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                                                                    EXHIBIT 10.8
                      APPLIED GRAPHICS TECHNOLOGIES, INC.

           1998 INCENTIVE COMPENSATION PLAN, AS AMENDED AND RESTATED

1.0      DEFINITIONS

The following terms shall have the following meanings unless the context
indicates otherwise:

1.1      "Affiliated Person" shall mean an employee of an entity other than the
Company whose activities may benefit the Company and who has been designated by
the Board to be eligible to participate in the Plan.

1.2      "Award" shall mean either a Stock Option, an SAR, a Stock Award, a
Stock Unit, a Performance Share, a Performance Unit, or a Cash Award.

1.3      "Award Agreement" shall mean a written agreement between the Company
and the Participant that establishes the terms, conditions, restrictions and/or
limitations applicable to an Award in addition to those established by the Plan
and by the Committee's exercise of its administrative powers.

1.4      "Board" shall mean the Board of Directors of the Company.

1.5      "Cash Award" shall mean the grant by the Committee to a Participant of
  an Award of cash as described in Section 11 below.

1.6      "Code" shall mean the Internal Revenue Code of 1986, as amended from
  time to time.

1.7      "Committee" shall mean (i) the Board or (ii) a committee or
subcommittee of the Board appointed by the Board from among its members. The
Committee may be the Board's Compensation Committee. Unless the Board
determines otherwise, the Committee shall be comprised solely of not less than
two members who each shall qualify as (x) a "Non-Employee Director" within the
meaning of Rule 16b-3(b)(3) (or any successor rule) under the Exchange Act and
(y) an "outside director" within the meaning of Section 162(m) of the Code and
the Treasury Regulations thereunder.

1.8      "Common Stock" shall mean the common stock, $.01 par value per share,
  of the Company.

1.9      "Company" shall mean Applied Graphics Technologies, Inc., a Delaware
  corporation.

1.10     "Dividend Equivalent Right" shall mean the right to receive an amount
equal to the amount of any dividend paid with respect to a share of Common
Stock multiplied by the number of hypothetical shares of Common Stock
underlying a Stock Unit or a Performance Unit, and which shall be payable in
cash, in Common Stock, in the form of additional Stock Units or Performance
Units (as the case may be), or a combination of all of the foregoing.

1.11     "Effective Date" shall mean the date on which the Plan is approved by
  the Company's stockholders.

1.12     "Employee" shall mean an employee of the Company or any Subsidiary as
  described in Treasury Regulation Section 1.421-7(h).

1.13     "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, including applicable regulations thereunder.

1.14     "Fair Market Value of the Common Stock" shall mean:

         (a)     if the Common Stock is readily tradeable on a national
         securities exchange or other market system, the closing price of the
         Common Stock on the date of calculation (or on the last preceding
         trading date if Common Stock was not traded on such date), or

         (b)     if the Common Stock is not readily tradeable on a national
         securities exchange or other market system:

                 (i)      the book value of a share of Common Stock as of the
                 last day of the last completed fiscal quarter preceding the
                 date of calculation; or

                 (ii)     any other value as otherwise determined in good faith
                 by the Board.
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1.15     "Independent Contractor" shall mean a person or an entity that renders
services to the Company, but -- if a person -- is not an Employee or a
Nonemployee Director.

1.16     "ISO" shall mean an "incentive stock option" as such term is used in
Code Section 422.

1.17     "Nonemployee Director" shall mean a member of the Board who is not an
Employee.

1.18     "Nonqualified Stock Option" shall mean a Stock Option that does not
qualify as an ISO.

1.19     "Participant" shall mean any Employee, Nonemployee Director,
Affiliated Person or Independent Contractor to whom an Award has been granted
by the Committee under the Plan.

1.20     "Performance-Based Award" shall mean an Award subject to the
achievement of certain performance goal or goals as described in Section 12
below.

1.21     "Performance Share" shall mean the grant by the Committee to a
Participant of an Award as described in Section 10.1 below.

1.22     "Performance Unit" shall mean the grant by the Committee to a
Participant of an Award as described in Section 10.2 below.

1.23     "Plan" shall mean the Applied Graphics Technologies, Inc. 1998
Incentive Compensation Plan.

1.24     "SAR" shall mean the grant by the Committee to a Participant of a
stock appreciation right as described in Section 8 below.

1.25     "Stock Award" shall mean the grant by the Committee to a Participant
of an Award of Common Stock under Section 9.1 below.

1.26     "Stock Option" shall mean the grant by the Committee to a Participant
of an option to purchase Common Stock under Section 7 below.

1.27     "Stock Unit" shall mean the grant by the Committee to a Participant of
an Award as described in Section 9.2 below.

1.28     "Subsidiary" shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the Voting Stock or any other business
entity in which the Company directly or indirectly has an ownership interest of
more than 50 percent.

1.29     "Treasury Regulations" shall mean the regulations promulgated under
the Code by the United States Department of the Treasury, as amended from time
to time.

1.30     "Vest" shall mean:

         (a)     with respect to Stock Options and SARs, when the Stock Option
         or SAR (or a portion of such Stock Option or SAR) first becomes
         exercisable and remains exercisable subject to the terms and
         conditions of such Stock Option or SAR; or


         (b)     with respect to Awards other than Stock Options and SARs, when
         the Participant has:

                 (i)      an unrestricted right, title and interest to receive
                 the compensation (whether payable in cash, Common Stock, or a
                 combination of both) attributable to an Award (or a portion of
                 such Award) or to otherwise enjoy the benefits underlying such
                 Award; and

                 (ii)     a right to transfer an Award subject to no
                 Company-imposed restrictions or limitations other than those
                 restrictions and/or limitations imposed by Section 14 below.

1.31     "Vesting Date" shall mean the date or dates on which an Award Vests.

1.32     "Voting Stock" shall mean the capital stock of any class or classes
having general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.

2.0      PURPOSE AND TERM OF PLAN

2.1      Purpose.  The purpose of the Plan is to provide motivation to certain
Employees, Nonemployee Directors, Affiliated Persons and Independent
Contractors to put forth maximum efforts toward the growth, profitability, and
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success of the Company and Subsidiaries by providing incentives to such
Employees, Nonemployee Directors, Affiliated Persons and Independent
Contractors either through cash payments and/ or through the ownership and
performance of the Common Stock. In addition, the Plan is intended to provide
incentives which will attract and retain highly qualified individuals as
Employees and Nonemployee Directors and to assist in aligning the interests of
such Employees and Nonemployee Directors with those of its stockholders.

2.2      Term.  The Plan shall be effective as of the Effective Date. The Plan
shall terminate on the 10th anniversary of the Effective Date (unless sooner
terminated by the Board).

3.0      ELIGIBILITY AND PARTICIPATION

3.1      Eligibility and Participation.  All Employees of the Company, all
Nonemployee Directors, Affiliated Persons and Independent Contractors shall be
eligible to participate in the Plan and to receive Awards. Participants shall
consist of such Employees, Nonemployee Directors, Affiliated Persons and
Independent Contractors as the Committee in its sole discretion designates to
receive Awards under the Plan. Designation of a Participant in any year shall
not require the Committee to designate such person or entity to receive an
Award in any other year or, once designated, to receive the same type or amount
of Award as granted to the Participant in any other year. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards.

4.0      ADMINISTRATION

4.1      Responsibility.  The Committee shall have the responsibility, in its
sole discretion, to control, operate, manage and administer the Plan in
accordance with its terms.

4.2      Award Agreement.  Each Award granted under the Plan shall be evidenced
by an Award Agreement which shall be signed by the Committee and the
Participant; provided, however, that in the event of any conflict between a
provision of the Plan and any provision of an Award Agreement, the provision of
the Plan shall prevail.

4.3      Authority of the Committee.  The Committee shall have all the
discretionary authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Plan, including but not
limited to the following:

         (a)     to determine eligibility for participation in the Plan;

         (b)     to determine eligibility for and the type and size of an Award
         granted under the Plan;

         (c)     to supply any omission, correct any defect, or reconcile any
         inconsistency in the Plan in such manner and to such extent as it
         shall deem appropriate in its sole discretion to carry the same into
         effect;

         (d)     to issue administrative guidelines as an aid to administer the
         Plan and make changes in such guidelines as it from time to time deems
         proper;

         (e)     to make rules for carrying out and administering the Plan and
         make changes in such rules as it from time to time deems proper;

         (f)     to the extent permitted under the Plan, grant waivers of Plan
         terms, conditions, restrictions, and limitations;

         (g)     to accelerate the Vesting of any Award when such action or
         actions would be in the best interest of the Company;

         (h)     to grant Awards in replacement of Awards previously granted
         under this Plan or any other executive compensation plan of the
         Company; and
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         (i)     to take any and all other actions it deems necessary or
         advisable for the proper operation or administration of the Plan.

4.4      Action by the Committee.  The Committee may act only by a majority of
its members. Any determination of the Committee may be made, without a meeting,
by a writing or writings signed by all of the members of the Committee. In
addition, the Committee may authorize any one or more of its members to execute
and deliver documents on behalf of the Committee.

4.5      Delegation of Authority.  The Committee may delegate to one or more of
its members, or to one or more agents, such administrative duties as it may
deem advisable; provided, however, that any such delegation shall be in
writing. In addition, the Committee, or any person to whom it has delegated
duties under this Section 4.5, may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have under
the Plan. The Committee may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company, or the Subsidiary whose
employees have benefitted from the Plan, as determined by the Committee.

4.6      Determinations and Interpretations by the Committee.  All
determinations and interpretations made by the Committee shall be binding and
conclusive on all Participants and their heirs, successors, and legal
representatives.

4.7      Liability.  No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act
hereunder, except in circumstances involving his or her bad faith, gross
negligence or willful misconduct, or for any act or failure to act hereunder by
any other member or employee or by any agent to whom duties in connection with
the administration of the Plan have been delegated.

4.8      Indemnification.  The Company shall indemnify members of the Committee
and any agent of the Committee who is an employee of the Company, against any
and all liabilities or expenses to which they may be subjected by reason of any
act or failure to act with respect to their duties on behalf of the Plan,
except in circumstances involving such person's bad faith, gross negligence or
willful misconduct.

5.0      SHARES SUBJECT TO PLAN

5.1      Available Shares.  The aggregate number of shares of Common Stock
which shall be available for grants of Awards under the Plan during its term
shall be 7,000,000, which shall include the number of shares of Common Stock
available for grants as of the Effective Date under the Company's Revised 1996
Stock Option Plan (the "1996 Plan"). On or about the Effective Date, the Board
shall amend the 1996 Plan so that no further grants shall be made under the
1996 Plan and all available shares under the 1996 Plan as of the Effective Date
shall be transferred to the Plan. Shares of Common Stock available for issuance
under the Plan may be either authorized but unissued shares, shares of issued
stock held in the Company's treasury, or both, at the discretion of the
Company, and subject to any adjustments made in accordance with Section 5.2
below. Any shares of Common Stock underlying Awards which terminate by
expiration, forfeiture, cancellation or otherwise without the issuance of such
shares shall again be available for grants of Awards under the Plan.

5.2      Adjustment to Shares.  If there is any change in the Common Stock of
the Company, through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split-up, split-off,
spin-off, combination of shares, exchange of shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to stockholders of the Company, an adjustment shall be made to each
outstanding Award so that each such Award shall thereafter be with respect to
or exercisable for such securities, cash and/or other property as would have
been received in respect of the Common Stock subject to such Award had such
Award been paid, distributed or exercised in full immediately prior to such
change or distribution. Such adjustment shall be made successively each time
any such change shall occur. In addition, in the event of any such change or
distribution, in order to prevent dilution or enlargement of Participants'
rights under the Plan, the Committee shall have the authority to adjust, in an
equitable manner, the number and kind of shares that may be issued under the
Plan, the number and kind of shares subject to outstanding Awards, the exercise
price applicable to outstanding Stock Options and SARs, and the Fair Market
Value of the Common Stock and other value determinations applicable to
outstanding Awards. Appropriate adjustments may also be made by the Committee
in the terms of any Awards granted under the Plan to reflect such changes or
distributions and to modify any other
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terms of outstanding Awards on an equitable basis, including modifications of
performance goals and changes in the length of performance periods; provided,
however, that with respect to Performance-Based Awards, such modifications
and/or changes do not disqualify compensation attributable to such Awards as
"performance-based compensation" under Code Section 162(m). In addition, the
Committee is authorized to make adjustments to the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of the Company, or in
response to changes in applicable laws, regulations, or accounting principles;
provided, however, that with respect to Performance-Based Awards, such
modifications and/or changes do not disqualify compensation attributable to
such Awards as "performance-based compensation" under Code Section 162(m).
Notwithstanding anything contained in the Plan, any adjustment with respect to
an ISO due to a change or distribution described in this Section 5.2 shall
comply with the rules of Code Section 424(a), and in no event shall any
adjustment be made which would render any ISO granted hereunder other than an
incentive stock option for purposes of Code Section 422.

6.0      MAXIMUM INDIVIDUAL AWARDS

6.1      Maximum Aggregate Number of Shares Underlying Stock-Based Awards
Granted Under the Plan to Any Single Participant.  The maximum aggregate number
of shares of Common Stock underlying all Awards measured in shares of Common
Stock (whether payable in cash, Common Stock, or a combination of both) that
may be granted to any single Participant during the life of the Plan shall be
1,000,000 shares, subject to adjustment as provided in Section 5.2 above. For
purposes of the preceding sentence, such Awards that are cancelled or repriced
shall continue to be counted in determining such maximum aggregate number of
shares of Common Stock that may be granted to any single Participant during the
life of the Plan.

6.2      Maximum Dollar Amount Underlying Cash-Based Awards Granted Under the
Plan to Any Single Participant. The maximum dollar amount that may be paid to
any single Participant with respect to all Awards granted to such Participant
measured in cash (whether payable in cash, Common Stock, or a combination of
both) during the life of the Plan shall be $30,000,000.

7.0      STOCK OPTIONS

7.1      In General.  The Committee may, in its sole discretion, grant Stock
Options to Employees, Nonemployee Directors, Affiliated Persons and/or
Independent Contractors. The Committee shall, in its sole discretion, determine
the Employees, the Nonemployee Directors, Affiliated Persons and Independent
Contractors who will receive Stock Options and the number of shares of Common
Stock underlying each Stock Option. With respect to Employees who become
Participants, the Committee may grant such Participants ISOs or Nonqualified
Stock Options or a combination of both. With respect to Nonemployee Directors,
Affiliated Persons and Independent Contractors who become Participants, the
Committee may grant such Participants only Nonqualified Stock Options. Each
Stock Option shall be subject to such terms and conditions consistent with the
Plan as the Committee may impose from time to time. In addition, each Stock
Option shall be subject to the terms and conditions set forth in Sections 7.2
through 7.8 below.

7.2      Exercise Price.  The Committee shall specify the exercise price of
each Stock Option in the Award Agreement; provided, however, that (i) the
exercise price of any ISO shall not be less than 100 percent of the Fair Market
Value of the Common Stock on the date of grant, and (ii) the exercise price of
any Nonqualified Stock Option shall not be less than 100 percent of the Fair
Market Value of the Common Stock on the date of grant unless the Committee --
in its sole discretion and due to special circumstances -- determines otherwise
on the date of grant.

7.3      Term of Stock Option.  The Committee shall specify the term of each
Stock Option in the Award Agreement; provided, however, that:

         (a)     no ISO shall be exercised after the 10th anniversary of the
         date of grant of such ISO; and

         (b)     no Nonqualified Stock Option shall be exercised after the 10th
         anniversary of the date of grant of such Nonqualified Stock Option,
         unless the Committee, in its sole discretion, provides otherwise.

Each Stock Option shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall, in its sole discretion, set
forth in the Award Agreement on the date of grant.
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7.4      Vesting Date.  The Committee shall specify the Vesting Date with
respect to each Stock Option in the Award Agreement. The Committee may grant
Stock Options that are Vested, either in whole or in part, on the date of
grant. If the Committee fails to specify a Vesting Date in the Award Agreement,
such Stock Option shall become exercisable in accordance with the following
schedule:
<TABLE>
<CAPTION>
                                                                                    CUMULATIVE
                      ANNIVERSARY OF DATE OF GRANT                              PERCENT THAT VESTS
                      ----------------------------                              ------------------
 <S>                                                                                   <C>
 Less than 1 year..................................................................      0%
 On the first anniversary date.....................................................     20%
 On the second anniversary date....................................................     25%
 On the third anniversary date.....................................................     30%
 On the fourth anniversary date....................................................     35%
 On the fifth anniversary date.....................................................    100%
</TABLE>

The Vesting of a Stock Option may also be subject to such other terms and
conditions as shall be determined by the Committee, including, without
limitation, accelerating the Vesting (i) based on individual performance or
(ii) if certain performance goals are achieved.

7.5      Exercise of Stock Options.  The Stock Option exercise price may be
paid in cash or, in the sole discretion of the Committee, by the delivery of
shares of Common Stock owned by the Participant for a period of greater than
six months, by the withholding of shares of Common Stock for which a Stock
Option is exercisable, or by a combination of these methods. In the sole
discretion of the Committee, payment may also be made by delivering a properly
executed exercise notice to the Company together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the exercise price. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms. The Committee may prescribe any other method of paying the
exercise price that it determines to be consistent with applicable law and the
purpose of the Plan, including, without limitation, in lieu of the exercise of
a Stock Option by delivery of shares of Common Stock then owned by a
Participant, providing the Company with a notarized statement attesting to the
number of shares owned by the Participant, where upon verification by the
Company, the Company would issue to the Participant only the number of
incremental shares to which the Participant is entitled upon exercise of the
Stock Option. In determining which methods a Participant may utilize to pay the
exercise price, the Committee may consider such factors as it determines are
appropriate; provided, however, that with respect to ISOs, all such
discretionary determinations by the Committee shall be made at the time of
grant and specified in the Award Agreement.

7.6      Restrictions Relating to ISOs.  In addition to being subject to the
terms and conditions of this Section 7, ISOs shall comply with all other
requirements under Code Section 422. Accordingly, ISOs may be granted only to
Participants who are employees (as described in Treasury Regulation Section
1.421-7(h)) of the Company or of any "Parent Corporation" (as defined in Code
Section 424(e)) or of any "Subsidiary Corporation" (as defined in Code Section
424(f)) on the date of grant. The aggregate market value (determined as of the
time the ISO is granted) of the Common Stock with respect to which ISOs (under
all option plans of the Company and of any Parent Corporation and of any
Subsidiary Corporation) are exercisable for the first time by a Participant
during any calendar year shall not exceed $100,000. For purposes of the
preceding sentence, (i) ISOs shall be taken into account in the order in which
they are granted and (ii) ISOs granted before 1987 shall not be taken into
account. ISOs shall not be transferable by the Participant otherwise than by
will or the laws of descent and distribution and shall be exercisable, during
the Participant's lifetime, only by such Participant. The Committee shall not
grant ISOs to any Employee who, at the time the ISO is granted, owns stock
possessing (after the application of the attribution rules of Code Section
424(d)) more than 10 percent of the total combined voting power of all classes
of stock of the Company or of any Parent Corporation or of any Subsidiary
Corporation unless the exercise price of the ISO is fixed at not less than 110
percent of the Fair Market Value of the Common Stock on the date of grant and
the exercise of such ISO is prohibited by its terms after the 5th anniversary
of the ISO's date of grant. In addition, no ISO shall be issued to a
Participant in tandem with a Nonqualified Stock Option issued to such
Participant in accordance with Treasury Regulation Section 14a.422A-1, Q/A-39.
<PAGE>   7
7.7      Additional Terms and Conditions.  The Committee may, by way of the
Award Agreements or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Stock Option, provided they are
not inconsistent with the Plan, including, without limitation, the requirement
that the Participant not engage in competition with the Company.

7.8      Conversion Stock Options.  The Committee may, in its sole discretion,
grant a Stock Option to any holder of an option (an "Original Option") to
purchase shares of the stock of any corporation:

                 (i)      the stock or assets of which were acquired, directly
                 or indirectly, by the Company or any Subsidiary; or

                 (ii)     which was merged with and into the Company or a
                 Subsidiary;

so that the Original Option is "converted" into a Stock Option (a "Conversion
Stock Option"); provided, however, that such Conversion Stock Option as of the
date of its grant (the "Conversion Stock Option Grant Date") shall have the
same economic value as the Original Option as of the Conversion Stock Option
Grant Date. In addition, unless the Committee in its sole discretion determines
otherwise, a Conversion Stock Option which is converting an Original Option
intended to qualify as an ISO shall have the same terms and conditions as
applicable to the Original Option in accordance with Code Section 424 and the
Treasury Regulations thereunder so that the conversion (x) is treated as the
issuance or assumption of a stock option under Code Section 424(a) and (y) is
not treated as a modification, extension or renewal of a stock option under
Code Section 424(h).

7.9      Grants to Non-Employee Directors. Upon being elected a Director, each
Non-Employee Director shall be granted a Non-Qualified Stock Option to purchase
25,000 (twenty-five thousand) shares of Common Stock, which Stock Option shall
be 50% (fifty percent) Vested on the first anniversary date of the date of
grant of such Stock Option and shall be 100% (one hundred percent) Vested on
the second anniversary date of the date of grant of such Stock Option. In
addition, on each anniversary date of the Non-Employee Director's commencement
of service as a Director, the Non-Employee Director will be granted a
Non-Qualified Stock Option to purchase 5,000 (five thousand) shares of Common
Stock, provided that he or she continues to serve as a Director on such date,
which Stock Option shall immediately vest on the respective date of such grant.

8.0      SARS

8.1      In General.  The Committee may, in its sole discretion, grant SARs to
Employees, Nonemployee Directors, Affiliated Persons, and/or Independent
Contractors. An SAR is a right to receive a payment in cash, Common Stock or a
combination of both, in an amount equal to the excess of:

         (x)  the Fair Market Value of the Common Stock, or other specified
         valuation, of a specified number of shares of Common Stock on the date
         the SAR is exercised; over

         (y)  the Fair Market Value of the Common Stock, or other specified
         valuation (which shall be no less than the Fair Market Value of the
         Common Stock), of such shares of Common Stock on the date the SAR is
         granted, all as determined by the Committee;

provided, however, that if a SAR is granted retroactively in tandem with or in
substitution for a Stock Option, the designated Fair Market Value of the Common
Stock in the Award Agreement may be the Fair Market Value of the Common Stock
on the date such Stock Option was granted. Each SAR shall be subject to such
terms and conditions, including, but not limited to, a provision that
automatically converts a SAR into a Stock Option on a conversion date specified
at the time of grant, as the Committee shall impose from time to time in its
sole discretion and subject to the terms of the Plan.

9.0      STOCK AWARDS AND STOCK UNITS

9.1      Stock Awards.  The Committee may, in its sole discretion, grant Stock
Awards to Employees, Nonemployee Directors, Affiliated Persons, and/or
Independent Contractors as additional compensation or in lieu of other
compensation for services to the Company. A Stock Award shall consist of shares
of Common Stock which shall be subject to such terms and conditions as the
Committee, in its sole discretion, determines appropriate -- including, without
limitation, restrictions on the sale or other disposition of such shares, the
Vesting Date with
<PAGE>   8
respect to such shares, and the right of the Company to reacquire such shares
for no consideration upon termination of the Participant's employment within
specified periods. The Committee may require the Participant to deliver a duly
signed stock power, endorsed in blank, relating to the Common Stock covered by
such Stock Award and/or that the stock certificates evidencing such shares be
held in custody or bear restrictive legends until the restrictions thereon
shall have lapsed. With respect to the shares of Common Stock subject to a
Stock Award granted to a Participant, such Participant shall have all of the
rights of a holder of shares of Common Stock, including the right to receive
dividends and to vote the shares, unless the Committee determines otherwise on
the date of grant.

9.2      Stock Units.  The Committee may, in its sole discretion, grant Stock
Units to Employees, Nonemployee Directors, Affiliated Persons, and/or
Independent Contractors as additional compensation or in lieu of other
compensation for services to the Company. A Stock Unit is a hypothetical share
of Common Stock represented by a notional account established and maintained
(or caused to be established or maintained) by the Company for such Participant
who receives a grant of Stock Units. Stock Units shall be subject to such terms
and conditions as the Committee, in its sole discretion, determines appropriate
-- including, without limitation, determinations of the Vesting Date with
respect to such Stock Units and the criteria for the Vesting of such Stock
Units. A Stock Unit granted by the Committee shall provide for payment in
shares of Common Stock at such time or times as the Award Agreement shall
specify. The Committee shall determine whether a Participant who has been
granted a Stock Unit shall also be entitled to a Dividend Equivalent Right.

9.3      Payout of Stock Units.  Subject to a Participant's election to defer
in accordance with Section 17.3 below, upon the Vesting of a Stock Unit, the
shares of Common Stock representing the Stock Unit shall be distributed to the
Participant, unless the Committee, in its sole discretion, provides for the
payment of the Stock Unit in cash (or partly in cash and partly in shares of
Common Stock) equal to the value of the shares of Common Stock which would
otherwise be distributed to the Participant.

10.0     PERFORMANCE SHARES AND PERFORMANCE UNITS

10.1     Performance Shares.  The Committee may, in its sole discretion, grant
Performance Shares to Employees, Nonemployee Directors, Affiliated Persons,
and/or Independent Contractors as additional compensation or in lieu of other
compensation for services to the Company. A Performance Share shall consist of
a share or shares of Common Stock which shall be subject to such terms and
conditions as the Committee, in its sole discretion, determines appropriate --
including, without limitation, determining the performance goal or goals which,
depending on the extent to which such goals are met, will determine the number
and/or value of the Performance Shares that will be paid out or distributed to
the Participant who has been granted Performance Shares. Performance goals may
be based on, without limitation, Company-wide, divisional and/or individual
performance, as the Committee, in its sole discretion, may determine, and may
be based on the performance measures listed in Section 12.3 below.

10.2     Performance Units.  The Committee may, in its sole discretion, grant
Performance Units to Employees, Nonemployee Directors, Affiliated Persons,
and/or Independent Contractors as additional compensation or in lieu of other
compensation for services to the Company. A Performance Unit is a hypothetical
share or shares of Common Stock represented by a notional account which shall
be established and maintained (or caused to be established or maintained) by
the Company for such Participant who receives a grant of Performance Units.
Performance Units shall be subject to such terms and conditions as the
Committee, in its sole discretion, determines appropriate -- including, without
limitation, determining the performance goal or goals which, depending on the
extent to which such goals are met, will determine the number and/or value of
the Performance Units that will be accrued with respect to the Participant who
has been granted Performance Units. Performance goals may be based on, without
limitation, Company-wide, divisional and/or individual performance, as the
Committee, in its sole discretion, may determine, and may be based on the
performance measures listed in Section 12.3 below.

10.3     Adjustment of Performance Goals.  With respect to those Performance
Shares or Performance Units that are not intended to qualify as
Performance-Based Awards (as described in Section 12 below), the Committee
shall have the authority at any time to make adjustments to performance goals
for any outstanding Performance Shares or Performance Units which the Committee
deems necessary or desirable unless at the time of establishment of the
performance goals the Committee shall have precluded its authority to make such
adjustments.

10.4     Payout of Performance Shares or Performance Units.  Subject to a
Participant's election to defer in accordance with Section 17.3 below, upon the
Vesting of a Performance Share or a Performance Unit, the Performance Share or
the Performance Unit shall be distributed to the Participant in shares of
Common Stock, unless the Committee, in its sole discretion, provides for the
payment of the Performance Share or a Performance
<PAGE>   9
Unit in cash (or partly in cash and partly in shares of Common Stock) equal to
the value of the shares of Common Stock which would otherwise be distributed to
the Participant.

11.0     CASH AWARDS

11.1     In General.  The Committee may, in its sole discretion, grant Cash
Awards to Employees, Nonemployee Directors, Affiliated Persons, and/or
Independent Contractors as additional compensation or in lieu of other
compensation for services to the Company. A Cash Award shall be subject to such
terms and conditions as the Committee, in its sole discretion, determines
appropriate -- including, without limitation, determining the Vesting Date with
respect to such Cash Award, the criteria for the Vesting of such Cash Award,
and the right of the Company to require the Participant to repay the Cash Award
(with or without interest) upon termination of the Participant's employment
within specified periods.

12.0     PERFORMANCE-BASED AWARDS

12.1     In General.  The Committee, in its sole discretion, may designate and
design Awards granted under the Plan as Performance-Based Awards (as defined
below) if it determines that compensation attributable to such Awards might not
otherwise be tax deductible by the Company due to the deduction limitation
imposed by Code Section 162(m). Accordingly, an Award granted under the Plan
may be granted in such a manner that the compensation attributable to such
Award is intended by the Committee to qualify as "performance-based
compensation" (as such term is used in Code Section 162(m) and the Treasury
Regulations thereunder) and thus be exempt from the deduction limitation
imposed by Code Section 162(m) ("Performance-Based Awards").

12.2     Qualification of Performance-Based Awards.  Awards shall qualify as
Performance-Based Awards under the Plan only if:

         (a)     at the time of grant the Committee is comprised solely of two
         or more "outside directors" (as such term is used in Code Section
         162(m) and the Treasury Regulations thereunder);

         (b)     with respect to either the granting or Vesting of an Award
         (other than (i) a Nonqualified Stock Option or (ii) an SAR, which are
         granted with an exercise price at or above the Fair Market Value of
         the Common Stock on the date of grant), such Award is subject to the
         achievement of a performance goal or goals based on one or more of the
         performance measures specified in Section 12.3 below;

         (c)     the Committee establishes in writing (i) the objective
         performance-based goals applicable to a given performance period and
         (ii) the individual employees or class of employees to which such
         performance-based goals apply no later than 90 days after the
         commencement of such performance period (but in no event after 25
         percent of such performance period has elapsed);

         (d)     no compensation attributable to a Performance-Based Award will
         be paid to or otherwise received by a Participant until the Committee
         certifies in writing that the performance goal or goals (and any other
         material terms) applicable to such performance period have been
         satisfied; and

         (e)     after the establishment of a performance goal, the Committee
         shall not revise such performance goal (unless such revision will not
         disqualify compensation attributable to the Award as
         "performance-based compensation" under Code Section 162(m)) or
         increase the amount of compensation payable with respect to such Award
         upon the attainment of such performance goal.
<PAGE>   10
12.3     Performance Measures.  The Committee may use the following performance
measures (either individually or in any combination) to set performance goals
with respect to Awards intended to qualify as Performance- Based Awards: net
sales; pre-tax income before allocation of corporate overhead and bonus;
budget; cash flow; earnings per share; net income; division, group or corporate
financial goals; return on stockholders' equity; return on assets; attainment
of strategic and operational initiatives; appreciation in and/or maintenance of
the price of the Common Stock or any other publicly-traded securities of the
Company; market share; gross profits; earnings before interest and taxes;
earnings before interest, taxes, depreciation and amortization; economic
value-added models; comparisons with various stock market indices; increase in
number of customers; and/or reductions in costs.

12.4     Shareholder Reapproval.  As required by Treasury Regulation Section
1.162-27(e)(vi), the material terms of performance goals as described in this
Section 12 shall be disclosed to and reapproved by the Company's stockholders
no later than the first stockholder meeting that occurs in the 5th year
following the year in which the Company stockholders previously approved such
performance goals.

13.0     CHANGE IN CONTROL

13.1     Accelerated Vesting or Payout.  Notwithstanding any other provision of
this Plan to the contrary, if there is a change in control of the Company, the
Committee, in its sole discretion, may take such actions as it deems
appropriate with respect to outstanding awards, including, without limitation,
accelerating the Vesting Date and/or payout of such Awards; provided, however,
that such action shall not conflict with any provision contained in an Award
Agreement unless such provision is amended in accordance with Section 16.3
below.

13.2     Cashout.  The Committee, in its sole discretion, may determine that,
upon the occurrence of a change in control of the Company, all or a portion of
certain outstanding Awards shall terminate within a specified number of days
after notice to the holders, and each such holder shall receive an amount equal
to the value of such Award on the date of the change in control, and with
respect to each share of Common Stock subject to a Stock Option or SAR, an
amount equal to the excess of the Fair Market Value of such shares of Common
Stock immediately prior to the occurrence of such change in control over the
exercise price per share of such Stock Option or SAR. Such amount shall be
payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof, as the Committee,
in its sole discretion, shall determine.

13.3     Assumption or Substitution of Awards.  Notwithstanding anything
contained in the Plan to the contrary, the Committee may, in its sole
discretion, provide that an Award may be assumed by any entity which acquires
control of the Company or may be substituted by a similar award under such
entity's compensation plans.

14.0     TERMINATION OF EMPLOYMENT IF PARTICIPANT IS AN EMPLOYEE

14.1     Termination of Employment Due to Death or Disability.  Subject to any
written agreement between the Company and a Participant, if a Participant's
employment is terminated due to death or disability:

         (a)     all non-Vested portions of Awards held by the Participant on
         the date of the Participant's death or the date of the termination of
         his or her employment, as the case may be, shall immediately be
         forfeited by such Participant as of such date; and

         (b)     all Vested portions of Stock Options and SARs held by the
         Participant on the date of the Participant's death or the date of the
         termination of his or her employment, as the case may be, shall remain
         exercisable until the earlier of:

                 (i)      the end of the 12-month period following the date of
                 the Participant's death or the date of the termination of his
                 or her employment, as the case may be; or

                 (ii)     -the date the Stock Option or SAR would otherwise
                 expire.

14.2     Termination of Employment for Cause.  Subject to any written agreement
between the Company and a Participant, if a Participant's employment is
terminated by the Company for cause, all Awards held by a Participant on the
date of the termination of his or her employment for cause, whether Vested or
non-Vested, shall immediately be forfeited by such Participant as of such date.
<PAGE>   11
14.3     Other Terminations of Employment.  Subject to any written agreement
between the Company and a Participant, if a Participant's employment is
terminated for any reason other than for cause or other than due to death or
disability:

         (a)     all non-Vested portions of Awards held by the Participant on
         the date of the termination of his or her employment shall immediately
         be forfeited by such Participant as of such date; and

         (b)     all Vested portions of Stock Options and/or SARs held by the
         Participant on the date of the termination of his or her employment
         shall remain exercisable until the earlier of:

                 (i)      the end of the 90-day period following the date of
                 the termination of the Participant's employment; or

                 (ii)     the date the Stock Option or SAR would otherwise
                 expire.

14.4     Committee Discretion.  Notwithstanding anything contained in the Plan
to the contrary, the Committee may, in its sole discretion and at anytime,
provide that:

         (a)     any or all non-Vested portions of Stock Options and/or SARs
         held by the Participant on the date of the Participant's death and/or
         the date of the termination of his or her employment shall immediately
         become exercisable as of such date and, except with respect to ISOs,
         shall remain exercisable until a date that occurs on or prior to the
         date the Stock Option or SAR is scheduled to expire;

         (b)     any or all Vested portions of Nonqualified Stock Options
         and/or SARs held by the Participant on the date of the Participant's
         death and/or the date of the termination of his or her employment
         shall remain exercisable until a date that occurs on or prior to the
         date the Stock Option or SAR is scheduled to expire; and/or

         (c)     any or all non-Vested portions of Stock Awards, Stock Units,
         Performance Shares, Performance Units, and/or Cash Awards held by the
         Participant on the date of the Participant's death and/or the date of
         the termination of his or her employment shall immediately Vest or
         shall become Vested on a date that occurs on or prior to the date the
         Award is scheduled to vest.

14.5     ISOs.  Notwithstanding anything contained in the Plan to the contrary,
(i) the provisions contained in this Section 14 shall be applied to an ISO only
if the application of such provision maintains the treatment of such ISO as an
ISO and (ii) the exercise period of an ISO in the event of a termination of the
Participant's employment due to disability provided in Section 14.1 above shall
be applied only if the Participant is "permanently and totally disabled" (as
such term is defined in Code Section 22(e)(3)).

15.0     TAXES

15.1     Withholding Taxes.  With respect to Employees, the Company, or the
applicable Subsidiary, may require a Participant who has become vested in his
or her Stock Award, Stock Unit, Performance Share or Performance Unit granted
hereunder, or who exercises a Stock Option or SAR granted hereunder to
reimburse the corporation which employs such Participant for any taxes required
by any governmental regulatory authority to be withheld or otherwise deducted
and paid by such corporation or entity in respect of the issuance or
disposition of such shares or the payment of any amounts. In lieu thereof, the
corporation or entity which employs such Participant shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such corporation or
<PAGE>   12
entity to the Participant upon such terms and conditions as the Committee shall
prescribe. The corporation or entity that employs such Participant may, in its
discretion, hold the stock certificate to which such Participant is entitled
upon the vesting of a Stock Award, Stock Unit, Performance Share or Performance
Unit or the exercise of a Stock Option or SAR as security for the payment of
such withholding tax liability, until cash sufficient to pay that liability has
been accumulated.

15.2     Use of Common Stock to Satisfy Withholding Obligation.  With respect
to Employees, at any time that the Company, Subsidiary or other entity that
employs such Participant becomes subject to a withholding obligation under
applicable law with respect to the vesting of a Stock Award, Stock Unit,
Performance Share or Performance Unit or the exercise of a Nonqualified Stock
Option (the "Tax Date"), except as set forth below, a holder of such Award may
elect to satisfy, in whole or in part, the holder's related personal tax
liabilities (an "Election") by (i) directing the Company, Subsidiary or other
entity that employs such Participant to withhold from shares issuable in the
related vesting or exercise either a specified number of shares or shares of
Common Stock having a specified value (in each case not in excess of the
related personal tax liabilities), (ii) tendering shares of Common Stock
previously issued pursuant to the exercise of a Stock Option or other shares of
the Common Stock owned by the holder, or (iii) combining any or all of the
foregoing Elections in any fashion. An Election shall be irrevocable. The
withheld shares and other shares of Common Stock tendered in payment shall be
valued at their Fair Market Value of the Common Stock on the Tax Date. The
Committee may disapprove of any Election, suspend or terminate the right to
make Elections or provide that the right to make Elections shall not apply to
particular shares or exercises. The Committee may impose any additional
conditions or restrictions on the right to make an Election as it shall deem
appropriate, including conditions or restrictions with respect to Section 16 of
the Exchange Act.

15.3     No Guarantee of Tax Consequences.  No person connected with the Plan
in any capacity, including, but not limited to, the Company and any Subsidiary
and their directors, officers, agents and employees makes any representation,
commitment, or guarantee that any tax treatment, including, but not limited to,
federal, state and local income, estate and gift tax treatment, will be
applicable with respect to amounts deferred under the Plan, or paid to or for
the benefit of a Participant under the Plan, or that such tax treatment will
apply to or be available to a Participant on account of participation in the
Plan.

16.0     AMENDMENT AND TERMINATION

16.1     Termination of Plan.  The Board may suspend or terminate the Plan at
any time with or without prior notice; provided, however, that no action
authorized by this Section 16.1 shall reduce the amount of any outstanding
Award or change the terms and conditions thereof without the Participant's
consent.

16.2     Amendment of Plan.  The Board may amend the Plan at any time with or
without prior notice; provided, however, that no action authorized by this
Section 16.2 shall reduce the amount of any outstanding Award or change the
terms and conditions thereof without the Participant's consent. No amendment of
the Plan shall, without the approval of the stockholders of the Company:

         (a)     increase the total number of shares which may be issued under
         the Plan;

         (b)     increase the maximum number of shares with respect to all
         Awards measured in Common Stock that may be granted to any individual
         under the Plan;

         (c)     increase the maximum dollar amount with respect to all Awards
         measured in cash that may be paid to any individual under the Plan; or

         (d)     modify the requirements as to eligibility for Awards under the
         Plan.

In addition, the Plan shall not be amended without the approval of such
amendment by the Company's stockholders if such amendment (i) is required under
the rules and regulations of the stock exchange or national market system on
which the Common Stock is listed or (ii) will disqualify any ISO granted
hereunder.

16.3     Amendment or Cancellation of Award Agreements.  The Committee may
amend or modify any Award Agreement at any time by mutual agreement between the
Committee and the Participant or such other persons as may then have an
interest therein. In addition, by mutual agreement between the Committee and a
Participant or such other persons as may then have an interest therein, Awards
may be granted to an Employee, Nonemployee
<PAGE>   13
Director, Affiliated Person or Independent Contractor in substitution and
exchange for, and in cancellation of, any Awards previously granted to such
Employee, Nonemployee Director, Affiliated Person or Independent Contractor
under the Plan, or any award previously granted to such Employee, Nonemployee
Director, Affiliated Person or Independent Contractor under any other present
or future plan of the Company or any present or future plan of an entity which
(i) is purchased by the Company, (ii) purchases the Company, or (iii) merges
into or with the Company.

17.0     MISCELLANEOUS

17.1     Other Provisions.  Awards granted under the Plan may also be subject
to such other provisions (whether or not applicable to the Award granted to any
other Participant) as the Committee determines on the date of grant to be
appropriate, including, without limitation, for the installment purchase of
Common Stock under Stock Options, to assist the Participant in financing the
acquisition of Common Stock, for the forfeiture of, or restrictions on resale
or other disposition of, Common Stock acquired under any Stock Option, for the
acceleration of Vesting of Awards in the event of a change in control of the
Company, for the payment of the value of Awards to Participants in the event of
a change in control of the Company, or to comply with federal and state
securities laws, or understandings or conditions as to the Participant's
employment in addition to those specifically provided for under the Plan.

17.2     Transferability.  Each Award granted under the Plan to a Participant
shall not be transferable otherwise than by will or the laws of descent and
distribution, and Stock Options and SARs shall be exercisable, during the
Participant's lifetime, only by the Participant. In the event of the death of a
Participant, each Stock Option or SAR theretofore granted to him or her shall
be exercisable during such period after his or her death as the Committee
shall, in its sole discretion, set forth in the Award Agreement on the date of
grant and then only by the executor or administrator of the estate of the
deceased Participant or the person or persons to whom the deceased
Participant's rights under the Stock Option or SAR shall pass by will or the
laws of descent and distribution. Notwithstanding the foregoing, the Committee,
in its sole discretion and on a case-by-case basis, may permit the
transferability of a Nonqualified Stock Option by a Participant, including, but
not limited to, members of the Participant's immediate family or trusts or
family partnerships or other similar entities for the benefit of such persons,
and all such transfers shall be subject to such terms, conditions, restrictions
and/or limitations, if any, as the Committee may establish and include in the
Award Agreement.

17.3     Election to Defer Compensation Attributable to Award.  The Committee
may, in its sole discretion, allow a Participant to elect to defer the receipt
of any compensation attributable to an Award under guidelines and procedures to
be established by the Committee after taking into account the advice of the
Company's tax counsel.

17.4     Listing of Shares and Related Matters.  If at any time the Committee
shall determine that the listing, registration or qualification of the shares
of Common Stock subject to any Award on any securities exchange or under any
applicable law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of, or in connection with,
the granting of an Award or the issuance of shares of Common Stock thereunder,
such Award may not be exercised, distributed or paid out, as the case may be,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.

17.5     No Right, Title, or Interest in Company Assets.  Participants shall
have no right, title, or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan. Nothing
contained in the Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, beneficiary, legal
representative or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly
set forth in the Plan. The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.

17.6     No Right to Continued Employment or Service or to Grants.  The
Participant's rights, if any, to continue to serve the Company as a director,
officer, employee, independent contractor or otherwise, shall not be enlarged
or otherwise affected by his or her designation as a Participant under the
Plan, and the Company or the applicable Subsidiary reserves the right to
terminate the employment of any Employee or the services of any Independent
Contractor or director at any time. The adoption of the Plan shall not be
deemed to give any Employee,
<PAGE>   14
Nonemployee Director, Affiliated Person or Independent Contractor or any other
individual any right to be selected as a Participant or to be granted an Award.

17.7     Awards Subject to Foreign Laws.  The Committee may grant Awards to
individual Participants who are subject to the tax laws of nations other than
the United States, and such Awards may have terms and conditions as determined
by the Committee as necessary to comply with applicable foreign laws. The
Committee may take any action which it deems advisable to obtain approval of
such Awards by the appropriate foreign governmental entity; provided, however,
that no such Awards may be granted pursuant to this Section 17.7 and no action
may be taken which would result in a violation of the Exchange Act or any other
applicable law.

17.8     Governing Law.  The Plan, all Awards granted hereunder, and all
actions taken in connection herewith shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws, except as superseded by applicable federal law.

17.9     Other Benefits.  No Award granted under the Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of
the Company or any Subsidiary nor affect any benefits or compensation under any
other benefit or compensation plan of the Company or any Subsidiary now or
subsequently in effect.

17.10    No Fractional Shares.  No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award.  The Committee shall
determine whether cash, Common Stock, Stock Options, or other property shall be
issued or paid in lieu of fractional shares or whether such fractional shares
or any rights thereto shall be forfeited or otherwise eliminated.