<PAGE>
 
                                                                   EXHIBIT 10.14

                               U.S. FOODSERVICE
                    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                           Effective:  July 1, 1998
                                        
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE> 
<CAPTION> 
                                                                              PAGE
                                                                              ----
<S>                                                                           <C> 
1. DEFINITIONS................................................................  1
2. SHARES SUBJECT TO THE PLAN.................................................  3
3. EMPLOYER CONTRIBUTION......................................................  3
4. DEFERRED COMPENSATION ACCOUNTS.............................................  3
   4.1. Accounts..............................................................  3
   4.2. Company Stock Account.................................................  3
   4.3. Employee Self Directed Account........................................  4
   4.4. Account Credits and Debits............................................  4
   4.5. Trust Accounts........................................................  4
   4.6. Subaccounts...........................................................  4
5. VESTING....................................................................  4
   5.1. General...............................................................  4
   5.2. Retirement; Disability; Death; Termination of Plan;
          Change in Control...................................................  5
   5.3. Change of Control.....................................................  5
   5.4. Good Reason...........................................................  6
   5.5. Termination for Cause.................................................  7
6. INVESTMENT EXPERIENCE......................................................  8
   6.1. Employee Self Directed Account........................................  8
   6.2. Company Stock Account.................................................  8
   6.3. Taxes; Statements.....................................................  9
7. DISTRIBUTIONS..............................................................  9
   7.1. Separation From Service...............................................  9
   7.2. Death; Disability; Retirement......................................... 10
   7.3. Resignation........................................................... 10
   7.4. Hardship.............................................................. 11
   7.5. Change of Control..................................................... 11
   7.6. Form of Payment....................................................... 12
8. ADMINISTRATION............................................................. 12
   8.1. Committee............................................................. 12
   8.2. Rules for Administration.............................................. 12
   8.3. Committee Action...................................................... 12
   8.4. Delegation............................................................ 13
   8.5. Services.............................................................. 13
   8.6. Indemnification....................................................... 13
9. AMENDMENT AND TERMINATION.................................................. 13
10. GENERAL PROVISIONS........................................................ 13
   10.1. Limitation of Rights................................................. 13
   10.2. Employment Rights.................................................... 13
   10.3. Assignment, Pledge or Encumbrance.................................... 14
</TABLE>

                                     - i -
<PAGE>
 
<TABLE>
<CAPTION>

<S>                                                                           <C>
   10.4. Minor or Incompetent................................................. 14
   10.5. Beneficiary.......................................................... 14
   10.6. Binding Provisions................................................... 14
   10.7. Notices.............................................................. 15
   10.8. Governing Law........................................................ 15
   10.9. Pronouns............................................................. 15
   10.10. Withholding......................................................... 15
   10.11. Effective Dates..................................................... 15
</TABLE> 


                                    - ii -
<PAGE>
 
1.   DEFINITIONS

1.1  "Affiliate" means any legal entity controlled, directly or indirectly, by
      ---------                                                               
     U.S. Foodservice.

1.2  "Beneficiary" means any person(s) or legal entity(ies) designated by the
      -----------                                                            
     Participant or otherwise determined in accordance with SECTION 10.5.

1.3  "Board of Directors" means the Board of Directors of the Company.
      ------------------                                              

1.4  "Cause" shall have the meaning set forth in SECTION 5.5.
      -----                                                  

1.5  "Change of Control" shall have the meaning set forth in SECTION 5.3.
      -----------------                                                  

1.6  "Committee" means the Administrative Committee which administers the Plan
      ---------                                                               
     in accordance with SECTION 8.

1.7  "Common Stock" means the common stock, par value $0.01 per share, of the
      ------------                                                           
     Company.

1.8  "Company" means U.S.  Foodservice, a Delaware corporation, or any successor
      -------                                                                   
     thereto.

1.9  "Continuous Service" means the total uninterrupted service of a Participant
      ------------------                                                        
     with the Company or an Affiliate from a measurement date to the date of the
     Participant's Separation from Service.

1.10 "Disability" means the absence of the Participant from the Participant's
      ----------                                                             
     duties with the Participant's Employer on a full-time basis for 180
     consecutive business days as a result of incapacity due to mental or
     physical illness which is determined to be total and permanent by a
     physician selected by the Company or its insurers and acceptable to the
     Participant or the Participant's legal representative.

1.11 "Earnings" for any Plan Year means the base salary of an Eligible Employee
      --------                                                                 
     for such Plan Year, including any authorized deferrals and payroll
     deductions and Target Bonus, but excluding the value of any perquisites,
     stock options, restricted stock or Restricted Stock Units unless granted in
     connection with authorized deferrals.

1.12 "Eligible Employee" for each Plan Year means an officer or other key
      -----------------                                                  
     management employee of the Employer designated by the Compensation
     Committee as eligible to participate in the Plan for such Plan Year or
     portion thereof.

                                       1
<PAGE>
 
1.13 "Employer" means the Company and any Affiliate thereof which shall be
      --------                                                            
     designated by the Board of Directors as a participating employer under the
     Plan.

1.14 "Employer Contribution Account" means any account maintained for a
      -----------------------------                                    
     Participant pursuant to SECTION 4.1.

1.15  "Fair Market Value" means the opening price of a share of Common Stock
       -----------------                                                    
     reported on the New York Stock Exchange (the "NYSE") on the date Fair
     Market Value is being determined, provided that if there is no opening
     price reported on such date, the Fair Market Value of a share of Common
     Stock on such date shall be deemed equal to the closing price as reported
     by the NYSE for the last preceding date on which sales of shares of Common
     Stock were reported.  Notwithstanding the foregoing, in the event that the
     shares of Common Stock are listed upon more than one established stock
     exchange, "Fair Market Value" means the opening price of the shares of
     Common Stock reported on the exchange that trades the largest volume of
     shares of Common Stock on the date Fair Market Value is being determined.

1.16  "Good Reason" shall have the meaning set forth in SECTION 5.4.
       -----------                                                  

1.17 "Participant" for any Plan Year means an Eligible Employee who participates
      -----------                                                               
     in the Plan for that Plan Year in accordance with SECTION 3.

1.18 "Plan" means the U.S.  Foodservice Supplemental Executive Retirement Plan
      ----                                                                    
     as set forth herein and as amended from time to time.

1.19 "Plan Year" means each fiscal year of the Company.
      ---------                                        

1.20 "Prime Rate" means the base rate on corporate loans at large U.S. money
      ----------                                                            
     center commercial banks, as such rate is reported under "Prime Rate" in the
     "Money Rates" section of The Wall Street Journal.
                              ----------------------- 

1.21 "Restricted Stock Unit" means a unit which represents a conditional right
      ---------------------                                                   
     to receive a share of Common Stock in the future.

1.22 "Retirement" means a Participant's Separation from Service on or after
      ----------                                                           
     reaching age 55 other than due to Disability, death or termination for
     Cause.

1.23 "Separation from Service" means termination of a Participant's employment
      -----------------------                                                 
     with the Participant's Employer by reason of Retirement, Disability, death,
     resignation, termination for Cause or otherwise.  Transfer to employment
     with an Affiliate shall not be deemed to be Separation from Service.

                                       2
<PAGE>
 
1.24 "Target Bonus" for any Plan Year means 100% of base salary provided that
      ------------                                                           
     the Target Bonus for any Plan Year is subject to change by the Compensation
     Committee prior to the end of the first quarter of such Plan Year.

1.25 "Trust" means the trust established by the Company that identifies the Plan
      -----                                                                     
     as a plan with respect to which assets are to be held by the Trustee.

1.26 "Trustees" means the trustee or trustees or their successors under the
      --------                                                             
     Trust.

2.   SHARES SUBJECT TO THE PLAN.

     Subject to adjustment as provided in SECTION 6.1, the aggregate number of
shares of  Common Stock that may be made available for distribution to
Participants under the Plan is the sum of (i) 45,000 and (ii) any shares
of Common Stock that are represented by awards under the Company's Restricted
Unit Plan which are forfeited, expire or are canceled with the delivery of
shares or which result in the forfeiture of shares to the Company.  The shares
issuable under the Plan shall be issued pursuant to the U.S. Foodservice 1994
Stock Incentive Plan, and may be authorized but unissued shares, treasury shares
or issued and outstanding shares that are purchased in the open market.

3.   EMPLOYER CONTRIBUTION

     As an initial Employer Contribution, the Employer shall credit to each
Participant's Employer Contribution Account, as of July 1, an amount equal to
the amounts shown on SCHEDULE 1 attached hereto.  The Employer shall credit to
each Participant's Employer Contribution Account an amount equal to 15% of
Earnings for the Plan Year.  Amounts shall be credited to each Participant's
Employer Contribution Account at such times as may be determined by the
Committee, but not less frequently than every three (3) months.

4.   DEFERRED COMPENSATION ACCOUNTS

     4.1.  ACCOUNTS

     Within the Employer Contribution Account, the Committee shall establish a
     Company Stock Account and an Employee Self Directed Account for each
     Participant for all periods during which such Participant participates in
     the Plan.

     4.2. COMPANY STOCK ACCOUNT

     Each Participant's Company Stock Account shall be credited with 50% of the
     Employer Contribution for the relevant period and shall be credited with

                                       3
<PAGE>
 
     dividends deemed attributable to the Restricted Stock Units credited to
     that Account, subject to adjustment as provided in SECTION 6.1.

     4.3. EMPLOYEE SELF DIRECTED ACCOUNT

     Each Participant's Employee Self Directed Account shall be credited with
     50% of the Employer Contribution and shall be credited or debited with any
     amounts deemed attributable to the investment experience of that Account.

     4.4. ACCOUNT CREDITS AND DEBITS

     All amounts credited to each Company Stock Account and Employee Self
     Directed Account shall at all times be the sole and absolute property of
     the Company, subject to the terms of any Trust with respect thereto.  The
     Company Stock Accounts and the Employee Self Directed Accounts shall be
     debited to the extent of any distributions made pursuant to SECTION 7.

     4.5. TRUST ACCOUNTS

     The Committee may cause the Trustee, if any, to maintain and invest
     separate asset accounts or subaccounts corresponding to each Participant's
     Company Stock Account and Employee Self Directed Account.

     4.6. SUBACCOUNTS

     The Committee may establish such subaccounts or separate accounts for each
     Participant as may be appropriate for the proper administration of the
     Plan.

5.   VESTING

     5.1.  GENERAL

     A Participant shall be separately vested in the amount credited to the
     Participant's Employer Contribution Account for each Plan Year, and the
     earnings thereon, in accordance with the following schedule:

<TABLE>
<CAPTION>
            Years of Continuous Service
        From the First Day of the Plan Year    Vested Percentage
        -------------------------------------  -----------------
        <S>                                    <C>
               Less than 1                             0

               At least 1                             20

               At least 2                             40
</TABLE> 

                                       4
<PAGE>
 
<TABLE> 
<CAPTION> 

        <S>                                    <C>

               At least 3                             60

               At least 4                             80

               5 or more                             100

</TABLE>

     provided however, that Participants shall be separately vested in the
     initial contribution amount credited to the Participant's Employer
     Contribution Account as of July 1, 1998, and the earnings thereon, in
     accordance with the following schedule:

<TABLE>
<CAPTION>

         Years of Continuous Service
             From July 1, 1998         Vested Percentage
        -----------------------------  -----------------
        <S>                            <C>
               Less than .5                    0

               At least .5                    20

               At least 1.5                   40

               At least 2.5                   60

               At least 3.5                   80

               4.5 or more                   100
</TABLE>

     5.2.  RETIREMENT; DISABILITY; DEATH; TERMINATION OF PLAN; CHANGE IN CONTROL

     Notwithstanding the provisions of SECTION 5.1, the amount credited to a
     Participant's Employer Contribution Account shall be 100% vested in the
     event of (i) Separation from Service by reason of Retirement, Good Reason
     (as defined below), Disability, or death of a Participant, (ii) termination
     of the Plan or (iii) a "Change of Control" (as defined below).

     5.3. CHANGE OF CONTROL

     "Change of Control" shall mean the happening of any of the following:

     (a)  individuals who, as of the date hereof, constitute the Board of
          Directors (the "Incumbent Board") cease for any reason to constitute
          at least a majority of the Board of Directors; provided, however, that
          any individual becoming a director subsequent to the date hereof whose
          election, or nomination for election by the Company's shareholders,

                                       5
<PAGE>
 
          was approved by a vote of at least a majority of the directors then
          comprising the Incumbent Board shall be considered as though such
          individual were a member of the Incumbent Board, but excluding, for
          this purpose, any such individual whose initial assumption of office
          occurs as a result of an actual or threatened election contest with
          respect to the election or removal of directors or other actual or
          threatened solicitation of proxies or consents by or on behalf of a
          Person (as defined in Paragraph (b) below) other than the Board of
          Directors;

     (b)  any individual, entity or group (within the meaning of Section
          13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act")) (a "Person"), is or becomes the
          beneficial owner (within the meaning of Rule 13d-3 promulgated under
          the Exchange Act) of 50% or more of the Company's stock generally
          entitled to vote for the election of directors ("Voting Stock") or the
          consummation of a reorganization, merger or consolidation or sale or
          other disposition of all or substantially all of the assets of the
          Company or other transaction (a "Business Transaction"), in each case,
          unless, following such Business Transaction, (i) no Person (excluding
          any employee benefit plan (or related trust) of the Company or such
          corporation resulting from such Business Transaction) beneficially
          owns, directly or indirectly, 50% or more of, respectively, the then
          outstanding shares of Voting Stock of the Company or the corporation
          resulting from such Business Transaction and (ii) at least a majority
          of the members of the board of directors of the corporation resulting
          from such Business Transaction were members of the Incumbent Board at
          the time of the execution of the initial agreement, or of the action
          of the Board of Directors, providing for such Business Transaction; or

     (c)  consummation of a complete liquidation or dissolution of the Company.

     5.4.  GOOD REASON

     "Good Reason" shall mean the happening of any of the following:

     (a)  the assignment to the Participant of any duties inconsistent,
          negatively, in any material respect with the Participant's position
          (including status, offices, titles and reporting requirements),
          authority, duties or responsibilities as contemplated by such
          Participant's position and any employment agreement between the
          Participant and the Participant's Employer, or any other action by the
          Employer which results in a diminution in such position, authority,
          duties or responsibilities, excluding for this purpose an isolated,
          insubstantial and inadvertent action not taken in bad faith and which
          is remedied by 

                                       6
<PAGE>
 
          the Employer promptly after receipt of notice thereof given by the
          Participant;

     (b)  any failure by the Employer to comply with any of the provisions
          governing compensation of any employment agreement between the
          Participant and the Employer other than an isolated, insubstantial and
          inadvertent failure not occurring in bad faith and which is remedied
          by the Employer promptly after receipt of notice thereof given by the
          Participant; or

     (c)  any action by the Employer requiring the Participant to be based at
          any office or location outside the metropolitan area of the office at
          which the Participant was based at the time the Participant commenced
          participating in the Plan or requiring the Participant to travel on
          Employer business to a substantially greater extent than required at
          the time the Participant commenced participating in the Plan.

     For purposes of this SECTION 5.4, any good faith determination of "Good
     Reason" made by the Participant shall be conclusive.

     5.5. TERMINATION FOR CAUSE

     If a Participant in the Plan incurs a termination of employment for Cause
     or, in the reasonable judgment of the Board of Directors, has failed to
     comply with the terms of any restrictive covenant of any employment
     agreement between the Participant and the Participant's Employer, the
     Participant shall forfeit all rights to receive any distributions or
     payments under the Plan.    "Cause" means (i) the willful and continued
     failure of the Participant to perform substantially the Participant's
     duties with the Participant's Employer (other than any failure resulting
     from incapacity due to physical or mental illness), after a written demand
     for substantial performance is delivered to the Participant by the Board or
     the Chief Executive Officer of the Company which specifically identifies
     the manner in which the Board of Directors or Chief Executive Officer
     believes that the Participant has not substantially performed the
     Participant's duties, or (ii) the willful engaging by the Participant in
     illegal conduct or gross misconduct which is materially and demonstrably
     injurious to the Employer.  For purposes of this definition, no act or
     failure to act, on the part of the Participant, shall be considered
     "willful" unless it is done, or omitted to be done, by the Participant in
     bad faith or without reasonable belief that the Participant's action or
     omission was in the best interests of the Employer.  Any act, or failure to
     act, based upon authority given pursuant to a resolution duly adopted by
     the Board of Directors or upon instructions of the Chief Executive Officer
     or a senior officer of the Company or based upon the advice of counsel for
     the Company 

                                       7
<PAGE>
 
     shall be conclusively presumed to be done, or omitted to be done, by the
     Participant in good faith and in the best interests of the Employer. The
     cessation of employment of the Participant shall not be deemed to be for
     Cause unless and until there shall have been delivered to the Participant a
     copy of a resolution duly adopted by the affirmative vote of not less than
     three-quarters of the entire membership of the Board of Directors at a
     meeting of the Board of Directors called and held for such purpose (after
     reasonable notice is provided to the Participant and the Participant is
     given an opportunity, together with counsel, to be heard before the Board
     of Directors), finding that, in the good faith opinion of the Board of
     Directors, the Participant has engaged in the conduct described in
     subparagraph (i) or (ii) above, and specifying the particulars thereof in
     detail.

6.   INVESTMENT EXPERIENCE

     6.1.  EMPLOYEE SELF DIRECTED ACCOUNT

     In its sole discretion, the Committee shall designate investments in which
     each Participant's Employee Self Directed Account may be deemed to be
     invested.  From such designated investments each Participant may select
     from time to time the investments in which the Participant's Employee Self
     Directed Account will be deemed to be invested.  Based on such selection,
     the Committee will credit or debit to each Participant's Employee Self
     Directed Account, as provided in SECTIONS 4.3 and 4.4, the amounts by which
     the Participant's Employee Self Directed Account would have increased or
     decreased as if they had been invested in the investments designated by the
     Participant.  The selection of investments is to be used only for the
     purpose of valuing each Participant's Employee Self Directed Account.  The
     Company and the Committee are under no obligation to acquire or provide any
     of the investments designated by a Participant, and any investments
     actually made by the Committee will be made solely in the name of the
     Company and will remain the property of the Company subject to the terms of
     any Trust.  During any period when the Company does not designate
     investments in which each Participant's Employee Self Directed Account may
     be deemed invested, the Company shall credit interest on each Participant's
     Employee Self Directed Account at a rate equivalent to the Prime Rate in
     effect during such period.

     6.2. COMPANY STOCK ACCOUNT

     Each Participant's Company Stock Account shall be deemed to be invested in
     the number of Restricted Stock Units determined by dividing the Fair Market
     Value of the Common Stock on the date the Company Stock Account is credited
     with such Restricted Stock Units into the portion of the Employer

                                       8
<PAGE>
 
     Contribution allocated to the Participant's Company Stock Account.  The
     Committee will credit and adjust each Participant's Company Stock Account,
     as provided in SECTIONS 4.2 and 4.4, in the amounts by which the
     Participant's Company Stock Account would have increased or been adjusted
     if it had been invested in Common Stock.  The deemed investment is to be
     used only for the purpose of valuing each Participant's Company Stock
     Account.  The Company and the Committee are under no obligation to acquire
     or provide any Common Stock, and any investments actually made by the
     Committee will be made solely in the name of the Company and will remain
     the property of the Company subject to the terms of any Trust.  If the
     number of outstanding shares of Common Stock is increased or decreased or
     the shares of Common Stock are changed into or exchanged for a different
     number or kind of shares  or other securities of the Company, in each case
     on account of any recapitalization, reclassification, stock split, reverse
     split, combination of shares, exchange of shares, stock dividend or other
     distribution payable in capital stock, or other increase or decrease in
     such shares effected without receipt of consideration by the Company, the
     number and kinds of shares in which the Company Stock Account is deemed
     invested shall be adjusted proportionately and accordingly by the Company.

     6.3. TAXES; STATEMENTS

     All taxes required to be paid in connection with the deemed investment
     experience of Company Stock Accounts and Employee Self Directed Accounts,
     but not in connection with the distributions to Participants, shall be paid
     by the Employer.  At least as often as 30 days after the last business day
     of each calendar quarter, the Committee shall provide the Participant with
     a statement of the Participant's account, in such reasonable detail as the
     Committee shall deem appropriate, showing the income, gains and losses
     (realized and unrealized), amounts of Employer Contributions, and
     distributions from the Participant's Company Stock Account and Employee
     Self Directed Account since the prior statement.

7.   DISTRIBUTIONS

     7.1.  SEPARATION FROM SERVICE.

          At the time an Eligible Employee commences participation in the Plan,
     such Eligible Employee shall also elect in such manner as approved by the
     Committee one of the following methods for the payment of the vested
     portion of the Participant's Company Stock Account and Employee Self
     Directed Account commencing within five years of the Participant's
     Separation from Service:

                                       9
<PAGE>
 
     (a)  a lump sum payment; or

     (b)  pro-rata annual installment payments for a period not to exceed 15
          years after Separation from Service, with each installment equal to
          the unpaid balance of such accounts divided by the number of remaining
          payments; and, if the Participant dies before all payments are made,
          the remaining payments to be made to the Participant's Beneficiary.

     A Participant may elect one method of payment to such Participant and a
     different method of payment to the Participant's Beneficiary.

     A Participant may request a change of the Participant's election as to the
     method of payment, by written notice to the Committee, subject to approval
     by the Committee in its sole discretion, at any time in a tax year prior to
     the tax year of the Participant's Separation from Service, provided,
     however, if a Participant's Separation from Service for any reason other
     than death occurs less than ninety (90) days following any election or
     request for a change in election of a method of payment to himself, such
     election may be disregarded by the Committee.

     7.2.  DEATH; DISABILITY; RETIREMENT

     Upon a Participant's Separation from Service by reason of the Participant's
     death, Disability or Retirement, the Company shall pay to such Participant,
     or to such Participant's Beneficiary in the case of the Participant's
     death, such Participant's Company Stock Account and Employee Self Directed
     Account as of the date of Separation from Service. Payment shall be made by
     the method and on the date(s) previously elected by the Participant, or in
     the sole discretion of the Committee, in a lump sum.

     Lump sum payments shall be made on the last day of the calendar quarter in
     which the Participant's Separation from Service occurs or on the date
     previously elected by the Participant, if applicable.

     7.3.  RESIGNATION

     Notwithstanding the provisions of SECTION 7.1, upon a Participant's
     Separation from Service by reason of the Participant's resignation, the
     Company shall pay to such Participant the vested portion of the
     Participant's Company Stock Account and Employee Self Directed Account as
     of the Date of Separation from Service resulting from the Participant's
     resignation.

     Payment shall be made to the Participant in a single lump sum on the last
     day of the calendar quarter in which the Participant's resignation occurs.

                                       10
<PAGE>
 
     Notwithstanding the foregoing, at the Participant's request, the Committee,
     at its option, may defer payment of the Participant's then vested Company
     Stock Account and Employee Self Directed Account to the time(s) previously
     selected by such Participant pursuant to SECTION 7.1. In the event of the
     Participant's death, the balance of such accounts shall be distributed in
     accordance with SECTION 7.2.

     7.4.  HARDSHIP

     (a)  Upon application by a Participant and approval thereof by the
          Committee, the Participant may withdraw, upon a showing of hardship,
          part or all of the amount vested in the Participant's Company Stock
          Account and Employee Self Directed Account.

     (b)  For purposes of SECTION 7.4(A), "hardship" shall mean severe financial
          hardship to a Participant resulting from a sudden and unexpected
          illness or accident of the Participant or of a dependent (as defined
          in Section 152(a) of the Internal Revenue Code of 1986, as amended) of
          the Participant, 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, which
          hardship may not be relieved through reimbursement or compensation by
          insurance or otherwise or by liquidation of the Participant's assets
          (to the extent such liquidation would not itself cause severe
          financial hardship).

     7.5.  CHANGE OF CONTROL.

     Notwithstanding anything to the contrary contained in this Plan, upon the
     consummation, of a Change of Control as defined in SECTION 5.3, each
     Participant's Company Stock Account shall be immediately vested and
     distributed to such Participant in a lump sum distribution within 15 days
     following the consummation of such Change in Control.   Notwithstanding
     anything to the contrary contained in this Plan, upon the consummation, of
     a Change of Control as defined in SECTION 5.3, each Participant's Employee
     Self-Directed Account shall be immediately vested and distributed to such
     Participant in a lump sum distribution within 15 days following
     Participant's Separation from Service subsequent to consummation of such
     Change in Control, or, in the event there is a Trust in effect with respect
     to the Plan, in accordance with the terms of the Trust.  For purposes of
     this SECTION 7.5, a Participant will be deemed to have Separated from
     Service if the Participant is providing services for less than 20 hours per
     week.

                                       11
<PAGE>
 
     7.6. FORM OF PAYMENT.

     (a)  The value of the Employee Self-Directed Account shall be distributed
          to the Participant in cash.

     (b)  The value of the Company Stock Account shall be distributed to the
          Participant in shares of Common Stock, provided, however that cash
          will be distributed in lieu of fractional shares.  The Company shall
          take use its best efforts to maintain the effectiveness of a
          registration statement on Form S-8 (or any successor form) or another
          appropriate form with respect to shares of Common Stock distributable
          pursuant to the Plan.

8.   ADMINISTRATION

     8.1.  COMMITTEE

     The general administration of the Plan and the responsibility for carrying
     out its provisions shall be placed in an Administrative Committee. The
     Committee shall consist of at least two members appointed from time to time
     by the Board of Directors to serve at the pleasure thereof. The initial
     Administrative Committee shall consist of the Chief Financial Officer and
     the General Counsel of the Company. Any member of the Committee may resign
     by delivering the Participant's written resignation to the Company, and may
     be removed at any time by action of the Board of Directors.

     8.2.  RULES FOR ADMINISTRATION

     Subject to the limitations of the Plan, the Committee may from time to time
     establish rules and procedures for the administration and interpretation of
     the Plan and the transaction of its business as the Committee may deem
     necessary or appropriate.  The determination of the Committee as to any
     disputed question shall be conclusive.

     8.3.  COMMITTEE ACTION

     Any act which the Plan authorizes or requires the Committee to do may be
     done by a majority of its members.  The action of such majority, expressed
     from time to time by a vote at a meeting (a) in person, (b) by telephone or
     other means by which all members may hear one another or (c) in writing
     without a meeting, shall constitute the action of the Committee and shall
     have the same effect for all purposes as if assented to by all members of
     the Committee at the time in office.

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     8.4.  DELEGATION

     The members of the Committee may authorize one or more of their number to
     execute or deliver any instrument, make any payment or perform any other
     act which the Plan authorizes or requires the Committee to do.

     8.5.  SERVICES

     The Committee may employ or retain agents to perform such clerical,
     accounting, trust, trustee and other services as they may require in
     carrying out the provisions of the Plan.

     8.6.  INDEMNIFICATION

     The Company shall indemnify and save harmless each member of the Committee
     against all expenses and liabilities arising out of membership on the
     Committee, excepting only expenses and liabilities arising from the such
     member's own gross negligence or willful misconduct, as determined by the
     Board of Directors.

9. AMENDMENT AND TERMINATION

The Company, by action of the Board of Directors or the Compensation Committee
thereof, may at any time or from time to time modify or amend any or all of the
provisions of the Plan, or may at any time terminate the Plan provided that the
Company may not amend SECTION 5 or 7.5 to adversely affect any Participant
rights under such SECTIONS 5 and 7.5.  No such action shall adversely affect the
accrued or vested rights of any Participant hereunder without the Participant's
consent thereto.

10.  GENERAL PROVISIONS

     10.1.  LIMITATION OF RIGHTS

     No Participant or other Eligible Employee shall have any right to any
     payment or benefit hereunder except to the extent provided in the Plan.

     10.2.  EMPLOYMENT RIGHTS

     The employment rights of any Participant or other Eligible Employee shall
     not be enlarged, guaranteed or affected by reason of any of the provisions
     of the Plan.

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     10.3.  ASSIGNMENT, PLEDGE OR ENCUMBRANCE

     Assignment, pledge or other encumbrance of any payments or benefits under
     the Plan shall not be permitted or recognized and, to the extent permitted
     by law, no such payments or benefits shall be subject to legal process or
     attachment for the payment of any claim of any person entitled to receive
     the same, except to the extent such assignment, pledge or other encumbrance
     is in favor of the Company to secure a loan or other extension of credit
     from the Company to the Participant.

     10.4.  MINOR OR INCOMPETENT

     If the Committee determines that any person to whom a payment is due
     hereunder is a minor or is incompetent by reason of physical or mental
     disability, the Committee shall have the power to cause the payments
     becoming due to such person to be made to another for the benefit of such
     minor or incompetent without responsibility of the Company or the Committee
     to see to the application of such payment, unless claim prior to such
     payment is made therefor by a duly appointed legal representative.
     Payments made pursuant to such power shall operate as a complete discharge
     of the Company and the Committee.

     10.5.  BENEFICIARY

     Each Participant may designate, by written notice to the Committee, any
     person or persons or legal entity or legal entities, including such
     Participant's estate, as such Participant's Beneficiary under the Plan.  A
     Participant may revoke the Participant's designation of a Beneficiary or
     change such Participant's Beneficiary at any time prior to such
     Participant's death by written notice to the Committee.  If no person or
     legal entity shall be designated by a Participant as such Participant's
     Beneficiary or if no designated Beneficiary survives such Participant, such
     Participant's Beneficiary shall be such Participant's estate.

     10.6.  BINDING PROVISIONS

     The provisions of this Plan shall be binding upon each Participant as a
     consequence of the Participant's election to participate in the Plan, and
     upon the Company, and their respective heirs, executors, administrators,
     successors and assigns.

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     10.7.  NOTICES

     Any election made or notice given by a Participant pursuant to the Plan
     shall be in writing to the Committee or to such representative thereof as
     may be designated by the Committee for such purpose and shall be deemed to
     have been made or given on the date received by the Committee or its
     representative.

     10.8.  GOVERNING LAW

     The validity and interpretation of the Plan and of any of its provisions
     shall be construed under the laws of the State of Maryland without giving
     effect to the choice of law provisions thereof.

     10.9.  PRONOUNS

     The masculine pronoun shall be deemed to include the feminine wherever it
     appears in the Plan unless a different meaning is required by the context.

     10.10. WITHHOLDING

     Upon the request of the Participant, the Company shall withhold from the
     shares of Common Stock distributable to such Participant such number of
     shares as shall be sufficient to satisfy all or a portion of any federal,
     state and local tax withholding requirements applicable to the designated
     distribution.  If the Participant has not requested to have sufficient
     shares withheld to satisfy all such withholding requirements, the Company
     shall have the right to deduct first from cash distributions hereunder any
     federal, state, or local taxes required by law to be withheld with respect
     to such distributions, and such additional amounts of withholding as are
     reasonably requested by the Participant.  Accordingly, the amount of
     federal, state, or local taxes required, or agreed, to be withheld by the
     Company with respect to the dollar amount determined pursuant to SECTION
     7.6(A) above shall, for purposes of satisfying such withholding
     obligations, be deducted from the dollar amount of the cash payment and
     paid by the Company to the appropriate taxing authorities.  If the entire
     cash distribution is insufficient to satisfy the withholding obligations,
     the Company shall have the right to deduct amounts from the Common Stock
     distributable to satisfy such withholding obligations.

     10.11.  EFFECTIVE DATES

     This Plan shall be effective as of July 1, 1998.

* * * * *

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