<PAGE>   1

                                                                   EXHIBIT 10.58

                                BROOKE GROUP LTD.

                          1999 LONG-TERM INCENTIVE PLAN

                                    * * * * *


         1. PURPOSE. The purpose of the 1999 Long-Term Incentive Plan (the
"Plan") is to further and promote the interests of Brooke Group Ltd. (the
"Company"), its Subsidiaries and its shareholders by enabling the Company and
its Subsidiaries to attract, retain and motivate officers, employees and
consultants or those who will become officers, employees or consultants, and to
align the interests of those individuals and the Company's shareholders. To do
this, the Plan offers equity-based opportunities providing such officers,
employees and consultants with a proprietary interest in maximizing the growth,
profitability and overall success of the Company and its Subsidiaries.

         2. DEFINITIONS. For purposes of the Plan, the following terms shall
have the meanings set forth below:

            2.1 "AWARD" means an award or grant made to a Participant under
Sections 6, 7 and/or 8 of the Plan.

            2.2 "AWARD AGREEMENT" means the agreement executed by a Participant
pursuant to Sections 3.2 and 15.6 of the Plan in connection with the granting of
an Award.

            2.3 "BOARD" means the Board of Directors of the Company, as
constituted from time to time.

            2.4 "CODE" means the Internal Revenue Code of 1986, as in effect and
as amended from time to time, or any successor statute thereto, together with
any rules, regulations and interpretations promulgated thereunder or with
respect thereto.

            2.5 "COMMITTEE" means the committee of the Board established to
administer the Plan, as described in Section 3 of the Plan.

            2.6 "COMMON STOCK" means the Common Stock, par value $.10 per
share, of the Company or any security of the Company issued by the Company in
substitution or exchange therefor.

            2.7 "COMPANY" means Brooke Group Ltd., a Delaware corporation,
or any successor corporation to Brooke Group Ltd.



<PAGE>   2

                                      -2-


            2.8 "DISABILITY" means disability as defined in the Participant's
Award Agreement or then effective employment agreement, or if the Participant's
Award Agreement does not define disability, or if the Participant is not then a
party to an effective employment agreement with the Company which defines
disability, "Disability" means disability as determined by the Committee in
accordance with standards and procedures similar to those under the Company's
long-term disability plan, if any. Subject to the first sentence of this Section
2.8, at any time that the Company does not maintain a long-term disability plan,
"Disability" shall mean any physical or mental disability which is determined to
be total and permanent by a physician selected in good faith by the Company.

            2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.

            2.10 "FAIR MARKET VALUE" means on, or with respect to, any given
date(s), the closing price of the Common Stock, as reported on the consolidated
transaction reporting system for the New York Stock Exchange for such date(s)
or, if the Common Stock was not traded on such date(s), on the next preceding
day or days on which the Common Stock was traded. If at any time the Common
Stock is not traded on such exchange, the Fair Market Value of a share of the
Common Stock shall be determined in good faith by the Board.

            2.11 "INCENTIVE STOCK OPTION" means any stock option granted
pursuant to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is intended to be (and is specifically designated as) an
"incentive stock option" within the meaning of Section 422 of the Code.

            2.12 "NON-QUALIFIED STOCK OPTION" means any stock option granted
pursuant to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is not (and is specifically designated as not being) an
Incentive Stock Option.

            2.13 "PARTICIPANT" means any individual who is selected from time to
time under Section 5 to receive an Award under the Plan.

            2.14 "PLAN" means the Brooke Group Ltd. 1999 Long-Term Incentive
Plan, as set forth herein and as in effect and as amended from time to time
(together with any rules and regulations promulgated by the Committee with
respect thereto).

            2.15 "RESTRICTED SHARES" means the restricted shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan and the relevant
Award Agreement.





<PAGE>   3
                                      -3-


            2.16 "RETIREMENT" means the voluntary retirement by the Participant
from active employment with the Company and its Subsidiaries on or after the
attainment of (i) age 65, or (ii) 60, with the consent of the Board.

            2.17 "STOCK APPRECIATION RIGHT" means an Award described in Section
7.2 of the Plan and granted pursuant to the provisions of Section 7 of the Plan.

            2.18 "SUBSIDIARY(IES)" means any corporation (other than the
Company) in an unbroken chain of corporations, including and beginning with the
Company, if each of such corporations, other than the last corporation in the
unbroken chain, owns, directly or indirectly, more than fifty percent (50%) of
the voting stock in one of the other corporations in such chain, or any
"subsidiary" of the Company as defined in Rule 405 under the Securities Act of
1933, as amended.

         3. ADMINISTRATION.

            3.1 THE COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall be appointed from time to time by the Board and shall be
comprised of not less than two (2) of the then members of the Board who are
Outside Directors (within the meaning of Code Section 162(m) and the regulations
promulgated thereunder) of the Company. No member of the Committee shall be
eligible to receive awards under the Plan. Consistent with the Bylaws of the
Company, members of the Committee shall serve at the pleasure of the Board and
the Board, subject to the immediately preceding sentence, may at any time and
from time to time remove members from, or add members to, the Committee.

            3.2 PLAN ADMINISTRATION AND PLAN RULES. The Committee is authorized
to construe and interpret the Plan and to promulgate, amend and rescind rules
and regulations relating to the implementation, administration and maintenance
of the Plan. Subject to the terms and conditions of the Plan, the Committee
shall make all determinations necessary or advisable for the implementation,
administration and maintenance of the Plan including, without limitation, (a)
selecting the Plan's Participants, (b) making Awards in such amounts and form as
the Committee shall determine, (c) imposing such restrictions, terms and
conditions upon such Awards as the Committee shall deem appropriate, and (d)
correcting any technical defect(s) or technical omission(s), or reconciling any
technical inconsistency(ies), in the Plan and/or any Award Agreement. The
Committee may designate persons other than members of the Committee to carry out
the day-to-day ministerial administration of the Plan under such conditions and
limitations as it may prescribe, except that the Committee shall not delegate
its authority with regard to the selection for participation in the Plan and/or
the granting of any Awards to Participants. The Committee's determinations under
the Plan need not be uniform and may be made selectively among Participants,
whether or not such Participants are similarly situated. Any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration, implementation or maintenance of the Plan shall
be


<PAGE>   4
                                      -4-


final, conclusive and binding upon all Participants and any person(s) claiming
under or through any Participants. The Company shall effect the granting of
Awards under the Plan, in accordance with the determinations made by the
Committee, by execution of written agreements and/or other instruments in such
form as is approved by the Committee.

            3.3 LIABILITY LIMITATION. Neither the Board nor the Committee, nor
any member of either, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan (or
any Award Agreement), and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including, without limitation, attorneys' fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under any directors and officers liability insurance coverage which may be in
effect from time to time.

         4. TERM OF PLAN/COMMON STOCK SUBJECT TO PLAN.

            4.1 TERM. The Plan shall terminate on December 31, 2008, except with
respect to Awards then outstanding. After such date no further Awards shall be
granted under the Plan.

            4.2 COMMON STOCK. The maximum number of shares of Common Stock in
respect of which Awards may be granted or paid out under the Plan, subject to
adjustment as provided in Section 13.2 of the Plan, shall not exceed 5,000,000
shares. In the event of a change in the Common Stock of the Company that is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be the Common Stock
for purposes of the Plan. Common Stock which may be issued under the Plan may be
either authorized and unissued shares or issued shares which have been
reacquired by the Company (in the open-market or in private transactions) and
which are being held as treasury shares. No fractional shares of Common Stock
shall be issued under the Plan.

            4.3 COMPUTATION OF AVAILABLE SHARES. For the purpose of computing
the total number of shares of Common Stock available for Awards under the Plan,
there shall be counted against the limitations set forth in Section 4.2 of the
Plan the maximum number of shares of Common Stock potentially subject to
issuance upon exercise or settlement of Awards granted under Sections 6 and 7 of
the Plan, and the number of shares of Common Stock issued under grants of
Restricted Shares pursuant to Section 8 of the Plan, in each case determined as
of the date on which such Awards are granted. If any Awards expire unexercised
or are forfeited, surrendered, cancelled, terminated or settled in cash in lieu
of Common Stock, the shares of Common Stock which were theretofore subject (or
potentially subject) to such Awards shall again be available for Awards under
the Plan to the extent of such expiration, forfeiture, surrender, cancellation,
termination or settlement of such Awards.



<PAGE>   5
                                      -5-


         5. ELIGIBILITY. Individuals eligible for Awards under the Plan shall
consist of all officers, employees and consultants, or those who will become
such officers, employees or consultants, of the Company and/or its Subsidiaries
who are responsible for the management, growth and protection of the business of
the Company and/or its Subsidiaries or whose performance or contribution, in the
sole discretion of the Committee, benefits or will benefit the Company.

         6. STOCK OPTIONS.

            6.1 TERMS AND CONDITIONS. Stock options granted under the Plan shall
be in respect of Common Stock and may be in the form of Incentive Stock Options,
or Non-Qualified Stock Options (sometimes referred to collectively herein as the
"Stock Option(s)"). Such Stock Options shall be subject to the terms and
conditions set forth in this Section 6 and any additional terms and conditions,
not inconsistent with the express terms and provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement.

            6.2 GRANT. Stock Options may be granted under the Plan in such form
as the Committee may from time to time approve. Stock Options may be granted
alone or in addition to other Awards under the Plan or in tandem with Stock
Appreciation Rights. Special provisions shall apply to Incentive Stock Options
granted to any employee who owns (within the meaning of Section 422(b)(6) of the
Code) more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or its parent corporation or any subsidiary of
the Company, within the meaning of Sections 424(e) and (f) of the Code (a "10%
Shareholder").

            6.3 EXERCISE PRICE. The exercise price per share of Common Stock
subject to a Stock Option shall be determined by the Committee, including,
without limitation, a determination based on a formula determined by the
Committee; PROVIDED, HOWEVER, that the exercise price of an Incentive Stock
Option shall not be less than one hundred percent (100%) of the Fair Market
Value of the Common Stock on the date of the grant of such Incentive Stock
Option; PROVIDED, FURTHER, HOWEVER, that, in the case of a 10% Shareholder, the
exercise price of an Incentive Stock Option shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the date of
grant.

            6.4 TERM. The term of each Stock Option shall be such period of time
as is fixed by the Committee; PROVIDED, HOWEVER, that the term of any Incentive
Stock Option shall not exceed ten (10) years (five (5) years, in the case of a
10% Shareholder) after the date immediately preceding the date on which the
Incentive Stock Option is granted.


<PAGE>   6



                                      -6-



            6.5 METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Secretary of the Company,
or the Secretary's designee, specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the exercise price in
cash, by certified check, bank draft or money order payable to the order of the
Company or, if permitted by the Committee (in its sole discretion) and
applicable law, by delivery of, alone or in conjunction with a partial cash or
instrument payment, (a) a fully-secured promissory note or notes, (b) shares of
Common Stock already owned by the Participant for at least six (6) months, or
(c) some other form of payment acceptable to the Committee. The Committee may
also permit Participants (either on a selective or group basis) to
simultaneously exercise Stock Options and sell the shares of Common Stock
thereby acquired, pursuant to a "cashless exercise" arrangement or program,
selected by and approved of in all respects in advance by the Committee. Payment
instruments shall be received by the Company subject to collection. The proceeds
received by the Company upon exercise of any Stock Option may be used by the
Company for general corporate purposes. Any portion of a Stock Option that is
exercised may not be exercised again.

            6.6 EXERCISABILITY. In respect of any Stock Option granted under the
Plan, unless otherwise provided in the Award Agreement or in the Participant's
employment agreement in respect of any such Stock Option, such Stock Option
shall become exercisable as to the aggregate number of shares of Common Stock
underlying such Stock Option, as determined on the date of grant, as follows:

            o     33%, on the first anniversary of the date of grant of
                  the Stock Option, provided the Participant is then
                  employed by the Company and/or one of its Subsidiaries;

            o     66%, on the second anniversary of the date of grant of
                  the Stock Option, provided the Participant is then
                  employed by the Company and/or one of its Subsidiaries;
                  and

            o     100%, on the third anniversary of the date of grant of
                  the Stock Option, provided the Participant is then
                  employed by the Company and/or one of its Subsidiaries.

            6.7 TANDEM GRANTS. If Non-Qualified Stock Options and Stock
Appreciation Rights are granted in tandem, as designated in the relevant Award
Agreements, the right of a Participant to exercise any such tandem Stock Option
shall terminate to the extent that the shares of Common Stock subject to such
Stock Option are used to calculate amounts or shares receivable upon the
exercise of the related tandem Stock Appreciation Right.



<PAGE>   7
                                      -7-


         7. STOCK APPRECIATION RIGHTS.

            7.1 TERMS AND CONDITIONS. The grant of Stock Appreciation Rights
under the Plan shall be subject to the terms and conditions set forth in this
Section 7 and any additional terms and conditions, not inconsistent with the
express terms and provisions of the Plan, as the Committee shall set forth in
the relevant Award Agreement.

            7.2 STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an
Award granted with respect to a specified number of shares of Common Stock
entitling a Participant to receive an amount equal to the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the Fair
Market Value of a share of Common Stock on the date of grant of the Stock
Appreciation Right, multiplied by the number of shares of Common Stock with
respect to which the Stock Appreciation Right shall have been exercised.

            7.3 GRANT. A Stock Appreciation Right may be granted in addition to
any other Award under the Plan or in tandem with or independent of a
Non-Qualified Stock Option.

            7.4 DATE OF EXERCISABILITY. Unless otherwise provided in the
Participant's employment agreement or the Award Agreement in respect of any
Stock Appreciation Right, a Stock Appreciation Right may be exercised by a
Participant, in accordance with and subject to all of the procedures established
by the Committee, in whole or in part at any time and from time to time during
its specified term. Notwithstanding the preceding sentence, in no event shall a
Stock Appreciation Right be exercisable prior to the date which is six (6)
months after the date on which the Stock Appreciation Right was granted or prior
to the exercisability of any Non-Qualified Stock Option with which it is granted
in tandem. The Committee may also provide, as set forth in the relevant Award
Agreement and without limitation, that some Stock Appreciation Rights shall be
automatically exercised and settled on one or more fixed dates specified therein
by the Committee.

            7.5 FORM OF PAYMENT. Upon exercise of a Stock Appreciation Right,
payment may be made in cash, in Restricted Shares or in shares of unrestricted
Common Stock, or in any combination thereof, as the Committee, in its sole
discretion, shall determine and provide in the relevant Award Agreement.

            7.6 TANDEM GRANT. The right of a Participant to exercise a tandem
Stock Appreciation Right shall terminate to the extent such Participant
exercises the Non-Qualified Stock Option to which such Stock Appreciation Right
is related.



<PAGE>   8

                                      -8-


         8. RESTRICTED SHARES.

            8.1 TERMS AND CONDITIONS. Grants of Restricted Shares shall be
subject to the terms and conditions set forth in this Section 8 and any
additional terms and conditions, not inconsistent with the express terms and
provisions of the Plan, as the Committee shall set forth in the relevant Award
Agreement. Restricted Shares may be granted alone or in addition to any other
Awards under the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of Restricted Shares to be granted to a Participant and the
Committee may provide or impose different terms and conditions on any particular
Restricted Share grant made to any Participant. With respect to each Participant
receiving an Award of Restricted Shares, there shall be issued a stock
certificate (or certificates) in respect of such Restricted Shares. Such stock
certificate(s) shall be registered in the name of such Participant, shall be
accompanied by a stock power duly executed by such Participant, and shall bear,
among other required legends, the following legend:

            "The transferability of this certificate and the shares of stock
            represented hereby are subject to the terms and conditions
            (including, without limitation, forfeiture events) contained in the
            Brooke Group Ltd. 1999 Long-Term Incentive Plan and an Award
            Agreement entered into between the registered owner hereof and
            Brooke Group Ltd. Copies of such Plan and Award Agreement are on
            file in the office of the Secretary of Brooke Group Ltd., 100 S.E.
            Second Street, Miami Florida 33131. Brooke Group Ltd. will furnish
            to the recordholder of the certificate, without charge and upon
            written request at its principal place of business, a copy of such
            Plan and Award Agreement. Brooke Group Ltd. reserves the right to
            refuse to record the transfer of this certificate until all such
            restrictions are satisfied, all such terms are complied with and all
            such conditions are satisfied."

Such stock certificate evidencing such shares shall, in the sole discretion of
the Committee, be deposited with and held in custody by the Company until the
restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.

            8.2 RESTRICTED SHARE GRANTS. A grant of Restricted Shares is an
Award of shares of Common Stock granted to a Participant, subject to such
restrictions, terms and conditions as the Committee deems appropriate,
including, without limitation, (a) restrictions on the sale, assignment,
transfer, hypothecation or other disposition of such shares, (b) the requirement
that the Participant deposit such shares with the Company while such shares are
subject to such restrictions, and (c) the requirement that such shares be
forfeited upon termination of employment for specified reasons within a
specified period of time or for other reasons (including, without limitation,
the failure to achieve designated performance goals).



<PAGE>   9

                                      -9-


            8.3 RESTRICTION PERIOD. In accordance with Sections 8.1 and 8.2 of
the Plan and unless otherwise determined by the Committee (in its sole
discretion) at any time and from time to time, Restricted Shares shall only
become unrestricted and vested in the Participant in accordance with such
vesting schedule relating to such Restricted Shares, if any, as the Committee
may establish in the relevant Award Agreement (the "Restriction Period").
Notwithstanding the preceding sentence, in no event shall the Restriction Period
be less than six (6) months after the date of grant. During the Restriction
Period, such stock shall be and remain unvested and a Participant may not sell,
assign, transfer, pledge, encumber or otherwise dispose of or hypothecate such
Award. Upon satisfaction of the vesting schedule and any other applicable
restrictions, terms and conditions, the Participant shall be entitled to receive
payment of the Restricted Shares or a portion thereof, as the case may be, as
provided in Section 8.4 of the Plan.

            8.4 PAYMENT OF RESTRICTED SHARE GRANTS. After the satisfaction
and/or lapse of the restrictions, terms and conditions established by the
Committee in respect of a grant of Restricted Shares, a new certificate, without
the legend set forth in Section 8.1 of the Plan, for the number of shares of
Common Stock which are no longer subject to such restrictions, terms and
conditions shall, as soon as practicable thereafter, be delivered to the
Participant.

            8.5 SHAREHOLDER RIGHTS. A Participant shall have, with respect to
the shares of Common Stock underlying a grant of Restricted Shares, all of the
rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Shares shall be treated as
additional Restricted Shares and shall be subject to the same restrictions and
other terms and conditions that apply to the unvested Restricted Shares in
respect of which such stock dividends are issued.

         9. DEFERRAL ELECTIONS/TAX REIMBURSEMENTS/OTHER PROVISIONS.

            9.1 DEFERRALS. The Committee may permit a Participant to elect to
defer receipt of any payment of cash or any delivery of shares of Common Stock
that would otherwise be due to such Participant by virtue of the exercise, earn
out or settlement of any Award made under the Plan. If any such election is
permitted, the Committee shall establish rules and procedures for such
deferrals, including, without limitation, the payment or crediting of reasonable
interest on such deferred amounts credited in cash, and the payment or crediting
of dividend equivalents in respect of deferrals credited in units of Common
Stock. The Committee may also provide in the relevant Award Agreement for a tax
reimbursement cash payment to be made by the Company in favor of any Participant
in connection with the tax consequences resulting from the grant, exercise,
settlement, or earn out of any Award made under the Plan.


<PAGE>   10
                                      -10-


             9.2 MAXIMUM YEARLY AWARDS. The maximum annual Common Stock amounts
in this Section 9.2 are subject to adjustment under Section 13.2 and are subject
to the Plan maximum under Section 4.2. Each individual Participant may not
receive in any calendar year Awards of Options or Stock Appreciation Rights
exceeding 1,500,000 underlying shares of Common Stock. In addition, during the
Term of the Plan, each individual Participant may not receive Awards of Options,
Stock Appreciation Rights and/or Restricted Shares exceeding one-half of the
maximum number of shares of Common Stock in respect of which Awards may be
granted or paid out under the Plan as provided in Section 4.2.

         10. DIVIDEND EQUIVALENTS. In addition to the provisions of Section 8.5
of the Plan, Awards of Stock Options, and/or Stock Appreciation Rights, may, in
the sole discretion of the Committee and if provided for in the relevant Award
Agreement, earn dividend equivalents. In respect of any such Award which is
outstanding on a dividend record date for Common Stock, the Participant shall be
credited with an amount equal to the amount of cash or stock dividends that
would have been paid on the shares of Common Stock covered by such Award had
such covered shares been issued and outstanding on such dividend record date.
The Committee shall establish such rules and procedures governing the crediting
of such dividend equivalents, including, without limitation, the amount, the
timing, form of payment and payment contingencies and/or restrictions of such
dividend equivalents, as it deems appropriate or necessary.

         11. TERMINATION OF EMPLOYMENT.

             11.1 GENERAL. Except as is otherwise provided (a) in the relevant
Award Agreement as determined by the Committee (in its sole discretion), or (b)
in the Participant's then effective employment agreement, if any, the following
terms and conditions shall apply as appropriate and as not inconsistent with the
terms and conditions, if any, contained in such Award Agreement and/or such
employment agreement:

                          11.1.1 OPTIONS/SARS. If a Participant's employment
             with the Company terminates for any reason any then unexercisable
             Stock Options and/or Stock Appreciation Rights shall be forfeited
             and cancelled by the Company. Except as otherwise provided in this
             Section 11.1.1, if a Participant's employment with the Company and
             its Subsidiaries terminates for any reason, such Participant's
             rights, if any, to exercise any then exercisable Stock Options
             and/or Stock Appreciation Rights, if any, shall terminate ninety
             (90) days after the date of such termination (but not beyond the
             stated term of any such Stock Option and/or Stock Appreciation
             Right as determined under Sections 6.4 and 7.4) and thereafter such
             Stock Options or Stock Appreciation Rights shall be forfeited and
             cancelled by the Company. The Committee, in its sole discretion,
             may determine that any such Participant's Stock Options and/or
             Stock Appreciation Rights, if any, to the extent exercisable
             immediately prior to any termination of employment (other than a
             termination due to death, Retirement or


<PAGE>   11


                                      -11-


             Disability), may remain exercisable for an additional specified
             time period after such ninety (90) day period expires (subject to
             any other applicable terms and provisions of the Plan and the
             relevant Award Agreement), but not beyond the stated term of any
             such Stock Option and/or Stock Appreciation Right. If any
             termination of employment is due to death, Retirement or
             Disability, a Participant (and such Participant's estate,
             designated beneficiary or other legal representative, as the case
             may be and as determined by the Committee) shall have the right, to
             the extent exercisable immediately prior to any such termination,
             to exercise such Stock Options and/or Stock Appreciation Rights, if
             any, at any time within the one (1) year period following such
             termination due to death, Retirement or Disability (but not beyond
             the term of any such Stock Option and/or Stock Appreciation Right
             as determined under Sections 6.4 and 7.4).

                          11.1.2 RESTRICTED SHARES. If a Participant's
             employment with the Company and its Subsidiaries terminates for any
             reason (other than due to Disability, Retirement or death) prior to
             the satisfaction and/or lapse of the restrictions, terms and
             conditions applicable to a grant of Restricted Shares, such
             Restricted Shares shall immediately be cancelled and the
             Participant (and such Participant's estate, designated beneficiary
             or other legal representative) shall forfeit any rights or
             interests in and with respect to any such Restricted Shares.
             Notwithstanding anything to the contrary in this Section 11, the
             Committee, in its sole discretion, may determine, prior to or
             within ninety (90) days after the date of such termination, that
             all or a portion of any such Participant's Restricted Shares shall
             not be so cancelled and forfeited. If the Participant's employment
             terminates due to death, Disability or Retirement, the Participant
             shall become 100% vested in any such Participant's restricted
             Shares as of the date of any such termination.

         12. NON-TRANSFERABILITY OF AWARDS. Unless otherwise provided in the
Award Agreement, no Award under the Plan or any Award Agreement, and no rights
or interests herein or therein, shall or may be assigned, transferred, sold,
exchanged, encumbered, pledged, or otherwise hypothecated or disposed of by a
Participant or any beneficiary(ies) of any Participant, except by testamentary
disposition by the Participant or the laws of intestate succession. No such
interest shall be subject to execution, attachment or similar legal process,
including, without limitation, seizure for the payment of the Participant's
debts, judgements, alimony, or separate maintenance. Unless otherwise provided
in the Award Agreement, during the lifetime of a Participant, Stock Options and
Stock Appreciation Rights are exercisable only by the Participant.



<PAGE>   12

                                      -12-


         13. CHANGES IN CAPITALIZATION AND OTHER MATTERS.

             13.1 NO CORPORATE ACTION RESTRICTION. The existence of the Plan,
any Award Agreement and/or the Awards granted hereunder shall not limit, affect
or restrict in any way the right or power of the Board or the shareholders of
the Company to make or authorize (a) any adjustment, recapitalization,
reorganization or other change in the Company's or any Subsidiary's capital
structure or its business, (b) any merger, consolidation or change in the
ownership of the Company or any Subsidiary, (c) any issue of bonds, debentures,
capital, preferred or prior preference stocks ahead of or affecting the
Company's or any Subsidiary's capital stock or the rights thereof, (d) any
dissolution or liquidation of the Company or any Subsidiary, (e) any sale or
transfer of all or any part of the Company's or any Subsidiary's assets or
business, or (f) any other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary or any other person shall have any claim
against any member of the Board or the Committee, the Company or any Subsidiary,
or any employees, officers or agents of the Company or any subsidiary, as a
result of any such action.

             13.2 RECAPITALIZATION ADJUSTMENTS. In the event of any change in
capitalization affecting the Common Stock of the Company, including, without
limitation, a stock dividend or other distribution, stock split, reverse stock
split, recapitalization, consolidation, subdivision, split-up, spin-off,
split-off, combination or exchange of shares or other form of reorganization or
recapitalization, or any other change affecting the Common Stock, the Board
shall authorize and make such proportionate adjustments, if any, as the Board
deems appropriate to reflect such change, including, without limitation, with
respect to the aggregate number of shares of the Common Stock for which Awards
in respect thereof may be granted under the Plan, the maximum number of shares
of the Common Stock which may be granted or awarded to any Participant, the
number of shares of the Common Stock covered by each outstanding Award, and the
exercise price or other price per share of Common Stock in respect of
outstanding Awards.

             13.3 CERTAIN MERGERS.

                          13.3.1 If the Company enters into or is involved in
             any merger, reorganization or other business combination with any
             person or entity (such merger, reorganization or other business
             combination to be referred to herein as a "Merger Event") and as a
             result of any such Merger Event the Company will be or is the
             surviving corporation, a Participant shall be entitled, as of the
             date of the execution of the agreement evidencing the Merger Event
             (the "Execution Date") and with respect to both exercisable and
             unexercisable Stock Options and/or Stock Appreciation Rights (but
             only to the extent not previously exercised), to receive substitute
             stock options and/or stock appreciation rights in respect of the
             shares of the surviving corporation on such terms and conditions,
             as to the number of shares, pricing and otherwise, which shall
             substantially preserve the value, rights and benefits of any
             affected Stock Options or Stock


<PAGE>   13


                                      -13-

             Appreciation Rights granted hereunder as of the date of the
             consummation of the Merger Event. Notwithstanding anything to the
             contrary in this Section 13.3, if any Merger Event occurs, the
             Company shall have the right, but not the obligation, to pay to
             each affected Participant an amount in cash or certified check
             equal to the excess of the Fair Market Value of the Common Stock
             underlying any affected unexercised Stock Options or Stock
             Appreciation Rights as of the Execution Date (whether then
             exercisable or not) over the aggregate exercise price of such
             unexercised Stock Options and/or Stock Appreciation Rights, as the
             case may be.

                          13.3.2 If, in the case of a Merger Event in which the
             Company will not be, or is not, the surviving corporation, and the
             Company determines not to make the cash or certified check payment
             described in Section 13.3.1 of the Plan, the Company shall compel
             and obligate, as a condition of the consummation of the Merger
             Event, the surviving or resulting corporation and/or the other
             party to the Merger Event, as necessary, or any parent, subsidiary
             or acquiring corporation thereof, to grant, with respect to both
             exercisable and unexercisable Stock Options and/or Stock
             Appreciation Rights (but only to the extent not previously
             exercised), substitute stock options or stock appreciation rights
             in respect of the shares of common or other capital stock of such
             surviving or resulting corporation on such terms and conditions, as
             to the number of shares, pricing and otherwise, which shall
             substantially preserve the value, rights and benefits of any
             affected Stock Options and/or Stock Appreciation Rights previously
             granted hereunder as of the date of the consummation of the Merger
             Event.

                          13.3.3 Upon receipt by any affected Participant of any
             such cash, certified check, or substitute stock options or stock
             appreciation rights as a result of any such Merger Event, such
             Participant's affected Stock Options and/or Stock Appreciation
             Rights for which such cash, certified check or substitute awards
             was received shall be thereupon cancelled without the need for
             obtaining the consent of any such affected Participant.

                          13.3.4 The foregoing adjustments and the manner of
             application of the foregoing provisions, including, without
             limitation, the issuance of any substitute stock options and/or
             stock appreciation rights, shall be determined in good faith by the
             Committee in its sole discretion. Any such adjustment may provide
             for the elimination of fractional shares.

         14. AMENDMENT, SUSPENSION AND TERMINATION.

             14.1 IN GENERAL. The Board may suspend or terminate the Plan (or
any portion thereof) at any time and may amend the Plan at any time and from
time to time in such respects as the Board may deem advisable to insure that any
and all Awards conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants


<PAGE>   14
                                      -14-


to benefit from any change in applicable laws or regulations, or in any other
respect the Board may deem to be in the best interests of the Company or any
Subsidiary. No such amendment, suspension or termination shall (x) materially
adversely effect the rights of any Participant under any outstanding Stock
Options, Stock Appreciation Rights, or Restricted Share grants, without the
consent of such Participant, or (y) make any change that would disqualify the
Plan, or any other plan of the Company or any Subsidiary intended to be so
qualified, from the benefits provided under Section 422 of the Code, or any
successor provisions thereto.

             14.2 AWARD AGREEMENT MODIFICATIONS. The Committee may (in its sole
discretion) amend or modify at any time and from time to time the terms and
provisions of any outstanding Stock Options, Stock Appreciation Rights, or
Restricted Share grants, in any manner to the extent that the Committee under
the Plan or any Award Agreement could have initially determined the
restrictions, terms and provisions of such Stock Options, Stock Appreciation
Rights, and/or Restricted Share grants, including, without limitation, changing
or accelerating (a) the date or dates as of which such Stock Options or Stock
Appreciation Rights shall become exercisable, or (b) the date or dates as of
which such Restricted Share grants shall become vested. No such amendment or
modification shall, however, materially adversely affect the rights of any
Participant under any such Award without the consent of such Participant.

         15. MISCELLANEOUS.

             15.1 TAX WITHHOLDING. The Company shall have the right to deduct
from any payment or settlement under the Plan, including, without limitation,
the exercise of any Stock Option or Stock Appreciation Right, or the delivery,
transfer or vesting of any Common Stock or Restricted Shares, any federal,
state, local or other taxes of any kind which the Committee, in its sole
discretion, deems necessary to be withheld to comply with the Code and/or any
other applicable law, rule or regulation. If the Committee, in its sole
discretion, permits shares of Common Stock to be used to satisfy any such tax
withholding, such Common Stock shall be valued based on the Fair Market Value of
such stock as of the date the tax withholding is required to be made, such date
to be determined by the Committee. The Committee may establish rules limiting
the use of Common Stock to meet withholding requirements by Participants who are
subject to Section 16 of the Exchange Act.

             15.2 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan, the
granting of any Award, nor the execution of any Award Agreement, shall confer
upon any employee of the Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, as the case may be, nor shall it
interfere in any way with the right, if any, of the Company or any Subsidiary to
terminate the employment of any employee at any time for any reason.



<PAGE>   15



                                      -15-



             15.3 UNFUNDED PLAN. The Plan shall be unfunded and the Company
shall not be required to segregate any assets in connection with any Awards
under the Plan. Any liability of the Company to any person with respect to any
Award under the Plan or any Award Agreement shall be based solely upon the
contractual obligations that may be created as a result of the Plan or any such
Award or Award Agreement. No such obligation of the Company shall be deemed to
be secured by any pledge of, encumbrance on, or other interest in, any property
or asset of the Company or any Subsidiary. Nothing contained in the Plan or any
Award Agreement shall be construed as creating in respect of any Participant (or
beneficiary thereof or any other person) any equity or other interest of any
kind in any assets of the Company or any Subsidiary or creating a trust of any
kind or a fiduciary relationship of any kind between the Company, any Subsidiary
and/or any such Participant, any beneficiary thereof or any other person.

             15.4 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under an Award made pursuant to the
Plan shall not be deemed a part of a Participant's compensation for purposes of
the determination of benefits under any other employee welfare or benefit plans
or arrangements, if any, provided by the Company or any Subsidiary unless
expressly provided in such other plans or arrangements, or except where the
Board expressly determines in writing that inclusion of an Award or portion of
an Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards or payments under any other plans or arrangements of the Company or its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain and motivate
employees.

             15.5 LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE. No Awards or
shares of the Common Stock shall be required to be issued or granted under the
Plan unless legal counsel for the Company shall be satisfied that such issuance
or grant will be in compliance with all applicable federal and state securities
laws and regulations and any other applicable laws or regulations. The Committee
may require, as a condition of any payment or share issuance, that certain
agreements, undertakings, representations, certificates, and/or information, as
the Committee may deem necessary or advisable, be executed or provided to the
Company to assure compliance with all such applicable laws or regulations.
Certificates for shares of the Restricted Shares and/or Common Stock delivered
under the Plan may be subject to such stock-transfer orders and such other
restrictions as the Committee may deem advisable under the rules, regulations,
or other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any applicable federal
or state securities law. In addition, if, at any time specified herein (or in
any Award Agreement or otherwise) for (a) the making of any Award, or the making
of any determination, (b) the issuance or other distribution of Restricted
Shares and/or Common Stock, or (c) the payment of amounts





<PAGE>   16
                                      -16-


to or through a Participant with respect to any Award, any law, rule, regulation
or other requirement of any governmental authority or agency shall require
either the Company, any Subsidiary or any Participant (or any estate, designated
beneficiary or other legal representative thereof) to take any action in
connection with any such determination, any such shares to be issued or
distributed, any such payment, or the making of any such determination, as the
case may be, shall be deferred until such required action is taken. With respect
to persons subject to Section 16 of the Exchange Act, transactions under the
Plan are intended to comply with all applicable conditions of SEC Rule 16b-3. To
the extent any provision of the Plan or any action by the administrators of the
Plan fails to so comply with such rule, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.

             15.6 AWARD AGREEMENTS. Each Participant receiving an Award under
the Plan shall enter into an Award Agreement with the Company in a form
specified by the Committee. Each such Participant shall agree to the
restrictions, terms and conditions of the Award set forth therein and in the
Plan.

             15.7 DESIGNATION OF BENEFICIARY. Each Participant to whom an Award
has been made under the Plan may designate a beneficiary or beneficiaries to
exercise any option or to receive any payment which under the terms of the Plan
and the relevant Award Agreement may become exercisable or payable on or after
the Participant's death. At any time, and from time to time, any such
designation may be changed or cancelled by the Participant without the consent
of any such beneficiary. Any such designation, change or cancellation must be on
a form provided for that purpose by the Committee and shall not be effective
until received by the Committee. If no beneficiary has been designated by a
deceased Participant, or if the designated beneficiaries have predeceased the
Participant, the beneficiary shall be the Participant's estate. If the
Participant designates more than one beneficiary, any payments under the Plan to
such beneficiaries shall be made in equal shares unless the Participant has
expressly designated otherwise, in which case the payments shall be made in the
shares designated by the Participant.

             15.8 LEAVES OF ABSENCE/TRANSFERS. The Committee shall have the
power to promulgate rules and regulations and to make determinations, as it
deems appropriate, under the Plan in respect of any leave of absence from the
Company or any Subsidiary granted to a Participant. Without limiting the
generality of the foregoing, the Committee may determine whether any such leave
of absence shall be treated as if the Participant has terminated employment with
the Company or any such Subsidiary. If a Participant transfers within the
Company, or to or from any Subsidiary, such Participant shall not be deemed to
have terminated employment as a result of such transfers.



<PAGE>   17

                                      -17-


             15.9 LOANS. Subject to applicable law, the Committee may provide,
pursuant to Plan rules, for the Company or any Subsidiary to make loans to
Participants to finance the exercise price of any Stock Options, as well as the
withholding obligation under Section 15.1 of the Plan and/or the estimated or
actual taxes payable by the Participant as a result of the exercise of such
Stock Option and the Committee may prescribe the terms and conditions of any
such loan.

             15.10 GOVERNING LAW. The Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware, without reference to the principles of conflict of laws thereof. Any
titles and headings herein are for reference purposes only, and shall in no way
limit, define or otherwise affect the meaning, construction or interpretation of
any provisions of the Plan.

             15.11 EFFECTIVE DATE. The Plan shall be effective upon its approval
by the Board and adoption by the Company, subject to the approval of the Plan by
the Company's shareholders in accordance with Sections 162(m) and 422 of the
Code.