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                                                                    EXHIBIT 10.7
                           WHITEHALL JEWELLERS, INC.
                         1996 LONG-TERM INCENTIVE PLAN
                                I. INTRODUCTION

     1.1 PURPOSES. The purposes of the 1996 Long-Term Incentive Plan (the
"Plan") of Whitehall Jewellers, Inc. (the "Company"), and its subsidiaries from
time to time (individually a "Subsidiary" and collectively the "Subsidiaries"),
are (a) to align the interests of the Company's stockholders and the recipients
of awards under this Plan by increasing the proprietary interest of such
recipients in the Company's growth and success, (b) to advance the interests of
the Company by attracting and retaining officers and other key employees, and
well-qualified persons who are not officers or employees of the Company
("non-employee directors") for service as directors of the Company and (c) to
motivate such employees and non-employee directors to act in the long-term best
interests of the Company's stockholders. For purposes of this Plan, references
to employment by the Company shall also mean employment by a Subsidiary.

     1.2 CERTAIN DEFINITIONS.

     "AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to
such terms in Rule 12b-2, as in effect on the effective date of this Plan, under
the Exchange Act; provided, however, that no director or officer of the Company
shall be deemed an Affiliate or Associate of any other director or officer of
the Company solely as a result of his or her being a director or officer of the
Company.

     "AGREEMENT" shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.

     "BENEFICIAL OWNER" (including the terms "BENEFICIALLY OWN" and "BENEFICIAL
OWNERSHIP"), when used with respect to any Person, shall be deemed to include
any securities which:

          (a) such Person or any of such Person's Affiliates or Associates
     beneficially owns, directly or indirectly (determined as provided in Rule
     13d-3, as in effect on the effective date of this Plan, under the Exchange
     Act);

          (b) such Person or any of such Person's Affiliates or Associates,
     directly or indirectly, has:

             (i) the right to acquire (whether such right is exercisable
        immediately or only after the passage of time or upon the satisfaction
        of any conditions, or both) pursuant to any written or oral agreement,
        arrangement or understanding (other than customary agreements with and
        among underwriters and selling group members with respect to a bona fide
        public offering of securities), upon the exercise of any options,
        warrants, rights or conversion or exchange privileges or otherwise;
        provided, however, that a Person shall not be deemed the Beneficial
        Owner of, or to Beneficially Own securities tendered pursuant to a
        tender or exchange offer made by or on behalf of such Person or any of
        such Person's Affiliates or Associates until such tendered securities
        are accepted for purchase or exchange; or

             (ii) the right to vote pursuant to any written or oral agreement,
        arrangement or understanding; provided, however, that a Person shall not
        be deemed the Beneficial Owner of, or to Beneficially Own, any security
        otherwise subject to this item (ii) if such agreement, arrangement or
        understanding to vote (1) arises solely from a revocable proxy or
        consent given to such Person or any of such Person's Affiliates or
        Associates in response to a public proxy or consent solicitation made
        pursuant to, and in accordance with, the applicable rules and
        regulations under the Exchange Act and (2) is not also then reportable
        by such Person on Schedule 13D (or any comparable or successor report
        then in effect) under the Exchange Act; or

             (iii) the right to dispose of pursuant to any written or oral
        agreement, arrangement or understanding (other than customary agreements
        with and among underwriters and selling group members with respect to a
        bona fide public offering of securities); or

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          (c) are beneficially owned, directly or indirectly, by any other
     Person with which such Person or any of such Person's Affiliates or
     Associates has any written or oral agreement, arrangement or understanding
     (other than customary agreements with and among underwriters and selling
     group members with respect to a bona fide public offering of securities)
     for the purpose of acquiring, holding, voting (except to the extent
     contemplated by the proviso to item (ii) of subparagraph (b) of the first
     paragraph of this definition) or disposing of any securities of the
     Company.

     Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.

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

     "BONUS STOCK" shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.

     "BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.

     "CAUSE" shall mean commission of a felony involving moral turpitude or any
material breach of any statutory or common law duty to the Company or a
Subsidiary involving willful malfeasance.

     "CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).

     "CODE" shall mean the Internal Revenue Code of 1986, as amended.

     "COMMITTEE" shall mean the Committee designated by the Board, consisting of
two or more members of the Board, each of whom shall be (a) a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and (b) an
"outside director" within the meaning of Section 162(m) of the Code, subject to
any transition rules applicable to the definition of outside director.

     "COMMON STOCK" shall mean the common stock, $.001 par value, of the
Company.

     "COMPANY" has the meaning specified in Section 1.1.

     "DIRECTORS OPTIONS" shall have the meaning set forth in Section 5.1.

     "DISABILITY" shall mean the inability for a continuous period of at least
six months of the holder of an award to perform substantially such holder's
duties and responsibilities, as determined solely by the Committee.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

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

     "EXEMPT PERSON" shall mean each of Hugh M. Patinkin, John R. Desjardins,
Matthew M. Patinkin and each Affiliate thereof.

     "FAIR MARKET VALUE" shall mean the average of the high and low transaction
prices of a share of Common Stock as reported in the National Association of
Securities Dealers Automated Quotation National Market System on the date as of
which such value is being determined, or, if the Common Stock is listed on a
national securities exchange, the average of the high and low transaction prices
of a share of Common Stock on the principal national stock exchange on which the
Common Stock is traded on the date as of which such value is being determined,
or, if there shall be no reported transactions for such date, on the next
preceding date for which transactions were reported; provided, however, that if
Fair Market Value for any date cannot be so determined, Fair Market Value shall
be determined by the Committee by whatever means or method as the Committee, in
the good faith exercise of its discretion, shall at such time deem appropriate.

     "FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with,
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair

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Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.

     "INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.

     "INCUMBENT BOARD" shall have the meaning set forth in Section 6.8(b)(ii)
hereof.

     "MATURE SHARES" shall mean shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (a) has held for at least six months or (b) has purchased on
the open market.

     "NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not
an officer or employee of the Company or any Subsidiary (except in the
definition of Committee, in which case "Non-Employee Director" shall have the
meaning set forth in Rule 16b-3 under the Exchange Act).

     "NON-STATUTORY STOCK OPTION" shall mean a stock option which is not an
Incentive Stock Option.

     "PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (a) as a condition to the
exercisability of all or a portion of an option or SAR or (b) during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common Stock
of a specified Fair Market Value for a specified period of time, earnings per
share, return to stockholders (including dividends), return on equity, earnings
of the Company, revenues, market share, cash flows or cost reduction goals, or
any combination of the foregoing. If the Committee desires that compensation
payable pursuant to any award subject to Performance Measures be "qualified
performance-based compensation" within the meaning of section 162(m) of the
Code, the Performance Measures shall be established by the Committee no later
than the end of the first quarter of the Performance Period or Restriction
Period, as applicable (or such other time designated by the Internal Revenue
Service).

     "PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.

     "PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to receive
one share of Common Stock, which may be Restricted Stock, or in lieu thereof,
the Fair Market Value of such Performance Share in cash.

     "PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.

     "PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.

     "PERSON" shall mean any individual, firm, corporation, partnership or other
entity, and shall include any successor (by merger or otherwise) of any of the
forgoing.

     "RESTRICTED STOCK" shall mean shares of Common Stock which are subject to a
Restriction Period.

     "RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under this
Plan.

     "RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.

     "SAR" shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.

     "STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.

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     "TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.

     "TAX DATE" shall have the meaning set forth in Section 6.5.

     "TEN PERCENT HOLDER" shall have the meaning set forth in Section 2.1(a).

     1.3 ADMINISTRATION. This Plan shall be administered by the Committee. Any
one or a combination of the following awards may be made under this Plan to
eligible persons: (a) options to purchase shares of Common Stock in the form of
Incentive Stock Options or Non-Statutory Stock Options, (b) in the form of
Tandem SARs or Free-Standing SARs, (c) Stock Awards in the form of Restricted
Stock or Bonus Stock and (d) Performance Shares. The Committee shall, subject to
the terms of this Plan, select eligible persons for participation in this Plan
and determine the form, amount and timing of each award to such persons and, if
applicable, the number of shares of Common Stock, the number of SARs and the
number of Performance Shares subject to such an award, the exercise price or
base price associated with the award, the time and conditions of exercise or
settlement of the award and all other terms and conditions of the award,
including, without limitation, the form of the Agreement evidencing the award.
The Committee shall, subject to the terms of this Plan, interpret this Plan and
the application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to the
grant of an award, conditions with respect to the award, such as limiting
competitive employment or other activities. All such interpretations, rules,
regulations and conditions shall be conclusive and binding on all parties.

     The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other executive officer of the Company as the
Committee deems appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (a) the grant of an award under
this Plan to any person who is a "covered employee" within the meaning of
Section 162(m) of the Code or who, in the Committee's judgment, is likely to be
a covered employee at any time during the period an award hereunder to such
employee would be outstanding or (b) the selection for participation in this
Plan of an officer or other person subject to Section 16 of the Exchange Act or
decisions concerning the timing, pricing or amount of an award to such an
officer or other person.

     No member of the Board of Directors or Committee, and neither the Chief
Executive Officer nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and the members of the Board of Directors and the
Committee and the President and Chief Executive Officer or other executive
officer shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company's Certificate of Incorporation and/or By-laws, as the
same may be amended or restated from time to time, and under any directors' and
officers' liability insurance that may be in effect from time to time.

     A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (a) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (b) acts approved in
writing by a majority of the members of the Committee without a meeting.

     Notwithstanding anything to the contrary herein, any grant of awards to a
Non-Employee Director shall require the approval of the Board.

     1.4 ELIGIBILITY. Participants in this Plan shall consist of such directors,
officers or other key employees of the Company and its Subsidiaries as the
Committee, in its sole discretion, may select from time to time. The Committee's
selection of a person to participate in this Plan at any time shall not require
the Committee to

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select such person to participate in this Plan at any other time. Non-Employee
Directors shall also be eligible to participate in this Plan in accordance with
Article V.

     1.5 SHARES AVAILABLE. Subject to adjustment as provided in Sections 6.7 and
6.8, 774,631 shares of Common Stock shall be available under this Plan, reduced
by the sum of the aggregate number of shares of Common Stock (a) that are issued
upon the grant of a Stock Award and (b) which become subject to outstanding
options, including Directors' Options, outstanding Free-Standing SARs and
outstanding Performance Shares. To the extent that shares of Common Stock
subject to an outstanding option (other than in connection with the exercise of
a Tandem SAR), Free-Standing SAR or Performance Share are not issued or
delivered by reason of the expiration, termination, cancellation or forfeiture
of such award or by reason of the delivery or withholding of shares of Common
Stock to pay all or a portion of the exercise price of an award, if any, or to
satisfy all or a portion of the tax withholding obligations relating to an
award, then such shares of Common Stock shall again be available under this
Plan.

     Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.

     To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options or SARs, Stock Awards or Performance Share Awards, or a
combination thereof may be granted during any calendar year to any person shall
be 412,500, subject to adjustment as provided in Section 6.7.

                II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

     2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. Each Incentive Stock Option shall
be granted within ten years of the effective date of this Plan. To the extent
that the aggregate Fair Market Value (determined as of the date of grant) of
shares of Common Stock with respect to which options designated as Incentive
Stock Options are exercisable for the first time by a participant during any
calendar year (under this Plan or any other plan of the Company, or any parent
or Subsidiary) exceeds the amount (currently $100,000) established by the Code,
such options shall constitute Non-Statutory Stock Options.

     Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

          (a) Number of Shares and Purchase Price. To the extent required, the
     number of shares of Common Stock subject to an option shall be determined
     by the Committee. The purchase price per share of Common Stock purchasable
     upon exercise of the option shall be determined by the Committee; provided,
     however, that the purchase price per share of Common Stock purchasable upon
     exercise of an Option shall not be less than 100% of the Fair Market Value
     of a share of Common Stock on the date of grant of such option; provided
     further, that if an Incentive Stock Option shall be granted to any person
     who, at the time such option is granted, owns capital stock possessing more
     than ten percent of the total combined voting power of all classes of
     capital stock of the Company (or of any parent or Subsidiary) (a "Ten
     Percent Holder"), the purchase price per share of Common Stock shall be the
     price (currently 110% of Fair Market Value) required by the Code in order
     to constitute an Incentive Stock Option.

          (b) Option Period and Exercisability. The period during which an
     option may be exercised shall be determined by the Committee; provided,
     however, that no Incentive Stock Option shall be exercised later than ten
     years after its date of grant; provided further, that if an Incentive Stock
     Option shall be granted to a Ten Percent Holder, such option shall not be
     exercised later than five years after its date of grant. The Committee may,
     in its discretion, establish Performance Measures which shall be satisfied
     or met as a condition to the grant of an option or to the exercisability of
     all or a portion of an option. The Committee shall determine whether an
     option shall become exercisable in cumulative or non-cumulative
     installments and in part or in full at any time. An exercisable option, or
     portion thereof, may be exercised
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     only with respect to whole shares of Common Stock, except that if the
     remaining option then exercisable is for less than a whole share, such
     remaining amount may be exercised.

          (c) Method of Exercise. An option may be exercised (i) by giving
     written notice to the Company specifying the number of whole shares of
     Common Stock to be purchased and accompanied by payment therefor in full
     (or arrangement made for such payment to the Company's satisfaction) either
     (1) in cash, (2) by delivery of Mature Shares having a Fair Market Value,
     determined as of the date of exercise, equal to the aggregate purchase
     price payable by reason of such exercise, (3) by authorizing the Company to
     withhold whole shares of Common Stock which would otherwise be delivered
     upon exercise of the option having a Fair Market Value, determined as of
     the date of exercise, equal to the aggregate purchase price payable by
     reason of such exercise, (4) in cash by a broker-dealer acceptable to the
     Company to whom the optionee has submitted an irrevocable notice of
     exercise or (5) a combination of (1), (2) and (3), in each case to the
     extent set forth in the Agreement relating to the option, (ii) if
     applicable, by surrendering to the Company any Tandem SARs which are
     canceled by reason of the exercise of the option and (iii) by executing
     such documents as the Company may reasonably request. The Committee shall
     have sole discretion to disapprove of an election pursuant to any of
     clauses (2)-(5). Any fraction of a share of Common Stock which would be
     required to pay such purchase price shall be disregarded and the remaining
     amount due shall be paid in cash by the optionee. No certificate
     representing Common Stock shall be delivered until the full purchase price
     therefor has been paid.

          (d) Additional Options. The Committee shall have the authority to
     include in any Agreement relating to an option a provision entitling the
     optionee to an additional option in the event such optionee exercises the
     option represented by such option agreement, in whole or in part, by
     delivering previously owned whole shares of Common Stock in payment of the
     purchase price in accordance with this Plan and such Agreement. Any such
     additional option shall be for a number of shares of Common Stock equal to
     the number of delivered shares, shall have a purchase price determined by
     the Committee in accordance with this Plan, shall be exercisable on the
     terms and subject to the conditions set forth in the Agreement relating to
     such additional option.

     2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
SARs to such eligible persons as may be selected by the Committee. The Agreement
relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.

     SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

          (a) Number of SARs and Base Price. The number of SARs subject to an
     award shall be determined by the Committee. Any Tandem SAR related to an
     Incentive Stock Option shall be granted at the same time that such
     Incentive Stock Option is granted. The base price of a Tandem SAR shall be
     the purchase price per share of Common Stock of the related option. The
     base price of a Free-Standing SAR shall be determined by the Committee;
     provided, however, that such base price shall not be less than 100% of the
     Fair Market Value of a share of Common Stock on the date of grant of such
     SAR.

          (b) Exercise Period and Exercisability. The Agreement relating to an
     award of SARs shall specify whether such award may be settled in shares of
     Common Stock (including shares of Restricted Stock) or cash or a
     combination thereof. The period for the exercise of an SAR shall be
     determined by the Committee; provided, however, that no Tandem SAR shall be
     exercised later than the expiration, cancellation, forfeiture or other
     termination of the related option. The Committee may, in its discretion,
     establish Performance Measures which shall be satisfied or met as a
     condition to the exercisability of an SAR. The Committee shall determine
     whether an SAR may be exercised in cumulative or non-cumulative
     installments and in part or in full at any time. An exercisable SAR, or
     portion thereof, may be exercised, in the case of a Tandem SAR, only with
     respect to whole shares of Common Stock and, in the case of a Free-Standing
     SAR, only with respect to a whole number of SARs. If an SAR is exercised
     for shares of Restricted Stock, a certificate or certificates representing
     such Restricted Stock shall be issued in accordance with Section 3.2(c) and
     the holder of such Restricted Stock shall have such rights of a stockholder
     of the Company as determined pursuant to Section 3.2(d). Prior to the
     exercise of an SAR
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     for shares of Common Stock, including Restricted Stock, the holder of such
     SAR shall have no rights as a stockholder of the Company with respect to
     the shares of Common Stock subject to such SAR.

          (c) Method of Exercise. A Tandem SAR may be exercised (i) by giving
     written notice to the Company specifying the number of whole SARs which are
     being exercised, (ii) by surrendering to the Company any options which are
     canceled by reason of the exercise of the Tandem SAR and (iii) by executing
     such documents as the Company may reasonably request. A Free-Standing SAR
     may be exercised (i) by giving written notice to the Company specifying the
     whole number (or if the remaining SAR then exercisable is for less then one
     whole share, such remaining amount) of SARs which are being exercised and
     (ii) by executing such documents as the Company may reasonably request.

     2.3 TERMINATION OF EMPLOYMENT OR SERVICE WITH THE COMPANY.

          (a) Disability. Subject to paragraph (f) below and Section 6.8, and
     unless otherwise specified in the Agreement relating to an option or SAR,
     as the case may be, if the employment or service with the Company of the
     holder of an option or SAR terminates by reason of Disability, each option
     and SAR held by such holder shall be exercisable only to the extent that
     such option or SAR, as the case may be, is exercisable on the effective
     date of such holder's termination of employment or service and may
     thereafter be exercised by such holder (or such holder's legal
     representative or similar person) until and including the earliest to occur
     of (i) the date which is three months (or such other period as set forth in
     the Agreement relating to such option or SAR) after the effective date of
     such holder's termination of employment or service and (ii) the expiration
     date of the term of such option or SAR.

          (b) Retirement. Subject to paragraph (f) below and Section 6.8, and
     unless otherwise specified in the Agreement relating to an option or SAR,
     as the case may be, if the employment or service with the Company of the
     holder of an option or SAR terminates by reason of retirement on or after
     age 65 with the consent of the Company, each option and SAR held by such
     holder shall be exercisable only to the extent that such option or SAR, as
     the case may be, is exercisable on the effective date of such holder's
     termination of employment or service and may thereafter be exercised by
     such holder (or such holder's legal representative or similar person) until
     and including the earliest to occur of (i) the date which is six months (or
     such other period as set forth in the Agreement relating to such option or
     SAR) after the effective date of such holder's termination of employment or
     service and (ii) the expiration date of the term of such option or SAR.

          (c) Death. Subject to paragraph (f) below and Section 6.8, and unless
     otherwise specified in the Agreement relating to an option or SAR, as the
     case may be, if the employment or service with the Company of the holder of
     an option or SAR terminates by reason of death, each option and SAR held by
     such holder shall be exercisable only to the extent that such option or
     SAR, as the case may be, is exercisable on the date of such holder's death,
     and may thereafter be exercised by such holder's executor, administrator,
     legal representative, beneficiary or similar person, as the case may be,
     until and including the earliest to occur of (i) the date which is one year
     (or such other period as set forth in the Agreement relating to such option
     or SAR) after the date of death and (ii) the expiration date of the term of
     such option or SAR.

          (d) Other Termination. If the employment or service with the Company
     of the holder of an option or SAR is terminated by the Company for Cause,
     each option and SAR held by such holder shall terminate automatically on
     the effective date of such holder's termination of employment or service.

     Subject to paragraph (f) below and Section 6.8, and unless specified in the
Agreement relating to an option or SAR, as the case may be, if the employment or
service with the Company of the holder of an option or SAR terminates for any
reason other than Disability, retirement on or after age 65 with the consent of
the Company, death or Cause, each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR is exercisable on the
effective date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is three months (or such other period as

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set forth in the Agreement relating to such option or SAR) after the effective
date of such holder's termination of employment or service and (ii) the
expiration date of the term of such option or SAR.

          (e) Death Following Termination of Employment or Service. Subject to
     paragraph (f) below and Section 6.8, and unless otherwise specified in the
     Agreement relating to an option or SAR, as the case may be, if the holder
     of an option or SAR dies during the three-month period following
     termination of employment or service by reason of Disability, or if the
     holder of an option or SAR dies during the three-month period following
     termination of employment or service by reason of retirement on or after
     age 65 with the consent of the Company, or if the holder of an option or
     SAR dies during the three-month period following termination of employment
     or service for any reason other than Disability or retirement on or after
     age 65 with the consent of the Company (or, in each case, such other period
     as set forth in the Agreement relating to such option or SAR), each option
     and SAR held by such holder shall be fully exercisable and may thereafter
     be exercised by the holder's executor, administrator, legal representative,
     beneficiary or similar person, as the case may be, until and including the
     earliest to occur of (i) the date which is one year (or such other period
     as set forth in the Agreement relating to such option or SAR) after the
     date of death and (ii) the expiration date of the term of such option or
     SAR.

          (f) Termination of Employment or Service -- Incentive Stock
     Options. Subject to Section 6.8 and unless otherwise specified in the
     Agreement relating to the option, if the employment or service with the
     Company of a holder of an incentive stock option terminates by reason of
     Permanent and Total Disability (as defined in Section 22(e)(3) of the
     Code), each incentive stock option held by such optionee shall be
     exercisable only to the extent that such option is exercisable on the
     effective date of such optionee's termination of employment or service by
     reason of Permanent and Total Disability, and may thereafter be exercised
     by such optionee (or such optionee's legal representative or similar
     person) until and including the earliest to occur of (i) the date which is
     three months (or such other period no longer than one year as set forth in
     the Agreement relating to such option) after the effective date of such
     optionee's termination of employment or service by reason of Permanent and
     Total Disability and (ii) the expiration date of the term of such option.

     Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates by reason of death, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such optionee's death and
may thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option)after the date of death and (ii) the
expiration date of the term of such option.

     If the employment or service with the Company of the optionee of an
Incentive Stock Option is terminated by the Company for Cause, each Incentive
Stock Option held by such optionee shall terminate automatically on the
effective date of such optionee's termination of employment or service.

     Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates for any reason other than
Permanent and Total Disability, death or Cause, each Incentive Stock Option held
by such optionee shall be exercisable only to the extent such option is
exercisable on the effective date of such optionee's termination of employment
or service, and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is three months after the effective date of such
optionee's termination of employment or service and (ii) the expiration date of
the term of such option.

     If the holder of an Incentive Stock Option dies during the three-month
period following termination of employment or service by reason of Permanent and
Total Disability (or such shorter period as set forth in the Agreement relating
to such option), or if the holder of an Incentive Stock Option dies during the
three-month period following termination of employment or service for any reason
other than Permanent and Total Disability, death or Cause, each Incentive Stock
Option held by such optionee shall be exercisable only to the extent such option
is exercisable on the date of the optionee's death and may thereafter be
exercised by the
                                       8
<PAGE>   9

optionee's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is one
year (or such shorter period as set forth in the Agreement relating to such
option) after the date of death and (ii) the expiration date of the term of such
option.

                               III. STOCK AWARDS

     3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards
to such eligible persons as may be selected by the Committee. Subject to
adjustment as provided in Sections 6.7 and 6.8 of this Plan, the aggregate
number of shares of Common Stock available under this Plan pursuant to all Stock
Awards shall not exceed 150,000 of the aggregate number of shares of Common
Stock available under this Plan. The Agreement relating to a Stock Award shall
specify whether the Stock Award is a Restricted Stock Award or Bonus Stock
Award.

     3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.

          (a) Number of Shares and Other Terms. The number of shares of Common
     Stock subject to a Restricted Stock Award or Bonus Stock Award and the
     Performance Measures (if any) and Restriction Period applicable to a
     Restricted Stock Award shall be determined by the Committee.

          (b) Vesting and Forfeiture. The Agreement relating to a Restricted
     Stock Award shall provide, in the manner determined by the Committee, in
     its discretion, and subject to the provisions of this Plan, for the vesting
     of the shares of Common Stock subject to such award (i) if specified
     Performance Measures are satisfied or met during the specified Restriction
     Period or (ii) if the holder of such award remains continuously in the
     employment or service of the Company during the specified Restricted Period
     and for the forfeiture of the shares of Common Stock subject to such award
     (x) if specified Performance Measures are not satisfied or met during the
     specified Restriction Period or (y) if the holder of such award does not
     remain continuously in the employment or service of the Company during the
     specified Restriction Period.

     Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.

          (c) Share Certificates. During the Restriction Period, a certificate
     or certificates representing a Restricted Stock Award shall be registered
     in the holder's name and may bear a legend, in addition to any legend which
     may be required pursuant to Section 6.6, indicating that the ownership of
     the shares of Common Stock represented by such certificate is subject to
     the restrictions, terms and conditions of this Plan and the Agreement
     relating to the Restricted Stock Award. All such certificates shall be
     deposited with the Company, together with stock powers or other instruments
     of assignment (including a power of attorney), each endorsed in blank with
     a guarantee of signature if deemed necessary or appropriate, which would
     permit transfer to the Company of all or a portion of the shares of Common
     Stock subject to the Restricted Stock Award in the event such award is
     forfeited in whole or in part. Upon termination of any applicable
     Restriction Period (and the satisfaction or attainment of applicable
     Performance Measures), or upon the grant of a Bonus Stock Award, in each
     case subject to the Company's right to require payment of any taxes in
     accordance with Section 6.5, a certificate or certificates evidencing
     ownership of the requisite number of shares of Common Stock shall be
     delivered to the holder of such award.

          (d) Rights with Respect to Restricted Stock Awards. Unless otherwise
     set forth in the Agreement relating to a Restricted Stock Award, and
     subject to the terms and conditions of a Restricted Stock Award, the holder
     of such award shall have all rights as a stockholder of the Company,
     including, but not limited to, voting rights, the right to receive
     dividends and the right to participate in any capital adjustment applicable
     to all holders of Common Stock; provided, however, that a distribution with
     respect to shares of Common Stock, other than a distribution in cash, shall
     be deposited with the Company and shall be subject to the same restrictions
     as the shares of Common Stock with respect to which such distribution was
     made.
                                       9
<PAGE>   10

          (e) Awards to Certain Executive Officers. Notwithstanding any other
     provision of this Article III, and only to the extent necessary to ensure
     the deductibility of the award to the Company, the Fair Market Value of the
     number of shares of Common Stock subject to a Stock Award granted to a
     "covered employee" within the meaning of Section 162(m) of the Code shall
     not exceed $2,000,000 (i) at the time of grant in the case of a Stock Award
     granted upon the attainment of Performance Measures or (ii) in the case of
     a Restricted Stock Award with Performance measures which shall be satisfied
     or met as a condition to the holder's receipt of the shares of Common Stock
     subject to such award, on the earlier of (x) the date on which the
     Performance Measures are satisfied or met and (y) the date the holder makes
     an election under Section 83(b) of the Code.

     3.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and unless
otherwise set forth in the Agreement relating to a Restricted Stock Award, if
the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Restriction Period
shall terminate as of the effective date of such holder's termination of
employment or service shall be forfeited and such portion shall be canceled by
the Company.

                          IV. PERFORMANCE SHARE AWARDS

     4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.

     4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.

          (a) Number of Performance Shares and Performance Measures. The number
     of Performance Shares subject to any award and the Performance Measures and
     Performance Period applicable to such award shall be determined by the
     Committee.

          (b) Vesting and Forfeiture. The Agreement relating to a Performance
     Share Award shall provide, in the manner determined by the Committee, in
     its discretion, and subject to the provisions of this Plan, for the vesting
     of such award, if specified Performance Measures are satisfied or met
     during the specified Performance Period, and for the forfeiture of such
     award, if specified Performance Measures are not satisfied or met during
     the specified Performance Period.

          (c) Settlement of Vested Performance Share Awards. The Agreement
     relating to a Performance Share Award (i) shall specify whether such award
     may be settled in shares of Common Stock (including shares of Restricted
     Stock) or cash or a combination thereof and (ii) may specify whether the
     holder thereof shall be entitled to receive, on a current or deferred
     basis, dividend equivalents, and, if determined by the Committee, interest
     on any deferred dividend equivalents, with respect to the number of shares
     of Common Stock subject to such award. If a Performance Share Award is
     settled in shares of Restricted Stock, a certificate or certificates
     representing such Restricted Stock shall be issued in accordance with
     Section 3.2(c) and the holder of such Restricted Stock shall have such
     rights of a stockholder of the Company as determined pursuant to Section
     3.2(d). Prior to the settlement of a Performance Share Award in shares of
     Common Stock, including Restricted Stock, the holder of such award shall
     have no rights as a stockholder of the Company with respect to the shares
     of Common Stock subject to such award.

     4.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and unless
otherwise set forth in the Agreement relating to a Performance Share Award, if
the employment or service with the Company of the holder of such award
terminates, the portion of such award which is subject to a Performance Period
on the effective date of such holder's termination of employment or service
shall be forfeited and such portion shall be canceled by the Company.

                                      10
<PAGE>   11

            V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS OPTIONS

     5.1 ELIGIBILITY. Each Non-Employee Director shall be granted options to
purchase shares of Common Stock in accordance with this Article V (collectively
"Directors Options"). All options granted under this Article V shall constitute
Non-Statutory Stock Options.

     5.2 GRANTS OF STOCK OPTIONS. Each Non-Employee Director may be granted
Non-Statutory Stock Options in the discretion of the Committee (subject to
approval by the Board).

                                      11
<PAGE>   12

     5.3 TERMINATION OF DIRECTORSHIP.

          (a) Disability. Subject to Section 6.8, if the holder of an option
     granted pursuant to this Article V ceases to be a director of the Company
     by reason of Disability, each such option held by such holder shall be
     exercisable only to the extent that such option is exercisable on the
     effective date of such holder's ceasing to be a director and may thereafter
     be exercised by such holder (or such holder's guardian, legal
     representative or similar person) until the earliest to occur of the (i)
     date which is three months after the effective date of such holder's
     ceasing to be a director and (ii) the expiration date of the term of such
     option.

          (b) Retirement. Subject to Section 6.8, if the holder of an option
     granted pursuant to this Article V ceases to be a director of the Company
     on or after age 65, each such option held by such holder shall be
     exercisable only to the extent that such option is exercisable on the
     effective date of such holder's ceasing to be a director and may thereafter
     be exercised by such holder (or such holder's legal representative or
     similar person) until the earliest to occur of the (i) date which is three
     months after the effective date of such holder's ceasing to be a director
     and (ii) the expiration date of the term of such option.

          (c) Death. Subject to Section 6.8, if the holder of an option granted
     pursuant to this Article V ceases to be a director of the Company by reason
     of death, each such option held by such holder shall be fully exercisable
     and may thereafter be exercised by such holder's executor, administrator,
     legal representative, beneficiary or similar person, as the case may be,
     until the earliest to occur of the (i) date which is one year after the
     date of death and (ii) the expiration date of the term of such option.

          (d) Other Termination. Subject to Section 6.8, if the holder of an
     option granted pursuant to this Article V ceases to be a director of the
     Company for any reason other than Disability, retirement on or after age 65
     or death, each such option held by such holder shall be exercisable only to
     the extent such option is exercisable on the effective date of such
     holder's ceasing to be a director and may thereafter be exercised by such
     holder (or such holder's legal representative or similar person) until the
     earliest to occur of the (i) date which is three months after the effective
     date of such holder's ceasing to be a director and (ii) the expiration date
     of the term of such option.

          (e) Death Following Termination of Directorship. Subject to Section
     6.8, if the holder of an option granted pursuant to this Article V dies
     during the three-month period following such holder's ceasing to be a
     director of the Company by reason of Disability, or if such a holder dies
     during the three-month period following such holder's ceasing to be a
     director of the Company on or after age 65, or if such a holder dies during
     the three-month period following such holder's ceasing to be a director for
     any reason other than by reason of Disability or retirement on or after age
     65, each such option held by such holder shall be exercisable only to the
     extent that such option is exercisable on the date of the holder's death
     and may thereafter be exercised by the holder's executor, administrator,
     legal representative, beneficiary or similar person, as the case may be,
     until the earliest to occur of the (i) date one year after the date of
     death and (ii) the expiration date of the term of such option.

     5.4 DIRECTORS OPTIONS. Each Directors Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:

          (a) Option Period and Exercisability. If at any time prior to the time
     that a Directors Option becomes exercisable, a Non-Employee Director shall
     no longer be a member of the Board, such Directors Option shall become void
     and of no further force or effect.

          (b) Purchase Price. The purchase price for the shares of Common Stock
     subject to any Directors Option shall be equal to 100% of the Fair Market
     Value of a share of Common Stock on the date of grant of such Directors
     Option. Such Directors Options shall be exercisable in accordance with
     Section 2.1(c).

          (c) Restrictions on Transfer. Directors Options shall be subject to
     the transfer restrictions and other provisions of Section 6.4.

                                      12
<PAGE>   13

          (d) Expiration. Each Directors Option which has become exercisable
     pursuant to Section 5.4(a), to the extent not theretofore exercised, shall
     expire on the first to occur of (i) the date which is three months after
     the first date on which the Non-Employee Director shall no longer be a
     member of the Board or the Board of Directors of a Subsidiary and (ii) the
     tenth anniversary of the date of grant of such option; provided, however,
     that if the Non-Employee Director shall die within such three-month period
     following the date on which he shall have ceased to serve as such a
     director, such option may be exercised at any time within the one-year
     period following the date of death to the extent not theretofore exercised
     (but in no event later than the tenth anniversary of the date of grant).

                                  VI. GENERAL

     6.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
stockholders of the Company for approval and, if approved by the affirmative
vote of a majority of the voting power of the shares of capital stock of the
Company entitled to vote thereon, shall become effective as of the commencement
of the initial public offering of the Company. This Plan shall terminate ten
years after its effective date unless terminated earlier by the Board.
Termination of this Plan shall not affect the terms or conditions of any award
granted prior to termination.

     Awards hereunder may be made at any time prior to the termination of this
Plan, provided that no award may be made later than ten years after the
effective date of this Plan. In the event that this Plan is not approved by the
stockholders of the Company, this Plan and any awards hereunder shall be void
and of no force or effect.

     6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation including Section 162(m) of the Code; provided, however, that
no amendment shall be made without stockholder approval if such amendment would
(a) increase the maximum number of shares of Common Stock available for issuance
under this Plan (subject to Section 6.7), (b) reduce the minimum purchase price
in the case of an option or the base price in the case of an SAR, (c) effect any
change inconsistent with Section 422 of the Code or (d) extend the term of this
Plan. No amendment may impair the rights of a holder of an outstanding award
without the consent of such holder.

     6.3 AGREEMENT. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.

     6.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE SHARES. No
option, SAR or Performance Share shall be transferable other than (i) by will,
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or (ii) as otherwise set forth in the
Agreement relating to such award. Each option, SAR or Performance Share may be
exercised or settled during the participant's lifetime only by the holder or the
holder's legal representative or similar person. Except as permitted by the
second preceding sentence, no option, SAR or Performance Share may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any option, SAR or
Performance Share, such award and all rights thereunder shall immediately become
null and void.

     6.5 TAX WITHHOLDING. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award of
any Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the

                                      13
<PAGE>   14

amount necessary to satisfy any such obligation or (ii) the holder may satisfy
any such obligation by any of the following means: (1) a cash payment to the
Company, (2) delivery to the Company of Mature Shares having an aggregate Fair
Market Value, determined as of the Tax Date, equal to the amount necessary to
satisfy any such obligation, (3) authorizing the Company to withhold whole
shares of Common Stock which would otherwise be delivered having an aggregate
Fair Market Value, determined as of the Tax Date, or withhold an amount of cash
which would otherwise be payable to a holder, equal to the amount necessary to
satisfy any such obligation, (4) in the case of the exercise of an option, a
cash payment by a broker-dealer acceptable to the Company to whom the optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3), in each case to the extent set forth in the Agreement relating to
the award; provided, however, that the Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(5). An Agreement may
provide for shares of Common Stock to be delivered or withheld having an
aggregate Fair Market Value in excess of the minimum amount required to be
withheld. Any fraction of a share of Common Stock which would be required to
satisfy such an obligation shall be disregarded and the remaining amount due
shall be paid in cash by the holder.

     6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

     6.7 ADJUSTMENT. Except as provided in Section 6.8, in the event of any
stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to holders of
Common Stock other than a regular cash dividend, the number and class of
securities available under this Plan, the number and class of securities subject
to each outstanding option and the purchase price per security, the number of
securities subject to each option to be granted to Non-Employee Directors
pursuant to Article V, the terms of each outstanding SAR, the number and class
of securities subject to each outstanding Stock Award, and the terms of each
outstanding Performance Share shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding options and SARs without
an increase in the aggregate purchase price or base price. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (a) available
under this Plan, such fractional security shall be disregarded, or (b) subject
to an award under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (1) the Fair Market Value on the
vesting, exercise or settlement date over (2) the exercise or base price, if
any, of such award.

     6.8 CHANGE IN CONTROL.

          (a)(i) Notwithstanding any provision in this Plan or any Agreement, in
     the event of a Change in Control pursuant to Section (b)(iii) or (iv)
     below, (1) all outstanding options and SARS shall immediately become
     exercisable in full, (2) the Restriction Period applicable to any
     outstanding Restricted Stock Award shall lapse, (3) the Performance Period
     applicable to any outstanding Performance Share shall lapse and (4) the
     Performance Measures applicable to any outstanding Restricted Stock Award
     (if any) and to any outstanding Performance Share shall be deemed to be
     satisfied at the maximum level. If, in connection with such Change in
     Control, holders of Common Stock receive solely shares of common stock that
     are registered under Section 12 of the Exchange Act, there shall be
     substituted for each share of Common Stock available under this Plan,
     whether or not then subject to an outstanding award, the number and class
     of shares into which each outstanding share of

                                       14
<PAGE>   15

     Common Stock shall be converted pursuant to such Change in Control. If, in
     connection with such Change in Control, holders of Common Stock receive
     solely cash and shares of common stock that are registered under Section 12
     of the Exchange Act, each outstanding award shall be surrendered to and
     canceled by the Company, and the holder shall receive, within ten days of
     the occurrence of such Change in Control, a proportionate amount of cash in
     the manner provided in Section (a)(ii) below, and there shall be
     substituted for the award surrendered a similar award reflecting a
     proportionate number of the class of shares into which each outstanding
     share of Common Stock shall be converted to such Change in Control. In the
     event of any such substitution, the proportion of cash and common stock,
     the purchase price per share in the case of an option and the base price in
     the case of an SAR, and any other terms of outstanding awards shall be
     appropriately adjusted by the Committee, such adjustments to be made in the
     case of outstanding options and SARs without an increase in the aggregate
     purchase price or base price; provided, that the proportion of cash and
     common stock substituted for outstanding awards shall reflect the
     approximate proportion of cash and common stock received by holders of
     Common Stock in such Change in Control. If, in connection with a Change in
     Control, holders of Common Stock receive any portion of the consideration
     in a form other than cash or shares of common stock that are registered
     under Section 12 of the Exchange Act, each share of Common Stock available
     under this Plan, whether or not then subject to an outstanding award, shall
     be substituted or surrendered for such proportion of common stock, cash or
     other consideration as shall be determined by the Committee pursuant to
     Section 6.7.

             (ii) Notwithstanding any provision in this Plan or any Agreement,
        in the event of a Change in Control pursuant to Section (b)(i) or (ii)
        below, or in the event of a Change in Control pursuant to Section
        (b)(iii) or (iv) below in connection with which the holders of Common
        Stock receive cash, each outstanding award shall be surrendered to the
        Company by the holder thereof, and each such award shall immediately be
        canceled by the Company, and the holder shall receive, within ten days
        of the occurrence of a Change in Control pursuant to Section (b)(i) or
        (ii) below or within ten days of the approval of the stockholders of the
        Company contemplated by Section (b)(iii) or (iv) below, a cash payment
        from the Company in an amount equal to (1) in the case of an option, the
        number of shares of Common Stock then subject to such option, multiplied
        by the excess, if any, of the greater of (A) the highest per share price
        offered to stockholders of the Company in any transaction whereby the
        Change in Control takes place or (B) the Fair Market Value of a share of
        Common Stock on the date of occurrence of the Change in Control, over
        the purchase price per share of Common Stock subject to the option; (2)
        in the case of a Free-Standing SAR, the number of shares of Common Stock
        then subject to such SAR, multiplied by the excess, if any, of the
        greater of (A) the highest per share price offered to stockholders of
        the Company in any transaction whereby the Change in Control takes place
        or (B) the Fair Market Value of a share of Common Stock on the date of
        occurrence of the Change in Control, over the base price of the SAR; and
        (3) in the case of a Restricted Stock Award or Performance Share Award,
        the number of shares of Common Stock or the number of Performance
        Shares, as the case may be, then subject to such award, multiplied by
        the greater of (A) the highest per share price offered to stockholders
        of the Company in any transaction whereby the Change in Control takes
        place or (B) the Fair Market Value of a share of Common Stock on the
        date of occurrence of the Change in Control. In the event of a Change in
        Control, each Tandem SAR shall be surrendered by the holder thereof and
        shall be canceled simultaneously with the cancellation of the related
        option. Except as may be provided in an agreement relating to an award,
        the Company may, but is not required to, cooperate with any person who
        is subject to Section 16 of the Exchange Act to assure that any cash
        payment in accordance with the foregoing to such person is made in
        compliance with Section 16 and the rules and regulations thereunder.

          (b) "Change in Control" shall mean:

             (i) the acquisition by any individual, entity or group (a
        "Person"), including any "person" within the meaning of Section 13(d)(3)
        or 14(d)(2) of the Exchange Act, of Beneficial Ownership of 25% or more
        of either (1) the then outstanding shares of common stock of the Company
        (the

                                      15
<PAGE>   16

        "Outstanding Company Common Stock") or (2) the combined voting power of
        the then outstanding securities of the Company entitled to vote
        generally in the election of directors (the "Outstanding Company Voting
        Securities"); excluding, however, the following: (A) any acquisition
        directly from the Company (excluding any acquisition resulting from the
        exercise of an exercise, conversion or exchange privilege unless the
        security being so exercised, converted or exchanged was acquired
        directly from the Company), (B) any acquisition by the Company, (C) any
        acquisition by an employee benefit plan (or related trust) sponsored or
        maintained by the Company or any corporation controlled by the Company,
        (D) any acquisition by an Exempt Person or (E) any acquisition by any
        corporation pursuant to a transaction which complies with clauses (1),
        (2) and (3) of subsection (iii) of this Section 6.8(b); provided
        further, that for purposes of clause (2), if any Person (other than an
        Exempt Person, the Company or any employee benefit plan (or related
        trust) sponsored or maintained by the Company or any corporation
        controlled by the Company) shall become the Beneficial Owner of 50% or
        more of the Outstanding Company Common Stock or 50% or more of the
        Outstanding Company Voting Securities by reason of an acquisition by the
        Company, and such Person shall, after such acquisition by the Company,
        become the Beneficial Owner of any additional shares of the Outstanding
        Company Common Stock or any additional Outstanding Company Voting
        Securities and such Beneficial Ownership is publicly announced, such
        additional Beneficial Ownership shall constitute a Change in Control;

             (ii) individuals who, as of the effective date hereof, constitute
        the Board of Directors (the "Incumbent Board") cease for any reason to
        constitute at least a majority of such Board; provided that any
        individual who becomes a director of the Company subsequent to the
        effective date hereof whose election, or nomination for election by the
        Company's stockholders, was approved by the vote of at least a majority
        of the directors then comprising the Incumbent Board shall be deemed a
        member of the Incumbent Board; and provided further, that any individual
        who was initially elected as a director of the Company as a result of an
        actual or threatened solicitation by a Person or group for the purpose
        of opposing a solicitation by any other Person or group with respect to
        the election or removal of directors shall not be deemed a member of the
        Incumbent Board;

             (iii) approval by the stockholders of the Company of a
        reorganization, merger or consolidation or sale or other disposition of
        all or substantially all of the assets of the Company (a "Corporate
        Transaction"); excluding, however, a Corporate Transaction pursuant to
        which (1) all or substantially all of the individuals or entities who
        are the Beneficial Owners, respectively, of the Outstanding Company
        Common Stock and the Outstanding Company Voting Securities immediately
        prior to such Corporate Transaction will Beneficially Own, directly or
        indirectly, more than 50% of, respectively, the outstanding shares of
        common stock, and the combined voting power of the outstanding
        securities of such corporation entitled to vote generally in the
        election of directors, as the case may be, of the corporation resulting
        from such Corporate Transaction (including, without limitation, a
        corporation which as a result of such transaction owns the Company or
        all or substantially all of the Company's assets either directly or
        indirectly) in substantially the same proportions relative to each other
        as their Beneficial Ownership, immediately prior to such Corporate
        Transaction, of the Outstanding Company Common Stock and the Outstanding
        Company Voting Securities, as the case may be, (2) no Person (other than
        an Exempt Person; the Company; any employee benefit plan (or related
        trust) sponsored or maintained by the Company or any corporation
        controlled by the Company; the corporation resulting from such Corporate
        Transaction; and any Person which Beneficially Owned, immediately prior
        to such Corporate Transaction, directly or indirectly, 50% or more of
        the Outstanding Company Common Stock or the Outstanding Company Voting
        Securities, as the case may be) will Beneficially Own, directly or
        indirectly, 50% or more of, respectively, the outstanding shares of
        common stock of the corporation resulting from such Corporate
        Transaction or the combined voting power of the outstanding securities
        of such corporation entitled to vote generally in the election of
        directors and (3) individuals who were members of the Incumbent Board
        will constitute at least a majority of the members of the board of
        directors of the corporation resulting from such Corporate Transaction;
        or

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             (iv) approval by the stockholders of the Company of a plan of
        complete liquidation or dissolution of the Company.

     Notwithstanding anything to the contrary herein, no Change of Control shall
be deemed to have taken place as a result of the issuance of shares of Common
Stock by the Company or the sale of shares of Common Stock by its stockholders
in connection with the Company's initial public offering.

     6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT/SERVICE. No person shall have
any right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment or
service by the Company, any Subsidiary or any affiliate of the Company or affect
in any manner the right of the Company, any Subsidiary or any affiliate of the
Company to terminate the employment or service of any person at any time without
liability hereunder.

     6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a stockholder
of the Company with respect to any shares of Common Stock or other equity
security of the Company which is subject to an award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.

     6.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.

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