<PAGE>
 
                                                                   EXHIBIT 10.85


                             AFC ENTERPRISES, INC.

                          DEFERRED COMPENSATION PLAN
<PAGE>
 
                             AFC ENTERPRISES, INC.
               
                          DEFERRED COMPENSATION PLAN


     Effective as of the 1st day of January, 1998, AFC Enterprises, Inc. (the
"Controlling Company") hereby establishes the AFC Enterprises, Inc. Deferred
Compensation Plan (the "Plan").

                         
                            BACKGROUND AND PURPOSE
                            ----------------------


     A.   GOAL. The Controlling Company desires to provide its designated key
          ----
management and highly compensated employees (and those of its affiliated
companies that participate in the Plan) with an opportunity (i) to defer the
receipt and income taxation of a portion of such employees' annual compensation,
and (ii) to receive, on a deferred basis, matching contributions made with
respect to at least a portion of such employees [] own deferrals.

     B.   PURPOSE. The purpose of the Plan document is to set forth the terms
          -------
and conditions pursuant to which these deferrals may be made and to describe the
nature and extent of the employees' rights to their deferred amounts.

     C.   TYPE OF PLAN. The Plan constitutes an unfunded, nonqualified
          ------------
deferred compensation plan that benefits certain designated employees who are
within a select group of key management or highly compensated employees.


                            STATEMENT OF AGREEMENT
                            ----------------------

     To establish the Plan with the purposes and goals as hereinabove described,
the Controlling Company hereby sets forth the terms and provisions as follows:

                                       i
<PAGE>
 
                             AFC ENTERPRISES, INC
                          DEFERRED COMPENSATION PLAN
  
                               TABLE OF CONTENTS
         
<TABLE> 
<S>                                                         <C> 
ARTICLE I DEFINITIONS ................................       1
    1.1   Account.....................................       1  
    1.2   Administrative Committee....................       1  
    1.3   Annual Bonus................................       1  
    1.4   Annual Bonus Election.......................       1  
    1.5   Beneficiary.................................       1  
    1.6   Board.......................................       1  
    1.7   Code........................................       1  
    1.8   Compensation................................       1  
    1.9   Controlled Group............................       2  
    1.10  Controlling Company.........................       2  
    1.11  Deferral Contributions......................       2  
    1.12  Deferral Election...........................       2  
    1.13  Disability or Disabled......................       2  
    1.14  Effective Date..............................       2  
    1.15  Eligible Employee...........................       2  
    1.16  ERISA.......................................       2  
    1.17  Financial Hardship..........................       2  
    1.18  Investment Election.........................       3  
    1.19  Investment Funds............................       3  
    1.20  Matching Contributions......................       3  
    1.21  Participant.................................       3  
    1.22  Participating Company.......................       3  
    1.23  Plan........................................       3  
    1.24  Plan Year...................................       3  
    1.25  Savings Plan................................       3  
    1.26  Surviving Spouse............................       3  
    1.27  Trust or Trust Agreement....................       4  
    1.28  Trustee.....................................       4  
    1.29  Trust Fund..................................       4  
    1.30  Valuation Date..............................       4   
 </TABLE>                                                               

                                      ii
<PAGE>
 
<TABLE> 
<S>                                                                        <C> 
ARTICLE II ELIGIBILITY AND PARTICIPATION.................................   5
     2.1  Eligibility....................................................   5
          (a) Annual Participation.......................................   5
          (b) Interim Plan Year Participation............................   5
     2.2       Procedure for Admission...................................   5
     2.3       Cessation of Eligibility..................................   5
          (a) Cessation of Eligible Status...............................   5
          (b) Inactive Participant Status................................   5

ARTICLE III PARTICIPANTS' ACCOUNTS; DEFERRALS AND CREDITING..............   6
     3.1  Participants' Accounts.........................................   6
          (a) Establishment of Accounts..................................   6
          (b) Nature of Contributions and Accounts.......................   6
          (c) Several Liabilities........................................   6
          (d) General Creditors..........................................   6
     3.2  Deferral Contributions.........................................   6
          (a) Effective Date.............................................   7
          (b) Term.......................................................   7
          (c) Amount.....................................................   7
          (d) Revocation.................................................   7
          (e) Annual Bonus Election......................................   7
          (f) Crediting of Deferred Compensation.........................   8
     3.3  Contributions..................................................   8
     3.4  Debiting of Distributions......................................   8
     3.5  Crediting of Earnings..........................................   9
     3.6  Vesting........................................................   9
     3.7  Notice to Participants of Account Balances.....................   9
     3.8  Good Faith Valuation Binding...................................   9
     3.9  Errors and Omissions in Accounts...............................  10

ARTICLE IV INVESTMENT FUNDS..............................................  11
     4.1  Selection by Administrative Committe...........................  11
     4.2  Participant Direction of Deemed Investments....................  11
          (a)  Nature of Participant Direction...........................  11
          (b)  Investment of Contributions...............................  11
          (c)  Investment of Existing Account Balances...................  11
          (d)  Administrative Committee Discretion.......................  12
</TABLE> 

                                      iii
<PAGE>
 
<TABLE> 
<S>                                                                  <C> 
ARTICLE V PAYMENT OF ACCOUNT BALANCES...............................  13
      5.1 Benefit Payments Upon Termination of Service
          for Reasons Other Than Death..............................  13
          (a)  General Rule Concerning Benefit Payments.............  13
          (b)  Timing of Distribution...............................  13
     5.2  Form of Distribution......................................  13
          (a)  Single-Sum Payment...................................  14
          (b)  Annual Installments..................................  14
     5.3  Death Benefits............................................  14
     5.4  In-Service Distributions..................................  15
          (a)  Hardship Distribut  .................................  15
          (b)  Distributions with Forfeiture........................  15
     5.5  Beneficiary Designation...................................  16
          (a)  General..............................................  16
          (b)  No Designation or Designee Dead or Missing...........  16
     5.6  Taxes.....................................................  16
ARTICLE VI CLAIMS...................................................  17
     6.1  Claims....................................................  17
          (a)  Initial Claim........................................  17
          (b)  Appeal...............................................  17
          (c)  Satisfaction of Claims...............................  17
ARTICLE VII SOURCE OF FUNDS; TRUST..................................  18
     7.1  Source of Funds...........................................  18
     7.2  Trust.....................................................  18
          (a)  Establishment........................................  18
          (b)  Distributions........................................  18
          (c)  Status of the Trust..................................  18
ARTICLE VIII ADMINISTRATIVE COMMITTEE...............................  19
     8.1  Action....................................................  19
     8.2  Rights and Duties.........................................  19
     8.3  Compensation, Indemnity and Liability.....................  20

ARTICLE IX AMENDMENT AND TERMINATION................................  21
     9.1  Amendments................................................  21
     9.2  Termination of Plan.......................................  21
</TABLE>                               
     
                                      iv
<PAGE>
 
<TABLE> 
<S>                                                                   <C> 
ARTICLE X MISCELLANEOUS............................................    22
     10.1 Taxation.................................................    22
     10.2 No Employment Contract...................................    22
     12.3 Headings.................................................    22
     10.4 Gender and Number........................................    22
     10.5 Assignment of Benefits...................................    22
     10.6 Legally Incompetent......................................    22
     10.7 Governing Law............................................    23

EXHIBIT A PARTICIPATING COMPANIES..................................   A-1
</TABLE>                               

                                       v
<PAGE>
 
                                   ARTICLE I
                                  DEFINITIONS
                                  -----------


     For purposes of the Plan, the following terms, when used with an initial
capital letter, shall have the meaning set forth below unless a different
meaning plainly is required by the context.

     1.1.      ACCOUNT shall mean, with respect to a Participant or Beneficiary,
               -------                                                          
the total dollar amount or value evidenced by the last balance posted in
accordance with the terms of the Plan to the account record established for such
Participant or Beneficiary.

     1.2.      ADMINISTRATIVE COMMITTEE shall mean the committee appointed by
               ------------------------                                      
the Board to administer the Plan, as provided in Article VIII.

     1.3.      ANNUAL BONUS shall mean that portion of an Eligible Employee's
               ------------                                                  
Compensation designated by the Administrative Committee as an annual bonus
payable with respect to services performed during a Plan Year.

     1.4.      ANNUAL BONUS ELECTION shall mean a written election form on which
               ---------------------                                            
a Participant may elect to defer under the Plan all or a portion of his Annual
Bonus.

     1.5.      BENEFICIARY shall mean, with respect to a Participant, the
               -----------  
person(s) designated in accordance with Section 5.5 to receive any death
benefits that may be payable under the Plan upon the death of the Participant.

     1.6.      BOARD shall mean the Board of Directors of the Controlling
               ----- 
Company.

     1.7.      CODE shall mean the Internal Revenue Code of 1986, as amended,
               ---- 
and any succeeding federal tax provisions.

     1.8       COMPENSATION shall mean, for a Participant for any Plan Year, the
total of such Participant's wages as defined in Section 3401(a) of the Code
together with all other compensatory payments to the Participant by a
Participating Company with respect to which the Participating Company must
furnish to the Participant a written statement pursuant to Sections 6041(d) and
6051(a)(3) of the Code, but determined without regard to any rules (such as the
exception for agricultural labor in Section 3401(a)(2) of the Code) which limit
the remuneration included in wages based on the nature or location of the
employment or services performed.

               Notwithstanding the above, Compensation shall include (i) any
amount which is contributed by a Participating Company pursuant to a salary
reduction agreement and which is not includible in the gross income of the
Participant under Sections 125, 402(e)(3), 402(h) or 403(b) of the Code for such
Plan Year and (ii) Deferral Contributions for such Plan Year.

     1.9       CONTROLLED GROUP shall mean all of the companies that are either
               ----------------
(i) members of the 
<PAGE>
 
same controlled group of corporations (within the meaning of Code Section
414(b)) or (ii) under common control (within the meaning of Code Section
414(c)), with the Controlling Company.
 
     1.10      CONTROLLING COMPANY shall mean AFC Enterprises, Inc., a
               ------------------- 
corporation with its principal place of business in Atlanta, Georgia.

     1.11      DEFERRAL CONTRIBUTIONS shall mean, for each Plan Year, that
               ---------------------- 
portion of a Participant's Compensation (inclusive of Annual Bonus deferrals)
deferred under the Plan pursuant to Section 3.2.

     1.12      DEFERRAL ELECTION shall mean a written election form (or election
               ----------------- 
in any other format permitted by the Administrative Committee) on which a
Participant may elect to defer a portion of his Compensation (other than his
Annual Bonus) under the Plan.

     1.13      DISABILITY OR DISABLED shall mean a Participant's status as
               ---------------------- 
disabled under the Controlling Company's long-term disability program.

     1.14      EFFECTIVE DATE shall mean January 1, 1998, the date that the Plan
               --------------                                                   
initially shall be effective.

     1.15      ELIGIBLE EMPLOYEE shall mean, for a Plan Year or portion of a
               ----------------- 
Plan Year, an individual:

               (a)  Who is a member of a select group of highly compensated or
key management employees who the Administrative Committee, in its sole
discretion, determines is eligible to participate in the Plan; and

               (b)  Who has satisfied the minimum compensation and/or other
classification requirements, if any, established from time to time by the
Administrative Committee.

     1.16      ERISA shall mean the Employee Retirement Income Security Act of
               ----- 
1974, as amended.

     1.17      FINANCIAL HARDSHIP shall mean a severe financial hardship to the
               ------------------                                              
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of the Participant's dependent [as defined in Code Section
152(a)], loss of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.  Financial Hardship shall be determined
by the Administrative Committee on the basis of the facts of each case,
including information supplied by the Participant in accordance with uniform
guidelines prescribed from time to time by the Administrative Committee;
provided, the Participant will be deemed not to have a Financial Hardship to the
extent that such hardship is or may be relieved:

               (a) Through reimbursement or compensation by insurance or
otherwise;

                                       2
<PAGE>
 
          (b) By liquidation of the Participant's assets, to the extent the
liquidation of assets would not itself cause severe financial hardship; or

          (c) By cessation of deferrals under the Plan.

Examples of what are not considered to be unforeseeable emergencies include the
need to send a Participant's child to college or the desire to purchase a home.

     1.18 INVESTMENT ELECTION shall mean an election, made in such form as the
          -------------------                                                 
Administrative Committee may direct or permit, pursuant to which a Participant
may elect the Investment Funds to be used in determining the rate of return to
be applied to the amounts credited to the Participant's Account.

     1.19 INVESTMENT FUNDS shall mean the investment funds selected from time to
          ----------------                                                      
time by the Administrative Committee for purposes of determining the rate of
return to be applied to the amounts credited to Participants' Accounts.

     1.20 MATCHING CONTRIBUTIONS shall mean, for each Plan Year, the amount
          ----------------------                                           
credited to a Participant's Account pursuant to Section 3.3.

     1.21 PARTICIPANT shall mean any person who has been admitted to, and has
          -----------                                                        
not been removed from, participation in the Plan pursuant to the provisions of
Article II.

     1.22 PARTICIPATING COMPANY  shall mean the Controlling Company and any
          ---------------------                                            
members of its Controlled Group that adopt the Plan as participating companies
therein.  A list of such members that are participating in the Plan shall be set
forth on Exhibit A hereto.

     1.23 PLAN shall mean the AFC Enterprises, Inc. Deferred Compensation Plan,
          ----                                                                 
as contained herein and all amendments hereto.  For tax purposes and purposes of
Title I of ERISA, the Plan is intended to be an unfunded, nonqualified deferred
compensation plan covering certain designated employees who are within a select
group of key management or highly compensated employees.

     1.24 PLAN YEAR shall mean the 12-consecutive-month period ending on
          ---------                                                     
December 31 of each year.

     1.25 SAVINGS PLAN shall mean the AFC Enterprises, Inc. 401(k) Savings Plan.
          ------------                                                          

     1.26 SURVIVING SPOUSE shall mean, with respect to a Participant, the person
          ----------------                                                      
who is treated as married to such Participant under the laws of the state in
which the Participant resides.  The determination of a Participant's Surviving
Spouse shall be made as of the date of such Participant's death.

     1.27 TRUST OR TRUST AGREEMENT shall mean the separate agreement or
          ------------------------                                     
agreements 

                                       3
<PAGE>
 
between the Controlling Company and the Trustee governing the creation of the
Trust Fund, and all amendments thereto.

     1.28 TRUSTEE  shall mean the party or parties so designated from time to
          -------                                                            
time pursuant to the terms of the Trust Agreement.

     1.29 TRUST FUND shall mean the total amount of cash and other property held
          ----------                                                            
by the Trustee (or any nominee thereof) at any time under the Trust Agreement.

     1.30 VALUATION DATE shall mean each day of the Plan Year on which the
          --------------                                                  
Plan's recordkeeper and the Trustee are each open to the public for business, or
such other date(s) determined by the Administrative Committee in its sole
discretion.

                                       4
<PAGE>
 
                                  ARTICLE II
                         ELIGIBILITY AND PARTICIPATION
                         -----------------------------

     2.1  ELIGIBILITY.
          ----------- 

          (a) ANNUAL PARTICIPATION.  Each individual who is an Eligible Employee
              --------------------                                              
as of the first day of a Plan Year shall be eligible to participate in the Plan
for the entire Plan Year.  Such individual's participation shall become
effective as of the first day of such Plan Year (assuming he satisfies the
procedures for admission described below).

          (b) INTERIM PLAN YEAR PARTICIPATION.
              ------------------------------- 

              (i)  Each individual who is an Eligible Employee as of the
Effective Date shall be eligible to participate in the Plan. Such individual's
participation shall become effective as of the Effective Date (assuming he
satisfies the procedures for admission described below).

              (ii) Each individual who becomes an Eligible Employee during a
Plan Year shall be eligible to participate in the Plan for a portion of such
Plan Year. Such individual's participation shall become effective as of the
first day of the calendar month coinciding with or next following the date he
becomes an Eligible Employee (assuming he satisfies the procedures for admission
described below).

     2.2  PROCEDURE FOR ADMISSION.
          ----------------------- 

          Each Eligible Employee shall become a Participant by completing such
forms and providing such data in a timely manner, as are required by the
Administrative Committee as a precondition of participation in the Plan.  Such
forms and data may include, without limitation, a Deferral Election, the
Eligible Employee's acceptance of the terms and conditions of the Plan, and the
designation of a Beneficiary to receive any death benefits payable hereunder.

     2.3  CESSATION OF ELIGIBILITY.
          ------------------------ 

          (a) CESSATION OF ELIGIBLE STATUS.  The Administrative Committee may
              ----------------------------                                   
remove an employee from active participation in the Plan if, as of any day
during a Plan Year, he ceases to satisfy the criteria which qualified him as an
Eligible Employee, in which case his deferrals under the Plan shall cease.

          (b) INACTIVE PARTICIPANT STATUS.  Even if his active participation in
              ---------------------------                                      
the Plan ends, an employee shall remain an inactive Participant in the Plan
until the earlier of (i) the date the full amount of his vested Account (if any)
is distributed from the Plan, or (ii) the date he again becomes an Eligible
Employee and recommences participation in the Plan.  During the period of time
that an employee is an inactive Participant in the Plan, his vested Account
shall continue to be credited with earnings as provided for in Section 3.5.

                                       5
<PAGE>
 
                                  ARTICLE III
                PARTICIPANTS' ACCOUNTS; DEFERRALS AND CREDITING
                -----------------------------------------------

     3.1  PARTICIPANTS' ACCOUNTS.
          ---------------------- 

          (a) ESTABLISHMENT OF ACCOUNTS.  The Administrative Committee shall
              -------------------------                                     
establish and maintain an Account on behalf of each Participant.  Each Account
shall be credited with (i) Deferral Contributions, (ii) Matching Contributions,
and (iii) earnings attributable to such Account, and shall be debited by
distributions.  Each Account of a Participant shall be maintained until the
vested value thereof has been distributed to or on behalf of such Participant or
his Beneficiary.

          (b) NATURE OF CONTRIBUTIONS AND ACCOUNTS.  The amounts credited to a
              ------------------------------------                            
Participant's Account shall be represented solely by bookkeeping entries.
Except as provided in Article VI, no monies or other assets shall actually be
set aside for such Participant, and all payments to a Participant under the Plan
shall be made from the general assets of the Participating Companies.

          (c) SEVERAL LIABILITIES.  Each Participating Company shall be
              -------------------                                      
severally (and not jointly) liable for the payment of benefits under the Plan in
an amount equal to the total of (i) all undistributed Deferral Contributions
withheld from Participants' Compensation paid or payable by each such
Participating Company, (ii) all undistributed Matching Contributions
attributable to Deferral Contributions described in clause (i) hereof, and (iii)
all undistributed earnings attributable thereto.  The Administrative Committee
shall allocate the total liability to pay benefits under the Plan among the
Participating Companies pursuant to this formula, and the Administrative
Committee's determination shall be final and binding.

          (d) GENERAL CREDITORS.  Any assets which may be acquired by a
              -----------------                                        
Participating Company in anticipation of its obligations under the Plan shall be
part of the general assets of such Participating Company.  A Participating
Company's obligation to pay benefits under the Plan constitutes a mere promise
of such Participating Company to pay such benefits, and a Participant or
Beneficiary shall be and remain no more than an unsecured, general creditor of
such Participating Company.

     3.2  DEFERRAL CONTRIBUTIONS.
          ---------------------- 

          Each Eligible Employee who is or becomes eligible to participate in
the Plan for all or any portion of a Plan Year may elect to have Deferral
Contributions made on his behalf for such Plan Year by completing and delivering
to the Administrative Committee (or its designee) a Deferral Election and/or
Annual Bonus Election setting forth the terms of his election.  Subject to the
terms and conditions set forth below, a Deferral Election may provide for the
reduction of an Eligible Employee's Compensation payable in each regular
paycheck paid during the Plan Year for which the Deferral Election is in effect,
and an Annual Bonus Election shall provide for the reduction of an Eligible
Employee's Annual Bonus payable during the Plan year for which the Annual Bonus
Election is in effect.  Subject to any modifications, additions or exceptions
that the Administrative Committee, in its sole discretion, deems necessary,
appropriate or helpful, the following terms shall 

                                       6
<PAGE>
 
apply to such elections:

          (a)  EFFECTIVE DATE.
               -------------- 

               (i)  INITIAL DEFERRAL ELECTION.  A Participant's initial Deferral
                    -------------------------                                   
Election with respect to his Compensation for any Plan Year shall be effective
for the first paycheck earned after the date the Deferral Election becomes
effective.  To be effective, a Participant's initial Deferral Election must be
made before the first day of the Plan Year for which Deferral Contributions will
be made.  If a Participant first becomes eligible to participate in the Plan on
a date other than the first day of a Plan Year, the Participant's Deferral
Election must be made no later than 30 days after the date on which the
Participant first becomes eligible to make Deferral Contributions under the
Plan. If an Eligible Employee fails to submit a Deferral Election in a timely
manner, he shall be deemed to have elected not to participate in the Plan for
that Plan Year.

               (i)  SUBSEQUENT DEFERRAL ELECTION.  A Participant's subsequent
                    ----------------------------  
Deferral Election with respect to his Compensation for any Plan Year must be
made on or before the last day of the Plan Year immediately preceding the Plan
Year for which he desires to participate and in which the Compensation to be
deferred is earned.

          (b)  TERM.  Each Participant's Deferral Election shall remain in
               ----                                                       
effect for all such Compensation earned during a Plan Year until the earliest of
(i) the last day of such Plan Year, (ii) the date the Participant ceases to be
an active Participant for such Plan Year, or (iii) the date the Participant
revokes such Deferral Election.  If a Participant is transferred from the
employment of one Participating Company to the employment of another
Participating Company, his Deferral Election with the first Participating
Company will remain in effect and will apply to his Compensation from the second
Participating Company until the earliest of those events set forth in the
preceding sentence.

          (c)  AMOUNT. A Participant may elect to defer his Compensation payable
               ------                                                           
in each regular paycheck in 1 percent increments, up to a maximum of 20 percent
(or such other maximum percentage or amount, if any, established by the
Administrative Committee from time-to-time).

          (d)  REVOCATION.  A Participant may revoke his Deferral Election by
               ----------                                                    
delivering a written notice of revocation to the Administrative Committee, and
such revocation shall be effective as soon as practicable after the date on
which it is received by the Administrative Committee.  A Participant who revokes
a Deferral Election may enter into a new Deferral Election with respect to his
Compensation for any subsequent Plan Year by making such Deferral Election on or
before the last day of the Plan Year immediately preceding the Plan Year for
which he desires to participate and in which the Compensation to be deferred is
payable.

                                       7
<PAGE>
 
          (e)  ANNUAL BONUS ELECTION. A Participant may complete and deliver to
               ---------------------                                           
the Administrative Committee (or its designee) an Annual Bonus Election with
respect to an Annual Bonus payable for a Plan Year.  The terms of such Annual
Bonus Election shall be determined by reference to the foregoing provisions of
this Section 3.2; provided, the following modifications shall apply:

               (i)   A Participant's Annual Bonus Election shall be effective
for the Annual Bonus payable after the date the Annual Bonus Election is
delivered to the Administrative Committee (or its designee). The Participant
shall deliver the Annual Bonus Election to the Administrative Committee (or its
designee) on or before the last day of the Plan Year immediately preceding the
Plan Year during which the amount of the Annual Bonus becomes definitely
ascertainable and payable.

               (ii)  Such Annual Bonus Election shall remain in effect only for
the Plan Year for which it is effective and a Participant may not revoke his
Annual Bonus Election.

               (iii) If a Participant does not make an Annual Bonus Election for
a Plan Year, no part of his Annual Bonus shall be deferred under the Plan.

               (iv)  The Participant may elect to defer his Annual Bonus in 1
percent increments, up to 100 percent, (or such other maximum amount, if any,
established by the Administrative Committee from time to time).

               (v)   Such Annual Bonus Election shall terminate at the date the
Participant ceases to be an active Participant.

          (f)  CREDITING OF DEFERRED COMPENSATION.  For each Plan Year that a
               ----------------------------------                            
Participant has a Deferral Election and/or an Annual Bonus Election in effect,
the Administrative Committee shall credit the amount of such Participant's
Deferral Contributions to his Account on, or as soon as practicable after, the
Valuation Date on which such amount would have been paid to him but for his
Deferral Election and/or an Annual Bonus Election.

     3.3  MATCHING CONTRIBUTIONS.
          ---------------------- 

          As of such date or time as the Administrative Committee, in its sole
discretion, determines from time-to-time, the Administrative Committee may
credit to the Account of each Participant who was employed by the Controlling
Company or a member of the Controlled Group on the last day of a Plan Year a
Matching Contribution in an amount, or equal to such percentage of a
Participant's Deferral Contributions for that Plan Year, as the Administrative
Committee may determine.

     3.4  DEBITING OF DISTRIBUTIONS.
          ------------------------- 

          As of each Valuation Date, the Administrative Committee shall debit
each Participant's Account for any amount distributed from such Account since
the immediately preceding Valuation Date.

                                       8
<PAGE>
 
     3.5  CREDITING OF EARNINGS.
          --------------------- 

          As of each Valuation Date prior to the date as of which distribution
of a Participant's Account balance is made or commences, the Administrative
Committee shall credit to each Participant's Account the amount of earnings
and/or losses applicable thereto for the period since the  immediately preceding
Valuation Date.  Such crediting of earnings and/or losses shall be effective as
of each Valuation Date, as follows:

          (a)  The Administrative Committee first shall determine the rate of
return for the period since the immediately preceding Valuation Date for each of
the Investment Funds;

          (b)  The Administrative Committee next shall determine the amount of
(i) each Participant's Account that was deemed invested in each such Investment
Fund as of the immediately preceding Valuation Date; minus (ii) the amount of
any distributions debited from the amount determined in clause (i) since the
immediately preceding Valuation Date; and

          (c)  The Administrative Committee shall then apply the rate of return
for each such Investment Fund for such Valuation Date (as determined in
subsection (a) hereof) to the Participant's amount deemed invested in such
Investment Fund for such Valuation Date (as determined in subsection (b)
hereof), and the total amount of earnings and/or losses resulting therefrom
shall be credited to such Participant's Account as of the applicable Valuation
Date.

          (d)  Deferral Contributions and Matching Contributions shall be
credited with earnings from the date such amounts would have been paid to the
Participant but for his Deferral and/or Bonus Election.

     3.6  VESTING.
          ------- 

          A Participant shall at all times be fully vested in his Deferral
Contributions and the earnings credited to his Account with respect to such
Deferral Contributions.  The Matching  Contributions credited to a Participant's
Account and the earnings credited with respect thereto shall vest in accordance
with the vesting schedule under the Savings Plan based on the Participant's
years of service as determined under the Savings Plan.

     3.7  NOTICE TO PARTICIPANTS OF ACCOUNT BALANCES.
          ------------------------------------------ 

          At least once for each Plan Year, the Administrative Committee shall
cause a written statement of a Participant's Account balance to be distributed
to the Participant.

     3.8  GOOD FAITH VALUATION BINDING.
          ---------------------------- 

          In determining the value of the Accounts, the Administrative Committee
shall exercise its best judgment, and all such determinations of value (in the
absence of bad faith) shall be binding upon all Participants and their
Beneficiaries.

                                       9
<PAGE>
 
     3.9  ERRORS AND OMISSIONS IN ACCOUNTS.
          -------------------------------- 

          If an error or omission is discovered in the Account of a Participant
or in the amount of a Participant's deferrals, the Administrative Committee, in
its sole discretion, shall cause appropriate, equitable adjustments to be made
as soon as administratively practicable following the discovery of such error or
omission.

                                       10
<PAGE>
 
                                  ARTICLE IV
                               INVESTMENT FUNDS
                               ----------------


     4.1  SELECTION BY ADMINISTRATIVE COMMITTEE.
          ------------------------------------- 

          From time to time, the Administrative Committee shall select two or
more Investment Funds for purposes of determining the rate of return on amounts
deemed invested in accordance with the terms of the Plan.  The Administrative
Committee may change, add or remove Investment Funds on a prospective basis at
anytime(s) and in any manner it deems appropriate.

     4.2  PARTICIPANT DIRECTION OF DEEMED INVESTMENTS.
          ------------------------------------------- 

          Each Participant generally may direct the manner in which his Account
shall be deemed invested in and among the Investment Funds; provided, such
investment directions shall be made in accordance with the following terms:

          (a) NATURE OF PARTICIPANT DIRECTION.  The selection of Investment
              -------------------------------                              
Funds by a Participant shall be for the sole purpose of determining the rate of
return to be credited to his Account, and shall not be treated or interpreted in
any manner whatsoever as a requirement or direction to actually invest assets in
any Investment Fund or any other investment media.  The Plan, as an unfunded,
nonqualified deferred compensation Plan, at no time shall have any actual
investment of assets relative to the benefits or Accounts hereunder.

          (b) INVESTMENT OF CONTRIBUTIONS.  Each Participant may make an
              ---------------------------                               
Investment Election prescribing the percentage of the future contributions that
will be deemed invested in each Investment Fund.  An initial Investment Election
of a Participant shall be made as of the date the Participant commences
participation in the Plan and shall apply to all contributions credited to such
Participant's Account after such date.  Such Participant may make subsequent
Investment Elections as of any Valuation Date, and each such election shall
apply to all such specified contributions credited to such Participant's Account
after the Administrative Committee (or its designee) has a reasonable
opportunity to process such election.  Any Investment Election made pursuant to
this subsection with respect to future contributions shall remain effective
until changed by the Participant.

          (c) INVESTMENT OF EXISTING ACCOUNT BALANCES.  Each Participant may
              ---------------------------------------                       
make an Investment Election prescribing the percentage of his existing Account
balance that will be deemed invested in each Investment Fund.  Such Participant
may make such Investment Elections as of any Valuation Date, and each such
election shall be effective after the Administrative Committee (or its designee)
has a reasonable opportunity to process such election.  Each such election shall
remain in effect until changed by such Participant.

                                       11
<PAGE>
 
          (d) ADMINISTRATIVE COMMITTEE DISCRETION.  The Administrative Committee
              -----------------------------------                               
shall have complete discretion to adopt and revise procedures to be followed in
making such Investment Elections.  Such procedures may include, but are not
limited to, the process of making elections, the permitted frequency of making
elections, the incremental size of elections, the deadline for making elections
and the effective date of such elections.  Any procedures adopted by the
Administrative Committee that are inconsistent with the deadlines or procedures
specified in this Section shall supersede such provisions of this Section
without the necessity of a Plan amendment.

                                       12
<PAGE>
 
                                   ARTICLE V
                          PAYMENT OF ACCOUNT BALANCES
                          ---------------------------


     5.1  BENEFIT PAYMENTS UPON TERMINATION OF SERVICE FOR REASONS OTHER THAN
          -------------------------------------------------------------------
DEATH.
----- 

          (a) GENERAL RULE CONCERNING BENEFIT PAYMENTS.  In accordance with the
              ----------------------------------------                         
terms of subsection (b) hereof, if a Participant terminates his employment with
the Controlling Company and all other members of the Controlled Group for any
reason other than death, he (or his Beneficiary, if he dies after such
termination of employment but before distribution of his Account) shall be
entitled to receive or begin receiving a distribution of the total of: (i) the
entire vested amount credited to his Account, determined as of the Valuation
Date on which such distribution is processed; plus (ii) the vested amount of
                                              ----                          
Deferral and Matching Contributions made since such Valuation Date; and minus
                                                                        -----
(iii) the amount of any distributions made to the Participant since such
Valuation Date.  For purposes of this subsection, the phrase "Valuation Date on
which such distribution is processed" refers to the Valuation Date established
for such purpose by administrative practice, even if actual payment is made or
commenced at a later date due to delays in valuation, administration or any
other procedure.

          (b) TIMING OF DISTRIBUTION.
              ---------------------- 

              (i)   Except as provided in subsection (b)(ii) hereof, the vested
     benefit payable to a Participant under this Section shall be made or
     commenced as soon as administratively feasible after the Participant
     terminates his employment with the Controlling Company and all other
     members of the Controlled Group for any reason other than death.

              (ii)  A Participant may elect, at the time he makes each Deferral
     Election and/or Annual Bonus Election, to have his benefit payable with
     respect to that election paid (or commenced) on any date (on or before the
     date his employment terminates, but not earlier than 3 years after the end
     of the Plan Year for which the Deferral Election applies) specified in such
     election. A Participant may elect a different benefit commencement date
     with respect to each Deferral Election and/or Annual Bonus Election;
     provided the Administrative Committee, in its sole discretion, may limit
     the number of different benefit commencement dates a Participant may elect
     with respect to all his benefits payable under the Plan. The Administrative
     Committee shall pay (or commence the payment of) the Participant's benefit
     as soon as administratively feasible after the time(s) specified in such
     Deferral Election(s) and/or Annual Bonus Election(s).  If the portion of a
     Participant's Account payable on a benefit commencement date includes non-
     vested Matching Contributions and the Participant's employment with the
     Controlling Company and all other members of the Controlled Group has not
     terminated, such amounts shall not be forfeited and shall be paid on the
     Participant's next benefit commencement date(s) to the extent they become
     further vested.

              (iii) Notwithstanding a Participant's election in subsection
(b)(ii), if the Participant's employment with the Controlling Company and all
other members of the Controlled

                                       13
<PAGE>
 
Group terminates before a given benefit commencement date elected by a
Participant, his benefit corresponding to such benefit commencement date shall
be immediately payable.

     5.2  FORM OF DISTRIBUTION.
          -------------------- 

          (a) SINGLE-SUM PAYMENT.  Except as provided in subsection (b) hereof,
              ------------------                                               
the benefit payable to a Participant under Section 5.1 shall be distributed in
the form of a single-sum payment in cash.

          (b) ANNUAL INSTALLMENTS.  A Participant may elect, at the time he
              -------------------                                          
makes each Deferral Election and/or Annual Bonus Election, to have his benefit
payable with respect to that election paid in the form of annual or quarterly
installment payments.  To the extent a Participant elects multiple benefit
commencement dates in accordance with Section 5.1(b)(ii), such Participant may
elect at the time of such subsequent Deferral Election(s) and/or Annual Bonus
Election(s) with respect to the total benefit corresponding to each benefit
commencement date, to receive such total benefit in the form of annual or
quarterly installments.  If a Participant does not elect the installment form of
distribution with respect to his benefit corresponding to a benefit commencement
date (as selected in accordance with Section 5.1(b)(ii)), his benefit
corresponding to such benefit commencement date shall be paid in the form of a
single-sum payment in cash unless, at least 1 year before such benefit
commencement date, the Participant makes a one-time election in writing to
receive such benefit in the form of annual or quarterly installment payments (in
accordance with the terms of this subsection).  If a Participant elects the
installment form of distribution with respect to a benefit commencement date (as
selected in accordance with Section 5.1(b)(ii), at least 1 year before such
benefit commencement date the Participant may make a one-time election in
writing to further delay the payment of the benefit corresponding to such
benefit commencement date (by electing a longer term of installment payments in
accordance with the terms of this subsection).  The following terms and
conditions shall apply to installment payments made under the Plan:

              (i)   The installment payments shall be made in substantially
     equal installments over a period not to exceed 15 years (adjusted for
     earnings between payments in the manner described in Section 3.5). The
     initial value of the obligation for the installment payments shall be equal
     to the amount of the Participant's Account balance calculated in accordance
     with the terms of Section 5.1(a).

              (ii)  If a Participant dies after payment of his benefit from the
     Plan has begun, but before his entire benefit has been distributed, the
     remaining amount of his Account balance shall be distributed to the
     Participant's designated Beneficiary in the form of a single-sum payment in
     cash.

              (iii) Notwithstanding a Participant?s election of installment
     payments under this subsection (b), if a Participant?s employment with the
     Controlling Company and all other members of the Controlled Group
     terminates before a given benefit commencement date, his benefit
     corresponding to such benefit commencement date shall be paid in the form
     of a single-sum payment in cash.

     5.3  DEATH BENEFITS.
          -------------- 

                                       14
<PAGE>
 
          If a Participant dies before payment of his benefit from the Plan is
made or commenced, the Beneficiary or Beneficiaries designated by such
Participant in his latest beneficiary designation form filed with the
Administrative Committee shall be entitled to receive a distribution of the
total of (i) the entire vested amount credited to such Participant's Account,
determined as of the Valuation Date on which such distribution is processed;
plus (ii) the vested amount of Deferral and Matching Contributions made since
----                                                                         
such Valuation Date; and minus (iii) the amount of any distributions made to the
                         -----                                                  
Participant since such Valuation Date.  For purposes of this Section, the phrase
"Valuation Date on which such distribution is processed" refers to the Valuation
Date established for such purpose by administrative practice, even if actual
payment is made at a later date due to delays in valuation, administration or
any other procedure.  The benefit shall be distributed to such Beneficiary or
Beneficiaries as soon as administratively feasible after the date of the
Participant's death, in the form of a single-sum payment in cash.

     5.4  IN-SERVICE DISTRIBUTIONS.
          ------------------------ 

          (a) HARDSHIP DISTRIBUTIONS.  Upon receipt of an application for an in-
              -----------------------                                          
service hardship distribution and the Administrative Committee's decision, made
in its sole discretion, that a Participant has suffered a Financial Hardship,
such Participant shall be entitled to receive an in-service distribution.  Such
distribution shall be paid in a single-sum payment in cash as soon as
administratively feasible after the Administrative Committee determines that the
Participant has incurred a Financial Hardship.  The amount of such single-sum
payment shall be limited to the amount that the Administrative Committee
determines is reasonably necessary to meet the Participant's requirements
resulting from the Financial Hardship.  The amount of such distribution shall
reduce the Participant's Account balance as provided in Section 3.4.

          (b) DISTRIBUTIONS WITH FORFEITURE.  Notwithstanding any other
              -----------------------------                            
provision of this Article V to the contrary, a Participant may elect, at any
time prior to termination of his employment with the Controlling Company and all
other members of the Controlled Group, to receive a distribution of a portion of
the total of (i) the entire vested amount credited to his Account, determined as
of the Valuation Date on which such distribution is processed; plus (ii) the
                                                               ----         
vested amount of Deferral Contributions and Matching Contributions made since
such Valuation Date; and minus (iii) the amount of any distributions made to the
                         -----                                                  
Participant since such Valuation Date.  Such distribution shall be made in the
form of a single-sum payment in cash as soon as administratively feasible after
the date of the Participant's election under this subsection (b).  At the time
such distribution is made, an amount equal to 10% of the amount distributed
shall be permanently and irrevocably forfeited (and, if the distribution request
is for 90% or more of such Participant's Account, the forfeiture amount shall be
deducted from his distribution amount to the extent there otherwise will be an
insufficient remaining Account balance from which to deduct this forfeiture).
In addition, the Participant receiving such distribution shall immediately cease
to actively participate in the Plan and shall not be eligible to resume active
participation in the Plan for a period of 1 year after such distribution.  Such
Participant may resume active participation in the Plan on the first day of the
calendar month coincident with or next following the 1-year anniversary of such
distribution by making a new Deferral Election and satisfying any other
procedures for admission under Section 2.2.  If the Participant fails to make a
new Deferral Election before the date he is eligible to resume active
participation in the Plan, he shall be deemed to have elected not to participate
in the Plan for 

                                       15
<PAGE>
 
the remainder of that Plan Year.

     5.5  BENEFICIARY DESIGNATION.
          ----------------------- 

          (a)  GENERAL.  Participants shall designate and from time to time may
               -------                                                         
redesignate their Beneficiaries in such form and manner as the Administrative
Committee may determine.

          (b)  NO DESIGNATION OR DESIGNEE DEAD OR MISSING.  In the event that:
               ------------------------------------------                     

               (1) a Participant dies without designating a Beneficiary;

               (2) the Beneficiary designated by a Participant is not surviving
     when a payment is to be made to such person under the Plan, and no
     contingent Beneficiary has been designated; or

               (3) the Beneficiary designated by a Participant cannot be located
     by the Administrative Committee within 1 year from the date benefits are to
     be paid to such person;

then, in any of such events, the Beneficiary of such Participant with respect to
any benefits that remain payable under the Plan shall be the Participant's
Surviving Spouse, if any, and if not, the estate of the Participant.

     5.6  TAXES.
          ----- 

          If the whole or any part of any Participant's or Beneficiary's benefit
hereunder shall become subject to any estate, inheritance, income or other tax
which the Participating Companies shall be required to pay or withhold, the
Participating Companies shall have the full power and authority to withhold and
pay such tax out of any monies or other property in its hand for the account of
the Participant or Beneficiary whose interests hereunder are so affected.  Prior
to making any payment, the Participating Companies may require such releases or
other documents from any lawful taxing authority as it shall deem necessary.
Notwithstanding anything in the Plan to the contrary, the distribution of a
Participant?s benefit hereunder prior to his termination of employment with the
Company shall be limited to an amount that would not cause the Participant to
receive compensation that the Administrative Committee determines would not be
deductible under Code Section 162(m).

                                       16
<PAGE>
 
                                  ARTICLE VI
                                    CLAIMS
                                    ------

     6.1  CLAIMS.
          ------ 

          (a) INITIAL CLAIM.  Claims for benefits under the Plan may be filed
              -------------                                                  
with the Administrative Committee on forms or in such other written documents,
as the Administrative Committee may prescribe.  The Administrative Committee
shall furnish to the claimant written notice of the disposition of a claim
within 90 days after the application therefor is filed.  In the event the claim
is denied, the notice of the disposition of the claim shall provide the specific
reasons for the denial, citations of the pertinent provisions of the Plan, and,
where appropriate, an explanation as to how the claimant can perfect the claim
and/or submit the claim for review.

          (b) APPEAL.  Any Participant or Beneficiary who has been denied a
              ------                                                       
benefit shall be entitled, upon request to the Administrative Committee, to
appeal the denial of his claim.  The claimant (or his duly authorized
representative) may review pertinent documents related to the Plan and in the
Administrative Committee's possession in order to prepare the appeal.  The
request for review, together with written statement of the claimant's position,
must be filed with the Administrative Committee no later than 60 days after
receipt of the written notification of denial of a claim provided for in
subsection (a).  The Administrative Committee's decision shall be made within 60
days following the filing of the request for review.  If unfavorable, the notice
of the decision shall explain the reasons for denial and indicate the provisions
of the Plan or other documents used to arrive at the decision.

          (c) SATISFACTION OF CLAIMS.  Any payment to a Participant or
              ----------------------                                  
Beneficiary shall to the extent thereof be in full satisfaction of all claims
hereunder against the Administrative Committee and the Participating Companies,
any of whom may require such Participant or Beneficiary, as a condition to such
payment, to execute a receipt and release therefor in such form as shall be
determined by the Administrative Committee or the Participating Companies.  If
receipt and release is required but the Participant or Beneficiary (as
applicable) does not provide such receipt and release in a timely enough manner
to permit a timely distribution in accordance with the general timing of
distribution provisions in the Plan, the payment of any affected distribution
may be delayed until the Administrative Committee or the Participating Companies
receive a proper receipt and release.

                                       17
<PAGE>
 
                                  ARTICLE VII
                            SOURCE OF FUNDS; TRUST
                            ----------------------

     7.1  SOURCE OF FUNDS.
          --------------- 

          Except as provided in this Section and Section 7.2 (relating to the
Trust), each Participating Company shall provide the benefits described in the
Plan from its general assets.  However, to the extent that funds in such Trust
allocable to the benefits payable under the Plan are sufficient, the Trust
assets may be used to pay benefits under the Plan.  If such Trust assets are not
sufficient to pay all benefits due under the Plan, then the appropriate
Participating Company shall have the obligation, and the Participant or
Beneficiary, who is due such benefits, shall look to the such Participating
Company to provide such benefits.

     7.2  TRUST.
          ----- 

          (a) ESTABLISHMENT.  To the extent determined by the Controlling
              -------------                                              
Company, the Participating Companies shall transfer the funds necessary to fund
benefits accrued hereunder to the Trustee to be held and administered by the
Trustee pursuant to the terms of the Trust Agreement.  Except as otherwise
provided in the Trust Agreement, each transfer into the Trust Fund shall be
irrevocable as long as a Participating Company has any liability or obligations
under the Plan to pay benefits, such that the Trust property is in no way
subject to use by the Participating Company; provided, it is the intent of the
Controlling Company that the assets held by the Trust are and shall remain at
all times subject to the claims of the general creditors of the Participating
Companies.

          (b) DISTRIBUTIONS.  Pursuant to the Trust Agreement, the Trustee shall
              -------------                                                     
make payments to Plan Participants and Beneficiaries in accordance with the
terms of the Plan.  The Participating Company shall make provisions for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by the Participating Company.

          (c) STATUS OF THE TRUST. No Participant or Beneficiary shall have any
              -------------------                                              
interest in the assets held by the Trust or in the general assets of the
Participating Companies other than as a general, unsecured creditor.
Accordingly, a Participating Company shall not grant a security interest in the
assets held by the Trust in favor of the Participants, Beneficiaries or any
creditor.

                                       18
<PAGE>
 
                                 ARTICLE VIII
                           ADMINISTRATIVE COMMITTEE
                           ------------------------

     8.1  ACTION.
          ------ 

          Action of the Administrative Committee may be taken with or without a
meeting of committee members; provided, action shall be taken only upon the vote
or other affirmative expression of a majority of the committee members qualified
to vote with respect to such action.  If a member of the committee is a
Participant or Beneficiary, he shall not participate in any decision which
solely affects his own benefit under the Plan.  For purposes of administering
the Plan, the Administrative Committee shall choose a secretary who shall keep
minutes of the committee's proceedings and all records and documents pertaining
to the administration of the Plan.  The secretary may execute any certificate or
any other written direction on behalf of the Administrative Committee.

     8.2  RIGHTS AND DUTIES.
          ----------------- 

          The Administrative Committee shall administer the Plan and shall have
all powers necessary to accomplish that purpose, including (but not limited to)
the following:

          (a) To construe, interpret and administer the Plan;

          (b) To make determinations required by the Plan, and to maintain
records regarding Participants' and Beneficiaries' benefits hereunder;

          (c) To compute and certify to the Participating Companies the amount
and kinds of benefits payable to Participants and Beneficiaries, and to
determine the time and manner in which such benefits are to be paid;

          (d) To authorize all disbursements by the Participating Companies
pursuant to the Plan;

          (e) To maintain all the necessary records of the administration of the
Plan;

          (f) To make and publish such rules for the regulation of the Plan as
are not inconsistent with the terms hereof;

          (g) To delegate to other individuals or entities from time to time the
performance of any of its duties or responsibilities hereunder;

          (h) To hire agents, accountants, actuaries, consultants and legal
counsel to assist in operating and administering the Plan.

                                       19
<PAGE>
 
The Administrative Committee shall have the exclusive right to construe and
interpret the Plan, to decide all questions of eligibility for benefits and to
determine the amount of such benefits, and its decisions on such matters shall
be final and conclusive on all parties.

     8.3  COMPENSATION, INDEMNITY AND LIABILITY.
          ------------------------------------- 

          The Administrative Committee and its members shall serve as such
without bond and without compensation for services hereunder.  All expenses of
the Administrative Committee shall be paid by the Participating Companies.  No
member of the committee shall be liable for any act or omission of any other
member of the committee, nor for any act or omission on his own part, excepting
his own willful misconduct.  The Participating Companies shall indemnify and
hold harmless the Administrative Committee and each member thereof against any
and all expenses and liabilities, including reasonable legal fees and expenses,
arising out of his membership on the committee, excepting only expenses and
liabilities arising out of his own willful misconduct.

                                       20
<PAGE>
 
                                  ARTICLE IX
                           AMENDMENT AND TERMINATION
                           -------------------------

     9.1  AMENDMENTS.
          ---------- 

          The Administrative Committee shall have the right, in its sole
discretion, to amend the Plan in whole or in part at any time and from time to
time.  Any amendment shall be in writing and executed by a duly authorized
officer of the Controlling Company.  An amendment to the Plan may modify its
terms in any respect whatsoever, and may include, without limitation, a
permanent or temporary freezing of the Plan such that the Plan shall remain in
effect with respect to existing Account balances without permitting any new
contributions; provided, no such action may reduce the amount already credited
to a Participant's Account without the affected Participant's written consent.
All Participants and Beneficiaries shall be bound by such amendment.

     9.2  TERMINATION OF PLAN.
          ------------------- 

          The Controlling Company reserves the right to discontinue and
terminate the Plan at any time, for any reason.  Any action to terminate the
Plan shall be taken by the Board in the form of a written Plan amendment
executed by a duly authorized officer of the Controlling Company.  If the Plan
is terminated, each Participant shall become 100 percent vested in his Account
which shall be distributed in a single-sum payment in cash as soon as
practicable after the date the Plan is terminated.  The amount of any such
distribution shall be determined as of the Valuation Date such termination
distribution is to be processed.  Such termination shall be binding on all
Participants and Beneficiaries.

                                       21
<PAGE>
 
                                   ARTICLE X
                                 MISCELLANEOUS
                                 -------------

     10.1 TAXATION.
          -------- 

          It is the intention of the Controlling Companies that the benefits
payable hereunder shall not be deductible by the Participating Companies nor
taxable for federal income tax purposes to Participants or Beneficiaries until
such benefits are paid by the Participating Companies, or the Trust, as the case
may be, to such Participants or Beneficiaries.  When such benefits are so paid,
it is the intention of the Participating Companies that they shall be deductible
by the Participating Companies under Code Section 162.

     10.2 NO EMPLOYMENT CONTRACT.
          ---------------------- 

          Nothing herein contained is intended to be nor shall be construed as
constituting a contract or other arrangement between a Participating Company and
any Participant to the effect that the Participant will be employed by the
Participating Company for any specific period of time.

     10.3 HEADINGS.
          -------- 

          The headings of the various articles and sections in the Plan are
solely for convenience and shall not be relied upon in construing any provisions
hereof.  Any reference to a section shall refer to a section of the Plan unless
specified otherwise.

     10.4 GENDER AND NUMBER.
          ----------------- 

          Use of any gender in the Plan will be deemed to include all genders
when appropriate, and use of the singular number will be deemed to include the
plural when appropriate, and vice versa in each instance.

     10.5 ASSIGNMENT OF BENEFITS
          ----------------------

          The right of a Participant or his Beneficiary to receive payments
under the Plan may not be anticipated, alienated, sold, assigned, transferred,
pledged, encumbered, attached or garnished by creditors of such Participant or
Beneficiary, except by will or by the laws of descent and distribution and then
only to the extent permitted under the terms of the Plan.

     10.6 LEGALLY INCOMPETENT.
          ------------------- 

          The Administrative Committee, in its sole discretion, may direct that
payment be made to an incompetent or disabled person, whether because of
minority or mental or physical disability, to the guardian of such person or to
the person having custody of such person, without further liability on the part
of a Participating Company for the amount of such payment to the person on whose
account such payment is made.

     10.7 GOVERNING LAW.
          ------------- 

                                       22
<PAGE>
 
          The Plan shall be construed, administered and governed in all respects
in accordance with applicable federal law (including ERISA) and, to the extent
not preempted by federal law, in accordance with the laws of the State of
Georgia.  If any provisions of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
hereof shall continue to be fully effective.

     IN WITNESS WHEREOF, the Controlling Company has caused the Plan to be
executed by its duly authorized officer as of this _________ day of December,
1997.

                             AFC ENTERPRISES, INC.


                                      By:________________________________

                                         Title:__________________________

                                       23
<PAGE>
 
                                   EXHIBIT A

                            PARTICIPATING COMPANIES
                            -----------------------
                                (See [_] 1.22)


COMPANY NAMES                                           EFFECTIVE DATE
-------------                                           --------------

AFC Enterprises, Inc.                                   January 1, 1998

                                      A-1