FORWARD AIR CORPORATION
 
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                      1999 STOCK OPTION AND INCENTIVE PLAN
 
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1.       PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
 
         The purpose of the Forward Air Corporation Stock Option and Incentive
Plan (the "Plan") is to enable Forward Air Corporation (the "Company") to
attract, retain and reward key employees of, and any consultant or other person
providing key services to, the Company and its Subsidiaries, and strengthen the
mutuality of interests between such persons and the Company's shareholders by
offering such persons performance-based stock incentives and/or other equity
interests or equity-based incentives in the Company.
 
         It is further intended that options granted by the Compensation or
other Committee (the "Committee") of the Board of Directors of the Company (the
"Board") pursuant to Section 8 of the Plan shall constitute "incentive stock
options" ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended and any successor thereto (the
"Code"), and options granted by the Committee pursuant to Section 7 of the Plan
shall constitute "nonqualified stock options" ("Nonqualified Stock Options").
The Committee may also grant stock appreciation rights ("Stock Appreciation
Rights" or "SARs") pursuant to Section 9 of the Plan and shares of restricted
stock ("Restricted Stock") pursuant to Section 10 of the Plan.
 
         The provisions of the Plan are intended to satisfy the requirements of
Section 16(b) of the Securities Exchange Act of 1934, and shall be interpreted
in a manner consistent with the requirements thereof, as now or hereafter
construed, interpreted, and applied by regulations, rulings, and cases. The Plan
is also designated so that awards granted hereunder intended to comply with the
requirements for "performance-based" compensation under Section 162(m) of the
Code may comply with such requirements. The creation and implementation of the
Plan shall not diminish or prejudice other compensation plans or programs
approved from time to time by the Board.
 
2.       DEFINITIONS.
 
         As used in this Plan, the following words and phrases shall have the
meanings indicated:
 
         (a) "Cause" means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or a participant's gross
negligence, willful misconduct or dishonesty, any of which is directly or
materially harmful to the business or reputation of the Company or any
Subsidiary, as determined by the Committee in its sole discretion.
 
         (b) "Common Stock" shall mean shares of Common Stock, par value $.01
per share, of the Company.
 
 
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         (c) "Disability" shall mean a disability as determined under procedures
established by the Committee for purposes of this Plan.
 
         (d) "Fair Market Value" per share of Common Stock as of a particular
date shall mean (i) the closing sales price per share of Common Stock on the
national securities exchange on which the Common Stock is principally traded,
for the last preceding date on which there was a sale of such Common Stock on
such exchange, or (ii) if the shares of Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked prices for the
shares of Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Common Stock in such market, or (iii) if
the shares of Common Stock are not then listed on a national securities exchange
or traded in an over-the-counter market, such value as the Committee, in its
sole discretion, shall determine. Notwithstanding any provision of the Plan to
the contrary, no determination made with respect to the Fair Market Value of a
share of Common Stock subject to Incentive Stock Option shall be inconsistent
with Section 422 of the Code or regulation thereunder.
 
         (e) "Immediate Family" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.
 
         (f) "Option" or "Options" shall mean a grant to a Grantee of an option
or options to purchase shares of Common Stock. Options granted by the Committee
pursuant to the Plan shall constitute either Incentive Stock Options or
Nonqualified Stock Options.
 
         (g) "Parent" shall mean any company (other than the Company) in an
unbroken chain of companies ending with the Company if, at the time of granting
an Option, each of the companies other than the Company owns stock or equity
interests (including partnership interests) possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock or equity
interests in one of the other companies in such chain.
 
         (h) "Performance Goals" means performance goals based on one or more of
the following criteria: (i) pre-tax income or after-tax income; (ii) operating
cash flow; (iii) operating profit; (iv) return on equity, assets, capital, or
investment; (v) earnings or book value per share; (vi) sales or revenues; (vii)
operating expenses; (viii) Common Stock price appreciation; and (ix)
implementation or completion of critical projects or processes. Where
applicable, the Performance Goals may be expressed in terms of attaining a
specified level of the particular criteria or the attainment of a percentage
increase or decrease in the particular criteria, and may be applied to one or
more of the Company or any Subsidiary, or a division or strategic business unit
of the Company, or may be applied to the performance of the Company relative to
a market index, a group of other companies, or a combination thereof, all as
determined by the Committee. The Performance Goals may include a threshold level
of performance below which no payment will be made (or no vesting will occur),
 
 
 
 
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levels of performance at which specified payments will be made (or specified
vesting will occur), and a maximum level of performance above which no
additional payment will be made (or at which full vesting will occur). Each of
the foregoing Performance Goals shall be determined, to the extent applicable,
in accordance with generally accepted accounting principles and shall be subject
to certification by the Committee; provided, that the Committee shall have the
authority to make equitable adjustments to the Performance Goals in recognition
of unusual or non-recurring events affecting the Company or any Subsidiary or
the financial statements of the Company or any Subsidiary, in response to
changes in applicable laws or regulations, or to account for items of gain,
loss, or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of business or
related to a change in accounting principles.
 
         (i) "Subsidiary" shall mean any company (other than the Company) in an
unbroken chain of companies beginning with the Company if, at the time of
granting an Option, each of the companies other than the last company in the
unbroken chain owns stock or equity interests (including partnership interests)
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock or equity interests in one of the other companies in such
chain.
 
         (j) "Ten Percent Stockholder" shall mean a Grantee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary.
 
         (k) "Retirement" means retirement by an employee from active employment
with the Company or any Subsidiary (i) on or after attaining age 65, or (ii)
with the express consent, for the purposes of this Plan, of the Committee or
such officer of the Company as the Committee may designate from time to time at
or before the time of such retirement, from active employment with the Company
or any Subsidiary after age 55.
 
3.       ADMINISTRATION.
 
         The Plan shall be administered by the Committee, which will be
comprised solely of "Non-Employee Directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
by the Board if for any reason the Committee is not so comprised, in which case
all references herein to the Committee shall refer to the Board.
 
         The Committee shall have the authority in its discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options, SARs, and
Restricted Stock; to determine which Options shall constitute Incentive Stock
Options and which Options shall constitute Nonqualified Stock Options and
whether such Options will be accompanied by Stock Appreciation Rights; to
determine the purchase price of the shares of Common Stock 
 
 
 
 
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covered by each Option (the "Option Price") and SARs and the kind of
consideration payable (if any) with respect to awards; to determine the period
during which Options may be exercised and during which Restricted Stock shall be
subject to restrictions, and whether in whole or in installments; to determine
the persons to whom, and the time or times at which awards shall be granted
(such persons are referred to herein as "Grantees"); to determine the number of
shares to be covered by each award; to determine the terms, conditions, and
restrictions of any Performance Goals and the number of Options, SARs, or shares
of Restricted Stock subject thereto; to interpret the Plan; to prescribe, amend,
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the agreements (which need not be identical) entered into in
connection with awards granted under the Plan (the "Agreements"); to cancel or
suspend awards, as necessary; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
 
         The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. All decisions, determinations,
and interpretations of the Committee shall be final and binding on all persons,
including the Company and Grantees of any awards under this Plan.
 
         The Board shall fill all vacancies, however caused, in the Committee.
The Board may from time to time appoint additional members to the Committee, and
may at any time remove one or more Committee members and substitute others. One
member of the Committee shall be selected by the Board as chairman. The
Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members either present in person or participating by conference telephone at
a meeting or by written consent. The Committee may appoint a secretary and make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings.
 
         No members of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any award
granted hereunder. To the fullest extent permitted by law, the Company shall
indemnify each person made or threatened to be made a party to any civil or
criminal action or proceeding by reason of the fact that such person, or his or
her testator or intestate, is or was a member of the Committee.
 
4.       ELIGIBILITY.
 
         Officers and other key employees of the Company or any Subsidiary, and
any consultant or other person providing key services to the Company or any
Subsidiary shall be eligible to receive awards hereunder (excluding members of
the Committee and any person who serves only as a director). In determining the
persons to whom awards shall be granted and the number of shares to
 
 
 
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be covered by each award, the Committee, in its sole discretion, shall take into
account the contribution by the eligible participants to the management, growth,
and profitability of the business of the Company and such other factors as the
Committee shall deem relevant.
 
         Officers and other key employees of the Company or any Subsidiary, and
any consultant or other person providing key services to the Company or any
Subsidiary shall be eligible to receive awards hereunder (excluding members of
the Committee and any person who serves only as a director). In determining the
persons to whom awards shall be granted and the number of shares to be covered
by each award, the Committee, in its sole discretion, shall take into account
the contribution by the eligible participants to the management, growth, and
profitability of the business of the Company and such other factors as the
Committee shall deem relevant.
 
5.       STOCK.
 
         The maximum number of shares of Common Stock reserved for the grant of
awards under the Plan shall be 500,000 subject to adjustment as provided in
Section 11 hereof. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company. No Grantees shall be eligible to receive awards relative to shares of
Common Stock which exceed 100,000 shares in any fiscal year.
 
         If any outstanding award under the Plan should, for any reason, expire
or be canceled, forfeited, or terminated, without having been exercised in full,
the shares of Common Stock allocable to the unexercised, canceled, forfeited, or
terminated portion of such award shall (unless the Plan shall have been
terminated) become available for subsequent grants of awards under the Plan.
 
6.       TERMS AND CONDITIONS OF OPTIONS.
 
         Each Option granted pursuant to the Plan shall be evidenced by a
written agreement between the Company and the Grantee (the "Option Agreement"),
in such form as the Committee shall from time to time approve, which Option
Agreement shall comply with and be subject to the following terms and
conditions:
 
         (a) Number of Shares. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
 
         (b) Type of Option. Each Option Agreement shall specifically state that
the Option constitutes an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options may be granted only to individuals who are employees of
the Company or any Subsidiary.
 
         (c) Option Price. Each Option Agreement shall state the Option Price,
which, in the case of an Incentive Stock Option, shall not be less than one
hundred percent (100%) of the Fair Market 
 
 
 
 
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Value of the shares of Common Stock covered by the Option on the date of grant.
The Option Price shall be subject to adjustment as provided in Section 11
hereof. Unless otherwise stated in the resolution, the date on which the
Committee adopts a resolution expressly granting an Option shall be considered
the day on which such Option is granted.
 
         (d) Medium and Time of Payment. The Option Price shall be paid in full,
at the time of exercise, as the Option Agreement may provide, in cash or in
shares of Common Stock having a Fair Market Value equal to such Option Price, or
in a combination of cash and Common Stock, or in such other manner as the
Committee shall determine.
 
         (e) Term and Exercisability of Options. Each Option shall be
exercisable at such times and under such conditions as the Committee, in its
discretion, shall determine; provided, however, that in the case of an Incentive
Stock Option, such exercise period shall not exceed ten (10) years from the date
of grant of such Option. The exercise period shall be subject to earlier
termination as provided in Section 6(f) hereof. An Option may be exercised, as
to any or all full shares of Common Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or its
designated agent.
 
         (f)      Termination of Employment
 
                  (i) Generally. Except as otherwise provided herein, an Option
may not be exercised unless the Grantee is then in the service or employ of the
Company or a Parent or Subsidiary (or a company or a parent or subsidiary
company of such company issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies), and unless the Grantee has remained
continuously so employed since the date of grant of the Option. Unless otherwise
determined by the Committee at or after the date of grant, in the event that the
employment of a Grantee terminates (other than by reason of death, Disability,
Retirement, or for Cause) all Options that are exercisable at the time of such
termination may be exercised for a period of 90 days from the date of such
termination or until the expiration of the stated term of the Option, whichever
period is shorter. For purposes of interpreting this Section 6(f) only, the
service of a director as a non-employee member of the Board shall be deemed to
be employment by the Company.
 
                  (ii) Death or Disability. If a Grantee dies while employed by
the Company or a Parent or Subsidiary (or within the period of extended
exercisability otherwise provided herein), or if the Grantee's employment
terminates by reason of Disability, all Options theretofore granted to such
Grantee will become fully vested and exercisable (notwithstanding any terms of
the Options providing for delayed exercisability) and may be exercised by the
Grantee, by the legal representative of the Grantee's estate, or by the legatee
under the Grantee's will at any time until the expiration of the stated term of
the Option. If an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Option will thereafter be treated as a Non-Qualified Stock Option. In the event
that an Option granted hereunder is exercised
 
 
 
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by the legal representative of a deceased or disabled Grantee, written notice of
such exercise must be accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such legal representative or legatee to
exercise such Option.
 
                  (iii) Retirement. If a Grantee's employment terminates by
reason of Retirement, any Option held by the Grantee may thereafter be
exercised, to the extent it was exercisable at the time of such Retirement or on
such accelerated basis as the Committee may determine at or after the date of
grant (but before the date of such Retirement), at any time until the expiration
of the stated term of the Option. If an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Option will thereafter be treated as a Non-Qualified Stock
Option.
 
                  (iv) Cause. If a Grantee's employment terminates for Cause,
the Option, to the extent not theretofore exercised, shall terminate on the date
of termination of employment.
 
                  (v) Committee Discretion. Notwithstanding the provisions of
subsections (i) through (iv) above, the Committee may, in its sole discretion,
at or after the date of grant (but before the date of termination), establish
different terms and conditions pertaining to the effect on any Option of
termination of a Grantee's employment, to the extent permitted by applicable
federal and state law.
 
         (g)      Buyout Provisions. The Committee may at any time offer to buy
out for a payment in cash, Common Stock, or Restricted Stock an option
previously granted, based on such terms and conditions as the Committee shall
establish and communicate to the Grantee at the time that such offer is made.
 
         (h)      Other Provisions. The Option Agreements evidencing Options
under the Plan shall contain such other terms and conditions, not inconsistent
with the Plan, as the Committee may determine.
 
7.       NONQUALIFIED STOCK OPTIONS.
 
         Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 6 hereof.
 
8.       INCENTIVE STOCK OPTIONS.
 
         Options granted pursuant to this Section 8 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
6 hereof.
 
 
 
 
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         (a) Value of Shares. The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of equity
securities of the Company with respect to which Incentive Stock Options granted
under this Plan and all other option plans of any Parent or Subsidiary become
exercisable for the first time by each Grantee during any calendar year shall
not exceed $100,000. To the extent such $100,000 limit has been exceeded with
respect to any Options first becoming exercisable, including acceleration upon a
Change in Control, and notwithstanding any statement in the Option Agreement
that it constitutes an Incentive Stock Option, the portion of such Option(s)
that exceeds such $100,000 limit shall be treated as a Nonqualified Stock
Option.
 
         (b) Ten Percent Stockholder. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the shares of
Common Stock on the date of grant of such Incentive Stock Option, and (ii) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
 
9.       STOCK APPRECIATION RIGHTS.
 
         The Committee is authorized to grant SARs to Grantees on the following
terms and conditions:
 
         (a) In General. Unless the Committee determines otherwise, an SAR (i)
granted in tandem with a Nonqualified Stock Option may be granted at the time of
grant of the related Nonqualified Stock Option or at any time thereafter, and
(ii) granted in tandem with an Incentive Stock Option may only be granted at the
time of grant of the related Incentive Stock Option. An SAR granted in tandem
with an Option shall be exercisable only to the extent the underlying Option is
exercisable and shall terminate when the underlying Option terminates.
 
         (b) SARs. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise thereof, equal
to the excess of (i) the Fair Market Value of one share of Common Stock on the
date of exercise over (ii) the grant price of the SAR (which in the case of an
SAR granted in tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such price as
the Committee may determine).
 
         (c) Performance Goals. The Committee may condition the exercise of any
SAR upon the attainment of specified Performance Goals, in its sole discretion.
 
 
 
 
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10.      RESTRICTED STOCK.
 
         The Committee may award shares of Restricted Stock to any eligible
person so determined by the Committee. Each award of Restricted Stock under the
Plan shall be evidenced by an instrument, in such form as the Committee shall
from time to time approve (the "Restricted Stock Agreement"), and shall comply
with the following terms and conditions (and with such other terms and
conditions not inconsistent with the terms of this Plan as the Committee, in its
discretion, shall establish including, without limitation, the requirement that
a Grantee provide consideration for Restricted Stock upon the lapse of
restrictions):
 
         (a) The Committee shall determine the number of shares of Common Stock
to be issued to the Grantee pursuant to the award.
 
         (b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, for such period as the Committee shall determine from
the date on which the award is granted (the "Restricted Period"). The Committee
may impose such other restrictions and conditions on the shares as it deems
appropriate including the satisfaction of Performance Goals. Certificates for
shares of stock issued pursuant to Restricted Stock awards shall bear an
appropriate legend referring to such restrictions, and any attempt to dispose of
any such shares of stock in contravention of such restrictions shall be null and
void and without effect. During the Restricted Period, such certificates shall
be held in escrow by an escrow agent appointed by the Committee. In determining
the Restricted Period of an award, the Committee may provide that the foregoing
restrictions lapse at such times, under such circumstances, and in such
installments, as the Committee may determine.
 
         (c) Subject to such exceptions as may be determined by the Committee,
if the Grantee's continuous employment with the Company or any Parent or
Subsidiary shall terminate for any reason prior to the expiration of the
Restricted Period of an award, any shares remaining subject to restrictions
(after taking into account the provisions of Subsection (f) of this Section 10)
shall thereupon be forfeited by the Grantee and transferred to, and reacquired
by, the Company or a Parent or Subsidiary at no cost to the Company or such
Parent or Subsidiary.
 
         (d) During the Restricted Period the Grantee shall possess all
incidents of ownership of such shares, subject to Subsection (b) of this Section
10, including the right to receive cash dividends with respect to such shares
and to vote such shares; provided, that shares of Common Stock distributed in
connection with a stock split or stock dividend shall be subject to restriction
and a risk of forfeiture to the same extent as the Restricted Stock with respect
to which such shares are distributed.
 
 
 
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         (e) Upon the occurrence of any of the events described in Section
11(c), all restrictions then outstanding with respect to shares of Restricted
Stock awarded hereunder shall automatically expire and be of no further force or
effect.
 
         (f) The Committee shall have the authority (and the Restricted Stock
Agreement may so provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of the Restricted Period with respect to
any or all of the shares of Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
 
         (g) If and when the Restricted Period expires without a prior
forfeiture of the Restricted Stock subject to such Restricted Period,
certificates for an appropriate number of unrestricted shares shall be delivered
to the Grantee promptly.
 
11.      EFFECT OF CERTAIN CHANGES.
 
         (a) If there is any change in the shares of Common Stock through the
declaration of extraordinary cash dividends, stock dividends, recapitalization,
stock splits, or combinations or exchanges of such shares, or other similar
transactions, the number of shares of Common Stock available for awards (both
the maximum number of shares issuable under the Plan as a whole and the maximum
number of shares issuable on a per-employee basis, each as set forth in Section
5 hereof), the number of such shares covered by outstanding awards, the
Performance Goals, and the price per share of Options or SARs shall be
proportionately adjusted by the Committee to reflect such change in the issued
shares of Common Stock; provided, that any fractional shares resulting from such
adjustment shall be eliminated; and provided, further, that, with respect to
Incentive Stock Options, such adjustment shall be made in accordance with
Section 424(h) of the Code.
 
         (b) In the event of the dissolution or liquidation of the Company; in
the event of any corporate separation or division, including but not limited to,
split-up, split-off or spin-off; or in the event of other similar transactions,
the Committee may, in its sole discretion, provide that either:
 
             (i) the Grantee of any award hereunder shall have the right to
exercise an Option (at its then Option Price) and receive such property, cash,
securities, or any combination thereof upon such exercise as would have been
received with respect to the number of shares of Common Stock for which such
Option might have been exercised immediately prior to such dissolution,
liquidation, or corporate separation or division; or
 
             (ii) each Option shall terminate as of a date to be fixed by
the Committee and that not less than thirty (30) days' written notice of the
date so fixed shall be given to each Grantee, who shall have the right, during
the period of thirty (30) days preceding such termination, to exercise all or
part of such Option.
 
 
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<PAGE>   11
 
         In the event of a proposed sale of all or substantially all of the
assets of the Company or the merger of the Company with or into another
corporation, any award then outstanding shall be assumed or an equivalent award
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless such successor corporation does not agree to
assume the award or to substitute an equivalent award, in which case the
Committee shall, in lieu of such assumption or substitution, provide for the
realization of such outstanding awards in the manner set forth in Section
11(b)(i) or 11(b)(ii) above.
 
         (c) If, while any awards remain outstanding under the Plan, any of the
following events shall occur (which events shall constitute a "Change in
Control" of the Company):
 
 
             (i) the "beneficial ownership," as defined in Rule 13d-3 under
the Exchange Act, of securities representing more than a majority of the
combined voting power of the Company are acquired by any "person" as defined in
Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B)
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, (C) Scott M. Niswonger or any member of his Immediate Family, or
(D) any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the
Company); or
 
             (ii) the shareholders of the Company approve a definitive agreement
to merge or consolidate the Company with or into another company (other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) a majority of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation), or to sell or otherwise dispose of all or
substantially all of its assets, or adopt a plan of liquidation; or
 
             (iii) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the election, or the
nomination for election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period); then from and after the
date on which any such Change in Control shall have occurred (the "Acceleration
Date"), any Option, SAR, and share of Restricted Stock awarded pursuant to this
Plan shall be exercisable or otherwise nonforfeitable in full, as applicable,
whether or not otherwise exercisable or forfeitable.
 
         Following the Acceleration Date, (i) the Committee shall, in the case
of a merger, consolidation, or sale or disposition of assets, promptly make an
appropriate adjustment to the number and class of shares of Common Stock
available for awards, and to the amount and kind of shares or other securities
or property receivable upon exercise or other realization of any outstanding
awards after the effective date of such transaction, and, if applicable, the
price thereof, and (ii) the 
 
 
 
 
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<PAGE>   12
 
Committee may in its discretion (unless proscribed with respect to certain
Grantees), permit the cancellation of outstanding Options, SARs, and Restricted
Stock in exchange for a cash payment in an amount equal to the Spread. The term
"Spread" as used herein shall mean an amount equal to the product computed by
multiplying (i) the excess of (A) the highest Fair Market Value per share of
Common Stock during the sixty-day period preceding the Acceleration Date over
(B) the Option Price per share of Common Stock at which such Option, SAR, or
Restricted Stock is exercisable, by (ii) the number of shares of Common Stock
with respect to which the Option, SAR, or Restricted Stock is being exercised.
 
         Notwithstanding the foregoing, (i) with respect to any Incentive Stock
Option (or an SAR relating to an Incentive Stock Option), the Grantee may not
receive a cash payment in excess of the maximum amount that will enable such
option to continue to qualify as an Incentive Stock Option, and (ii) no Grantee
subject to the reporting requirements of Section 16(a) of the Exchange Act shall
be eligible to receive a cash payment in respect of any award held for less than
six months prior to exercise.
 
         (d) In the event of a change in the Common Stock of the Company as
presently constituted that is limited to a change of all of its authorized
shares of Common Stock into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
 
         (e) Except as herein before expressly provided in this Section 11, the
Grantee of an award hereunder shall have no rights by reason of any subdivision
or consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger, or consolidation
or spin-off of assets or stock of another company; and any issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock subject to
an award. The grant of an award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to merge or
to consolidate or to dissolve, liquidate, or sell, or transfer all or part of
its business or assets or engage in any similar transactions.
 
12.      SURRENDER AND EXCHANGES OF AWARDS.
 
         The Committee may permit the voluntary surrender of all or a portion of
any Option granted under the Plan or any option granted under any other plan,
program, or arrangement of the Company or any Subsidiary ("Surrendered Option"),
to be conditioned upon the granting to the Grantee of a new Option for the same
number of shares of Common Stock as the Surrendered Option, or may require such
voluntary surrender as a condition precedent to a grant of a new Option to such
Grantee.
 
 
 
 
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Subject to the provisions of the Plan, such new Option (1) may be an Incentive
Stock Option or a Nonqualified Stock Option and (2) shall be exercisable at the
price, during such period, and on such other terms and conditions as are
specified by the Committee at the time the new Option is granted. The Committee
may also grant Restricted Stock in exchange for Surrendered Options to any
holder of such Surrendered Option.
 
13.      PERIOD DURING WHICH AWARDS MAY BE GRANTED.
 
         Awards may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the effective date of the Plan, provided that
awards granted prior to such tenth anniversary date may be extended beyond such
date.
 
14.      LIMITS ON TRANSFERABILITY OF AWARDS.
 
         Awards of Incentive Stock Options (and any SAR related thereto) shall
not be transferable otherwise than by will or by the laws of descent and
distribution, and all Incentive Stock Options are exercisable during the
Grantee's lifetime only by the Grantee. Awards of Nonqualified Stock Options
(and any SAR related thereto) shall not be transferable, without the prior
written consent of the Committee, other than (i) by will or by the laws of
descent and distribution, (ii) by a Grantee to a member of his or her Immediate
Family, or (iii) to a trust for the benefit of the Grantee or a member of his or
her Immediate Family. Awards of Restricted Stock shall be transferable only to
the extent set forth in the Restricted Stock Agreement.
 
15.      EFFECTIVE DATE OF PLAN.
 
         The Plan shall be effective as of February 5, 1999, subject to the
approval of the Plan by the holders of a majority of the shares of Common Stock.
Any grants made under the Plan prior to such approval shall be effective when
made (unless otherwise specified by the Committee at the time of grant), but
shall be conditioned on, and subject to, such approval of the Plan by such
shareholders.
 
16.      AGREEMENT BY GRANTEE REGARDING WITHHOLDING TAXES.
 
         If the Committee shall so require, as a condition of exercise of an
Option or SAR or other realization of an award, each Grantee shall agree that no
later than the date of exercise or other realization of an award granted
hereunder, the Grantee will pay to the Company or make arrangements satisfactory
to the Committee regarding payment of any federal, state, or local taxes of any
kind required by law to be withheld upon the exercise of an Option or other
realization of an award. Alternatively, the Committee may provide that a Grantee
may elect, to the extent permitted
 
 
 
 
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or required by law, to have the Company deduct federal, state, and local taxes
of any kind required by law to be withheld upon the exercise of an Option or
realization of any award from any payment of any kind due to the Grantee. The
Committee may, in its sole discretion, permit withholding obligations to be
satisfied in shares of Common Stock subject to the award.
 
17.      AMENDMENT AND TERMINATION OF THE PLAN.
 
         The Board at any time and from time to time may suspend, terminate,
modify, or amend the Plan without stockholder approval to the fullest extent
permitted by the Exchange Act and the rules and regulations thereunder;
provided, however, that no suspension, termination, modification, or amendment
of the Plan may adversely affect any award previously granted hereunder, unless
the written consent of the Grantee is obtained.
 
18.      RIGHTS AS A SHAREHOLDER.
 
         Except as provided in Section 10(d) hereof, a Grantee or a transferee
of an award shall have no rights as a shareholder with respect to any shares
covered by the award until the date of the issuance of a stock certificate to
him or her for such shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities, or other property) or
distribution of other rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section 11 hereof.
 
19.      NO RIGHTS TO EMPLOYMENT.
 
         Nothing in the Plan or in any award granted or Agreement entered into
pursuant hereto shall confer upon any Grantee the right to continue in the
employ of the Company or any subsidiary or to be entitled to any remuneration or
benefits not set forth in the Plan or such Agreement or to interfere with or
limit in any way the right of the Company or any such subsidiary to terminate
such Grantee=s employment. Awards granted under the Plan shall not be affected
by any change in duties or position of a Grantee as long as such Grantee
continues in the employ of the Company or any Subsidiary.
 
20.      BENEFICIARY.
 
         A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Grantee, the executor or administrator of the Grantee's estate
shall be deemed to be the Grantee's beneficiary.
 
21.      UNFUNDED STATUS OF PLAN.
 
         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a Grantee by
the Company, nothing
 
 
 
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contained herein shall give any such Grantee any rights that are greater than
those of a general creditor of the Company. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock or payments in lieu
of or with respect to awards hereunder; provided, however, that, unless the
Committee otherwise determines with the consent of the affected participant, the
existence of such trusts or other arrangements is consistent with the "unfunded"
status of the Plan.
 
22.      GOVERNING LAW.
 
         The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Tennessee.