<PAGE>
 
                                                                 EXHIBIT (10)-24

                               MEDPARTNERS, INC.

                  1997 LONG TERM INCENTIVE COMPENSATION PLAN
<PAGE>
 
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                                                                   CONTENTS                                                    Page
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ARTICLE 1 ESTABLISHMENT, OBJECTIVES AND DURATION................................................................................ 1
  1.1  ESTABLISHMENT OF THE PLAN................................................................................................ 1
  1.2  OBJECTIVES OF THE PLAN................................................................................................... 1
  1.3  DURATION OF THE PLAN..................................................................................................... 1

ARTICLE 2 DEFINITIONS........................................................................................................... 1

  2.1  "AFFILIATE".............................................................................................................. 1
  2.2  "AWARD".................................................................................................................. 1
  2.3  "AWARD AGREEMENT"........................................................................................................ 2
  2.4  "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP"............................................................................. 2
  2.5  "BOARD" or "BOARD OF DIRECTORS".......................................................................................... 2
  2.6  "CAUSE".................................................................................................................. 2
  2.7  "CHANGE IN CONTROL"...................................................................................................... 2
  2.8  "CODE"................................................................................................................... 3
  2.9  "COMMITTEE".............................................................................................................. 4
  2.10  "COMPANY"............................................................................................................... 4
  2.11  "DIRECTOR".............................................................................................................. 4
  2.12  "DISABILITY"............................................................................................................ 4
  2.13  "EFFECTIVE DATE"........................................................................................................ 4
  2.14  "ELIGIBLE PERSON"....................................................................................................... 4
  2.15  "EMPLOYEE".............................................................................................................. 4
  2.16  "EXCHANGE ACT".......................................................................................................... 4
  2.17  "FAIR MARKET VALUE"..................................................................................................... 4
  2.18  "IMMEDIATE FAMILY MEMBERS".............................................................................................. 4
  2.19  "INCENTIVE STOCK OPTION" or "ISO"....................................................................................... 5
  2.20  "INSIDER"............................................................................................................... 5
  2.21  "NONEMPLOYEE DIRECTOR".................................................................................................. 5
  2.22  "NONQUALIFIED STOCK OPTION" or "NQSO"................................................................................... 5
  2.23  "OPTION"................................................................................................................ 5
  2.24  "OPTION PRICE".......................................................................................................... 5
  2.25  "PARTICIPANT"........................................................................................................... 5
  2.26  "PERIOD OF RESTRICTION"................................................................................................. 5
  2.27  "PERSON"................................................................................................................ 5
  2.28  "PLAN".................................................................................................................. 5
  2.29  "RESTRICTED STOCK"...................................................................................................... 5
  2.30  "RETIREMENT" as applied to a Participant, means the Participant's termination of employment in a manner which
        qualifies the Participant to receive immediately payable retirement benefit under the applicable retirement plan
        maintained by the Company (the "Retirement Plan"), under the successor or replacement of such Retirement Plan if it
        is then no longer in effect, or under any other retirement plan......................................................... 5

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  2.30  maintained or adopted by the Company which is determined by the Committee to be the functional equivalent of such
        Retirement Plan; or. with respect to a Participant who may not or has not participated in a retirement plan 
        maintained by the Company or an Affiliate, "Retirement" shall have the meaning determined by the Committee  
        from time to time....................................................................................................... 6
  2.31  "SHARES"................................................................................................................ 6
  2.32  "SUBSIDIARY"............................................................................................................ 6

ARTICLE 3 ADMINISTRATION........................................................................................................ 6

  3.1  THE COMMITTEE............................................................................................................ 6
  3.2  AUTHORITY OF THE COMMITTEE............................................................................................... 6
  3.3  DECISIONS BINDING........................................................................................................ 6
  3.4  COSTS OF PLAN............................................................................................................ 6

ARTICLE 4 SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS......................................................................... 7

  4.1  NUMBER OF SHARES AVAILABLE FOR GRANTS.................................................................................... 7
  4.2  ADJUSTMENTS IN AUTHORIZED SHARES......................................................................................... 7

ARTICLE 5 ELIGIBILITY AND PARTICIPATION......................................................................................... 8

  5.1  ELIGIBILITY.............................................................................................................. 8
  5.2  ACTUAL PARTICIPATION..................................................................................................... 8

ARTICLE 6 STOCK OPTIONS......................................................................................................... 8

  6.1  GRANT OF OPTIONS......................................................................................................... 8
  6.2  AWARD AGREEMENT.......................................................................................................... 8
  6.3  OPTION PRICE............................................................................................................. 8
  6.4  DURATION OF OPTIONS...................................................................................................... 9
  6.5  EXERCISE OF OPTIONS...................................................................................................... 9
  6.6  PAYMENT.................................................................................................................. 9
  6.7  RESTRICTIONS ON SHARE TRANSFERABILITY....................................................................................10
  6.8  TERMINATION OF EMPLOYMENT................................................................................................10
  6.9  NONTRANSFERABILITY OF OPTIONS............................................................................................10
       (a)  INCENTIVE STOCK OPTIONS.............................................................................................11
       (b)  NONQUALIFIED STOCK OPTIONS..........................................................................................11

ARTICLE 7 RESTRICTED STOCK......................................................................................................11

  7.1  GRANT OF RESTRICTED STOCK................................................................................................11
  7.2  RESTRICTED STOCK AGREEMENT...............................................................................................11
  7.3  TRANSFERABILITY..........................................................................................................11
  7.4  OTHER RESTRICTIONS.......................................................................................................12
  7.5  VOTING RIGHTS............................................................................................................12
  7.6  DIVIDENDS AND OTHER DISTRIBUTIONS........................................................................................12
  7.7  TERMINATION OF EMPLOYMENT................................................................................................12
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ARTICLE 8 BENEFICIARY DESIGNATION...............................................................................................13

ARTICLE 9 DEFERRALS.............................................................................................................13

ARTICLE 10 RIGHTS OF EMPLOYEES..................................................................................................13

  10.1  EMPLOYMENT..............................................................................................................13
  10.2  PARTICIPATION...........................................................................................................13

ARTICLE 11 CHANGE IN CONTROL....................................................................................................14

  11.1  TREATMENT OF OUTSTANDING AWARDS.........................................................................................14
  11.2  TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL PROVISIONS...............................................14

ARTICLE 12......................................................................................................................14

ARTICLE 13 AMENDMENT, MODIFICATION, AND TERMINATION.............................................................................14

  13.1  AMENDMENT, MODIFICATION, AND TERMINATION................................................................................14
  13.2  ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS......................................15
  13.3  AWARDS PREVIOUSLY GRANTED...............................................................................................15

ARTICLE 14 WITHHOLDING..........................................................................................................15

  14.1  TAX WITHHOLDING.........................................................................................................15
  14.2  SHARE WITHHOLDING.......................................................................................................15

ARTICLE 15 INDEMNIFICATION......................................................................................................15

ARTICLE 16 SUCCESSORS...........................................................................................................16

ARTICLE 17 LEGAL CONSTRUCTION...................................................................................................16

  17.1  GENDER AND NUMBER.......................................................................................................16
  17.2  SEVERABILITY............................................................................................................16
  17.3  REQUIREMENTS OF LAW.....................................................................................................16
  17.4  SECURITIES LAW COMPLIANCE...............................................................................................16
  17.5  GOVERNING LAW...........................................................................................................16
</TABLE>
<PAGE>
 
                    AMENDED AND RESTATED MEDPARTNERS, INC.
                  1997 LONG TERM INCENTIVE COMPENSATION PLAN

                                   ARTICLE 1

                    ESTABLISHMENT, OBJECTIVES AND DURATION

           1.1  ESTABLISHMENT OF THE PLAN.  MedPartners, Inc., a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "MedPartners, Inc. 1997 Long Term
Incentive Compensation Plan" (hereinafter referred to as the "Plan"), as set
forth in this document. The Plan permits the grant of Incentive Stock Options,
Nonqualified Stock Options and Restricted Stock.

          The Plan shall become effective as of February 25, 1997 (the
"Effective Date") and shall remain in effect as provided in Section 1.3 hereof.

          1.2  OBJECTIVES OF THE PLAN.  The objectives of the Plan are to
optimize the profitability and growth of the Company through the use of
incentives which are consistent with the Company's objectives and which link the
interests of Participants to those of the Company's stockholders; to provide
Participants with an incentive for excellence in individual performance; and to
promote teamwork among Participants.

          The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract, and retain the services of Participants who
make significant contributions to the Company's success and to allow
Participants to share in the success of the Company.

          1.3  DURATION OF THE PLAN.  The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect, subject to
the right of the Board of Directors or the Committee to amend or terminate the
Plan at any time pursuant to Article 12 hereof, until all Shares subject to it
shall have been purchased or acquired according to the Plan's provisions.
However, in no event may an Incentive Stock Option be granted under the Plan on
or after February 25, 2007.

                                   ARTICLE 2

                                  DEFINITIONS

          Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter of the
word shall be capitalized:

          2.1  "AFFILIATE" means a "parent corporation" or "subsidiary
corporation" as defined in Section 424 of the Code.

          2.2  "AWARD" means, individually or collectively, a grant under this
Plan of Incentive Stock Options, Nonqualified Stock Options or Restricted Stock.
<PAGE>
 
          2.3  "AWARD AGREEMENT" means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.

          2.4  "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.

          2.5  "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
the Company.

          2.6  "CAUSE" shall be determined by the Committee, exercising good
faith and reasonable judgment, and shall mean the occurrence of any one or more
of the following:

          (a)  The willful and continued failure by the Participant to
     substantially perform his duties (other than any such failure resulting
     from the Participant's Disability) after a written demand for substantial
     performance is delivered by the Committee to the Participant that
     specifically identifies the manner in which the Committee believes that the
     Participant has not substantially performed his duties, and the Participant
     has failed to remedy the situation within 30 calendar days of receiving
     such notice; or

          (b)  The Participant's conviction for committing an act of fraud,
     embezzlement, theft or another act constituting a felony; or
   
          (c)  The willful engaging by the Participant in gross misconduct
     materially and demonstrably injurious to the Company, as determined by the
     Committee. However, no act or failure to act on the Participant's part
     shall be considered "willful" unless done, or omitted to be done, by the
     Participant not in good faith and without reasonable belief that his action
     or omission was in the best interest of the Company.

          2.7  "CHANGE IN CONTROL" of the Company shall be deemed to have
occurred as of the first day that any one or more of the following conditions
shall have been satisfied:

          (a)  The acquisition by any Person of Beneficial Ownership of 20% or
     more of either (i) the then outstanding Shares, or (ii) the combined voting
     power of the outstanding voting securities of the Company entitled to vote
     generally in the selection of Directors; provided, however, that for
     purposes of this subsection, the following transactions shall not
     constitute a Change of Control: (A) any acquisition directly from the
     Company through a public offering of Shares, (B) any acquisition by the
     Company, (C) any acquisition by any employee benefit plan (or related
     trust) sponsored or maintained by the Company or any corporation controlled
     by the Company, or (D) any acquisition by any corporation pursuant to a
     transaction which complies with clauses (i), (ii) and (iii) of subsection
     (c) below;

          (b)  The cessation, for any reason, of the individuals who constitute
     the Company's Board of Directors as of the date hereof ("Incumbent Board")
     to constitute at

                                       2
<PAGE>
 
     least a majority of the Company's Board of Directors; provided, however,
     that any individual becoming a Director following the date hereof whose
     election, or nomination for election by the Company's stockholders, was
     approved by a vote of at least a majority of the Directors then comprising
     the Incumbent Board shall be considered as though such individual was a
     member of the Incumbent Board, but excluding, for this purpose, any such
     individual whose initial assumption of office occurs because of an actual
     or threatened election contest with respect to the election or removal of
     Directors or other actual or threatened solicitation of proxies or consents
     by or on behalf of a Person other than the Company's Board of Directors;

          (c)  The consummation of a reorganization, merger or consolidation or
     sale or other disposition of all or substantially all of the assets of the
     Company ("Business Combination") unless, following such Business
     Combination, (i) all or substantially all of the individuals and entities
     who were the Beneficial Owners, respectively, of the outstanding Shares and
     the outstanding voting securities of the Company immediately before such
     Business Combination beneficially own, directly or indirectly, more than
     50% of, respectively, the then outstanding Shares and the combined voting
     power of the then outstanding voting securities entitled to vote generally
     in the election of Directors, as the case may be, of the Company resulting
     from such Business Combination (including, without limitation, a
     corporation which as a result of such transaction owns the Company or all
     or substantially all of the Company's assets either directly or through one
     or more subsidiaries) in substantially the same proportions as their
     ownership immediately before such Business Combination of the outstanding
     Shares and the outstanding voting securities of the Company, as the case
     may be; (ii) no party (excluding any corporation resulting from such
     Business Combination or any employee benefit plan (or related trust) of the
     Company or such corporation resulting from such Business Combination)
     beneficially owns, directly or indirectly, 20% or more of, respectively,
     the then outstanding shares of common stock of the corporation resulting
     from such Business Combination or the combined voting power of the then
     outstanding voting securities of such corporation except to the extent that
     such ownership existed before the Business Combination; and (iii) at least
     a majority of the members of the board of directors of the corporation
     resulting from such Business Combination were members of the Company's
     Board of Directors at the time of the execution of the initial agreement,
     or of the action of the Company's Board of Directors, providing for such
     Business Combination; or

          (d)  The approval by the stockholders of the Company of a complete
     liquidation or dissolution of the Company.

          (e)  Any other condition or event (i) that the Committee determines to
     be a "Change in Control" within the meaning of this Section 2.7 and (ii)
     that is set forth as a supplement to this Section 2.7 in the Award
     Agreement.

          2.8  "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.

                                       3
<PAGE>
 
          2.9  "COMMITTEE" means the Compensation Committee of the Board, as
specified in Article 3 herein, or such other Committee appointed by the Board to
administer the Plan with respect to grants of Awards.

          2.10  "COMPANY" means MedPartners, Inc., and also means any
corporation of which a majority of the voting capital stock is owned directly or
indirectly by MedPartners, Inc. or by any of its Subsidiaries, and any other
corporation designated by the Committee as being a Company hereunder (but only
during the period of such ownership or designation).

          2.11  "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.

          2.12  "DISABILITY", as applied to a Participant, means that the
Participant (a) has established to the satisfaction of the Committee that the
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to last for a continuous period of not less than 12 months (all within the
meaning of Section 22(e)(3) of the Code), and (b) has satisfied any requirement
imposed by the Committee in regard to evidence of such disability.

          2.13  "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.

          2.14  "ELIGIBLE PERSON" shall mean all Employees, Directors or
consultants of the Company or any Affiliate; provided, however, that no Award
may be granted to anyone who is not an "employee" as that term is defined in
General Instruction A.(1)(a) of Form S-8, as such definition may be amended from
time to time, without first receiving advice and guidance from the Company's
outside counsel as to the effect of such grant.

          2.15  "EMPLOYEE" means any officer or employee of the Company.

          2.16  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

          2.17  "FAIR MARKET VALUE" Except as otherwise determined by the
Committee, the "Fair Market Value" of a Share as of any date shall be equal to
the closing sale price of a Share as reported on The National Association of
Securities Dealers' New York Stock Exchange Composite Reporting Tape (or if the
Shares are not traded on The New York Stock Exchange, the closing sale price on
the exchange on which it is traded or as reported by an applicable automated
quotation system) (the "Composite Tape"), on the applicable date or, if no sales
of Shares are reported on such date, the closing sale price of a Share on the
date the Shares was last reported on the Composite Tape (or such other exchange
or automated quotation system, if applicable).

          2.18  "IMMEDIATE FAMILY MEMBERS" means the spouse, children and
grandchildren of a Participant.

                                       4
<PAGE>
 
          2.19  "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as an Incentive
Stock Option and which is intended to meet the requirements of Code Section 422.

          2.20  "INSIDER" shall mean an individual who is, on the relevant date,
a Director, a 10% Beneficial Owner of any class of the Company's equity
securities that is registered pursuant to Section 12 of the Exchange Act or an
officer of the Company, as defined under Section 16 of the Exchange Act and as
determined by the Board of Directors from time to time.

          2.21  "NONEMPLOYEE DIRECTOR" means an individual who is a member of
the Board of Directors of the Company but who is not an Employee of the Company.

          2.22  "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to
purchase Shares granted under Article 6 herein and which is not intended to meet
the requirements of Code Section 422.

          2.23  "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.

          2.24  "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option.

          2.25  "PARTICIPANT" means an Eligible Person who has outstanding an
Award granted under the Plan.

          2.26  "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance objectives, or upon the
occurrence of other events as determined by the Committee, at its discretion),
and the Shares of Restricted Stock are subject to a substantial risk of
forfeiture, as provided in Article 7 herein.

          2.27  "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

          2.28  "PLAN" means the MedPartners, Inc. 1997 Long Term Incentive
Compensation Plan.

          2.29  "RESTRICTED STOCK"means an Award granted to a Participant
pursuant to Article 7 herein.

          2.30  "RETIREMENT" as applied to a Participant, means the
Participant's termination of employment in a manner which qualifies the
Participant to receive immediately payable retirement benefits under the
applicable retirement plan maintained by the Company (the "Retirement Plan"),
under the successor or replacement of such Retirement Plan if it is then no
longer in effect, or under any other retirement plan

                                       5
<PAGE>
 
maintained or adopted by the Company which is determined by the Committee to be
the functional equivalent of such Retirement Plan; or, with respect to a
Participant who may not or has not participated in a retirement plan maintained
by the Company or an Affiliate, "Retirement" shall have the meaning determined
by the Committee from time to time.

          2.31  "SHARES" means Common Stock of MedPartners, Inc., par value
$.001 per share.

          2.32  "SUBSIDIARY" means any corporation, partnership, joint venture
or other entity in which the Company has a majority voting interest.

                                   ARTICLE 3

                                ADMINISTRATION

          3.1  THE COMMITTEE.  The Plan shall be administered by the Committee,
or by any other committee appointed by the Board, which Committee shall consist
solely of two or more "Nonemployee Directors" within the meaning of Rule 16b-3
under the Exchange Act, or any successor provision. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors.

          3.2  AUTHORITY OF THE COMMITTEE.  Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner not inconsistent with
the Plan; construe and interpret the Plan and any Award Agreement or other
instrument entered into under the Plan as they apply to Participants; establish,
amend, or waive rules and regulations for the Plan's administration as they
apply to Participants; alter, amend, suspend or terminate the Plan in whole or
in part; and (subject to the provisions of Article 13 herein) amend the terms
and conditions of any outstanding Award to the extent such terms and conditions
are within the discretion of the Committee as provided in the Plan.  Further,
the Committee shall make all other determinations which may be necessary or
advisable for the administration of the Plan, as the Plan applies to
Participants.  As permitted by law, the Committee may delegate its authority as
identified herein.

          3.3  DECISIONS BINDING.  All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants and their
estates and beneficiaries.

          3.4  COSTS OF PLAN.  The costs and expenses incurred in the operation
and administration of the Plan shall be borne by the Company.

                                       6
<PAGE>
 
                                   ARTICLE 4

                 SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

          4.1  NUMBER OF SHARES AVAILABLE FOR GRANTS.  Subject to adjustment as
provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be 6,725,000.

          The number of Shares reserved for issuance under the Plan shall
automatically increase on the first day of each calendar year during the term of
this Plan, beginning with the 1998 calendar year, by an amount equal to 1% of
the Shares outstanding on December 31 of the immediately preceding year.
However, such additional Shares shall not be available for grants of Incentive
Stock Options, unless and until the increase in the number of Shares provided
for herein is subsequently approved by the stockholders of the Company in
accordance with Section 422 of the Code.

          Shares issued upon exercise of Options or Awards of Restricted Stock
under the Plan may be either authorized but unissued Shares or Shares re-
acquired by the Company.  If, on or prior to the termination of the Plan, an
Award granted thereunder expires or is terminated for any reason without having
been exercised or vested in full, the unpurchased or unvested Shares covered
thereby will again become available for the grant of Awards under the Plan.
Shares covered by Options surrendered in connection with the exercise of other
Options shall not be deemed to have been exercised and shall again become
available for the grant of awards under the Plan.

          Notwithstanding the foregoing, the maximum number of Shares of
Restricted Stock granted pursuant to Article 7 herein shall be an amount equal
to one-fifth of the total number of Shares reserved for issuance under the Plan.

          4.2  ADJUSTMENTS IN AUTHORIZED SHARES.  In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property (excluding cash dividends) of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of the
Company, such adjustment shall be made in the number and class of Shares which
may be delivered under Section 4.1, in the number and class of and/or price of
Shares subject to outstanding Awards granted under the Plan, and in the Award
limits set forth in Section 4.1, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.

                                       7
<PAGE>
 
                                   ARTICLE 5

                         ELIGIBILITY AND PARTICIPATION

          5.1  ELIGIBILITY.  All Eligible Persons are eligible to participate in
this Plan.

          5.2  ACTUAL PARTICIPATION.  Subject to the provisions of the Plan, the
Committee may, from time to time, select from all Eligible Persons, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.

                                   ARTICLE 6

                                 STOCK OPTIONS

          6.1  GRANT OF OPTIONS.  Subject to the terms and provisions of the
Plan, Options may be granted to Participants in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee.

          6.2  AWARD AGREEMENT.  Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the Option,
the number of Shares to which the Option pertains, and such other provisions as
the Committee shall determine. Each such Award Agreement shall incorporate by
reference the terms and provisions of the Plan as in effect at the time of its
execution and may contain such other terms and provisions not contrary to the
Plan as shall be approved and adopted by the Committee. The Award Agreement also
shall specify whether the Option is intended to be an ISO within the meaning of
Code Section 422, or an NQSO whose grant is intended not to fall under the
provisions of Code Section 422.

          6.3  OPTION PRICE.  The Option Price for each grant of an Option under
this Plan shall be at least equal to 100% of the Fair Market Value of a Share on
the date the Option is granted; provided, however, that the exercise price of an
ISO granted to any person who owns, directly or indirectly, (or is treated as
owning by reason of attribution rules, currently set forth in Code Section 424),
stock of the Company constituting more than 10% of the total combined voting
power of the Company's outstanding stock, or the stock of any of its corporate
subsidiaries, shall in no event be less than 110% of the Fair Market Value of
such Shares.

          6.4  VESTING OF OPTIONS.  Except as provided by the Committee in the
applicable Award Agreement, Options will vest and become exercisable as follows:

          (a)  34% of the Options shall vest on the date such options are
     granted;

          (b)  33% of the Options granted shall vest on each of the first
     anniversary and second anniversary of the date such Options are granted;
     provided, however, that if during the first year after the date such
     --------  -------                                                   
     Secondary Options are granted, the stock price of the Shares closes at or
     above $12.00 (or such other price determined by the Committee and set forth
     in the applicable

                                       8
<PAGE>
 
     Award Agreement) for any twenty (20) out of thirty (30) consecutive trading
     days, the 33% of the Options due to vest on the first anniversary of the
     date such Secondary Options are granted shall vest immediately at the end
     of such 20th day, and provided, however, that if during the second year
                           --------  -------
     after the date such Options are granted, the stock price of the Shares
     closes at or above $18.00 (or such other price determined by the Committee
     and set forth in the applicable Award Agreement) for any twenty (20) out of
     thirty (30) consecutive trading days, the 33% of the Options due to vest on
     the second anniversary of the date such Options are granted shall vest
     immediately at the end of such 20th day.

          6.5  DURATION OF OPTIONS.  Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of grant;
provided, however, that no Incentive Stock Option shall be exercisable later
than the tenth anniversary date of its grant. Furthermore, each Stock Option
granted to any person who owns, directly or indirectly (or is treated as owning
by reason of attribution rules, currently set forth in Internal Revenue Code
Section 424), stock of the Company constituting more than 10% of the total
combined voting power of the Company's outstanding stock, or the stock of any of
its corporate subsidiaries, is not exercisable after the expiration of five
years from the date such Option is granted.

          6.6  EXERCISE OF OPTIONS.  Options granted under this Article 6 shall
be exercisable at such times as set forth in the vesting schedule in Section 6.4
hereof, unless otherwise set forth in the Award Agreement, and be subject to
such restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for each grant or for each Participant.
Notwithstanding any contrary provisions contained in this Plan, the aggregate
Fair Market Value (determined as of the time each ISO is granted) of the Shares
with respect to which ISO's issued to any one person thereunder are exercisable
for the first time during any calendar year shall not exceed $100,000.

          6.7  PAYMENT. Options granted under this Article 6 shall be exercised
by the delivery of a proper notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised.

          No shares of Common Stock shall be issued on the exercise of an Option
unless the Option Price is paid for in full at the time of exercise.  Payment
shall be made in cash, which may be paid by check or other instrument acceptable
to the Company.  In addition, subject to compliance with applicable laws and
regulations and such conditions as the Committee may impose, the Committee may
elect to accept payment in shares of Common Stock of the Company which are
already owned by the Participant, valued at the Fair Market Value thereof on the
date of exercise.  The Committee may also allow a Participant to exercise an
Option by use of proceeds to be received from the sale of Common Stock issuable
pursuant to the Option being exercised.

          As soon as practicable after receipt of proper notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name,

                                       9
<PAGE>
 
Share certificates in an appropriate amount based upon the number of Shares
purchased under the Option(s).

          6.8  RESTRICTIONS ON SHARE TRANSFERABILITY.  The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.

          6.9  TERMINATION OF EMPLOYMENT.

(a)  Except as provided in paragraphs (b) and (c) below and except as otherwise
specifically provided in the Award Agreement, each Option, to the extent it has
not been previously exercised, shall terminate upon the earliest to occur of:
(a) the expiration of the Option period set forth in the Option Award Agreement;
(b) for ISOs, the expiration of three months following the Participant's
Retirement (following the Participant's Retirement, NQSOs shall terminate upon
the expiration of the Option period set forth in the Option Award Agreement);
(c) the expiration of 12 months following the Participant's death or Disability;
(d) immediately upon the Participant ceasing to be an employee, officer,
consultant, director or otherwise affiliated with the Company for Cause; or (e)
the expiration of 90 days following the Participant ceasing to be an employee,
officer, consultant, director or otherwise affiliated with the Company for any
reason other than Cause, death, Disability, or Retirement.

(b)  Notwithstanding anything in the Plan to the contrary, any Option granted on
or after September 21, 1998 (a "Secondary Option"), to the extent it has not
been previously exercised, shall terminate upon the earliest to occur of: (a)
the expiration of the Secondary Option period set forth in the Award Agreement;
(b) the expiration of 12 months following the Participant's death or Disability;
(c) immediately upon termination for Cause (as defined below); or (d) the
expiration of 90 days following the Participant's termination of employment for
any reason other than Cause (as defined below), Change in Control, death or
Disability.

     For purposes of the preceding sentence only, Cause means the Company,
Subsidiary or an Affiliate having cause to terminate a Participant's status as
an employee, officer, consultant, or director or other affiliation with the
Company under any existing employment agreement between the Participant and the
Company, a Subsidiary or an Affiliate or, in the absence of such an employment
agreement, upon (i) the determination by the Committee that the Participant has
ceased to perform his duties to the Company, a Subsidiary or an Affiliate (other
than as a result of his incapacity due to physical or mental illness or injury),
which failure amounts to an intentional and extended neglect of his duties to
such party, (ii) the Committee's determination that the Participant has engaged
or is about to engage in conduct materially injurious to the Company, a
Subsidiary or an Affiliate, or (iii) the Participant having been convicted of a
felony.

                                       10
<PAGE>
 
(c)  Notwithstanding the foregoing, any Secondary Option, to the extent it has
not been previously exercised prior to a Change in Control shall remain
exercisable for its full original term upon and following such Change in
Control.

          6.10  NONTRANSFERABILITY OF OPTIONS.

          (a)  INCENTIVE STOCK OPTIONS.  No ISO granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all ISOs
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant.

          (b)  NONQUALIFIED STOCK OPTIONS.  No NSO granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Notwithstanding
the foregoing, to the extent not prohibited by any statute, rule or regulation
applicable to the Plan, the Options, or the registration with the Securities and
Exchange Commission of the Shares to be issued upon exercise of the Options, the
Committee may, in its discretion, authorize all or a portion of NQSOs granted to
a Participant to be on terms which permit transfer by such Participant to (i)
Immediate Family Members, (ii) a trust or trusts for the exclusive benefit of
such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (A) there may be no
consideration for any such transfer, (B) the Award Agreement pursuant to which
such Options are granted must be approved by the Committee, and must expressly
provide for transferability in a manner consistent with this Section, and (C)
subsequent transfers of transferred Options shall be prohibited except those by
will or the laws of descent and distribution. Following transfer, any such
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of this
Plan, the term "Participant" shall be deemed to refer to the transferee. The
events of termination of employment shall continue to be applied with respect to
the original Participant, following which the Options shall be exercisable by
the transferee only to the extent, and for the periods specified in this Section
6.9. Notwithstanding the foregoing, should the Committee provide that Options
granted be transferable, the Company by such action incurs no obligation to
notify or otherwise provide notice to a transferee of early termination of the
Option. In the event of a transfer, as set forth above, the original Participant
is and will remain subject to and responsible for any applicable withholding
taxes upon the exercise of such Options.

                                   ARTICLE 7

                               RESTRICTED STOCK

          7.1  GRANT OF RESTRICTED STOCK.  Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time, may grant Shares
of Restricted Stock to Participants in such amounts as the Committee shall
determine. Without limiting the generality of the foregoing, Restricted Shares
may be granted in connection with payouts under other compensation programs of
the Company.

                                       11
<PAGE>
 
          7.2  RESTRICTED STOCK AGREEMENT.  Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.

          7.3  TRANSFERABILITY.  Except as provided in this Article 7, the
Shares of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.

          7.4  OTHER RESTRICTIONS.  Subject to Article 8 herein, the Committee
shall impose such other conditions and/or restrictions on any Shares of
Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance objectives (Company-wide, business unit,
and/or individual), time-based restrictions on vesting following the attainment
of the performance objectives, and/or restrictions under applicable federal or
state securities laws.

          At the discretion of the Committee, the Company may retain the
certificates representing Shares of Restricted Stock in the Company's possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied.

          Except as otherwise provided in this Article 7, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the applicable
Period of Restriction.

          7.5  VOTING RIGHTS.  During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.

          7.6  DIVIDENDS AND OTHER DISTRIBUTIONS.  During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may be credited with regular cash dividends paid with respect to the underlying
Shares while they are so held. Such dividends may be paid currently, accrued as
contingent cash obligations, or converted into additional shares of Restricted
Stock, upon such terms as the Committee establishes.

          The Committee may apply any restrictions to the dividends that the
Committee deems appropriate.

          In the event that any dividend constitutes a "derivative security" or
an "equity security" pursuant to Rule 16(a) under the Exchange Act, such
dividend shall be

                                       12
<PAGE>
 
subject to a vesting period equal to the remaining vesting period of the Shares
of Restricted Stock with respect to which the dividend is paid.

          7.7  TERMINATION OF EMPLOYMENT.  Upon a Participant's death,
Disability, or Retirement, all Restricted Shares shall vest immediately. Each
Restricted Stock Award Agreement shall set forth the extent to which the
Participant shall have the right to retain unvested Restricted Shares following
the date the Participant ceases to be an employee, officer, consultant, director
or otherwise affiliated with the Company in all other circumstances. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with each Participant, need not be
uniform among all Shares of Restricted Stock issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of employment.

                                   ARTICLE 8

                            BENEFICIARY DESIGNATION

          A Participant under the Plan may make written designation of a
beneficiary on forms prescribed by and filed with the Corporate Secretary of the
Company.  Such beneficiary, or if no such designation of any beneficiary has
been made, the legal representative of such Participant or such other person
entitled thereto as determined by a court of competent jurisdiction, may
exercise, in accordance with and subject to the provisions of Article 6, any
unterminated and unexpired Option granted to such Participant to the same extent
that the Participant himself could have exercised such Option were he alive or
able; provided, however, that no Option granted under the Plan shall be
exercisable for more Shares than the Participant could have purchased thereunder
on the date his employment by, or other relationship with, the Company and its
Subsidiaries was terminated.

                                   ARTICLE 9

                                   DEFERRALS

          The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option, the lapse or waiver of restrictions with respect to Restricted Stock, or
the satisfaction of any requirements or objectives with respect to performance
measures, if any.  If any such deferral election is required or permitted, the
Committee shall, in its sole discretion, establish rules and procedures for such
payment deferrals.

                                  ARTICLE 10

                              RIGHTS OF EMPLOYEES

          10.1  EMPLOYMENT.  Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate any Participant's employment at
any

                                       13
<PAGE>
 
time, nor confer upon any Participant any right to continue in the employ of the
Company.

          10.2  PARTICIPATION.  No Employee shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.

                                  ARTICLE 11

                               CHANGE IN CONTROL

          11.1  TREATMENT OF OUTSTANDING AWARDS.  Upon the occurrence of a
Change in Control, unless otherwise specifically prohibited under applicable
laws, or by the rules and regulations of any governing governmental agencies or
national securities exchanges,:

          (a)  Any and all Options granted hereunder shall become immediately
     vested and exercisable and shall remain exercisable throughout their entire
     term; and

          (b)  Any restriction periods and restrictions imposed on Shares of
     Restricted Stock shall lapse; provided, however, that the degree of vesting
     associated with Restricted Stock which has been conditioned upon the
     achievement of performance conditions pursuant to Section 7.4 herein shall
     be determined in the manner set forth in Section 7.4 herein.

          11.2  TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS.  Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 11 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards.

                                  ARTICLE 12

                       SALE OF BUSINESS UNIT OF COMPANY

          The Committee, in connection with the sale of any Subsidiary,
Affiliate, division or other business unit of the Company, may within the
Committee's sole and absolute discretion (1) cause any or all Options granted
hereunder to Participants whose Options or rights under Options will be
adversely affected by such transaction (a) to become immediately exercisable, or
(b) to remain exercisable after such transaction for such period as the
Committee deems appropriate under the circumstances, or both (a) and (b), or (2)
cause the restrictions on any or all Shares of Restricted Stock awarded
hereunder to Participants whose Restricted Stock will be adversely affected by
such transaction to lapse immediately. The provision of this Article 12 and the
actions of the Committee taken pursuant to this Article 12 shall be effective
upon action of the Committee alone without amendment to any Award Agreement or
the consent of any Participant.

                                       14
<PAGE>
 
                                  ARTICLE 13

                   AMENDMENT, MODIFICATION, AND TERMINATION

          13.1  AMENDMENT, MODIFICATION, AND TERMINATION.  Subject to Section
11.2 herein, the Board or the Committee may at any time and from time to time,
alter, amend, suspend or terminate the Plan in whole or in part, except that,
without approval of the stockholders of the Company, no such revision or
amendment shall increase the number of shares available for grants of ISOs under
the Plan or alter the class of participants in the Plan.

          Notwithstanding the foregoing, and subject to Section 11.2 herein,
neither the Company nor the Board or Committee on its behalf may cancel
outstanding Awards and issue substitute Awards in replacement thereof or reduce
the exercise price of any outstanding Options without stockholder approval.

          13.2  ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS.  The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.2 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan.

          13.3  AWARDS PREVIOUSLY GRANTED.  No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.

                                  ARTICLE 14

                                  WITHHOLDING

          14.1  TAX WITHHOLDING.  The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

          14.2  SHARE WITHHOLDING.  To the extent provided by the Committee, a
Participant may elect to have any distribution to be made under this Plan to be
withheld or to surrender to the Company Shares already owned by the Participant
to fulfill any tax withholding obligation.

                                       15
<PAGE>
 
                                  ARTICLE 15

                                INDEMNIFICATION

          Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf.  The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

                                  ARTICLE 16

                                  SUCCESSORS

          All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation or otherwise.

                                  ARTICLE 17

                              LEGAL CONSTRUCTION

          17.1  GENDER AND NUMBER.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular; and, the singular shall include the plural.

          17.2  SEVERABILITY.  In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

          17.3  REQUIREMENTS OF LAW.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

                                       16
<PAGE>
 
          17.4  SECURITIES LAW COMPLIANCE.  With respect to Insiders,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.

          17.5  GOVERNING LAW.  To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the state of Delaware.

                                       17