Confidential Treatment is requested
                                             for portions of this document.

                              EMPLOYMENT AGREEMENT

     This  Employment  Agreement  ("Agreement")  is made and entered into by and
between  W. Don  Bell  ("Bell")  and  Bell  Microproducts,  Inc.,  a  California
corporation ("Company'), effective as of December 10, 1996.

                                   WITNESETH

     WHEREAS,  Bell has been  serving and  continues  to serve as the  Chairman,
President and Chief Executive Officer of Company; and

     WHEREAS,  the parties wish to continue Bell's employment with Company for a
period of at least three years from the date of this  Agreement  and wish to set
forth the terms and conditions of that employment relationship in writing;

     NOW,  THEREFORE,  in  consideration  of Bell's  continued  employment  with
Company, and other good and valuable consideration,  and in consideration of the
covenants  contained  herein,  the receipt and  sufficiency  of which are hereby
acknowledged, the parties do hereby agree and contract as follows:

     1. Term of  Employment.  Company  hereby agrees to employ Bell as Chairman,
President and Chief  Executive  Officer for the period  commencing with the date
set forth above and ending on December 31, 1999,  unless  Bell's  employment  is
terminated earlier pursuant to Paragraph 4 of this Agreement. After December 31,
1999,  Bell's  employment  with  Company  may be  continued  by  mutual  written
agreement of the parties.

     2. Duties. Bell accepts employment with Company as its Chairman,  President
and Chief Executive Officer.  Bell agrees to devote his full time, attention and
best  efforts to the  business  and affairs of Company.  Bell shall  perform all
duties  and  responsibilities   commensurate  with  his  position  as  Chairman,
President and Chief Executive Officer and shall follow the reasonable  direction
of the Board of Directors of the Company.  Company  agrees to nominate  Bell for
election to  Company's  Board of  Directors,  and Bell agrees to serve,  for any
period for which he is so elected,  without  additional  compensation  therefor.
Bell may serve on corporate,  civic or charitable boards or committees,  fulfill
speaking engagements and manage personal investments, so long as Company, in its
sole  discretion,  reasonably  determines that such activities do not interfere,
compete  with or  otherwise  pose a conflict  of  interest  with  respect to the
performance of Bell's duties and  responsibilities  under this  Agreement.  Bell
shall  comply with  Company's  policies and  procedures  as adopted from time to
time; provided, however, that to the extent any such policies and procedures are
inconsistent  with  this  Agreement,  the  provisions  of this  Agreement  shall
control.

                                      -1-

<PAGE>

                                            Confidential Treatment is requested
                                             for portions of this document.

     3. Compensation and Benefit. During the term of this Agreement,  Bell shall
be receiving the following compensation and benefits:

          a. Base Salary.  Bell shall  receive a minimum base salary of $375,000
     per year, less applicable  withholding,  payable monthly or more frequently
     in accordance with Company's customary payroll practices.  The Compensation
     Committee  of the  Company's  Board of Directors  shall review  Bell's base
     salary at least annually and may, in its sole discretion, increase the base
     salary under its normal compensation policies for executive officers.

          b. Annual Incentive  Compensation.  Bell shall  participate in any and
     all annual incentive  compensation plans,  including but not limited to the
     Management Incentive Program,  which may be established by the Compensation
     Committee of Company's Board of Directors for the Chief  Executive  Officer
     from time to time.  In no event  shall any  annual  incentive  compensation
     plans  established by the  Compensation  Committee for the Chief  Executive
     Officer  after the date set forth above be less  favorable  than the annual
     incentive  compensation plans currently  maintained for the Chief Executive
     Officer as of such date.

          c. EPS Enhancement Incentive.

          (i) Within  thirty  (30) days  following  the  issuance of the audited
     financial  statements  for the  1997  fiscal  year  and  each  fiscal  year
     thereafter until the termination of this Agreement,  Company shall pay Bell
     a lump-sum cash incentive  payment (the "EPS Enhancement  Incentive") equal
     to (i) $5,000 for each $0.01 of Company's annual net earnings per share (as
     hereinafter  defined) over and above [ * ] per share,  plus (ii) $3,000 for
     each $.01 of  Company's  annual  net  earnings  per  share (as  hereinafter
     defined) over and above [ * ] per share.

          (ii)  For  purposes  of this  Paragraph  3(c),  the term  "annual  net
     earnings  per  share" for any  fiscal  year  shall mean the net  profits of
     Company,  after the provision for income taxes, any extraordinary  items of
     profit or loss and the computation of any payments due under this Paragraph
     3(c),  expressed on a fully diluted  earnings per share basis (based on the
     weighted average number of shares of Company's Common Stock  outstanding or
     equivalent  thereto or otherwise treated as outstanding  during such annual
     fiscal period),  computed in accordance with generally accepted  accounting
     principles by Company's  independent  public accountants and as reported in
     Company's audited financial  statements for such fiscal year. The [ * ] and
     [ * ] per share  thresholds  stated herein shall be adjusted to reflect the
     effect of any stock  dividends on, or stock splits or reverse splits of, or
     recapitalizations,   reclassifications   or  other   similar   transactions
     affecting  Company's Common Stock which are declared or effected before the
     date of this Agreement in the same manner as such  dividends,  stock splits
     or transactions have been reflected in the annual net earnings per share in
     accordance with generally accepted



                                      -2-
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                                            Confidential Treatment is requested
                                             for portions of this document.

     accounting  principles  and as  reported  in  Company's  audited  financial
     statements,  and the $5,000 and $3,000 amounts shall be adjusted consistent
     with the goals of the EPS  Enhancement  Incentive and the amount that would
     otherwise be payable without such adjustment pursuant to Section 3(c).

          (iii) If, in any  fiscal  year,  the total  compensation  paid to Bell
     would result in a violation of the compensation  deduction limits contained
     in Section 162(m) of the Internal Revenue Code of 1986 (the "Code"), or any
     successor  provision,  and the regulations issued thereunder,  a portion of
     the EPS Enhancement  Incentive shall be credited to a deferred compensation
     account and shall become due and payable upon the effective  date of Bell's
     termination  of  employment  for any reason.  The  portion  credited to the
     deferred  compensation  account shall be the amount necessary to avoid such
     violation  of Code  Section  162(m).  All amounts  credited to the deferred
     compensation account shall be adjusted for interest,  compounded quarterly,
     at the prime  interest  rate quoted by  Citicorp,  N.A.  from time to time,
     beginning  with the date the deferred  compensation  account is established
     and  continuing  until all  amounts  have been  paid in full.  Upon  Bell's
     termination of employment, the balance of the deferred compensation account
     shall be paid in equal annual installments not to exceed $500,000 per year.
     The deferred  compensation account shall at all times be entirely unfunded.
     Neither  Bell nor his  successors  shall have any interest in the assets of
     Company  by reason of the right to  receive  the  amounts  credited  to the
     deferred  compensation  account,  and Bell  shall have only the rights of a
     general unsecured creditor with respect thereto.

          d. Long-Term Disability Insurance.  Company agrees to pay all premiums
     required for long-term disability insurance which shall provide Bell with a
     disability   benefit   equal  to  sixty   percent  (60%)  of  Bell's  total
     compensation  if, as the result of Bell's  incapacity  due to  physical  or
     mental illness, Bell is unable to perform his duties as President and Chief
     Executive Officer.  Company may, in its discretion,  provide such long-term
     disability insurance under its group policy.

          e. Business  Expenses.  Company will  reimburse  Bell for ordinary and
     necessary  travel  and other  out-of-pocket  expenses  incurred  by Bell in
     connection with the performance of his duties,  provided that Bell promptly
     submits to Company receipts verifying such expenses.

          f. Other Emp1oyee  Benefits.  Bell shall be eligible to participate in
     any and all other  employee  benefit plans and programs  offered by Company
     from time to time,  including  but not  limited  to, any  medical,  dental,
     short-term  disability and life insurance  coverage,  stock option plans or
     retirement  plans,  in  accordance  with the terms and  conditions of those
     benefit plans and programs and on a basis  consistent with that customarily
     provided to  Company's  executive  officers.  In  addition,  Company  shall
     continue to maintain all life insurance  policies currently in effect as of
     the effective date set forth above.


                                      -3-
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                                            Confidential Treatment is requested
                                             for portions of this document.

          g.  Vacation and Other  Absence.  Bell shall be entitled paid vacation
     each year in accordance  with Company's  then-current  vacation  policy for
     executive  officers.  The rules  relating to other  absences  from  regular
     duties for holidays,  sick or disability  leave,  leave of absence  without
     pay, or for other reasons,  shall be the same as those customarily provided
     to Company's executive officers.

     4. Terminition. Unless extended by mutual written agreement of the parties,
and except for the  provisions  hereof  which are  intended to survive for other
periods of time as specified herein, this Agreement shall terminate (a) upon the
expiration  date stated in  Paragraph 1 (i.e.,  December 31 , 1999);  (b) at any
time upon mutual written  agreement of the parties;  (c) immediately upon Bell's
death;  (d) by the Company,  immediately and without prior written  notice,  for
"cause" (as defined in Section 5(c) below); or (e) by Bell or by Company for any
reason not  otherwise  covered by clauses  (a), (b), (c) or (d) herein,  with at
least  thirty  (30)  days'  written  notice to the  other.  Except as  otherwise
provided in  Paragraph  5, upon the  termination  of Bell's  employment  for any
reason,  Bell shall be entitled to receive his base salary through his last date
of employment,  any annual  incentive  compensation  described in Paragraph 3(b)
which Bell may have  earned  through  his last date of  employment,  the amounts
credited to the deferred  compensation  account described in Paragraph 3(c), any
unreimbursed  business expenses incurred prior to such termination of employment
and such other  employee  benefits  to the extent  permitted  by the  applicable
policies or plan documents or as required by law.

     5. Severance Benefits.

          a. Termination  Without Cause or Involuntary  Termination.  If Company
     terminates  Bell's  employment   without  cause  or  in  the  event  of  an
     "involuntary  termination"  (as defined in Section  5(c) below) at any time
     during the term of this Agreement,  Bell shall be entitled to the following
     additional severance benefits:

          (i) Base Salary.  Company shall continue to pay Bell his  then-current
     base salary  through the  expiration  date stated in  Paragraph  1, or such
     later date as may have been mutually agreed to in writing by the parties.

          (ii) Benefits.  Company shall continue to provide, at no cost to Bell,
     medical, dental, short-term disability and life insurance benefits for Bell
     and his dependents  through the  expiration  date stated in Paragraph 1, or
     such later date as may have been mutually agreed to by the parties,  at the
     same level of coverage as was  provided  to Bell  immediately  prior to the
     termination  of his  employment,  and shall  continue  to pay all  premiums
     required  for the  long-term  disability  insurance  coverage  described in
     Paragraph 3(d) through the  expiration  date stated in Paragraph 1, or such
     later date as may have been mutually agreed to by the parties.


                                      -4-
<PAGE>

                                            Confidential Treatment is requested
                                             for portions of this document.

          Company may, in its discretion,  provide the benefits described herein
     under  the  Company's  group  plans or under  no less  favorable  insurance
     contracts or arrangements  secured by the Company.  For purposes of Title X
     of the Consolidated Budget  Reconciliation Act of 1985 ("COBRA"),  the date
     of the  "qualifying  event"  for  Bell  and  his  dependents  shall  be the
     expiration date stated in Paragraph 1. Company's obligations to provide the
     benefits  described  herein shall cease if Bell and his  dependents  become
     covered  under  another  employer's  group  medical,   dental,   short-term
     disability,  long-term disability or life insurance plans that provide Bell
     and his dependents with comparable benefits and levels of coverage.

          (iii) portion of EPS  Enhancement  Incentive for Current  Fiscal Year.
     Within thirty (30) days after the effective  date of Bell's  termination of
     employment, Bell shall receive a lump-sum cash payment for a portion of the
     EPS Enhancement Incentive which he could have earned for the fiscal year in
     which  his  employment  terminates.  Such  portion  shall  be  based on the
     cumulative  monthly earnings per share for such fiscal year through the end
     of the month coinciding with or immediately preceding the effective date of
     Bell's termination of employment as reported in Company's interim financial
     statements. For purposes of determining such portion of the EPS Enhancement
     Incentive, the [ * ] and [ * ] thresholds described in Paragraph 3(c) shall
     be pro rated for the number of months  counted in such  cumulative  monthly
     earnings per share,  rounded down to the nearest cent. Exhibit A sets forth
     an example of how the  payments  required  under this  Paragraph  5(a)(iii)
     shall be calculated, but such Exhibit A shall not, in any manner, limit the
     application of this Paragraph 5(a)(iii).

          (iv) Average Annual and EPS Enhancement Incentives. Within thirty (30)
     days after the effective date of Bell's  termination  of  employment,  Bell
     shall  receive a lump-sum  cash payment equal to three times the sum of (A)
     the monthly average of the EPS Enhancement Incentive described in Paragraph
     3(e) which Bell may have  earned for each  fiscal  year or portion  thereof
     during  the term of this  Agreement,  including  the  fiscal  year in which
     Bell's termination of employment occurs,  multiplied by twelve, and (B) the
     monthly  average of all other annual  incentive  compensation  described in
     Paragraph  3(b) which Bell may have  earned for each fiscal year or portion
     thereof  during the term of this  Agreement,  including  the fiscal year in
     which  Bell's  termination  of  employment  occurs,  multiplied  by twelve.
     Exhibit A sets  forth an example of how the  payments  required  under this
     Paragraph  5(a)(iv) shall be  calculated,  but such Exhibit A shall not, in
     any manner, limit the application of this Paragraph 5(a)(iv).

          (v)  Acceleration  of Stock Options.  Notwithstanding  anything in the
     Amended and Restated  1988 Stock Option Plan,  any  successor  plan, or any
     stock option  agreement to the contrary,  upon the effective date of Bell's
     termination  of  employment,  one hundred  percent  (100%) of the  unvested
     portion of any stock  option or  restricted  stock award held by Bell shall
     automatically be accelerated in full so as to become fully vested,  subject
     to the restrictions relating to "pooling-of-interests" accounting treatment



                                      -5-
<PAGE>

                                            Confidential Treatment is requested
                                             for portions of this document.

          contained in Section 3(a)(i)(3) of the Management  Retention Agreement
          entered  into by  Bell  and the  Company  on  December  31,  1996,  if
          applicable.

          b. Termination Upon Disability.  If Bell's  employment with Company is
     terminated  on account of  disability  at any time  during the term of this
     Agreement, Bell shall be entitled to the following additional benefits:

          (i) Benefits.  Company shall continue to provide,  at no cost to Bell,
     medical,  dental and life  insurance  benefits for Bell and his  dependents
     through the  expiration  date stated in  Paragraph 1, or such later date as
     may have been  mutually  agreed  to by the  parties,  at the same  level of
     coverage as was provided to Bell  immediately  prior to the  termination of
     his employment.

          Company may, in its discretion,  provide the benefits described herein
     under  the  Company's  group  plans or under  no less  favorable  insurance
     contracts or arrangements  secured by the Company.  For purposes of Title X
     of the Consolidated Budget  Reconciliation Act of 1985 ("COBRA"),  the date
     of the "qualifying  event" for Bell and his dependents  shall be the end of
     the  twenty-four  month  period  following  the  effective  date of  Bell's
     termination  of employment.  Company's  obligations to provide the benefits
     described  herein  shall cease if Bell and his  dependents  become  covered
     under another employer's group medical, dental or life insurance plans that
     provide  Bell and his  dependents  with  comparable  benefits and levels of
     coverage.

          (ii) Portion of EPS  Enhancement  Incentive  for Current  Fiscal Year.
     Within thirty (30) days after the effective  date of Bell's  termination of
     employment  on account of  disability,  Bell shall  receive a lump-sum cash
     payment for a portion of the EPS Enhancement  Incentive which he could have
     earned for the fiscal year in which his employment terminates. Such portion
     shall be based on the cumulative monthly earnings per share for such fiscal
     year through the end of the month coinciding with or immediately  preceding
     the effective  date of Bell's  termination  of  employment,  as reported in
     Company's  interim financial  statements.  For purposes of determining such
     portion of the EPS  Enhancement  Incentive,  the [ * ] and [ * ] thresholds
     described  in  Paragraph  3(e)  shall be pro rated for the number of months
     counted in such cumulative monthly earnings per share,  rounded down to the
     nearest cent.

          c. Definitions.

          (i) Cause. "Cause" shall mean (i) any act of personal dishonesty taken
     by Bell in connection with his duties and responsibilities as President and
     Chief  Executive  Officer and  intended to result in  substantial  personal
     enrichment of Bell,  (ii) Bell's  conviction of a felony or (iii) a willful
     act by Bell which  constitutes  gross  misconduct and which is injurious to
     the Company.

                                       -6-


<PAGE>

                                            Confidential Treatment is requested
                                             for portions of this document.

               (ii) Disability.  "Disability" shall have the same meaning as set
          forth in the long-term  disability  insurance  contract referred to in
          Paragraph 3(d).

               (iii) Involuntary  Termination.  "Involuntary  termination" shall
          mean:

                    (A) without Bell's express written consent,  the significant
               reduction  of  Bell's  duties,   authority  or  responsibilities,
               relative  to his duties,  authority  or  responsibilities   as in
               effect immediately prior to such reduction,  or the assignment to
               Bell of such reduced duties, authority or responsibilities;

                    (B) without Bell's express  written  consent,  a substantial
               reduction,  without good business reasons,  of the facilities and
               perquisites  (including  office space and location)  available to
               Bell immediately prior to such reduction;

                    (C) a  reduction  by  Company  in Bell's  base  salary as in
               effect immediately prior to such reduction;

                    (D) a material  reduction by Company in the kind or level of
               employee benefits,  including bonuses, to which Bell was entitled
               immediately  prior to such  reduction with the result that Bell's
               overall benefits package is significantly reduced;

                    (E) Bell's  relocation to a facility or a location more than
               thirty-five (35) miles from Bell's then present location, without
               Bell's express written consent;

                    (F) any  purported  relation of Bell by Company which is not
               effected  for   disability   or  for  cause,   or  any  purported
               termination for which the grounds relied upon are not valid;

                    (G) the failure of Company to obtain the  assumption of this
               Agreement by any successors contemplated in Paragraph 8 below; or

                    (H) any act or set of facts or  circumstances  which  would,
               under  California  law  or  statute   constitute  a  constructive
               termination of Bell.


     6. Covenant Not to Compete. In consideration of Bell's employment hereunder
and other good and valuable consideration, and in consideration of the covenants
confined herein,  the receipt and sufficiency of which are hereby  acknowledged,
all of  which  are  express  payments  for the  obligations  set  forth  in this
Paragraph 6, Bell agrees that, during his employment and for a period of two (2)
years  after  the  termination  of this  Agreement,  he will  not,  directly  or
indirectly, engage in (whether as an employee, consultant,  proprietor, partner,
director or  otherwise),  have any ownership  interest in, or participate in the
financing, operation,

                                      -7-
<PAGE>

                                            Confidential Treatment is requested
                                             for portions of this document.

management  or control of any firm,  corporation  or business that engages in or
intends to engage in business that is in direct  competition  with the Company's
principal  business (as defined and discussed in Company's  documents  fled with
the Securities Exchange Commission);  provided,  however, that nothing contained
herein shall prevent Bell from owning or  purchasing  securities of any business
entity whose securities are regularly traded on any national securities exchange
or in the  over-the-counter  market if such  ownership does not result in his or
his  affiliates'  owning directly or beneficially at any time five percent (50%)
of the voting securities of any corporation engaged in any business  competitive
to the business then carried on by Company.

     7.  Remedies.  The  restriction  contained in Paragraph 6 is necessary  for
Company's  protection,  and any breach  thereof will cause  Company  irreparable
damage for which there is no adequate  remedy at law.  Bell agrees that,  in the
event of such  breach,  Company  shall,  in addition to any other  remedy  which
Company may have at law or in equity,  be entitled  to seek such  equitable  and
injunctive  relief as may be available without the necessity of proving damages.
Company agrees that, in the event of a breach of this Agreement by Company, Bell
shall have all such remedies as may be available at law or in equity.

     8. Successors.

          a. Company's  Successors.  Any successor to Company (whether direct or
     indirect and whether by purchase,  merger,  consolidation,  liquidation  or
     otherwise) to all or substantially all of Company's  business and/or assets
     shall assume the  obligations  under this Agreement and agree  expressly to
     perform the obligations  under this Agreement in the same manner and to the
     same extent as Company would be required to perform such obligations in the
     absence of  succession.  For all purposes  under this  Agreement,  the term
     "Company"  shall include any successor to Company's  business and/or assets
     which executes and delivers the assumption  agreement  contemplated by this
     Paragraph  8(a) or which  becomes  bound by the terms of this  Agreement by
     operation of law.

          b.  Employee's  Successors.  The  terms of this  agreement  and all of
     Bell's  hereunder  shall inure to the benefit  of, and be  enforceable  by,
     Bell's  personal  or  legal  representatives,   executors,  administrators,
     successors, heirs, distributees, devisees and legatees.

     9.  Notice.  Notices  and all  other  communications  contemplated  by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of Bell, mailed notices shall
be addressed to him at the home address which he most recently  communicated  to
Company in writing. In the case of Company, mailed notices shall be addressed to
its corporate  headquarters,  and all notices shall be directed to the attention
of its Secretary.


                                      -8-
<PAGE>
                                            Confidential Treatment is requested
                                             for portions of this document.

     10.  Coordination of Agreements.  In the event of any conflict between this
Agreement  and the  Management  Retention  Agreement  entered  into by Bell  and
Company on November, 1996, the terms of this Agreement shall control.

     11. Miscellaneous Provisions.

          a. No Duty to  Mitigate.  Bell shall not be required  to mitigate  the
     amount of any payment  contemplated by this  Agreement,  nor shall any such
     payment be reduced by any  earnings  that Bell may  receive  from any other
     source.

          b. Amendment Waiver. No provision of this Agreement shall be modified,
     waived or discharged unless the modification, waiver or discharge is agreed
     to in writing  and signed by Bell and by an  authorized  officer of Company
     (other  than  Bell).  No  waiver by either  party of any  breach  of, or of
     compliance  with, any condition or provision of this Agreement by the other
     party shall be  considered a waiver of any other  condition or provision or
     of the same condition or provision at any other time.

          c. Whole Agreement.  No agreements,  representations or understandings
     (whether  oral or written  and whether  express or  implied)  which are not
     expressly  set forth in this  Agreement  have been made or entered  into by
     either  party with respect to the subject  matter  hereof.  This  Agreement
     supersedes  in their  entirety  any  prior or  contemporaneous  agreements,
     whether written,  oral, express or implied,  relating to the subject matter
     hereof.

          d.  Governing  Law. The  validity,  interpretation,  construction  and
     performance of this Agreement shall be governed by the laws of the State of
     California.

          e. Severability.  The invalidity or  unenforceability of any provision
     or  provisions  of  this  Agreement   shall  not  affect  the  validity  or
     enforceability  of any other provision  hereof,  which shall remain in full
     force and effect.

          f.  Withholding.  All payments made pursuant to this Agreement will be
     subject to the withholding of all applicable federal, state or local income
     and employment

          g. Counterparts.  This Agreement may be executed in counterparts, each
     of which  shall be  deemed  an  original,  but all of which  together  will
     constitute one and the same instrument.



                                      -9-
<PAGE>
                                            Confidential Treatment is requested
                                             for portions of this document.

     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the day
and year set forth above.

COMPANY:                               BELL MICROPRODUCTS, INC.

                                       /s/ Edward L. Gelbach
                                       ----------------------------------------

                                       Dated: 12/10/96
                                             ----------------------------------


BELL:
                                       /s/ W. Don Bell
                                       ----------------------------------------
                                       W. Don Bell

                                       Dated: 12/10/96
                                             ----------------------------------


                                      -10-
<PAGE>

                                            Confidential Treatment is requested
                                             for portions of this document.

                                   EXHIBIT A

     This  Exhibit A sets forth an example of how the  payments  required  under
Paragraphs  5(a)(iii) and 5(a)(iv)  should be calculated,  but shall not, in any
manner, limit the application of such provisions.

Example: Assume that Bell is terminated on June 30, 1997. Company's earnings per
share ("EPS") for FY 1997 are as follows:

     First Quarter               [ * ]
     Second Quarter              [ * ]
     Third Quarter               [ * ]
     Fourth Quarter              [ * ]

During FY 1997, Bell earned the following incentive bonuses:

     First Quarter               [ * ]
     Second Quarter              [ * ]

1. Paragraph 5(a)(iii) - EPS Enhancement Incentive for 1997.

     Cumulative Monthly EPS:       [ * ]

     Pro Rata Threshhold:          [ * ]

     EPS Enhancement
     Incentive for 1997:           [ * ]

2. Paragraph 5(a)(iv) - Average Annum and EPS Enhancement Incentives.

   (A)   EPS Enhancement Incentive: [ * ]

         Monthly Aveme EPS:         [ * ]

         Average Annual EPS:        [ * ]

         Three-Year Payout:         [ * ]


                                      A-1

<PAGE>

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                                             for portions of this document.

(B)   Other Incentive Bonuses:

      Monthly Average
      Inventive Bonus:             [ * ]

      Average Annual Bonus:        [ * ]

      Three-Year Payout:           [ * ]

Total Payout equals the sum of (A) and (B):    [ * ]


                                      A-2