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                                                                 EXHIBIT 10.6
                                       
                            APEX MORTGAGE CAPITAL, INC.
                                          
                                AMENDED AND RESTATED

                               1997 STOCK OPTION PLAN






<PAGE>

                                       
                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                 PAGE
<S>  <C>                                                                         <C>
1.   The Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

     1.1       Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

     1.2       Administration and Authorization; Power and Procedure . . . . . . .  1
               1.2.1     Committee . . . . . . . . . . . . . . . . . . . . . . . .  1
               1.2.2     Plan Awards; Interpretation; Powers of Committee. . . . .  1
               1.2.3     Binding Determinations. . . . . . . . . . . . . . . . . .  2
               1.2.4     Reliance on Experts . . . . . . . . . . . . . . . . . . .  2
               1.2.5     Delegation. . . . . . . . . . . . . . . . . . . . . . . .  2

     1.3       Participation . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
     1.4       Shares Available for Awards; Share Limits . . . . . . . . . . . . .  3
               1.4.1     Shares Available. . . . . . . . . . . . . . . . . . . . .  3
               1.4.2     Share Limits. . . . . . . . . . . . . . . . . . . . . . .  3
               1.4.3     Limitation on Ownership . . . . . . . . . . . . . . . . .  3
               1.4.4     Share Reservation; Replenishment and Reissue of
                         Unvested Awards . . . . . . . . . . . . . . . . . . . . .  3

     1.5       Grant of Awards . . . . . . . . . . . . . . . . . . . . . . . . . .  4
     1.6       Award Period. . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

     1.7       Limitations on Exercise and Vesting of Awards . . . . . . . . . . .  4
               1.7.1     Provisions for Exercise . . . . . . . . . . . . . . . . .  4
               1.7.2     Procedure . . . . . . . . . . . . . . . . . . . . . . . .  4
               1.7.3     Fractional Shares/Minimum Issue . . . . . . . . . . . . .  4

     1.8       Acceptance of Notes to Finance Exercise . . . . . . . . . . . . . .  4
               1.8.1     Principal . . . . . . . . . . . . . . . . . . . . . . . .  5
               1.8.2     Term. . . . . . . . . . . . . . . . . . . . . . . . . . .  5
               1.8.3     Recourse; Security; Compliance. . . . . . . . . . . . . .  5
               1.8.4     Termination of Employment . . . . . . . . . . . . . . . .  5

     1.9       No Transferability; Limited Exception to Transfer Restrictions. . .  5
               1.9.1     Limit On Exercise and Transfer. . . . . . . . . . . . . .  5
               1.9.2     Exceptions. . . . . . . . . . . . . . . . . . . . . . . .  6
               1.9.3     Further Exceptions to Limits On Transfer. . . . . . . . .  6

2.   Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

     2.1       Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

     2.2       Option Price. . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
               2.2.1     Pricing Limits. . . . . . . . . . . . . . . . . . . . . .  6
               2.2.2     Payment Provisions. . . . . . . . . . . . . . . . . . . .  6
</TABLE>
                                       i

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<TABLE>

<S>  <C>                                                                         <C>
     2.3       Limitations on Grant and Terms of Incentive Stock Options . . . . .  7
               2.3.1     $100,000 Limit. . . . . . . . . . . . . . . . . . . . . .  7
               2.3.2     Option Period . . . . . . . . . . . . . . . . . . . . . .  7
               2.3.3     Other Code Limits . . . . . . . . . . . . . . . . . . . .  7

     2.4       Limits on 10% Holders . . . . . . . . . . . . . . . . . . . . . . .  7

     2.5       Option Repricing/Cancellation and Regrant/Waiver of 
               Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

     2.6       Effects of Termination of Employment; Termination of Subsidiary
               Status; Discretionary Provisions. . . . . . . . . . . . . . . . . .  8
               2.6.1     Options - Resignation or Dismissal. . . . . . . . . . . .  8
               2.6.2     Options - Death or Disability . . . . . . . . . . . . . .  8
               2.6.3     Options - Retirement. . . . . . . . . . . . . . . . . . .  8
               2.6.4     Certain SARs. . . . . . . . . . . . . . . . . . . . . . .  9
               2.6.5     Other Awards. . . . . . . . . . . . . . . . . . . . . . .  9
               2.6.6     Committee Discretion. . . . . . . . . . . . . . . . . . .  9
     
     2.7       Options and Rights in Substitution for Stock Options Granted by
               Other Corporations. . . . . . . . . . . . . . . . . . . . . . . . .  9

3.   Stock Appreciation Rights (Including Limited Stock Appreciation Rights. . . .  9

     3.1       Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

     3.2       Exercise of Stock Appreciation Rights . . . . . . . . . . . . . . .  9
               3.2.1     Exercisability. . . . . . . . . . . . . . . . . . . . . .  9
               3.2.2     Effect on Available Shares. . . . . . . . . . . . . . . . 10
               3.2.3     Stand-Alone SARs. . . . . . . . . . . . . . . . . . . . . 10
               3.2.4     Proportionate Reduction . . . . . . . . . . . . . . . . . 10

     3.3       Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
               3.3.1     Amount. . . . . . . . . . . . . . . . . . . . . . . . . . 10
               3.3.2     Form of Payment . . . . . . . . . . . . . . . . . . . . . 10

     3.4       Limited Stock Appreciation Rights . . . . . . . . . . . . . . . . . 10

4.   Restricted Stock Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

     4.1       Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

     4.2       Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
               4.2.1     Pre-Vesting Restraints. . . . . . . . . . . . . . . . . . 11
               4.2.2     Dividend and Voting Rights. . . . . . . . . . . . . . . . 11
               4.2.3     Cash Payments . . . . . . . . . . . . . . . . . . . . . . 11

     4.3       Return to the Corporation . . . . . . . . . . . . . . . . . . . . . 12

5.   Performance Share Awards; Stock Units; Stock Bonuses. . . . . . . . . . . . . 12

     5.1       Grants of Performance Share Awards. . . . . . . . . . . . . . . . . 12

     5.2       Special Performance-Based Share Awards. . . . . . . . . . . . . . . 12
               5.2.1     Eligible Class. . . . . . . . . . . . . . . . . . . . . . 13
               5.2.2     Maximum Award . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
                                       ii

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<TABLE>

<S>  <C>                                                                         <C>
               5.2.3     Committee Certification . . . . . . . . . . . . . . . . . 13
               5.2.4     Terms and Conditions of Awards. . . . . . . . . . . . . . 13
               5.2.5     Stock Payout Features . . . . . . . . . . . . . . . . . . 13
               5.2.6     Adjustments for Material Changes. . . . . . . . . . . . . 13

     5.3       Grants of Stock Bonuses . . . . . . . . . . . . . . . . . . . . . . 13

     5.4       Deferred Payments . . . . . . . . . . . . . . . . . . . . . . . . . 14

     5.5       Cash Bonus Awards . . . . . . . . . . . . . . . . . . . . . . . . . 14
               5.5.1     Performance Goals . . . . . . . . . . . . . . . . . . . . 14

     5.6       Alternative Payments. . . . . . . . . . . . . . . . . . . . . . . . 14

6.   Other Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

     6.1       Rights of Eligible Persons, Participants and Beneficiaries. . . . . 14
               6.1.1     Employment Status . . . . . . . . . . . . . . . . . . . . 14
               6.1.2     No Employment Contract. . . . . . . . . . . . . . . . . . 14
               6.1.3     Plan Not Funded . . . . . . . . . . . . . . . . . . . . . 14

     6.2       Adjustments; Acceleration . . . . . . . . . . . . . . . . . . . . . 15
               6.2.1     Adjustments . . . . . . . . . . . . . . . . . . . . . . . 15
               6.2.2     Acceleration of Awards Upon Change in Control . . . . . . 16
               6.2.3     Possible Early Termination of Accelerated Awards. . . . . 16
               6.2.4     Golden Parachute Limitations. . . . . . . . . . . . . . . 16

     6.3       Effect of Termination of Employment . . . . . . . . . . . . . . . . 17

     6.4       Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 17
               6.4.1     General . . . . . . . . . . . . . . . . . . . . . . . . . 17
               6.4.2     Restrictions on Transfer. . . . . . . . . . . . . . . . . 17

     6.5       Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 18
               6.5.1     Provision for Tax Withholding Offset. . . . . . . . . . . 18
               6.5.2     Tax Loans . . . . . . . . . . . . . . . . . . . . . . . . 18

     6.6       Plan Amendment, Termination and Suspension. . . . . . . . . . . . . 18
               6.6.1     Board Authorization . . . . . . . . . . . . . . . . . . . 18
               6.6.2     Stockholder Approval. . . . . . . . . . . . . . . . . . . 19
               6.6.3     Amendments to Awards. . . . . . . . . . . . . . . . . . . 19
               6.6.4     Limitations on Amendments to Plan and Awards. . . . . . . 19

     6.7       Privileges of Stock Ownership . . . . . . . . . . . . . . . . . . . 19

     6.8       Effective Date of the Plan. . . . . . . . . . . . . . . . . . . . . 19

     6.9       Term of the Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 19

     6.10      Governing Law/Construction/Severability . . . . . . . . . . . . . . 19
               6.10.1    Choice of Law . . . . . . . . . . . . . . . . . . . . . . 19
               6.10.2    Severability. . . . . . . . . . . . . . . . . . . . . . . 20
               6.10.3    Plan Construction . . . . . . . . . . . . . . . . . . . . 20

     6.11      Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

                                       iii

<PAGE>

<TABLE>

<S>  <C>                                                                         <C>
     6.12      Effect of Change of Subsidiary Status . . . . . . . . . . . . . . . 20
     6.13      Non-Exclusivity of Plan . . . . . . . . . . . . . . . . . . . . . . 20

7.   Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

8.   Non-Employee Director Options . . . . . . . . . . . . . . . . . . . . . . . . 25

     8.1       Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

     8.2       Option Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
               8.2.1     Time of Initial Award . . . . . . . . . . . . . . . . . . 25
               8.2.2     Subsequent Automatic Awards . . . . . . . . . . . . . . . 26
               8.2.3     Subsequent Discretionary Awards . . . . . . . . . . . . . 26

     8.3       Option Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

     8.4       Option Period and Exercisability. . . . . . . . . . . . . . . . . . 26

     8.5       Termination of Directorship . . . . . . . . . . . . . . . . . . . . 26

     8.6       Adjustments; Accelerations; Terminations. . . . . . . . . . . . . . 26

     8.7       Acceleration Upon a Change in Control Event . . . . . . . . . . . . 27

</TABLE>

                                       iv

<PAGE>

                                       
                            APEX MORTGAGE CAPITAL, INC.
                    AMENDED AND RESTATED 1997 STOCK OPTION PLAN


                                  1.     THE PLAN

1.1    PURPOSE.  The purpose of this Plan is to promote the success of the
       Company and the interests of its stockholders by attracting, motivating,
       retaining and rewarding directors, officers and employees and other
       Eligible Persons associated with the management of the Company with
       awards and incentives for high levels of performance and improving the
       financial performance of the Company, by aligning the interests of the
       those persons and the Company's stockholders, and by attracting,
       motivating and retaining experienced and knowledgeable independent
       directors through the benefits provided under Section 8.  "Corporation"
       means Apex Mortgage Capital, Inc. and "Company" means the Corporation and
       its Subsidiaries, collectively.  These terms and other capitalized terms
       are defined in Section 7.

1.2    ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE

       1.2.1  COMMITTEE.  This Plan will be administered by and all Awards to
              Eligible Persons will be authorized by the Committee, other than
              the Initial Awards which have been authorized by the Corporation's
              stockholder(s) in connection with approving this Plan.  Action of
              the Committee with respect to the administration of this Plan will
              be taken pursuant to a majority vote or by written consent of its
              members.

       1.2.2  PLAN AWARDS; INTERPRETATION; POWERS OF COMMITTEE.  Subject to the
              express provisions of this Plan, the Committee will have the
              authority to:

              (a)    determine the particular Eligible Persons who will receive
                     Awards;

              (b)    grant Awards to Eligible Persons, determine the price at
                     which securities will be offered or awarded and the amount
                     of securities to be offered or awarded to any of such
                     Eligible Persons, and determine the other specific terms
                     and conditions of such Awards consistent with the express
                     limits of this Plan, and establish the installments (if
                     any) in which such Awards will become exercisable or will
                     vest, or determine that no delayed exercisability or
                     vesting is required, and establish the events of
                     termination or reversion of such Awards;

              (c)    approve the forms of Award Agreements (which need not be
                     identical either as to type of Award or among
                     Participants);

              (d)    construe and interpret this Plan and any agreements
                     defining the rights and obligations of the Company and
                     Eligible Persons under this Plan, further

                                       

<PAGE>

                     define the terms used in this Plan, and prescribe, amend 
                     and rescind rules and regulations relating to the 
                     administration of this Plan;

              (e)    cancel, modify, or waive the Corporation's rights with
                     respect to, or modify, discontinue, suspend, or terminate
                     any or all outstanding Awards held by Eligible Persons,
                     subject to any required consent under Section 6.6;

              (f)    accelerate or extend the exercisability or extend the term
                     of any or all such outstanding Awards within the maximum 10
                     year term of Awards under Section 1.6; and

              (g)    make all other determinations and take such other action as
                     contemplated by this Plan or as may be necessary or
                     advisable for the administration of this Plan and the
                     effectuation of its purposes.

              Notwithstanding the foregoing, the provisions of Sections 8.2.1
              and 8.2.2 relating to Non-Employee Director Awards will be
              automatic and, to the maximum extent possible, self-effectuating.

       1.2.3  BINDING DETERMINATIONS.  Any action taken by, or inaction of, the
              Corporation, any Subsidiary, the Board or the Committee relating
              or pursuant to this Plan will be within the absolute discretion of
              that entity or body and will be conclusive and binding upon all
              persons.  No member of the Board or Committee, or officer of the
              Corporation or any Subsidiary, will be liable for any such action
              or inaction of the entity or body, of another person or, except in
              circumstances involving bad faith, of himself or herself.  Subject
              only to compliance with the express provisions hereof, the Board
              and Committee may act in their absolute discretion in matters
              within their authority related to this Plan.

       1.2.4  RELIANCE ON EXPERTS.  In making any determination or in taking or
              not taking any action under this Plan, the Committee or the Board,
              as the case may be, may obtain and may rely upon the advice of
              experts, including professional advisors to the Corporation.  No
              director, officer or agent of the Company will be liable for any
              such action or determination taken or made or omitted in good
              faith.

       1.2.5  DELEGATION.  The Committee may delegate ministerial, 
              non-discretionary functions to individuals who are officers or
              employees of the Company.

1.3    PARTICIPATION.  Awards may be granted by the Committee only to those
       persons that the Committee determines to be Eligible Persons.  An
       Eligible Person who has been granted an Award may, if otherwise eligible,
       be granted additional Awards if the Committee so determines.

                                       2

<PAGE>

1.4    SHARES AVAILABLE FOR AWARDS; SHARE LIMITS

       1.4.1  SHARES AVAILABLE.  Subject to the provisions of Section 6.2, the 
              capital stock that may be delivered under this Plan will be 
              shares of the Corporation's authorized but unissued Common Stock 
              and any shares of its Common Stock held as treasury shares 
              (the "Shares").  The Shares may be delivered for any lawful 
              consideration.

       1.4.2  SHARE LIMITS.  The maximum number of Shares that may be delivered
              pursuant to Awards granted to Eligible Persons under this Plan
              will not exceed 1,000,000 Shares (the "Share Limit").  The number
              of Shares subject to Awards outstanding at any time will not
              exceed the number of Shares remaining available for issuance under
              the Plan.  The maximum number of Shares subject to those Options
              and Stock Appreciation Rights that are granted during any calendar
              year to any one individual, subject to Section 1.4.3, will be
              limited to 200,000 Shares.  Each of the foregoing numerical limits
              is subject to adjustment as contemplated by this Section 1.4 and
              Section 6.2.

       1.4.3  LIMITATION ON OWNERSHIP.

              (a)    No Awards will be granted under the Plan to any person who,
                     after the grant of such Award, would be deemed to
                     beneficially own more than 9.8% (in value or in number of
                     Shares, whichever is more restrictive) of the outstanding
                     Shares of Common Stock of the Corporation.  For purposes of
                     this Section 1.4.3, "ownership" is determined in accordance
                     with the Real Estate Investment Trust provisions of the
                     Code, the constructive ownership provisions of Section 544
                     of the Code (as modified by Section 856(1)(b) of the Code),
                     and Rule 13d-3 promulgated under the Exchange Act.

              (b)    If, after an Award is granted, circumstances of ownership
                     (or the Corporation's knowledge thereof) change so that the
                     exercise of such Award would cause the Participant to
                     beneficially own more Shares than are permitted pursuant to
                     paragraph (a) above, then upon any exercise of such Award
                     that causes such result, the Corporation shall have the
                     right to deliver to the Participant, in lieu of Shares, a
                     check or cash in the amount equal to the Fair Market Value
                     of the Shares otherwise deliverable on the date of exercise
                     (minus any amounts withheld pursuant to Section 6.5).
  
       1.4.4  SHARE RESERVATION; REPLENISHMENT AND REISSUE OF UNVESTED AWARDS. 
              No Award may be granted under this Plan unless, on the date of
              grant, the sum of (a) the maximum number of Shares issuable at any
              time pursuant to such Award, plus (b) the number of Shares that
              have previously been issued pursuant to Awards granted under this
              Plan, other than reacquired Shares available for reissue
              consistent with any applicable legal limitations, plus (c) the
              maximum number of Shares that may be issued at any time after such
              date of grant pursuant to Awards that are outstanding on such
              date, does not exceed the Share Limit.  Shares that

                                       3

<PAGE>

              are subject to or underlie Awards that expire or for any reason 
              are canceled or terminated, are forfeited, fail to vest, or for 
              any other reason are not paid or delivered under this Plan, as 
              well as reacquired Shares, will again, except to the extent 
              prohibited by law, be available for subsequent Awards under the 
              Plan.  Except as limited by law, if an Award is or may be settled 
              only in cash, such Award need not be counted against any of the 
              limits under this Section 1.4.

1.5    GRANT OF AWARDS.  Subject to the express provisions of this Plan, the
       Committee will determine the number of Shares subject to each Award, the
       price (if any) to be paid for the Shares or the Award and, in the case of
       performance share awards, in addition to matters addressed in
       Section 1.2.2, the specific objectives, goals and performance criteria
       (such as an increase in sales, market value, earnings or book value over
       a base period, the years of service before vesting, the relevant job
       classification or level of responsibility or other factors) that further
       define the terms of the performance share award.  Each Award will be
       evidenced by an Award Agreement signed by the Corporation and, if
       required by the Committee, by the Participant.

1.6    AWARD PERIOD.  The Award Period of any Option, SAR, warrant or similar
       right shall expire and any other Award shall either vest or be forfeited
       not more than 10 years after the date of grant; PROVIDED, HOWEVER, that
       any payment of cash or delivery of Shares pursuant to an Award may be
       delayed until a future date if specifically authorized by the Committee
       in writing.

1.7    LIMITATIONS ON EXERCISE AND VESTING OF AWARDS.

       1.7.1  PROVISIONS FOR EXERCISE.  Unless the Committee otherwise expressly
              provides, no Award will be exercisable or will vest until at least
              six months after the initial Award Date, and once exercisable an
              Award will remain exercisable until the expiration or earlier
              termination of the Award.

       1.7.2  PROCEDURE.  Any exercisable Award will be deemed to be exercised
              when the Corporation receives written notice of such exercise from
              the Participant, together with any required payment made in
              accordance with Section 2.2.2 or 8.4, as the case may be, and any
              other requirements of exercise, including any document required by
              Section 6.4, are satisfied.

       1.7.3  FRACTIONAL SHARES/MINIMUM ISSUE.  Fractional share interests will
              be disregarded, but may be accumulated. The Committee, however,
              may determine in the case of Eligible Persons that cash, other
              securities, or other property will be paid or transferred in lieu
              of any fractional share interests.  No fewer than 100 Shares may
              be purchased on exercise of any Award at one time unless the
              number purchased is the total number at the time available for
              purchase under the Award.

1.8    ACCEPTANCE OF NOTES TO FINANCE EXERCISE.  The Corporation, in its sole
       discretion, may accept one or more notes from any Eligible Person in
       connection with the exercise or receipt of any outstanding Award; but any
       such note will be subject to the following terms and conditions:

                                       4

<PAGE>

       1.8.1  PRINCIPAL.  The principal of the note will not exceed the amount
              required to be paid to the Corporation upon the exercise or
              receipt of one or more Awards under the Plan and the note will be
              delivered directly to the Corporation in consideration of such
              exercise or receipt.

       1.8.2  TERM.  The initial term of the note will be determined by the
              Committee; but the term of the note, including extensions, will
              not exceed a period of five years.

       1.8.3  RECOURSE; SECURITY; COMPLIANCE.  The note will provide for full
              recourse to the Participant and will bear interest at a rate
              determined by the Committee but not less than the interest rate
              necessary to avoid the imputation of interest under the Code.  If
              required by the Committee or by applicable law, the note will be
              secured by a pledge of any Shares or rights financed thereby in
              compliance with applicable law.  The terms, repayment provisions,
              and collateral release provisions of the note and the pledge
              securing the note will conform with applicable rules and
              regulations of the Federal Reserve Board as then in effect.

       1.8.4  TERMINATION OF EMPLOYMENT.  If the employment of the Participant
              terminates, the unpaid principal balance of the note will become
              due and payable on the 10th business day after the Severance Date;
              but if a sale of such Shares would cause the Participant to incur
              liability under Section 16(b) of the Exchange Act, the unpaid
              balance will become due and payable on the 10th business day after
              the first day on which a sale of such Shares could have been made
              without incurring such liability assuming for these purposes that
              there are no other transactions (or deemed transactions) in
              securities of this Corporation by the Participant after such
              termination.

1.9    NO TRANSFERABILITY; LIMITED EXCEPTION TO TRANSFER RESTRICTIONS.

       1.9.1  LIMIT ON EXERCISE AND TRANSFER.  Unless otherwise expressly
              provided in (or pursuant to) this Section 1.9, by applicable law
              and by the Award Agreement, as the same may be amended, (a) all
              Awards are non-transferable and will not be subject in any manner
              to sale, transfer, anticipation, alienation, assignment, pledge,
              encumbrance or charge, (b) Awards may be exercised only by the
              Participant, and (c) amounts payable or Shares issuable pursuant
              to an Award will be delivered only to (or for the account of) the
              Participant.

       1.9.2  EXCEPTIONS.  The Committee may permit Awards to be exercised by
              and paid only to certain persons or entities related to the
              Participant pursuant to such conditions and procedures as the
              Committee may establish.  Any permitted transfer will be subject
              to the condition that the Committee receive evidence satisfactory
              to it that the transfer is being made to related persons for
              estate and/or tax planning purposes and without consideration
              (other than nominal consideration).  Incentive Stock Options and
              Restricted Stock Awards, however, will be subject to any and all
              additional transfer restrictions under the Code.

                                       5

<PAGE>

       1.9.3  FURTHER EXCEPTIONS TO LIMITS ON TRANSFER.  The exercise and
              transfer restrictions in Section 1.9.1 will not apply to:

              (a)    transfers to the Corporation,

              (b)    the designation of a beneficiary to receive benefits if the
                     Participant dies or, if the Participant has died, transfers
                     to or exercise by the Participant's beneficiary, or, in the
                     absence of a validly designated beneficiary, transfers by
                     will or the laws of descent and distribution,

              (c)    transfers pursuant to a QDRO if approved or ratified by the
                     Committee,

              (d)    if the Participant has suffered a disability, permitted
                     transfers or exercises on behalf of the Participant by the
                     Participant's legal representative, or

              (e)    the authorization by the Committee of "cashless exercise"
                     procedures with third parties who provide financing for the
                     purpose of (or who otherwise facilitate) the exercise of
                     Awards consistent with applicable laws and the express
                     authorization of the Committee.
                                          
                                   2.     OPTIONS

2.1    GRANTS.  One or more Options may be granted under this Section to any
       Eligible Person.  Each Option granted will be designated by the Committee
       in the applicable Award Agreement as either an Incentive Stock Option,
       subject to Section 2.3, or a Non-Qualified Stock Option.

2.2    OPTION PRICE.

       2.2.1  PRICING LIMITS.  The purchase price per Share of the Shares
              covered by each Option will be not be less than 100% (110% in the
              case of a Participant described in Section 2.4) of the Fair Market
              Value of the Common Stock on the date of grant.

       2.2.2  PAYMENT PROVISIONS.  The purchase price of any Shares purchased on
              exercise of an Option granted under this Section will be paid in
              full at the time of each purchase in one or a combination of the
              following methods:  (a) in cash or by electronic funds transfer;
              (b) by certified or cashier's check payable to the order of the
              Corporation; (c) if permitted by the Committee, by a promissory
              note of the Participant consistent with the requirements of
              Sections 1.8 and 6.4; (d) by notice and third party payment in
              such manner as may be authorized by the Committee; or (e) by the
              delivery of shares of Common Stock of the Corporation already
              owned by the Participant, but the Committee may in its absolute
              discretion limit the Participant's ability to exercise an Award by
              delivering such shares, and any shares delivered that were
              initially acquired upon exercise of a stock option must have been
              owned by the Participant at least six months as of the date of
              delivery.  Shares of Common Stock used to satisfy the exercise
              price of an Option will be

                                       6

<PAGE>

              valued at their Fair Market Value on the date of exercise. 
              Without limiting the generality of the foregoing, the Committee 
              may provide that the Option can be exercised and payment made by 
              delivering a properly executed exercise notice together with 
              irrevocable instructions to a broker to promptly deliver to the 
              Corporation the amount of sale proceeds necessary to pay the 
              exercise price and, unless otherwise prohibited by the Committee 
              or applicable law, any applicable tax withholding under 
              Section 6.5.  The Corporation will not be obligated to deliver 
              certificates for the shares unless and until it receives full 
              payment of the exercise price therefor and any related 
              withholding obligations have been satisfied.

2.3    LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.

       2.3.1  $100,000 LIMIT.  To the extent that the aggregate "Fair Market
              Value" of Shares with respect to which incentive stock options
              first become exercisable by a Participant in any calendar year
              exceeds $100,000, taking into account both Shares subject to
              Incentive Stock Options under this Plan and stock subject to
              incentive stock options under all other plans of the Company or
              any parent corporation, such options will be treated as
              Nonqualified Stock Options.  For this purpose, the "Fair Market
              Value" of the stock subject to options will be determined as of
              the date the options were awarded.  In reducing the number of
              options treated as incentive stock options to meet the $100,000
              limit, the most recently granted options will be reduced first. 
              To the extent a reduction of simultaneously granted options is
              necessary to meet the $100,000 limit, the Committee may, in the
              manner and to the extent permitted by law, designate which Shares
              are to be treated as Shares acquired pursuant to the exercise of
              an Incentive Stock Option.

       2.3.2  OPTION PERIOD.  Except as provided in Section 1.6, each Option and
              all rights thereunder will expire no later than 10 years after the
              Award Date.

       2.3.3  OTHER CODE LIMITS.  Incentive Stock Options may only be granted to
              Eligible Employees of the Corporation or a Subsidiary who satisfy
              the eligibility requirements of the Code.  There will be imposed
              in any Award Agreement relating to Incentive Stock Options such
              other terms and conditions as from time to time are required in
              order that the Option be an "incentive stock option" as that term
              is defined in Section 422 of the Code.

2.4    LIMITS ON 10% HOLDERS.  No Incentive Stock Option may be granted to any
       person who, at the time the Option is granted, owns (or is deemed to own
       under Section 424(d) of the Code) shares of outstanding Common Stock
       possessing more than 10% of the total combined voting power of all
       classes of stock of the Corporation, unless the exercise price of such
       Option is at least 110% of the Fair Market Value of the stock subject to
       the Option and such Option by its terms is not exercisable after the
       expiration of five years from the date such Option is granted.

                                       7

<PAGE>

2.5    OPTION REPRICING/CANCELLATION AND REGRANT/WAIVER OF RESTRICTIONS. 
       Subject to Section 1.4 and Section 6.6 and the specific limitations on
       Awards contained in this Plan, the Committee from time to time may
       authorize, generally or in specific cases only, for the benefit of any
       Eligible Person any adjustment in the exercise or purchase price, the
       vesting schedule, the number of Shares subject to, the restrictions upon
       or the term of, an Award granted under this Section by cancellation of an
       outstanding Award and a subsequent regranting of an Award, by amendment,
       by substitution of an outstanding Award, by waiver or by other legally
       valid means.  Such amendment or other action may result among other
       changes in an exercise or purchase price that is higher or lower than the
       exercise or purchase price of the original or prior Award, provide for a
       greater or lesser number of Shares subject to the Award, or provide for a
       longer or shorter vesting or exercise period.

2.6    EFFECTS OF TERMINATION OF EMPLOYMENT; TERMINATION OF SUBSIDIARY STATUS;
       DISCRETIONARY PROVISIONS.

       2.6.1  OPTIONS - RESIGNATION OR DISMISSAL.  If the Participant's
              employment by (or other service specified in the Award Agreement
              to) the Company or the Manager, as the case may be, terminates for
              any reason (the date of such termination being referred to as the
              "Severance Date") other than Retirement, Total Disability or
              death, or "for Cause" (as determined in the discretion of the
              Committee), the Participant will have, unless otherwise provided
              in the Award Agreement and subject to earlier termination pursuant
              to or as contemplated by Section 1.6 or 6.2, 90 days after the
              Severance Date to exercise any Option to the extent exercisable on
              the Severance Date.  In the case of a termination "for Cause", the
              Option will terminate on the Severance Date.  The Option, to the
              extent not exercisable on the Severance Date, will terminate in
              all cases, unless the Award Agreement or the Committee otherwise
              provides.

       2.6.2  OPTIONS - DEATH OR DISABILITY.  If the Participant's employment by
              (or specified service to) the Company or the Manager, as the case
              may be, terminates as a result of Total Disability or death, the
              Participant, Participant's Personal Representative or the
              Participant's Beneficiary, as the case may be, will have, unless
              otherwise provided in the Award Agreement and subject to earlier
              termination pursuant to or as contemplated by Section 1.6 or 6.2,
              until 12 months after the Severance Date to exercise any Option to
              the extent exercisable on the Severance Date.  Any Option to the
              extent not exercisable on the Severance Date will terminate.

       2.6.3  OPTIONS - RETIREMENT.  If the Participant's employment by (or
              specified service to) the Company or the Manager, as the case may
              be, terminates as a result of Retirement, the Participant,
              Participant's Personal Representative or the Participant's
              Beneficiary, as the case may be, will have, unless otherwise
              provided in the Award Agreement and subject to earlier termination
              pursuant to or as contemplated by Section 1.6 or 6.2, until 12
              months after the Severance Date to exercise any Nonqualified Stock
              Option (three months after the Severance Date if an Incentive
              Stock Option states it is it be retained) to the extent
              exercisable on

                                       8

<PAGE>

              the Severance Date.  The Option, to the extent not exercisable 
              on the Severance Date, will terminate.

       2.6.4  CERTAIN SARS.  Any SAR granted concurrently or in tandem with an
              Option will have the same post-Severance Date provisions and
              exercisability periods as the Option to which it relates, unless
              the Committee otherwise provides.

       2.6.5  OTHER AWARDS.  The Committee will establish in respect of each
              other Award granted hereunder the Participant's rights and
              benefits (if any) if the Participant's employment is terminated
              and in so doing may make distinctions based upon the cause of
              termination and the nature of the Award.

       2.6.6  COMMITTEE DISCRETION.  Notwithstanding the foregoing provisions of
              this Section 2.6, in the event of, or in anticipation of, a
              termination of employment with the Company or the Manager, as the
              case may be, for any reason, other than a discharge for Cause, the
              Committee, by express provisions in or by amendment to the Award
              Agreement, may increase the portion of the Participant's Award
              available to the Participant, or Participant's Beneficiary or
              Personal Representative, as the case may be, and/or, subject to
              the provisions of Section 1.6, extend the exercisability period,
              upon such terms as the Committee deems appropriate.

2.7    OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
       CORPORATIONS.  Options and Stock Appreciation Rights may be granted to
       Eligible Persons under this Plan in substitution for employee stock
       options granted by other entities to persons who are or who will become
       Eligible Persons in respect of the Company, in connection with a
       distribution, merger or reorganization by or with the granting entity or
       an affiliated entity, or the acquisition by the Company, directly or
       indirectly, of all or a substantial part of the stock or assets of the
       employing entity.
                                          
                         3.     STOCK APPRECIATION RIGHTS 
                    (INCLUDING LIMITED STOCK APPRECIATION RIGHTS)
       
3.1    GRANTS.  The Committee may grant to any Eligible Person Stock
       Appreciation Rights either concurrently with the grant of another Award
       or in respect of an outstanding Award, in whole or in part, or
       independently of any other Award.  Any Stock Appreciation Right granted
       in connection with an Incentive Stock Option will contain such terms as
       may be required to comply with the provisions of Section 422 of the Code
       and the regulations promulgated thereunder, unless the holder otherwise
       agrees.

3.2    EXERCISE OF STOCK APPRECIATION RIGHTS.

       3.2.1  EXERCISABILITY.  Unless the Award Agreement or the Committee
              otherwise provides, a Stock Appreciation Right related to another
              Award will be exercisable at such time or times, and to the
              extent, that the related Award will be exercisable.

                                       9

<PAGE>

       3.2.2  EFFECT ON AVAILABLE SHARES.  To the extent that a Stock
              Appreciation Right is exercised, only the actual number of
              delivered Shares will be charged against the maximum amount of
              Common Stock that may be delivered pursuant to Awards under this
              Plan.  The number of shares subject to the Stock Appreciation
              Right and the related Option of the Participant will, however, be
              reduced by the number of underlying shares as to which the
              exercise related, unless the Award Agreement otherwise expressly
              provides.

       3.2.3  STAND-ALONE SARS.  A Stock Appreciation Right granted
              independently of any other Award will be exercisable pursuant to
              the terms of the Award Agreement but in no event earlier than six
              months after the Award Date, except in the case of death or Total
              Disability.

       3.2.4  PROPORTIONATE REDUCTION  If an SAR extends to less than all the
              Shares covered by the related Award and if a portion of the
              related Award is thereafter exercised, the number of Shares
              subject to the unexercised SAR shall be reduced only if and to the
              extent that the remaining number of Shares covered by the related
              Award is less than the remaining number of Shares subject to such
              SAR.

3.3    PAYMENT.

       3.3.1  AMOUNT.  Unless the Committee otherwise provides, upon exercise of
              a Stock Appreciation Right and the attendant surrender of an
              exercisable portion of any related Award, the Participant will be
              entitled to receive subject to Section 6.5 payment of an amount
              determined by multiplying

              (a)    the difference obtained by subtracting the exercise price
                     per Share under the related Award (if applicable) or the
                     initial share value specified in the Award from the Fair
                     Market Value of a share of Common Stock on the date of
                     exercise of the Stock Appreciation Right, by

              (b)    the number of Shares with respect to which the Stock
                     Appreciation Right has been exercised.

       3.3.2  FORM OF PAYMENT.  The Committee, in its sole discretion, will
              determine the form in which payment will be made of the amount
              determined under Section 3.3.1 above, either solely in cash,
              solely in Shares (valued at Fair Market Value on the date of
              exercise of the Stock Appreciation Right), or partly in Shares and
              partly in cash, provided that the Committee has determined that
              such exercise and payment are consistent with applicable law.  If
              the Committee permits the Participant to elect to receive cash or
              Shares (or a combination thereof) upon exercise, the election will
              be subject to such conditions as the Committee may impose.

3.4    LIMITED STOCK APPRECIATION RIGHTS.  The Committee may grant to any
       Eligible Person Stock Appreciation Rights exercisable only upon or in
       respect of a change in control or any other specified event ("Limited
       SARs") and such Limited SARs may relate to or

                                       10

<PAGE>

       operate in tandem or combination with or substitution for Options, other 
       SARs or other Awards (or any combination thereof), and may be payable 
       in cash or Shares based on the spread between the base price of the SAR 
       and a price based upon or equal to the Fair Market Value of the Shares 
       during a specified period or at a specified time before, after or 
       including the date of such event.
                                          
                           4.     RESTRICTED STOCK AWARDS

4.1    GRANTS.  The Committee may grant one or more Restricted Stock Awards to
       any Eligible Person.  Each Restricted Stock Award Agreement will specify
       the number of Shares to be issued to the Participant, the date of such
       issuance, the consideration for such Shares (but not less than the
       minimum lawful consideration under applicable state law) payable by the
       Participant, the extent (if any) to which and the time (if ever) at which
       the Participant will be entitled to dividends, voting and other rights in
       respect of the Shares prior to vesting, and the restrictions (which may
       be based on performance criteria, passage of time or other factors or any
       combination thereof) imposed on such Shares and the conditions of release
       or lapse of such restrictions.  Such restrictions will not lapse earlier
       than six months after the Award Date, except to the extent the Committee
       may otherwise expressly provide.  Stock certificates evidencing shares of
       Restricted Stock pending the lapse of the restrictions ("Restricted
       Shares") will bear a legend making appropriate reference to the
       restrictions hereunder and will be held by the Corporation or by a third
       party designated by the Committee until the restrictions on such
       Restricted Shares have lapsed and the Restricted Shares have vested in
       accordance with the provisions of the Award and Section 1.7.  Upon
       issuance of the Restricted Stock Award, the Participant may be required
       to provide such further assurance and documents as the Committee may
       require to enforce the restrictions.

4.2    RESTRICTIONS.

       4.2.1  PRE-VESTING RESTRAINTS.  Except as provided in Sections 4.1 and
              1.9, Restricted Shares comprising any Restricted Stock Award may
              not be sold, assigned, transferred, pledged or otherwise disposed
              of or encumbered, either voluntarily or involuntarily, until the
              restrictions on such Restricted Shares have lapsed and the Shares
              have become vested.

       4.2.2  DIVIDEND AND VOTING RIGHTS.  Unless otherwise provided in the
              applicable Award Agreement, a Participant receiving a Restricted
              Stock Award will be entitled to cash dividend and voting rights
              for all Shares issued even though they are not vested, but such
              rights will terminate immediately as to any Restricted Shares
              which cease to be eligible for vesting.

       4.2.3  CASH PAYMENTS.  If the Participant has been paid or received cash
              (including any dividends) in connection with the Restricted Stock
              Award, the Award Agreement will specify the extent (if any) to
              which the cash must be returned (with or without an earnings
              factor) as to any Restricted Shares that cease to be eligible for
              vesting.

                                       11

<PAGE>

4.3    RETURN TO THE CORPORATION.  Unless the Committee otherwise expressly
       provides, Restricted Shares that remain subject to restrictions as of a
       Severance Date with respect to the Participant or are subject to other
       conditions to vesting that have not been satisfied by the time specified
       in the applicable Award Agreement will not vest and will be returned to
       the Corporation in such manner and on such terms as set forth in the
       Award Agreement or as the Committee otherwise expressly provides.
                                          
            5.     PERFORMANCE SHARE AWARDS; STOCK UNITS; STOCK BONUSES

5.1    GRANTS OF PERFORMANCE SHARE AWARDS.  The Committee may grant Performance
       Share Awards to Eligible Employees based upon such factors as the
       Committee deems relevant in light of the specific type and terms of the
       award.  An Award Agreement will specify the maximum number of Shares (if
       any) subject to the Performance Share Award, the consideration (but not
       less than the minimum lawful consideration) to be paid for any such
       Shares as may be issuable to the Participant, the duration of the Award
       and the conditions upon which delivery of any Shares or cash to the
       Participant will be based.  The amount of cash or Shares or other
       property that may be deliverable pursuant to such Award will be based
       upon the degree of attainment over a specified period of not more than 10
       years (a "performance cycle") as may be established by the Committee of
       such measure(s) of the performance of the Company (or any part thereof)
       or the Participant as may be established by the Committee.  The Committee
       may provide for full or partial credit, prior to completion of such
       performance cycle or the attainment of the performance achievement
       specified in the Award, in the event of the Participant's death,
       Retirement, or Total Disability, a Change in Control Event or in such
       other circumstances as the Committee (consistent with Section 6.10.3(b),
       if applicable) may determine.

5.2    SPECIAL PERFORMANCE-BASED SHARE AWARDS.  Options or SAR's granted with an
       exercise price not less than Fair Market Value at the applicable date of
       grant for Section 162(m) purposes to Eligible Employees which otherwise
       satisfy the conditions to deductibility under Section 162(m) of the Code
       are deemed "Qualifying Awards".  Without limiting the generality of the
       foregoing, and in addition to Qualifying Awards granted under other
       provisions of this Plan, other performance-based awards within the
       meaning of Section 162(m) of the Code ("Performance-Based Awards"),
       whether in the form of restricted stock, performance stock, phantom stock
       or other rights, the vesting of which depends on the performance of the
       Company on a consolidated, segment, subsidiary, or division basis, with
       reference to revenue growth, net earnings (before or after taxes or
       before or after taxes, interest, depreciation, and/or amortization), cash
       flow, return on equity, return on assets or return on net investment, or
       cost containment or reduction, or any combination thereof (the "business
       criteria") relative to preestablished performance goals, may be granted
       under this Plan.  To the extent so applicable, these terms are used as
       applied under generally accepted accounting principles and in the
       Company's financial reporting.  The applicable business criterion or
       criteria and the specific performance goals must be approved by the
       Committee in advance of any applicable deadlines under the Code and while
       the performance relating to such goals remains substantially uncertain. 
       The applicable performance measurement period may be not less than one
       (except as provided in Section 1.6) nor more than 10 years.   Other types
       of performance and non-performance awards may also be granted under the
       other provisions of this Plan.  The

                                       12

<PAGE>

       following provisions relate to all Performance-Based Awards (other than 
       Qualifying Awards) granted under this Plan:

       5.2.1  ELIGIBLE CLASS.  The eligible class of persons for Awards under
              this Section is executive officers of the Corporation.

       5.2.2  MAXIMUM AWARD.  Subject to Section 1.4.2, in no event will grants
              in any calendar year to any one individual under this Section 5.2
              relate to more than 250,000 shares or, (if payable solely in cash)
              a cash amount of more than $1,000,000.

       5.2.3  COMMITTEE CERTIFICATION.  To the extent required by Section
              162(m), before any Performance-Based Award under this Section 5.2
              is paid, the Committee must certify that the material terms of the
              Performance-Based Award were satisfied.

       5.2.4  TERMS AND CONDITIONS OF AWARDS.  The Committee will have
              discretion to determine the restrictions or other limitations of
              the individual Awards under this Section 5.2 (including the
              authority to reduce Awards, payouts or vesting or to pay no
              Awards, in its sole discretion, if the Committee preserves such
              authority at the time of grant by language to this effect in its
              authorizing resolutions or otherwise).

       5.2.5  STOCK PAYOUT FEATURES.  In lieu of cash payment of an Award, the
              Committee may require or allow all or a portion of the Award to be
              paid in the form of Shares, Restricted Shares, an Option, or
              another Award.

       5.2.6  ADJUSTMENTS FOR MATERIAL CHANGES.  Performance goals or other
              features of an Award under this Section 5.2 may provide that they
              (a) shall be adjusted to reflect a change in corporate
              capitalization, a corporate transaction (such as a reorganization,
              combination, separation, or merger) or a complete or partial
              corporate liquidation, or (b) shall be calculated either without
              regard for or to reflect any change in accounting policies or
              practices affecting the Company and/or the business criteria or
              performance goals or targets, or (c) shall be adjusted for any
              other circumstance or event, or (d) any combination of (a) through
              (c), but only to the extent in each case that such adjustment or
              determination in respect of Performance-Based Awards would be
              consistent with the requirements of Section 162(m) to qualify as
              performance-based compensation.

5.3    GRANTS OF STOCK BONUSES.  The Committee may grant a Stock Bonus to any
       Eligible Person to reward exceptional or special services, contributions
       or achievements in the manner and on such terms and conditions (including
       any restrictions on such Shares) as determined from time to time by the
       Committee.  The number of Shares so awarded will be determined by the
       Committee.  The Award may be granted independently or in lieu of a cash
       bonus.

                                       13

<PAGE>

5.4    DEFERRED PAYMENTS; STOCK UNITS.  The Committee may authorize for the
       benefit of any Eligible Person the deferral of any payment of cash or
       Shares that may otherwise become due or of cash otherwise payable under
       this Plan or otherwise, in the form of stock units payable in cash or
       Shares or by other means, and may provide for accretion thereof based
       upon such deferment, at the election or at the request of the
       Participant, subject to any other applicable terms of this Plan.  Such
       deferral will be subject to such further conditions, restrictions or
       requirements as the Committee may impose, subject to any then vested
       rights of Participants.

5.5    CASH BONUS AWARDS.

       5.5.1  PERFORMANCE GOALS.  The Committee may establish a program of
              annual incentive awards that are payable in cash to Eligible
              Persons based upon the extent to which performance goals are met
              during the performance period.  The performance goals may depend
              upon the performance of the Company on a consolidated, subsidiary
              division basis with reference to revenues, net earnings (before or
              after interest, taxes, depreciation, or amortization), cash flow,
              return on equity or on assets or net investment, cost containment
              or reduction, or achievement of strategic goals (or any
              combination of such factors).  In addition, the award may depend
              upon the Eligible Employee's individual performance.

5.6    ALTERNATIVE PAYMENTS.  In lieu of cash payment of an Award, the Committee
       may require or allow all or a portion of the Award to be paid or credited
       in the form of Shares, Restricted Shares, an Option or other Award.
                                          
                              6.     OTHER PROVISIONS

6.1    RIGHTS OF ELIGIBLE PERSONS, PARTICIPANTS AND BENEFICIARIES.

       6.1.1  EMPLOYMENT STATUS.  Status as an Eligible Person will not be
              construed as a commitment that any Award will be made under this
              Plan to an Eligible Person or to Eligible Persons generally.

       6.1.2  NO EMPLOYMENT CONTRACT.  Nothing contained in this Plan (or in any
              other documents related to this Plan or to any Award) will confer
              upon any Eligible Person or other Participant any right to
              continue in the employ or other service of the Company or the
              Manager, as the case may be, or constitute any management or other
              contract or agreement of employment or other service, nor will
              interfere in any way with the right of the Company or the Manager,
              as the case may be, to otherwise change a person's compensation or
              other benefits or to terminate the employment or service of such
              person, with or without cause.  This Plan or any related document
              will not, however, adversely affect any independent contractual
              right of such person without the Participant's consent.

       6.1.3  PLAN NOT FUNDED.  Awards payable under this Plan will be payable
              in Shares or from the general assets of the Corporation, and
              (except as provided in Section 1.4.3) no special or separate
              reserve, fund or deposit will be made to

                                       14

<PAGE>

              assure payment of such Awards.  No Participant, Beneficiary or 
              other person will have any right, title or interest in any fund 
              or in any specific asset (including Shares) of the Company by 
              reason of any Award hereunder.  Neither the provisions of this 
              Plan (or of any related documents), nor the creation or adoption 
              of this Plan, nor any action taken pursuant to the provisions of 
              this Plan will create, or be construed to create, a trust of any 
              kind or a fiduciary relationship between the Company and any 
              Participant, Beneficiary or other person.  To the extent that a 
              Participant, Beneficiary or other person acquires a right to 
              receive payment pursuant to any Award hereunder, such right will 
              be no greater than the right of any unsecured general creditor 
              of the Company.

6.2    ADJUSTMENTS; ACCELERATION.

6.2.1  ADJUSTMENTS.  The following provisions will apply in the case of (i) any
       extraordinary dividend or other extraordinary distribution occurs in
       respect of the Common Stock (whether in the form of cash, Common Stock,
       other securities, or other property), (ii) any reclassification,
       recapitalization, stock split (including a stock split in the form of a
       stock dividend), or reverse stock split, (iii) any reorganization,
       merger, combination, consolidation, split-up, spin-off, combination,
       material repurchase or exchange of Common Stock or other securities of
       the Corporation, (iv) any similar, unusual or extraordinary corporate
       transaction (or event in respect of the Common Stock) or (v) a sale of
       substantially all the assets of the Corporation as an entirety. In such
       event, the Committee will, in such manner and to such extent (if any) as
       it deems appropriate and equitable:

              (a)    (i)    proportionately adjust any or all of (1) the number
              and type of Shares (or other securities) that thereafter may be
              made the subject of Awards (including the specific maximum and
              numbers of shares set forth elsewhere in this Plan), (2) the
              number, amount and type of Shares (or other securities or
              property) subject to any or all outstanding Awards, (3) the grant,
              purchase, or exercise price of any or all outstanding Awards, (4)
              the securities, cash or other property deliverable upon exercise
              of any outstanding Awards, or (5) the performance standards
              appropriate to any outstanding Awards, or

                     (ii)   in the case of an extraordinary dividend or other
                            distribution, recapitalization, reclassification,
                            merger, reorganization, consolidation, combination,
                            sale of assets, split up, exchange, or spin off,
                            make provision for a cash payment or for the
                            substitution or exchange of any or all outstanding
                            Awards or the cash, securities or property
                            deliverable to the holder of any or all outstanding
                            Awards based upon the distribution or consideration
                            payable to holders of the Common Stock of the
                            Corporation upon or in respect of such event.

              (c)    In each case, with respect to Awards of Incentive Stock
                     Options, no such adjustment will be made that would cause
                     the Plan to violate

                                       15

<PAGE>

                     Section 424(a) of the Code or any successor provisions 
                     without the written consent of holders materially 
                     adversely affected thereby.

              (d)    In any of such events, the Committee may take such action
                     sufficiently prior to such event if necessary to permit the
                     Participant to realize the benefits intended to be conveyed
                     with respect to the underlying shares in the same manner as
                     is available to stockholders generally.

       6.2.2  ACCELERATION OF AWARDS UPON CHANGE IN CONTROL.  Unless prior to a
              Change in Control Event the Committee determines that, upon its
              occurrence, benefits under any or all Awards will not accelerate
              or determines that only certain or limited benefits under any or
              all Awards will be accelerated and the extent to which they will
              be accelerated, and/or establishes a different time in respect of
              such Event for such acceleration, then upon the occurrence of a
              Change in Control Event

              (a)    each Option and Stock Appreciation Right will become
                     immediately exercisable,

              (b)    Restricted Stock will immediately vest free of
                     restrictions, and

              (c)    each Performance Share Award will become payable to the
                     Participant.

However, in the case of a transaction intended to be accounted for as a pooling
of interests transaction, the Committee shall have no discretion with respect to
the foregoing acceleration of Awards.  The Committee may override the
limitations on acceleration in this Section 6.2.2 by express provision in the
Award Agreement and may accord any Eligible Person a right to refuse any
acceleration, whether pursuant to the Award Agreement or otherwise, in such
circumstances as the Committee may approve.

Any acceleration of Awards will comply with applicable legal requirements and,
if the circumstances require, may be deemed by the Committee to occur an instant
before the event.

       6.2.3  POSSIBLE EARLY TERMINATION OF ACCELERATED AWARDS. If any Option or
              other right to acquire Shares under this Plan (other than under
              Section 8) has been fully accelerated as required or permitted by
              Section 6.2.2 but is not exercised at or prior to (a) a
              dissolution of the Corporation, or (b) an event described in
              Section 6.2.1 that the Corporation does not survive, or (c) the
              consummation of an event described in Section 6.1 involving a
              Change of Control approved by the Board, the Option or right will
              terminate, subject to any provision that has been expressly made
              by the Committee through a plan of reorganization approved by the
              Board or otherwise for the survival, substitution, assumption,
              exchange or other settlement of the Option or right.

       6.2.4  GOLDEN PARACHUTE LIMITATIONS.  Unless otherwise specified in an
              Award Agreement or expressly approved by the Committee, no Award
              will be accelerated under this Plan to an extent or in a manner
              that would not be fully

                                       16

<PAGE>

              deductible by the Company for federal income tax purposes because 
              of Section 280G of the Code, nor will any payment hereunder be 
              accelerated if any portion of such accelerated payment would not 
              be deductible by the Company because of Section 280G of the Code. 
              If a holder would be entitled to benefits or payments hereunder 
              and under any other plan or program that would constitute 
              "parachute payments" as defined in Section 280G of the Code, then 
              the holder may by written notice to the Company designate the 
              order in which such parachute payments will be reduced or 
              modified so that the Company is not denied federal income tax 
              deductions for any "parachute payments" because of Section 280G 
              of the Code.

6.3    EFFECT OF TERMINATION OF EMPLOYMENT.  The Committee will establish in
       respect of each Award granted to an Eligible Person the effect of a
       termination of employment or service on the rights and benefits
       thereunder and in so doing may make distinctions based upon the cause of
       termination.

6.4    COMPLIANCE WITH LAWS.

       6.4.1  GENERAL.      This Plan, the granting, vesting and exercise of
              Awards under this Plan and the offer, issuance and delivery of
              Shares and/or the payment of money under this Plan or under Awards
              granted hereunder are subject to compliance with all applicable
              federal and state laws, rules and regulations (including but not
              limited to state and federal securities law, federal margin
              requirements) and to such approvals by any listing, regulatory or
              governmental authority as may, in the opinion of counsel for the
              Corporation, be necessary or advisable in connection therewith. 
              Any securities delivered under this Plan will be subject to such
              restrictions, and to any restrictions the Committee may require to
              preserve a pooling of interests under generally accepted
              accounting principles, and the person acquiring such securities
              will, if requested by the Corporation, provide such assurances and
              representations to the Corporation as the Corporation may deem
              necessary or desirable, to assure compliance with all applicable
              legal requirements.

       6.4.2  RESTRICTIONS ON TRANSFER.  If the offer or sale of any Shares
              under the Plan is not registered under the Securities Act, but an
              exemption is available which requires an investment representation
              or other representation, each Participant will be required to
              represent that the Shares are being acquired for investment, and
              not with a view to the sale or distribution thereof, and to make
              such other representations as are deemed necessary or appropriate
              in the opinion of the Committee and the Corporation's counsel. 
              Any determination by the Corporation and its counsel in connection
              with any other the matters set forth in this Section 6.4 will be
              conclusive and binding on all persons.  Stock certificates
              evidencing Shares acquired under the Plan pursuant to an
              unregistered transaction will bear the following restrictive
              legend and such other restrictive legends as are required or
              deemed advisable under the provisions of any applicable law:

                                       17

<PAGE>

                     "THE SALE OF THE SECURITIES REPRESENTED HEREBY HAVE NOT
                     BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                     AMENDED (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES WILL
                     BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS
                     IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL
                     FOR THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER
                     FOR SUCH TRANSFER TO COMPLY WITH THE ACT."

                            If, in the opinion of the Corporation and its
                            counsel, any legend placed on a stock certificate
                            representing Shares sold under the Plan is no longer
                            required, the holder of such certificate may
                            exchange such certificate for a certificate
                            representing the same number of Shares without such
                            legend.

6.5    TAX WITHHOLDING.

       6.5.1  PROVISION FOR TAX WITHHOLDING OFFSET.  Upon any exercise, vesting,
              or payment of any Award or upon the disposition of Shares acquired
              pursuant to the exercise of an Incentive Stock Option prior to
              satisfaction of the holding period requirements of Section 422 of
              the Code, the Company shall have the right at its option to (a)
              require the Participant (or Personal Representative or
              Beneficiary, as the case may be) to pay or provide for payment of
              the amount of any taxes which the Company may be required to
              withhold with respect to such Award event or payment or (b) deduct
              from any amount payable in cash the amount of any taxes which the
              Company may be required to withhold with respect to such cash
              payment.  In any case where a tax is required to be withheld in
              connection with the delivery of Shares under this Plan, the
              Committee may in its sole discretion (subject to Section 6.4)
              grant (either at the time of the Award or thereafter) to the
              Participant the right to elect, pursuant to such rules and subject
              to such conditions as the Committee may establish, to have the
              Corporation reduce the number of Shares to be delivered by (or
              otherwise reacquire) the appropriate number of Shares valued at
              their then Fair Market Value, to satisfy such withholding
              obligation.

       6.5.2  TAX LOANS.  If so provided in the Award Agreement, the Company
              may, to the extent permitted by law, authorize a loan to an
              Eligible Person in the amount of any taxes that the Company may be
              required to withhold with respect to Shares received (or disposed
              of, as the case may be) pursuant to a transaction described in
              Section 6.5.1.  Such a loan will be for a term, at a rate of
              interest and pursuant to such other terms and conditions as the
              Company, under applicable law may establish and such loan need not
              comply with the provisions of Section 1.8.

6.6    PLAN AMENDMENT, TERMINATION AND SUSPENSION.

       6.6.1  BOARD AUTHORIZATION.  The Board may, at any time, terminate or,
              from time to time, amend, modify or suspend this Plan, in whole or
              in part.  No Awards may be

                                       18

<PAGE>

              granted during any suspension of this Plan or after termination 
              of this Plan, but the Committee will retain jurisdiction as to 
              Awards then outstanding in accordance with the terms of this Plan.

       6.6.2  STOCKHOLDER APPROVAL.  To the extent then required under Sections
              422 and 424 of the Code or any other applicable law, or deemed
              necessary or advisable by the Board, any amendment to this Plan
              shall be subject to stockholder approval.

       6.6.3  AMENDMENTS TO AWARDS.  Without limiting any other express
              authority of the Committee under but subject to the express limits
              of this Plan, the Committee by agreement or resolution may waive
              conditions of or limitations on Awards to Participants that the
              Committee in the prior exercise of its discretion has imposed,
              without the consent of a Participant, and may make other changes
              to the terms and conditions of Awards that do not affect in any
              manner materially adverse to the Participant, the Participant's
              rights and benefits under an Award.

       6.6.4  LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS.  No amendment,
              suspension or termination of this Plan or change of or affecting
              any outstanding Award will, without written consent of the
              Participant, affect in any manner materially adverse to the
              Participant any rights or benefits of the Participant or
              obligations of the Corporation under any Award granted under this
              Plan prior to the effective date of such change.  Changes
              contemplated by Section 6.2 will not be deemed to constitute
              changes or amendments for purposes of this Section 6.6.

6.7    PRIVILEGES OF STOCK OWNERSHIP.  Except as otherwise expressly authorized
       by the Committee or this Plan, a Participant will not be entitled to any
       privilege of stock ownership as to any Shares not actually delivered to
       and held of record by the Participant.  No adjustment will be made for
       dividends or other rights as a stockholder for which a record date is
       prior to such date of delivery.

6.8    EFFECTIVE DATE OF THE PLAN.  This Plan is effective as of December 3,
       1997 (the "Effective Date").  The Plan was approved by the Corporation's
       stockholder(s) on October 17, 1997.

6.9    TERM OF THE PLAN.  No Award may be granted under this Plan more than ten
       years after the Effective Date (the "termination date").  Unless
       otherwise expressly provided in this Plan or in an applicable Award
       Agreement, any Award granted prior to the termination date may extend
       beyond such date, and all authority of the Committee with respect to
       Awards hereunder, including the authority to amend an Award, will
       continue during any suspension of this Plan and in respect of Awards
       outstanding on the termination date.

6.10   GOVERNING LAW/CONSTRUCTION/SEVERABILITY.

       6.10.1 CHOICE OF LAW.  This Plan, the Awards, all documents evidencing
              Awards and all other related documents will be governed by, and
              construed in accordance with the laws of the State of California.

                                       19


<PAGE>

       6.10.2 SEVERABILITY.  If a court of competent jurisdiction holds any
              provision invalid and unenforceable, the remaining provisions of
              this Plan will continue in effect.

       6.10.3 PLAN CONSTRUCTION.

              (a)    RULE 16B-3.  It is the intent of the Corporation that the
                     Awards hereunder satisfy and be interpreted in a manner
                     that, in the case of Participants who are or may be subject
                     to Section 16 of the Exchange Act, satisfies the applicable
                     requirements of Rule 16b-3 so that such persons (unless
                     they otherwise agree) will be entitled to the benefits of
                     Rule 16b-3 or other exemptive rules under Section 16 of the
                     Exchange Act in respect of those transactions and will not
                     be subjected to avoidable liability thereunder.  If any
                     provision of this Plan or of any Award would otherwise
                     frustrate or conflict with the intent expressed above, that
                     provision to the extent reasonable will be interpreted as
                     to avoid such conflict.  If the conflict remains
                     irreconcilable, the Committee may disregard the provision
                     if it concludes that to do so furthers the interest of the
                     Corporation, is fair to the affected Participant and is
                     consistent with the purposes of this Plan as to such
                     persons in the circumstances.

              (b)    SECTION 162(M).  It is the further intent of the Company
                     that, to the extent the Corporation or Awards under this
                     Plan may be or become subject to Section 162(m), Options or
                     SARs with an exercise or base price not less than Fair
                     Market Value on the date of grant and performance awards
                     under Section 5.2 of this Plan that are granted to or held
                     by a person subject to Section 162(m) of the Code will
                     qualify as performance-based compensation under
                     Section 162(m) of the Code, and this Plan will be
                     interpreted consistent with such intent.

6.11   CAPTIONS.  Captions and headings are given to the sections and
       subsections of this Plan solely as a convenience to facilitate reference.
       Such headings will not be deemed in any way material or relevant to the
       construction or interpretation of this Plan or any provision thereof.

6.12   EFFECT OF CHANGE OF SUBSIDIARY STATUS.  For purposes of this Plan and any
       Award hereunder, if an entity ceases to be a Subsidiary a termination of
       employment and service will be deemed to have occurred with respect to
       each Eligible Person in respect of such Subsidiary who does not continue
       as an Eligible Person in respect of another entity within the Company. 

6.13   NON-EXCLUSIVITY OF PLAN.  Nothing in this Plan will limit or be deemed to
       limit the authority of the Board or the Committee to grant awards or
       authorize any other compensation, with or without reference to the Common
       Stock, under any other plan or authority.


                                          20

<PAGE>
                                 7.  DEFINITIONS

"AWARD" means an award of any Option, Stock Appreciation Right, Restricted 
Stock, Stock Bonus, performance share award, stock unit, dividend equivalent 
or deferred payment right or other right or security that would constitute a 
"derivative security" under Rule 16a-1(c) of the Exchange Act, or any 
combination thereof, whether alternative or cumulative, authorized by and 
granted under this Plan.

"AWARD AGREEMENT" means any writing setting forth the terms of an Award that has
been authorized by the Committee.

"AWARD DATE" means the date upon which the Committee took the action granting an
Award or such later date as the Committee designates as the Award Date at the
time of the Award or, in the case of Awards under Section 8, the applicable
dates set forth therein.

"AWARD PERIOD" means the period beginning on an Award Date and ending on the
expiration date of such Award.

"BENEFICIARY" means the person, persons, trust or trusts designated by a
Participant or, in the absence of a designation, entitled by will or the laws of
descent and distribution, to receive the benefits specified in the Award
Agreement and under this Plan if the Participant dies, and means the
Participant's executor or administrator if no other Beneficiary is designated
and able to act under the circumstances.

"BOARD" means the Board of Directors of the Corporation.

"CHANGE IN CONTROL EVENT" means any of the following: 

              (a)    Approval by the stockholders of the Corporation of the
                     dissolution or liquidation of the Corporation;

              (b)    Approval by the stockholders of the Corporation of an
                     agreement to merge or consolidate, or otherwise reorganize,
                     with or into one or more entities that are not Subsidiaries
                     or other affiliates, as a result of which less than 50% of
                     the outstanding voting securities of the surviving or
                     resulting entity immediately after the reorganization are,
                     or will be, owned, directly or indirectly, by stockholders
                     of the Corporation immediately before such reorganization
                     (assuming for purposes of such determination that there is
                     no change in the record ownership of the Corporation's
                     securities from the record date for such approval until
                     such reorganization and that such record owners hold no
                     securities of the other parties to such reorganization),
                     but including in such determination any securities of the
                     other parties to such reorganization held by affiliates of
                     the Corporation);

              (c)    Approval by the stockholders of the Corporation of the sale
                     of substantially all of the Corporation's business and/or
                     assets as an entity to a person or entity that is not a
                     Subsidiary or other affiliate; or; 

                                       21


<PAGE>

              (d)    Any "person" (as such term is used in Sections 13(d) and
                     14(d) of the Exchange Act but excluding any person
                     described in and satisfying the conditions of Rule 
                     13d-1(b)(1) thereunder) becomes the beneficial owner (as
                     defined in Rule 13d-3 under the Exchange Act), directly or
                     indirectly, of securities of the Corporation representing
                     more than 50% of the combined voting power of the
                     Corporation's then outstanding securities entitled to then
                     vote generally in the election of directors of the
                     Corporation; or

              (e)    During any period not longer than two consecutive years,
                     individuals who at the beginning of such period constituted
                     the Board cease to constitute at least a majority thereof,
                     unless the election, or the nomination for election by the
                     Corporation's stockholders, of each new Board member was
                     approved by a vote of at least three-fourths of the Board
                     members then still in office who were Board members at the
                     beginning of such period (including for these purposes, new
                     members whose election or nomination was so approved).

"CODE" means the Internal Revenue Code of 1986, as amended from time to time.

"COMMISSION" means the Securities and Exchange Commission.

"COMMITTEE" means one or more committees appointed by the Board to administer
this Plan, each of which will be comprised of two or more directors meeting such
criteria as the Board may establish from time to time in order to satisfy any
applicable legal or regulatory requirements.

"COMMON STOCK" means the Common Stock of the Corporation and such other
securities or property as may become the subject of Awards, or become subject to
Awards, pursuant to an adjustment made under Section 6.2 of this Plan.

"COMPANY" means, collectively, the Corporation and its Subsidiaries.

"CORPORATION" means Apex Mortgage Capital, Inc., a Maryland corporation, and its
successors.

"ELIGIBLE EMPLOYEE" means an officer (whether or not a director) or employee of
the Company.

"ELIGIBLE PERSON" means an Eligible Employee, or any Other Eligible Person, as
determined by the Committee.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time
to time. 

"FAIR MARKET VALUE" on any date means (a) if the stock is listed or admitted to
trade on a national securities exchange, the closing price of the stock on the
Composite Tape, as published in the Western Edition of The Wall Street Journal,
of the principal national securities exchange on which the stock is so listed or
admitted to trade, on such date, or, if there is no trading of the stock on such
date, then the closing price of the stock as quoted on such Composite Tape on
the 

                                       22

<PAGE>

next preceding date on which there was trading in such shares; (b) if the 
stock is not listed or admitted to trade on a national securities exchange, 
the last price for the stock on such date, as furnished by the National 
Association of Securities Dealers, Inc. ("NASD") through the NASDAQ National 
Market Reporting System or a similar organization if the NASD is no longer 
reporting such information; (c) if the stock is not listed or admitted to 
trade on a national securities exchange and is not reported on the National 
Market Reporting System, the mean between the bid and asked price for the 
stock on such date, as furnished by the NASD or a similar organization; or 
(d) if the stock is not listed or admitted to trade on a national securities 
exchange, is not reported on the National Market Reporting System and if bid 
and asked prices for the stock are not furnished by the NASD or a similar 
organization, the value as established by the Committee at such time for 
purposes of this Plan.

"INCENTIVE STOCK OPTION" means an Option that is designated and intended as an
incentive stock option within the meaning of Section 422 of the Code, the award
of that contains such provisions (including but not limited to the receipt of
stockholder approval of this Plan, if the award is made prior to such approval)
and is made under such circumstances and to such persons as may be necessary to
comply with that section.

"INITIAL AWARDS" means the Options granted immediately prior to the 
effectiveness of the registration statement relating to the Corporation's 
initial public offering, which Options are granted to officers and employees 
of the Corporation and the Manager and which are exercisable for an aggregate 
of 300,000 shares of Common Stock.

"MANAGER" means TCW Investment Management Company.

"NONQUALIFIED STOCK OPTION" means an Option that is designated as a 
Nonqualified Stock Option and will include any Option intended as an 
Incentive Stock Option that fails to meet the applicable legal requirements 
thereof.  Any Option granted hereunder that is not designated as an incentive 
stock option will be deemed to be designated a nonqualified stock option 
under this Plan and not an incentive stock option under the Code.

"NON-EMPLOYEE DIRECTOR" means a member of the Board of Directors of the 
Corporation who is not an officer or employee of the Company.  For purposes 
of this Plan, the Chairman of the Board will be deemed an officer of the 
Company.

"OPTION" means an option to purchase Common Stock granted under this Plan.  
The Committee will designate any Option granted to an Eligible Person as a 
Nonqualified Stock Option or an Incentive Stock Option.

"OTHER ELIGIBLE PERSON" means any Non-Employee Director, the Manager, any 
director, officer or employee of the Manager, or any other individual 
consultant or advisor who renders or has rendered BONA FIDE services (other 
than services in connection with the offering or sale of 

                                       23

<PAGE>

securities of the Company in a capital raising transaction) to the Company. A 
non-employee providing BONA FIDE services to the Company may only be selected 
as an Other Eligible Person if such person's participation in this Plan would 
not adversely affect (a) the Corporation's eligibility to use Form S-8 or 
Form S-3 to register under the Securities Act the offering of shares issuable 
under this Plan by the Company or (b) the Corporation's compliance with any 
other applicable laws; PROVIDED, HOWEVER, in the case of clause (a) above, 
such person may be selected as an Other Eligible Person if the Committee 
determines that the offering and issuance of Shares to such person in the 
circumstances satisfies the requirements of any applicable exemption from 
registration under federal and state securities laws and regulations.

"PARTICIPANT" means an Eligible Person who has been granted an Award under this
Plan and a Non-Employee Director who has been received an Award under Section 8
of this Plan.

"PERFORMANCE SHARE AWARD" means an Award of a right to receive Shares under
Section 5.1, or to receive Shares or other compensation (including cash) under
Section 5.2, the issuance or payment of that is contingent upon, among other
conditions, the attainment of performance objectives specified by the Committee.

"PERSONAL REPRESENTATIVE" means the person or persons who, upon the disability
or incompetence of a Participant, has acquired on behalf of the Participant, by
legal proceeding or otherwise, the power to exercise the rights or receive
benefits under this Plan by virtue of having become the legal representative of
the Participant.

"PLAN" means this Apex Mortgage Capital, Inc. Amended and Restated 1997 Stock
Option Plan, as amended from time to time.

"QDRO" means a qualified domestic relations order.

"RESTRICTED SHARES" or "Restricted Stock" means Shares awarded to a Participant
under this Plan, subject to payment of such consideration, if any, and such
conditions on vesting (which may include, among others, the passage of time,
specified performance objectives or other factors) and such transfer and other
restrictions as are established in or pursuant to this Plan and the related
Award Agreement, for so long as such Shares remain unvested under the terms of
the applicable Award Agreement.

"RETIREMENT" means retirement with the consent of the Company or the Manager, as
the case may be, or, from active service as an employee or officer of the
Company or the Manager, as the case may be, on or after attaining age 55 with
ten or more years of service or age 65, or, in the case of a Non-Employee
Director, retirement or failure to stand for reelection, with the consent of the
Board of Directors, on or after age 55 with ten or more years of service, or in
any case after age 65.


                                       24

<PAGE>

"RULE 16B-3" means Rule 16b-3 as promulgated by the Commission pursuant to the
Exchange Act, as amended from time to time. 

"SECURITIES ACT" means the Securities Act of 1933, as amended from time to time.

"STOCK APPRECIATION RIGHT" or "SAR" means a right authorized under this Plan to
receive a number of Shares or an amount of cash, or a combination of Shares and
cash, the aggregate amount or value of which is determined by reference to a
change in the Fair Market Value of the Common Stock.

"STOCK BONUS" means an Award of Shares granted under this Plan for no
consideration other than past services and without restriction other than such
transfer or other restrictions as the Committee may deem advisable to assure
compliance with law.

"STOCK UNIT" means a bookkeeping entry which serves a unit of measurement
relative to a Share for purposes of determining the payment of a deferred
benefit or right under the Plan.

"SUBSIDIARY" means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.

"TOTAL DISABILITY" means a disability where Participant is unable to effectively
engage in the material activities required for Participant's position with the
Company or the Manager, as the case may be, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a period of 90
consecutive days or for shorter periods aggregating 180 days in any consecutive
12 month period.

                        8.   NON-EMPLOYEE DIRECTOR OPTIONS

8.1    PARTICIPATION.  Awards under this Section 8 will be made only to 
       Non-Employee Directors and will be evidenced by Award Agreements in the
       form adopted by the Committee.

8.2    OPTION GRANTS.

       8.2.1  TIME OF INITIAL AWARD. After approval of this Plan by the
              stockholder(s) of the Corporation, and upon the closing of the
              Corporation's initial public offering, each person who is then a
              Non-Employee Director will automatically be granted (without any
              action by the Board or Committee) a Non-qualified Stock Option
              (the Award Date of which will be the date of the closing of such
              initial public offering) to purchase 25,000 shares of Common Stock
              at the price that the Corporations Common Stock is offered in such
              initial public offering.


                                       25

<PAGE>

       8.2.2  SUBSEQUENT AUTOMATIC AWARDS.  If any person who is not then an
              officer or employee of the Company becomes a director of the
              Corporation, such person will automatically be granted (without
              any action by the Board or Committee) a Non-qualified Stock Option
              (the Award Date of which will be the date such person takes
              office) to purchase 25,000 Shares.

       8.2.3  SUBSEQUENT DISCRETIONARY AWARDS.  The Committee shall have the
              authority to grant additional Options to Non-Employee Directors
              from time to time; provided, however that no more than 50,000
              shares, subject to adjustment as contemplated by Section 6.2, in
              the aggregate, shall be subject to Options made to any one 
              Non-Employee Director under this Section 8.2 and provided further
              that any such discretionary Option shall be subject to 
              contemporaneous approval or ratification by a majority of the 
              members of the Board of Directors and a majority of the Directors
              who are not recipients of such grants.

8.3    OPTION PRICE.  The purchase price per share of the Common Stock covered
       by each Option granted pursuant to Section 8.2.2 or Section 8.2.3 will be
       100% of the Fair Market Value of the Common Stock on the Award Date.  The
       exercise price of any Option granted under this Section will be paid in
       full at the time of each purchase in cash or by check or in Shares valued
       at the Fair Market Value on the date of exercise of the Option, or partly
       in such shares and partly in cash, but any such shares used in payment
       must be owned by the Participant at least six months prior to the date of
       exercise.  Any notice and third party cashless exercise payment
       procedures authorized by the Committee with respect to Options under
       Section 2 may be utilized with respect to Options granted under Section
       8.2 unless the Committee or applicable law otherwise provide.

8.4    OPTION PERIOD AND EXERCISABILITY.  Each Option granted under this Section
       8 and all rights or obligations thereunder will expire on the day before
       the 10th anniversary of the Award Date and will be subject to earlier
       termination as provided below. Each Option granted under Section 8.2
       shall become exercisable no earlier than six months after the Award Date.
       Unless the Board or Committee otherwise provides in the applicable Award
       Agreement, an Option will vest as follows:  one-third on each of the
       first, second and third anniversaries of the date of grant.

8.5    TERMINATION OF DIRECTORSHIP.  If a Non-Employee Director's services as a
       member of the Board of Directors terminate by reason of death, Total
       Disability or Retirement, an Option granted pursuant to this Section 8
       held by such Participant will immediately become and will remain
       exercisable for nine months after the date of such termination or until
       the expiration of the stated term of such Option, whichever first occurs.
       If a Non-Employee Director's services as a member of the Board of
       Directors terminate for any other reason, any portion of an Option
       granted pursuant to this Section that is not then exercisable will
       terminate and any portion of such Option that is then exercisable may be
       exercised for six months after the date of such termination or until the
       expiration of the stated term whichever first occurs.

8.6    ADJUSTMENTS; ACCELERATIONS; TERMINATIONS.  Options granted under this
       Section 8 will be subject to adjustments, accelerations and terminations
       as provided in Section 6.2, but 


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<PAGE>

       only to the extent that in the case of a Change in Control Event such 
       effect and any Board or Committee action in respect thereof is effected
       pursuant to the terms of a reorganization agreement approved by 
       stockholders of the Corporation or is otherwise consistent with the 
       effect on Options held by persons other than executive officers or 
       directors of the Corporation (or, if there are none, consistent in 
       respect of the underlying shares with the effect on stockholders 
       generally).

8.7    ACCELERATION UPON A CHANGE IN CONTROL EVENT.  Upon the occurrence of a
       Change in Control Event and acceleration under Section 6.2.2, each Option
       granted under Section 8.2 hereof will become immediately exercisable in
       full.  To the extent that any Option granted under this Section 8 is not
       exercised prior to (a) a dissolution of the Corporation or (b) a merger
       or other corporate event that the Corporation does not survive, and no
       provision is (or consistent with the provisions of this Plan can be) made
       for the assumption, conversion, substitution or exchange of the Option,
       the Option will terminate upon the occurrence of such event.


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