CAL DIVE INTERNATIONAL, INC.
                         2005 LONG TERM INCENTIVE PLAN
 
                                   ARTICLE I
 
                      ESTABLISHMENT, PURPOSE AND DURATION
 
     1.1  Establishment.  The Company hereby establishes an incentive
compensation plan, to be known as "Cal Dive International, Inc. 2005 Long Term
Incentive Plan," as set forth in this document. The Plan permits the grant of
Options, Restricted Stock and Restricted Stock Units. The Plan shall become
effective on the latest of (a) the date the Plan is approved by the Board (b)
the date the Plan is approved by the holders of at least a majority of the
outstanding shares of voting stock of the Company and (c) if the provisions of
the corporate charter, by-laws or applicable state law prescribes a greater
degree of shareholder approval for this action, the approval by the holders of
that percentage, at a meeting of shareholders, and shall remain in effect as
provided in Section 1.3.
 
     1.2  Purpose of the Plan.  The purpose of the Plan is to provide incentives
to directors, corporate officers and other employees of the Company and its
Affiliates by enabling them to acquire shares of common stock of the Company and
to receive other compensation based on the increase in value of the common stock
of the Company or certain other performance measures. The Plan is intended to
advance the best interests of the Company, its Affiliates and its shareholders
by providing those persons who have substantial responsibility for the
management and growth of the Company and its Affiliates with additional
performance incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
their employment with the Company and its Affiliates.
 
     1.3  Duration of Authority to Make Grants Under the Plan.  No Awards may be
granted under the Plan on or after May 1, 2015. The applicable provisions of the
Plan will continue in effect with respect to an Award granted under the Plan for
as long as such Award remains outstanding.
 
                                   ARTICLE II
 
                                  DEFINITIONS
 
     The words and phrases defined in this Article shall have the meaning set
out below throughout the Plan, unless the context in which any such word or
phrase appears reasonably requires a broader, narrower or different meaning.
 
     2.1  "Affiliate" means any corporation, partnership, limited liability
company or association, trust or other entity or organization which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company. For purposes of the preceding sentence, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any entity or organization, shall mean the
possession, directly or indirectly, of the power (a) to vote more than 50
percent (50%) of the securities having ordinary voting power for the election of
directors of the controlled entity or organization, or (ii) to direct or cause
the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract
or otherwise.
 
     2.2  "Award" means, individually or collectively, a grant under the Plan of
Options, Restricted Stock and Restricted Stock Units in each case subject to the
terms and provisions of the Plan.
 
     2.3  "Award Agreement" means an agreement that sets forth the terms and
conditions applicable to an Award granted under the Plan.
 
     2.4  "Board" means the board of directors of the Company.
 
     2.5  "Change in Control" means the occurrence of any of the following
events: (a) there shall be consummated (i) any consolidation or merger of the
Company in which the Company is not the continuing or
 
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surviving corporation or pursuant to which shares of the Stock would be
converted into cash, securities or other property, other than a merger of the
Company where a majority of the Board of the surviving corporation is, and for a
two-year period after the merger continues to be, persons who were directors of
the Company immediately prior to the merger or were elected as directors, or
nominated for election as director, by a vote of at least two-thirds of the
directors then still in office who were directors of the Company immediately
prior to the merger, or (ii) any sale, lease, exchange or transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company; (b) the shareholders of the Company shall approve any
plan or proposal for the liquidation or dissolution of the Company; or (c) (i)
any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act, other than the Company or a subsidiary thereof or any employee
benefit plan sponsored by the Company or a subsidiary thereof, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 20 percent or more of the combined voting
power of the Company's then outstanding securities ordinarily (and apart from
rights accruing in special circumstances) having the right to vote in the
election of directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, and (ii) at any time
during a period of two years after such "person" becomes such a beneficial
owner, individuals who immediately prior to the beginning of such period
constituted the Board shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination by the Board for
election by the Company's shareholders of each new director during such period
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.
 
     2.6  "Code" means the United States Internal Revenue Code of 1986, as
amended from time to time.
 
     2.7  "Committee" means a committee of at least two persons, who are members
of the Compensation Committee of the Board and are appointed by the Compensation
Committee of the Board, or, to the extent it chooses to operate as the
Committee, the Compensation Committee of the Board. Each member of the Committee
in respect of his or her participation in any decision with respect to an Award
intended to satisfy the requirements of section 162(m) of the Code must satisfy
the requirements of "outside director" status within the meaning of section
162(m) of the Code; provided, however, that the failure to satisfy such
requirement shall not affect the validity of the action of any committee
otherwise duly authorized and acting in the matter. As to Awards, grants or
other transactions that are authorized by the Committee and that are intended to
be exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule
16b-3(d)(1) under the Exchange Act with respect to committee action must also be
satisfied. For all purposes under the Plan, the Chief Executive Officer of the
Company shall be deemed to be the "Committee" with respect to Options granted by
him pursuant to Section 4.1.
 
     2.8  "Company" means Cal Dive International, Inc., a Minnesota corporation,
or any successor (by reincorporation, merger or otherwise).
 
     2.9  "Corporate Change" shall have the meaning ascribed to that term in
Section 4.5(c).
 
     2.10  "Disability" means as determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Holder that would
entitle him to payment of disability income payments under the Company's long
term disability insurance policy or plan for employees as then in effect; or in
the event that the Holder is not covered, for whatever reason under the
Company's long term disability insurance policy or plan for employees or in the
event the Company does not maintain such a long term disability insurance
policy, "Disability" means a permanent and total disability as defined in
section 22(e)(3) of the Code. A determination of Disability may be made by a
physician selected or approved by the Committee and, in this respect, the Holder
shall submit to an examination by such physician upon request by the Committee.
 
     2.11  "Employee" means (a) a person employed by the Company or any
Affiliate as a common law employee or (b) a person who has agreed to become a
common law employee of the Company or any Affiliate and is expected to become
such within six (6) months from the date of a determination made for purposes of
the Plan.
 
     2.12  "Exchange Act" means the United States Securities Exchange Act of
1934, as amended from time to time.
 
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     2.13  "Fair Market Value" of the Stock as of any particular date means (1)
if the Stock is traded on a stock exchange, the closing sale price of the Stock
on that date as reported on the principal securities exchange on which the Stock
is traded, or (2) if the Stock is traded in the over-the-counter market, the
average between the high bid and low asked price on that date as reported in
such over-the-counter market; provided that (a) if the Stock is not so traded,
(b) if no closing price or bid and asked prices for the stock was so reported on
that date or (c) if, in the discretion of the Committee, another means of
determining the fair market value of a share of Stock at such date shall be
necessary or advisable, the Committee may provide for another means for
determining such fair market value.
 
     2.14  "Fiscal Year" means the Company's fiscal year.
 
     2.15  "Holder" means a person who has been granted an Award or any person
who is entitled to receive Shares under an Award.
 
     2.16  "Mature Shares" means shares of Stock that the Holder has held for at
least six months.
 
     2.17  "Minimum Statutory Tax Withholding Obligation" means the amount the
Company or an Affiliate is required to withhold for federal, state and local
taxes based upon the applicable minimum statutory withholding rates required by
the relevant tax authorities.
 
     2.18  "Option" means an option to purchase Stock granted pursuant to
Article V.
 
     2.19  "Option Price" shall have the meaning ascribed to that term in
Section 5.4.
 
     2.20  "Optionee" means a person who is granted an Option under the Plan.
 
     2.21  "Option Agreement" means a written contract setting forth the terms
and conditions of an Option.
 
     2.22  "Period of Restriction" means the period during which Restricted
Stock is subject to a substantial risk of forfeiture (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, in its discretion), as provided in
Article VI.
 
     2.23  "Plan" means Cal Dive International, Inc. 2005 Long Term Incentive
Plan, as set forth in this document and as it may be amended from time to time.
 
     2.24  "Restricted Stock" means shares of restricted Stock issued or granted
under the Plan pursuant to Article VI.
 
     2.25  "Restricted Stock Award" means an authorization by the Committee to
issue or transfer Restricted Stock to a Holder.
 
     2.26  "Restricted Stock Unit" means a unit credited to a Holder's ledger
account maintained by the Company pursuant to Article VIII.
 
     2.27  "Restricted Stock Unit Award" means an Award granted pursuant to
Article VII.
 
     2.28  "Retirement" means retirement in accordance with the terms of a
retirement plan that is qualified under section 401(a) of the Code and
maintained by the Company or an Affiliate in which the Holder is a participant.
 
     2.29  "Section 409A" means section 409A of the Code and Department of
Treasury rules and regulations issued thereunder.
 
     2.30  "Stock" means the common stock of the Company, no par value per share
(or such other par value as may be designated by act of the Company's
shareholders).
 
     2.31  "Substantial Risk of Forfeiture" shall have the meaning ascribed to
that term in section 409A of the Code and Department of Treasury guidance issued
thereunder.
 
     2.32  "Termination of Employment" means the termination of the Award
recipient's employment relationship with the Company and all Affiliates.
 
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                                  ARTICLE III
 
                         ELIGIBILITY AND PARTICIPATION
 
     3.1  Eligibility.  The persons who are eligible to receive Awards under the
Plan are Employees and directors of the Company.
 
     3.2  Participation.  Subject to the terms and provisions of the Plan, the
Committee may, from time to time, select the Employees to whom Awards shall be
granted and shall determine the nature and amount of each Award.
 
                                   ARTICLE IV
 
                     GENERAL PROVISIONS RELATING TO AWARDS
 
     4.1  Authority to Grant Awards.  The Committee may grant Awards to those
Employees as the Committee shall from time to time determine, under the terms
and conditions of the Plan. Subject only to any applicable limitations set out
in the Plan, the number of shares of Stock or other value to be covered by any
Award to be granted under the Plan shall be as determined by the Committee in
its sole discretion. However, the Chief Executive Officer of the Company is
authorized to grant Options, with respect to no more than 100,000 shares of
Stock per Fiscal Year, as inducements to hire prospective Employees who will not
be officers of the Company subject to the provisions of Section 16 of the
Exchange Act.
 
     4.2  Dedicated Shares; Maximum Awards.  The aggregate number of shares of
Stock with respect to which Awards may be granted under the Plan is 3,000,000.
The aggregate number of shares of Stock with respect to which Options may be
granted under the Plan is 1,000,000. The aggregate number of shares of Stock
with respect to which Restricted Stock Awards or Restricted Stock Unit Awards
may be granted under the Plan is 2,000,000. The maximum number of shares of
Stock with respect to which Options may be granted to an Employee during a
Fiscal Year is 88,000. The maximum number of shares of Stock with respect to
which Restricted Stock Awards may be granted to an Employee during a Fiscal Year
is 44,000. The maximum number of shares of Stock with respect to which
Restricted Stock Unit Awards may be granted to an Employee during a Fiscal Year
may not exceed in value the Fair Market Value of 50,000 shares of Stock
determined as of the date of grant. Each of the foregoing numerical limits
stated in this Section 4.2 shall be subject to adjustment in accordance with the
provisions of Section 4.5. If shares of Stock are withheld from payment of an
Award to satisfy tax obligations with respect to the Award, such shares of Stock
will count against the aggregate number of shares of Stock with respect to which
Awards may be granted under the Plan. If Shares are tendered in payment of an
Option Price of an Option, such shares of Stock will not be added to the
aggregate number of shares of Stock with respect to which Awards may be granted
under the Plan. To the extent that any outstanding Award is forfeited or
cancelled for any reason or is settled in cash in lieu of shares of Stock, the
shares of Stock allocable to such portion of the Award may again be subject to
an Award granted under the Plan.
 
     4.3  Non Transferability.  Except as specified in the applicable Award
Agreements or in domestic relations court orders, Awards shall not be
transferable by the Holder other than by will or under the laws of descent and
distribution, and shall be exercisable, during the Holder's lifetime, only by
him or her. In the discretion of the Committee, any attempt to transfer an Award
other than under the terms of the Plan and the applicable Award Agreement may
terminate the Award.
 
     4.4  Requirements of Law.  The Company shall not be required to sell or
issue any shares of Stock under any Award if issuing those shares of Stock would
constitute or result in a violation by the Holder or the Company of any
provision of any law, statute or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating
to the registration of securities, upon exercise of any Option or pursuant to
any other Award, the Company shall not be required to issue any shares of Stock
unless the Committee has received evidence satisfactory to it to the effect that
the Holder will not transfer the shares of Stock except in accordance with
applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law.
The
 
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determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
shares of Stock covered by the Plan pursuant to applicable securities laws of
any country or any political subdivision. In the event the shares of Stock
issuable on exercise of an Option or pursuant to any other Award are not
registered, the Company may imprint on the certificate evidencing the shares of
Stock any legend that counsel for the Company considers necessary or advisable
to comply with applicable law, or, should the shares of Stock be represented by
book or electronic entry rather than a certificate, the Company may take such
steps to restrict transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause or
enable the exercise of an Option or any other Award, or the issuance of shares
of Stock pursuant thereto, to comply with any law or regulation of any
governmental authority.
 
     4.5  Changes in the Company's Capital Structure.
 
          (a) The existence of outstanding Awards shall not affect in any way
     the right or power of the Company or its shareholders to make or authorize
     any or all adjustments, recapitalizations, reorganizations or other changes
     in the Company's capital structure or its business, any merger or
     consolidation of the Company, any issue of bonds, debentures, preferred or
     prior preference shares ahead of or affecting the Stock or Stock rights,
     the dissolution or liquidation of the Company, any sale or transfer of all
     or any part of its assets or business or any other corporate act or
     proceeding, whether of a similar character or otherwise.
 
          (b) If the Company shall effect a subdivision or consolidation of
     Stock or other capital readjustment, the payment of a Stock dividend, or
     other increase or reduction of the number of shares of Stock outstanding,
     without receiving compensation therefor in money, services or property,
     then (1) the number, class or series and per share price of Stock subject
     to outstanding Options or other Awards under the Plan shall be
     appropriately adjusted in such a manner as to entitle a Holder to receive
     upon exercise of an Option or other Award, for the same aggregate cash
     consideration, the equivalent total number and class or series of Stock the
     Holder would have received had the Holder exercised his or her Option or
     other Award in full immediately prior to the event requiring the
     adjustment, and (2) the number and class or series of Stock then reserved
     to be issued under the Plan shall be adjusted by substituting for the total
     number and class or series of Stock then reserved, that number and class or
     series of Stock that would have been received by the owner of an equal
     number of outstanding shares of Stock of each class or series of Stock as
     the result of the event requiring the adjustment.
 
          (c) If while unexercised Options or other Awards remain outstanding
     under the Plan (1) the Company shall not be the surviving entity in any
     merger, consolidation or other reorganization (or survives only as a
     subsidiary of an entity other than an entity that was wholly-owned by the
     Company immediately prior to such merger, consolidation or other
     reorganization), (2) the Company sells, leases or exchanges or agrees to
     sell, lease or exchange all or substantially all of its assets to any other
     person or entity (other than an entity wholly-owned by the Company), (3)
     the Company is to be dissolved or (4) the Company is a party to any other
     corporate transaction (as defined under section 424(a) of the Code and
     applicable Department of Treasury regulations) that is not described in
     clauses (1), (2) or (3) of this sentence (each such event is referred to
     herein as a "Corporate Change"), then, except as otherwise provided in an
     Award Agreement (provided that such exceptions shall not apply in the case
     of a reincorporation merger), or as a result of the Committee's
     effectuation of one or more of the alternatives described below, there
     shall be no acceleration of the time at which any Award then outstanding
     may be exercised, and no later than ten days after the approval by the
     shareholders of the Company of such Corporate Change, the Committee, acting
     in its sole and absolute discretion without the consent or approval of any
     Holder, shall act to effect one or more of the following alternatives,
     which may vary among individual Holders and which may vary among Awards
     held by any individual Holder (provided that, with respect to a
     reincorporation merger in which Holders of the Company's ordinary shares
     will receive one ordinary share of the successor corporation for each
     ordinary share of the Company, none of such alternatives shall apply and,
     without Committee action, each Award shall automatically convert into a
     similar award of the successor corporation exercisable for the same number
                                        43
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     of ordinary shares of the successor as the Award was exercisable for
     ordinary shares of Stock of the Company):
 
             (1) accelerate the time at which some or all of the Awards then
        outstanding may be exercised so that such Awards may be exercised in
        full for a limited period of time on or before a specified date (before
        or after such Corporate Change) fixed by the Committee, after which
        specified date all such Awards that remain unexercised and all rights of
        Holders thereunder shall terminate;
 
             (2) require the mandatory surrender to the Company by all or
        selected Holders of some or all of the then outstanding Awards held by
        such Holders (irrespective of whether such Awards are then exercisable
        under the provisions of the Plan or the applicable Award Agreement
        evidencing such Award) as of a date, before or after such Corporate
        Change, specified by the Committee, in which event the Committee shall
        thereupon cancel such Award and the Company shall pay to each such
        Holder an amount of cash per share equal to the excess, if any, of the
        per share price offered to shareholders of the Company in connection
        with such Corporate Change over the exercise prices under such Award for
        such shares;
 
             (3) with respect to all or selected Holders, have some or all of
        their then outstanding Awards (whether vested or unvested) assumed or
        have a new award of a similar nature substituted for some or all of
        their then outstanding Awards under the Plan (whether vested or
        unvested) by an entity which is a party to the transaction resulting in
        such Corporate Change and which is then employing such Holder or which
        is affiliated or associated with such Holder in the same or a
        substantially similar manner as the Company prior to the Corporate
        Change, or a parent or subsidiary of such entity, provided that (A) such
        assumption or substitution is on a basis where the excess of the
        aggregate fair market value of the Stock subject to the Award
        immediately after the assumption or substitution over the aggregate
        exercise price of such Stock is equal to the excess of the aggregate
        fair market value of all Stock subject to the Award immediately before
        such assumption or substitution over the aggregate exercise price of
        such Stock, and (B) the assumed rights under such existing Award or the
        substituted rights under such new Award as the case may be will have the
        same terms and conditions as the rights under the existing Award assumed
        or substituted for, as the case may be;
 
             (4) provide that the number and class or series of Stock covered by
        an Award (whether vested or unvested) theretofore granted shall be
        adjusted so that such Award when exercised shall thereafter cover the
        number and class or series of Stock or other securities or property
        (including, without limitation, cash) to which the Holder would have
        been entitled pursuant to the terms of the agreement or plan relating to
        such Corporate Change if, immediately prior to such Corporate Change,
        the Holder had been the holder of record of the number of shares of
        Stock then covered by such Award; or
 
             (5) make such adjustments to Awards then outstanding as the
        Committee deems appropriate to reflect such Corporate Change (provided,
        however, that the Committee may determine in its sole and absolute
        discretion that no such adjustment is necessary).
 
        In effecting one or more of alternatives in (3), (4) or (5) immediately
        above, and except as otherwise may be provided in an Award Agreement,
        the Committee, in its sole and absolute discretion and without the
        consent or approval of any Holder, may accelerate the time at which some
        or all Awards then outstanding may be exercised.
 
          (d) In the event of changes in the outstanding Stock by reason of
     recapitalizations, reorganizations, mergers, consolidations, combinations,
     exchanges or other relevant changes in capitalization occurring after the
     date of the grant of any Award and not otherwise provided for by this
     Section 4.5, any outstanding Award and any Award Agreements evidencing such
     Award shall be subject to adjustment by the Committee in its sole and
     absolute discretion as to the number and price of Stock or other
     consideration subject to such Award. In the event of any such change in the
     outstanding Stock, the
 
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     aggregate number of shares of Stock available under the Plan may be
     appropriately adjusted by the Committee, whose determination shall be
     conclusive.
 
          (e) After a merger of one or more corporations into the Company or
     after a consolidation of the Company and one or more corporations in which
     the Company shall be the surviving corporation, each Holder shall be
     entitled to have his Restricted Stock appropriately adjusted based on the
     manner in which the shares of Stock were adjusted under the terms of the
     agreement of merger or consolidation.
 
          (f) The issuance by the Company of stock of any class or series, or
     securities convertible into, or exchangeable for, stock of any class or
     series, for cash or property, or for labor or services either upon direct
     sale or upon the exercise of rights or warrants to subscribe for them, or
     upon conversion or exchange of stock or obligations of the Company
     convertible into, or exchangeable for, stock or other securities, shall not
     affect, and no adjustment by reason of such issuance shall be made with
     respect to, the number, class or series, or price of shares of Stock then
     subject to outstanding Options or other Awards.
 
     4.6  Election Under Section 83(b) of the Code.  No Holder shall exercise
the election permitted under section 83(b) of the Code with respect to any Award
without the written approval of the Chief Financial Officer of the Company. Any
Holder who makes an election under section 83(b) of the Code with respect to any
Award without the written approval of the Chief Financial Officer of the Company
may, in the discretion of the Committee, forfeit any or all Awards granted to
him or her under the Plan.
 
     4.7  Forfeiture for Cause.  Notwithstanding any other provision of the Plan
or an Award Agreement, if the Committee finds by a majority vote that a Holder,
before or after his Termination of Employment (a) committed a fraud,
embezzlement, theft, felony or an act of dishonesty in the course of his
employment by the Company or an Affiliate which conduct damaged the Company or
an Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then
as of the date the Committee makes its finding, any Awards awarded to the Holder
that have not been exercised by the Holder (including all Awards that have not
yet vested) will be forfeited to the Company. The findings and decision of the
Committee with respect to such matter, including those regarding the acts of the
Holder and the damage done to the Company, will be final for all purposes. No
decision of the Committee, however, will affect the finality of the discharge of
the individual by the Company or an Affiliate.
 
     4.8  Forfeiture Events.  The Committee may specify in an Award Agreement
that the Holder's rights, payments, and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events may include, but
shall not be limited to, Termination of Employment for cause, termination of the
Holder's provision of services to the Company or its Affiliates, violation of
material policies of the Company and its Affiliates, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the Holder, or
other conduct by the Holder that is detrimental to the business or reputation of
the Company and its Affiliates.
 
                                   ARTICLE V
 
                                    OPTIONS
 
     5.1  Authority to Grant Options.  Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may grant Options
under the Plan to eligible persons in such number and upon such terms as the
Committee shall determine.
 
     5.2  Type of Options Available.  All options granted under the Plan shall
be nonqualified stock options that are not intended to satisfy the requirements
of section 422 of the Code.
 
     5.3  Option Agreement.  Each Option grant under the Plan shall be evidenced
by an Option Agreement that shall specify (a) the Option Price, (b) the duration
of the Option, (c) the number of shares of Stock to which the Option pertains,
(d) the exercise restrictions applicable to the Option, and (e) such other
provisions as the Committee shall determine that are not inconsistent with the
terms and provisions of the Plan.
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     5.4  Option Price.  The price at which shares of Stock may be purchased
under an Option (the "Option Price") shall not be less than 100 percent (100%)
of the Fair Market Value of the shares of Stock on the date the Option is
granted. Subject to the limitation set forth in the preceding sentence of this
Section 5.4, the Committee shall determine the Option Price for each grant of an
Option under the Plan. Except as provided in Section 4.5, the Committee shall
not directly or indirectly lower the Option Price of a previously granted
Option.
 
     5.5  Duration of Options.  An Option shall not be exercisable after the
earlier of (i) the general term of the Option specified in Section 5.5(a), or
(ii) the period of time specified herein that follows the Optionee's death,
Disability, Retirement or other Termination of Employment. Unless the Optionee's
applicable Option Agreement specifies otherwise, an Option shall not continue to
vest after the Optionee's Termination of Employment for any reason other than
the death or Disability of the Optionee.
 
          (a) General Term of Option.  Unless the Option Agreement specifies a
     shorter general term, an Option shall expire on the tenth anniversary of
     the date the Option is granted.
 
          (b) Early Termination of Option Due to Termination of Employment Other
     Than for Death, Disability or Retirement.  Except as may be otherwise
     expressly provided by the Committee in an Option Agreement, an Option shall
     terminate on the earlier of (1) the date of the expiration of the general
     term of the Option or (2) the date that is 60 days after the date of the
     Optionee's Termination of Employment, whether with or without cause, for
     any reason other than the death, Disability or Retirement of the Optionee,
     during which period the Optionee shall be entitled to exercise the Option
     in respect of the number of shares of Stock that the Optionee would have
     been entitled to purchase had the Optionee exercised the Option on the date
     of such Termination of Employment. The Committee shall determine whether an
     authorized leave of absence, absence on military or government service, or
     any other absence from service shall constitute a termination of the
     employment relationship between the Optionee and the Company and all
     Affiliates.
 
          (c) Early Termination of Option Due to Death.  Unless the Committee
     specifies otherwise in the applicable Option Agreement, in the event of the
     Optionee's Termination of Employment due to death before the date of
     expiration of the general term of the Option, the Optionee's Option shall
     terminate on the earlier of the date of expiration of the general term of
     the Option or the first anniversary of the date of the Optionee's death,
     during which period the Optionee's executors or administrators or such
     persons to whom such Options were transferred by will or by the laws of
     descent and distribution, shall be entitled to exercise the Option in
     respect of the number of shares of Stock that the Optionee would have been
     entitled to purchase had the Optionee exercised the Option on the date of
     his death.
 
          (d) Early Termination of Option Due to Disability.  Unless the
     Committee specifies otherwise in the applicable Option Agreement, in the
     event of the Termination of Employment due to Disability before the date of
     the expiration of the general term of the Option, the Optionee's Option
     shall terminate on the earlier of the expiration of the general term of the
     Option or the first anniversary of the date of the Termination of
     Employment due to Disability, during which period the Optionee shall be
     entitled to exercise the Option in respect of the number of shares of Stock
     that the Optionee would have been entitled to purchase had the Optionee
     exercised the Option on the date of such Termination of Employment.
 
          (e) Early Termination of Option Due to Retirement.  Unless the
     Committee specifies otherwise in the applicable Option Agreement, in the
     event of the Optionee's Termination of Employment due to Retirement before
     the date of the expiration of the general term of the Option, the
     Optionee's Option shall terminate on the earlier of the expiration of the
     general term of the Option or the first anniversary of the date of the
     Termination of Employment due to Retirement, during which period the
     Optionee shall be entitled to exercise the Option in respect of the number
     of shares of Stock that the Optionee would have been entitled to purchase
     had the Optionee exercised the Option on the date of such Termination of
     Employment.
 
                                        46
<PAGE>
 
     After the death of the Optionee, the Optionee's executors, administrators
     or any person or persons to whom the Optionee's Option may be transferred
     by will or by the laws of descent and distribution, shall have the right,
     at any time prior to the termination of the Option to exercise the Option,
     in respect to the number of all of the remaining unexercised and unexpired
     shares of Stock subject to the Option.
 
     5.6  Amount Exercisable.  Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Option
Agreement in its sole discretion. Unless the Committee specifies otherwise in an
applicable Option Agreement, an Option Agreement shall set forth the following
terms regarding the exercise of the Option covered by the Option Agreement:
 
          (a) No Option granted under the Plan may be exercised until an
     Optionee has completed one year of continuous employment with the Company
     or any subsidiary of the Company following the date of grant;
 
          (b) Beginning on the day after the first anniversary of the date of
     grant, an Option may be exercised up to 20 percent of the shares subject to
     the Option;
 
          (c) After the expiration of each succeeding anniversary date of the
     date of grant, the Option may be exercised up to an additional 20 percent
     of the shares initially subject to the Option, so that after the expiration
     of the fifth anniversary of the date of grant, the Option shall be
     exercisable in full;
 
          (d) To the extent not exercised, installments shall be cumulative and
     may be exercised in whole or in part until the Option expires on the tenth
     anniversary of the date of grant.
 
     However, the Committee, in its discretion, may change the terms of exercise
     so that any Option may be exercised so long as it is valid and outstanding
     from time to time in part or as a whole in such manner and subject to such
     conditions as the Committee may set. In addition, the Committee, in its
     discretion, may accelerate the time in which any outstanding Option may be
     exercised. However, in no event shall any Option be exercisable after the
     tenth anniversary of the date of the grant of the Option.
 
     5.7  Exercise of Options.
 
          (a) General Method of Exercise.  Subject to the terms and provisions
     of the Plan and an Optionee's Option Agreement, Options may be exercised in
     whole or in part from time to time by the delivery of written notice in the
     manner designated by the Committee stating (1) that the Optionee wishes to
     exercise such option on the date such notice is so delivered, (2) the
     number of shares of Stock with respect to which the Option is to be
     exercised and (3) the address to which the certificate representing such
     shares of Stock should be mailed. Except in the case of exercise by a third
     party broker as provided below, in order for the notice to be effective the
     notice must be accompanied by payment of the Option Price by any
     combination of the following: (a) cash, certified check, bank draft or
     postal or express money order for an amount equal to the Option Price under
     the Option, (b) Mature Shares with a Fair Market Value on the date of
     exercise equal to the Option Price under the Option (if approved in advance
     by the Committee or an executive officer of the Company), (c) an election
     to make a cashless exercise through a registered broker dealer (if approved
     in advance by the Committee or an executive officer of the Company) or (d)
     except as specified below, any other form of payment which is acceptable to
     the Committee. If Mature Shares are used for payment by the Optionee, the
     aggregate Fair Market Value of the shares of Stock tendered must be equal
     to or less than the aggregate Option Price of the shares of Stock being
     purchased upon exercise of the Option, and any difference must be paid by
     cash, certified check, bank draft or postal or express money order payable
     to the order of the Company.
 
        Whenever an Option is exercised by exchanging shares of Stock owned by
        the Optionee, the Optionee shall deliver to the Company or its delegate
        certificates registered in the name of the Optionee representing a
        number of shares of Stock legally and beneficially owned by the
        Optionee, free of all liens, claims, and encumbrances of every kind,
        accompanied by stock powers duly endorsed in blank by the record holder
        of the shares represented by the certificates, (with signature
        guaranteed by a commercial bank or trust company or by a brokerage firm
        having a membership on a registered national stock exchange). The
        delivery of certificates upon the exercise of Option is
 
                                        47
<PAGE>
 
        subject to the condition that the person exercising the Option provide
        the Company with the information the Company might reasonably request
        pertaining to exercise, sale or other disposition of an Option.
 
          (b) Issuance of Shares.  Subject to Section 4.4 and Section 5.7(c), as
     promptly as practicable after receipt of written notification and payment,
     in the form permitted under Section 10.3, of an amount of money necessary
     to satisfy any withholding tax liability that may result from the exercise
     of such Option, the Company shall deliver to the Optionee certificates for
     the number of shares with respect to which the Option has been exercised,
     issued in the Optionee's name. Delivery of the shares shall be deemed
     effected for all purposes when a stock transfer agent of the Company shall
     have deposited the certificates in the United States mail, addressed to the
     Optionee, at the address specified by the Optionee.
 
          (c) Limitations on Exercise Alternatives.  The Committee shall not
     permit an Optionee to pay such Optionee's Option Price upon the exercise of
     an Option by having the Company reduce the number of shares of Stock that
     will be delivered pursuant to the exercise of the Option. In addition, the
     Committee shall not permit an Optionee to pay such Optionee's Option Price
     upon the exercise of an Option by using shares of Stock other than Mature
     Shares. An Option may not be exercised for a fraction of a share of Stock.
 
     5.8  Transferability of Options.  No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, except
as otherwise provided in an Optionee's Option Agreement, all Options granted to
an Optionee under the Plan shall be exercisable during his or her lifetime only
by such Optionee. Any attempted assignment of an Option in violation of this
Section 5.8 shall be null and void.
 
     5.9  No Rights as Shareholder.  An Optionee shall not have any rights as a
shareholder with respect to Stock covered by an Option until he exercises the
Option; and, except as otherwise provided in Section 4.5, no adjustment for
dividends, or otherwise, shall be made if the record date therefor is prior to
the date of such exercise.
 
                                   ARTICLE VI
 
                            RESTRICTED STOCK AWARDS
 
     6.1  Restricted Stock Awards.  The Committee may make Awards of Restricted
Stock to eligible persons selected by it. The amount of, the vesting and the
transferability restrictions applicable to any Restricted Stock Award shall be
determined by the Committee in its sole discretion. If the Committee imposes
vesting or transferability restrictions on a Holder's rights with respect to
Restricted Stock, the Committee may issue such instructions to the Company's
share transfer agent in connection therewith as it deems appropriate. The
Committee may also cause the certificate for Shares issued pursuant to a
Restricted Stock Award to be imprinted with any legend which counsel for the
Company considers advisable with respect to the restrictions or, should the
Shares be represented by book or electronic entry rather than a certificate, the
Company may take such steps to restrict transfer of the Shares as counsel for
the Company considers necessary or advisable to comply with applicable law.
 
     6.2  Restricted Stock Award Agreement.  Each Restricted Stock Award shall
be evidenced by an Award Agreement that contains any vesting, transferability
restrictions and other provisions not inconsistent with the Plan as the
Committee may specify.
 
     6.3  Holder's Rights as Shareholder.  Subject to the terms and conditions
of the Plan, each recipient of a Restricted Stock Award shall have all the
rights of a shareholder with respect to the shares of Restricted Stock included
in the Restricted Stock Award during the Period of Restriction established for
the Restricted Stock Award. Dividends paid with respect to Restricted Stock in
cash or property other than shares of Stock or rights to acquire shares of Stock
shall be paid to the recipient of the Restricted Stock Award currently.
Dividends paid in shares of Stock or rights to acquire shares of Stock shall be
added to and become a part of the Restricted Stock. During the Period of
Restriction, certificates representing the Restricted Stock shall be
 
                                        48
<PAGE>
 
registered in the recipient's name and bear a restrictive legend to the effect
that ownership of such Restricted Stock, and the enjoyment of all rights
appurtenant thereto, are subject to the restrictions, terms, and conditions
provided in the Plan and the applicable Restricted Stock Award Agreement. Such
certificates shall be deposited by the recipient with the Secretary of the
Company or such other officer of the Company as may be designated by the
Committee, together with all stock powers or other instruments of assignment,
each endorsed in blank, which will permit transfer to the Company of all or any
portion of the Restricted Stock which shall be forfeited in accordance with the
Plan and the applicable Restricted Stock Award Agreement.
 
                                  ARTICLE VII
 
                          RESTRICTED STOCK UNIT AWARDS
 
     7.1  Authority to Grant Restricted Stock Unit Awards.  Subject to the terms
and provisions of the Plan, the Committee, at any time, and from time to time,
may grant Restricted Stock Unit Awards under the Plan to eligible persons in
such amounts and upon such terms as the Committee shall determine. The amount
of, the vesting and the transferability restrictions applicable to any
Restricted Stock Unit Award shall be determined by the Committee in its sole
discretion. The Committee shall maintain a bookkeeping ledger account which
reflects the number of Restricted Stock Units credited under the Plan for the
benefit of a Holder.
 
     7.2  Restricted Stock Unit Awards.  A Restricted Stock Unit Award shall be
similar in nature to Restricted Stock Award except that no shares of Stock are
actually transferred to the Holder until a later date specified in the
applicable Award Agreement. Each Restricted Stock Unit shall have a value equal
to the Fair Market Value of a share of Stock.
 
     7.3  Restricted Stock Unit Award Agreement.  Each Restricted Stock Unit
Award shall be evidenced by an Award Agreement that contains any Substantial
Risk of Forfeiture, transferability restrictions, form and time of payment
provisions and other provisions not inconsistent with the Plan as the Committee
may specify.
 
     7.4  Form of Payment Under Restricted Stock Unit Award.  Payment under a
Restricted Stock Unit Award shall be made in either cash or shares of Stock as
specified in the Holder's Award Agreement.
 
     7.5  Time of Payment Under Restricted Stock Unit Award.  A Holder's payment
under a Restricted Stock Unit Award shall be made at such time as is specified
in the Holder's Award Agreement. The Award Agreement shall specify that the
payment will be made (1) by a date that is no later than the date that is two
and one-half (2 1/2) months after the end of the Fiscal Year in which the
Restricted Stock Unit Award payment is no longer subject to a Substantial Risk
of Forfeiture or (2) at a time that is permissible under Section 409A.
 
     7.6  Holder's Rights as Shareholder.  A Holder of a Restricted Stock Unit
Award shall have no rights of a shareholder with respect to the Restricted Stock
Unit Award. A Holder shall have no voting rights with respect to any Restricted
Stock Unit Award.
 
     7.7  Compliance With Section 409A.  Restricted Stock Unit Awards shall be
designed and operated in such a manner that they are either exempt from the
application of, or comply with, the requirements of Section 409A.
 
                                  ARTICLE VIII
 
                                 ADMINISTRATION
 
     8.1  Awards.  The Plan shall be administered by the Committee or, in the
absence of the Committee, the Plan shall be administered by the Board. The
members of the Committee shall serve at the discretion of the Board. The
Committee shall have full and exclusive power and authority to administer the
Plan and to take all actions that the Plan expressly contemplates or are
necessary or appropriate in connection with the administration of the Plan with
respect to Awards granted under the Plan.
 
                                        49
<PAGE>
 
     8.2  Authority of the Committee.  The Committee shall have full and
exclusive power to interpret and apply the terms and provisions of the Plan and
Awards made under the Plan, and to adopt such rules, regulations and guidelines
for implementing the Plan as the Committee may deem necessary or proper, all of
which powers shall be exercised in the best interests of the Company and in
keeping with the objectives of the Plan. A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall decide any
question brought before that meeting. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly called and held. All
questions of interpretation and application of the Plan, or as to award granted
under the Plan, shall be subject to the determination, which shall be final and
binding, of a majority of the whole Committee. No member of the Committee shall
be liable for any act or omission of any other member of the Committee or for
any act or omission on his own part, including but not limited to the exercise
of any power or discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct. In carrying out its
authority under the Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
 
          (a) determine the persons to whom and the time or times at which
     Awards will be made;
 
          (b) determine the number and exercise price of shares of Stock covered
     in each Award, subject to the terms and provisions of the Plan;
 
          (c) determine the terms, provisions and conditions of each Award,
     which need not be identical and need not match the default terms set forth
     in the Plan;
 
          (d) accelerate the time at which any outstanding Award will vest;
 
          (e) prescribe, amend and rescind rules and regulations relating to
     administration of the Plan; and
 
          (f) make all other determinations and take all other actions deemed
     necessary, appropriate or advisable for the proper administration of the
     Plan.
 
     The Committee may correct any defect or supply any omission or reconcile
     any inconsistency in the Plan or in any Award to a Holder in the manner and
     to the extent the Committee deems necessary or desirable to further the
     Plan's objectives. Further, the Committee shall make all other
     determinations that may be necessary or advisable for the administration of
     the Plan. As permitted by law and the terms and provisions of the Plan, the
     Committee may delegate its authority as identified in Section 8.3.
 
     The actions of the Committee in exercising all of the rights, powers, and
     authorities set out in this Article VIII and all other Articles of the
     Plan, when performed in good faith and in its sole judgment, shall be
     final, conclusive and binding on all persons. The Committee may employ
     attorneys, consultants, accountants, agents, and other persons, any of whom
     may be an Employee, and the Committee, the Company, and its officers and
     Board shall be entitled to rely upon the advice, opinions, or valuations of
     any such persons.
 
     8.3  Decisions Binding.  All determinations and decisions made by the
Committee or the Board, as the case may be, pursuant to the provisions of the
Plan and all related orders and resolutions of the Committee or the Board, as
the case may be, shall be final, conclusive and binding on all persons,
including the Company, its shareholders, Employees, Holders and the estates and
beneficiaries of Employees and Holders.
 
     8.4  No Liability.  Under no circumstances shall the Company, the Board or
the Committee incur liability for any indirect, incidental, consequential or
special damages (including lost profits) of any form incurred by any person,
whether or not foreseeable and regardless of the form of the act in which such a
claim may be brought, with respect to the Plan or the Company's, the Committee's
or the Board's roles in connection with the Plan.
 
                                        50
<PAGE>
 
                                   ARTICLE IX
 
                        AMENDMENT OR TERMINATION OF PLAN
 
     9.1  Amendment, Modification, Suspension, and Termination.  Subject to
Section 9.2 the Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate the Plan and any Award Agreement in whole or in
part; provided, however, that, without the prior approval of the Company's
shareholders and except as provided in Section 4.5, the Committee shall not
directly or indirectly lower the Option Price of a previously granted Option,
and no amendment of the Plan shall be made without shareholder approval if
shareholder approval is required by applicable law or stock exchange rules.
 
     9.2  Awards Previously Granted.  Notwithstanding any other provision of the
Plan to the contrary, no termination, amendment, suspension, or modification of
the Plan or an Award Agreement shall adversely affect in any material way any
Award previously granted under the Plan, without the written consent of the
Holder holding such Award.
 
                                   ARTICLE X
 
                                 MISCELLANEOUS
 
     10.1  Unfunded Plan/No Establishment of a Trust Fund.  Holders shall have
no right, title, or interest whatsoever in or to any investments that the
Company or any of its Affiliates may make to aid in meeting obligations under
the Plan. Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Holder, beneficiary, legal
representative, or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts, except as expressly
set forth in the Plan. No property shall be set aside nor shall a trust fund of
any kind be established to secure the rights of any Holder under the Plan. All
Holders shall at all times rely solely upon the general credit of the Company
for the payment of any benefit which becomes payable under the Plan. The Plan is
not intended to be subject to the Employee Retirement Income Security Act of
1974, as amended.
 
     10.2  No Employment Obligation.  The granting of any Award shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ, or
utilize the services of, any Holder. The right of the Company or any Affiliate
to terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Award has been granted to him, and nothing in the
Plan or an Award Agreement shall interfere with or limit in any way the right of
the Company or its Affiliates to terminate any Holder's employment at any time
or for any reason not prohibited by law.
 
     10.3  Tax Withholding.  The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Holder any sums required by
federal, state or local tax law to be withheld with respect to the vesting or
exercise of an Award or lapse of restrictions on an Award. In the alternative,
the Company may require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any Affiliate in
cash or by check within one day after the date of vesting, exercise or lapse of
restrictions. In the discretion of the Committee, and with the consent of the
Holder, the Company may reduce the number of shares of Stock issued to the
Holder upon such Holder's exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value
of the shares of Stock held back shall not exceed the Company's or the
Affiliate's Minimum Statutory Tax Withholding Obligation. The Committee may, in
its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding
Obligation arising upon the vesting of Restricted Stock by delivering to the
Holder of the Restricted Stock Award a reduced number of shares of Stock in the
manner specified herein. If permitted by the Committee and acceptable to the
Holder, at the time of vesting of shares of Restricted Stock, the Company shall
(a) calculate the amount of the Company's or an Affiliate's Minimum Statutory
Tax
                                        51
<PAGE>
 
Withholding Obligation on the assumption that all such shares of vested
Restricted Stock are made available for delivery, (b) reduce the number of such
shares of Stock made available for delivery so that the Fair Market Value of the
shares of Stock withheld on the vesting date approximates the Company's or an
Affiliate's Minimum Statutory Tax Withholding Obligation and (c) in lieu of the
withheld shares of Stock, remit cash to the United States Treasury and other
applicable governmental authorities, on behalf of the Holder, in the amount of
the Minimum Statutory Tax Withholding Obligation. The Company shall withhold
only whole shares of Stock to satisfy its Minimum Statutory Tax Withholding
Obligation. Where the Fair Market Value of the withheld shares of Stock does not
equal the amount of the Minimum Statutory Tax Withholding Obligation, the
Company shall withhold shares of Stock with a Fair Market Value slightly less
than the amount of then Minimum Statutory Tax Withholding Obligation and the
Holder must satisfy the remaining minimum withholding obligation in some other
manner permitted under this Section 10.3. The withheld shares of Stock not made
available for delivery by the Company shall be retained as treasury shares or
will be cancelled and, in either case, the Holder's right, title and interest in
such shares of Stock shall terminate. The Company shall have no obligation upon
vesting or exercise of any Award or lapse of restrictions on Restricted Stock
until the Company or an Affiliate has received payment sufficient to cover the
Minimum Statutory Tax Withholding Obligation with respect to that vesting,
exercise or lapse of restrictions. Neither the Company nor any Affiliate shall
be obligated to advise a Holder of the existence of the tax or the amount which
it will be required to withhold.
 
     10.4  Written Agreement.  Each Award shall be embodied in a written
agreement or statement which shall be subject to the terms and conditions of the
Plan. The Award Agreement shall be signed by a member of the Committee on behalf
of the Committee and the Company or by an executive officer of the Company,
other than the Holder, on behalf of the Company, and may be signed by the Holder
to the extent required by the Committee. The Award Agreement may specify the
effect of a Change in Control on the Award. The Award Agreement may contain any
other provisions that the Committee in its discretion shall deem advisable which
are not inconsistent with the terms and provisions of the Plan.
 
     10.5  Indemnification of the Committee.  The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled without further action on his or her part to
indemnity from the Company for, all expenses (including attorney's fees, the
amount of judgments and the amount of approved settlements made with a view to
the curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by such member in connection with or arising out of
any action, suit or proceeding in which such member may be involved by reason of
such member being or having been a member of the Committee, whether or not he or
she continues to be a member of the Committee at the time of incurring the
expenses, including, without limitation, matters as to which such member shall
be finally adjudged in any action, suit or proceeding to have been negligent in
the performance of such member's duty as a member of the Committee. However,
this indemnity shall not include any expenses incurred by any member of the
Committee in respect of matters as to which such member shall be finally
adjudged in any action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of his duty as a member of
the Committee. In addition, no right of indemnification under the Plan shall be
available to or enforceable by any member of the Committee unless, within 60
days after institution of any action, suit or proceeding, such member shall have
offered the Company, in writing, the opportunity to handle and defend same at
its own expense. This right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each member of the Committee and shall be
in addition to all other rights to which a member of the Committee may be
entitled as a matter of law, contract or otherwise.
 
     10.6  Gender and Number.  If the context requires, words of one gender when
used in the Plan shall include the other and words used in the singular or
plural shall include the other.
 
     10.7  Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
 
                                        52
<PAGE>
 
     10.8  Headings.  Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms and provisions of the Plan.
 
     10.9  Other Compensation Plans.  The adoption of the Plan shall not affect
any other option, incentive or other compensation or benefit plans in effect for
the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of incentive compensation arrangements for
Employees.
 
     10.10  Other Awards.  The grant of an Award shall not confer upon the
Holder the right to receive any future or other Awards under the Plan, whether
or not Awards may be granted to similarly situated Holders, or the right to
receive future Awards upon the same terms or conditions as previously granted.
 
     10.11  Successors.  All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
 
     10.12  Law Limitations/Governmental Approvals.  The granting of Awards and
the issuance of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
 
     10.13  Delivery of Title.  The Company shall have no obligation to issue or
deliver evidence of title for shares of Stock issued under the Plan prior to:
 
          (a) obtaining any approvals from governmental agencies that the
     Company determines are necessary or advisable; and
 
          (b) completion of any registration or other qualification of the Stock
     under any applicable national or foreign law or ruling of any governmental
     body that the Company determines to be necessary or advisable.
 
     10.14  Inability to Obtain Authority.  The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any shares of Stock hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such shares of Stock as to
which such requisite authority shall not have been obtained.
 
     10.15  No Fractional Shares.  No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, additional Awards, or other property shall be issued or paid in
lieu of fractional shares of Stock or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
 
     10.16  Waiver of Jury.  Each Award Agreement shall specify that the Award
recipient and the Company shall both waive a trial by jury of any or all issues
arising in any action or proceeding between the parties or their successors,
heirs and assigns, under or connected with the Award, the Plan, or any of the
provisions of the Award Agreement or the Plan.
 
     10.17  Governing Law.  The provisions of the Plan and the rights of all
persons claiming thereunder shall be construed, administered and governed under
the laws of the State of Texas, without regard to principles of conflicts of
law.