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                                  EXHIBIT 10.1

                                 WAVEPHORE, INC.

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                          1998 EMPLOYEE INCENTIVE PLAN

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1.    Purpose of the Plan

      The purpose of this WavePhore, Inc. 1998 Employee Incentive Plan ("Plan")
is to create shareholder value. To do so, the Plan provides incentives to
selected employees of the Company and its Subsidiaries, and selected
non-employee consultants and advisors to the Company and its Subsidiaries, who
are not Executive Officers or Directors of WavePhore, Inc., and who contribute,
and are expected to contribute, materially to its success. The Plan also
provides a means of rewarding outstanding performance and enhances the interest
of such persons in the Company's success and development by providing them a
proprietary interest in the Company. Further, the Plan is designed to enhance
the Company's ability to maintain a competitive position in attracting and
retaining qualified personnel necessary for the success and development of the
Company.

2.    Definitions

      As used in the Plan, the following definitions apply to the terms
indicated below:

            (a) "Board of Directors" shall mean the Board of Directors of
      WavePhore, Inc.

            (b) "Cause," when used in connection with the termination of a
      Participant's employment with the Company, for purposes of the Plan, shall
      mean the termination of the Participant's employment by the Company on
      account of (i) the willful and continued failure by the Participant
      substantially to perform his duties and obligations (other than any such
      failure resulting from his incapacity due to physical or mental illness)
      or (ii) the willful engaging by the Participant in an act or acts which
      could reasonably be expected to cause injury to the Company or are
      contrary to the best interests of the Company. For purposes of 



                                       
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      this Section 2(b), no act, or failure to act, on a Participant's part
      shall be considered "willful" unless done, or omitted to be done, by the
      Participant in bad faith and without reasonable belief that his action or
      omission was in the best interests of the Company.

            (c) "Cash Bonus" shall mean an award of a bonus payable in cash
      pursuant to Section 13 hereof.

            (d) "Change in Control" shall mean:

                        (i) the acquisition at any time by a "person" or "group"
            (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange
            Act) (excluding, for this purpose, David E. Deeds, any affiliate of
            David E. Deeds, the Company or any Subsidiary or any employee
            benefit plan of the Company or any Subsidiary) of beneficial
            ownership (as defined in Rule 13d-3 under the Exchange Act) directly
            or indirectly, of securities representing 20% or more of the
            combined voting power in the election of directors of the
            then-outstanding securities of the Company or any successor of the
            Company;

                        (ii) the termination of service as directors, for any
            reason other than death, disability or retirement from the Board of
            Directors, during any period of two consecutive years or less, of
            individuals who at the beginning of such period constituted a
            majority of the Board of Directors, unless the election of or
            nomination for election of each new director during such period was
            approved by a vote of at least two-thirds of the directors still in
            office who were directors at the beginning of the period;

                        (iii) approval by the shareholders of the Company of any
            merger or consolidation or statutory share exchange as a result of
            which the Common Shares shall be changed, converted or exchanged
            (other than a merger or share exchange with a wholly-owned
            Subsidiary of the Company), or liquidation of the Company, or any
            sale or disposition of 50% or more of the assets or earning power of
            the Company; or

                        (iv) approval by the shareholders of the Company of any
            merger, or consolidation, or statutory share exchange to which the
            Company is a party as a result of which the persons who were
            shareholders of the Company immediately prior to the effective 




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            date of the merger, or consolidation, or statutory share exchange
            shall have beneficial ownership of less than 50% of the combined
            voting power in the election of directors of the surviving
            corporation following the effective date of such merger, or
            consolidation, or statutory share exchange; provided, however, that
            no change in control shall be deemed to have occurred if, prior to
            such time as a change in control would otherwise be deemed to have
            occurred, the Company's Board of Directors deems otherwise.

            (e) "Committee" shall mean the committee appointed by the Board of
      Directors from time to time to administer the Plan.

            (f) "Common Shares" shall mean WavePhore, Inc. common shares, no par
      value per share.

            (g) "Company" shall mean WavePhore, Inc., an Indiana corporation,
      and each of its Subsidiaries.

            (h) "Disability" shall mean a Participant's inability to engage in
      any substantial gainful activity by reason of any medically determinable
      physical or mental impairment which can be expected to result in death or
      which has lasted or can be expected to last for a continuous period of not
      less than twelve (12) months.

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

            (j) "Executive Officer" shall mean the Chief Executive Officer,
            Chief Financial Officer, Executive Vice President, Senior Vice
            President, Vice President, Treasurer, Secretary, and any person
            serving in a similar capacity, of WavePhore, Inc.

            (k) the "Fair Market Value" of Common Shares with respect to any day
      shall be (i) the closing sales price on the immediately preceding business
      day of Common Shares as reported on the principal securities exchange on
      which Common Shares are then listed or admitted to trading or (ii) if not
      so reported, the average of the closing bid and ask prices on the
      immediately preceding business day as reported on the National Association
      of Securities Dealers Automated Quotation System or (iii) if not so
      reported, as furnished by any member of the National Association of
      Securities Dealers, Inc. selected by the Committee. In the event that the
      price of Common Shares shall not be so reported, the Fair 


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      Market Value of Common Shares shall be determined by the Committee in its
      absolute discretion.

            (l) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
      Stand-Alone SAR, share of Phantom Stock, Stock Bonus or Cash Bonus granted
      pursuant to the terms of the Plan.

            (m) "Incentive Stock Option" shall mean an Option which is an
      "incentive stock option" within the meaning of Section 422 of the Code.

            (n) "Issue Date" shall mean the date established by the Committee on
      which certificates representing shares of Restricted Stock shall be issued
      by WavePhore, Inc. pursuant to the terms of Section 10(d) hereof.

            (o) "LSAR" shall mean a limited stock appreciation right which is
      granted pursuant to the provisions of Section 7 hereof and which relates
      to an Option. Each LSAR shall be exercisable only upon the occurrence of a
      Change in Control and only in the alternative to the exercise of its
      related Option.

            (p) "Non-Employee Participant" shall mean a Participant who is not
      an employee of the Company.

            (q) "Non-Qualified Stock Option" shall mean an Option which is not
      an Incentive Stock Option and which is identified as a Non-Qualified Stock
      Option in the agreement by which it is evidenced.

            (r) "Option" shall mean an option to purchase Common Shares of
      WavePhore, Inc. granted pursuant to Section 6 hereof. Each Option shall be
      identified as a Non-Qualified Stock Option in the agreement by which it is
      evidenced.

            (s) "Participant" shall mean a person who is eligible to participate
      in the Plan and to whom an Incentive Award is granted pursuant to the
      Plan, and, upon his death, his successors, heirs, executors and
      administrators, as the case may be.

            (t) "Person" shall mean a "person," as such term is used in Sections
      13(d) and 14(d) of the Exchange Act.

            (u) "Phantom Stock" shall mean the right to receive in cash the Fair
      Market Value of Common Shares of WavePhore, Inc., which right is 




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      granted pursuant to Section 11 hereof and subject to the terms and
      conditions contained therein.

            (v) "Plan" shall mean the WavePhore, Inc. 1998 Employee Incentive
      Plan, as it may be amended from time to time.

            (w) "Restricted Stock" shall mean a Common Share which is granted
      pursuant to the terms of Section 10 hereof and which is subject to the
      restrictions set forth in Section 10(c) hereof for so long as such
      restrictions continue to apply to such share.

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

            (y) "Stand-Alone SAR" shall mean a stock appreciation right granted
      pursuant to Section 9 hereof which is not related to any Option.

            (z) "Stock Bonus" shall mean a grant of a bonus payable in Common
      Shares pursuant to Section 12 hereof.

            (aa) "Subsidiary" shall mean any corporation in which at the time of
      reference WavePhore, Inc. owns, directly or indirectly, stock comprising
      more than fifty percent of the total combined voting power of all classes
      of stock of such corporation.

            (bb) "Tandem SAR" shall mean a stock appreciation right granted
      pursuant to Section 8 hereof which is related to an Option. Each Tandem
      SAR shall be exercisable only to the extent its related Option is
      exercisable and only in the alternative to the exercise of its related
      Option.

            (cc) "Vesting Date" shall mean the date established by the Committee
      on which a share of Restricted Stock or Phantom Stock may vest.

            (dd) "WavePhore, Inc." shall mean WavePhore, Inc., an Indiana
      corporation, and its successors.

3.    Stock Subject to the Plan

      Under the Plan, the Committee may grant to Participants (i) Options, (ii)
LSARs, (iii) Tandem SARs, (iv) Stand-Alone SARs, (v) shares of Restricted Stock,




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(vi) shares of Phantom Stock, (vii) Stock Bonuses and (viii) Cash Bonuses.

      Subject to adjustment as provided in Section 14 hereof, the Committee may
grant Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
Stock and Stock Bonuses under the Plan with respect to a number of Common Shares
that in the aggregate does not exceed 4,000,000 shares. The grant of an LSAR,
Tandem SAR or Cash Bonus shall not reduce the number of Common Shares with
respect to which Options, Stand-Alone SARs, shares of Restricted Stock, shares
of Phantom Stock or Stock Bonuses may be granted pursuant to the Plan.

      In the event that any outstanding Option or Stand-Alone SAR expires,
terminates or is canceled for any reason (other than pursuant to Paragraphs
7(b)(2) or 8(b)(3) hereof), the Common Shares subject to the unexercised portion
of such Option or Stand-Alone SAR shall again be available for grants under the
Plan. In the event that an outstanding Option is canceled pursuant to Paragraphs
7(b)(2) or 8(b)(3) hereof by reason of the exercise of an LSAR or a Tandem SAR,
the Common Shares subject to the canceled portion of such Option shall not again
be available for grants under the Plan. In the event that any shares of
Restricted Stock or Phantom Stock, or any Common Shares granted in a Stock Bonus
are forfeited or canceled for any reason, such shares shall again be available
for grants under the Plan.

      Common Shares issued under the Plan may be either newly issued shares or
treasury shares, at the discretion of the Committee, and WavePhore, Inc. hereby
reserves 4,000,000 Common Shares for issuance pursuant to the Plan.

4.    Administration of the Plan

      The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more directors. The Committee shall from time to time
designate the persons who shall be granted Incentive Awards and the amount and
type of such Incentive Awards.

      The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties.




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      The Committee may, in its absolute discretion (i) accelerate the date on
which any Option or Stand-Alone SAR granted under the Plan becomes exercisable,
(ii) accelerate the Vesting Date or Issue Date, or waive any condition imposed
pursuant to Section 10(b) hereof, with respect to any share of Restricted Stock
granted under the Plan and (iii) accelerate the Vesting Date or waive any
condition imposed pursuant to Section 11(c) hereof, with respect to any share of
Phantom Stock granted under the Plan.

      In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices) as
the Committee specifies. Notwithstanding Section 3 herein, prior to the
surrender of such other Incentive Awards, Incentive Awards granted pursuant to
the preceding sentence of this Section 4 shall not count against the limits set
forth in such Section 3.

      Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee.

      No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and WavePhore, Inc. shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.

5.    Eligibility

      The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such employees of the Company and non-employee consultants and
advisors to the Company, as the Committee shall select from time to time.
Executive Officers and Directors of WavePhore, Inc. shall not be 



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eligible to receive Incentive Awards pursuant to the Plan.

6.    Options

      Subject to the provisions of the Plan, the Committee may grant Options,
which Options shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Options shall comply with and be subject to the
following terms and conditions:

            (a)   Identification of Options

            All Options granted under the Plan shall be clearly identified in
      the agreement evidencing such Options as Non-Qualified Stock Options. No
      Incentive Stock Options may be granted under the Plan.

            (b)   Exercise Price

            The exercise price of any Non-Qualified Stock Option granted under
      the Plan shall be such price as the Committee shall determine on the date
      on which such Non-Qualified Stock Option is granted; provided, that such
      price may not be less than the minimum price required by applicable law.

            (c)   Term and Exercise of Option

                  (1) Each Option shall be exercisable on such date or dates,
            during such period and for such number of Common Shares as shall be
            determined by the Committee on the day on which such Option is
            granted and set forth in the Option agreement with respect to such
            Option; provided, however, that no Option shall be exercisable after
            the expiration of ten years from the date such Option was granted;
            and, provided, further, that each Option shall be subject to earlier
            termination, expiration or cancellation as provided in the Plan.

                  (2) Each Option shall be exercisable in whole or in part;
            provided, that no partial exercise of an Option shall be for an
            aggregate exercise price of less than $1,000, unless such partial
            exercise is for the last remaining unexercised portion of such
            Option. The partial exercise of an Option shall not cause the
            expiration, termination or cancellation of the remaining portion
            thereof. Upon the partial exercise of an Option, the agreements




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            evidencing such Option and any related LSARs and Tandem SARs shall
            be returned to the Participant exercising such Option together with
            the delivery of the certificates described in Section 6(c)(4)
            hereof.

                  (3) An Option shall be exercised by delivering notice to
            WavePhore, Inc.'s principal office, to the attention of its
            Secretary, no less than one business day in advance of the effective
            date of the proposed exercise. Such notice shall be accompanied by
            the agreements evidencing the Option and any related LSARs and
            Tandem SARs, shall specify the number of Common Shares with respect
            to which the Option is being exercised and the effective date of the
            proposed exercise and shall be signed by the Participant. The
            Participant may withdraw such notice at any time prior to the close
            of business on the business day immediately preceding the effective
            date of the proposed exercise, in which case such agreements shall
            be returned to him. Payment for Common Shares purchased upon the
            exercise of an Option shall be made on the effective date of such
            exercise either (i) in cash, by certified check, bank cashier's
            check or wire transfer or (ii) subject to the approval of the
            Committee, in Common Shares owned by the Participant and valued at
            their Fair Market Value on the effective date of such exercise, or
            partly in Common Shares with the balance in cash, by certified
            check, bank cashier's check or wire transfer. Any payment in Common
            Shares shall be effected by the delivery of such shares to the
            Secretary of WavePhore, Inc., duly endorsed in blank or accompanied
            by stock powers duly executed in blank, together with any other
            documents and evidences as the Secretary of WavePhore, Inc. shall
            require from time to time.

                  (4) Any Option granted under the Plan may be exercised by a
            broker-dealer acting on behalf of a Participant if (i) the
            broker-dealer has received from the Participant or the Company a
            fully-and-duly-endorsed agreement evidencing such Option and
            instructions signed by the Participant requesting WavePhore, Inc. to
            deliver the Common Shares subject to such Option to the
            broker-dealer on behalf of the Participant and specifying the
            account into which such shares should be deposited, (ii) adequate
            provision has been made with respect to the payment of any
            withholding taxes due upon such exercise and (iii) the broker-dealer
            and the Participant have otherwise complied with Section 220.3(e)(4)
            of Regulation T, 12 CFR Part 220.



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                  (5) Certificates for Common Shares purchased upon the exercise
            of an Option shall be issued in the name of the Participant and
            delivered to the Participant as soon as practicable following the
            effective date on which the Option is exercised.

            (d)   Effect of Termination of Employment

                  (1) In the event that the employment of a Participant with the
            Company shall terminate for any reason other than retirement at age
            60 or later, Cause, Disability or death (i) Options granted to such
            Participant, to the extent that they were exercisable at the time of
            such termination, shall remain exercisable until the expiration of
            one month after such termination, on which date they shall expire,
            and (ii) Options granted to such Participant, to the extent that
            they were not exercisable at the time of such termination, shall
            expire at the close of business on the date of such termination;
            provided, however, that no Option shall be exercisable after the
            expiration of its term.

                  (2) In the event that the employment of a Participant with the
            Company shall terminate on account of the retirement at age 60 or
            later, Disability or death of the Participant (i) Options granted to
            such Participant, to the extent that they were exercisable at the
            time of such termination, shall remain exercisable until the
            expiration of one year after such termination, on which date they
            shall expire, and (ii) Options granted to such Participant, to the
            extent that they were not exercisable at the time of such
            termination, shall expire at the close of business on the date of
            such termination; provided, however, that no Option shall be
            exercisable after the expiration of its term.

                  (3) In the event of the termination of a Participant's
            employment for Cause, all outstanding Options granted to such
            Participant shall expire at the commencement of business on the date
            of such termination.

                  (4) In the event that a Non-Employee Participant ceases to
            provide services to the Company, all Options granted to such
            Non-Employee Participant shall remain exercisable in accordance with
            their terms.




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            (e)   Acceleration of Exercise Date Upon Change in Control

            Upon the occurrence of a Change in Control, each Option granted
      under the Plan and outstanding at such time shall become fully and
      immediately exercisable and shall remain exercisable until its expiration,
      termination or cancellation pursuant to the terms of the Plan.

7.    Limited Stock Appreciation Rights

      The Committee may grant in connection with any Option granted hereunder
one or more LSARs relating to a number of Common Shares equal to or less than
the number of Common Shares subject to the related Option. An LSAR may be
granted at the same time as, or subsequent to the time that, its related Option
is granted. Each LSAR shall be evidenced by an agreement in such form as the
Committee shall from time to time approve. Each LSAR granted hereunder shall be
subject to the following terms and conditions:

            (a)   Benefit Upon Exercise

                  The exercise of an LSAR relating to a Non-Qualified Stock
            Option with respect to any number of Common Shares shall entitle the
            Participant to a cash payment, for each such share, equal to the
            excess of (i) the greater of (A) the highest price per Common Share
            paid in the Change in Control in connection with which such LSAR
            became exercisable and (B) the Fair Market Value of a Common Share
            on the date of such Change in Control over (ii) the exercise price
            of the related Option. Such payment shall be paid as soon as
            practical, but in no event later than the expiration of five
            business days, after the effective date of such exercise.

            (b)   Term and Exercise of LSARs

                  (1) An LSAR shall be exercisable only during the period
            commencing on the first day following the occurrence of a Change in
            Control and terminating on the expiration of sixty days after such
            date. Notwithstanding the preceding sentence of this Section 7(b),
            in the event that an LSAR held by any Participant who is or may be
            subject to the provisions of Section 16(b) of the Exchange Act
            becomes exercisable prior to the expiration of six months following
            the date on which it is granted, then the LSAR shall also be
            exercisable during the period commencing on the first day
            immediately following the expiration of such six month period and




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            terminating on the expiration of sixty days following such date.
            Notwithstanding anything else herein, an LSAR may be exercised only
            if and to the extent that the Option to which it relates is
            exercisable.

                  (2) The exercise of an LSAR with respect to a number of Common
            Shares shall cause the immediate and automatic cancellation of the
            Option to which it relates with respect to an equal number of
            shares. The exercise of an Option, or the cancellation, termination
            or expiration of an Option (other than pursuant to this Paragraph
            (2)), with respect to a number of Common Shares, shall cause the
            cancellation of the LSAR related to it with respect to an equal
            number of shares.

                  (3) Each LSAR shall be exercisable in whole or in part;
            provided, that no partial exercise of an LSAR shall be for an
            aggregate exercise price of less than $1,000, unless such partial
            exercise is for the last remaining unexercised portion of such LSAR.
            The partial exercise of an LSAR shall not cause the expiration,
            termination or cancellation of the remaining portion thereof. Upon
            the partial exercise of an LSAR, the agreements evidencing the LSAR,
            the related Option and any Tandem SARs related to such Option shall
            be returned to the Participant exercising such LSAR together with
            the payment described in Paragraph 7(a)(i) or (ii) hereof, as
            applicable.

                  (4) An LSAR shall be exercised by delivering notice to
            WavePhore, Inc.'s principal office, to the attention of its
            Secretary, no less than one business day in advance of the effective
            date of the proposed exercise. Such notice shall be accompanied by
            the applicable agreements evidencing the LSAR, the related Option
            and any Tandem SARs relating to such Option, shall specify the
            number of Common Shares with respect to which the LSAR is being
            exercised and the effective date of the proposed exercise and shall
            be signed by the Participant. The Participant may withdraw such
            notice at any time prior to the close of business on the business
            day immediately preceding the effective date of the proposed
            exercise, in which case such agreements shall be returned to him.

8.    Tandem Stock Appreciation Rights



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      The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of Common Shares equal to or less
than the number of Common Shares subject to the related Option. A Tandem SAR may
be granted at the same time as, or subsequent to the time that, its related
Option is granted. Each Tandem SAR shall be evidenced by an agreement in such
form as the Committee shall from time to time approve. Tandem SARs shall comply
with and be subject to the following terms and conditions:

            (a)   Benefit Upon Exercise

            The exercise of a Tandem SAR with respect to any number of Common
      Shares shall entitle a Participant to a cash payment, for each such share,
      equal to the excess of (i) the Fair Market Value of a Common Share on the
      effective date of such exercise over (ii) the exercise price of the
      related Option. Such payment shall be paid as soon as practical, but in no
      event later than the expiration of five business days, after the effective
      date of such exercise.

            (b)   Term and Exercise of Tandem SAR

                  (1) A Tandem SAR shall be exercisable at the same time and to
            the same extent (on a proportional basis, with any fractional amount
            being rounded down to the immediately preceding whole number) as its
            related Option. Notwithstanding the first sentence of this Paragraph
            8(b)(1), a Tandem SAR shall not be exercisable at any time that an
            LSAR related to the Option to which the Tandem SAR is related is
            exercisable.

                  (2) Notwithstanding the first sentence of Paragraph 8(b)(1)
            hereof, the Committee may, in its absolute discretion, grant one or
            more Tandem SARs which shall not become exercisable unless and until
            the Participant to whom such Tandem SAR is granted is, in the
            determination of the Committee, subject to Section 16(b) of the
            Exchange Act and which shall cease to be exercisable if and at the
            time that the Participant ceases, in the determination of the
            Committee, to be subject to such Section 16(b).

                  (3) The exercise of a Tandem SAR with respect to a number of
            Common Shares shall cause the immediate and automatic cancellation
            of its related Option with respect to an equal number of shares. The
            exercise of an Option, or the 



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            cancellation, termination or expiration of an Option (other than
            pursuant to this Paragraph (3)), with respect to a number of Common
            Shares shall cause the automatic and immediate cancellation of its
            related Tandem SARs to the extent that the number of Common Shares
            subject to such Option after such exercise, cancellation,
            termination or expiration is less than the number of shares subject
            to such Tandem SARs. Such Tandem SARs shall be canceled in the order
            in which they became exercisable.

                  (4) Each Tandem SAR shall be exercisable in whole or in part;
            provided, that no partial exercise of a Tandem SAR shall be for an
            aggregate exercise price of less than $1,000, unless such partial
            exercise is for the last remaining unexercised portion of such
            Tandem SAR. The partial exercise of a Tandem SAR shall not cause the
            expiration, termination or cancellation of the remaining portion
            thereof. Upon the partial exercise of a Tandem SAR, the agreements
            evidencing such Tandem SAR, its related Option and LSARs relating to
            such Option shall be returned to the Participant exercising such
            Tandem SAR together with the payment described in Section 8(a)
            hereof.

                  (5) A Tandem SAR shall be exercised by delivering notice to
            WavePhore, Inc.'s principal office, to the attention of its
            Secretary, no less than one business day in advance of the effective
            date of the proposed exercise. Such notice shall be accompanied by
            the applicable agreements evidencing the Tandem SAR, its related
            Option and any LSARs related to such Option, shall specify the
            number of Common Shares with respect to which the Tandem SAR is
            being exercised and the effective date of the proposed exercise and
            shall be signed by the Participant. The Participant may withdraw
            such notice at any time prior to the close of business on the
            business day immediately preceding the effective date of the
            proposed exercise, in which case such agreements shall be returned
            to him.

9.    Stand-Alone Stock Appreciation Rights

      Subject to the provisions of the Plan, the Committee may grant Stand-Alone
SARs, which Stand-Alone SARs shall be evidenced by agreements in such form as
the Committee shall from time to time approve. Stand-Alone SARs shall comply
with and be subject to the following terms and conditions:




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            (a)   Exercise Price

            The exercise price of any Stand-Alone SAR granted under the Plan
      shall be determined by the Committee at the time of the grant of such
      Stand-Alone SAR.

            (b)   Benefit Upon Exercise

            The exercise of a Stand-Alone SAR with respect to any number of
      Common Shares prior to the occurrence of a Change in Control shall entitle
      a Participant to a cash payment, for each such share, equal to the excess
      of (i) the Fair Market Value of a Common Share on the exercise date over
      (ii) the exercise price of the Stand-Alone SAR. The exercise of a
      Stand-Alone SAR with respect to any number of Common Shares upon or after
      the occurrence of a Change in Control shall entitle a Participant to a
      cash payment, for each such share, equal to the excess of (i) the greater
      of (A) the highest price per Common Share paid in connection with such
      Change in Control and (B) the Fair Market Value of a Common Share on the
      date of such Change in Control over (ii) the exercise price of the
      Stand-Alone SAR. Such payments shall be paid as soon as practical, but in
      no event later than five business days, after the effective date of the
      exercise.

            (c)   Term and Exercise of Stand-Alone SARs

                  (1) Each Stand-Alone SAR shall be exercisable on such date or
            dates, during such period and for such number of Common Shares as
            shall be determined by the Committee and set forth in the
            Stand-Alone SAR agreement with respect to such Stand-Alone SAR;
            provided, however, that no Stand-Alone SAR shall be exercisable
            after the expiration of ten years from the date such Stand-Alone SAR
            was granted; and, provided, further, that each Stand-Alone SAR shall
            be subject to earlier termination, expiration or cancellation as
            provided in the Plan.

                  (2) Each Stand-Alone SAR may be exercised in whole or in part;
            provided, that no partial exercise of a Stand-Alone SAR shall be for
            an aggregate exercise price of less than $1,000, unless such partial
            exercise is for the last remaining unexercised portion of such
            Stand-Alone SAR. The partial exercise of a Stand-Alone SAR 




                                       15
<PAGE>   16
            shall not cause the expiration, termination or cancellation of the
            remaining portion thereof. Upon the partial exercise of a
            Stand-Alone SAR, the agreement evidencing such Stand-Alone SAR shall
            be returned to the Participant exercising such Stand-Alone SAR
            together with the payment described in Section 9(b) hereof.

                  (3) A Stand-Alone SAR shall be exercised by delivering notice
            to WavePhore, Inc.'s principal office, to the attention of its
            Secretary, no less than one business day in advance of the effective
            date of the proposed exercise. Such notice shall be accompanied by
            the applicable agreement evidencing the Stand-Alone SAR, shall
            specify the number of Common Shares with respect to which the
            Stand-Alone SAR is being exercised and the effective date of the
            proposed exercise and shall be signed by the Participant. The
            Participant may withdraw such notice at any time prior to the close
            of business on the business day immediately preceding the effective
            date of the proposed exercise, in which case the agreement
            evidencing the Stand-Alone SAR shall be returned to him.

            (d)   Effect of Termination of Employment

                  (1) In the event that the employment of a Participant with the
            Company shall terminate for any reason other than retirement at age
            60 or later, Cause, Disability or death (i) Stand-Alone SARs granted
            to such Participant, to the extent that they were exercisable at the
            time of such termination, shall remain exercisable until the
            expiration of one month after such termination, on which date they
            shall expire, and (ii) Stand-Alone SARs granted to such Participant,
            to the extent that they were not exercisable at the time of such
            termination, shall expire at the close of business on the date of
            such termination; provided, however, that no Stand-Alone SAR shall
            be exercisable after the expiration of its term.

                  (2) In the event that the employment of a Participant with the
            Company shall terminate on account of the retirement at age 60 or
            later, Disability or death of the Participant (i) Stand-Alone SARs
            granted to such Participant, to the extent that they were
            exercisable at the time of such termination, shall remain
            exercisable until the expiration of one year after such termination,
            on which date they shall expire, and (ii) Stand-Alone SARs granted




                                       16
<PAGE>   17
            to such Participant, to the extent that they were not exercisable at
            the time of such termination, shall expire at the close of business
            on the date of such termination; provided, however, that no
            Stand-Alone SAR shall be exercisable after the expiration of its
            term.

                  (3) In the event of the termination of a Participant's
            employment for Cause, all outstanding Stand-Alone SARs granted to
            such Participant shall expire at the commencement of business on the
            date of such termination.

                  (4) In the event that a Non-Employee Participant ceases to
            provide services to the Company, all Stand-Alone SARs granted to
            such Non-Employee Participant shall remain exercisable in accordance
            with their terms.

            (e)   Acceleration of Exercise Date Upon Change in Control

            Upon the occurrence of a Change in Control, each Stand-Alone SAR
      granted under the Plan and outstanding at such time shall become fully and
      immediately exercisable and shall remain exercisable until its expiration,
      termination or cancellation pursuant to the terms of the Plan.

10.   Restricted Stock

      Subject to the provisions of the Plan, the Committee may grant shares of
Restricted Stock. Each grant of shares of Restricted Stock shall be evidenced by
an agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Restricted Stock shall comply with and be subject to the
following terms and conditions:

            (a)   Issue Date and Vesting Date

            At the time of the grant of shares of Restricted Stock, the
      Committee shall establish an Issue Date or Issue Dates and a Vesting Date
      or Vesting Dates with respect to such shares. The Committee may divide
      such shares into classes and assign a different Issue Date and/or Vesting
      Date for each class. Except as provided in Sections 10(c) and 10(f)
      hereof, upon the occurrence of the Issue Date with respect to a share of
      Restricted Stock, a share of Restricted Stock shall be issued in
      accordance with the provisions of Section 10(d) hereof. Provided that all
      conditions to the vesting of a share of Restricted Stock imposed pursuant
      to Section 10(b) hereof are satisfied, and except as provided in Sections




                                       17
<PAGE>   18
      10(c) and 10(f) hereof, upon the occurrence of the Vesting Date with
      respect to a share of Restricted Stock, such share shall vest and the
      restrictions of Section 10(c) hereof shall cease to apply to such share.

            (b)   Conditions to Vesting

            At the time of the grant of shares of Restricted Stock, the
      Committee may impose such restrictions or conditions, not inconsistent
      with the provisions hereof, to the vesting of such shares as it, in its
      absolute discretion deems appropriate. By way of example and not by way of
      limitation, the Committee may require, as a condition to the vesting of
      any class or classes of shares of Restricted Stock, that the Participant
      or the Company achieve certain performance criteria, such criteria to be
      specified by the Committee at the time of the grant of such shares.

            (c)   Restrictions on Transfer Prior to Vesting

            Prior to the vesting of a share of Restricted Stock, no transfer of
      a Participant's rights with respect to such shares, whether voluntary or
      involuntary, by operation of law or otherwise, shall vest the transferee
      with any interest or right in or with respect to such share, but
      immediately upon any attempt to transfer such rights, such share, and all
      of the rights related thereto, shall be forfeited by the Participant and
      the transfer shall be of no force or effect.

            (d)   Issuance of Certificates

                  (1) Except as provided in Sections 10(c) or 10(f) hereof,
            reasonably promptly after the Issue Date with respect to shares of
            Restricted Stock, WavePhore, Inc. shall cause to be issued a stock
            certificate, registered in the name of the Participant to whom such
            shares were granted, evidencing such shares; provided, that
            WavePhore, Inc. shall not cause to be issued such a stock
            certificate unless it has received a stock power duly endorsed in
            blank with respect to such shares. Each such stock certificate shall
            bear the following legend:

                        "The transferability of this certificate and the shares
                  of stock represented hereby are subject to the restrictions,
                  terms and conditions (including forfeiture and restrictions
                  against transfer) contained in the WavePhore, Inc. 1998



                                       18
<PAGE>   19
                  Employee Incentive Plan and an Agreement entered into between
                  the registered owner of such shares and WavePhore, Inc. A copy
                  of the Plan and Agreement is on file in the office of the
                  Secretary of WavePhore, Inc."

                  Such legend shall not be removed from the certificate
            evidencing such shares until such shares vest pursuant to the terms
            hereof.

                  (2) Each certificate issued pursuant to Paragraph 10(d)(1)
            hereof, together with the stock powers relating to the shares of
            Restricted Stock evidenced by such certificate, shall be deposited
            by the Company with a custodian designated by the Company. The
            Company shall cause such custodian to issue to the Participant a
            receipt evidencing the certificates held by it which are registered
            in the name of the Participant.

            (e)   Consequences Upon Vesting

                  Upon the vesting of a share of Restricted Stock pursuant to
      the terms hereof, the restrictions of Section 10(c) hereof shall cease to
      apply to such share. Reasonably promptly after a share of Restricted Stock
      vests pursuant to the terms hereof, WavePhore, Inc. shall cause to be
      issued and delivered to the Participant to whom such shares were granted,
      a certificate evidencing such share, free of the legend set forth in
      Paragraph 10(d)(1) hereof, together with any other property of the
      Participant held by the custodian pursuant to Section 14(b) hereof.

            (f)   Effect of Termination of Employment

                  (1) In the event that the employment of a Participant with the
            Company shall terminate for any reason other than Cause prior to the
            vesting of shares of Restricted Stock granted to such Participant, a
            proportion of such shares, to the extent not forfeited or canceled
            on or prior to such termination pursuant to any provision hereof,
            shall vest on the date of such termination. The proportion referred
            to in the preceding sentence shall be determined by the Committee at
            the time of the grant of such shares of Restricted Stock and may be
            based on the achievement of any conditions imposed by the Committee
            with respect to such shares pursuant to Section 10(b). Such
            proportion may be equal to zero.




                                       19
<PAGE>   20
                  (2) In the event of the termination of a Participant's
            employment for Cause, all shares of Restricted Stock granted to such
            Participant which have not vested as of the date of such termination
            shall immediately be forfeited.

                  (3) In the event that a Non-Employee Participant ceases to
            provide services to the Company all shares of Restricted Stock
            granted to such Non-Employee Participant shall vest in accordance
            with the terms of the grant.

            (g)   Effect of Change in Control

                  Upon the occurrence of a Change in Control, all shares of
      Restricted Stock which have not theretofore vested (including those with
      respect to which the Issue Date has not yet occurred), or been canceled or
      forfeited pursuant to any provision hereof, shall immediately vest.

11.   Phantom Stock

      Subject to the provisions of the Plan, the Committee may grant shares of
Phantom Stock. Each grant of shares of Phantom Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Phantom Stock shall comply with and be subject to the
following terms and conditions:

            (a)   Vesting Date

                  At the time of the grant of shares of Phantom Stock, the
      Committee shall establish a Vesting Date or Vesting Dates with respect to
      such shares. The Committee may divide such shares into classes and assign
      a different Vesting Date for each class. Provided that all conditions to
      the vesting of a share of Phantom Stock imposed pursuant to Section 11(c)
      hereof are satisfied, and except as provided in Section 11(d) hereof, upon
      the occurrence of the Vesting Date with respect to a share of Phantom
      Stock, such share shall vest.

            (b)   Benefit Upon Vesting

                  Upon the vesting of a share of Phantom Stock, a Participant
      shall be entitled to receive in cash, within 30 days of the date on which
      such share vests, an amount in cash in a lump sum equal to the sum of 



                                       20
<PAGE>   21
      (i) the Fair Market Value of a Common Share of the Company on the date on
      which such share of Phantom Stock vests and (ii) the aggregate amount of
      cash dividends paid with respect to a Common Share of the Company during
      the period commencing on the date on which the share of Phantom Stock was
      granted and terminating on the date on which such share vests.

            (c)   Conditions to Vesting

                  At the time of the grant of shares of Phantom Stock, the
      Committee may impose such restrictions or conditions, not inconsistent
      with the provisions hereof, to the vesting of such shares as it, in its
      absolute discretion deems appropriate. By way of example and not by way of
      limitation, the Committee may require, as a condition to the vesting of
      any class or classes of shares of Phantom Stock, that the Participant or
      the Company achieve certain performance criteria, such criteria to be
      specified by the Committee at the time of the grant of such shares.

            (d)   Effect of Termination of Employment

                  (1) In the event that the employment of a Participant with the
            Company shall terminate for any reason other than Cause prior to the
            vesting of shares of Phantom Stock granted to such Participant, a
            proportion of such shares, to the extent not forfeited or canceled
            on or prior to such termination pursuant to any provision hereof,
            shall vest on the date of such termination. The proportion referred
            to in the preceding sentence shall be determined by the Committee at
            the time of the grant of such shares of Phantom Stock and may be
            based on the achievement of any conditions imposed by the Committee
            with respect to such shares pursuant to Section 11(c). Such
            proportion may be equal to zero.

                  (2) In the event of the termination of a Participant's
            employment for Cause, all shares of Phantom Stock granted to such
            Participant which have not vested as of the date of such termination
            shall immediately be forfeited.

                  (3) In the event that a Non-Employee Participant ceases to
            provide services to the Company, all shares of Phantom Stock granted
            to such Non-Employee Participant shall vest in accordance 




                                       21
<PAGE>   22
            with the terms of the grant.

            (e)   Effect of Change in Control

                  Upon the occurrence of a Change in Control, all shares of
      Phantom Stock which have not theretofore vested, or been canceled or
      forfeited pursuant to any provision hereof, shall immediately vest.

12.   Stock Bonuses

      Subject to the provisions of the Plan, the Committee may grant Stock
Bonuses in such amounts as it shall determine from time to time. A Stock Bonus
shall be paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. Certificates for Common
Shares granted as a Stock Bonus shall be issued in the name of the Participant
to whom such grant was made and delivered to such Participant as soon as
practicable after the date on which such Stock Bonus is required to be paid.

13.   Cash Bonuses

      Subject to the provisions of the Plan, the Committee may grant, in
connection with any grant of Restricted Stock or Stock Bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes in
connection with such Restricted Stock or Stock Bonus, in such amounts as the
Committee shall determine from time to time; provided however, that in no event
shall the amount of a Cash Bonus exceed 50% of the Fair Market Value of the
related shares of Restricted Stock or Stock Bonus on such date. A Cash Bonus
shall be subject to such conditions as the Committee shall determine at the time
of the grant of such Cash Bonus.

14.   Adjustment Upon Changes in Common Shares

            (a)   Shares Available for Grants

                  In the event of any change in the number of Common Shares
      outstanding by reason of any stock dividend or split, recapitalization,
      merger, consolidation, combination or exchange of shares or similar
      corporate change, the maximum aggregate number of Common Shares with
      respect to which the Committee may grant Options, Stand-Alone SARs, shares
      of Restricted Stock, shares of Phantom Stock and Stock 



                                       22
<PAGE>   23
      Bonuses shall be appropriately adjusted by the Committee. In the event of
      any change in the number of Common Shares outstanding by reason of any
      other event or transaction, the Committee may, but need not, make such
      adjustments in the number and class of Common Shares with respect to which
      Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
      Stock and Stock Bonuses may be granted as the Committee may deem
      appropriate.

            (b)   Outstanding Restricted Stock and Phantom Stock

                  Unless the Committee in its absolute discretion otherwise
      determines, any securities or other property (including dividends paid in
      cash) received by a Participant with respect to a share of Restricted
      Stock, the Issue Date with respect to which occurs prior to such event,
      but which has not vested as of the date of such event, as result of any
      dividend, stock split, recapitalization, merger, consolidation,
      combination, exchange of shares or otherwise will not vest until such
      share of Restricted Stock vests, and shall be promptly deposited with the
      custodian designated pursuant to Paragraph 10(d)(2) hereof.

            The Committee may, in its absolute discretion, adjust any grant of
      shares of Restricted Stock, the Issue Date with respect to which has not
      occurred as of the date of the occurrence of any of the following events,
      or any grant of shares of Phantom Stock, to reflect any dividend, stock
      split, recapitalization, merger, consolidation, combination, exchange of
      shares or similar corporate change as the Committee may deem appropriate
      to prevent the enlargement or dilution of rights of Participants under the
      grant.

                  (c)   Outstanding Options, LSARs, Tandem SARs and Stand-Alone 
            SARs--Certain Increases or Decreases in Issued Shares Without 
            Consideration

            Subject to any required action by the shareholders of WavePhore,
      Inc., in the event of any increase or decrease in the number of issued
      Common Shares resulting from a subdivision or consolidation of Common
      Shares or the payment of a stock dividend (but only on the Common Shares),
      the Committee shall proportionally adjust the number of Common Shares
      subject to each outstanding Option, LSAR, Tandem SAR and Stand-Alone SAR,
      and the exercise price per Common Share of each such Option, LSAR, Tandem
      SAR and Stand-Alone SAR.




                                       23
<PAGE>   24
                  (d) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
            SARs--Certain Mergers

            Subject to any required action by the shareholders of WavePhore,
      Inc., in the event that WavePhore, Inc. shall be the surviving corporation
      in any merger or consolidation (except a merger or consolidation as a
      result of which the holders of Common Shares receive securities of another
      corporation), each Option, LSAR, Tandem SAR and Stand-Alone SAR
      outstanding on the date of such merger or consolidation shall pertain to
      and apply to the securities which a holder of the number of Common Shares
      subject to such Option, LSAR, Tandem SAR or Stand-Alone SAR would have
      received in such merger or consolidation.

                  (e)   Outstanding Options, LSARs, Tandem SARs and Stand-Alone 
            SARs--Certain Other Transactions

            In the event of (i) a dissolution or liquidation of WavePhore, Inc.,
      (ii) a sale of all or substantially all of WavePhore, Inc.'s assets, (iii)
      a merger or consolidation involving WavePhore, Inc. in which WavePhore,
      Inc. is not the surviving corporation or (iv) a merger or consolidation
      involving WavePhore, Inc. in which WavePhore, Inc. is the surviving
      corporation but the holders of Common Shares receive securities of another
      corporation and/or other property, including cash, the Committee shall, in
      its absolute discretion, have the power to:

                        (i) cancel, effective immediately prior to the
            occurrence of such event, each Option (including each LSAR and
            Tandem SAR related thereto) and Stand-Alone SAR outstanding
            immediately prior to such event (whether or not then exercisable),
            and, in full consideration of such cancellation, pay to the
            Participant to whom such Option or Stand-Alone SAR was granted an
            amount in cash, for each Common Share subject to such Option or
            Stand-Alone SAR, respectively, equal to the excess of (A) the value,
            as determined by the Committee in its absolute discretion, of the
            property (including cash) received by the holder of a Common Share
            as a result of such event over (B) the exercise price of such Option
            or Stand-Alone SAR; or

                        (ii) provide for the exchange of each Option (including
            any related LSAR or Tandem SAR) and Stand-Alone SAR outstanding
            immediately prior to such event (whether or not then exercisable)
            for an option on or stock appreciation right with 




                                       24
<PAGE>   25
      respect to, as appropriate, some or all of the property for which such
      Option or Stand-Alone SAR is exchanged and, incident thereto, make an
      equitable adjustment as determined by the Committee in its absolute
      discretion in the exercise price of the option or stock appreciation
      right, or the number of shares or amount of property subject to the option
      or stock appreciation right or, if appropriate, provide for a cash payment
      to the Participant to whom such Option or Stand-Alone SAR was granted in
      partial consideration for the exchange of the Option or Stand-Alone SAR.

                  (f) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
            SARs--Other Changes

            In the event of any change in the capitalization of WavePhore, Inc.
      or corporate change other than those specifically referred to in Section
      14(c), (d) or (e) hereof, the Committee may, in its absolute discretion,
      make such adjustments in the number and class of shares subject to
      Options, LSARs, Tandem SARs or Stand-Alone SARs outstanding on the date on
      which such change occurs and in the per share exercise price of each such
      Option, LSAR, Tandem SAR and Stand-Alone SAR as the Committee may consider
      appropriate to prevent dilution or enlargement of rights.

            (g)   No Other Rights

                  Except as expressly provided in the Plan, no Participant shall
      have any rights by reason of any subdivision or consolidation of shares of
      stock of any class, the payment of any dividend, any increase or decrease
      in the number of shares of stock of any class or any dissolution,
      liquidation, merger or consolidation of WavePhore, Inc. or any other
      corporation. Except as expressly provided in the Plan, no issuance by
      WavePhore, Inc. of shares of stock of any class, or securities
      convertible, into shares of stock of any class, shall affect, and no
      adjustment by reason thereof shall be made with respect to the number of
      Common Shares subject to an Incentive Award or the exercise price of any
      Option, LSAR, Tandem SAR or Stand-Alone SAR.

15.   Rights as a Stockholder

      No person shall have any rights as a stockholder with respect to any
Common Shares covered by or relating to any Incentive Award granted 



                                       25
<PAGE>   26
pursuant to this Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 14
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.

16.   No Special Employment Rights; No Right to Incentive Award

      Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.

      No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.

17.   Securities Matters

            (a) The Company shall be under no obligation to effect the
      registration pursuant to the Securities Act of any Common Shares to be
      issued hereunder or to effect similar compliance under any state laws.
      Notwithstanding anything herein to the contrary, the Company shall not be
      obligated to cause to be issued or delivered any certificates evidencing
      Common Shares pursuant to the Plan unless and until the Company is advised
      by its counsel that the issuance and delivery of such certificates is in
      compliance with all applicable laws, regulations of governmental authority
      and the requirements of any securities exchange on which Common Shares are
      traded. The Committee may require, as a condition of the issuance and
      delivery of certificates evidencing Common Shares pursuant to the terms
      hereof, that the recipient of such shares make such covenants, agreements
      and representations, and that such certificates bear such legends, as the
      Committee, in its sole discretion, deems necessary or desirable.

            (b) The exercise of any Option granted hereunder shall only be



                                       26
<PAGE>   27
      effective at such time as counsel to the Company shall have determined
      that the issuance and delivery of Common Shares pursuant to such exercise
      is in compliance with all applicable laws, regulations of governmental
      authority and the requirements of any securities exchange on which Common
      Shares are traded. The Company may, in its sole discretion, defer the
      effectiveness of any exercise of an Option granted hereunder in order to
      allow the issuance of shares of Common stock pursuant thereto to be made
      pursuant to registration or an exemption from the registration or other
      methods for compliance available under federal or state securities laws.
      The Company shall inform the Participant in writing of its decision to
      defer the effectiveness of the exercise of an Option granted hereunder.
      During the period that the effectiveness of the exercise of an Option has
      been deferred, the Participant may, by written notice, withdraw such
      exercise and obtain the refund of any amount paid with respect thereto.

18.   Withholding Taxes

            (a)   Cash Remittance

            Whenever Common Shares are to be issued upon the exercise of an
      Option, the occurrence of the Issue Date or Vesting Date with respect to a
      share of Restricted Stock or the payment of a Stock Bonus, the Company
      shall have the right to require the Participant to remit to the Company in
      cash an amount sufficient to satisfy federal, state and local withholding
      tax requirements, if any, attributable to such exercise, occurrence or
      payment prior to the delivery of any certificate or certificates for such
      shares. In addition, upon the exercise of an LSAR, Tandem SAR or
      Stand-Alone Sar, the grant of a Cash Bonus or the making of a payment with
      respect to a share of Phantom Stock, the Company shall have the right to
      withhold from any cash payment required to be made pursuant thereto an
      amount sufficient to satisfy the federal, state and local withholding tax
      requirements.

            (b)   Stock Remittance

            At the election of the Participant, subject to the approval of the
      Committee, when Common Shares are to be issued upon the exercise of an
      Option, the occurrence of the Issue Date or the Vesting Date with respect
      to a share of Restricted Stock or the grant of a Stock Bonus, in lieu of
      the remittance required by Section 18(a) hereof, the Participant may
      tender to the Company a number of Common Shares determined by 



                                       27
<PAGE>   28
      such Participant, the Fair Market Value of which at the tender date the
      Committee determines to be sufficient to satisfy the federal, state and
      local withholding tax requirements, if any, attributable to such exercise,
      occurrence or grant and not greater than the Participant's estimated total
      federal, state and local tax obligations associated with such exercise,
      occurrence or grant.

            (c)   Stock Withholding

            At the election of the Participant, subject to the approval of the
      Committee, when Common Shares are to be issued upon the exercise of an
      Option, the occurrence of the Issue Date or the Vesting Date with respect
      to a share of Restricted Stock or the grant of a Stock Bonus, in lieu of
      the remittance required by Section 18(a) hereof, the Company shall
      withhold a number of such shares determined by such Participant, the Fair
      Market Value of which at the exercise date the Committee determines to be
      sufficient to satisfy the federal, state and local withholding tax
      requirements, if any, attributable to such exercise, occurrence or grant
      and is not greater than the Participant's estimated total federal, state
      and local tax obligations associated with such exercise, occurrence or
      grant.

19.   Amendment of the Plan

      The Plan will have no fixed termination date, but may be terminated at any
time by the Board of Directors. Incentive Awards outstanding as of the date of
any such termination will not be affected or impaired by the termination of the
Plan. The Board of Directors may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of a Participant with respect to an Incentive Award without the
Participant's consent.

20.   No Obligation to Exercise

      The grant to a Participant of an Option, LSAR, Tandem SAR or Stand-Alone
SAR shall impose no obligation upon such Participant to exercise such Option,
LSAR, Tandem SAR or Stand-Alone SAR.

21.   Nontransferability

      Unless the Committee provides otherwise, (i) no right or interest of a
Participant in any Incentive Award may be pledged, encumbered, or 



                                       28
<PAGE>   29
hypothecated to or in favor of any party other than the Company or a Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Subsidiary, and (ii) no Incentive
Award shall be assignable or transferable by a Participant other than by will or
the laws of descent and distribution.

22.   Expenses and Receipts

      The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.

23.   Suspension or Termination of Incentive Award

      In addition to the remedies of the Company elsewhere provided for herein,
if the Committee reasonably believes that a Participant has committed an act of
misconduct as described in this Section, the Committee may suspend the
Participant's rights to exercise any Incentive Award pending a determination by
the Board of Directors. If the Board of Directors determines a Participant has
committed an act of misconduct, including, but not limited to, embezzlement,
fraud, dishonesty, nonpayment of any obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company's rules resulting in loss,
damage or injury to the Company, or a Participant makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition, induces any Company customer to
breach a contract with the Company, induces any principal for whom the Company
acts as agent to terminate such agency relationship, or has failed to comply
with of the terms and conditions of the Plan or any agreement executed by such
Participant evidencing an Incentive Award, unless such failure has been remedied
by such Participant within 10 days after having been notified of such failure by
the Committee, neither the Participant nor his or her estate, executors,
administrators, or heirs, shall be entitled to exercise any Incentive Award
whatsoever. In making such determination, the Board of Directors shall act
fairly and shall give the Participant an opportunity to appear and present
evidence on his or her behalf at a hearing before a committee of the Board of
Directors.

24.   Effective Date of Plan

      The Plan shall be effective as of November 19, 1998.



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