(f) shall constitute "qualified performance-based compensation" within
the meaning of Code Section 162(m).  Accordingly, if any provision of the Plan
or any Award Agreement relating to such an Award does not comply or is
inconsistent with the requirements of Code Section 162(m), such provision shall
be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the performance
objectives.

     (k) Governing Law.  The validity, construction and effect of the Plan, any
         -------------
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.

     (l) Effective Date; Plan Termination.  The Plan shall become effective as
         --------------------------------
of the date of its adoption by the Board and approval of the Company's
stockholders, and shall continue in effect until terminated by the Board.

                                       12