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                                                                   EXHIBIT 10.26









                                 COMPUSA INC.
                           DEFERRED COMPENSATION PLAN
                (Amended and Restated Effective January 1, 1997)
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                                 COMPUSA INC.
                           DEFERRED COMPENSATION PLAN
                (Amended and Restated Effective January 1, 1997)

                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                   ARTICLE I
                                  DEFINITIONS
 
 1.1  "401(k) Plan".........................................................  1
 1.2  "401(k) Plan Election"................................................  1
 1.3  "Affiliate"...........................................................  1
 1.4  "Beneficiary".........................................................  1
 1.5  "Board"...............................................................  1
 1.6  "Change In Control"...................................................  1
 1.7  "Code"................................................................  1
 1.8  "Committee"...........................................................  1
 1.9  "Common Stock"........................................................  2
1.10  "Company".............................................................  2
1.11  "Compensation"........................................................  2
1.12  "Compensation Committee"..............................................  2
1.13  "Compensation Deferrals"..............................................  2
1.14  "Disability"..........................................................  2
1.15  "Eligible Employee"...................................................  2
1.16  "Employers"...........................................................  2
1.17  "ERISA"...............................................................  2
1.18  "Financial Hardship"..................................................  2
1.19  "Hypothetical Investment Funds".......................................  3
1.20  "Matching Contributions"..............................................  3
1.21  "Maximum 401(k) Plan Amount"..........................................  3
1.22  "Normal Retirement Date"..............................................  3
1.23  "Participant".........................................................  3
1.24  "Participant's Account"...............................................  3
1.25  "Plan"................................................................  3
1.26  "Plan Year"...........................................................  3
1.27  "Supplemental Matching Contributions".................................  3
1.28  "Trust"...............................................................  3
1.29  "Year of Vesting Service".............................................  3

                                   ARTICLE II
                                 PARTICIPATION

2.1   Participation.........................................................  3
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      2.1.1  Participation in Full Plan Year................................  4
      2.1.2  Participation in Partial Plan Year.............................  4
      2.1.3  No Election Changes During Plan Year...........................  4
      2.1.4  Specific Timing and Method of Election.........................  4
2.2   Hardship Suspension of Participation..................................  4
2.3   Termination of Participation..........................................  4

                                  ARTICLE III
               COMPENSATION DEFERRALS, MATCHING CONTRIBUTIONS AND
                      SUPPLEMENTAL MATCHING CONTRIBUTIONS

3.1   Compensation Deferrals................................................  4
3.2   Crediting of Compensation Deferrals...................................  5
3.3   Matching Contributions................................................  5
3.4   Crediting of Matching Contributions...................................  5
3.5   Supplemental Matching Contributions...................................  5
3.6   Crediting of Supplemental Matching Contributions......................  5
3.7   Election Regarding 401(k) Plan........................................  6
      3.7.1  401(k) Plan Election...........................................  6
      3.7.2  Maximum 401(k) Plan Amount.....................................  6

                                   ARTICLE IV
                                   ACCOUNTING

4.1   Participants' Accounts.................................................  6
4.2   Participants Remain Unsecured Creditors................................  7
4.3   Accounting Methods.....................................................  7
4.4   Account Statements.....................................................  7
4.5   Investments............................................................  7

                                   ARTICLE V
                                 DISTRIBUTIONS

5.1   Normal Time for Distribution...........................................  7
5.2   Beneficiary Designations...............................................  8
5.3   Financial Hardship.....................................................  8
5.4   Payments to Incompetents...............................................  8
5.5   Undistributable Accounts...............................................  8
5.6   Committee Discretion...................................................  8

                                   ARTICLE VI
                                    VESTING

6.1   Vesting in Compensation Deferral Accounts..............................  9

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6.2   Vesting in Matching and Supplemental Matching Contribution Accounts....  9
      6.2.1  Termination.....................................................  9
      6.2.2  Accelerated Vesting.............................................  9
6.3   Transfers of Employment................................................ 10

                                  ARTICLE VII
                                 ADMINISTRATION

7.1   Plan Administrator..................................................... 10
7.2   Committee.............................................................. 10
7.3   Actions by Committee................................................... 10
7.4   Powers of Committee.................................................... 10
7.5   Decisions of Committee................................................. 11
7.6   Administrative Expenses................................................ 11
7.7   Eligibility to Participate............................................. 11
7.8   Indemnification........................................................ 11

                                  ARTICLE VIII
                                    FUNDING

8.1   Unfunded Plan.......................................................... 12
8.2   Trust.................................................................. 12

                                   ARTICLE IX
                           AMENDMENT AND TERMINATION

9.1   Company's Obligations Limited.......................................... 12
9.2   Right to Amend or Terminate............................................ 12
9.3   Effect of Termination.................................................. 12
9.4   Disposition of Affiliates.............................................. 13

                                   ARTICLE X
                               GENERAL PROVISIONS

10.1   Participation by Affiliates........................................... 13
10.2   Inalienability........................................................ 13
10.3   Rights and Duties..................................................... 13
10.4   No Enlargement of Employment Rights................................... 13
10.5   Apportionment of Costs and Duties..................................... 13
10.6   Contributions Not Counted Under Other Employee Benefit Plans.......... 14
10.7   Applicable Law........................................................ 14
10.8   Severability.......................................................... 14
10.9   Captions.............................................................. 14
10.10  Gender and Number..................................................... 14

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                                    - iv -
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                                  COMPUSA INC.
                           DEFERRED COMPENSATION PLAN
                (Amended and Restated Effective January 1, 1997)

          CompUSA Inc., a Delaware corporation, established the CompUSA Inc.
Deferred Compensation Plan, effective as of November 1, 1995, for the benefit of
a select group of management and highly compensated employees of the Company and
its participating Affiliates, in order to provide such employees with certain
deferred compensation benefits.  The Plan is amended and restated effective
January 1, 1997, upon the following terms and conditions.  The Plan is an
unfunded deferred compensation plan that is intended to qualify for the
exemptions provided in Sections 201, 301 and 401 of ERISA.  The Plan is an
excess benefit plan (within the meaning of Section 240.16b-3(b)(2) of the
regulations promulgated under the Securities Exchange Act of 1934) with respect
to the CompSavings Plan for Employees of CompUSA Inc.


                                   ARTICLE I
                                  DEFINITIONS

          As used in the Plan, the following terms have the following meanings
unless a different meaning is plainly required by the context:

          1.1 "401(K) PLAN" means the CompSavings Plan for Employees of CompUSA
Inc., as amended from time to time.

          1.2 "401(K) PLAN ELECTION" has the meaning ascribed to such term in
Section 3.7.

          1.3  "AFFILIATE" means a corporation, trade or business which is,
together with any Employer, a member of a controlled group of corporations or an
affiliated service group or under common control (within the meaning of Code
Section 414(b), (c) or (m)), but only for the period during which such other
entity is so affiliated with any Employer.

          1.4  "BENEFICIARY" means the person or persons entitled to receive
benefits under the Plan upon the death of a Participant as provided in Section
5.2.

          1.5  "BOARD" means the Board of Directors of the Company as
constituted from time to time or any committee of such Board that has been
authorized by the Board to act on behalf of the Board with respect to the Plan
and the Trust.

          1.6 "CHANGE IN CONTROL" has the meaning ascribed to such term in
Section 6.2.2.

          1.7  "CODE" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code includes such section, any
regulation promulgated thereunder, and any comparable provision of any future
legislation amending, supplementing or superseding such section.
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          1.8  "COMMITTEE" means the CompSavings Plan Committee as it may be
constituted from time to time pursuant to the 401(k) Plan.  In the
administration of the Plan, the Committee shall have all powers allocated to the
Committee in connection with the administration of the 401(k) Plan and all
powers specifically set out in Article VII of the Plan.

          1.9 "COMMON STOCK" means the common stock, par value $.01 per share,
of the Company.

          1.10 "COMPANY" means CompUSA Inc., a Delaware corporation.

          1.11  "COMPENSATION" has the same meaning ascribed to the term "Pay"
(determined without regard to the limitation imposed in the 401(k) Plan by Code
Section 401(a)(17)) with respect to each Participant in the 401(k) Plan,
together with all Compensation Deferrals under the Plan by such Participant
during the same period.

          1.12  "COMPENSATION COMMITTEE" means the Compensation Committee of the
Board as it may be constituted from time to time.

          1.13  "COMPENSATION DEFERRALS" means the amounts credited to
Participants' Accounts under the Plan pursuant to their deferral elections made
in accordance with Section 2.1.

          1.14 "DISABILITY" has the same meaning ascribed to such term in the
401(k) Plan.

          1.15  "ELIGIBLE EMPLOYEE" means an employee of an Employer who (i) is
eligible to participate in the 401(k) Plan, and (ii) satisfies such additional
eligibility requirements as the Compensation Committee may establish from time
to time.  It shall be the policy of the Compensation Committee to limit
eligibility for participation in the Plan to a select group of management and
highly compensated employees of the Employers.

          1.16  "EMPLOYERS" means the Company and each of its Affiliates that
adopts the Plan.  With respect to an individual Participant, the term "Employer"
means the Company or its Affiliate that has adopted the Plan and that directly
employs such Participant.

          1.17  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.  Reference to a specific section of ERISA includes such
section, any regulation promulgated thereunder, and any comparable provision of
any future legislation amending, supplementing or superseding such section.

          1.18  "FINANCIAL HARDSHIP" means a severe financial emergency that is
caused by a sudden and unexpected accident, illness or other event beyond the
control of the Participant that, without a suspension of deferrals or
accelerated distribution (as the case may be), would result in a severe
financial burden to the Participant or a member of the Participant's immediate
family.  A Financial Hardship does not exist to the extent that the hardship may
be relieved by

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(a) reimbursement or compensation by insurance, or (b) by liquidation of the
Participant's other assets (to the extent such liquidation itself would not
cause a severe financial hardship).

          1.19  "HYPOTHETICAL INVESTMENT FUNDS" means the hypothetical
investment funds used for tracking investment performance under the Plan.  The
number, identity and composition of the Hypothetical Investment Funds shall be
determined from time to time by the Committee.  It shall be the policy of the
Committee to maintain Hypothetical Investment Funds under the Plan that are
similar to the actual investment funds under the 401(k) Plan.

          1.20 "MATCHING CONTRIBUTIONS" means the amounts credited to
Participants' Accounts in accordance with Section 3.4.

          1.21 "MAXIMUM 401(K) PLAN AMOUNT" has the meaning ascribed to such
term in Section 3.7.

          1.22 "NORMAL RETIREMENT DATE" has the same meaning ascribed to such
term in the 401(k) Plan.

          1.23  "PARTICIPANT" means an Eligible Employee who (a) has become a
Participant in the Plan pursuant to Section 2.1 and (b) has not ceased to be a
Participant pursuant to Section 2.3.

          1.24  "PARTICIPANT'S ACCOUNT" or "ACCOUNT" means as to any Participant
the separate account maintained on the books of the Employers in order to
reflect the Participant's interest in the Plan.

          1.25  "PLAN" means the CompUSA Inc. Deferred Compensation Plan as set
forth in this instrument and as hereafter amended from time to time.

          1.26  "PLAN YEAR" means the calendar year.

          1.27  "SUPPLEMENTAL MATCHING CONTRIBUTIONS" means the amounts credited
to Participants' Accounts in accordance with Section 3.6.

          1.28  "TRUST" means the CompUSA Inc. Deferred Compensation Trust
entered into by and between the Company and Wells Fargo Bank, N.A., as trustee.

          1.29 "YEAR OF VESTING SERVICE" has the same meaning ascribed to such
term in the 401(k) Plan.

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                                   ARTICLE II
                                 PARTICIPATION


          2.1 PARTICIPATION. Each Eligible Employee's decision to become a
Participant shall be entirely voluntary.

              2.1.1 PARTICIPATION IN FULL PLAN YEAR. An Eligible Employee may
          elect to become a Participant (or to continue or reinstate such
          person's active participation) in the Plan for any Plan Year by
          electing, no later than December 31 of the preceding Plan Year, to
          make Compensation Deferrals under the Plan. An election under this
          Section 2.1.1 to make Compensation Deferrals shall be effective only
          for the Plan Year with respect to which the election is made.

              2.1.2 PARTICIPATION IN PARTIAL PLAN YEAR. Each individual who
          becomes an Eligible Employee after the first day of a Plan Year by
          hire or change in the Plan's eligibility provisions may become a
          Participant in the Plan by electing, within 30 days after the date
          such person becomes an Eligible Employee, to make Compensation
          Deferrals under the Plan. An election under this Section 2.1.2 to make
          Compensation Deferrals shall be effective only for the whole calendar
          months that remain in the Plan Year with respect to which the election
          is made.

              2.1.3 NO ELECTION CHANGES DURING PLAN YEAR. A Participant may not
          change or revoke a Compensation Deferral election for a Plan Year
          after such election is effective except as provided in Section 2.2.

              2.1.4 SPECIFIC TIMING AND METHOD OF ELECTION. Notwithstanding any
          contrary provision of this Section 2.1, the Committee, in its sole
          discretion, shall determine the manner and times for Participants to
          make Compensation Deferral elections. The times prescribed by the
          Committee may be earlier than the times specified in Sections 2.1.1
          and 2.1.2 but shall not be later than the times prescribed in such
          Sections.

          2.2  HARDSHIP SUSPENSION OF PARTICIPATION.  In the event that a
Participant incurs a Financial Hardship, the Committee, in its sole discretion,
may suspend the Participant's Compensation Deferral election for the remainder
of the Plan Year.  However, an election to make Compensation Deferrals under
Section 2.1 shall be irrevocable as to amounts deferred through the effective
date of any suspension made in accordance with this Section 2.2.

          2.3  TERMINATION OF PARTICIPATION.  An Eligible Employee who has
become a Participant shall remain a Participant until such Participant's entire
vested Account is distributed.  However, an Eligible Employee who has become a
Participant may or may not be an active Participant making Compensation
Deferrals for a particular Plan Year depending upon whether such person has
elected to make Compensation Deferrals for such Plan Year.

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                                  ARTICLE III
               COMPENSATION DEFERRALS, MATCHING CONTRIBUTIONS AND
                      SUPPLEMENTAL MATCHING CONTRIBUTIONS


          3.1  COMPENSATION DEFERRALS.  At the times and in the manner
prescribed in Section 2.1, each Eligible Employee may elect to defer portions of
such person's Compensation and to have the amounts of such deferrals credited to
such person's Account under the Plan on the books of the Employers.  For each
Plan Year, an Eligible Employee may elect to defer an amount equal to any whole
percentage of the Participant's Compensation, provided that the percentage
elected by the Participant shall not exceed 15% of such Participant's
Compensation.

          3.2  CREDITING OF COMPENSATION DEFERRALS.  The amounts deferred
pursuant to Section 3.1 shall reduce the Participant's Compensation during the
Plan Year and shall be credited to the Participant's Account as soon as
practicable after the last day of each payroll period in which the amounts (but
for the deferral) would have been paid to the Participant.  For each payroll
period, the dollar amount to be deferred from each Compensation payment shall be
determined by the Committee using such procedures as it shall adopt from time to
time.

          3.3  MATCHING CONTRIBUTIONS.  Following the end of each Plan Year in
which Compensation Deferrals are made under the Plan, each Participant's
Employer shall credit the Participant's Matching Contribution Account with an
amount equal to 25% of each Participant's Compensation Deferrals for that Plan
Year.  The amount of Compensation Deferrals for any Plan Year that may be taken
into account under this Section 3.3 for any Participant shall not exceed the
lesser of the following:  (a) 5% of the Participant's Compensation for the Plan
Year and (b) the limit on elective deferrals for the Plan Year as specified in
Code Section 402(g)(1) (as adjusted pursuant to Code Section 402(g)(5)).  For
each Plan Year, a Participant shall be eligible to receive an allocation of
Matching Contributions only if the Participant would have been eligible to
receive an allocation of matching contributions under the 401(k) Plan if the
Participant's Compensation Deferrals had been made pursuant to the 401(k) Plan.
The obligations of a Participant's Employer to credit Matching Contributions
under the Plan with respect to the Participant shall be offset by the amount of
any matching contributions paid or accrued by any Employer with respect to the
Participant under the 401(k) Plan.

          3.4  CREDITING OF MATCHING CONTRIBUTIONS.  Subject to the final
sentence of the preceding Section 3.3, Matching Contributions on behalf of a
Participant for a Plan Year shall be credited to the Participant's Matching
Contribution Account as soon as practicable after the last day of such Plan Year
in accordance with Section 3.3.  For each Plan Year, the dollar amount of
Matching Contributions shall be determined by the Committee using such
procedures as it shall adopt from time to time.

          3.5  SUPPLEMENTAL MATCHING CONTRIBUTIONS.  From time to time, the
Compensation Committee may determine that Supplemental Matching Contributions
shall be credited with respect to a Participant's Compensation Deferrals on such
terms and conditions as the Compensation Committee may specify in its sole
discretion.

          3.6  CREDITING OF SUPPLEMENTAL MATCHING CONTRIBUTIONS.  Any
Supplemental Matching Contributions made on behalf of a Participant shall be
credited to the Participant's Supplemental

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Matching Account as of the date specified by the Compensation Committee.  The
dollar amount of Supplemental Matching Contributions credited to any
Participant's Account shall be determined by the Committee using such procedures
as it shall adopt from time to time.

          3.7  ELECTION REGARDING 401(K) PLAN.  For the Plan Year beginning on
January 1, 1996 and ending on December 31, 1996, each Participant may make a
401(k) Plan Election for a Plan Year at the same time that the Participant makes
a Compensation Deferral Election for that Plan Year.  All 401(k) Plan Elections
shall be made in the form and manner and at the time specified by the Committee.
If a Participant makes a 401(k) Plan Election, the Participant's Maximum 401(k)
Plan Amount shall be transferred from the Plan to the 401(k) Plan in accordance
with such election.  If a Participant fails to make a 401(k) Plan Election for a
Plan Year, the Participant's Maximum 401(k) Plan Amount for that Plan Year shall
be paid in cash to the Participant as soon as practicable following the end of
the Plan Year (but in no event later than March 15 of the immediately following
Plan Year).  Any amounts not transferred or distributed in accordance with this
Section 3.7 shall continue to be subject to the provisions of the Plan.

               3.7.1 401(K) PLAN ELECTION. A 401(k) Plan Election is an election
          by the Participant to have the Participant's Maximum 401(k) Plan
          Amount for such Plan Year transferred as soon as practicable following
          the end of that Plan Year (but in no event later than March 15 of the
          immediately following Plan Year) from the Plan to the 401(k) Plan.

               3.7.2 MAXIMUM 401(K) PLAN AMOUNT. With respect to each
          Participant for each Plan Year, the Participant's Maximum 401(k) Plan
          Amount is an amount equal to the lesser of (a) or (b), where (a) is
          the maximum amount of Compensation Deferrals (excluding all deemed
          investment earnings thereon) for such Plan Year that could otherwise
          have been made for such Plan Year on behalf of the Participant to the
          401(k) Plan, subject to the actual deferral percentage test applicable
          to the 401(k) Plan and the limitation on the amount of elective
          deferrals under Code Section 402(g) applicable to the Participant; or
          (b) the Participant's Compensation Deferrals for such Plan Year.


                                   ARTICLE IV
                                   ACCOUNTING

          4.1  PARTICIPANTS' ACCOUNTS.  At the direction of the Committee, there
shall be established and maintained on the books of the Company for each
Employer a separate Account for each Participant to which shall be credited all
of the Participant's Compensation Deferrals, Matching Contributions and any
Supplemental Matching Contributions together with deemed investment earnings and
losses on such amounts.  Each Participant's Account shall be comprised of one or
more separate subaccounts including without limitation the following:

               4.1.1 A Compensation Deferral Account to which the Participant's
          Compensation Deferrals shall be credited together with deemed
          investment earnings and losses thereon;

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               4.1.2 A Matching Contribution Account to which the Participant's
          Matching Contributions shall be credited together with deemed
          investment earnings and losses thereon; and

               4.1.3 A Supplemental Matching Contribution Account to which the
          Participant's Supplemental Matching Contributions (if any) shall be
          credited together with deemed investment earnings and losses thereon.

          The deemed investment earnings and losses on a Participant's
subaccounts shall be based on the investment performance of the Hypothetical
Investment Funds with respect to such subaccounts; provided that no actual
investment shall be made in such Hypothetical Investment Funds with respect to a
Participant.

          4.2  PARTICIPANTS REMAIN UNSECURED CREDITORS.  All amounts credited to
a Participant's Account under the Plan shall continue for all purposes to be a
part of the general assets of the Employers.  Each Participant's interest in the
Participant's Account shall make the Participant only a general, unsecured
creditor of the Employers.

          4.3  ACCOUNTING METHODS.  The accounting methods and procedures to be
used under the Plan for the purpose of maintaining the Participants' Accounts,
including the calculation and crediting of deemed investment earnings and
losses, shall be determined by the Committee in its sole discretion.  The
accounting methods and procedures selected by the Committee may be revised from
time to time.

          4.4  ACCOUNT STATEMENTS.  The Committee shall cause a statement of
each Participant's Account to be furnished to the Participant at least annually.

          4.5  INVESTMENTS.  All amounts accumulated pursuant to the Plan shall
for all purposes be a part of the general assets of the Employers.  Each
Participant's interest in the Plan shall make the Participant only a general
creditor of the Employers, and no actual investments shall be made on behalf of
Participants in the Plan.  It shall be the policy of the Committee that any
assets accumulated in the Trust shall be invested in the Hypothetical Investment
Funds in accordance with each Participant's investment fund election under the
401(k) Plan.  From time to time but not less often than quarterly, the Committee
shall review each Participant's 401(k) Plan investment fund election and cause
the allocation of assets in the Hypothetical Investment Funds and future
contributions thereto to be adjusted to reflect each Participant's 401(k) Plan
investment fund election.  The Committee may establish such rules and procedures
as it deems necessary or appropriate to provide for the investment of any assets
accumulated in the Trust.

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                                   ARTICLE V
                                 DISTRIBUTIONS
                                        
          5.1  NORMAL TIME FOR DISTRIBUTION.  Subject to Sections 5.3 and 5.6,
distribution of the balance credited to a Participant's Account shall be made in
a single payment as soon as practicable following the Participant's termination
of employment with the Company and all Affiliates but in no event shall such
amount be distributed later than the last day of the Plan Year following the
Plan Year in which the Participant terminated employment.  The distribution
shall be paid in cash except that any portion of a Participant's Account that is
deemed to be invested in a Hypothetical Investment Fund wholly or primarily
invested in Common Stock may, if requested by the Participant, be paid in the
form of whole shares of Common Stock and cash in lieu of fractional shares.

          5.2  BENEFICIARY DESIGNATIONS.  By electing to participate in the
Plan, each Participant agrees that his designated Beneficiary determined for
purposes of the 401(k) Plan shall be the Participant's designated Beneficiary
for purposes of the Plan.

          5.3  FINANCIAL HARDSHIP.  In the event that a Participant suffers a
Financial Hardship, the Committee, in its sole discretion and notwithstanding
any contrary provision of the Plan, may determine that all or part of the
Participant's Account shall be paid to the Participant immediately; provided
that the amount paid to the Participant pursuant to this Section 5.3 shall be
limited to the amount reasonably necessary to alleviate such Financial Hardship.
Payment under this Section 5.3 may not be made to the extent that such Financial
Hardship may be relieved by suspension of the Participant's Compensation
Deferrals in accordance with Section 2.2.

          5.4  PAYMENTS TO INCOMPETENTS.  If any amount is due to be paid to a
minor or if the Committee reasonably believes that any payee is legally
incapable of receiving any payment due such person, the Committee shall have the
payment of such amount or any part thereof made to the person or institution
that it reasonably believes is caring for or supporting the payee unless the
Committee has received notice of a claim for such amount from a legally
appointed guardian or conservator of the payee.  Any payment shall, to the
extent thereof, be a complete discharge of any liability under the Plan and of
the Employers to the payee.

          5.5  UNDISTRIBUTABLE ACCOUNTS.  Each Participant and (in the event of
death) the Participant's Beneficiary shall keep the Committee advised of such
person's mailing address.  If the Committee is unable to locate the Participant
or Beneficiary to whom a Participant's Account is payable under this Article 5,
the Participant's Account shall continue to be credited with deemed investment
earnings and losses in accordance with Section 4.5.  Accounts that, in
accordance with the preceding sentence, have been undistributable for a period
of 36 months after the Participant's termination of employment shall be
forfeited from the Trust to the Participant's Employer as of the end of such
36th month.  If a Participant whose Account is forfeited under this Section 5.5
(or the Participant's Beneficiary) files a claim for distribution of the Account
after the date that the Account is forfeited and if the Committee determines
that such claim is valid, then the Participant's Employer shall reinstate and
distribute the Participant's forfeited Account (determined without regard to
investment earnings or losses after the date of forfeiture) as soon as
practicable.

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          5.6  COMMITTEE DISCRETION.  Within the provisions of this Article 5,
the Committee shall have sole discretion to determine the specific timing of the
payment of any Account under the Plan.


                                   ARTICLE VI
                                    VESTING

          6.1  VESTING IN COMPENSATION DEFERRAL ACCOUNTS.  Subject to Section
8.1 (relating to creditor status) and Section 9.2 (relating to amendment and
termination of the Plan), a Participant's interest in the balance credited to
the Participant's Compensation Deferral Account shall at all times be fully
vested and nonforfeitable.

          6.2  VESTING IN MATCHING AND SUPPLEMENTAL MATCHING CONTRIBUTION
ACCOUNTS.  Subject to Section 8.1 and Section 9.2, a Participant's interest in
the Participant's Matching Contribution Account and Supplemental Matching
Contribution Account shall become fully vested and nonforfeitable in accordance
with the following schedule:

                   Number of Years
                 of Vesting Service      Vested Percentage
                 ------------------      -----------------

                 less than 1                      0%
                 1 but less than 2               25%
                 2 but less than 3               50%
                 3 but less than 4               75%
                 4 or more                      100%

               6.2.1 TERMINATION. Upon termination of the Participant's
          employment with the Company and all Affiliates, the vested portion of
          the Participant's Matching Contribution Account and Supplemental
          Matching Contribution Account shall be distributable to the
          Participant in the manner and at the time set forth in Article 5, and
          the unvested portion of such Accounts shall be permanently forfeited
          from the Participant's Account. Forfeitures resulting under the Plan
          shall be used to offset the amount of future Matching Contributions
          and Supplemental Matching Contributions.

               6.2.2 ACCELERATED VESTING. Notwithstanding the foregoing but
          subject to Section 8.1 and Section 9.2, a Participant's interest in
          the Participant's Matching Contribution Account and Supplemental
          Matching Contribution Account shall become fully vested and
          nonforfeitable upon the earlier to occur of the following: (a) the
          Participant's Normal Retirement Date if the Participant is employed by
          an Employer or Affiliate on that date; (b) the Participant's
          termination of employment with the Company and all Affiliates due to
          the Participant's death; or (c) a Change In Control. For purposes of
          this Section 6.2.2, a "Change In Control" will be deemed to have
          occurred when any Person meets the requirements for becoming an
          Acquiring Person, whether or not a Distribution Date occurs

                                     - 9 -
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          or the Rights are redeemed by the Company, as those terms are defined
          in the Rights Agreement between the Company and Bank One, Texas, N.A.
          as Rights Agent (First Interstate Bank of Texas, N.A. became successor
          Rights Agent as of November 1, 1995), dated as of April 29, 1994 (the
          "Rights Agreement"); provided that a Change In Control shall not be
          deemed to have occurred for purposes of this Section 6.2.2 with
          respect to any Person meeting the requirements of clauses (i) and (ii)
          of Rule 13d-1(b)(1) promulgated under the Securities Exchange Act of
          1934, as amended.

          6.3  TRANSFERS OF EMPLOYMENT.  The transfer of a Participant from
employment with an Employer to employment with an Affiliate shall not constitute
a termination of employment under the Plan.  A Participant's employment for
purposes of the Plan shall be deemed to have terminated upon termination of the
Participant's employment with all Affiliates.


                                  ARTICLE VII
                                 ADMINISTRATION

          7.1  PLAN ADMINISTRATOR.  The Company is designated as the
administrator of the Plan within the meaning of Section 3(16)(A) of ERISA.

          7.2  COMMITTEE.  The Plan shall be administered by the Committee.  The
Committee shall have the authority to control and manage the operation and
administration of the Plan.  Any member of the Committee may resign at any time
by notice in writing mailed or delivered to the Secretary of the Company.

          7.3  ACTIONS BY COMMITTEE.  Each decision of a majority of the members
of the Committee then in office shall constitute the final and binding act of
the Committee.  The Committee may act (a) at meetings called or held in person
or by conference telephone call and (b) by unanimous written consent and shall
keep minutes of all meetings held and a record of all actions taken by unanimous
written consent.

          7.4  POWERS OF COMMITTEE.  The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of the Plan
and to control its operation in accordance with its terms including without
limitation the following powers:

               7.4.1 to interpret and determine the meaning and validity of the
          provisions of the Plan and to determine any question arising under, or
          in connection with, the administration, operation or validity of the
          Plan or any amendment thereto;

               7.4.2 to determine any and all considerations affecting the
          eligibility of any employee to become a Participant or remain a
          Participant in the Plan, subject to the eligibility requirements
          established from time to time by the Compensation Committee;

                                     - 10 -
<PAGE>
 
               7.4.3 to cause one or more separate Accounts to be maintained for
          each Participant;

               7.4.4 to cause Compensation Deferrals, Matching Contributions,
          Supplemental Matching Contributions and deemed investment earnings and
          losses thereon to be credited to Participants' Accounts;

               7.4.5 to establish and revise accounting methods or procedures as
          provided in Section 4.3;

               7.4.6 to determine the status and rights of Participants, their
          spouses, Beneficiaries, and estates;

               7.4.7 to employ such counsel, agents and advisers and to obtain
          such legal, clerical and other services as it may deem necessary or
          appropriate in carrying out the provisions of the Plan;

               7.4.8 to establish rules for the performance of its powers and
          duties and for the administration of the Plan;

               7.4.9 to arrange for distribution to each Participant of a
          statement of benefits under the Plan from time to time but not less
          often than annually;

               7.4.10 to publish a claims and appeal procedure satisfying the
          standards of Section 503 of ERISA pursuant to which individuals or
          estates may claim Plan benefits (including the exercise of rights
          purported to be granted by the Plan) and appeal denials of such
          claims;

               7.4.11 to delegate to any one or more of its members or to any
          other person, severally or jointly, the authority to perform for and
          on behalf of the Committee one or more of the functions of the
          Committee under the Plan; and

               7.4.12 to decide all issues and questions regarding Accounts and
          the time, form, manner and amount of distributions to Participants.

          7.5  DECISIONS OF COMMITTEE.  All actions, interpretations and
decisions of the Committee shall be conclusive and binding on all persons and
shall be given the maximum deference allowed by law.

          7.6  ADMINISTRATIVE EXPENSES.  All expenses incurred in the
administration of the Plan by the Committee, or otherwise, including legal fees
and expenses, shall be paid and borne by the Employers.

                                     - 11 -
<PAGE>
 
          7.7  ELIGIBILITY TO PARTICIPATE.  No member of the Committee who is
also an employee of an Employer shall be excluded from participating in the Plan
if otherwise eligible, but such person shall not be entitled, as a member of the
Committee, to act or pass upon any matters pertaining specifically to such
person's own Account under the Plan.

          7.8  INDEMNIFICATION.  By adopting the Plan, each of the Employers
agrees to indemnify and hold harmless the members of the Committee from and
against any and all losses, claims, damages or liabilities (including attorneys'
fees and amounts paid, with the approval of the Board, in settlement of any
claim) arising out of or resulting from the implementation of a duty, act or
decision with respect to the Plan, so long as such duty, act or decision does
not involve gross negligence or willful misconduct on the part of any such
individual.


                                  ARTICLE VIII
                                    FUNDING

          8.1  UNFUNDED PLAN.  All amounts credited to a Participant's Account
under the Plan shall continue for all purposes to be a part of the general
assets of the Employers.  The interest of the Participant in the Participant's
Account, including the Participant's right to distribution thereof, shall be an
unsecured claim against the general assets of the Employers.  In the event that
an Employer (other than the Company) becomes insolvent and therefore unable to
make a payment or payments under the Plan, the Company shall make such payments;
provided, however, that nothing in this sentence shall make any Participant
anything other than a general, unsecured creditor of the Company.  Nothing
contained in the Plan shall give any Participant or Beneficiary any interest in
or claim against any specific assets of the Employers.

          8.2  TRUST.  The Company has entered into the Trust for the purpose of
funding and satisfying the Employers' obligations under the Plan.  From time to
time throughout each Plan Year, the Employers shall transfer an amount in cash
to the Trust equal to the aggregate amount credited to Participants' Accounts as
contributions pursuant to the Plan.  Any payments made by the Trust pursuant to
the Plan shall be in complete satisfaction of the Employers' and the Plan's
obligations to make such payments.


                                   ARTICLE IX
                           AMENDMENT AND TERMINATION

          9.1  COMPANY'S OBLIGATIONS LIMITED.  The Company intends to continue
the Plan indefinitely and to maintain each Participant's Account until such
Account is paid to the Participant (or the Participant's Beneficiary) in
accordance with the provisions of the Plan.  However, the Plan is voluntary on
the part of the Company, and the Company does not guarantee to continue the
Plan.  Compensation Deferrals, Matching Contributions and Supplemental Matching
Contributions may be suspended or discontinued at any time.

                                     - 12 -
<PAGE>
 
          9.2  RIGHT TO AMEND OR TERMINATE.  The Board reserves the right to
alter, amend or terminate the Plan, or any part thereof, in such manner as it
may determine, at any time and for any reason.  No amendment to the Plan shall
be effective to decrease or impair the rights of any Participant to any portion
of such Participant's Account determined under the Plan immediately prior to the
adoption of such amendment.  Notwithstanding the foregoing, the Plan may be
amended (prospectively, retroactively or both) if necessary to comply with all
laws applicable to the Plan.

          9.3  EFFECT OF TERMINATION.  If the Plan is terminated pursuant to
this Article 9, the balances credited to the Accounts of the affected
Participants shall become fully vested and nonforfeitable and shall be
distributed to such affected Participants at the time and in the manner set
forth in Article 5; provided that the Compensation Committee, in its sole
discretion, may authorize accelerated distribution of Participants' Accounts as
of any earlier date.

          9.4  DISPOSITION OF AFFILIATES.  Notwithstanding any contrary
provision of the Plan, in the event that one or more Participants transfer
employment to an entity that is not an Affiliate pursuant to an agreement
regarding the sale of the stock or assets of an Affiliate, or a spin-off, split-
up or other change in the capital structure of an Affiliate (each, an "affected
Participant"), the Board, in its sole discretion, may determine that (a) the
liability for amounts credited to an affected Participant's Account shall be
assumed by such entity (or an affiliate thereof), and upon assumption by such
entity (or affiliate thereof) of such liability, no Employer shall have any
liability under the Plan to such affected Participant, or (b) the amounts
credited to an affected Participant's Account shall be distributed to the
Participant in a single payment following the affected Participant's termination
of employment with all Affiliates.


                                   ARTICLE X
                               GENERAL PROVISIONS

          10.1  PARTICIPATION BY AFFILIATES.  Affiliates of the Company may
become participating Employers by adopting the Plan.  Upon adoption of the Plan,
an Affiliate is deemed to agree to all of the Plan's terms, including without
limitation the provisions granting exclusive authority to the Board to amend the
Plan and the provisions granting exclusive authority to the Committee to
administer and interpret the Plan.  Any Affiliate may terminate its
participation in the Plan at any time.

          10.2  INALIENABILITY.  In no event may either a Participant, a former
Participant or such person's Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors of a Participant nor be liable to attachment,
execution or other legal process.

                                     - 13 -
<PAGE>
 
          10.3  RIGHTS AND DUTIES.  Neither the Employers nor the Committee
shall be subject to any liability or duty under the Plan except as expressly
provided in the Plan, or for any action taken, omitted or suffered in good
faith.

          10.4  NO ENLARGEMENT OF EMPLOYMENT RIGHTS.  Neither the establishment
or maintenance of the Plan, the making of any Compensation Deferrals, nor any
action of any Employer or the Committee shall be held or construed to confer
upon any person any right to be continued as an employee of an Employer nor,
upon dismissal, any right or interest in any specific assets of the Employers
other than as provided in the Plan.  Each Employer expressly reserves the right
to discharge any of its employees at any time.

          10.5  APPORTIONMENT OF COSTS AND DUTIES.  All acts required of the
Employers under the Plan may be performed by the Company for itself and all
other Employers, and the costs of the Plan may be equitably apportioned by the
Committee among the Company and all other Employers.  Whenever an Employer is
permitted or required under the terms of the Plan to do or perform any act,
matter or thing, it shall be done and performed by any officer or employee of
the Employer who is authorized by the board of directors of the Employer.

          10.6  CONTRIBUTIONS NOT COUNTED UNDER OTHER EMPLOYEE BENEFIT PLANS.
Compensation Deferrals, Matching Contributions and any Supplemental Matching
Contributions will not be considered for purposes of contributions or benefits
under any other employee benefit plan sponsored by the Employers except to the
extent specifically provided herein or therein.

          10.7  APPLICABLE LAW.  The Plan shall be construed, regulated and
administered under ERISA and other applicable federal laws and, where not
otherwise preempted, by the laws of the State of Texas.

          10.8  SEVERABILITY.  If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provisions of the Plan, and in lieu of each provision that is held invalid or
unenforceable, there shall be added as part of the Plan a provision that shall
be as similar in terms to such invalid or unenforceable provision as may be
possible and be valid, legal and enforceable.

          10.9  CAPTIONS.  The captions contained in and the table of contents
prefixed to the Plan are inserted only as a matter of convenience and for
reference and in no way define, limit, enlarge or describe the scope or intent
of the Plan nor in any way affect the construction of any provision of the Plan.

          10.10  GENDER AND NUMBER.  The masculine gender shall be deemed to
denote the feminine or neuter genders, the singular to denote the plural, and
the plural to denote the singular, where the context so permits.

                                     - 14 -