<PAGE>   1
                                                          Exhibit (10)(iii)(A)2

             LUCENT TECHNOLOGIES INC. DEFERRED COMPENSATION PLAN
             ---------------------------------------------------

                            Adopted July 18, 1997


                                   Preamble
                                   --------

        Effective October 1, 1996, Lucent Technologies Inc. (the "Company")
established the Lucent Technologies Inc. Officer Incentive Award Deferral Plan
and the Lucent Technologies Inc. Deferred Compensation Plan for Non-Employee
Directors, each of which was merged into the Lucent Technologies Inc. Deferred
Compensation Plan (the "Plan") in July 1997. The Plan is intended to constitute
an unfunded, deferred compensation plan maintained primarily for a select group
of management or highly compensated employees and for members of the Board of
Directors who are not employees of the Company. The purpose of the Plan is to
provide a means by which eligible employees and non-employee Directors may
defer the receipt of certain forms of compensation while at the same time
giving the Company the present use of the compensation so deferred. The Plan is
intended to be an employee pension benefit plan within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended. The
Plan is not a qualified plan under Section 401(a) of the Internal Revenue Code
of 1986, as amended. Benefits under the Plan are paid directly by the Company
out of its general assets when due.
<PAGE>   2
                                       -2-


SECTION  1. DEFINITIONS.

                  As used in the Plan, the following terms shall have the
meanings set forth below:

                  (a) "1996 Program" shall mean the Lucent Technologies Inc.
1996 Long Term Incentive Program.

                  (b) "Account" shall mean, for each Participant, such
Participant's Deferred Cash Equivalent Account and Deferred Share Equivalent
Account.

                  (c) "Administrator" shall mean the Senior Vice President -
Human Resources of the Company.

                  (d) "Affiliate" shall mean (i) any Person that directly, or
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Company or (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.

                  (e) "Beneficiary Election" shall mean a written instrument, in
a form prescribed by the Administrator, relating to elections under Section 5.

                  (f) "Board" shall mean the Board of Directors of the Company.

                  (g) "Change in Control" shall mean the happening of any of the
following events:

                  (1)      An acquisition by any individual, entity or group
                           (within the meaning of Section 13(d)(3) or 14(d)(2)
                           of the Exchange Act) (an "Entity") of beneficial
                           ownership (within the meaning of Rule 13d-3
                           promulgated under the Exchange Act) of 20% or more of
                           either (A) the then outstanding shares of common
                           stock of the Company (the "Outstanding Company Common
                           Stock") or (B) the combined voting power of the then
                           outstanding voting securities of the Company entitled
                           to vote generally in the election of directors (the
                           "Outstanding Company Voting Securities"); excluding,
                           however, the following: (1) any acquisition directly
                           from the Company, other than an acquisition by virtue
                           of the exercise of a conversion privilege unless the
                           security being so converted was itself acquired
                           directly from the Company, (2) any acquisition by the
                           Company, (3) any acquisition by any employee benefit
                           plan (or related trust) sponsored or maintained by
                           the Company or any corporation controlled by the
                           Company, or (4) any acquisition by any corporation
                           pursuant to a transaction which complies with clauses
                           (A), (B) and (C) of subsection (3) of this Section
                           1(g); or
<PAGE>   3
                                       -3-


                  (2)      A change in the composition of the Board during any
                           two year period such that the individuals who, as of
                           the beginning of such two year period, constitute the
                           Board (such Board shall be hereinafter referred to as
                           the "Incumbent Board") cease for any reason to
                           constitute at least a majority of the Board;
                           provided, however, that for purposes of this
                           definition, any individual who becomes a member of
                           the Board subsequent to the beginning of the two year
                           period, whose election, or nomination for election by
                           the Company's shareowners, was approved by a vote of
                           at least a majority of those individuals who are
                           members of the Board and who were also members of the
                           Incumbent Board (or deemed to be such pursuant to
                           this proviso) shall be considered as though such
                           individual were a member of the Incumbent Board; and
                           provided, further however, that any such individual
                           whose initial assumption of office occurs as a result
                           of or in connection with either an actual or
                           threatened election contest (as such terms are used
                           in Rule 14a-11 of Regulation 14A promulgated under
                           the Exchange Act) or other actual or threatened
                           solicitation of proxies or consents by or on behalf
                           of an Entity other than the Board shall not be so
                           considered as a member of the Incumbent Board; or

                  (3)      The approval by the shareowners of the Company of a
                           merger, reorganization or consolidation or sale or
                           other disposition of all or substantially all of the
                           assets of the Company (each, a "Corporate
                           Transaction") or, if consummation of such Corporate
                           Transaction is subject, at the time of such approval
                           by shareowners, to the consent of any government or
                           governmental agency, the obtaining of such consent
                           (either explicitly or implicitly by consummation);
                           excluding however, such a Corporate Transaction
                           pursuant to which (A) all or substantially all of the
                           individuals and entities who are the beneficial
                           owners of the Outstanding Company Common Stock and
                           Outstanding Company Voting Securities immediately
                           prior to such Corporate Transaction will beneficially
                           own, directly or indirectly, more than 60% of the
                           outstanding shares of common stock, and the combined
                           voting power of the then outstanding voting
                           securities entitled to vote generally in the election
                           of directors of the corporation resulting from such
                           Corporate Transaction (including, without limitation,
                           a corporation or other Person which as a result of
                           such transaction owns the Company or all or
                           substantially all of the Company's assets either
                           directly or through one or more subsidiaries (a
                           "Parent Company")) in substantially the same
                           proportions as their ownership, immediately prior to
                           such Corporate Transaction, of the Outstanding
                           Company Common Stock and Outstanding Company Voting
                           Securities, (B)
<PAGE>   4
                                       -4-


                           no Entity (other than the Company, any employee
                           benefit plan (or related trust) of the Company, such
                           corporation resulting from such Corporate Transaction
                           or, if reference was made to equity ownership of any
                           Parent Company for purposes of determining whether
                           clause (A) above is satisfied in connection with the
                           applicable Corporate Transaction, such Parent
                           Company) will beneficially own, directly or
                           indirectly, 20% or more of the outstanding shares of
                           common stock of the corporation resulting from such
                           Corporate Transaction or the combined voting power of
                           the outstanding voting securities of such corporation
                           entitled to vote generally in the election of
                           directors unless such ownership resulted solely from
                           ownership of securities of the Company prior to the
                           Corporate Transaction, and (C) individuals who were
                           members of the Incumbent Board will immediately after
                           the consummation of the Corporate Transaction
                           constitute at least a majority of the members of the
                           board of directors of the corporation resulting from
                           such Corporate Transaction (or, if reference was made
                           to equity ownership of any Parent Company for
                           purposes of determining whether clause (A) above is
                           satisfied in connection with the applicable Corporate
                           Transaction, of the Parent Company); or

                  (4)      The approval by the shareowners of the Company of a
                           complete liquidation or dissolution of the Company.

                  (h) "Change in Control Election" shall mean a written
instrument, in a form prescribed by the Administrator, relating to elections
under Section 7.

                  (i) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                  (j) "Committee" shall mean the Corporate Governance and
Compensation Committee of the Board (or any successor committee).

                  (k) "Company" shall mean Lucent Technologies Inc.

                  (l) "Deferral Election" shall mean a written election, in a
form prescribed by the Administrator, to defer receipt of Incentive Awards,
Retainer Payments or salary otherwise payable to a Participant.

                  (m) "Deferred Cash Equivalent Account" shall mean a book-entry
account in the name of a Participant maintained in the Company's records with
entries denominated in dollars.

                  (n) "Deferred Share Equivalent Account" shall mean a
book-entry account in the name of a Participant maintained in the Company's
records with entries denominated in Share equivalents.
<PAGE>   5
                                       -5-


                  (o) "Director" shall mean any non-employee member of the
Board.

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

                  (q) "Eligible Member" shall mean an Officer, a Director, Other
Participant or a participant in either Predecessor Plan  or another person who
is designated by the Committee as an Eligible Member.

                  (r) "Fiscal Year" shall mean the period commencing October 1
and ending on the next succeeding September 30.

                  (s) "Incentive Award" shall mean any award under the Short
Term Plan, any other bonus payment, any performance awards, stock unit awards or
other awards under the 1996 Program (other than options) and any dividend
equivalent payment under the 1996 Program.

                  (t) "NYSE" shall mean the New York Stock Exchange, Inc.

                  (u) "Officer" shall mean any employee of the Company or any of
its Affiliates holding a position evaluated or classified above the executive
("E-band") level or its equivalent, and identified in the Company's records as
an officer of the Company (including an Officer who was a participant in any
Predecessor Plan).

                  (v) "Other Participant" shall mean any employee of the Company
or any of its Affiliates (1) holding a position evaluated or classified at or
above the "D-Band" level or its equivalent, and identified in the Company's
records as affected by the limitations on covered compensation described in
Section 401(a)(17) of the Code or the limitations on benefits described in
Section 415 of the Code or who has an Account with a positive balance, or (2)
holding a position evaluated or classified at or above the "E-Band" level or its
equivalent, in either case, only if the Administrator determines that such group
of employees shall be eligible to participate in the Plan.

                  (w) "Participant" shall mean an Eligible Member who delivers a
Deferral Election to the Company or who receives a Savings Plan Make-Up Credit.
A person shall not cease being a Participant if the person ceases being an
Eligible Member, if the person has an Account with a positive balance.

                  (x) "Participating Company" shall mean the Company and any of
its Affiliates.

                  (y) "Payment Election" shall have the meaning set forth in
Section 6(a).
<PAGE>   6
                                      -6-


                  (z) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, limited liability company, other entity or government or political
subdivision thereof.

                  (aa) "Plan" shall mean this Lucent Technologies Inc. Deferred
Compensation Plan.

                  (bb) "Plan Year" shall mean each twelve (12) consecutive month
period commencing January 1 and ending on December 31 of the same calendar year.

                  (cc) "Potential Change in Control" shall mean the happening of
any of the following events: (1) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control, (2)
any person (including the Company) publicly announces its intention to take or
to consider taking actions which if consummated would constitute a Change in
Control, (3) any person becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company's then outstanding securities or (4) the Board adopts a
resolution to the effect that a Potential Change in Control for purposes of the
Plan has occurred.

                  (dd) "Predecessor Plans" shall mean the Lucent Technologies
Inc. Officer Incentive Award Deferral Plan and the Lucent Technologies Inc.
Deferred Compensation Plan for Non-Employee Directors.

                  (ee) "Retainer Payments" shall mean any amounts payable to a
Director for service as a Director.

                  (ff) "Savings Plan" shall mean the Lucent Technologies Inc.
Long Term Savings Plan for Management Employees.

                  (gg) "Savings Plan Make-Up Credit" shall mean, for any
Eligible Member and any Plan Year, an amount equal to the excess, if any, of the
value of the contribution that would have been made by the Company for the
applicable Plan Year on behalf of the Eligible Member under Section 4.4 of the
Savings Plan (based upon the Pay Reduction Agreement (as defined in the Savings
Plan) made by the Eligible Member pursuant to Section 4.5(a) of the Savings
Plan) or any similar provision under any similar plan of the Company, without
regard to any limitation imposed by Sections 401(a)(17), 401(m)(2)(A) or 415 of
the Code, over the contribution actually made to the Savings Plan pursuant to
such Section 4.4, or to such other plan pursuant to such similar provision, for
the applicable Plan Year.

                  (hh) "Shares" shall mean the shares of common stock, $.01 par
value, of the Company.
<PAGE>   7
                                       -7-


                  (ii) "Short Term Plan" shall mean the Lucent Technologies Inc.
Short Term Incentive Plan.


         SECTION 2 .  DEFERRAL ELECTIONS.

                  (a) DELIVERY AND EFFECTIVENESS OF DEFERRAL ELECTIONS. A
Participant may elect to defer receipt of Incentive Awards, Retainer Payments or
salary otherwise payable to the Participant in future Fiscal Years by delivering
a Deferral Election to the Participant's employing Participating Company not
later than September 15 preceding the Fiscal Year in which the Deferral Election
is to become effective or such other time as the Committee shall determine. A
Deferral Election shall become irrevocable for a Fiscal Year at the end of the
last day of the preceding Fiscal Year. A deferral election under a Predecessor
Plan that has not been terminated shall be deemed a Deferral Election for
purposes of the Plan. During the period that a Deferral Election is effective,
the Participant shall not be entitled to receive currently payments covered by
such Deferral Election. The Company shall instead make credits to the
Participant's Account in accordance with Section 3.

                  (b) CONTENTS OF DEFERRAL ELECTIONS. Each Deferral Election
shall specify the types of compensation which shall be subject to such Deferral
Election and the effective date of the Deferral Election and shall contain the
Participant's Payment Election. A Deferral Election may also contain the date on
which the Deferral Election is to terminate.

                  (c) MODIFICATION AND RENEWAL OF DEFERRAL ELECTIONS. A Deferral
Election shall remain effective until the Participant terminates or modifies
such election by written notice to the Company. Any such termination or
modification shall become effective immediately following the end of the Fiscal
Year in which such notice is given. A Participant who has terminated a Deferral
Election may, so long as such Participant remains an Eligible Member or has an
Account with a positive balance, thereafter file a new Deferral Election in
accordance with Section 2(a).

                  (d) DEFERRAL OF INCENTIVE AWARDS. A Deferral Election may
relate to all or any portion of the Incentive Awards otherwise payable to a
Participant. The Deferral Election shall also specify the percentages of such
Incentive Awards that shall be credited to the Participant's Deferred Cash
Equivalent Account and Deferred Share Equivalent Account. If the amount of the
part of any Incentive Award (other than dividend equivalent payments) subject to
a Deferral Election is less than $1,000 (based on a valuation at the time the
award would otherwise be paid), that Incentive Award will be paid currently and
no credit relating to such Incentive Award will be made under the Plan.

                  (e) DEFERRAL OF SALARY. A Deferral Election may relate to all
or part of a Participant's salary; provided, however, that a Participant may not
elect to defer salary
<PAGE>   8
                                       -8-


in any Fiscal Year unless the Participant has elected to defer all of his or her
awards under the Short Term Plan and any other bonus payments for such Fiscal
Year.

                  (f) DEFERRAL OF RETAINER PAYMENTS. A Director's Deferral
Election may relate to all or part of the Retainer Payments otherwise payable to
the Director. Notwithstanding Section 2(a), a newly-elected Director may deliver
a Deferral Election to the Company within 30 days after his or her election,
which Deferral Election shall be effective for all Retainer Payments after the
date on which the Deferral Election is delivered to the Company.


         SECTION 3 .  PARTICIPANT ACCOUNTS.

                  (a) DEFERRED CASH EQUIVALENT ACCOUNT. (i) There shall be
credited to a Participant's Deferred Cash Equivalent Account the following:
amounts related to Incentive Awards for which a Deferral Election specifies
crediting to the Participant's Deferred Cash Equivalent Account, that portion of
a Director's Retainer Payment which is subject to a Deferral Election and which
would otherwise have been distributed in cash by the Company, deferred amounts
related to salary, amounts previously deferred under the Predecessor Plans and
credited to the Deferred Cash Equivalent Account, and Savings Plan Make-Up
Credits.

                  (ii) If the Savings Plan Make-up Credit for an Eligible Member
for any Plan Year shall be greater than zero, the Deferred Cash Equivalent
Account of such Eligible Member shall be credited with an amount equal to such
Savings Plan Make-Up Credit at such time as the Committee shall determine.

                  (iii) Amounts credited to the Participant's Deferred Cash
Equivalent Account shall bear interest as provided in Section 4 from the date
the Incentive Award, Retainer Payment, salary or Savings Plan Make-Up Credits
would otherwise have been paid to the Participant or paid or credited to the
Savings Plan, as applicable. Interest shall be credited to Deferred Cash
Equivalent Accounts at the end of each fiscal quarter of the Company.


                  (b) DEFERRED SHARE EQUIVALENT ACCOUNT. (i) There shall be
credited to a Participant's Deferred Share Equivalent Account the following:
amounts related to Incentive Awards for which a Deferral Election specifies
crediting to the Participant's Deferred Share Equivalent Account, Retainer
Payments which would otherwise have been distributed in Shares and amounts
previously deferred in share equivalents under the Predecessor Plans credited
under this Plan.

                  (ii) Cash amounts credited to a Participant's Deferred Share
Equivalent Account shall be converted to the number of Share equivalents
determined by dividing such cash amount by the Conversion Price. In addition,
the Participant's Deferred
<PAGE>   9
                                      -9-


Share Equivalent Account shall be credited on each dividend payment date for
Shares, with an amount equal to the number of Shares that could be purchased at
the Conversion Price with dividends that would have been payable on the number
of Shares equal to the number of Share equivalents in the Participant's Deferred
Share Equivalent Account on the record date for such dividend. "Conversion
Price" means the average of the daily high and low sale prices of Shares on the
NYSE for the period of five trading days ending on the date such amount
otherwise would have been paid to the Participant or, in the case of a dividend
equivalent, on the dividend payment date, or the period of five trading days
immediately preceding such applicable date if the NYSE is closed on such
applicable date.

                  (iii) In the event of any change in outstanding Shares by
reason of any stock dividend or stock split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change, the Board shall make such adjustments, if any, that it deems appropriate
in the number of Share equivalents then credited to Participants' Deferred Share
Equivalent Accounts. Any and all such adjustments shall be within the sole
discretion of the Board and its decision in regard to such adjustments shall be
conclusive, final and binding upon all parties concerned.


         SECTION 4 .  DEFERRED CASH EQUIVALENT ACCOUNT INTEREST RATE.

                  (a) INTEREST RATE GENERALLY. The interest rate to be accrued
on a Participant's Deferred Cash Equivalent Account shall be such rate as is
determined, from time to time, by the Board. Such rate may be applied by the
Board to a Participant's existing balance in a Deferred Cash Equivalent Account
or to amounts subsequently credited to such Participant's Account. The
determination by the Board pursuant to this Section 4 shall be within its sole
discretion and its decision shall be conclusive, final and binding upon all
parties concerned.

                  (b) INTEREST RATE FOLLOWING TERMINATION WITHOUT THE COMPANY'S
CONSENT. Notwithstanding Section 4(a), with respect to amounts credited to the
Deferred Cash Equivalent Accounts of Officers and Other Participants who
terminate employment (other than by death or disability) under circumstances
that the Administrator determines are not in the interests of the Company, the
effective annual rate of interest following the date of such termination of
employment shall be the one-year U.S. Treasury note rate.


         SECTION 5 .  PAYMENTS FOLLOWING DEATH.

                  (a) FORM OF PAYMENT. A Participant may deliver a Beneficiary
Election to the Administrator electing that, in the event the Participant should
die before full payment of all amounts credited to the Participant's Account,
the balance of the Account shall be distributed in one payment or in some other
number of approximately
<PAGE>   10
                                      -10-


equal annual installments (not exceeding five (5)) to the person(s) designated
in the Beneficiary Election. In the event that a Participant fails to designate
such a beneficiary, or the beneficiary(ies) predecease(s) him, payment following
the death of the Participant shall be made to the Participant's surviving spouse
or, if there is no surviving spouse, to the Participant's estate. The first
installment (or the single payment if the Participant has so elected) shall be
paid on the first day of the calendar quarter next following the month of death;
provided, however, that the Committee may, in its sole discretion, direct that
the first installment (or the single payment) shall be paid on the first day of
the calendar year next following the year of death.

                  (b) CHANGE OF BENEFICIARY DESIGNATION. The elections referred
to in Section 5(a), including the designation of a beneficiary or beneficiaries,
may be changed by a Participant at any time by delivering a new Beneficiary
Election to the Administrator.


         SECTION 6.   PAYMENTS.

                  (a) COMMENCEMENT OF BENEFITS. (i) At the time a Participant
makes a Deferral Election, a Participant shall also make an election under
Section 6(a)(ii) with respect to the distribution of the amounts credited to
such Participant's Account other than Savings Plan Make-Up Credits (each such
election, a "Payment Election"). Any similar election related to the
distribution of deferred amounts under the Predecessor Plans which has not been
modified or terminated shall be deemed a Payment Election under this Plan. A
Participant may, at any time earlier than twelve (12) months prior to the date
on which a distribution of a portion (or all) of a Participant's Account would
be payable under the terms of such Payment Election, submit a written election
to the Company requesting that the initial distribution date be further deferred
(hereinafter a "Redeferral Election"). A participant may make a single
Redeferral Election with respect to each Payment Election, and the Redeferral
Election shall supersede the Payment Election and be irrevocable upon delivery
to the Administrator.

                  (ii) Each Payment Election shall specify whether payments
related to Account balances other than Savings Plan Make-Up Credits shall
commence (i) on the first day of the calendar quarter next following the month
in which the Participant attains the age specified in such election, which age
shall not be earlier than 55 or later than 70, (ii) on the first day of the
calendar quarter next following the month in which the Participant retires from
a Participating Company or otherwise terminates employment with any
Participating Company (except for a transfer to another Participating Company);
provided, however, that the Committee may, in its sole discretion, direct that
the Participant's benefits shall commence on the first day of the calendar year
next following the year of retirement or other termination of employment, or
(iii) on the first day of the calendar year next following the calendar year in
which the Participant retires from a Participating Company or otherwise
terminates employment with any Participating Company (except for a transfer to
another Participating Company).
<PAGE>   11
                                      -11-


                  (iii) Notwithstanding the foregoing, amounts credited to a
Participant's Account as Savings Plan Make-Up Credits or earnings thereon shall
be distributed in one payment following the Participant's termination of
employment.

                  (b) FORM OF DISTRIBUTIONS. Amounts credited to a Participant's
Deferred Cash Equivalent Account shall be distributed in cash. Amounts credited
to a Participant's Deferred Share Equivalent Account as Share equivalents shall
be distributed in the form of an equal number of Shares, unless the Company
shall determine that payment of an equivalent cash amount is necessary or
convenient for its purposes.

                  (c) PAYMENT PERIOD. (i) A Participant may elect in a Payment
Election to receive the amounts credited to the Participant's Account other than
Savings Plan Make-Up Credits in one payment or in some other number of
approximately equal annual installments (not exceeding ten (10) or such longer
period as approved by the Committee, in individual cases), provided, however,
that the number of annual installments may not extend beyond the life expectancy
of the Participant, determined as of the date the first installment is paid.
Notwithstanding an election pursuant to the previous sentence, the entire amount
then credited to a Participant's Account shall be paid immediately in a single
payment (A) if the Participant is discharged for cause by his or her
Participating Company, (B) if the Administrator determines that the Participant
engaged in misconduct in connection with the Participant's employment with the
Participating Company, (C) if the Participant terminates employment under
circumstances that the Administrator determines are not in the interest of the
Company, or (D) if the Participant without the consent of the board of directors
of his or her Participating Company, both during and for a period of nine (9)
months after termination for any reason of the Participant's employment, on
behalf of any competitor of the Company (x) renders any services relating to:
(1) strategic planning, research and development, manufacturing, marketing, or
selling with respect to any product, process, material or service which
resembles, competes with, or is the same as a product, process, material or
service of the Company about which the Participant gained any proprietary or
confidential information or on which the Participant worked during the three (3)
years prior to termination of employment, or (2) any actual or potential
customer of Lucent about whom the Participant gained any proprietary or
confidential knowledge or with whom the Participant worked during the three (3)
years prior to termination of employment, or (y) solicits or offers, or induces
or encourages others to solicit or offer, employment to any employee of the
Company.

                  (ii) Installments subsequent to the first installment to the
Participant, or to a beneficiary or to the Participant's estate, shall be paid
on the first day of the applicable calendar quarter in each succeeding calendar
year until the entire amount credited to the Participant's Account shall have
been paid. Prior to distribution, Accounts shall continue to receive credits
under Section 3(a)(ii) and Section 3(b)(ii).
<PAGE>   12
                                      -12-


                  (d) ACCELERATION OF PAYMENT FOR SEVERE FINANCIAL HARDSHIP. In
the event a Participant, or the Participant's beneficiary after the
Participant's death, incurs a severe financial hardship, the Committee may, in
its sole discretion, accelerate or otherwise revise the payment schedule for the
Participant's Account to the extent reasonably deemed necessary to eliminate or
alleviate the severe financial hardship. For the purpose of this Section 6(d) a
severe financial hardship must have been caused by an accident, illness or other
event beyond the control of the Participant or, if applicable, the beneficiary.

                  (e) IMMEDIATE DISTRIBUTION OF DEFERRED CASH EQUIVALENT ACCOUNT
BALANCE. A Participant or former Participant participating in the Plan may at
any time elect to receive a distribution of all or any portion of the balance in
his or her Deferred Cash Equivalent Account. Amounts credited to Deferred Share
Equivalent Accounts shall not be available for distribution under this Section
6(e). Requests for distributions shall be submitted in writing (on a form
prescribed by the Administrator for such purpose) to the Administrator.
Distributions from the Participant's (or former Participant's) Deferred Cash
Equivalent Account pursuant to this Section 6(e) will at all times be subject to
(i) reduction for applicable tax withholdings pursuant to Section 9(h), and (ii)
a percentage reduction in the amount requested equal to six percent (6%) of the
amount requested. Distributions pursuant to this Section 6(e) shall be payable
in a single lump sum, in cash, within thirty (30) days of submission of the
completed form.


         SECTION 7 .  CHANGE IN CONTROL.

                  (a) Notwithstanding any Payment Election, a Participant may,
prior to the earlier of a Change in Control or September 30, 1998, deliver a
Change in Control Election to the Administrator, electing to have the aggregate
amount credited to the Participant's Account both before and after the filing of
such Change in Control Election paid in one lump-sum payment as soon as
practicable following a Change in Control, but in no event later than 90 days
after such Change in Control. Notwithstanding any Payment Election, any person
who becomes a Participant after September 30, 1998, may file a written notice
with the Administrator within 90 days of becoming a Participant, electing to
have the aggregate amount credited to the Participant's Account paid in one
lump-sum payment as soon as practicable following a Change in Control, but in no
event later than 90 days after such Change in Control.

                  (b) A Participant may, prior to the earlier of a Change in
Control or the beginning of the Fiscal Year in which the election is to take
effect, deliver a Change in Control Election to the Administrator, electing to
have the aggregate amount credited to the Participant's Account, in all Fiscal
Years commencing with the first Fiscal Year beginning after the date the Change
in Control Election is delivered to the Administrator, paid in one lump-sum
payment as soon as practicable following a Change in Control, but in no event
later than 90 days after such Change in Control. Amounts credited to the
Participant's Account prior to the effective date of such Change
<PAGE>   13
                                      -13-


in Control Election shall not be affected by such Change in Control Election and
shall be distributed following a Change in Control in accordance with any prior
Change in Control Election or, if the Participant has not made a Change in
Control Election, in accordance with the Plan.

                  (c) A Participant may, prior to the earlier of a Change in
Control or the beginning of any Fiscal Year, deliver a written notice to the
Administrator revoking any Change in Control Election with respect to amounts
credited to the Participant's Account in Fiscal Years commencing after the
written notice is delivered. Amounts credited to the Participant's Account prior
to the effective date of the written notice delivered pursuant to this Section
7(c) shall not be affected by such written notice and shall be distributed
following a Change in Control in accordance with any existing Change in Control
Election or, if the Participant has not made a Change in Control Election, in
accordance with the Plan.


         SECTION 8.   ADMINISTRATION.

                  (a) ADMINISTRATION. The Administrator shall have the authority
to administer and to interpret the Plan.

                  (b) RESPONSIBILITIES AND POWERS OF THE ADMINISTRATOR. In
administering the Plan, the Administrator shall have the following
responsibilities:

                  (1)      To administer the Plan in accordance with the terms
                           hereof, and to exercise all powers specifically
                           conferred upon the Administrator hereby or necessary
                           to carry out the provisions hereof;

                  (2)      To construe this Plan, which construction shall be
                           conclusive, correct any defects, supply omissions,
                           and reconcile inconsistencies to the extent necessary
                           to effectuate the Plan;

                  (3)      To determine in his or her sole discretion the amount
                           of benefits payable to Participants under the Plan.
                           Any interpretation or determination made by the Plan
                           Administrator pursuant to its discretionary authority
                           shall be final and binding on the Company, any
                           Participant, and any other affected party; and

                  (4)      To keep all records relating to Participants and such
                           other records as are necessary for proper operation
                           of the Plan.

                  (c) ACTIONS OF THE ADMINISTRATOR. In carrying out the
responsibilities set forth in Section 8(b):
<PAGE>   14
                                      -14-


                  (1)      The Administrator may adopt rules and regulations
                           necessary for the administration of the Plan which
                           are consistent with the provisions hereof.

                  (2)      All acts and decisions of the Administrator shall
                           apply uniformly to all Participants in like
                           circumstances. Written records shall be kept of all
                           acts and decisions.

                  (3)      The Administrator may delegate, in writing, any of
                           his or her responsibilities and powers with respect
                           to the Plan to another individual or individuals.

                  (d) The Administrator shall have the right to hire, at the
expense of the Company, such professional assistants and consultants as he or
she, in his or her sole discretion, deems necessary or advisable, including but
not limited to accountants, actuaries, consultants, counsel and such clerical
assistance as is necessary for proper discharge of his or her duties hereunder.


         SECTION 9 .  MISCELLANEOUS.

                  (a) BENEFITS PAYABLE BY THE COMPANY. All benefits payable
under this Plan constitute an unfunded obligation of the Company. Payments shall
be made, as due, from the general funds of the Company or, in the case of Share
payments, from newly issued Shares, Shares purchased in the market, treasury
Shares or otherwise. The Company may, at its option, maintain one or more
bookkeeping reserve accounts to reflect its obligations under the Plan and may
make such investments as it may deem desirable to assist it in meeting its
obligations. Any such investments shall be assets of the Company subject to the
claims of its general creditors. No person eligible for a benefit under this
Plan shall have any right, title to, or interest in any such investments.
Nothing contained in this Section 9(a) shall limit the ability of the Employer
to pay benefits through a grantor trust as provided in Section 9(b).
Participants are general, unsecured creditors of the Company. This Plan
constitutes a mere promise to pay benefits in the future.

                  (b) ESTABLISHMENT OF GRANTOR TRUST. The Company shall create a
grantor trust or utilize an existing grantor trust to assist it in accumulating
the Shares and cash needed to fulfill its obligations under this Plan. If such a
trust shall not have been created when a Potential Change in Control shall
occur, the Company shall create such a trust as soon as practicable thereafter.
The Board shall determine whether it is necessary or appropriate to deposit
Shares and cash in said grantor trust to enable the Company to meets its
obligations under this Plan and the extent of any such deposit to the grantor
trust.
<PAGE>   15
                                      -15-


                  (c) OBLIGATION FOR PAYMENT OF BENEFITS. The obligation to make
a distribution of amounts credited to a Participant's Account shall be borne by
the Participating Company which otherwise would have paid such amounts
currently. However, the obligation to make a distribution with respect to
Accounts which are related to amounts credited under a Predecessor Plan, and
with respect to which no Participating Company would otherwise have paid the
related award or deferred amount currently, shall be borne by the Participating
Company to which the Participant was assigned on October 1, 1996.

                  (d) AMENDMENT OR TERMINATION. (i) The Board may amend the Plan
or terminate the Plan at any time, but such amendment or termination shall not
adversely affect the rights of any Participant, without his or her consent, to
any benefit under the Plan to which such Participant may have previously become
entitled prior to the effective date of such amendment or termination. The
Administrator with the concurrence of the General Counsel of the Company or his
delegate shall be authorized to make minor or administrative changes to the
Plan, as well as amendments required by applicable federal or state law (or
authorized or made desirable by such statutes). Any amendment to the Plan by the
Board shall be made in writing, with or without a meeting, or shall be made in
writing by the Administrator, to the extent of the aforementioned authorization.

                  (ii) If the Plan is terminated, a valuation shall be made of
each Participant's Account balance as of the Plan termination date. The amount
of such Account balance shall be payable to the Participant at the time it would
have been payable under Section 5 and Section 6 had the Plan not been
terminated; provided, however, that the Committee may elect instead to
immediately distribute all Participants' Account balances in lump sums upon
termination of the Plan.

                  (e) ENTIRE AGREEMENT. This Plan constitutes the entire
agreement of the Company with respect to the benefits provided herein and cannot
be modified orally or in any writing other than as set forth in Section 9(d).

                  (f) PAYMENTS TO INCOMPETENTS. If a Participant entitled to
receive any benefits hereunder is adjudged to be legally incapable of giving
valid receipt and discharge for such benefits, they will be paid to the duly
appointed guardian of such Participant or to such other legally appointed person
as the Administrator may designate. Such payment shall, to the extent made, be
deemed a complete discharge of any liability for such payment under the Plan.

                  (g) BENEFITS NOT TRANSFERABLE. The right of any person to any
benefit or payment under the Plan shall not be subject to voluntary or
involuntary transfer, alienation or assignment and, to the fullest extent
permitted by law, shall not be subject to attachment, execution, garnishment,
sequestration or other legal or equitable process. In the event a person who is
receiving or is entitled to receive benefits under the Plan attempts to assign,
transfer or dispose of such right, or if an attempt is made to
<PAGE>   16
                                      -16-


subject said right to such process, such assignment, transfer, or disposition
shall be null and void.

                  (h) TAX WITHHOLDING. The Company is authorized to withhold
from any Account or payment due under the Plan the amount of applicable
withholding taxes in respect of such payment or Account and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such federal, state or other governmental entity
tax obligation.

                  (i) GOVERNING LAW. The provisions of the Plan shall be
construed in accordance with the laws of the State of Delaware.


Approved:


_______________________________________
Curtis R. Artis
Senior Vice President - Human Resources