<PAGE>   1
                                                                   EXHIBIT 10.36
                          1996 LONG-TERM INCENTIVE PLAN


1.  Purpose. The Pinnacle Micro, Inc. 1996 Long-Term Incentive Plan seeks to
promote the interest of the Company and its shareholders by assisting the
Company to attract, retain and reward executive, managerial and other key
employees and consultants and to promote a mutuality of interest between such
persons and the Company's shareholders. The Plan allows performance-based stock
and cash incentives and other equity-based incentive awards, thereby giving Plan
participants a proprietary interest in pursuing the long-term growth,
profitability and financial success of the Company.

2.  Definitions. For purposes of the Plan, the following terms shall have the
meanings set forth below:

      (a)        "Award" or "Awards" means an award or grant made to a 
            Participant under Sections 6 through 9, inclusive, of the Plan.

      (b)        "Award Agreement" means a written agreement in such form as 
            may from time to time be approved by the Committee, setting forth 
            the terms and conditions of an Award and executed by the Company 
            and the Participant.

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

      (d)        "Cause" for an Employee's termination shall be determined by 
            the Board of Directors of the Company; provided, however, that any
            Employee's written employment agreement which includes a different
            definition of cause or an analogous provision, shall govern with
            respect to that Employee.

      (e)        "Change in Control" means the occurrence of any of the 
            following events:

                  1) The acquisition after the date hereof in one or more
            transactions by any "Person" (as the term person is used for
            purposes of Section 13(d) or 14(d) of the Exchange Act) of
            "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
            under the Exchange Act) of forty percent (40%) or more of the
            combined voting power of the Company's then outstanding voting
            securities (the "Voting Securities"), provided, however, that for
            purposes of this paragraph (a), the Voting Securities acquired
            directly from the Company by any Person shall be excluded from the
            determination of such Person's Beneficial Ownership of Voting
            Securities (but such Voting Securities shall be included in the
            calculation of the total number of Voting Securities then
            outstanding); or

                  2) During any period of two consecutive years during the term
            of this Plan, individuals who at the beginning of such period
            constitute the Board cease for any reason to constitute at least a
            majority thereof, unless the election of each director who was not a
            director at the beginning of such period has been approved in
            advance by directors representing at least two-thirds of the
            directors then in office who were directors at the beginning of the
            period; or

                  3) Approval by shareholders of the Company of (i) a merger or
            consolidation involving the Company if the stockholders of the
            Company immediately before such merger or consolidation do not own,
            directly or indirectly, immediately following such merger or
            consolidation, more than fifty percent (50%) of the combined voting
            power of the outstanding voting securities of the corporation
            resulting from such merger or consolidation in substantially the
            same proportion as their ownership of the Voting Securities
            immediately before such merger or consolidation, or (ii) a complete
            liquidation or dissolution of the Company or an agreement for the
            sale or other disposition of all or substantially all of the assets
            of the Company.


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            Notwithstanding anything in this paragraph to the contrary, a Change
            in Control shall not be deemed to occur solely because forty (40%)
            or more of the then outstanding Voting Securities is acquired by (i)
            a trustee or other fiduciary holding securities under one or more
            employee benefit plans maintained by the Company or any of its
            subsidiaries, or (ii) any corporation which, immediately prior to
            such acquisition, is owned directly or indirectly by the
            stockholders of the Company in the same proportion as their
            ownership of stock in the Company immediately prior to such
            acquisition.

            Moreover, notwithstanding anything in this paragraph to the
            contrary, a Change in Control shall not be deemed to occur solely
            because any Person (the "Subject Person") acquires Beneficial
            Ownership of more than the permitted percentage of the outstanding
            Voting Securities as a result of an acquisition of Voting Securities
            by the Company which, by reducing the number of Voting Securities
            outstanding, increases the proportional number of shares
            Beneficially Owned by the Subject Person, provided, that if, after
            such share acquisition by the Company, the Subject Person becomes
            the Beneficial Owner of any additional Voting Securities, then a
            Change in Control shall occur.

       (f)       "Code" means the Internal Revenue Code of 1986, as in effect 
            from time to time, or any successor thereto, together with rules,
            regulations and interpretations promulgated thereunder.

       (g)       "Committee" means the Compensation Committee of the Board,
            constituted as provided in Section 3 of the Plan, or any other
            committee appointed by the Board with responsibility for the
            administration of the Plan whose members meet the requirements for
            eligibility to serve set forth in Section 3 of the Plan.

       (h)       "Common Stock" means the Common Stock par value $0.001 per 
            share of the Company or any security of the Company issued in 
            substitution, exchange or lieu thereof.

       (i)       "Company" means Pinnacle Micro, Inc., a Delaware corporation 
            or any successor corporation.

       (j)       "Consultant" means an individual that provides bona fide 
            services to the Company and who is not an employee of the Company.

       (k)       "Director" means a member of the Board.

       (l)       "Disability" means disability as determined by the Committee in
            accordance with standards and procedures similar to those under the
            Company's long-term disability plan.

       (m)       "Employee" means key employees (including officers who are 
            members of the Board) of the Company or any Subsidiary; as 
            identified by the Committee.

       (n)       "Exchange Act" means the Securities Exchange Act of 1934, as 
            amended and in effect from time to time, or any successor statute.

       (o)       "Fair Market Value" of Common Stock on any date means (i) if 
            the Common Stock is listed on an established stock exchange or any
            automated quotation system that provides sale quotations, the
            closing sale price for a share of the Common Stock on such exchange
            or quotation system on the applicable date, or if no sale of the
            Common Stock shall have been made on that day, on the next preceding
            day on which there was a sale of the Common Stock; (ii) if the
            Common Stock is not listed on any exchange or quotation system, but
            bid and asked prices are 


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                                                                           10.36


            quoted and published, the mean between the quoted bid and asked
            prices on the applicable date, and if such prices are not available
            on such day, on the next preceding day on which such prices were
            available; and (iii) if the Common Stock is not regularly quoted,
            the fair market value of a share of Common Stock on the applicable
            date established by the Committee in good faith by any fair and
            reasonable means. Fair Market Value determined by the Committee in
            good faith shall be final, binding and conclusive on all parties.

       (p)       "Incentive Stock Option" means any Stock Option that is 
            specifically designated by the Committee as an "incentive stock 
            option" within the meaning of section 422 of the Code.

       (q)       "Non-Employee Director" except for purposes of Section 3(a), 
            means any Director who is not an Employee of the Company or any
            Subsidiary.

       (r)       "Non-Qualified Stock Option" means any Stock Option that is 
            not an Incentive Stock Option.

       (s)       "Participant" means an Employee or Non-Employee Director to 
            whom an Award has been made and is outstanding under the Plan.

       (t)       "Performance Award" means an Award granted pursuant to the
            provisions of Section 9 of the Plan, the vesting of which is
            contingent upon the attainment of specific Performance Objectives
            during specific Performance Periods.

       (u)       "Performance Equity Grant" means an Award of units representing
            shares of Common Stock granted pursuant to the provisions of Section
            9 of the Plan.

       (v)       "Performance Objectives" means specific targets and objectives
            established by the Committee using one or more of the following
            criteria: earnings per share of the Common Stock, return on average
            stockholders' equity, return on capital, total stockholder returns
            of the Company, operating cash flow, net income, sales growth,
            return on sales and return on net assets. Performance Objectives may
            be absolute or may be based on the results of a peer group of
            comparable companies established by the Committee. Satisfaction of
            Performance Objectives shall be determined in accordance with
            generally accepted accounting principles, as utilized by the Company
            in its reports filed under the Exchange Act.

       (w)       "Performance Period" means a period of not less than one fiscal
            quarter nor more than three consecutive Company fiscal years for
            which Performance Objectives have been established.

       (x)       "Performance Unit Grant" means an Award of monetary units 
            granted pursuant to the provisions of Section 9 of the Plan.

       (y)       "Plan" means this Pinnacle Micro Inc. 1996 Long-Term Incentive
            Plan, as set forth herein and as it may be amended from time to 
            time.

       (z)       "Restriction Period" means the period of time (i) a non-
            Consultant Participant must remain employed by the Company or any 
            of its Subsidiaries or in such circumstances where an Employee 
            becomes a Non-Employee Director and (ii) a Consultant provides 
            bona fide services to the Company or a Subsidiary, in order for a 
            Restricted Stock Award to vest.

       (aa)      "Restricted Stock Award" means an Award of shares of Common 
            Stock granted pursuant to the provisions of Section 8 of the Plan 
            which may be subject to restrictions which lapse over 


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            time with or without regard to Performance Objectives, as the
            Committee in its sole discretion shall determine.

       (bb)      "Retirement" means retirement from active employment with the
            Company and its Subsidiaries at any age at which the Participant is
            entitled to an immediately commencing pension under any retirement
            plan of the Company or as otherwise determined by the Board of
            Directors.

       (cc)      "Rule 16b-3" means Rule 16b-3 of the General Rules and 
            Regulations under the Exchange Act (or any successor rule or 
            regulation).

       (dd)      "Spread" means the amount (not less than zero) by which the 
            Fair Market Value of a share of Common Stock subject to the Stock 
            Option exceeds the exercise price of a Stock Option.

       (ee)      "Stock Appreciation Right" means an Award granted pursuant to 
            the provisions of Section 7 of the Plan, entitling a Participant to
            receive an amount equal to (or if the Committee shall determine at
            the time of grant, less than) the excess of the Fair Market Value of
            a share of Common Stock on the date of exercise over the Fair Market
            Value of a share of Common Stock on the date of grant of the Stock
            Appreciation Right, multiplied by the number of shares of Common
            Stock with respect to which the Stock Appreciation Right shall have
            been exercised.

       (ff)      "Stock Option" means an Award to purchase shares of Common 
            Stock granted pursuant to the provisions of Section 6 of the Plan.

       (gg)      "Subsidiary" means any corporation (other than the Company) 
            in an unbroken chain of corporations beginning with the Company if 
            each of the corporations other than the last corporation in the 
            unbroken chain owns stock possessing fifty percent or more of the 
            total combined voting power of all classes of stock in one of the 
            other corporations in such chain.

       (hh)      "Ten-Percent Stockholder" means an individual who "owns," as 
            defined in section 424 of the Code, stock possessing more than ten 
            percent of the total combined voting power of all classes of stock 
            of: (i) the Company, (ii) a Subsidiary, or (iii) a parent 
            corporation of the Company.

       (ii)      Window Period" means the period beginning on the third 
            business day following the date of release of the financial data 
            specified in paragraph (e)(l)(ii) of Rule 16b-3 and ending on the 
            twelfth business day following such date.

3.     Administration.

       (a)       The Committee. The Plan shall be administered by a Committee
            appointed from time to time by the Board and comprised of not less
            than two of the then members of the Board. To the extent required by
            Rule 16b-3, each Committee member must be a "non-employee director"
            as defined, for purposes of this Section 3(a), in Rule 16b-3. Unless
            the Board determines otherwise, the Committee shall be comprised
            solely of persons who qualify as "outside" directors for purposes of
            section 162(m)(4)(C)(i) of the Code. Members of the Committee shall
            serve at the pleasure of the Board and the Board may from time to
            time remove members from, or add members to, the Committee. A
            majority of the members of the Committee shall have the power to act
            for the Committee. Action approved in writing by a majority of the
            members of the Committee then serving shall be fully as effective as
            if the action had been taken by majority vote at a duly called
            meeting of the Committee, but only if each member of the Committee
            was given notice of such proposed action one day prior to such
            written approval.


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       (b)       Powers of the Committee. The Committee is authorized to
            construe and interpret the Plan, to promulgate, amend and rescind
            rules and regulations relating to the implementation of the Plan and
            to make all other determinations necessary or advisable for the
            administration of the Plan. Subject to the provisions of the Plan,
            the Committee shall have full authority, in its discretion, to
            determine the Employees and Non-Employee Directors to whom Awards
            shall be granted, the number of shares of Common Stock or units to
            be covered by each of the Awards, and the terms of any such Award.
            Any good faith determination, decision or action of the Committee in
            connection with the construction, interpretation, administration, or
            application of the Plan shall be final, conclusive and binding upon
            all persons participating in the Plan and any person claiming under
            or through them. The Company shall effect the granting of Awards by
            execution of appropriate Award Agreements. No member of the
            Committee shall be liable for any good faith act or omission with
            respect to his or her service on the Committee.

4.     Shares of Common Stock Subject to the Plan.

       (a)       Maximum Number of Shares of Common Stock. The maximum number of
            shares of Common Stock as to which Awards may be granted under the
            Plan shall be one million five hundred thousand (1,500,000), subject
            to adjustment, as provided in Section 14 of the Plan. For the
            purpose of computing the total number of shares of Common Stock
            available for Awards under the Plan, counted against this limit
            shall be the number of shares of Common Stock subject to issuance
            upon exercise or settlement of Awards, in each case determined as at
            the dates as of which such Awards are granted. If any Awards are
            forfeited, terminated or expire unexercised, the shares of Common
            Stock which had been subject to such Awards shall again be available
            for Awards under the Plan to the extent of such forfeiture or
            expiration of such Awards. Common Stock which may be issued under
            the Plan may be either authorized and unissued shares or issued
            shares which have been reacquired by the Company. Fractional shares
            of Common Stock shall not be issued under the Plan.

       (b)       Certain Limitations. The maximum number of shares of Common
            Stock with respect to which Stock Options and Stock Appreciation
            Rights may be granted during any fiscal year to any Employee shall
            not exceed 100,000 and the maximum number of shares of Common Stock
            with respect to which Restricted Stock Awards may be granted during
            any fiscal year to any Participant should not exceed 100,000;
            however, the maximum number of shares of Common Stock with respect
            to which Awards may be granted during any fiscal year to any
            Employee shall not exceed 100,000. The maximum dollar value with
            respect to Awards (other than Stock Options and Stock Appreciation
            Rights payable in shares of Common Stock) that are intended to
            qualify as performance-based compensation under section 162(m)(4)(C)
            of the Code which may be paid in any fiscal year during any
            particular Performance Period to any Employee shall be One Million
            dollars ($1,000,000).

5.   Eligibility. Awards may be granted from time to time to Employees and
Consultants as the Committee, in its discretion, shall determine. In making
Awards, the Committee shall take into account the duties of prospective
Awardees, their present and potential contributions to the success of the
Company and any of its Subsidiaries, and such other factors as the Committee
shall deem relevant in connection with accomplishing the purposes of the Plan.

6.   Stock Options. Stock Options granted under the Plan may be (i) Incentive
Stock Options, (ii) Non-Qualified Stock Options or (iii) a combination of the
foregoing. The Award Agreement shall designate the extent to which a Stock
Option is an Incentive Stock Option or a Non-Qualified Stock Option. Stock
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable:



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       (a)       Grant. Stock Options may be granted alone, in addition to or in
            tandem with other Awards under the Plan.

       (b)       Stock Option Price. The exercise price per share of Common
            Stock purchasable under a Stock Option shall be determined by the
            Committee at the time of grant, but in no event shall the exercise
            price of a Stock Option be less than One Hundred Percent of the Fair
            Market Value of a share of the Common Stock on the date of the grant
            of such Stock Option. In addition, in the case of an Employee who is
            a Ten-Percent Shareholder at the time an Incentive Stock Option is
            granted, the exercise price of an Incentive Stock Option shall not
            be less than One Hundred Ten Percent of the Fair Market Value of the
            Common Stock on the date of the grant of such Incentive Stock
            Option.

       (c)       Option Term. The term of each Stock Option shall be fixed by
            the Committee, except that such term shall not exceed ten years. In
            the case of a grant of an Incentive Stock Option to an Employee who
            is a Ten-Percent Shareholder at the time of grant, the term of an
            Incentive Stock Option shall not exceed five years.

       (d)       Exercisability. A Stock Option shall be exercisable at such
            times and subject to such terms and conditions as shall be
            determined by the Committee at the date of grant. Except as provided
            in Section 12 of the Plan or in the relevant Award Agreement, no
            Stock Option may be exercised unless the holder thereof is at the
            time of such exercise in the employ or service (including service as
            a director) of the Company or a Subsidiary and has been continuously
            serving or so employed since the date the Stock Option was granted.

       (e)       Method of Exercise. A Stock Option may be exercised, in whole
            or in part, by giving written notice of exercise to the Company
            specifying the number of shares of Common Stock to be purchased.
            Such notice shall be accompanied by payment in full of the purchase
            price in cash, in shares of Common Stock already owned by the
            Participant (subject to the requirements of Rule 16b-3) or any
            combination of cash and such shares. No shares of Common Stock shall
            be issued until full payment has been made therefor. The Committee
            will establish procedures whereby a Participant (subject to
            requirements of Rule 16b-3, Regulation T, federal income tax laws,
            and other federal, state and local tax and securities laws) can
            exercise a Stock Option or a portion thereof without making a direct
            payment of the option price to the Company. The Committee shall
            establish the administrative procedures and policies its deems
            appropriate and such procedures and policies shall be binding on any
            Participant wishing to utilize the cashless exercise program.

       (f)       Special Rules for Incentive Stock Options. To the extent that
            the aggregate Fair Market Value (determined as of the options'
            grant) of the Common Stock with respect to which Incentive Stock
            Options first become exercisable by the Participant during any
            calendar year (under all such plans of the Participant's employer
            corporation and its parent, and Subsidiaries, if any), exceeds
            $100,000, the options shall not be an Incentive Stock Option. For
            purposes of the preceding sentence, Stock Options shall be taken
            into account in the order in which they were granted. Any Stock
            Option granted under the Plan which is intended to be an Incentive
            Stock Option, but which is in excess of the limitation set forth in
            this Section shall to that extent be a Non-Qualified Stock Option.
            Incentive Stock Options shall not be granted after the 10th
            anniversary of the Plan's adoption by the Board.

7.  Stock Appreciation Rights. The grant of Stock Appreciation Rights under the
Plan shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the express terms of
the Plan, as the Committee shall deem desirable:


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       (a)       Grant. A Stock Appreciation Right may be granted in tandem
            with, in addition to or independent of a Stock Option or any other
            Award under the Plan.

       (b)       Exercise. A Stock Appreciation Right may be exercised by a
            Participant in accordance with procedures established by the
            Committee. The Committee may also provide that a Stock Appreciation
            Right shall be automatically exercised on one or more specified
            dates. A Stock Appreciation Right granted in tandem with a Stock
            Option will entitle the Participant, upon exercise of the Stock
            Appreciation Right to surrender all or part of the unexercised
            portion of that tandem Stock Option and to receive the Spread for
            the number of shares of Common Stock which could have been acquired
            under the surrendered Stock Option. Each Stock Appreciation Right
            granted in tandem with a Stock Option shall be exercisable to the
            extent, and only to the extent, the related Stock Option is
            exercisable. Each Stock Appreciation Right shall be for such term as
            the Committee may determine, not to exceed 10 years and may expire
            prior to the term of a tandem Stock Option. Each Stock Appreciation
            Right granted on a stand alone basis shall be exercisable to the
            extent, and for such term, as the Committee may determine. Except as
            provided in Section 12 of the Plan or in the relevant Award
            Agreement, no Stock Appreciation Right may be exercised unless the
            holder thereof is at the time of such exercise in the employ or
            service (including service as a director) of the Company or a
            Subsidiary and has been continuously so employed since the date the
            Stock Appreciation Right was granted.

       (c)       Form of Payment. Payment upon exercise of a Stock Appreciation
            Right may be made in cash, in shares of Common Stock or any
            combination thereof, as the Committee shall determine except that
            for any Stock Appreciation Right exercised on or subsequent to a
            Change in Control payment shall be in cash.

       (d)       Special Rules for Stock Appreciation Rights Granted in Tandem
            with Incentive Stock Options. With respect to Stock Appreciation
            Rights granted in tandem with Incentive Stock Options, the following
            rules shall apply:

            (i) The Stock Appreciation Right shall not be exercisable unless the
            Spread on the related Incentive Stock Option is positive.

            (ii) In no event shall any amounts paid per share pursuant to the
            Stock Appreciation Right exceed the Spread on the date of exercise
            of the related Incentive Stock Option.

            (iii) The Stock Appreciation Right must expire no later than the
            last date on which the related Incentive Stock Option can be
            exercised.

8. Restricted Stock Awards. Restricted Stock Awards may be subject to
restrictions which lapse over time. They may be granted with or without regard
to Performance Objectives for a specific Performance Period. Restricted Stock
Awards shall be subject to the following terms and conditions and may contain
such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Committee shall deem desirable:

       (a)       Restricted Stock Awards. A Restricted Stock Award is an Award
            of shares of Common Stock transferred to a Participant subject to
            such terms and conditions as the Committee deems appropriate,
            including, without limitation, restrictions on the sale, assignment,
            transfer or other disposition of such shares and the requirement
            that the Participant forfeit such shares on termination of
            employment for specified reasons within a specified period of time.

       (b)       Grants of Awards. Restricted Stock Awards may be granted under
            the Plan in such form and on such terms and conditions as the
            Committee may from time to time approve. Restricted 


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                Stock Awards may be granted alone, in addition to or in tandem
                with other Awards under the Plan. Subject to the terms of the
                Plan, the Committee shall determine the number of Restricted
                Stock Awards to be granted to a Participant and the Committee
                may impose different terms and conditions on any particular
                Restricted Stock Award made to any Participant. Each Participant
                receiving a Restricted Stock Award shall be issued a stock
                certificate for those shares of Common Stock. This certificate
                shall be registered in the name of such Participant, shall be
                accompanied by a stock power duly executed by such Participant,
                and shall bear an appropriate legend referring to the terms,
                conditions and restrictions applicable to the Award. This
                certificate shall be held in custody by the Company until the
                restrictions on it have lapsed or been removed.

        (c)             Performance Objectives. If the Committee determines that
                a Restricted Stock Award is intended to qualify as
                performance-based compensation under section 162(m)(4)(C) of the
                Code, the Restricted Stock Award shall be subject to the
                attainment of Performance Objectives for a Performance Period.
                Specific Performance Objectives shall be established in writing
                no later than the number of days equal to 25% of the applicable
                Performance Period after the commencement of the Performance
                Period to which the Performance Objectives relate. In
                establishing the Performance Objectives, the Committee shall
                also establish a schedule setting forth the portion of the
                Restricted Stock Award which will be earned based on the degree
                of achievement of the Performance Objectives, as determined by
                the Committee. Except to the extent it would cause a Restricted
                Stock Award intended to qualify as performance-based
                compensation to fail so to qualify, the Committee may at any
                time adjust the Performance Objectives, change any schedule of
                vesting, change the way Performance Objectives are measured or
                shorten any Performance Period if it determines that conditions
                or the occurrence of events warrant such action. The Committee
                shall not have the discretion to increase a Restricted Stock
                Award which is intended to constitute performance-based
                compensation under the Code.

        (d)             Restriction Period. In order for a Participant to vest
                in a Restricted Stock Award, the Participant must remain in the
                employment or service (including service as a director) of the
                Company or its Subsidiaries, subject to relief for specified
                reasons, for the Restriction Period set forth in the Award
                Agreement. The Committee, in its sole discretion, may provide
                for the lapse of restrictions in installments during the
                Restriction Period. Unless otherwise restricted by the
                provisions of Section 8(c), upon expiration of the applicable
                Restriction Period (or lapse of restrictions during the
                Restriction Period if the restrictions lapse in installments)
                the Participant shall be entitled to receive his or her
                Restricted Stock Award or portion thereof, as the case may be.
                If the Restricted Stock Award is intended to constitute
                performance-based compensation under the Code, as soon as
                practicable after the end of the applicable measurement period
                as determined by the Committee, the Committee shall determine
                the extent to which the Performance Objectives, if any, have
                been met and the extent to which Restricted Stock Awards are
                payable.

        (e)             Performance Periods. The Committee may establish
                Performance Periods applicable to Restricted Stock Awards. There
                shall be no limitation on the number of Performance Periods
                established by the Committee and more than one Performance
                Period may encompass the same fiscal year.

        (f)             Rights as a Shareholder. Subject to any restrictions set
                forth in the applicable Award Agreement, with respect to the
                shares of Common Stock received under a Restricted Stock Award,
                a Participant shall have all of the rights of a shareholder of
                the Company, including the right to vote the shares and the
                right to receive any cash dividends. Subject to any restrictions
                set forth in the applicable Award Agreement, stock dividends
                issued with respect to the shares covered by a Restricted Stock
                Award shall be treated as additional shares under the Restricted
                Stock Award and shall be subject to the same restrictions and
                other terms and conditions that apply to shares under the
                Restricted Stock Award with respect to which such dividends are
                issued.


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                                                                        10.36

9.      Performance Awards. Performance Awards granted under the Plan may be in
the form of either Performance Equity Grants or Performance Unit Grants, or a
combination of both as determined by the Committee at the time of grant.
Performance Awards shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee shall deem desirable:

        (a)             Performance Equity Grants. A Performance Equity Grant is
                an Award of units (with each unit equivalent in value to one
                share of Common Stock) granted to a Participant subject to such
                terms and conditions as the Committee deems appropriate,
                including, without limitation, the requirement that the
                Participant forfeit units in the event certain Performance
                Objectives are not met within a designated Performance Period.

        (b)             Performance Unit Grants. A Performance Unit Grant is an
                Award of units (with each unit representing such monetary amount
                as designated by the Committee) granted to a Participant subject
                to such terms and conditions as the Committee deems appropriate,
                including, without limitation, the requirement that the
                Participant forfeit units in the event certain Performance
                Objectives are not met within a designated Performance Period.

        (c)             Grants of Awards. Performance Awards may be granted
                under the Plan in such form and to such Participants as the
                Committee may from time to time approve. Performance Awards may
                be granted alone, in addition to or in tandem with other Awards
                under the Plan. Subject to the terms of the Plan, the Committee
                shall determine the number of Performance Awards to be granted
                to a Participant. The Committee may impose different terms and
                conditions on any particular Performance Award made to any
                Participant. Each grant of a Performance Award shall be
                evidenced by a written instrument granting a specified number of
                Performance Equity Grants or Performance Unit Grants and
                designating the Performance Period, the Performance Objectives,
                the proportion of payments for performance between the minimum
                and full performance levels, if any, restrictions applicable to
                shares of Common Stock receivable in settlement, if any, and any
                other terms, conditions, restrictions and rights with respect to
                such grant as determined by the Committee.

        (d)             Performance Periods. The Committee shall establish
                Performance Periods applicable to Performance Awards. There
                shall be no limitation on the number of Performance Periods
                established by the Committee and more than one Performance
                Period may encompass the same fiscal year.

        (e)             Performance Objectives. If the Committee determines that
                a Performance Award is intended to qualify as performance-based
                compensation under section 162(m)(4)(C) of the Code, the special
                provisions of Section 8(c) shall apply.

        (f)             Payment of Awards. In the case of a Performance Equity
                Grant, the Participant shall be entitled to receive payment for
                each unit earned in an amount equal to the aggregate Fair Market
                Value of the shares of Common Stock covered by such Award. In
                the case of a Performance Unit Grant, the Participant shall be
                entitled to receive payment for each unit earned in an amount
                equal to the dollar value of each unit times the number of units
                earned. Settlement of a Performance Award shall be made as soon
                as practicable following the conclusion of the respective
                Performance Period. Payment shall be made in cash, in shares of
                Common Stock (the number to be determined based on Fair Market
                Value at the conclusion of such Performance Period) or in any
                combination thereof, as the Committee in its sole discretion
                shall determine.


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<PAGE>   10
                                                                           10.36


10.     Deferral Elections. The Committee in its sole discretion may permit a
Participant to elect to defer his or her receipt of the payment of cash or the
delivery of shares of Common Stock that would otherwise be due to such
Participant by virtue of the earn out or exercise of an Award made under the
Plan. If any such election is permitted, the Committee shall establish rules and
procedures for such payment deferrals, including the possible (a) payment or
crediting of reasonable interest or earnings on the deferred amounts, (b) the
payment or crediting of dividend equivalents on deferrals of Common Stock and
(c) the election procedures a Participant must use.

11.     Deferral Elections. The Committee may permit any Participant receiving
an Award to elect to defer his or her receipt of a payment of cash or shares
that would be otherwise due such individual by virtue of the exercise,
settlement, vesting or lapse of restrictions regarding any Award made under the
Plan. If any such election is permitted, the Committee shall establish rules and
procedures for such payment deferrals, including the possible payment or
crediting or reasonable interest on such deferred amounts credited in cash and
the payment or crediting of dividend equivalents in respect to deferrals
credited in shares of Common Stock.

12.     Termination of Employment or Service. Except as otherwise provided in
Section 15(a) or an Award Agreement, upon termination of a Participant's
employment with the Company or any of its Subsidiaries or a Non-Employee
Director's service with the Company or a Consultant's service to the Company, as
the case may be, the Participant (or in the case of death, the persons to whom
the Award is transferred by will or the laws of descent and distribution) may
exercise the Award during the following periods of time (but in no event after
the normal expiration date of such Award) to the extent the Participant was
entitled to exercise the Award at the date of termination:

          (i)   in the case of death, Disability or Retirement, the Award shall
                remain exercisable for one year after the date of termination;

         (ii)   in the case of termination for Cause, the Award shall remain
                exercisable for 5 Company working days following such
                termination and shall thereafter be no longer exercisable; and

        (iii)   in the case of termination for any other reason, the Award shall
                remain exercisable for 90 days after the date of termination.

To the extent the Award is not exercised within the foregoing periods of time,
the Award shall automatically terminate at the end of the applicable period of
time.

13.     Non-transferability of Awards. Except as permitted by the Committee, no
Award under the Plan, and no rights or interest therein, shall be assignable or
transferable by a Participant except by will, the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined by
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.

14.     Changes in Capitalization.

        (a)             No Effect on Power to Make Changes in Capitalization.
                The existence of the Plan and the Awards granted hereunder shall
                not affect or restrict the right of the Board or the
                shareholders of the Company to make any adjustment,
                recapitalization, reorganization or other change in the
                Company's capital structure or its business, to merge or
                consolidate the Company with another entity, issue bonds,
                debentures or preferred or prior preference stocks ahead of or
                affecting the Company's capital stock, to dissolve or liquidate
                the Company or to sell or transfer any part of its assets or
                business, or to engage in any other corporate act or proceeding.

        (b)             Adjustments. In the event of changes in all of the
                outstanding shares of Common Stock by reason of stock dividends,
                stock splits, recapitalization, mergers, consolidations,
                combinations, or exchanges of shares, separations,
                reorganizations, liquidations or similar events, or in the event


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<PAGE>   11
                                                                           10.36


                extraordinary cash or non-cash dividends are declared with
                respect to outstanding shares of Common Stock or other similar
                transactions, the number and class of shares of Common Stock
                available under the Plan in the aggregate, the number and class
                of shares of Common Stock subject to Awards theretofore granted,
                the number of Stock Appreciation Rights theretofore granted,
                applicable purchase prices, applicable Performance Objectives
                for the Performance Periods not yet completed and performance
                levels related thereto, and all other applicable provisions,
                shall be equitably adjusted by the Committee, as determined by
                the Committee in its sole discretion.

                Any adjustments made pursuant to this Section may provide for
                the elimination of any fractional share of Common Stock which
                might otherwise become subject to an Award.

15.     Change in Control.

        (a)             Special Treatment. In the event of a Change in Control
                (i) all Stock Options or Stock Appreciation Rights then
                outstanding shall become fully exercisable as of the date of the
                Change in Control, whether or not then exercisable, (ii) all
                restrictions and conditions of all Restricted Stock Awards then
                outstanding shall be deemed satisfied as of the date of the
                Change in Control and (iii) all Performance Awards shall be
                deemed to have been fully earned as of the date of the Change of
                Control. Moreover, the Committee, in its sole discretion, may at
                any time, and subject to the terms and conditions as it may
                impose: (a) grant Awards that become exercisable only in the
                event of a Change in Control, (b) provide for Awards to be
                exercised automatically and only for cash in the event of a
                Change in Control, and (c) provide in advance or at the time of
                a Change in Control for cash to be paid in settlement of any
                Award in the event of a Change in Control.

        (b)             Restrictions on Benefits. Notwithstanding the provisions
                of Section 15(a), the aggregate present value of all parachute
                payments payable to or for the benefit of a Participant, whether
                payable pursuant to the Plan (or otherwise) (excluding those
                payments made pursuant to an agreement with the Company that
                specifically provides otherwise), shall be limited to three
                times the Participant's base amount less one dollar and, to the
                extent necessary, the special treatment described in clauses (i)
                and (ii) of Section 15(a) shall be reduced or eliminated by the
                Committee in order that this limitation not be exceeded;
                provided, however, that this provision shall not apply if the
                Employee's written employment agreement contains a comprehensive
                parachute provision with conflicting terms. For purposes of this
                Section, the terms "parachute payment," "base amount" and
                "present value" shall have the meanings assigned thereto under
                Code section 280G. It is the intention of this Section to avoid
                excise taxes on the Participant under Code section 4999 or the
                disallowance of a deduction to the Company pursuant to Code
                section 280G. Acceptance of an Award constitutes the
                Participant's agreement to this Section of the Plan.

16.     Amendment and Termination. The Board may amend or terminate the Plan at
any time, but no amendment shall be made without the approval of the
stockholders of the Company if stockholder approval under section 422 of the
Code or Rule 16b-3 would be required or if it would change the material terms of
performance goals that were previously approved by the Company's stockholders,
within the meaning of Treasury Regulation Section 1.162-27(e)(4)(vi) or a
successor provision (unless the Board determines that such approval is not
necessary to avoid loss of a deduction under section 162(m) of the Code, such
approval will not avoid such a loss of deduction or such approval is not
advisable). No amendment of the Plan or any Award granted under the Plan shall
impair any Participant's rights, without his or her consent, under any Award
theretofore granted under the Plan.

17.     Miscellaneous.

        (a)             Tax Withholding. The Company shall have the right to
                deduct or withhold any taxes, including transfer taxes, of any
                kind required by law to be withheld with respect to such
                payments 


                                       56
<PAGE>   12
                                                                           10.36



                under the Plan or to take such other action as may be necessary
                in the opinion of the Company to satisfy all obligations for the
                payment of such taxes, including requiring the Participant or
                his beneficiary or estate to pay any amount required to be
                withheld. If Common Stock is used to satisfy tax withholding,
                such Stock shall be valued based on the Fair Market Value when
                the tax withholding is required to be made. If the Employee
                disposes of shares of Common Stock acquired pursuant to an
                Incentive Stock Option in any transaction considered to be a
                disqualifying transaction under sections 421 and 422 of the
                Code, the Employee must give the Company written notice of such
                transfer and the Company shall have the right to deduct any
                taxes required by law to be withheld from any amounts otherwise
                payable to the Employee.

        (b)             No Right to Employment. Neither the adoption of
                the Plan nor the granting of any Award shall confer upon any
                employee of the Company or any Subsidiary any right to continued
                employment with the Company or any Subsidiary nor shall it
                interfere in any way with the right of the Company or a
                Subsidiary to terminate the employment of any of its employees
                at any time, with or without Cause even if Awards will be
                forfeited as a result of employment termination. The grant of an
                Award to a Consultant or to a Non-Employment Director shall
                neither confer employment status towards such individual nor
                prevent the Company from terminating such individual's services.

        (c)             Unfunded Plan. Except as provided in Section 17(d), the
                Plan shall be unfunded and the Company shall not be required to
                segregate any assets that may at any time be represented by
                Awards under the Plan. No obligation of the Company under the
                Plan or any Award shall be deemed to be secured by any pledge
                of, or other encumbrance on, any property of the Company.

        (d)             Payments to Trust. The Committee is authorized to cause
                to be established a trust agreement or several trust agreements
                or other funding vehicles whereunder the Company may make
                payments of amounts due or to become due to Participants in the
                Plan.

        (e)             Other Company Benefit and Compensation Programs.
                Payments and other benefits received by a Participant under an
                Award made pursuant to the Plan shall not be deemed a part of a
                Participant's regular, recurring compensation for purposes of
                the termination, indemnity or severance pay law of any country
                and shall not be included in, nor have any effect on, the
                determination of benefits under any other employee benefit plan
                or similar arrangement provided by the Company or a Subsidiary
                unless expressly so provided by such other plan or arrangements,
                or except where the Committee expressly determines that
                inclusion of an Award or portion of an Award should be included
                to accurately reflect competitive compensation practices or to
                recognize that an award has been made in lieu of a portion of
                competitive annual cash compensation. Awards under the Plan may
                be made in combination with or in tandem with, or as
                alternatives to, grants, awards or payments under any other
                Company or Subsidiary plans. The Company or any Subsidiary may
                adopt such other compensation programs and additional
                compensation arrangements as it deems necessary to attract,
                retain and reward employees for their service.

        (f)             Securities Law Restrictions. No shares of Common Stock
                shall be issued under the Plan unless counsel for the Company
                shall be satisfied that such issuance will be in compliance with
                applicable Federal and state securities laws. Certificates for
                shares of Common Stock delivered under the Plan may be subject
                to such stock-transfer orders and other restrictions as the
                Committee may deem advisable under the rules, regulations, and
                other requirements of the Securities and Exchange Commission,
                any stock exchange upon which the Common Stock is then listed,
                and any applicable Federal or state securities law. The
                Committee may cause a legend or legends to be put on any such
                certificates to make appropriate reference to such restrictions.


                                       57
<PAGE>   13
                                                                           10.36



        (g)             Award Agreement. Each Participant receiving an Award
                under the Plan shall enter into an Award Agreement with the
                Company in a form specified by the Committee agreeing to the
                terms and conditions of the Award and such related matters as
                the Committee shall, in its sole discretion, determine.

        (h)             Costs of Plan. The costs and expenses of administering
                the Plan shall be borne by the Company.

        (i)             Section 16. With respect to persons subject to Section
                16 of the Exchange Act, transactions under this Plan are
                intended to comply with all applicable conditions of Rule 16b-3
                or its successors under the Exchange Act. To the extent any
                provision under the Plan or action by the Committee fails to so
                comply, it shall be deemed null and void to the extent permitted
                by law and deemed advisable by the Committee.

        (j)             Governing Law. The Plan and all actions taken thereunder
                shall be governed by and construed in accordance with the laws
                of the State of California without regard to the principles of
                the conflict of laws thereof.

        (k)             Effective Date And Termination Date. The Plan shall be
                effective upon Board approval and adoption, subject to approval
                by the Company's shareholders at the 1996 annual meeting of
                shareholders. The Plan shall terminate ten years after the date
                of Board approval.

        (l)             Severability. In the event any provision or provisions
                of the Plan are held to be invalid, illegal or unenforceable,
                the validity, legality and enforceability of the remaining
                provisions shall not in any way be effected or impaired.


                                       58