<PAGE>





                          PLATINUM ENTERTAINMENT, INC.

                    1995 EMPLOYEE INCENTIVE COMPENSATION PLAN


                 AS AMENDED AND RESTATED EFFECTIVE JUNE 1, 1996




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<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE I

ESTABLISHMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-6
     1.1    PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-6

ARTICLE II

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-6
     2.1    "AFFILIATE". . . . . . . . . . . . . . . . . . . . . . . . . . . P-6
     2.2    "AGREEMENT" or "AWARD AGREEMENT" . . . . . . . . . . . . . . . . P-6
     2.3    "AWARD". . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-7
     2.4    "BENEFICIARY". . . . . . . . . . . . . . . . . . . . . . . . . . P-7
     2.5    "BOARD OF DIRECTORS" or "BOARD". . . . . . . . . . . . . . . . . P-7
     2.6    "CASH INCENTIVE AWARD" . . . . . . . . . . . . . . . . . . . . . P-7
     2.7    "CAUSE". . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-7
     2.8    "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE". . . . . . . . P-7
     2.9    "CODE" or "INTERNAL REVENUE CODE". . . . . . . . . . . . . . . . P-7
     2.10   "COMMISSION" . . . . . . . . . . . . . . . . . . . . . . . . . . P-7
     2.11   "COMMITTEE". . . . . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.12   "COMMON STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.13   "COMPANY". . . . . . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.14   "COVERED EMPLOYEE" . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.15   "DEFERRED STOCK" . . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.16   "DISABILITY" . . . . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.17   "DISINTERESTED PERSON" . . . . . . . . . . . . . . . . . . . . . P-8
     2.18   "DIVIDEND EQUIVALENT". . . . . . . . . . . . . . . . . . . . . . P-8
     2.19   "EFFECTIVE DATE" . . . . . . . . . . . . . . . . . . . . . . . . P-8
     2.20   "EXCHANGE ACT" . . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.21   "FAIR MARKET VALUE". . . . . . . . . . . . . . . . . . . . . . . P-9
     2.22   "GRANT DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.23   "INCENTIVE STOCK OPTION" . . . . . . . . . . . . . . . . . . . . P-9
     2.24   "NASDAQ" . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.25   "NON-EMPLOYEE DIRECTOR". . . . . . . . . . . . . . . . . . . . . P-9
     2.26   "NON-QUALIFIED STOCK OPTION" . . . . . . . . . . . . . . . . . . P-9
     2.27   "OPTION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.28   "OPTION PERIOD". . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.29   "OPTION PRICE" . . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.31   "PARTICIPANT". . . . . . . . . . . . . . . . . . . . . . . . . . P-9
     2.32   "PERFORMANCE AWARD". . . . . . . . . . . . . . . . . . . . . . .P-10
     2.33   "PLAN" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-10
     2.34   "REPRESENTATIVE" . . . . . . . . . . . . . . . . . . . . . . . .P-10
     2.35   "RESTRICTED STOCK" . . . . . . . . . . . . . . . . . . . . . . .P-10
     2.36   "RETIREMENT" . . . . . . . . . . . . . . . . . . . . . . . . . .P-10


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<PAGE>

                                                                            Page
                                                                            ----

     2.37   "RULE 16b-3" and "RULE 16a-1(c)(3)". . . . . . . . . . . . . . .P-10
     2.38   "SECURITIES ACT" . . . . . . . . . . . . . . . . . . . . . . . .P-10
     2.39   "STOCK APPRECIATION RIGHT" . . . . . . . . . . . . . . . . . . .P-10
     2.40   "STOCK OPTION" . . . . . . . . . . . . . . . . . . . . . . . . .P-11
     2.41   "TERMINATION OF EMPLOYMENT". . . . . . . . . . . . . . . . . . .P-11

ARTICLE III

ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-11
     3.1    COMMITTEE STRUCTURE AND AUTHORITY. . . . . . . . . . . . . . . .P-11

ARTICLE IV

STOCK SUBJECT TO PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . .P-14
     4.1    NUMBER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . .P-14
     4.2    RELEASE OF SHARES. . . . . . . . . . . . . . . . . . . . . . . .P-14
     4.3    RESTRICTIONS ON SHARES . . . . . . . . . . . . . . . . . . . . .P-14
     4.4    STOCKHOLDER RIGHTS . . . . . . . . . . . . . . . . . . . . . . .P-15
     4.5    BEST EFFORTS TO REGISTER . . . . . . . . . . . . . . . . . . . .P-15
     4.6    ANTI-DILUTION. . . . . . . . . . . . . . . . . . . . . . . . . .P-15

ARTICLE V

ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-16
     5.1    ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .P-16

ARTICLE VI

STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-16
     6.1    GRANT OF STOCK OPTIONS TO PARTICIPANTS WHO ARE NOT NON-EMPLOYEE
            DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . .P-16
     6.2    GRANT OF DIRECTOR OPTIONS. . . . . . . . . . . . . . . . . . . .P-17
     6.3    TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . .P-17
     6.4    TERMINATION BY REASON OF DEATH . . . . . . . . . . . . . . . . .P-20
     6.5    TERMINATION BY REASON OF DISABILITY. . . . . . . . . . . . . . .P-20
     6.6    OTHER TERMINATION. . . . . . . . . . . . . . . . . . . . . . . .P-20
     6.7    CASHING OUT OF OPTION. . . . . . . . . . . . . . . . . . . . . .P-21

ARTICLE VII

STOCK APPRECIATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . .P-21
     7.1    GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-21
     7.2    GRANT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-21
     7.3    TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . .P-22


                                       P-3

<PAGE>

                                                                            Page
                                                                            ----
ARTICLE VIII

RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-23
     8.1    GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-23
     8.2    AWARDS AND CERTIFICATES. . . . . . . . . . . . . . . . . . . . .P-24
     8.3    TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . .P-24

ARTICLE IX

DEFERRED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-25
     9.1    GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-25
     9.2    TERMS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . .P-25

ARTICLE X

OTHER AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-26
     10.1   BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. . . . . . . . . .P-27
     10.2   DIVIDEND EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . .P-27
     10.3   OTHER STOCK-BASED AWARDS . . . . . . . . . . . . . . . . . . . .P-27
     10.4   PERFORMANCE AWARDS . . . . . . . . . . . . . . . . . . . . . . .P-27

ARTICLE XI

PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN . . . . . . . . . . .P-30
     11.1   LIMITED TRANSFER DURING OFFERING . . . . . . . . . . . . . . . .P-31
     11.2   COMMITTEE DISCRETION . . . . . . . . . . . . . . . . . . . . . .P-31
     11.3   NO COMPANY OBLIGATION. . . . . . . . . . . . . . . . . . . . . .P-31

ARTICLE XII

CHANGE IN CONTROL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . .P-31
     12.1   IMPACT OF EVENT. . . . . . . . . . . . . . . . . . . . . . . . .P-31
     12.3   CHANGE IN CONTROL PRICE. . . . . . . . . . . . . . . . . . . . .P-33

ARTICLE XIII

MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-33
     13.1   AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . . . . . .P-33
     13.2   STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS . . . . .P-34
     13.3   FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS . . . . . . .P-35
     13.4   STATUS OF AWARDS UNDER CODE SECTION 162(M) . . . . . . . . . . .P-35
     13.5   UNFUNDED STATUS OF PLAN; LIMITS ON TRANSFERABILITY . . . . . . .P-35
     13.6   GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . .P-35
     13.7   MITIGATION OF EXCISE TAX . . . . . . . . . . . . . . . . . . . .P-37
     13.8   RIGHTS WITH RESPECT TO CONTINUANCE OF EMPLOYMENT . . . . . . . .P-38


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<PAGE>

                                                                            Page
                                                                            ----
     13.9   AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER
            CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .P-38
     13.10  PROCEDURE FOR ADOPTION . . . . . . . . . . . . . . . . . . . . .P-38
     13.11  PROCEDURE FOR WITHDRAWAL . . . . . . . . . . . . . . . . . . . .P-38
     13.12  DELAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-39
     13.13  HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . .P-39
     13.14  SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . .P-39
     13.15  SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . .P-39
     13.16  ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . .P-39


                                       P-5

<PAGE>

                          PLATINUM ENTERTAINMENT, INC.
                    1995 EMPLOYEE INCENTIVE COMPENSATION PLAN


                                    ARTICLE I

                                  ESTABLISHMENT

       1.1    PURPOSE.

       The Platinum Entertainment, Inc. 1995 Employee Incentive Compensation
Plan ("Plan") previously established by Platinum Entertainment, Inc. ("Company")
and amended and restated effective as of January 1, 1996 is hereby amended and
restated in its entirety, effective as of June 1, 1996.  The purpose of the Plan
is to promote the overall financial objectives of the Company and its
stockholders by motivating those persons selected to participate in the Plan to
achieve long-term growth in stockholder equity in the Company and by retaining
the association of those individuals who are instrumental in achieving this
growth.  The Plan is intended to qualify certain compensation awarded under the
Plan for tax deductibility under Section 162(m) of the Code (as defined herein)
to the extent deemed appropriate by the Committee (as defined herein).  The Plan
as amended and restated and the grant of awards thereunder, to the extent
affected by the amendment and restatement or granted after the effective date of
the amendment and restatement, are expressly conditioned upon the Plan's
approval by the stockholders of the Company.  If such approval is not obtained,
then this Plan and all Awards (as defined herein) to the extent affected by the
amendment and restatement or granted after the effective date of the amendment
and restatement hereunder shall be null and void AB INITIO.  The Plan as amended
and restated is adopted, subject to stockholder approval, effective as of June
1, 1996.


                                   ARTICLE II

                                   DEFINITIONS

       For purposes of the Plan, the following terms are defined as set forth
below:

       2.1    "AFFILIATE" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.

       2.2    "AGREEMENT" or "AWARD AGREEMENT" means, individually or
collectively, any agreement entered into pursuant to the Plan pursuant to which
an Award is granted to a Participant.


                                       P-6

<PAGE>

       2.3    "AWARD" means any Option, SAR, Restricted Stock, Deferred Stock,
Stock, Dividend Equivalent, Other Stock-Based Award, Performance Award or Cash
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.

       2.4    "BENEFICIARY" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted hereunder.  If, upon
a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.

       2.5    "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of
the Company.

       2.6    "CASH INCENTIVE AWARD" means a conditional right granted to a
Participant under Section 10.4(c) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified period.

       2.7    "CAUSE" shall mean, for purposes of whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or an Affiliate for "cause" as defined in such
agreement or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term "cause" or
a substantially equivalent term, then Cause shall mean (a) any act or failure to
act deemed to constitute cause under the Company's established practices,
policies or guidelines applicable to the Participant or (b) the Participant's
act or act of omission which constitutes gross misconduct with respect to the
Company or an Affiliate in any material respect, including, without limitation,
an act or act of omission of a criminal nature, the result of which is
detrimental to the interests of the Company or an Affiliate, or conduct, or the
omission of conduct, which constitutes a material breach of a duty the
Participant owes to the Company or an Affiliate.

       2.8    "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have the
meanings set forth in Sections 12.2 and 12.3, respectively.

       2.9    "CODE" or "INTERNAL REVENUE CODE" means the Internal Revenue Code
of 1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.

       2.10   "COMMISSION" means the Securities and Exchange Commission or any
successor agency.


                                       P-7

<PAGE>

       2.11   "COMMITTEE" means the person or persons appointed to administer
this Plan, as further described herein.

       2.12   "COMMON STOCK" means the shares of the regular voting Common
Stock, $.001 par value, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter or
the common stock of any successor to the Company which is designated for the
purpose of the Plan.

       2.13   "COMPANY" means Platinum Entertainment, Inc., a Delaware
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.

       2.14   "COVERED EMPLOYEE" means a Participant who is a "covered employee"
within the meaning of Section 162(m) of the Code.

       2.15   "DEFERRED STOCK" means a right, granted to a Participant under
Section 9.1 hereof, to receive Common Stock, cash or a combination thereof at
the end of a specified deferral period.

       2.16   "DISABILITY" means a mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self-inflicted injury or willfully self-
induced sickness; or (ii) an injury or disease contracted, suffered, or incurred
while participating in a criminal offense.  The determination of Disability
shall be made by the Committee.  The determination of Disability for purposes of
this Plan shall not be construed to be an admission of disability for any other
purpose.

       2.17   "DISINTERESTED PERSON" shall have the meaning set forth in Rule
16b-3, or any successor definition adopted by the Commission, and shall mean a
person who is also an "outside director" under Section 162(m) of the Code.

       2.18   "DIVIDEND EQUIVALENT" means a right, granted to a Participant
under Section 10.2, to receive cash, Common Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock.

       2.19   "EFFECTIVE DATE" means as to the Plan's amendment and restatement,
June 1, 1996.


                                       P-8

<PAGE>

       2.20   "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

       2.21   "FAIR MARKET VALUE" means the fair market value of Common Stock,
Awards, or other property as determined by the Committee or under procedures
established by the Committee.  Unless otherwise determined by the Committee and
in the event of grants of Directors Options under Section 6.2, the Fair Market
Value per share of Common Stock as of any given date shall be the closing sale
price per share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Common Stock is traded on the date
as of which such value is being determined or, if there is no sale on that date,
then on the last previous day on which a sale was reported.

       2.22   "GRANT DATE" means the date as of which an Award is granted
pursuant to the Plan.

       2.23   "INCENTIVE STOCK OPTION" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

       2.24   "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq
National Market.

       2.25 "NON-EMPLOYEE DIRECTOR" means each and any director who serves on
the Board and who is not an officer or employee of the Company or any of its
Affiliates.

       2.26   "NON-QUALIFIED STOCK OPTION" means an Option to purchase Common
Stock in the Company granted under the Plan, the taxation of which is pursuant
to Section 83 of the Code.

       2.27   "OPTION" means a right, granted to a Participant under Section 6.1
hereof, to purchase Common Stock or other Awards at a specified price during
specified time periods.

       2.28   "OPTION PERIOD" means the period during which an Option shall be
exercisable in accordance with the related Agreement and Article VI.

       2.29   "OPTION PRICE" means the price at which the Common Stock may be
purchased under an Option as provided in Section 6.3(b).

       2.30   "OTHER STOCK BASED AWARDS" means Awards granted to a Participant
under Section 10.3 hereof.

       2.31   "PARTICIPANT" means a person who satisfies the eligibility
conditions of Article V and to whom an Award has been granted by the Committee
under the Plan, and in the event a Representative is appointed for a Participant
or another person becomes a Representative, then the term "Participant" shall
mean such


                                       P-9

<PAGE>

Representative.  The term shall also include a trust for the benefit of the
Participant, a partnership the interest of which is held by or for the benefit
of the Participant, the Participant's parents, spouse or descendants, or a
custodian under a uniform gifts to minors act or similar statute for the benefit
of the Participant's descendants, to the extent permitted by the Committee and
not inconsistent with Rule 16b-3.  Notwithstanding the foregoing, the term
"Termination of Employment" shall mean the Termination of Employment of the
person to whom the Award was originally granted.

       2.32   "PERFORMANCE AWARD" means a right, granted to a Participant under
Section 10.4 hereof, to receive Awards based upon performance criteria specified
by the Committee.

       2.33   "PLAN" means the Platinum Entertainment, Inc. 1995 Employee
Incentive Compensation Plan, as herein set forth and as may be amended from time
to time.

       2.34   "REPRESENTATIVE" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been transferred with the permission of the
Committee; provided that only one of the foregoing shall be the Representative
at any point in time as determined under applicable law and recognized by the
Committee.

       2.35   "RESTRICTED STOCK" means Common Stock granted to a Participant
under Section 8.1 hereof, that is subject to certain restrictions and to a risk
of forfeiture.

       2.36   "RETIREMENT" means the Participant's Termination of Employment
after attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such a plan, or if
the Participant is not covered by such a plan, then age 65, or age 55 with the
accrual of 10 years of service.

       2.37   "RULE 16b-3"and "RULE 16a-1(c)(3)" mean Rule 16b-3 and Rule 16a-
1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

       2.38   "SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

       2.39   "STOCK APPRECIATION RIGHT" means a right granted under Article
VII.


                                      P-10

<PAGE>

       2.40   "STOCK OPTION" means a right, granted to a Participant under
Sections 6.1 or 6.2 hereof, to purchase Common Stock.

       2.41   "TERMINATION OF EMPLOYMENT" means the occurrence of any act or
event, whether pursuant to an employment agreement or otherwise, that actually
or effectively causes or results in the person's ceasing, for whatever reason,
to be an officer, independent contractor, director or employee of the Company or
of any Affiliate of the Company, or to be an officer, independent contractor,
director or employee of any entity that provides services to the Company or a
Affiliate of the Company, including, without limitation, death, Disability,
dismissal, severance at the election of the Participant, Retirement, or
severance as a result of the discontinuance, liquidation, sale or transfer by
the Company or its Affiliates of all businesses owned or operated by the Company
or its Affiliates.  With respect to any person who is not an employee with
respect to the Company or a Affiliate of the Company, the Agreement shall
establish what act or event shall constitute a Termination of Employment for
purposes of the Plan.  A transfer of employment from the Company to a Affiliate,
or from a Affiliate to the Company, will not be a Termination of Employment,
unless expressly determined by the Committee.  A Termination of Employment shall
occur for an employee who is employed by a Affiliate of the company if the
Affiliate shall cease to be a Affiliate and the Participant shall not
immediately thereafter become an employee of the Company or a Affiliate of the
Company.

       In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.


                                   ARTICLE III

                                 ADMINISTRATION

       3.1    COMMITTEE STRUCTURE AND AUTHORITY.  Prior to the date of the first
registration of an equity security of the Company under the Exchange Act (the
"Registration Date"), the Plan shall be administered by the Board of Directors.
From and after the Registration Date, the Plan shall be administered by the
Committee which shall be comprised of one or more persons.  The Committee shall
be the Compensation Committee of the Board of Directors, unless such committee
does not exist or the Board establishes or identifies another committee whose
purpose is the administration of this Plan; provided that only those members of
the Committee who participate in the decision relative to Awards under this Plan
shall be deemed to be the "Committee" for purposes of this Plan.  The Committee
shall be comprised of such number of Disinterested Persons as is required for
application of Rule 16b-3 and the deduction of compensation under Section 162(m)
of the Code.  In the absence of an appointment, the Board or the portion thereof
that is a Disinterested Person shall be the Committee.  A majority of the
Committee shall constitute a quorum at any meeting thereof (including by
telephone conference) and the acts of a majority of the members present, or acts
approved in writing by a majority of the entire Committee


                                      P-11

<PAGE>

without a meeting, shall be the acts of the Committee for purposes of this Plan.
The Committee may authorize any one or more of its members or an officer of the
Company to execute and deliver documents on behalf of the Committee.  A member
of the Committee shall not exercise any discretion respecting himself or herself
under the Plan.  The Board shall have the authority to remove, replace or fill
any vacancy of any member of the Committee upon notice to the Committee and the
affected member.  Any member of the Committee may resign upon notice to the
Board.  The Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it
determines.

       Among other things, the Committee shall have the authority, subject to
the terms of the Plan and the limitation of section (c)(2)(ii) of Rule 16b-3 so
that the Plan is described in that section:

              (a)    to select those persons to whom Awards may be granted from
       time to time;

              (b)    to determine whether and to what extent Awards or any
       combination thereof are to be granted hereunder;

              (c)    to determine the number of shares of Common Stock to be
       covered by each stock-based Award granted hereunder;

              (d)    to determine the terms and conditions of any Award granted
       hereunder (including, but not limited to, the Option Price, the Option
       Period, any exercise restriction or limitation and any exercise
       acceleration, forfeiture or waiver regarding any Award, any shares of
       Common Stock relating thereto, any performance criteria and the
       satisfaction of each criteria);

              (e)    to adjust the terms and conditions, at any time or from
       time to time, of any Award, subject to the limitations of Section 13.1;

              (f)    to determine to what extent and under what circumstances
       Common Stock and other amounts payable with respect to an Award shall be
       deferred;

              (g)    to determine under what circumstances an Award may be
       settled in cash or Common Stock;

              (h)    to provide for the forms of Agreements to be utilized in
       connection with the Plan;

              (i)    to determine whether a Participant has a Disability or a
       Retirement;

              (j)    to determine what securities law requirements are
       applicable to the Plan, Awards and the issuance of shares of Common Stock
       under the Plan and


                                      P-12

<PAGE>

       to require of a Participant that appropriate action be taken with respect
       to such requirements;

              (k)    to cancel, with the consent of the Participant or as
       otherwise provided in the Plan or an Agreement, outstanding Awards;

              (l)    to interpret and make final determinations with respect to
       the remaining number of shares of Common Stock available under this Plan;

              (m)    to require, as a condition of the exercise of an Award or
       the issuance or transfer of a certificate of Common Stock, the
       withholding from a Participant of the amount of any Federal, state or
       local taxes as may be necessary in order for the Company or any other
       employer to obtain a deduction or as may be otherwise required by law;

              (n)    to determine whether and with what effect a Participant has
       incurred a Termination of Employment;

              (o)    to determine whether the Company or any other person has a
       right or obligation to purchase Common Stock from a Participant and, if
       so, the terms and conditions on which such Common Stock is to be
       purchased;

              (p)    to determine the restrictions or limitations on the
       transfer of Common Stock;

              (q)    to determine whether an Award is to be adjusted, modified
       or purchased, or is to become fully exercisable, under the Plan or the
       terms of an Agreement;

              (r)    to determine the permissible methods of Award exercise and
       payment, including cashless exercise arrangements;

              (s)    to adopt, amend and rescind such rules and regulations as,
       in its opinion, may be advisable in the administration of the Plan; and

              (t)    to appoint and compensate agents, counsel, auditors or
       other specialists to aid it in the discharge of its duties.

       The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan.  The Committee's policies and
procedures may differ with respect to Awards granted at different times or to
different Participants.

       Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion, and in the case of any determination
relating


                                      P-13

<PAGE>

to an Award, may be made at the time of the grant of the Award or, unless in
contravention of any express term of the Plan or an Agreement, at any time
thereafter.  All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Participants.  No determination shall be subject to DE NOVO review if challenged
in court.


                                   ARTICLE IV

                              STOCK SUBJECT TO PLAN

       4.1    NUMBER OF SHARES.  Subject to the adjustment under Section 4.6,
the total number of shares of Common Stock reserved and available for
distribution pursuant to Awards under the Plan shall be 5,000,000 shares of
Common Stock authorized for issuance on the Effective Date (after taking into
account the 1-for-25 reverse stock split effected on March 4, 1996 (the "Reverse
Split").  In any one fiscal year, shares of Common Stock covered by Awards
issued during such year shall not exceed the greater of (i) 500,000 shares
(after taking into account the Reverse Split and subject to adjustment under
Section 4.6) and (ii) ten percent (10%) of the shares of Common Stock
outstanding at the date of the Annual Meeting of the Stockholders of the Company
held during such fiscal year.  Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

       4.2    RELEASE OF SHARES.  The Committee shall have full authority to
determine the number of shares of Common Stock available for Award, and in its
discretion may include (within limitation) as available for distribution any
shares of Common Stock that have ceased to be subject to an Award, any shares of
Common Stock subject to any Award that are forfeited, any Award that otherwise
terminates without issuance of shares of Common Stock being made to the
Participant, or any shares (whether or not restricted) of Common Stock that are
received by the Company in connection with the exercise of an Award, including
the satisfaction of any tax liability or the satisfaction of a tax withholding
obligation.  If any shares could not again be available for Options to a
particular Participant under applicable law, such shares shall be available
exclusively for Options to Participants who are not subject to such limitations.

       4.3    RESTRICTIONS ON SHARES.  Shares of Common Stock issued as or in
conjunction with an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in an Award Agreement.  The Company
shall not be required to issue or deliver any certificates for shares of Common
Stock, cash or other property prior to (i) the listing of such shares on any
stock exchange or NASDAQ (or other public market) on which the Common Stock may
then be listed (or regularly traded), (ii) the completion of any registration or
qualification of such shares under Federal or state law, or any ruling or
regulation of any government body which the Committee determines to be necessary
or advisable, and (iii) the satisfaction of any applicable withholding
obligation in order for the Company or an Affiliate to obtain


                                      P-14

<PAGE>

a deduction with respect to the exercise of an Award.  The Company may cause any
certificate for any share of Common Stock to be delivered to be properly marked
with a legend or other notation reflecting the limitations on transfer of such
Common Stock as provided in this Plan or as the Committee may otherwise require.
The Committee may require any person exercising an Award to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares of Common Stock in
compliance with applicable law or otherwise.  Fractional shares shall not be
delivered, but shall be rounded to the next lower whole number of shares.

       4.4    STOCKHOLDER RIGHTS.  No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Award until, after proper
exercise of the Award or other action required, such shares shall have been
recorded on the Company's official stockholder records as having been issued and
transferred.  Upon exercise of the Award or any portion thereof, the Company
will have thirty (30) days in which to issue the shares, and the Participant
will not be treated as a stockholder for any purpose whatsoever prior to such
issuance.  No adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date such shares are recorded as issued
and transferred in the Company's official stockholder records, except as
provided herein or in an Agreement.

       4.5    BEST EFFORTS TO REGISTER.  The Company will register under the
Securities Act the Common Stock delivered or deliverable pursuant to Awards on
Commission Form S-8 if available to the Company for this purpose (or any
successor or alternate form that is substantially similar to that form to the
extent available to effect such registration), in accordance with the rules and
regulations governing such forms, as soon after stockholder approval of the Plan
as the Committee, in its sole discretion, shall deem such registration
appropriate.  The Company will use its best efforts to cause the registration
statement to become effective and will file such supplements and amendments to
the registration statement as may be necessary to keep the registration
statement in effect until the earliest of (a) one year following the expiration
of the Option Period of the last Option outstanding, (b) the date the Company is
no longer a reporting company under the Exchange Act and (c) the date all
Participants have disposed of all shares delivered pursuant to any Award.

       4.6    ANTI-DILUTION.  In the event of any Company stock dividend, stock
split, reverse stock split, combination or exchange of shares, recapitalization
or other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off,
split-off or distribution to Company stockholders other than a normal cash
dividend), sale by the Company of all or a substantial portion of its assets
(measured on either a stand-alone or consolidated basis), reorganization, rights
offering, a partial or complete liquidation, or any other corporate transaction,
Company stock offering or event involving the Company and having an effect
similar to any of the foregoing, then the Committee shall adjust or substitute,
as the case may be, the number of shares of Common Stock available for Awards
under the Plan, the number of shares of Common Stock covered by outstanding
Awards, the maximum number of Awards available for grant to any


                                      P-15

<PAGE>

Participant for a stated period of time (including the maximum number of Stock
Appreciation Rights), the number of Director Options granted pursuant to Section
6.2, the exercise price per share of outstanding Awards, and performance
conditions and any other characteristics or terms of the Awards as the Committee
shall deem necessary or appropriate to reflect equitably the effects of such
changes to the Participants; provided, however, that the Committee may limit any
such adjustment so as to maintain the deductibility of the Awards under Section
162(m) of the Code and that any fractional shares resulting from such adjustment
shall be eliminated by rounding to the next lower whole number of shares with
appropriate payment for such fractional shares as shall reasonably be determined
by the Committee.


                                    ARTICLE V

                                   ELIGIBILITY

       5.1    ELIGIBILITY.  Except as herein provided, the persons who shall be
eligible to participate in the Plan and be granted Awards shall be those persons
who are directors, officers, employees and consultants of the Company or any
subsidiary of the Company, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its Subsidiaries.  Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be
granted Awards and shall determine the terms and conditions with respect
thereto.  In making any such selection and in determining the form of the Award
with respect to Participants, the Committee may give consideration to the
person's functions and responsibilities, the person's contributions to the
Company and its Subsidiaries, the value of the individual's service to the
Company and its Subsidiaries and such other factors deemed relevant by the
Committee.  The Committee may designate in writing any person who is not
eligible to participate in the Plan if such person would otherwise be eligible
to participate in this Plan (and members of the Committee, except as provided in
Section 6.2, are expressly excluded to the extent such persons are intended to
be Disinterested Persons).


                                   ARTICLE VI

                                  STOCK OPTIONS

       6.1    GRANT OF STOCK OPTIONS TO PARTICIPANTS WHO ARE NOT NON-EMPLOYEE
DIRECTORS.  The Committee shall have authority to grant Stock Options under the
Plan at any time or from time to time, to Participants who are not Non-Employee
Directors.  The grant of a Stock Option to such Participants shall occur as of
the date the Committee determines.  Stock Options to such Participants may be
granted alone or in addition to other Awards and may be either Incentive Stock
Options or Non-Qualified Stock Options.  An Option shall entitle such
Participant to receive shares of Common Stock upon exercise of such Option,
subject to the Participant's satisfaction


                                      P-16

<PAGE>

in full of any conditions, restrictions or limitations imposed in accordance
with the Plan or an Agreement (the terms and provisions of which may differ from
other Agreements), including, without limitation, payment of the Option Price.
During any fiscal year, and subject to the limitation set forth in Section 4.1,
Options to purchase no more than 500,000 shares of Common Stock (after taking
into account the Reverse Split, and subject to adjustment under Section 4.6)
shall be granted to any Participant.

       Each Option granted under this Plan shall be evidenced by an Agreement,
in a form approved by the Committee, which shall embody the terms and conditions
of such Option and which shall be subject to the express terms and conditions
set forth in the Plan.  Such Agreement shall become effective upon execution by
the Participant.  Only a person who is a common-law employee of the Company, any
parent corporation of the Company or a subsidiary (as such terms are defined in
Section 424 of the Code) on the date of grant shall be eligible to be granted an
Option which is intended to be and is an Incentive Stock Option.  To the extent
that any Stock Option is not designated as an Incentive Stock Option or even if
so designated does not qualify as an Incentive Stock Option, it shall constitute
a Non-Qualified Stock Option.  Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under
Section 422 of the Code or, without the consent of the Participant affected, to
disqualify any Incentive Stock Option under such Section 422.

       6.2    GRANT OF DIRECTOR OPTIONS.  On March 1, 1996, subject to
availability of shares of Common Stock under the Plan, each Non-Employee
Director who is still a Non-Employee Director on such date shall be granted an
option ("Director Option") to purchase 375,000 shares of Common Stock without
further action by the Board or the Committee.  Such Directors Options shall vest
in three equal increments on each of the first three anniversaries of the
closing of the initial public offering of the Company's Common Stock subject to
the Non-Employee Director continuing to be a Non-Employee Director on the
vesting date.  If the number of shares of Common Stock available to grant under
the Plan on the scheduled date of grant is insufficient to make all automatic
grants required to be made pursuant to the Plan on such date, then each Non-
Employee Director shall receive a Director Option to purchase a pro rata number
of the remaining shares of Common Stock available under the Plan; provided
further, however, that if such proration results in fractional shares of Common
Stock, then such Director Option shall be rounded down to the nearest number of
whole shares of Common Stock.  In all events, the price at which the Common
Stock may be purchased under the Director Option shall be the per share price to
the public as set forth in the Prospectus delivered in connection with the
initial public offering of the Company's Common Stock.  Each Director Option
granted under this Plan shall be evidenced by an Agreement, in a form approved
by the Committee, which shall embody the terms and conditions of such Director
Option and which shall be subject to the express terms and conditions set forth
in the Plan.  Such Agreement shall become effective upon execution by the Non-
Employee Director.


                                      P-17

<PAGE>

       6.3    TERMS AND CONDITIONS.  Stock Options shall be subject to such
terms and conditions as shall be determined by the Committee, including the
following:

              (a)    OPTION PERIOD.  The Option Period of each Stock Option
       shall be fixed by the Committee; provided that no Stock Option shall be
       exercisable more than ten (10) years after the date the Stock Option is
       granted.  In the case of an Incentive Stock Option granted to an
       individual who owns more than ten percent (10%) of the combined voting
       power of all classes of stock of the Company, a corporation which is a
       parent corporation of the Company or any subsidiary of the Company (each
       as defined in Section 424 of the Code), the Option Period shall not
       exceed five (5) years from the date of grant.  No Option which is
       intended to be an Incentive Stock Option shall be granted more than ten
       (10) years from the date the Plan is adopted by the Company or the date
       the Plan is approved by the stockholders of the Company, whichever is
       earlier.

              (b)    OPTION PRICE.  The Option Price per share of the Common
       Stock purchasable under an Option shall be determined by the Committee;
       provided, however, that the Option Price per share shall be not less than
       the Fair Market Value per share on the date the Option is granted.  If
       such Option is intended to qualify as an Incentive Stock Option and is
       granted to an individual who owns or who is deemed to own stock
       possessing more than ten percent (10%) of the combined voting power of
       all classes of stock of the Company, a corporation which is a parent
       corporation of the Company or any subsidiary of the Company (each as
       defined in Section 424 of the Code), the Option Price per share shall not
       be less than one hundred ten percent (110%) of such Fair Market Value per
       share.

              (c)    EXERCISABILITY.  Subject to Section 12.1, Stock Options
       shall be exercisable at such time or times and subject to such terms and
       conditions as shall be determined by the Committee.  If the Committee
       provides that any Stock Option is exercisable only in installments, the
       Committee may at any time waive such installment exercise provisions, in
       whole or in part.  In addition, the Committee may at any time accelerate
       the exercisability of any Stock Option.  If the Committee intends that an
       Option be an Incentive Stock Option, the Committee may, in its
       discretion, provide that the aggregate Fair Market Value (determined at
       the Grant Date) of the Common Stock as to which such Incentive Stock
       Option which is exercisable for the first time during any calendar year
       shall not exceed $100,000.

              (d)    METHOD OF EXERCISE.  Subject to the provisions of this
       Article VI, a Participant may exercise Stock Options, in whole or in
       part, at any time during the Option Period by the Participant's giving
       written notice of exercise on a form provided by the Committee (if
       available) to the Company specifying the number of shares of Common Stock
       subject to the Stock Option to be purchased.  Except when waived by the
       Committee, such notice shall be accompanied by payment in full of the
       purchase price by cash or check or such other form of payment as the
       Company may accept.  If approved by the



                                      P-18

<PAGE>

       Committee (including approval at the time of exercise), payment in full
       or in part may also be made (i) by delivering Common Stock already owned
       by the Participant having a total Fair Market Value on the date of such
       delivery equal to the Option Price; (ii) by the execution and delivery of
       a note or other evidence of indebtedness (and any security agreement
       thereunder) satisfactory to the Committee and permitted in accordance
       with Section 6.3(e); (iii) by authorizing the Company to retain shares of
       Common Stock which would otherwise be issuable upon exercise of the
       Option having a total Fair Market Value on the date of delivery equal to
       the Option Price; (iv) by the delivery of cash or the extension of credit
       by a broker-dealer to whom the Participant has submitted a notice of
       exercise or otherwise indicated an intent to exercise an Option (in
       accordance with Part 220, Chapter II, Title 12 of the Code of Federal
       Regulations, so-called "cashless" exercise); or (v) by any combination of
       the foregoing or by any other method permitted by the Committee.  If
       payment of the Option Price of a Stock Option is made in whole or in part
       in the form of Restricted Stock or Deferred Stock, the number of shares
       of Common Stock to be received upon such exercise that is equal to the
       number of shares of Restricted Stock or Deferred Stock used for payment
       of the Option Price shall be subject to the same forfeiture restrictions
       or deferral limitations to which such Restricted Stock or Deferred Stock
       was subject, unless otherwise determined by the Committee.  In the case
       of an Incentive Stock Option, the right to make a payment in the form of
       already owned shares of Common Stock of the same class as the Common
       Stock subject to the Stock Option may be authorized only at the time the
       Stock Option is granted.  No shares of Common Stock shall be issued until
       full payment therefor, as determined by the Committee, has been made.
       Subject to any forfeiture restrictions or deferral limitations that may
       apply if a Stock Option is exercised using Restricted Stock or Deferred
       Stock, a Participant shall have all of the rights of a stockholder of the
       Company holding the class of Common Stock that is subject to such Stock
       Option (including, if applicable, the right to vote the shares and the
       right to receive dividends), when the Participant has given written
       notice of exercise, has paid in full for such shares and such shares have
       been recorded on the Company's official stockholder records as having
       been issued or transferred.

              (e)    COMPANY LOAN OR GUARANTEE.  Upon the exercise of any Option
       and subject to the pertinent Agreement and the discretion of the
       Committee, the Company may at the request of the Participant:

                     (i)    lend to the Participant an amount equal to such
              portion of the Option Price as the Committee may determine; or

                     (ii)   guarantee a loan obtained by the Participant from a
              third-party for the purpose of tendering the Option Price.

       The terms and conditions of any loan or guarantee, including the term,
       interest rate and any security interest thereunder and whether the loan
       shall be with recourse, shall be determined by the Committee, except that
       no extension of


                                      P-19

<PAGE>

       credit or guarantee shall obligate the Company for an amount to exceed
       the lesser of the aggregate Fair Market Value per share of the Common
       Stock on the date of exercise, less the par value of the shares of Common
       Stock to be purchased upon the exercise of the Award, or the amount
       permitted under applicable laws or the regulations and rules of the
       Federal Reserve Board and any other governmental agency having
       jurisdiction.

              (f)    NON-TRANSFERABILITY OF OPTIONS.  Except as provided herein
       or in an Agreement and then only consistent with the intent that the
       Option be an Incentive Stock Option, no Stock Option or interest therein
       shall be transferable by the Participant other than by will or by the
       laws of descent and distribution or by a designation of beneficiary
       effective upon the death of the Participant, and all Stock Options shall
       be exercisable during the Participant's lifetime only by the Participant.
       If and to the extent transferability is permitted by Rule 16b-3 or does
       not result in liability to any Participant and except as otherwise
       provided herein or by an Agreement, every Option granted hereunder shall
       be freely transferable, but only if such transfer does not result in
       liability under Section 16 of the Exchange Act to the Participant or
       other Participants and is consistent with registration of the Option and
       sale of Common Stock on Form S-8 (or a successor form) or is consistent
       with the use of Form S-8 (or the Committee's waiver of such condition)
       and consistent with an Award's intended status as an Incentive Stock
       Option (as applicable).

       6.4    TERMINATION BY REASON OF DEATH.  Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of ninety
(90) days following the date of the appointment of a Representative (or such
other period or no period as the Committee may specify) or until the expiration
of the Option Period, whichever period is the shorter.

       6.5    TERMINATION BY REASON OF DISABILITY.  Unless otherwise provided in
an Agreement or determined by the Committee, if a Participant incurs a
Termination of Employment due to a Disability, any unexpired and unexercised
Stock Option held by such Participant shall thereafter be fully exercisable by
the Participant for the period of ninety (90) days (or such other period or no
period as the Committee may specify) immediately following the date of such
Termination of Employment or until the expiration of the Option Period,
whichever period is shorter, and the Participant's death at any time following
such Termination of Employment due to Disability shall not affect the foregoing.
In the event of Termination of Employment by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.

       6.6    OTHER TERMINATION.  Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
due to Retirement, or the Termination of Employment is involuntary on the part
of the


                                      P-20

<PAGE>

Participant (but is not due to death or Disability or with Cause), any Stock
Option held by such Participant shall thereupon terminate, except that such
Stock Option, to the extent then exercisable, may be exercised for the lesser of
the ninety (90) day period commencing with the date of such Termination of
Employment or until the expiration of the Option Period.  Unless otherwise
provided in an Agreement or determined by the Committee, if the Participant
incurs a Termination of Employment which is either (a) voluntary on the part of
the Participant (and is not due to Retirement) or (b) with Cause, the Option
shall terminate immediately.  Unless otherwise provided in an Agreement or
determined by the Committee, the death or Disability of a Participant after a
Termination of Employment otherwise provided herein shall not extend the time
permitted to exercise an Option.

       6.7    CASHING OUT OF OPTION.  On receipt of written notice of exercise,
the Committee may elect to cash out all or part of the portion of any Stock
Option with respect to which Option at least six months have elapsed since the
Grant Date (provided that such limitation shall not apply to an Option granted
to a Participant who has subsequently died) to be exercised by paying the
Participant an amount, in cash or Common Stock, equal to the excess of the Fair
Market Value of the Common Stock that is subject to the Option over the Option
Price times the number of shares of Common Stock subject to the Option on the
effective date of such cash-out.  Cash-outs relating to Options held by
Participants who are actually or potentially subject to Section 16(b) of the
Exchange Act shall comply with the "window period" provisions of Rule 16b-3, to
the extent applicable, and, in the case of cash-outs of Non-Qualified Stock
Options held by such Participants, the Committee may determine Fair Market Value
under the pricing rule set forth in Section 7.3(b).


                                   ARTICLE VII

                            STOCK APPRECIATION RIGHTS

       7.1    GENERAL.  The Committee shall have authority to grant Stock
Appreciation Rights under the Plan at any time or from time to time.  Subject to
the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).

       7.2    GRANT.  Stock Appreciation Rights may be granted in conjunction
with all or part of any Stock Option granted under the Plan, in which case the
exercise of the Stock Appreciation Right shall require the cancellation of a
corresponding portion of the Stock Option, and the exercise of a Stock Option
shall result in the cancellation of a corresponding portion of the Stock
Appreciation Right.  In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant of such Stock Option.  In
the case of an Incentive Stock Option, such rights may be granted only at the
time of grant of such Stock Option.  A Stock Appreciation Right


                                      P-21

<PAGE>

may also be granted on a stand-alone basis.  The grant of a Stock Appreciation
Right shall occur as of the date the Committee determines.  Each Stock
Appreciation Right granted under this Plan shall be evidenced by an Agreement,
which shall embody the terms and conditions of such Stock Appreciation Right and
which shall be subject to the terms and conditions set forth in this Plan.
During any fiscal year, and subject to the limitation set forth in Section 4.1,
Stock Appreciation Rights covering no more than 500,000 shares of Common Stock
(after taking into account the Reverse Split, and subject to adjustment under
Section 4.6) shall be granted to any Participant.

       7.3    TERMS AND CONDITIONS.  Stock Appreciation Rights shall be subject
to such terms and conditions as shall be determined by the Committee, including
the following:

              (a)    PERIOD AND EXERCISE.  The term of a Stock Appreciation
       Right shall be established by the Committee.  If granted in conjunction
       with a Stock Option, the Stock Appreciation Right shall have a term which
       is the same as the Option Period and shall be exercisable only at such
       time or times and to the extent the related Stock Options would be
       exercisable in accordance with the provisions of Article VI.  A Stock
       Appreciation Right which is granted on a stand-alone basis shall be for
       such period and shall be exercisable at such times and to the extent
       provided in an Agreement.  Stock Appreciation Rights shall be exercised
       by the Participant's giving written notice of exercise on a form provided
       by the Committee (if available) to the Company specifying the portion of
       the Stock Appreciation Right to be exercised.

              (b)    AMOUNT.  Upon the exercise of a Stock Appreciation Right
       granted in conjunction with a Stock Option, a Participant shall be
       entitled to receive an amount in cash, shares of Common Stock or both as
       determined by the Committee or as otherwise permitted in an Agreement
       equal in value to the excess of the Fair Market Value per share of Common
       Stock over the Option Price per share of Common Stock specified in the
       related Agreement multiplied by the number of shares in respect of which
       the Stock Appreciation Right is exercised.  In the case of a Stock
       Appreciation Right granted on a stand-alone basis, the Agreement shall
       specify the value to be used in lieu of the Option Price per share of
       Common Stock.  The aggregate Fair Market Value per share of the Common
       Stock shall be determined as of the date of exercise of such Stock
       Appreciation Right.

              (c)    SPECIAL RULES.  In the case of Stock Appreciation Rights
       relating to Stock Options held by Participants who are actually or
       potentially subject to Section 16(b) of the Exchange Act:

                     (i)    The Committee may require that such Stock
              Appreciation Rights be exercised only in accordance with the
              applicable "window period" provisions of Rule 16b-3;


                                      P-22

<PAGE>

                     (ii)   The Committee may provide that the amount to be paid
              upon exercise of such Stock Appreciation Rights (other than those
              relating to Incentive Stock Options) during a Rule 16b-3 "window
              period" shall be based on the highest mean sales price of the
              Common Stock on the principal exchange on which the Common Stock
              is traded, NASDAQ or other relevant market for determining value
              on any day during such "window period"; and

                     (iii)  No Stock Appreciation Right shall be exercisable
              during the first six months of its term, except that this
              limitation shall not apply in the event of death or Disability of
              the Participant prior to the expiration of the six-month period.

              (d)    NON-TRANSFERABILITY OF STOCK APPRECIATION RIGHTS.  Stock
       Appreciation Rights shall be transferable only when and to the extent
       that a Stock Option would be transferable under the Plan unless otherwise
       provided in an Agreement.

              (e)    TERMINATION.  A Stock Appreciation Right shall terminate at
       such time as a Stock Option would terminate under the Plan, unless
       otherwise provided in an Agreement.

              (f)    EFFECT ON SHARES UNDER THE PLAN.  Upon the exercise of a
       Stock Appreciation Right, the Stock Option or part thereof to which such
       Stock Appreciation Right is related shall be deemed to have been
       exercised for the purpose of the limitation set forth in Section 4.2 on
       the number of shares of Common Stock to be issued under the Plan, but
       only to the extent of the number of shares of Common Stock covered by the
       Stock Appreciation Right at the time of exercise based on the value of
       the Stock Appreciation Right at such time.

              (g)    INCENTIVE STOCK OPTION.  A Stock Appreciation Right granted
       in tandem with an Incentive Stock Option shall not be exercisable unless
       the Fair Market Value of the Common Stock on the date of exercise exceeds
       the Option Price.  In no event shall any amount paid pursuant to the
       Stock Appreciation Right exceed the difference between the Fair Market
       Value on the date of exercise and the Option Price.


                                  ARTICLE VIII

                                RESTRICTED STOCK

       8.1    GENERAL.  The Committee shall have authority to grant Restricted
Stock under the Plan at any time or from time to time.  Shares of Restricted
Stock may be awarded either alone or in addition to other Awards granted under
the Plan.  The Committee shall determine the persons to whom and the time or
times at which


                                      P-23

<PAGE>

grants of Restricted Stock will be awarded, the number of shares of Restricted
Stock to be awarded to any Participant, the time or times within which such
Awards may be subject to forfeiture and any other terms and conditions of the
Awards.  Each Award shall be confirmed by, and be subject to the terms of, an
Agreement.  The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals by the Participant or by the Company
or an Affiliate (including a division or department of the Company or an
Affiliate) for or within which the Participant is primarily employed or upon
such other factors or criteria as the Committee shall determine.  The provisions
of Restricted Stock Awards need not be the same with respect to any Participant.

       8.2    AWARDS AND CERTIFICATES.  Notwithstanding the limitations on
issuance of shares of Common Stock otherwise provided in the Plan, each
Participant receiving an Award of Restricted Stock shall be issued a certificate
in respect of such shares of Restricted Stock.  Such certificate shall be
registered in the name of such Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award as
determined by the Committee.  The Committee may require that the certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award of Restricted
Stock, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.

       8.3    TERMS AND CONDITIONS.  Shares of Restricted Stock shall be subject
to the following terms and conditions:

              (a)    LIMITATIONS ON TRANSFERABILITY.  Subject to the provisions
       of the Plan and the Agreement, during a period set by the Committee
       commencing with the date of such Award (the "Restriction Period"), the
       Participant shall not be permitted to sell, assign, transfer, pledge or
       otherwise encumber any interest in shares of Restricted Stock.

              (b)    RIGHTS.  Except as provided in Section 8.3(a), the
       Participant shall have, with respect to the shares of Restricted Stock,
       all of the rights of a stockholder of the Company holding the class of
       Common Stock that is the subject of the Restricted Stock, including, if
       applicable, the right to vote the shares and the right to receive any
       cash dividends.  Unless otherwise determined by the Committee and subject
       to the Plan, cash dividends on the class of Common Stock that is the
       subject of the Restricted Stock shall be automatically deferred and
       reinvested in additional Restricted Stock, and dividends on the class of
       Common Stock that is the subject of the Restricted Stock payable in
       Common Stock shall be paid in the form of Restricted Stock of the same
       class as the Common Stock on which such dividend was paid.

              (c)    ACCELERATION.  Based on service, performance by the
       Participant or by the Company or an Affiliate, including any division or
       department for which the Participant is employed, or such other factors
       or criteria as the Committee


                                      P-24

<PAGE>

       may determine, the Committee may provide for the lapse of restrictions in
       installments and may accelerate the vesting of all or any part of any
       Award and waive the restrictions for all or any part of such Award.

              (d)    FORFEITURE.  Unless otherwise provided in an Agreement or
       determined by the Committee, if the Participant incurs a Termination of
       Employment during the Restriction Period due to death or Disability, the
       restrictions shall lapse and the Participant shall be fully vested in the
       Restricted Stock.  Except to the extent otherwise provided in the
       applicable Agreement and the Plan, upon a Participant's Termination of
       Employment for any reason during the Restriction Period other than death
       or Disability, all shares of Restricted Stock still subject to
       restriction shall be forfeited by the Participant, except the Committee
       shall have the discretion to waive in whole or in part any or all
       remaining restrictions with respect to any or all of such Participant's
       shares of Restricted Stock.

              (e)    DELIVERY.  If and when the Restriction Period expires
       without a prior forfeiture of the Restricted Stock subject to such
       Restriction Period, unlegended certificates for such shares shall be
       delivered to the Participant.

              (f)    ELECTION.  A Participant may elect to further defer receipt
       of the Restricted Stock for a specified period or until a specified
       event, subject in each case to the Committee's approval and to such terms
       as are determined by the Committee.  Subject to any exceptions adopted by
       the Committee, such election must be made one (1) year prior to
       completion of the Restriction Period.

                                   ARTICLE IX

                                 DEFERRED STOCK

       9.1    GENERAL.  The Committee shall have authority to grant Deferred
Stock under the Plan at any time or from time to time.  Shares of Deferred Stock
may be awarded either alone or in addition to other Awards granted under the
Plan.  The Committee shall determine the persons to whom and the time or times
at which Deferred Stock will be awarded, the number of shares of Deferred Stock
to be awarded to any Participant, the duration of the period (the "Deferral
Period") prior to which the Common Stock will be delivered, and the conditions
under which receipt of the Common Stock will be deferred and any other terms and
conditions of the Awards.  Each Award shall be confirmed by, and be subject to
the terms of, an Agreement.  The Committee may condition the grant of Deferred
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate, including a division or department of the
Company or an Affiliate for or within which the Participant is primarily
employed, or upon such other factors or criteria as the Committee shall
determine.  The provisions of Deferred Stock Awards need not be the same with
respect to any Participant.


                                      P-25

<PAGE>

       9.2    TERMS AND CONDITIONS.  Deferred Stock Awards shall be subject to
the following terms and conditions:

              (a)    LIMITATIONS ON TRANSFERABILITY.  Subject to the provisions
       of the Plan and the Agreement, Deferred Stock Awards, or any interest
       therein, may not be sold, assigned, transferred, pledged or otherwise
       encumbered during the Deferral Period.  At the expiration of the Deferral
       Period (or Elective Deferral Period as defined in Section 9.2(e), where
       applicable), the Committee may elect to deliver Common Stock, cash equal
       to the Fair Market Value of such Common Stock or a combination of cash
       and Common Stock to the Participant for the shares covered by the
       Deferred Stock Award.

              (b)    RIGHTS.  Unless otherwise determined by the Committee and
       subject to the Plan, cash dividends on the Common Stock that is the
       subject of the Deferred Stock Award shall be automatically deferred and
       reinvested in additional Deferred Stock, and dividends on the Common
       Stock that is the subject of the Deferred Stock Award payable in Common
       Stock shall be paid in the form of Deferred Stock of the same class as
       the Common Stock on which such dividend was paid.

              (c)    ACCELERATION.  Based on service, performance by the
       Participant or by the Company or the Affiliate, including any division or
       department for which the Participant is employed, or such other factors
       or criteria as the Committee may determine, the Committee may provide for
       the lapse of deferral limitations in installments and may accelerate the
       vesting of all or any part of any Award and waive the deferral
       limitations for all or any part of such Award.

              (d)    FORFEITURE.  Unless otherwise provided in an Agreement or
       determined by the Committee, if the Participant incurs a Termination of
       Employment during the Deferral Period due to death or Disability, the
       restrictions shall lapse and the Participant shall be fully vested in the
       Deferred Stock.  Unless otherwise provided in an Agreement or determined
       by the Committee, upon a Participant's Termination of Employment for any
       reason during the Deferral Period other than death or Disability, the
       rights to the shares still covered by the Award shall be forfeited by the
       Participant, except the Committee shall have the discretion to waive in
       whole or in part any or all remaining deferral limitations with respect
       to any or all of such Participant's Deferred Stock.

              (e)    ELECTION.  A Participant may elect further to defer receipt
       of the Deferred Stock payable under an Award (or an installment of an
       Award) for a specified period or until a specified event (an "Elective
       Deferral Period"), subject in each case to the Committee's approval and
       to such terms as are determined by the Committee.  Subject to any
       exceptions adopted by the Committee, such election must be made at least
       one (1) year prior to completion of the Deferral Period for the Award (or
       of the applicable installment thereof).


                                      P-26

<PAGE>

                                    ARTICLE X

                                  OTHER AWARDS

       10.1   BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS.  The Committee is
authorized to grant Common Stock as a bonus, or to grant Common Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property
under other plans or compensatory arrangements, provided that, in the case of
Participants subject to Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisition of Common Stock or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Common Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee.

       10.2   DIVIDEND EQUIVALENTS.  The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Common Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Common Stock.  Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award.  The Committee may provide that Dividend Equivalents will be paid
or distributed when accrued or will be deemed to have been reinvested in
additional Common Stock, Awards, or other investment vehicles, and subject to
such restrictions on transferability and risks of forfeiture, as the Committee
may specify.

       10.3   OTHER STOCK-BASED AWARDS.  The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Common Stock, purchase rights for Common Stock,
Awards with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, and Awards valued by reference to the
book value of Common Stock or the value of securities of or the performance of
specified Subsidiaries.  The Committee shall determine the terms and conditions
of such Awards.  Common Stock delivered pursuant to an Award in the nature of a
purchase right granted under this Section 10.3 shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Common Stock, other Awards, or other
property, as the Committee shall determine.  Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to
this Section 10.3.

       10.4   PERFORMANCE AWARDS.

              (a)    PERFORMANCE CONDITIONS.  The right of a Participant to
       exercise or receive a grant or settlement of any Award, and its timing,
       may be subject to performance conditions specified by the Committee.  The
       Committee may use


                                      P-27

<PAGE>

       business criteria and other measures of performance it deems appropriate
       in establishing any performance conditions, and may exercise its
       discretion to reduce or increase the amounts payable under any Award
       subject to performance conditions, except as limited under Sections
       10.4(b) and 10.4(c) hereof in the case of a Performance Award intended to
       qualify under Code Section 162(m).

              (b)    PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES.
       If the Committee determines that a Performance Award to be granted to a
       person the Committee regards as likely to be a Covered Employee should
       qualify as "performance-based compensation" for purposes of Code
       Section 162(m), the grant and/or settlement of such Performance Award
       shall be contingent upon achievement of preestablished performance goals
       and other terms set forth in this Section 10.4(b).

                     (i)    PERFORMANCE GOALS GENERALLY.  The performance goals
              for such Performance Awards shall consist of one or more business
              criteria and a targeted level or levels of performance with
              respect to such criteria, as specified by the Committee consistent
              with this Section 10.4(b).  Performance goals shall be objective
              and shall otherwise meet the requirements of Code Section 162(m),
              including the requirement that the level or levels of performance
              targeted by the Committee result in the performance goals being
              "substantially uncertain."  The Committee may determine that more
              than one performance goal must be achieved as a condition to
              settlement of such Performance Awards.  Performance goals may
              differ for Performance Awards granted to any one Participant or to
              different Participants.

                     (ii)   BUSINESS CRITERIA.  One or more of the following
              business criteria for the Company, on a consolidated basis, and/or
              for specified Affiliates or business units of the Company (except
              with respect to the total stockholder return and earnings per
              share criteria), shall be used exclusively by the Committee in
              establishing performance goals for such Performance Awards:  (1)
              total stockholder return; (2) such total stockholder return as
              compared to total return (on a comparable basis) of a publicly
              available index such as, but not limited to, the Standard & Poor's
              500 or the Nasdaq-U.S. Index; (3) net income; (4) pre-tax
              earnings; (5) EBITDA; (6) pre-tax operating earnings after
              interest expense and before bonuses, service fees, and
              extraordinary or special items; (7) operating margin; (8) earnings
              per share; (9) return on equity; (10) return on capital; (11)
              return on investment; (12) operating income, before payment of
              executive bonuses; and (13) working capital.  The foregoing
              business criteria shall also be exclusively used in establishing
              performance goals for Cash Incentive Awards granted under
              Section 10.4(c) hereof.


                                      P-28

<PAGE>

                     (iii)  PERFORMANCE PERIOD: TIMING FOR ESTABLISHING
              PERFORMANCE GOALS.  Achievement of performance goals in respect of
              such Performance Awards shall be measured over such periods as may
              be specified by the Committee.  Performance goals shall be
              established on or before the dates that are required or permitted
              for "performance-based compensation" under Code Section 162(m).

                     (iv)   SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS.
              Settlement of Performance Awards may be in cash or Common Stock,
              or other Awards, or other property, in the discretion of the
              Committee.  The Committee may, in its discretion, reduce the
              amount of a settlement otherwise to be made in connection with
              such Performance Awards, but may not exercise discretion to
              increase any such amount payable in respect of a Performance Award
              subject to this Section 10.4(b).  The Committee shall specify the
              circumstances in which such Performance Awards shall be forfeited
              or paid in the event of a Termination of Employment or a Change in
              Control prior to the end of a performance period or settlement of
              Performance Awards, and other terms relating to such Performance
              Awards.

              (c)    CASH INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
       EMPLOYEES.  The Committee may grant Cash Incentive Awards to Participants
       including those designated by the Committee as likely to be Covered
       Employees, which Awards shall represent a conditional right to receive a
       payment in cash, unless otherwise determined by the Committee, after the
       end of a specified fiscal year or fiscal quarter or other period
       specified by the Committee, in accordance with this Section 10.6(c).
       With respect to any fiscal year, the maximum Cash Incentive Award payable
       to any Participant shall not exceed three percent (3.0%) of the Company's
       gross revenues for such fiscal year.

                     (i)    CASH INCENTIVE AWARD.  The Cash Incentive Award for
              Participants the Committee regards as likely to be regarded as
              Covered Employees shall be based on achievement of a performance
              goal or goals based on one or more of the business criteria set
              forth in Section 10.4(b), and may be based on such criteria for
              any other Participant.  The Committee may specify the amount of
              the individual Cash Incentive Award as a percentage of any such
              business criteria, a percentage thereof in excess of a threshold
              amount, or another amount which need not bear a strictly
              mathematical relationship to such relationship criteria.  The
              Committee may establish an Cash Incentive Award pool that includes
              Participants the Committee regards likely to be regarded as
              Covered Employees, which shall be an unfunded pool, for purposes
              of measuring Company performance in connection with Cash Incentive
              Awards.  The amount of the Cash Incentive Award pool shall be
              based upon the achievement of a performance goal or goals based on
              one or more of the business criteria set forth in Section 10.4(b)
              hereof in the given performance period, as specified by the
              Committee.  The


                                      P-29

<PAGE>

              Committee may specify the amount of the Cash Incentive Award pool
              as a percentage of any of such business criteria, a percentage
              thereof in excess of a threshold amount, or as another amount
              which need not bear a strictly mathematical relationship to such
              business criteria.

                     (ii)   POTENTIAL CASH INCENTIVE AWARDS.  Not later than the
              date required or permitted for "qualified performance-based
              compensation" under Code Section 162(m), the Committee shall
              determine the Participants who will potentially receive Cash
              Incentive Awards for the specified fiscal year, fiscal quarter or
              other period, either as individual Cash Incentive Awards or out of
              an Cash Incentive Award pool established by such date and the
              amount or method for determining the amount of the individual Cash
              Incentive Award or the amount of such Participant's portion of the
              Cash Incentive Award pool or the individual Cash Incentive Award.

                     (iii)  PAYOUT OF CASH INCENTIVE AWARDS.  After the end of
              the specified fiscal year, fiscal quarter or other period, as the
              case may be, the Committee shall determine the amount, if any, of
              potential individual Cash Incentive Award otherwise payable to a
              Participant, the Cash Incentive Award pool and the maximum amount
              of potential Cash Incentive Award payable to each Participant in
              the Cash Incentive Award pool.  The Committee may, in its
              discretion, determine that the amount payable to any Participant
              as a final Cash Incentive Award shall be increased or reduced from
              the amount of his or her potential Cash Incentive Award, including
              a determination to make no final Award whatsoever, but may not
              exercise discretion to increase any such amount in the case of an
              Cash Incentive Award intended to qualify under Code
              Section 162(m).  The Committee shall specify the circumstances in
              which an Cash Incentive Award shall be paid or forfeited in the
              event of Termination of Employment by the Participant or a Change
              in Control prior to the end of the period for measuring
              performance or the payout of such Cash Incentive Award, and other
              terms relating to such Cash Incentive Award in accordance with the
              Plan.  Upon the completion of the measuring period and the
              determination of the right to payment and the amount, the
              Committee shall direct the Committee to make payment.

              (d)    WRITTEN DETERMINATIONS.  All determinations by the
       Committee as to the establishment of performance goals and the potential
       Performance Awards or Cash Incentive Awards related to such performance
       goals and as to the achievement of performance goals relating to such
       Awards, the amount of any Cash Incentive Award pool and the amount of
       final Cash Incentive Awards, shall be made in writing in the case of any
       Award intended to qualify under Code Section 162(m).  The Committee may
       not delegate any responsibility relating to such Performance Awards or
       Cash Incentive Awards.


                                      P-30

<PAGE>

                                   ARTICLE XI

             PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN

       11.1   LIMITED TRANSFER DURING OFFERING.  In the event there is an
effective registration statement under the Securities Act pursuant to which
shares of Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Award.

       11.2   COMMITTEE DISCRETION.  The Committee may in its sole discretion
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Award (including the
purchase of any unexercised Awards which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company, upon such terms and
conditions as the Committee may determine and set forth in an Agreement.  The
provisions of this Article X shall be construed by the Committee in its sole
discretion, and shall be subject to such other terms and conditions as the
Committee may from time to time determine.  Notwithstanding any provision herein
to the contrary, the Company may upon determination by the Committee assign its
right to purchase shares of Common Stock under this Article X, whereupon the
assignee of such right shall have all the rights, duties and obligations of the
Company with respect to purchase of the shares of Common Stock.

       11.3   NO COMPANY OBLIGATION.  None of the Company, an Affiliate or the
Committee shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of, any material information regarding the Company
or any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company's purchase of Common Stock or an Award from
such holder in accordance with the terms hereof.


                                   ARTICLE XII

                          CHANGE IN CONTROL PROVISIONS

       12.1   IMPACT OF EVENT.  Notwithstanding any other provision of the Plan
to the contrary, unless otherwise provided in an Agreement, in the event of a
Change in Control (as defined in Section 12.2):

              (a)    Any Stock Appreciation Rights and Stock Options outstanding
       as of the date such Change in Control and not then exercisable shall
       become fully exercisable to the full extent of the original grant;


                                      P-31

<PAGE>

              (b)    The restrictions and deferral limitations applicable to any
       Restricted Stock, Deferred Stock or other Award shall lapse, and such
       Restricted Stock, Deferred Stock or other Award shall become free of all
       restrictions and become fully vested and transferable to the full extent
       of the original grant.

              (c)    The performance goals and other conditions with respect to
       any outstanding Performance Award or Cash Incentive Award shall be deemed
       to have been satisfied in full, and such Award shall be fully
       distributable, if and to the extent provided by the Committee in the
       Agreement relating to such Award or otherwise, notwithstanding that the
       Award may not be fully deductible to the Company under Section 162(m) of
       the Code.

              (d)    The Committee shall have full discretion, notwithstanding
       anything herein or in an Award Agreement to the contrary, to do any or
       all of the following with respect to an outstanding Award:

                     (1)    To cause any Award to be cancelled, provided notice
                            of at least 15 days thereof is provided before the
                            date of cancellation;

                     (2)    To provide that the securities of another entity be
                            substituted hereunder for the Common Stock and to
                            make equitable adjustment with respect thereto;

                     (3)    To grant the Participant by giving notice during a
                            pre-set period to surrender all or part of a stock-
                            based Award to the Company and to receive cash in an
                            amount equal to the amount by which the "Change in
                            Control Price" (as defined in Section 12.3) per
                            share of Common Stock on the date of such election
                            shall exceed the amount which the Participant must
                            pay to exercise the Award per share of Common Stock
                            under the Award (the "Spread") multiplied by the
                            number of shares of Common Stock granted under the
                            Award;

                     (4)    To require the assumption of the obligation of the
                            Company under the Plan subject to appropriate
                            adjustment; and

                     (5)    To take any other action the Committee determines to
                            take.

       12.2   DEFINITION OF CHANGE IN CONTROL.  For purposes of this Plan, a
"Change in Control" shall be deemed to have occurred if (a) any corporation,
person or other entity (other than the Company, a majority-owned subsidiary of
the Company or any of its subsidiaries, or an employee benefit plan (or related
trust) sponsored or maintained by the Company), including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes
the beneficial owner of stock representing more than the greater of (i) twenty-
five percent (25%) of the combined


                                      P-32

<PAGE>

voting power of the Company's then outstanding securities or (ii) the percentage
of the combined voting power of the Company's then outstanding securities which
equals (A) ten percent (10%) plus (B) the percentage of the combined voting
power of the Company's outstanding securities held by such corporation, person
or entity on the Effective Date; (b)(i) the stockholders of the Company approve
a definitive agreement to merge or consolidate the Company with or into another
corporation other than a majority-owned subsidiary of the Company, or to sell or
otherwise dispose of all or substantially all of the Company's assets, and (ii)
the persons who were the members of the Board of Directors of the Company prior
to such approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; (c) the stockholders of the
Company approve a plan of liquidation of the Company; or (d) within any period
of 24 consecutive months, persons who were members of the Board of Directors of
the Company immediately prior to such 24-month period, together with any persons
who were first elected as directors (other than as a result of any settlement of
a proxy or consent solicitation contest or any action taken to avoid such a
contest) during such 24-month period by or upon the recommendation of persons
who were members of the Board of Directors of the Company immediately prior to
such 24-month period and who constituted a majority of the Board of Directors of
the Company at the time of such election, cease to constitute a majority of the
Board.

       12.3   CHANGE IN CONTROL PRICE.  For purposes of the Plan, "Change in
Control Price" means the higher of (a) the highest reported sales price of a
share of Common Stock in any transaction reported on the principal exchange on
which such shares are listed or on NASDAQ during the 60-day period prior to and
including the date of a Change in Control or (b) if the Change in Control is the
result of a tender or exchange offer, merger, consolidation, liquidation or sale
of all or substantially all of the assets of the Company (in each case a
"Corporate Transaction"), the highest price per share of Common Stock paid in
such Corporate Transaction, except that, in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock Options, such price
shall be based only on the Fair Market Value of the Common Stock on the date any
such Incentive Stock Option or Stock Appreciation Right is exercised.  To the
extent that the consideration paid in any such Corporate Transaction consists
all or in part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
discretion of the Committee.


                                  ARTICLE XIII

                                  MISCELLANEOUS

       13.1   AMENDMENTS AND TERMINATION.  The Board may amend, alter or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a Participant
under a Stock Option, Stock Appreciation Right, Restricted Stock Award or
Deferred Stock Award theretofore granted without the Participant's consent,
except such an amendment (a)


                                      P-33

<PAGE>

made to avoid an expense charge to the Company or an Affiliate, (b) made to
cause the Plan to qualify for the exemption provided by Rule 16b-3 or (c) to
prevent the Plan from being disqualified from the exemption provided by Rule
16b-3.  In addition, no such amendment shall be made without the approval of the
Company's stockholders to the extent such approval is required by law or
agreement.  Notwithstanding the foregoing, the Plan may not be amended more than
once every six (6) months to change the Plan provisions listed in section
(c)(2)(ii)(A) of Rule 16b-3, other than to comport with changes in the Code or
Rule 16b-3.

       The Committee may amend the Plan at any time provided that (a) no
amendment shall impair the rights of any Participant under any Award theretofore
granted without the Participant's consent, (b) no amendment shall disqualify the
Plan from the exemption provided by Rule 16b-3, and (c) any amendment shall be
subject to the approval or rejection of the Board (d) an amendment may be made
to avoid an expense charge to the Company or an Affiliate.  Notwithstanding the
foregoing, the Plan may not be amended more than once every six (6) months to
change the Plan provisions listed in section (c)(2)(ii)(A) of Rule 16b-3, other
than to comport with changes in the Code or Rule 16b-3.

       The Committee may amend the terms of any Award or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without the Participant's consent or reduce an Option
Price, except such an amendment made to cause the Plan or Award to qualify for
the exemption provided by Rule 16b-3 or to avoid an expense charge to the
Company or an Affiliate.  The Committee's discretion to amend the Plan or
Agreement shall be limited to the Plan's constituting a plan described in
section (c)(2)(ii) of Rule 16b-3.

       Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.  Notwithstanding
anything in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interest accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest accounting
shall be available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interest accounting.

       13.2   STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.  Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary, or any business entity to be acquired by the Company or a
subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary.  Such additional, tandem, and substitute or exchange
Awards may be granted at any time.  If an Award is granted in substitution or
exchange for another Award or award, the


                                      P-34

<PAGE>

Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award.  In addition, Awards may be
granted in lieu of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any subsidiary, in which the Fair Market
Value of Common Stock subject to the Award is equivalent in value to the cash
compensation, or in which the exercise price, grant price or purchase price of
the Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Common Stock minus the value of the cash
compensation surrendered.

       13.3   FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS.  Subject to
the terms of the Plan and any applicable Agreement, payments to be made by the
Company or an Affiliate upon the exercise of an Award or settlement of an Award
may be made in such forms as the Committee shall determine, including, without
limitation, cash, Common Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis.  The
settlement of any Award may be accelerated, and cash paid in lieu of Common
Stock in connection with such settlement, in the discretion of the Committee or
upon occurrence of one or more specified events (in addition to a Change in
Control).  Installment or deferred payments may be required by the Committee
(subject to Section 13.1 of the Plan) or permitted at the election of the
Participant.  Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the granting or crediting of Dividend Equivalents in respect of installment
or deferred payments denominated in Common Stock.

       13.4   STATUS OF AWARDS UNDER CODE SECTION 162(M).  It is the intent of
the Company that Awards granted to persons who are Covered Employees within the
meaning of Code Section 162(m) shall constitute "qualified performance-based
compensation" satisfying the requirements of Code Section 162(m).  Accordingly,
the provisions of the Plan shall be interpreted in a manner consistent with Code
Section 162(m).  If any provision of the Plan or any agreement relating to such
an Award does not comply or is inconsistent with the requirements of Code
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.

       13.5   UNFUNDED STATUS OF PLAN; LIMITS ON TRANSFERABILITY.  It is
intended that the Plan be an "unfunded" plan for incentive and deferred
compensation.  The Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or make payments; provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of the Plan.  Unless otherwise provided in this Plan
or in an Agreement, no Award shall be subject to the claims of Participant's
creditors and no Award may be transferred, assigned, alienated or encumbered in
any way other than by will or the laws of descent and distribution or to a
Representative upon the death of the Participant.

       13.6   GENERAL PROVISIONS.


                                      P-35

<PAGE>

              (a)    REPRESENTATION.  The Committee may require each person
       purchasing or receiving shares pursuant to an Award to represent to and
       agree with the Company in writing that such person is acquiring the
       shares without a view to the distribution thereof.  The certificates for
       such shares may include any legend which the Committee deems appropriate
       to reflect any restrictions on transfer.

              (b)    NO ADDITIONAL OBLIGATION.  Nothing contained in the Plan
       shall prevent the Company or an Affiliate from adopting other or
       additional compensation arrangements for its employees.

              (c)    WITHHOLDING.  No later than the date as of which an amount
       first becomes includible in the gross income of the Participant for
       Federal income tax purposes with respect to any Award, the Participant
       shall pay to the Company (or other entity identified by the Committee),
       or make arrangements satisfactory to the Company or other entity
       identified by the Committee regarding the payment of, any Federal, state,
       local or foreign taxes of any kind required by law to be withheld with
       respect to such amount required in order for the Company or an Affiliate
       to obtain a current deduction.  Unless otherwise determined by the
       Committee, withholding obligations may be settled with Common Stock,
       including Common Stock that is part of the Award that gives rise to the
       withholding requirement provided that any applicable requirements under
       Section 16 of the Exchange Act are satisfied.  The obligations of the
       Company under this Plan shall be conditional on such payment or
       arrangements, and the Company and its Affiliates shall, to the extent
       permitted by law, have the right to deduct any such taxes from any
       payment otherwise due to the Participant.  If the Participant disposes of
       shares of Common Stock acquired pursuant to an Incentive Stock Option in
       any transaction considered to be a disqualifying transaction under the
       Code, the Participant must give written notice of such transfer and the
       Company shall have the right to deduct any taxes required by law to be
       withheld from any amounts otherwise payable to the Participant.  Unless
       otherwise determined by the Committee, withholding obligations may be
       settled with Common Stock, including Common Stock that is part of the
       Award that gives rise to the withholding requirement, provided that any
       applicable requirements under Section 16 of the Exchange Act are
       satisfied.  The obligations of the Company under the Plan shall be
       conditional on such payment or arrangements, and the Company and its
       Affiliates shall, to the extent permitted by law, have the right to
       deduct any such taxes from any payment otherwise due to the Participant.

              (d)    REINVESTMENT.  The reinvestment of dividends in additional
       Deferred or Restricted Stock at the time of any dividend payment shall be
       permissible only if sufficient shares of Common Stock are available under
       the Plan for such reinvestment (taking into account then outstanding
       Options and other Awards).



                                      P-36

<PAGE>

              (e)    REPRESENTATION.  The Committee shall establish such
       procedures as it deems appropriate for a Participant to designate a
       Representative to whom any amounts payable in the event of the
       Participant's death are to be paid.

              (f)    CONTROLLING LAW.  The Plan and all Awards made and actions
       taken thereunder shall be governed by and construed in accordance with
       the laws of the State of Illinois (other than its law respecting choice
       of law) except to the extent the General Corporation Law of the State of
       Delaware would be mandatorily applicable.  The Plan shall be construed to
       comply with all applicable law and to avoid liability to the Company, an
       Affiliate or a Participant, including, without limitation, liability
       under Section 16(b) of the Exchange Act.

              (g)    OFFSET.  Any amounts owed to the Company or an Affiliate by
       the Participant of whatever nature may be offset by the Company from the
       value of any shares of Common Stock, cash or other thing of value under
       this Plan or an Agreement to be transferred to the Participant, and no
       shares of Common Stock, cash or other thing of value under this Plan or
       an Agreement shall be transferred unless and until all disputes between
       the Company and the Participant have been fully and finally resolved and
       the Participant has waived all claims to such against the Company or an
       Affiliate.

              (h)    FAIL SAFE.  With respect to persons subject to Section 16
       of the Exchange Act, transactions under this Plan are intended to comply
       with all applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3), as
       applicable.  To the extent any provision of the Plan or action by the
       Committee fails to so comply, it shall be deemed null and void, to the
       extent permitted by law and deemed advisable by the Committee.  Moreover,
       in the event the Plan does not include a provision required by Rule 16b-3
       or Rule 16a-1(c)(3) to be stated herein, such provision (other than one
       relating to eligibility requirements or the price and amount of Awards)
       shall be deemed to be incorporated by reference into the Plan with
       respect to Participants subject to Section 16.

              (i)    The grant of an Award shall in no way affect the right of
       the Company to adjust, reclassify, reorganize or otherwise change its
       capital or business structure or to merge, consolidation, dissolve,
       liquidate or sell or transfer all or any part of its business or assets.

       13.7   MITIGATION OF EXCISE TAX.  If any payment or right accruing to a
Participant under this Plan (without the application of this Section 13.7),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments"), would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under the Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights


                                      P-37

<PAGE>

or payments under this Plan is to apply shall be made by the Committee in good
faith after consultation with the Participant, and such determination shall be
conclusive and binding on the Participant.  The Participant shall cooperate in
good faith with the Committee in making such determination and providing the
necessary information for this purpose.  The foregoing provisions of this
Section 13.7 shall apply with respect to any person only if, after reduction for
any applicable Federal excise tax imposed by Section 4999 of the Code and
Federal income tax imposed by the Code, the Total Payments accruing to such
person would be less than the amount of the Total Payments as reduced, if
applicable, under the foregoing provisions of the Plan and after reduction for
only Federal income taxes.

       13.8   RIGHTS WITH RESPECT TO CONTINUANCE OF EMPLOYMENT.  Nothing
contained herein shall be deemed to alter the relationship between the Company
or an Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship.  Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant.  The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract.  The Company or
an Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan.  There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant's employment or service as existed
prior to the individual's becoming a Participant in this Plan.

       13.9   AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER CORPORATIONS.
Awards (including cash in respect of fractional shares) may be granted under the
Plan from time to time in substitution for awards held by employees, directors
or service providers of other corporations who are about to become officers,
directors or employees of the Company or an Affiliate as the result of a merger
or consolidation of the employing corporation with the Company or an Affiliate,
or the acquisition by the Company or an Affiliate of the assets of the employing
corporation, or the acquisition by the Company or Affiliate of the stock of the
employing corporation, as the result of which it becomes a designated employer
under the Plan.  The terms and conditions of the Awards so granted may vary from
the terms and conditions set forth in this Plan at the time of such grant as the
majority of the members of the Committee may deem appropriate to conform, in
whole or in part, to the provisions of the awards in substitution for which they
are granted.

       13.10  PROCEDURE FOR ADOPTION.  Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the board resolution.

       13.11  PROCEDURE FOR WITHDRAWAL.  Any Affiliate which has adopted the
Plan may, by resolution of the board of directors of such Affiliate, with the
consent


                                      P-38

<PAGE>

of the Board of Directors and subject to such conditions as may be imposed by
the Board of Directors, terminate its adoption of the Plan.

       13.12  DELAY.  If at the time a Participant incurs a Termination of
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period, or the period for exercise of a Stock Appreciation Right as provided in
the Agreement, whichever is shorter.  The Company shall have the right to
suspend or delay any time period described in the Plan or an Agreement if the
Committee shall determine that the action may constitute a violation of any law
or result in liability under any law to the Company, an Affiliate or a
stockholder of the Company until such time as the action required or permitted
shall not constitute a violation of law or result in liability to the Company,
an Affiliate or a stockholder of the Company.  The Committee shall have the
discretion to suspend the application of the provisions of the Plan required
solely to comply with Rule 16b-3 if the Committee shall determine that Rule 16b-
3 does not apply to the Plan.

       13.13  HEADINGS.  The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.

       13.14  SEVERABILITY.  If any provision of this Plan shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as
if such invalid or unenforceable provision were omitted.

       13.15  SUCCESSORS AND ASSIGNS.  This Plan shall inure to the benefit of
and be binding upon each successor and assign of the Company.  All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.

       13.16  ENTIRE AGREEMENT.  This Plan and the Agreement constitute the
entire agreement with respect to the subject matter hereof and thereof, provided
that


                                      P-39

<PAGE>

in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of this Plan shall control.

       Executed this ____ day of __________, 19___, effective June 1, 1996.


                                          PLATINUM ENTERTAINMENT, INC.



                                          By:   /s/ Steven Devick
                                              -----------------------------


                                      P-40