<PAGE>   1
                                                                    EXHIBIT 10.4



PROPECTUS
                        COMPUTER LEARNING CENTERS, INC.
                        10021 Balls Ford Road, Suite 200
                            Manassas, Virginia 20109
                           Telephone:  (703) 367-7000

                        1,000,000 SHARES OF COMMON STOCK
                           ($.01 par value per share)

                           2000 STOCK INCENTIVE PLAN


                 The shares of common stock, $.01 par value per share (the
"Common Stock"), of Computer Learning Centers, Inc. (the "Company") covered by
this Prospectus are offered as set forth under the heading "DESCRIPTION OF THE
PLAN" to certain employees, officers and directors of, and consultants and
advisors to, the Company and its subsidiaries under the Company's 2000 Stock
Incentive Plan (the "Plan").  This Prospectus also covers additional shares
that may be issuable under the Plan in the event of a stock dividend, stock
split, recapitalization or other change affecting the Common Stock.

                         -----------------------------

                 Members of the Board of Directors ("Directors") and executive
officers of the Company may be deemed to be "affiliates" of the Company for
purposes of the Securities Act of 1933, as amended (the "Securities Act"), and
may resell shares of Common Stock purchased under the Plan only in accordance
with certain restrictions imposed by the Securities Act.  Any Director or
executive officer intending to sell shares of Common Stock acquired under the
Plan should consult with legal counsel prior to doing so.  See "RESALE OF
SHARES BY AFFILIATES."

                         -----------------------------

                 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

                         -----------------------------

                 This document constitutes part of a prospectus covering
securities that have been registered under the Securities Act.  The date of
this Prospectus is August __, 2000.





                                       i
<PAGE>   2
                             AVAILABLE INFORMATION

                 The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission").  Such documents may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at the
following regional offices of the Commission:  Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.  Copies of such documents may also be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates.  In addition, the Commission
maintains an internet site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding registrants, such as the Company,
that file electronically with the Commission.  Copies of such documents may
also be inspected at the offices of the Company.

                         -----------------------------

                 The Company has filed with the Commission a registration
statement on Form S-8 (together with all amendments, exhibits and schedules
thereto, the "Registration Statement") under the Securities Act with respect to
the Common Stock offered hereby.  This Prospectus does not contain all of the
information set forth in the Registration Statement.  Copies of the
Registration Statement may be obtained in the manner described above.

                         -----------------------------

                 The Company hereby undertakes to provide, without charge, upon
written or oral request of any person to whom this Prospectus is delivered, a
copy of any and all documents incorporated by reference in this Prospectus.
See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."  Any other documents
required to be delivered to participants in the Plan (the "Participants")
pursuant to Rule 428(b) under the Securities Act shall also be provided,
without charge, upon written or oral request of any participant.  Requests for
such information should be addressed to Computer Learning Centers, Inc.,
Attention: Chief Financial Officer, 10021 Balls Ford Road, Suite 200, Manassas,
Virginia  20109; telephone:  (703) 392-1415.





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<PAGE>   3
                 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY
OTHER PERSON DEEMED TO BE AN UNDERWRITER.  NEITHER DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN.

                         -----------------------------

                 This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the shares covered by this Prospectus by anyone
in any jurisdiction in which such offer or solicitation is not authorized, or
in which the person making such offer or solicitation is not qualified to do
so, or to anyone to whom it is unlawful to make such offer or solicitation.





                                      iii
<PAGE>   4
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page
<S>                                                                                              <C>
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DESCRIPTION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

       Shares Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
       Per-Participant Limit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
       Liquidation or Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
       Merger or Acquisition  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
       Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
       Eligibility  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
       Terms of Awards  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
       Stock Options  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
       Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
       Other Stock-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
       General Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
       Transferability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
       Effective Date, Termination and Amendment  . . . . . . . . . . . . . . . . . . . . . . . . 7
       U.S. Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

RESALE OF SHARES BY AFFILIATES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . .11
</TABLE>





                                       iv
<PAGE>   5
                                  THE COMPANY

         Computer Learning Centers, Inc., a Delaware corporation (the
"Company"), is the issuer of the 1,000,000 shares of common stock covered by
this Prospectus.  The Company's principal offices are located at 10021 Balls
Ford Road, Suite 200, Manassas, Virginia 20109.


                            DESCRIPTION OF THE PLAN


         This Prospectus relates to shares of Common Stock issuable to
employees, officers and directors of, and consultants and advisors to, the
Company and its subsidiaries under the Plan.  The Plan provides for the grant
of "incentive stock options" intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options"), non-statutory stock options, restricted stock and other stock-based
awards (each, an "Award").

         The purpose of the Plan is to advance the interests of the Company's
stockholders by enhancing the Company's ability to attract, retain and motivate
persons who make (or are expected to make) important contributions to the
Company by providing such persons with equity ownership opportunities and
performance based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders.

         As stockholders, participants in the Plan will share in the financial
profit or loss of the Company and will run the usual stockholder's risk that
the value of the Common Stock may go up or down.  Neither the Company nor
anyone else can guarantee the future value of the Common Stock.  The decision,
therefore, as to whether or not a participant should acquire shares issuable
under the Plan must be made individually on the basis of each employee's own
economic circumstances.

         The following is a brief summary of the provisions of the Plan, a copy
of which has been furnished to each recipient of an award.  This summary is
qualified in all respects by reference to the full text of the Plan.

SHARES SUBJECT TO THE PLAN

         The total number of shares issuable under the Plan is limited to
1,000,000 shares of Common Stock.  Whenever Awards under the Plan expire,
terminate or otherwise become unexerciseable, the shares of Common Stock which
were subject to such Awards may again be available for award under the Plan,
subject, however, in the case of Incentive Stock Options, to any limitations
required under the Code.  Shares issued under the Plan may consist in whole or
in part of authorized but unissued shares or treasury shares.





                                       1
<PAGE>   6
         The Board of Directors (the "Board") is required to make appropriate
adjustments in connection with the Plan and any outstanding Awards to reflect
stock dividends, stock splits and certain other events.

PER-PARTICIPANT LIMIT

         Subject to adjustment as described above, the maximum number of shares
with respect to which an Award may be granted to any Participant under the Plan
shall be 200,000 shares per calendar year.

LIQUIDATION OR DISSOLUTION

         Options. In the event of a proposed liquidation or dissolution of the
Company, the Board shall upon written notice to the Participants in the Plan
provide that all then unexercised options will (i) become exercisable in full
as of a specified time at least 10 business days prior to the effective date of
such liquidation or dissolution and (ii) terminate effective upon such
liquidation or dissolution, except to the extent exercised before such
effective date.

         Restricted Stock Awards.  The Board may specify the effect of a
liquidation or dissolution on any Restricted Stock Award (as defined below) or
other Award granted under the Plan at the time of the grant of such Award.

MERGER OR ACQUISITION

         Options. Upon the occurrence of an Acquisition Event (as defined
below), or the execution by the Company of any agreement with respect to an
Acquisition Event, the Board shall take any one or more of the following
actions with respect to then outstanding Awards: (i) provide that outstanding
Options shall be assumed, or equivalent Options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), provided that
any such Options substituted for Incentive Stock Options shall satisfy, in the
determination of the Board, the requirements of Section 424(a) of the Code;
(ii) upon written notice to the Participants, provide that all then unexercised
Options will become exercisable in full as of a specified time (the
"Acceleration Time") prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to the
extent exercised by the Participants between the Acceleration Time and the
consummation of such Acquisition Event; (iii) in the event of an Acquisition
Event under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock surrendered
pursuant to such Acquisition Event (the "Acquisition Price"), provide that all
outstanding Options shall terminate upon consummation of such Acquisition Event
and each Participant shall receive, in exchange therefor, a cash payment equal
to the amount (if any) by which (A) the Acquisition Price multiplied by the
number of shares of Common Stock subject to such outstanding Options (whether
or not then exercisable), exceeds (B) the aggregate





                                       2
<PAGE>   7
exercise price of such Options.  An "Acquisition Event" shall mean: (a) any
merger or consolidation of the Company with or into another entity as a result
of which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property, (b) any exchange of shares of the
Company for cash, securities or other property pursuant to a share exchange
transaction or (c) any sale of all or substantially all of the assets of the
Company.

         Restricted Stock Awards.  Upon the occurrence of an Acquisition Event
or the execution by the Company of any agreement with respect to an Acquisition
Event, the Board shall take one or more of the following actions:  (i) provide
that all Restricted Stock Awards then outstanding shall become free of all
restrictions prior to the consummation of the Acquisition Event; and (ii)
provide that any other stock-based Awards outstanding (A) shall become
exercisable, realizable or vested in full, or shall be free of all conditions
or restrictions, as applicable to each such Award, prior to the consummation of
the Acquisition Event, or (B), if applicable, shall be assumed, or equivalent
Awards shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof).

ADMINISTRATION OF THE PLAN

         The Plan is administered by the Board, which currently consists of
five directors divided into three classes.  At each annual meeting of the
stockholders of the Company, each such class of directors, on a rotating basis,
is elected to a three-year term in accordance with the provisions of the Second
Amended and Restated Certificate of Incorporation and the Amended and Restated
By-Laws of the Company.  The Board has the authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines and practices
relating to the Plan as it will deem advisable.  The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it deems expedient to carry the Plan into
effect. The Board is the sole and final judge of such expediency and its
decisions are final and binding.  No member of the Board or person acting
pursuant to authority delegated by the Board is liable for any action or
determination relating to or under the Plan made in good faith.

         To the extent permitted by applicable law, the Board may delegate any
or all of its powers under the Plan to one or more committees or subcommittees
of the Board to administer the Plan (each a "Committee").  All references
herein, unless otherwise indicated, to the "Board" shall mean the Board or a
Committee of the Board.

ELIGIBILITY

         All employees, officers, directors, consultants and advisors of the
Company and its subsidiaries are eligible to be granted Awards under the Plan.
Incentive Stock Options may be awarded only to persons eligible to receive
Incentive Stock Options under the Code.





                                       3
<PAGE>   8
TERMS OF AWARDS

         The Plan provides for the granting of the following types of Awards:
Incentive Stock Options, non-statutory stock options, restricted stock and
other stock-based Awards.  Below is a brief discussion of each type of Award.
For a discussion of the federal income tax treatment of Awards, see the
relevant discussion under the heading "U.S. Federal Income Tax Consequences."

STOCK OPTIONS

         Grant of Options.  The Board selects the recipients of options and
determines the number of shares of Common Stock covered by such options, the
dates upon which such options become exercisable, the exercise price, the
duration of such options and any other applicable conditions and limitations.
Participants must refer to their option agreement for the specific terms and
conditions applicable to their option.

         Option Exercise Price.  Participants receive the right to purchase a
specified number of shares of Common Stock at a specified option price
established by the Board provided, however, that the exercise price of
incentive stock options is not less than 100% of the fair market value of the
Common Stock when granted.

         Duration and Exercise of Option.  Each option is exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.  No option will be granted for a term in excess of
10 years.

         Terms of Payment.  Options granted under the Plan may provide for the
payment of the exercise price (i) in cash or check in an amount equal to the
exercise price of such options; (ii) unless the Board specifies otherwise in
the applicable option agreement, by delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price or delivery by the optionee
to the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price; (iii) by delivery of Shares of Common
Stock owned by the optionee for at least six months valued at their fair market
value; (iv) to the extent permitted by the Board and specified in the
applicable option agreement (A) by delivery of a promissory note of the
optionee to the Company on terms determined by the Board or (B) by payment of
such other lawful consideration as the Board may determine, or (iv) any
combination of the foregoing permitted forms of payment.

         Termination of Employment or Other Status.  The Board determines the
period of time during which an optionee may exercise an option following
termination of employment or other relationship with the Company, retirement,
authorized leave of





                                       4
<PAGE>   9
absence, death or disability.  The exercise of stock options that are
transferable after termination of employment or other status (other than under
the laws of descent and distribution) are not covered by the Registration
Statement.

         Limitations on Incentive Stock Options.  An option that the Board
intends to be an Incentive Stock Option is subject to and will be construed
consistently with the requirements of Section 422 of the Code.  The Plan
provides that the Company will have no liability to an optionee, or any other
party, if an option (or any part thereof) which is intended to qualify as an
Incentive Stock Option does not so qualify.  Options granted under the Plan
that are intended to be Incentive Stock Options will generally be subject to
the following terms and conditions:

                 (a)      In order to qualify for Incentive Stock Option
treatment under the Code, at the time of exercise the optionee must be, and
from the date of grant of his or her option must have been continuously,
employed by the Company, except that an Incentive Stock Option may be exercised
within the period of three months after the date the optionee ceases to be an
employee of the Company (or within such lesser period as may be specified in
the applicable option agreement), provided, that the agreement with respect to
such option may designate a longer exercise period and that the exercise after
such three-month period shall be treated as the exercise of a non-statutory
stock option under the Plan.  Notwithstanding the foregoing provisions, no
Incentive Stock Option may be exercised after its expiration date.

                 (b)      Each Incentive Stock Option granted under the Plan
shall, at the time of grant, be specifically designated as such in the option
agreement covering such.

                 (c)      The exercise price per share of Common Stock subject
to an Incentive Stock Option shall not be less than 100% of the fair market
value of a share of Common Stock at the time such option is granted.

                 (d)      Notwithstanding anything to the contrary in the Plan,
if any employee to whom an Incentive Stock Option is to be granted under the
Plan is, at the time of the grant of such option, the owner of stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation (after taking into account
the attribution of stock ownership rule of Section 424(d) and of the Code),
then the following special provisions will be applicable to the Incentive Stock
Option granted to such individual:

                          (i)     The purchase price per share of the Common
                 Stock subject to such Incentive Stock Option shall not be less
                 than 110% of the fair market value of one share of Common
                 Stock at the time of grant; and

                          (ii)    The option exercise period shall not exceed
                 five years from the date of grant.





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<PAGE>   10
         (e)     For so long as the Code shall so provide, options granted to
any employee under the Plan (and any other incentive stock option plans of the
Company or of its parent or subsidiary corporation) that are intended to
constitute Incentive Stock Options will not qualify as Incentive Stock Options
to the extent that such options, in the aggregate, become exercisable for the
first time in any one calendar year for shares of Common Stock with an
aggregate fair market value (determined as of the respective date or dates of
grant) of more than $100,000.

RESTRICTED STOCK

         Grants.  The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all
or part of such shares at their issue price or other stated or formula price
(or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction period
or periods established by the Board for such Award (each, a "Restricted Stock
Award").

         Terms and Conditions.  The Board will determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.  Any stock certificates
issued in respect of a Restricted Stock Award will be registered in the name of
the recipient and, unless otherwise determined by the Board, deposited by the
recipient, together with a stock power endorsed in blank, with the Company (or
its designee).  At the expiration of the applicable restriction periods (which
may occur as a result of the passage of time, the attainment by the Company or
the recipient of certain performance based objectives or other criteria
established by the Board), the Company (or such designee) will deliver the
certificates no longer subject to such restrictions to the Participant or, if
the Participant has died, to the beneficiary designated, in a manner determined
by the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant's death.

OTHER STOCK-BASED AWARDS

         The Board has the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including
the grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

GENERAL RESTRICTIONS

         The Company is not obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove restrictions from shares previously delivered
under the Plan until (i) all conditions of the Award have been met or removed
to the satisfaction of the Company, (ii) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and delivery
of such shares have been satisfied, including any applicable securities laws
and any applicable stock exchange or stock market rules





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<PAGE>   11
and regulations, and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules or
regulations.

         No person will have any claim or right to be granted an Award and the
grant of an Award will not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company
expressly reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under the
Plan, except as expressly provided in the applicable Award.

         Subject to the provisions of the applicable Award, no Participant or
designated beneficiary of a Participant has any rights as a stockholder with
respect to any shares of Common Stock to be distributed under the Plan until
becoming the record holder of such shares.

TRANSFERABILITY

         Except as the Board may otherwise determine or provide in an Award,
Awards may not be sold, assigned, transferred, pledged or otherwise encumbered
by the person to whom they are granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
life of the Participant, will be exercisable only by the Participant.

EFFECTIVE DATE, TERMINATION AND AMENDMENT

         The Plan was adopted by the Board and became effective on May 26,
2000. The Plan was approved by the stockholders of the Company on August 1,
2000. No Awards may be made under the Plan after May 25, 2010, but Awards
previously granted may extend beyond that date.

         The Board may at any time amend, suspend or terminate the Plan or any
portion thereof at any time, subject to certain limitations in the case of
Awards designated as subject to Section 162(m) of the Code.  The Board may at
any time provide that any options will become immediately exercisable in full
or in part, that any Restricted Stock Awards will be free of all restrictions
or that any other stock-based Awards become exercisable or free of
restrictions, as the case may be.

         The Board may amend, modify or terminate any outstanding Award,
including but not limited to, substituting therefor another Award of the same
or a different type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a non-statutory stock option, provided
that the Participant's consent to such action will be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.

U.S. FEDERAL INCOME TAX CONSEQUENCES





                                       7
<PAGE>   12
         The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
Plan and with respect to the sale of Common Stock acquired under the Plan. It
does not address the tax consequences of other stock based awards.  It also
does not address the tax consequences that may arise with respect to any gift
or disposition other than by sale of Common Stock acquired under the Plan. For
precise advice as to any specific transaction or set of circumstances,
Participants should consult with their own tax advisors.  Participants should
also consult with their own tax advisors regarding the application of any
state, local, and foreign taxes and any federal gift, estate, and inheritance
taxes.

         The Plan is not a qualified plan under Section 401(a) of the Code.

         Incentive Stock Options.  In general, a Participant will not recognize
taxable income upon the grant or exercise of an Incentive Stock Option.
Instead, a Participant will recognize taxable income with respect to an
Incentive Stock Option only upon the sale of Common Stock acquired through the
exercise of the option ("ISO Stock").  Nevertheless, in the case of a
Participant who has not been an employee of the Company at all times commencing
on the date on which a particular option was granted (the "Grant Date") and
ending on the date that is three months before the date on which the option is
exercised (the "Exercise Date"), an option generally will be treated as though
it were a non-statutory stock option and taxed as described below under
"Non-Statutory Stock Options."  Similarly, options will be treated as
non-statutory stock options for purposes of the alternative minimum tax. While
a Participant will pay alternative minimum tax only to the extent of the excess
of that tax over the Participant's regular tax, the treatment of an option as a
non-statutory stock option for purposes of the alternative minimum tax could
create such an excess.

         Generally, the tax consequences of selling ISO Stock will vary with
the length of time that the Participant has owned the ISO Stock at the time it
is sold.  If the Participant sells ISO Stock after having owned it for at least
two years from the date the option was granted (the "Grant Date") and one year
from the date the option was exercised (the "Exercise Date"), then the
Participant will recognize long-term capital gain in an amount equal to the
excess of the sale price of the ISO Stock over the exercise price.

         If the Participant sells ISO Stock prior to having owned it for at
least two years from the Grant Date and one year from the Exercise Date (a
"Disqualifying Disposition"), then the Participant generally will recognize
ordinary compensation income in an amount equal to the lesser of:

                          (i)     the excess of the fair market value of the
                 ISO Stock on the Exercise Date over the exercise price; and





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<PAGE>   13
                          (ii)    the excess of the sale price of the ISO Stock
                 over the exercise price.

         A Participant making a Disqualifying Disposition will also recognize
capital gain in an amount equal to any excess of the sale price of the ISO
Stock over the fair market value of the ISO Stock on the Exercise Date.  This
capital gain will be a long-term capital gain if the Participant has held the
ISO Stock for more than one year prior to the date of the sale and will be a
short-term capital gain if the Participant has held the ISO Stock for a shorter
period.

         If a Participant sells ISO Stock for less than the exercise price,
then the Participant  will recognize capital loss equal to the excess of the
exercise price over the sale price of the ISO Stock.  This capital loss will be
a long-term capital loss if the Participant has held the ISO Stock for more
than one year prior to the date of the sale and will be a short-term capital
loss if the Participant has held the ISO Stock for a shorter period.

         Non-Statutory Stock Options.  As in the case of an Incentive Stock
Option, a Participant will not recognize taxable income upon the grant of a
non-statutory stock option.  However, a Participant who exercises a
non-statutory stock option generally will recognize ordinary compensation
income in an amount equal to the excess of the fair market value of the Common
Stock acquired through the exercise of the option (the "NSO Stock") on the
Exercise Date over the exercise price.

         With respect to any NSO Stock, a Participant will have a tax basis
equal to the exercise price plus any income recognized upon the exercise of the
option.  Upon selling NSO Stock, a Participant generally will recognize capital
gain or loss in an amount equal to the difference between the sale price of the
NSO Stock over the Participant's tax basis in the NSO Stock. This capital gain
or loss will be a long-term capital gain or loss if the Participant has held
the NSO Stock for more than one year prior to the date of the sale and will be
short-term capital gain or loss if the Participant has held the NSO Stock for a
shorter period.

         Delivery of Common Stock Upon Exercise of Stock Options.  Under
certain circumstances, the Plan permits a Participant to exercise a stock
option by delivering to the Company Common Stock having a fair market value
equal in amount to the exercise price.  The use of this method of exercise
generally will not alter the tax consequences described above, and it may
enable a Participant to dispose of appreciated Common Stock without immediately
recognizing capital gain on the disposition.  The Participant's tax basis in
any shares of Common Stock delivered to the Company to exercise an option
generally will be carried over to an equal number of shares of Common Stock
acquired upon exercising the option.  Nevertheless, Participants should
consider that the delivery to the Company of ISO Stock or stock acquired
pursuant to the Company's employee stock purchase plan will constitute a
Disqualifying





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<PAGE>   14
Disposition, having all of the adverse tax consequences described above, if the
holding period requirements described above are not satisfied with respect to
that stock.

         Restricted Stock.  A Participant will not recognize taxable income
upon the grant of a Restricted Stock Award unless the Participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election").  If the
Participant makes a Section 83(b) Election within 30 days of the Grant Date,
then the Participant will recognize ordinary compensation income, for the year
in which the Award is granted, in an amount equal to the excess of the fair
market value of the Common Stock at the time the Award is granted over the
purchase price paid for the Common Stock.  If such election is made and the
Participant subsequently forfeits some or all of the shares, then the
Participant generally will not be entitled to any refund of taxes paid as a
result of the Section 83(b) Election.  If a Section 83(b) Election is not made,
then the Participant will recognize ordinary compensation income at the time
that the forfeiture provisions or restrictions on transfer lapse in an amount
equal to the excess of the fair market value of the Common Stock at the time of
such lapse over the original purchase price paid for the Common Stock. The
Participant will have a tax basis in the Common Stock acquired equal to the sum
of the price paid and the amount of ordinary income recognized either at the
time of the Section 83(b) Election is made or at the time the forfeiture
provisions or transfer restrictions lapse, as applicable.

         Upon the disposition of the Common Stock acquired pursuant to a
Restricted Stock Award, the Participant will recognize a capital gain or loss
equal to the difference between the sale price of the Common Stock and the
Participant's tax basis in the Common Stock.  The gain or loss will be a
long-term gain or loss if the shares are held for more than one year.  For this
purpose, the holding period will begin on the day after the date on which the
forfeiture provisions or restrictions lapse if a Section 83(b) Election is not
made, or on the day after the Award is granted if a Section 83(b) Election is
made.

         Other Stock-Based Awards.  The tax consequences associated with any
other stock-based Award granted under the Plan will vary depending on the
specific terms of the Award.  Among the relevant factors are whether or not the
Award has a readily ascertainable fair market value, whether or not the Award
is subject to forfeiture provisions or restrictions on transfer, the nature of
the property to be received by the Participant under the Award, and the
Participant's holding period and tax basis for the Award or underlying Common
Stock.

         Maximum Income Tax Rates on Capital Gain and Ordinary Income.
Long-term capital gain will be taxable at a maximum rate of 20%.  Short-term
capital gain and ordinary income will be taxable at a maximum rate of 39.6%.
Phaseouts of personal exemptions and reductions of allowable itemized
deductions at higher levels of income may result in slightly higher marginal
tax rates.  Ordinary compensation income will also be subject to a Medicare tax
and, under certain circumstances, a social security tax.





                                       10
<PAGE>   15
         Tax Consequences to the Company.  The grant of a stock option or
Restricted Stock Award (absent a Section 83(b) Election by the Participant)
under the Plan will have no tax consequences to the Company.  Moreover, in
general, neither the exercise of an Incentive Stock Option acquired under the
Plan nor the sale of any Common Stock acquired under the Plan will have any tax
consequences to the Company.  The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a Participant under the Plan.  Any such deduction will be
subject to the limitations of Section 162(m) of the Code.

         Withholding.  Although a Participant's Disqualifying Disposition of
ISO Stock will result in the recognition of ordinary compensation income, the
Company will have no withholding obligation with respect to that income. In
contrast, the Company will have a withholding obligation with respect to
ordinary compensation income recognized with respect to a non-statutory stock
option or Restricted Stock Award by a Participant who has been employed by the
Company.  The Company will require any such Participant to make arrangements to
satisfy this withholding obligation.


                         RESALE OF SHARES BY AFFILIATES

         Shares of Common Stock issued under the Plan after the effectiveness
of the Registration Statement may be resold freely, except that any Participant
deemed to be an affiliate of the Company, within the meaning of the Securities
Act and the rules and regulations promulgated thereunder, may not sell shares
acquired under the Plan unless such shares have been registered by the Company
under the Securities Act for resale by such affiliate or an exemption from
registration under the Securities Act is available.  Rule 144 under the
Securities Act provides an exemption from registration, provided certain
limitations on the manner of sale and the number of shares sold are observed
(holding period limitations do not apply).  An employee who is not an executive
officer, director or 10% stockholder of the Company generally would not be
deemed to be an "affiliate" of the Company.



                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE


         The following documents, which are on file with the Commission, are
incorporated in this Prospectus by reference:

                 (1)      The Company's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Exchange Act, or the latest prospectus filed
pursuant to Rule 424(b)





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<PAGE>   16
under the Securities Act that contains audited financial statements for the
Company's latest fiscal year for which such statements have been filed.

                 (2)      All other reports filed pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by the
document referred to in (l) above.

                 (3)      The description of the Common Stock contained in a
registration statement filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.

         All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all shares of Common Stock
offered hereby have been sold or which deregisters all shares of Common Stock
then remaining unsold, shall be deemed to be incorporated by reference herein
and to be part hereof from the date of the filing of such documents.





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