EMERGING COMMUNICATIONS, INC.
                  1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN


     1. Purposes.

     The purposes of the 1999 Long Term Incentive and Share Award Plan are to
advance the interests of Emerging Communications, Inc., a Delaware corporation,
and its shareholders by providing a means to attract, retain and motivate
employees and directors of the Company upon whose judgment, initiative and
efforts the continued success, growth and development of the Company is
dependent.

     2. Definitions.

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

     (a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board or the Committee as a participating
employer under the Plan; provided that the Company owns, directly or indirectly,
at least 20% of the combined voting power of all classes of stock of such entity
or at least 20% of the ownership interests in such entity.

     (b) "Award" means any Option, SAR, Restricted Share, Restricted Share Unit,
Performance Share, Performance Unit, Dividend Equivalent or Other Share-Based
Award granted to an Eligible Person under the Plan.

     (c) "Award Agreement" means any written agreement, contract or other
instrument or document evidencing an Award.

     (d) "Beneficiary" means the person, persons, trust or trusts which have
been designated by an Eligible Person in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under this Plan upon the death of such Eligible Person, or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

     (e) "Board" means the Board of Directors of the Company.

     (f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.

     (g) "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan;
provided, however, that the Committee shall consist of two or more directors of
the Company, each of whom is a "non-employee director" within the meaning of
Rule 16b-3 under the Exchange Act, to the extent applicable.

     (h) "Company" means Emerging Communications, Inc., a corporation organized
under the laws of Delaware, or any successor corporation.

     (i) "Director" means a member of the Board who is not an employee of the
Company, a Subsidiary or an Affiliate.

     (j) "Dividend Equivalent" means a right, granted under Section 5(g), to
receive cash, Shares or other property equal in value to dividends paid with
respect to a specified number of Shares.


<PAGE>
                                      -2-


Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award, and may be paid currently or on a deferred basis.

     (k) "Eligible Person" means (i) an employee of the Company, a Subsidiary or
an Affiliate, including any director who is an employee, who is responsible for
or contributes to the management, growth and/or profitability of the business of
the Company, its Subsidiaries or Affiliates or (ii) a Director.

     (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and regulations thereunder.

     (m) "Fair Market Value" means, with respect to Shares or other property,
the fair market value of such Shares or other property determined by such
methods or procedures as shall be established from time to time by the
Committee. If the Shares are listed on any established stock exchange or a
national market system, unless otherwise determined by the Committee in good
faith, the Fair Market Value of Shares shall mean the mean between the high and
low selling prices per Share on the immediately preceding date (or, if the
Shares were not traded on that day, the next preceding day that the Shares were
traded) on the principal exchange on which the Shares are traded, as such prices
are officially quoted on such exchange.

     (n) "ISO" means any option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.

     (o) "NQSO" means any Option that is not an ISO.

     (p) "Option" means a right, granted under Section 5(b), to purchase one or
more Shares.

     (q) "Other Share-Based Award" means a right, granted under Section 5(h),
that relates to or is valued by reference to Shares.

     (r) "Participant" means an Eligible Person who has been granted an Award
under the Plan.

     (s) "Performance Share" means a performance share granted under Section
5(f).

     (t) "Performance Unit" means a performance unit granted under Section 5(f).

     (u) "Plan" means this 1997 Long Term Incentive and Share Award Plan.

     (v) "Restricted Shares" means an Award of Shares under Section 5(d) that
may be subject to certain restrictions and to a risk of forfeiture.

     (w) "Restricted Share Unit" means a right, granted under Section 5(e), to
receive Shares or cash at the end of a specified deferral period.

     (x) "Rule 16b-3" means Rule 16b-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.

     (y) "SAR" or "Share Appreciation Right" means the right, granted under
Section 5(c), to be paid an amount measured by the difference between the
exercise price of the right and the Fair


<PAGE>
                                      -3-


Market Value of Shares on the date of exercise of the right, with payment to be
made in cash, Shares or property as specified in the Award or determined by the
Committee.

     (z) "Shares" means common stock, $.01 par value per share, of the Company.

     (aa) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns shares
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

     3. Administration.

     (a) Authority of the Committee. Except as provided in Section 7, the Plan
shall be administered by the Committee, and the Committee shall have full and
final authority to take the following actions, in each case subject to and
consistent with the provisions of the Plan:

          (i) to select Eligible Persons to whom Awards may be granted;

          (ii) to designate Affiliates;

          (iii) to determine the type or types of Awards to be granted to each
     Eligible Person;

          (iv) to determine the type and number of Awards to be granted, the
     number of Shares to which an Award may relate, the terms and conditions of
     any Award granted under the Plan (including, but not limited to, any
     exercise price, grant price or purchase price, and any bases for adjusting
     such exercise, grant or purchase price, any restriction or condition, any
     schedule for lapse of restrictions or conditions relating to
     transferability or forfeiture, exercisability or settlement of an Award,
     and waiver or accelerations thereof, and waivers of performance conditions
     relating to an Award, based in each case on such considerations as the
     Committee shall determine) and all other matters to be determined in
     connection with an Award;

          (v) to determine whether, to what extent, and under what circumstances
     an Award may be settled, or the exercise price of an Award may be paid, in
     cash, Shares, other Awards or other property, or an Award may be canceled,
     forfeited, exchanged or surrendered;

          (vi) to determine whether, to what extent, and under what
     circumstances cash, Shares, other Awards or other property payable with
     respect to an Award will be deferred either automatically, at the election
     of the Committee, or at the election of the Eligible Person;

          (vii) to prescribe the form of each Award Agreement, which need not be
     identical for each Eligible Person;

          (viii) to adopt, amend, suspend, waive and rescind such rules and
     regulations and appoint such agents as the Committee may deem necessary or
     advisable to administer the Plan;

          (ix) to correct any defect or supply any omission or reconcile any
     inconsistency in the Plan and to construe and interpret the Plan and any
     Award, rules and regulations, Award Agreement or other instrument
     hereunder;

          (x) to accelerate the exercisability or vesting of all or any portion
     of any Award or to extend the period during which an Award is exercisable;
     and


<PAGE>
                                      -4-


          (xi) to make all other decisions and determinations as may be required
     under the terms of the Plan or as the Committee may deem necessary or
     advisable for the administration of the Plan.

     (b) Manner of Exercise of Committee Authority. The Committee shall have
sole discretion in exercising its authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive and binding on all
persons, including the Company, Subsidiaries, Affiliates, Eligible Persons, any
person claiming any rights under the Plan from or through any Eligible Person
and shareholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. The Committee may delegate to officers
or managers of the Company or any Subsidiary or Affiliate the authority, subject
to such terms as the Committee shall determine, to perform administrative
functions and, with respect to Awards granted to persons not subject to Section
16 of the Exchange Act, to perform such other functions as the Committee may
determine, to the extent permitted under Rule 16b-3 (if applicable) and
applicable law.

     (c) Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary or
Affiliate, the Company's independent certified public accountants, or other
professional retained by the Company to assist in the administration of the
Plan. All members of the Committee and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation.

     (d) Limitation on Committee's Discretion. Anything in this Plan to the
contrary notwithstanding, in the case of any Award which is intended to qualify
as "performance-based compensation" within the meaning of Section 162(m)(4)(C)
of the Code, if the Award Agreement so provides, the Committee shall have no
discretion to increase the amount of compensation payable under the Award to the
extent such an increase would cause the Award to lose its qualification as such
performance-based compensation.

     4. Shares Subject to the Plan.

     (a) Subject to adjustment as provided in Section 4(b) hereof, the total
number of Shares reserved for issuance in connection with Awards under the Plan
shall be [ ].1 No Award may be granted if the number of Shares to which such
Award relates, when added to the number of Shares previously issued under the
Plan or otherwise previously reserved under the Plan, exceeds the number of
Shares reserved under the preceding sentence. If any Awards are forfeited,
canceled, terminated, exchanged or surrendered or such Award is settled in cash
or otherwise terminates without a distribution of Shares to the Participant, any
Shares counted against the number of Shares reserved and available under the
Plan with respect to such Award shall, to the extent of any such forfeiture,
settlement, termination, cancellation, exchange or surrender, again be available
for Awards under the Plan.

     (b) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reclassification,
reorganization, merger, consolidation, spin-off, combination, repurchase or
share exchange, or other similar corporate transaction or event, affects the
Shares such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Eligible Persons under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems appropriate and, in
such manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares which may thereafter be issued under the Plan, (ii) the number
and kind of shares, other securities or other consideration issued or issuable
in respect of outstanding Awards and (iii) the exercise

----------

1    Represents 10% of the outstanding shares of Common Stock on a fully diluted
     basis.

<PAGE>
                                      -5-


price, grant price or purchase price relating to any Award; provided, however,
in each case, that, with respect to ISOs, such adjustment shall be made in
accordance with Section 424(a) of the Code, unless the Committee determines
otherwise. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria and performance objectives included
in, Awards in recognition of unusual or non-recurring events (including, without
limitation, events described in the preceding sentence) affecting the Company or
any Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations or accounting principles; provided, however, that, if an Award
Agreement specifically so provides, the Committee shall not have discretion to
increase the amount of compensation payable under the Award to the extent such
an increase would cause the Award to lose its qualification as performance-based
compensation for purposes of Section 162(m)(4)(C) of the Code and the
regulations thereunder.

     (c) Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares, including Shares
acquired by purchase in the open market or in private transactions.

     5. Specific Terms of Awards.

     (a) General. Awards may be granted on the terms and conditions set forth in
this Section 5. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(d)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms regarding forfeiture
of Awards or continued exercisability of Awards in the event of termination of
employment by the Eligible Person.

     (b) Options. The Committee is authorized to grant Options, which may be
NQSOs or ISOs, to Eligible Persons on the following terms and conditions:

          (i) Exercise Price. The exercise price per Share purchasable under an
     Option shall be determined by the Committee, and the Committee may, without
     limitation, set an exercise price that is based upon achievement of
     performance criteria if deemed appropriate by the Committee.

          (ii) Time and Method of Exercise. The Committee shall determine at the
     date of grant or thereafter the time or times at which an Option may be
     exercised in whole or in part (including, without limitation, upon
     achievement of performance criteria if deemed appropriate by the
     Committee), the methods by which such exercise price may be paid or deemed
     to be paid (including, without limitation, broker-assisted exercise
     arrangements), the form of such payment (including, without limitation,
     cash, Shares, notes or other property) and the methods by which Shares will
     be delivered or deemed to be delivered to Eligible Persons.

          (iii) ISOs. The terms of any ISO granted under the Plan shall comply
     in all respects with the provisions of Section 422 of the Code, including
     but not limited to the requirement that the ISO shall be granted within ten
     years from the earlier of the date of adoption or shareholder approval of
     the Plan. ISOs may only be granted to employees of the Company or a
     Subsidiary.

     (c) SARs. The Committee is authorized to grant SARs to Eligible Persons on
the following terms and conditions:

          (i) Right to Payment. An SAR shall confer on the Eligible Person to
     whom it is granted a right to receive with respect to each Share subject
     thereto, upon exercise thereof, the excess of (1) the Fair Market Value of
     one Share on the date of exercise (or, if the Committee shall so determine
     in the case of any such right, the Fair Market Value of one Share at any
     time during a specified period before or after the date of exercise) over
     (2) the exercise price of the SAR as


<PAGE>
                                      -6-


     determined by the Committee as of the date of grant of the SAR (which, in
     the case of an SAR granted in tandem with an Option, shall be equal to the
     exercise price of the underlying Option).

          (ii) Other Terms. The Committee shall determine, at the time of grant
     or thereafter, the time or times at which an SAR may be exercised in whole
     or in part, the method of exercise, method of settlement, form of
     consideration payable in settlement, method by which Shares will be
     delivered or deemed to be delivered to Eligible Persons, whether or not an
     SAR shall be in tandem with any other Award and any other terms and
     conditions of any SAR. Unless the Committee determines otherwise, an SAR
     (1) granted in tandem with an NQSO may be granted at the time of grant of
     the related NQSO or at any time thereafter and (2) granted in tandem with
     an ISO may only be granted at the time of grant of the related ISO.

     (d) Restricted Shares. The Committee is authorized to grant Restricted
Shares to Eligible Persons on the following terms and conditions:

          (i) Issuance and Restrictions. Restricted Shares shall be subject to
     such restrictions on transferability and other restrictions, if any, as the
     Committee may impose at the date of grant or thereafter, which restrictions
     may lapse separately or in combination at such times, under such
     circumstances (including, without limitation, upon achievement of
     performance criteria if deemed appropriate by the Committee), in such
     installments or otherwise, as the Committee may determine. Except to the
     extent restricted under the Award Agreement relating to the Restricted
     Shares, an Eligible Person granted Restricted Shares shall have all of the
     rights of a shareholder including, without limitation, the right to vote
     Restricted Shares and the right to receive dividends thereon. The Committee
     must certify in writing prior to the lapse of restrictions conditioned on
     achievement of performance criteria that such performance criteria were in
     fact satisfied.

          (ii) Forfeiture. Except as otherwise determined by the Committee, at
     the date of grant or thereafter, upon termination of employment during the
     applicable restriction period, Restricted Shares and any accrued but unpaid
     dividends or Dividend Equivalents that are at that time subject to
     restrictions shall be forfeited; provided, however, that the Committee may
     provide, by rule or regulation or in any Award Agreement, or may determine
     in any individual case, that restrictions or forfeiture conditions relating
     to Restricted Shares will be waived in whole or in part in the event of
     terminations resulting from specified causes, and the Committee may in
     other cases waive in whole or in part the forfeiture of Restricted Shares.

          (iii) Certificates for Shares. Restricted Shares granted under the
     Plan may be evidenced in such manner as the Committee shall determine. If
     certificates representing Restricted Shares are registered in the name of
     the Eligible Person, such certificates shall bear an appropriate legend
     referring to the terms, conditions and restrictions applicable to such
     Restricted Shares, and the Company shall retain physical possession of the
     certificate.

          (iv) Dividends. Dividends paid on Restricted Shares shall be either
     paid at the dividend payment date, or deferred for payment to such date as
     determined by the Committee, in cash or in unrestricted Shares having a
     Fair Market Value equal to the amount of such dividends. Shares distributed
     in connection with a Share split or dividend in Shares, and other property
     distributed as a dividend, shall be subject to restrictions and a risk of
     forfeiture to the same extent as the Restricted Shares with respect to
     which such Shares or other property has been distributed.

     (e) Restricted Share Units. The Committee is authorized to grant Restricted
Share Units to Eligible Persons, subject to the following terms and conditions:

          (i) Award and Restrictions. Delivery of Shares or cash, as the case
     may be, will occur upon expiration of the deferral period specified for
     Restricted Share Units by the Committee (or, if


<PAGE>
                                      -7-


     permitted by the Committee, as elected by the Eligible Person). In
     addition, Restricted Share Units shall be subject to such restrictions as
     the Committee may impose, if any (including, without limitation, the
     achievement of performance criteria if deemed appropriate by the
     Committee), at the date of grant or thereafter, which restrictions may
     lapse at the expiration of the deferral period or at earlier or later
     specified times, separately or in combination, in installments or
     otherwise, as the Committee may determine. The Committee must certify in
     writing prior to the lapse of restrictions conditioned on the achievement
     of performance criteria that such performance criteria were in fact
     satisfied.

          (ii) Forfeiture. Except as otherwise determined by the Committee at
     the date of grant or thereafter, upon termination of employment (as
     determined under criteria established by the Committee) during the
     applicable deferral period or portion thereof to which forfeiture
     conditions apply (as provided in the Award Agreement evidencing the
     Restricted Share Units), or upon failure to satisfy any other conditions
     precedent to the delivery of Shares or cash to which such Restricted Share
     Units relate, all Restricted Share Units that are at that time subject to
     deferral or restriction shall be forfeited; provided, however, that the
     Committee may provide, by rule or regulation or in any Award Agreement, or
     may determine in any individual case, that restrictions or forfeiture
     conditions relating to Restricted Share Units will be waived in whole or in
     part in the event of termination resulting from specified causes, and the
     Committee may in other cases waive in whole or in part the forfeiture of
     Restricted Share Units.

     (f) Performance Shares and Performance Units. The Committee is authorized
to grant Performance Shares or Performance Units or both to Eligible Persons on
the following terms and conditions:

          (i) Performance Period. The Committee shall determine a performance
     period (the "Performance Period") of one or more years and shall determine
     the performance objectives for grants of Performance Shares and Performance
     Units. Performance objectives may vary from Eligible Person to Eligible
     Person and shall be based upon such performance criteria as the Committee
     may deem appropriate. Performance Periods may overlap and Eligible Persons
     may participate simultaneously with respect to Performance Shares and
     Performance Units for which different Performance Periods are prescribed.

          (ii) Award Value. At the beginning of a Performance Period, the
     Committee shall determine for each Eligible Person or group of Eligible
     Persons with respect to that Performance Period the range of number of
     Shares, if any, in the case of Performance Shares, and the range of dollar
     values, if any, in the case of Performance Units, which may be fixed or may
     vary in accordance with such performance or other criteria specified by the
     Committee, which shall be paid to an Eligible Person as an Award if the
     relevant measure of Company performance for the Performance Period is met.

          (iii) Significant Events. If during the course of a Performance Period
     there shall occur significant events as determined by the Committee which
     the Committee expects to have a substantial effect on a performance
     objective during such period, the Committee may revise such objective;
     provided, however, that, if an Award Agreement so provides, the Committee
     shall not have any discretion to increase the amount of compensation
     payable under the Award to the extent such an increase would cause the
     Award to lose its qualification as performance-based compensation for
     purposes of Section 162(m)(4)(C) of the Code and the regulations
     thereunder.

          (iv) Forfeiture. Except as otherwise determined by the Committee, at
     the date of grant or thereafter, upon termination of employment during the
     applicable Performance Period, Performance Shares and Performance Units for
     which the Performance Period was prescribed shall be forfeited; provided,
     however, that the Committee may provide, by rule or regulation or in any

<PAGE>
                                      -8-


     Award Agreement, or may determine in an individual case, that restrictions
     or forfeiture conditions relating to Performance Shares and Performance
     Units will be waived in whole or in part in the event of terminations
     resulting from specified causes, and the Committee may in other cases waive
     in whole or in part the forfeiture of Performance Shares and Performance
     Units.

          (v) Payment. Each Performance Share or Performance Unit may be paid in
     whole Shares, or cash or a combination of Shares and cash either as a lump
     sum payment or in installments, all as the Committee shall determine, at
     the time of grant of the Performance Share or Performance Unit or
     otherwise, commencing as soon as practicable after the end of the relevant
     Performance Period. The Committee must certify in writing prior to the
     payment of any Performance Share or Performance Unit that the performance
     objectives and any other material terms were in fact satisfied.

     (g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Eligible Persons. The Committee may provide, at the date of grant
or thereafter, that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Shares, or
other investment vehicles as the Committee may specify, provided that Dividend
Equivalents (other than freestanding Dividend Equivalents) shall be subject to
all conditions and restrictions of the underlying Awards to which they relate.

     (h) Other Share-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Persons 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, Shares, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
unrestricted shares awarded purely as a "bonus" and not subject to any
restrictions or conditions, other rights convertible or exchangeable into
Shares, purchase rights for Shares, 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 performance of specified
Subsidiaries or Affiliates. The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Shares,
notes or other property, as the Committee shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, shall also be
authorized pursuant to this Section 5(h).

     6. Certain Provisions Applicable to Awards.

     (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Persons either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Subsidiary or Affiliate,
or any business entity to be acquired by the Company or a Subsidiary or
Affiliate, or any other right of an Eligible Person to receive payment from the
Company or any Subsidiary or Affiliate. The per Share exercise price of any
Option, grant price of any SAR, or purchase price of any other Award conferring
a right to purchase Shares which is granted, in connection with the substitution
of awards granted under any other plan or agreement of the Company or any
Subsidiary or Affiliate or any business entity to be acquired by the Company or
any Subsidiary or Affiliate, shall be determined by the Committee, in its
discretion.

     (b) Terms of Awards. The term of each Award granted to an Eligible Person
shall be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any ISO or an SAR granted in tandem
therewith exceed a period of ten years from the date of its grant (or such
shorter period as may be applicable under Section 422 of the Code).


<PAGE>
                                      -9-


     (c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares, or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments.

     (d) Nontransferability. Unless otherwise set forth by the Committee in an
Award Agreement, Awards (except for vested shares) shall not be transferable by
an Eligible Person except by will or the laws of descent and distribution
(except pursuant to a Beneficiary designation) and shall be exercisable during
the lifetime of an Eligible Person only by such Eligible Person or his guardian
or legal representative. An Eligible Person's rights under the Plan may not be
pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be
subject to claims of the Eligible Person's creditors.

     7. Change of Control Provisions.

     (a) Acceleration of Exercisability and Lapse of Restrictions; Cash-Out of
Awards. In the event of a Change of Control, the following acceleration and
cash-out provisions shall apply unless otherwise provided by the Committee at
the time of the Award grant.

          (i) All outstanding Awards pursuant to which the Participant may have
     rights the exercise of which is restricted or limited, shall become fully
     exercisable at the time of the Change of Control. Unless the right to lapse
     of restrictions or limitations is waived or deferred by a Participant prior
     to such lapse, all restrictions or limitations (including risks of
     forfeiture and deferrals) on outstanding Awards subject to restrictions or
     limitations under the Plan shall lapse, and all performance criteria and
     other conditions to payment of Awards under which payments of cash, Shares
     or other property are subject to conditions shall be deemed to be achieved
     or fulfilled and shall be waived by the Company at the time of the Change
     of Control.

          (ii) For a period of up to 60 days following a Change of Control, the
     Participant may elect to surrender any outstanding Award and to receive, in
     full satisfaction therefor, a cash payment equal to the value of such Award
     calculated on the basis of the Change of Control Price of any Shares or the
     Fair Market Value of any property other than Shares relating to such Award;
     provided, however, that in the case of an ISO, or a Stock Appreciation
     Right granted in tandem therewith, the cash payment shall be based upon the
     Fair Market Value of Shares on the date of exercise; provided further,
     however, that in the case of a Change of Control described in Section
     7(b)(i)(c) or (d) below, the payment described in this sentence may, in the
     discretion of the Committee, be made in the form of Shares having a Fair
     Market Value equal to the amount of cash that would otherwise be paid. In
     the event that an Award is granted in tandem with another Award such that
     the Participant's right to payment for such Award is an alternative to
     payment of another Award, the Participant electing to surrender any such
     tandem Award shall surrender all alternative Awards related thereto and
     receive payment for the Award which produces the highest payment to the
     Participant.

     (b) Definitions of Certain Terms. For purposes of this Section 7, the
following definitions, in addition to those set forth in Section 2, shall apply:

          (i) "Change of Control" means and shall be deemed to have occurred if:

               (a) any person (within the meaning of the Exchange Act), other
          than the Company or a Related Party, is or becomes the "beneficial
          owner" (as defined in Rule 13d-3 under


<PAGE>
                                      -10-


          the Exchange Act), directly or indirectly, of Voting Securities
          representing 30 percent or more of the total voting power of all the
          then-outstanding Voting Securities; or

               (b) the individuals who, as of the effective date of the Plan,
          constitute the Board, together with those who first become directors
          subsequent to such date and whose recommendation, election or
          nomination for election to the Board was approved by a vote of at
          least a majority of the directors then still in office who either were
          directors as of the effective date of the Plan or whose
          recommendation, election or nomination for election was previously so
          approved (the "Continuing Directors"), cease for any reason to
          constitute a majority of the members of the Board; or

               (c) (x) the stockholders of the Company approve a merger,
          consolidation, recapitalization or reorganization of the Company or a
          Subsidiary, reverse split of any class of Voting Securities, or an
          acquisition of securities or assets by the Company or a Subsidiary, or
          (y) consummation of any such transaction if stockholder approval is
          not obtained, other than, with respect to both (x) and (y) (I) any
          such transaction in which the holders of outstanding Voting Securities
          immediately prior to the transaction receive (or, in the case of a
          transaction involving a Subsidiary and not the Company, retain), with
          respect to such Voting Securities, voting securities of the surviving
          or transferee entity representing more than 60 percent of the total
          voting power outstanding immediately after such transaction, with the
          voting power of each such continuing holder relative to other such
          continuing holders not substantially altered in the transaction, or
          (II) any such transaction which would result in a Related Party
          beneficially owning more than 50 percent of the voting securities of
          the surviving entity outstanding immediately after such transaction;
          or


               (d) the stockholders of the Company approve a plan of complete
          liquidation of the Company or an agreement for the sale or disposition
          by the Company of all or substantially all of the Company's assets
          other than any such transaction which would result in a Related Party
          owning or acquiring more than 50 percent of the assets owned by the
          Company immediately prior to the transaction.

          (ii) "Change of Control Price" means, with respect to a Share, the
     higher of (a) the highest reported sales price of Shares during the 30
     calendar days preceding a Change of Control on the principal stock exchange
     or market quotation system on which the Shares are traded or (b) the
     highest price paid or offered in a transaction which either (I) results in
     a Change of Control or (II) would be consummated but for another
     transaction which results in a Change of Control and, if it were
     consummated, would result in a Change of Control. With respect to clause
     (b) in the preceding sentence, the "price paid or offered" will be equal to
     the sum of (I) the face amount of any portion of the consideration
     consisting of cash or cash equivalents and (II) the fair market value of
     any portion of the consideration consisting of real or personal property
     other than cash or cash equivalents, as established by an independent
     appraiser selected by the Committee.

          (iii) "Related Party" means (a) a majority-owned subsidiary of the
     Company; (b) an employee or group of employees of the Company or any
     majority-owned subsidiary of the Company; (c) a trustee or other fiduciary
     holding securities under an employee benefit plan of the Company or any
     majority-owned subsidiary of the Company; (d) a corporation owned directly
     or indirectly by the stockholders of the Company in substantially the same
     proportion as their ownership of Voting Securities; or (e) any person who
     on the Effective Date (as defined in Section 8(k)) hereof owns a majority
     of the Voting Securities of the Company.


<PAGE>
                                      -11-


          (iv) "Voting Securities or Security" means any securities of the
     Company which carry the right to vote generally in the election of
     directors.

     8. General Provisions.

     (a) Compliance with Legal and Trading Requirements. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company
under the Plan and any Award Agreement, shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Shares under any Award
until completion of such stock exchange or market system listing or registration
or qualification of such Shares or other required action under any state or
federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules and regulations. No
provisions of the Plan shall be interpreted or construed to obligate the Company
to register any Shares under federal or state law.

     (b) No Right to Continued Employment or Service. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee or director
the right to be retained in the employ or service of the Company or any of its
Subsidiaries or Affiliates, nor shall it interfere in any way with the right of
the Company or any of its Subsidiaries or Affiliates to terminate any employee's
or director's employment or service at any time.

     (c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Person, amounts of withholding and other taxes due in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Eligible Persons to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Person's tax obligations.

     (d) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders of the Company or
Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Company's shareholders to the extent such shareholder approval is required under
Section 422 of the Code; provided, however, that, without the consent of an
affected Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially and adversely affect the rights of such
Participant under any Award theretofore granted to him or her. The Committee may
waive any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue or terminate, any Award theretofore granted, prospectively
or retrospectively; provided, however, that, without the consent of a
Participant, no amendment, alteration, suspension, discontinuation or
termination of any Award may materially and adversely affect the rights of such
Participant under any Award theretofore granted to him or her.

     (e) No Rights to Awards; No Shareholder Rights. No Eligible Person or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Eligible Persons and employees.
No Award shall confer on any Eligible Person any of the rights of a shareholder
of the Company unless and until Shares are duly issued or transferred to the
Eligible Person in accordance with the terms of the Award.

     (f) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an


<PAGE>
                                      -12-


Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the
Company; provided, however, that the Committee may authorize the creation of
trusts or make other arrangements to meet the Company's obligations under the
Plan to deliver cash, Shares, other Awards, or other property pursuant to any
Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant.

     (g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of options and other awards otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.

     (h) Not Compensation for Benefit Plans. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits
under any benefit plan or other arrangement of the Company for the benefit of
its employees or directors unless the Company shall determine otherwise.

     (i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.

     (j) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of New York without giving effect to
principles of conflict of laws.

     (k) Effective Date; Plan Termination. The Plan shall become effective as of
[ ], 1997 (the "Effective Date"). The Plan shall terminate as to future awards
on the date which is ten (10) years after the Effective Date.

     (l) Titles and Headings. The titles and headings of the sections in the
Plan are for convenience of reference only. In the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.