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                        PIONEER NATURAL RESOURCES COMPANY
 
                          2006 LONG TERM INCENTIVE PLAN
 
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<PAGE>
 
 
                                TABLE OF CONTENTS
 
 
1.   Purpose.............................................................. 1
 
2.   Definitions...........................................................1
 
3.   Administration........................................................5
     (a)      Authority of the Committee...................................5
     (b)      Manner of Exercise of Committee Authority....................6
     (c)      Limitation of Liability......................................6
 
4.   Stock Subject to Plan.................................................7
     (a)      Overall Number of Shares Available for Delivery..............7
     (b)      Application of Limitation to Grants of Awards................7
     (c)      Availability of Shares Not Issued under Awards...............7
     (d)      Stock Offered................................................7
 
5.   Eligibility; Per Person Award Limitations.............................8
 
6.   Specific Terms of Awards..............................................8
     (a)      General......................................................8
     (b)      Options......................................................8
     (c)      Stock Appreciation Rights....................................9
     (d)      Restricted Stock............................................10
     (e)      Restricted Stock Units......................................11
     (f)      Bonus Stock and Awards in Lieu of Obligations...............12
     (g)      Dividend Equivalents........................................12
     (h)      Other Stock-Based Awards....................................12
 
7.   Certain Provisions Applicable to Awards..............................12
     (a)      Termination of Employment...................................12
     (b)      Stand-Alone, Additional, Tandem, and Substitute Awards......13
     (c)      Term of Awards..............................................13
     (d)      Form and Timing of Payment under Awards; Deferrals..........13
     (e)      Exemptions from Section 16(b) Liability.....................13
     (f)      Non-Competition Agreement...................................14
 
8.   Performance and Annual Incentive Awards..............................14
     (a)      Performance Conditions......................................14
     (b)      Performance Awards Granted to Designated Covered
              Employees...................................................14
     (c)      Annual Incentive Awards Granted to Designated
              Covered Employees...........................................16
     (d)      Written Determinations......................................17
     (e)      Status of Section 8(b) and Section 8(c) Awards under
              Section 162(m) of the Code..................................17
 
9.   Recapitalization or Reorganization; Change in Control................17
     (a)      Existence of Plans and Awards...............................17
     (b)      Subdivision or Consolidation of Shares......................17
     (c)      Corporate Recapitalization..................................18
 
 
                                       i
 
 
 
<PAGE>
 
 
 
     (d)      Additional Issuances........................................19
     (e)      Change in Control...........................................19
     (f)      Change in Control Price.....................................20
 
10.  General Provisions...................................................22
     (a)      Transferability.............................................22
     (b)      Taxes.......................................................23
     (c)      Changes to this Plan and Awards.............................23
     (d)      Limitation on Rights Conferred under Plan...................24
     (e)      Unfunded Status of Awards...................................24
     (f)      Nonexclusivity of this Plan.................................24
     (g)      Severability................................................24
     (h)      Governing Law...............................................24
     (i)      Conditions to Delivery of Stock.............................25
 
 
                                      -ii-
 
 
<PAGE>
 
 
                        PIONEER NATURAL RESOURCES COMPANY
 
                          2006 Long-Term Incentive Plan
 
 
 
     1.  Purpose.  The purpose of the Pioneer  Natural  Resources  Company  2006
Long-Term  Incentive  Plan (the  "Plan")  is to  provide a means  through  which
Pioneer Natural Resources Company, a Delaware  corporation (the "Company"),  and
its Subsidiaries may attract and retain able persons as employees, directors and
consultants  of the Company and to provide a means  whereby  those  persons upon
whom the responsibilities of the successful administration and management of the
Company rest,  and whose present and potential  contributions  to the welfare of
the Company are of  importance,  can acquire and maintain  stock  ownership,  or
awards the value of which is tied to the  performance  of the  Company,  thereby
strengthening  their  concern for the welfare of the Company and their desire to
remain in its devoted employ.  A further purpose of this Plan is to provide such
employees  and directors  with  additional  incentive  and reward  opportunities
designed to enhance the profitable growth of the Company. Accordingly, this Plan
primarily provides for the granting of Incentive Stock Options, options which do
not constitute  Incentive  Stock Options,  Restricted  Stock Awards,  Restricted
Stock Units, Stock Appreciation  Rights or any combination of the foregoing,  as
is best suited to the  circumstances  of the  particular  individual as provided
herein.
 
     2.  Definitions.  For purposes of this Plan,  the following  terms shall be
defined as set forth  below,  in  addition  to such  terms  defined in Section 1
hereof:
 
         (a)  "Annual Incentive Award"  means a  conditional right  granted to a
Participant under Section 8(c) hereof to receive a cash payment,  Stock or other
Award,  unless  otherwise  determined  by  the  Committee,  after  the  end of a
specified year.
 
         (b)  "Award" means any Option, SAR (including Limited SAR),  Restricted
Stock Award,  Restricted  Stock Unit,  Dividend  Equivalent,  Other  Stock-Based
Award,  Performance  Award or Annual  Incentive  Award,  together with any other
right or interest granted to a Participant under this Plan.
 
         (c)  "Beneficiary" means one or more persons,  trusts or other entities
which have been  designated by a Participant  in his or her most recent  written
beneficiary  designation  filed  with the  Committee  to  receive  the  benefits
specified  under this Plan upon such  Participant's  death or to which Awards or
other rights are transferred if and to the extent  permitted under Section 10(a)
hereof. If, upon a Participant's  death,  there is no designated  Beneficiary or
surviving designated  Beneficiary,  then the term Beneficiary means the persons,
trusts  or  other  entities  entitled  by  will  or  the  laws  of  descent  and
distribution to receive such benefits.
 
         (d)  "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.
 
         (e)  "Board" means the Company's Board of Directors.
 
 
<PAGE>
 
 
         (f)  "Business Day" means any day other than a Saturday, a Sunday, or a
day on which  banking  institutions  in the  state of Texas  are  authorized  or
obligated by law or executive order to close.
 
         (g)  "Change in Control"  means the  occurrence of any of the following
events:
 
              (i) The acquisition by any individual, entity or group (within the
meaning of Section  13(d)(3) or 14(d)(2) of the  Exchange  Act) (a  "Person") of
beneficial  ownership  (within the meaning of Rule 13d-3  promulgated  under the
Exchange Act) of 40% or more of either (x) the then outstanding  shares of Stock
of the Company (the  "Outstanding  Company  Stock") or (y) the  combined  voting
power of the then outstanding  voting securities of the Company entitled to vote
generally  in  the  election  of  directors  (the  "Outstanding  Company  Voting
Securities");  provided,  however, that for purposes of this subsection (i), the
following  acquisitions  shall  not  constitute  a Change  of  Control:  (A) any
acquisition  directly from the Company,  (B) any acquisition by the Company, (C)
any  acquisition by any employee  benefit plan (or related  trust)  sponsored or
maintained  by the Company or any  corporation  controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of paragraph (iii) below; or
 
              (ii) A majority of the members of the Board is replaced during any
12-month period by directors whose  appointment or election is not endorsed by a
majority  of the  members  constituting  the  Board  prior  to the  date  of the
appointment or election; or
 
              (iii) Consummation of a reorganization, merger or consolidation or
sale or other  disposition  of all or  substantially  all of the  assets  of the
Company  or an  acquisition  of  assets  of  another  corporation  (a  "Business
Combination"),  in each case, unless,  following such Business Combination,  (A)
all or substantially all of the individuals and entities who were the beneficial
owners,  respectively,  of the Outstanding Company Stock and Outstanding Company
Voting Securities  immediately prior to such Business  Combination  beneficially
own,  directly  or  indirectly,  more  than  50%  of,  respectively,   the  then
outstanding  shares of common  stock and the  combined  voting power of the then
outstanding  voting  securities  entitled to vote  generally  in the election of
directors,  as the case may be, of the corporation  resulting from such Business
Combination (including,  without limitation,  a corporation which as a result of
such transaction  owns the Company or all or substantially  all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same  proportions  as  their  ownership,  immediately  prior  to  such  Business
Combination  of the  Outstanding  Company Stock and  Outstanding  Company Voting
Securities,  as the case may be, (B) no Person  (excluding any employee  benefit
plan (or related  trust) of the Company or the  corporation  resulting from such
Business Combination) beneficially owns, directly or indirectly, 40% or more of,
respectively,  the then  outstanding  shares of common stock of the  corporation
resulting  from such Business  Combination  or the combined  voting power of the
then outstanding voting securities of such corporation except to the extent that
such  ownership  results solely from ownership of the Company that existed prior
to the  Business  Combination  and (C) at least a majority of the members of the
board of directors of the corporation  resulting from such Business  Combination
were members of the Incumbent  Board at the time of the execution of the initial
agreement,  or  of  the  action  of  the  Board,  providing  for  such  Business
Combination; or
 
 
                                      -2-
 
 
<PAGE>
 
 
              (iv) Approval  by the  stockholders  of the  Company of a complete
liquidation or dissolution of the Company.
 
         (h)  "Code"  means the  Internal Revenue Code of 1986,  as amended from
time to time,  including  regulations  thereunder  and successor  provisions and
regulations thereto.
 
         (i)  "Committee"  means a committee of two or more directors designated
by the Board to administer this Plan; provided,  however, that, unless otherwise
determined  by the Board,  the  Committee  shall  consist  solely of two or more
directors, each of whom shall be (i) a "nonemployee director" within the meaning
of Rule 16b-3 under the Exchange Act, and (ii) an "outside  director" as defined
under section 162(m) of the Code, unless administration of this Plan by "outside
directors" is not then required in order to qualify for tax deductibility  under
section 162(m) of the Code.
 
         (j)  "Covered Employee"  means an  Eligible  Person  who  is a  Covered
Employee as specified in Section 8(e) of this Plan.
 
         (k)  "Dividend  Equivalent"  means a right,  granted  to a  Participant
under Section 6(g), to receive cash, Stock, other Awards or other property equal
in value to  dividends  paid with  respect  to a  specified  number of shares of
Stock, or other periodic payments.
 
         (l)  "Effective Date" means May 3, 2006.
 
         (m)  "Eligible Person" means all officers and  employees of the Company
or of any Subsidiary,  and other persons who provide  services to the Company or
any of its  Subsidiaries,  including  directors of the  Company.  An employee on
leave of absence  may be  considered  as still in the employ of the Company or a
Subsidiary for purposes of eligibility for participation in this Plan.
 
         (n)  "Exchange Act"  means  the  Securities  Exchange  Act  of 1934, as
amended from time to time,  including rules thereunder and successor  provisions
and rules thereto.
 
         (o)  "Executive  Officer"  means an executive officer of the Company as
defined  under the Exchange Act.
 
         (p)  "Fair Market Value" means, for a particular day the value equal to
the closing price of a share of Stock on the most recent date on which shares of
Stock were  publicly  traded  preceding  the date with respect to which the Fair
Market  Valuation  determination  is made.  In the event shares of Stock are not
publicly  traded at the time a  determination  of their  value is required to be
made hereunder,  the  determination  of their Fair Market Value shall be made by
the Committee in such manner it deems appropriate.
 
         (q)  "Incentive Stock Option" or "ISO"  means any Option intended to be
and designated as an incentive stock option within the meaning of section 422 of
the Code or any successor provision thereto.
 
         (r)  "Incumbent Board" shall mean individuals who,  as of the Effective
Date,  constitute  the Board and any other  individual who becomes a director of
the Company after that date and whose  election or  appointment  by the Board or
 
 
                                      -3-
 
 
<PAGE>
 
 
nomination for election by the Company's  stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board.
 
         (s)  "Non-Surviving Event"  means an event of  Restructure as described
in either subsection (ii) or (iii) of Section 1(bb).
 
         (t)  "Option"  means a right,  granted to a  Participant  under Section
6(b)  hereof,  to purchase  Stock or other  Awards at a specified  price  during
specified time periods.
 
         (u)  "Other Stock-Based  Awards" means Awards  granted to a Participant
under Section 6(i) hereof.
 
         (v)  "Participant"  means a person  who has been granted an Award under
this Plan  which  remains  outstanding,  including  a person who is no longer an
Eligible Person.
 
         (w)  "Performance Unit" means a right,  granted to a  Participant under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.
 
         (x)  "Person"  means  any  person or  entity of any  nature whatsoever,
specifically  including an  individual,  a firm,  a company,  a  corporation,  a
partnership,  a limited  liability  company,  a trust or other entity; a Person,
together  with that  Person's  Affiliates  and  Associates  (as those  terms are
defined in Rule 12b-2  under the  Exchange  Act),  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 Company  with such Person,  shall be
deemed a single "Person."
 
         (y)  "Qualified  Member"  means  a  member  of the  Committee  who is a
"nonemployee  Director"  within the meaning of Rule  16b-3(b)(3) and an "outside
director"  within the  meaning of Treasury  Regulation  1.162-27  under  section
162(m) of the Code.
 
         (z)  "Restricted Stock"  means  Stock  granted  to a  Participant under
Section 6(d) hereof,  that is subject to certain  restrictions  and to a risk of
forfeiture.
 
         (aa) "Restricted Stock Unit"  means a right,  granted  to a Participant
under Section 6(e) hereof,  to receive Stock,  cash or a combination  thereof at
the end of a specified deferral period.
 
         (bb) "Restructure"  means  the  occurrence of  any one  or more  of the
following:
 
               (i)   The merger or consolidation of the Company with any Person,
whether  effected as a single  transaction or a series of related  transactions,
with the Company  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 Company,
cash, or other property;
 
 
                                      -4-
 
 
<PAGE>
 
 
               (ii)  The merger or consolidation of the Company with any Person,
whether  effected as a single  transaction or a series of related  transactions,
with (A) the Company not being the continuing or surviving entity of that merger
or consolidation or (B) the Company 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 Company, cash, or other property; or
 
               (iii)  The   transfer,   directly  or   indirectly,   of  all  or
substantially  all of the  assets  of the  Company  (whether  by  sale,  merger,
consolidation,  liquidation  or otherwise) to any Person  whether  effected as a
single transaction or a series of related transactions.
 
         (cc) "Rule 16b-3" means Rule 16b-3,  promulgated by the  Securities and
Exchange  Commission  under section 16 of the Exchange Act, as from time to time
in effect and applicable to this Plan and Participants.
 
         (dd) "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.
 
         (ee) "Stock"  means the  Company's  Common  Stock,  par value  $.01 per
share,  and such other securities as may be substituted (or  resubstituted)  for
Stock pursuant to Section 9.
 
         (ff) "Stock Appreciation Rights"  or "SAR"  means a right  granted to a
Participant under Section 6(c) hereof.
 
         (gg) "Subsidiary" means with respect to any Person,  any corporation or
other  entity of which a  majority  of the  voting  power of the  voting  equity
securities or equity interest is owned, directly or indirectly, by that Person.
 
     3.  Administration.
 
         (a)  Authority of the Committee. This Plan shall be administered by the
Committee  except to the extent the Board  elects to  administer  this Plan,  in
which  case  references  herein to the  "Committee"  shall be deemed to  include
references  to the "Board."  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 (i) adopt,  amend, and rescind  administrative  and interpretive
rules and regulations  relating to the Plan; (ii) determine the Eligible Persons
to whom,  and the  time or  times at  which,  Awards  shall  be  granted;  (iii)
determine  the  amount  of  cash  and the  number  of  shares  of  Stock,  Stock
Appreciation  Rights,  Restricted Stock Units or Restricted Stock Awards, or any
combination thereof, that shall be the subject of each Award; (iv) determine the
terms and  provisions  of each Award  agreement  (which need not be  identical),
including  provisions  defining  or  otherwise  relating to (A) the term and the
period or periods and extent of exercisability of the Options, (B) the extent to
which the  transferability of shares of Stock issued or transferred  pursuant to
any Award is restricted,  (C) except as otherwise provided herein, the effect of
termination of employment of a Participant  on the Award,  and (D) the effect of
approved leaves of absence  (consistent  with any applicable  regulations of the
Internal  Revenue  Service);  (v) accelerate the time of  exercisability  of any
Award that has been granted;  (vi) construe the respective  Award agreements and
the  Plan;  (vii)  make  determinations  of the Fair  Market  Value of the Stock
 
 
                                      -5-
 
 
<PAGE>
 
 
pursuant to the Plan;  (viii)  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  Persons who are subject to section 16(b) of the
Exchange Act or section 162(m) of the Code; (ix) terminate,  modify or amend the
Plan;  and (x) 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) of the Code,  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 Section 3(a) shall be final and conclusive.
 
         (b)  Manner of  Exercise of  Committee  Authority.  At any time  that a
member of the Committee is not a Qualified  Member,  any action of the Committee
relating  to an Award  granted  or to be granted  to a  Participant  who is then
subject to section 16 of the Exchange Act in respect of the Company, or relating
to  an  Award  intended  by  the  Committee  to  qualify  as  "performance-based
compensation"  within the meaning of section 162(m) of the Code and  regulations
thereunder,  may be  taken  either  (i)  by a  subcommittee,  designated  by the
Committee,  composed  solely of two or more  Qualified  Members,  or (ii) by the
Committee but with each such member who is not a Qualified Member  abstaining or
recusing himself or herself from such action; provided, however, that, upon such
abstention or recusal,  the  Committee  remains  composed  solely of two or more
Qualified  Members.  Such action,  authorized by such a  subcommittee  or by the
Committee upon the abstention or recusal of such non-Qualified Member(s),  shall
be the action of the  Committee  for  purposes  of this Plan.  Any action of the
Committee shall be final,  conclusive and binding on all persons,  including the
Company,  its  Subsidiaries,  stockholders,  Participants,   Beneficiaries,  and
transferees  under Section 10(a) hereof or other persons claiming rights from or
through a Participant. The express grant of any specific power to the Committee,
and the  taking  of any  action by the  Committee,  shall  not be  construed  as
limiting any power or authority of the Committee.  The Committee may delegate to
officers or managers of the Company or any  Subsidiary,  or committees  thereof,
the  authority,  subject  to such terms as the  Committee  shall  determine,  to
perform such functions, including administrative functions, as the Committee may
determine,  to the extent that such delegation will not result in the loss of an
exemption under Rule  16b-3(d)(1) for Awards granted to Participants  subject to
section 16 of the  Exchange  Act in respect  of the  Company  and will not cause
Awards  intended to qualify as  "performance-based  compensation"  under section
162(m) of the Code to fail to so qualify.  The Committee  may appoint  agents to
assist it in administering this Plan.
 
         (c)  Limitation of Liability.  The Committee  and each  member  thereof
shall be  entitled  to,  in good  faith,  rely or act upon any  report  or other
information furnished to him or her by any officer or employee of the Company or
a Subsidiary, the Company's legal counsel, independent auditors,  consultants or
any other agents assisting in the  administration  of this Plan.  Members of the
Committee  and any officer or employee of the Company or a Subsidiary  acting at
the direction or on behalf of the Committee  shall not be personally  liable for
any action or  determination  taken or made in good  faith with  respect to this
 
 
                                      -6-
 
 
<PAGE>
 
 
Plan, and shall, to the fullest extent permitted by law, be indemnified and held
harmless by the Company with respect to any such action or determination.
 
     4.  Stock Subject to Plan.
 
         (a)  Overall Number of Shares Available for Delivery.  Subject to
adjustment in a manner  consistent  with any adjustment made pursuant to Section
9, the total number of shares of Stock  reserved and  available  for delivery in
connection with Awards under this Plan shall not exceed 4,600,000 shares and the
total  number  of  shares  of Stock  received  and  available  for  delivery  in
connection with ISOs under this Plan shall not exceed 4,600,000 shares. No Award
may be  granted  under  the  Plan on or  after  the 10 year  anniversary  of the
Effective Date.
 
         (b)  Application of  Limitation to  Grants of  Awards.  No Award may be
granted if the number of shares of Stock to be delivered in connection with such
Award exceeds the number of shares of Stock remaining  available under this Plan
minus the number of shares of Stock  issuable  in  settlement  of or relating to
then-outstanding  Awards. The Committee may adopt reasonable counting procedures
to ensure appropriate  counting,  avoid double counting (as, for example, in the
case of tandem or  substitute  awards)  and make  adjustments  if the  number of
shares of Stock actually  delivered differs from the number of shares previously
counted in connection with an Award.
 
         (c)  Availability of Shares Not  Issued under  Awards.  Shares of Stock
subject to an Award  under  this Plan that  expire or are  canceled,  forfeited,
settled in cash or  otherwise  terminated  without an  issuance of shares to the
Participant,  including  (i) the  number of shares  withheld  in  payment of any
exercise or purchase price of an Award or taxes relating to Awards, and (ii) the
number of shares  surrendered in payment of any exercise or purchase price of an
Award or taxes  relating to any Award,  will again be available for Awards under
this Plan,  except  that if any such  shares  could not again be  available  for
Awards to a particular Participant under any applicable law or regulation,  such
shares shall be available  exclusively  for Awards to  Participants  who are not
subject to such limitation.
 
         (d)  Stock Offered.  The shares to be delivered under the Plan shall be
made available from (i) authorized but unissued shares of Stock, (ii) Stock held
in the  treasury of the  Company,  or (iii)  previously  issued  shares of Stock
reacquired by the Company, including shares purchased on the open market.
 
 
                                      -7-
 
 
<PAGE>
 
 
 
     5.  Eligibility; Per Person Award Limitations.  Awards may be granted under
this Plan only to Persons who are Eligible  Persons at the time of grant thereof
or in connection  with the severance or retirement of Eligible  Individuals.  In
each fiscal year or 12-month  period,  as  applicable,  during any part of which
this Plan is in effect,  a Covered Employee may not be granted (a) Awards (other
than Awards  designated  to be paid only in cash)  relating to more than 250,000
shares  of  Stock,  subject  to  adjustment  in a  manner  consistent  with  any
adjustment made pursuant to Section 9 and (b) Awards  designated to be paid only
in cash having a value determined on the date of grant in excess of $4,000,000.
 
     6.  Specific Terms of Awards.
 
         (a)  General. Awards may  be granted  on the  terms and  conditions set
forth in this Section 6. In addition,  the  Committee may impose on any Award or
the exercise  thereof,  at the date of grant or  thereafter  (subject to Section
10(c)),  such  additional  terms  and  conditions,  not  inconsistent  with  the
provisions of this Plan,  as the  Committee  shall  determine,  including  terms
requiring  forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or  her  Award.  The  Committee  shall  retain  full  power  and  discretion  to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under this Plan;  provided,  however,  that the Committee shall
not have any discretion to accelerate,  waive or modify any term or condition of
an Award that is intended  to qualify as  "performance-based  compensation"  for
purposes of section 162(m) of the Code if such discretion  would cause the Award
to not so qualify.
 
         (b)   Options.  The  Committee  is   authorized  to  grant  Options  to
Participants on the following terms and conditions:
 
               (i)   Exercise  Price.  Each  Option  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 ISO 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 as of the date of grant of the Option
(or in the case of an individual who owns stock  possessing more than 10 percent
of the total combined voting power of all classes of stock of the Corporation or
its  parent or any  Subsidiary  110% of the Fair  Market  Value per share of the
Stock on the date of grant). The exercise price per share of Stock subject to an
Option other than an  Incentive  Stock Option shall not be less than the greater
of (1) the par value  per  share of the  Stock  and (2) 100% of the Fair  Market
Value per share of the stock as of the date of grant of the Option.
 
               (ii)  Time and Method of Exercise.  The Committee shall determine
the time or times at which or the  circumstances  under  which an Option  may be
exercised in whole or in part  (including  based on  achievement  of performance
goals and/or future  service  requirements),  the methods by which such exercise
price  may be paid or  deemed to be paid,  the form of such  payment,  including
without limitation cash, Stock, other Awards or awards granted under other plans
of the Company or any Subsidiary,  or other property  (including  notes or other
contractual  obligations of Participants  to make payment on a deferred  basis),
and the  methods by or forms in which  Stock will be  delivered  or deemed to be
delivered  to  Participants,  including,  but not  limited  to, the  delivery of
 
                                      -8-
 
 
<PAGE>
 
 
Restricted Stock subject to Section 6(d). In the case of an exercise whereby the
Exercise Price is paid with Stock,  such Stock shall be valued as of the date of
exercise.
 
               (iii) ISOs.  The terms of any ISO granted  under this  Plan shall
comply in all respects with the provisions of section 422 of the Code.  Anything
in this Plan to the contrary  notwithstanding,  no term of this Plan relating to
ISOs (including any SAR in tandem  therewith)  shall be interpreted,  amended or
altered,  nor shall any  discretion  or  authority  granted  under  this Plan be
exercised,  so as to disqualify either this Plan or any ISO under section 422 of
the Code, unless the Participant has first requested the change that will result
in such  disqualification.  ISOs shall not be granted  more than ten years after
the  earlier of the  adoption  of this Plan or the  approval of this Plan by the
Company's stockholders.  Notwithstanding the foregoing, the Fair Market Value of
shares of Stock subject to an ISO and the aggregate  Fair Market Value of shares
of stock of any parent or Subsidiary corporation (within the meaning of sections
424(e) and (f) of the Code) subject to any other  incentive stock option (within
the  meaning  of  section  422 of the  Code))  of the  Company  or a  parent  or
Subsidiary  corporation  (within the  meaning of sections  424(e) and (f) of the
Code) that first becomes  purchasable  by a Participant in any calendar year may
not (with respect to that Participant) 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 the  incentive  stock  options is  granted.
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.
 
         (c)  Stock Appreciation Rights.  The  Committee is  authorized to grant
SARs to Participants on the following terms and conditions:
 
               (i)   Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive,  upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Stock on the date of exercise over (B) the
grant price of the SAR as determined by the Committee.
 
               (ii)  Rights Related  to  Options.  A  Stock  Appreciation  Right
granted  pursuant to an Option shall entitle a Participant,  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  6(c)(ii)(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)  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)  Upon  the  exercise  of  a  Stock  Appreciation  Right
         related  to an Option,  a  Participant  shall  be entitled  to  receive
         payment from the Company of an amount determined by multiplying:
 
 
                                      -9-
 
 
<PAGE>
 
 
                          (1)  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
 
                          (2) the number  of  shares  as  to  which  that  Stock
               Appreciation Right has been exercised.
 
               (iii) 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)  Each Award agreement  shall state the total  number of
         shares of Stock to which the Stock Appreciation Right relates.
 
                     (B)  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)  Each Award agreement shall state the date at which the
         Stock Appreciation Rights shall expire if not previously exercised.
 
                     (D)  Each  Stock   Appreciation  Right   shall   entitle  a
         participant,  upon exercise  thereof,  to receive payment  of an amount
         determined by multiplying:
 
                          (1)  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
 
                          (2)  the number  of  shares  as  to  which  the  Stock
               Appreciation Right has been exercised.
 
               (iv)  Terms.  Except as otherwise provided herein,  the Committee
shall  determine at the date of grant or thereafter,  the time or times at which
and the  circumstances  under which an SAR may be  exercised in whole or in part
(including  based on  achievement  of  performance  goals and/or future  service
requirements),   the  method  of  exercise,   method  of  settlement,   form  of
consideration  payable in settlement,  method by or forms in which Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR shall
be in tandem or in  combination  with any other  Award,  and any other terms and
conditions of any SAR. SARs may be either  freestanding  or in tandem with other
Awards.
 
         (d)   Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
 
 
                                      -10-
 
 
<PAGE>
 
 
               (i)  Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose,  which restrictions may lapse separately or
in  combination  at such times,  under such  circumstances  (including  based on
achievement of performance  goals and/or future service  requirements),  in such
installments  or otherwise,  as the Committee may determine at the date of grant
or thereafter.  During the restricted period applicable to the Restricted Stock,
the  Restricted  Stock  may not be  sold,  transferred,  pledged,  hypothecated,
margined or otherwise encumbered by the Participant.
 
               (ii)  Certificates for Stock. Restricted Stock granted under this
Plan may be  evidenced  in such  manner as the  Committee  shall  determine.  If
certificates  representing  Restricted  Stock are  registered in the name of the
Participant,   the  Committee  may  require  that  such   certificates  bear  an
appropriate   legend  referring  to  the  terms,   conditions  and  restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the  certificates,  and that the  Participant  deliver  a stock  power to the
Company, endorsed in blank, relating to the Restricted Stock.
 
               (iii) Dividends and Splits.  As a  condition  to the  grant of an
Award of Restricted  Stock, the Committee may require or permit a Participant to
elect  that  any  cash  dividends  paid  on  a  share  of  Restricted  Stock  be
automatically  reinvested in additional shares of Restricted Stock or applied to
the purchase of additional Awards under this Plan.  Unless otherwise  determined
by the Committee,  Stock  distributed in connection  with a Stock split or Stock
dividend,  and other  property  distributed  as a dividend,  shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock
with respect to which such Stock or other property has been distributed.
 
         (e)   Restricted Stock Units.  The  Committee  is  authorized to  grant
Restricted Stock Units to Participants, which are rights to receive Stock at the
end  of a  specified  deferral  period,  subject  to  the  following  terms  and
conditions:
 
               (i)  Award and Restrictions. Settlement of an Award of Restricted
Stock Units shall occur upon  expiration  of the deferral  period  specified for
such Restricted  Stock Unit by the Committee (or, if permitted by the Committee,
as elected by the  Participant).  In addition,  Restricted  Stock Units shall be
subject to such  restrictions  (which may include a risk of  forfeiture)  as the
Committee may impose, if any, which  restrictions may lapse at the expiration of
the  deferral  period  or  at  earlier   specified  times  (including  based  on
achievement of performance goals and/or future service requirements), separately
or in combination, in installments or otherwise, as the Committee may determine.
Restricted  Stock Units shall be  satisfied  by the delivery of cash or Stock in
the amount equal to the Fair Market Value of the  specified  number of shares of
Stock  covered by the  Restricted  Stock Units,  or a  combination  thereof,  as
determined by the Committee at the date of grant or thereafter.
 
               (ii)  Dividend Equivalents.  Unless  otherwise  determined by the
Committee at date of grant,  Dividend  Equivalents  on the  specified  number of
shares of Stock  covered by an Award of  Restricted  Stock Units shall be either
(A) paid with respect to such  Restricted  Stock Units on the  dividend  payment
date in cash or in shares of unrestricted Stock having a Fair Market Value equal
to the amount of such dividends, or (B) deferred with respect to such Restricted
 
 
                                      -11-
 
 
<PAGE>
 
 
Stock Units and the amount or value thereof  automatically  deemed reinvested in
additional Restricted Stock Units, other Awards or other investment vehicles, as
the Committee shall determine or permit the Participant to elect.
 
         (f)   Bonus Stock and Awards  in Lieu of Obligations.  The Committee is
authorized to grant Stock as a bonus,  or to grant Stock or other Awards in lieu
of  obligations  to pay cash or deliver other  property under this Plan or under
other  plans  or  compensatory  arrangements,  provided  that,  in the  case  of
Participants  subject  to  section 16 of the  Exchange  Act,  the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that  acquisitions  of Stock or other  Awards are exempt  from  liability
under section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall
be subject to such other terms as shall be determined by the  Committee.  In the
case of any grant of Stock to an officer of the Company or a Subsidiary  in lieu
of salary or other cash  compensation,  the number of shares granted in place of
such compensation shall be reasonable, as determined by the Committee.
 
         (g)   Dividend  Equivalents.  The  Committee  is  authorized  to  grant
Dividend  Equivalents  to a  Participant,  entitling the  Participant to receive
cash,  Stock,  other Awards,  or other property equal in value to dividends paid
with  respect  to a  specified  number of shares  of  Stock,  or other  periodic
payments.  Dividend  Equivalents may be awarded on a  free-standing  basis or in
connection  with  another  Award.   The  Committee  may  provide  that  Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment  vehicles,  and
subject to such restrictions on transferability and risks of forfeiture,  as the
Committee may specify.
 
         (h)   Other Stock-Based Awards. The Committee is authorized, subject to
limitations  under  applicable law, to grant to  Participants  such other Awards
that may be  denominated  or payable in, valued in whole or in part by reference
to, or otherwise  based on, or related to, Stock,  as deemed by the Committee to
be  consistent  with the  purposes of this Plan,  including  without  limitation
convertible  or  exchangeable  debt  securities,  other  rights  convertible  or
exchangeable  into  Stock,  purchase  rights  for Stock,  Awards  with value and
payment  contingent  upon  performance  of  the  Company  or any  other  factors
designated by the Committee, and Awards valued by reference to the book value of
Stock  or  the  value  of  securities  of  or  the   performance   of  specified
Subsidiaries.  The Committee  shall  determine the terms and  conditions of such
Awards.  Stock delivered  pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration,  paid
for at such  times,  by such  methods,  and in such  forms,  including,  without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine.  Cash awards, as an element of or supplement to any other Award under
this Plan, may also be granted pursuant to this Section 6(h).
 
     7.  Certain Provisions Applicable to Awards.
 
         (a)   Termination  of  Employment.  Except  as  provided   herein,  the
treatment of an Award upon a  termination  of  employment  or any other  service
relationship by and between a Participant and any Company or Subsidiary shall be
specified in the agreement controlling such Award.
 
 
                                      -12-
 
 
<PAGE>
 
 
         (b)   Stand-Alone, Additional, Tandem,  and  Substitute Awards.  Awards
granted  under this Plan may, in the  discretion  of the  Committee,  be granted
either alone or in addition to, in tandem with, or in  substitution  or exchange
for, any other Award or any award granted under another plan of the Company, any
Subsidiary,  or  any  business  entity  to  be  acquired  by  the  Company  or a
Subsidiary,  or any other right of a  Participant  to receive  payment  from the
Company or any Subsidiary.  Such  additional,  tandem and substitute or exchange
Awards  may be granted at any time.  If an Award is granted in  substitution  or
exchange for another  Award,  the Committee  shall require the surrender of such
other Award in consideration for the grant of the new Award. In addition, Awards
may be granted in lieu of cash  compensation,  including in lieu of cash amounts
payable under other plans of the Company or any  Subsidiary,  in which the value
of Stock subject to the Award is  equivalent  in value to the cash  compensation
(for  example,  Restricted  Stock Units or  Restricted  Stock),  or in which the
exercise  price,  grant price or purchase  price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of the  underlying
Stock minus the value of the cash compensation surrendered (for example, Options
granted  with  an  exercise  price  "discounted"  by  the  amount  of  the  cash
compensation surrendered).
 
         (c)   Term of Awards.  The term of each Award shall be for such  period
as may be determined by the Committee;  provided that in no event shall the term
of any Option or SAR exceed a period of ten years (or such  shorter  term as may
be required in respect of an ISO under section 422 of the Code).
 
         (d)   Form and Timing of Payment  under Awards;  Deferrals.  Subject to
the terms of this Plan and any applicable Award  agreement,  payments to be made
by the Company or a Subsidiary  upon the exercise of an Option or other Award or
settlement  of an  Award  may be made  in  such  forms  as the  Committee  shall
determine,  including  without  limitation  cash,  Stock,  other Awards or other
property,  and may be made in a single payment or transfer, in installments,  or
on a deferred basis.  Except as otherwise provided herein, the settlement of any
Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more
specified  events (in addition to a Change in Control).  Installment or deferred
payments  may be required  by the  Committee  (subject to Section  10(c) of this
Plan, including the consent provisions thereof in the case of any deferral of an
outstanding Award not provided for in the original Award agreement) or permitted
at the election of the  Participant on terms and  conditions  established by the
Committee. Payments may include, without limitation,  provisions for the payment
or crediting of reasonable  interest on installment or deferred  payments or the
grant or  crediting  of  Dividend  Equivalents  or other  amounts  in respect of
installment or deferred  payments  denominated in Stock. Any deferral shall only
be allowed as is provided in a separate  deferred  compensation  plan adopted by
the  Company.  This Plan shall not  constitute  an "employee  benefit  plan" for
purposes of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended.
 
         (e)   Exemptions from Section 16(b) Liability.  It is the intent of the
Company that the grant of any Awards to or other  transaction  by a  Participant
who is  subject  to section  16 of the  Exchange  Act shall be exempt  from such
section   pursuant  to  an  applicable   exemption   (except  for   transactions
acknowledged in writing to be non-exempt by such Participant).  Accordingly,  if
any  provision  of this Plan or any Award  agreement  does not  comply  with the
requirements  of Rule 16b-3 as then  applicable  to any such  transaction,  such
 
 
                                      -13-
 
 
<PAGE>
 
 
provision  shall be  construed  or deemed  amended  to the extent  necessary  to
conform to the applicable  requirements  of Rule 16b-3 so that such  Participant
shall avoid liability under section 16(b) of the Exchange Act.
 
         (f)   Non-Competition Agreement.  Each Participant to  whom an Award is
granted  under this Plan may be required  to agree in writing as a condition  to
the  granting  of such Award not to engage in conduct  in  competition  with the
Company or any of its  Subsidiaries  for a period after the  termination of such
Participant's  employment with the Company and its Subsidiaries as determined by
the Committee.
 
     8.  Performance and Annual Incentive Awards.
 
         (a)   Performance Conditions. The right of a Participant to exercise or
receive a grant or  settlement  of any  Award,  and the timing  thereof,  may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may  deem  appropriate  in  establishing  any  performance  conditions,  and may
exercise  its  discretion  to reduce or increase the amounts  payable  under any
Award subject to performance  conditions,  except as limited under Sections 8(b)
and 8(c) hereof in the case of a  Performance  Award or Annual  Incentive  Award
intended to qualify under section 162(m) of the Code.
 
         (b)   Performance Awards  Granted to  Designated Covered Employees.  If
the Committee  determines that a Performance  Award to be granted to an Eligible
Person who is  designated  by the  Committee as likely to be a Covered  Employee
should  qualify as  "performance-based  compensation"  for  purposes  of section
162(m) of the Code, the grant,  exercise and/or  settlement of such  Performance
Award may be contingent upon achievement of preestablished performance goals and
other terms set forth in this Section 8(b).
 
                (i)   Performance Goals Generally.  The  performance  goals  for
such  Performance  Awards  shall  consist of one or more  business  criteria  or
individual  performance  criteria and a targeted  level or levels of performance
with respect to each of such criteria,  as specified by the Committee consistent
with this Section 8(b). Performance goals shall be objective and shall otherwise
meet the  requirements of section 162(m) of the Code and regulations  thereunder
(including Treasury Regulation  ss.1.162-27 and successor  regulations thereto),
including the  requirement  that the level or levels of performance  targeted by
the  Committee   result  in  the   achievement   of   performance   goals  being
"substantially  uncertain."  The Committee may determine  that such  Performance
Awards shall be granted,  exercised,  and/or settled upon achievement of any one
performance  goal or that two or more of the performance  goals must be achieved
as a condition to grant,  exercise and/or settlement of such Performance Awards.
Performance  goals  may  differ  for  Performance  Awards  granted  to  any  one
Participant or to different Participants.
 
                (ii)  Business and Individual Performance Criteria
 
                      (A)  Business  Criteria.  One  or  more  of  the following
business criteria for the Company, on a consolidated basis, and/or for specified
Subsidiaries  or business or  geographical  units of the  Company  (except  with
respect to the total stockholder return and earnings per share criteria),  shall
 
 
                                      -14-
 
 
<PAGE>
 
 
be used by the Committee in establishing  performance goals for such Performance
Awards:  (1) earnings per share; (2) increase in revenues;  (3) increase in cash
flow; (4) increase in cash flow return;  (5) return on net assets; (6) return on
assets,  return on investment;  (7) return on capital; (8) return on equity; (9)
economic value added; (10) operating margin; (11) contribution  margin; (12) net
income;   (13)  pretax   earnings;   (14)  pretax  earnings   before   interest,
depreciation,  amortization,  exploration  and  abandonment  costs;  (15) pretax
operating earnings after interest expense and before  incentives,  service fees,
and extraordinary or special items; or operating income;  (16) total stockholder
return;   (17)  debt  reduction;   (18)  production  growth;  (19)  general  and
administrative expenses; (20) reserve replacement;  (21) finding and development
costs;  (22) net asset value;  (23) operating  costs,  and (24) any of the above
goals  determined  on an  absolute  or  relative  basis  or as  compared  to the
performance  of a published or special index deemed  applicable by the Committee
including,  but not limited to, the Standard & Poor's 500 Stock Index or a group
of comparable  companies.  One or more of the foregoing  business criteria shall
also be exclusively used in establishing  performance goals for Annual Incentive
Awards granted to a Covered Employee under Section 8(c) hereof.
 
                      (B)  Individual Performance Criteria.  The grant, exercise
and/or  settlement of Performance  Awards may also be contingent upon individual
performance goals established by the Committee.  If required for compliance with
section 162(m) of the Code, such criteria shall be approved by the  stockholders
of the Company.
 
                (iii) Performance Period;  Timing for  Establishing  Performance
Goals.  Achievement of performance  goals in respect of such Performance  Awards
shall be measured over a performance  period of up to ten years, as specified by
the Committee.  Performance  goals shall be  established  not later than 90 days
after the beginning of any  performance  period  applicable to such  Performance
Awards,   or  at  such  other  date  as  may  be  required  or   permitted   for
"performance-based compensation" under section 162(m) of the Code.
 
                (iv)  Performance  Award  Pool.  The  Committee may  establish a
Performance  Award  pool,  which  shall be an  unfunded  pool,  for  purposes of
measuring  performance of the Company in connection with Performance Awards. The
amount of such  Performance  Award pool shall be based upon the achievement of a
performance  goal or goals  based on one or more of the  criteria  set  forth in
Section 8(b)(ii) hereof during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof. The Committee may specify
the  amount  of the  Performance  Award  pool  as a  percentage  of any of  such
criteria,  a percentage  thereof in excess of a threshold  amount, or as another
amount  which  need  not  bear a  strictly  mathematical  relationship  to  such
criteria.
 
                (v)   Settlement of Performance Awards;  Other Terms.  After the
end of each  performance  period,  the Committee shall determine the amount,  if
any, of (A) the  Performance  Award pool,  and the maximum  amount of  potential
Performance  Award payable to each Participant in the Performance Award pool, or
(B)  the  amount  of  potential  Performance  Award  otherwise  payable  to each
Participant.  Settlement  of such  Performance  Awards shall be in cash,  Stock,
other  Awards  or  other  property,  in the  discretion  of the  Committee.  The
Committee may, in its discretion, reduce the amount of a settlement otherwise to
be made  in  connection  with  such  Performance  Awards,  but may not  exercise
discretion to increase any such amount payable to a Covered  Employee in respect
 
 
                                      -15-
 
 
<PAGE>
 
 
of a Performance Award subject to this Section 8(b). The Committee shall specify
the circumstances in which such Performance Awards shall be paid or forfeited in
the event of termination of employment by the Participant  prior to the end of a
performance period or settlement of Performance Awards.
 
         (c)  Annual Incentive Awards Granted to  Designated  Covered Employees.
If the Committee  determines that an Annual  Incentive Award to be granted to an
Eligible  Person who is  designated  by the  Committee as likely to be a Covered
Employee  should  qualify as  "performance-based  compensation"  for purposes of
section 162(m) of the Code, the grant, exercise and/or settlement of such Annual
Incentive  Award  shall  be  contingent  upon   achievement  of   preestablished
performance goals and other terms set forth in this Section 8(c).
 
               (i)   Annual Incentive Award Pool. The Committee may establish an
Annual  Incentive  Award pool,  which shall be an unfunded pool, for purposes of
measuring performance of the Company in connection with Annual Incentive Awards.
The  amount  of such  Annual  Incentive  Award  pool  shall  be  based  upon the
achievement of a performance  goal or goals based on one or more of the business
criteria  set forth in Section  8(b)(ii)  hereof  during  the given  performance
period,  as specified  by the  Committee in  accordance  with Section  8(b)(iii)
hereof.  The Committee may specify the amount of the Annual Incentive Award pool
as a percentage of any of such business criteria, a percentage thereof in excess
of a  threshold  amount,  or as  another  amount  which need not bear a strictly
mathematical relationship to such business criteria.
 
               (ii)  Potential Annual Incentive  Awards.  Not later than the end
of the  90th  day of  each  applicable  year,  or at such  other  date as may be
required or  permitted in the case of Awards  intended to be  "performance-based
compensation"  under section 162(m) of the Code, the Committee  shall  determine
the Eligible Persons who will potentially  receive Annual Incentive Awards,  and
the amounts potentially payable thereunder,  for that fiscal year, either out of
an Annual  Incentive  Award pool  established by such date under Section 8(c)(i)
hereof or as  individual  Annual  Incentive  Awards.  In the case of  individual
Annual  Incentive  Awards  intended to qualify under section 162(m) of the Code,
the  amount  potentially  payable  shall be  based  upon  the  achievement  of a
performance  goal or goals  based on one or more of the  business  criteria  set
forth in Section 8(b)(ii) hereof in the given  performance year, as specified by
the Committee;  in situations  not governed by section 162(m) of the Code,  such
amount shall be based on such criteria as shall be established by the Committee.
In all cases,  the maximum Annual  Incentive Award of any  Participant  shall be
subject to the limitation set forth in Section 5 hereof.
 
               (iii) Payout of Annual Incentive Awards.  After  the end  of each
applicable  year, the Committee shall  determine the amount,  if any, of (A) the
Annual  Incentive  Award  pool,  and the  maximum  amount  of  potential  Annual
Incentive Award payable to each  Participant in the Annual Incentive Award pool,
or (B) the amount of potential Annual Incentive Award otherwise  payable to each
Participant.  The Committee  may, in its  discretion,  determine that the amount
payable to any Participant as a final Annual  Incentive Award shall be increased
or  reduced  from the amount of his or her  potential  Annual  Incentive  Award,
including  a  determination  to  make no  final  Award  whatsoever,  but may not
exercise  discretion  to  increase  any such  amount  in the  case of an  Annual
Incentive  Award  intended  to qualify  under  section  162(m) of the Code.  The
Committee  shall specify the  circumstances  in which an Annual  Incentive Award
 
 
                                      -16-
 
 
<PAGE>
 
 
shall be paid or  forfeited in the event of  termination  of  employment  by the
Participant prior to the end of the applicable year or settlement of such Annual
Incentive Award.
 
         (d)  Written Determinations.  All determinations by the Committee as to
the establishment of performance goals, the amount of any Performance Award pool
or  potential  individual  Performance  Awards  and  as to  the  achievement  of
performance  goals  relating to  Performance  Awards under Section 8(b), and the
amount  of any  Annual  Incentive  Award  pool or  potential  individual  Annual
Incentive  Awards and the amount of final Annual  Incentive Awards under Section
8(c),  shall be made in  writing  in the case of any Award  intended  to qualify
under  section   162(m)  of  the  Code.  The  Committee  may  not  delegate  any
responsibility relating to such Performance Awards or Annual Incentive Awards.
 
         (e)  Status of  Section  8(b) and  Section 8(c)  Awards  under  Section
162(m) of the Code. It is the intent of the Company that Performance  Awards and
Annual  Incentive  Awards under Sections 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning  of section  162(m) of the Code and  regulations  thereunder  (including
Treasury Regulation  ss.1.162-27 and successor regulations thereto) shall, if so
designated by the Committee, constitute "performance-based  compensation" within
the  meaning  of  section  162(m)  of  the  Code  and  regulations   thereunder.
Accordingly,  the  terms of  Sections  8(b),  (c),  (d) and (e),  including  the
definitions  of  Covered  Employee  and  other  terms  used  therein,  shall  be
interpreted  in a  manner  consistent  with  section  162(m)  of  the  Code  and
regulations  thereunder.  The foregoing  notwithstanding,  because the Committee
cannot  determine with certainty  whether a given  Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered  Employee  as used  herein  shall mean only a person  designated  by the
Committee,  at the time of grant of  Performance  Awards or an Annual  Incentive
Award,  who is likely to be a Covered Employee with respect to that fiscal year.
If any  provision  of this  Plan as in  effect  on the date of  adoption  or any
agreements  relating to Performance  Awards or Annual  Incentive Awards that are
designated as intended to comply with section 162(m) of the Code does not comply
or is  inconsistent  with the  requirements  of  section  162(m)  of the Code or
regulations  thereunder,  such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.
 
     9.  Recapitalization or Reorganization; Change in Control.
 
         (a)  Existence of Plans and Awards.  The existence of this Plan and the
Awards granted  hereunder  shall not affect in any way the right or power of the
Board or the  stockholders  of the Company to make or authorize any  adjustment,
recapitalization,  reorganization  or  other  change  in the  Company's  capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity  securities ahead of or affecting Stock or the rights thereof,
the  dissolution or liquidation of the Company or any sale,  lease,  exchange or
other  disposition  of all or any part of its  assets or  business  or any other
corporate act or proceeding.
 
         (b)  Subdivision or Consolidation of Shares.  The terms of an Award and
the number of shares of Stock  authorized  pursuant  to  Section 4 for  issuance
under the Plan shall be subject to  adjustment  from time to time, in accordance
with the following provisions:
 
 
                                      -17-
 
 
<PAGE>
 
 
              (i) If at any  time,  or from  time  to time,  the  Company  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 (A) the
maximum number of shares of Stock  available for the Plan as provided in Section
4 shall be increased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, (B) 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 (C) the price  (including  the
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.
 
              (ii) If at any time,  or from  time  to time,  the  Company  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,  (A) the  maximum  number of shares  of Stock  available  for the Plan as
provided in Section 4 shall be decreased proportionately, and the kind of shares
or other securities available for the Plan shall be appropriately  adjusted, (B)
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 (C) the
price  (including the 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.
 
              (iii)  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  Section  9(b),  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 to each
Award after giving effect to the adjustments.  The Committee shall promptly give
each Participant such a notice.
 
              (iv)  Adjustments under Subsections 9(b)(i) and (ii) 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.
 
         (c)   Corporate Recapitalization.
 
               (i) If the Company recapitalizes, reclassifies its capital stock,
or otherwise  changes its capital structure (a  "recapitalization"),  the number
and class of shares of Stock covered by an Option or an SAR theretofore  granted
shall be adjusted so that such Option or SAR shall  thereafter  cover the number
and class of shares of stock and  securities to which the holder would have been
entitled pursuant to the terms of the  recapitalization if, immediately prior to
the recapitalization,  the holder had been the holder of record of the number of
shares of Stock  then  covered by such  Option or SAR and the share  limitations
provided in Sections 4 and 5 shall be adjusted in a manner  consistent  with the
recapitalization.
 
 
                                      -18-
 
 
<PAGE>
 
 
               (ii) In the event of changes  in the outstanding  Stock by reason
of recapitalization,  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 9, any
outstanding Awards and any agreements evidencing such Awards shall be subject to
adjustment  by the  Committee  at its  discretion  as to the number and price of
shares of Stock or other  consideration  subject to such Awards. In the event of
any such  change  in the  outstanding  Stock,  the  aggregate  number  of shares
available under this Plan may be appropriately adjusted by the Committee,  whose
determination shall be conclusive.
 
         (d)  Additional Issuances.  Except as hereinbefore  expressly provided,
the  issuance  by the  Company  of shares  of stock of any  class or  securities
convertible  into  shares of stock of any class,  for cash,  property,  labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other  securities,  and in any case  whether or not for fair
value,  shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to Awards theretofore  granted
or the purchase price per share, if applicable.
 
         (e) Change in Control. Upon the occurrence of a Change in Control, with
respect only to Awards held by  Participants  who are  employees or directors of
the Company (and their permitted  transferees  pursuant to Section 10(a)) at the
occurrence  of the Change in Control,  (i) 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");  (ii) the  restriction
period of any Restricted Stock Award and Restricted Stock Unit shall immediately
be accelerated  and the  restrictions  shall expire;  and (iii) the  performance
goals established  under the Performance  Awards will be deemed to have been met
for all  performance  periods upon the occurrence of a Change in Control and the
holder will be paid a pro rata portion of all  associated  targeted  performance
goals (based on the number of complete and partial calendar months elapsed as of
the  occurrence of the Change in Control) in cash within  thirty days  following
the Change in Control or in Stock  effective  as of the Change in  Control,  for
cash and stock-based  Performance  Awards  respectively.  If a Change in Control
involves  a  Restructure  or  occurs  in  connection  with a series  of  related
transactions involving a Restructure and if such Restructure is in the form of a
Non-Surviving  Event and as a part of such  Restructure  shares of stock,  other
securities,  cash or property  shall be issuable or  deliverable in exchange for
Stock,  then the 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 Restructure  (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 Restructure).
 
 
                                      -19-
 
 
<PAGE>
 
 
         (f)  Restructure and No Change in Control.  In the event a  Restructure
should occur at any time while there is any outstanding  Option, SAR, Restricted
Stock Award or Restricted  Stock Unit  hereunder and that  Restructure  does not
occur in connection  with a Change in Control or in connection  with a series of
related transactions involving a Change in Control, then:
 
              (i)  no  holder  of  an  Option  shall  automatically  be  granted
corresponding SARs;
 
              (ii) neither  any  outstanding SARs  nor any  outstanding  Options
shall immediately  become fully vested and exercisable in full merely because of
the occurrence of the Restructure;
 
              (iii) the restriction  period  of any  Restricted  Stock  Award or
Restricted  Stock Unit shall not immediately be accelerated and the restrictions
shall not expire merely because of the occurrence of the Restructure; and
 
              (iv) at the option of  the Committee,  the Company may  (but shall
not be required to) take any one or more of the following actions:
 
                   (A)  grant each  holder of an  Option corresponding  Stock or
         cash SARs;
 
                   (B)  accelerate  in whole or in  part the time of the vesting
         and exercisability of  any one  or more  of the  outstanding  SARs  and
         Options so  as  to  provide  that  those  SARs  and  Options  shall  be
         exercisable before, upon, or after the consummation of the Restructure;
 
                   (C)  accelerate in whole or in part the expiration of some or
         all of the  restrictions on any  Restricted Stock  Award or  Restricted
         Stock Unit so that the Stock subject to that  Restricted Stock Award or
         Restricted Stock Unit shall be  owned by the holder without restriction
         or risk of forfeiture;
 
                   (D)  the performance goals  established under the Performance
         Awards will not be deemed to have  been fully  met for all  performance
         periods merely because of the occurrence of the Restructure;
 
                   (E)  if the  Restructure  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 Options,  SARs, Restricted  Stock Awards and
         Restricted Stock Units  upon such terms and provisions as the Committee
         deems desirable; or
 
                   (F)  redeem  in  whole  or in  part  any  one or  more of the
         outstanding Options, SARs, Restricted Stock Awards and Restricted Stock
         Units  (whether  or not  then  exercisable) in consideration  of a cash
         payment, as such payment may be reduced for tax withholding obligations
         as contemplated in the section governing the  particular form of Award,
         in an amount equal to:
 
 
                                      -20-
 
 
<PAGE>
 
 
                        (1)  for  Options  and  SARs granted  in connection with
                    Options, the excess of a) the  Fair Market Value, determined
                    as of the date immediately preceding the consummation of the
                    Restructure,  of the  aggregate  number  of  shares of Stock
                    subject to the  Award and  as to  which the  Award  is being
                    redeemed  over  b) the  Exercise  Price  for that number  of
                    shares of Stock;
 
                        (2)  for SARs not granted in  connection with an Option,
                    the excess of  (a)  the Fair Market  Value, determined as of
                    the  date  immediately  preceding  the  consummation  of the
                    Restructure,  of the  aggregate  number  of shares  of Stock
                    subject to  the Award  and as  to which  the  Award is being
                    redeemed over (b) the  Fair  Market Value  of the  number of
                    shares of Stock on the date of grant;
 
                        (3)  for Restricted  Stock Awards  and Restricted  Stock
                    Units,  the Fair  Market Value,  determined  as of  the date
                    immediately  preceding the  consummation of the Restructure,
                    of the aggregate  number of shares of  Stock subject  to the
                    Award and as to which the Award is being redeemed; and
 
                        (4)  for Performance Awards,  the amount per Performance
                    Award as the Committee in its  sole discretion may determine
                    (which may be zero dollars).
 
The Company shall  promptly  notify each holder of an outstanding  Option,  SAR,
Restricted  Stock Award or Restricted Stock Unit of any election or action taken
by the Company  under this Section  9(f). In the event of any election or action
taken by the Company  pursuant to this Section 9(f) that  requires the amendment
or  cancellation of any Award agreement as may be specified in any notice to the
holder thereof,  that holder shall promptly  deliver that Award agreement to the
Company in order for that  amendment or  cancellation  to be  implemented by the
Company and the  Committee.  The failure of the holder to deliver any such Award
agreement to the Company as provided in the preceding  sentence shall not in any
manner effect the validity or  enforceability of any action taken by the Company
and the Committee under this Section 9(f),  including,  without limitation,  any
redemption of an Option, SAR, Restricted Stock Award or Restricted Stock Unit as
of the consummation of a Restructure. Any cash payment to be made by the Company
pursuant  to  this  Section  9(f)  in  connection  with  the  redemption  of any
outstanding  Options,  SARs,  Restricted  Stock Awards or Restricted Stock Units
shall be paid to the holder  thereof  currently with the delivery to the Company
of the Award agreement evidencing that Award;  provided,  however, that any such
redemption   shall  be  effective  upon  the  consummation  of  the  Restructure
notwithstanding that the payment of the redemption price may occur subsequent to
the  consummation.  If  all  or  any  portion  of an  outstanding  Option,  SAR,
Restricted  Stock  Award  or  Restricted  Stock  Unit  is  to  be  exercised  or
accelerated  upon or after the consummation of a Restructure that is in the form
of a  Non-Surviving  Event  and as a part of that  Restructure  shares of stock,
other securities,  cash or property shall be issuable or deliverable in exchange
for Stock,  then the  holder of such  Option,  SAR,  Restricted  Stock  Award or
Restricted  Stock Unit 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
 
 
                                      -21-
 
 
<PAGE>
 
 
securities,  cash or property to which such number of shares of Stock would have
been  entitled in  connection  with the  Restructure  (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 Restructure).
 
     10. General Provisions.
 
         (a)  Transferability.
 
              (i) Permitted Transferees.  The Committee may,  in its discretion,
permit a  Participant  to  transfer  all or any  portion  of an  Option or Stock
Appreciation  Right,  or authorize all or a portion of such Awards to be granted
to an Eligible Person to be on terms which permit transfer by such  Participant;
provided that, in either case the  transferee or transferees  must be any child,
stepchild,  grandchild, parent, stepparent,  grandparent, spouse, former spouse,
sibling,    niece,    nephew,    mother-in-law,    father-in-law,    son-in-law,
daughter-in-law,    brother-in-law,   or   sister-in-law,   including   adoptive
relationships,  in each case with respect to the Participant, any person sharing
the Participant's  household (other than a tenant or employee of the Company), a
trust in which  these  persons  have more than fifty  percent of the  beneficial
interest,  a foundation in which these persons (or the Participant)  control the
management  of  assets,  and any other  entity in which  these  persons  (or the
Participant) own more than fifty percent of the voting interests  (collectively,
"Permitted   Transferees");   provided   further  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. Agreements evidencing Awards 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(a)(i).
 
              (ii) Qualified  Domestic  Relations  Orders.   An  Option,   Stock
Appreciation Right, Restricted Stock Unit Award or Restricted Stock Award may be
transferred,  to a Permitted Transferee,  pursuant to a domestic relations order
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.
 
              (iii)  Other   Transfers.   Except  as   expressly  permitted   by
Subsections 10(a)(i) and 10(a)(ii),  Awards shall not be transferable other than
by will or the laws of descent and distribution. Notwithstanding anything to the
contrary in this Section 10, an Incentive Stock Option shall not be transferable
other than by will or the laws of descent and distribution.
 
              (iv) Effect of Transfer.  Following the  transfer of any  Award as
contemplated by Subsections 10(a)(i),  10(a)(ii) and 10(a)(iii),  (A) such Award
shall continue to be subject to the same terms and conditions as were applicable
immediately  prior to transfer,  provided that the term  "Participant"  shall be
deemed to refer to the Permitted  Transferee,  the  recipient  under a qualified
domestic  relations  order,  the estate or heirs of a deceased  Participant,  or
other  transferee,  as  applicable,  to the  extent  appropriate  to enable  the
Participant to exercise the  transferred  Award in accordance  with the terms of
this Plan and  applicable  law and (B) the  provisions of the Award  relating to
 
 
                                      -22-
 
 
<PAGE>
 
 
exercisability  hereof shall continue to be applied with respect to the original
Participant 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,  the  estate  or heirs  of a  deceased
Participant,  or other transferee, as applicable, only to the extent and for the
periods that would have been applicable in the absence of the transfer.
 
              (v) Procedures  and  Restrictions.  Any  Participant  desiring  to
transfer  an  Award  as  permitted  under  Subsections  10(a)(i),  10(a)(ii)  or
10(a)(iii) 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 (A) it would  give rise to
short-swing  liability under section 16(b) of the Exchange Act or (B) it may not
be made in compliance with all applicable federal,  state and foreign securities
laws.
 
              (vi) Registration.  To the  extent the  issuance to any  Permitted
Transferee of any shares of Stock  issuable  pursuant to Awards  transferred  as
permitted  in this Section  10(a) is not  registered  pursuant to the  effective
registration statement of the Company generally covering the shares to be issued
pursuant to this Plan to initial  holders of Awards,  the Company shall not have
any  obligation to register the issuance of any such shares of Stock to any such
transferee.
 
         (b) Taxes.  The Company and any  Subsidiary is  authorized to  withhold
from any Award  granted,  or any  payment  relating to an Award under this Plan,
including from a distribution  of Stock,  amounts of withholding and other taxes
due or  potentially  payable in  connection  with any  transaction  involving an
Award,  and to take such other  action as the  Committee  may deem  advisable to
enable the Company and  Participants  to satisfy  obligations for the payment of
withholding  taxes  and  other  tax  obligations  relating  to any  Award.  This
authority shall include authority to withhold or receive Stock or other property
and to make cash payments in respect  thereof in satisfaction of a Participant's
tax  obligations,  either on a mandatory or elective  basis in the discretion of
the Committee.
 
         (c) Changes  to this  Plan and  Awards.  The  Board  may amend,  alter,
suspend,  discontinue  or terminate  this Plan or the  Committee's  authority to
grant  Awards  under  this  Plan   without  the  consent  of   stockholders   or
Participants,  except that any amendment or  alteration to this Plan,  including
any  increase in any share  limitation,  shall be subject to the approval of the
Company's  stockholders  not later than the annual  meeting next  following such
Board  action if such  stockholder  approval is required by any federal or state
law or  regulation  or the rules of any stock  exchange or  automated  quotation
system  on which the  Stock  may then be  listed  or  quoted,  and the Board may
otherwise,  in its  discretion,  determine  to submit other such changes to this
Plan to  stockholders  for approval;  provided  that,  without the consent of an
affected  Participant,  no such Board action may materially and adversely affect
the rights of such  Participant  under any  previously  granted and  outstanding
Award. The Committee may waive any conditions or rights under, or amend,  alter,
suspend,  discontinue or terminate any Award  theretofore  granted and any Award
agreement relating thereto,  except as otherwise provided in this Plan; provided
that, without the consent of an affected  Participant,  no such Committee action
may materially and adversely  affect the rights of such  Participant  under such
Award.
 
 
                                      -23-
 
 
<PAGE>
 
 
 
         (d) Limitation on Rights  Conferred  under Plan.  Neither this Plan nor
any action taken  hereunder shall be construed as (i) giving any Eligible Person
or Participant  the right to continue as an Eligible Person or Participant or in
the employ or service of the Company or a Subsidiary,  (ii)  interfering  in any
way with the right of the Company or a  Subsidiary  to  terminate  any  Eligible
Person's or  Participant's  employment  or service at any time,  (iii) giving an
Eligible Person or Participant any claim to be granted any Award under this Plan
or to be  treated  uniformly  with other  Participants  and  employees,  or (iv)
conferring  on a Participant  any of the rights of a stockholder  of the Company
unless and until the  Participant is duly issued or transferred  shares of Stock
in accordance with the terms of an Award.
 
         (e) Unfunded Status of Awards.  This Plan is  intended to constitute an
"unfunded" plan for certain incentive awards.
 
         (f) Nonexclusivity of this Plan.  Neither the adoption  of this Plan by
the Board nor its  submission  to the  stockholders  of the Company for approval
shall be construed as creating  any  limitations  on the power of the Board or a
committee  thereof  to adopt such other  incentive  arrangements  as it may deem
desirable,  including  incentive  arrangements  and awards  which do not qualify
under  section  162(m)  of the Code.  Nothing  contained  in this Plan  shall be
construed  to prevent the Company or any  Subsidiary  from taking any  corporate
action which is deemed by the Company or such Subsidiary to be appropriate or in
its best  interest,  whether or not such action would have an adverse  effect on
this Plan or any Award made under this Plan. No employee,  beneficiary  or other
person shall have any claim against the Company or any Subsidiary as a result of
any such action.
 
         (g) 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  Persons who are subject to section 16(b)
of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock
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 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 the Code.
With  respect to  Incentive  Stock  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 Stock Option cannot so qualify,  that Option (to that extent) shall be
deemed an Option not subject to section 422 of the Code for all  purposes of the
Plan.
 
         (h) Governing Law. All questions arising with respect to the provisions
of the Plan and Awards 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. The
obligation  of the Company 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.
 
 
                                      -24-
 
 
<PAGE>
 
 
         (i) Conditions to  Delivery of Stock.  Nothing herein  or in  any Award
granted  hereunder or any Award agreement shall require the Company to issue any
shares  with  respect to any Award if that  issuance  would,  in the  opinion of
counsel for the Company,  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 or Restricted Stock Unit, the Company may, as a condition precedent to the
exercise  of such  Option  or  Stock  Appreciation  Right or  settlement  of any
Restricted  Stock Award or Restricted  Stock Unit,  require from the Participant
(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 Company,  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. No Option or Stock  Appreciation
Right shall be exercisable  and no settlement of any  Restricted  Stock Award or
Restricted Stock Unit shall occur with respect to a Participant unless and until
the holder  thereof  shall have paid cash or property to, or performed  services
for, the Company 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.
 
 
                                      -25-
 
 
 
 
<PAGE>
 
 
</TEXT>
</DOCUMENT>