<PAGE>   1
                                                                    EXHIBIT 10.4





                          CHASE BRASS INDUSTRIES, INC.
                         1994 LONG-TERM INCENTIVE PLAN
                    (AS AMENDED EFFECTIVE OCTOBER 21, 1996)


                           SCOPE AND PURPOSE OF PLAN

         Chase Brass Industries, Inc., a Delaware corporation (the
"Corporation"), has adopted this 1994 Long-Term Incentive Plan (the "Plan") to
provide for the granting of:

         (a)     Incentive Options (hereafter defined) to certain Key Employees
                 (hereafter defined);

         (b)     Nonstatutory Options (hereafter defined) to certain Key
                 Employees and Non-Employee Directors (hereafter defined);

         (c)     Restricted Stock Awards (hereafter defined) to certain Key
                 Employees; and

         (d)     Stock Appreciation Rights (hereafter defined) to certain Key
                 Employees.

         The purpose of the Plan is to provide an incentive for Key Employees
and directors of the Corporation or its Subsidiaries (hereafter defined) to
remain in the service of the Corporation or its Subsidiaries, to extend to them
the opportunity to acquire a proprietary interest in the Corporation so that
they will apply their best efforts for the benefit of the Corporation, and to
aid the Corporation in attracting able persons to enter the service of the
Corporation and its Subsidiaries.

SECTION 1. DEFINITIONS

         1.1     "Acquiring Person" means any Person other than (a) the
Corporation, any Subsidiary of the Corporation, any employee benefit plan of
the Corporation or of a Subsidiary of the Corporation or of a corporation owned
directly or indirectly by the stockholders of the Corporation in substantially
the same proportions as their ownership of Stock of the Corporation, or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation or of a Subsidiary of the Corporation or of a corporation owned
directly or indirectly by the stockholders of the Corporation in substantially
the same proportions as their ownership of Stock of the Corporation (b)
Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), or (c) any
Affiliate of CVC that is directly controlled by Citicorp or Citibank, N.A., or
otherwise is in the same tier as CVC of Affiliates under the control of such
entities ("Direct Affiliates"),
<PAGE>   2
but shall not include any entities that may be deemed an Affiliate of CVC as a
result of the investment by any Direct Affiliate in such entity.

         1.2     "Affiliate" means (a) any Person who is directly or indirectly
the beneficial owner of at least 10% of the voting power of the outstanding
Voting Securities of the Corporation or (b) any Person controlling, controlled
by, or under common control with the Corporation or any Person contemplated in
clause (a) of this Subsection 1.2.

         1.3     "Award" means the grant of any form of Option, Restricted
Stock Award, or Stock Appreciation Right under the Plan, whether granted
individually, in combination, or in tandem, to a Holder pursuant to the terms,
conditions, and limitations that the Committee may establish in order to
fulfill the objectives of the Plan.

         1.4     "Award Agreement" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and limitations of
the Award granted to that Holder.

         1.5     "Board of Directors" means the board of directors of the
Corporation.

         1.6     "Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in the state of Ohio are authorized or
obligated by law or executive order to close.

         1.7     "Change in Control" means the event that is deemed to have
occurred if:

                 (a)      any Acquiring Person is or becomes the "beneficial
         owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
         indirectly, of securities of the Corporation representing fifty
         percent or more of the combined voting power of the then outstanding
         Voting Securities of the Corporation; or

                 (b)      a public announcement is made of a tender or exchange
         offer by any Acquiring Person for fifty percent or more of the
         outstanding Voting Securities of the Corporation, and the Board of
         Directors approves or fails to oppose that tender or exchange offer in
         its statements in Schedule 14D-9 under the Exchange Act; provided,
         however, that the events to occur under Subsection 9.2 hereof shall
         not occur solely as a result of an event described in this clause (b)
         unless, within one year after the occurrence of such event, an event
         described in clauses (a), (c) or (d) hereof shall have occurred, in
         which case such events to occur under Subsection 9.2 hereof shall
         occur upon the occurrence of such event but shall be deemed to have
         been effective as of the time of the occurrence of the event described
         in this clause (b); or

                 (c)      the stockholders of the Corporation approve a merger
         or consolidation of the Corporation with any other corporation or
         partnership (or, if no such approval is required, the consummation of
         such a merger or consolidation of the Corporation), other than a
         merger or consolidation that would result in the Voting Securities of
         the Corporation outstanding immediately before the consummation
         thereof continuing to





                                       2
<PAGE>   3
         represent (either by remaining outstanding or by being converted into
         Voting Securities of the surviving entity or of a parent of the
         surviving entity) a majority of the combined voting power of the
         Voting Securities and Convertible Voting Securities (on a
         fully-diluted basis assuming full conversion thereof) of the surviving
         entity (or its parent) outstanding immediately after that merger or
         consolidation; or


                 (d)      the stockholders of the Corporation approve a plan of
         complete liquidation of the Corporation or an agreement for the sale
         or disposition by the Corporation of all or substantially all the
         Corporation's assets (or, if no such approval is required, the
         consummation of such a liquidation, sale, or disposition in one
         transaction or series of related transactions) other than a
         liquidation, sale or disposition of all or substantially all the
         Corporation's assets in one transaction or a series of related
         transactions to a Subsidiary of the Corporation or any other
         corporation owned directly or indirectly by the stockholders of the
         Corporation in substantially the same proportions as their ownership
         of stock in the Corporation.

         1.8     "Code" means the Internal Revenue Code of 1986, as amended.

         1.9     "Committee" means the committee appointed pursuant to Section
3 by the Board of Directors to administer the Plan.

         1.10    "Convertible Voting Securities" means any and all options,
warrants, or other rights to purchase, or securities convertible into or
exchangeable or exercisable for, directly or indirectly, Voting Securities of
any Person.

         1.11    "Corporation" means Chase Brass Industries, Inc., a Delaware
corporation.

         1.12    "Date of Grant" has the meaning given it in Subsection 4.3.

         1.13    "Disability" has the meaning given it in Subsection 10.3.

         1.14    "Disinterested Person" means a Person that meets the
definition of both a "Non-Employee Director" under Rule 16b-3(b)(3) and an
"outside director" under Section 162(m).

         1.15    "Effective Date" means the later of (a) the date the Plan is
adopted by the Board of Directors, (b) the date the Plan is approved by the
stockholders of the Corporation and (c) the closing date of the Initial Public
Offering.

         1.16    "Eligible Individuals" means (a) Key Employees, (b)
Non-Employee Directors, and (c) any other Person that the Committee designates
as eligible for an Award (other than for Incentive Options) because the Person
performs, or has performed, bona fide consulting or advisory services for the
Corporation or any of its Subsidiaries (other than services in connection with
the offer or sale of securities in a capital-raising transaction) and the
Committee determines that the Person has a direct and significant effect on the
financial development of the Corporation





                                       3
<PAGE>   4
or any of its Subsidiaries.  Notwithstanding the foregoing provisions of this
Subsection 1.16, to ensure that the requirements of the fourth sentence of
Subsection 3.1 are satisfied, the Board of Directors may from time to time
specify individuals who shall not be eligible for the grant of Awards or equity
securities under any plan of the Corporation or its Affiliates.  Nevertheless,
the Board of Directors may at any time determine that an individual who has
been so excluded from eligibility shall become eligible for grants of Awards
and grants of such other equity securities under any plans of the Corporation
or its Affiliates so long as that eligibility will not impair the Plan's
satisfaction of the conditions of Rule 16b-3.

         1.17    "Employee" means any employee of the Corporation or of any of
its Subsidiaries, including officers and directors of the Corporation who are
also employees of the Corporation or of any of its Subsidiaries.

         1.18    "Exchange Act" means the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder, or any successor law, as it
may be amended from time to time.

         1.19    "Exercise Notice" has the meaning given it in Subsection 5.5.

         1.20    "Exercise Price" has the meaning given it in Subsection 5.4.

         1.21    "Fair Market Value" means, for a particular day:

                 (a)      If shares of Stock of the same class are listed or
         admitted to unlisted trading privileges on any national or regional
         securities exchange at the date of determining the Fair Market Value,
         then the last reported sale price, regular way, on the composite tape
         of that exchange on the last Business Day before the date in question
         or, if no such sale takes place on that Business Day, the average of
         the closing bid and asked prices, regular way, in either case as
         reported in the principal consolidated transaction reporting system
         with respect to securities listed or admitted to unlisted trading
         privileges on that securities exchange; or

                 (b)      If shares of Stock of the same class are not listed
         or admitted to unlisted trading privileges as provided in Subsection
         1.21(a) and sales prices for shares of Stock of the same class in the
         over-the-counter market are reported by the National Association of
         Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ")
         National Market System (or such other system then in use) at the date
         of determining the Fair Market Value, then the last reported sales
         price so reported on the last Business Day before the date in question
         or, if no such sale takes place on that Business Day, the average of
         the high bid and low asked prices so reported; or

                 (c)      If shares of Stock of the same class are not listed
         or admitted to unlisted trading privileges as provided in Subsection
         1.21(a) and sales prices for shares of Stock of the same class are not
         reported by the NASDAQ National Market System (or a similar system
         then in use) as provided in Subsection 1.21(b), and if bid and asked
         prices for





                                       4
<PAGE>   5
         shares of Stock of the same class in the over-the-counter market are
         reported by NASDAQ (or, if not so reported, by the National Quotation
         Bureau Incorporated) at the date of determining the Fair Market Value,
         then the average of the high bid and low asked prices on the last
         Business Day before the date in question; or

                 (d)      If shares of Stock of the same class are not listed
         or admitted to unlisted trading privileges as provided in Subsection
         1.21(a) and sales prices or bid and asked prices therefor are not
         reported by NASDAQ (or the National Quotation Bureau Incorporated) as
         provided in Subsection 1.21(b) or Subsection 1.21(c) at the date of
         determining the Fair Market Value, then the value determined in good
         faith by the Committee, which determination shall be conclusive for
         all purposes; or

                 (e)      If shares of Stock of the same class are listed or
         admitted to unlisted trading privileges as provided in Subsection
         1.21(a) or sales prices or bid and asked prices therefor are reported
         by NASDAQ (or the National Quotation Bureau Incorporated) as provided
         in Subsection 1.21(b) or Subsection 1.21(c) at the date of determining
         the Fair Market Value, but the volume of trading is so low that the
         Board of Directors determines in good faith that such prices are not
         indicative of the fair value of the Stock, then the value determined
         in good faith by the Committee, which determination shall be
         conclusive for all purposes notwithstanding the provisions of
         Subsections 1.21(a), (b), or (c).

For purposes of valuing Incentive Options, the Fair Market Value of Stock shall
be determined without regard to any restriction other than one that, by its
terms, will never lapse.  For purposes of the redemption provided for in
Subsection 9.3(d)(v), Fair Market Value shall have the meaning and shall be
determined as set forth above; provided, however, that the Committee, with
respect to any such redemption, shall have the right to determine that the Fair
Market Value for purposes of the redemption should be an amount measured by the
value of the shares of Stock, other securities, cash, or property otherwise
being received by holders of shares of Stock in connection with the
Restructuring and upon that determination the Committee shall have the power
and authority to determine Fair Market Value for purposes of the redemption
based upon the value of such shares of stock, other securities, cash, or
property.  Any such determination by the Committee, as evidenced by a
resolution of the Committee, shall be conclusive for all purposes.

         1.22    "Fair Value" means such value as is determined by a majority
of the "disinterested" directors of the Corporation, as evidenced by a
resolution of such disinterested directors, even if the disinterested directors
of the Corporation constitute less than a quorum.  If the Corporation does not
have any disinterested directors, the Fair Value shall be such value as is
determined by a nationally recognized investment banking firm selected by the
Corporation, the expenses of which shall be borne by the Corporation.

         1.23    "Holder" means an Eligible Individual to whom an outstanding
Award has been granted or a transferee of any Award as permitted under Section
4.7.

         1.24    "Incentive Option" means an incentive stock option as defined
under Section 422 of the Code and regulations thereunder.





                                       5
<PAGE>   6
         1.25    "Initial Public Offering" means the first public offering of
Stock by the Corporation effected pursuant to an effective registration
statement under the Securities Act.

         1.26    "Key Employee" means any Employee whom the Committee
identifies as having a direct and significant effect on the performance of the
Corporation or any of its Subsidiaries.

         1.27    "Non-Employee Director" means a director of the Corporation
who while a director is not an Employee or an officer of the Corporation or any
subsidiary of the Corporation.

         1.28    "Nonstatutory Option" means a stock option that does not
satisfy the requirements of Section 422 of the Code or that is designated at
the Date of Grant or in the applicable Award Agreement to be an option other
than an Incentive Option.

         1.29    "Non-Surviving Event" means an event of Restructuring as
described in either Subsection 1.36(b) or Subsection 1.36(c).

         1.30    "Normal Retirement" means the separation of a Holder from
employment with the Corporation and its Subsidiaries on or after the attainment
of age 59 1/2 with the right to receive an immediate benefit under a
tax-qualified retirement plan under Section 401(a) of the Code approved by the
Corporation or any Subsidiary thereof.

         1.31    "Option" means either an Incentive Option or a Nonstatutory
Option, or both.

         1.32    "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity.  A Person, together with
that Person's affiliates and associates (as "affiliate" and "associate" are
defined in Rule 12b-2 under the Exchange Act for purposes of this definition
only), and any Persons acting as a partnership, limited partnership, joint
venture, association, syndicate, or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or
consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting, or disposing of securities of
the Corporation with that Person, shall be deemed a single "Person."

         1.33    "Plan" means the Corporation's 1994 Long-Term Incentive Plan,
as it may be amended from time to time.

         1.34    "Restricted Stock" means Stock that is nontransferable or
subject to substantial risk of forfeiture until specific conditions are met.

         1.35    "Restricted Stock Award" means the grant of or the right to
purchase, on the terms and conditions of Section 7 or that the Committee
otherwise determines, Restricted Stock.

         1.36    "Restructuring" means the occurrence of any one or more of the
following:





                                       6
<PAGE>   7
                 (a)      The merger or consolidation of the Corporation with
         any Person, whether effected as a single transaction or a series of
         related transactions, with the Corporation remaining the continuing or
         surviving entity of that merger or consolidation and the Stock
         remaining outstanding and not changed into or exchanged for stock or
         other securities of any other Person or of the Corporation, cash, or
         other property;

                 (b)      The merger or consolidation of the Corporation with
         any Person, whether effected as a single transaction or a series of
         related transactions, with (i) the Corporation not being the
         continuing or surviving entity of that merger or consolidation or (ii)
         the Corporation remaining the continuing or surviving entity of that
         merger or consolidation but all or a part of the outstanding shares of
         Stock are changed into or exchanged for stock or other securities of
         any other Person or the Corporation, cash, or other property; or

                 (c)      The transfer, directly or indirectly, of all or
         substantially all of the assets of the Corporation (whether by sale,
         merger, consolidation, liquidation, or otherwise) to any Person,
         whether effected as a single transaction or a series of related
         transactions.

         1.37    "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, or any successor rule, as it may be amended from time to time,
and references to paragraphs or clauses of Rule 16b-3 shall refer to the
corresponding paragraphs or clauses of Rule 16b-3 as it exists at the Effective
Date or the comparable paragraph or clause of Rule 16b-3 as it may thereafter
be amended.

         1.38    "Section 162(m)" means Section 162(m) of the Code, or any
successor section under the Code, as it may be amended from time to time and as
interpreted by final or proposed regulations promulgated thereunder from time
to time.

         1.39    "Securities Act" means the Securities Act of 1933 and the
rules and regulations promulgated thereunder, or any successor law, as it may
be amended from time to time.

         1.40    "Stock" means the Corporation's authorized common stock, par
value $.01 per share, or any other securities that are substituted for the
Stock as provided in Section 9.

         1.41    "Stock Appreciation Right" means the right to receive an
amount equal to the excess of the Fair Market Value of a share of Stock (as
determined on the date of exercise) over, as appropriate, the Exercise Price of
a related Option or the Fair Market Value of the Stock on the Date of Grant of
the Stock Appreciation Right.

         1.42    "Subsidiary" means, with respect to any Person, any
corporation, or other entity of which a majority of the Voting Securities is
owned, directly or indirectly, by that Person.

         1.43    "Total Shares" has the meaning given it in Subsection 9.2.





                                       7
<PAGE>   8
         1.44    "Voting Securities" means (i) any securities that are entitled
to vote generally in the election of directors, in the admission of general
partners or in the selection of any other similar governing body and (ii) with
respect to the Corporation, all shares of the Corporation's nonvoting common
stock, par value $.01 per share (all of which are convertible into shares of
the Corporation's common stock, par value $.01 per share).

SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN

         2.1     Maximum Number of Shares.  Subject to the provisions of
Subsections 2.2 and 2.5 and Section 9 of this Plan, the aggregate number of
shares of Stock that may be issued, transferred or exercised pursuant to Awards
under the Plan shall be one million (1,000,000) shares of Stock.  Except as
provided in Section 8, awards to which shares of such Stock relate may be
awarded to any one Eligible Individual or allocated among the Eligible
Individuals, as determined by the Committee.

         2.2     Limitation of Shares.  For purposes of the limitations
specified in Subsection 2.1, the following principles shall apply:

                 (a)      the following shall count against and decrease the
         number of shares of Stock that may be issued for purposes of
         Subsection 2.1: (i) shares of Stock subject to outstanding Options,
         outstanding shares of Restricted Stock, and shares subject to
         outstanding Stock Appreciation Rights granted independent of Options
         (based on a good faith estimate by the Corporation or the Committee of
         the maximum number of shares for which the Stock Appreciation Right
         may be settled (assuming payment in full in shares of Stock)), and
         (ii) in the case of Options granted in tandem with Stock Appreciation
         Rights, the greater of the number of shares of Stock that would be
         counted if one or the other alone was outstanding (determined as
         described in clause (i) above);

                 (b)      the following shall be added back to the number of
         shares of Stock that may be issued for purposes of Subsection 2.1: (i)
         shares of Stock with respect to which Options, Stock Appreciation
         Rights granted independent of Options, or Restricted Stock Awards
         expire, are cancelled, or otherwise terminate without being exercised,
         converted, or vested, as applicable, and (ii) in the case of Options
         granted in tandem with Stock Appreciation Rights, shares of Stock as
         to which an Option has been surrendered in connection with the
         exercise of a related ("tandem") Stock Appreciation Right, to the
         extent the number surrendered exceeds the number issued upon exercise
         of the Stock Appreciation Right;

                 (c)      shares of Stock subject to Stock Appreciation Rights
         granted independent of Options (calculated as provided in clause (a)
         above) that are exercised and paid in cash shall be added back to the
         number of shares of Stock that may be issued for purposes of
         Subsection 2.1;

                 (d)      shares of Stock that are transferred by a Holder of
         an Award (or withheld by the Corporation) as full or partial payment
         to the Corporation of the purchase price of





                                       8
<PAGE>   9
         shares of Stock subject to an Option or the Corporation's or any
         Subsidiary's tax withholding obligations shall not be added back to
         the number of shares of Stock that may be issued for purposes of
         Subsection 2.1 and shall not again be subject to Awards; and

                 (e)      if the number of shares of Stock counted against the
         number of shares that may be issued for purposes of Subsection 2.1 is
         based upon an estimate made by the Corporation or the Committee as
         provided in clause (a) above and the actual number of shares of Stock
         issued pursuant to the applicable Award is greater or less than the
         estimated number, then, upon such issuance, the number of shares of
         Stock that may be issued pursuant to Subsection 2.1 shall be further
         reduced by the excess issuance or increased by the shortfall, as
         applicable.

         Notwithstanding the provisions of this Subsection 2.2, (i) no Stock
shall be treated as issuable under the Plan to Eligible Individuals (A) subject
to Section 16 of the Exchange Act if otherwise prohibited from issuance under
Rule 16b-3 or (B) subject to Section 162(m) if otherwise prohibited from
issuance under Section 162(m) and (ii) the Committee may impose restrictions
which are more limited than set forth herein with respect to shares of stock
subject to Awards that may be added back to the number of shares of stock that
may be issued for purposes of Subsection 2.1.

         2.3     Description of Shares.  The shares to be delivered under the
Plan shall be made available from (a) authorized but unissued shares of Stock,
(b) Stock held in the treasury of the Corporation, or (c) previously issued
shares of Stock reacquired by the Corporation, including shares purchased on
the open market, in each situation as the Board of Directors or the Committee
may determine from time to time at its sole option.

         2.4     Registration and Listing of Shares.  From time to time, the
Board of Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges, and other appropriate Persons
to make shares of Stock available for issuance pursuant to the exercise of
Awards.

         2.5     Reduction in Outstanding Shares of Stock.  Nothing in this
Section 2 shall impair the right of the Corporation to reduce the number of
outstanding shares of Stock pursuant to repurchases, redemptions, or otherwise;
provided, however, that no reduction in the number of outstanding shares of
Stock shall (a) impair the validity of any outstanding Award, whether or not
that Award is fully exercisable or fully vested, or (b) impair the status of
any shares of Stock previously issued pursuant to the exercise of an Award or
thereafter issued pursuant to a then-outstanding Award as duly authorized,
validly issued, fully paid, and nonassessable shares.





                                       9
<PAGE>   10
SECTION 3. ADMINISTRATION OF THE PLAN

         3.1     Committee.  The Board of Directors may administer the Plan
with respect to all Eligible Individuals or may delegate all or part of that
duty to the Committee; provided that the Committee shall not have the power to
appoint members of the Committee.  Except for references in Subsections 3.1,
3.2, and 3.3, and unless the context otherwise requires, references herein to
the Committee shall also refer to the Board of Directors as administrator of
the Plan.  The Committee shall be constituted so that, as long as Stock is
registered under Section 12 of the Exchange Act, each member of the Committee
shall be a Disinterested Person and so that the Plan in all other applicable
respects will qualify transactions related to the Plan for the exemptions from
Section 16(b) of the Exchange Act provided by Rule 16b-3 and the exemption from
the deductibility limitation imposed by Section 162(m) provided by the
performance-based compensation exception described in Section 162(m), to the
extent exemptions thereunder may be available.  The number of Persons that
shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors and, unless that majority
of the Board of Directors determines otherwise or Rule 16b-3 or Section 162(m)
is amended to require otherwise, shall be no less than two Persons.
Notwithstanding the foregoing, the Board of Directors may designate the
Compensation Committee of the Board of Directors to serve as the Committee
hereunder, provided that each member of such Compensation Committee is a
Disinterested Person.

         3.2     Duration, Removal, Etc.  The members of the Committee shall
serve at the discretion of the Board of Directors, which shall have the power,
at any time and from time to time, to remove members from or add members to the
Committee.  Removal from the Committee may be with or without cause.  Any
individual serving as a member of the Committee shall have the right to resign
from membership in the Committee by at least three days' written notice to the
Board of Directors.  The Board of Directors, and not the remaining members of
the Committee, shall have the power and authority to fill all vacancies on the
Committee.  The Board of Directors shall promptly fill any vacancy that causes
the number of members of the Committee to be below two or any other number that
Rule 16b-3 or Section 162(m) may require from time to time.

         3.3     Meetings and Actions of Committee.  The Board of Directors
shall designate which of the Committee members shall be the chairman of the
Committee.  If the Board of Directors fails to designate a Committee chairman,
the members of the Committee shall elect one of the Committee members as
chairman, who shall act as chairman until he ceases to be a member of the
Committee or until the Board of Directors elects a new chairman.  The Committee
shall hold its meetings at those times and places as the chairman of the
Committee may determine.  At all meetings of the Committee, a quorum for the
transaction of business shall be required and a quorum shall be deemed present
if at least a majority of the members of the Committee are present.  At any
meeting of the Committee, each member shall have one vote.  All decisions and
determinations of the Committee shall be made by the majority vote or majority
decision of all of its members present at a meeting at which a quorum is
present; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting that was duly called and held.
The





                                       10
<PAGE>   11
Committee may make any rules and regulations for the conduct of its business
that are not inconsistent with the provisions of the Plan, the Certificate of
Incorporation of the Corporation, the by-laws of the Corporation, and Rule
16b-3 and Section 162(m) so long as applicable, as the Committee may deem
advisable.

         3.4     Committee's Powers.  Subject to the express provisions of the
Plan and Rule 16b-3, the Committee shall have the authority, in its sole and
absolute discretion, to (a) adopt, amend, and rescind administrative and
interpretive rules and regulations relating to the Plan; (b) determine the
Eligible Individuals to whom, and the time or times at which, Awards shall be
granted; (c) determine the amount of cash and the number of shares of Stock,
Stock Appreciation Rights, or Restricted Stock Awards, or any combination
thereof, that shall be the subject of each Award; (d) determine the terms and
provisions of each Award Agreement (which need not be identical), including
provisions defining or otherwise relating to (i) the term and the period or
periods and extent of exercisability of the Options, (ii) the extent to which
the transferability of shares of Stock issued or transferred pursuant to any
Award is restricted, (iii) the effect of termination of employment of a Holder
on the Award, and (iv) the effect of approved leaves of absence (consistent
with any applicable regulations of the Internal Revenue Service); (e)
accelerate, pursuant to Section 8, the time of exercisability of any Option
that has been granted; (f) construe the respective Award Agreements and the
Plan; (g) make determinations of the Fair Market Value of the Stock pursuant to
the Plan; (h) delegate its duties under the Plan to such agents as it may
appoint from time to time, provided that the Committee may not delegate its
duties with respect to making Awards to, or otherwise with respect to Awards
granted to, Eligible Individuals who are subject to Section 16(b) of the
Exchange Act or Section 162(m); (i) subject to ratification by the Board of
Directors, terminate, modify, or amend the Plan; and (j) make all other
determinations, perform all other acts, and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee
deems appropriate.  Subject to Rule 16b-3 and Section 162(m), the Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan, in any Award, or in any Award Agreement in the manner and to the extent
it deems necessary or desirable to carry the Plan into effect, and the
Committee shall be the sole and final judge of that necessity or desirability.
The determinations of the Committee on the matters referred to in this
Subsection 3.4 shall be final and conclusive.

SECTION 4.  ELIGIBILITY AND PARTICIPATION

         4.1     Eligible Individuals.  Awards may be granted pursuant to the
Plan only to persons who are Eligible Individuals at the time of the grant
thereof.

         4.2     Grant of Awards.  Subject to the express provisions of the
Plan, the Committee shall determine which Eligible Individuals shall be granted
Awards from time to time.  In making grants, the Committee shall take into
consideration the contribution that the potential Holder has made or may make
to the success of the Corporation or its Subsidiaries and such other
considerations as the Board of Directors may from time to time specify.  The
Committee shall also determine the number of shares subject to each of the
Awards and shall authorize and cause the Corporation to grant Awards in
accordance with those determinations.





                                       11
<PAGE>   12
         4.3     Date of Grant.  Subject to the penultimate sentence of this
Subsection 4.3 and clause (ii) of the first sentence of Subsection 10.9, the
date on which the Committee completes all action resolving to offer an Award to
an individual, including the specification of the number of shares of Stock to
be subject to the Award, shall be the date on which the Award covered by an
Award Agreement is granted (the "Date of Grant"), even though certain terms of
the Award Agreement may not be determined at that time and even though the
Award Agreement may not be executed until a later time.  With respect to Awards
granted to Non-Employee Directors under Subsection 8.2(b) or 8.2(c), the Date
of Grant shall be the date identified in the applicable subsection.  In no
event shall a Holder gain any rights in addition to those specified by the
Committee in its grant, regardless of the time that may pass between the grant
of the Award and the actual execution of the Award Agreement by the Corporation
and the Holder.

         4.4     Award Agreements.  Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Corporation
incorporating those terms that the Committee shall deem necessary or desirable.
More than one Award may be granted under the Plan to the same Eligible
Individual and be outstanding concurrently.  In the event an Eligible
Individual is granted both one or more Incentive Options and one or more
Nonstatutory Options, those grants shall be evidenced by separate Award
Agreements, one for each of the Incentive Option grants and one for each of the
Nonstatutory Option grants.

         4.5     Limitation for Incentive Options.  Notwithstanding any
provision contained herein to the contrary, (a) a person shall not be eligible
to receive an Incentive Option unless he is an Employee of the Corporation or a
corporate Subsidiary (but not a partnership Subsidiary) and (b) a Person shall
not be eligible to receive an Incentive Option if, immediately before the time
the Option is granted, that person owns (within the meaning of Sections 422 and
424(d) of the Code) stock possessing more than ten percent of the total
combined voting power or value of all classes of outstanding stock of the
Corporation or a Subsidiary; provided, however, Subsection 4.5(b) shall not
apply if, at the time the Incentive Option is granted, the Exercise Price of
the Incentive





                                       12
<PAGE>   13
Option is at least one hundred ten percent of Fair Market Value and the
Incentive Option is not, by its terms, exercisable after the expiration of five
years from the Date of Grant.

         4.6     No Right to Award.  The adoption of the Plan shall not be
deemed to give any Person a right to be granted an Award.

SECTION 5. TERMS AND CONDITIONS OF OPTIONS

         Except as otherwise provided in Section 8 with respect to Awards to
Non-Employee Directors, all Options granted under the Plan shall comply with,
and the related Award Agreements shall be deemed to include and be subject to,
the terms and conditions set forth in this Section 5 (to the extent each term
and condition applies to the form of Option) and also to the terms and
conditions set forth in Sections 9 and 10; provided, however, that the
Committee may authorize an Award Agreement that expressly contains terms and
provisions that differ from the terms and provisions set forth in Subsections
9.2, 9.3, and 9.4 and any of the terms and provisions of Section 10 (other than
Subsections 10.5, 10.8 and 10.9).

         5.1     Number of Shares.  Each Award Agreement shall state the total
number of shares of Stock to which it relates.

         5.2     Vesting.  Each Award Agreement shall state the time or periods
in which, or the conditions upon satisfaction of which, the right to exercise
the Option or a portion thereof shall vest and the number of shares of Stock
for which the right to exercise the Option shall vest at each such time,
period, or fulfillment of condition.

         5.3     Expiration of Options.  Options may be exercised during the
term determined by the Committee and set forth in the Award Agreement; provided
that no Incentive Option shall by its terms be exercisable after the expiration
of a period of ten years commencing on the Date of Grant of the Incentive
Option.

         5.4     Exercise Price.  Each Award Agreement shall state the exercise
price per share of Stock (the "Exercise Price"); provided, however, that the
exercise price per share of Stock subject to an Incentive Option shall not be
less than the greater of (a) the par value per share of the Stock or (b) 100%
of the Fair Market Value per share of the Stock on the Date of Grant of the
Option, and the exercise price per share of Stock subject to a Nonstatutory
Option shall not be less than the par value per share of the Stock (but may be
less than the Fair Market Value of a share of the Stock on the Date of Grant).

         5.5     Method of Exercise.  The Option shall be exercisable only by
written notice of exercise (the "Exercise Notice") delivered to the Corporation
during the term of the Option, which notice shall (a) state the number of
shares of Stock with respect to which the Option is being exercised, (b) be
signed by the Holder of the Option or, if the Holder is dead or becomes
affected by a Disability, by the person authorized to exercise the Option
pursuant to Subsection 10.3, (c) be accompanied by the Exercise Price for all
shares of Stock for which the Option is





                                       13
<PAGE>   14
being exercised, and (d) include such other information, instruments, and
documents as may be required to satisfy any other condition to exercise
contained in the Award Agreement.  The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding provisions of this
Subsection 5.5 have been satisfied.

         5.6     Incentive Option Exercises.  Except as otherwise provided in
Subsection 10.3, during a Holder's lifetime, only the Holder may exercise an
Incentive Option.

         5.7     Medium and Time of Payment.  The Exercise Price of an Option
shall be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock owned by the Holder (including shares received
upon exercise of the Option or shares of Restricted Stock already held by the
Holder) and having a Fair Market Value at least equal to the aggregate Exercise
Price payable in connection with such exercise, or (c) by any combination of
clauses (a) and (b).  If the Committee elects to accept shares of Stock in
payment of all or any portion of the Exercise Price, then (for purposes of
payment of the Exercise Price) those shares of Stock shall be deemed to have a
cash value equal to their aggregate Fair Market Value determined as of the date
the certificate for such shares is delivered to the Corporation.  If the
Committee elects to accept shares of Restricted Stock in payment of all or any
portion of the Exercise Price, then an equal number of shares issued pursuant
to the exercise shall be restricted on the same terms and for the restriction
period remaining on the shares used for payment.

         5.8     Payment with Sale Proceeds.  In addition, at the request of a
Holder and to the extent permitted by applicable law, the Committee may (but
shall not be required to) approve arrangements with a brokerage firm under
which that brokerage firm, on behalf of the Holder, shall pay to the
Corporation the Exercise Price of the Option being exercised and the
Corporation shall promptly deliver the exercised shares of Stock to the
brokerage firm.  To accomplish this transaction, the Holder must deliver to the
Corporation an Exercise Notice containing irrevocable instructions from the
Holder to the Corporation to deliver the Stock certificates representing the
shares of Stock directly to the broker.  Upon receiving a copy of the Exercise
Notice acknowledged by the Corporation, the broker shall sell that number of
shares of Stock or loan the Holder an amount sufficient to pay the Exercise
Price and any withholding obligations due.  The broker then shall deliver to
the Corporation that portion of the sale or loan proceeds necessary to cover
the Exercise Price and any withholding obligations due.  The Committee shall
not approve any transaction of this nature if the Committee believes that the
transaction would give rise to the Holder's liability for short-swing profits
under Section 16(b) of the Exchange Act.

         5.9     Payment of Taxes.  The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the exercise of an Option or thereafter, the amount that the Committee deems
necessary to satisfy the Corporation's or its Subsidiary's current or future
obligation to withhold federal, state, or local income or other taxes that the
Holder incurs by exercising an Option.  In connection with the exercise of an
Option requiring tax withholding, a Holder may (a) direct the Corporation to
withhold from the shares of Stock to be issued to the Holder the number of
shares necessary to satisfy the Corporation's obligation to withhold taxes,





                                       14
<PAGE>   15
that determination to be based on the shares' Fair Market Value as of the date
of exercise; (b) deliver to the Corporation sufficient shares of Stock (based
upon the Fair Market Value as of the date of such delivery) to satisfy the
Corporation's tax withholding obligation, which tax withholding obligation is
based on the shares' Fair Market Value as of the later of the date of exercise
or the date as of which the shares of Stock issued in connection with such
exercise become includable in the income of the Holder; or (c) deliver
sufficient cash to the Corporation to satisfy its tax withholding obligations.
Holders who elect to use such a Stock withholding feature must make the
election at the time and in the manner that the Committee prescribes.  The
Committee may, at its sole option, deny any Holder's request to satisfy
withholding obligations through Stock instead of cash.  In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld or delivered as payment of
any tax withholding obligation is insufficient to discharge that tax
withholding obligation, then the Holder shall pay to the Corporation,
immediately upon the Committee's request, the amount of that deficiency in the
form of payment requested by the Committee.

         5.10    Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option.  Except as
otherwise provided in Subsection 9.3, with respect to any Incentive Option
granted under the Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any Subsidiary (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Corporation or its Subsidiaries (or a
predecessor corporation of any such corporation) that first become purchasable
by a Holder in any calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section 422 of the
Code or applicable regulations or rulings from time to time.  As used in the
previous sentence, Fair Market Value shall be determined as of the Date of
Grant of the Incentive Option.  For purposes of this Subsection 5.10,
"predecessor corporation" means (a) a corporation that was a party to a
transaction described in Section 424(a) of the Code (or which would be so
described if a substitution or assumption under that Section had been effected)
with the Corporation, (b) a corporation which, at the time the new incentive
stock option (within the meaning of Section 422 of the Code) is granted, is a
Subsidiary of the Corporation or a predecessor corporation of any such
corporations, or (c) a predecessor corporation of any such corporations.
Failure to comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.

         5.11    No Fractional Shares.  The Corporation shall not in any case
be required to sell, issue, or deliver a fractional share with respect to any
Option.  In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same
fraction (as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.

         5.12    Modification, Extension, and Renewal of Options.  Subject to
the terms and conditions of and within the limitations of the Plan, Rule 16b-3,
and any consent required by the last sentence of this Subsection 5.12, the
Committee may (a) modify, extend, or renew





                                       15
<PAGE>   16
outstanding Options granted under the Plan, (b) accept the surrender of Options
outstanding hereunder (to the extent not previously exercised) and authorize
the granting of new Options in substitution for outstanding Options (to the
extent not previously exercised), and (c) amend the terms of an Incentive
Option at any time to include provisions that have the effect of changing the
Incentive Option to a Nonstatutory Option.  Nevertheless, without the consent
of the Holder, the Committee may not modify any outstanding Options so as to
specify a higher or lower Exercise Price or accept the surrender of outstanding
Incentive Options and authorize the granting of new Options in substitution
therefor specifying a higher or lower Exercise Price.  In addition, no
modification of an Option granted hereunder shall, without the consent of the
Holder, alter or impair any rights or obligations under any Option theretofore
granted to such Holder under the Plan except, with respect to Incentive
Options, as may be necessary to satisfy the requirements of Section 422 of the
Code or as permitted in clause (c) of this Subsection 5.12.

         5.13    Other Agreement Provisions.  The Award Agreements authorized
under the Plan shall contain such provisions in addition to those required by
the Plan (including, without limitation, restrictions or the removal of
restrictions upon the exercise of the Option and the retention or transfer of
shares thereby acquired) as the Committee may deem advisable.  Each Award
Agreement shall identify the Option evidenced thereby as an Incentive Option or
Nonstatutory Option, as the case may be, and no Award Agreement shall cover
both an Incentive Option and a Nonstatutory Option.  Each Award Agreement
relating to an Incentive Option granted hereunder shall contain such
limitations and restrictions upon the exercise of the Incentive Option to which
it relates as shall be necessary for the Incentive Option to which such Award
Agreement relates to constitute an incentive stock option, as defined in
Section 422 of the Code.

         5.14    Option Status.  To the extent an Incentive Option (or any
portion thereof) fails to constitute an incentive stock option under Section
422 of the Code, such portion of the Incentive Option which fails to so qualify
shall be deemed to be a Nonstatutory Option under this Plan.

SECTION 6. STOCK APPRECIATION RIGHTS

         All Stock Appreciation Rights granted under the Plan shall comply
with, and the related Award Agreements shall be deemed to include and be
subject to, the terms and conditions set forth in this Section 6 (to the extent
each term and condition applies to the form of Stock Appreciation Right) and
also the terms and conditions set forth in Sections 9 and 10; provided,
however, that the Committee may authorize an Award Agreement related to a Stock
Appreciation Right that expressly contains terms and provisions that differ
from the terms and provisions set forth in Subsections 9.2, 9.3, and 9.4 and
any of the terms and provisions of Section 10 (other than Subsection 10.9).

         6.1     Form of Right.  A Stock Appreciation Right may be granted to
an Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option, or (b) independent of an
Option.

         6.2     Rights Related to Options.  A Stock Appreciation Right granted
pursuant to an Option shall entitle a Holder, upon exercise, to surrender that
Option or any portion thereof, to the extent unexercised, and to receive
payment of an amount computed pursuant to Subsection





                                       16
<PAGE>   17
6.2(b).  That Option shall then cease to be exercisable to the extent
surrendered.  Stock Appreciation Rights granted in connection with an Option
shall be subject to the terms of the Award Agreement governing the Option,
which shall comply with the following provisions in addition to those
applicable to Options:

                 (a)      Exercise and Transfer.  Subject to Subsection 10.8, a
         Stock Appreciation Right granted in connection with an Option shall be
         exercisable only at such time or times and only to the extent that the
         related Option is exercisable and shall not be transferable except to
         the extent that the related Option is transferable.

                 (b)      Value of Right.  Upon the exercise of a Stock
         Appreciation Right related to an Option, a Holder shall be entitled to
         receive payment from the Corporation of an amount determined by
         Multiplying:

                          (i)     The difference obtained by subtracting the
                 Exercise Price of a share of Stock specified in the related
                 Option from the Fair Market Value of a share of Stock on the
                 date of exercise of the Stock Appreciation Right, by

                          (ii)    The number of shares as to which that Stock
                 Appreciation Right has been exercised.

         6.3     Right Without Option.  A Stock Appreciation Right granted
independent of an Option shall be exercisable as determined by the Committee
and set forth in the Award Agreement governing the Stock Appreciation Right,
which Award Agreement shall comply with the following provisions:

                 (a)      Number of Shares.  Each Award Agreement shall state
         the total number of shares of Stock to which the Stock Appreciation
         Right relates.

                 (b)      Vesting.  Each Award Agreement shall state the time
         or periods in which the right to exercise the Stock Appreciation Right
         or a portion thereof shall vest and the number of shares of Stock for
         which the right to exercise the Stock Appreciation Right shall vest at
         each such time or period.

                 (c)      Expiration of Rights.  Each Award Agreement shall
         state the date at which the Stock Appreciation Rights shall expire if
         not previously exercised.

                 (d)      Value of Right.  Each Stock Appreciation Right shall
         entitle a Holder, upon exercise thereof, to receive payment of an
         amount determined by multiplying:

                          (i)     The difference obtained by subtracting the
                 Fair Market Value of a share of Stock on the Date of Grant of
                 the Stock Appreciation Right from the Fair Market Value of a
                 share of Stock on the date of exercise of that Stock
                 Appreciation Right, by

                          (ii)    The number of shares as to which the Stock
                 Appreciation Right has been exercised.





                                       17
<PAGE>   18
         6.4     Limitations on Rights.  Notwithstanding Subsections 6.2(b) and
6.3(d), the Committee may limit the amount payable upon exercise of a Stock
Appreciation Right.  Any such limitation must be determined as of the Date of
Grant and be noted on the Award Agreement evidencing the Holder's Stock
Appreciation Right.

         6.5     Payment of Rights.  Payment of the amount determined under
Subsection 6.2(b) or 6.3(d) and Subsection 6.4 may be made, in the sole
discretion of the Committee, unless specifically provided otherwise in the
Award Agreement, solely in whole shares of Stock valued at Fair Market Value on
the date of exercise of the Stock Appreciation Right, solely in cash, or in a
combination of cash and whole shares of Stock.  If the Committee decides to
make full payment in shares of Stock and the amount payable results in a
fractional share, payment for the fractional share shall be made in cash.

         6.6     Payment of Taxes.  The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the exercise of a Stock Appreciation Right or thereafter, the amount that the
Committee deems necessary to satisfy the Corporation's or its Subsidiary's
current or future obligation to withhold federal, state, or local income or
other taxes that the Holder incurs by exercising a Stock Appreciation Right.
In connection with the exercise of a Stock Appreciation Right requiring tax
withholding, a Holder may (a) direct the Corporation to withhold from the
shares of Stock to be issued to the Holder the number of shares necessary to
satisfy the Corporation's obligation to withhold taxes, that determination to
be based on the shares' Fair Market Value as of the date of exercise; (b)
deliver to the Corporation sufficient shares of Stock (based upon the Fair
Market Value as of the date of such delivery) to satisfy the Corporation's tax
withholding obligation, which tax withholding obligation is based on the
shares' Fair Market Value as of the later of the date of exercise or the date
as of which the shares of Stock issued in connection with such exercise become
includable in the income of the Holder; or (c) deliver sufficient cash to the
Corporation to satisfy its tax withholding obligation.  Holders who elect to
have Stock withheld pursuant to (a) or (b) above must make the election at the
time and in the manner that the Committee prescribes.  The Committee may, in
its sole discretion, deny any Holder's request to satisfy withholding
obligation through Stock instead of cash.  In the





                                       18
<PAGE>   19
event the Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld or delivered as
payment of any tax withholding obligation is insufficient to discharge that tax
withholding obligation, then the Holder shall pay to the Corporation,
immediately upon the Committee's request, the amount of that deficiency in the
form of payment requested by the Committee.

         6.7     Other Agreement Provisions.  The Award Agreements authorized
relating to Stock Appreciation Rights shall contain such provisions in addition
to those required by the Plan (including, without limitation, restrictions or
the removal of restrictions upon the exercise of the Stock Appreciation Right
and the retention or transfer of shares thereby acquired) as the Committee may
deem advisable.

SECTION 7. RESTRICTED STOCK AWARDS

         All Restricted Stock Awards granted under the Plan shall comply with
and be subject to, and the related Award Agreements shall be deemed to include,
the terms and conditions set forth in this Section 7 and also to the terms and
conditions set forth in Sections 9 and 10; provided, however, that the
Committee may authorize an Award Agreement related to a Restricted Stock Award
that expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and the terms and
provisions set forth in Section 10 (other than Subsections 10.8 and 10.9).

         7.1     Restrictions.  All shares of Restricted Stock Awards granted
or sold pursuant to the Plan shall be subject to the following conditions:

                 (a)      Transferability.  The shares may not be sold,
         transferred, or otherwise alienated or hypothecated until the
         restrictions are removed or expire.

                 (b)      Conditions to Removal of Restrictions.  Conditions to
         removal or expiration of the restrictions may include, but are not
         required to be limited to, continuing employment or service as a
         director, officer, consultant, or advisor or achievement of
         performance objectives described in the Award Agreement.

                 (c)      Legend.  Each certificate representing Restricted
         Stock Awards granted pursuant to the Plan shall bear a legend making
         appropriate reference to the restrictions imposed.

                 (d)      Possession.  The Committee may require the
         Corporation to retain physical custody of the certificates
         representing Restricted Stock Awards during the restriction period and
         may require a Holder of the Award to execute stock powers in blank for
         those certificates and deliver those stock powers to the Corporation,
         or the Committee may require the Holder to enter into an escrow
         agreement providing that the certificates representing Restricted
         Stock Awards granted or sold pursuant to the Plan shall remain in the
         physical custody of an escrow holder until all restrictions are
         removed or expire.





                                       19
<PAGE>   20
                 (e)      Other Conditions.  The Committee may impose other
         conditions on any shares granted or sold as Restricted Stock Awards
         pursuant to the Plan as it may deem advisable, including without
         limitation (i) restrictions under the Securities Act or Exchange Act,
         (ii) the requirements of any securities exchange upon which the shares
         or shares of the same class are then listed, and (iii) any state
         securities law applicable to the shares.

         7.2     Expiration of Restrictions.  The restrictions imposed in
Subsection 7.1 on Restricted Stock Awards shall lapse as determined by the
Committee and set forth in the applicable Award Agreement, and the Corporation
shall promptly deliver to the Holder of the Restricted Stock Award a
certificate representing the number of shares for which restrictions have
lapsed, free of any restrictive legend relating to the lapsed restrictions.
Each Restricted Stock Award may have a different restriction period as
determined by the Committee in its sole discretion.  The Committee may, in its
discretion, prospectively reduce the restriction period applicable to a
particular Restricted Stock Award.

         7.3     Rights as Stockholder.  Subject to the provisions of
Subsections 7.1 and 10.9, the Committee may, in its discretion, determine what
rights, if any, a Holder shall have with respect to the Restricted Stock Awards
granted or sold, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.

         7.4     Payment of Taxes.  The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation) the amount that
the Committee deems necessary to satisfy the Corporation's or its Subsidiary's
current or future obligation to withhold federal, state, or local income or
other taxes that the Holder incurs by reason of the Restricted Stock Award.  A
Holder may (a) direct the Corporation to withhold from the shares of Stock to
be issued to the Holder the number of shares necessary to satisfy the
Corporation's obligation to withhold taxes, that determination to be based on
the shares' Fair Market Value as of the date on which tax withholding is to be
made; (b) deliver to the Corporation sufficient shares of Stock (based upon the
Fair Market Value as of the date of such delivery) to satisfy the Corporation's
tax withholding obligation, which tax withholding obligation is based on the
shares' Fair Market Value as of the later of the date of issuance or the date
as of which the shares of Stock issued become includable in the income of the
Holder; or (c) deliver sufficient cash to the Corporation to satisfy its tax
withholding obligations.  Holders who elect to have Stock withheld pursuant to
(a) or (b) above must make the election at the time and in the manner that the
Committee prescribes.  The Committee may, in its sole discretion, deny any
Holder's request to satisfy withholding obligations through Stock instead of
cash.  In the event the Committee subsequently determines that the aggregate
Fair Market Value (as determined above) of any shares of Stock withheld or
delivered as payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then the Holder shall pay to the
Corporation, immediately upon the Committee's request, the amount of that
deficiency.





                                       20
<PAGE>   21
         7.5     Other Agreement Provisions.  The Award Agreements relating to
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.

SECTION 8.  AWARDS TO NON-EMPLOYEE DIRECTORS

         Except as otherwise provided in this Section 8 or the applicable Award
Agreement, Awards granted pursuant to this Section 8 shall be subject to the
conditions of Section 5 to the extent permitted under Rule 16b-3.

         8.1     Ineligibility for Other Awards.  Non-Employee Directors shall
not be eligible to receive any Awards under the Plan other than the Awards
specified in this Section 8.

         8.2     Awards of Nonstatutory Options.

                 (a)      Eligibility.  Each Non-Employee Director of the
         Corporation shall be eligible for Awards as specified in Subsections
         8.2(b) or 8.2(c) below.

                 (b)      Awards to Non-Employee Directors at the Closing of
         Initial Public Offering.  Each Non-Employee Director as of the closing
         date of the Initial Public Offering (including persons who are elected
         as a Non- Employee Director in conjunction with the closing of the
         Initial Public Offering) shall be awarded a Nonstatutory Option to
         purchase 5,000 shares of Stock at an Exercise Price per share equal to
         the public offering price set forth on the cover page of the
         Corporation's final prospectus pursuant to which the Initial Public
         Offering is effected.

                 (c)      Awards to Non-Employee Directors Elected or Appointed
         After the Closing of the Initial Public Offering.  Each Non-Employee
         Director who is elected or appointed to the Board of Directors after
         the closing date of the Initial Public Offering, and has not served as
         a member of the Board of Directors before such date, shall be awarded
         a Nonstatutory Option to purchase 5,000 shares of Stock upon the date
         of such election or appointment to the Board of Directors at an
         Exercise Price per share equal to the average Fair Market Value of a
         share of Stock for the five trading days immediately preceding the
         Date of Grant.

         8.3     Available Stock.  The automatic Awards specified in Subsection
8.2 shall be made in the amounts specified in Subsection 8.2 only if the number
of shares of Stock available to be issued, transferred or exercised pursuant to
Awards under this Plan (as calculated in Section 2) is sufficient to make all
automatic grants required to be made by Subsection 8.2 on the Date of Grant of
those automatic Awards.  In the event that the number of shares of Stock that
are available to be issued, transferred, or exercised pursuant to Awards under
the Plan on the Date of Grant of the automatic Awards described in Subsection
8.2 is insufficient to permit the grant of the entire number of shares
specified in Subsection 8.2, then the number of available shares shall be
apportioned equally among the automatic Awards made on that date, and the
number of





                                       21
<PAGE>   22
shares apportioned to each automatic Award shall be the amount of shares
automatically subject to that automatic Award.

         8.4     Exercisability.  Each Nonstatutory Option granted pursuant to
this Section 8 shall become exercisable with respect to 1,000 shares of Stock
on each of the first five anniversaries of the Date of Grant.  Each
Nonstatutory Option awarded pursuant to this Section 8 shall expire 10 years
after the Date of Grant.

SECTION 9. ADJUSTMENT PROVISIONS

         9.1     Adjustment of Awards and Authorized Stock.  The terms of an
Award and the number of shares of Stock authorized pursuant to Subsection 2.1
for issuance under the Plan shall be subject to adjustment from time to time,
in accordance with the following provisions:

                 (a)      If at any time, or from time to time, the Corporation
         shall subdivide as a whole (by reclassification, by a Stock split, by
         the issuance of a distribution on Stock payable in Stock, or
         otherwise) the number of shares of Stock then outstanding into a
         greater number of shares of Stock, then (i) the maximum number of
         shares of Stock available for the Plan as provided in Subsection 2.1
         shall be increased proportionately, and the kind of shares or other
         securities available for the Plan shall be appropriately adjusted,
         (ii) the number of shares of Stock (or other kind of shares or
         securities) that may be acquired under any Award shall be increased
         proportionately, and (iii) the price (including Exercise Price) for
         each share of Stock (or other kind of shares or securities) subject to
         then outstanding Awards shall be reduced proportionately, without
         changing the aggregate purchase price or value as to which outstanding
         Awards remain exercisable or subject to restrictions.

                 (b)      If at any time, or from time to time, the Corporation
         shall consolidate as a whole (by reclassification, reverse Stock
         split, or otherwise) the number of shares of Stock then outstanding
         into a lesser number of shares of Stock, (i) the maximum number of
         shares of Stock available for the Plan as provided in Subsection 2.1
         shall be decreased proportionately, and the kind of shares or other
         securities available for the Plan shall be appropriately adjusted,
         (ii) the number of shares of Stock (or other kind of shares or
         securities) that may be acquired under any Award shall be decreased
         proportionately, and (iii) the price (including Exercise Price) for
         each share of Stock (or other kind of shares or securities) subject to
         then outstanding Awards shall be increased proportionately, without
         changing the aggregate purchase price or value as to which outstanding
         Awards remain exercisable or subject to restrictions.

                 (c)      Whenever the number of shares of Stock subject to
         outstanding Awards and the price for each share of Stock subject to
         outstanding Awards are required to be adjusted as provided in this
         Subsection 9.1, the Committee shall promptly prepare a notice setting
         forth, in reasonable detail, the event requiring adjustment, the
         amount of the adjustment, the method by which such adjustment was
         calculated, and the change in price and the number of shares of Stock,
         other securities, cash, or property purchasable subject





                                       22
<PAGE>   23
         to each Award after giving effect to the adjustments.  The Committee
         shall promptly give each Holder such a notice.

                 (d)      Adjustments under Subsections 9.1(a) and (b) shall be
         made by the Committee, and its determination as to what adjustments
         shall be made and the extent thereof shall be final, binding, and
         conclusive.  No fractional interest shall be issued under the Plan on
         account of any such adjustments.

         9.2     Changes in Control.  Upon the occurrence of a Change in
Control, subject to Subsection 1.7(b) (a) each Holder of an Option shall
immediately be granted corresponding Stock Appreciation Rights; (b) all
outstanding Stock Appreciation Rights and Options shall immediately become
fully vested and exercisable in full, including that portion of any Stock
Appreciation Right or Option that pursuant to the terms and provisions of the
applicable Award Agreement had not yet become exercisable (the total number of
shares of Stock as to which a Stock Appreciation Right or Option is exercisable
upon the occurrence of a Change in Control is referred to herein as the "Total
Shares"); and (c) the restriction period of any Restricted Stock Award shall
immediately be accelerated and the restrictions shall expire.  If a Change in
Control involves a Restructuring or occurs in connection with a series of
related transactions involving a Restructuring and if such Restructuring is in
the form of a Non-Surviving Event and as a part of such Restructuring shares of
Stock, other securities, cash, or property shall be issuable or deliverable in
exchange for Stock, then a Holder of an Award shall be entitled to purchase or
receive (in lieu of the Total Shares that the Holder would otherwise be
entitled to purchase or receive), as appropriate for the form of Award, the
number of shares of Stock, other securities, cash, or property to which that
number of Total Shares would have been entitled in connection with such
Restructuring (and, for Options, at an aggregate exercise price equal to the
Exercise Price that would have been payable if that number of Total Shares had
been purchased on the exercise of the Option immediately before the
consummation of the Restructuring).  Nothing in this Subsection 9.2 shall
impose on a Holder the obligation to exercise any Award immediately before or
upon the Change of Control or cause the Holder to forfeit the right to exercise
the Award during the remainder of the original term of the Award because of a
Change in Control.

         9.3     Restructuring Without Change in Control.  In the event a
Restructuring shall occur at any time while there is any outstanding Award
hereunder and that Restructuring does not occur in connection with a Change in
Control or a series of related transactions involving a Change in Control,
then:

                 (a)      no outstanding Option or Stock Appreciation Right
         shall immediately become fully vested and exercisable in full merely
         because of the occurrence of the Restructuring;

                 (b)      no Holder of an Option shall automatically be granted
         corresponding Stock Appreciation Rights;





                                       23
<PAGE>   24
                 (c)      the restriction period of any Restricted Stock Award
         shall not immediately be accelerated and the restrictions expire
         merely because of the occurrence of the Restructuring; and

                 (d)      at the option of the Committee, the Committee may
         (but shall not be required to) cause the Corporation to take any one
         or more of the following actions with respect to outstanding Awards
         other than Awards granted pursuant to Section 8 hereof:

                          (i)     accelerate in whole or in part the time of
                 the vesting and exercisability of any one or more of the
                 outstanding Stock Appreciation Rights and Options so as to
                 provide that those Stock Appreciation Rights and Options shall
                 be exercisable before, upon, or after the consummation of the
                 Restructuring;

                          (ii)    grant each Holder of an Option corresponding
                 Stock Appreciation Rights;

                          (iii)   accelerate in whole or in part the expiration
                 of some or all of the restrictions on any Restricted Stock
                 Award;

                          (iv)    if the Restructuring is in the form of a
                 Non-Surviving Event, cause the surviving entity to assume in
                 whole or in part any one or more of the outstanding Awards
                 upon such terms and provisions as the Committee deems
                 desirable; or

                          (v)     redeem in whole or in part any one or more of
                 the outstanding Awards (whether or not then exercisable) in
                 consideration of a cash payment, as such payment may be
                 reduced for tax withholding obligations as contemplated in
                 Subsections 5.9, 6.6, or 7.4, as applicable, in an amount
                 equal to:

                                  (A)      for Options and Stock Appreciation
                          Rights granted in connection with Options, the excess
                          of (1) the Fair Market Value, determined as of the
                          date immediately preceding the consummation of the
                          Restructuring, of the aggregate number of shares of
                          Stock subject to the Award and as to which the Award
                          is being redeemed over (2) the Exercise Price for
                          that number of shares of Stock;

                                  (B)      for Stock Appreciation Rights not
                          granted in connection with an Option, the excess of
                          (1) the Fair Market Value, determined as of the date
                          immediately preceding the consummation of the
                          Restructuring, of the aggregate number of shares of
                          Stock subject to the Award and as to which the Award
                          is being redeemed over (2) the Fair Market Value of
                          the number of shares of Stock on the Date of Grant;
                          and

                                  (C)      for Restricted Stock Awards, the
                          Fair Market Value, determined as of the date
                          immediately preceding the consummation of the





                                       24
<PAGE>   25
                          Restructuring, of the aggregate number of shares of
                          Stock subject to the Award and as to which the Award
                          is being redeemed.

The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Subsection 9.3.  In the event of any
election or action taken by the Corporation pursuant to this Subsection 9.3
that requires the amendment or cancellation of any Award Agreement as may be
specified in any notice to the Holder thereof, that the Holder shall promptly
deliver that Award Agreement to the Corporation in order for that amendment or
cancellation to be implemented by the Corporation and the Committee.  The
failure of the Holder to deliver any such Award Agreement to the Corporation as
provided in the preceding sentence shall not in any manner affect the validity
or enforceability of any action taken by the Corporation and the Committee
under this Subsection 9.3, including without limitation any redemption of an
Award as of the consummation of a Restructuring.  Any cash payment to be made
by the Corporation pursuant to this Subsection 9.3 in connection with the
redemption of any outstanding Awards shall be paid to the Holder thereof
currently with the delivery to the Corporation of the Award Agreement
evidencing that Award; provided, however, that any such redemption shall be
effective upon the consummation of the Restructuring notwithstanding that the
payment of the redemption price may occur subsequent to the consummation.  If
all or any portion of an outstanding Award is to be exercised or accelerated
upon or after the consummation of a Restructuring that does not occur in
connection with a Change in Control and is in the form of a Non-Surviving
Event, and as a part of that Restructuring shares of stock, other securities,
cash, or property shall be issuable or deliverable in exchange for Stock, then
the Holder of the Award shall thereafter be entitled to purchase or receive (in
lieu of the number of shares of Stock that the Holder would otherwise be
entitled to purchase or receive) the number of shares of Stock, other
securities, cash, or property to which such number of shares of Stock would
have been entitled in connection with the Restructuring (and, for Options, upon
payment of the aggregate exercise price equal to the Exercise Price that would
have been payable if that number of Total Shares had been purchased on the
exercise of the Option immediately before the consummation of the
Restructuring) and such Award Agreement shall be subject to adjustments that
shall be as nearly equivalent as may be practical to the adjustments provided
for in this Section 9.  Notwithstanding the provisions of this Subsection 9.3,
the Committee shall not have the power or authority to take any action pursuant
to this Subsection 9.3 that causes the Plan not to be in compliance with the
requirements of Rule 16b-3 and any such action purported to be taken by the
Committee shall be null and void and without any force or effect.

         9.4     Notice of Restructuring.  The Corporation shall attempt to
keep all Holders informed with respect to any Restructuring or of any potential
Restructuring to the same extent that the Corporation's stockholders are
informed by the Corporation of any such event or potential event.

SECTION 10. ADDITIONAL PROVISIONS

         10.1    Termination of Employment.  Except as provided below, if a
Holder is an Eligible Individual because the Holder is an Employee and if that
employment relationship is terminated for any reason other than (a) Normal
Retirement, (b) that Holder's death, or (c) that Holder's





                                       25
<PAGE>   26
Disability (hereinafter defined), then any and all Awards held by such Holder
in such Holder's capacity as an Employee as of the date of the termination that
are not yet exercisable (or for which restrictions have not lapsed) shall
become null and void as of the date of such termination and the portion, if
any, of such Awards that are exercisable as of the date of termination shall be
exercisable for a period of the lesser of (i) the remainder of the term of the
Award or (ii) the date which is 180 days after the date of termination.  If a
Holder is an Eligible Individual because such Holder is an Employee and if that
employment relationship is terminated as a result of (a) Normal Retirement, (b)
that Holder's death, or (c) that Holder's Disability, then any and all Awards
held by such Holder in such Holder's capacity as an Employee as of the date of
termination that are not yet exercisable (or for which restrictions have not
lapsed) shall become exercisable (and the restrictions thereon, if any, shall
lapse) as of the date of termination, and all such Awards held by that Holder
as of the date of termination that are exercisable (either as a result of this
sentence or otherwise) shall be exercisable for a period of the lesser of (i)
the remainder of the term of the Award or (ii) the date which is 180 days after
the date of termination.  Any portion of any such Award not exercised upon the
expiration of the lesser of the periods specified in (i) or (ii) of the
preceding two sentences shall be null and void upon the expiration of such
period, as applicable.  If a Holder is an Eligible Individual because the
Holder is an Employee and if that employment relationship is terminated by the
Corporation for "cause" (hereafter defined), then any and all Awards held by
such Holder in such Holder's capacity as an Employee as of the date of the
termination shall become null and void as of the date of such termination.
"Cause" shall have the meanings given such term in the employment agreement of
the Holder (if any) with the Corporation or a Subsidiary of the Corporation;
provided, however, that if that Holder has no employment agreement, "cause"
shall mean, as determined by the Board of Directors in the sole discretion
exercised in good faith of the Board of Directors, (a) the breach by the Holder
of any nondisclosure, noncompetition, or other agreement to which the Holder
and the Corporation are parties, (b) the commission by the Holder of a felony
or of a misdemeanor involving moral turpitude, (c) the participation by the
Holder in any fraud, (d) dishonesty by the Holder that is detrimental to the
best interest of the Corporation, (e) the willful and continued failure by the
Holder to substantially perform his duties to the Corporation (other than any
such failure resulting from the Holder's incapacity due to physical or mental
illness) after written demand for substantial performance is delivered by the
Corporation specifically identifying the manner in which the Corporation
believes the Holder has not substantially performed his duties, or (f) the
willful engaging by the Holder in misconduct which is materially injurious to
the Corporation, monetarily or otherwise.

         10.2    Other Loss of Eligibility.  Except as provided below, if a
Holder is an Eligible Individual because the Holder is serving in a capacity
other than as an Employee and if that capacity is terminated for any reason
other than the Holder's death or Disability, then that portion, if any, of any
and all Awards held by the Holder that were granted because of that capacity
which are not yet exercisable (or for which restrictions have not lapsed) as of
the date of the termination shall become null and void as of the date of the
termination and the portion, if any, of any and all Awards held by the Holder
that are then exercisable as of the date of the termination shall survive the
termination and shall be exercisable for a period of the lesser of (a) the
remainder of the term of the Award or (b) 180 days following the date such
capacity is terminated.  If a Holder is an Eligible Individual because the
Holder is serving in a capacity other





                                       26
<PAGE>   27
than as an Employee and if that capacity is terminated by reason of the
Holder's death or Disability, then the portion, if any, of any and all Awards
held by the Holder that are not yet exercisable (or for which restrictions have
not lapsed) as of the date of that termination for death or Disability shall
become exercisable (and the restrictions thereon, if any, shall lapse) and all
such Awards held by that Holder as of the date of termination that are
exercisable (either as a result of this sentence or otherwise) shall be
exercisable for a period of the lesser of (a) the remainder of the term of the
Award or (b) the date which is 180 days after the date of termination.  Any
portion of an Award not exercised upon the expiration of the lesser of the
periods specified in (a) or (b) of the preceding two sentences shall be null
and void upon the expiration of such period, as applicable.  If a Holder is an
Eligible Individual because the Holder is serving in a capacity other than as
an Employee and if that capacity is terminated by the Corporation for "cause"
(hereafter defined), then any and all Awards held by the Holder that were
granted because of that capacity shall become null and void as of the date of
such termination.  "Cause" shall have the meaning given such term in the
contractual agreement of the Holder (if any) with the Corporation or a
Subsidiary of the Corporation; provided, however, that if that Holder has no
contractual agreement, "cause" shall mean, as determined by the Board of
Directors in the sole discretion exercised in good faith of the Board of
Directors, (a) the breach by the Holder of any other agreement to which the
Holder and the Corporation are parties, (b) the commission by the Holder of a
felony or of a misdemeanor involving moral turpitude, (c) the participation by
the Holder in any fraud, (d) dishonesty by the Holder that is detrimental to
the best interest of the Corporation, (e) the willful and continued failure by
the Holder to substantially perform his duties to the Corporation (other than
any such failure resulting from the Holder's incapacity due to physical or
mental illness) after written demand for substantial performance is delivered
by the Corporation specifically identifying the manner in which the Corporation
believes the Holder has not substantially performed his duties, or (f) the
willful engaging by the Holder in misconduct which is materially injurious to
the Corporation, monetarily or otherwise.

         10.3    Death or Disability.  Upon the death or Disability of a
Holder, any and all Awards held by the Holder that are not yet exercisable (or
for which restrictions have not lapsed) as of the date of the Holder's death or
Disability may be exercised by, in the case of the Holder's Disability, the
Holder, his guardian or his legal representative or, in the case of the
Holder's death, by the Holder's legal representatives, heirs, legatees, or
distributees, in each case for the periods prescribed in Subsection 10.1 or
Subsection 10.2, as applicable.  "Disability" shall have the meaning given it
in the employment agreement of the Holder; provided, however, that if that the
Holder has no employment agreement, "Disability" shall mean, as determined by
the Board of Directors in the sole discretion exercised in good faith of the
Board of Directors, a physical or mental impairment of sufficient severity that
either the Holder is unable to continue performing the duties he performed
before such impairment or the Holder's condition entitles him to disability
benefits under any insurance or employee benefit plan of the Corporation or its
Subsidiaries and that impairment or condition is cited by the Corporation as
the reason for termination of the Holder's employment or participation as a
member of the Board of Directors.

         10.4    Leave of Absence.  With respect to an Award, the Committee
may, in its sole discretion, determine that any Holder who is on leave of
absence for any reason will be





                                       27
<PAGE>   28
considered to still be in the employ of the Corporation, provided that rights
to that Award during a leave of absence will be limited to the extent to which
those rights were earned, vested, or exercisable when the leave of absence
began.

         10.5    Transferability of Awards.

                 (a)      Permitted Transferees.  The Committee may, in its
         discretion, permit a Holder to transfer all or any portion of an
         Option or Stock Appreciation Right, or authorize all or a portion of
         any Option or Stock Appreciation Right to be granted to an Eligible
         Individual to be on terms which permit transfer by such Holder, to (i)
         the spouse, children or grandchildren of the Holder ("Immediate Family
         Members"), (ii) a trust or trusts for the exclusive benefit of such
         Immediate Family Members, or (iii) a partnership in which such
         Immediate Family Members are the only partners (collectively,
         "Permitted Transferees"); provided that (x) there may be no
         consideration for any such transfer and (y) subsequent transfers of
         Awards transferred as provided above shall be prohibited except
         subsequent transfers back to the original Holder of the Award and
         transfers to other Permitted Transferees of the original Holder.
         Award Agreements evidencing Options or Stock Appreciation Rights with
         respect to which such transferability is authorized at the time of
         grant must be approved by the Committee, and must expressly provide
         for transferability in a manner consistent with this subsection
         10.5(a).

                 (b)      Qualified Domestic Relations Orders.  Options and
         Stock Appreciation rights may be transferred pursuant to qualified
         domestic relations orders entered or approved by a court of competent
         jurisdiction upon delivery to the Company of written notice of such
         transfer and a certified copy of such order.

                 (c)      Other Transfers.  Except as expressly permitted by
         subsections 10.5(a) and 10.5(b), Awards requiring exercise shall not
         be transferable other than by will or the laws of descent and
         distribution.

                 (d)      Effect of Transfer.  Following the transfer of any
         Award as contemplated by Subsections 10.5(a), 10.5(b) and 10.5(c), (i)
         such Award shall continue to be subject to the same terms and
         conditions as were applicable immediately prior to transfer, provided
         that the term "Holder" shall be deemed to refer to the Permitted
         Transferee, the recipient under a qualified domestic relations order,
         or the estate or heirs of a deceased Holder, as applicable, to the
         extent appropriate to enable the Holder to exercise the transferred
         Award in accordance with the terms of this Plan and applicable law and
         (ii) the provisions of Subsections 10.1, 10.2 and 10.3 hereof shall
         continue to be applied with respect to the original Holder and,
         following the occurrence of any such events described therein the
         Awards shall be exercisable by the Permitted Transferee, the recipient
         under a qualified domestic relations order, or the estate or heirs of
         a deceased Holder, as applicable, only to the extent and for the
         periods specified in Subsections 10.1, 10.2 and 10.3.





                                       28
<PAGE>   29
                 (e)      Procedures and Restrictions.  Any Holder desiring to
         transfer an Award as permitted under Subsections 10.5(a) or 10.5(b)
         shall make application therefor in the manner and time specified by
         the Committee and shall comply with such other requirements as the
         Committee may require to assure compliance with all applicable
         securities laws.  The Committee shall not give permission for such a
         transfer if (i) it would give rise to short-swing liability under
         Section 16(b) of the Exchange Act, (ii) it may not be made in
         compliance with all applicable federal, state and foreign securities
         laws or (iii) with respect to any Award granted prior to October 21,
         1996 (the effective date of amendments to this Plan to convert this
         Plan to be in accordance with Rule 16b-3 as amended effective August
         15, 1996), such transfer would occur within six months after the date
         of grant of such Award.

                 (f)      Registration.  To the extent the issuance to any
         Permitted Transferee of any shares of Stock issuable pursuant to
         Awards transferred as permitted in this Subsection 10.5 is not
         registered pursuant to the effective registration statement of the
         Corporation generally covering the shares to be issued pursuant to
         this Plan to initial Holders of Awards, the Corporation shall not have
         any obligation to register the issuance of any such shares of Stock to
         any such transferee.

                 (g)      Option Status.  To the extent a permitted transfer of
         an Incentive Option under this Section 10.5 would cause an Incentive
         Option (or any portion theref) to fail to constitute an incentive
         stock option under Section 422 of the Code, such portion of the
         Incentive Option shall be deemed to be a Nonstatutory Option under
         this Plan.


         10.6    Forfeiture and Restrictions on Transfer.  Each Award Agreement
may contain or otherwise provide for conditions giving rise to the forfeiture
of the Stock acquired pursuant to an Award or otherwise and may also provide
for those restrictions on the transferability of shares of the Stock acquired
pursuant to an Award or otherwise that the Committee in its sole and absolute
discretion may deem proper or advisable.  The conditions giving rise to
forfeiture may include, but need not be limited to, the requirement that the
Holder render substantial services to the Corporation or its Subsidiaries for a
specified period of time.  The restrictions on transferability may include, but
need not be limited to, options and rights of first refusal in favor of the
Corporation and stockholders of the Corporation other than the Holder of such
shares of Stock who is a party to the particular Award Agreement or a
subsequent holder of the shares of Stock who is bound by that Award Agreement.

         10.7    Delivery of Certificates of Stock.  Subject to Subsection
10.8, the Corporation shall promptly issue and deliver a certificate
representing the number of shares of Stock as to which (a) an Option has been
exercised after the Corporation receives an Exercise Notice and upon receipt by
the Corporation of the Exercise Price and any tax withholding as may be
requested, (b) a Stock Appreciation Right has been exercised (to the extent the
Committee determines to pay such Stock Appreciation Right in shares of Stock
pursuant to Subsection 6.5) and upon receipt by the Corporation of any tax
withholding as may be requested, and (c) restrictions have lapsed with respect
to a Restricted Stock Award and upon receipt by the Corporation of any tax





                                       29
<PAGE>   30
withholding as may be requested.  The value of the shares of Stock or cash
transferable because of an Award under the Plan shall not bear any interest
owing to the passage of time, except as may be otherwise provided in an Award
Agreement.  If a Holder is entitled to receive certificates representing Stock
received for more than one form of Award under the Plan, separate Stock
certificates shall be issued with respect to Incentive Options and Nonstatutory
Options.

         10.8    Conditions to Delivery of Stock.  Nothing herein or in any
Award granted hereunder or any Award Agreement shall require the Corporation to
issue any shares with respect to any Award if that issuance would, in the
opinion of counsel for the Corporation, constitute a violation of the
Securities Act or any similar or superseding statute or statutes, any other
applicable statute or regulation, or the rules of any applicable securities
exchange or securities association, as then in effect.  At the time of any
exercise of an Option or Stock Appreciation Right, or at the time of any grant
of a Restricted Stock Award, the Corporation may, as a condition precedent to
the exercise of such Option or Stock Appreciation Right or vesting of any
Restricted Stock Award, require from the Holder of the Award (or in the event
of his death, his legal representatives, heirs, legatees, or distributees) such
written representations, if any, concerning the Holder's intentions with regard
to the retention or disposition of the shares of Stock being acquired pursuant
to the Award and such written covenants and agreements, if any, as to the
manner of disposal of such shares as, in the opinion of counsel to the
Corporation, may be necessary to ensure that any disposition by that Holder (or
in the event of the Holder's death, his legal representatives, heirs, legatees,
or distributees) will not involve a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities
exchange or securities association, as then in effect.

         10.9    Certain Directors and Officers.  With respect to Holders who
are directors or officers of the Corporation or any of its Subsidiaries and who
are subject to Section 16(b) of the Exchange Act, Awards granted prior to the
date the stockholders of the Corporation shall have approved the Plan shall be
subject to such stockholder approval, may not be transferred or exercised, as
applicable, until such stockholder approval is obtained, and shall become null
and void on the first anniversary of the Effective Date if such stockholder
approval is not obtained on or before the Effective Date.  In addition, no such
officer or director shall have shares of Stock withheld to pay tax withholding
obligations unless permitted under Rule 16b-3 and agreed to by the Committee.
Any election by any such officer or director to have tax withholding
obligations satisfied by the withholding of shares of Stock shall be
irrevocable, shall be communicated in writing to the Committee and shall be
subject to prior approval by Board of Directors, the Committee or the
shareholders of the Corporation as provided by Rule 16b-3.  Any election by
such an officer or director to receive cash in full or partial settlement of a
Stock Appreciation Right, as well as any exercise by such individual of a Stock
Appreciation Right for such cash, in either case to the extent permitted under
the applicable Award Agreement or otherwise permitted by the Committee, shall
be subject to prior approval by the Board of Directors, the Committee or the
shareholders of the Corporation as provided by Rule 16b-3.





                                       30
<PAGE>   31
         10.10   Securities Act Legend.  Certificates for shares of Stock, when
issued, may have the following legend, or statements of other applicable
restrictions, endorsed thereon and may not be immediately transferable:

         THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
         SECURITIES LAWS.  THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
         PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF
         PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION
         OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE
         ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION
         WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.

This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.

         10.11   Legend for Restrictions on Transfer.  Each certificate
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first refusal, provided for under the Plan or an Award Agreement, bear
a legend that complies with applicable law with respect to the restrictions on
transferability contained in this Subsection 10.11, such as:

         THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
         RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT
         ENTITLED "CHASE BRASS INDUSTRIES, INC. 1994 LONG-TERM INCENTIVE PLAN"
         AS ADOPTED BY CHASE BRASS INDUSTRIES, INC. (THE "CORPORATION"), AND
         DATED NOVEMBER 10, 1994, AND AN AGREEMENT THEREUNDER BETWEEN THE
         CORPORATION AND THE INITIAL HOLDER THEREOF DATED ___________________,
         199 , AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF
         EXCEPT AS THEREIN PROVIDED.  THE CORPORATION WILL FURNISH A COPY OF
         SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS CERTIFICATE
         WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF
         BUSINESS OR REGISTERED OFFICE.

         10.12   Rights as a Stockholder.  A Holder shall have no right as a
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name.  No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 9 hereof.
Nevertheless, dividends, dividend equivalent rights and voting rights may be
extended to and made part of any Award (other than Options or Stock
Appreciation Rights) denominated in Stock or units of Stock, subject to such
terms, conditions and restrictions as the Committee may establish.  The
Committee may





                                       31
<PAGE>   32
also establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Stock or units of Stock.

         10.13   Furnish Information.  Each Holder shall furnish to the
Corporation all information requested by the Corporation to enable it to comply
with any reporting or other requirement imposed upon the Corporation by or
under any applicable statute or regulation.

         10.14   Obligation to Exercise.  The granting of an Award hereunder
shall impose no obligation upon a Holder to exercise the same or any part
thereof.

         10.15   Adjustments to Awards.  Subject to the general limitations set
forth in Sections 5, 6, and 9, the Committee may make any adjustment in the
exercise price of, the number of shares subject to, or the terms of a
Nonstatutory Option or Stock Appreciation Right by cancelling an outstanding
Nonstatutory Option or Stock Appreciation Right and regranting a Nonstatutory
Option or Stock Appreciation Right.  Such adjustment shall be made by amending,
substituting, or regranting an outstanding Nonstatutory Option or Stock
Appreciation Right.  Such amendment, substitution, or regrant may result in
terms and conditions that differ from the terms and conditions of the original
Nonstatutory Option or Stock Appreciation Right.  The Committee may not,
however, impair the rights of any Holder of previously granted Nonstatutory
Options or Stock Appreciation Rights without that Holder's consent.  If such
action is effected by amendment, such amendment shall be deemed effective as of
the Date of Grant of the amended Award.

         10.16   Remedies.  The Corporation shall be entitled to recover from a
Holder reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.

         10.17   Information Confidential.  As partial consideration for the
granting of each Award hereunder, a Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Holder's spouse, tax or financial advisors, or to a
financial institution to the extent that such information is necessary to
secure a loan.  In the event any breach of this promise comes to the attention
of the Committee, it shall take into consideration that breach in determining
whether to recommend the grant of any future Award to that Holder, as a factor
mitigating against the advisability of granting any such future Award to that
Person.

         10.18   Consideration.  No Option or Stock Appreciation Right shall be
exercisable and no restriction on any Restricted Stock Award shall lapse with
respect to a Holder unless and until the Holder thereof shall have paid cash or
property to, or performed services for, the Corporation or any of its
Subsidiaries that the Committee believes is equal to or greater in value than
the par value of the Stock subject to such Award.





                                       32
<PAGE>   33
SECTION 11. EFFECTIVENESS, DURATION AND AMENDMENT OF PLAN

         11.1    Effectiveness; Duration.  Notwithstanding the provisions of
the Plan, Awards granted prior to the date the stockholders of the Corporation
approve the Plan shall be subject to such stockholder approval and may not be
transferred or exercised, as applicable, until such stockholder approval is
obtained.  No Awards may be granted hereunder after the date that is ten years
after the Effective Date.

         11.2    Amendment.  The Committee may, insofar as permitted by law and
subject to ratification of the Board of Directors, with respect to any shares
which, at the time, are not subject to Awards, suspend or discontinue the Plan
or revise or amend it in any respect whatsoever and may amend any provision of
the Plan or any Award Agreement to make the Plan or the Award Agreement, or
both, comply with Section 16(b) of the Exchange Act and the exemptions from
those sections in the regulations thereunder.  The Committee may also, subject
to ratification of the Board of Directors, amend, modify, suspend, or terminate
the Plan for the purpose of meeting or addressing any changes in other legal
requirements applicable to the Corporation or the Plan or for any other purpose
permitted by law.  The Plan may not be amended without the consent of the
holders of a majority of the shares of Stock then outstanding to (a) increase
materially the aggregate number of shares of Stock that may be issued under the
Plan (except for adjustments pursuant to Section 9 hereof), (b) increase
materially the benefits accruing to Eligible Individuals under the Plan, or (c)
modify materially the requirements about eligibility for participation in the
Plan; provided, however, that such amendments may be made without the consent
of stockholders of the Corporation to the extent applicable law and other legal
requirements (including Rule 16b-3 or Section 162(m)) permit such changes
without shareholder approval.  Notwithstanding the provisions of this
Subsection 11.2, the Committee specifically shall have the authority, subject
to ratification by the Board of Directors, to amend the Plan (without approval
of the holders of the shares of Stock then outstanding) to the extent required
to cause the Plan, as it relates to Options and Stock Appreciation Rights
granted to Eligible Individuals subject to Section 162(m), to comply with the
requirements for classification of Awards as "performance-based compensation"
under Section 162(m)(4)(C), except for such amendments that require such
stockholder approval under Section 162(m).

SECTION 12. GENERAL

         12.1    Application of Funds.  The proceeds received by the
Corporation from the sale of shares pursuant to Awards may be used for any
general corporate purpose.

         12.2    Right of the Corporation and Subsidiaries to Terminate
Employment.  Nothing contained in the Plan, or in any Award Agreement, shall
confer upon any Holder the right to continue in the employ of the Corporation
or any Subsidiary or interfere in any way with the rights of the Corporation or
any Subsidiary to terminate the Holder's employment at any time.

         12.3    No Liability for Good Faith Determinations.  Neither the
members of the Board of Directors nor any member of the Committee shall be
liable for any act, omission or determination taken or made in good faith with
respect to the Plan or any Award granted under





                                       33
<PAGE>   34
it; and members of the Board of Directors and the Committee shall be entitled
to indemnification and reimbursement by the Corporation in respect of any
claim, loss, damage, or expense (including attorneys' fees, the costs of
settling any suit, provided such settlement is approved by independent legal
counsel selected by the Corporation, and amounts paid in satisfaction of a
judgment, except a judgment based on a finding of bad faith) arising therefrom
to the full extent permitted by law and under any directors' and officers'
liability or similar insurance coverage that may from time to time be in
effect.  This right to indemnification shall be in addition to, and not a
limitation on, any other indemnification rights any member of the Board of
Directors or the Committee may have.

         12.4    Other Benefits.  Participation in the Plan shall not preclude
a Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension,
profit sharing, retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees.  Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan and such arrangements
may be either generally applicable or applicable only in specific cases.

         12.5    Exclusion from Pension and Profit-Sharing Compensation.  By
acceptance of an Award (regardless of form), as applicable, each Holder shall
be deemed to have agreed that the Award is special incentive compensation that
will not be taken into account in any manner as salary, compensation, or bonus
in determining the amount of any payment under any pension, retirement, or
other employee benefit plan of the Corporation or any Subsidiary unless any
pension, retirement, or other employee benefit plan of the Corporation or any
Subsidiary expressly provides that such Award shall be so considered for
purposes of determining the amount of any payment under any such plan.  In
addition, each beneficiary of a deceased Holder shall be deemed to have agreed
that the Award will not affect the amount of any life insurance coverage, if
any, provided by the Corporation or a Subsidiary on the life of a Holder that
is payable to the beneficiary under any life insurance plan covering employees
of the Corporation or any Subsidiary.

         12.6    Execution of Receipts and Releases.  Any payment of cash or
any issuance or transfer of shares of Stock to a Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder.  The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.

         12.7    Unfunded Plan.  Insofar as it provides for Awards of cash and
Stock, the Plan shall be unfunded.  Although bookkeeping accounts may be
established with respect to Holders who are entitled to cash, Stock, or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience.  The Corporation shall not be required to segregate any





                                       34
<PAGE>   35
assets that may at any time be represented by cash, Stock, or rights thereto,
nor shall the Plan be construed as providing for such segregation, nor shall
the Corporation nor the Board of Directors nor the Committee be deemed to be a
trustee of any cash, Stock, or rights thereto to be granted under the Plan.
Any liability of the Corporation to any Holder with respect to a grant of cash,
Stock, or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award
Agreement; no such obligation of the Corporation shall be deemed to be secured
by any pledge or other encumbrance on any property of the Corporation.  Neither
the Corporation nor the Board of Directors nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.

         12.8    No Guarantee of Interests.  Neither the Committee nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.

         12.9    Payment of Expenses.  All expenses incident to the
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries.

         12.10   Corporation Records.  Records of the Corporation or its
Subsidiaries regarding a Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by
the Committee to be incorrect.

         12.11   Information.  The Corporation and its Subsidiaries shall, upon
request or as may be specifically required hereunder, furnish or cause to be
furnished all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.

         12.12   No Liability of Corporation.  The Corporation assumes no
obligation or responsibility to a Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.

         12.13   Corporation Action.  Any action required of the Corporation
shall be by resolution of its Board of Directors or by a person authorized to
act by resolution of the Board of Directors.

         12.14   Severability.  If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but such provision shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein.  If any of the terms or
provisions of this Plan or any Award Agreement conflict with the requirements
of Rule 16b-3 (as those terms or provisions are applied to Eligible Individuals
who are subject to Section 16(b) of the Exchange Act) or Section 422 of the
Code (with respect to Incentive Options), then those conflicting terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of Rule 16b-3 (unless the Board of Directors or the Committee, as
appropriate, has expressly determined that the Plan or such Award should not
comply with Rule 16b-3) or Section 422 of





                                       35
<PAGE>   36
the Code.  With respect to Incentive Options, if this Plan does not contain any
provision required to be included herein under Section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
further, that, to the extent any Option that is intended to qualify as an
Incentive Option cannot so qualify, that Option (to that extent) shall be
deemed a Nonstatutory Option for all purposes of the Plan.

         12.15   Notices.  Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail.  Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is actually received, addressed
to the applicable party as specified in the applicable Award Agreement.  The
Corporation or a Holder may change, at any time and from time to time, by
written notice to the other, the address which it or he had previously
specified for receiving notices.  Until changed in accordance herewith, the
Corporation and each Holder shall specify as its and his address for receiving
notices the address set forth in the Award Agreement pertaining to the shares
to which such notice relates.  Any person entitled to notice hereunder may
waive such notice.

         12.16   Successors.  The Plan shall be binding upon the Holder, his
legal representatives, heirs, legatees, and distributees, upon the Corporation,
its successors and assigns and upon the Committee and its successors.

         12.17   Headings.  The titles and headings of Sections and Subsections
are included for convenience of reference only and are not to be considered in
construction of the provisions hereof.

         12.18   Governing Law.  All questions arising with respect to the
provisions of the Plan shall be determined by application of the laws of the
State of Delaware, without giving effect to any conflict of law provisions
thereof, except to the extent Delaware law is preempted by federal law.
Questions arising with respect to the provisions of an Award Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Award Agreement, except to the extent Delaware corporate law conflicts with
the contract law of such state, in which event Delaware corporate law, without
giving effect to any conflict of law provisions thereof, shall govern.  The
obligation of the Corporation to sell and deliver Stock hereunder is subject to
applicable federal and state laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Stock.

         12.19   Availability of Exempt Transactions.  Notwithstanding the
provisions of the Plan, nothing contained in the Plan shall prohibit any
transactions permitted by Rule 16a-2(d) promulgated under the Exchange Act to
the extent such transactions are approved by the Committee and are not in
violation of, and do not otherwise cause the Plan not to be in compliance with,
Rule 16b-3.

         12.20   Word Usage.  Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of the Plan dictates, the
plural shall be read as the singular and the singular as the plural.





                                       36
<PAGE>   37
         IN WITNESS WHEREOF, Chase Brass Industries, Inc., acting by and
through its officer hereunto duly authorized, has executed this instrument, to
be effective as of October 21, 1996.


                                        CHASE BRASS INDUSTRIES, INC.


                                        By: /s/ Michael T. Segraves
                                            ---------------------------------
                                            Michael T. Segraves
                                            Vice President





                                       37