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                                                                  EXHIBIT 10.13


                             JEFFERIES GROUP, INC.

                                 UNITED KINGDOM

                           CAPITAL ACCUMULATION PLAN
                               FOR KEY EMPLOYEES

                                 DECEMBER 1996


1       PURPOSE OF THE PLAN

        The purposes of the Jefferies Group, Inc. United Kingdom Capital
Accumulation Plan for Key Employees (the "Plan") are to advance the interests
of the Company and to increase stockholder value by providing certain of the
Company's officers and other key employees who are working in the United
Kingdom with an incentive to acquire and increase their proprietary interest in
the Company, and by providing an additional programme that will help to attract
and retain qualified officers and key employees.

2       DEFINITIONS

As used in the Plan, the following terms shall have the meanings set forth
below:

        2.1     "Available Shares" means the shares of Common Stock purchased
by the Company in the open market for purposes of the Plan, designated as such
by the Committee, which are held by the Company at any one time and over which
Options have not previously been granted to any Participant under the Plan,
subject to Section 5.1.

        2.2     "Beneficiary" means the beneficiary or beneficiaries designated
by a Participant, pursuant to the terms of the Plan, to receive the amounts, if
any, payable following the death of such Participant, and to exercise Options
following the death of such Participant.

        2.3     "Board" means the Board of Directors of Jefferies Group, Inc.

        2.4     "Cash Balance Account" and "Profit-Based Deferred Compensation
Account" means the memorandum accounts established for a Participant in
accordance with Section 7.

        2.5     "Committee" means the Compensation Committee of the Board and
such other committee of persons nominated by the Compensation Committee and
delegated authority under Section 3.3 hereof.

        2.6     "Common Stock" means the Common Stock of the Company, $0.01 par
value, and such other securities as may be substituted for Common Stock or such
other securities pursuant to Section 7.8.

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        2.7     "Company" means Jefferies Group, Inc., its subsidiaries and
affiliates, if any, unless used in conjunction with "Common Stock", in which
case it means Jefferies Group, Inc.

        2.8     "Director" means a member of the Board.

        2.9     "Disability" means the inability to substantially perform the
usual duties of the person's occupation by reason of a medically determinable
physical or mental impairment which can be expected to be of long, continued
and indefinite duration, as determined by the Committee.

        2.10    "Enrolment Period" means the thirty-day period, or other period
specified by the Committee, following notification by the Committee of an
officer's or other key employee's selection in respect of a given calendar year
to become a Participant in the Plan. The Committee may, in its discretion,
require that the Enrolment Period with respect to any calendar year will expire
six months or more before the time Options will first be granted to a
Participant under Section 7.4 hereof in such year, in order to comply with Rule
16b-3(d)(1)(i) (or a successor to such Rule) promulgated under the Securities
Exchange Act. In any case the Enrolment Period shall end prior to the
commencement of the year to which the Plan Election relates or, in the case of
an employee joining the Company or transferring to the United Kingdom, the
Enrolment Period shall end prior to his commencing employment.

        2.11    "Exercise Price" means the price per share payable by a
Participant on the exercise of an Option to acquire shares which the Exercise
Price shall equal seventeen percent (17%) of the average cost per Share (as
determined by the Committee) incurred by the Company in purchasing the
Available Shares as at the date on which that Option is granted.

        2.12    "Fair Market Value", as of any date, means the mean of the
closing bid/ask prices of the Common Stock as reported on the NASDAQ National
market as determined on a daily basis and averaged over the day as of which the
valuation is to be made and the four trading days immediately prior thereto.

        2.13    "Investment Letter" means a letter, in a form approved by the
Committee, by which a Participant makes such representations and agreements as
the Committee may deem advisable in order to ensure that the Plan and
transactions thereunder comply with applicable United States, United Kingdom
and other laws and regulations.

        2.14    "Option" means a right to acquire Shares granted under the
Plan, which right is granted to a Participant under the provisions of the Stock
Ownership Plan as a Non-Qualified Stock Option (as defined under the Stock
Ownership Plan).

        2.15    "Option Divisor" means the number resulting when the Exercise
Price of Options to be granted on a given date is subtracted from eighty-five
percent (85%) of the average cost per share of Available Shares designated as
of that date. For the purposes of calculating the Option Divisor, the average
cost per share of Available Shares shall be converted to sterling using the
average exchange rate, as determined by the Committee, for the quarter that
includes the date on which the Option Divisor is being determined.


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        2.16    "Participant" means an officer or other key employee of the
Company who has been selected for participation by the Committee and who has
executed a Plan Election for a given calendar year.

        2.17    "Plan" means the Jefferies Group, Inc. United Kingdom Capital
Accumulation Plan for Key Employees.

        2.18    "Plan Election" means an agreement filed during the Enrolment
Period in respect of any calendar year that constitutes an election to (a)
become a Participant in the Plan in respect of such year; (b) forgo receipt of
annual compensation; and (c) accept the terms and conditions of the Plan in
connection with such forgoing.

        2.19    "Plan Term" means the period commencing on 1 January in any
calendar year in respect of which a Plan Election has been filed ("the
commencement date") and ending on 15 February immediately following the fourth
anniversary of the commencement date (where the Participant has so elected) or
15 February immediately following the fifth anniversary (where the Participant
has so elected) or 15 February immediately following the six anniversary of the
commencement date (where the Participant has so elected); provided, however,
that the expiration of the Plan Term will be accelerated to an earlier date in
the circumstances set forth in Sections 6.6, 8.4, 8.7 and 17.2.

        2.20    "Registration Statement" means the form required under the
United States Securities Act of 1933, as amended, pursuant to which any offer
or sale of Common Stock or other securities of the Company may be registered
for purposes of this Plan.

        2.21    "Reporting Person" means a Participant who is then subject to
the reporting requirements of Section 16(a) of the Securities Exchange Act with
respect to equity securities of the Company.

        2.22    "Rules" means the rules of the Plan as set out herein.

        2.23    "Securities Exchange Act" means the United States Securities
Exchange Act of 1934, as amended and the rules and regulations promulgated
thereunder.

        2.24    "Share" means a share of Common Stock.

        2.25    "Stock Ownership Plan" means the Jefferies Group, Inc. 1993
Stock Ownership and Long-Term Incentive Plan.

        2.26    "Valuation Date" means the last day of a fiscal month or year
of the Company as determined by the Committee under uniform rules, immediately
preceding a distribution under the Plan.

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3       ADMINISTRATION

        3.1     The Plan shall be administered and interpreted by the
Committee. Where an Option is granted in accordance with these Rules of the
Stock Ownership Plan shall also apply in connection with the Option, and if
there is any doubt as to which rules apply in particular circumstances these
Rules shall take precedence, except to the extent that these Rules may
contravene the Stock Ownership Plan.

        3.2     The Committee shall have the authority to (a) establish such
additional rules and regulations as it deems necessary for the proper operation
and administration of the Plan; (b) select in its absolute discretion the
officers and other key employees of the Company who are working in the United
Kingdom to participate in the Plan; (c) engage such professional advisors, who
may or may not already be rendering services to the Company, as it shall
require or may deem advisable for purposes of the Plan, and make use of such
agents and clerical or other personnel as it shall require or may deem
advisable for purposes of the Plan; (d) determine amounts to be credited to
Participant memorandum accounts; and (e) make any other determination or take
any other action that the Committee is authorised to take under the Plan or
that the Committee may deem necessary or desirable for the administration of
the Plan.

        3.3     The Committee may delegate to officers or managers of the
Company the authority, subject to such terms as the Committee shall determine,
to perform administrative functions and, in respect of officers and key
employees who are not Reporting Persons and who are eligible under Section 4
hereof, to perform all functions of the Committee under the Plan other than
those specifically excluded by the terms of such delegation.

        3.4     Any decision, interpretation or other action made or taken in
good faith by or at the direction of the Company, the Board, or the Committee
(or any of its members, pursuant to any authority duly delegated to any such
member) arising out of or in connection with the Plan shall be within the
absolute discretion of any or all of them, as the case may be and shall be
final, binding and conclusive on the Company and all employees and Participants
and their respective beneficiaries, heirs, executors, administrators,
successors and assigns (subject to the terms of any Committee delegation).

4       ELIGIBILITY

        4.1     Officers and other key employees of the Company who are, at the
time of selection, working in the United Kingdom and who are responsible for or
contribute to the management, growth and profitability of the business of the
Company are eligible to participate in the Plan, subject to their selection by
the Committee and provided that such individual elects irrevocably to forgo
annual compensation pursuant to the terms of the Plan, and agrees (a) to
execute such documents and (b) to accept such restrictions, including, but not
limited to, the execution of an Investment Letter, as the Committee, in its
sole discretion, may require.

        4.2     Participation in any given year does not guarantee selection by
the Committee for participation in any subsequent year. Eligible officers and
other key employees selected for participation will be notified each year of
their selection by the Committee.

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5       SHARES RESERVED FOR ISSUANCE UNDER THE PLAN IN CONJUNCTION WITH THE
        STOCK OWNERSHIP PLAN

        5.1     Shares issued under the Plan shall be counted against shares
available under the Stock Ownership Plan. Neither new nor treasury shares of
Company's Common Stock held as of the date of adoption of the Plan shall be
used or reserved for issuance under the Plan. Shares will not be deemed
Available Shares under the Plan if and to the extent that such shares exceed
the limitation on shares available under the Stock Ownership Plan.

        5.2     The Company shall, from time to time, purchase Shares in the
open market during the term of the Plan for issuance to Participants on
exercise of Options in accordance with the terms hereof and of the Stock
Ownership Plan. The Company will specifically designate all such Shares at the
time they are purchased as Available Shares having been purchased for the
purpose of granting Options under the Plan; provided, however, that prior to
exercise by Participants of Options granted under the Plan, any such Available
Shares so purchased shall be the sole property of the Company, and no
Participant or Beneficiary shall have any right, title or interest whatsoever
in or to any such Shares.

        5.3     The acquisition of Common Stock, as described herein, will be
made on behalf of the Company solely under the direction of the Committee,
subject to applicable law.

6       FORGOING OF COMPENSATION

        6.1     Each officer or other key employee selected for participation
in the Plan may elect to participate by executing and filing a Plan Election
with the Committee during the Enrolment Period, in a form and manner approved
by the Committee.

        6.2     The Plan Election shall indicate the amount the Participant is
required to forgo pursuant to the Plan and the Plan Term.

        6.3     The amount that must be forgone by any Participant for any
calendar year, shall be an amount equal to the sum of (a) 10% of the first
200,000 pound sterling of the Participant's annual compensation in respect of
duties performed in the United Kingdom, plus (b) 15% of the next 200,000 pound
sterling of the Participant's annual compensation in respect of duties
performed in the United Kingdom, plus (c) 20% of the Participant's annual
compensation over 400,000 pound sterling in respect of duties performed in the
United Kingdom. The preceding notwithstanding, the Committee may set a limit on
the amount of compensation which may be deferred in a year.

        6.4     In the event an officer or other key employee does not elect to
participate or otherwise does not file a Plan Election within the Enrollment
Period in respect of a calendar year, such officer or other key employee shall
not be a Plan Participant in respect of such a calendar year but such event will
have no effect on Plan Elections filed in prior or subsequent years, if any.

        6.5     The election to forgo annual compensation pursuant to a Plan
Election, once made, is irrevocable and not subject to cancellation by the
Participant for any reason whatsoever, including, but not limited to, upon
termination of the Participant's employment, 

         

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except as expressly provided herein. However, the Committee may consider a
written request by a Participant, to discontinue participation in the Plan for a
particular Plan Term based on an emergency or other unforeseen circumstance
which causes substantial economic hardship to the Participant. The Committee
shall retain sole and absolute discretion to determine whether a Participant's
request to discontinue participation shall be granted, and the terms and
conditions, if any, including, but not limited to, whether any accrued amounts
will be paid out prior to the expiration of the Plan Term and the timing and
amount thereof, a financial penalty imposed, or reimbursement required of any
cost incurred by the Company to process the request (which penalty or
reimbursement shall not exceed the amounts accrued to the Participant's Plan
accounts under Section 7.3, 7.6 and 7.7), on which the request shall be granted.
The Committee's decision to allow one Participant to discontinue participation
in the Plan shall not require the Committee to act similarly with respect to a
request by any other Participant, whether or not such Participant is in similar
circumstances or assert the same or similar reasons for such relief. On electing
irrevocably to forgo annual compensation pursuant to the Plan a Participant
shall have no rights whatsoever in respect of the amount forgone except as
provided in the Plan (including Section 8.7 hereof).

        6.6     Notwithstanding anything to the contrary set forth above in
this Section 6, the Committee may modify the terms of the Plan Election,
Enrolment Period or Plan Term, if the Committee believes that such
modifications are necessary in order to comply with the rules and regulations
of the United States Securities and Exchange Commission, or any other
governmental authority, or otherwise to assure that the purposes and objectives
of the Plan are met.

7       PLAN ACCOUNTS

        7.1     The Company shall maintain two memorandum accounts for each
Participant under the Plan. These shall consist of a Cash Balance Account and a
Profit-Based Deferred Compensation Account.

        7.2     Forty percent (40%) of the compensation forgone by a
Participant shall be credited to the Participant's Cash Balance Account as of
the date such compensation would have been paid to the Participant had it not
been forgone pursuant to the terms of the Plan. The remaining sixty percent
(60%) of the compensation forgone by a Participant shall be credited to the
Participant's Profit-Based Deferred Compensation Account as of the date such
compensation would have been paid to the Participant had it not been forgone
pursuant to the terms of the Plan.

        7.3     At the end of each calendar quarter, the Company shall credit
each Cash Balance Account with interest equal to the amount determined by
multiplying (a) the average percentage the Company paid on its margin accounts
carrying credit balances during such calendar quarter, by (b) the daily
weighted average amount of such Cash Balance Account (such weighted average to
be determined by adding the amounts in the Participant's Cash Balance Account on
each day during such quarter and dividing the total so obtained by the number
of days in such quarter); provided, however, that interest will be credited
only if there shall exist a balance in the Cash Balance Account on the last day
of such calendar quarter.
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        7.4     If there shall exist a balance in the Cash Balance Account of
any Participant on the last day of any calendar quarter, the Committee shall
grant Options to the Participant over Common Stock such that the whole number of
Shares over which Options are granted is calculated by dividing that balance in
the Cash Balance Account by the Option Divisor. Notwithstanding the foregoing,
if the aggregate number of Options that would otherwise be granted to all
Participants pursuant to this section would exceed the number of Available
Shares, then the aggregate number of Options to be granted to all Participants
shall be limited to the number of Available Shares and such aggregate number of
Options shall be granted on a pro rata basis, based on the respective balance in
the Cash Balance Account of each Participant.

        7.5     Each Participant's Cash Balance Account shall be reduced on the
last day of each calendar quarter by an amount equal to the product of the
number of Shares over which Options were granted to the Participant on that date
and the Option Divisor. If, after such reduction, any balance remains in the
Cash Balance Account, such balance shall be carried forward to the next occasion
on which options are granted by the Committee notwithstanding that the
Participant may not have filed an election in respect of the year in which that
occasion may fall.

        7.6     The Company shall credit each Participant's Cash Balance Account
with an amount determined by multiplying the number of Shares over which Options
have been granted to the Participant in respect of such Cash Balance Account and
remain outstanding on the record date for a dividend or distribution, other than
a dividend or distribution in the form of Common Stock, by an amount equal to
the sterling equivalent amount of cash dividends (as determined by the
Committee) declared per Share, as of the date of payment of such dividends or
distribution, using the exchange rate for that date.

        7.7     Until the end of the third calendar year following the year
compensation is forgone, the Company shall credit or charge as the case may be
the Profit-Based Deferred Compensation Account of each Participant, as of the
last day of each fiscal year, with an amount of deemed "interest" determined by
multiplying (a) 85% of the fully-diluted earnings per share or loss per share as
the case may be of the Company's Common Stock for such fiscal year divided by
the Fair Market Value of the Common Stock determined as of the last trading day
of the preceding fiscal year by (b) the daily weighted average amount of such
Profit-Based Deferred Compensation Account (such weighted average to be
determined by adding the amounts in the Participant's Profit-Based Deferred
Compensation Account on each day during such fiscal year and dividing the total
so obtained by the number of days in such fiscal year).  After the end of the
third calendar year following the year compensation is forgone, amounts credited
to the Profit-Based Deferred Compensation Account will be credited, as of the
last day of each fiscal year of the Company, with deemed interest at an annual
percentage rate equal to (i) the one- or two-year Treasury note rate (depending
upon the number of years remaining in the stated Plan Term), as of [the last day
of the third calendar year following the year the compensation is forgone], plus
(ii) 100 basis points. The foregoing notwithstanding, no interest will be
credited for any calendar year under the Section 7.7 unless there shall exist a
balance in the Profit-based Deferred Compensation Account on the last day of
such calendar year.

        7.8     If there shall be any other change in the number or kind of
outstanding shares of the Company's Common Stock as a result of a stock split,
dividend or distribution in 


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the form of property other than cash, recapitalization, combination of shares,
merger, consolidation or otherwise, the number and kind of Shares over which
Options have been granted to each Participant and the Exercise Price thereof
shall be equitably adjusted (as determined by the Committee in its sole
discretion) to reflect such event. In such case, the average cost per share of
Available Shares, if any, on the date of such event shall also be equitably
adjusted for purposes of calculating the number of Shares over which Options may
be granted to a Participant pursuant to Section 7.4 above.

        7.9     Once a Cash Balance Account or Profit-Based Deferred
Compensation Account has been established in respect of any Participant, or an
Option has been granted to such Participant, such accounts and Options cannot
be withdrawn or cancelled by any unilateral action of the Company; provided,
however, that the establishment and maintenance of, or credits to, such
memorandum Accounts shall not entitle any Participant or his Beneficiary to any
right, title or interest in or to any specific asset of the Company. A
Participant will not forfeit Options solely because of a termination of the
Participant's employment (although the termination of the Plan Term may occur
in accordance with Section 8.6, which may also accelerate the expiration of an
Option). 

8       PAYMENT AT THE END OF THE PLAN TERM

        8.1     Within two months after the end of the applicable Plan Term
(including an accelerated expiration as provided under Section 6.6,8 and 17.2),
a Participant shall be entitled to exercise the Options granted to him under
this Plan in respect of such Plan Term in accordance with the procedures set out
in the Stock Ownership Plan, rules under the Plan and the Option agreement. No
Option shall be exercisable under any circumstances prior to the expiration of
the Plan Term in respect of which the Option was granted, and such Option may be
exercised following the expiration of the Plan Term for a period of (i) two
months if the Plan Term expires at the stated expiration date specified by the
Participant in his or her Plan Election or earlier following the death or
disability of the Participant or under Section 17.2, or (ii) fourteen days if
the Plan Term expires due to the acceleration by the Committee in the event of
hardship of the Participant or otherwise in its discretion under Section 8.6 or
8.7.  The Option will lapse at the end of the specified exercise period
following expiration of the Plan Term.

        8.2     Notwithstanding the provisions of Section 8.3 below if there is
sufficient balance in the Profit Based Deferred Compensation Account and/or the
Cash Balance Account at the end of the Plan Term after deduction of all or any
amounts required to be deducted in accordance with Section 10.3, a Participant
may elect for the Exercise Price in respect of the Option granted to him under
the Plan to be deducted by the Company from the proceeds of the cash payment
referred to in section 8.3 in satisfaction of the Exercise Price payable by him.

        8.3     As soon as practicable after exercise of a Participant's Options
granted under this Plan in connection with a Cash Balance Account relating to a
specified Plan Term (or upon expiration of such Options unexercised), such
Participant shall be entitled to receive from the Company an amount in cash
equal to the sum of (a) the balance in such Cash Balance Account, if any, and
(b) the balance in his Profit-Based Deferred Compensation Account, if any,
relating to such Plan Term.  In the event that cash payments due under this
Section 8.3 are not 

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made within fourteen days after the Participant has exercised his Options, the
Cash Balance Account and the Profit-Based Deferred Compensation Account shall
accrue interest from the day after the end of the Plan Term until the date on
which payment is made at a rate equal to the amount which the Company paid on
its margin accounts carrying credit balances during that period.  The foregoing
notwithstanding, distributions shall be made following the death or Disability
of the Participant in accordance with Section 8.4.

        8.4     In the event of a Participant's death or Disability prior to
the stated expiration of a Plan term, the Plan Term in respect of such
Participant will expire at the end of the calendar year during which such death
or disability occurred.  In such case, the Participant, the Participant's
Beneficiary, or the Participant's estate, as may be appropriate, shall be
entitled to exercise the Options granted to the Participant under this Plan in
respect of such Plan Term during the period specified in Section 8.1, and to
receive from the Company, as soon as practicable thereafter, an amount in cash
equal to the balance in his Cash Balance Account, if any and, as soon as
practicable after the determination of the fully diluted earnings or loss per
share for the fiscal year in which such death or Disability occurred, an amount
in cash equal to the balance in his Profit-Based Deferred Compensation Account,
if any.  In the event that cash payments due under this Section 8.4 are not
made by April 15 of the year following expiration of the Plan term, the Cash
Balance Account and the Profit-Based Deferred Compensation Account shall accrue
interest from the day after the expiration of the Plan Term until the date on
which payment is made at the rate specified in Section 8.3 above.

        8.5     If a Participant's employment with the Company shall terminate
for any reason prior to the end of a Plan Term (other than by reason of death
or Disability), then the Participant shall, unless otherwise determined by the
Committee, as hereinafter provided, continue to be bound by and be subject to,
all the terms and provisions of the Plan.

        8.6     Notwithstanding the provisions of Section 8.5 above the
Committee shall have the right in its sole discretion to accelerate the end of
a Plan Term, with respect to all Plan Terms of a Participant whose employment
with the Company terminates other than due to death or Disability, to the last
day of the calendar quarter during which such termination occurs or to any
subsequent date deemed appropriate by the Committee. The date determined by the
Committee shall be deemed to be the expiration of the Plan Term with respect to
all such Plan Terms of the Participant, and a distribution shall be made
pursuant to Section 8.3 above.

        8.7     In the event of hardship, change in tax laws or other
unforeseen circumstances, the Committee may in its absolute discretion
accelerate the expiration of any Plan Term of any Participant to the last day
of any calendar quarter, in which case, the date determined by the Committee
shall be deemed to be the expiration of the Plan Term with respect to any or
all such Plan Terms of the Participant, and a distribution shall be made
pursuant to Section 8.3 above.

        8.8     In the event that the Committee so determines pursuant to
Section 8.6 or 8.7, above the Committee shall notify the Participant of the
date which is deemed to be the expiration of a specified Plan Term on or before
that date, and the Participant shall be entitled to exercise the Options
granted to him under this Plan in accordance with the Section 8.1 above.

<PAGE>   10
        8.9     Notwithstanding the preceding, if so required to comply with
Securities Exchange Act Rule 16b-3 no shares of Common Stock acquired upon
exercise of an Option may be sold by any Participant who is a Reporting Person
less than six months after the grant of the Option unless such shares may be
disposed of by such Reporting Person without incurring liability under Section
16(b) of the Securities Exchange Act of 1934.

9.      UNFUNDED PLAN

        The Plan is intended to constitute an "unfunded" plan. Unless otherwise
determined by the Committee, the Plan shall be unfunded and shall not create
(or be construed to create) a trust or a separate fund or funds. To the extent
that any person acquires a right to receive payments from the Company pursuant
to this Plan, such right (unless otherwise determined by the Committee) shall
be no greater than the right of any unsecured general creditor of the Company.

10.     MISCELLANEOUS PROVISIONS RELATED TO PARTICIPANTS

        10.1    Participation in the Plan shall not be construed as giving a
Participant the right to be retained in the employ of the Company. The Company
may at any time dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan.
No Participant or other person shall have any claim to participate, and there
is no obligation for uniformity of treatment of Participants or of a
Participant's Beneficiary.

        10.2    Nothing under the Plan, unless otherwise provided in the Plan,
shall entitle a Participant to any dividend, voting or other right of a
stockholder unless and until the date of delivery under the Plan of the Shares
acquired on exercise of Options.

        10.3    A Participant may be required to pay to the Company, and the
Company shall have the right to deduct from all amounts paid to a Participant
(whether under the Plan or otherwise), any taxes required by law to be paid or
withheld in respect of payments or distributions hereunder to such Participant
or Option exercises by Participants, and any taxes (including Social Security
contributions) required by law to be paid or withheld in respect of
compensation forgone under the Plan. At the election of a Participant, the
Committee may withhold shares or accept the transfer of shares to the Company,
in such amounts as are equivalent to the Fair Market Value of any withholding
obligation arising at the end of the Plan Term. 

        10.4    No right to any amount payable at any time under the Plan may
be assigned, transferred, pledged or encumbered, either voluntarily or by
operation of law, except as expressly provided herein or as may otherwise be
required by law. No Option or other right which may constitute a "derivative
security" within the general definition of Rule 16a-1(c)(3) under the
Securities Exchange Act shall be transferable by a Participant other than by
will or the laws of descent and distribution and any such Options or other
right shall be exercisable during the lifetime of the Participant only by the
Participant or his guardian or legal representative.

<PAGE>   11
11      DESIGNATION OF BENEFICIARIES

        Each Participant may file and maintain with the Company a written
designation of one or more persons as the Beneficiary or Beneficiaries who 
shall be entitled to receive payments or distributions, if any, of cash payable
or to exercise Options under the Plan upon the Participant's death. If no such
designation is in effect at the time of a Participant's death, or if no
designated Beneficiary survives the Participant or if such designation
conflicts with the law, the Participant's estate shall be entitled to receive
such payment, if any, payable and to exercise Options under the Plan upon the
Participant's death.

12      EFFECT ON OTHER PLANS

        Neither the adoption of the Plan nor anything contained in the Plan
shall prevent the Company from adopting or continuing other or additional
compensation arrangement or discontinuing or terminating such arrangements, and
such other arrangements as may be either generally applicable or applicable only
in specific cases.

13      PLAN EXPENSES

        The Company shall pay the fees and expenses of accountants, counsel,
agents and other personnel and all other costs of administration of the Plan,
including brokerage commissions and other costs of repurchasing shares pursuant
to Section 5.2.


14      SEVERABILITY

        If any provision of the Plan or any Plan Election is or becomes or
is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to
any Participant or Plan Election under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or a
Plan Election, such provision shall be stricken as to such jurisdiction or
Participant and the remainder of the Plan and any such Plan Election shall
remain in full force and effect.

15      GOVERNING LAW

        The validity, construction and effect of the Plan, any rules and
regulations relating to the Plan and any Plan Election shall be determined in
accordance with the laws of the State of Delaware and applicable U.S. federal
law. 

16      TERM OF PLAN
                
        The Plan shall remain in effect until terminated by the Committee or
the Board. 

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17      AMENDMENT AND TERMINATION OF THE PLAN

        17.1     The Plan may be amended by the Board in any respect, without
the consent of stockholders or Participants. No amendments may materially
impair the rights of a Participant, other than as may be provided in Sections 8
and 17.2 of the Plan, without the consent of such Participant, unless required
by law.

        17.2     The Plan may be terminated at any time by the Board and the
end of all Plan Terms may be accelerated to a date concurrent with such
termination.